EXECUTION VERSION

Exhibit 10.29
PURCHASE AND SALE AGREEMENT
BY AND BETWEEN
L’Auberge Newco, LLC

and

Orchards Newco, LLC
(collectively “Seller”)
AND
DiamondRock Acquisition, LLC
(“Purchaser”)

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TABLE OF CONTENTS
1
AGREEMENT TO PURCHASE AND SELL
1
1.1
Real Property
2
1.2
Personalty
2
1.3
Excluded Property
4
2
PURCHASE PRICE AND PAYMENT
5
2.1
Purchase Price
5
2.2
Initial Deposit.
6
2.3
Payment
6
2.4
Intentionally Deleted
6
2.5
Closing
7
2.6
Inspection Period
7
2.7
Termination Option
9
2.8
Purchaser’s Reports
9
2.9
Title
9
2.10
Liquor License
10
2.11
Hotel Management Agreement; Other Agreements.
11
3
REPRESENTATIONS AND WARRANTIES OF SELLER
11
3.1
Representations and Warranties
11
3.2
Survival
15
3.3
Seller’s Indemnity
15
3.4
Matters Pertaining to Representations and Warranties
16
4
COVENANTS.
17
4.1
Seller’s Covenants
17
4.2
Purchaser’s Covenants
19
5
REPRESENTATIONS AND WARRANTIES OF PURCHASER
20
5.1
Authority
20
5.2
No Violation
20
5.3
Bankruptcy
20
5.4
OFAC
20
5.5
Litigation
21
6
AS IS PURCHASE
21
7
PURCHASER’S INDUCEMENTS TO SELLER
22
7.1
Purchaser’s Acknowledgements
22
7.2
Confidentiality
23
8
CONDITIONS TO CLOSING
24
8.1
Purchaser’s Conditions
24
8.2
Seller’s Conditions
25
8.3
Failure of Condition
25
9
CLOSING DELIVERIES
25
9.1
Seller’s Closing Deliveries
25
9.2
Purchaser’s Closing Deliveries
27
10
APPORTIONMENTS; EXPENSES
28

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10.1
Apportionments
28
10.2
Deposits
29
10.3
Room Revenue
29
10.4
Accounts Receivable; Accounts Payable
30
10.5
Other Revenue; Vending Machine Revenue
30
10.6
Guests’ Property
31
10.7
Accounting
31
10.8
Employee Compensation
31
10.9
Inventory
31
10.10
House Funds
31
10.11
Transferable Excluded Property
31
10.12
Post-Closing Adjustments
32
10.13
Expenses.
33
10.14
Survival
33
11
EMINENT DOMAIN; CASUALTY
33
11.1
Eminent Domain
33
11.2
Casualty
34
12
DEFAULT AND REMEDIES
35
12.1
Seller’s Remedies
35
12.2
Purchaser’s Remedies
35
12.3
Seller’s Liability
36
12.4
Remedies Exclusive
36
12.5
Parent Guaranty
36
13
FURTHER ASSURANCES
37
14
NOTICES
37
15
BROKERS
38
16
MISCELLANEOUS
38
16.1
Assignability
38
16.2
Governing Law; Parties in Interest
39
16.3
Recording
39
16.4
Time of the Essence
39
16.5
Headings
39
16.6
Counterparts; Signatures
39
16.7
Exhibits
39
16.8
Merger
39
16.9
Entire Agreement; Amendments
39
16.10
Jury Trial Waiver
39
16.11
Exclusive Jurisdiction
40
16.12
No Third Party Beneficiaries
40
16.13
Business Day
40
16.14
Severability
40
16.15
Access to Records After Closing
40
16.16
Seller; Joint & Several
40

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PURCHASE AND SALE AGREEMENT
L’Auberge Newco, LLC, a Delaware limited liability company (“L’Auberge Newco”),
and Orchards Newco, LLC, a Delaware limited liability company (“Orchards
Newco”), (collectively “Seller”) and DiamondRock Acquisition, LLC, a Delaware
limited liability company (“Purchaser”), hereby enter into this PURCHASE AND
SALE AGREEMENT (this “Agreement”) as of February 22, 2017 (the “Effective
Date”).
R E C I T A L S
A.L’Auberge Newco is the fee owner of the real property, including all
improvements thereon, located on the land, and all water rights appurtenant
thereto (the “L’Auberge Newco Land”), as described in Exhibit A-1 attached
hereto and incorporated herein, which real property includes what is commonly
known as the L’Auberge de Sedona Hotel & Resort, including a hotel and a
restaurant and bar in Sedona, Coconino County, Arizona (the “L’Auberge Newco
Property”);
B.Orchards Newco is the fee owner of the real property, including all
improvements thereon, located on the land, and all water rights appurtenant
thereto (the “Orchards Newco Land”), as described in Exhibit A-2 attached hereto
and incorporated herein, which real property includes what is commonly known as
the “Orchards Inn”, including a hotel and the restaurant commonly known as 89
Agave, in Sedona, Coconino County, Arizona (the “Orchards Newco Property”). The
L’Auberge Newco Property and the Orchards Newco Property are sometimes
collectively referred to herein as the “Fee Property”.
C.Orchards Newco holds the sub-lessee’s interest in those certain subleases
described in Exhibit A-3 attached hereto and incorporated herein as the
“ORCHARDS NEWCO LEASES” (the “Orchards Leasehold Property”). L’Auberge Newco
holds the lessee’s interest in that certain lease described in Exhibit A-3 as
the “L’AUBERGE NEWCO LEASE” (the “L’Auberge Leasehold Property” and, together
with the Orchards Leasehold Property, the “Leasehold Property”). The Leasehold
Property and the Fee Property are sometimes collectively referred to herein as
the “Real Property”.
D.Seller and Purchaser desire to set forth herein the terms, conditions and
agreements under and by which: (i) Seller shall sell, transfer and/or assign all
of its right, title and interest in and to the Real Property to Purchaser and
Purchaser shall purchase, accept and assume such right, title and interest in
the Real Property; and (ii) Purchaser and an affiliate of Seller (“Manager”)
shall enter into a hotel management agreement for the management of the Real
Property.
In consideration of Ten Dollars ($10.00) and other good and valuable
consideration, the receipt, sufficiency and delivery of which are hereby
acknowledged, the parties hereto hereby agree as follows:

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1.AGREEMENT TO PURCHASE AND SELL.
Subject to the terms set forth in this Agreement, at the Closing, Seller shall
sell, convey, transfer, assign and deliver to Purchaser, and Purchaser shall
purchase and accept from Seller, all right, title and interest of Seller in and
to the property and assets set forth in this Section 1, but expressly excluding
the Excluded Property (collectively, the “Property”):

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1.1    Real Property. All of Seller’s right, title and interest in and to the
Real Property.

1.2    Personalty. All personal property owned by Seller and located at, and
used in connection with, the operation of the Real Property (collectively, the
“Personalty”), including, without limitation:
(a)    all furniture, furnishings, fixtures (other than those which are part of
the Real Property), equipment, machinery, tools, vehicles, computer hardware,
telecommunications and information technology systems, art work and other items
of tangible personal property which are located at the Real Property or ordered
for future use at the Real Property as of the Apportionment Time, other than the
Supplies, F&B, Liquor Inventory, Retail Merchandise, Books and Records and Plans
and Specifications (the “FF&E”);
(b)    All china, glassware and silverware, linens, uniforms, engineering,
maintenance, cleaning and housekeeping supplies, matches and ashtrays, soap and
other toiletries, stationery, menus, hotel service directories and other printed
materials and all other similar supplies and materials, which are located at the
Real Property or ordered for future use at the Real Property as of the
Apportionment Time, of the types and quantities on hand on the Effective Date
subject to such depletion and restocking as shall occur and be made in the
normal course of business but in accordance with present standards for the Real
Property (the “Supplies”);
(c)    All food and non-alcoholic beverages and opened alcoholic beverages (to
the extent transferable under applicable law) which are located at the Real
Property, or ordered for future sale at the Real Property as of the
Apportionment Time, including, without limitation, all food and non-alcoholic or
opened alcoholic beverages located in the guest rooms, but excluding the Liquor
Inventory (as defined below) (the “F&B”), provided that to the extent that any
applicable law prohibits the transfer of alcoholic beverages to Purchaser, such
beverages shall not be considered a part of F&B until such time as the same may
lawfully be transferred after Closing, at which point the same shall be
transferred (pending any post-Closing transfer, such alcoholic beverages shall
be subject to the terms of any post-Closing interim liquor license agreement
entered into pursuant to the terms hereof);
(d)    All unopened beer, wine, spirits and other liquor inventory held for sale
and/or consumption in the ordinary course of business of the Real Property (the
“Liquor Inventory”); provided, however, that Purchaser shall pay to Seller One
Hundred Twenty Five Thousand and No/100 Dollars ($125,000.00) for the Liquor
Inventory at the Closing in addition to and separate from the Purchase Price;
(e)    All merchandise located at the Real Property and held for sale to guests
and customers thereof or the general public, or ordered for future sale at the
Real Property as of the Apportionment Time, but expressly excluding the F&B and
Liquor Inventory (the “Retail Merchandise”);

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(f)    All licenses, permits and authorizations presently issued (or any
renewals or replacements of any such licenses, permits and authorizations
between the Effective Date and the Closing Date) in connection with the
construction, use or occupancy or operation of all or any part of the Real
Property as it is presently being operated and entitlements for approved and
future development of the Real Property other than the Innholder Liquor License,
together with any deposits made by Seller thereunder (the “Permits”), to the
extent such Permits and deposits are transferable without consent under
applicable law, or consent is obtained;
(g)    To the extent they may be transferred without consent, or consent for
such transfer is obtained, (i) all rights, if any, under any warranties or
guaranties issued to Seller by any manufacturer or contractor in connection with
purchase, construction or installation of the Personalty or any improvements
included in the Real Property, to the extent in effect as of the Closing Date;
(ii) computer software (subject to the terms of any applicable third party
license agreements) used in connection with any computer systems located at the
Real Property; (iii) trademarks, trade names, service marks and other
intellectual property rights held or used in connection with the Real Property,
including without limitation (A) “L’Auberge de Sedona”, “L’Auberge Sedona”,
“L’Auberge Restaurant on Oak Creek,” “Spa at L’Auberge”, “L’Auberge Restaurant,”
“Orchards Inn” and variations thereof, (B) the domain names “lauberge.com”,
“laubergedesedona.com”, “laubergesedona.com” and variations thereof, and (C) the
logo and related marks currently used by Seller for the Orchards Newco Property
and the domain name “orchardsinn.com” and variations thereof; (iv) other
intangibles associated with the Real Property, including, without limitation,
goodwill, logos and designs related to the Real Property and other general
intangibles relating to the Real Property and (iv) all telephone numbers,
internet addresses and social media accounts specifically dedicated and
identified with the Real Property (collectively, the “Intangibles”);
(h)    All (i) maintenance, service and supply contracts, booking and
reservation agreements, license and royalty agreements, credit card service
agreements, and all other similar agreements for goods or services which are
held by Seller in connection with the Real Property or the construction, use or
occupancy or operation of all or any part of the Real Property as it is
presently being operated, other than employment contracts or similar agreements
and those agreements associated with the Leasehold Property, Equipment Leases,
and Permits; and (ii) those certain contracts and other agreements relating to
ongoing capital improvements or expenditures at the Property described on
Schedule 1.2(h) (“Construction Contracts”, and together with those contracts and
agreements set forth in clause (i) hereof, the “Contracts”), together with all
deposits made or held by Seller thereunder, to the extent such Contracts and
deposits are transferable without consent, or the consent for such transfer is
obtained;
(i)    The leases and purchase money security agreements for any equipment,
machinery, vehicles, furniture or other personal property located at the Real
Property which are held by Seller (the “Equipment Leases”), together with all
deposits made or

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held by Seller thereunder, to the extent such Equipment Leases and deposits are
transferable without consent, or the consent for such transfer is obtained;
(a)    all contracts and reservations made for rooms, banquets, conference rooms
or other facilities, meals or other services at the Real Property to be supplied
from and/or after the Closing Date (“Bookings”),
(b)    to the extent transferable and owned by Seller, surveys, architectural,
consulting and engineering blueprints, plans and specifications and drawings
related to the Real Property (“Plans and Specifications”);
(c)    to the extent transferable and owned by Seller, all customer and guest
lists and information and all books, records, promotional material, tenant data,
marketing and leasing material and forms (including, without limitation, any
such records, data, information, material and forms in the form of digital
files), keys, and other materials of any kind owned by Seller which are used in
the ownership or use of the Real Property (excluding, however, internal
memoranda and information that is covered by the attorney-client privilege or
any confidentiality agreement entered into by Seller) (“Books and Records”);
provided, however, that copies of all Books and Records may be retained by
Seller;
(d)    Seller’s interest in the leases described on Exhibit A-3 (the “Property
Leases”); and
(e)    A license to use the logo and marks described on Schedule 1.3(i) (the
“License”).

1.3    Excluded Property. Notwithstanding anything to the contrary in this
Agreement, including, but not limited to, Sections 1.1 and 1.2 above, the
property, assets, rights and interests set forth in this Section 1.3
(collectively, the “Excluded Property”) are excluded from the Property:
(a)    subject to Section 10 hereof, accounts receivable for periods prior to
and including the Apportionment Time;
(b)    tax deposits, utility deposits and other deposits held by parties other
than Seller, except for any transferable deposits assigned to Purchaser, for
which Seller is to be reimbursed as herein provided;
(c)    any tax, insurance, FF&E, capital improvement and/or other escrows,
impounds or reserves held by Seller’s lender or any other party, except to the
extent such items are specifically assigned to Purchaser and for which Seller
receives a credit at Closing;
(d)    all checks, drafts, notes and other evidence of indebtedness held by
Seller on the Closing Date, and any balances on deposit with banking
institutions relating to the Real Property, including amounts held in “house
banks;”

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(e)    any personnel files, employment agreements and employee benefit plans and
related documents and information;
(f)    any and all Personalty owned by guests or employees of the Seller or by a
vendor, tenant or any other third party distinct from Seller;
(g)    any rights held by Seller to receive or recover property, debt, or
damages on a cause of action, or rights to assert claims or defenses, whether
pending or not and whether arising in contract, tort, or otherwise, including
rights to indemnification, damages for breach of warranty or any other event or
circumstance, judgments, settlements, and proceeds from judgments and
settlements, to the extent related to the Existing Litigation (as that term is
defined in Section 3.1.3 below);
(h)    except as otherwise provided in this Agreement, Seller’s insurance
relating to the Real Property and any insurance claims or proceeds arising out
of or relating to events that occur prior to the Closing Date;
(i)    except as expressly provided in Section 1.2(n), the logo and marks
described on Schedule 1.3(i) hereof;
(j)    the logo and marks described on Schedule 1.3(j) hereof (which Seller
shall cancel effective as of the Closing Date);
(k)    the domain names “laubergecollection.com”, “laubergeresorts.com” and
variations thereof; and
(l)    except as otherwise provided in Section 11.2 hereof, all tax returns of
Seller and all claims, refunds or credits in respect of taxes of Seller for any
tax period ending before the Closing.

2.    PURCHASE PRICE AND PAYMENT.

2.1    Purchase Price. The purchase price for the Property (the “Purchase
Price”) shall be the sum of Ninety-Seven Million Dollars ($97,000,000.00),
allocated as follows: (i) Sixty-Six Million Dollars ($66,000,000) to the
L’Auberge Newco Property (including L’Auberge Newco’s interest in the Property
Leases) and related assets and (ii) Thirty-One Million Dollars ($31,000,000) to
the Orchards Newco Property (including Orchard Newco’s interest in the Property
Leases) and related assets. Subject to the terms and conditions of this
Agreement, the Purchase Price shall be paid as provided below. The parties shall
use their good faith efforts to agree to an allocation of the Purchase Price
between the Real Property and the Personalty prior to Closing (“Allocation”).
Notwithstanding the foregoing, if the parties hereto are unable to agree on a
mutually satisfactory Allocation, each of Purchaser and Seller shall use its own
allocation for purposes of this Section 2.1, and each party shall file federal,
state and local tax returns based on each party’s own determination of the
proper allocation of the Purchase Price, except that the allocation proposed by
Purchaser (provided that the same is reasonable) shall be used in

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connection with any transfer and sales taxes payable in connection with the
transfer of the Property pursuant to this Agreement.

2.2    Deposit.
2.2.1    Initial Deposit. Within one (1) business day after the Effective Date,
Purchaser shall deliver a deposit in the amount of Two Million and 00/100
Dollars ($2,000,000.00) (the “Initial Deposit”) to First American Title
Insurance Company, attention: Brian Lobuts (“Escrow Agent”). If the Deposit is
not posted as and when required as provided above in this Section, then, at
Seller’s option, this Agreement shall terminate. Concurrently with the execution
and delivery of this Agreement, Seller, Purchaser and Escrow Agent shall enter
into an escrow agreement substantially in the form of Exhibit B attached hereto
(the “Escrow Agreement”). The Deposit (as hereinafter defined) shall be held and
disbursed in accordance with this Agreement and the Escrow Agreement.
2.2.2    Additional Deposit. Unless this Agreement is terminated pursuant to the
provisions of Section 2.7 or any other provision expressly providing Purchaser a
termination right, Purchaser shall deliver to Escrow Agent an additional deposit
in current funds in the amount of Two Million and 00/100 Dollars ($2,000,000.00)
(the “Additional Deposit”), on the first business day following the date on
which Orchards Sublease Lender and the sublandlord under each of the Property
Leases constituting the Orchards Leasehold Property, shall have executed,
acknowledged and delivered the Orchards Sublease SNDA either (i) to Seller or
Purchaser or (ii) to Escrow Agent with instructions to release the same to
Purchaser at Closing, and the Deposit shall be nonrefundable to Purchaser except
as otherwise specifically set forth in this Agreement. For purposes of this
Agreement, the term “Deposit” shall mean the Initial Deposit or Additional
Deposit, or both (together with interest thereon), whichever is posted or
required to be posted under the terms of this Agreement.

2.3    Payment. At or prior to 11:00 a.m., Arizona time, on the Closing Date,
Purchaser shall deposit or cause to be deposited with the Escrow Agent sums
sufficient to pay the Purchase Price and all other amounts necessary to satisfy
Purchaser’s obligations with respect to closing the transactions contemplated
herein. On the Closing Date, Purchaser shall cause the Purchase Price to be paid
to Seller as follows:
2.3.1    Delivery of Deposit. Purchaser shall, at Purchaser’s election, either
(i) cause the Escrow Agent to pay to Seller the Deposit held by the Escrow Agent
by federal wire transfer in immediately available funds to such bank account(s)
as Seller may designate, and such amount shall be credited against the Purchase
Price, or (ii) request that the Escrow Agent return the Deposit upon Closing to
Purchaser, in which event Purchaser shall deliver the balance due of the
Purchase Price as provided in Section 2.3.2 below.
2.3.2    Payment of Balance. Purchaser shall timely fund to the Escrow Agent (i)
the remaining balance of the Purchase Price after application of the provisions
of Section 2.3.1, as adjusted for the prorations and credits set forth in this
Agreement, and shall cause the Escrow Agent to transfer to Seller such amounts
by federal wire transfer in immediately available funds upon Closing to such
bank account(s) as Seller may designate.

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2.4    Intentionally Deleted.

2.5    Closing. Payment of the Purchase Price and the closing hereunder (the
“Closing”) will take place pursuant to an escrow closing, conducted by the
Escrow Agent, on March 1, 2017 (the “Closing Date”), subject to termination of
this Agreement pursuant to Section 4.1.7 hereof. On or prior to the Closing
Date, the parties shall deposit in escrow with the Escrow Agent all documents,
instruments and Closing funds required to be delivered by such party in order to
consummate Closing pursuant to this Agreement.

2.6    Inspection Period. Until 5:00 p.m. Arizona time on the Effective Date
(the “Inspection Period”), Purchaser shall be entitled to review and approve or
disapprove the physical and economic condition of the Property, title to the
Real Property, all agreements, environmental issues, permits, entitlements,
zoning matters, water rights, building and expansion potential, books and
records of the business enterprise, including but not limited to lodging, food
and beverage, and other issues affecting the Property. During the Inspection
Period, Purchaser shall not conduct any on-site investigations of the Property
except with Seller’s prior, written consent, in Seller’s sole and absolute
discretion, provided that Seller is reasonably cooperative with Purchaser’s
needs and requirements as it relates to timing and access to the Property.
During the Inspection Period, Purchaser shall arrange for on-site and off-site
visits and inspections, including, without limitation, any third party
inspections, at times approved by Seller in Seller’s sole and absolute
discretion. Seller shall be entitled to have one or more representatives present
at all times during any and all on-site visits. Prior to the commencement of
Purchaser’s inspection of the Property, Purchaser will deliver to Seller a list
of due diligence items requested, together with a preliminary schedule of
proposed on-site visits for Seller’s approval and scheduling. Prior to the
Closing, except as otherwise provided in Section 7.2.1, neither Purchaser nor
any agent or representative of Purchaser shall (i) communicate with, contact or
otherwise solicit any employee at any of the facilities operating on the
Property or (ii) discuss the sale of the Property or any terms of this Agreement
with any employee at any of the facilities operating at the Property. In no
event shall Purchaser perform any test borings or other intrusive testing, with
respect to the Property, including without limitation, any Phase II
environmental testing without the prior written consent of Seller, which consent
may be withheld in Seller’s sole and absolute discretion.
2.6.1    Insurance. Prior to entry upon the Property, Purchaser shall deliver to
Seller evidence reasonably satisfactory to Seller that Purchaser has obtained
commercial general liability insurance in an amount of not less than $2,000,000
and written on such forms as are reasonably acceptable to Seller, naming Seller
as an additional insured, with respect to the Property and any entry onto or
activities on or about the Property by Purchaser and all of Purchaser’s agents,
employees and contractors (and any others entering onto the Property for or at
the request of Purchaser).
2.6.2    Limitation on Inspections. In connection with the right to enter upon
the Property set forth in this Section 2, Purchaser agrees (i) to comply with
all applicable laws, (ii) not to interfere with the operation of the Real
Property or disturb or otherwise interfere in the use of the Property by any
hotel guest, and (iii) to restore the Property substantially to its prior

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condition existing immediately prior to the inspection of Purchaser to the
extent the performance of such inspection by Purchaser causes damage thereto. In
addition, and notwithstanding the foregoing provisions of this Section 2.6,
Purchaser and its agents, employees and contractors (and any others entering
onto the Property for or at the request of Purchaser) shall: (a) be subject to
and shall not violate the rights of any hotel guest; (b) not damage any part of
the Property or any other property; (c) not injure or otherwise cause bodily
harm to Seller or its agents, contractors and employees or any hotel guest (or
any others entering onto the Property); (d) promptly pay when due the costs of
all tests, investigations and examinations with regard to the Property conducted
by or at the instruction of Purchaser and all of Purchaser’s agents, employees
and contractors (and any others entering onto the Property for or at the request
of Purchaser); (e) not permit any liens to attach to the Property by reason of
the exercise of its rights under this Section 2.6; (f) keep confidential
pursuant to Section 7.2 below the results of any such study or investigation
except as may be required by applicable law; (g) not contact any governmental
official or representative regarding the Property without first obtaining prior
written consent of Seller, which consent shall not be unreasonably withheld,
conditioned or delayed and may be conditioned on Seller’s presence and/or
participation in connection with any such contact, provided, however, that the
foregoing shall not prohibit Purchaser from obtaining Phase I environmental
review preparations, requesting and reviewing public records, or merely
requesting customary compliance or ‘no violations’ letters, certificates or
reports from applicable governmental entities nor from requesting a copy of
applicable zoning code materials, life safety code materials and similar
materials or taking action reasonably necessary to transfer the Permits and
Innholder Liquor License to Purchaser or its designee from and after Closing.
Seller shall reasonably cooperate with Purchaser in its due diligence but shall
not be obligated to incur any liability or expense in connection therewith.
Purchaser shall, and does hereby agree to, indemnify, defend and hold Seller,
its parent corporation, their respective affiliates, Seller’s property manager
and asset manager, the direct and indirect members, managers, partners,
trustees, shareholders, beneficiaries, directors, officers, employees, attorneys
and agents of each of them, and their respective heirs, successors, personal
representatives and assigns (collectively, the “Seller Related Parties”),
harmless for, from and against any and all claims, demands, suits, obligations,
payments, damages, losses, penalties, liabilities, costs and expenses
(including, but not limited to, reasonable attorneys’ fees) caused, directly or
indirectly, by the actions of Purchaser and any and all of Purchaser’s agents,
employees and contractors (and any others entering onto the Property for or at
the request of Purchaser) taken or occurring in, on or about the Property in the
exercise of the inspection right granted pursuant to this Section 2.6,
including, without limitation, (i) claims made by any hotel guest against Seller
for Purchaser’s entry onto the Property or into any of the facilities located
thereon or any interference with any use or damage to the premises or property
of any hotel guest or other person in connection with Purchaser’s review of the
Property, and (ii) Purchaser’s obligations pursuant to this Section 2.6.2;
provided, however, such indemnity shall not extend to protect Seller from (x)
any pre-existing liabilities for matters merely discovered by Purchaser (e.g.,
latent environmental contamination), except to the extent Purchaser’s actions
aggravate any pre-existing condition or disturb any such latent environmental
contamination (and then only to the extent of such aggravation or disturbance),
or (y) any such claims that directly result from the actions or omissions of
Seller, including any intentional misconduct or gross negligence of Seller. The
provisions of this Section 2.6.2 shall survive the Closing or termination of
this Agreement.

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2.6.3    Deliveries. Seller has made available for Purchaser’s inspection and
copying all tests, studies, documents, and other information related to the
Property, and the operation of the businesses located thereon in Seller’s
possession or control (excluding any confidential materials).

2.7    Termination Option. Purchaser shall have the right to terminate this
Agreement if it has determined in its sole discretion not to proceed with this
transaction by giving written notice of such election to terminate to Seller by
no later than 5:00 p.m. Arizona time on the Effective Date, in which event
except as expressly provided for in this Agreement, neither Seller nor Purchaser
shall have any further liability or obligation to the other under this
Agreement. In the absence of such timely notice, the termination option provided
for in this Section 2.7 shall automatically expire and be of no further force or
effect, and this Agreement shall continue in full force and effect.

2.8    Purchaser’s Reports. At no cost to Seller and upon Seller’s request,
Purchaser shall deliver to Seller copies of all third party reports and other
information prepared by third parties for Purchaser relating to the Property,
including, without limitation, the Title Commitment and Survey (as these terms
are defined below), environmental and engineering reports. The provisions of
this Section 2.8 shall survive the Closing or termination of the Agreement.

2.9    Title. Prior to the Effective Date Purchaser has delivered to Seller a
title commitment(s) (collectively, the “Title Commitment”) for a title policy
(or policies) from First American Title Insurance Company (“Title Company”).
2.9.1    Title and Survey Objections. Purchaser shall have the right to object
to any exceptions to the Title Commitment or matters shown on any ALTA survey of
the Real Property (the “Survey”) that Purchaser may elect to obtain, at
Purchaser’s sole cost and expense, by giving written notice to Seller no later
than the expiration of the Inspection Period, stating the matters to which
Purchaser objects and the reasons therefor. Seller shall provide to the Title
Company at Closing an affidavit(s) (the “Seller’s Affidavits”) in the form
attached hereto as Exhibit I. In addition, Purchaser agrees that it shall not
object to any of the following matters:
(A)    liens for unpaid real estate or personal property taxes or assessments
and water rates, water meter charges, sewer taxes, rents and charges, if any,
provided that such items are paid in full by Seller and released of record on or
before Closing to the satisfaction of the Title Company, or apportioned as
provided in this Agreement;
(B)    zoning laws and regulations and ordinances, proffers and similar
conditions of municipal and other governmental authorities affecting the
Property (but not violations thereof); and
(C)    any liens, encumbrances or other defects or exceptions to title insurance
coverage caused by Purchaser, by any of its affiliates, by any of their
respective agents, employees, contractors or other representatives or by Seller,
by its affiliates, or by any of their agents, employees or other representatives
at Purchaser’s request or with Purchaser’s consent.

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Seller shall be obligated to Cure all Mandatory Cure Items (hereinafter defined)
at or prior to Closing. If any matter materially affecting title or the Survey
and not disclosed in the Title Commitment arises or is first disclosed to
Purchaser after the expiration of the Inspection Period, then Purchaser shall
have five (5) business days after obtaining knowledge thereof to object to such
matter. Seller shall, within three (3) days after receipt of such written
notice, notify Purchaser in writing of its election to Cure or not Cure such
Purchaser’s objections, and if Seller elects to Cure any such other Purchaser’s
objections, Seller shall use reasonable efforts to Cure such objections and
shall provide Purchaser with a reasonably detailed description of the Cure to be
undertaken, together with a description of the time frame in which such Cure is
to be effected in accordance with Section 2.9.2 hereof. Seller’s failure to
timely notify Purchaser as west forth above shall be deemed an election not to
Cure. If Seller elects not to Cure any such objections, Purchaser’s sole
recourse shall be to exercise its right to terminate this Agreement by providing
written notice to Seller within five (5) business days of Seller’s election (or
deemed election) not to cure the applicable objections, in which event (y) the
Deposit shall be returned to Purchaser, and (z) except as expressly provided for
in this Agreement, neither Seller nor Purchaser shall have any further liability
or obligation to the other under this Agreement. In the event Purchaser does not
terminate this Agreement as provided under this Section 2.9.1, such objections
that Seller elected not to Cure shall become Permitted Exceptions hereunder. For
purposes of this Section 2, the term “Cure” shall mean, at Seller’s election (i)
the removal of such matter of record, (ii) the provision of information to the
Title Company sufficient to remove such matter as a title exception in the Title
Commitment, or (iii) the provision of a bond sufficient to cause the Title
Company to remove such matter from the Title Commitment. The term “Permitted
Exceptions” shall mean (i) the items set forth in subparagraphs (A) through (C)
above, (ii) all matters of record and all matters disclosed on the Survey which
are not timely objected to by Purchaser as provided above or which are timely
objected to but such objection is thereafter waived by Purchaser, and (iii) any
matters which become Permitted Exceptions pursuant to Section 2.9.2 below, but
shall specifically exclude the Mandatory Cure Items. The term “Mandatory Cure
Items” shall mean (i) any mortgage or deed of trust lien, (ii) any mechanics’ or
materialmen’s lien, (iii) any lien securing a monetary amount and (iv) any
non-monetary Encumbrance becoming of record from and after the effective date of
the Title Commitment, in each case, affecting the Property or any portion
thereof.
2.9.2    Seller’s Opportunity to Cure. If Seller elects to Cure any title or
survey objection, Seller shall use commercially reasonable efforts to Cure such
objection at or prior to Closing. Notwithstanding the foregoing, Seller shall
have a reasonable period of time, not to exceed thirty (30) days, to do so and
the Closing Date shall be extended, if necessary, to the date such items are
Cured. Apart from Seller’s obligations under Section 2.9.1 with respect to the
Mandatory Cure Items, if any other objections are not Cured within the foregoing
time period, then Purchaser may either: (a) terminate this Agreement, in which
event (i) the Deposit shall be returned to Purchaser, and (ii) except as
expressly provided for in this Agreement, neither Seller nor Purchaser shall
have any further liability or obligation to the other under this Agreement, or
(b) proceed to Closing under this Agreement and take title to the Property
subject to such uncured objections without any reduction in the Purchase Price,
in which case such uncured objections shall become Permitted Exceptions.

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2.10    Liquor License. Nothing in this Agreement shall be construed as an
assignment of the liquor license or attempt to transfer the liquor license to
the Purchaser. Upon Closing, the Purchaser shall execute and file with the
applicable governmental authority applications for the issuance of new liquor
licenses for the Property (the “Innholder Liquor License”). Simultaneously with
the filing of the application for a new Innholder Liquor Licenses for the
Property, the Purchaser shall file with the applicable governmental authority
applications for interim Innholder Liquor Licenses allowing the Purchaser to
continue the operation of the Property during the period the applications for
new Innholder Liquor Licenses are pending. Purchaser shall use diligent, good
faith efforts to obtain new Innholder Liquor Licenses pursuant to applicable law
by no later than thirty (30) days after Closing. Purchaser agrees to pay all
fees, charges, and related costs charged by governmental authorities in
connection with the issuance of the Innholder Liquor License. Seller agrees to
reasonably cooperate, and to cause Manager to reasonably cooperate with
Purchaser, at no cost or expense to Seller, and execute all reasonable and
necessary documents in connection with the liquor license applications, and
further, Seller agrees to keep the existing liquor licenses in good standing for
thirty (30) days following Closing or until the time that Purchaser has been
issued the Innholder Liquor Licenses (including the interim Innholder Liquor
Licenses). If this Agreement is terminated at any time, Purchaser shall
immediately terminate any liquor license application process then in effect, if
any, and Seller shall have the explicit authority to do so on Purchaser’s
behalf. The parties agree and acknowledge that the issuance of a new liquor
licenses is not a condition to the Closing but Seller shall reasonably cooperate
with Purchaser prior to and after Closing (if necessary) to effect the issuance
of the Innholder Liquor License (which obligation shall survive the Closing). In
consideration of the foregoing, Purchaser shall indemnify and hold Seller and
the Seller Related Parties harmless for, from and against any and all claims,
damages, demands, causes of action, liabilities, lawsuits, judgments, losses,
costs and expenses (including, but not limited to, reasonable attorneys' fees)
incurred by Seller by reason of or arising out of or related to the liquor
license applications; such indemnification obligation shall survive Closing.

2.11    Hotel Management Agreement; Other Agreements.
2.11.1    Contemporaneously with the Closing, Purchaser and Manager will enter
into a hotel management agreement pursuant to which Manager shall manage the
Real Property (the “Management Agreement”) subject to the terms thereof, which
Management Agreement shall be substantially in the form attached hereto as
Exhibit H.
2.11.2    Contemporaneously with the Closing, Purchaser and Seller will enter
into a license agreement transferring the License to Purchaser (the “License
Agreement”), which License Agreement shall be substantially in the form attached
hereto as Exhibit L.
2.11.3    Contemporaneously with the Closing, Purchaser, DiamondRock Hospitality
Limited Partnership (“DRHLP”), and Parent (hereinafter defined) will enter into
an agreement (the “Parent Agreement”), which Parent Agreement shall be
substantially in the form attached hereto as Exhibit M.

3.    REPRESENTATIONS AND WARRANTIES OF SELLER.

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3.1    Representations and Warranties. Seller represents and warrants to
Purchaser that the following are true and correct in all material respects as of
the Effective Date:
3.1.1    Authority. Each Seller is a limited liability company validly existing
and in good standing under the laws of the State of Delaware and is registered
to do business in Arizona, and Seller has all requisite limited liability
company power and authority to enter into this Agreement and all documents now
or hereafter to be executed and delivered by Seller pursuant to this Agreement
and to perform its obligations under this Agreement and under such documents.
Seller has obtained any consents necessary for it to enter into and perform its
obligations under this Agreement.
3.1.2    No Violation. The execution, delivery and performance by Seller of this
Agreement will not result in a violation by Seller of its obligations under any
of the following that are binding on Seller: (a) any judgment or order entered
by any court or governmental body, (b) any governmental statute, ordinance,
code, rule or regulation, or (c) any contract or agreement or indenture.
3.1.3    Litigation. There are no judgments presently outstanding and
unsatisfied against Seller or the Property. Except as provided on Schedule 3.1.3
attached to this Agreement, neither Seller nor the Property are involved in any
litigation at law or in equity, or any other proceeding before any court, or by
or before any governmental or administrative agency, and no such litigation or
proceeding is, to Seller’s knowledge, threatened against Seller or the Property,
nor relating to the transactions contemplated by this Agreement. The litigation
matters and proceedings listed on Schedule 3.1.3 attached hereto are referred to
collectively in this Agreement as the “Existing Litigation”.
3.1.4    FIRPTA. Seller is not a “foreign person” as defined in Section
1445(f)(3) of the Internal Revenue Code.
3.1.5    Bankruptcy. Seller has not (a) commenced a voluntary case with respect
to it or its assets, or to Seller’s knowledge 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, (b) 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
proceeding, to hold, administer and/or liquidate all or substantially all of its
assets, or (c) made a general assignment for the benefit of creditors.
3.1.6    Environmental. Except as may be disclosed in any environmental report
delivered to Purchaser or prepared at Purchaser’s request and received by
Purchaser during the Inspection Period, to Seller’s knowledge, no “Hazardous
Substances” (as hereinafter defined) have been disposed of, or identified on,
under or at the Property in violation of applicable “Environmental Laws” (as
hereinafter defined). Except as may be disclosed to Purchaser in writing during
the Inspection Period, Seller has not received written notice from any
governmental authorities, or any political or quasi-political, subdivision,
agency, authority, department, court, commission, board, bureau or
instrumentality of any of the foregoing

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asserting jurisdiction over any of the parties hereto or over the Property, that
the Property is or may be in violation of any applicable federal, state or
municipal law, ordinance or regulation regarding Hazardous Substances. To
Seller’s knowledge, except as may be disclosed in any environmental report
delivered to Purchaser or prepared at Purchaser’s request and received by
Purchaser during the Inspection Period, no Hazardous Substances were used in the
construction of the improvements at the Property, no Release (as hereinafter
defined) of Hazardous Substances has occurred at, from, in, adjacent to, or on
the Property, nor are there any Hazardous Substances in, on, about or migrating
to the Property, and the Property is not affected in any way by any Hazardous
Substances. Except as disclosed by any environmental report delivered to
Purchaser or prepared at Purchaser’s request and received by Purchaser during
the Inspection Period, to Seller’s knowledge, there are no incinerators, septic
tanks, underground storage tanks, PCB-containing equipment, asbestos-containing
material, formaldehyde insulators or cesspools on the Property, all waste is
discharged from the Property into a public sanitary sewer system in accordance
with applicable legal requirements, and no Hazardous Substances are discharged
from the Property, directly or indirectly, by Seller or any other party. As used
herein, the term “Hazardous Substances” shall mean: (a) those substances
included within the definitions of any one or more of the terms “hazardous
materials,” “hazardous wastes,” “hazardous substances,” “industrial wastes,” and
“toxic pollutants,” as such terms are defined under the Environmental Laws, or
any of them; (b) petroleum and petroleum products, including, without
limitation, crude oil and any fractions thereof; (c) natural gas, synthetic gas
and any mixtures thereof; (d) asbestos and or any material which contains any
hydrated mineral silicate, including, without limitation, chrysotile, amosite,
crocidolite, tremolite, anthophylite and/or actinolite, whether friable or
non-friable; (e) polychlorinated biphenyl (“PCBs”) or PCB-containing materials
or fluids; (f) radon; (g) any other hazardous or radioactive substance,
material, pollutant, contaminant or waste; and (h) any other substance with
respect to which any Environmental Law or governmental authority requires
environmental investigation, monitoring or remediation. As used herein, the term
“Environmental Laws” shall mean all federal, state and local laws, statutes,
ordinances and regulations, now or hereafter in effect, in each case as amended
or supplemented from time to time, including, without limitation, all applicable
judicial or administrative orders, applicable consent decrees and binding
judgments relating to the regulation and protection of human health, safety, the
environment and natural resources (including, without limitation, ambient air,
surface, water, groundwater, wetlands, land surface or subsurface strata,
wildlife, aquatic species and vegetation), including, without limitation, the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended (42 U.S.C. § 9601 et seq.), the Hazardous Material Transportation Act,
as amended (49 U.S.C. §§ 5101 et seq.), the Federal Insecticide, Fungicide, and
Rodenticide Act, as amended (7 U.S.C. § 136 et seq.), the Resource Conservation
and Recovery Act, as amended (42 U.S.C. § 6901 et seq.), the Toxic Substances
Control Act, as amended (15 U.S.C. § 2601 et seq.), the Clean Air Act, as
amended (42 U.S.C. § 7401 et seq.), the Federal Water Pollution Control Act, as
amended (33 U.S.C. § 1251 et seq), the Safe Drinking Water Act, as amended (42
U.S.C. § 300f et seq.), any state or local counterpart or equivalent of any of
the foregoing, and any federal, state or local transfer of ownership
notification or approval statutes. “Release” shall mean any spilling, leaking,
pumping, pouring, emitting, emptying, discharging, injecting, escaping,
leaching, dumping or disposing of any Hazardous Substances.

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3.1.7    OFAC. To Seller’s knowledge, Seller (a) is not in violation of any
Anti-Terrorism Law (as defined below), (b) is not a Prohibited Person (as
defined below), or (c) is not and will not knowingly (i) conduct any business or
engage in any transaction or dealing with any Prohibited Person, including the
making or receiving any contribution of funds, goods or services to or for the
benefit of any Prohibited Person, (ii) deal in, or otherwise engage in any
transaction relating to, any property or interests in property blocked pursuant
to Executive Order No. 13224 (as defined below); or (iii) engage in or conspire
to engage in any transaction that evades or avoids, or has the purpose or intent
of evading or avoiding, or attempts to violate, any of the prohibitions set
forth in any Anti-Terrorism Law. As used herein: (1) “Anti-Terrorism Law” is
defined as any Law relating to terrorism or money-laundering, including
Executive Order No. 13224 and the USA Patriot Act (as defined below); (2)
“Executive Order No. 13224” is defined as the Executive Order No. 13224 on
Terrorist Financing, effective September 24, 2001, relating to “Blocking
Property and Prohibiting Transactions With Persons Who Commit, Threaten to
Commit, or Support Terrorism.”; (3) “Prohibited Person” is defined as (A) person
or entity that is listed in the Annex to, or is otherwise subject to the
provisions of, Executive Order No. 13224; (B) an entity that is listed in the
Annex to, or is otherwise subject to the provisions of, a person or entity owned
or controlled by, or acting for or on behalf of, any person or Executive Order
No. 13224; (C) a person or entity with whom any lender is prohibited from
dealing or otherwise engaging in any transaction by any Anti-Terrorism Law;
person or entity who commits, threatens or conspires to commit or supports
“terrorism” as defined in Executive Order No. 13224; (D) a person or entity that
is named as a “specially designated national and blocked person” on the most
current list published by the U.S. Treasury Department Office of Foreign Assets
Control at its official website,
http://www.treas.gov/offices/eotffc/sdn/tllsdn.pdf or at any replacement website
or other official publication of such list; or (E) a person or entity who is
affiliated with a person or entity described in clauses (1)-(4) of this
definition; and (4) “USA Patriot Act” is defined as the “Uniting and
Strengthening America by Providing Appropriate Tools Required to Intercept and
Obstruct Terrorism Act of 2001” (Public Law 107-56). After the Closing Date,
Seller agrees to cooperate with Purchaser in providing such additional
information and documentation on Seller’s legal or beneficial ownership,
policies, procedures and sources of funds as the Purchaser reasonably deems
necessary or prudent to enable it to comply with anti-money laundering laws now
in existence or hereafter amended.
3.1.8    Notice of Violations. The list of Permits and the Innholder Liquor
License set forth on Schedule 3.1.8 is true and correct, and true, correct and
complete copies of all of the foregoing have been delivered to Purchaser. Except
as set forth on Schedule 3.1.8 attached to this Agreement, Seller has received
no written notice from any applicable governmental authority of any violation (a
“Violation”) of any zoning, building, health, environmental or other laws,
codes, ordinances, regulations, orders or requirements of any city, county,
state or other governmental authority having jurisdiction thereof and affecting
the Real Property, which Violations are pending and remain uncured, and to
Seller’s knowledge, no such Violations exist.
3.1.9    Contracts; Equipment Leases. The list of Contracts and Equipment Leases
set forth on Exhibit J attached hereto is true and correct with respect to any
Contract and/

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or Equipment Lease that either (a) requires annual payments in the aggregate in
excess of Twenty Five Thousand and 00/100 Dollars ($25,000) and/or (b) is not
terminable without penalty or fee on thirty (30) days’ notice or less
(collectively, “Material Contracts and Equipment Leases”) and, to Seller’s
knowledge, the list of all other Contracts and Equipment Leases set forth on
Exhibit J attached hereto is true and correct, and true, correct and complete
copies of all of the foregoing Contracts and Equipment Leases have been
delivered to Purchaser. To Seller’s knowledge, there are no uncured defaults by
Seller or any third party under any of the Contracts or Equipment Leases.
3.1.10    Property Leases. Except for the Property Leases and the site lease
agreement described in Section C of Exhibit A-3, there are no space leases,
licenses or other similar occupancy agreements affecting the Real Property
(collectively, “Space Leases”). The list of the Property Leases and Space Leases
set forth on Exhibit A-3 attached hereto is true and correct, and true, correct
and complete copies of all of the foregoing have been delivered to Purchaser. To
Seller’s knowledge, except as provided in Schedule 3.1.10, there are no uncured
defaults by Seller or any other party under any of the Property Leases or Space
Leases.
3.1.11    Employees; Union. All employees employed in connection with the Hotel
are employees of the Seller. There is no collective bargaining agreement or
other union agreement currently in existence or that has been proposed or is
being negotiated with respect to the employees and no effort currently exists to
organize any of the employees into a bargaining unit.
3.1.12    Financial Statements. All of the financial statements provided by
Seller to Purchaser with respect to the Property are correct and complete copies
thereof and are the same financial statements that Seller uses for its own
purposes with respect to the Property.
3.1.13    Management; Franchise. There are no contracts or other agreements for
the management, leasing, franchising or branding of the Property or any portion
thereof except for those which shall be terminated at or prior to Closing (and
excluding the Management Agreement).
3.1.14    Taxes. (a) Seller has paid all hotel occupancy, sales, use and other
taxes and assessments with respect to the Property that are due and payable as
of the date hereof (other than the amounts shown on Schedule 3.1.14, which shall
be paid by Seller at or prior to Closing); (b) to Seller’s knowledge, Seller has
not received any written notice for an audit of any taxes which has not been
resolved or completed; and (c) Seller is not currently contesting, protesting or
appealing any taxes assessed on or against the Property.
3.1.15    Ownership. Seller has good title to the Personalty, which shall be
free and clear of all liens and encumbrances as of the Closing Date other than
any applicable Permitted Exceptions and Equipment Leases disclosed to Purchaser
prior to the expiration of the Inspection Period.

3.2    Survival. Seller’s representations and warranties set forth in this
Agreement shall survive the Closing for a period (the “Survival Period”) of nine
(9) months and Purchaser shall

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provide Seller with notice of any claims on Seller’s representations and
warranties within said Survival Period or the same shall be forever barred and
waived.

3.3    Seller’s Indemnity. Seller shall indemnify and hold Purchaser harmless
for, from and against any and all claims, damages, demands, causes of action,
liabilities, lawsuits, judgments, losses, costs and expenses (including, but not
limited to, attorneys' fees) (collectively, the “Claims”) incurred by Purchaser
by reason of or arising out of or related to the failure of Seller’s
representations and warranties set forth in Section 3.1 to be true and correct
in all material respects as of the Effective Date and, subject to Section 3.4
hereof, as of the Closing Date except to the extent such Claims arise as a
result of Purchaser’s negligence or misconduct. Any action brought by Purchaser
in connection with such indemnity shall be commenced during the Survival Period
or shall be forever barred and waived. Further, Seller shall indemnify and hold
Purchaser harmless for, from and against any and all Claims incurred by
Purchaser by reason of or arising out of or related to (i) liabilities for
damages to third parties that are based upon matters relating to the use,
operation, ownership, maintenance or construction of the Property prior to the
Closing Date (excluding (A) matters related to the physical condition of the
Property not causing death or injury to third parties and for which Seller is
expressly released under this Agreement and (B) liabilities for which Purchaser
receives a credit at the Closing), (ii) the Existing Litigation and (iii)
liabilities under the Property Leases for common area maintenance charges
accruing on or before May 31, 2023, which indemnity shall be without limitation
as to time and which indemnity shall not be subject to the limitations on
Seller’s liability (i.e., floor, cap, etc.) set forth in Section 12.3 hereof.
All indemnification obligations of Seller hereunder shall survive the Closing.

3.4    Matters Pertaining to Representations and Warranties. As used throughout
this Agreement, the phrase “to Seller’s knowledge” or phrases of similar import
shall mean the actual, not constructive or imputed, knowledge of Lawrence D.
Bain and/or Greg Hanss (collectively, the “Knowledge Parties”) without any
obligation on their part to make any independent investigation of the matters
being represented and warranted, or to make any inquiry of any other persons, or
to search or examine any files, records, books or correspondence (except that
Seller agrees that the Knowledge Parties shall review the representations and
warranties with Matthew Hart prior to the Effective Date). The Knowledge Parties
shall have no personal liability for a breach of a representation or warranty
set forth in this Agreement. To the extent any inaccuracy in a representation
and warranty of Seller in this Agreement is revealed in any of the documents or
information provided or made available to Purchaser or otherwise obtained by
Purchaser no later than two (2) business days prior to the end of the Inspection
Period, such representation and warranty shall be deemed modified to reflect
such inaccuracy. Further, to the extent Purchaser discovers prior to the end of
the Inspection Period any inaccuracy in a representation and warranty of Seller
in this Agreement and Purchaser does not terminate this Agreement as provided in
Section 2.7 of this Agreement, such representation and warranty shall be deemed
modified to reflect such inaccuracy and Purchaser shall so notify Seller. In
addition, to the extent Purchaser discovers prior to the Closing any inaccuracy
in a representation and warranty of Seller in this Agreement and the Closing
occurs, such representation and warranty shall be deemed modified to reflect
such inaccuracy and Purchaser shall so notify Seller. The amendment, expiration,
termination, renewal or replacement of any Contract or Booking, or the

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entering into of any new such agreement in compliance with the terms of this
Agreement, shall not be deemed to render any representation or warranty of
Seller untrue.
If Seller becomes aware of any act or circumstance which would materially and
adversely change or render materially and adversely incorrect any representation
or warranty made by Seller in Section 3.1, whether as of the date given or at
any time thereafter through the Closing Date, Seller will give prompt written
notice of such material change to Purchaser. Upon receipt by Purchaser of
Seller’s notice of such material change or upon Purchaser’s discovery of a
material change in any such representation or warranty prior to the Closing,
Purchaser may, as Purchaser’s sole and exclusive remedy, either (i) terminate
this Agreement within five (5) days of receipt of Seller’s notice and receive a
return of the Deposit and, if such change arises from a Seller default under
this Agreement, reimbursement of Purchaser’s actual third-party costs incurred
in connection with the transaction contemplated by this Agreement but in any
event not to exceed One Hundred Fifty Thousand and 00/100 Dollars ($150,000.00)
(“Purchaser’s Costs”), or (ii) waive the breached representation or warranty and
proceed to the Closing, and Seller shall have no further obligation or liability
to Purchaser with respect thereto. In the event Purchaser notifies Seller of its
election to terminate this Agreement, Seller shall have the right, within five
(5) days of receipt of Purchaser’s election, to remedy the change, and if Seller
remedies such change prior to or at the Closing to Purchaser’s satisfaction, in
its reasonable discretion, Purchaser’s election to terminate will be of no force
or effect. Seller’s failure to respond within said five (5) day period shall be
conclusively deemed to constitute Seller’s election not to remedy such change,
in which event Purchaser’s election to terminate this Agreement shall stand.
Notwithstanding anything to the contrary herein, in no event shall Seller be
liable to Purchaser for, or be deemed to be in default hereunder by reason of
any breach of any representation or warranty which results from any change that
both (i) occurs between the Effective Date and the Closing Date and (ii) is
expressly permitted under the terms of this Agreement or is beyond the
reasonable control of Seller to prevent; provided, however, that Purchaser shall
have the termination rights described above. If, despite the changes described
in any such Seller notice, Purchaser elects to waive the breached representation
or warranty and proceed with the Closing, Seller’s representations and
warranties set forth in this Agreement shall be deemed to have been modified by
all statements made in such notice(s). In addition, if Purchaser is aware of any
breach of Seller’s representations and warranties herein but nonetheless
consummates the purchase of the Property, such representations and warranties
shall be deemed to have been modified herein to reflect Purchaser’s awareness,
and Purchaser shall have no claim or right against Seller in connection
therewith.

4.    COVENANTS.

4.1    Seller’s Covenants.
4.1.1    Maintenance of Property. From and after the Effective Date through the
Closing, Seller shall use commercially reasonable efforts to operate and manage
the Real Property in the ordinary course of business and in a manner
substantially consistent with the way the Real Property is being operated and
managed as of the Effective Date, including maintaining in good standing and/or
renewing the Permits, provided, however, that Seller shall not have any

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obligation by reason of this Section 4.1 to make any capital improvements to the
Real Property. Seller shall maintain Supplies, F&B, Retail Merchandise, and
other Personalty reasonably sufficient for the operation of the Property in
accordance with its current standard of operation, and resupply, substitute or
replace any of such items as may be depleted in the ordinary course of business.
4.1.2    Booking of Business. Seller shall continue to market the rooms and
other facilities within the Property and make and accept commercially reasonable
Bookings for the Real Property in the ordinary course, subject to the terms of
Section 4.2.4 below.
4.1.3    Agreements. From and after the Effective Date, Seller, and/or Seller’s
agent, as the case may be, shall not be permitted to enter into new Material
Contracts and Equipment Leases or any Space Leases, and to terminate or modify
existing Material Contracts and Equipment Leases and/or any Space Leases,
without first obtaining Purchaser’s prior consent (not to be unreasonably
withheld, conditioned or delayed). Between the expiration of the Inspection
Period and the Closing Date, Seller, and/or Seller’s agent, as the case may be,
shall not be permitted to enter into any new Contracts, Equipment Leases or
Space Leases, and to terminate or modify any existing Contracts, Equipment
Leases and/or Space Leases, without first obtaining Purchaser’s prior consent
(not to be unreasonably withheld, conditioned or delayed). Promptly following
the execution of any Contract, Equipment Lease and/or Space Lease from and after
the Effective Date, Seller shall provide Purchaser with a correct and complete
copy thereof. Seller will terminate as of the Closing Date any property
management agreement in effect with respect to the Real Property.
4.1.4    Negative Covenants. From the Effective Date until the Closing Date,
Seller shall not take any of the following actions without the prior express
written consent of Purchaser, which consent shall not be unreasonably withheld,
conditioned or delayed: (a) make or permit to be made any material alterations
to or upon the Real Property or any part of the Real Property except as provided
for in any of the Permitted Exceptions; (b) grant any liens or encumbrances upon
the Property that will not be discharged upon the Closing; (c) remove or permit
the removal from the Real Property of any fixtures, mechanical equipment, or any
other item included in the Real Property except in the ordinary course of
business (provided the same are replaced with items of substantially similar
value), as necessary for repairs or replacements of worn out or obsolete items
or as otherwise provided for in any of the Permitted Exceptions; or (d) offer
for sale, market, transfer, or otherwise sell any portion of the Property except
as permitted pursuant to Section 4.1.1 above.
4.1.5    Insurance. Seller shall maintain through the Closing Date, insurance
policies equivalent in all material respects to those maintained as of the
Effective Date with respect to the Property.
4.1.6    Performance of Obligations. Seller shall continue to perform and comply
with its obligations under the Contracts, Equipment Leases and Property Leases
pursuant to the terms thereof. Seller shall not amend or otherwise modify the
Property Leases, or waive any material obligations of the applicable landlord
and/or sublandlord thereunder. From and after the Effective Date Seller shall
use commercially reasonable efforts to obtain (i) signed

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estoppels from the counterparties to the Property Leases (including the
counterparties to any prime leases related thereto) in substantially the forms
attached hereto as Exhibit K, revealing no default thereunder and otherwise
consistent in all material respects with the applicable terms of this Agreement
(the “Estoppels”) and (ii) any consents required by the terms of the Property
Leases (and any prime leases related thereto).
4.1.7    SNDA. Seller shall use commercially reasonable efforts to obtain a
subordination, non-disturbance and attornment agreement in substantially the
form attached hereto as Exhibit N (each an “SNDA”) from (i) the lender (the
“Orchards Sublease Lender”) secured by Orchards Leasehold Property (such SNDA,
the “Orchards Sublease SNDA”) and (ii) the lender (the “L’Auberge Parking Lease
Lender”) secured by the L’Auberge Leasehold Property (such SNDA, the “L’Auberge
Parking Lease SNDA”). In the event that the Orchards Sublease Lender has not
executed, acknowledged and delivered the Orchards Sublease SNDA to Seller or
Purchaser on or before 5:00 p.m. Arizona time on March 1, 2017, then the Deposit
shall be returned to Purchaser, this Agreement shall thereupon automatically
terminate and except as expressly provided for in this Agreement, neither Seller
nor Purchaser shall have any further liability or obligation to the other under
this Agreement.

4.2    Purchaser’s Covenants.
4.2.1    Employees. Purchaser acknowledges that all employees at the facilities
operating upon the Real Property are employed by Seller. Except to the extent
Seller may decide to terminate an employee prior to the Closing Date, Seller
shall maintain the employment of all of its employees up through the Closing
Date. No later than three (3) days prior to Closing, Manager shall offer
employment (subject to the Closing, and to commence immediately thereupon) to
any such employees necessary so as not to trigger the application of the Worker
Adjustment and Retraining Notification Act or similar state or local laws or
regulations (collectively, the “WARN Act”) as a result of the Closing or within
120 days following the Closing. Manager’s employment terms for all employees
shall comply with all governmental regulations relating to such employees and
shall be sufficient to prevent Seller from incurring any loss or liability under
the WARN Act. If, following the Closing, Manager desires to terminate the
employment of or lay off any employee, then Manager shall be solely responsible
for complying with all applicable provisions of federal, state and municipal
laws and regulations relating to such action, including without limitation any
applicable provisions of the WARN Act. The provisions of this Section 4.2.1
shall survive the Closing.
4.2.2    Intentionally Deleted.
4.2.3    Intentionally Deleted.
4.2.4    Pre-Closing Reservations and Other Revenue Producing Agreements.
Purchaser agrees to the following:
(A)    Purchaser will honor, for its account, the terms and rates of all
Bookings confirmed by Seller for dates after the Closing Date entered into in
accordance with the terms of this Agreement, provided that at or prior to
Closing Seller provides to Purchaser the

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terms and conditions of all such Bookings. Purchaser authorizes Seller to
continue to accept reservations and enter into Bookings for periods after the
Closing Date in the ordinary course of Seller’s business. Purchaser recognizes
that such reservations may include discounts or other benefits, including,
without limitation, special promotions or benefits, frequent traveler awards
programs, vacation discount programs, corporate, government or group discounts,
weekend discounts or requirements that ancillary food, beverage or other
benefits be delivered by Purchaser to the guest(s) holding such reservations.
Purchaser agrees to honor all such reservations in accordance with their terms,
provided that at or prior to Closing Seller provides to Purchaser the terms and
conditions of all such reservations. The aggregate amount of any deposits
received by Seller with respect to Bookings for dates after the Closing Date
(whether paid in cash or by credit card) as a down payment for any Bookings,
including without limitation, all amounts on account of the period following
from and after the Closing Date from advance payments (e.g. Living Social,
Groupon, and similar programs) (“Advance Deposits”) will be retained by Seller,
and Purchaser shall receive a credit at the Closing on the Closing Statement in
an amount equal to the Advance Deposits.
(B)    Purchaser agrees that Seller cannot make and has not made any
representation or warranty that any party holding a room reservation or
agreement for any hotel facilities or services will utilize such reservation or
honor such agreement. Purchaser, by the execution hereof, assumes the risk of
non-utilization of reservations and non-performance of such agreements for the
period following the Closing Date.
(C)    Purchaser agrees to indemnify, defend, and hold Seller harmless for, from
and against any claim that may be asserted against Seller alleging that
Purchaser has failed to honor any Bookings entered into in accordance with the
terms of this Agreement for any period following the Closing Date, provided that
at or prior to Closing Seller provides to Purchaser the terms and conditions of
all such Bookings.
4.2.5    Post-Closing Indemnification. Purchaser shall indemnify and hold Seller
harmless for, from and against any and all Claims incurred by Seller by reason
of or arising out of or related to liabilities for damages to third parties that
are based upon matters relating to the use, operation, ownership, maintenance or
construction of the Property from and after the Closing Date (excluding (A)
matters which Purchaser is expressly not required to indemnify Seller under this
Agreement or under the Management Agreement, (B) matters arising due to a breach
or default by Manager under the Management Agreement and (C) the Existing
Litigation).

5.    REPRESENTATIONS AND WARRANTIES OF PURCHASER.
Representations and Warranties. Purchaser represents and warrants to Seller as
follows as of the date hereof:

5.1    Authority. Purchaser is a limited liability company duly formed, validly
existing and in good standing under the laws of the State of Delaware and will
be authorized as of Closing to do business in the State of Arizona, and
Purchaser has all requisite limited liability company power and authority to
enter into this Agreement and all documents now or hereafter to

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be executed and delivered by Purchaser pursuant to this Agreement and to perform
its obligations under this Agreement and under such documents. Purchaser has
obtained any consents necessary for it to enter into this Agreement.

5.2    No Violation. The execution, delivery and performance by Purchaser of
this Agreement will not result in a violation by Purchaser of (a) any judgment
or order entered by any court or governmental body, (b) any governmental
statute, ordinance, code, rule or regulation, or (c) any contract or agreement
or indenture.

5.3    Bankruptcy. Purchaser has not (a) commenced a voluntary case with respect
to it or its assets, 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, (b) 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 proceeding, to hold,
administer and/or liquidate all or substantially all of its assets, or (c) made
a general assignment for the benefit of creditors.

5.4    OFAC. To Purchaser’s actual knowledge, Purchaser (a) is not in violation
of any Anti-Terrorism Law, (b) is not a Prohibited Person, or (c) is not and
will not knowingly (i) conduct any business or engage in any transaction or
dealing with any Prohibited Person, including the making or receiving any
contribution of funds, goods or services to or for the benefit of any Prohibited
Person, (ii) deal in, or otherwise engage in any transaction relating to, any
property or interests in property blocked pursuant to Executive Order No. 13224;
or (iii) engage in or conspire to engage in any transaction that evades or
avoids, or has the purpose or intent of evading or avoiding, or attempts to
violate, any of the prohibitions set forth in any Anti-Terrorism Law. After the
Closing Date, Purchaser agrees to cooperate with Seller in providing such
additional information and documentation on Purchaser’s legal or beneficial
ownership, policies, procedures and sources of funds as Seller reasonably deems
necessary or prudent to enable it to comply with anti-money laundering laws as
now in existence or hereafter amended.

5.5    Litigation. There are no pending or, to Purchaser’s knowledge, overtly
threatened actions, suits or proceedings against or effecting Purchaser, or
arising out of this Agreement or the transactions contemplated by this Agreement
that could materially interfere with the consummation by Purchaser of the
transaction contemplated by this Agreement.

6.    AS IS PURCHASE.
EXCEPT FOR SUCH SELLER REPRESENTATIONS AND WARRANTIES AS ARE EXPRESSLY SET FORTH
IN THIS AGREEMENT OR ANY OTHER DOCUMENTS DELIVERED AT THE CLOSING HEREUNDER,
PURCHASER IS ACQUIRING THE PROPERTY IN ITS “AS IS” CONDITION, WITH ALL FAULTS,
AND WITHOUT ANY WARRANTY, EXPRESS, IMPLIED OR STATUTORY, ALL OF WHICH ARE HEREBY
WAIVED AND DISCLAIMED BY PURCHASER. OTHER THAN AS EXPRESSLY SET FORTH IN THIS
AGREEMENT OR IN ANY OTHER DOCUMENTS DELIVERED AT THE CLOSING HEREUNDER, NO
SELLER RELATED PARTIES HAS MADE ANY REPRESENTATIONS OR WARRANTIES, DIRECT OR
INDIRECT, ORAL OR WRITTEN,

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EXPRESS OR IMPLIED, TO PURCHASER OR ANY AGENTS, REPRESENTATIVES, CONTRACTORS OR
EMPLOYEES OF PURCHASER WITH RESPECT TO THE CONDITION OR CONSTRUCTION OF THE
PROPERTY, ITS FITNESS FOR ANY PARTICULAR PURPOSE, ITS MERCHANTABILITY, ITS
COMPLIANCE WITH ANY LAWS, ZONING REGULATIONS, OR OTHERWISE AND PURCHASER IS NOT
AWARE OF AND DOES NOT RELY UPON ANY SUCH REPRESENTATION. PURCHASER ACKNOWLEDGES
THAT THE INSPECTION PERIOD WILL HAVE AFFORDED PURCHASER THE OPPORTUNITY TO MAKE
SUCH INSPECTIONS (OR HAVE SUCH INSPECTIONS MADE BY CONSULTANTS) AS IT DESIRES OF
THE PROPERTY AND ALL FACTS RELEVANT TO ITS USE, INCLUDING, WITHOUT LIMITATION,
THE INTERIOR, EXTERIOR, STRUCTURE, AND CONSTRUCTION OF ALL IMPROVEMENTS, IF ANY,
AND THE CONDITION OF SOILS AND SUBSURFACES. EXCEPT FOR SUCH SELLER
REPRESENTATIONS AND WARRANTIES AS ARE EXPRESSLY SET FORTH IN THIS AGREEMENT OR
ANY OTHER DOCUMENTS DELIVERED AT THE CLOSING HEREUNDER, SELLER AND EACH PERSON
ACTING OR PURPORTING TO ACT ON BEHALF OF SELLER HAS NOT, DOES NOT AND WILL NOT
MAKE ANY REPRESENTATIONS OR WARRANTIES WITH REGARD TO (A) COMPLIANCE WITH ANY
ENVIRONMENTAL LAWS OR LAND USE LAWS, RULES, REGULATIONS, ORDERS, OR REQUIREMENTS
INCLUDING, BUT NOT LIMITED TO, THOSE PERTAINING TO THE HANDLING, GENERATING,
TREATING, STORING OR DISPOSING OF ANY HAZARDOUS SUBSTANCES OR (B) ABSENCE OF ANY
CLAIMS, WHETHER ASSERTED OR UNASSERTED, WITH RESPECT TO COMPLIANCE WITH
ENVIRONMENTAL LAWS OR ENVIRONMENTAL CONDITIONS AT THE PROPERTY. EXCEPT WITH
RESPECT TO A BREACH BY SELLER OF ANY REPRESENTATION OR WARRANTY EXPRESSLY
CONTAINED IN THIS AGREEMENT AND MATTERS FOR WHICH SELLER INDEMNIFIES PURCHASER
IN THIS AGREEMENT (AND SUBJECT TO THE TERMS OF THIS AGREEMENT), PURCHASER HEREBY
WAIVES, RELEASES AND FOREVER DISCHARGES THE SELLER RELATED PARTIES OF AND FROM
ANY AND ALL CLAIMS, ACTIONS, CAUSES OF ACTION, DEMANDS, RIGHTS, DAMAGES,
LIABILITIES AND COSTS WHATSOEVER, DIRECT OR INDIRECT, KNOWN OR UNKNOWN, WHICH
PURCHASER NOW HAS OR WHICH MAY ARISE IN THE FUTURE AGAINST ANY OF THE SELLER
RELATED PARTIES OR ANY SUCH OTHER PARTIES RELATED IN ANY WAY TO THE PROPERTY,
INCLUDING, WITHOUT LIMITATION, ITS CONSTRUCTION, VALUE, COMPLIANCE WITH LAWS,
ZONING REGULATIONS, COMPLIANCE WITH ENVIRONMENTAL LAWS OR THE PRESENCE OF
HAZARDOUS SUBSTANCES OR IN ANY WAY RELATING TO THE PHYSICAL CONDITION OF THE
PROPERTY. IN FURTHERANCE OF THE FOREGOING SENTENCE AND NOT IN LIMITATION
THEREOF, EXCEPT AS OTHERWISE PERMITTED BY THE TERMS OF THIS AGREEMENT, PURCHASER
HEREBY AGREES NOT TO ASSERT ANY CLAIM FOR CONTRIBUTION, COST, RECOVERY OR
OTHERWISE AGAINST THE SELLER RELATED PARTIES (WHETHER ARISING UNDER STATUTORY
LAW, COMMON LAW, FEDERAL LAW, STATE LAW OR OTHERWISE) RELATING DIRECTLY OR
INDIRECTLY TO THE PHYSICAL CONDITION OF THE PROPERTY, INCLUDING, WITHOUT
LIMITATION, THE EXISTENCE OF OIL, LEAD PAINT, ASBESTOS, OR HAZARDOUS MATERIALS
OR SUBSTANCES ON, OR THE ENVIRONMENTAL CONDITION OF, THE

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PROPERTY, WHETHER KNOWN OR UNKNOWN. NOTWITHSTANDING THE FOREGOING, PURCHASER’S
RELEASE OF SELLER AND THE SELLER RELATED PARTIES IN THIS SECTION 6 DOES NOT
APPLY TO ANY CONTRIBUTION CLAIMS WHICH MAY ARISE FROM A THIRD PARTY CLAIM
ASSERTED AGAINST PURCHASER AFTER CLOSING DUE TO AN ACT OF SELLER OCCURRING PRIOR
TO CLOSING. THE PROVISIONS OF THIS SECTION 6 SHALL SURVIVE THE CLOSING OR
TERMINATION OF THIS AGREEMENT.

7.    PURCHASER’S INDUCEMENTS TO SELLER.

7.1    Purchaser’s Acknowledgements. Purchaser acknowledges and agrees that,
except as expressly provided in this Agreement, having been given the
opportunity to inspect the Property, Purchaser is relying solely on its own
investigation of the Property and not, except as otherwise expressly provided in
this Agreement, on any information provided or to be provided by Seller.
Purchaser acknowledges, represents and warrants that Purchaser is an experienced
and sophisticated hotel and resort owner and investor and is not in a disparate
bargaining position with respect to Seller in connection with the transaction
contemplated by this Agreement, that Purchaser freely and fairly agreed to this
acknowledgment as part of the negotiations for the transaction contemplated by
this Agreement, that Purchaser is represented by legal counsel in connection
with this transaction and that Purchaser has conferred with such legal counsel
concerning this waiver. The provisions of this Section 7.1 shall survive Closing
or termination of this Agreement.

7.2    Confidentiality.
7.2.1    Purchaser’s Confidentiality. Purchaser expressly acknowledges and
agrees to hold in confidence the transactions contemplated by this Agreement,
the terms, conditions and negotiations concerning the same, and any and all
information regarding the Seller, the Property or the operation thereof provided
by Seller or obtained by Purchaser that are not otherwise known by or readily
available to the public and not to disclose such non-public information except
to its legal counsel, surveyor, broker, accountants, consultants, officers,
directors, shareholders, partners, members, prospective partners and members and
their counsel, lenders and prospective lenders and their respective counsel, and
the Title Company (collectively, the “Purchaser Authorized Representatives”),
and except and only to the extent that such disclosure may be necessary in
Purchaser’s sole discretion for Purchaser’s performance under this Agreement, or
otherwise as may be required by law or court order, and further except in
connection with any litigation between Purchaser and Seller. Purchaser shall
inform its Purchaser Authorized Representatives of the confidentiality
provisions of this Agreement and instruct same to comply herewith. Purchaser
further acknowledges and agrees that, unless and until the Closing occurs,
Purchaser shall not disclose any information and materials obtained by Purchaser
in connection with the Property that are not otherwise known by or readily
available to the public to any third persons (other than to its Purchaser
Authorized Representatives) without the prior written consent of Seller, which
consent shall not be unreasonably withheld, delayed or conditioned. If the
transaction contemplated by this Agreement does not occur for any reason
whatsoever, Purchaser shall, promptly upon receipt of written request from
Seller, return to Seller, and shall instruct its Purchaser Authorized
Representatives to return to Seller, all copies

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and originals of all documents and information provided to Purchaser by Seller.
Without limiting the foregoing, Purchaser expressly acknowledges the
confidential nature of the proposed transaction described in this Agreement and
the potential adverse consequences to Seller and the operational performance of
the resort and the motel operated by Seller on the Real Property if this
Agreement is not held in the strictest confidence, and Purchaser shall not
expressly and intentionally disclose the Agreement to any employee at the Real
Property except in connection with offers of employment from and after Closing.
Prior to the Closing, Purchaser shall not, without Seller’s prior, written
consent, which consent may be granted or withheld in Seller’s sole and absolute
discretion, solicit, contact, recruit, hire, discuss potential employment with
or otherwise communicate with any past or present employees or consultants at
the resort or the motel operated by Seller at the Real Property; provided,
however, that during the Inspection Period Purchaser may communicate with the
General Manager (Managing Director), Director of Sales, Revenue Manager,
Director of Engineering, and Food and Beverage Director for the purpose of
conducting Purchaser’s due diligence inspections. With respect to the employees
set forth in the preceding sentence for which Purchaser shall have the right to
contact from and after the Effective Date without Seller’s prior written
consent, Purchaser shall notify Seller of any intended communications with the
foregoing employees and Seller (or its representative) shall be provided an
opportunity to participate in any such meetings or communications. In the event
this Agreement is terminated for any reason, Purchaser agrees not to knowingly
and directly solicit or recruit any current employee of the resort or the motel
operated by Seller at the Real Property for a period of one (1) year following
the termination of this Agreement. Except as to information regarding the
Property, the provisions of this Section 7.2.1 shall survive Closing or
termination of this Agreement.
7.2.2    Seller’s Confidentiality. Seller expressly acknowledges and agrees to
hold in confidence the transactions contemplated by this Agreement, the terms,
conditions and negotiations concerning the same, and any and all information
regarding the Purchaser that is not otherwise known by or readily available to
the public and not to disclose such non-public information except to its legal
counsel, surveyor, broker, accountants, consultants, officers, directors,
shareholders, lenders, investors, partners, members, prospective partners and
members and their counsel, lenders and prospective lenders and their respective
counsel, and the Title Company (collectively, the “Seller Authorized
Representatives”), and except and only to the extent that such disclosure may be
necessary in Seller’s sole discretion for Seller’s performance under this
Agreement, or otherwise as may be required by law or court order, and further
except in connection with any litigation between Purchaser and Seller. Seller
shall inform its Seller Authorized Representatives of the confidentiality
provisions of this Agreement and instruct same to comply herewith. Seller
further acknowledges and agrees that, unless and until the Closing occurs,
Seller shall not disclose any information and materials obtained by Seller in
connection with the Property that are not otherwise known by or readily
available to the public to any third persons (other than to its Seller
Authorized Representatives) without the prior written consent of Purchaser,
which consent shall not be unreasonably withheld, delayed or conditioned.
7.2.3    Disclosure. Nothing contained in this Section 7.2 shall preclude or
limit either party from disclosing or accessing any information otherwise deemed
confidential under this Section 7.2 in connection with such party’s enforcement
of its rights following a

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disagreement or dispute under this Agreement or in response to lawful process or
subpoena or other valid or enforceable order of a court of competent
jurisdiction or with respect to any filings with governmental authorities,
including without limitation, any and all filings required by applicable State
or Federal securities laws required by reason of the transactions provided for
in this Agreement. The provisions of this Section 7.2 shall survive any
termination of this Agreement.

8.    CONDITIONS TO CLOSING.

8.1    Purchaser’s Conditions. Purchaser’s obligation to consummate Closing
pursuant to this Agreement is conditioned upon the satisfaction (or waiver by
Purchaser) of the following conditions on and as of the Closing Date:
8.1.1    Seller shall have performed and satisfied its obligations under this
Agreement in all material respects, including Seller’s obligations under Section
9.1 hereof.
8.1.2    The representations and warranties of Seller set forth in Section 3.1
shall be true and correct in all material respects as of the Closing as if made
on the Closing Date, except as otherwise set forth in the second paragraph of
Section 3.4.
8.1.3    The Escrow Agent shall be committed, subject only to the payment by
Purchaser of the costs and fees related thereto and satisfaction of Purchaser’s
other obligations, to issue an owner’s and, in the case of the Leasehold
Property, a leasehold title insurance policy consistent with the provisions of
Section 2.9.
8.1.4    Receipt of the Estoppels and, if required under the applicable Property
Lease, the consent of the landlord and/or sublandlord under each of the Property
Leases constituting the Leasehold Property and the prime lease related thereto
shall have been obtained.
8.1.5    The Orchards Sublease Lender and the sublandlord under each of the
Property Leases constituting the Orchards Leasehold Property, shall have
executed, acknowledged and delivered the Orchards Sublease SNDA.

8.2    Seller’s Conditions. Seller’s obligation to consummate Closing pursuant
to this Agreement is conditioned upon the satisfaction (or waiver by Seller) of
the following conditions on and as of the Closing Date:
8.2.1    Purchaser shall have performed and satisfied its obligations under this
Agreement in all material respects, including Purchaser’s obligations under
Section 9.2 hereof.
8.2.2    The representations and warranties of Purchaser shall be true and
correct in all material respects as of the Closing.
8.2.3    The consent of the landlord under each of the Property Leases
constituting the Leasehold Property shall have been obtained, if such consent is
required under the applicable Property Lease.

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8.2.4    The Orchards Sublease Lender and the sublandlord under each of the
Property Leases constituting the Orchards Leasehold Property, shall have
executed, acknowledged and delivered the Orchards Sublease SNDA.

8.3    Failure of Condition. In the event that any condition set forth in
Sections 8.1 or 8.2 is not satisfied, or waived by Purchaser (in the case of the
conditions set forth in Section 8.1) or by Seller (in the case of the conditions
set forth in Section 8.2), on or as of the Closing Date, and the other party is
not otherwise in default hereunder, the sole right of Purchaser (in the case of
the conditions set forth in Section 8.1) and Seller (in the case of the
conditions set forth in Section 8.2) shall be (a) to terminate this Agreement by
delivering written notice of such termination to the other party on or prior to
the Closing Date, in which event the Deposit shall be returned to Purchaser and
the parties shall have no further obligations or liabilities to the other
hereunder, except as expressly provided for in this Agreement or (b) waive the
satisfaction of such condition or conditions and proceed to Closing in
accordance with and subject to the terms of this Agreement; provided, however,
that the foregoing shall not relieve either party of any liability to the other
for the breach of any representation or warranty set forth in this Agreement if
such party has no knowledge of such breach and elects to proceed to Closing.

9.    CLOSING DELIVERIES.

9.1    Seller’s Closing Deliveries. At Closing, Seller shall deliver, or cause
to be delivered, to Purchaser the following with respect to the Property:
9.1.1    A Special Warranty Deed in substantially the form attached hereto as
Exhibit D, conveying the L’Auberge Newco Property to Purchaser (the “L’Auberge
Newco Deed”), executed and acknowledged by L’Auberge Newco;
9.1.2    A Special Warranty Deed in substantially the form attached hereto as
Exhibit D, conveying the Orchards Newco Property to Purchaser (the “Orchards
Newco Deed” and, together with the L’Auberge Newco Deed, the “Deeds”), executed
and acknowledged by Orchards Newco;
9.1.3    An original Assignment and Assumption of Lease for each Property Lease
constituting the Leasehold Property (collectively, the “Assignments of Lease”),
each in substantially the form attached hereto as Exhibit E, each executed and
acknowledged by Seller and assigning to Purchaser all of Seller’s right, title
and interest in the Leasehold Property;
9.1.4    A Blanket Conveyance, Bill of Sale and General Assignment from each
Seller for the Space Leases, FF&E, Supplies, F&B, Retail Merchandise, Books and
Records, Plans and Specifications, Contracts (except as to any such agreements
that are terminated or should be terminated pursuant to the terms of this
Agreement or that expire prior to the Closing Date), Intangibles, and other
Personalty, substantially in the form attached hereto as Exhibit F (the “Bills
of Sale”).
9.1.5    Certifications and affidavits as required by the Foreign Investors Real
Property Tax Act, substantially in the form attached hereto as Exhibit G.

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9.1.6    The Management Agreement, executed by Manager.
9.1.7    To the extent available for delivery by Seller, a set of all guest
registration cards, guest transcripts, guest histories, sales files, and all
other available guest information.
9.1.8    To the extent available for delivery by Seller, a list of all Bookings.
9.1.9    All books, records, operating reports, files and other materials
(including but not limited to keys, security cards, access codes, security
deposit boxes, etc.) in the possession or control of Seller which are necessary
in Seller’s reasonable discretion to maintain continuity of operation of the
Property, provided Purchaser shall fully cooperate with Seller’s requests to
obtain copies of same following the Closing at no cost to Seller, if required
for purposes of any proceeding, action or federal, state or local tax
investigation or audit.
9.1.10    Written notice executed by Seller notifying all interested parties as
reasonably agreed upon by Purchaser and Seller, in a form to be reasonably
approved by Purchaser and Seller, that the Property has been conveyed to
Purchaser and directing that all payments (for periods occurring subsequent to
the Closing Date), inquiries and the like be forwarded to Purchaser at the
address to be provided by Purchaser.
9.1.11    A closing and proration statement agreed to by the parties which
reflects all adjustments to the Purchase Price contemplated by this Agreement
(the “Closing Statement”).
9.1.12    Any transfer documents or certificates required by any applicable
governing body or law to complete this transaction, including, without
limitation, an IRS 1099S form and Arizona Department of Revenue Affidavit of
Property Value.
9.1.13    The Seller’s Affidavits, together with any additional affidavits
and/or escrow of funds required by the Title Company to issue the owner’s and,
in the case of the Leasehold Property, leasehold title insurance policies free
and clear of the Mandatory Cure Items.
9.1.14    All other documents reasonably required to effectuate this Agreement
and the transaction contemplated by this Agreement, including but not limited to
any documents required to transfer to Purchaser and recognize Purchaser’s right,
title and interest in and to (i) any water right claims (including related
Statements of Claimant) held by or on behalf of Seller with respect to the Real
Property and (ii) the Intangibles.
9.1.15    A certificate executed by Seller, dated as of the Closing Date,
stating that the representations and warranties of Seller contained in this
Agreement are true and correct in all material respects as of the Closing Date
(with appropriate modifications as are permitted under Section 3.4) or noting
any exceptions thereto.

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9.1.16    A certificate or registration of title for any owned vehicle, duly
executed by Seller, conveying such vehicle to Purchaser.
9.1.17    The License Agreement, executed by Seller and any affiliate of Seller
having an interest in the logo and marks attached as Schedule 1.3(i).
9.1.18    The Parent Agreement, executed by Parent.
9.1.19    The Orchards Sublease SNDA, executed and acknowledged by the Orchards
Sublease Lender and the applicable sublandlord under the Property Leases
comprising the Orchards Leasehold Property; and
9.1.20    If obtained by Seller prior to the Closing, the L’Auberge Parking
Lease SNDA, executed and acknowledged by the L’Auberge Parking Lease Lender and
the applicable landlord under the Property Lease comprising the L’Auberge
Leasehold Property; provided, however, that Seller’s delivery of the L’Auberge
Parking Lease SNDA shall not serve to condition Purchaser’s obligation to
consummate Closing pursuant to this Agreement.

9.2    Purchaser’s Closing Deliveries. At Closing, Purchaser shall deliver, or
cause to be delivered, to Seller the following:
9.2.1    The Purchase Price, adjusted in accordance with the provisions of
Sections 2 and 10 hereof.
9.2.2    Counterpart originals of the Assignments of Lease.
9.2.3    A counterpart original of the Bills of Sale.
9.2.4    The Closing Statement.
9.2.5    Any transfer documents or certificates required by any applicable
governing body or law to complete this transaction, including, without
limitation, an IRS 1099S form and Arizona Department of Revenue Affidavit of
Property Value.
9.2.6    A counterpart of the Management Agreement.
9.2.7    All other documents reasonably required to effectuate this Agreement
and the transaction contemplated by this Agreement.
9.2.8    A certificate executed by Purchaser, dated as of the Closing Date,
stating that the representations and warranties of Purchaser contained in this
Agreement are true and correct in all material respects as of the Closing Date
or noting any exceptions thereto.
9.2.9    A counterpart original of the License Agreement.
9.2.10    A counterpart of the Parent Agreement, executed by Purchaser and
DRHLP.

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10.    APPORTIONMENTS; EXPENSES.

10.1    Apportionments. Except as otherwise expressly provided in this
Agreement, all income and expenses of the facilities operating on the Real
Property with respect to the period prior to the Closing Date shall be for the
account of Seller, and all income and expenses of the facilities operating on
the Real Property with respect to the period from and after the Closing Date
shall be for the account of Purchaser. The following specific apportionments
shall be made between the parties at the Closing as of 11:59 p.m. Arizona time
on the day immediately prior to the Closing Date (the “Apportionment Time”):
10.1.1    real estate taxes, personal property taxes, special assessments and
vault charges, if any, on the basis of the fiscal period for which assessed;
provided that if a tax bill for the current period has not yet been issued, the
apportionment shall be based on Seller’s estimate of such taxes based on the
assessed value of the Property for the fiscal year which is being assessed, or
the prior year’s tax bill, in either case with a re-proration subsequent to
Closing promptly after a current tax bill has been issued. Any tax refunds or
abatements in respect of periods prior to the Closing Date will belong to
Seller, and any tax refunds or abatements in respect of periods subsequent to
the Closing Date will belong to Purchaser. Purchaser shall have the right to
commence, continue and settle any proceeding to contest real estate taxes and
other assessments which include any period of time from and after the Closing
Date; provided, however, that (a) to the extent that any proceeding includes any
period of time before the Closing Date and the commencement, continuation or
settlement of such proceeding could reasonably be expected to result in an
increase in real estate taxes (including interest and penalties) and other
assessments for which Seller would be liable, Purchaser shall not commence,
continue or settle such proceeding without the prior express, written consent of
Seller, which consent may be withheld in Seller’s sole and absolute discretion;
and (b) Seller shall be entitled to that portion of any refund or tax benefit
relating to the period occurring before the Closing after payment to Purchaser
of all costs and expenses, including, without limitation, reasonable attorneys’
fees and disbursements, actually incurred by Purchaser in obtaining such refund
or in obtaining any tax benefits including benefits based on decreases in
assessed valuation;
10.1.2    water and sewer service charges and charges for gas, electricity,
telephone and all other public utilities. If there are meters measuring the
consumption of water, gas or electric current, Seller, not more than one day
prior to the Apportionment Time, if possible, shall endeavor to cause such
meters to be read, and shall pay all utility bills for which Seller is liable
upon receipt of statements therefor. Purchaser shall be responsible for causing
such utilities and services to be changed to its name effective as of the
Closing Date and shall be liable for and shall pay all utility bills for
services rendered from and after the Closing Date and Seller shall receive a
credit at Closing for all utility deposits held by any utilities on the Closing
Date that are transferred to Purchaser and provided such deposit remains on
deposit for the benefit of Purchaser;
10.1.3    amounts which have been paid or are payable under the Contracts
assigned to and assumed by Purchaser at Closing, except as otherwise set forth
in Section 10.1.7

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below, amounts which have been paid or are payable under the Property Leases,
and amounts which have been received under the Space Leases;
10.1.4    prepaid operating and advertising expenses (excluding expenses for
advertising that is aired, mailed or published on or after the Closing Date,
which shall be Purchaser’s sole expense) to the extent the item for which such
expense was incurred is transferred to Purchaser;
10.1.5    commissions of credit and referral organizations related to Bookings;
10.1.6    all other charges and fees customarily prorated and adjusted in
similar transactions. Purchaser shall receive a credit at Closing for the face
amount of any gift certificates or vouchers for free or reduced rate rooms (or
if no face amount is given an amount equal to $150 per room per night), and 50%
of the face amount of any gift certificates or vouchers for free or reduced food
and beverage or other services which have been issued but not redeemed prior to
Closing; and
10.1.7    from and after the Apportionment Time Purchaser shall pay for all work
performed under any Construction Contracts assigned to and assumed by Purchaser
at Closing, and at Closing, Seller provide to Purchaser a credit equal to the
amount of any retainage then held by or on behalf of Seller with respect to the
work to be performed under any such Construction Contract.

10.2    Deposits. All Advance Deposits and any other deposits (including any
interest thereon due the party making such deposit) from guests or others made
as security or in connection with services to be rendered from or after Closing
shall be retained by Seller and Purchaser shall receive a credit therefor at the
Closing.

10.3    Room Revenue. All revenues received or to be received from transient
guests on account of room rents for the period ending on the Apportionment Time
shall belong to Seller, and for the period beginning on the day immediately
following the Apportionment Time such revenues shall belong to Purchaser;
provided, however, that revenues received or “posted” in the normal course after
the time Seller normally closes its front desk activity for the “night” audit
for the Apportionment Time (the “Front Desk Closing Hour”) shall belong to
Purchaser. The accounts receivable of registered guests at the Property who have
not checked out and were occupying rooms as of 11:59 p.m. on the Apportionment
Time are collectively called the “Current Ledger”. The portion of the Current
Ledger that relates to the night preceding the Closing Date (the “Pre-Closing
Ledger”) shall be split 50/50 between Seller and Purchaser net of sales and
occupancy taxes (which shall be paid to Seller, who shall pay to the appropriate
taxing authority the sales and occupancy taxes assessed on the entire
Pre-Closing Ledger), and net of all credit card company charges, travel company
charges and other similar charges and commissions (which shall be paid by Seller
to the appropriate party). Following Closing (if and to the extent such amounts
are actually received by Purchaser), Purchaser shall pay over to Seller the
Seller’s share of the proceeds of the Current Ledger attributable to each
guest’s account for the period ending on the Apportionment Time.

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10.4    Accounts Receivable; Accounts Payable.
10.4.1    All accounts receivable (other than the Current Ledger) as of the
Apportionment Time shall belong to Seller. Seller shall have the right to
receive, collect, discharge and compromise all such accounts receivable.
Following the Closing, Purchaser shall promptly forward to Seller any amounts
received by Purchaser on account of such accounts receivable, subject to the
terms of this paragraph. Other than the foregoing, Purchaser shall have no
obligation with respect to any such account, and Purchaser shall not be required
to take any legal proceeding or action to effect collection on behalf of Seller.
With regard to any payment made within the 24 month period following Closing
from any person or entity who is indebted to the facilities operating on the
Real Property both with respect to accounts receivable accruing on or before the
Apportionment Time and with respect to accounts receivable accruing subsequent
to the Apportionment Time, if the periods to which such payments relate are not
specifically identified by the payor, such payment shall be applied first to the
payment in full of any amounts due to Purchaser on accounts accruing subsequent
to the Apportionment Time and then to amounts due to Seller on accounts accruing
on or before the Apportionment Time.
10.4.2    Any indebtedness, accounts payable, liabilities or obligations of any
kind or nature related to Seller or the Property for the periods prior to and
including the Apportionment Time shall be retained and paid by Seller, and
Purchaser shall not be or become liable therefor, except to the extent Purchaser
receives a credit therefor at Closing or otherwise assumes such liabilities
pursuant to this Agreement.

10.5    Other Revenue; Vending Machine Revenue. Any and all revenues earned or
derived by Seller from the operation of the facilities operating on the Real
Property or the sale of goods or services to guests, patrons, or occupants
thereof on or before the Apportionment Time, other than revenues described in
Section 10.3, but including, without limitation, revenues received by Seller
from the sale of food and beverages, if any, rental of meeting and banquet
rooms, telephone sales, pay television sales, valet and parking services,
automated teller machines, and other similar revenues, together with any sales
tax or other taxes thereon, shall belong to Seller. Vending and automated teller
machine proceeds shall be counted as close to the Front Desk Closing Hour as is
possible and the net amount thereof shall be credited to Seller at Closing.

10.6    Guests’ Property. All baggage or other property of patrons of the
Property checked or left in care of Seller shall be listed in an inventory to be
prepared in duplicate and signed by Seller’s and Purchaser’s representatives on
the Closing Date. Purchaser shall be responsible from and after the Closing Date
and will indemnify and hold Seller harmless for, from and against all claims for
all baggage and property listed in such inventory. Seller shall indemnify and
hold harmless Purchaser for, from and against claims for baggage and property
not listed in such inventory but shown to have been left in custody at the
Property prior to the Closing Date. All baggage or other property of guests
retained by Seller as security for unpaid accounts receivable may be left on the
Property without any responsibility or liability therefor on the part of
Purchaser, for a period not to exceed one month from Closing Date, within which
time such baggage or other property shall be removed or otherwise disposed of by
Seller.

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10.7    Accounting. Except as otherwise expressly provided herein, all
apportionments and adjustments shall be made on an accrual basis in accordance
with generally accepted accounting principles. A final accounting of the
apportionments and adjustments shall be prepared by Seller’s and Purchaser’s
representatives no later than one (1) business day prior to the Apportionment
Time and the Closing Date (in either case, subject to adjustment as provided
below). The results of the accounting shall be incorporated into the Closing
Statement and, upon the request of either Purchaser or Seller, shall be reviewed
by a reputable accounting firm that is reasonably acceptable to the parties (the
“Accountants”), provided that such review does not hinder or delay the Closing.
The determinations made by the Accountants shall be binding on both Seller and
Purchaser subject to Section 10.12 hereof. The fees and expenses of the
Accountants shall be borne exclusively by the party requesting the use of such
Accountants.

10.8    Employee Compensation. Seller shall provide Purchaser with a credit at
Closing for all accrued and earned (but unpaid or unused) employees’ wages,
vacation pay, paid time off, vacation time, sick pay, sick time, bonuses (based
on the budgeted amount of such bonuses, and subject to adjustment after Closing
based on the actual bonuses paid to such employees), pension benefits, and other
benefits earned by and due to or accrued to employees at the Property through
the Apportionment Time, together with F.I.C.A., unemployment and other taxes and
benefits due from any employer of such employees (collectively, “Wages and
Benefits”) accrued through the Apportionment Time. From and after Closing,
Purchaser shall be solely liable for all such Wages and Benefits for which
Purchaser receives a credit at Closing and those first arising from and after
the Apportionment Time, and Seller shall remain liable for all other Wages and
Benefits that accrued prior to the Apportionment Time.

10.9    Inventory. Except as otherwise described in Section 1.2(d), Seller shall
not receive a credit for any F&B, Liquor Inventory, Supplies or Retail
Merchandise.

10.10    House Funds. At Closing, Seller shall receive a credit for all the cash
on hand at the facilities operating on the Real Property as of the Apportionment
Time, and such cash on hand shall become the property of Purchaser as of the
Closing.

10.11    Other Items.
10.11.1    At Closing, Seller shall receive a credit for any and all items
described in Section 1.3(b) or 1.3(c) that are specifically assigned and
received by Purchaser at Closing.
10.11.2    At Closing, in addition to the Purchase Price, Purchaser shall
reimburse Seller for amounts paid by Seller in respect of the capex projects
described on Schedule 10.11.2, provided that such reimbursement shall not exceed
the sum of $200,000.00 in the aggregate. Seller shall provide reasonable
documentation substantiating such payment.
10.11.3    At Closing, in addition to the Purchase Price, Purchaser shall pay to
Seller the sum of $300,000.00 for amounts paid by Seller in connection with
obtaining the Estoppels and the SNDA.

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10.11.4    Attached as Schedule 10.11.4 is a list of repair work currently in
process by Seller. To the extent that such work has not been completed or paid
for by Seller at Closing, Purchaser shall receive a credit in the amount of the
cost (as reasonably estimated by Seller and Purchaser, subject to true-up
pursuant to Section 10.12) of completing and paying for such work.

10.12    Post-Closing Adjustments.
10.12.1    For purposes of this Section 10, all items described in this Section
10 and reflected on the Closing Statement are deemed the estimates of the
prorations, credits and other adjustments subject to adjustment hereunder. No
later than one hundred twenty (120) days after Closing (except for the
reproration of any taxes set forth in Section 10.1.1 for which final tax bills
are not yet available), Purchaser shall prepare and deliver to Seller a final
Closing statement (the “Final Statement”), which shall correct the estimates and
(if necessary) other amounts used in the Closing Statement, as adjusted in
accordance with both parties’ post-Closing examination of the books and records
of the Property and on facts discovered by either party after Closing and the
actual amounts collected from the guests for whom Seller was given a credit
under the prorations of the Current Ledger. For purposes of the Current Ledger,
such adjustment shall be based upon the actual amounts collected from the
guests, which amounts are attributable to the credit previously given to Seller
under the prorations. If the Final Statement indicates that the credit given to
Seller at Closing exceeds the actual amounts collected from the guests, Seller
shall be deemed to have purchased all such uncollected Current Ledger amounts
previously credited to Seller (together with the rights and claims arising
therefrom) from Purchaser by a corresponding credit to Purchaser on such Final
Statement.
10.12.2    Within ten (10) business days after the Final Statement has been
agreed upon by Seller and Purchaser, Purchaser or Seller (as the case may be)
shall pay to the other the net amount owing on the final settlement of the
Closing prorations, credits and other adjustments as shown by the agreed Final
Statement.
10.12.3    If Seller and Purchaser, each acting reasonably and in good faith,
cannot resolve any issue with respect to the adjustments describe in this
Section 10.12, they shall submit such issue for binding resolution by the
Accountants. The parties shall bear equally all fees and expenses of the
Accountants in connection with the resolution of such issue, and each party
shall bear its own legal, accounting and other fees and expenses incurred in
connection with the resolution of the issue by the Accountants. Such resolution
shall be final and binding on the parties and judgment may be entered upon such
resolution in any court having jurisdiction thereof.

10.13    Expenses.
10.13.1    Seller’s Expenses. Seller shall pay (a) the base cost of an ALTA
standard coverage title policy (or policies) covering the Real Property in the
insured amount of the Purchase Price, (b) one-half of any escrow or settlement
fee charged by the Title Company, (c) the portion of any title premium for any
endorsements for which Seller causes to be issued to cure title matters which
Seller has expressly committed to cure hereunder, (d) all costs and

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expenses associated with removing Mandatory Cure Items from the title policy,
including any recording charges, reconveyance charges and prepayment fees and
penalties, and (e) expenses incurred by Seller in connection with the
transaction contemplated by this Agreement.
10.13.2    Purchaser’s Expenses. Purchaser shall pay: (a) the incremental cost
of an ALTA extended coverage title policy (or policies) covering the Real
Property and any endorsements requested by Purchaser, (b) all recording fees
payable in connection with the recording of the Deed, (c) all state and local
transfer taxes, if any, (d) the cost of any ALTA surveys or survey updates
obtained by Purchaser, (e) any costs and expenses associated with the Liquor
License Application (including any fees imposed by the Arizona Department of
Liquor Licenses and Control in connection therewith), (f) one-half of any escrow
or settlement fee charged by the Title Company, and (g) Purchaser’s expenses
incurred in connection with the transaction contemplated by this Agreement.
10.13.3    Other Expenses. Except as specifically provided for in this
Agreement, Seller and Purchaser shall allocate all closing costs between them in
accordance with customary practice in the County of Coconino, State of Arizona.

10.14    Survival. The provisions of this Section 10 shall survive the Closing.

11.    EMINENT DOMAIN; CASUALTY.

11.1    Eminent Domain. If prior to the Closing Date condemnation proceedings
are commenced against all or any part of the Real Property, then Seller shall
promptly notify Purchaser of the same (the “Taking Notice”) and the following
provisions shall apply:
11.1.1    Total Taking. If in the event such condemnation is commenced against
all or substantially all of the Real Property, this Agreement shall terminate in
which event (a) the Deposit shall be returned to Purchaser and (b) except as
expressly provided for in this Agreement, neither Seller nor Purchaser shall
have any further liability or obligation under this Agreement.
11.1.2    Material Taking. In the event such condemnation is Material (as
defined below) but not a total taking as set forth in Section 11.1.1 above,
Purchaser shall have the right to terminate this Agreement by notice to Seller
given on or before the date that is the earlier to occur of (a) ten (10) days
after the date of the Taking Notice and (b) the Closing. In the event that
Purchaser does not terminate this Agreement, Purchaser shall accept such title
to the Real Property as Seller can deliver, in which case Seller shall pay over
or assign to Purchaser all rights and proceeds arising by reason of such taking
(less any collection costs incurred by Seller in connection therewith and any
costs and expenses incurred by Seller to restore the Property, provided that
Purchaser has approved the same, such approval not to be unreasonably withheld,
conditioned or delayed) and Purchaser shall pay the Purchase Price without
reduction. If the Agreement is terminated pursuant to this Section 11.1.2, (i)
the Deposit shall be returned to Purchaser, and (ii) except as expressly
provided for in this Agreement, neither Seller nor Purchaser shall have any
further liability or obligation under this Agreement.

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11.1.3    Immaterial Taking. In the event such condemnation is not Material,
then Purchaser shall accept such title to the Real Property as Seller can
deliver, in which case Seller shall pay over or assign to Purchaser all rights
and proceeds arising by reason of such taking (less any collection costs
incurred by Seller in connection therewith and any costs and expenses incurred
by Seller to restore the Property, provided that Purchaser has approved the
same, such approval not to be unreasonably withheld, conditioned or delayed) and
Purchaser shall pay the Purchase Price at the Closing without reduction.
11.1.4    “Material”. For purposes of this Section 11.1, the term “Material”
shall mean a condemnation involving (i) any portion of the land or improvements
included in the Real Property that materially impairs the present use and
operation of the Real Property, (ii) 10% or more of the Real Property or (iii)
all or a material portion of access to the Real Property.

11.2    Casualty. If any time prior to the Closing any portion of the
improvements included in the Real Property is destroyed or damaged as a result
of fire or any casualty, Seller shall promptly notify Purchaser of the same. The
rights and obligations of the parties by reason of such destruction or damage
shall be as follows:
11.2.1    If the Cost of Repair and Restoration (as hereinafter defined) of such
destruction or damage shall be One Million and No/100 Dollars $1,000,000.00 (the
“Repair Threshold”) or less and the destruction or damage does not materially
impair the use and operation of the public space (including restaurants) within
the Real Property, the obligations of the parties under this Agreement shall not
be affected by such destruction or damage, and Purchaser shall accept title to
the Property in its destroyed or damaged condition. Purchaser shall pay the
Purchase Price without reduction, and Seller shall pay over or assign to
Purchaser without recourse all rights to any proceeds of insurance payable with
respect to such destruction or damage (less any collection costs incurred by
Seller in connection therewith and any costs and expenses incurred by Seller to
restore the Property, provided that Purchaser has approved of any such
settlement of the casualty claim and/or restoration, such approval not to be
unreasonably withheld, conditioned or delayed) including the proceeds of any
rent loss insurance applicable to the period after Closing, and Purchaser shall
receive a credit against the Purchase Price in the amount of any deductible.
11.2.2    If the Cost of Repair and Restoration of such destruction or damage
shall exceed the Repair Threshold or the destruction or damage materially
impairs the use and operation of the public space (including restaurants) within
the Real Property, then Purchaser shall have the right to terminate this
Agreement by notice to Seller given on or before the date that is the earlier to
occur of (a) ten (10) days after the date of the Cost Notice (as hereinafter
defined) or (b) the Closing. In the event that Purchaser does not elect to
terminate this Agreement as permitted by this Section 11.2.2, Purchaser shall
accept title to the Property in its destroyed or damaged condition in accordance
with and subject to the provisions of Section 11.2.1. In the event that the
Agreement is terminated pursuant to this Section 11.2.2, (i) the Deposit shall
be returned to Purchaser, and (ii) except as expressly provided for in this
Agreement, neither Seller nor Purchaser shall have any further liability or
obligation to the other under this Agreement.

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11.2.3    The term “Cost of Repair and Restoration” shall mean the amount of
Seller’s good faith estimate of the actual cost of repair and restoration.
Seller shall send Purchaser notice of the Cost of Repair and Restoration (the
“Cost Notice”) promptly after making the aforesaid estimate.

12.    DEFAULT AND REMEDIES.

12.1    Seller’s Remedies. At Closing under this Agreement, if Purchaser
defaults in its obligation to deliver (i) the Purchase Price or (ii) any of its
other closing deliveries and such default under this clause (ii) continues for
three (3) business days following the Closing Date, Seller shall be entitled to
receive the sum of: (a) the entire Deposit; and (b) Seller’s per diem interest
expense incurred under the existing first position loan encumbering the Property
for each day following the Closing Date during which such default under clause
(ii) continues (not to exceed three (3) business days) (“Seller’s Carry Costs”),
as agreed liquidated damages (and not as a penalty) and as Seller’s sole remedy,
in lieu of, and as full compensation for, all other rights or claims of Seller
against Purchaser by reason of such default. Upon such payment to Seller of the
Deposit and, if applicable, Seller’s Carry Costs, this Agreement shall terminate
and, except as expressly provided for in this Agreement, neither Seller nor
Purchaser shall have any further liability or obligation under this Agreement.
Purchaser and Seller acknowledge that the damages to Seller resulting from
Purchaser’s breach would be difficult, if not impossible, to ascertain with any
accuracy, and that the liquidated damage amount set forth in this Section 12.1
represents both parties’ reasonable efforts to approximate such potential
damages. Additionally, in the event the Closing occurs within three (3) business
days following the Closing Date as a result of a default under clause (ii)
above, then Purchaser, in addition to the Purchase Price, shall pay Seller’s
Carry Costs to Seller at the Closing.

12.2    Purchaser’s Remedies. If Seller fails to satisfy any condition to
Closing set forth in Sections 8.1.1 or 8.1.2 (provided that with respect to any
failure to satisfy the condition to Closing set forth in Section 8.1.2, such
failure is the result of an act or omission reasonably within Seller’s control
or a breach of this Agreement by Seller), and such failure is not waived by
Purchaser, or Seller otherwise defaults in its obligation to close under this
Agreement, and any such failure or default continues for five (5) business days
following Seller’s receipt of written notice of such default from Purchaser,
Purchaser’s sole remedy therefor shall be to either (a) bring an action for
specific performance of Seller’s obligation under this Agreement to deliver the
documents required under Section 9.1 above, provided that any action for
specific performance must be initiated no later than sixty (60) days after the
date that Closing is otherwise required to occur under this Agreement; or (b)
terminate this Agreement by written notice to Seller (which notice shall
indicate that a Seller default is alleged by Purchaser) and receive the entire
Deposit and reimbursement from Seller of Purchaser’s Costs, in which event
neither Seller nor Purchaser shall have any further liability or obligation
under this Agreement except as expressly provided for in this Agreement.
Notwithstanding anything to the contrary in this Agreement, to the full extent
permitted by law, Purchaser waives, and Seller shall not be liable to Purchaser
for, any claim against Seller for loss of business opportunity, loss of profits,
loss of income, economic loss or other special or consequential losses or
damages or punitive damages. In the event that Purchaser elects to seek specific
performance under this Section 12.2,

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Seller shall not be obligated to expend any money to change the condition of the
Property or the state of title of the Property except as otherwise required by
this Agreement. Notwithstanding the foregoing provisions of this Section 12.2,
Seller shall not be entitled to any notice from Purchaser nor any cure period
with respect to the closing condition set forth in Section 8.1.5 or the required
Seller closing delivery set forth in Section 9.1.19, and this Agreement shall
automatically terminate upon the failure of such condition and/or closing
delivery, Escrow Agent shall promptly refund the Deposit to Purchaser, and
neither Seller nor Purchaser shall have any further liability or obligation
under this Agreement except as expressly provided for in this Agreement.

12.3    Seller’s Liability. Except as otherwise expressly set forth in this
Agreement, if Closing shall occur under this Agreement (a) Seller’s maximum
liability under this Agreement and any of the documents delivered by Seller
under this Agreement (including, without limitation, all of the documents
delivered at Closing and any documents of further assurance required thereafter)
for liabilities that survive Closing shall not exceed One Million Seven Hundred
Fifty Thousand Dollars ($1,750,000) in the aggregate (the “Seller’s Cap”), and
(b) Purchaser hereby waives any claim it may otherwise have against Seller under
this Agreement or any such documents for the first Fifty Thousand Dollars
($50,000.00) for all claims in the aggregate under this Agreement or such
documents; provided further that the foregoing limitations on Seller’s liability
shall not apply to Seller’s obligations under Sections 10, 15 and 16.17 hereof
and the penultimate sentence of Section 3.3 hereof. Purchaser agrees to use
commercially reasonable efforts to first seek recovery of insured losses under
any insurance policies and other losses under the applicable Contracts prior to
seeking recovery from Seller and Seller shall not be liable to Purchaser to the
extent Purchaser’s claim is satisfied from such insurance policies or Contracts.

12.4    Remedies Exclusive. By the express agreement of Purchaser and Seller,
the remedies set forth in this Section 12 constitute the sole remedies at law or
in equity available to Purchaser and Seller, as the case may be, on account of
the other party’s breach of its obligations to close under this Agreement,
provided, however, to the extent any terms or provisions of this Agreement are
specifically intended to survive the Closing and delivery of the Deed or the
termination of this Agreement, Purchaser shall have all remedies with respect
thereto as may be available at law or in equity, subject to and pursuant to
Section 12.3, and Seller shall have all remedies with respect thereto as may be
available at law or in equity. In no event, however, shall either party to this
Agreement be liable for any consequential, special, indirect or punitive damages
(except to the extent payable to a third party).

12.5    Parent Guaranty. Subject to all of the limitations of Seller’s liability
set forth in this Agreement, including, but not limited to, those limitations
set forth in Sections 3.2, 3.4, 6, 7, 12.2, 12.3 and 12.4 of this Agreement, IMH
Financial Corporation, a Delaware corporation (“Parent”), the sole member of
each Seller, hereby agrees to indemnify and hold harmless Buyer for, from and
against any breach of any representation or warranty made by Seller under
Section 3 of this Agreement and/or breach of any indemnification obligation or
other post-Closing obligation of Seller under this Agreement. Notwithstanding
anything to the contrary in this Agreement or in any document, instrument or
agreement to be delivered hereunder, in no event

38

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shall the liability of Parent with respect to any breach of any representation
or warranty made by Seller under Section 3 of this Agreement exceed the lesser
of (1) the actual liability of Seller under this Agreement or (2) the Seller’s
Cap. This Section 12.5 shall survive the Closing but with respect to the
representations and warranties made by Seller under Section 3 of this Agreement
shall expire upon the expiration of the applicable Survival Period (other than
with respect to indemnity claims related to such representations and warranties
that Purchaser has given Seller notice of prior to the expiration of the
Survival Period in accordance with Section 3.2, and other than with respect to
Seller’s obligations under Section 16.17).

13.    FURTHER ASSURANCES.
After the Closing, Seller and Purchaser agree to perform such other acts, and to
execute, acknowledge and deliver, such other instruments, documents and other
materials as the other may reasonably request (at no cost or liability to the
performing party) and as shall be necessary in order to effect the consummation
of the transactions contemplated by this Agreement or to provide further
assurances of any transfer, conveyance or assignment made pursuant to this
Agreement. The provision of this Section 13 shall survive the Closing.

14.    NOTICES.
Except as may be otherwise provided in this Agreement, all notices, demands,
requests or other communications required or permitted to be given under this
Agreement must be delivered to the following addresses (a) personally, by hand
delivery, whereby delivery is deemed to have occurred at the time of delivery;
(b) by Federal Express or a similar internationally recognized overnight courier
service, whereby delivery is deemed to have occurred the business day following
deposit with the courier during courier’s business hours; or (c) by email,
provided that the transmission is completed no later than 5:00 p.m. Arizona time
on a business day and a confirmation copy is delivered within one (1) business
day thereafter by the method set forth in clause (a) or (b) of this Section 14,
whereby delivery is deemed to have occurred on the business day on which
electronic transmission is completed.
If to Seller or Parent:    c/o IMH Financial Corporation
7001 North Scottsdale Road, Suite 2050
Scottsdale, Arizona 85253
Attn: Lawrence D. Bain
Email: ldb@imhfc.com

with a copy to:        IMH Financial Corporation
7001 North Scottsdale Road, Suite 2050
Scottsdale, Arizona 85253
Attn: Legal Department
Email: legal@imhfc.com

If to Purchaser:    c/o DiamondRock Hospitality Company                
3 Bethesda Metro Center, Suite 1500

39

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Bethesda, MD 20814
Attn: Chief Investment Officer
Email: troy.furbay@drhc.com

with a copy to:        c/o DiamondRock Hospitality Company                
3 Bethesda Metro Center, Suite 1500
Bethesda, MD 20814
Attn: General Counsel
Email: bill.tennis@drhc.com
and with a copy to:    Arnold & Porter Kaye Scholer LLP
601 Massachusetts Avenue, NW
Washington, DC 20001
Attn: Michael D. Goodwin, Esq.
Email: michael.goodwin@apks.com

Notice given by counsel to a party to this Agreement shall be considered notice
given by such party. Any party to this Agreement or its counsel may designate a
different address for itself by notice given in the manner set forth above.

15.    BROKERS.
Purchaser represents to Seller that it has not engaged any broker or agent in
connection with this transaction other than Snyder Nationwide Real Estate
(“Broker”). Purchaser has agreed to pay Broker pursuant to a separate agreement
between Purchaser and Broker. Except as expressly set forth in this Section 15,
Purchaser agrees to pay Broker any and all commissions and/or fees associated
with this Agreement pursuant to separate agreements if, as and when the Closing
shall occur and as provided in such separate agreements. Seller represents to
Purchaser that it has not engaged any broker or agent or advisor in connection
with this transaction. Each of Purchaser and Seller hereby indemnifies and holds
harmless the other from all loss, cost and expenses (including reasonable
attorneys’ fees and expenses) arising out of a breach of its representation or
undertaking set forth in this Section 15. The provisions of this Section 15
shall survive Closing or the termination of this Agreement.

16.    MISCELLANEOUS.

16.1    Assignability. Purchaser may not assign or transfer all or any portion
of its rights or obligations under this Agreement to any other individual,
entity or person without the prior written consent thereto by Seller, except
that Seller’s prior written consent shall not be required for any assignment by
Purchaser to an entity (or entities) which is wholly owned or controlled,
directly or indirectly, by Purchaser, or an entity (or entities) which controls
or is under common control with Purchaser (each, a “Purchaser Affiliate”). For
clarity, Purchaser may assign its right to take title to the Property related to
the L’Auberge de Sedona and the Property related to the Orchards Inn to separate
Purchaser Affiliates. No assignment or transfer by Purchaser will release
Purchaser of its obligations under this Agreement.

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16.2    Governing Law; Parties in Interest. This Agreement shall be governed by
the law of the State of Arizona without giving effect to its conflicts of law
principles and shall bind and inure to the benefit of the parties to this
Agreement and their respective heirs, executors, administrators, successors, and
permitted assigns.

16.3    Recording. No notice or memorandum of this Agreement shall be recorded
in any public record. A violation of this prohibition shall constitute a
material breach of this Agreement.

16.4    Time of the Essence. Subject to the provisions of Section 16.13, time is
of the essence of each and every provision of this Agreement.

16.5    Headings. The headings preceding the text of the sections and
subsections hereof are inserted solely for convenience of reference and shall
not constitute a part of this Agreement, nor shall they affect its meaning,
construction or effect.

16.6    Counterparts; Signatures. This Agreement, and any amendments hereto, may
be executed simultaneously in counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument. Facsimile signatures and signatures delivered electronically (e.g.
via pdf file) shall be deemed to be the equivalent of original signatures for
purposes of this Agreement and any amendments hereto.

16.7    Exhibits. All Exhibits and Schedules which are referred to in this
Agreement and which are attached to this Agreement are expressly made and
constitute a part of this Agreement.

16.8    Merger. Except as otherwise specifically provided in this Agreement with
respect to obligations that survive the Closing, the acceptance of the Deed by
the recordation thereof shall be deemed to be a full and complete performance
and discharge of every agreement and obligation of Seller and Purchaser
contained in this Agreement.

16.9    Entire Agreement; Amendments. This Agreement and the Exhibits and
Schedules to this Agreement set forth all of the covenants, representations,
warranties, agreements, conditions and undertakings between the parties to this
Agreement with respect to the subject matter of this Agreement, and supersede
all prior and contemporaneous agreements and understandings, inducements or
conditions, express or implied, oral or written. This Agreement may not be
changed orally but only by an agreement in writing, duly executed by or on
behalf of the party or parties against whom enforcement of any waiver, change,
modification, consent or discharge is sought.

16.10    JURY TRIAL WAIVER. EACH PARTY HEREBY WAIVES TRIAL BY JURY IN ANY
ACTION, PROCEEDING, CLAIM OR COUNTERCLAIM BROUGHT BY EITHER PARTY IN CONNECTION
WITH ANY MATTER ARISING OUT OF OR IN ANY WAY CONNECTED WITH THIS AGREEMENT AND
THE RELATIONSHIP OF PURCHASER AND SELLER UNDER THIS AGREEMENT. EACH PARTY HEREBY
CONSENTS TO ANY SERVICE OF PROCESS IN ANY SUCH ACTION, PROCEEDING, CLAIM OR
COUNTERCLAIM AT THE ADDRESS SET FORTH FOR SUCH PARTY IN THIS

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AGREEMENT; PROVIDED, HOWEVER, THAT NOTHING IN THIS AGREEMENT SHALL BE CONSTRUED
AS REQUIRING SUCH SERVICE AT SUCH ADDRESS. THIS JURY TRIAL WAIVER PROVISION
SHALL SURVIVE THE CLOSING OR THE TERMINATION OF THIS AGREEMENT.

16.11    Exclusive Jurisdiction. Any claim, counterclaim or other action arising
under this Agreement shall be brought only in the state or cognizant federal
courts in the State of Arizona. This provision shall survive the Closing or the
termination of this Agreement.

16.12    No Third Party Beneficiaries. This Agreement is for the sole benefit of
the parties to this Agreement (and their respective successors and permitted
assigns), and no other person or entity shall be deemed to be a third-party
beneficiary of this Agreement.

16.13    Business Day. For purposes of this Agreement, “business day” means
a day other than Saturday, Sunday or other day when commercial banks in Arizona
are authorized or required by applicable laws and regulations to close. If a
date or the expiration date of any period that is set out in any paragraph of
this Agreement falls upon a day that is not a business day, then, in such event,
the date or expiration date of such period shall be extended to the next
business day.

16.14    Severability. If any one or more of the provisions hereof shall for any
reason be held to be invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect any other provision
hereof, and this Agreement shall be construed as if such invalid, illegal or
unenforceable provision had never been contained herein.

16.15    Access to Records After Closing. Seller may retain and remove from the
Real Property prior to Closing tax records (including accounts payable records,
posting journals, closing income journals, miscellaneous income and adjustment
vouchers, tax exempt documentation and tax filing records), personnel records of
employees and such other records as it deems reasonably necessary to retain and
which will not interfere with the normal operations of the business; provided
that Seller shall give Purchaser an opportunity to make copies of any or all of
such records (other than the Excluded Personnel Files and other records
constituting Excluded Property) prior to the records being removed. For a period
of three (3) years from the Closing, Purchaser shall provide Seller and its
counsel and other advisors, reasonable access to the books and records remaining
after Closing, upon reasonable notice and during normal business hours as
requested in advance by Seller.

16.16    Seller; Joint & Several. The obligations of each of L’Auberge Newco and
Orchards Newco hereunder shall be joint and several.
16.17    Post-Closing Work. After Closing, Seller, at its cost, shall cause to
be performed the Work described on Schedule 16.17 (the “Work”). Seller shall
cause the Work to be performed in a good and workmanlike manner, and in
performing the Work shall not utilize any personnel whose compensation is paid
or reimbursed by Purchaser under the Management Agreement. Seller shall complete
the Work on or before the one (1) year anniversary of Closing, and Seller and
Purchaser shall mutually agree upon a schedule for the Work to minimize

42

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disruption to the operation of the Property. Seller’s obligations under this
Section 16.17 shall survive Closing.
[Signature Page Follows]

IN WITNESS WHEREOF, the parties have executed and delivered this Agreement as of
the Effective Date.

SELLER:
L’AUBERGE NEWCO, LLC,
a Delaware limited liability company:

By:
IMH Financial Corporation, a Delaware corporation, its sole member

By: /s/ Lawrence D. Bain    
Name: Lawrence D. Bain    
Title: Chairman and CEO    
By:    /s/ Len Padula    
    Name:    Len Padula    
    Its:    Independent Manager

ORCHARDS NEWCO, LLC,
a Delaware limited liability company:
By: IMH Financial Corporation, a Delaware
corporation, its sole member
By: /s/ Lawrence D. Bain    
Name: Lawrence D. Bain    
Title: Chairman and CEO    
By:    /s/ Len Padula                
    Name:    Len Padula                
    Its:    Independent Manager

43

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[Signatures continue on the following page]

[Signature Page to Purchase and Sale Agreement]

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PURCHASER:
DIAMONDROCK ACQUISITION, LLC, a Delaware limited liability company

By: __/s/ Troy Furbay_____________
Name: __Troy Furbay_____________
Title: Director

[Signature page to Purchase and Sale Agreement]

[Signature Page to Purchase and Sale Agreement]

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PARENT:
Accepted and agreed to solely with respect to the provisions of Section 12.5 of
this Agreement, but subject to the limitations of liability set forth in this
Agreement, including, without limitation, those limitations set forth in
Sections Sections 3.2, 3.4, 6, 7, 12.2, 12.3 and 12.4 of this Agreement. In no
event shall Parent be obligated to indemnify or hold harmless Buyer or any
affiliate of Buyer for any amount in excess of Seller’s liability under this
Agreement as limited by this Agreement.
IMH Financial Corporation,
                        a Delaware corporation
By:    /s/ Lawrence D. Bain            

                        Name:    Lawrence D. Bain            

                        Its:    Chairman and CEO            

 

[Signature Page to Purchase and Sale Agreement]

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EXHIBIT A-1
L’AUBERGE NEWCO PROPERTY
THE LAND REFERRED TO HEREIN BELOW IS SITUATED IN THE COUNTY OF COCONINO, STATE
OF ARIZONA, AND IS DESCRIBED AS FOLLOWS:
PARCEL NO. 1:
A parcel of land situated in the West half of Section 8, Township 17 North,
Range 6 East, of the Gila and Salt River Base and Meridian, Coconino County,
Arizona, being more particularly described as follows:
COMMENCING at the West quarter corner of said Section 8, as marked by a B.L.M
brass capped pipe under drain cover in sidewalk and from which the Southwest
corner of said Section 8, as marked by a B.L.M brass capped pipe in cairn, lies
South 01 degrees 42 minutes 03 seconds East (basis of bearings for this
description), a distance of 2621.04 feet;
THENCE from said West quarter corner, North 12 degrees 54 minutes 17 seconds
East (North 12 degrees 27 minutes 33 seconds East, record), a distance of 76.90
feet (76.90 feet record), to a point on the Southeasterly right of way line of
Arizona State Highway 89-A;
THENCE Northeasterly along said Southeasterly right of way line being a
non-tangent curve, concave to the Southeast, having a radius of 2150.00 feet
(2,150.00 feet, record), a chord bearing of North 23 degrees 04 minutes 02
seconds East and a central angle of 05 degrees 24 minutes 36 seconds (05 degrees
24 minutes 18 seconds, record), an arc distance of 203.00 feet (203.00 feet,
record), to a concrete nail with brass tag stamped “LS14184” set at the position
of a previously set cotton picker spindle with tag stamped “LS14184”;
THENCE continuing Northeasterly along said Southeasterly right of way line,
being a curve, concave to the Southeast, having a radius of 2150.00 feet
(2,150.00 feet record), a chord bearing of North 26 degrees 36 minutes 58
seconds East, a central angle of 01 degrees 41 minutes 17 seconds (01 degrees 41
minutes 39 seconds, record), an arc distance of 63.35 feet (63.57 feet, record),
to a concrete nail with brass tag stamped “LS14184” set at the position of a
previously set chiseled “+” in concrete;
THENCE departing said Southeasterly right of way line of Arizona State Highway
89-A, South 89 degrees 51 minutes 31 seconds East (North 89 degrees 42 minutes
07 seconds East, record), a distance of 3.74 feet to a point on the
Northeasterly line of that certain tract of land acquired by the City of Sedona
in December 2005 and described in Document No. 2005-3361777 of the Coconino
County Recorder’s office in Coconino county, Arizona;
THENCE along the North line of the Orchards/L’Auberge parcel, South 89 degrees
51 minutes 31 seconds East (North 89 degrees 42 minutes 07 seconds East,
record), a distance of 212.10 feet to a ½” rebar with cap stamped “LS14184”
(previously set);

A-1-1

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THENCE along the Northerly line of the Orchards/L’Auberge parcel, South 40
degrees 28 minutes 17 seconds East (South 41 degrees 45 minutes 00 seconds East,
record), a distance of 62.25 feet to the POINT OF BEGINNING;
THENCE South 40 degrees 28 minutes 17 seconds East (South 41 degrees 45 minutes
00 seconds East, record), a distance of 47.00 feet to a ½” rebar with tag
stamped “LS14184” (previously set);
THENCE North 38 degrees 57 minutes 49 seconds East, (North 38 degrees 15 minutes
00 seconds East record), a distance of 150.75 feet (152.00 feet record) to a ½”
rebar with tag stamped “LS14184” (previously set).
THENCE South 50 degrees 57 minutes 03 seconds East, (South 51 degrees 45 minutes
00 seconds East record), a distance of 82.00 feet (82.00 feet record) to a ½”
rebar with tag stamped “LS14184” (previously set);
THENCE North 57 degrees 27 minutes 57 seconds East (North 56 degrees 40 minutes
00 seconds East record), a distance of 26.55 feet (26.5 feet record) to a ½”
rebar with tag stamped “LS14184” (previously set);
THENCE South 32 degrees 32 minutes 03 seconds East (South 33 degrees 20 minutes
00 seconds East record), a distance of 523.60 feet (542.50 feet record) to a
point in Oak Creek that lies on the Northwesterly boundary of the “Brewer
Tract”, described in Docket 510, page 496, of the Coconino County Recorder’s
Office and from which a ½” rebar with tag stamped “LS14184” previously set as a
witness corner lies, North 32 degrees 32 minutes 03 seconds West, a distance of
100.00 feet;
THENCE South 51 degrees 44 minutes 33 seconds West (no record) a distance of
6.59 feet (no record) to the Westerly corner of said “Brewer Tract” being a
portion in Oak Creek;
THENCE South 54 degrees 01 minutes 27 seconds East (no record), a distance of
19.52 feet (no record) along the Southwesterly boundary of said “Brewer Tract”
to a point in Oak Creek;
THENCE South 52 degrees 31 minutes 27 seconds West (South 51 degrees 43 minutes
30 seconds West, record), a distance of 11.99 feet (11.40 feet record) to a
point in Oak Creek;
THENCE South 69 degrees 02 minutes 57 seconds West (South 68 degrees 15 minutes
00 seconds West record), a distance of 166.54 feet (166.54 feet) to a point in
Oak Creek;
THENCE South 48 degrees 22 minutes 03 seconds East (South 49 degrees 10 minutes
00 seconds East, record), a distance of 60.39 feet (60.40 feet record), to a ½”
rebar with tag stamped “PE2924” (previously set);
THENCE South 63 degrees 20 minutes 02 seconds West, (South 62 degrees 02 minutes
45 seconds West, record), a distance of 835.28 feet (832.38 feet record) to a
point in Oak Creek that is on the West line of said Section 8 and lies South 01
degrees 42 minutes 03 seconds East, a distance of 624.60 feet from said West
quarter corner of Section 8;

A-1-2

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THENCE North 01 degrees 42 minutes 03 seconds West (North 02 degrees 30 minutes
00 seconds West, record), a distance of 447.60 feet (447.60 feet record) along
said West line of Section 8 to a ½” rebar with tag stamped “LS14184” (previously
set);
THENCE North 38 degrees 37 minutes 57 seconds East (North 37 degrees 50 minutes
00 seconds East, record), a distance of 207.55 feet to a ½” rebar with tag
stamped “LS14184” (previously set);
THENCE North 38 degrees 09 minutes 30 seconds East (North 37 degrees 50 minutes
00 seconds East, record), a distance of 109.23 feet to a ½” rebar with no
identification (previously found):
THENCE North 49 degrees 44 minutes 02 seconds East, a distance of 94.50 feet;
THENCE North 37 degrees 42 minutes 35 seconds East, a distance of 174.72 feet to
the POINT OF BEGINNING.
EXCEPTING THEREFROM the following described property:
A parcel of land being a portion of “Parcel 1B” as said “Parcel 1B” is shown and
described on that certain ALTA/ACSM Land Title Survey map recorded as instrument
number 3490268 in the Official Records of Coconino County, said parcel being
situated in the West half of Section 8, Township 17 North, Range 6 East of the
Gila and Salt River Base and Meridian in Coconino County, Arizona, and being
more particularly described as follows:
COMMENCING at the West quarter corner of said Section 8, as marked by a G.L.O.
brass capped pipe under drain cover in sidewalk and from which the Southwest
corner of said Section 8, as marked by a B.L.M brass capped pipe in cairn, lies
South 01º42’03” East (basis of bearings for this description), a distance of
2621.04 feet;
Thence from said West quarter corner, along the West line of the Southwest
quarter of said Section 8, South 01º42’03” East, a distance of 624.60 feet to
the Southwest corner of said “Parcel 1B”;
Thence along the Southerly boundary of said “Parcel 1B”, North 63º20’02” East a
distance of 579.51 feet to the POINT OF BEGINNING;
Thence continuing along said Southerly boundary of “Parcel 1B”, North 63º20’02”
East a distance of 255.77 feet;
Thence continuing along said Southerly boundary of “Parcel 1B”, North 48º22’03”
West a distance of 60.39 feet;
Thence continuing along said Southerly boundary of “Parcel 1B”, North 69º02’57”
East a distance of 32.29 feet to the most Northerly corner of the Weckerly
parcel as described in Docket 1525, pages 007-009 of the Coconino County
Recorder’s Office;
Thence along a prolongation of the Northeasterly boundary of said Weckerly
parcel, North 54º01’29” West a distance of 23.88 feet, more or less, to the
centerline of Oak Creek as it may exist from time to time in the future;

A-1-3

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Thence along said centerline of Oak Creek, as it may exist from time to time in
the future, an approximate bearing of South 65º34’01” West a distance of 111.83
feet, more or less;
Thence continuing along said centerline of Oak Creek, as it may exist from time
to time in the future, an approximate bearing of South 69º31’14” West a distance
of 163.52 feet, more or less, to the intersection of said centerline of Oak
Creek with the Northwesterly prolongation of the Southwesterly boundary of the
Miller parcel as described in Docket 1478, pages 378 & 378A of the Coconino
County Recorder’s Office;
Thence in a reversed direction of said Northwesterly prolongation of the
Southwesterly boundary of the Miller parcel, South 38°15’58” East a distance of
98.08 feet, more or less, to the POINT OF BEGINNING.
PARCEL NO. 2:
An easement for ingress, egress and public utilities created by instrument
recorded December 22, 1982, in Docket 911, page 206, records of Coconino County,
Arizona, more particularly described as follows:
A strip of land 33.00 feet wide situated in the Southeast quarter of Section 7,
Township 17 North, Range 6 East, of the Gila and Salt River Base and Meridian,
Coconino County, Arizona, being more particularly defined as lying 16.50 feet on
each side of the following described centerline:
COMMENCING at the East quarter corner of said Section 7, as marked by a GLO
brass capped pipe under drain cover in sidewalk and from which the Southeast
corner of said Section 7, as marked by a B.L.M. brass capped pipe, lies South 01
degrees 42 minutes 03 seconds East (basis of bearings for this description), a
distance of 2621.04 feet;
THENCE South 01 degrees 42 minutes 03 seconds East (South 02 degrees 30 minutes
00 seconds East, recorded), a distance of 261.40 feet (261.4 feet record) along
the East line of said Southeast quarter of Section 7 to the POINT OF BEGINNING
of this center line (side lines of strip of land begin on said East line);
THENCE South 28 degrees 37 minutes 57 seconds West (South 27 degrees 50 minutes
00 seconds West record), a distance of 500.20 feet (500.2 feet record);
THENCE South 37 degrees 53 minutes 57 seconds West (South 37 degrees 06 minutes
00 seconds West, record), a distance of 330.00 feet (330.00 feet record) to the
terminus of center line:
EXCEPT therefrom all that portion thereof lying within the right of way of
Arizona Highway 89-A;
PARCEL NO. 3:
A perpetual, non-exclusive easement for ingress and egress as set forth in that
certain easement agreement recorded April 25, 2002 in instrument number
2002-3138455 and re-recorded July 18, 2005 in instrument number 2005-3332653 of
Official Records, Coconino County, Arizona.

A-1-4

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PARCEL NO. 4:
A parcel of land being a portion of the “Pacini Tract” described in Parcel II in
Docket 1711, page 863 and 864 of the Coconino County Recorder’s Office and
situated in the West half of Section 8, Township 17 North, Range 6 East, of the
Gila and Salt River Base and Meridian, Coconino County, Arizona, said parcel
being more particularly described as follows:
COMMENCING at the West quarter corner of said Section 8, as marked by a B.L.M
brass capped pipe under drain cover in sidewalk and from which the Southwest
corner of said Section 8, as marked by a B.L.M brass capped pipe in cairn, lies
South 01 degrees 42 minutes 03 seconds East (basis of bearings for this
description), a distance of 2621.04 feet;
THENCE from said West quarter corner, North 21 degrees 27 minutes 04 seconds
East, a distance of 342.00 feet (North 20 degrees 32 minutes East, a distance of
342 feet, record) to a ½” rebar with tag stamped “LS14184” set at the position
of a previously set chiseled “+” in concrete (previously set) on the
Southeasterly right of way line of Arizona Highway 89-A;
THENCE departing said Southeasterly right of way line of Arizona Highway 89-A
South 89 degrees 51 minutes 31 seconds East, a distance of 215.83 feet (North 89
degrees 10 minutes East, a distance of 217.50 feet record), to a ½” rebar with
plastic cap stamped “LS14184” (found);
THENCE South 40 degrees 28 minutes 17 seconds East, a distance of 109.25 feet
(South 41 degrees 45 minutes East, a distance of 110.77 feet record) to a ½”
rebar with plastic cap stamped “LS14184” (previously set);
THENCE North 38 degrees 57 minutes 49 seconds East, a distance of 150.75 feet
(North 38 degrees 15 minutes East, a distance of 152.0 feet record), to a ½”
rebar with tag stamped “LS14184” (previously set) at a corner of said “Pacini
Tract”;
THENCE along the boundary of said “Pacini Tract” South 50 degrees 57 minutes 03
seconds East, a distance of 82.00 feet (same as record) to a ½” rebar with tag
stamped “LS14184” (found) at a corner thereof;
THENCE continuing along the boundary of said “Pacini Tract” North 57 degrees 27
minutes 57 seconds East, a distance of 26.55 feet (same as record) to a ½” rebar
with tag stamped “LS14184” (found) at a corner thereof;
THENCE continuing along the boundary of said “Pacini Tract”, South 32 degrees 32
minutes 03 seconds East, a distance of 5.00 feet to the POINT OF BEGINNING;
THENCE North 57 degrees 27 minutes 57 seconds East, a distance of 58.00 feet to
a ½” rebar with tag stamped “LS14184”;
THENCE North 89 degrees 27 minutes 57 seconds East, a distance of 35.39 feet to
a ½” rebar with tag stamped “LS14184”;

A-1-5

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THENCE South 00 degrees 32 minutes 03 seconds East, a distance of 163.25 feet to
a ½” rebar with tag stamped “LS14184”;
THENCE South 32 degrees 32 minutes 03 seconds East, a distance of 215.13 feet to
a ½” rebar with tag stamped “LS14184”;
THENCE South 31 degrees 56 minutes 49 seconds East, a distance of 146.28 feet to
a point on the Northwesterly boundary of the “Brewer Tract” as described in
Docket 510, page 496 of the Coconino County Recorder’s Office and the Southwest
corner of the said “Pacini Tract” and from which a ½” rebar with brass tag
stamped “LS14184” (previously set as a witness corner) bears North 32 degrees 32
minutes 03 seconds West, a distance of 100.00 feet;
THENCE along the Westerly boundary of the said “Pacini Tract”, North 32 degrees
32 minutes 03 seconds West, a distance of 518.60 feet to the POINT OF BEGINNING.

A-1-6

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EXHIBIT A-2
ORCHARDS NEWCO PROPERTY
THE LAND REFERRED TO HEREIN BELOW IS SITUATED IN THE COUNTY OF COCONINO, STATE
OF ARIZONA, AND IS DESCRIBED AS FOLLOWS:
PARCEL NO. 1:
A parcel of land situated in the West half of Section 8, Township 17 North,
Range 6 East, of the Gila and Salt River Base and Meridian, Coconino County,
Arizona, being more particularly described as follows:
COMMENCING at the West quarter corner of said Section 8, as marked by a B.L.M
brass capped pipe under drain cover in sidewalk and from which the Southwest
corner of said Section 8, as marked by a B.L.M brass capped pipe in cairn, lies
South 01 degrees 42 minutes 03 seconds East (basis of bearings for this
description), a distance of 2621.04 feet;
THENCE from said West quarter corner, North 12 degrees 54 minutes 17 seconds
East (North 12 degrees 27 minutes 33 seconds East, record), a distance of 76.90
feet (76.90 feet, record) to a point on the Southeasterly right-of-way line of
Arizona State Highway 89-A;
THENCE Northeasterly along said Southeasterly right of way line being a
non-tangent curve, concave to the Southeast, having a radius of 2150.00 feet
(2150.00 feet record)., a chord being of North 23 degrees 04 minutes 02 seconds
East and a central angle of 05 degrees 24 minutes 36 seconds (05 degrees 24
minutes 18 seconds, record), an arc distance of 203.00 feet (203.00 feet
record), to a concrete nail with brass tag stamped “LS14184” set at the position
of a previously set cotton picker spindle with tag stamped “LS14184”;
THENCE departing said Southeasterly right of way line of Arizona State Highway
89A, South 65 degrees 25 minutes 03 seconds East, a distance of 11.73 feet to
the POINT OF BEGINNING, which lies on the Southeasterly line of that certain
tract of land acquired by the City of Sedona in December 2005 and described in
Document NO. 2005-3361777 of the Coconino County Recorder’s Office, Coconino
County, Arizona;
THENCE along said Southeasterly line, North 24 degrees 46 minutes 32 seconds
East, a distance of 23.47 feet;
THENCE continuing along said Southeasterly line, North 21 degrees 21 minutes 48
seconds East, a distance of 3.63 feet;
THENCE continuing along said Southeasterly line, North 20 degrees 52 minutes 26
seconds West, a distance of 8.33 feet;
THENCE continuing along said Southeasterly line, North 69 degrees 07 minutes 34
seconds East, a distance of 1.00 feet;

A-2-1

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THENCE continuing along said Southeasterly line, North 19 degrees 27 minutes 50
seconds West, a distance of 6.81 feet;
THENCE continuing along said Southeasterly line, North 26 degrees 18 minutes 08
seconds East, a distance of 19.54 feet;
THENCE continuing along said Southeasterly line, South 62 degrees 51 minutes 12
seconds East, a distance of 4.07 feet;
THENCE continuing along said Southeasterly line, North 23 degrees 53 minutes 25
seconds East, a distance of 6.93 feet;
THENCE continuing along said Southeasterly line of that tract of land acquired
by the City of Sedona in December 2005, North 62 degrees 35 minutes 35 seconds
West, a distance of 0.55 feet to the North line of the Orchards/L’Auberge
parcel;
THENCE along said North line of the Orchards/L’Auberge parcel, South 89 degrees
51 minutes 31 seconds East (North 89 degrees 42 minutes 07 seconds East,
record), a distance of 212.10 feet to a ½” rebar with cap stamped “LS14184”
(previously set);
THENCE South 40 degrees 28 minutes 17 seconds East, (South 41 degrees 45 minutes
00 seconds East, record), a distance of 62.25 feet;
THENCE South 37 degrees 42 minutes 35 seconds West, a distance of 174.72 feet;
THENCE South 49 degrees 44 minutes 02 seconds West, a distance of 94.50 feet to
a ½” rebar with no identification (previously found);
THENCE North 31 degrees 49 minutes 11 seconds West (North 32 degrees 21 minutes
20 seconds West, record), a distance of 114.47 feet (113.94 feet record) to a ½”
rebar with cap stamped “LS 14184” (previously set);
THENCE North 22 degrees 35 minutes 10 seconds East (North 24 degrees 24 minutes
07 seconds East, record), a distance of 66.04 feet (65.00 feet, record) to a
concrete nail with brass tag stamped “LS14184”, previously set at the position
of a previously set chiseled “+” in concrete;
THENCE North 65 degrees 25 minutes 03 seconds West, (North 65 degrees 34 minutes
02 seconds West, record), a distance of 65.96 feet to the POINT OF BEGINNING.
PARCEL NO. 2:
An easement for overhead canopies and other purposes by or pursuant to that
certain Special Warranty Deed (In Lieu of Condemnation) recorded December 27,
2005 in Document No. 3361777, Official Records of Coconino County, Arizona.

A-2-2

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EXHIBIT A-3
LEASEHOLD PROPERTY AND OTHER SPACE LEASES
A.
ORCHARDS NEWCO LEASES*

1.
Lease dated as of March 13, 2009, by and between Canyon Portal II, L.L.C., an
Arizona limited liability company (“Canyon Portal”), as landlord, and Orchards
Annex, LLC, an Arizona limited liability company (“Original Orchards Annex
Lessee”), as tenant, as amended by that certain Amendment to Lease dated as of
July 1, 2011, by and between Canyon Portal and Original Orchards Annex Lessee,
as further amended by that certain Second Amendment to Lease dated as of May 14,
2013 by and between Canyon Portal and Original Orchards Annex Lessee, as
assigned to Orchards Newco pursuant to that certain Assignment and Assumption of
Lease and Consent to Assignment and Assumption of Lease dated as of May 14, 2013
by and between Original Orchards Annex Lessee, as assignor, and Orchards Newco,
as assignee, and consented to by Canyon Portal, as further amended by that
certain Third Amendment to Lease dated as of _______________, 2017 by and
between Canyon Portal and Orchards Newco, and as affected by that certain
Settlement Agreement and Release by and between Canyon Portal and Orchards Newco
dated as of ______________, 2017 (collectively, the “Orchards Annex Lease”),
pursuant to which Canyon Portal leases to Orchards Newco 28 hotel rooms in the
Orchards Inn annex.

 
2.
Lease for Parking Spaces dated as of January 1, 2012 by and between Canyon
Portal and Orchards Inn & Restaurant, LLC, an Arizona limited liability company
(“Original Orchards Parking Lessee”), as amended by that certain Amendment to
Lease dated as of May 1, 2012, by and between Canyon Portal and Original
Orchards Parking Lessee, as further amended by that certain Second Amendment to
Lease dated as of May 14, 2013, by and between Canyon Portal and Original
Orchards Parking Lessee, as assigned to Orchards Newco pursuant to that certain
Assignment and Assumption of Lease and Consent to Assignment and Assumption of
Lease dated as of May 14, 2013 by and between Original Orchards Annex Lessee and
Orchards Newco and consented to by Canyon Portal, as further amended by that
certain Third Amendment to Lease dated as of ________________, 2017, by and
between Canyon Portal and Orchards Newco, and as affected by that certain
Settlement Agreement and Release by and between Canyon Portal and Orchards Newco
dated as of ______________, 2017 (collectively, the “Orchards Parking Lease”),
pursuant to which Canyon Portal leases to Orchards Newco 10 parking spaces.

3.
Lease dated as of April 1, 2012, by and between Canyon Portal and L’Auberge
Orchards LLC, an Arizona limited liability company (“Original L’Auberge
Lessee”), as amended by that certain Amendment to Lease dated as of May 14, 2013
by and between Canyon Portal and Original L’Auberge Lessee, as assigned to
Orchards Newco pursuant to that certain Assignment and Assumption of Lease and

A-3-1

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Consent to Assignment and Assumption of Lease dated as of May 14, 2013, by and
between Original L’Auberge Lessee and Orchards Newco and consented to by Canyon
Portal, as further amended by that certain Second Amendment to Lease dated as of
_________________, 2017, by and between Canyon Portal and Orchards Newco, and as
affected by that certain Settlement Agreement and Release by and between Canyon
Portal and Orchards Newco dated as of ______________, 2017 (collectively, the
“Temporary Housing Lease”), pursuant to which Canyon Portal leases to Orchards
Newco five temporary housing units.

4.
Lease dated as of April 1, 2010, by and between Canyon Portal and Original
L’Auberge Lessee, as amended by that certain First Amendment to Lease dated as
of February 1, 2011, by and between Canyon Portal and Original L’Auberge Lessee,
as further amended by that certain Second Amendment to Lease dated as of May 14,
2013, by and between Canyon Portal and Original L’Auberge Lessee as assigned to
Orchards Newco pursuant to that certain Assignment and Assumption of Lease and
Consent to Assignment and Assumption of Lease dated as of May 14, 2013, by and
between Original L’Auberge Lessee and Orchards Newco and consented to by Canyon
Portal, as further amended by that certain Third Amendment to Lease dated as of
____________________, 2017, by and between Canyon Portal and Orchards Newco, and
as affected by that certain Settlement Agreement and Release by and between
Canyon Portal and Orchards Newco dated as of ______________, 2017 (collectively,
the “Telephone Room Lease”), pursuant to which Canyon Portal leases to Orchards
Newco approximately 174 square feet for a telephone room.

B.
L’AUBERGE NEWCO LEASE*

1.
Lease For Parking Spaces dated as of January 1, 2012, by and between Sinagua
Plaza II, L.L.C., an Arizona limited liability company (“Sinagua”), as landlord,
and L’Auberge Orchards LLC, an Arizona limited liability company (“Original
L’Auberge Lessee”), as tenant, as amended by that certain Amendment to Lease
dated as of May 1, 2012, by and between Sinagua and Original L’Auberge Lessee,
as further amended by that certain Second Amendment to Lease dated as of May 14,
2013, by and between Sinagua and Original L’Auberge Lessee, as assigned to
L’Auberge pursuant to that certain Assignment and Assumption of Lease and
Consent to Assignment and Assumption of Lease dated as of May 14, 2013, by and
between Original L’Auberge Lessee, as assignor, and L’Auberge Newco, as
assignee, and consented to by Sinagua, as further amended by that certain Third
Amendment to Lease dated as of ________________, 2017, by and between Sinagua
and L’Auberge Newco, and as affected by that certain Settlement Agreement and
Release by and between Sinagua and L’Auberge Newco dated as of ______________,
2017 (collectively, the “Sinagua Plaza Parking Lease”), pursuant to which
Sinagua leases to L’Auberge Newco 17 parking spaces on the property located at
320 N. Highway 89A, Sedona, Arizona.

A-3-2

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C. SPACE LEASES

1.
Site Lease Agreement dated as of February 16, 2016, by and between Orchards
Newco and T-Mobile West LLC, a Delaware limited liability company (“T-Mobile”),
pursuant to which Orchards Newco leases to T-Mobile space on the rooftop of the
Orchards Inn to install communications equipment.

* SELLER ACKNOWLEDGES AND AGREES THAT ALL AMENDMENTS AND/OR OTHER MODIFICATIONS
TO THE ORCHARDS NEWCO LEASES OR THE L’AUBERGE NEWCO LEASE FROM AND AFTER THE
EFFECTIVE DATE SHALL BE IN THE FORM APPROVED BY PURCHASER PRIOR TO THE EFFECTIVE
DATE.

A-3-3

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EXHIBIT B
FORM OF ESCROW AGREEMENT
__________________________, a Delaware limited liability company (“Seller”),
___________________, a ___________________ (“Purchaser”), and
____________________________(“Escrow Agent”), hereby enter into this ESCROW
AGREEMENT (this “Agreement”) as of ______________, 2017. Reference is made to
that certain Purchase and Sale Agreement dated as of _________, 2017 (the
“Purchase Agreement”) between Seller and Purchaser. The defined terms used in
this Agreement but not defined in this Agreement shall have the meanings set
forth in the Purchase Agreement.
(1)
Purchaser and Seller have agreed to select Escrow Agent to serve as escrow agent
with respect to the Deposit to be made by Purchaser pursuant to the Purchase
Agreement. The purpose of this Agreement is to prescribe instructions governing
the services of Escrow Agent with respect to the Deposit and the Closing.

(2)
Seller and Purchaser hereby engage Escrow Agent to serve as escrow agent with
respect to the Deposit made by Purchaser pursuant to the terms of the Purchase
Agreement. A copy of the Purchase Agreement has been delivered to Escrow Agent.
Escrow Agent hereby accepts such engagement.

(3)
Upon receipt of the Deposit, Escrow Agent agrees to place the Deposit into
multiple interest-bearing accounts (such that each account is fully FDIC
insured) and to notify Purchaser and Seller of the location and number of such
accounts or otherwise invest the Deposit in a manner approved by the parties.
Purchaser’s Federal Taxpayer Identification Number is __________.

(4)
Escrow Agent shall disburse the Deposit in accordance with the terms and
conditions of the Purchase Agreement.

(5)
Except in the case of a disbursement of the Deposit pursuant to Section 4.1.7 of
the Agreement (in which case no notice from Escrow Agent shall be required),
prior to disbursing the Deposit, Escrow Agent shall provide to Purchaser and
Seller not less than five (5) business days’ prior written notice of Escrow
Agent’s intent to disburse the Deposit. If there is a dispute regarding the
disbursement or disposition of the Deposit, or if Escrow Agent shall receive
conflicting written demands or instructions with respect to the Deposit, then
Escrow Agent shall withhold such disbursement or disposition until notified by
Purchaser and Seller that such dispute is resolved or Escrow Agent may file a
suit of interpleader, and the cost and expense of filing such interpleader
action shall be divided equally between Seller and Purchaser.

(6)
Escrow Agent shall not be liable for any damage, liability or loss arising out
of or in connection with the services rendered by Escrow Agent pursuant to this
Agreement

B-1

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unless the same results from the negligence, gross negligence, or willful
misconduct of Escrow Agent.
(7)
Copies of all notices given by any party under this Agreement shall be delivered
in accordance with the provisions of Section 14 of the Purchase Agreement to all
other parties to this Agreement, to the following addresses:

If to Seller:    
with a copy to:    
If to Purchaser:    _________________________
_________________________
_________________________
_________________________
Attn:
Phone:
Email:

with a copy to:        _________________________
_________________________
_________________________
_________________________
Attn:
Phone:
Email:

If to Escrow Agent:    _________________________
_________________________
_________________________
_________________________
Attn:
Phone:
Email:

Notice given by counsel to a party to this Agreement shall be considered notice
given by such party. Any party to this Agreement, its counsel or the Escrow
Agent may designate a different address for itself by notice given in the manner
set forth above. Any notice or demand shall be deemed to have been given upon
actual delivery (or refusal of delivery).

B-2

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(8)
The instructions contained in this Agreement may not be modified, amended or
altered in any way except by a writing (which may be in counterpart copies)
signed by Seller, Purchaser and Escrow Agent.

(9)
Purchaser and Seller reserve the right, at any time and from time to time, to
substitute a new escrow agent in place of Escrow Agent.

(10)
This Agreement is intended solely to supplement and implement the provisions of
the Purchase Agreement and is not intended to modify, amend or vary any of the
rights or obligations of Purchaser or Seller under the Purchase Agreement.

(11)
This Agreement may be executed in one or more counterparts, each of which shall
be deemed to be an original, but all of which together shall constitute one and
the same instrument; provided, however, in no event shall this Agreement be
effective unless and until signed by all parties to this Agreement. Facsimile
signatures shall be deemed to be the equivalent of original signatures for
purposes of this Agreement.

[SIGNATURES APPEAR ON THE FOLLOWING PAGE]

B-3

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IN WITNESS WHEREOF, the parties to this Agreement have executed this Agreement
as of the date first written above.
SELLER:
    
By:    
Name:    
Title:    
[SIGNATURES CONTINUE ON THE FOLLOWING PAGE]

B-4

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PURCHASER:
[INSERT SIGNATURE BLOCK]
[SIGNATURES CONTINUE ON THE FOLLOWING PAGE]

B-5

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ESCROW AGENT:
[INSERT SIGNATURE BLOCK]

B-6

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EXHIBIT C
[intentionally omitted]

C-1

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EXHIBIT D
SPECIAL WARRANTY DEED

When recorded mail to:
            
            
            

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SPECIAL WARRANTY DEED
For Ten Dollars and other valuable consideration, _______________________, an
__________________ company, the Grantor, does hereby convey to
______________________, a _______________ company, the Grantee, Grantor’s
interest in the real property and improvements situated in __________ County,
Arizona, described on attached Exhibit A, together with all rights, benefits,
privileges, easements, tenements, hereditaments, water rights, and appurtenances
upon or in any way appertaining thereto (including but not limited to
development rights, water rights, etc.);
SUBJECT TO: Existing taxes, and the covenants, conditions, restrictions, rights
of way, easements, and other matters of record shown on the attached Exhibit B.
Grantor warrants title against the acts of Grantor only, subject to the matters
above set forth.
DATE: ______________, 2017
GRANTOR:

________________________________, a _______________

By:     
Name:     
Title:     

D-1

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STATE OF ARIZONA    )
) ss.
County of Maricopa    )

Acknowledged before me this ____ day of _________________, 2017, by __________,
the ______________ of ____________________, a _______________, for and on behalf
thereof.
    
Notary Public
My commission expires:
    

D-2

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Exhibit A
[attach legal description]

D-3

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Exhibit B
[attach permitted exceptions]

D-4

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EXHIBIT E
FORM OF ASSIGNMENT AND ASSUMPTION OF LEASE
When recorded mail to:
            
            
            

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ASSIGNMENT AND ASSUMPTION OF LEASE

THIS ASSIGNMENT AND ASSUMPTION OF LEASE (“Assignment”) is made and
entered into as of this          day of             , 20     (the “Effective
Date”), by and between [Orchards / L’Auberge] Newco, LLC, a Delaware limited
liability company (“Assignor”), and                      (“Assignee”).

RECITALS

A.[Describe Lease] (the “Lease”).

B.Assignor desires to assign its rights and delegate its obligations as Tenant
under the Lease to Assignee and Assignee desires to accept and assume such
rights and obligations.

C.The parties have agreed to execute this Assignment in order to effect such
assignment, delegation and assumption on the terms and conditions set forth
herein.

AGREEMENT

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which is acknowledged, the parties hereby agree as follows:

1.REPRESENTATION AND WARRANTY OF ASSIGNOR

Assignor hereby represents and warrants to Assignee that (a) attached hereto as
Exhibit A is true and complete copy of the Lease, (b) neither Landlord nor
Assignor are in default of their obligations under the Lease, and (c) no event
has occurred which would constitute default under the Lease.

2.ASSIGNMENT OF LEASE

E-1

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For good and valuable consideration receipt of which is hereby acknowledged,
Assignor hereby (a) transfers and assigns to Assignee the entire right, title
and interest of Assignor in and
to the Lease, and (b) delegates and transfers to Assignee all of Assignors
obligations under the Lease.

3.ACCEPTANCE AND ASSUMPTION

Assignee hereby (a) accepts the assignment of all such rights and assumes all
such duties and obligations as the “Tenant” under the Lease arising with respect
to the period from and after the Effective Date, and (b) agrees to perform the
duties and obligations of the Assignor arising under the Lease with respect to
the period from and after the Effective Date of this Assignment to the same
extent as if Assignee were the original “Tenant” named in such Lease. Assignee
shall indemnify, defend and hold Assignor harmless from and against all
liabilities and obligations of Assignee relating to the Lease to the extent that
such obligations are applicable to the period, and required to be performed,
from and after the effective date of this Assignment. Assignor shall indemnify,
defend and hold Assignee harmless from and against all liabilities and
obligations of Assignor relating to the Lease to the extent that such
obligations are applicable to the period, and were required to be performed,
prior to the effective date of this Assignment.

4.    MISCELLANEOUS

4.1    Further Assurances. Each party agrees to take such additional steps and
to execute such additional documents as may be necessary to effectuate the
purposes of this Assignment.
4.2    Attorneys’ Fees. If any action is commenced to construe or enforce the
terms and conditions of this Assignment or the rights created hereunder, the
party prevailing in that action shall be entitled to recover its reasonable
attorneys’ fees as well as the costs and expenses of enforcing or appealing any
judgment entered therein.

4.3    Governing Law, Jurisdiction and Venue. This Agreement shall be governed
by and construed in accordance with the laws of the State of Arizona without
regard to the application of its conflict-of-law principles. Each party hereby
consents to the jurisdiction of the courts of Maricopa County Arizona for the
purposes of all actions commenced under or in connection with this Agreement.

4.4    Binding Effect. This Agreement shall be binding upon and shall inure to
the benefit of each of the parties hereto as well as their respective heirs
successors and assigns.

4.5    Authority. The signature of the person executing this Assignment
evidences the full power and authority of such person to enter into this
Assignment on behalf of the party he or she represents, and the terms applicable
to such party hereunder shall be valid and binding upon the party he or she
represents.

E-2

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4.6    Entire Agreement. This Assignment constitutes the entire and final
agreement between the parties with respect to the subject matter hereof and may
not be changed, terminated or otherwise varied except by writing duly executed
by the parties.

4.7    Captions. All captions in this Assignment are included herein for
convenience of reference only and shall not constitute part of this Assignment
for any other purpose.

4.8    Counterparts. This Assignment may be executed in any number of
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same agreement.

IN WITNESS WHEREOF the parties hereto have executed this Assignment effective as
of the Effective Date.
[SIGNATURES ON FOLLOWING PAGE]

E-3

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ASSIGNOR:
________________________________, a _______________
,
a(n)     

By:     
Name:     
Title:     

ACKNOWLEDGMENT

STATE OF ARIZONA
)
 
 
)
 
COUNTY OF MARICOPA
)
 
 
 
 
On _______________, 2017, before me, ______________________, a Notary Public in
and for the State of Arizona, personally appeared ________________________,
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person whose name is subscribed to the within instrument and
acknowledged to me that he executed the same in his authorized capacity, and
that by his signature on the instrument the person, or the entity upon behalf of
which ______________________ acted, executed the instrument.

______________________________________
Signature

 
(Space above for official notarial seal)
 
 
Assignment and Assumption of Lease
Dated: ____________________, 2017
Pages: 5
 
Other signers: ___________________
 

E-4

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ASSIGNEE:

,
a(n)     

By:     
Name:     
Title:     

STATE OF ___________    )
) ss.
County of _____________    )

Acknowledged before me this ____ day of _________________, 2017, by __________,
the ______________ of ____________________, a _______________, for and on behalf
thereof.
    
Notary Public
My commission expires:
    

E-5

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EXHIBIT F
FORM OF BLANKET CONVEYANCE,
BILL OF SALE AND GENERAL ASSIGNMENT
_____________________________, a Delaware limited liability company
(“Assignor”), and _________________, a ______________________ (“Assignee”),
hereby enter into this BLANKET CONVEYANCE, BILL OF SALE AND GENERAL ASSIGNMENT
(this “Assignment”) as of ___________, 2017.
W I T N E S S E T H:
WHEREAS, of even date herewith, Assignor conveyed to Assignee its interest in
the property (the “Land”) described on Exhibit A attached hereto and made a part
hereof for all purposes, together with the hotel and all improvements located
thereon (collectively, the “Hotel” and together with the Land, the “Property”);
and
WHEREAS, it is the desire of Assignor hereby to assign, transfer and convey to
Assignee certain personal property and other rights of Assignor associated with
the Property, as hereinafter set forth.
NOW, THEREFORE, in consideration of the receipt of Ten and No/100 Dollars
($10.00) and other good and valuable consideration, in hand paid by Assignee to
Assignor, the receipt and sufficiency of which are hereby acknowledged and
confessed by Assignor:
(1)
Assignment. Assignor does hereby sell, transfer, assign and convey to Assignee
and its successors and assigns, and Assignee does hereby assume and accept, all
of Assignor’s right, title, and interest, if any, in and to the following
(collectively, the “Assigned Property”):

(a) [FINAL PROVISIONS FROM SECTION 1.2 TO BE INSERTED]
TO HAVE AND TO HOLD the Assigned Property unto Assignee and Assignee’s
successors, legal representatives and assigns, forever.
(2)    Assumption. Assignee hereby agrees to assume, fulfill, perform and
discharge, the various liabilities, duties, covenants, obligations and
agreements of the Assignor under or with respect to the Assigned Property
arising from and after the date hereof. Assignor retains all obligations of
Assignor accruing prior to the date hereof under or with respect to the Assigned
Property except to the extent any such obligation is prorated and adjusted
pursuant to Section 10 of that certain Purchase and Sale Agreement by and
between Assignor, [other Seller] and Assignee and dated _____________ __, 2017.
(3)    Indemnity. Assignee shall indemnify, defend and hold Assignor harmless
from and against all liabilities and obligations of Assignee relating to the
Assigned Property to the extent that such obligations are applicable to the
period, and required to be performed, from and after the

F-1

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effective date of this Assignment. Assignor shall indemnify, defend and hold
Assignee harmless from and against all liabilities and obligations of Assignor
relating to the Assigned Property to the extent that such obligations are
applicable to the period, and were required to be performed, prior to the
effective date of this Assignment.
(4)    Governing Law. This Assignment shall be governed by, and construed under,
the laws of the State of Arizona.
(5)    Counterparts. This Assignment may be executed in multiple counterparts,
which shall together constitute a single document. Facsimile signatures shall be
deemed to be the equivalent of original signatures for purposes of this
Agreement.
[NO FURTHER TEXT ON THIS PAGE; SIGNATURE PAGES FOLLOW]

F-2

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IN WITNESS WHEREOF, Assignor and Assignee have executed this Assignment as of
the date first above written.
ASSIGNOR:
    
By:    
Name:    
Title:    
ASSIGNEE:
[INSERT SIGNATURE BLOCK]

F-3

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EXHIBIT G
FORM OF FIRPTA CERTIFICATE
Section 1445 of the Internal Revenue Code of 1986, as amended (the “Code”),
provides that a transferee of a U.S. real property interest must withhold tax if
the transferor is a foreign person or entity. To inform the transferee that
withholding of tax is not required upon the disposition of a U.S. real property
interest by _________________, a __________________ (the “Seller”), the
undersigned hereby certifies the following on behalf of the Company:
(13)
The Seller is not a foreign person, foreign corporation, foreign partnership,
foreign trust, or foreign estate (as those terms are defined in the Code and the
Income Tax Regulations promulgated thereunder);

(14)
The Seller’s U.S. Employer identification number is ________________; and

(15)
The Seller’s office address is: c/o _________________________.

The undersigned understands that this certification may be disclosed to the
Internal Revenue Service by the transferee and that any false statement
contained in this Agreement could be punished by fine, imprisonment or both.
Under penalties of perjury, the undersigned declares that the undersigned has
examined this certification and that, to the best of the undersigned’s knowledge
and belief, it is true, correct and complete, and the undersigned further
declares that the undersigned has authority to sign this document.
[NO FURTHER TEXT ON THIS PAGE; SIGNATURE PAGE FOLLOWS]

G-1

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SELLER:
    
By:    
Name:    
Title:    

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EXHIBIT H

MANAGEMENT AGREEMENT

[the form transmitted by John Jacobsen to Jonathan Brohard and others by email
on February 21, 2017]

H-1

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EXHIBIT I

FORM OF SELLER’S AFFIDAVITS

[see attached]

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firstamericantitlelogo.jpg [firstamericantitlelogo.jpg]
First American Title Insurance Company

    
OWNER’S AFFIDAVIT AND GAP INDEMNITY

First American Title Insurance Company Commitment Nos. NCS-830777-DC72
(L’Auberge Newco) and NCS-830776-DC72 (Orchards Newco) (collectively, the “Title
Commitment”).

BEFORE ME, the undersigned authority, personally appeared ___________________
(the “Affiant”), the ______________________ of IMH Financial Corporation, a
Delaware corporation, the sole member of L’Auberge Newco, LLC, a Delaware
limited liability company, and Orchards Newco, LLC, a Delaware limited liability
company (collectively, the “Owner”), who first being duly sworn, deposes and
states as follows:

1.
Affiant is duly authorized to make this affidavit on behalf of the Owner.

2.    To Affiant’s knowledge, the Owner is the titleholder of that certain real
property described in the above-referenced Title Commitment, and on “Exhibit A”
attached hereto, (the “Property”).

3.    To Affiant’s knowledge, the Owner is entitled to possession of the
Property and except for the leases/tenants listed on Exhibit “B” attached hereto
and except for matters set forth or referred to in the above-referenced Title
Commitment, there is no other person or entity in possession which has any right
in the Property.

4. To Affiant’s knowledge, the Owner has not entered into any written agreement
with any real estate broker.

5.    To Affiant’s knowledge, based solely on a Zoning Analysis Report dated
January 24, 2017, and amended January 25, 2017, prepared by AEI Consultants as
Project No. 367589, the Property is currently zoned PD: Planned Development
Zoning District & State Route 89A Character District (sign regulation district).
To Affiant’s knowledge, there is no proposed change in zoning for the Property.

6.    To Affiant’s knowledge, except for any matters set forth or referred to in
the above-referenced Title Commitment, all real estate taxes, special
assessments, water and sewer charges and management fees, if any, are fully
paid.

7.    To Affiant’s knowledge, except as disclosed or referred to in the
above-referenced Title Commitment, there are no unrecorded labor, mechanics’, or
materialmen’s liens against the Property.
    
Also, during the period of six months immediately preceding the date of this
affidavit, except as disclosed or referred to in the above-referenced Title
Commitment, no work has been done and no materials have been furnished in
connection with the erection, equipment, repair, protection or removal of any
building or other structure on the Property or in connection with the
improvement of the Property for which such work or materials have not been paid
in full. Owner, by the undersigned, agrees to indemnify and hold harmless First
American Title Insurance Company against any and all claims arising therefrom.

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First American Title Insurance Company

8.    To Affiant’s knowledge, except as may be disclosed or referred to in the
above-referenced Title Commitment, there are no unrecorded options or contracts
to purchase, contracts for deed or mortgage commitments, sales agreements,
participation agreements, mortgages, or unrecorded deeds, easements or
rights-of-way for users or adverse interest with respect to the Property.

9.    To Affiant’s knowledge, except for the leases/tenants listed on Exhibit
“B” attached hereto and except for other matters that may be disclosed or
referred to in the above-referenced Title Commitment, there are no unrecorded
existing tenancies, leases or other occupancies affecting the Property. To
Affiant’s knowledge, any such unrecorded tenancies, leases or other occupancies,
if any, contain no options to purchase the Property or rights of first refusal.

10.    To Affiant’s knowledge, there is no action or proceeding, including but
not limited to bankruptcy, which is now pending against Owner in any State or
Federal Court, nor to Affiant’s knowledge is there any attachment, judgment or
other encumbrance which may now constitute a lien upon the Property except as
may be disclosed or referred to in the above-referenced Title Commitment, nor to
Affiant’s knowledge are there any claims or pending claims against Owner which
may be satisfied through a lien or attachment against the Property except as may
be disclosed or referred to in the above-referenced Title Commitment.

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Owner’s Affidavit and Gap Indemnity    Page 4

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11. To Affiant’s knowledge, the Owner has received no written notice (except as
may have been disclosed in the public records of the applicable jurisdiction) of
an officially proposed or pending special assessment or a pending taking of any
portion of the Property by any governmental body; and to the Affiant’s
knowledge, there has been no work done on the Property, nor notice received that
work is to be done on the Property by the municipality (county, city, borough or
township), or at its direction, including but not limited to the installation of
water or sewer lines or of other utilities, or for improvements such as paving
or repaving of streets or alleys, or the installation of curbs and sidewalks.

12.    To Affiant’s knowledge, the Owner has received no written notice of past
or present violations of any covenants, conditions, restrictions and/or
agreements set forth in the above-referenced Title Commitment for the Property
which remains uncured, and to Affiant’s knowledge any charge or assessment
provided for in the covenants, conditions and restriction that have become due
and payable have been duly paid as of the date hereof.

13.    To Affiant’s knowledge, the Owner has received (or will receive prior to
the closing) any and all partnership and/or membership consents and/or corporate
resolutions necessary in order to authorize the conveyance of the Property.
14.    To Affiant’s knowledge, the Owner is not and has not been in the business
of and the Property has not been and will not be used for the business of (a)
purchasing on credit any of the following: perishable fruits, vegetables or
other perishable agricultural commodities, poultry, meat or poultry or meat
products on credit, (b) distributing, processing, wholesaling, canning, storing
or serving perishable fruits, vegetables or other perishable agricultural
commodities, poultry, meat or poultry or meat products and there are no matters
pending against the Owner that could give rise to a trust or lien that would
attach to the property under The Perishable Agricultural Commodities Act,
1930 (7 U.S.C. §§499a, et seq.) or the Packers and Stockyards Act (7 U.S.C.
§§181 et seq.) or under similar state laws.

15.    To Affiant’s knowledge, the Owner is not a foreign Person, but rather is
a “United States person” within the meaning of Section 7701(a)(30) of the
Internal Revenue Code of 1986, as amended (the “Code”), and that Owner’s true
and correct United States taxpayer identification number (or Social Security
number) is set forth below opposite the signature of Owner. Owner is making the
statements set forth herein for the purpose of releasing the Purchaser and/or
Settlement Agent from any withholding obligation, which might otherwise be
imposed under Section 1445(a) of the Code.

THIS AFFIDAVIT is made for the purpose of inducing FIRST AMERICAN TITLE
INSURANCE COMPANY to issue a title insurance policy(s) or other title evidence,
and if acting as escrowee or closing agent, then to disburse any funds held as
escrowee or closing agent. Owner hereby indemnifies and agrees to save harmless
FIRST AMERICAN TITLE INSURANCE COMPANY against any damages or expense, including
attorney fees, sustained as a result of any of the foregoing matters not being
true and accurate and further indemnifies FIRST AMERICAN TITLE INSURANCE COMPANY
as to defects, liens, encumbrances, adverse claims or other matters, if any,
created by Owner, and first appearing on the public records or attaching
subsequent to the most recent Effective Date of the above-referenced Commitment
but prior to the date the instruments to be insured in said policy(s) are
recorded.

H-1

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First American Title Insurance Company

Nothing in this Affidavit shall affect in any way title insurance coverage
heretofore provided to Owner by FIRST AMERICAN TITLE INSURANCE COMPANY or its
affiliates, or their respective predecessors-in-interest, with respect to the
Property.

As used herein, the term “Affiant’s knowledge” means the current actual
knowledge of Affiant as of the date hereof, without duty of independent
investigation. Affiant represents that Affiant is the person most likely to have
knowledge of the matters set forth herein with respect to the Property. Affiant
makes this Affidavit in his above-described corporate capacity on behalf of
Owner. Notwithstanding anything to the contrary in this Affidavit or otherwise,
in no event shall Affiant be personally liable for any indemnifications or
undertakings of Owner set forth herein or any inaccuracy of the statements or
representations made herein.

[signature on following page]

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Owner’s Affidavit and Gap Indemnity    Page 2

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First American Title Insurance Company

Dated as of this _____ day of                , 2017.

EIN:______________________                                        
___________________________acting in his capacity as
______________________ of IMH Financial Corporation, a
Delaware corporation, the sole member of Owner
                                        
                    
STATE OF ARIZONA
COUNTY OF MARICOPA, to-wit:

Sworn to and subscribed before me this ______ day of _____________, 2017.

    __________________________________________
NOTARY PUBLIC
        
[NOTARY SEAL]

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First American Title Insurance Company

“EXHIBIT A”

L’Auberge Newco, LLC

PARCEL NO. 1:
A PARCEL OF LAND SITUATED IN THE WEST HALF OF SECTION 8, TOWNSHIP 17 NORTH,
RANGE 6 EAST, OF THE GILA AND SALT RIVER BASE AND MERIDIAN, COCONINO COUNTY,
ARIZONA, BEING MORE PARTICULARLY DESCRIBED AS FOLLOWS:

COMMENCING AT THE WEST QUARTER CORNER OF SAID SECTION 8, AS MARKED BY A B.L.M
BRASS CAPPED PIPE UNDER DRAIN COVER IN SIDEWALK AND FROM WHICH THE SOUTHWEST
CORNER OF SAID SECTION 8, AS MARKED BY A B.L.M BRASS CAPPED PIPE IN CAIRN, LIES
SOUTH 01 DEGREES 42 MINUTES 03 SECONDS EAST (BASIS OF BEARINGS FOR THIS
DESCRIPTION), A DISTANCE OF 2621.04 FEET;

THENCE FROM SAID WEST QUARTER CORNER, NORTH 12 DEGREES 54 MINUTES 17 SECONDS
EAST (NORTH 12 DEGREES 27 MINUTES 33 SECONDS EAST, RECORD), A DISTANCE OF 76.90
FEET (76.90 FEET RECORD), TO A POINT ON THE SOUTHEASTERLY RIGHT OF WAY LINE OF
ARIZONA STATE HIGHWAY 89-A;

THENCE NORTHEASTERLY ALONG SAID SOUTHEASTERLY RIGHT OF WAY LINE BEING A
NON-TANGENT CURVE, CONCAVE TO THE SOUTHEAST, HAVING A RADIUS OF 2150.00 FEET
(2,150.00 FEET, RECORD), A CHORD BEARING OF NORTH 23 DEGREES 04 MINUTES 02
SECONDS EAST AND A CENTRAL ANGLE OF 05 DEGREES 24 MINUTES 36 SECONDS (05 DEGREES
24 MINUTES 18 SECONDS, RECORD), AN ARC DISTANCE OF 203.00 FEET (203.00 FEET,
RECORD), TO A CONCRETE NAIL WITH BRASS TAG STAMPED “LS14184” SET AT THE POSITION
OF A PREVIOUSLY SET COTTON PICKER SPINDLE WITH TAG STAMPED “LS14184”;

THENCE CONTINUING NORTHEASTERLY ALONG SAID SOUTHEASTERLY RIGHT OF WAY LINE,
BEING A CURVE, CONCAVE TO THE SOUTHEAST, HAVING A RADIUS OF 2150.00 FEET
(2,150.00 FEET RECORD), A CHORD BEARING OF NORTH 26 DEGREES 36 MINUTES 58
SECONDS EAST, A CENTRAL ANGLE OF 01 DEGREES 41 MINUTES 17 SECONDS (01 DEGREES 41
MINUTES 39 SECONDS, RECORD), AN ARC DISTANCE OF 63.35 FEET (63.57 FEET, RECORD),
TO A CONCRETE NAIL WITH BRASS TAG STAMPED “LS14184” SET AT THE POSITION OF A
PREVIOUSLY SET CHISELED “+” IN CONCRETE;

THENCE DEPARTING SAID SOUTHEASTERLY RIGHT OF WAY LINE OF ARIZONA STATE HIGHWAY
89-A, SOUTH 89 DEGREES 51 MINUTES 31 SECONDS EAST (NORTH 89 DEGREES 42 MINUTES
07 SECONDS EAST, RECORD), A DISTANCE OF 3.74 FEET TO A POINT ON THE
NORTHEASTERLY LINE OF THAT CERTAIN TRACT OF LAND ACQUIRED BY THE CITY OF SEDONA
IN DECEMBER 2005 AND DESCRIBED IN DOCUMENT NO. OF THE COCONINO COUNTY RECORDER’S
OFFICE IN COCONINO COUNTY, ARIZONA;

THENCE ALONG THE NORTH LINE OF THE ORCHARDS/L’AUBERGE PARCEL, SOUTH 89 DEGREES
51 MINUTES 31 SECONDS EAST (NORTH 89 DEGREES 42 MINUTES 07 SECONDS EAST,
RECORD), A DISTANCE OF 212.10 FEET TO A ½” REBAR WITH CAP STAMPED “LS14184”
(PREVIOUSLY SET);

THENCE ALONG THE NORTHERLY LINE OF THE ORCHARDS/L’AUBERGE PARCEL, SOUTH 40
DEGREES 28 MINUTES 17 SECONDS EAST (SOUTH 41 DEGREES 45 MINUTES 00 SECONDS EAST,
RECORD), A DISTANCE OF 62.25 FEET TO THE POINT OF BEGINNING;

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First American Title Insurance Company

THENCE SOUTH 40 DEGREES 28 MINUTES 17 SECONDS EAST (SOUTH 41 DEGREES 45 MINUTES
00 SECONDS EAST, RECORD), A DISTANCE OF 47.00 FEET TO A ½” REBAR WITH TAG
STAMPED “LS14184” (PREVIOUSLY SET);
THENCE NORTH 38 DEGREES 57 MINUTES 49 SECONDS EAST, (NORTH 38 DEGREES 15 MINUTES
00
SECONDS EAST RECORD), A DISTANCE OF 150.75 FEET (152.00 FEET RECORD) TO A ½”
REBAR WITH
TAG STAMPED “LS14184” (PREVIOUSLY SET).

THENCE SOUTH 50 DEGREES 57 MINUTES 03 SECONDS EAST, (SOUTH 51 DEGREES 45 MINUTES
00 SECONDS EAST RECORD), A DISTANCE OF 82.00 FEET (82.00 FEET RECORD) TO A ½”
REBAR WITH TAG STAMPED “LS14184” (PREVIOUSLY SET);

THENCE NORTH 57 DEGREES 27 MINUTES 57 SECONDS EAST (NORTH 56 DEGREES 40 MINUTES
00 SECONDS EAST RECORD), A DISTANCE OF 26.55 FEET (26.5 FEET RECORD) TO A ½”
REBAR WITH TAG STAMPED “LS14184” (PREVIOUSLY SET);

THENCE SOUTH 32 DEGREES 32 MINUTES 03 SECONDS EAST (SOUTH 33 DEGREES 20 MINUTES
00 SECONDS EAST RECORD), A DISTANCE OF 523.60 FEET (542.50 FEET RECORD) TO A
POINT IN OAK CREEK THAT LIES ON THE NORTHWESTERLY BOUNDARY OF THE “BREWER
TRACT”, DESCRIBED IN , OF THE COCONINO COUNTY RECORDER’S OFFICE AND FROM WHICH A
½” REBAR WITH TAG STAMPED “LS14184” PREVIOUSLY SET AS A WITNESS CORNER LIES,
NORTH 32 DEGREES 32 MINUTES 03 SECONDS WEST, A DISTANCE OF 100.00 FEET;

THENCE SOUTH 51 DEGREES 44 MINUTES 33 SECONDS WEST (NO RECORD) A DISTANCE OF
6.59 FEET (NO RECORD) TO THE WESTERLY CORNER OF SAID “BREWER TRACT” BEING A
PORTION IN OAK CREEK;

THENCE SOUTH 54 DEGREES 01 MINUTES 27 SECONDS EAST (NO RECORD), A DISTANCE OF
19.52 FEET (NO RECORD) ALONG THE SOUTHWESTERLY BOUNDARY OF SAID “BREWER TRACT”
TO A POINT IN OAK CREEK;

THENCE SOUTH 52 DEGREES 31 MINUTES 27 SECONDS WEST (SOUTH 51 DEGREES 43 MINUTES
30 SECONDS WEST, RECORD), A DISTANCE OF 11.99 FEET (11.40 FEET RECORD) TO A
POINT IN OAK CREEK;

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Owner’s Affidavit and Gap Indemnity    Page 5

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First American Title Insurance Company

THENCE SOUTH 69 DEGREES 02 MINUTES 57 SECONDS WEST (SOUTH 68 DEGREES 15 MINUTES
00 SECONDS WEST RECORD), A DISTANCE OF 166.54 FEET (166.54 FEET) TO A POINT IN
OAK CREEK;

THENCE SOUTH 48 DEGREES 22 MINUTES 03 SECONDS EAST (SOUTH 49 DEGREES 10 MINUTES
00 SECONDS EAST, RECORD), A DISTANCE OF 60.39 FEET (60.40 FEET RECORD), TO A ½”
REBAR WITH TAG STAMPED “PE2924” (PREVIOUSLY SET);

THENCE SOUTH 63 DEGREES 20 MINUTES 02 SECONDS WEST, (SOUTH 62 DEGREES 02 MINUTES
45 SECONDS WEST, RECORD), A DISTANCE OF 835.28 FEET (832.38 FEET RECORD) TO A
POINT IN OAK CREEK THAT IS ON THE WEST LINE OF SAID SECTION 8 AND LIES SOUTH 01
DEGREES 42 MINUTES 03 SECONDS EAST, A DISTANCE OF 624.60 FEET FROM SAID WEST
QUARTER CORNER OF SECTION 8;

THENCE NORTH 01 DEGREES 42 MINUTES 03 SECONDS WEST (NORTH 02 DEGREES 30 MINUTES
00 SECONDS WEST, RECORD), A DISTANCE OF 447.60 FEET (447.60 FEET RECORD) ALONG
SAID WEST LINE OF SECTION 8 TO A ½” REBAR WITH TAG STAMPED “LS14184” (PREVIOUSLY
SET);

THENCE NORTH 38 DEGREES 37 MINUTES 57 SECONDS EAST (NORTH 37 DEGREES 50 MINUTES
00 SECONDS EAST, RECORD), A DISTANCE OF 207.55 FEET TO A ½” REBAR WITH TAG
STAMPED “LS14184” (PREVIOUSLY SET);

THENCE NORTH 38 DEGREES 09 MINUTES 30 SECONDS EAST (NORTH 37 DEGREES 50 MINUTES
00 SECONDS EAST, RECORD), A DISTANCE OF 109.23 FEET TO A ½” REBAR WITH NO
IDENTIFICATION (PREVIOUSLY FOUND);

THENCE NORTH 49 DEGREES 44 MINUTES 02 SECONDS EAST, A DISTANCE OF 94.50 FEET;
THENCE NORTH 37 DEGREES 42 MINUTES 35 SECONDS EAST, A DISTANCE OF 174.72 FEET TO
THE
POINT OF BEGINNING.

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Owner’s Affidavit and Gap Indemnity    Page 6

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First American Title Insurance Company

EXCEPTING THEREFROM THE FOLLOWING DESCRIBED PROPERTY:

A PARCEL OF LAND BEING A PORTION OF “PARCEL 1B” AS SAID “PARCEL 1B” IS SHOWN AND
DESCRIBED ON THAT CERTAIN ALTA/ACSM LAND TITLE SURVEY MAP RECORDED AS INSTRUMENT
NUMBER IN THE OFFICIAL RECORDS OF COCONINO COUNTY, SAID PARCEL BEING SITUATED IN
THE WEST HALF OF SECTION 8, TOWNSHIP 17 NORTH, RANGE 6 EAST OF THE GILA AND SALT
RIVER BASE AND MERIDIAN IN COCONINO COUNTY, ARIZONA, AND BEING MORE PARTICULARLY
DESCRIBED AS FOLLOWS:

COMMENCING AT THE WEST QUARTER CORNER OF SAID SECTION 8, AS MARKED BY A G.L.O.
BRASS CAPPED PIPE UNDER DRAIN COVER IN SIDEWALK AND FROM WHICH THE SOUTHWEST
CORNER OF SAID SECTION 8, AS MARKED BY A B.L.M BRASS CAPPED PIPE IN CAIRN, LIES
SOUTH 01°42’03” EAST (BASIS OF BEARINGS FOR THIS DESCRIPTION), A DISTANCE OF
2621.04 FEET;

THENCE FROM SAID WEST QUARTER CORNER, ALONG THE WEST LINE OF THE SOUTHWEST
QUARTER OF SAID SECTION 8, SOUTH 01°42’03” EAST, A DISTANCE OF 624.60 FEET TO
THE SOUTHWEST CORNER OF SAID “PARCEL 1B”;

THENCE ALONG THE SOUTHERLY BOUNDARY OF SAID “PARCEL 1B”, NORTH 63°20’02” EAST A
DISTANCE OF 579.51 FEET TO THE POINT OF BEGINNING;

THENCE CONTINUING ALONG SAID SOUTHERLY BOUNDARY OF “PARCEL 1B”, NORTH 63°20’02”
EAST A DISTANCE OF 255.77 FEET;

THENCE CONTINUING ALONG SAID SOUTHERLY BOUNDARY OF “PARCEL 1B”, NORTH 48°22’03”
WEST A DISTANCE OF 60.39 FEET;

THENCE CONTINUING ALONG SAID SOUTHERLY BOUNDARY OF “PARCEL 1B”, NORTH 69°02’57”
EAST A DISTANCE OF 32.29 FEET TO THE MOST NORTHERLY CORNER OF THE WECKERLY
PARCEL AS DESCRIBED IN OF THE COCONINO COUNTY RECORDER’S OFFICE;

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First American Title Insurance Company

THENCE ALONG A PROLONGATION OF THE NORTHEASTERLY BOUNDARY OF SAID WECKERLY
PARCEL, NORTH 54°01’29” WEST A DISTANCE OF 23.88 FEET, MORE OR LESS, TO THE
CENTERLINE OF OAK CREEK AS IT MAY EXIST FROM TIME TO TIME IN THE FUTURE;

THENCE ALONG SAID CENTERLINE OF OAK CREEK, AS IT MAY EXIST FROM TIME TO TIME IN
THE FUTURE, AN APPROXIMATE BEARING OF SOUTH 65°34’01” WEST A DISTANCE OF 111.83
FEET, MORE OR LESS;

THENCE CONTINUING ALONG SAID CENTERLINE OF OAK CREEK, AS IT MAY EXIST FROM TIME
TO TIME IN THE FUTURE, AN APPROXIMATE BEARING OF SOUTH 69°31’14” WEST A DISTANCE
OF 163.52 FEET, MORE OR LESS, TO THE INTERSECTION OF SAID CENTERLINE OF OAK
CREEK WITH THE NORTHWESTERLY PROLONGATION OF THE SOUTHWESTERLY BOUNDARY OF THE
MILLER PARCEL AS DESCRIBED IN OF THE COCONINO COUNTY RECORDER’S OFFICE;

THENCE IN A REVERSED DIRECTION OF SAID NORTHWESTERLY PROLONGATION OF THE
SOUTHWESTERLY BOUNDARY OF THE MILLER PARCEL, SOUTH 38°15’58” EAST A DISTANCE OF
98.08 FEET, MORE OR LESS, TO THE POINT OF BEGINNING.
PARCEL NO. 2:
AN EASEMENT FOR INGRESS, EGRESS AND PUBLIC UTILITIES CREATED BY INSTRUMENT
RECORDED DECEMBER 22, 1982, IN DOCKET 911, PAGE 206, RECORDS OF COCONINO COUNTY,
ARIZONA, MORE
PARTICULARLY DESCRIBED AS FOLLOWS:
A STRIP OF LAND 33.00 FEET WIDE SITUATED IN THE SOUTHEAST QUARTER OF SECTION 7,
TOWNSHIP 17 NORTH, RANGE 6 EAST, OF THE GILA AND SALT RIVER BASE AND MERIDIAN,
COCONINO COUNTY, ARIZONA, BEING MORE PARTICULARLY DEFINED AS LYING 16.50 FEET ON
EACH SIDE OF THE FOLLOWING DESCRIBED CENTERLINE:

COMMENCING AT THE EAST QUARTER CORNER OF SAID SECTION 7, AS MARKED BY A GLO
BRASS CAPPED PIPE UNDER DRAIN COVER IN SIDEWALK AND FROM WHICH THE SOUTHEAST
CORNER OF SAID SECTION 7, AS MARKED BY A B.L.M.

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First American Title Insurance Company

BRASS CAPPED PIPE, LIES SOUTH 01 DEGREES 42 MINUTES 03 SECONDS EAST (BASIS OF
BEARINGS FOR THIS DESCRIPTION), A DISTANCE OF 2621.04 FEET;

THENCE SOUTH 01 DEGREES 42 MINUTES 03 SECONDS EAST (SOUTH 02 DEGREES 30 MINUTES
00 SECONDS EAST, RECORDED), A DISTANCE OF 261.40 FEET (261.4 FEET RECORD) ALONG
THE EAST LINE OF SAID SOUTHEAST QUARTER OF SECTION 7 TO THE POINT OF BEGINNING
OF THIS CENTER LINE (SIDE LINES OF STRIP OF LAND BEGIN ON SAID EAST LINE);

THENCE SOUTH 28 DEGREES 37 MINUTES 57 SECONDS WEST (SOUTH 27 DEGREES 50 MINUTES
00 SECONDS WEST RECORD), A DISTANCE OF 500.20 FEET (500.2 FEET RECORD);

THENCE SOUTH 37 DEGREES 53 MINUTES 57 SECONDS WEST (SOUTH 37 DEGREES 06 MINUTES
00 SECONDS WEST, RECORD), A DISTANCE OF 330.00 FEET (330.00 FEET RECORD) TO THE
TERMINUS OF CENTER LINE;

EXCEPT THEREFROM ALL THAT PORTION THEREOF LYING WITHIN THE RIGHT OF WAY OF
ARIZONA HIGHWAY 89-A;
PARCEL NO. 3:
A PERPETUAL, NON-EXCLUSIVE EASEMENT FOR INGRESS AND EGRESS AS SET FORTH IN THAT
CERTAIN EASEMENT AGREEMENT RECORDED APRIL 25, 2002 IN INSTRUMENT NUMBER 2002
3138455 AND RE-RECORDED JULY 18, 2005 IN INSTRUMENT NUMBER 2005 3332653 OF
OFFICIAL RECORDS, COCONINO COUNTY, ARIZONA.
PARCEL NO. 4:
A PARCEL OF LAND BEING A PORTION OF THE “PACINI TRACT” DESCRIBED IN PARCEL II IN
DOCKET 1711, PAGE 863 AND 864 OF THE COCONINO COUNTY RECORDERS OFFICE AND
SITUATED IN THE WEST HALF OF SECTION 8, TOWNSHIP 17 NORTH, RANGE 6 EAST, OF THE
GILA AND SALT RIVER BASE AND MERIDIAN, COCONINO COUNTY, ARIZONA, SAID PARCEL
BEING MORE PARTICULARLY DESCRIBED AS FOLLOWS:

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First American Title Insurance Company

COMMENCING AT THE WEST QUARTER CORNER OF SAID SECTION 8, AS MARKED BY A B.L.M
BRASS CAPPED PIPE UNDER DRAIN COVER IN SIDEWALK AND FROM WHICH THE SOUTHWEST
CORNER OF SAID SECTION 8, AS MARKED BY A B.L.M BRASS CAPPED PIPE IN CAIRN, LIES
SOUTH 01 DEGREES 42 MINUTES 03 SECONDS EAST (BASIS OF BEARINGS FOR THIS
DESCRIPTION), A DISTANCE OF 2621.04 FEET;

THENCE FROM SAID WEST QUARTER CORNER, NORTH 21 DEGREES 27 MINUTES 04 SECONDS
EAST, A DISTANCE OF 342.00 FEET (NORTH 20 DEGREES 32 MINUTES EAST, A DISTANCE OF
342 FEET, RECORD) TO A ½” REBAR WITH TAG STAMPED “LS14184” SET AT THE POSITION
OF A PREVIOUSLY SET CHISELED “+” IN CONCRETE (PREVIOUSLY SET) ON THE
SOUTHEASTERLY RIGHT OF WAY LINE OF ARIZONA HIGHWAY 89-A;

THENCE DEPARTING SAID SOUTHEASTERLY RIGHT OF WAY LINE OF ARIZONA HIGHWAY 89-A
SOUTH 89 DEGREES 51 MINUTES 31 SECONDS EAST, A DISTANCE OF 215.83 FEET (NORTH 89
DEGREES 10 MINUTES EAST, A DISTANCE OF 217.50 FEET RECORD), TO A ½” REBAR WITH
PLASTIC CAP STAMPED
“LS14184” (FOUND);
THENCE SOUTH 40 DEGREES 28 MINUTES 17 SECONDS EAST, A DISTANCE OF 109.25 FEET
(SOUTH 41
DEGREES 45 MINUTES EAST, A DISTANCE OF 110.77 FEET RECORD) TO A ½” REBAR WITH
PLASTIC CAP STAMPED “LS14184” (PREVIOUSLY SET);

THENCE NORTH 38 DEGREES 57 MINUTES 49 SECONDS EAST, A DISTANCE OF 150.75 FEET
(NORTH 38 DEGREES 15 MINUTES EAST, A DISTANCE OF 152.0 FEET RECORD), TO A ½”
REBAR WITH TAG STAMPED “LS14184” (PREVIOUSLY SET) AT A CORNER OF SAID “PACINI
TRACT”;

THENCE ALONG THE BOUNDARY OF SAID “PACINI TRACT” SOUTH 50 DEGREES 57 MINUTES 03
SECONDS EAST, A DISTANCE OF 82.00 FEET (SAME AS RECORD) TO A ½” REBAR WITH TAG
STAMPED “LS14184” (FOUND) AT A CORNER THEREOF;

THENCE CONTINUING ALONG THE BOUNDARY OF SAID “PACINI TRACT” NORTH 57 DEGREES 27
MINUTES 57 SECONDS EAST, A DISTANCE OF 26.55 FEET (SAME AS

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First American Title Insurance Company

RECORD) TO A ½” REBAR WITH TAG STAMPED “LS14184” (FOUND) AT A CORNER THEREOF;

THENCE CONTINUING ALONG THE BOUNDARY OF SAID “PACINI TRACT”, SOUTH 32 DEGREES 32
MINUTES 03 SECONDS EAST, A DISTANCE OF 5.00 FEET TO THE POINT OF BEGINNING;

THENCE NORTH 57 DEGREES 27 MINUTES 57 SECONDS EAST, A DISTANCE OF 58.00 FEET TO
A ½” REBAR WITH TAG STAMPED “LS14184”;

THENCE NORTH 89 DEGREES 27 MINUTES 57 SECONDS EAST, A DISTANCE OF 35.39 FEET TO
A ½” REBAR WITH TAG STAMPED “LS14184”;

THENCE SOUTH 00 DEGREES 32 MINUTES 03 SECONDS EAST, A DISTANCE OF 163.25 FEET TO
A ½” REBAR WITH TAG STAMPED “LS14184”;

THENCE SOUTH 32 DEGREES 32 MINUTES 03 SECONDS EAST, A DISTANCE OF 215.13 FEET TO
A ½” REBAR WITH TAG STAMPED “LS14184”;

THENCE SOUTH 31 DEGREES 56 MINUTES 49 SECONDS EAST, A DISTANCE OF 146.28 FEET TO
A POINT ON THE NORTHWESTERLY BOUNDARY OF THE “BREWER TRACT” AS DESCRIBED IN
DOCKET 510, PAGE 496 OF THE COCONINO COUNTY RECORDER’S OFFICE AND THE SOUTHWEST
CORNER OF THE SAID “PACINI TRACT” AND FROM WHICH A ½” REBAR WITH BRASS TAG
STAMPED “LS14184” (PREVIOUSLY SET AS A WITNESS CORNER) BEARS NORTH 32 DEGREES 32
MINUTES 03 SECONDS WEST, A DISTANCE OF 100.00 FEET;

THENCE ALONG THE WESTERLY BOUNDARY OF THE SAID “PACINI TRACT”, NORTH 32 DEGREES
32
MINUTES 03 SECONDS WEST, A DISTANCE OF 518.60 FEET TO THE POINT OF BEGINNING.

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

Owner’s Affidavit and Gap Indemnity    Page 11

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

firstamericantitlelogo.jpg [firstamericantitlelogo.jpg]
First American Title Insurance Company

Orchards Newco, LLC

PARCEL NO. 1:
A PARCEL OF LAND SITUATED IN THE WEST HALF OF SECTION 8, TOWNSHIP 17 NORTH,
RANGE 6 EAST, OF THE GILA AND SALT RIVER BASE AND MERIDIAN, COCONINO COUNTY,
ARIZONA, BEING MORE PARTICULARLY DESCRIBED AS FOLLOWS:

COMMENCING AT THE WEST QUARTER CORNER OF SAID SECTION 8, AS MARKED BY A B.L.M
BRASS CAPPED PIPE UNDER DRAIN COVER IN SIDEWALK AND FROM WHICH THE SOUTHWEST
CORNER OF SAID SECTION 8, AS MARKED BY A B.L.M BRASS CAPPED PIPE IN CAIRN, LIES
SOUTH 01 DEGREES 42 MINUTES 03 SECONDS EAST (BASIS OF BEARINGS FOR THIS
DESCRIPTION), A DISTANCE OF 2621.04 FEET;

THENCE FROM SAID WEST QUARTER CORNER, NORTH 12 DEGREES 54 MINUTES 17 SECONDS
EAST (NORTH 12 DEGREES 27 MINUTES 33 SECONDS EAST, RECORD), A DISTANCE OF 76.90
FEET (76.90 FEET, RECORD) TO A POINT ON THE SOUTHEASTERLY RIGHT-OF-WAY LINE OF
ARIZONA STATE HIGHWAY 89-A;

THENCE NORTHEASTERLY ALONG SAID SOUTHEASTERLY RIGHT OF WAY LINE BEING A
NON-TANGENT CURVE, CONCAVE TO THE SOUTHEAST, HAVING A RADIUS OF 2150.00 FEET
(2150.00 FEET RECORD)., A CHORD BEING OF NORTH 23 DEGREES 04 MINUTES 02 SECONDS
EAST AND A CENTRAL ANGLE OF 05 DEGREES 24 MINUTES 36 SECONDS (05 DEGREES 24
MINUTES 18 SECONDS, RECORD), AN ARC DISTANCE OF 203.00 FEET (203.00 FEET
RECORD), TO A CONCRETE NAIL WITH BRASS TAG STAMPED "LS14184" SET AT THE POSITION
OF A PREVIOUSLY SET COTTON PICKER SPINDLE WITH TAG STAMPED "LS14184";

THENCE DEPARTING SAID SOUTHEASTERLY RIGHT OF WAY LINE OF ARIZONA STATE HIGHWAY
89A, SOUTH 65 DEGREES 25 MINUTES 03 SECONDS EAST, A DISTANCE OF 11.73 FEET TO
THE POINT OF BEGINNING, WHICH LIES ON THE SOUTHEASTERLY LINE OF THAT CERTAIN
TRACT OF LAND ACQUIRED BY THE CITY OF SEDONA IN DECEMBER 2005 AND DESCRIBED IN
DOCUMENT NO. 2005-3361777 OF THE COCONINO COUNTY RECORDER'S OFFICE, COCONINO
COUNTY, ARIZONA;

THENCE ALONG SAID SOUTHEASTERLY LINE, NORTH 24 DEGREES 46 MINUTES 32 SECONDS
EAST, A DISTANCE OF 23.47 FEET;

THENCE CONTINUING ALONG SAID SOUTHEASTERLY LINE, NORTH 21 DEGREES 21 MINUTES 48
SECONDS EAST, A DISTANCE OF 3.63 FEET;

THENCE CONTINUING ALONG SAID SOUTHEASTERLY LINE, NORTH 20 DEGREES 52 MINUTES 26
SECONDS WEST, A DISTANCE OF 8.33 FEET;

THENCE CONTINUING ALONG SAID SOUTHEASTERLY LINE, NORTH 69 DEGREES 07 MINUTES 34
SECONDS EAST, A DISTANCE OF 1.00 FEET;

THENCE CONTINUING ALONG SAID SOUTHEASTERLY LINE, NORTH 19 DEGREES 27 MINUTES 50
SECONDS WEST, A DISTANCE OF 6.81 FEET;

THENCE CONTINUING ALONG SAID SOUTHEASTERLY LINE, NORTH 26 DEGREES 18 MINUTES 08
SECONDS EAST, A DISTANCE OF 19.54 FEET;

THENCE CONTINUING ALONG SAID SOUTHE STERLY LINE, SOUTH 62 DEGREES 51 MINUTES 12
SECONDS EAST, A DISTANCE OF 4.07 FEET;

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Owner’s Affidavit and Gap Indemnity    Page 12

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

firstamericantitlelogo.jpg [firstamericantitlelogo.jpg]
First American Title Insurance Company

THENCE CONTINUING ALONG SAID SOUTHEASTERLY LINE, NORTH 23 DEGREES 53 MINUTES 25
SECONDS EAST, A DISTANCE OF 6.93 FEET;

THENCE CONTINUING ALONG SAID SOUTHEASTERLY LINE OF THAT TRACT OF LAND ACQUIRED
BY THE CITY OF SEDONA IN DECEMBER 2005, NORTH 62 DEGREES 35 MINUTES 35 SECONDS
WEST, A DISTANCE OF 0.55 FEET TO THE NORTH LINE OF THE ORCHARDS/L'AUBERGE
PARCEL;

THENCE ALONG SAID NORTH LINE OF THE ORCHARDS/L'AUBERGE PARCEL, SOUTH 89 DEGREES
51 MINUTES 31 SECONDS EAST (NORTH 89 DEGREES 42 MINUTES 07 SECONDS EAST,
RECORD), A DISTANCE OF 212.10 FEET TO A ½" REBAR WITH CAP STAMPED "LS14184"
(PREVIOUSLY SET);

THENCE SOUTH 40 DEGREES 28 MINUTES 17 SECONDS EAST, (SOUTH 41 DEGREES 45 MINUTES
00 SECONDS EAST, RECORD), A DISTANCE OF 62.25 FEET;

THENCE SOUTH 37 DEGREES 42 MINUTES 35 SECONDS WEST, A DISTANCE OF 174.72 FEET;

THENCE SOUTH 49 DEGREES 44 MINUTES 02 SECONDS WEST, A DISTANCE OF 94.50 FEET TO
A ½" REBAR WITH NO IDENTIFICATION (PREVIOUSLY FOUND);

THENCE NORTH 31 DEGREES 49 MINUTES 11 SECONDS WEST (NORTH 32 DEGREES 21 MINUTES
20 SECONDS WEST, RECORD), A DISTANCE OF 114.47 FEET (113.94 FEET RECORD) TO A ½"
REBAR WITH CAP STAMPED "LS 14184" (PREVIOUSLY SET);

THENCE NORTH 22 DEGREES 35 MINUTES 10 SECONDS EAST (NORTH 24 DEGREES 24 MINUTES
07 SECONDS EAST, RECORD), A DISTANCE OF 66.04 FEET (65.00 FEET, RECORD) TO A
CONCRETE NAIL WITH BRASS TAG STAMPED "LS14184", PREVIOUSLY SET AT THE POSITION
OF A PREVIOUSLY SET CHISELED "+" IN CONCRETE;

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

Owner’s Affidavit and Gap Indemnity    Page 13

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

firstamericantitlelogo.jpg [firstamericantitlelogo.jpg]
First American Title Insurance Company

THENCE NORTH 65 DEGREES 25 MINUTES 03 SECONDS WEST, (NORTH 65 DEGREES 34 MINUTES
02 SECONDS WEST, RECORD), A DISTANCE OF 65.96 FEET TO THE POINT OF BEGINNING.
PARCEL NO. 2:
AN EASEMENT FOR OVERHEAD CANOPIES AND OTHER PURPOSES BY OR PURSUANT TO THAT
CERTAIN SPECIAL WARRANTY DEED (IN LIEU OF CONDEMNATION) RECORDED DECEMBER 27,
2005 IN
DOCUMENT NO. 3361777, OFFICIAL RECORDS OF COCONINO COUNTY, ARIZONA.

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Owner’s Affidavit and Gap Indemnity    Page 14

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firstamericantitlelogo.jpg [firstamericantitlelogo.jpg]
First American Title Insurance Company

“EXHIBIT B”

LEASES / TENANTS
(ATTACH RENT ROLL)

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Owner’s Affidavit and Gap Indemnity    Page 15

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EXHIBIT J

CONTRACTS AND EQUIPMENT LEASES
 
 
 
 
Vendor
Type
Description
Start Date
 
 
 
 
booking.com
Service Agreement
Accommodation Agreement for online booking channel
 
Cintas Fire Protection
Service Agreement
Fire Alarm Monitoring
4/28/2011
FivePals, Inc (Alice)
Service Agreement
Concierge Software
12/29/2016
J Public Relations
Service Agreement
Public Relations & Marketing
11/1/2013
J Public Relations (7th & Wit)
Service Agreement
Online Social Media Management
9/21/2016
Knowcross
Software Agreement
Customer Relations Software
9/28/2014
Marisol Marketing
Service Agreement
Website, search engine, PPC management
10/1/2016
Specialty Textile
Service Agreement
Linen Rental & Laundry
10/6/2010
Taures Technology (MerIT)
Staffing Agreement
Information Tehcnologies Support & Services
8/1/2015
Xerox Smart Document Solutions
Service Agreement
Cost per Print
10/20/2016
 
 
 
 
Equipment Leases:
 
 
 
Great America Financial (Xerox)
Equipment Lease
Xerox Color C70 Copier
10/20/2016
EcoLab Equipment
Equipment Lease
EDR Dishmachine
 

J-1

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

 
 
 
 
 
 
 
 
 
Vendor
Type
Description
Start Date
 
 
 
 
Marisol Marketing
Service Agreement
Website, search engine, PPC management (Orchards)
10/1/2016
Marisol Marketing
Service Agreement
Website, search engine, PPC management (89Agave)
10/1/2016
Specialty Textile
Service Agreement
Linen Rental & Laundry
10/6/2010
Suddenlink
Service Agreement
Cable TV
2/1/2012
Taures Technology (MerIT)
Staffing Agreement
Information Tehcnologies Support & Services
8/1/2015
 
 
 
 
Equipment Leases:
 
 
 
EcoLab Equipment
Equipment Lease
Dishmachine
10/1/2016
EcoLab Equipment
Equipment Lease
Booster Heater
10/1/2016

J-2

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

EXHIBIT K

FORM OF ESTOPPELS
LEASE ESTOPPEL CERTIFICATE
February __, 2017

DiamondRock Acquisition, LLC
c/o DiamondRock Hospitality Company
3 Bethesda Metro Center, Suite 1500
Bethesda, Maryland 20814
Attention: Troy Furbay

L’Auberge Newco, LLC
Orchards Newco, LLC
c/o IMH Financial Corporation
7001 N. Scottsdale Road, Suite 2050
Scottsdale, Arizona 85253
Attention: Lawrence D. Bain, CEO
Re:
Premises located at 270-300 N. Highway 89A in Sedona, Arizona (the
“Property”)    

Ladies and Gentlemen:

The undersigned, Canyon Portal II, L.L.C., an Arizona limited liability company
(“Landlord”), as landlord under (a) that certain Canyon Portal Motel Lease dated
as of March 13, 2009, by and between Landlord and Orchards Annex, LLC, an
Arizona limited liability company (“Original Tenant”), as amended by that
certain Amendment to Lease dated as of July 1, 2011, by and between Landlord and
Original Tenant, as further amended by that certain Second Amendment to Lease
dated as of May 14, 2013, by and between Landlord and Original Tenant, as
assigned to Orchards Newco, LLC, a Delaware limited liability company (“Tenant”)
pursuant to that certain Assignment and Assumption of Lease and Consent to
Assignment and Assumption of Lease (Orchards Annex Property) dated as of May 14,
2013, by and among Original Tenant, Tenant and Landlord, and as further amended
by that certain Third Amendment to Lease dated as of _______________, 2017, by
and between Landlord and Tenant (collectively, the “Orchards Annex Lease”),
pursuant to which Landlord leased to Tenant those certain 28 hotel units in
three buildings located in Sedona, Arizona (“the “Orchards Annex Property”), (b)
that certain Lease for Parking Spaces dated as of January 1, 2012, by and
between Landlord and Orchards Inn & Restaurant LLC, an Arizona limited liability
company (“Original Tenant II”), as amended by that certain Amendment to Lease
dated as of May 1, 2012, by and between Landlord and Original Tenant II, as
further amended by that certain Second Amendment to Lease dated as of May 14,
2013, by and between Landlord and Original Tenant II, and as assigned to Tenant
pursuant to that certain Assignment and Assumption of Lease and Consent to
Assignment and Assumption of Lease (Orchards Inn Parking Lease) dated as of May
14, 2013, by and among Original Tenant II, Tenant and Landlord, and as

K-1

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further amended by that certain Third Amendment to Lease dated as of
_______________, 2017, by and between Landlord and Tenant (collectively, the
“Orchards Inn Parking Lease”), pursuant to which Landlord leased to Tenant 10
parking spaces (the “Orchards Inn Parking Property”), (c) that certain Lease
with a Commencement Date of April 1, 2010, by and between Landlord and L’Auberge
Orchards, LLC, an Arizona limited liability company (“Original Tenant III”), as
amended by that certain First Amendment to Lease dated as of February 1, 2011,
by and between Landlord and Original Tenant III, as further amended by that
certain Second Amendment to Tenant Lease dated as of May 14, 2013, by and
between Landlord and Original Tenant III, and as assigned to Tenant pursuant to
that certain Assignment and Assumption of Lease and Consent to Assignment and
Assumption of Lease (Telephone Room Lease) dated as of May 14, 2013, by and
among Original Tenant III, Tenant and Landlord, and as further amended by that
certain Third Amendment to Lease dated as of _______________, 2017, by and
between Landlord and Tenant (collectively, the “Telephone Room Lease”), pursuant
to which Landlord leased to Tenant that certain space for housing of
telecommunications equipment (“the “Telephone Room Property”), and (d) that
certain Lease dated as of April 1, 2012, by and between Landlord and Original
Tenant III, as amended by that certain Amendment to Lease (Temporary Housing
Units) dated as of May 14, 2013, by and between Landlord and Original Tenant
III, and as assigned to Tenant pursuant to that certain Assignment and
Assumption of Lease and Consent to Assignment and Assumption of Lease (Temporary
Housing Lease) dated as of May 14, 2013, by and among Original Tenant III,
Tenant and Landlord, and as further amended by that certain Second Amendment to
Lease dated as of _______________, 2017, by and between Landlord and Tenant
(collectively, the “Temporary Housing Lease”), pursuant to which Landlord leased
to Tenant Units 418, 419, 436,437 and 438 (“the “Temporary Housing Property”)
(the Orchards Annex Lease, the Orchards Inn Parking Lease, the Telephone Room
Lease, and the Temporary Housing Lease are referred to herein individually and
collectively, as applicable, as the “Lease”), hereby warrants, represents and
certifies, as of the date hereof, to Tenant, DiamondRock Acquisition, LLC, a
Delaware limited liability company, together with its affiliates (collectively,
“Purchaser”), and their respective lenders, title insurance companies,
successors and assigns (collectively, the “Reliance Parties”) as follows:

1.Landlord, and the persons executing this certificate on behalf of Landlord,
have the power and authority to execute this certificate. Landlord acknowledges
and agrees that this Lease Estoppel Certificate is made expressly for the
benefit of, and may be relied upon by Purchaser and the other Reliance Parties
in connection with the Lease, the potential assignment thereof and the potential
financing thereof.
2.Landlord filed a Chapter 11 Bankruptcy on December 31, 2015. The Bankruptcy
Court approved Landlord’s Plan of Reorganization on July 27, 2016, which
expressly included Landlord’s assumption of the Orchards Annex Lease, the
Orchards Inn Parking Lease, the Telephone Room Lease and the Temporary Housing
Lease.
Orchards Annex Lease
3.The term of the Orchards Annex Lease commenced on March 1, 2009, and expires
on December 31, 2040, subject to any extension options set forth in the Orchards
Annex Lease.

K-2

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4.The current gross monthly rent under the Orchards Annex Lease is $9,815.00,
and has been paid in full through February 28, 2017. No additional rent or
charge (including without limitation, as applicable, late charges, interest,
taxes, maintenance, operating expenses or otherwise) is overdue. There are no
provisions for, and Landlord has no rights with respect to, termination of the
Orchards Annex Lease or increasing the rent payable thereunder, except as
expressly set forth in the Orchards Annex Lease. Tenant’s Proportionate Share of
common area is 32.04%. The Orchards Annex Lease is in full force and effect and
has not been modified, supplemented or amended in any way whatsoever (except as
set forth in the introductory paragraph of this Lease Estoppel Certificate). All
of the terms and conditions of Tenant’s rights to, and occupancy of, the
Orchards Annex Property are as set forth in the Orchards Annex Lease, and there
are no other agreements, whether oral or written, between Tenant and Landlord,
concerning the Orchards Annex Property. Landlord consents to the assignment of
the Orchards Annex Lease to Purchaser and agrees to recognize Purchaser as the
“Tenant” under the Orchards Annex Lease from and after the consummation of any
assignment thereof to Purchaser.
5.Landlord is the current “Landlord” as defined in the Orchards Annex Lease.
6.Landlord has not delivered or received any uncured notices of default under
the Orchards Annex Lease. Landlord previously delivered notices of default under
the Orchards Annex Lease; however, any and all defaults set forth in such
notices have since been cured. To the best of Landlord’s knowledge, there is no
default by Tenant or Landlord under the Orchards Annex Lease, nor has any event
or omission occurred which, with the giving of notice or the lapse of time, or
both, would constitute a default or event of default thereunder or give Tenant
any right to terminate the Orchards Annex Lease as of the date of this Lease
Estoppel Certificate.
Orchards Inn Parking Lease
7.The term of the Orchards Inn Parking Lease commenced on April 1, 2010, and
expires on December 31, 2040, subject to any extension options set forth in the
Orchards Inn Parking Lease.
8.The current minimum monthly rent under the Orchards Inn Parking Lease is
$2,758.00, and has been paid in full through February 28, 2017. No additional
rent or charge (including without limitation, as applicable, late charges,
interest, taxes, maintenance, operating expenses or otherwise) is overdue. There
are no provisions for, and Landlord has no rights with respect to, termination
of the Orchards Inn Parking Lease or increasing the rent payable thereunder,
except as expressly set forth in the Orchards Inn Parking Lease.
9.The Orchards Inn Parking Lease is in full force and effect and has not been
modified, supplemented or amended in any way whatsoever (except as set forth in
the introductory paragraph of this Lease Estoppel Certificate). All of the terms
and conditions of Tenant’s rights to, and occupancy of, the Orchards Inn Parking
Property are as set forth in the Orchards Inn Parking Lease, and there are no
other agreements, whether oral or written, between Tenant and Landlord,
concerning the Orchards Inn Parking Property.
10.Landlord is the current “Landlord” as defined in the Orchards Inn Parking
Lease.

K-3

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

11.Landlord has not delivered or received any uncured notices of default under
the Orchards Inn Parking Lease. Landlord previously delivered notices of default
under the Orchards Inn Parking Lease; however, any and all defaults set forth in
such notice have since been cured. To the best of Landlord’s knowledge, there is
no default by Tenant or Landlord under the Orchards Inn Parking Lease, nor has
any event or omission occurred which, with the giving of notice or the lapse of
time, or both, would constitute a default or event of default thereunder or give
Tenant any right to terminate the Orchards Inn Parking Lease as of the date of
this Lease Estoppel Certificate.
Telephone Room Lease
12.The term of the Telephone Room Lease commenced on January 1, 2012, and
expires on December 31, 2040, subject to any extension options set forth in the
Telephone Room Lease.
13.The current minimum monthly rent under the Telephone Room Lease is $536.00,
and has been paid in full through February 28, 2017. No additional rent or
charge (including without limitation, as applicable, late charges, interest,
taxes, maintenance, operating expenses or otherwise) is overdue. There are no
provisions for, and Landlord has no rights with respect to, termination of the
Telephone Room Lease or increasing the rent payable thereunder, except as
expressly set forth in the Telephone Room Lease.
14.The Telephone Room Lease is in full force and effect and has not been
modified, supplemented or amended in any way whatsoever (except as set forth in
the introductory paragraph of this Lease Estoppel Certificate). All of the terms
and conditions of Tenant’s rights to, and occupancy of, the Telephone Room
Property are as set forth in the Telephone Room Lease, and there are no other
agreements, whether oral or written, between Tenant and Landlord, concerning the
Telephone Room Property.
15.Landlord is the current “Landlord” as defined in the Telephone Room Lease.
16.Landlord has not delivered or received any uncured notices of default under
the Telephone Room Lease. Landlord previously delivered notices of default under
the Telephone Room Lease; however, any and all defaults set forth in such notice
have since been cured. To the best of Landlord’s knowledge, there is no default
by Tenant or Landlord under the Telephone Room Lease, nor has any event or
omission occurred which, with the giving of notice or the lapse of time, or
both, would constitute a default or event of default thereunder or give Tenant
any right to terminate the Telephone Room Lease as of the date of this Lease
Estoppel Certificate.
Temporary Housing Lease
17.The term of the Temporary Housing Lease commenced on April 1, 2012, and
expires on December 31, 2040, subject to any extension options set forth in the
Temporary Housing Lease.
18.The current gross monthly rent under the Temporary Housing Lease is
$3,100.00, and has been paid in full through February 28, 2017. No additional
rent or charge (including without limitation, as applicable, late charges,
interest, taxes, maintenance, operating expenses or otherwise) is overdue. There
are no provisions for, and Landlord has no rights with respect to, termination
of

K-4

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

the Temporary Housing Lease or increasing the rent payable thereunder, except as
expressly set forth in the Temporary Housing Lease.
19.The Temporary Housing Lease is in full force and effect and has not been
modified, supplemented or amended in any way whatsoever (except as set forth in
the introductory paragraph of this Lease Estoppel Certificate). All of the terms
and conditions of Tenant’s rights to, and occupancy of, the Temporary Housing
Property are as set forth in the Temporary Housing Lease, and there are no other
agreements, whether oral or written, between Tenant and Landlord, concerning the
Temporary Housing Property.
20.Landlord is the current “Landlord” as defined in the Temporary Housing
Lease.Landlord has not delivered or received any uncured notices of default
under the Temporary Housing Lease.
21.Landlord previously delivered notices of default under the Temporary Housing
Lease; however, any and all defaults set forth in such notice have since been
cured. To the best of Landlord’s knowledge, there is no default by Tenant or
Landlord under the Temporary Housing Lease, nor has any event or omission
occurred which, with the giving of notice or the lapse of time, or both, would
constitute a default or event of default thereunder or give Tenant any right to
terminate the Temporary Housing Lease as of the date of this Lease Estoppel
Certificate.
[Remainder of page intentionally left blank; signature page follows]

K-5

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

IN WITNESS WHEREOF, the undersigned has executed this Lease Estoppel Certificate
as of the day and year first above written.
LANDLORD:
CANYON PORTAL II, L.L.C.,
an Arizona limited liability company

By: ________________________________
                             Al Spector
Its:     Manager

K-6

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

LEASE ESTOPPEL CERTIFICATE
February __, 2017

DiamondRock Acquisition, LLC
c/o DiamondRock Hospitality Company
3 Bethesda Metro Center, Suite 1500
Bethesda, Maryland 20814
Attention: Troy Furbay

L’Auberge Newco, LLC
Orchards Newco, LLC
c/o IMH Financial Corporation
7001 N. Scottsdale Road, Suite 2050
Scottsdale, Arizona 85253
Attention: Lawrence D. Bain, CEO
Re:
Premises located at 320 N. Highway 89A in Sedona, Arizona (the “Property”)    

Ladies and Gentlemen:
The undersigned, Sinagua Plaza II, L.L.C., an Arizona limited liability company
(“Landlord”), as landlord under that certain Lease for Parking Spaces dated as
of January 1, 2012, by and between Landlord and L’Auberge Orchards LLC, an
Arizona limited liability company (“Original Tenant”), as amended by that
certain Amendment to Lease dated as of May 1, 2012, by and between Landlord and
Original Tenant, as further amended by that certain Second Amendment to Lease
dated as of May 14, 2013, by and between Landlord and Original Tenant, and as
assigned to Orchards Newco, LLC, a Delaware limited liability company (“Tenant”)
pursuant to that certain Assignment and Assumption of Lease and Consent to
Assignment and Assumption of Lease (Sinagua Plaza Parking Lease) dated as of May
14, 2013, by and among Original Tenant, Tenant and Landlord, and as further
amended by that certain Third Amendment to Lease dated as of ______________,
2017, by and between Landlord and Tenant (collectively, the “Parking Lease”),
pursuant to which Landlord leased to Tenant seventeen (17) parking spaces on the
property commonly known as 320 N. Highway 89A, Sedona, Arizona (“the “Parking
Space Property”), hereby warrants, represents and certifies, as of the date
hereof, to Tenant, DiamondRock Acquisition, LLC, a Delaware limited liability
company, together with its affiliates (collectively, “Purchaser”), and their
respective lenders, title insurance companies, successors and assigns
(collectively, the “Reliance Parties”) as follows:
1.Landlord is the ”Landlord” as defined in the Parking Lease.
2.None of the following events have occurred with respect to Landlord: (a) the
filing by or against Landlord of a petition in bankruptcy, insolvency,
reorganization or an action for the

K-7

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

appointment of a receiver of trustee; or (b) the making of an assignment by
Landlord for the benefit of creditors.
3.Landlord, and the persons executing this certificate on behalf of Landlord,
have the power and authority to execute this certificate. Landlord acknowledges
and agrees that this Lease Estoppel Certificate is made expressly for the
benefit of, and may be relied upon by Purchaser and the other Reliance Parties
in connection with the Lease, the potential assignment thereof and the potential
financing thereof.
4.The term of the Parking Lease commenced on January 1, 2012, and expires on May
14, 2023, subject to any extension options set forth in the Parking Lease.
5.The current minimum monthly rent under the Parking Lease is $2,347.85, and has
been paid in full through February 28, 2017. No additional rent or charge
(including without limitation, as applicable, late charges, interest, taxes,
maintenance, operating expenses or otherwise) is overdue. There are no
provisions for, and Landlord has no rights with respect to, termination of the
Parking Lease or increasing the rent payable thereunder, except as expressly set
forth in the Parking Lease.
6.The Parking Lease is in full force and effect and has not been modified,
supplemented or amended in any way whatsoever (except as set forth in the
introductory paragraph of this Lease Estoppel Certificate). All of the terms and
conditions of Tenant’s rights to, and occupancy of, the Parking Space Property
are as set forth in the Parking Lease, and there are no other agreements,
whether oral or written, between Tenant and Landlord, concerning the Parking
Space Property.
7.Landlord has not delivered or received any uncured notices of default under
the Parking Lease. Landlord previously delivered notices of default under the
Parking Lease; however, any and all defaults set forth in such notice have since
been cured. To the best of Landlord’s knowledge, there is no default by Tenant
or Landlord under the Parking Lease, nor has any event or omission occurred
which, with the giving of notice or the lapse of time, or both, would constitute
a default or event of default thereunder or give Tenant any right to terminate
the Parking Lease as of the date of this Lease Estoppel Certificate.

[Remainder of page intentionally left blank; signature page follows]

K-8

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

IN WITNESS WHEREOF, the undersigned has executed this Lease Estoppel Certificate
as of the day and year first above written.
LANDLORD:
Sinagua Plaza II, L.L.C.,
an Arizona limited liability company

By:    JOHNAL CORPORATION
                                        an Arizona corporation
Its:    Manager
                                        
By: ________________________________
John Carleton
                                        Its:    President
               

By: ________________________________
                                 Al Spector
Its:    Vice President

K-9

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EXHIBIT L

LICENSE AGREEMENT

[the form transmitted by Nickolas Jensen to Michael Goodwin and others by email
on February 21, 2017]

L-1

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

EXHIBIT M

PARENT AGREEMENT

[the form transmitted by John Jacobsen to Nickolas Jensen and others by email on
February 9, 2017]

M-1

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

M-2

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

EXHIBIT N

ORCHARDS SUBLEASE SNDA
[see attached]

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

N-1

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SCHEDULE 1.3(i)
LICENSE

laubergelogo.jpg [laubergelogo.jpg]

Schedule 1.3(i) – page 1

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SCHEDULE 1.3(j)
TRADEMARKS CANCELLED BY SELLER
Upon the Closing, Seller will cause the following trademarks registered with the
United States Patent and Trademark Office to be cancelled:

Mark
Serial No/ Filing Date
Registration No. / Reg. Date
Owner
Services
L’AUBERGE DE SEDONA (and design)
sedonapurchaseagreeme_image3.jpg [sedonapurchaseagreeme_image3.jpg]®
86/338,010
07/15/2014

4,808,662
9/08/2015
Class 43
4,806,689
9/08/2015
Class 44
L’Auberge Newco, LLC
Hotel and resort services; Restaurant and bar services; Catering services in
Class 43 (first use 05/00/1984)
Health spa services in Class 44 (first use 05/00/1984)

SPA AT L’AUBERGE (and design)
sedonapurchaseagreeme_image4.jpg [sedonapurchaseagreeme_image4.jpg]
86/338,032
07/15/2014
4,930,109
4/5/2016

L’Auberge Newco, LLC

Health spa services in Class 44 (first use 07/00/2007)

Upon the Closing, Seller will cause the following trademarks registered with the
Arizona Secretary of State to be cancelled:

Mark
File ID/ Filing Date
Registration No. / Reg. Date
Owner
Services
A GRAY COLORED OUTLINE OF A DUCK WHOSE BEAK FACES TO THE LEFT AND THEN BELOW THE
DUCK THE WORDS "SPA AT L'AUBERGE" IN GRAY LETTERING
58511
10/15/2014

Class 43
L’Auberge Newco, LLC
(HEALTH SPA SERVICES). MARK IS USED ON MENUS, ROBES, RETAIL 

Schedule 1.3(j) – page 1

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SCHEDULE 1.2(h)
CAPITAL IMPROVEMENT CONTRACTS TO BE ASSUMED
1.
Capital Purchase Order dated November 1, 2016, for L’Auberge de Sedona Kitchen.
Vendor: Sysco. Re: 20 quart planetary mixer.

2.
Capital Purchase Order dated November 1, 2016, for L’Auberge de Sedona Kitchen.
Vendor: Sysco. Re: 30 quart planetary mixer.

3.
Capital Purchase Order dated January 12, 2017, for 89Agave. Vendor: Manfred
Designs. Re: 89Agave Bar Top.

4.
Purchase Order dated July 11, 2016, for 89Agave Kitchen. Vendor: Wasserstrom.
Re: Kitchen Equipment for 89Agave.

5.
Purchase Order dated October 19, 2016, for 89Agave Kitchen. Vendor: Sysco
supplies on the fly. Re: Platters and bowls for 89Agave.

6.
Purchase Order dated October 19, 2016, for 89Agave Kitchen. Vendor: Sysco
supplies on the fly. Re: Platter, coffee mugs and steel basket for 89Agave.

7.
Purchase Order dated October 19, 2016, for 89Agave Kitchen. Vendor: Sysco
supplies on the fly. Re: Coffee mugs, salad bowl and taco tray for 89Agave.

8.
Capital Purchase Order dated September 30, 2016, for L’Auberge de Sedona Food &
Beverage. Vendor: Wasserstrom. Re: Banquet hotbox.

9.
Capital Purchase Order dated September 30, 2016, for L’Auberge de Sedona Food &
Beverage. Vendor: R.W.Smith. Re: Banquet plates and covers.

10.
Capital Purchase Order dated September 30, 2016, for L’Auberge de Sedona Food &
Beverage. Vendor: Wasserstrom. Re: Plates and bowls for Cress.

11.
AIA Document A105-2007 Agreement between L’Auberge Newco, LLC, and Desert Scape
LLC, dated January 30, 2017, Re: Landscaping/flagstone work at Etch at L’Auberge
de Sedona.

12.
Capital Purchase Order dated February 3, 2017, for L’Auberge de Sedona. Vendor:
Desert Scape LLC. Re: Etch flagstone change order #1.

13.
Capital Purchase Order dated February 3, 2017, for L’Auberge de Sedona. Vendor:
Desert Scape LLC. Re: Etch flagstone change order #2.

14.
Capital Purchase Order dated July 18, 2016, for L’Auberge de Sedona. Vendor:
Harbour Outdoor. Re: Etch patio furniture.

Schedule 1.2(h) – page 1

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15.
Capital Purchase Order dated April 21, 2015, for L’Auberge de Sedona –
Engineering. Vendor: Abreeze Fire Protection. Re: Garage sprinkler system.

16.
Capital Purchase Order dated December 6, 2016, for L’Auberge de Sedona. Vendor:
Straightline Custom Painting LLC. Re: Lodge ballroom paint.

17.
Capital Purchase Order dated December 27, 2016, for L’Auberge de Sedona. Vendor:
UTZ Metalcraft, LLC. Re: Lodge stair guardrail and handrail.

18.
Capital Purchase Order dated December 6, 2016, for L’Auberge de Sedona. Vendor:
StarFloors. Re: New carpeting in the Lodge ballroom.

19.
Plates & Silverware Quote, dated February 17, 2017. Vendor: TriMark Foodservice,
Supplies and Design, R.W. Smith.

20.
Purchase Order Overview. Vendor: S&B Design. Re: Curtain for Lodge ballroom.

21.
Purchase Order Overview. Vendor: S&B Design. Re: Veranda umbrellas.

22.
Capital Purchase Order dated February 3, 2017, for L’Auberge de Sedona –
Property Operations. Vendor: Straightline Custom Painting. Re: Matisse paint –
hallways and bathrooms.

23.
Capital Purchase Order dated January 24, 2017, for L’Auberge de Sedona –
Engineering. Vendor: SWI. Re: Parking fire suppression.

24.
Capital Purchase Order dated February 3, 2017, for L’Auberge de Sedona. Vendor:
Manfred Design Inc. Re: Railing and handrails at Etch.

25.
Capital Purchase Order dated February 3, 2017, for L’Auberge de Sedona. Vendor:
SB Design. Re: Umbrellas at Etch.

26.
Capital Purchase Order dated February 3, 2017, for L’Auberge de Sedona. Vendor:
SB Design. Re: Ballroom curtains.

27.
Capital Purchase Order dated February 3, 2017, for L’Auberge de Sedona. Vendor:
SB Design. Re: Creekside FF & E Attic Stock.

Schedule 1.2(h) – page 2

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SCHEDULE 3.1.3

EXISTING LITIGATION

[the litigation set forth in the schedule sent by Nickolas Jensen to John
Jacobsen and others by email on February 15, 2017]

Schedule 3.1.3 – page 1

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SCHEDULE 3.1.8

LICENSES AND PERMITS; VIOLATIONS

L’Auberge – Licenses and Permits

1.
Arizona State Board of Cosmetology – License No. SAES17071 – Type: Aesthetician
Salon License – Issued to L’Auberge Spa, LLC

2.
Public Health Services District – Coconino County – License No. EHL-5650 – Type:
EH-MT/HTL – Issued to L’Auberge Newco LLC

3.
Public Health Services District – Coconino County – License No. EHL-5651 – Type:
EH-Pool – Issued to L’Auberge Newco LLC

4.
Public Health Services District – Coconino County – License No. EHL-5652 – Type:
EH-Pool – Issued to L’Auberge Newco LLC

5.
Public Health Services District – Coconino County – License No. EHL-5649 – Type:
EH-Food Services – Issued to L’Auberge Newco LLC

6.
Public Health Services District – Coconino County – License No. EHL-5648 – Type:
EH-Food Services – Issued to L’Auberge Newco LLC

7.
Public Health Services District – Coconino County – License No. EHL-5647 – Type:
EH-Food Services – Issued to L’Auberge Newco LLC

8.
State of Arizona Department of Liquor Licenses and Control Alcoholic Beverage
License – License No. 11033047 – Issued to L’Auberge Newco LLC

9.
City of Sedona 2016 Business License – License No. BL-003055 – Issued to
L’Auberge Newco LLC

10.
Arizona Department of Revenue, Transaction Privilege Tax License – License No.
21000004 – Issued to L’Auberge Newco LLC

11.
City of Sedona, Department of Community Development – Certificate of Occupancy –
Building Permit No. B-01832, B-01869 & B-01870 – Issued to L’Auberge Resort

12.
Certificate of Occupancy, Coconino County, Department of Building Inspection –
Building Permit No. 85-102 – Issued to L’Auberge Partnership Ltd

13.
Certificate of Occupancy, Coconino County, Department of Building Inspection –
Building Permit No. B-01374 – Issued to L’Auberge Newco

14.
The Industrial Commission of Arizona – Elevator Section – State Serial No. 10276

Schedule 3.1.8 – page 1

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Violations of L’Auberge Permits and Licenses:    None

Orchards – Licenses and Permits
1.
City of Sedona 2017 Business License – License No. BL-003054 – Issued to
Orchards Newco LLC

2.
City of Sedona – Department of Engineering – Right of Way Permit – Permit No.
ROW15-00221 – Issued to Orchards Newco LLC

3.
City of Sedona – Department of Community Development – Sign Permit – Permit No.
SP15-00103 – Issued to Orchards Newco LLC

4.
Public Health Services Department Coconino County – License No. EHL-5663 –
Issued to Orchards Newco LLC

5.
State of Arizona Department of Liquor License and Control Alcoholic Beverage
License – License No. 11033046 – Issued to Orchards Newco LLC

6.
City of Sedona – Department of Community Development – Certificate of Occupancy
– Building Permit No. B-01375 – Issued to Orchards Newco LLC

7.
Public Services District Coconino County – License No. EHL-5662 – Issued to
Orchards Newco LLC

Violations of Orchards Permits and Licenses:    None

Schedule 3.1.8 – page 2

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SCHEDULE 3.1.10

PROPERTY LEASE MATTERS
The following is a list of alleged uncured defaults by Seller under the Property
Leases:

1.Alleged defaults for late payment of rent and non-payment of late fees and
charges described in twelve (12) separate letters dated December 7, 2016, from
Canyon Portal II, L.L.C. (“CPII”), as landlord, regarding the Orchards Leasehold
Property, and in twelve (12) separate letters dated December 22, 2016 from CPII
regarding the Orchards Leasehold Property.

2.Alleged defaults for late payment of rent and non-payment of late fees and
charges described in three (3) separate letters dated December 7, 2016, from
Sinagua Plaza II, L.L.C. (“SPII”), as landlord, regarding the L’Auberge
Leasehold Property, and three (3) separate letters dated December 22, 2016 from
SPII regarding the L’Auberge Leasehold Property.

3.Alleged default for non-payment of late fees described in a letter dated
January 16, 2017 from CPII, as landlord, regarding the Temporary Housing Lease
within the Orchards Leasehold Property.

4.Alleged default for non-payment of late fees described in a letter dated
January 16, 2017 from SPII, as landlord, regarding the L’Auberge Leasehold
Property.

5.Alleged default for non-payment of common area maintenance charges described
in a letter dated January 23, 2017 from CPII, as landlord, regarding the
Orchards Leasehold Property.

6.Alleged default for non-payment of operating expenses and common area
maintenance charges described in a letter dated January 23, 2017 from CPII, as
landlord, regarding the L’Auberge Leasehold Property.

 

Schedule 3.1.10 – page 1

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SCHEDULE 3.1.14

DELINQUENT TAXES
None.

Schedule 3.1.14 – page 1

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SCHEDULE 10.11.2

REIMBURSABLE CAPEX PROJECTS
capexlauberge.jpg [capexlauberge.jpg]

SCHEDULE 10.11.4
SELLER REPAIR WORK
Sedona Portfolio
 
 
 
Schedule of Ongoing Projects
 
 
 
 
 
 
 
Sedona Portfolio - Ongoing Capex Projects
Area of Property Renovation
Hotel
Notes
 
 
 
Ongoing projects that are in progress and being completed and paid for by IMH
Guestroom rewire
Orchards
 
Computer Replacements
Orchards
 
Lodge Shower Pans
L'Auberge
 
Lodge Tile Floor
L'Auberge
 
Carpet Cleaner / Extractor
L'Auberge
 
Cottage 68 Floor Repairs
L'Auberge
 
Exchange Server
L'Auberge
 
Computer Replacements
L'Auberge
 
Lodge Exterior Painting
L'Auberge
 
Reverse Osmosis Refill Water Stations
L'Auberge
 
Command Center & Base Camp
L'Auberge
 
Goldenstein Gallery - Creek House Art
L'Auberge
 
Creekside Cottages FF&E Attic Stock
L'Auberge
 
Restaurant Fencing
L'Auberge
 

Schedule 10.11.2 – page 1

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Schedule 10.11.4 – page 1

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SCHEDULE 16.17
SELLER POST-CLOSING WORK

Sedona Portfolio
 
 
Schedule of ADA related Projects
 
 
 
 
 
Sedona Portfolio - ADA Barrier Removal
Area of Property Renovation
Hotel
Notes
 
 
 
ADA to be completed and paid for by IMH
 
 
3 New Sleeping Rooms (mixed room type)
Orchards
 
Hard wire hearing impaired room
Orchards
 
Convert existing room to full compliance
Orchards
 
 
 
 
4 New Sleeping Rooms (mixed room type)
L'Auberge
 
Hard wire hearing impaired room
L'Auberge
 
Convert existing room to full compliance
L'Auberge
 

Sedona Portfolio
 
 
Schedule of Deferred Maintenance
 
 
 
 
 
Sedona Portfolio - Deferred Maintenance
Area of Property Renovation
Hotel
Notes
 
 
 
Projects to be completed and paid for by IMH
 
 
Wood siding deterioration (external)
Orchards
 
Balcony Repair (separation)
Orchards
 
Door Spring Hinges (fire code)
Orchards
 
Orchards Hot Water Room (fire proofing)
Orchards
 
 
 
 
Cottage wood deterioration (external)
L'Auberge
 
 
 
 
Source: Property Condition Report 01/30/2017
 
 
Completed by Building Evaluations, LLC
 
 

Schedule 16.17 – page 1