Exhibit 10.2

 

MEMBERSHIP INTEREST PURCHASE AGREEMENT

 

(Hilton Garden Inn Providence, Rhode Island)

 

THIS MEMBERSHIP INTEREST PURCHASE AGREEMENT (this “Agreement” or “Contract”), is
made as of the 14th day of January, 2020 (the “Effective Date”), by, between and
among the persons and entities signing this Agreement below under the heading
“Sellers” (each being referred to individually as “Seller,” and collectively as
“Sellers”), and The Procaccianti Group, LLC, a Rhode Island limited liability
company (“Purchaser”).

 

RECITALS:

 

WHEREAS, Sellers are parties to that certain Amended and Restated Operating
Agreement dated as of June __, 2015 (the “LLC Agreement”) with respect to Gano
Holdings, LLC, a Rhode Island limited liability company (hereinafter the
“Company”); and

 

WHEREAS, Sellers are all of the members of the Company; and

 

WHEREAS, the Company is the owner of the land, buildings and other improvements
comprising that certain hotel known as the Hilton Garden Inn Providence located
at 220 India Street, Providence, Rhode Island 02903 and being more particularly
described in Exhibit A attached hereto (the “Property”),

 

WHEREAS, Purchaser desires to acquire all of the membership interests in the
Company from Sellers upon the terms and conditions hereinafter set forth; and

 

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

 

ARTICLE 1

SALE OF THE PROPERTY

 

1.1           Agreement of Purchase and Sale. Subject to the terms and
conditions hereinafter set forth, Sellers agree to sell, assign, transfer and
convey to Purchaser, and Purchaser agrees to purchase from the Sellers, all
(i.e. 100%) of the outstanding membership interests in the Company (collectively
referred to as the “Interests”).

 

ARTICLE 2

CONSIDERATION

 

2.1           Purchase Price.

 

2.1.1     The purchase price (“Purchase Price”) for the Interests is TWENTY
EIGHT MILLION FIVE HUNDRED THOUSAND AND 00/100 Dollars ($28,500,000.00), which
shall be payable by Purchaser to Sellers at Closing (subject to prorations and
other credits

  

 

 

 

provided for in this Contract) in immediately available funds to an account
designated by Sellers at least two Business Days prior to Closing.

 

2.1.2      At Purchaser’s election, Seller and Purchaser hereby agree to
reasonably cooperate with each other in arranging for the liens securing the
Existing Mortgage Loan to be assigned to Purchaser’s lender or other designee,
and in the event of such assignment, Purchaser shall purchase the Property
subject to the liens securing the Existing Mortgage Loan, as so assigned. Due to
the assignment of the liens securing the Existing Mortgage Loan (A) the Balance
of the Purchase Price will be decreased by the outstanding balance of all
amounts payable under the Existing Mortgage Loan as of the Closing Date, (B) the
liens securing the Existing Mortgage Loan (as the same may be amended and
assigned) will be deemed approved by Purchaser and to be Permitted Exceptions,
(C) the Property will be conveyed subject to such liens as the same may be
amended and assigned, and (D) Seller cause the lender under the Existing
Mortgage Loan to assign the liens securing the Existing Mortgage Loan to any
lender providing financing to Purchaser, which such lender shall be designated
by Purchaser within ten (10) Business Days of Closing; provided, however that if
for any reason such liens cannot be assigned, then not withstanding anything to
the contrary herein, the Property will be conveyed free and clear of such liens
and the foregoing provisions of this Section 2.1.2 shall not apply.

 

2.2  Earnest Money. Within two (2) Business Days following the execution of this
Contract by both Sellers and Purchaser, Purchaser shall deposit with First
American Title Insurance Company (the “Title Company”), the sum of Five Hundred
Thousand and 00/100 Dollars ($500,000) (the “Initial Deposit”) in good funds. No
later than two (2) Business Days following the end of the Inspection Period (as
hereinafter defined) (provided that this Contract is not sooner terminated in
accordance with the terms hereof), Purchaser shall deposit with the Title
Company an additional Five Hundred Thousand and 00/100 Dollars ($500,000) (the
“Additional Deposit” and together with the Initial Deposit, the “Deposit”).
Should Purchaser fail to make the Initial Deposit or the Additional Deposit, if
any when due, this Contract shall automatically terminate, whereupon the Title
Company shall return to Sellers all executed originals of this Contract then in
its possession and Sellers and Purchaser shall have no further rights,
liabilities or obligations hereunder except as expressly set forth herein. The
Title Company shall deposit the Deposit in an non-interest bearing account
maintained at a federally insured bank or savings and loan association, in such
a manner that the entire Deposit is, to the extent feasible, protected by
federal deposit insurance. To facilitate the timely deposit of such funds,
Purchaser hereby represents, warrants, covenants and agrees with Sellers and the
Title Company that Purchaser's federal taxpayer identification number is
45-2480908 and that it will promptly execute such documentation as the Title
Company may reasonably require to enable the Title Company to comply with the
deposit instructions set forth herein.

 

2.2.1     The Deposit and any interest earned thereon is hereinafter
collectively referred to as the “Earnest Money.” If the transaction contemplated
by this Contract is consummated in accordance with the terms and provisions
hereof, the Earnest Money shall be credited against the Purchase Price and paid
to Sellers at Closing. If the transaction is not so consummated, the Earnest
Money shall be held and delivered by the Title Company as hereinafter provided.

 

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2.2.2      The balance of the Purchase Price, subject to the credits, prorations
and adjustments set forth herein, shall be paid in cash by wire transfer of
immediately available funds.

 

2.3  Allocation. Sellers and Purchaser shall cooperate with each other in good
faith to arrive at a mutually acceptable allocation of the Purchase Price among
the Land, Improvements, Personalty and other customary items either party hereto
may request to be allocated (the “Allocation”), and if agreed upon in writing
such Allocation shall be deemed attached hereto as Schedule 2.2. Upon
Purchaser’s request, Sellers shall provide Purchaser with a statement of
Sellers’ proposed allocation of the Purchase Price within five (5) Business Days
of Purchaser’s request. If the Allocation cannot be agreed upon, each party may
use its own determination and bear any consequences related thereto and
Purchaser’s allocation shall be utilized in calculating transfer, sales and
similar tax and related filings under this Contract; and Purchaser’s allocation
shall control with respect to the amount to be stated on any transfer tax
declaration submitted in connection with the transfer of the Interests. If the
parties are able to agree upon an Allocation, Sellers and Purchaser agree to
(i) be bound by the Allocation and (ii) act in accordance with the Allocation in
the preparation of financial statements and filing of all tax returns.

 

2.4  Amendment. In connection with the purchase of the Interest, during the
Inspection Period, the parties shall negotiate in good faith an amendment to
enable one or more of the Sellers the opportunity to realize the value of its
interest in the Company under the Contract by contributing their interests in
the Company to the Purchaser in exchange for membership interests in the
Purchaser  in a tax-free manner under Section 721 of the Code or other structure
that may be agreed to by the parties.  

 

ARTICLE 3 

 

INSPECTIONS

 

3.1  Reports. Purchaser hereby acknowledges that Sellers have provided Purchaser
with all documents, tests, reports and other materials and information about the
Property, including, without limitation, certain environmental reports and
certain financial information relating to the Company, in the Sellers’
possession. Purchaser shall be solely responsible for obtaining any updates,
revisions, re-certifications, etc., to any environmental or property condition
reports. Upon request, from time to time during the Inspection Period, Sellers
will use reasonable efforts to furnish to Purchaser or make available to
Purchaser all material information which is in Sellers’ possession or control
concerning the Company or the Property that Purchaser, its attorneys,
accountants, engineers or other representatives shall reasonably request. Except
as provided herein, without limiting Article 5 of this Agreement, all items
provided to Purchaser by Sellers or Sellers’ Representative in accordance with
this Section 3.1 (“Diligence Materials”) are being provided solely as an
accommodation to Purchaser and without recourse, representation or warranty of
any kind against or by the Company or Sellers or against the third parties who
may have prepared the reports and other items delivered to Purchaser except as
set forth herein or in any document delivered by Sellers at Closing. If for any
reason the Closing shall not occur, Purchaser shall, upon written request,
return to Sellers all Property Documents provided by Sellers to Purchaser, it
being understood and agreed that the provisions of this sentence shall survive
the expiration or termination of this Agreement.

 

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3.2  Inspection.

 

3.2.1      During the Inspection Period and thereafter through Closing if this
Contract is not earlier terminated, Purchaser shall be permitted to enter or to
have its authorized representatives and its and their agents, employees and
representatives (“Purchaser's Representatives”) enter upon the Property or any
part thereof at any reasonable time, subject to the rights of Tenants, guests
and other occupants occupying space in the Property pursuant to Leases or
otherwise, for the purpose of reviewing the books and records relating to the
Property, including all records relating to operating income and expenses of the
Property and the originals of any of the Diligence Materials submitted to
Purchaser, and for the further purpose of conducting physical inspections of the
Property and making, at Purchaser's sole risk and expense, such other
inspections, examinations, investigations and tests as Purchaser considers
appropriate, provided that:

 

(a)         All Investigations shall be conducted during the normal business
hours of the Property, unless Sellers otherwise approve in writing and upon
appropriate notice to any Tenants. Purchaser shall deliver to Sellers a written
request to enter the Property at least twenty-four (24) hours prior to the
intended date of entry (which may be given by email to Peter Ziegler
(pziegler@procaccianti.com). Each such request shall specify the intended date
of entry and shall provide a reasonably detailed description of the proposed
Investigations, including, without limitation, a list of contractors who will be
performing the proposed Investigation and such other information as Sellers
reasonably require in connection with such proposed Investigation.

 

(b)         Purchaser and Purchaser's Representatives shall not unreasonably
interfere with the usual operation of the Property by Sellers, the Company and
its Tenants, guests or other occupants.

 

(c)          Purchaser and Purchaser's Representatives shall exercise due care
and ordinary prudence in performing any Investigations and shall not cause or
permit any damage or injury to be done to the Property and shall promptly
restore the Property to substantially the condition as existed prior to such
Investigations.

 

(d)         Neither Purchaser nor any Purchaser's Representative has authority
to do anything that may result in a lien or encumbrance against the Property in
connection with its inspections. Without limiting the foregoing, however,
Purchaser agrees to promptly pay when due all costs associated with its
inspections and not to cause, permit or suffer any lien or encumbrance to be
asserted against the Property related to its inspections (provided that in the
case of an improperly filed lien, Purchaser may bond around such lien provided
that it thereafter uses diligence efforts to cause such lien to be removed of
record).

 

(e)          Purchaser specifically agrees that neither it nor any of its
employees or agents shall contact or communicate directly with any tenant,
occupant, or any Hotel Employee unless such communication shall have been
approved by Peter Ziegler (or any other representative designated by Seller).
Purchaser shall have the right to communicate with the general manager, chief
engineer, director of sales and comptroller provided that Purchaser gives notice
to Sellers at least 24 hours in advance of such communication and

 

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provides Sellers with the opportunity to be present for such communication.
Commencing fifteen (15) Business Days prior to Closing, Sellers will cooperate
to provide Purchaser reasonable access to coordinate transition matters prior to
Closing, including interviewing the Hotel Employees for future employment at the
Hotel. Sellers shall be entitled to have a representative present during any
such communications.

 

(f)          Purchaser shall comply with all federal, state and local laws,
rules, regulations and ordinances which might in any way relate to the
Investigations.

 

(g)         Other than research of public records and databases, neither
Purchaser nor any Purchaser's Representative shall communicate with any
regulatory agencies or their individual employees concerning the Property,
without giving at least 48 hours prior written notice to Seller. Sellers shall
have the right to participate in any meetings or telephone calls with such
agencies or employees. Notwithstanding the foregoing or anything contained
herein to the contrary, Purchaser and Purchaser’s Representatives shall have the
right, without any requirement to notify Seller, to (i) review (and to seek
through FOIA requests) land records, building department, health department and
other local governmental authority records with respect to the Land and
Improvements and the operation of the Hotel (including, without limitation, for
the preparation of (and due diligence required therefor) title reports, zoning
reports, property condition reports, environmental assessment reports and other
customary due diligence), and (ii) apply to (including the pursuit thereof) the
applicable governmental authority for any incentives, licenses or permits
necessary or desirable for Purchaser’s continued operation of the Hotel after
the Closing.

 

(h)        Notwithstanding anything herein contained to the contrary, without
the prior written consent of Seller, which consent may be withheld, delayed or
conditioned by Sellers in their sole and absolute discretion, Purchaser shall
not be entitled to conduct any invasive physical or environmental inspection,
testing or sampling at the Property, including without limitation, any
environmental testing other than a Phase I study. If Sellers consent to
performance of a test or investigation involving physical disturbance or
invasive testing of any portion of the Property, prior to conducting such
testing Purchaser shall provide Seller with a reasonably detailed testing plan
outlining the scope of work and specific tests Purchaser intends to perform,
including location of any borings or samples and means and methodology of the
tests. No such tests shall be conducted without Sellers’ prior written approval
of the testing plan and the specific test or investigation. Sellers shall have
the right to have a representative present during any test or any test or
Investigation. Purchaser shall, at its own expense, promptly fill and compact
any holes, and otherwise restore any damage to the Property related to the
Investigations.

 

(i)          Before conducting and during inspections, Purchaser and each
Purchaser's Representative conducting any inspection shall maintain workers'
compensation insurance in accordance with applicable law, and Purchaser, or the
applicable Purchaser's Representative conducting any inspection, shall maintain
(1) commercial general liability insurance with limits of at least Two Million
Dollars ($2,000,000.00) for bodily or personal injury or death, (2) property
damage insurance in the amount of at least One Million Dollars ($1,000,000.00),
and (3) contractual liability insurance with respect to Purchaser's

 

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indemnification obligations hereunder. Purchaser shall deliver to Sellers
evidence of such workers' compensation insurance and evidence of the commercial
general liability, property damage and contractual liability insurance before
conducting any inspections of the Property, including a certificate of insurance
on Acord Form 27 (modified to include liability). Each such insurance policy
shall be written by a reputable insurance company having a rating of at least
“A:VII” by Best's Rating Guide (or a comparable rating by a successor rating
service), and shall otherwise be subject to Sellers’ prior approval. Such
insurance policies shall name as additional insureds Sellers, the Company,
Manager and such other parties holding insurable interests as Sellers may
designate.

 

(j)          Purchaser shall indemnify, defend and hold the Company, Sellers,
and Manager, and their respective partners, shareholders, officers, members,
directors, agents and employees (the “Seller Indemnified Parties”) harmless from
any and all losses, costs, liens, claims, causes of action, liability, damages,
expenses and liability (including, without limitation, court costs and
reasonable attorneys' fees) incurred in connection with or arising in any way
from (a) any inspections conducted by Purchaser and/or Purchaser's
Representative, (b) the exercise of Purchaser's rights under this Section 3.2,
or (c) any breach by Purchaser and/or Purchaser's Representative of the terms of
this Section 3.2, except that Purchaser’s obligations as set forth in this
sentence shall not extend to previously existing conditions that are discovered
by Purchaser or its agents to be present on, under or about the Property, nor
shall Purchaser’s obligations extend to conditions that are caused or
exacerbated by the actions of a Seller or its employees or agents. This
indemnity provision shall survive termination or expiration of this Contract. If
any proceeding is filed for which indemnity is required hereunder, Purchaser
agrees, upon request therefore, to defend the indemnified party in such
proceeding at its sole cost utilizing counsel reasonably satisfactory to the
indemnified party.

 

(k)        Purchaser agrees that the Diligence Materials, the information
gathered in connection with this Contract and the fact of this transaction shall
be considered “Confidential Information”, and such Confidential Information
shall be used by Purchaser and Purchaser Representatives solely for the purpose
of Purchaser’s evaluation of the Property and the transactions contemplated by
this Contract. Neither Purchaser nor any Purchaser Representative shall reveal,
disclose, disseminate, publish or communicate to any other persons, parties or
entities any Confidential Information, without the prior written consent of
Seller, which shall not be unreasonably withheld, conditioned or delayed, other
than to Purchaser’s partners, employees, consultants, attorneys, engineers,
licensees, prospective investors, and lenders involved in this transaction and
who have notified to preserve the confidentiality of such information as
required hereby (collectively, “Permitted Outside Parties”). Purchaser shall be
responsible for ensuring that any and all Permitted Outside Parties (and any
other person for whom Purchaser has responsibility hereunder) complies with this
section. Purchaser shall not divulge the contents of the Diligence Materials or
other Confidential Information to any party other than Permitted Outside Parties
except in connection with a court order or other legal process otherwise in
strict accordance with the confidentiality standards set forth in this section.
In permitting Purchaser and the Permitted Outside Parties to review the
Diligence Materials or any other Confidential Information, neither the Company
nor any Seller has not waived any privilege or claim of confidentiality with
respect thereto, and no third party benefits or relationships

 

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of any kind, either express or implied, have been offered, intended or created.
Notwithstanding anything to the contrary herein, Confidential Information shall
not include information which (a) is or becomes generally available to the
public other than as a result of a disclosure by Purchaser or the Permitted
Outside Parties, (b) was available to Purchaser or the Permitted Outside Parties
on a nonconfidential basis prior to its disclosure by a Seller or its
representatives, (c) becomes available to Purchaser or the Permitted Outside
Parties on a nonconfidential basis from a person, other than a Seller or its
representatives, who is not otherwise bound by a confidentiality agreement with
a Seller or any of its representatives not to transmit the information to
Purchaser or the Permitted Outside Parties, or (d) is independently developed by
any employee or agent of Purchaser or the Permitted Outside Parties who did not
have access to the Confidential Information. The provisions of this section
shall survive the termination of this Contract. Purchaser shall also promptly
notify Sellers in writing of requests for Confidential Information from any
third party or regulatory agency.

 

3.3  Right of Termination. This Contract shall be deemed accepted unless
Purchaser shall evidence its intent to terminate this Contract by written notice
thereof in accordance with Section 11.3 of this Contract to Sellers and Escrow
Agent on or prior to prior to the expiration of the Inspection Period (the
“Termination Notice”) which may be given for any reason or no reason in
Purchaser’s sole discretion. Upon receipt of the Termination Notice, Escrow
Agent shall immediately return the Deposit to Purchaser and this Contract shall
thereupon be deemed terminated, and neither party hereto shall have any
obligations of any nature to the other hereunder or by reason hereof, except for
those provisions that expressly survive such termination.

 

3.4  Assumption of Contracts. Purchaser shall have the right, at any time before
the end of the Inspection Period, to notify Sellers of any Property Contracts
that Purchaser has elected not to assume on the Closing Date. With respect to
such Property Contracts, Sellers shall promptly terminate such Property
Contracts effective as of the Closing Date. Sellers shall deliver the applicable
notices of termination as soon as practicable following Sellers’ receipt of the
Purchaser’s notice. With respect to the Property Contracts that Purchaser has
elected to assume (each, an “Assumed Contract”), Purchaser shall cause the
Company shall continue to pay all sums and perform all other covenants and
obligations which are to be paid, performed and complied with under the Assumed
Contracts first arising or accruing on and after the Closing Date.

 

3.5  Franchise Agreement. Sellers have informed Purchaser that the Company and
the Property is subject to the terms of the Franchise Agreement. As used herein,
the “Franchisor Consent” shall mean Franchisor’s agreement to concurrently with
Closing either (a) terminate the Franchise Agreement and release Sellers as of
the Closing Date from liabilities under the Franchise Agreement (other than
those that are expressly stated in the Franchise Agreement to survive a
termination of the Franchise Agreement) and enter into its standard franchise
agreement in connection its ownership of the Hotel (such new franchise or
license agreement, the “New Franchise Agreement”)or (b) consent to the transfer
of the Interests pursuant to the terms of the Franchise Agreement. Within
fifteen (15) days after the Effective Date, Purchaser shall (i) apply to
Franchisor to obtain the Franchisor Consent and use commercially reasonable
efforts to submit all information and documentation required by Franchisor in
connection therewith; and (ii) thereafter, diligently pursue and use
commercially reasonable efforts to obtain the Franchisor Consent prior to
Closing. Other than the Company’s payment of any regularly recurring royalties

 

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or other fees and payments due under the existing Franchise Agreement accrued as
of the Closing Date (including without limitation any costs and fees imposed by
Franchisor resulting from the Company’s default under the Franchise Agreement
prior to Closing but specifically not including any costs, penalties or fees
imposed in connection with the closing of the transaction contemplated by this
Contract and the termination of the Franchise Agreement in connection therewith,
which shall be paid by Sellers at Closing), all costs and expenses associated
with seeking and obtaining (including liquidated damages, if any) the New
Franchise Agreement shall be borne by Purchaser.

 

ARTICLE 4 

 

TITLE AND SURVEY

 

4.1  Title Report. Purchaser shall order a title insurance commitment with
respect to the Land and Improvements (a “Title Commitment”). Purchaser shall
ensure that a duplicate of such Title Commitment be delivered to Sellers’
counsel, together with legible photocopies (to the extent available) of all
instruments referred to in such Title Commitment as conditions or exceptions to
title to the Property and to the extent available, a current tax search with
respect to the Land and Improvements from all applicable taxing authorities.

 

4.2  Reserved.

 

4.3  Survey. If Purchaser orders any update to the Existing Survey (a “Survey
Update”), Purchaser shall ensure that a duplicate of such Survey Update be
delivered to Sellers’ counsel.

 

4.4  Review of Title and Survey.

 

4.4.1      If the Title Commitment and/or Survey Update shows matters
objectionable to Purchaser, and Sellers have received written notice of such
objectionable matters (collectively, “Title Objections”) from Purchaser on or
before the date which is five (5) Business Days prior to the expiration of the
Inspection Period, Sellers shall deliver to Purchaser a written notice of
Sellers’ election to cure any of the Title Objections referenced in Purchaser’s
notice three (3) Business Days after Sellers’ receipt of such notice. Failure to
deliver such response shall be deemed Sellers’ election not to cure any of the
Title Objections referenced therein. If Sellers elect to cure any of such Title
Objections, Sellers shall have until the earlier to occur of (i) the date that
is thirty (30) days after receipt of such notice or (ii) the Closing Date to
cure any such Title Objections. Title Objections will not be deemed to include
those matters which (1) are affirmatively insured against by the Title Company
without indemnification from Sellers in a manner acceptable to Purchaser in its
reasonable discretion; or (2) will be discharged or removed by Sellers at or
prior to Closing. Failure to timely notify Sellers of Title Objections shall be
deemed a waiver by Purchaser of Purchaser’s right to disapprove any of the
matters referenced in the Title Commitment, and Purchaser shall then accept such
title as is described in the Title Commitment without reduction of the Purchase
Price or reservation of any claim against Seller. Except as expressly set forth
herein, Sellers shall have no obligation to remove Title Objections, and any
failure or refusal of Sellers to do so shall not be a default of Sellers
hereunder. If Sellers elect or are deemed to have elected not to attempt to cure
or remove one or more of the Title Objections, Purchaser’s sole and exclusive
remedy shall be to either (i) terminate this

 

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Contract in accordance with Section 3.3 and receive a return of the Deposit, or
(ii) accept such title subject to such Title Objections without reduction in the
Purchase Price or reservation of any claim against Sellers and to close
hereunder, subject, however, to Sellers’ performance of all of the other terms,
conditions and covenants of this Agreement to be performed by Sellers hereunder.

 

4.4.2      Notwithstanding the provisions of this Contract to the contrary, at
or prior to Closing, Sellers shall cause the Company to satisfy any mortgages,
deeds of trust, construction, mechanics’ or materialmen’s liens, judgment liens,
tax liens or other liens or charges evidencing monetary encumbrances, in each
case solely to the extent claimed by or through or consented to by Seller (other
than liens for non-delinquent general real estate taxes or assessments and liens
caused by Purchaser or Purchaser’s agents), and any exceptions set forth in the
Title Commitment that can be satisfied by the payment of fines, fees or other
monies, and such matters shall not be Permitted Exceptions and that it shall be
Sellers’ responsibility to cause the Title Company remove such liens from the
Title Policy issued at Closing. If such Title Objections Sellers elect or are
required to remove prior to Closing as set forth herein are not cured as of the
Closing Date, Purchaser’s sole and exclusive remedy shall be to either (i)
terminate this Contract by written notice to Sellers and proceed pursuant to
Section 10.2, or (ii) to accept the transfer of the Interests without reduction
of the Purchase Price or reservation of any claim against Seller.

 

4.4.3      If any supplement or revision to the Title Commitment and/or Survey
Update issued subsequent to the respective dates of the Title Commitment and the
Survey Update contains exceptions to title or defects not shown in the original
Title Commitment or the original Survey Update, as applicable, and such
additional Title Objections were not caused by Purchaser or any person on behalf
of Purchaser, then Purchaser shall be entitled to object to such exceptions by
written notice of objection to Seller on or before the fifth (5th) day after
Purchaser’s receipt of the supplement showing such exceptions. Seller shall have
until five (5) Business Days from the receipt of Purchaser’s notice of each such
additional Title Objections that comply with the requirements of this Section
4.4 to remove or to remedy the conditions or defects resulting in such
exceptions and to procure a supplement to the Title Commitment or the Survey
Update, as applicable, removing such Title Objection or to agree in writing to
cure such Title Objection(s) prior to Closing. If Seller is either unable or
unwilling to provide for the removal of one or more of such additional Title
Objections or does not agree to cure such Title Objections, within such five (5)
Business Day period, then, at Purchaser’s option, this Contract may be
terminated upon written notice given by Purchaser to Seller on or before the
second (2nd) Business Day after such five (5) Business Day period. Upon delivery
of such termination notice, this Contract shall automatically terminate and the
parties shall be released from all further obligations under this Contract
(except for those which expressly survive termination of this Agreement),
provided that the Earnest Money shall be disbursed by Escrow Agent to Purchaser;
provided, further, if Purchaser terminates this Agreement because Seller is
unwilling or unable to cure any monetary encumbrance required to be removed or
bonded over in accordance with this Agreement, the same shall be treated as a
default by Seller and Purchaser shall have the right to avail itself of the
remedies provided in, and subject to, Section 10.2. If Purchaser shall have the
right to, but does not, terminate this Contract in the manner set forth above in
this Section 4.4.3, then Purchaser shall be deemed to have waived its objection
to any Title

 

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Objection referred to in Purchaser’s notice of Title Objections relating to such
supplement which shall not have been cured or which Seller elected not to cure
prior to Closing, and this Contract shall remain in full force and effect.
Anything in this Contract to the contrary notwithstanding, the Closing Date
shall be extended to such date as required by this Section 4.4.3 such that all
notice and cure periods have timely lapsed or expired.

 

4.5  Purchaser's Post-Termination Obligations. In the event Purchaser terminates
this Contract pursuant to the right to do so set forth in Section 3.3, 8.1, or
4.4 hereof, Purchaser shall remain liable for the costs and expenses of any
Title Commitment, UCC Searches, or Survey Update, and Purchaser shall pay all
such costs and expenses as and when the same become due and payable. The
provisions of this Section 4.5 shall survive the expiration, early termination
or Closing of this Contract.

 

ARTICLE 5

REPRESENTATIONS AND WARRANTIES

 

5.1  Sellers’ Representations. Sellers represents and warrants to Purchaser as
of the Effective Date, as follows:

 

5.1.1     Each Seller has the full right and authority to enter into this
Agreement and to consummate or cause to be consummated the transaction
contemplated by this Agreement, without the necessity for further consent from
any third party. Each Seller owns their respective Interest and each Seller has
the full right and authority to transfer all of the Interests owned by such
Seller. The Interests consist of and account for all ownership, membership,
equity and other interests of any kind in the Company, including but not limited
ot any options to purchase, warrants, equity conversion rights or the like. The
person signing this Agreement on behalf of each Seller is authorized to do so
and this Agreement constitutes the valid and binding agreement of such Seller,
and is enforceable in accordance with its terms. The execution and delivery of
this Agreement, and the performance by such Seller of its obligations hereunder,
do not violate any provision of such Sellers’, or the Company’s articles of
organization, the LLC Agreement or the articles of organization or the operating
agreement or the trust indenture of any Seller or any agreement or judicial
order to which such Seller is subject.

 

5.1.2      Each Seller is duly organized, validly existing and in good standing
under the laws of the state of its creation as a Delaware limited liability
company, and is qualified or registered to do business and is in good standing
in the state in which the Property is located, with full power and authority to
enter into and execute this Contract and to consummate the transactions
contemplated hereby. Each Seller has received all requisite organizational
approvals necessary for the execution of this Contract and the consummation of
the transactions contemplated hereby and this Contract constitutes the legal,
valid and biding obligation of each Seller, enforceable against such Seller in
accordance with its terms, except as such enforceability may be limited by
bankruptcy, insolvency, moratorium, reorganization or other similar laws
affecting debtors' and creditors' rights generally and general equitable
provisions.

 

10

 

 

5.1.3      The Company is duly organized, validly existing and in good standing
under the laws of the state of its creation as a Delaware limited liability
company, and is qualified or registered to do business and is in good standing
in the state in which the Property is located. The Company has full limited
liability company power and authority to own, operate and lease the Property and
to carry on its business as it has been and is currently conducted. Other than
the Property, the Company does not own any other property or assets of any kind
or nature and does not now conduct and has never conducted any other business
other than in connection with the ownership and operation of the Property.

 

5.1.4      To Sellers’ knowledge, the Company has not engaged in or permitted
any operations or activities upon, or any use or occupancy of the Property for
the purpose of or in any way involving the handling, manufacture, treatment,
storage, use, generation, release, discharge, refining, dumping, or disposal of
any Hazardous Materials in violation of Applicable Laws. Except as disclosed on
Schedule 5.1.4, the Company has not received any written notice from any
governmental or regulatory authority of the presence or release of any Hazardous
Materials in violation of any applicable Environmental Laws which remains
uncured.

 

5.1.5     Except as set forth on Schedule 5.1.5, there are no actions, suits,
proceedings, arbitrations, governmental investigations, administrative or other
adjudicatory proceedings or other legal actions pending or, to Sellers’
knowledge threatened in writing, in any court or before or by any Governmental
Authority against or affecting the Company or the Property.

 

5.1.6     There are no pending eminent domain or condemnation proceedings
against the Property or any material part thereof and to Sellers’ knowledge, no
such proceedings are presently threatened in writing or contemplated by any
authority with the power of eminent domain.

 

5.1.7      No Seller is a foreign person subject to withholding tax as required
by Section 1445 of the Internal Revenue Code.

 

5.1.8      All individuals are employed at the Property including the Hotel
Employees are all employees of the Company. To Sellers’ knowledge, there are no
agreements relating to any labor or collective bargaining agreement affecting
the Property and there are no pension plans of any type with respect to Hotel
Employees that would be binding on Purchaser or the Company after Closing. The
Company has not received any written notice from any labor union or group of
employees that such union or group represents or believes or claims it
represents or intends to represent any of the Hotel Employees nor has the
Company received any written notice of any claim of unfair labor practices. To
Sellers’ knowledge, Manager is not a party to any written employment agreements
with respect to the Property that would be binding on Purchaser or the Company
after Closing.

 

5.1.9      The execution and delivery of this Contract by each Seller and the
consummation by such Seller of the transactions contemplated hereby will not (i)
violate any judgment, order, injunction, decree, regulation or ruling of any
court or governmental entity or (ii) conflict with, result in a breach of, or
constitute a default under the

 

11

 

 

organizational documents of such Seller, any note or other evidence of
indebtedness, any mortgage, deed of trust or indenture, or any lease or other
material agreement or instrument to which such Seller is a party or by which
such Seller may be bound.

 

5.1.10    No consent, waiver, approval or authorization is required from any
person or entity (that would materially adversely affect each Seller’s ability
to consummate the transactions contemplated hereby or has not already been
obtained) in connection with the execution and delivery of this Contract by such
Seller or the performance by such Seller of the transactions contemplated
hereby.

 

5.1.11    None of the Sellers or the Company has (i) commenced a voluntary case,
or had entered against it a petition, for relief under any federal bankruptcy
act or any similar petition, order or decree under any federal or state law or
statute relative to bankruptcy, insolvency or other relief for debtors, (ii)
caused, suffered or consented to the appointment of a receiver, trustee,
administrator, conservator, liquidator or similar official in any federal, state
or foreign judicial or non-judicial proceedings, to hold, administer and/or
liquidate all or substantially all of its property, or (iii) made an assignment
for the benefit of creditors.

 

5.1.12    All Leases are listed in Schedule 5.1.12. Except as set forth on
Schedule 5.1.12, there are no leases, licenses or occupancy agreements in effect
with respect to the Property, or any portion thereof. To Sellers’ knowledge,
there are no outstanding obligations for commissions, tenant improvements or
other tenant concessions with respect to the Property.

 

5.1.13    All Property Contracts are listed in Schedule 5.1.13. All Property
Contracts are in full force and effect, and there are no defaults or events that
with notice or the passage of time or both, would constitute a default by the
Company under any such Property Contract, nor, to Sellers’ knowledge, by any
other party thereto. 

 

5.1.14    Sellers have delivered or made available to Purchaser copies of all
licenses (including, without limitation, liquor licenses), certificates of
occupancy, permits and approvals required to be issued by any Governmental
Authority or any third party and used in or necessary to the ownership,
operation, leasing, maintenance or use of the Property or any part thereof,
including the use of the Hotel as a fully functioning full service hotel (the
“Permits”). Except as set forth on Schedule 5.1.14, the Company has not received
a notice from any applicable Governmental Authority (i) of any violation,
default, intended or threatened non-renewal, suspension or revocation of any of
the Permits or (ii) that the Hotel lacks any permits or licenses necessary for
the present use and occupancy of the Hotel.

 

5.1.15    No Seller is or is acting on behalf of an employee benefit plan (a
“Plan”) subject to the Employee Retirement Income Security Act of 1974, as
amended (“ERISA”) or Section 4975 of the Internal Revenue Code of 1986, as
amended (the “Code”) and none of its assets constitutes or will constitute (or
are or will be deemed, for purposes of ERISA or Section 4975 of the Code, or, if
applicable, any substantially similar federal, state, local or foreign law, to
constitute) assets of any such Plan.

 

 

12

 

 

5.1.16    No Seller nor to Sellers’ knowledge any beneficial owner of any
Seller: (i) is listed on the Specially Designated Nationals and Blocked Persons
List maintained by the Office of Foreign Assets Control, Department of the
Treasury (“OFAC”) pursuant to Executive Order No. 133224 66 Fed. Reg. 49079
(September 25, 2001) (the “Order”) and/or on any other list of terrorists or
terrorist organizations maintained pursuant to any of the rules and regulations
of OFAC or pursuant to any other applicable orders (such lists are collectively
referred to as the “Lists”); (ii) is a person or entity who has been determined
by competent authority to be subject to the prohibitions contained in the
Orders; (iii) to Sellers’ knowledge is owned or controlled by, or acts for or on
behalf of, any person or entity on the Lists or any other person or entity who
has been determined by competent authority to be subject to the prohibitions
contained in the Order, or (iv) is or has engaged in any dealings or
transactions, or is otherwise associated, with any Forbidden Entity. A
“Forbidden Entity” is defined as (A) the governments of Cuba, Iran, North Korea,
Myanmar, Syria and Sudan (each, a “Prohibited Country”) and any of their
agencies, including, but not limited to, political units and subdivisions (each,
a “Prohibited Government”); and (B) any company that (1) is wholly or partially
managed or controlled by a Prohibited Government, (2) is established, organized
under, or whose principal place of business is in any Prohibited Country, or (3)
has failed to submit an affidavit following request therefore averring that it
does not own or control any property or asset in and has not and does not
transact business with any Prohibited Country. For purposes of this Section
5.1.15, a “company” is any entity whether publicly traded or privately owned
capable of affecting commerce, including, but not limited to, a government,
governmental agency, natural person, legal person, sole proprietorship,
partnership, firm corporation, subsidiary, affiliate, franchisor, franchisee,
joint venture, trade association, financial institution, utility, public
franchise, provider of financial services, trust, or enterprise and any
association thereof. The foregoing does not apply to any person or entity to the
extent that such person’s interest in a Seller is through a US publicly traded
entity.

 

5.1.17    Subject to the Property Contracts, the Company has good and valid
title to all of the tangible personal property, and, other than Property
Contracts, shall be free and clear of all liens and encumbrances as of the
Closing Date.

 

5.1.18    There are no existing management contracts or franchise agreements
relating to the Property other than (i) the Management Agreement and (ii) the
Franchise Agreement. There are no defaults or events that with notice or the
passage of time or both, would constitute a default by the Company under the
Management Agreement or the Franchise Agreement, nor, to Sellers’ knowledge, by
any other party thereto.

 

5.1.19    Sellers have furnished to Purchaser copies of all financial statements
for the Property prepared by the Manager for the periods ending December 31,
2015-2018 and for the calendar months of 2019 and of the current year through
the month preceding the date hereof, and all books and records of the Property,
or true and complete copies thereof, maintained during Sellers’ ownership of the
Company in the ordinary course of business.

 

5.1.20    Other than pursuant to the Franchise Agreement, the Company has not
granted any options, rights of first refusal, rights of first offer or any other
rights in favor of third parties with respect to the Property or any interest
therein nor do any other unexpired

  

13

 

 

rights exist in favor of third persons to purchase or otherwise acquire the
Property or any interest therein.

 

5.1.21    (i) All tax returns of the Company have been properly and timely
filed, (ii) all such tax returns were true, complete, and correct in all
material respects, and (iii) the Company or Manager have paid all taxes that are
due and payable in accordance with Applicable Laws in connection with the Hotel
and its operation, including, without limitation, employer withholding taxes,
sales and use taxes, occupancy taxes, real property taxes and personal property
taxes. There are no tax claims, audits or proceedings pending or threatened
against the Company, the Company has not received notice of and has no knowledge
of any special tax assessment relating to the Hotel, the Property or any portion
thereof, and there are no tax agreements in place affecting the Hotel or the
Property. The Property is not subject to any protest or appeal proceedings
related to real property tax assessments or subject to “rollback” or similar
reassessment for prior years. The Company has been treated as a partnership for
federal, state, and local income tax purposes since its formation.

 

5.1.22    The Company has not received notice of any violation of any applicable
laws, rules and regulations related to the Property that has not been cured
prior to the Effective Date

 

5.1.23    To Sellers’ knowledge, no Security Breach or attempted Security Breach
has occurred at the Hotel. To Sellers’ knowledge, the Company and Manager have
collected, used, imported, exported, stored, processed, and protected all
Personal Information and other information protected by Data Rules, in
accordance with the privacy policies of Seller, Manager, Franchisor, and in
accordance with Data Rules applicable to Seller.

 

5.1.24    There are no ongoing capital improvement projects at the Property that
have commenced on or before the date hereof that will not be completed and paid
for in full prior to Closing.

 

5.2  Sellers’ Knowledge. When used in this Contract or in any certificate or
other document delivered pursuant hereto, the phrase “to Sellers’ knowledge,” or
derivations thereof shall be construed to mean the current, actual knowledge of
Peter Ziegler and shall not include any knowledge which may be imputed to
Sellers or of any other person. Purchaser acknowledges that the individuals
named above are named solely for the purpose of defining and narrowing the scope
of Sellers’ knowledge and not for the purpose of imposing any liability on or
creating any duties running from such individuals to Purchaser. Purchaser
covenants that it will bring no action of any kind against such individuals,
related to or arising out of these representations and warranties.

 

5.3  Purchaser's Representations. Purchaser represents and warrants to Sellers
as of the Effective Date, as follows:

 

5.3.1      Purchaser is duly organized, validly existing and in good standing
under the laws of the state of its formation and is, or will be as of Closing,
qualified to do business and in good standing in the state in which the Property
is located, with full power and authority to enter into and execute this
Contract and to consummate the transactions

 

14

 

 

contemplated hereby. Purchaser has received all requisite entity approvals
necessary for the execution of this Contract and the consummation of the
transactions contemplated hereby and this Contract constitutes the legal, valid
and binding obligation of Purchaser, enforceable against Purchaser in accordance
with its terms, except as such enforceability may be limited by bankruptcy,
insolvency, moratorium, reorganization or other similar laws affecting debtors'
and creditors' rights generally and general equitable provisions.

 

5.3.2      Neither the execution of this Contract nor the performance by
Purchaser of its obligations hereunder will violate, be in conflict with, result
in a breach of, or constitute (with due notice or lapse of time, or both) a
default under any Applicable Law.

 

5.3.3      Neither Purchaser nor to Purchaser’s knowledge any beneficial owner
of Purchaser: (i) is listed on OFAC, the Order and/or on any other list of
terrorists or terrorist organizations maintained pursuant to any of the rules
and regulations of OFAC or pursuant to any other applicable orders; (ii) is a
person or entity who has been determined by competent authority to be subject to
the prohibitions contained in the Orders; (iii) to Purchaser’s knowledge, is
owned or controlled by, or acts for or on behalf of, any person or entity on the
Lists or any other person or entity who has been determined by competent
authority to be subject to the prohibitions contained in the Order, or (iv) is
or has engaged in any dealings or transactions, or is otherwise associated, with
any Forbidden Entity. The foregoing does not apply to any person or entity to
the extent that such person’s interest in a Seller is through a US publicly
traded entity.

 

5.3.4      It is expressly acknowledged by Purchaser that this transaction is
not subject to any financing contingency and that no financing for this
transaction shall be provided by Seller.

 

5.4  Survival. The representations and warranties made by Seller in this
Contract, including in Section 5.1 and 12.1 hereof, and the representations and
warranties made by Purchaser in this Contract, including in Section 5.3 hereof
shall be effective as of the Effective Date and continue in full force and
effect after the Closing for a period of nine (9) months (the “Survival
Period”); provided any claim arising by reason of a claimed breach of such
representations and warranties must be stated in a written notice to Sellers or
Purchaser, as applicable, on or before the expiration of the Survival Period.
Notwithstanding the foregoing, if, prior to the Closing, Purchaser obtains
actual knowledge that any representation or warranty of Sellers is inaccurate
and Purchaser nonetheless proceeds with the Closing, such representation or
warranty by Sellers shall be deemed to be qualified or modified to reflect
Purchaser’s actual knowledge of such breach and Purchaser shall have no right to
make, and hereby waives, any claim with respect thereto to the extent of such
actual knowledge. When used in this Contract or in any certificate or other
document delivered pursuant hereto, the phrase “to Purchaser's knowledge,” or
derivations thereof shall be construed to mean the current, actual knowledge of
Peter Ziegler after making reasonable inquiry of the general manager of the
Hotel but without obligation to make any other investigation of the files,
documents or studies in the possession of other persons, and shall not include
any knowledge which may be imputed to Purchaser or of any other person.

 

5.5  Limitation of Sellers’ Liability. Notwithstanding any other provision of
this Contract, any agreement or other instrument contemplated by this Contract,
or any rights which Purchaser might

 

15

 

 

otherwise have at law, equity, or by statute, whether based on contract or some
other claim (except for liability based upon fraud on the part of Sellers), in
no event will Sellers’ liability to Purchaser exceed Five Hundred Seventy
Thousand and 00/100 Dollars ($570,000.00) (the “Liability Cap”). Without
limiting the generality of the foregoing, the general and limited partners,
employees, agent or affiliate of Sellers will not in any manner be personally or
individually liable for the obligations of Sellers hereunder or for any claims
related to this Contract, any agreement or other instrument contemplated by this
Contract, or the Property. The provisions of this Section 5.5 shall survive the
Closing.

 

5.6  As Is; Release. (a) Purchaser acknowledges that Purchaser will have the
opportunity to independently and personally inspect the Property and that
Purchaser has entered into this Contract based upon its ability to make such
examination and inspection. The Property is to be sold to and accepted by
Purchaser at Closing in its then present condition “AS IS, WITH ALL FAULTS,
(WHETHER LATENT, PATENT OR DETECTABLE OR NOT) AND WITHOUT ANY WARRANTY
WHATSOEVER, EXPRESS OR IMPLIED”, and without any reduction in the Purchase Price
for any change in the physical or financial condition occurring from and after
the Effective Date except for the express representations and warranties of
Sellers contained in in this Contract and any closing document delivered by
Sellers. Notwithstanding anything contained herein to the contrary, it is
understood and agreed that, except for the express representations and
warranties of Sellers contained in this Contract and any closing document
delivered by Sellers, Sellers and Sellers’ agents or employees have not made and
are not now making, and they specifically disclaim, any warranties,
representations or guaranties of any kind or character, express or implied, oral
or written, past, present or future, with respect to the Property, including,
but not limited to, warranties, representations or guaranties as to (1) matters
of title; (2) environmental matters of any kind relating to the Property, the
Land or the Improvements or any portion thereof (including the condition of the
soil or groundwater beneath the Property); (3) geological conditions, including,
without limitation, subsidence, subsurface conditions, water table, underground
water reservoirs, limitations regarding the withdrawal of water and earthquake
faults and the resulting damage of past and/or future earthquakes; (4) whether,
and to the extent to which the Property or any portion thereof is affected by
any stream (surface or underground), body of water, flood prone area, flood
plain, floodway or special flood hazard; (5) drainage; (6) soil conditions,
including the existence of instability, past soil repairs, soil additions or
conditions of soil fill, or susceptibility to landslides, or the sufficiency of
any under shoring; (7) zoning to which the Property or any portion thereof may
be subject; (8) the availability of any utilities to the Property or any portion
thereof including, without limitation, water, sewage, gas and electric; (9)
usages of adjoining property; (10) access to the Property or any portion
thereof, (11) the value, compliance with the plans and specifications, size,
location, age, use, design, quality, description, suitability, structural
integrity, operation, title to, or physical or financial condition of the
Property or any portion thereof, or any income, expenses, charges, liens,
encumbrances, rights or claims on or affecting or pertaining to the Property or
any part thereof; (12) the presence of Hazardous Materials (hereinafter defined)
in or on, under or in the vicinity of the Property; (13) the condition or use of
the Property or compliance of the Property with any or all past, present or
future federal, state or local ordinances, rules, regulations or laws, building,
fire or zoning ordinances, codes or other similar laws; (14) the existence or
non-existence of underground storage tanks; (15) any other matter affecting the
stability or integrity of the Real Property; (16) the potential for further
development of the Property; (17) the existence of vested land use, zoning or
building entitlements affecting the Property; (18) the merchantability of the
Property or fitness of the Property for any

 

16

 

 

particular purpose (Purchaser affirming that Purchaser has not relied on
Sellers’ or Sellers’ agents’ or employees’ skill or judgment to select or
furnish the Property for any particular purpose, and that Sellers makes no
warranty that the Property is fit for any particular-purpose); or (19) tax
consequences. EXCEPT AS EXPRESSLY SET FORTH HEREIN AND ANY CLOSING DOCUMENT
DELIVERED BY SELLER, SELLERS MAKES NO REPRESENTATIONS OR WARRANTIES OF ANY KIND
TO PURCHASER, INCLUDING, WITHOUT LIMITATION, THE PHYSICAL CONDITION OF THE
PROPERTY AND ANY IMPROVEMENTS LOCATED THEREON, OR THEIR SUITABILITY FOR ANY
PARTICULAR PURPOSE OR OF MERCHANTABILITY. PURCHASER SHALL RELY ON ITS
INVESTIGATIONS OF THE PROPERTY IN DETERMINING WHETHER TO ACQUIRE IT.

 

(b)         Except as otherwise expressly set forth in this Contract or the
documents delivered by Sellers at Closing or any claims based on fraud or
intentional misconduct, from and after Closing, Sellers and their respective
partners, shareholders, officers, directors, agents, employees, property
manager, controlling persons and affiliates (individually a “Seller Party” and
collectively the “Seller Parties”) are hereby released from all responsibility
and liability regarding the condition (including the presence in the soil, air,
structures and surface and subsurface waters, of materials or substances that
have been or may in the future be determined to be toxic, hazardous, undesirable
or subject to regulation and that may need to be specially treated, handled
and/or removed from the Property under current or future federal, state and
local laws, regulations or guidelines), valuation, salability or utility of the
Property, or its suitability for any purpose whatsoever. Except as specifically
provided in the prior sentence, Purchaser specifically releases Sellers from any
claims it may have against Sellers now or in the future under the Comprehensive
Environmental Response, Compensation and Liability Act, 42 U.S.C. §§ 9601 et
seq., as amended; the Resource Conservation and Recovery Act, 42 U.S.C. §§ 6901
et seq., as amended; any other analogous state or federal statute; and common
law arising from the environmental conditions of the Property or the presence of
Hazardous Materials, solid wastes, or any other pollutants or contamination the
Property.

 

(c)         Purchaser acknowledges that any information of any type which
Purchaser has received or may receive from any Seller Party, including, without
limitation, any environmental reports and surveys, is furnished on the express
condition that Purchaser shall make an independent verification of the accuracy
of such information, all such information being furnished without any warranty
whatsoever except as expressly set forth in this Contract.

 

(d)         THE PROVISIONS OF THIS SECTION ARE A MATERIAL PART OF THE
CONSIDERATION FOR SELLERS’ ENTERING INTO THIS CONTRACT, AND SHALL SURVIVE
CLOSING.

 

ARTICLE 6

CONDITIONS TO CLOSING

 

6.1  Conditions to Purchaser's Obligation to Close. In addition to the
conditions set forth elsewhere in this Contract, the following conditions shall
be conditions precedent to the obligation of Purchaser to purchase the Property
on the Closing Date as provided herein (and any of the following conditions can
be waived only in writing by Purchaser):

 

17

 

 

6.1.1      Each of Sellers’ representations and warranties shall be true and
correct in all material respects as if made on and as of the Closing Date.

 

6.1.2      Sellers shall have performed and complied in all material respects
with all covenants and conditions required by this Contract to be performed or
complied with by Sellers at or prior to Closing.

 

6.1.3      If, and only if Purchaser has provided the Purchaser’s Pro Forma to
Sellers prior to the end of the Inspection Period, at Closing, the Title Company
shall issue to the Purchaser or be irrevocably committed to issue to the
Purchaser an extended coverage ALTA owner’s policy of title insurance or an
endorsement to the Company’s existing owner’s policy (the “Title Policy”), in
the form of the Purchaser’s Pro Forma subject only to the Permitted Exceptions
and other standard terms and conditions, provided, however that the Purchaser
acknowledges that despite the inclusion of endorsements in the Purchaser’s Pro
Forma, neither the receipt of any endorsements nor the failure of the Title
Company to remove any other standard terms and conditions shall be conditions to
the Purchaser’s obligations under this Agreement, nor shall the failure to
obtain same result in any reduction or set off against the Purchase Price or
delay the Closing. Notwithstanding anything to the contrary, nothing set forth
in the previous sentence shall excuse Sellers’ performance of its obligations
pursuant to Section 4.4 or Section 7.2.1 hereof.

 

6.1.4      The existing Management Agreement and the Property Contracts other
than the Assumed Contracts shall have been terminated at no cost or expense to
Purchaser.

 

6.1.5      Purchaser shall have received Franchisor Consent and, if applicable,
Franchisor shall be ready, willing and able to enter into the New Franchise
Agreement with Purchaser at Closing. Purchaser shall be entitled to attempt to
negotiate the terms of the New Franchise Agreement (including, without
limitation, the PIP) for the Hotel, however, it shall not be a condition of the
Purchaser’s obligation to close on the transactions contemplated by this
Contract that any of Purchaser’s requested terms be accepted by Franchisor.

 

6.1.6      Sellers shall have delivered all of the other documents and made all
of the other deliveries required from it pursuant to Section 7.2 hereof.

 

6.2  Conditions to Sellers’ Obligation to Close. In addition to the conditions
set forth elsewhere in this Contract, the following condition(s) shall be
conditions precedent to the obligation of Sellers to sell the Interests on the
Closing Date as provided herein (and any of the following conditions can be
waived in writing by Seller):

 

6.2.1      All of Purchaser’s representations and warranties shall be true and
correct in all material respects as of Closing and Purchaser shall have
performed and complied in all material respects with all covenants and
conditions required by this Contract to be performed or complied with by
Purchaser at or prior to Closing.

 

18

 

 

ARTICLE 7

CLOSING

 

7.1  Closing Date. Provided all of the conditions to Closing have been
satisfied, the Closing shall be held by delivery of Closing documents in escrow
to the Title Company at 2:00 p.m. Eastern time on the date which is date which
is thirty (30) days after the end of the Inspection Period, or at such earlier
date and time as may be mutually agreed upon in writing by Sellers and Purchaser
(the “Closing Date”). The wire transfer of the cash portion of the Purchase
Price must be actually received by Sellers no later than 4:00 p.m. Eastern time
on the Closing Date. At any time after the expiration of the Inspection Period,
Purchaser may accelerate the Closing Date by delivering written notice to
Sellers (the “Acceleration Notice”) stating Purchaser’s intention to accelerate
the Closing Date and the date on which the Closing shall occur, which date shall
be at least five (5) days after the date of the Acceleration Notice.

 

7.2  Closing Matters.

 

7.2.1      Sellers’ Closing Documents. At Closing, Sellers shall execute,
deliver and acknowledge the following documents:

 

(a)          If requested by Purchaser, each Seller shall deliver to Purchaser
an original certificate for the Interest owned by such Seller in the form
required by FATIC (as hereinafter defined) in order to issue the UCC Policy (as
hereinafter defined) (a “Certificate”) duly endorsed in blank;

 

(b)         Sellers shall deliver to Purchaser a certificate dated as of the
date of Closing, stating that each of the representations set forth in Section
5.1 are, as of such date, true, complete and correct in all material respects;
provided, however, in the event that any representation set forth in Section 5.1
needs to be modified due to changes since the Effective Date, such certificate
shall identify any representation which is not, or no longer is, true and
correct and explaining the state of facts giving rise to the change. In no event
shall Sellers be liable to Purchaser for, or be deemed to be in default
hereunder by reason of, any breach of representation which results from any
change that (i) occurs between the Effective Date and the date of Closing and
(ii) is expressly permitted under the terms of this Agreement or is beyond the
reasonable control of Sellers to prevent. If, despite changes or other matters
described in such certificate, the Closing occurs, Sellers’ representations set
forth in this Agreement shall be deemed to have been modified by all statements
made in such certificate. Nothing in this Section 7.2.1(b) shall effect or limit
Purchaser’s rights under Section 10.2 in connection with a default by Sellers
hereunder;

 

(c)          Each Seller shall deliver to Purchaser (i) such evidence as the
Title Company may reasonably require as to the authority of the person or
persons executing documents on behalf of such Seller, and (ii) affidavits in the
form attached hereto as Exhibit B so as to enable the Title Company to issue a
Non-Imputation Endorsement to the Title Policy;

 

(d)         Each Seller shall deliver to Purchaser a certificate pursuant to
Treasury Regulations Section 1.1445-2(b), substantially in the form attached
hereto as Exhibit C

 

19

 

 

duly executed by such Seller stating that such Seller is not a “foreign person”
within the meaning of Section 1445 of the Code;

 

(e)          Sellers’ Representative shall execute the Closing statement on
behalf of all Sellers;

 

(f)          Purchaser may elect to obtain a commitment from First American
Title Insurance Company (“FATIC”) to issue an Eagle 9 UCC Insurance Policy in
the amount of the Purchase Price subject only to the payment of the applicable
premium, together with a Buyer’s Equity Ownership Endorsement, all in
substantially the form attached hereto and made a part hereof as Exhibit D,
insuring Purchaser’s ownership of the Interests (the “UCC Policy”); provided,
however, that (1) Purchaser shall be required to provide any information and
take any actions which FATIC may reasonably require of the purchaser of the
Interests in order to issue the UCC Policy, and (2) Sellers shall be required to
provide any information and take any actions which FATIC may reasonably require
of the sellers of the Interests in order to issue the UCC Policy;

 

(g)        Sellers shall deliver such additional documents that Purchaser or the
Title Company may reasonably require for the proper consummation of the
transaction contemplated by this Agreement (provided, however, no such
additional document shall materially expand any obligation, covenant,
representation or warranty of Sellers or result in any new or additional
obligation, covenant, representation or warranty of Sellers under this Agreement
beyond those expressly set forth in this Agreement); and

 

(h)          Sellers shall deliver a certificate of legal existence respecting
the Company.

 

7.2.2      Other Closing Actions by Seller. In addition to the documents to be
executed and delivered by Sellers pursuant to Section 7.2.1, at Closing Sellers
shall:

 

(a)         Cause Manager to deliver a schedule of Bookings for the Property to
Purchaser; and

 

(b)        Deliver such evidence of the authority and capacity of Sellers and
its representatives as Purchaser, Purchaser's counsel may reasonably require.

 

7.2.3      Purchaser's Closing Documents. At Closing, Purchaser shall execute,
deliver and acknowledge the following documents:

 

(a)          pay to the Escrow Agent the full amount of the Purchase Price
(which amount shall include the Deposit), as increased or decreased by
prorations and adjustments as herein provided, for delivery of the balance
(after payment by the Escrow Agent of sums in satisfaction of all mortgages and
liens to be satisfied by Sellers in accordance with Section 4.4.2 above, subject
to Section 2.1.2) in immediately available wire transferred funds pursuant to
Section 2.1 hereof;

 

(b)         deliver to Sellers such evidence as the Sellers may reasonably
require as to the authority of the person or persons executing documents on
behalf of Purchaser;

 

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(c)          execute the Closing statement;

 

(d)        deliver written acknowledgment of receipt of Certificates for all of
the Interests, and take any other actions (including, without limitation,
delivery of information relating to Purchaser) which FATIC may reasonably
require of the purchaser of the Interests in order to issue the UCC Policy; and

 

(e)          deliver such additional documents that Sellers, FATIC or the Title
Company may reasonably require for the proper consummation of the transaction
contemplated by this Agreement (provided, however, no such additional document
shall materially expand any obligation, covenant, representation or warranty of
Purchaser or result in any new or additional obligation, covenant,
representation or warranty of Purchaser under this Agreement beyond those
expressly set forth in this Agreement).

 

7.2.4      Other Closing Actions by Purchaser. In addition to the documents to
be executed, delivered and acknowledged by Purchaser pursuant to Section 7.2.3,
at Closing Purchaser shall:

 

(a)         Deliver such evidence of the authority and capacity of Purchaser and
its representatives as Sellers, Sellers’ counsel or the Title Company may
reasonably require.

 

7.2.5      Prorations and Adjustments.

 

(a)         Operating Adjustments. The following matters and items pertaining to
the Property, the Hotel and the Hotel Business shall be apportioned between
Purchaser and Sellers or, where applicable, credited in total to a particular
party, as of the Time of Transfer, in accordance with the Closing Statement. The
net credits in favor of Purchaser shall be deducted from the balance of the
Purchase Price at the Closing and the net credits in favor of Sellers shall be
added to the Purchase Price at the Closing. Unless otherwise indicated below,
Purchaser shall receive a credit for any of the following items to the extent
the same are accrued but unpaid as of the Time of Transfer (whether or not due,
owing or delinquent as of the Time of Transfer), and Sellers shall receive a
credit to the extent any of the following items shall have been paid prior to
the Closing Date to the extent the payment thereof relates to any period of time
after the Time of Transfer.

 

  (i) Guest Ledger Receivables. Sellers shall receive a credit for all Guest
Ledger Receivables, at the face value thereof, for all room nights through the
Time of Transfer. Sellers and Purchaser shall each receive a credit equal to one
half of the amount of the estimated Guest Ledger Receivables for the full room
night on the Closing Date, irrespective of the time of posting thereof (less
credit card charges, travel company charges and similar commissions). All
kitchen and bar facilities will be closed as of 1:00 a.m. on the Closing Date
and Sellers shall receive the income from all kitchen and bar facilities through
1:00 a.m. on the Closing Date and Purchaser shall receive the income from all
kitchen and bar facilities from and after 1:00 a.m. on the Closing Date,
provided that to the extent such income is included in Guest Ledger Receivables
it shall be credited in accordance with the prior two sentences of this
paragraph. It is acknowledged that under the Company's current accounting system
all Guest Ledger

  

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    Receivables for a given date are posted on 1:00 a.m. on the next succeeding
date and, notwithstanding that the Time of Transfer is 12:01 a.m., all such
receivables posted as of 1:00 a.m. on the Closing Date shall be deemed to relate
to the date prior to the Closing Date and shall be credited to Sellers and
notwithstanding the fact that Guest Ledger receivables with respect to the
Closing Date are posted at 1:00 a.m. on the following date, such amounts shall
be deemed to relate to the Closing Date.

 

  (ii) Function Revenues. Revenues from conferences, receptions, catering,
meetings and other functions occurring in any conference, banquet or meeting
rooms at the Hotel, including usage charges and related taxes, food and beverage
sales, valet parking charges, equipment rentals and telecommunications charges,
shall be allocated between Sellers and Purchaser, based on when the function
therein commenced, with (a) one-day functions commencing prior to the Time of
Transfer being allocated to Seller; (b) one-day functions commencing after the
Time of Transfer being allocated to Purchaser; and (c) multi-day functions being
allocated between Sellers and Purchaser according to the number of days of the
function occurring before the Time of Transfer and the number of days of the
function occurring after the Time of Transfer.

 

  (iii) Taxes and Assessments. Real estate taxes, personal property taxes,
taxes, special assessments and vault charges, if any, shall be apportioned as of
the Closing Date on the basis of the fiscal period for which assessed. If any
such taxes, assessments or charges which have been apportioned shall
subsequently be reduced by abatement, the amount of such abatement, less the
cost of obtaining the same, shall be prorated as of the Closing Date as part of
the post-closing adjustments conducted pursuant to Section 7.2.5.

 

  (iv) Utility Contracts. Telephone and communications contracts and contracts
for the supply of heat, steam, electric power, gas, lighting and any other
utility service, with Sellers receiving a credit for all deposits, if any, made
by the Company as security under any such public service contracts if the same
are transferable and provided such deposits remain on deposit for the benefit of
Purchaser. Where possible, cutoff readings will be secured for all utilities as
of the Time of Transfer. To the extent they are not available, the cost of such
utilities shall be apportioned between the parties on the basis of the latest
actual (not estimated) bill for such service and adjusted as necessary
post-closing as contemplated in Section 7.2.5.

 

  (v) Contracts, Leases and Permit Fees. Any amounts prepaid or payable under
any Property Contracts that are assumed by Purchaser shall be prorated at the
Closing as of the Closing Date with Sellers obligated for all sums accrued prior
to the Time of Transfer and Purchaser obligated for all sums accrued after the
Time of Transfer. Purchaser shall receive a credit for the total value of any
outstanding gift certificates, vouchers, coupons or other discounted or free
services or accommodations. Any rents and other amounts prepaid, accrued or due
and payable under the Leases, if any, shall be prorated as of the Time of
Transfer between Sellers and Purchaser. The Purchaser shall receive a credit for
all security deposits which are not on the books of the Company at Closing.
Sellers shall receive a credit for any recurring fees for all Permits which have
been paid by Sellers prior to the Closing and relate to the period from and
after the Closing Date, and

  

22

 

 

    Purchaser shall receive a credit for any such fees which have not been paid
as of the Closing and relate to the period prior to the Closing Date. Any
additional amounts not known at the Closing will be part of the post-closing
adjustments contemplated in Section 7.2.5(d).

 

  (vi) Consumables, FF&E and Small Operating Equipment. There shall be no
adjustment with respect to the Consumables, FF&E and Small Operating Equipment.

 

  (vii) Bookings. Purchaser shall receive a credit for advance payments, if any,
under Bookings to the extent the Bookings relate to a period after the Time of
Transfer, net of any commissions paid or incurred by the Company for such
Bookings.

 

  (viii) Restaurants and Bars. Sellers shall close out the transactions in the
restaurants and bars in the Property through the time of closing as of the
Closing Date and shall retain all monies accrued as of the Closing Date and
Purchaser shall be entitled to any monies accrued from the restaurants and bars
thereafter.

 

  (ix) Petty Cash Funds and House Banks. Purchaser shall purchase from Sellers
(or Sellers shall receive a credit therefor) all petty cash funds and cash in
house banks at 100% of face value at the Time of Transfer. At the Time of
Transfer, Sellers’ Representative shall, in the presence of a representative of
Purchaser, perform, or cause to be performed, an accounting of all petty cash
funds and cash in house banks. Vending machine monies, if any, will be removed
and retained by Sellers as of the Time of Transfer.

 

  (x) Security Deposits. Purchaser shall be entitled to a credit for all
Security Deposits held by Sellers as of the Time of Transfer which are not
transferred to Purchaser.

 

  (xi) Employee Compensation. Purchaser shall receive a credit for all earned
wages and benefits that any Hotel Employee is owed, as of the Closing Date.

 

  (xii) Trade Payables. Trade payables shall mean (for all purposes) under this
Contract open accounts payable to trade vendors or suppliers of the Hotel and
all related facilities. At Closing, Purchaser shall receive a credit for (i) all
trade payables which have been invoiced and are due and owing as of the Closing.
With respect to trade payables that are not yet due and payable as of the
Closing but which have accrued or relate to that period on or prior to the Time
of Transfer, Purchaser shall receive a credit against the Purchase Price in the
amount of such payables as of the Closing and Purchaser shall be obligated to
pay such payables if and to the extent it has received a credit from Sellers at
Closing. Purchaser agrees to pay all trade payables from the Hotel which accrue
and relate to that period after the Time of Transfer, including any payables for
supplies ordered before Closing but delivered to the Hotel on or after the
Closing Date.

 

  (xiii) Other. Such other items as are provided for in this Contract or as are
normally prorated and adjusted in the sale of real property in or about
Providence, Rhode Island or of a hotel.

 

23

 

 

(b)           Receivables. Sellers shall be entitled to receive one hundred
percent (100%) of the amount of all receivables and Purchaser shall pay same
over to Sellers within five (5) days after receipt following the Closing (other
than Guest Ledger Receivables, which shall be prorated pursuant to Section
7.2.5(a)).

 

(c)          Preparation of Closing Statement. No later than two (2) Business
Days prior to the Closing, Sellers’ Representative shall deliver to Purchaser a
draft closing statement (the “Closing Statement”). The Closing Statement shall
contain the Sellers’ estimate of the amounts of the items requiring the
prorations and adjustments in this Contract. The amounts set forth on the
Closing Statement shall be adjusted as of the Closing and shall be the basis
upon which the prorations and adjustments provided for herein shall be made at
the Closing.

 

(d)         Post-Closing Adjustments. To the extent the exact amount of any
adjustment item provided for in this Section 7.2.5 cannot be precisely
determined on the Closing Date, the parties shall estimate the amount thereof,
for purposes of computing the net amount due Sellers or Purchaser pursuant to
this Section 7.2.5 and shall determine the exact amount thereof not later than
one hundred twenty (120) days after the Closing Date or as soon thereafter as is
reasonably practicable (with no time limit for any reproration of taxes).

 

7.3  Intentionally Omitted.

 

7.4  Closing Costs. Sellers shall pay one-half of the escrow fee charged by the
Title Company, its share of the prorations as set forth in Section 7.2.5 hereof,
documentary stamp tax associated with the transfer of the Interests, and its own
attorney's fees. Purchaser shall pay the cost of the Survey, the premium for
Purchaser’s owner’s policy of title insurance including the premium for any
extended coverage or endorsements to Purchaser’s owner’s policy that Purchaser
elects to purchase, the premium for any lender’s policy of title insurance as
well as any endorsements to such lender’s policy, all inspections undertaken
pursuant to ARTICLE 3 hereof, one-half of the escrow fee charged by the Title
Company, all fees and charges for recording any other instruments other than any
documents filed to remove a Title Objection to be filed or recorded at Closing,
documentary stamp tax and intangible tax other than documentary stamp tax
associated with the transfer of the Interests, (and any documents filed to
remove a Title Objection) to be filed or recorded at Closing, its proportionate
share of the prorations as set forth in Section 7.2.5 hereof, all sales tax
associated with the transfer of any Personalty pursuant to this Agreement, and
its own attorney's fees. Except as otherwise provided in this Section, all other
expenses hereunder shall be paid by the party incurring such expenses unless
local custom dictates otherwise. The provisions of this Section 7.4 shall
survive the Closing.

 

7.5  Liquor License.

 

7.5.1      Purchaser or its designated manager (together, hereinafter
“Operator”) shall, pursuant to all Applicable Laws, execute such forms, license
applications and other documents as may be reasonably necessary for Operator to
obtain a transfer of the existing Liquor Licenses or the issuance of new liquor
and alcoholic beverage licenses (collectively, the “New Liquor Licenses”)
necessary to operate any restaurants, bars, lounges and other liquor facilities
presently located within the Improvements from and after the Closing Date.

  

24

 

 

7.5.2     Seller shall, in all cases, cooperate reasonably with Operator's
execution and filing of all forms, applications and other documents necessary to
cause the acquisition or transfer of the Liquor Licenses or New Liquor Licenses,
as applicable, by or to Operator. Operator's attempts to obtain the transfer of
the Liquor Licenses or issuance of the New Liquor Licenses shall, under no
circumstances, diminish, prior to the Closing, the full force and effect of the
Liquor Licenses presently maintained in the operation of the restaurants, bars,
lounges and other liquor facilities presently located within the Improvements.

 

7.5.3      Purchaser shall be responsible for all third party fees and costs in
connection with Sellers’ cooperation regarding the foregoing. At such time after
Closing as the New Liquor Licenses are obtained, Existing Permittee or Seller,
as applicable, will convey, at no additional cost, all alcoholic beverages to
Operator by a conveyance document in form reasonably acceptable to Seller and
Purchaser and in accordance with the requirements of all Applicable Laws. If it
is anticipated that upon Closing Purchaser or Operator will not have received a
new liquor license or a temporary liquor license permitting the continuation of
the sale and consumption of alcoholic beverages at the Hotel after the Closing
and an Interim Liquor Agreement is not permitted pursuant to Applicable Laws,
then Purchaser shall have the one (1) time right to extend the initial Closing
Date by a period not to exceed thirty (30) days, by delivering written notice to
the Seller on or prior to the date that is three (3) days prior to the initial
Closing Date of its election to exercise such extension right.

 

7.5.4      In no event shall a Seller be required to cause the Company to obtain
any additional Liquor Licenses which such Existing Permitee does not possess at
the time of Closing; provided, however, Sellers shall or shall cause the
Existing Permitee to maintain in good standing any Liquor Licenses in effect as
of the Effective Date.

 

7.5.5      This Section 7.5 shall survive the Closing.

 

7.6  Reserved.

 

7.7  Guest Baggage. On the Closing Date, all baggage and other property of
registered guests in the Hotel on the Closing Date which has been checked with
or left in the care of Sellers shall be inventoried, sealed, and tagged jointly
by Sellers and Purchaser and transferred to the care of Purchaser.

 

7.8  Safe Deposit Boxes. On the Closing Date, Sellers shall deliver to Purchaser
all keys or combinations to the safe deposit boxes at the Hotel, all receipts
and agreements relating to the then current use or rental of such safe deposit
boxes and a complete list of the name and room number of each depositor. On the
Closing Date, Sellers shall send written notice to the registered parties who
have safe deposit boxes, advising them of the sale of the Property to Purchaser
and the procedures to be followed pursuant to this Section and requesting the
removal and verification of the contents of the relevant safe deposit box or
boxes within three (3) Business Days of the Closing Date. Safe deposit boxes of
such depositors who have not responded to such written notice shall be listed at
the end of such three (3) Business Day period. Said boxes shall be opened in the
presence of representatives of Sellers and Purchaser and the contents thereof
inventoried, sealed and tagged. Any such contents so inventoried, sealed and
tagged and thereafter remaining in Purchaser's custody, and the contents of any
unopened safe deposit boxes, shall be the sole

 

25

 

 

responsibility of Purchaser and Purchaser hereby agrees to indemnify and hold
Sellers harmless from and against any loss, cost, liability or damage arising in
connection with such contents or lack of contents arising after the date that
such contents are so inventoried, sealed and tagged. The provisions of this
Section 7.8 shall survive the Closing.

 

ARTICLE 8

DAMAGE TO PROPERTY

 

8.1  Casualty; Condemnation. Sellers agree to give Purchaser prompt notice of
any casualty affecting the Land, the Improvements or any material portion of the
Personalty between the date hereof and the Closing Date or of any actual or
threatened (in writing) taking or condemnation of all or any portion of the Land
or the Improvements.

 

8.1.1      If prior to the Closing there shall occur:

 

(a)         damage to the Property caused by fire or other casualty which would
cost an amount equal to three and one-half percent (3.5%) of the Purchase Price
or more to repair or restore, as reasonably determined by Sellers (“Material
Casualty”); or

 

(b)        the taking or condemnation of all or any portion of the Land and the
Improvements (i) cause the Hotel to be in violation of any Applicable Law,
including, without limitation, zoning laws and requirements, (ii) result in any
permanent material reduction or restriction in access to the Land and
Improvements, or (iii) have a materially adverse effect on the business as
conducted prior to such taking (in Purchaser’s commercially reasonable
discretion) (“Material Taking”);

 

then in any such event, Purchaser may at its option terminate this Contract by
notice to Sellers within ten (10) days after Purchaser has received the notice
referred to above or at the Closing, whichever is later. If Purchaser does not
elect to terminate this Contract, then the Closing shall take place as provided
herein without abatement of the Purchase Price, and Sellers shall assign to
Purchaser at the Closing without recourse or warranty all interest of Sellers in
and to any insurance proceeds or condemnation awards which may be payable to
Sellers on account of any such occurrence and Purchaser shall receive as a
credit against the Purchase Price the amount of any unpaid deductible applicable
to such insurance proceeds (less any portion of the deductible that has been
applied to covered losses).

 

8.1.2      If prior to the Closing there shall occur damage to the Property
other than a Material Casualty, or a taking or condemnation other than a
Material Taking, then in any such event, Purchaser shall have no right to
terminate its obligations under this Contract, but there shall be assigned to
Purchaser at Closing without recourse or warranty all interest of Sellers in and
to any insurance proceeds or condemnation awards which may be payable to Sellers
on account of any such occurrence and Purchaser shall receive as a credit
against the Purchase Price the amount of any unpaid deductible applicable to
such insurance proceeds (less any portion of the deductible that has been
applied to covered losses).

 

26

 

 

ARTICLE 9

INTERIM AND POST-CLOSING RESPONSIBILITIES

 

9.1  Interim Responsibilities.

 

9.1.1      Management of the Property. Sellers agree that during the period
between the Effective Date and the Closing Date:

 

(a)         Sellers shall cause the Property to be operated, managed and
maintained in the manner which is substantially similar to the manner it has
been operated and maintained during the twelve (12) month period prior to the
Effective Date, so that the Property shall, except for normal wear and tear, be
in substantially the same condition on the Closing Date as on the Effective
Date;

 

(b)         Sellers will cause the Company to maintain property and liability
insurance coverage in the ordinary course of the Company’s business with respect
to the Property from the date hereof through the Closing Date or earlier
termination of this Contract;

 

(c)          promptly notify Purchaser within five (5) Business Days of receipt
by Seller, of (x) any notice of any violations of zoning, building, fire, health
environmental or other Applicable Laws relating or referring to the Company, the
Hotel or any improvements thereon, (y) of any written claim or notice of dispute
relating to or affecting the Company or the Hotel, and (z) any written notice of
default received by the Company under any Lease or other third party contract
following the Effective Date;

 

(d)          cause the Company to renew all Permits;

 

(e)         Sellers will not permit the Company to grant any lien or cause any
instrument to be recorded that would further encumber the Property in any
manner, other than memoranda of lease and/or subordination, non-disturbance and
attornment agreements with respect to Leases entered into in accordance with the
terms hereof or liens or encumbrances to be discharged as of the Closing Date;

 

(f)          Following the end of the Inspection Period until the Closing Date
or earlier termination of this Agreement, without the prior written consent of
Purchaser, Sellers shall not (x) enter into any third party contracts, equipment
leases or other material agreements affecting the Company or the Property, or
(y) amend, modify, terminate or accept the surrender of any existing tenancies
pursuant to any Lease; provided, however, that during the Inspection Period,
Sellers shall promptly notify Purchaser of any such contract, agreement or
tenancy that is entered into or modified as described in (x) or (y), and deliver
to Purchaser copies of all documents executed in connection therewith.

 

(g)          Sellers shall deliver a notice of termination with respect to the
Contracts with respect to the Company and the Property except the Assumed
Contracts. All termination fees and any other costs and expenses relating to
such termination shall be the responsibility solely of Sellers, and Purchaser
shall not have any responsibility or liability therefor; and

 

27

 

 

ARTICLE 10

REMEDIES

 

10.1          Sellers’ Remedies. In the event Purchaser fails to perform its
obligations pursuant to this Contract before Closing for any reason except (a)
failure by Sellers to perform any of its obligations hereunder or (b) the
termination of this Contract by Sellers or Purchaser pursuant to the terms
hereof, Sellers shall be entitled as its sole and exclusive remedy hereunder to
terminate this Contract by written notice to Purchaser and recover the Earnest
Money as liquidated damages and not as a penalty, in full satisfaction of claims
against Purchaser hereunder, and the Title Company shall immediately pay the
Earnest Money to Sellers, and the parties shall have no further rights or
obligations under this Contract, except those which expressly survive such
termination. Sellers and Purchaser agree that Sellers’ damages resulting from
Purchaser's default are difficult, if not impossible, to determine and the
Earnest Money is a fair estimate of those damages which has been agreed to in an
effort to cause the amount of said damages to be certain.

 

10.2          Purchaser's Remedies. Except as otherwise provided in Section
6.1.5, in the event Sellers fails to perform its obligations pursuant to this
Contract for any reason except (a) failure by Purchaser to perform hereunder or
(b) a termination of this Contract by Sellers or Purchaser pursuant to the terms
hereof, Purchaser may, as its sole remedy, either terminate this Contract by
giving Sellers timely written notice of such election prior to or at Closing or
enforce specific performance of this Contract against Sellers provided that such
action is commenced within thirty (30) days of the scheduled Closing Date. In
the event Purchaser elects to terminate this Contract pursuant to this Section
10.2, the Earnest Money shall be returned to Purchaser, Sellers shall promptly
reimburse Purchaser for Purchaser’s thirty-party costs and expenses related to
the transaction contemplated by this Contract, in an amount not to exceed
$75,000.00 in the aggregate (“Purchaser’s Due Diligence Costs”), and thereafter
the parties shall have no further rights or obligations under this Contract,
except those which expressly survive such termination.

 

10.3          Attorney's Fees. In the event either party hereto is required to
employ an attorney because of the other party's default, the defaulting party
shall pay the nondefaulting party's reasonable attorney's fees incurred in the
enforcement of this Contract; it being understood and agreed that the
determination of the prevailing party shall be included in the matters which are
the subject of such action or suit. The terms of this Section shall survive the
Closing.

 

10.4          Disposition of Earnest Money. In the event of a termination of
this Contract by either Sellers or Purchaser, the Title Company is authorized to
deliver the Earnest Money to the party entitled to same pursuant to the terms
hereof on or before the tenth (10th) day following receipt by the Title Company
and the nonterminating party of written notice of such termination from the
terminating party, unless the other party hereto notifies the Title Company that
it disputes the right of the other party to receive the Earnest Money prior to
the expiration of such ten (10) day period; provided, however, in the event
Purchaser delivers a Termination Notice in accordance with Section 3.3 hereof,
the Title Company shall immediately return the Earnest Money to Purchaser in
accordance with Section 3.3. In such event the Title Company shall have the
right to hold such funds until it receives further mutual direction from Sellers
and Purchaser or to interplead the Earnest Money into a court of competent
jurisdiction in the county in which the Property is located. All attorneys' fees
and costs and expenses of the Title Company incurred in connection with such

 

28

 

 

interpleader shall be assessed against the party that is not awarded the Earnest
Money in the event that such Earnest Money is interplead or otherwise pursuant
to a court order or if the Earnest Money is distributed in part to both parties,
then in the inverse proportion of such distribution.

 

10.5          Following Closing.

 

10.5.1    Indemnification by Sellers. Following the Closing, Sellers shall
indemnify and hold Purchaser and Purchaser’s Indemnified Parties harmless from
and against any and all costs, fees, expenses, damages, deficiencies, interest
and penalties (including, without limitation, reasonable attorneys’ fees and
disbursements) suffered or incurred by any such indemnified party (“Costs”) in
connection with any and all losses, liabilities, claims, damages and expenses
(“Losses”), arising out of, or in any way relating to, (i) claims for any debts
or obligations occurring on or about or in connection with the Property or any
portion thereof which occurs prior to the Closing, and (ii) the business or
operation of the Hotel at any time during Sellers’ ownership of the Company;
provided, however, that this indemnity shall expressly exclude all liabilities
with respect to the physical condition of the Property, subject to Sections 5.4,
5.5 and 5.6.

 

10.5.2    Indemnification by Purchaser. Following the Closing, Purchaser shall
indemnify and hold Sellers and Sellers’ Indemnified Parties harmless from any
and all Costs in connection with Losses arising out of, or in any way relating
the business or operation of the Property from and after Closing, such
obligations to survive Closing, subject to the Survival Period. Notwithstanding
the foregoing, in no event shall Purchaser have any obligations under this
Section 10.5.2 or otherwise to indemnify or defend Sellers’ Indemnified Parties
from, against and with respect to liabilities arising from any claims arising
prior to the Closing in connection with the violation of Environmental Laws and
any claims by third parties for personal injury or property damage arising out
of events occurring prior to the Closing (whether as a result of any violation
of Environmental Laws or otherwise).

 

10.5.3    Survival. This Section 10.5 shall survive the Closing.

 

ARTICLE 11

MISCELLANEOUS

 

11.1         Entire Contract. This Contract contains the entire agreement of the
parties hereto and supersedes and replaces any letter of intent or term sheet
between the parties, which the parties hereby agree is null and void and of no
further force or effect. There are no other agreements, oral or written, and
this Contract can be amended only by written agreement signed by the party
against whom enforcement is sought, and by reference made a part hereof.

 

11.2         Binding. This Contract, and the terms, covenants, and conditions
herein contained, shall be covenants running with the Land and shall inure to
the benefit of and be binding upon the successors and assigns of each of the
parties hereto. Neither party shall assign or transfer or permit the assignment
or transfer of its rights or obligations under this Contract without the prior
written consent of the other, any such assignment or transfer without such prior
consent being hereby

 

29

 

 

declared to be null and void; provided, however, that Purchaser shall have the
right to either nominate one or more Affiliates to take title to all or any
portion the Property or assign all or any portion of this Contract to one or
more Affiliates without Sellers’ consent, upon written notice to Sellers no
later than five (5) days prior to the Closing Date, but Purchaser shall remain
jointly and severally liable following any such assignment for all pre-Closing
obligations of “Purchaser” hereunder and such assignee(s) shall assume Buyer’s
rights and obligations under this Contract.

 

11.3          Notice. Any notice, communication, request, reply or advice
(collectively, “Notice”) provided for or permitted by this Contract to be made
or accepted by either party must be in writing. Notice may, unless otherwise
provided herein, be (i) delivered by hand with receipt; (ii) sent by recognized
overnight delivery service; (iii) sent by certified or registered mail, postage
prepaid, with return receipt requested or (iv) by electronic mail or facsimile
transmission during normal business hours with a confirmation copy delivered by
another method permitted under this Section. For the purposes of notice, the
addresses of the parties shall, until changed as hereinafter provided, be as
follows:

  

Purchaser: c/o The Procaccianti Group   1140 Reservoir Avenue   Cranston, RI
02920   Attention: Ggregory D. Vickowski   Facsimile: 401-943-6320   Email:
gvick@procaccianti.com     with a copy to: Morrison & Foerster LLP   250 West
55th Street   New York, NY 10019-9601   Attention: Jeffrey J. Temple, Esq.  
Facsimile: (212) 468-7900   Email: jtemple@mofo.com     and with a copy to:    
The Procaccianti Group   1140 Reservoir Avenue   Cranston, RI 02920   Attention:
Ron Hadar   Facsimile: 401-943-6320   Email: rhadar@procaccianti.com

  

30

 

 

Sellers: to the address set forth beneath such Seller’s name on the signature
page below     with a copy to: The Procaccianti Group   1140 Reservoir Avenue  
Cranston, RI 02920   Attention: Peter Ziegler   Facsimile: 401-943-6320   Email:
pziegler@procaccianti.com     with a copy to: Greenberg Traurig, LLP   One
International Place – Suite 2000   Boston, MA 02110   Attention: James P.
Redding, Esq.   Facsimile: 617-897-0961   Email: reddingj@gtlaw.com

 

The parties hereto shall have the right from time to time to change their
respective addresses, and each shall have the right to specify as its address
any other address within the United States of America by at least five (5) days
written notice to the other party. Notices may be given by attorneys on behalf
of the party whom they represent. Notices shall be deemed to be effective upon
receipt (which a print-out confirmation shall be deemed to satisfy in the case
of notices given by facsimile or electronic confirmation of delivery generated
by sender’s computer or device shall be deemed to satisfy in case of notices
given by e-mail) or refusal of the addressee to accept delivery.

 

11.4          Reporting Person. Purchaser and Sellers hereby designate Title
Company as the “reporting person” pursuant to the provisions of Section 6045(e)
of the Internal Revenue Code of 1986, as amended.

 

11.5          Time. Time is of the essence in all things pertaining to the
performance of this Contract.

 

11.6          Governing Law. This Contract shall be construed in accordance with
the laws of the State where the Land is situated.

 

11.7          Currency. All dollar amounts are expressed in United States
currency.

 

11.8          Section Headings. The section headings contained in this Contract
are for convenience only and shall in no way enlarge or limit the scope or
meaning of the various and several sections hereof.

 

11.9          No Survival of Obligations. Except as otherwise expressly
otherwise provided herein, the terms, conditions, warranties, representations,
obligations and rights set forth herein shall not survive Closing.

 

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11.10       Business Days. If the date for the performance of any obligation, or
the giving of any notice, by Sellers or Purchaser hereunder falls upon a day
other than a Business Day, then the time for such performance or the giving of
such notice shall be extended until the next Business Day.

 

11.11       Irrevocable Option. To the extent that this Contract is ever
construed as an option agreement, Sellers and Purchaser hereby acknowledge that
independent consideration for such option in the sum of $10.00 has been (or will
upon demand, be) paid to Sellers by Purchaser, and based on such consideration
and the mutual covenants of Sellers and Purchaser contained herein, Sellers
hereby agrees that any such option granted Purchaser is irrevocable, and Sellers
shall not terminate said option without the prior written consent of Purchaser,
except to the extent that termination may be expressly provided for herein.

 

11.12       No Recordation. Without the prior written consent of Seller, there
shall be no recordation of either this Contract or any memorandum hereof, or any
affidavit pertaining hereto, and any such recordation of this Contract or
memorandum hereof by Purchaser without the prior written consent of Sellers
shall constitute a default hereunder by Purchaser, whereupon this Contract
shall, at the option of Seller, terminate and be of no further force and effect
and all Earnest Money deposited hereunder shall be immediately delivered to the
Seller, whereupon the parties shall have no further duties or obligations one to
the other.

 

11.13       Reserved.

 

11.14      Waiver of Trial By Jury. Sellers and Purchaser hereby waives trial by
jury in any action arising out of matters related to this Contract, which waiver
is informed and voluntary.

 

11.15      No Waiver. Failure by any party to enforce against any other party
any term or provision of this Contract shall not waive such party's right to
enforce against any other party the same or any other term or provision. No
waiver by any party hereto of any condition hereunder for its benefit shall
constitute a waiver of any other or further right, nor shall any single or
partial exercise of any right preclude any other or further exercise thereof or
any other rights. The waiver of any breach hereunder shall not be deemed to be a
waiver of any other or subsequent breach hereof. No extensions of time for the
performance of any obligations shall be deemed or construed as an extension of
time for the performance of any other obligation.

 

11.16      Counterparts. This Contract may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed and delivered shall be deemed to be an original and all
of which taken together shall constitute one and the same instrument. Signatures
transmitted via facsimile and/or electronic mail shall be deemed originals.

 

11.17      Further Assurances. The parties agree to execute such instructions to
the Title Company and such other instruments or to do such further acts as may
be reasonably necessary to carry out the provisions of this Contract; provided,
however, that no party shall be obligated to provide such other instruments and
to do such further acts that would materially increase such party’s liabilities
hereunder or materially decrease such party’s rights hereunder. The provisions
of this section shall survive the Closing.

 

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ARTICLE 12

REAL ESTATE COMMISSIONS

 

12.1          Commissions. Sellers and Purchaser each hereby severally
represents to the other party hereto that it has not contacted or worked with
any agent, broker or other similar party with respect to the transactions
contemplated by this Contract.

 

12.2          Sellers hereby agrees to indemnify and hold Purchaser harmless
from the claims of any agent, broker or other similar party claiming by, through
or under Sellers with respect to the transactions contemplated by this Contract
and this indemnification shall survive the Closing. Purchaser hereby agrees to
indemnify and hold Sellers harmless from the claims of any agent, broker or
other similar party claiming by, through or under Purchaser with respect to the
transactions contemplated by this Contract other than the Broker, and this
indemnification shall survive the Closing or earlier termination of this
Contract.

 

12.3          Marketing. During the pendency of this Contract, Sellers shall
cease (and cause to be ceased) all efforts to market the Property and shall not
solicit (or cause to be solicited) offers for the purchase of the Property.

 

ARTICLE 13

ESCROW PROVISIONS

 

13.1          By executing the joinder hereto, Title Company agrees to hold the
Earnest Money pursuant to the provisions of Article 2 and upon the following
terms:

 

13.1.1    The Title Company shall have no duties or responsibilities other than
those expressly set forth herein. The Title Company shall have no duty to
enforce any obligation of any person to make any payment or delivery or to
enforce any obligation of any person to perform any other act. The Title Company
shall be under no liability to the other parties hereto or to anyone else by
reason of any failure on the part of any party hereto (other than the Title
Company) or any maker, guarantor, endorser or other signatory of any document or
any other person to perform such person’s obligations under any such document.
Except for amendments to this Contract hereinafter referred to and except for
joint instructions given to the Title Company by Sellers and Purchaser relating
to the Earnest Money, Title Company shall not be obligated to recognize any
agreement between any or all of the persons referred to herein, notwithstanding
that references thereto may be made herein and whether or not it has knowledge
thereof.

 

13.1.2    In its capacity as escrow agent, the Title Company shall not be
responsible for the genuineness or validity of any security, instrument,
document or item deposited with it and shall have no responsibility other than
to faithfully follow the instructions contained herein, and it is fully
protected in acting in accordance with any written instrument given to it
hereunder by any of the parties hereto and reasonably believed by the Title
Company to have been signed by the proper person, except that Title Company
shall act in accordance

 

33

 

 

with Section 10.4 in connection with the disposition of the Earnest Money. The
Title Company may assume that any person purporting to give any notice hereunder
has been duly authorized to do so. The Title Company is acting as a stakeholder
only with respect to the Earnest Money. Promptly after the receipt by the Title
Company of (a) notice of any demand by either party claiming that it is entitled
to the Earnest Money or (b) any other claim or the commencement of any action,
suit or proceeding by either party, the Title Company shall, if a claim in
respect thereof is to be made against any of the other parties hereto, send a
copy of such notice to the other party and inform the other party of such claim;
but the failure by the Title Company to give such notice shall not relieve any
party from any liability which such party may have to the Title Company
hereunder. In the event that, prior to the expiration of the Inspection Period,
the Title Company receives a copy of a Termination Notice from Purchaser, the
Title Company shall, by not later than the second (2nd) Business Day following
receipt of Purchaser’s request, return the Initial Deposit (unless Purchaser and
Sellers advise you in writing otherwise) held by you to Purchaser regardless of
any instruction to the contrary from Seller.

 

13.1.3    It is understood and agreed that the duties of the Title Company are
purely ministerial in nature. The Title Company shall not be liable to the other
parties hereto or to anyone else for any action taken or omitted by it, or any
action suffered by it to be taken or omitted, in good faith and in the exercise
of reasonable judgment, except for acts of willful misconduct or gross
negligence. Except with respect to the disposition of the Earnest Money pursuant
to Section 10.4, the Title Company may rely conclusively and shall be protected
in acting upon any order, notice, demand, certificate, opinion or advice of
counsel (including counsel chosen by the Title Company), statement, instrument,
report or other paper or document (not only as to its due execution and the
validity and effectiveness of its provisions, but also as to the truth and
acceptability of any information therein contained) which is reasonably believed
by the Title Company to be genuine and to be signed or presented by the proper
person or persons. The Title Company shall not be bound by any notice or demand,
or any waiver, modification, termination or rescission of this Contract or any
of the terms hereof, unless evidenced by a final judgment or decree of a court
of competent jurisdiction in the State of New York, or a Federal court in such
jurisdiction or a writing delivered to the Title Company signed by the proper
party or parties (subject to Section 10.4) and, if the duties or rights of the
Title Company are affected, unless it shall give its prior written consent
thereto.

 

13.1.4    The Title Company shall have the right to assume in the absence of
written notice to the contrary from the proper person or persons that a fact or
an event by reason of which an action would or might be taken by the Title
Company does not exist or has not occurred, without incurring liability to the
other parties hereto or to anyone else for any action taken or omitted, or any
action suffered by it to be taken or omitted, in good faith and in the exercise
of reasonable judgment, in reliance upon such assumption.

 

13.1.5    Except in connection with the Title Company’s willful misconduct or
gross negligence, the Title Company shall be indemnified and held harmless
jointly and severally by the other parties hereto from and against any and all
expenses or loss suffered by the Title Company (as escrow agent), including
reasonable attorneys’ fees, in connection with any action, suit or other
proceeding involving any claim, which arises out of or relates to

 

34

 

 

this Contract, the services of the Title Company hereunder or the monies held by
it hereunder.

 

13.1.6    From time to time on and after the date hereof, Sellers and Purchaser
shall deliver or cause to be delivered to the Title Company such further
documents and instruments and shall do and cause to be done such further acts as
the Title Company shall reasonably request (it being understood that the Title
Company shall have no obligation to make any such request except as reasonably
required herein) to carry out more effectively the provisions and purposes of
this Contract, to evidence compliance herewith or to assure itself that it is
protected in acting hereunder.

 

13.1.7    The Title Company may resign at any time as the escrow agent hereunder
upon giving five (5) days’ prior written notice to that effect to both Sellers
and Purchaser. In such event, the successor escrow agent shall be a nationally
recognized title insurance company or other person acceptable to both Sellers
and Purchaser. Such party that will no longer be serving as escrow agent shall
deliver, against receipt, to such successor escrow agent, the Earnest Money held
by such party, to be held by such successor escrow agent pursuant to the terms
and provisions of this Contract. If no such successor has been designated on or
before such party ceases to be escrow agent hereunder, whether by resignation or
otherwise, its obligations as escrow agent shall continue until such successor
is appointed, provided, however, its sole obligation thereafter shall be to
safely keep all monies then held by it and to deliver the same to the person,
firm or corporation designated as its successor or until directed by a final
order or judgment of a court of competent jurisdiction or upon mutual direction
of Purchaser and Seller, whereupon the Title Company shall make disposition
thereof in accordance with such order; provided further, however, that the Title
Company, in such event, shall deliver the Earnest Money against receipt, to any
bank or trust company or title insurance company mutually designated by the
Purchaser and Seller. If no successor escrow agent is designated and qualified
within five (5) days after its resignation is effective, such party that will no
longer be serving as escrow agent may apply to any court of competent
jurisdiction for the appointment of a successor escrow agent.

 

ARTICLE 14

DEFINITIONS

 

As used in this Contract, the following terms shall have the respective meanings
ascribed to them

 

14.1          Affiliate or affiliate shall mean, with reference to a Person, (a)
any other Person directly or indirectly controlling or controlled by or under
direct or indirect common control with such Person, (b) any officer, director or
partner of such Person, or (c) any company of which such Person is an officer,
director or partner. For the purposes hereof, the term “control” (including
“controlling,” “controlled by” and “under common control with”) means the
possession, direct or indirect, of the power to direct or cause the direction of
the management and the policies of a Person, whether through the ownership of
voting securities, by contract or otherwise.

 

35

 

 

14.2          Applicable Laws shall mean any and all presently existing and
future judicial decisions, statutes, rulings, rules, regulations, permits,
certificates or ordinances of any Governmental Authority applicable to the
Property.

 

14.3          Bookings shall mean all contracts or reservations for the use of
guest rooms, banquet facilities, restaurants or meeting rooms or any other space
in the Hotel.

 

14.4          Business Day shall mean Monday through Friday excluding Saturday,
Sunday or any other day on which national banks in Providence, Rhode Island are
not open for business.

 

14.5          Consumables shall mean all unused food and beverages (including,
subject to Section 7.5, all liquor, wine, beer, and other spirits), contents of
all vending machines, all unused engineering, maintenance and housekeeping
supplies, including soap, cleaning materials, and other materials, all unused
stationery, brochures, advertising materials and other printed items, and all
other unused supplies of all kinds which are held in storage and available for
use in connection with the maintenance and operation of the Hotel and which have
a useful life which extends beyond the Closing Date (collectively, the
“Consumables”;

 

14.6          Data Rules shall mean any federal, state or local law, statute,
ordinance, code, order, decrees, or other governmental rule, regulation or
requirement, with respect to the collection, storage, use, processing and
transfer of Personal Information in any way, including data protection laws,
privacy laws, laws regulating marketing communications and/or electronic
communications, information security regulations, security breach notification
rules, including without limitation, PCI DDS, as well as any requirement, term
or condition contained in any agreement affecting Seller, Manger or the Hotel.

 

14.7          Effective Date shall mean the date on which this Contract has been
executed and delivered by all parties hereto.

 

14.8          Environmental Laws means any and all federal, state, county and
local statutes, laws, regulations and binding rules in effect on the Effective
Date relating to the protection of the environment or to the use, transportation
and disposal of Hazardous Materials.

 

14.9          Existing Mortgage Loan means that certain mortgage loan in the
original amount of $13,135,000 to the Company from East Boston Savings Bank
dated as of May 27, 2015.

 

14.10      FF&E shall mean all fixtures, furniture, furnishings, fittings,
vehicles, equipment, machinery, apparatus, appliances and other articles of
personal property located or to be located at the Improvements and used or
usable in connection with the Hotel Business, excluding (i) Consumables, (ii)
Small Operating Equipment, (iii) equipment leased by Sellers or provided to
Sellers pursuant to a Property Contract and not owned by Seller, or (iv)
property owned or leased by tenants, guests, employees or persons furnishing
goods or services to the Hotel.

 

14.11      Franchise Agreement means that certain Marriott Hotel Relicense
Agreement, dated as of May 3, 2007, by and between Marriott International, Inc.
and Seller, as amended, restated, supplemented, extended or otherwise modified
from time to time.

 

36

 

 

14.12      Governmental Authority shall mean the United States, the state, the
county, the city, or any other political subdivision in which the Property is
located, and any other political subdivision, agency or instrumentality
exercising jurisdiction over the Property.

 

14.13      Guest Ledger Receivables means amounts, including, without
limitation, room charges, telephone charges, parking garage charges, food,
beverage and entertainment revenue, and all other fees in connection with any
services provided at the Hotel accrued or accruable to the accounts of the
guests occupying rooms in the Hotel, whether as transient guests or otherwise,
as of the Time of Transfer.

 

14.14      Hazardous Material shall mean any substance:

 

(a)         the presence of which requires investigation or remediation under
any statute, regulation, ordinance, order or policy of a Governmental Authority;
or

 

(b)          which is defined as a “hazardous waste,” “hazardous substance,”
pollutant, or contaminant under any Environmental Law, including, without
limitation, the Comprehensive Environmental Response, Compensation and Liability
Act (42 U.S.C. § 9601 et seq.) and/or the Resource Conservation and Recovery Act
(42 U.S.C. § 6901 et seq.).

 

14.15      Hotel means the hotel located on and operating at the Property as of
the Effective Date.

 

14.16      Hotel Business means the business relating to the operation and
management of the Hotel.

 

14.17      Hotel Employees means all individuals employed in regular full-time,
regular part-time, temporary and on-call job positions at the Hotel at the time
in question, and specifically excluding any independent contractors.

 

14.18      Improvements shall mean all of the buildings and other structures and
improvements situated on the Land, and all mechanical, heating, air
conditioning, plumbing, electrical and ventilating systems and all other
fixtures and equipment servicing the Land and which constitute real property
under applicable Laws.

 

14.19      Inspection Period means the period of time commencing on the
Effective Date and terminating at 6:00 pm (Eastern Standard Time) on February
12, 2020.

 

14.20      Intangible Hotel Assets all electronic files, data and information,
software licenses, internet domain names, URLs and websites, telephone and
facsimile numbers listing in directories, customer and supplier lists and files,
including, without limitation, all guest or customer profiles, contact
information, histories, preferences and any other guest or customer information,
credit records, labels, promotional literature, security codes, goodwill of
Sellers related to the Hotel, contract rights, leases, concessions, trademarks,
servicemarks, logos, names of hotel restaurants and other food and beverage
outlets or other identifying symbols used in connection with the Hotel,
transferable Permits (as hereinafter defined), including the Liquor License, all
assignable warranties and guaranties, if any, relating to the Land, Improvements
or Personalty (collectively, the “Warranties”), rights to apply for any tax
credits in connection with the Hotel or the Land or Improvements, signage
rights, utility and development rights and privileges, technology and

 

37

 

 

technical information, employee records and information, reservation system
software and other items of intangible personal property relating to the
ownership or operation of the Hotel and owned by Sellers whether on paper,
electronic format, DVD or CD-Rom, but excluding the Excluded Property.

 

14.21      Land means all of the land located in Providence, and more
particularly described in Exhibit A attached hereto and incorporated herein for
all purposes, together with (i) all strips or gores, if any, between the Land
and abutting properties, whether owned or claimed by deed, limitations or
otherwise, and whether or not they are located inside or outside of the
boundaries of the Land, (ii) any land lying in or under the bed of any highway,
avenue, street, road, alley, easement or right-of-way, open or proposed, in, on,
across, abutting or adjacent to the Land, to the center line thereof, and (iii)
all easements in or upon the Land and all other rights and appurtenances
belonging or in anywise pertaining to the Land or the Improvements.

 

14.22      Leases means those leases set forth on Schedule 5.1.12 annexed
hereto.

 

14.23      Liquor License means any alcoholic beverage licenses issued in
connection with the operation of the Property.

 

14.24      Management Agreement that certain Hotel Management Agreement by and
between the Company and Manager dated December 28, 1995 as amended February 27,
2007 and February 27, 2017.

 

14.25      Manager shall mean Lenox Hotels, Inc., a Rhode Island corporation.

 

14.26      PCI DDS shall mean the Payment Card Industry and Data Security
Standard(s), as each may be amended from time to time.

 

14.27      Permitted Exceptions shall mean All (i) real estate taxes not due and
payable as of the Closing Date, (ii) Title Exceptions disclosed in the Title
Commitment and all matters disclosed on the Survey, that are not objected to by
Purchaser in any Title Objection, or are otherwise deemed Permitted Exceptions
pursuant to the terms of this Agreement, (iii) all Leases, (iv) the exceptions
and exclusions customarily contained in pre-printed title policy jackets in the
state in which the Property is located unless, and then only to the extent that,
the same can be deleted from the title policy jacket upon Seller’s delivery of
customary seller’s title affidavit, (v) all liens and encumbrances created by
Purchaser or its agents or consultants, (vi) any supplemental taxes, if any,
assessed following the sale of the Real Property and the Improvements to
Purchaser on the Closing Date, (vii) all equipment leases and security interests
recorded in connection with the assumed contracts, (viii) right, interest or
claim that may exist, arise or be asserted against the title to the Land or
Improvements under or pursuant to the Perishable Agricultural Commodities Act of
1930, as amended, 7 USC 499a et seq., the Packers and Stockyard Act of 1921, as
amended, 7 USC 181 et seq., or any similar state laws, (ix) guests of the Hotel
in the ordinary course of business, (x) governmental laws, codes, ordinances and
restrictions now or hereafter in effect so far as these affect the Land or
Improvement or any part thereof, including, without limitation, zoning
ordinances (and amendments and additions relating thereto) and the Americans
with Disabilities Act of 1990, as amended, and (xi) any other items created in
accordance with the terms of this Agreement.

 

38

 

 

14.28      Personalty shall mean the Consumables; the FF&E and the Small
Operating Equipment.

 

14.29      Personal Information means (a) any personally identifiable
information of any individual or payment cardholder, including without
limitation, name, address, account number, bank account information, social
security number, driver’s license number, email addresses, passwords, log-ins
and other non-public personal financial information or room preference, or that
otherwise can be used (alone or when combined with other information in Sellers
or Manager’s control) to identify, locate or contact an individual and (b) any
similar information that relates to a payment card authorized by or bearing the
logo of a member of the Payment Card Industry (“PCI”) Security Standards Council
(the “PCI SSC”) or any similar organization. Personal Information can be in any
media or format, including computerized or electronic records as well as
paper-based files.

 

14.30      Person shall mean any individual, partnership, limited liability
company, corporation, trust or other entity.

 

14.31      Property Contracts shall mean all written service, supply and
maintenance contracts and written leases of personal property relating to the
maintenance, ownership, use, possession or operation of the Land, Improvements
or Personalty, but excluding the Management Agreement and Franchise Agreement.

 

14.32      Purchaser Indemnified Parties means Purchaser and its Affiliates, and
each of their respective shareholders, directors, officers, members, partners,
trustees, employees and agents, and the successors, assigns, heirs and legal
representatives of each of the foregoing.

 

14.33      Security Breach means any unauthorized use, disclosure, modification
or access of Personal Information.

 

14.34      Small Operating Equipment all china, glassware, stemware, bath mats,
bath rugs, shower curtains, tools, linens, towels, uniforms, bedding, silverware
and other serving utensils, telephones, televisions, cable equipment, computers
and any other equipment, goods, utensils, supplies or reserve stock owned by
Seller, located in the Hotel or at the Improvements and used or held in reserve
or storage for future use in connection with the maintenance and operation of
the Hotel, excluding the Consumables and the FF&E.

 

14.35      Time of Transfer means 12:01 a.m. eastern time on the Closing Date.

 

14.36      Uniform System of Accounts shall mean the Uniform System of Accounts
for the Lodging Industry used by the Company in preparing the books and records
of the Hotel.

  

[remainder of page intentionally blank]

 

39

 

 

IN WITNESS WHEREOF, this Contract has been duly executed in multiple
counterparts (each of which is to be deemed original for all purposes) by the
parties hereto.

 

 

  SELLERS:       TPG DP JV, LLC,   a Delaware limited liability company        
By: /s/ Elizabeth A. Procaccianti     Name: Elizabeth A. Procaccianti     Title:
Manager     Address:             ETJ Gano Holdings, Inc.   a Rhode Island
corporation             By: /s/ Elizabeth A. Procaccianti     Name: Elizabeth A.
Procaccianti     Title: President     Address:             PRJA Gano Holdings,
LLC,   a Delaware limited liability company             By: /s/ Elizabeth A.
Procaccianti     Name: Elizabeth A. Procaccianti     Title: Manager     Address:
            EHI Gano Holdings, Inc.   a Rhode Island corporation

          By: /s/ Elizabeth A. Procaccianti     Name: Elizabeth A. Procaccianti
    Title: President     Address:  

 

[signatures continue on following page]

 

40

 

 

 

  PURCHASER:       THE PROCACCIANTI GROUP, LLC,   a Rhode Island limited
liability company           By: /s/ James A. Procaccianti   Name: James A.
Procaccianti   Title: Manager

  

41

 

 

JOINDER BY TITLE COMPANY

 

The undersigned, referred to in the foregoing Contract as the “Title Company,”
hereby acknowledges receipt of a fully executed copy (or executed counterparts)
of the foregoing Contract on this 14th day of January, 2020, and accepts the
obligations of the Title Company as set forth therein. Upon receipt, the Title
Company hereby agrees to hold the Earnest Money as directed in this Contract and
to distribute the Earnest Money in accordance with the terms and provisions of
the Contract.

 

  FIRST AMERICAN TITLE INSURANCE COMPANY           By: /s/ Mark Krivelevich  
Name: Mark Krivelevich   Title: Associate Underwriter               Address:    
110 East 42nd street,   New York, NY 10017        

42

 

  

JOINDER

 

The undersigned, in consideration of being an affiliate of Sellers and therefore
having a financial interest, hereby covenants and agrees that, for the duration
of the Survival Period (and, if a proceeding is commenced by Purchaser within
the time limits required under Section 5.4 of this Agreement, during the
pendency of such proceeding if longer), it shall cause Sellers to have capital
in an amount not less than the Liability Cap (or the amount of damages claimed
by Purchaser if such amount is less than the Liability Cap after the expiration
of the Survival Period). This Joinder shall survive the Closing.

 

TPG DP JV, LLC,

a Delaware limited liability company

          By: /s/ Elizabeth A. Procaccianti   Name: Elizabeth A. Procaccianti  
Title: Manager

 

43

 

 

EXHIBITS AND SCHEDULES

 

EXHIBITS

 

Exhibit A Description of Land Exhibit B Non-Imputation Endorsement Exhibit C
Non-Foreign Affidavit Exhibit D Buyer’s Equity Ownership Endorsement Schedule
2.2 Allocation Schedule 5.1.4 Environmental Law Violations Schedule 5.1.5
Litigation Schedule 5.1.12 Leases Schedule 5.1.13 Property Contracts Schedule
5.1.14 Permits

 

 

 

  

EXHIBIT A

  

Legal Description

 

The Land referred to herein below is situated in the County of Providence, State
of Rhode Island, and is described as follows:

 

That certain tract or parcel of land, together with all buildings and
improvements thereon, located westerly of India Street and Tockworton Street, in
the City of Providence, County of Providence, State of Rhode Island, being
bounded and described as follows:

 

Beginning at a point in the terminus of India Street, said point, being the most
southwesterly corner of the herein described parcel;

 

thence running in a northwesterly direction, by and with land now or formerly of
the State of Rhode Island, a distance of 199.16 feet to a corner, said corner
being the most southwesterly corner of the herein described parcel;

 

thence turning an interior angle of 106° 04' 16" and running in a northerly
direction, by and with the aforementioned State of Rhode Island land, a distance
of 148.27 feet to a corner, said corner being the most northwesterly corner of
the herein described parcel;

 

thence turning an interior angle of 126° 47' 47" and running in a northeasterly
direction, by and with the southerly State Freeway Line of Route 195. a distance
of 31.22 feet to a point;

 

thence turning an interior angle of 139° 01' 22" and running in an easterly
direction. by and with the aforementioned State Freeway Line of Route 195, a
distance of 91.64 feet to a point;

 

thence turning an interior angle of 348° 01' 18" and running in a northeasterly
direction, by and with the aforementioned State Freeway Line of Route 195, a
distance of 44.34 feet to a point;

 

thence turning an interior angle of 22° 46' 24" and running in a northeasterly
direction, by and with the aforementioned State Freeway Line of Route 195, a
distance of 64.59 feet to a point;

 

thence turning an interior angle of 157° 13' 36" and running in a southeasterly
direction. by and with the aforementioned State Freeway Line of Route 195. a
distance of 117.70 feet to a corner, said corner being the most northeasterly
corner of the herein described parcel;

 

thence turning an interior angle of 90° 00' 00" and running in a southwesterly
direction. by and with the terminus of Tockwotton Street, a distance of 25.00
feet to a corner, said corner being the southwesterly corner of Tockwotton
Street;

 

A-1

 

 

thence turning an Interior angle of 179° 38' 45" and continuing in a
southwesterly direction, by and with land now or formerly of Brown University, a
distance of 161.01 feet to a corner, said corner being the most southwesterly
corner of said Brown University land;

 

thence turning an interior angle of 180° 26' 00" and continuing in a
southwesterly direction, by and with the previously mentioned terminus of India
Street, a distance of 25.08 feet to the point and place of beginning;

 

The last course making an angle of 90° 00' 00" with the first herein described
course.

 

Continuing by calculation, 44,145 square feet of land.

 

And

 

Beginning at a point 126.109 feet right of station 108+21.80 of the Interstate
195 Centerline;

 

Thence, S05°16'22"E along the former freeway line, a distance of 149.15 feet to
a point 274.230 feet right of station 108+04.29;

 

Thence, S79°12'06"E, along the former freeway line, a distance of 199.16 feet to
a point 346.104 feet right of station 110+21.04;

 

Thence, S10°53'32"W, along the former freeway line, a distance of 26.23 feet to
a point 371.103 feet right of station 110+10.64;

 

Thence, N80°11'14"W, along the new freeway line, a distance of 146.26 feet to a
point 321.231 feet right of station 110+41.89;

 

Thence, N74°24'50"W, along the new freeway line, a distance of 39.55 feet to a
point 302.908 feet right of station 108+06.84;

 

Thence, N59°50'10"W, along the new freeway line, a distance of 28.26 feet to a
point 283.931 feet right of station 107+85.90;

 

Thence, N42°28'23"W, along the new freeway line, a distance of 10.75 feet to a
point 274.661 feet right of station 107+80.44;

 

Thence, N14°46'22"W, along the new freeway line, a distance of 10.61 feet to a
point 264.067 feet right of station 107+79.93;

 

Thence, N05°11'07"W, along the new freeway line, a distance of 124.00 feet to a
point 140.947 feet right of station 107+94.68;

 

Thence, N49°18'14"E, along the new freeway line, a distance of 30.92 feet to the
point of beginning.

 

A-2

 

 

The herein described parcel is delineated as Parcel A on Rhode Island Highway
Plat No. 2869 and contains 9,227 square feet of land more or less.

 

And

 

Beginning at a point 113.352 feet right of station 109+02.94 of the Interstate
I95 Centerline;

 

Thence, S76°56'05"E along the former freeway line, a distance of 41.08 feet to a
point 129.594 feet right of station 109+43.94;

 

Thence, N89°43'06"W, along the former freeway line, a distance of 91.66 feet to
a point 111.466 feet right of station 108+48.57;

 

Thence, N80°17'31"E, along the new freeway line, a distance of 52.39 feet to the
point of beginning.

 

The herein described parcel is delineated as Parcel B on Rhode Island Highway
Plat No. 2869 and contains 417 square feet of land more or less.

 

Being the same property conveyed to Gano Holdings, LLC from Fordson Associates
I, L.P. by Warranty Deed dated February 29, 1997 and recorded March 7, 1997 in
book 3508, Page 187, also acquired title from State of Rhode Island and
Providence Plantations by Bargain and Sale Deed, dated September 18, 2015 and
recorded November 23, 2015 in book 11266, Page 315.

  

A-3

 

 

EXHIBIT B

 

Non-Imputation Endorsement

 

[to be attached prior to end of Inspection Period]

 

 

B-1

 

 

EXHIBIT C

Non-Foreign Affidavit

 

Section 1445 of the Internal Revenue Code provides that a transferee of a U.S.
real property interest must withhold tax if the transferor is a foreign person.
For U.S. tax purposes (including section 1445), the owner of a disregarded
entity (which has legal title to a U.S. real property interest under local law)
will be the transferor of the property and not the disregarded entity. To inform
the transferee, _______________, a ____________ (“Transferee”) that withholding
of tax is not required upon the disposition of a U.S. real property interest by
[________] (“Transferor”), and with the knowledge that the Transferee will rely
upon the following statements, the undersigned hereby certifies the following on
behalf of Transferor.

 

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 §
1.1445-2(b)(2)(iii);

 

3.       Transferor's U.S. employer identification number is _____________; and

 

4.       Transferor's office address 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.

 

Under penalties of perjury I declare that I have examined this certification and
to the best of my knowledge and belief it is true, correct and complete, and I
further declare that I have authority to sign this document on behalf of
Transferor.

 

  SELLER       [], a [] limited liability company       By:       Name:    
Title:

 

Source CFR, Section 1.1445-2T(b)(2)(iii)(B)

 

C-1

 

  

EXHIBIT D

 

Buyer’s Equity Ownership Endorsement

 

[to be provided prior to end of the Inspection Period]

 

D-1

 

 

Schedule 5.1.3

  

Environmental Laws Violations

  

[see attached]

 

 

 

 

 Schedule 5.1.5

 

Litigation

  

[see attached]

 

 

 

 

Schedule 5.1.12

  

Leases

  

[see attached]

 

 

 

 

Schedule 5.1.3

  

Property Contracts

  

[see attached]

  

 

 

 

Schedule 5.1.14

 

Permits

 

[see attached]