Exhibit 10.51

ASSIGNMENT AND ASSUMPTION AGREEMENT

by and between

BARCELÓ CRESTLINE CORPORATION

and

APPLE EIGHT HOSPITALITY OWNERSHIP, INC.

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TABLE OF CONTENTS

 

SECTION 1.

   DEFINITIONS    1

SECTION 2.

   MARRIOTT ASSETS AND MARRIOTT LIABILITIES    2

SECTION 3.

   RESERVATION OF RIGHTS    2

SECTION 4.

   ASSUMPTION BY APPLE    2

SECTION 5.

   JOINT RIGHTS AND LIABILITIES    3

SECTION 6.

   PURCHASE PRICE    3

SECTION 7.

   ADDITIONAL DEPOSIT    4

SECTION 8.

   CLOSING    6

SECTION 9.

   REPRESENTATIONS AND WARRANTIES    7

SECTION 10.

   DISCLAIMER    8

SECTION 11.

   BROKER’S FEE    8

SECTION 12.

   INSPECTION; DUE DILIGENCE    9

SECTION 13.

   DUE DILIGENCE PERIOD    9

SECTION 14.

   TITLE INSURANCE AND SURVEYS    9

SECTION 15.

   FRANCHISE AGREEMENTS, ASSUMED INDEBTEDNESS, LIQUOR LICENSES    9

SECTION 16.

   CONSTRUCTION HOTELS    9

SECTION 17.

   PROPERTY IMPROVEMENT PLANS; FRANCHISE AGREEMENT COSTS    10

SECTION 18.

   GROUND LANDLORD ESTOPPELS    10

SECTION 19.

   JEFFERSON PILOT LAND    11

SECTION 20.

   SUFFOLK HOTELS    11

SECTION 21.

   CHARLOTTESVILLE COURTYARD    11

SECTION 22.

   JP EXPENSES    11

SECTION 23.

   MANAGEMENT OF MARRIOTT HOTELS AND EXCLUDED HOTELS    11

SECTION 24.

   PERFORMANCE COVENANT    13

SECTION 25.

   CONFIDENTIALITY    13

SECTION 26.

   EMPLOYEES AND EMPLOYMENT MATTERS    13

SECTION 27.

   CONDITIONS TO CLOSING    13

SECTION 28.

   CASUALTY AND CONDEMNATION    13

SECTION 29.

   BUYER TERMINATION RIGHTS UNDER PURCHASE AGREEMENT    14

SECTION 30.

   TERMINATION RIGHTS UNDER THIS AGREEMENT    16

SECTION 31.

   EFFECT OF TERMINATION    20

SECTION 32.

   LIABILITY AND INDEMNIFICATION    21

SECTION 33.

   EXPENSES; SETOFF    23

SECTION 34.

   COMMERCIALLY REASONABLE EFFORTS; FURTHER ASSURANCES    24

SECTION 35.

   PUBLIC ANNOUNCEMENTS    24

SECTION 36.

   AMENDMENTS TO PURCHASE AGREEMENT    24

SECTION 37.

   NOTICES    24

SECTION 38.

   AMENDMENTS AND WAIVERS    26

SECTION 39.

   SUCCESSORS AND ASSIGNS    26

SECTION 40.

   GOVERNING LAW    26

SECTION 41.

   JURISDICTION    26

SECTION 42.

   WAIVER OF JURY TRIAL    26

SECTION 43.

   COUNTERPARTS; THIRD PARTY BENEFICIARIES    26

SECTION 44.

   ENTIRE AGREEMENT    27

SECTION 45.

   CAPTIONS    27

SECTION 46.

   SEVERABILITY    27

SECTION 47.

   RULES OF CONSTRUCTION    27

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ASSIGNMENT AND ASSUMPTION AGREEMENT

This ASSIGNMENT AND ASSUMPTION AGREEMENT (together with the Schedules hereto,
this “Agreement”) is dated as of May 9, 2008 by and between Barceló Crestline
Corporation, a Maryland corporation (“BCC”), and Apple Eight Hospitality
Ownership, Inc., a Virginia corporation ( “Apple”). BCC and Apple are referred
to hereinafter individually as a “Party” and collectively as the “Parties.”

RECITALS:

A. BCC has entered into that certain Purchase and Sale Agreement, dated as of
February 22, 2008, with Tidewater Hotels & Resorts, Inc., a Virginia corporation
(“Tidewater”) and the parties identified on Schedule A thereto (collectively
with Tidewater, the “Sellers”), and Thomas J. Lyons, Jr., as guarantor (as the
same may be amended, supplemented or otherwise modified from time to time, the
“Purchase Agreement”), pursuant to which Sellers have agreed to sell to BCC, and
BCC has agreed to purchase from Sellers, in each case subject to the terms and
conditions contained therein, certain hotels and resorts and related assets and
businesses.

B. BCC has the right under the Purchase Agreement to assign the Purchase
Agreement in whole or in part to any Person upon written notice to Sellers
delivered at least two Business Days prior to the Closing Date.

C. BCC wishes to assign and delegate to Apple certain of its rights and
obligations under the Purchase Agreement to purchase those hotels and resorts
set forth on Schedule A hereto (the “Marriott Hotels”), and to purchase certain
assets and assume certain liabilities related thereto, and Apple wishes to
accept such assignment and assume BCC’s obligations with respect to the Marriott
Hotels and the assets and liabilities related thereto, in each case on the terms
and conditions set forth in this Agreement.

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

Section 1. Definitions. Capitalized terms used and not defined in this Agreement
shall have the meanings ascribed to them in the Purchase Agreement. In addition,
the following terms have the following meanings:

“Apple Expenses” means the reasonable, out-of-pocket third party expenses
actually paid by Apple, or its affiliates, shareholders, officers, directors,
agents, advisors or other representatives, in connection with entering into
franchise agreements with respect to the Marriott Hotels, including franchise
application and transfer fees, and Apple’s assumption of the Assumed
Indebtedness, including loan assumption fees; provided that Apple Expenses shall
not include any fees or expenses of Apple’s legal counsel or other advisors.

“BCC Expenses” means the fees, costs and expenses incurred by BCC, or its
affiliates, shareholders, officers, directors, agents, advisors or other
representatives, described on Schedule 1 hereto.

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Section 2. Marriott Assets and Marriott Liabilities. Effective immediately upon
the expiration of the Due Diligence Period under the Purchase Agreement, which
the Parties acknowledge and agree will expire at 5:00 p.m. Eastern Time on
May 9, 2008 (the “Effective Time”) and upon the terms and subject to the
conditions set forth in this Agreement, BCC hereby assigns to Apple, and Apple
hereby accepts from BCC:

(a) BCC’s right, title and interest under the Purchase Agreement (i) to purchase
and acquire from Sellers the Marriott Hotels, together with the Purchased Assets
listed in or contemplated by Sections 2.01(a), 2.01(e), 2.01(f), 2.01(g),
2.01(h) and 2.01(j) of the Purchase Agreement, but only to the extent such
Purchased Assets are related to the Marriott Hotels and (ii) to all other
rights, benefits, interests and remedies under the Purchase Agreement with
respect to the Marriott Hotels (such Purchased Assets and such rights, benefits,
interests and remedies, together with the Marriott Hotels, the “Marriott
Assets”); and

(b) BCC’s liabilities and obligations under the Purchase Agreement to assume
from Sellers and their Affiliates, and to pay or otherwise perform, satisfy and
discharge, all of the Assumed Liabilities to the extent related to the Marriott
Assets (collectively, the “Marriott Liabilities”).

Section 3. Reservation of Rights. Notwithstanding the provisions of Section 2 or
any other provision of this Agreement or the Purchase Agreement, it is
acknowledged and agreed that (i) BCC shall not assign to Apple, and Apple shall
have no rights to purchase or acquire in any manner, any of the Purchased Assets
contemplated in Sections 2.01(b), 2.01(c), 2.01(d) or 2.01(i) of the Purchase
Agreement, or any other Purchased Assets that are not related to the Marriott
Hotels (all Purchased Assets other than the Marriott Assets, the “BCC Assets”),
(ii) Apple shall not assume any Assumed Liabilities under the Purchase Agreement
other than the Marriott Liabilities (all Assumed Liabilities other than the
Marriott Liabilities, the “BCC Liabilities”), and (iii) BCC expressly retains
and reserves all right, title and interest in, to and under the Purchase
Agreement, and all benefits, obligations and liabilities with respect thereto,
other than all rights with respect to (including the right to acquire) the
Marriott Assets and the right to assume the Marriott Liabilities expressly
assigned to and assumed by Apple under Sections 2 and 4 of this Agreement (the
right to acquire the BCC Assets and to assume the BCC Liabilities, together with
all other rights, benefits, obligations and liabilities under the Purchase
Agreement not expressly assigned to and assumed by Apple hereunder, the “BCC
Reserved Rights and Liabilities”). For avoidance of doubt, it is acknowledged
and agreed that neither Apple nor BCC shall acquire any Excluded Assets or
assume any Excluded Liabilities under the Purchase Agreement.

Section 4. Assumption by Apple. Effective as of the Effective Time, and upon and
subject to the terms and subject to the conditions set forth in this Agreement,
Apple hereby assumes and agrees to perform, satisfy and discharge all of the
liabilities and obligations of BCC with respect to the purchase and acquisition
of the Marriott Assets, and the assumption of the Marriott Liabilities, from
Sellers and their Affiliates under the terms and conditions of the Purchase
Agreement as if Apple were the original “Buyer” of the Marriott Assets under the
Purchase Agreement. Without limiting the foregoing, Apple hereby assumes and
agrees to perform, comply with and be bound by all terms, conditions,
provisions, restrictions, limitations, liabilities and obligations applicable to
“Buyer” under the Purchase Agreement as if Apple were an

 

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original party to the Purchase Agreement as the Buyer thereunder; provided that
the foregoing shall not confer upon Apple any of the BCC Reserved Rights and
Liabilities, including any right or obligation to purchase the BCC Assets or to
assume the BCC Liabilities. It is acknowledged and agreed that Apple shall have
all rights of Buyer, and shall be responsible for liabilities and obligations of
Buyer, under Section 5.18 of the Purchase Agreement (Access to Financial
Information); provided that upon reasonable request of Apple, BCC shall
cooperate in good faith in connection with Apple’s exercise of such rights.

Section 5. Joint Rights and Liabilities. Except as otherwise provided in this
Agreement:

(a) to the extent any term, condition, provision, restriction, limitation,
right, liability or obligation under the Purchase Agreement, including with
respect to any election, consent or approval rights, shall be solely applicable
to the Marriott Assets or the Marriott Liabilities, Apple shall have the sole
rights and obligations (as between BCC and Apple) with respect thereto;

(b) to the extent any term, condition, provision, restriction, limitation,
right, liability or obligation under the Purchase Agreement, including with
respect to any election, consent or approval rights, shall be solely applicable
to the BCC Reserved Rights and Liabilities, the BCC Assets or the BCC
Liabilities, BCC shall have the sole rights and obligations (as between BCC and
Apple) with respect thereto;

(c) to the extent any term, condition, provision, restriction, limitation,
right, liability or obligation under the Purchase Agreement is solely applicable
to the Marriott Assets or the Marriott Liabilities under Section 5(a), or is
solely applicable to the BCC Reserved Rights and Liabilities, the BCC Assets or
the BCC Liabilities under Section 5(b), but the exercise or enforcement of such
term, condition, provision, restriction, limitation, right, liability or
obligation could reasonably be expected to have a material effect (positive or
negative) on the other Party, the Party with sole rights and obligations with
respect thereto shall cooperate in good faith with the other Party with respect
to such exercise and enforcement; and

(d) to the extent any term, condition, provision, restriction, limitation,
right, liability or obligation under the Purchase Agreement is jointly
applicable to any of the Marriott Assets or the Marriott Liabilities, on one
hand, and the BCC Reserved Rights and Liabilities, the BCC Assets or the BCC
Liabilities, on the other hand, the Parties shall have joint rights thereto and
obligations thereunder; provided that in such event the Parties shall endeavor
in good faith to divide the exercise and benefit of such rights, and the
performance of and liability for such obligations, based upon the applicable
hotel or other assets or rights so that the Party acquiring such hotel or other
assets or rights shall exercise all rights and perform all obligations related
thereto.

Section 6. Purchase Price.

(a) Subject to adjustment as provided in this Agreement and the Purchase
Agreement (but only to the extent related to the Marriott Assets), the aggregate
purchase price (the “Apple Purchase Price”) for the Marriott Assets shall equal
$184,200,000, allocated to the Marriott Assets as set forth on Schedule 6.

 

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(b) The Apple Purchase Price shall be payable as follows:

(i) subject to reduction in accordance with the terms and conditions of this
Agreement and the Purchase Agreement (including, to the extent applicable,
Sections 5.06, 5.13 and 5.16 of the Purchase Agreement), on the Initial Closing
Date, Apple shall pay to Sellers an amount equal to: (A) (1) the aggregate
portion of the Apple Purchase Price allocable to the Marriott Hotels and the
related Marriott Assets to be acquired by Apple on the Initial Closing Date, as
set forth on Schedule 6, plus (2) if the Marriott Hotel known as “Courtyard
North” is acquired on the Initial Closing, any amounts payable by Buyer to
Sellers in accordance with Section 5.17 of the Purchase Agreement minus (B) any
Assumed Indebtedness related to the Marriott Assets acquired by Apple on the
Initial Closing Date, plus or minus, as the case may be, (C) the net amount of
any apportionments between Buyer and Sellers made as of the Initial Closing Date
with respect to the Marriott Assets acquired by Apple on the Initial Closing
Date in accordance with Section 12.01 of the Purchase Agreement; and

(ii) subject to adjustment as provided in this Agreement and the Purchase
Agreement, on each Delayed Closing Date, Apple shall pay to Sellers an amount
equal to: (A) the portion of the Apple Purchase Price attributable to the
Marriott Hotels and the related Marriott Assets to be acquired by Apple in the
applicable Delayed Closing, as set forth on Schedule 6, minus (B) any Assumed
Indebtedness related to the Marriott Assets acquired by Apple in such Delayed
Closing, plus or minus, as the case may be, (C) the net amount of any
apportionments between Buyer and Sellers made as of such Delayed Closing Date
with respect to the Marriott Assets acquired by Apple on such Delayed Closing
Date in accordance with Section 12.01 of the Purchase Agreement.

Section 7. Additional Deposit.

(a) No later than 5:00 p.m. Eastern Time on May 12, 2008, Apple shall pay and
deliver to the Escrow Agent, in accordance with an escrow agreement in the form
attached hereto as Schedule 7 (the “Apple Escrow Agreement”), the amount of
$2,500,000 (together with any interest accrued thereon, the “Apple Deposit”).
BCC shall fund the Additional Deposit required to be delivered to the Escrow
Agent by Buyer in accordance with the provisions of the Escrow Agreement and
Section 2.06(e) of the Purchase Agreement. Apple’s obligation to pay the Apple
Deposit into escrow is absolute and unconditional. The failure by Apple to pay
such amount into escrow no later than 5:00 p.m. Eastern Time on May 12, 2008
shall constitute a material breach by Apple of this Agreement. In such case, BCC
shall be entitled to terminate this Agreement, in which case (i) in the event
that the Purchase Agreement shall also be terminated, and in connection with
such termination, Buyer shall forfeit the Deposit to Sellers, Apple shall be
liable to BCC for, and shall pay and deliver to BCC, the entire amount of the
Deposit, together with all interest accrued thereon from the date of deposit of
the Deposit into escrow under the Escrow Agreement, (ii) Apple shall pay to BCC,
and reimburse BCC for, the BCC Expenses, and (iii) except as otherwise
contemplated herein, neither Apple nor BCC shall have any further liability or
obligation to the other under this Agreement or the Purchase Agreement as a
result of such termination.

 

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(b) It is acknowledged and agreed that under the Purchase Agreement, on the
Initial Closing Date, a portion of the Deposit in the amount of the Initial
Deposit, plus any interest accrued thereon from the date of deposit of the
Initial Deposit into escrow under the Escrow Agreement, shall be paid to Sellers
by the Escrow Agent for credit against the Closing Payment otherwise payable by
Buyer to Sellers, and the remainder of the Deposit (the Additional Deposit, plus
any interest accrued thereon from the date of deposit of the Additional Deposit
into escrow under the Escrow Agreement) shall continue to be held in escrow as
security for payment of the remainder of the Purchase Price.

(c) In order to allocate between themselves the credit for the Deposit against
the Purchase Price due under the Purchase Agreement, BCC and Apple agree that:

(i) on the Initial Closing Date: (A) BCC’s obligations with respect to payment
of the Purchase Price to Sellers under the Purchase Agreement and this Agreement
shall be reduced by the amount of the Initial Deposit, plus any interest accrued
thereon from the date of deposit of the Initial Deposit into escrow under the
Escrow Agreement, and such amount shall be released from escrow under the Escrow
Agreement and delivered to Sellers; (B) Apple’s obligations with respect to
payment of the Purchase Price in respect of the Marriott Assets acquired by
Apple on the Initial Closing Date payable to Sellers on the Initial Closing Date
under the Purchase Agreement and this Agreement shall not be reduced by any
amount of the Deposit; (C) the Additional Deposit, plus any interest accrued
thereon from the date of deposit of the Additional Deposit into escrow under the
Escrow Agreement shall remain in escrow under the Escrow Agreement; and (D) the
Apple Deposit, plus any interest accrued thereon from the date of deposit of the
Apple Deposit into escrow under the Apple Escrow Agreement, shall remain in
escrow under the Apple Escrow Agreement;

(ii) on the Delayed Closing Date for the sale of the Marriott Hotels known as
“Courtyard – Carolina Beach,” “Courtyard – Suffolk” and “TownePlace Suites –
Suffolk,” the remaining Deposit shall be released from escrow under the Escrow
Agreement and paid to Sellers, and Apple’s obligation with respect to payment of
the Purchase Price for the Marriott Assets acquired at such Delayed Closing
shall be reduced by such released amount; provided that if “Courtyard – Carolina
Beach,” “Courtyard – Suffolk” and “TownePlace Suites – Suffolk” are acquired in
separate Delayed Closings, a portion of the Deposit that is proportional to the
portion of the Purchase Price attributable to the Purchased Hotels acquired in
each such Delayed Closing, as compared to the aggregate portion of the Purchase
Price attributable to the “Courtyard – Carolina Beach,” “Courtyard – Suffolk”
and “TownePlace Suites – Suffolk” Purchased Hotels, shall be released from
escrow under the Escrow Agreement and paid to Sellers as credit against the
applicable Delayed Closing Payment, and Apple’s obligation with respect to
payment of the Purchase Price for the Marriott Assets acquired at such Delayed
Closing shall be reduced by such released amount, and any remaining Deposit
shall continue to be held in escrow under the Escrow Agreement;

 

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(iii) on the date of the last Delayed Closing of the Purchased Hotels known as
“Courtyard – Carolina Beach,” “Courtyard – Suffolk” and “TownePlace Suites –
Suffolk,” the remaining balance of the Deposit under the Escrow Agreement shall
be paid and released to Sellers, and credited against the Purchase Price
remaining to be paid to Sellers under the Purchase Agreement; and

(iv) simultaneously with any release of any amount of the Deposit from escrow
under the Escrow Agreement and payment of such amount to Sellers under the
Purchase Agreement, the same amount shall be released from escrow under the
Apple Escrow Agreement and paid to BCC.

(d) In the event of any termination of the obligation of Buyer and Sellers to
consummate any Delayed Closing under the Purchase Agreement after the Initial
Closing, if any portion of the Deposit then held in escrow under the Escrow
Agreement shall be payable to Buyer under the terms and conditions of the
Purchase Agreement and the Escrow Agreement, (i) such payment of the Deposit
shall be made and released to BCC under the Escrow Agreement, and
(ii) simultaneously with BCC’s receipt of the Deposit from escrow, an equal
amount of the Apple Deposit shall be paid and released to Apple under the Apple
Escrow Agreement.

(e) It is acknowledged and agreed that the Deposit under the Escrow Agreement
and the Apple Deposit under the Apple Escrow Agreement shall each be held by the
Escrow Agent, and that the Escrow Agent shall be directed to invest the funds so
as to accrue interest at the same rate.

Section 8. Closing.

(a) Apple agrees to execute and deliver the Transaction Agreements and the other
closing deliveries required to be executed and delivered by Buyer under the
Purchase Agreement, as and when required by the Purchase Agreement, to the
extent related to the Purchased Assets included in the Marriott Assets,
including those closing deliveries set forth in Section 2.07 and Article 8 of
the Purchase Agreement. Without limiting the generality of the foregoing, Apple
shall make all of the representations and warranties of Buyer (with such
modifications as may be appropriate for such representations and warranties to
be applicable to Apple) to Sellers and Guarantor contemplated in Article 4 as of
each applicable Closing Date, and Apple shall deliver to Sellers the
certificates required under Section 8.03(a)(iii) and 8.04(b)(iii), as
applicable. On each Closing Date, Apple shall pay to BCC, and reimburse BCC for,
the BCC Expenses payable in respect of the Marriott Hotels acquired by Apple on
such Closing Date.

(b) BCC agrees to execute and deliver the Transaction Agreements and the other
closing deliveries required to be executed and delivered by Buyer under the
Purchase Agreement, as and when required by the Purchase Agreement, to the
extent related to the Purchased Assets included in the BCC Assets, including
those closing deliveries set forth in Section 2.07 and Article 8 of the Purchase
Agreement. Without limiting the generality of the foregoing, BCC shall make all
of the representations and warranties of Buyer to Sellers and Guarantor
contemplated in Article 4 as of the Initial Closing Date, and BCC shall deliver
to Sellers the certificates required under Section 8.03(a)(iii) and
8.04(b)(iii), as applicable.

 

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Section 9. Representations and Warranties.

(a) Apple hereby represents and warrants to BCC as follows:

(i) Apple is a corporation duly organized, validly existing and in good standing
under the laws of the Commonwealth of Virginia. Apple is duly qualified to do
business and is in good standing in the Commonwealth of Virginia and as a
foreign corporation or other legal entity in each jurisdiction where the
character of the properties owned or leased by it or the nature of the business
transacted by it requires it to be so qualified.

(ii) The execution, delivery and performance by Apple of this Agreement and the
consummation of the transactions contemplated hereby are within Apple’s
corporate powers and have been (or will be prior to the applicable Closing Date)
duly authorized by all requisite corporate action on the part of Apple. This
Agreement has been duly executed and delivered by Apple and (assuming due
authorization, execution and delivery by BCC) this Agreement constitutes a
legal, valid and binding obligation of Apple enforceable in accordance with its
terms, except as such enforceability may be limited by bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium or similar Applicable Laws
relating to or affecting creditors’ rights generally or by general equitable
principles (whether considered in a proceeding in equity or at law).

(iii) The execution, delivery and performance by Apple of this Agreement and the
consummation of the transactions contemplated hereby require no action by or in
respect of, consent or approval of, or filing with, any Governmental Authority;
provided that Apple is required to make certain filings and disclosures under
applicable securities laws.

(iv) The execution, delivery and performance by Apple of this Agreement and the
consummation of the transactions contemplated hereby do not and will not
(i) contravene or violate the charter or bylaws of Apple, or (ii) contravene or
violate any Applicable Law or any judgment, order, injunction, or decree of any
Governmental Authority applicable to Apple.

(b) BCC hereby represents and warrants to Apple as follows.

(i) BCC is a corporation duly organized, validly existing and in good standing
under the laws of the State of Maryland. BCC is duly qualified to do business
and is in good standing in the State of Maryland and as a foreign corporation or
other legal entity in each jurisdiction where the character of the properties
owned or leased by it or the nature of the business transacted by it requires it
to be so qualified.

(ii) The execution, delivery and performance by BCC of this Agreement and the
consummation of the transactions contemplated hereby are within each BCC’s
corporate powers and have been (or will be prior to the Initial Closing Date)
duly authorized by all requisite corporate action on the part of BCC. This
Agreement has been duly executed and delivered by BCC and (assuming due
authorization, execution

 

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and delivery by Apple) this Agreement constitutes a legal, valid and binding
obligation of BCC enforceable in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium or similar Applicable Laws relating to or affecting
creditors’ rights generally or by general equitable principles (whether
considered in a proceeding in equity or at law).

(iii) The execution, delivery and performance by BCC of this Agreement and the
consummation of the transactions contemplated hereby require no action by or in
respect of, consent or approval of, or filing with, any Governmental Authority.

(iv) The execution, delivery and performance by BCC of this Agreement and the
consummation of the transactions contemplated hereby do not and will not
(i) contravene or violate the charter or bylaws of BCC, or (ii) contravene or
violate any Applicable Law or any judgment, order, injunction, or decree of any
Governmental Authority applicable to BCC.

(v) The Purchase Agreement is in full force and effect and, as of the date of
this Agreement, there exist no material defaults on the part of BCC or, to the
knowledge of BCC, on the part of Sellers under the Purchase Agreement. BCC has
not heretofore assigned, sold, pledged or encumbered its right, title or
interest in or under the Purchase Agreement. As of the date of this Agreement,
BCC has furnished to Apple a complete copy of the Purchase Agreement, together
with all amendments thereto. As of the date of this Agreement, BCC has not
exercised any rights of Buyer under the Purchase Agreement to terminate the
Purchase Agreement or to exclude any of the Marriott Assets from the Purchased
Assets to be acquired thereunder. BCC has not received any written notice from
Sellers under the Purchase Agreement to exclude the Purchased Hotel known as
“Courtyard North” and its related Purchased Assets from the purchase and sale
under the Purchase Agreement pursuant to Section 5.13 of the Purchase Agreement.

Section 10. DISCLAIMER. NOTWITHSTANDING ANY PROVISION OF THIS AGREEMENT OR THE
PURCHASE AGREEMENT, EACH OF BCC AND APPLE HEREBY EXPRESSLY DISCLAIMS, AND EACH
OTHER PARTY HEREBY EXPRESSLY ACKNOWLEDGES AND AGREES THAT NEITHER BCC, APPLE NOR
ANY OF THEIR RESPECTIVE AFFILIATES, EMPLOYEES, ADVISORS, AGENTS OR OTHER
REPRESENTATIVES HAS MADE OR WILL MAKE AT ANY TIME, EITHER EXPRESSLY OR
IMPLIEDLY, ANY REPRESENTATIONS, GUARANTIES, COVENANTS, PROMISES, STATEMENTS,
ASSURANCES OR WARRANTIES OF ANY KIND WHATSOEVER CONCERNING ANY OF THE ACQUIRED
BUSINESS, THE PURCHASED ASSETS, THE EXCLUDED ASSETS, THE ASSUMED LIABILITIES,
THE EXCLUDED LIABILITIES OR ANY RIGHTS, PRIVILEGES, LIABILITIES OR OBLIGATIONS
OF ANY PERSON UNDER THE PURCHASE AGREEMENT OR THE OTHER TRANSACTION AGREEMENTS.

Section 11. Broker’s Fee. It is acknowledged and agreed that upon the Closing,
BCC is obligated to pay a fee to CB Richard Ellis of Virginia, Inc. (“CBRE”)
under the

 

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Confidentiality and Commission Agreement dated as of November 29, 2007 between
BCC and CBRE (the “CBRE Agreement”). Apple shall be responsible for, and shall
pay in full, a portion of the fee due to CBRE under the CBRE Agreement that is
attributable to the Marriott Assets, which amounts are set forth on Schedule 11
(the “CBRE Fee”), and BCC shall be responsible for all other fees due to CBRE
under the CBRE Agreement. On each Closing Date, Apple shall pay the applicable
portion of the CBRE Fee due at such Closing directly to CBRE, in accordance with
payment instructions to be delivered by CBRE under the CBRE Agreement.

Section 12. Inspection; Due Diligence. Apple shall have all rights of “Buyer”
under Section 5.02(a) of the Purchase Agreement to conduct due diligence in
connection with its purchase of the Marriott Hotels and the Marriott Assets;
provided that Apple shall be subject to and bound by the conditions and
restrictions set forth in Section 5.02(a) of the Purchase Agreement.

Section 13. Due Diligence Period. It is acknowledged and agreed that the Due
Diligence Period under the Purchase Agreement has expired, and therefore that
neither Party has the right to terminate the Purchase Agreement without fault
under Section 5.02(b) of the Purchase Agreement.

Section 14. Title Insurance and Surveys. It is acknowledged and agreed that BCC
was required to obtain Title Commitments and Surveys with respect to the
Purchased Assets, including the Marriott Hotels, within 10 Business Days of the
date of the Purchase Agreement, and that BCC was required to deliver the
Objection Notices to Sellers on or before April 11, 2008. It is further
acknowledged and agreed that Buyer’s right under Section 5.03 of the Purchase
Agreement to terminate the Purchase Agreement has expired in accordance with its
terms, and that neither BCC nor Apple shall have any right to terminate the
Purchase Agreement under Section 5.03 of the Purchase Agreement; provided that
if any of Buyer’s rights were reserved prior to such expiration, or otherwise
become exercisable by Buyer after the Effective Time, that Apple shall have all
rights and obligations of “Buyer” under Section 5.03 of the Purchase Agreement;
provided further that (i) notwithstanding the foregoing, each Party shall have
the rights to terminate this Agreement and the Purchase Agreement otherwise
contemplated in this Agreement or the Purchase Agreement, to the extent
applicable, and (ii) the Parties’ acknowledgement under this Section 14 shall
not constitute an approval of any exceptions that Sellers have agreed to
eliminate in accordance with Section 5.03 of the Purchase Agreement.

Section 15. Franchise Agreements, Assumed Indebtedness, Liquor Licenses.
Promptly after the Effective Time, (a) Apple shall perform Buyer’s obligations
under, and shall comply with in all respects, Sections 5.04 (Franchise
Agreements), 5.07 (Assumption of Assumed Indebtedness; Payment of Non-Assumed
Indebtedness) and 5.08 (Liquor Licenses) of the Purchase Agreement, to the
extent such provisions and obligations relate to the Marriott Assets, and
(b) Apple shall be responsible for and shall pay any and all costs and expenses
contemplated to be paid by Buyer under any of Sections 5.04, 5.07 or 5.08 of the
Purchase Agreement, including franchise application and transfer fees, loan
assumption fees and/or licensing fees, to the extent relating to the Marriott
Assets.

Section 16. Construction Hotels. From and after the Effective Time, Apple shall
be solely liable and responsible for all liabilities and obligations under the
Purchase Agreement with

 

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respect to the Construction Hotels, including the obligation to purchase the
Construction Hotels upon satisfaction or waiver of all conditions to Buyer’s
obligation to consummate such purchase under the Purchase Agreement. From and
after the Effective Time, BCC shall have no liabilities or obligations
whatsoever under the Purchase Agreement with respect to the Construction Hotels.
Notwithstanding the foregoing, BCC shall have the sole and exclusive right to
manage the Construction Hotels upon Apple’s acquisition of such Construction
Hotels, pursuant to the terms and conditions of the Apple Management Agreements
entered into on the Initial Closing Date in accordance with Section 23 hereof
(it being understood that if Apple does not acquire a Construction Hotel, the
Apple Management Agreement for such Construction Hotel will terminate by its
terms). Apple shall pay to BCC the BCC Expenses applicable to each Construction
Hotel on the date of Closing of Apple’s acquisition of each such Construction
Hotel.

Section 17. Property Improvement Plans; Franchise Agreement Costs. With respect
to all Franchise Agreement Costs to be borne by Buyer under Section 5.06 of the
Purchase Agreement, Apple shall be liable for and shall pay 100% of such costs
to the extent applicable to the Marriott Assets. In the event Sellers shall
deliver notice to Buyer to terminate the Purchase Agreement under
Section 5.06(c) of the Purchase Agreement, then either Party shall be entitled
to elect to assume the excess Franchise Agreement Costs under Section 5.06(c)
and to cause Sellers to consummate the Closing. In the event neither BCC nor
Apple shall elect to cause Sellers to consummate the Closing under
Section 5.06(c) of the Purchase Agreement, and the Purchase Agreement shall
therefore be terminated under Section 5.06(c), then, upon the effectiveness of
the termination of the Purchase Agreement, (i) this Agreement shall terminate
automatically, (ii) the entire Deposit, together with all interest accrued
thereon from the date of deposit of the Deposit into escrow under the Escrow
Agreement, shall be refunded to BCC, and Apple shall have no right to any
portion of the Deposit, (iii) the entire Apple Deposit, together with all
interest accrued thereon from the date of deposit of the Apple Deposit into
escrow under the Apple Escrow Agreement, shall be refunded to Apple, and BCC
shall have no right to any portion of the Apple Deposit, (iv) the Buyer’s
Expenses to be paid by Sellers to Buyer under Section 5.06(c) of the Purchase
Agreement as a result of such termination shall be shared equally between BCC
and Apple, (v) Apple shall pay to BCC, and reimburse BCC for, the BCC Expenses,
and (vi) except as otherwise contemplated in this Agreement, neither Apple nor
BCC shall have any further liability or obligation to the other under this
Agreement or the Purchase Agreement as a result of such termination. For
avoidance of doubt, it is acknowledged and agreed that Apple shall not be liable
for any costs and expenses of BCC pursuant to this Section 17 unless such costs
and expenses constitute BCC Expenses and such BCC Expenses are due and payable
hereunder.

Section 18. Ground Landlord Estoppels. From and after the Effective Time, but
subject to the terms and conditions of this Agreement, Apple shall have all
rights and obligations of “Buyer” under Section 5.09 of the Purchase Agreement
with respect to the Marriott Assets. Notwithstanding the foregoing, in the event
Apple shall desire to extend the Initial Closing Date in accordance with
Section 5.09(ii) of the Purchase Agreement, Apple shall consult in good faith
with BCC in determining whether or not to so extend the Initial Closing Date. In
addition, in the event Apple (subject to Section 30(e)) shall terminate the
Purchase Agreement in accordance with the provisions of Section 5.09 of the
Purchase Agreement, then, upon the effectiveness of the termination of the
Purchase Agreement, (i) this Agreement shall terminate automatically, (ii)

 

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the entire Deposit, together with all interest accrued thereon from the date of
deposit of the Deposit into escrow under the Escrow Agreement, shall be refunded
to BCC, and Apple shall have no right to any portion of the Deposit, (iii) the
entire Apple Deposit, together with all interest accrued thereon from the date
of deposit of the Apple Deposit into escrow under the Apple Escrow Agreement,
shall be refunded to Apple, and BCC shall have no right to any portion of the
Apple Deposit, (iv) Apple shall pay to BCC, and reimburse BCC for, the BCC
Expenses, and (v) except as otherwise contemplated in this Agreement, neither
Apple nor BCC shall have any further liability or obligation to the other under
this Agreement or the Purchase Agreement as a result of such termination.

Section 19. Jefferson Pilot Land. From and after the Effective Time, but subject
to the terms and conditions of this Agreement, Apple shall have all rights and
obligations of “Buyer” under Section 5.13 of the Purchase Agreement, including
Buyer’s right to exclude Courtyard North and its related Purchased Assets from
the purchase and sale transactions contemplated under the Purchase Agreement.
Notwithstanding the foregoing, in the event Apple shall exclude Courtyard North
from the purchase and sale under the Purchase Agreement, all costs and expenses
of Buyer to be paid by Sellers on the Initial Closing Date under Section 5.13 of
the Purchase Agreement shall be shared equally between BCC and Apple.

Section 20. Suffolk Hotels. From and after the Effective Time, but subject to
the terms and conditions of this Agreement, Apple shall have all rights,
remedies and obligations of “Buyer” under Section 5.14 of the Purchase
Agreement, including Buyer’s right to exclude Courtyard Suffolk and TownePlace
Suites Suffolk from the purchase and sale transactions contemplated under the
Purchase Agreement.

Section 21. Charlottesville Courtyard. From and after the Effective Time, but
subject to the terms and conditions of this Agreement, Apple shall have all
rights, remedies and obligations of “Buyer” under Section 5.16 of the Purchase
Agreement in accordance with, and subject to the provisions of, Section 5.16 of
the Purchase Agreement. In the event the Charlottesville Closing shall not take
place simultaneously with the Initial Closing, and the Purchase Price shall be
consequently reduced by $500,000 under Section 5.16 of the Purchase Agreement,
such $500,000 amount shall reduce Apple’s purchase price payable under this
Agreement and the Purchase Agreement.

Section 22. JP Expenses. From and after the Effective Time, but subject to the
terms and conditions of this Agreement, Apple shall have all rights and
obligations of “Buyer” under Section 5.17 of the Purchase Agreement and Apple
shall be responsible for and shall pay all JP Expenses and other amounts payable
by Buyer under Section 5.17 of the Purchase Agreement.

Section 23. Management of Marriott Hotels and Excluded Hotels.

(a) On the Initial Closing Date, BCC and Apple shall enter into a management
agreement with respect to each Marriott Hotel in the applicable form attached
hereto as Schedule 23, subject to such modifications as may be agreed by the
Parties (such agreements, the “Apple Management Agreements”), pursuant to which
BCC, or its Affiliate, shall act as manager for each Marriott Hotel; provided
that with respect to each Construction Hotel or any other Marriott Hotel not
acquired by Apple on the Initial Closing Date, BCC and Apple shall enter into an

 

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Apple Management Agreement on the Initial Closing Date, but BCC shall not begin
performing services under the Apple Management Agreements for the Construction
Hotels (except for pre-opening services, to the extent contemplated in the
applicable Apple Management Agreement for such Construction Hotels) or any other
Marriott Hotel not acquired by Apple on the Initial Closing Date, and Apple
shall have no payment or other obligations to BCC thereunder, unless and until
consummation of the applicable Delayed Closing for each such Construction Hotel
or other Marriott Hotel not acquired by Apple on the Initial Closing Date
(except for payment for pre-opening services, to the extent contemplated in the
applicable Apple Management Agreement for such Construction Hotels), and each
such Apple Management Agreement shall provide for termination without cost to
Apple (except for costs incurred and payable in connection with pre-opening
services, to the extent contemplated in the applicable Apple Management
Agreement for the Construction Hotels) if any Marriott Hotel is not acquired by
Apple pursuant to the terms of this Agreement and the Purchase Agreement. It is
acknowledged and agreed that Apple’s rights to acquire the Marriott Assets under
this Agreement and the Purchase Agreement are expressly conditioned upon Apple’s
execution of an Apple Management Agreement for each Marriott Hotel on or prior
to the Initial Closing Date. Notwithstanding any provision of this Agreement or
the Purchase Agreement to the contrary, BCC shall not be obligated to consummate
any Closing of the transactions contemplated under the Purchase Agreement unless
and until Apple shall have executed and delivered to BCC an Apple Management
Agreement with respect to each of the Marriott Hotels on or prior to the Initial
Closing Date. If at any time all conditions to the Initial Closing under the
Purchase Agreement shall have been satisfied, or waived by the applicable
parties, and Apple shall refuse to execute and deliver to BCC an Apple
Management Agreement with respect to each of the Marriott Hotels at or prior to
such time, then (i) BCC shall not be required to consummate the Initial Closing
under the Purchase Agreement, (ii) BCC shall be entitled to terminate this
Agreement immediately for Apple’s material breach, and the remedies contemplated
in Section 30(a)(i) shall apply (but without any notice or cure period), and
(iii) Apple shall indemnify and hold harmless BCC and all BCC Indemnified
Parties from and against any and all Damages incurred by such BCC Indemnified
Parties as a result of a breach by Buyer of the terms and conditions of the
Purchase Agreement due to BCC’s refusal to consummate the Closing, including any
loss of the Deposit under the Purchase Agreement.

(b) It is acknowledged and agreed that BCC or its Affiliate shall provide
management services to each of the Excluded Hotels (including any Purchased
Hotels the purchase and sale of which is terminated under the Purchase Agreement
prior to the Closing), and that neither Apple nor any of its Affiliates,
employees, agents or representatives shall have any right to provide management
services to any of the Excluded Hotels. In the event any Purchased Hotel under
the Purchase Agreement shall become an Excluded Hotel for any reason, including
as contemplated in Sections 5.05, 5.13, 5.14 and 5.16 of the Purchase Agreement,
(i) Apple shall not have any rights to manage such Excluded Hotels, and
(ii) such Excluded Hotels shall be managed by BCC under the terms and conditions
of the Purchase Agreement. It is further acknowledged and agreed that BCC shall
have the sole right of first refusal as to each Excluded Hotel under
Section 6.02 of the Purchase Agreement and that Apple shall not have any rights
under Section 6.02 of the Purchase Agreement; provided that (A) promptly upon
receipt of any notice from Sellers triggering BCC’s right of first refusal under
the Purchase Agreement, BCC shall provide notice to Apple that such right of
first refusal has been initiated and, subject to the same obligations of
confidentiality that may be imposed upon BCC in connection with

 

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such notice and right of first refusal, BCC shall disclose to Apple the purchase
price for the applicable Excluded Hotel subject to BCC’s right of first refusal,
and (B) subject to BCC’s right of first refusal under the Purchase Agreement and
all rights of BCC thereunder, Apple shall not otherwise be restricted or
prohibited from acquiring any of the Excluded Hotels.

Section 24. Performance Covenant. Each of BCC and Apple hereby covenants and
agrees that it will perform and fulfill its covenants and obligations as Buyer
under the Purchase Agreement in accordance with the terms and subject to the
conditions of the Purchase Agreement, as such covenants and obligations are
allocated between the Parties under this Agreement.

Section 25. Confidentiality. All confidential or proprietary information with
respect to any of BCC, Sellers, the Purchased Assets, the Acquired Business, the
Assumed Liabilities or the transactions contemplated by the Purchase Agreement
shall be kept and held confidential by Apple in accordance with the terms and
conditions of the letter agreement between Apple and BCC dated as of
February 28, 2008, without regard to whether such letter agreement shall remain
in effect by its terms. Notwithstanding the foregoing or anything contained in
such letter agreement, this Agreement or the Purchase Agreement to the contrary,
subject to the provisions of Section 35, Apple shall be entitled to make such
disclosures and public or other filings as may be required by applicable law,
including filings with the Securities and Exchange Commission.

Section 26. Employees and Employment Matters. Notwithstanding any provisions of
Section 6.08 of the Purchase Agreement or any other provision of the Purchase
Agreement or this Agreement to the contrary, BCC shall make offers of employment
to each of the Employees in accordance with Section 6.08 of the Purchase
Agreement and covenants and agrees to perform, satisfy and discharge all
obligations of Buyer under the Purchase Agreement with respect to employees,
benefit plans and other employment matters, including with respect to the
Marriott Assets, and Apple shall have no obligation or liability with respect to
any of the foregoing obligations (which shall be included within the definition
of BCC Reserved Rights and Liabilities), and Apple shall not make, and shall
have no obligation to make, offers of employment to, hire or employ any of the
Employees, regardless of whether or not such Employees may currently be employed
by the Marriott Hotels. BCC agrees to indemnify and hold harmless each Apple
Indemnified Party (as hereinafter defined) from and against all losses, costs,
expenses, liabilities and damages paid or incurred by any Apple Indemnified
Party as a result of BCC’s breach of its obligations under this Section 26 or
the applicable provisions of the Purchase Agreement.

Section 27. Conditions to Closing.

(a) The obligation of BCC to consummate each Closing under the Purchase
Agreement shall be subject to the satisfaction, or the waiver by BCC, of the
conditions to the Buyer’s obligations to close set forth in Article 8 of the
Purchase Agreement, to the extent such conditions are applicable to the BCC
Reserved Rights and Liabilities, the BCC Assets or the BCC Liabilities. The
obligation of Apple to consummate each Closing under the Purchase Agreement
shall be subject to the satisfaction, or the waiver by Apple, of the conditions
to the Buyer’s obligations to close set forth in Article 8 of the Purchase
Agreement, to the extent such conditions are applicable to the Marriott Assets
or the Marriott Liabilities. With respect to

 

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conditions upon the obligation of Buyer to consummate any Closing under the
Purchase Agreement that are of general application, that are applicable to both
the BCC Assets (or the BCC Liabilities) and the Marriott Assets (or the Marriott
Liabilities) or that are not clearly applicable to any of the foregoing, each of
BCC and Apple shall be entitled to satisfaction or waiver of such condition as a
condition precedent to its obligation to consummate such Closing under the
Purchase Agreement. Except as otherwise provided in Section 23(a), with respect
to BCC, each Party hereby covenants and agrees to consummate each Closing of the
transactions under the Purchase Agreement upon such time as such Party’s
respective conditions to such Closing shall be satisfied or waived.

(b) Except as otherwise provided in Section 23(a), with respect to BCC, if
either BCC or Apple shall refuse to consummate the Closing at any time when all
conditions precedent to such Party’s obligation to close under the Purchase
Agreement have been satisfied or waived, the other Party shall have the remedies
contemplated in Section 30(c), as applicable.

Section 28. Casualty and Condemnation. From and after the Effective Time, but
subject to the terms and conditions of this Agreement, (a) Apple shall have all
rights and obligations of “Buyer” under Article 11 of the Purchase Agreement
with respect to the Marriott Assets, and (b) BCC shall have all rights and
obligations of “Buyer” under Article 11 of the Purchase Agreement with respect
to the BCC Assets. In the event either BCC or (subject to Section 30(e)) Apple,
as applicable, shall terminate the Purchase Agreement in accordance with the
provisions of Article 11 of the Purchase Agreement, then, upon the effectiveness
of the termination of the Purchase Agreement, (i) this Agreement shall terminate
automatically, (ii) the entire Deposit, together with all interest accrued
thereon from the date of deposit of the Deposit into escrow under the Escrow
Agreement, shall be refunded to BCC, and Apple shall have no right to any
portion of the Deposit, (iii) the entire Apple Deposit, together with all
interest accrued thereon from the date of deposit of the Apple Deposit into
escrow under the Apple Escrow Agreement, shall be refunded to Apple, and BCC
shall have no right to any portion of the Apple Deposit, (iv) Apple shall pay to
BCC, and reimburse BCC for, the BCC Expenses, and (v) except as otherwise
contemplated in this Agreement, neither Apple nor BCC shall have any further
liability or obligation to the other under this Agreement or the Purchase
Agreement as a result of such termination. In the event of any partial
termination of the Purchase Agreement by either Party under Article 11 of the
Purchase Agreement, this Agreement and the Purchase Agreement shall remain in
effect and the applicable provisions of the Purchase Agreement shall govern.

Section 29. Buyer Termination Rights Under Purchase Agreement.

(a) In addition to the rights of the Parties to terminate the Purchase Agreement
contained elsewhere in this Agreement (including Sections 13, 14, 17, 18, 28 and
30) and/or in the Purchase Agreement, the Parties shall have the right to
exercise Buyer’s rights under the Purchase Agreement to terminate the Purchase
Agreement at any time prior to the Initial Closing as follows:

(i) With respect to any mutual agreement of Buyer and Sellers to terminate the
Purchase Agreement under Section 10.01(a)(i) of the Purchase Agreement, each of
Apple and BCC must agree in writing to such termination prior to either Party
executing any such written agreement of termination with Sellers.

 

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(ii) Each of BCC and (subject to Section 30(e)) Apple shall have the right to
exercise Buyer’s right to terminate the Purchase Agreement pursuant to
Section 10.01(a)(ii) of the Purchase Agreement if the Initial Closing shall not
have been consummated on or before the Drop Dead Date (as such date may be
extended under the Purchase Agreement); provided, however, that a Party may not
so terminate the Purchase Agreement if the Initial Closing shall not have been
consummated by the Drop Dead Date by reason of the failure of such Party to
perform, or to cause its Affiliates to perform, in all material respects any of
its or their respective covenants or agreements contained the Purchase
Agreement.

(iii) Each of BCC and (subject to Section 30(e)) Apple shall have the right to
exercise Buyer’s right to terminate the Purchase Agreement pursuant to
Section 10.01(a)(iii) of the Purchase Agreement in the event of a material
breach of the Sellers under the Purchase Agreement (subject to the terms and
conditions of Section 10.01(a)(iii) of the Purchase Agreement).

(iv) In the event the Parties shall agree to terminate the Purchase Agreement in
accordance with Section 29(a)(i), or either BCC or (subject to Section 30(e))
Apple, as applicable, shall terminate the Purchase Agreement in accordance with
Section 29(a)(ii) or 29(a)(iii) of this Agreement prior to the Initial Closing
Date, then, in each case upon the effectiveness of the termination of the
Purchase Agreement, (A) this Agreement shall terminate automatically, (B) the
entire Deposit, together with all interest accrued thereon from the date of
deposit of the Deposit into escrow under the Escrow Agreement, shall be refunded
to BCC, and Apple shall have no right to any portion of the Deposit, (C) the
entire Apple Deposit, together with all interest accrued thereon from the date
of deposit of the Apple Deposit into escrow under the Apple Escrow Agreement,
shall be refunded to Apple, and BCC shall have no right to any portion of the
Apple Deposit, (D) any Buyer’s Expenses to be paid by Sellers to Buyer under
10.03(a) of the Purchase Agreement as a result of such termination shall be
shared equally between BCC and Apple, (E) Apple shall pay to BCC, and reimburse
BCC for, the BCC Expenses, and (F) except as otherwise contemplated herein,
neither Apple nor BCC shall have any further liability or obligation to the
other under this Agreement or the Purchase Agreement as a result of such
termination.

(b) After the Initial Closing, Apple shall have the right to exercise Buyer’s
rights under the Purchase Agreement to terminate the obligation of Buyer and
Sellers to consummate a Delayed Closing under the Purchase Agreement as follows:

(i) With respect to any mutual agreement of Buyer and Sellers to terminate the
obligation of Buyer and Sellers to consummate a Delayed Closing under
Section 10.01(b)(i) of the Purchase Agreement, Apple may agree in writing to
such termination, subject to the provisions of Section 30(e).

 

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(ii) Apple shall have the right to exercise Buyer’s right to terminate the
obligation of Buyer and Sellers to consummate a Delayed Closing pursuant to
Section 10.01(b)(ii) of the Purchase Agreement in the event of a material breach
of the Sellers under the Purchase Agreement (subject to the terms and conditions
of Section 10.01(b)(ii) of the Purchase Agreement).

(iii) In the event Apple shall terminate the obligation under the Purchase
Agreement of Buyer and Sellers to consummate a Delayed Closing in accordance
with this Section 29(b), then, upon the effectiveness of such termination,
(i) the obligations of Apple under this Agreement to consummate such Delayed
Closing shall terminate automatically, (ii) any portion of the Deposit, together
with interest accrued thereon, payable to Buyer under the Purchase Agreement as
a result of such termination shall be refunded to BCC, (iii) the same amount
shall be refunded to Apple from the Apple Deposit under the Apple Escrow
Agreement, (iv) Apple shall pay to BCC, and reimburse BCC for, any BCC Expenses
not previously reimbursed to BCC that would have been payable at such Delayed
Closing, and (v) except as otherwise contemplated herein, neither Apple nor BCC
shall have any further liability or obligation to the other under this Agreement
or the Purchase Agreement as a result of such termination.

Section 30. Termination Rights Under this Agreement.

(a) In addition to the rights of the Parties to terminate this Agreement prior
to the Initial Closing Date contained elsewhere in this Agreement (including
Sections 13, 14, 17, 18, 28 and 29), each of BCC and Apple shall have the right
to terminate this Agreement prior to the Initial Closing Date in the event of a
material breach by the other of any covenant or agreement under this Agreement
or the Purchase Agreement, where such breach is not cured by the breaching party
within 10 Business Days of receiving written notice from the terminating party
of the breach, which written notice shall state that unless such breach is cured
in accordance with this Section 30(a), the terminating Party intends to
terminate this Agreement.

(i) In the event of any termination of this Agreement by BCC under this
Section 30(a) as a result of Apple’s breach of this Agreement, (A) the entire
Apple Deposit, together with all interest accrued on the Apple Deposit from the
date of deposit of the Apple Deposit into escrow under the Apple Escrow
Agreement, shall be paid and released in full to BCC and Apple shall not be
entitled to any portion of the Deposit or the Apple Deposit, (B) Apple shall pay
to BCC, and reimburse BCC for, the BCC Expenses, and (C) except as otherwise
contemplated herein, neither Apple nor BCC shall have any further liability or
obligation to the other under this Agreement or the Purchase Agreement as a
result of such termination.

(ii) In the event of any termination of this Agreement by Apple under this
Section 30(a) as a result of BCC’s breach of this Agreement, (A) the entire
Apple Deposit, together with all interest accrued on the Apple Deposit from the
date of deposit of the Apple Deposit into escrow under the Apple Escrow
Agreement, shall be refunded to Apple, (B) BCC shall pay and reimburse Apple for
the Apple Expenses and all BCC Expenses previously paid by Apple to BCC, and
(C) except as otherwise contemplated herein, neither Apple nor BCC shall have
any further liability or obligation to the other under this Agreement or the
Purchase Agreement as a result of such termination.

 

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(b) This Agreement may not be terminated after the Initial Closing Date.
However, after the Initial Closing but prior to any Delayed Closing, each of BCC
and Apple shall have the right to terminate the rights and obligations under
this Agreement to consummate such Delayed Closing in the event of a material
breach by the other of any covenant or agreement under this Agreement or the
Purchase Agreement, where such breach is not cured by the breaching party within
10 Business Days of receiving written notice from the terminating party of the
breach, which written notice shall state that unless such breach is cured in
accordance with this Section 30(b), the terminating Party intends to terminate
the rights and obligations under this Agreement to consummate such Delayed
Closing.

(i) In the event of any termination under this Section 30(b) after the Initial
Closing Date by BCC of the rights and obligations under this Agreement to
consummate any Delayed Closing, (A) a portion of any remaining Apple Deposit
corresponding to such Delayed Closing, and any interest accrued thereon, shall
be released from escrow under the Apple Escrow Agreement and paid to BCC,
(B) Apple shall pay to BCC, and reimburse BCC for, any BCC Expenses not
previously reimbursed to BCC corresponding to such Delayed Closing, and
(C) except as otherwise contemplated herein, neither Apple nor BCC shall have
any further liability or obligation to the other under this Agreement or the
Purchase Agreement relating to such Delayed Closing as a result of such
termination.

(ii) In the event of any termination under this Section 30(b) after the Initial
Closing Date by Apple of the rights and obligations under this Agreement to
consummate any Delayed Closing, (A) a portion of any remaining Apple Deposit
corresponding to such Delayed Closing, and any interest accrued thereon, shall
be released from escrow under the Apple Escrow Agreement and paid to Apple,
(B) BCC shall pay and reimburse Apple for the Apple Expenses corresponding to
such Delayed Closing, and all BCC Expenses previously paid by Apple to BCC, to
the extent corresponding to such Delayed Closing, and (C) except as otherwise
contemplated herein, neither Apple nor BCC shall have any further liability or
obligation to the other under this Agreement or the Purchase Agreement relating
to such Delayed Closing as a result of such termination.

(c) This Agreement shall terminate automatically in the event of any termination
of the Purchase Agreement by Sellers pursuant to Section 10.01(a)(iii) of the
Purchase Agreement except as expressly set forth in this Agreement.

(i) In the event that the breach by Buyer under the Purchase Agreement giving
rise to Sellers’ termination under Section 10.01(a)(iii) of the Purchase
Agreement is a breach of a covenant, agreement or obligation allocated solely to
BCC under this Agreement, or results from BCC’s failure to consummate a Closing
under the Purchase Agreement at any time after which the conditions to BCC’s
obligation to consummate such Closing shall have been satisfied or waived (other
than as contemplated in Section 23), (A) the entire Apple Deposit, together with
all interest

 

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accrued on the Apple Deposit from the date of deposit of the Apple Deposit into
escrow under the Apple Escrow Agreement, shall be refunded to Apple, (B) BCC
shall pay and reimburse Apple for the Apple Expenses, and (C) except as
otherwise contemplated herein, neither Apple nor BCC shall have any further
liability or obligation to the other under this Agreement or the Purchase
Agreement as a result of such termination.

(ii) In the event that the breach by Buyer under the Purchase Agreement giving
rise to Sellers’ termination under Section 10.01(a)(iii) of the Purchase
Agreement is a breach of a covenant, agreement or obligation allocated solely to
Apple under this Agreement, or results from Apple’s failure to consummate a
Closing under the Purchase Agreement at any time after which the conditions to
Apple’s obligation to consummate such Closing shall have been satisfied or
waived, (A) the entire Apple Deposit, together with all interest accrued on the
Apple Deposit from the date of deposit of the Apple Deposit into escrow under
the Apple Escrow Agreement, shall be paid and released in full to BCC, and Apple
shall not be entitled to any portion of the Apple Deposit, (B) Apple shall pay
to BCC, and reimburse BCC for, all BCC Expenses, and (C) except as otherwise
contemplated herein, neither Apple nor BCC shall have any further liability or
obligation to the other under this Agreement or the Purchase Agreement as a
result of such termination.

(iii) In the event that the breach by Buyer under the Purchase Agreement giving
rise to Sellers’ termination under Section 10.01(a)(iii) of the Purchase
Agreement is a breach of a covenant, agreement or obligation allocated jointly
to both BCC and Apple under this Agreement, or results from the Parties’ mutual
failure to consummate a Closing under the Purchase Agreement at any time after
which the conditions to the Parties’ obligation to consummate such Closing shall
have been satisfied (other than, with respect to BCC, as contemplated in
Section 23), the Parties shall share liability on a basis proportionate to their
relative responsibility for such breach, including liability for the Deposit
(provided that in no event shall Apple’s liability for the Deposit or any
portion thereof exceed the amount of the then remaining Apple Deposit, nor shall
BCC’s liability for the Deposit or any portion thereof exceed the amount of the
then remaining Deposit) and for any further liabilities or obligations incurred
as a result of such breach; provided that in such event Apple shall pay to, and
reimburse BCC for, the BCC Expenses.

(d) In the event of any termination by Sellers of the obligation of Buyer and
Sellers to consummate a Delayed Closing under the Purchase Agreement pursuant to
Section 10.01(b)(ii) of the Purchase Agreement, this Agreement shall not
terminate, but the corresponding obligation of the Parties to consummate such
Delayed Closing hereunder shall likewise terminate.

(i) In the event that the breach by Buyer under the Purchase Agreement giving
rise to Sellers’ termination of a Delayed Closing under Section 10.01(b)(ii) of
the Purchase Agreement is a breach of a covenant, agreement or obligation
allocated solely to BCC under this Agreement, or results from BCC’s failure to
consummate such Delayed Closing under the Purchase Agreement at any time after
which the conditions to BCC’s obligation to consummate such Closing shall have
been

 

18

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satisfied or waived (other than as contemplated in Section 23), (A) any portion
of the Apple Deposit corresponding to such Delayed Closing, together with all
interest accrued thereon, shall be refunded to Apple, (B) BCC shall pay and
reimburse Apple for the Apple Expenses corresponding to such Delayed Closing,
and (C) except as otherwise contemplated herein, neither Apple nor BCC shall
have any further liability or obligation to the other under this Agreement or
the Purchase Agreement with respect to such Delayed Closing as a result of such
termination.

(ii) In the event that the breach by Buyer under the Purchase Agreement giving
rise to Sellers’ termination of a Delayed Closing under Section 10.01(b)(ii) of
the Purchase Agreement is a breach of a covenant, agreement or obligation
allocated solely to Apple under this Agreement, or results from Apple’s failure
to consummate such Delayed Closing under the Purchase Agreement at any time
after which the conditions to Apple’s obligation to consummate such Closing
shall have been satisfied or waived, (A) any portion of the Apple Deposit
corresponding to such Delayed Closing, together with all interest accrued
thereon, shall be paid and released in full to BCC, (B) Apple shall pay to BCC,
and reimburse BCC for, all BCC Expenses corresponding to such Delayed Closing,
and (C) except as otherwise contemplated herein, neither Apple nor BCC shall
have any further liability or obligation to the other under this Agreement or
the Purchase Agreement with respect to such Delayed Closing as a result of such
termination.

(iii) In the event that the breach by Buyer under the Purchase Agreement giving
rise to Sellers’ termination of a Delayed Closing under Section 10.01(b)(ii) of
the Purchase Agreement is a breach of a covenant, agreement or obligation
allocated jointly to both BCC and Apple under this Agreement, or results from
the Parties’ mutual failure to consummate such Delayed Closing under the
Purchase Agreement at any time after which the conditions to the Parties’
obligation to consummate such Delayed Closing shall have been satisfied (other
than, with respect to BCC, as contemplated in Section 23), the Parties shall
share liability on a basis proportionate to their relative responsibility for
such breach, including liability for any portion of the Deposit payable to
Sellers (provided that in no event shall Apple’s liability for the Deposit or
any portion thereof exceed the amount of the then remaining Apple Deposit, nor
shall BCC’s liability for the Deposit or any portion thereof exceed the amount
of the then remaining Deposit) and for any further liabilities or obligations
incurred as a result of such breach; provided that in such event Apple shall pay
to, and reimburse BCC for, the BCC Expenses corresponding to such Delayed
Closing.

(e) Notwithstanding any provision of this Agreement or the Purchase Agreement to
the contrary, with respect to any right of Apple under this Agreement or
otherwise (x) to terminate the Purchase Agreement voluntarily prior to the
Initial Closing Date, or (y) to terminate the obligation of Buyer and Sellers to
consummate any Delayed Closing under the Purchase Agreement, in the event Apple
shall desire to exercise any such right of termination, Apple shall first
deliver written notice of such intention to BCC at least three Business Days
prior to the effective date of such termination, and BCC shall have the right to
elect instead to terminate this Agreement, or to terminate Apple’s obligation to
consummate any Delayed Closing under this Agreement, as the case may be.

 

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(i) In the event of any termination by BCC of this Agreement under clause (x) of
Section 30(e), (i) this Agreement shall be terminated upon BCC’s notice of
termination to Apple, (ii) the Purchase Agreement shall remain in full force and
effect in accordance with its terms, (iii) the Apple Deposit, together with all
interest accrued on the Apple Deposit from the date of deposit of the Apple
Deposit into escrow under the Apple Escrow Agreement, shall be refunded to
Apple, (iv) Apple shall reimburse BCC for all BCC Expenses, and (v) except as
otherwise contemplated in this Agreement, neither Apple nor BCC shall have any
further liability or obligation to the other under this Agreement or the
Purchase Agreement as a result of such termination.

(ii) In the event of any termination by BCC of Apple’s obligation to consummate
any Delayed Closing under this Agreement under clause (y) of Section 30(e),
(i) the Purchase Agreement shall remain in full force and effect in accordance
with its terms, (ii) any remaining portion of the Apple Deposit corresponding to
such Delayed Closing, together with all interest accrued thereon, shall be
refunded to Apple, (iii) Apple shall reimburse BCC for all BCC Expenses
corresponding to such Delayed Closing, and (iv) except as otherwise contemplated
in this Agreement, neither Apple nor BCC shall have any further liability or
obligation to the other under this Agreement or the Purchase Agreement as a
result of such termination.

(f) With respect to any right of BCC under this Agreement or otherwise to
terminate the Purchase Agreement voluntarily prior to the Initial Closing Date,
BCC shall deliver written notice of its exercise of any such right to Apple at
least three Business Days prior to the effective date of such termination. BCC
shall not have the right to terminate this Agreement other than as to a Delayed
Closing after the Initial Closing Date.

Section 31. Effect of Termination.

(a) Upon any termination of this Agreement, this Agreement shall forthwith
become void and of no further force or effect, except those which expressly
survive termination and except:

(i) for the following provisions, which shall remain in full force and effect:
Section 25 (Confidentiality), this Section 31, Section 33 (Expenses), Section 35
(Public Announcements), Section 40 (Governing Law), Section 41 (Jurisdiction)
and Section 44 (Entire Agreement); and

(ii) claims and obligations arising prior to or simultaneously with such
termination, including obligations of the Parties under this Agreement for any
payment, reimbursement or release, as the case may be, of the Initial Deposit,
the Additional Deposit, the Apple Deposit, the BCC Expenses or the Apple
Expenses, as applicable, shall survive such termination.

(b) It is acknowledged and agreed that a termination of this Agreement shall not
constitute an automatic termination of the Purchase Agreement; provided that the
Parties acknowledge and agree that an event or circumstance giving rise to a
termination of this Agreement may also result in a termination of the Purchase
Agreement pursuant to the terms

 

20

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thereof. Effective upon any termination of this Agreement, and in the event the
Purchase Agreement has not also been terminated, (i) Apple shall forfeit and
relinquish all rights and interests under the Purchase Agreement and shall no
longer be a Buyer under the Purchase Agreement and (ii) upon the request of BCC,
Apple shall assign to BCC all rights, benefits and obligations assigned to Apple
under this Agreement and shall take all actions as reasonably necessary under
the Purchase Agreement to effect such assignment, including delivery of written
notice to Sellers under the Purchase Agreement; provided that Apple shall not be
relieved of any liabilities or obligations arising or incurred under this
Agreement or the Purchase Agreement prior to any termination of this Agreement.
If, upon BCC’s request, Apple shall assign its rights, benefits and obligations
under the Purchase Agreement to BCC in accordance with the foregoing clause
(ii), BCC shall indemnify and hold harmless Apple for any liabilities, losses,
costs, expenses and damages paid or incurred by Apple as a Buyer under the
Purchase Agreement arising from acts or omissions of BCC (or its affiliates,
agents or representatives) occurring after the termination of this Agreement.

(c) It is further acknowledged and agreed that a termination of the rights and
obligations to consummate a Delayed Closing under this Agreement or the Purchase
Agreement shall not constitute a termination of this Agreement or the Purchase
Agreement, but shall be limited to the termination of the rights and obligations
of the Parties, and of Buyer and Sellers under the Purchase Agreement, to
consummate such Delayed Closing. Effective upon any termination of Apple’s right
and obligation to consummate a Delayed Closing under this Agreement, (i) Apple
shall forfeit and relinquish its rights and interests under the Purchase
Agreement to consummate such Delayed Closing, and (ii) upon the request of BCC,
Apple shall assign to BCC all rights, benefits and obligations assigned to Apple
under this Agreement with respect to such Delayed Closing, and shall take all
actions as reasonably necessary under the Purchase Agreement to effect such
assignment, including delivery of written notice to Sellers under the Purchase
Agreement; provided that Apple shall not be relieved of any liabilities or
obligations arising or incurred under this Agreement or the Purchase Agreement
with respect to such Delayed Closing prior to such termination. If, upon BCC’s
request, Apple shall assign its rights, benefits and obligations under the
Purchase Agreement with respect to any Delayed Closing to BCC in accordance with
the foregoing clause (ii), BCC shall indemnify and hold harmless Apple for any
liabilities, losses, costs, expenses and damages paid or incurred by Apple in
connection with each such Delayed Closing under the Purchase Agreement arising
from acts or omissions of BCC (or its affiliates, agents or representatives)
occurring after such termination.

Section 32. Liability and Indemnification.

(a) From and after the Initial Closing Date, each of BCC and Apple shall have,
and shall be entitled to exercise, all of the rights and remedies of Buyer
against Sellers and Guarantor under the Purchase Agreement, including under
Article 9 and Section 13.14 thereof, to the extent related to each of their
respective Purchased Assets and Assumed Liabilities and, with respect to BCC,
the BCC Reserved Rights and Liabilities. To the extent any claim for
indemnification against the Sellers relates to assets or properties acquired by,
or liabilities assumed by, both BCC and Apple, or is otherwise mutually
applicable to BCC and Apple, BCC and Apple shall cooperate in good faith in the
pursuit of such claim so as to maximize recovery of Damages by both BCC and
Apple (and their respective Indemnified Parties under the Purchase Agreement)
under the Purchase Agreement.

 

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(b) From and after the Initial Closing Date, each of BCC and Apple shall be
liable for, and shall perform and discharge, all liabilities and obligations of
Buyer under the Purchase Agreement, including Article 9 thereof, to the extent
related to each of their respective Purchased Assets and Assumed Liabilities or
the acts or omissions of such Party. To the extent any claim for indemnification
by any Seller Indemnified Party relates to assets or properties acquired by, or
liabilities assumed by, both BCC and Apple, or is otherwise mutually applicable
to BCC and Apple, BCC and Apple shall cooperate in good faith in the defense of
such claim so as to minimize liability for Damages for which Apple and/or BCC
are liable to Sellers under the Purchase Agreement. Any Damages awarded to any
Seller Indemnified Party with respect to claims mutually applicable to BCC and
Apple shall be divided between BCC and Apple equitably in proportion to their
relative fault as determined by BCC and Apple, by negotiation, settlement, legal
proceedings or otherwise.

(c) Each of BCC and Apple (in such capacity, the “Indemnifying Party”) shall
indemnify the other Party and its Affiliates, successors and assigns, and each
of such Person’s agents, including accountants, counsel, directors, officers,
employees and consultants (with respect to BCC, the “BCC Indemnified Parties”
and with respect to Apple, the “Apple Indemnified Parties”) against and hold
each of them harmless from any and all Damages caused by, resulting from,
arising out of or relating to any liabilities and obligations allocated pursuant
to this Agreement to such Indemnifying Party as a Buyer under the Purchase
Agreement, including any failure to perform any covenants or agreements or any
claims for indemnification asserted by any Seller Indemnified Party under the
Purchase Agreement.

(d) In addition, BCC shall indemnify and hold harmless each of the Apple
Indemnified Parties from and against any Damages suffered by the Apple
Indemnified Parties resulting from BCC’s breach of the Purchase Agreement prior
to the Effective Time; provided that BCC shall not have any liability or
obligation to Apple, and Apple hereby waives and releases any claims against or
liabilities or obligations of BCC, for Damages arising out of or relating to the
following actions or inactions of BCC as Buyer of the Marriott Assets and the
Marriott Liabilities prior to the Effective Date (except to the extent such
Damages suffered by Apple arise from a claim from a Seller Indemnified Party or
a third party):

(i) BCC’s actions taken in accordance with Section 5.03 of the Purchase
Agreement in connection with (A) ordering and obtaining Title Commitments and
Surveys, (B) the submission of Buyer’s Objection Notices to Sellers, (C) the
grant of an extension to Sellers for Sellers’ delivery of responses to Buyer’s
Objection Notices, (D) BCC’s failure to terminate the Purchase Agreement during
the Title Termination Period, (E) BCC’s acceptance of Permitted Exceptions on
behalf of Buyer or (F) BCC’s approval of the condition of title of any parcel of
Owned Real Property on behalf of Buyer under the Purchase Agreement;

(ii) BCC’s failure (A) to submit an application to each franchisor or licensor
under the Franchise Agreements for the transfer or assignment of such Franchise
Agreements to Buyer, or for the issuance of a new franchise agreement to Buyer,
promptly after the date of the Purchase Agreement, (B) to use diligence and
commercially reasonable efforts to obtain all necessary approvals for such
transfers, assignments or new issuances, as the case may be, or (C) to exercise
reasonable

 

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commercial efforts to secure the release of the applicable Seller and any
guarantor under Sellers’ Franchise Agreements, in each case as contemplated
under Section 5.04 of the Purchase Agreement;

(iii) BCC’s negotiation of and agreement upon Property Improvement Plans under
Section 5.06 of the Purchase Agreement

(iv) BCC’s failure (A) to submit applications to applicable lenders with respect
to assumption of the Assumed Indebtedness promptly after the date of the
Purchase Agreement, (B) to pay any application fees, loan assumption fees or
costs of lenders associated with assumption by Buyer of the Assumed
Indebtedness, or (C) to provide financial or other information to the lenders,
or to use diligent and commercially reasonable efforts to obtain the consent of
lenders to Buyer’s assumption of the Assumed Indebtedness, in each case as
contemplated under Section 5.07 of the Purchase Agreement;

(v) BCC’s failure (A) to make an application promptly after the date of the
Purchase Agreement to the appropriate Governmental Authorities to have new
liquor licenses issued in the name of Buyer or an entity designated by Buyer in
compliance with local law for those Marriott Hotels that sell alcoholic
beverages, or (B) to use diligence and reasonable efforts to obtain approvals of
applicable Governmental Authorities for the issuance of new liquor licenses
prior to the applicable Closing Date, in each case as contemplated under
Section 5.08 of the Purchase Agreement; or

(vi) BCC’s failure to exclude Courtyard North from the purchase and sale
transactions under the Purchase Agreement in accordance with the provisions of
Section 5.13.

Notwithstanding the foregoing, BCC represents and warrants to Apple that BCC
knows of no claim of delay or lack of due diligence that would prevent the Drop
Dead Date from being extended in accordance with Section 10.01(a)(ii) of the
Purchase Agreement.

(e) In addition to and without limiting the generality of Section 32(d), BCC
shall not have any liability or obligation to Apple, and Apple hereby waives and
releases any claims against or liabilities or obligations of BCC, relating to
BCC’s performance of due diligence with respect to the Marriott Assets,
including the quantity, quality, adequacy, method, content or thoroughness of
such due diligence. Apple acknowledges and agrees that any results of due
diligence or other information provided by BCC to Apple with respect to the
Marriott Assets were provided merely for convenience and that BCC shall not have
any liability or obligation to Apple arising therefrom.

(f) Notwithstanding any provision of this Agreement, neither Party shall be
liable under this Agreement for consequential, indirect, special or punitive
damages or lost profits, except to the extent payable to a third party.

Section 33. Expenses; Setoff. Except as otherwise provided in this Agreement
(including in Sections 14, 17, 18, 28, 29 and 30), all costs and expenses
incurred in connection with negotiating, preparing and executing this Agreement
shall be paid by the Party incurring

 

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such cost or expenses. Except for the reimbursement of BCC Expenses or Apple
Expenses to the extent contemplated herein, each Party shall be responsible for
its own, and neither Party shall be obligated to reimburse the other for, any
costs or expenses incurred in connection with this Agreement or the Purchase
Agreement or the transactions contemplated hereby or thereby, and neither Party
shall be liable to the other for any fees or expenses of legal counsel or other
advisors. Each Party (the “Payor”) shall be entitled to set off against any
unpaid amounts owed to the other Party (the “Payee”), pursuant to the Purchase
Agreement, the Transaction Agreements, this Agreement or otherwise, any amounts
owed by the Payee to the Payor pursuant to the Purchase Agreement, the
Transaction Agreements, this Agreement or otherwise, including any amounts then
subject to a pending claim for indemnification or collection under this
Agreement (for so long as such claim shall remain pending). Each Party shall be
responsible for the portion of Transfer Taxes payable by Buyer under the
Purchase Agreement that is attributable to such Party’s Purchased Assets.

Section 34. Commercially Reasonable Efforts; Further Assurances. Subject to the
terms and conditions of this Agreement, the Parties (i) will use their
commercially reasonable efforts to take, or cause to be taken, all actions and
to do, or cause to be done, all things necessary or desirable under Applicable
Laws or otherwise to consummate the assignment and assumption transactions
contemplated by this Agreement and the consummation of the transactions
contemplated under the Purchase Agreement, and (ii) agree to execute and
deliver, or cause to be executed and delivered, such other documents,
certificates, agreements and other writings as may be reasonably necessary to
implement expeditiously the assignment and assumption transactions contemplated
by this Agreement and the consummation of the transactions contemplated under
the Purchase Agreement.

Section 35. Public Announcements. Neither Party will issue any press release or
make any public statement with respect to this Agreement, the Purchase Agreement
or the transactions contemplated hereby or thereby without the prior written
consent of the other Party, unless required under Applicable Law.
Notwithstanding the foregoing, in the event Apple shall desire or be required to
issue any press release or make any public statement or other filings or
disclosures with respect to this Agreement, the Purchase Agreement or the
transactions contemplated hereby or thereby, Apple shall endeavor to provide a
draft of such intended release or disclosure to BCC and to Tidewater at least
two Business Days prior to such release, and shall consider in good faith any
comments or objections of BCC or Tidewater to the form or substance of such
release or disclosure as well as any reasonable requests of BCC or Tidewater for
confidential treatment of particular provisions of this Agreement or the
Purchase Agreement.

Section 36. Amendments to Purchase Agreement. Neither Party shall be entitled to
agree to, or to effect, any amendments to or modifications of the Purchase
Agreement without the prior consent of the other, which consent shall not be
unreasonably withheld or delayed.

Section 37. Notices. All notices, requests and other communications to either
Party hereunder shall be in writing (including facsimile transmission) and shall
be given or delivered personally, by facsimile with confirmation of receipt, by
mail (first class, postage prepaid), by overnight delivery using a nationally
recognized carrier or by email, to the Parties at the following addresses:

 

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if to BCC to:

Barceló Crestline Corporation

8405 Greensboro Drive, Suite 500

McLean, Virginia 22102

Attn: General Counsel

Fax No.: (571) 382-1754

Email: pierre.donahue@crestlinehotels.com

with a copy to:

Hogan & Hartson LLP

555 Thirteenth Street, NW

Washington, DC 20004

Attn: Elizabeth M. Donley; Bruce W. Gilchrist

Fax No.: (202) 637-5910

Email: edonley@hhlaw.com; bwgilchrist@hhlaw.com

if to Apple, to:

c/o Apple REIT Eight

814 East Main Street

Richmond, VA 23219

Attn: Samuel F. Reynolds; David P. Buckley

Fax No: (804) 344-8129

Email: sreynolds@applereit.com; dbuckley@applereit.com

with a copy to:

McGuire Woods LLP

One James Center

901 East Cary Street

Richmond, Virginia 23219-4030

Attn: Nancy R. Little

Fax No: (804) 698-2101

Email: nlittle@mcguirewoods.com

or to such other representative or at such other address as a party may furnish
to the other Party in writing. All such notices, requests and other
communications shall be deemed received on the date of receipt by the recipient
thereof if received prior to 5:00 p.m. in the place of receipt and such day is a
Business Day in the place of receipt. Otherwise, any such notice, request or
communication shall be deemed not to have been received until the next
succeeding Business Day in the place of receipt.

 

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Section 38. Amendments and Waivers.

(a) Any provision of this Agreement may be amended or waived if, but only if,
such amendment or waiver is in writing, which writing specifically references
the section of this Agreement to be amended or waived, and is signed, in the
case of an amendment, by each Party or in the case of a waiver, by the Party
against whom the waiver is to be effective.

(b) No failure or delay by any Party in exercising any right, power or privilege
hereunder shall operate as a waiver thereof nor shall any single or partial
exercise thereof preclude any other or further exercise thereof or the exercise
of any other right, power or privilege.

Section 39. Successors and Assigns. The provisions of this Agreement shall be
binding upon and inure to the benefit of the Parties hereto and their respective
successors and assigns. Neither Party may assign, delegate or otherwise transfer
any of its rights or obligations under this Agreement without the prior written
consent of the other Party; provided that each Party shall have the right to
designate one or more Affiliates to take title to one or more of its respective
Purchased Assets on any Closing Date, and to assign its corresponding rights and
obligations under this Agreement and the Purchase Agreement to such Affiliates,
upon written notice to the other delivered no later than two days prior to such
Closing Date; provided further that no such designation or assignment shall
relieve such Party of any of its liabilities or obligations under this Agreement
or the Purchase Agreement.

Section 40. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Virginia without regard to the
conflicts of law rules of such state.

Section 41. Jurisdiction. Except as otherwise expressly provided in this
Agreement, the Parties hereto agree that any suit, action or proceeding seeking
to enforce any provision of, or based on any matter arising out of or in
connection with, this Agreement or the transactions contemplated hereby shall be
brought in a federal or state court located in the Commonwealth of Virginia and
that any cause of action arising out of this Agreement shall be deemed to have
arisen from a transaction of business in the Commonwealth of Virginia, and each
of the Parties hereby irrevocably consents to the jurisdiction of such courts
(and of the appropriate appellate courts therefrom) in any such suit, action or
proceeding and irrevocably waives, to the fullest extent permitted by law, any
objection that it may now or hereafter have to the laying of the venue of any
such suit, action or proceeding in any such court or that any such suit, action
or proceeding which is brought in any such court has been brought in an
inconvenient forum. Process in any such suit, action or proceeding may be served
on any party anywhere in the world, whether within or without the jurisdiction
of any such court.

Section 42. Waiver of Jury Trial. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY
WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF
OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

Section 43. Counterparts; Third Party Beneficiaries. This Agreement may be
signed in one or more counterparts, each of which shall be an original, with the
same effect as if the signatures hereto and thereto were upon the same
instrument. Any change made to any

 

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counterpart but not made to all counterparts shall have no effect. This
Agreement shall become effective when each Party shall have received a
counterpart hereof or thereof signed by the other Party. Signatures provided by
facsimile transmission shall be deemed to be original signatures. No provision
of this Agreement is intended to confer upon any Person other than the Parties
any rights or remedies hereunder.

Section 44. Entire Agreement. This Agreement, together with the Purchase
Agreement and other Transaction Agreements, constitutes the entire agreement
between the Parties with respect to the subject matter hereof and supersedes all
prior agreements and understandings, both oral and written, between the Parties
with respect to the subject matter of this Agreement. This Agreement shall not
be construed as if prepared by one Party, but rather according to its fair
meaning as a whole, as if both Parties had prepared it.

Section 45. Captions. The captions herein are included for convenience of
reference only and shall be ignored in the construction or interpretation
hereof.

Section 46. Severability. If any term or other provision of this Agreement is
held by a court of competent jurisdiction to be invalid, illegal or incapable of
being enforced under any rule of law in any particular respect or under any
particular circumstances, such term or provision shall nevertheless remain in
full force and effect in all other respects and under all other circumstances,
and all other terms, conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the Parties shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the Parties as closely as possible in an acceptable manner to the end
that the transactions contemplated hereby are fulfilled to the fullest extent
possible.

Section 47. Rules of Construction. Unless the context of this Agreement
otherwise clearly requires:

(a) references to the plural include the singular, references to the singular
include the plural, references to any gender include the other gender, the terms
“include,” “includes,” and “including” are not limiting and have the inclusive
meaning represented by the phrase “include without limitation,” “includes
without limitation,” and “including without limitation,” respectively, except
when used together with the word “either” or otherwise for the purpose of
identifying mutually exclusive alternatives, and the term “or” has the inclusive
meaning represented by the phrase “and/or”;

(b) the terms “hereof”, “herein”, “hereunder”, “hereto” and similar terms in
this Agreement refer to this Agreement as a whole and not to any particular
provision of this Agreement;

(c) the terms “day” and “days” mean and refer to calendar day(s);

(d) all Article, Section, Exhibit and Schedule references herein are to
Articles, Sections, Exhibits and Schedules of this Agreement; and

 

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(e) any deadline or time period set forth in this Agreement that by its terms
ends on a day that is not a Business Day shall be automatically extended to the
next succeeding Business Day.

[Signature pages follow]

 

28

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IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be duly
executed by their respective authorized officers as of the day and year first
above written.

 

BARCELÓ CRESTLINE CORPORATION,

a Maryland corporation

By:  

/s/ James Carroll

Name:   James Carroll Title:   EVP & CFO APPLE EIGHT HOSPITALITY OWNERSHIP,
INC., a Virginia corporation By:  

/s/ Justin G. Knight

Name:   Justin G. Knight Title:   President

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

PURCHASE AND SALE AGREEMENT

dated as of

February 22, 2008

among

TIDEWATER HOTELS & RESORTS, INC.

and

THE PARTIES IDENTIFIED ON SCHEDULE A

as Sellers,

THOMAS J. LYONS, JR.

as Guarantor

and

BARCELÓ CRESTLINE CORPORATION

as Buyer

EXECUTION COPY

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

TABLE OF CONTENTS

 

 

 

ARTICLE 1

   DEFINITIONS, RULES OF CONSTRUCTION AND ACCOUNTING TERMS    1

SECTION 1.01

       DEFINITIONS    1

SECTION 1.02

       TERMS DEFINED ELSEWHERE IN THIS AGREEMENT    5

SECTION 1.03

       RULES OF CONSTRUCTION    8

SECTION 1.04

       ACCOUNTING TERMS    8

ARTICLE 2

   PURCHASE AND SALE    9

SECTION 2.01

       PURCHASE AND SALE    9

SECTION 2.02

       EXCLUDED ASSETS    13

SECTION 2.03

       ASSUMED LIABILITIES    13

SECTION 2.04

       EXCLUDED LIABILITIES    14

SECTION 2.05

       ASSIGNMENT OF ASSUMED CONTRACTS    15

SECTION 2.06

       PURCHASE PRICE; ALLOCATION OF PURCHASE PRICE    16

SECTION 2.07

       CLOSING TRANSACTIONS AND DELIVERIES    17

ARTICLE 3

   REPRESENTATIONS AND WARRANTIES OF SELLERS AND GUARANTOR    19

SECTION 3.01

       CORPORATE EXISTENCE AND POWER    19

SECTION 3.02

       CORPORATE AUTHORIZATION    20

SECTION 3.03

       GOVERNMENTAL AUTHORIZATION    20

SECTION 3.04

       NONCONTRAVENTION    20

SECTION 3.05

       INTENTIONALLY OMITTED    21

SECTION 3.06

       FINANCIAL INFORMATION    21

SECTION 3.07

       ABSENCE OF CERTAIN CHANGES    21

SECTION 3.08

       TITLE    22

SECTION 3.09

       MATERIAL CONTRACTS    22

SECTION 3.10

       LITIGATION    24

SECTION 3.11

       COMPLIANCE WITH LAWS; PERMITS    24

SECTION 3.12

       REAL PROPERTY    25

SECTION 3.13

       INTENTIONALLY OMITTED    26

SECTION 3.14

       MANAGEMENT    26

SECTION 3.15

       INSURANCE    26

SECTION 3.16

       EMPLOYEE MATTERS    27

SECTION 3.17

       EMPLOYEE BENEFIT PLANS    27

SECTION 3.18

       ENVIRONMENTAL MATTERS    28

SECTION 3.19

       BANKRUPTCY    28

SECTION 3.20

       TAXES    29

SECTION 3.21

       RELATED PARTY TRANSACTIONS    29

SECTION 3.22

       INTENTIONALLY OMITTED    30

SECTION 3.23

       INTELLECTUAL PROPERTY MATTERS    30

SECTION 3.24

       FINDERS’ FEES    30

ARTICLE 4

   REPRESENTATIONS AND WARRANTIES OF BUYER    30

SECTION 4.01

       CORPORATE EXISTENCE AND POWER    30

SECTION 4.02

       CORPORATE AUTHORIZATION    30

SECTION 4.03

       GOVERNMENTAL AUTHORIZATION    30

SECTION 4.04

       NONCONTRAVENTION    30

SECTION 4.05

       LITIGATION    31

SECTION 4.06

       FINDERS’ FEES    31

ARTICLE 5

   PRE-CLOSING COVENANTS, AGREEMENTS AND MATTERS    31

SECTION 5.01

       CONDUCT OF BUSINESS    31

EXECUTION COPY

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SECTION 5.02

       INSPECTION; DUE DILIGENCE PERIOD    33

SECTION 5.03

       TITLE INSURANCE AND SURVEYS    34

SECTION 5.04

       FRANCHISE AGREEMENTS    35

SECTION 5.05

       CERTIFICATES OF OCCUPANCY; CONSTRUCTION HOTELS    36

SECTION 5.06

       PROPERTY IMPROVEMENT PLANS; FRANCHISE AGREEMENT COSTS    36

SECTION 5.07

       ASSUMPTION OF ASSUMED INDEBTEDNESS; PAYMENT OF NON-ASSUMED INDEBTEDNESS
   38

SECTION 5.08

       LIQUOR LICENSES    38

SECTION 5.09

       GROUND LANDLORD ESTOPPELS    39

SECTION 5.10

       NOTICES OF CERTAIN EVENTS    39

SECTION 5.11

       INTENTIONALLY OMITTED    39

SECTION 5.12

       SELLER COOPERATION    40

SECTION 5.13

       JEFFERSON PILOT LAND    40

SECTION 5.14

       SUFFOLK INDEBTEDNESS    40

SECTION 5.15

       HOLIDAY INN OCEANSIDE    41

SECTION 5.16

       CHARLOTTESVILLE COURTYARD    41

SECTION 5.17

       JP EXPENSES    42

ARTICLE 6

   FURTHER COVENANTS AND AGREEMENTS OF THE PARTIES    42

SECTION 6.01

       NO COMPETITION    42

SECTION 6.02

       RIGHT OF FIRST REFUSAL    43

SECTION 6.03

       MANAGEMENT OF EXCLUDED HOTELS    43

SECTION 6.04

       LAUNDRY SERVICES    43

SECTION 6.05

       PARKING LOT LEASE    43

SECTION 6.06

       MECHANICS LIENS    44

SECTION 6.07

       CONFIDENTIALITY    44

SECTION 6.08

       EMPLOYEES AND OFFERS OF EMPLOYMENT    44

SECTION 6.09

       NONSOLICITATION    45

SECTION 6.10

       COMMERCIALLY REASONABLE EFFORTS; FURTHER ASSURANCES    45

SECTION 6.11

       PUBLIC ANNOUNCEMENTS    45

ARTICLE 7

   TAX MATTERS    46

SECTION 7.01

       TAX COOPERATION; ALLOCATION OF TAXES    46

ARTICLE 8

   CONDITIONS TO CLOSING    47

SECTION 8.01

       CONDITIONS TO OBLIGATIONS OF EACH PARTY    47

SECTION 8.02

       CONDITIONS TO OBLIGATIONS OF BUYER    47

SECTION 8.03

       CONDITIONS TO OBLIGATIONS OF SELLERS AND GUARANTOR    48

SECTION 8.04

       CONDITIONS TO DELAYED CLOSINGS    49

SECTION 8.05

       MANAGEMENT AGREEMENTS FOR EXCLUDED HOTELS    51

ARTICLE 9

   SURVIVAL; INDEMNIFICATION    51

SECTION 9.01

       SURVIVAL    51

SECTION 9.02

       INDEMNIFICATION    52

SECTION 9.03

       PROCEDURES    53

SECTION 9.04

       CALCULATION OF DAMAGES    55

SECTION 9.05

       EXCLUSIVITY    55

ARTICLE 10

   TERMINATION    56

SECTION 10.01

       TERMINATION    56

SECTION 10.02

       EFFECT OF TERMINATION    57

SECTION 10.03

       DEPOSIT    57

ARTICLE 11

   CASUALTY OR CONDEMNATION    58

SECTION 11.01

       NOTICE TO BUYER    58

SECTION 11.02

       CONDEMNATION OR CASUALTY    58

SECTION 11.03

       RISK OF LOSS    58

 

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ARTICLE 12

   APPORTIONMENTS    58

SECTION 12.01

       APPORTIONMENTS    58

SECTION 12.02

       POST-CLOSING ADJUSTMENT    60

ARTICLE 13

   MISCELLANEOUS    61

SECTION 13.01

       NOTICES    61

SECTION 13.02

       AMENDMENTS AND WAIVERS    62

SECTION 13.03

       EXPENSES    62

SECTION 13.04

       SUCCESSORS AND ASSIGNS    62

SECTION 13.05

       GOVERNING LAW    62

SECTION 13.06

       JURISDICTION    62

SECTION 13.07

       WAIVER OF JURY TRIAL    63

SECTION 13.08

       COUNTERPARTS; THIRD PARTY BENEFICIARIES    63

SECTION 13.09

       ENTIRE AGREEMENT    63

SECTION 13.10

       CAPTIONS    63

SECTION 13.11

       NO OTHER REPRESENTATIONS    63

SECTION 13.12

       SEVERABILITY    64

SECTION 13.13

       INDIVIDUAL SELLER AND INDIVIDUAL PURCHASED ASSETS    65

SECTION 13.14

       GUARANTY    65

Exhibits and Schedules

 

Exhibits    Exhibit A    Purchased Hotels Exhibit A-1    Holiday Inn Beachside
Ground Lease/Smith Exhibit A-2    Holiday Inn Beachside Ground Lease/Joyner
Exhibit A-3    Courtyard South Ground Lease Exhibit A-4    Sheraton Oceanfront
Ground Lease Exhibit B    Laundry Facility Exhibit C    Parking Lot Exhibit D   
Excluded Hotels Exhibit E    Assumed Indebtedness Exhibit F    Form of Bill of
Sale, Assignment and Assumption Agreement Exhibit G    Form of Deed Exhibit H   
Form of Escrow Agreement Exhibit I    Form of FIRPTA Certificate Exhibit J   
Jefferson Pilot Land Exhibit K    Form of Ground Lease Assignment Exhibit L   
Form of Ground Landlord Estoppel Purchase Agreement Schedules Schedule A   
Selling Entities and Purchased Assets Schedule 2.01(a)(v)    Certain Assumed
Contracts Schedule 2.02(d)    Excluded Contracts Schedule 2.06(b)    Allocation
Statement Schedule 5.01    Conduct of Business Schedule 6.02    Procedures for
Right of First Refusal

 

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Schedule 9.02    Limitations on Indemnification for Representations and
Warranties Schedule 13.14    Limitations on Guaranty Sellers’ Schedules Schedule
3.03    Governmental Authorization Schedule 3.04    Noncontravention Schedule
3.06    Financial Statements Schedule 3.07    Absence of Certain Changes
Schedule 3.08    Liens Schedule 3.09(a)    Material Contracts Schedule 3.10   
Litigation Schedule 3.11    Compliance with Laws; Permits Schedule 3.12(a)   
Real Property Schedule 3.15    Insurance Schedule 3.16    Employee Matters
Schedule 3.17    Employee Benefit Plans Schedule 3.18(a)    Environmental
Matters Schedule 3.18(b)    Environmental Permits Schedule 3.20    Taxes
Schedule 3.21    Related Party Transactions Schedule 3.23    Intellectual
Property Matters Buyer’s Schedules Schedule 4.02    Corporate Authorization
Schedule 4.03    Governmental Authorization Schedule 4.04    Noncontravention

 

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PURCHASE AND SALE AGREEMENT

This PURCHASE AND SALE AGREEMENT (together with the Exhibits, Schedules and
Attachments hereto, this “Agreement”) is dated as of February 22, 2008 by and
among Tidewater Hotels & Resorts, Inc., a Virginia corporation (“Tidewater”),
each of the Sellers identified in Schedule A attached hereto (collectively with
Tidewater, each a “Seller” and collectively, the “Sellers”), Thomas J. Lyons,
Jr. (“Guarantor”) and Barceló Crestline Corporation, a Maryland corporation
(“Buyer”). Sellers and Guarantor, on one hand, and Buyer, on the other hand, are
referred to hereinafter individually as a “Party” and collectively as the
“Parties.”

RECITALS:

A. Sellers are the owners of (i) the hotels and resorts described on Exhibit A
(together with all Purchased Assets associated therewith, as described in
further detail herein, each a “Purchased Hotel”), (ii) the Management Company
Business; (iii) a laundry facility located on Lots 7 and 8, Horse Pasture Road,
Virginia Beach, Virginia (the “Laundry Facility”), and (iv) a parking lot
located at 36th Street and Atlantic Avenue, Virginia Beach, Virginia (the
“Parking Lot”).

B. Guarantor is the owner of a majority of the ownership interests in each of
the Sellers and/or Controls each of the Sellers.

C. Sellers desire to sell and transfer all of the assets, and certain of the
liabilities, of the Purchased Hotels, the Management Company Business, the
Laundry Facility and the Parking Lot to Buyer, and Buyer desires to purchase the
assets and assume certain liabilities of the Purchased Hotels, the Management
Company Business, the Laundry Facility and the Parking Lot from Sellers, upon
the terms and subject to the conditions hereinafter set forth.

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

ARTICLE 1

DEFINITIONS, RULES OF CONSTRUCTION AND ACCOUNTING TERMS

Section 1.01 Definitions. The following terms and phrases, as used in this
Agreement, have the following meanings:

“Acquired Business” means, collectively, the business, operation and use of the
Purchased Assets.

“Affiliate” of any specified Person means any other Person directly or
indirectly Controlling or Controlled by or under direct or indirect common
Control with such specified Person. Guarantor shall be deemed to be an Affiliate
of each of the Sellers for purposes of this Agreement.

EXECUTION COPY

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“Applicable Law” means, with respect to any Person, any federal, state or local
statute, law, common law ruling, ordinance, rule, regulation, order, writ,
injunction, decree or other requirement of any Governmental Authority applicable
to such Person or any of its properties, assets, officers, directors, employees,
consultants or agents (in connection with such officer’s, director’s,
employee’s, consultant’s or agent’s activities on behalf of such Person),
including building codes and zoning laws.

“Business Day” means a day, other than a Saturday, Sunday or other day on which
commercial banks in the Commonwealth of Virginia are authorized or required by
law to close.

“Buyer’s Expenses” means all costs and expenses (including attorneys’ fees and
expenses) incurred by Buyer in connection with this Agreement and the
transactions contemplated hereby, up to an aggregate amount of $250,000.

“Claims” means all causes of action, claims, credits, demands, indemnity rights
or judgments.

“Closing Date” means, with respect to each Closing as the context so requires,
the date of such Closing.

“Contracts” means, with respect to any Person, all contracts, agreements,
leases, subleases, licenses, commitments and other undertakings of any kind,
whether written or oral, to which such Person is a party, under which such
Person is otherwise entitled to benefits or by which such Person otherwise is
bound.

“Control” means, with respect to any Person, the power to direct the management
and policies of such Person, directly or indirectly, whether through the
ownership of voting securities, by contract or otherwise; and the terms
“Controlling” and “Controlled” have meanings correlative to the foregoing.

“Employees” means all employees performing services for the Purchased Hotels,
the Management Company Business, the Laundry Facility, the Parking Lot and any
other Purchased Assets.

“Employment Liabilities” means, collectively, liabilities with respect to the
Employees, including liabilities for payment of all compensation, wages,
bonuses, incentive payments, accrued vacation pay, sick leave, pension benefits,
COBRA rights, and other benefits earned and accrued, together with F.I.C.A.,
unemployment and other taxes and benefits due from any employer of such
Employees.

“Environmental Laws” means all Applicable Laws relating to protection of or
damage to natural resources or the environment, pollution control, product
registration or Hazardous Materials.

“Franchise Agreement” means, with respect to each Purchased Hotel, any franchise
agreement, license agreement or similar Contract with any franchisor, licensor
or other Person with respect to the license and use of a hotel franchise or
brand.

 

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“GAAP” means generally accepted accounting principles in the United States.

“Governmental Authority” means any foreign, domestic, federal, territorial,
state or local governmental authority, quasi-governmental authority,
instrumentality, court, government or self-regulatory organization, commission,
tribunal or organization or any regulatory, administrative or other agency, or
any political or other subdivision, department or branch of any of the
foregoing.

“Ground Landlords” means, collectively, the Holiday Inn Beachside Ground
Landlord/Smith, the Holiday Inn Beachside Ground Landlord/Joyner, the Courtyard
South Ground Landlord and the Sheraton Oceanfront Landlord.

“Ground Leases” means, collectively, the Holiday Inn Beachside Ground
Lease/Smith, the Holiday Inn Beachside Ground Lease/Joyner, the Courtyard South
Ground Lease and the Sheraton Oceanfront Ground Lease.

“Hazardous Materials” means any wastes, substances, radiation, or materials
(whether solids, liquids or gases) that (i) are listed, regulated or defined
under any Environmental Laws; (ii) contain polychlorinated biphenyls (PCBs),
mold, methyl-tertiary butyl ether (MTBE), lead-based paints, urea-formaldehyde
foam insulation, or petroleum or petroleum products (including crude oil or any
fraction thereof); or (iii) pose a hazard to human health, safety, natural
resources, employees, or the environment.

“Indebtedness” means, as to any Person: (i) indebtedness created, issued or
incurred by such Person for borrowed money or deferred purchase price (whether
by loan or the issuance and sale of debt securities or otherwise);
(ii) indebtedness of others secured by a Lien on the property of such Person,
whether or not the respective indebtedness so secured has been assumed by such
Person; and (iii) indebtedness of others guaranteed by such Person.

“Intellectual Property Rights” means any trademark, service mark, trade name,
invention, patent, trade secret, copyright, know-how (including any
registrations or applications for registration of any of the foregoing) or any
other similar type of proprietary intellectual property right.

“JP Indebtedness” means, collectively, all Indebtedness with respect to those
Purchased Hotels identified on Exhibit A hereto as “Courtyard South,” “Courtyard
North,” and “Charlottesville Courtyard.”

“Lien” means any mortgage, deed of trust, lien, pledge, charge, security
interest, option, encroachment, easement, covenant, lease, reservation,
restriction, encumbrance or defect in title of any kind.

“Management Company Business” means the performance of management, marketing and
related services for the Purchased Hotels and for the Excluded Hotels.

“Management Company Contracts” means all Contracts pursuant to which the
Management Company Business performs management, marketing or similar services
for any Person, including the Purchased Hotels and the Excluded Hotels.

 

3

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“Permits” means licenses (including liquor licenses), certificates of occupancy,
franchises, permits and authorization or approvals required to be issued by any
Governmental Authority and used in or necessary to the operation of (i) each
Purchased Hotel as a fully functioning hotel, (ii) the Management Company
Business, (iii) the Laundry Facility, (iv) the Parking Lot, or (v) any of the
other Purchased Assets, as applicable.

“Person” means an individual, a corporation, a general partnership, a limited
partnership, a limited liability company, a limited liability partnership, an
association, a trust or any other entity or organization, including a
Governmental Authority.

“Pre-Closing Tax Period” means, with respect to each Closing, (i) any taxable
period ending on or before the Closing Date for such Closing, and (ii) with
respect to a taxable period that commences before but ends after the Closing
Date for such Closing, the portion of such period up to but excluding the
Closing Date for such Closing.

“Proceedings” means governmental, judicial or administrative proceedings (public
or private), litigation, suits, arbitration, disputes, claims or causes of
action.

“Related Party” means Thomas J. Lyons, Jr., Timothy J. Stiffler, and (i) any of
their respective relatives by blood, marriage or adoption, (ii) any entity in
which Thomas J. Lyons, Jr., Timothy J. Stiffler or any of the persons described
in clause (i) owns a beneficial interest and (iii) any Affiliate of any of the
foregoing.

“Release” means any emission, spill, seepage, leak, escape, leaching, discharge,
injection, pumping, pouring, emptying, dumping, disposal, migration or release
of Hazardous Materials into or upon or presence of Hazardous Materials in the
environment.

“Required Consent” means each notice, consent, approval or other action by any
Person necessary or required with respect to any of the Material Assumed
Contracts described in any of Sections 3.09(a)(ii), 3.09(a)(iv), 3.09(a)(vii),
3.09(a)(ix) or 3.09(a)(xv) as a result of the execution, delivery and/or
performance of this Agreement or the other Transaction Agreements.

“Seller Employee Plan” means each “employee benefit plan”, as defined in
Section 3(3) of ERISA, each material employment, change in control, retention,
severance or similar contract, plan, arrangement or policy and each other
material plan or arrangement providing for compensation, bonuses,
profit-sharing, stock option or other equity-based rights or other forms of
incentive or deferred compensation, vacation benefits, insurance (including any
self-insured arrangements), health or medical benefits, employee assistance
program, disability or sick leave benefits, workers’ compensation, supplemental
unemployment benefits, severance benefits and post-employment or retirement
benefits (including compensation, pension, health, medical or life insurance
benefits) which is maintained, administered or contributed to by Sellers or any
of their Affiliates and covers any Employee.

“Tax Authority” means a Governmental Authority having jurisdiction over the
assessment, determination, collection or imposition of any Tax.

“Tax Returns” means all returns (including information returns), declarations,
reports, estimates and statements regarding Taxes required to be filed with any
Tax Authority.

 

4

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“Taxes” means all taxes, and any charges, fees, imposts or other assessments
with respect thereto, including all gross receipts, net income, sales, use, ad
valorem, value added, transfer, franchise, license, withholding, payroll,
employment, excise, estimated, severance, stamp, occupation and property taxes,
tariffs and customs duties, together with any interest and any penalties,
additions to tax or additional amounts imposed by any Tax Authority.

“Transaction Agreements” means this Agreement, the Assignment and Assumption
Agreements, the Deeds, the Escrow Agreement, the Pre-Opening Services Agreements
and the Parking Lot Lease Contract, including any exhibits or attachments to any
of the foregoing, as the same may be amended from time to time.

Section 1.02 Terms Defined Elsewhere in this Agreement.

 

Term

  

Section

Accountants

   12.02

Additional Deposit

   2.06(e)

Agreement

   Preamble

Allocation Statement

   2.06(b)

Apportioned Tax Obligations

   7.01(b)

Apportionment Date

   12.01

Apportionment Principles

   12.02

Assignment and Assumption Agreements

   2.07(b)(ii)

Assumed Contracts

   2.03(a)

Assumed Franchise Agreement

   5.04

Assumed Indebtedness

   2.03(b)

Assumed Liabilities

   2.03

Bankruptcy Code

   3.19

Basket

   9.02(a)

Buyer

   Preamble

Buyer Indemnified Parties

   9.02(a)

Cap

   9.02(a)

Certificates of Occupancy

   5.05

Charlottesville Closing

   5.16

Charlottesville Indebtedness

   5.16

Closing

   2.07(a)

Closing Payment

   2.06(a)(ii)

Competing Operations

   6.01

Confidential Information

   6.07

Construction Closing

   5.05

Construction Hotel

   5.05

Courtyard South Ground Landlord

   2.01(a)(iv)(B)

Courtyard South Ground Lease

   2.01(a)(iv)(B)

Current Ledger

   12.01(a)

Damages

   9.02(a)

Deed

   2.07(b)(iii)

Delayed Closing

   2.07(a)(ii)

 

5

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Delayed Closing Date

   2.06(a)(iii)

Delayed Closing Payment

   2.06(a)(iii)

Deposit

   2.06(e)

Drop Dead Date

   10.01(a)(ii)

Due Diligence Materials

   5.02(a)

Due Diligence Period

   5.02(b)

Employee Schedule

   6.08

Environmental Permits

   3.18(b)

Equipment Leases

   2.01(a)(v)

ERISA Affiliate

   3.17(c)

Escrow Agent

   2.06(e)

Escrow Agreement

   2.06(e)

Excluded Assets

   2.02

Excluded Hotels

   2.02(a)

Excluded Liabilities

   2.04

FF&E

   2.01(a)(iii)(A)

Financial Statements

   3.06

Fixed Asset Supplies

   2.01(a)(iii)(B)

Franchise Agreement Costs

   5.06(b)

Franchise Application Fees

   5.04

Ground Landlord Estoppel

   5.09

Guarantor

   Preamble

Holiday Inn Beachside Ground Landlord/Joyner

   2.01(iv)(A)

Holiday Inn Beachside Ground Landlord/Smith

   2.01(iv)(A)

Holiday Inn Beachside Ground Lease/Joyner

   2.01(iv)(A)

Holiday Inn Beachside Ground Lease/Smith

   2.01(iv)(A)

Holiday Inn Sunspree

   6.01

Hotel Contracts

   2.01(a)(v)

Hotel Improvements

   2.01(a)(ii)

Improvements

   3.12(c)

Indemnified Party

   9.03(a)

Indemnifying Party

   9.03(a)

Initial Closing

   2.07(a)(i)

Initial Closing Date

   2.06(a)(ii)

Initial Deposit

   2.06(e)

Inventories

   2.01(a)(iii)(C)

Jefferson Pilot Land

   5.13

JP Expenses

   5.17

Land

   2.01(a)(i)

Laundry Facility

   Recitals

Leased Real Property

   3.12(a)

Material Assumed Contract

   3.09(b)

Material Contracts

   3.09(a)

Non-Assumed Indebtedness

   5.07

Objection Notice

   5.03(b)

Obligations

   13.14

 

6

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Oceanside Closing

   5.15

Oceanside Indebtedness

   5.15

Owned Real Property

   3.12(a)

Parking Lot

   Recitals

Parking Lot Lease Contract

   6.05

Parking Lot Lessee

   6.05

Parties

   Preamble

Party

   Preamble

Permitted Exceptions

   5.03(d)

Permitted Liens

   3.08

Personal Property

   2.01(a)(iii)(E)

Post-Closing Tax Period

   7.01(b)

Pre-Opening Services Agreement

   6.03

Property Improvement Plan

   5.06(a)

Purchase Price

   2.06(a)(i)

Purchased Assets

   2.01

Purchased Hotel

   Recitals

Real Property

   3.12(a)

Refusal

   5.03(c)

Residence Inn

   6.05

Retained Indebtedness

   2.04(h)

Seller Indemnified Parties

   9.02(b)

Sellers

   Preamble

Sheraton Oceanfront Ground Landlord

   2.01(a)(iv)(C)

Sheraton Oceanfront Ground Lease

   2.01(a)(iv)(C)

Space Leases

   2.01(a)(v)

Suffolk Assumed Indebtedness

   5.14

Survey

   5.03(a)

Surveyor

   5.03(a)

Terminated Franchise Agreement

   5.04

Termination Notice

   5.02(b)

Third Party Claim

   9.03(b)

Tidewater

   Preamble

Title Commitment

   5.03(a)

Title Company

   2.06(e)

Title Policy

   8.02(c)

Title Termination Period

   5.03(c)

Transfer Taxes

   7.01(c)

Transferred Employees

   6.08

Transferred Permits

   2.01(e)

Uniform System of Accounts

   2.01(a)(iii)(B)

Utilities

   3.12(c)

Zoning Permits

   3.12(d)

 

7

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Section 1.03 Rules of Construction. Unless the context of this Agreement
otherwise clearly requires:

(a) references to the plural include the singular, references to the singular
include the plural, references to any gender include the other gender, the terms
“include,” “includes,” and “including” are not limiting and have the inclusive
meaning represented by the phrase “include without limitation,” “includes
without limitation,” and “including without limitation,” respectively, except
when used together with the word “either” or otherwise for the purpose of
identifying mutually exclusive alternatives, the term “or” has the inclusive
meaning represented by the phrase “and/or”;

(b) the terms “hereof”, “herein”, “hereunder”, “hereto” and similar terms in
this Agreement refer to this Agreement as a whole and not to any particular
provision of this Agreement;

(c) the terms “day” and “days” mean and refer to calendar day(s);

(d) the phrase “to the knowledge,” “known by,” “known” or “knowingly” (and any
similar phrase) means (i) with respect to Sellers, to the actual knowledge of
Thomas J. Lyons, Jr. and/or Timothy J. Stiffler and, when used in a
representation and warranty, shall be deemed to include a representation that a
reasonable investigation or inquiry of the subject matter thereof has been made
of such individuals (provided that such individuals shall not be liable for
claims under this Agreement merely in their capacity as knowledge parties for
Sellers), and (ii) with respect to Buyer, to the actual knowledge of Ed Hoganson
and/or Bruce Wardinski and, when used in a representation and warranty, shall be
deemed to include a representation that a reasonable investigation or inquiry of
the subject matter thereof has been made of such individuals (provided that such
individuals shall not be liable for claims under this Agreement merely in their
capacity as knowledge parties for Buyer);

(e) all Article, Section, Exhibit and Schedule references herein are to
Articles, Sections, Exhibits and Schedules of this Agreement;

(f) any deadline or time period set forth in this Agreement that by its terms
ends on a day that is not a Business Day shall be automatically extended to the
next succeeding Business Day; and

(g) the Schedules delivered by Sellers pursuant to Article III hereto shall not
amend, limit or otherwise modify the liabilities and obligations of the Sellers
with respect to the payment, performance, satisfaction, retention and discharge
in full of all Excluded Liabilities.

Section 1.04 Accounting Terms. All accounting terms not specifically defined in
this Agreement shall be construed in accordance with GAAP.

 

8

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ARTICLE 2

PURCHASE AND SALE

Section 2.01 Purchase and Sale. Upon the terms and subject to the conditions of
this Agreement, Sellers agree to sell, convey, transfer, assign and deliver, or
cause to be sold, conveyed, transferred, assigned and delivered, to Buyer, and
Buyer agrees to purchase from Sellers, free and clear of all liabilities of
Sellers and their Affiliates (other than the Assumed Liabilities) and Liens
(other than as expressly permitted herein), all of Sellers’ and their
Affiliates’ right, title and interest in, to and under the following assets and
properties, other than the Excluded Assets (collectively, the “Purchased
Assets”):

(a) Purchased Hotels. All assets, properties, rights, licenses, permits,
Contracts, real property, causes of action and business of every kind and
description, real, personal or mixed, tangible or intangible, owned by, leased
by or in the possession of Sellers or their Affiliates and held or used in
connection with the Purchased Hotels, whether now owned or acquired after the
date of this Agreement (but prior to the applicable Closing Date), including:

(i) with respect to each Purchased Hotel, the fee interest in and to those
certain parcels of land more particularly described on Exhibit A attached hereto
and made a part hereof, including all right, title and interest of Sellers and
their Affiliates in and to the land lying in the bed of any street or highway in
front of or adjoining such land, all water and mineral rights, development
rights and all easements, rights and other interests appurtenant thereto,
including the Jefferson Pilot Land (collectively, the “Land”);

(ii) with respect to each Purchased Hotel, any and all of Sellers’ or their
Affiliates’ right, title and interest in and to the buildings located on the
Land, and any and all other buildings, structures (surface and sub-surface),
fixtures and other improvements located on the Land, excluding trade fixtures
owned by tenants under the Space Leases (as hereinafter defined) (collectively,
the “Hotel Improvements”);

(iii) with respect to each Purchased Hotel, the following personal property:

(A) all furniture, furnishings, fixtures, vehicles, rugs, mats, carpeting,
appliances, devices, engines, computers, telephone and other communications
equipment, televisions and other video equipment, plumbing fixtures and other
equipment located upon the Land or within the Hotel Improvements (the “FF&E”);

(B) all items included within the definition of “Property and Equipment” under
the Uniform System of Accounts for the Lodging Industry, Tenth Revised Edition,
as published by the Hotel Association of New York City, Inc. (the “Uniform
System of Accounts”) located at or used in the operation of the Purchased Hotel,
including linen, china, glassware, tableware, silver, uniforms and similar items
(the “Fixed Asset Supplies”);

 

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(C) all “Inventories” as defined in the Uniform System of Accounts located at or
used in the operation of the Purchased Hotel, such as provisions in storerooms,
refrigerators, pantries and kitchens, beverages in wine cellars and bars, other
merchandise intended for sale or resale, fuel, mechanical supplies, stationery,
guest supplies, maintenance and housekeeping supplies and other expensed
supplies and similar items (the “Inventories”), provided, however, that to the
extent that any Applicable Law prohibits the transfer of alcoholic beverages
from Sellers to Buyer, such beverages shall not be considered a part of
Inventories;

(D) to the extent transferable, all surveys, architectural, consulting and
engineering blueprints, plans and specifications and reports, if any, related to
the Purchased Hotel, all books and records, if any, related to the Purchased
Hotel; and

(E) to the extent transferable, any and all other items of tangible or
intangible personal property owned by Sellers or any of their Affiliates,
including Intellectual Property Rights, and located at or used by the Purchased
Hotels (the property described in subclauses (A) through (E) of this
Section 2.01(a)(iii) being herein referred to as the “Personal Property”);
provided that with respect to Personal Property leased by Sellers, title to such
leased Personal Property shall not be transferred to Buyer hereunder, but the
applicable leases with respect to such Personal Property shall constitute
Purchased Assets;

(iv) (A) with respect to hotel known as “Holiday Inn Beachside,” (i) the
leasehold interest under that certain Ground Lease, dated as of September 26,
1994, by and between Clarence J. Smith and Margaret Bonner Smith, as lessors
(the “Holiday Inn Beachside Ground Landlord/Smith”), and Beachside, L.C., as
lessee (the “Holiday Inn Beachside Ground Lease/Smith”) with respect to the real
property described on Exhibit A-1, and (ii) the leasehold interest under that
certain Lease dated October 1, 1994 between Powell W. Joyner, Jr. and Joan P.
Joyner, as lessors (the “Holiday Inn Beachside Ground Landlord/Joyner”) and
Beachside, L.C., as lessee (the “Holiday Inn Beachside Ground Lease/Joyner”)
with respect to the real property described on Exhibit A-2, (B) with respect to
the hotel known as “Courtyard South,” the leasehold interest under that certain
Deed of Lease, dated as of December 16, 1998, by and between Ivo Grgas, as
lessor (the “Courtyard South Ground Landlord”), and Leeward-Princess Anne
Investment Associates, L.L.C., as lessee (the “Courtyard South Ground Lease”
with respect to the real property described on Exhibit A-3, and (C) with respect
to the hotel known as “Sheraton Oceanfront,” the leasehold interest under that
certain Ground Lease, dated as of January 1, 1993 by and between Bank of
America, N.A., as trustee under Declaration of Trust dated July 23, 1975 with
B.M. Stanton, as lessor (the “Sheraton Oceanfront Ground Landlord”) and
Clearwater Investment Associates, L.P., as lessee (the “Sheraton Oceanfront
Ground Lease”) with respect to the real property described on Exhibit A-4.

(v) with respect to each Purchased Hotel, subject to Section 2.05, all rights of
Sellers and their Affiliates under (A) all Contracts related to the maintenance,
ownership, use, possession, management, marketing or operation of such Purchased
Hotel or of the Personal Property associated therewith (“Hotel Contracts”),
(B) any leases of Personal Property located at, or used in the operation of,
such Purchased Hotel

 

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(“Equipment Leases”), (C) any leases, subleases and other occupancy agreements,
which provide for the use or occupancy of space or facilities on or relating to
such Purchased Hotel (the “Space Leases”), (D) Contracts described on Schedule
2.01(a)(v), and (E) the Assumed Franchise Agreements, but expressly excluding
the Terminated Franchise Agreements; and

(vi) with respect to each Purchased Hotel, any and all of Sellers’ or their
Affiliates’ right, title and interest in and to all assignable existing
warranties and guaranties (express or implied) issued to Sellers or their
Affiliates in connection with the Hotel Improvements or the Personal Property;

(b) Management Company Business. All assets, properties, rights, licenses,
permits, Contracts, real property, causes of action and business of every kind
and description, real, personal or mixed, tangible or intangible, owned by,
leased by or in the possession of Sellers or their Affiliates and held or used
in connection with the conduct of the Management Company Business, whether now
owned or acquired after the date of this Agreement (but prior to the applicable
Closing Date), including:

(i) the Management Company Contracts with respect to the Purchased Hotels and
the Excluded Hotels and rights to payments and other benefits thereunder;

(ii) to the extent assignable or transferable, as the case may be, all computer
equipment, systems, software and programs used in the Management Company
Business;

(iii) the lease of office space by Tidewater at 3600 Pacific Avenue, Virginia
Beach, Virginia; and

(iv) all personal property associated with the Management Company Business,
including Intellectual Property Rights, furniture, equipment and other fixed
assets, office equipment and supplies, inventories, communications equipment and
vehicles;

(c) Laundry Facility. All assets, properties, rights, licenses, permits,
Contracts, real property, causes of action and business of every kind and
description, real, personal or mixed, tangible or intangible, owned by, leased
by or in the possession of Sellers or their Affiliates and held or used in
connection with the Laundry Facility, whether now owned or acquired after the
date of this Agreement (but prior to the applicable Closing Date), including:

(i) the fee interest in and to the parcel of land described on Exhibit B
attached hereto and made a part hereof, and all right, title and interest of
Sellers in and to the land lying in the bed of any street or highway in front of
or adjoining the Laundry Facility, all water and mineral rights, development
rights and all easements, rights and other interests appurtenant thereto, and
all buildings located on the Laundry Facility;

(ii) any and all of Sellers’ or their Affiliates’ right, title and interest in
and to the buildings located at the Laundry Facility, and any and all other
buildings, structures (surface and sub-surface), fixtures and other improvements
located at the Laundry Facility;

 

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(iii) all machinery, equipment, fixed assets, materials, supplies, inventories,
furniture and vehicles used in connection with the operation of the Laundry
Facility; and

(iv) all Contracts, including Contracts with respect to the supply of materials
or the provision of services to the Laundry Facility;

(d) Sheraton Oceanfront Parking Lot. All assets, properties, rights, licenses,
permits, Contracts, real property, causes of action and business of every kind
and description, real, personal or mixed, tangible or intangible, owned by,
leased by or in the possession of Sellers or their Affiliates and held or used
in connection with the Parking Lot, whether now owned or acquired after the date
of this Agreement (but prior to the applicable Closing Date), including:

(i) the fee interest in and to the parcel of land described on Exhibit C
attached hereto as made a part hereof, and all right, title and interest of
Sellers and their Affiliates in and to the land lying in the bed of any street
or highway in front of or adjoining the Parking Lot, all water and mineral
rights, development rights and all easements, rights and other interests
appurtenant thereto, and all buildings located on the Parking Lot; and

(ii) any and all of Sellers’ or their Affiliates’ right, title and interest in
and to the buildings located on the Parking Lot, and any and all other
buildings, structures (surface and sub-surface), fixtures and other improvements
located on the Parking Lot;

(e) Licenses and Permits. All of Sellers’ and their Affiliates’ right, title and
interest in any to any transferable Permits owned by or granted to, or held or
used by, Sellers or their Affiliates in connection with any of the Purchased
Assets (collectively, the “Transferred Permits”);

(f) Books and Records. All of Sellers’ and their Affiliates’ right, title and
interest in and to any books, records, files and papers, whether in hard copy or
computer format, related to the Purchased Assets, including any marketing,
promotional or similar materials related to the Purchased Assets;

(g) Goodwill. All of Sellers’ and their Affiliates’ right, title and interest in
and to any goodwill associated with the Purchased Assets, together with the
right to represent to third parties that Buyer is the successor to the Purchased
Assets;

(h) Claims and Causes of Action. All rights and claims of Sellers and their
Affiliates against third parties, whether in tort, contract or otherwise, and
whether mature contingent or otherwise (i) related to the Assumed Liabilities or
(ii) related to Acquired Business, but only, in the case of this clause (ii), to
the extent relating to periods following the applicable Closing Date;

 

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(i) Tidewater Name. All right and title of Sellers in and to, and related rights
to use, on an exclusive basis, the trade name “Tidewater” and all derivations
thereof, including “Tidewater Hotels & Resorts”; and

(j) Buyer Apportioned Assets. All revenues, accounts receivable and other assets
apportioned to Buyer in accordance with Article 12;

provided that the sale, conveyance, transfer, assignment and delivery of the
Purchased Assets pursuant to this Agreement shall not include the assumption of
any liability of Sellers or their Affiliates relating to any of the Purchased
Assets unless Buyer expressly assumes such liability pursuant to this Agreement.

Section 2.02 Excluded Assets. The Purchased Assets shall specifically exclude
the following assets (collectively, the “Excluded Assets”).

(a) Excluded Hotels. The hotels and resorts identified on Exhibit D (the
“Excluded Hotels”), including all associated real property and personal and
intangible property and Sellers’ and their Affiliates’ ownership interests in
any Persons holding title to such hotels and resorts;

(b) Cash. Any cash and cash equivalents of Sellers and their Affiliates and all
rights to any bank accounts of Sellers and their Affiliates;

(c) Claims and Causes of Action. All rights and claims of Sellers and their
Affiliates against third parties, whether in tort, contract or otherwise and
whether mature, contingent or otherwise (i) related to the Excluded Liabilities,
or (ii) related to the Acquired Business, but only, in the case of clause (ii),
to the extent relating to periods prior to the applicable Closing Date;

(d) Excluded Contracts. The Contracts described on Schedule 2.02(d);

(e) Insurance. All insurance policies maintained by Sellers, including prepaid
premiums thereunder;

(f) Non-Assumed Indebtedness. All refunds, rebates and escrow amounts relating
to the Non-Assumed Indebtedness; and

(g) Seller Apportioned Assets. All refunds, rebates, escrow amounts, revenues,
accounts receivable and other assets, in each case attributable to periods prior
to the applicable Closing Date, and apportioned to Sellers and their Affiliates
in accordance with Article 12.

Section 2.03 Assumed Liabilities. Upon the terms and subject to the conditions
of this Agreement, effective at the time of the applicable Closing, Buyer agrees
to pay or otherwise perform, satisfy and discharge the following liabilities
(collectively, the “Assumed Liabilities”):

 

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(a) Assumed Contracts. All liabilities and obligations of Sellers or any of
their Affiliates under any Contracts constituting Purchased Assets, including
the Hotel Contracts, Equipment Leases, Space Leases, Assumed Franchise
Agreements and Management Company Contracts (collectively, the “Assumed
Contracts”), but solely to the extent such liabilities and obligations arise
from the performance of the Assumed Contracts in accordance with their terms
from and after the applicable Closing Date (it being understood that the
Terminated Franchise Agreements shall not be Assumed Contracts and shall be
replaced with new franchise agreements in accordance with Section 5.04);

(b) Assumed Indebtedness. All liabilities and obligations of Sellers and their
Affiliates as of the applicable Closing Date for repayment of Indebtedness under
the loans and financing arrangements described on Exhibit E (collectively, the
“Assumed Indebtedness”) in accordance with the terms and conditions of such
Assumed Indebtedness; provided that Buyer’s assumption of the Assumed
Indebtedness shall be conditioned upon receipt of all required consents and
approvals of the applicable lender with respect to such assumption; and

(c) Buyer Apportioned Liabilities. All expenses, accounts payable or other
liabilities apportioned to Buyer in accordance with Article 12.

Section 2.04 Excluded Liabilities. Buyer shall not assume any, and Sellers shall
be responsible for the discharge, payment, performance, retention and
satisfaction of all, liabilities and obligations of Sellers and their Affiliates
and of the Acquired Business other than the Assumed Liabilities (collectively,
the “Excluded Liabilities”). Without limiting the generality of the foregoing,
Excluded Liabilities shall include:

(a) Liabilities Reflected on Balance Sheet. Other than liabilities apportioned
to Buyer in accordance with Article 12, all liabilities that would be reflected
on a balance sheet prepared in accordance with GAAP as of the applicable Closing
Date, including accounts payable and notes payable;

(b) Assumed Contracts. All liabilities and obligations under any Assumed
Contracts to the extent such liabilities and obligations arise from the
performance of the Assumed Contracts prior to the applicable Closing Date;

(c) Assumed Indebtedness. All liabilities and obligations under the Assumed
Indebtedness with respect to all periods prior to the applicable Closing Date;

(d) Taxes. Taxes based upon, arising out of, or resulting from the Acquired
Business for periods up to and including the applicable Closing Date, and any
income Taxes resulting from the transactions contemplated by this Agreement;

(e) Excluded Assets. All liabilities and obligations relating to or arising out
of Excluded Assets, or any business, events, transactions, facts, acts or
omissions of Sellers or their Affiliates other than the Acquired Business;

(f) Employment Related Liabilities. All liabilities and obligations owed by any
of Sellers or their Affiliates to any of their current or former employees,
directors, consultants, independent contractors, leased employees or the
dependents of any of them, including liabilities, obligations and claims of any
kind arising out of the employment (or termination of employment, whether actual
or constructive) of the Employees prior to the applicable Closing Date,
including any actual or constructive termination of any Employees in connection
with the transactions contemplated by this Agreement;

 

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(g) D&O Liabilities. All liabilities and obligations arising out of indemnity
obligations for the benefit of directors, officers, employees and agents of
Sellers and their Affiliates;

(h) Indebtedness. All liabilities and obligations with respect to any
Indebtedness other than the Assumed Indebtedness, to the extent not discharged
in full prior to the applicable Closing Date (“Retained Indebtedness”);

(i) Sellers’ Environmental Liabilities. All liabilities, damages, losses,
Claims, obligations, sanctions, costs and expenses, including interest,
penalties and attorneys’ and experts’ fees and disbursements, arising under
Environmental Laws in connection with (i) the Excluded Assets, (ii) any real
property formerly but not currently owned, operated or leased by Sellers or
their Affiliates or (iii) facts, circumstances, conditions or Releases of
Hazardous Materials existing, initiated or occurring prior to the applicable
Closing Date; and

(j) Seller Apportioned Liabilities. All expenses, accounts payable or other
liabilities apportioned to Sellers and their Affiliates in accordance with
Article 12.

Section 2.05 Assignment of Assumed Contracts. Sellers will use their
commercially reasonable efforts to obtain, prior to each Closing, all applicable
consents and approvals of third parties required in connection with the
consummation of the transactions contemplated hereby; provided that nothing in
this Section 2.05 shall modify or limit in any manner Sellers’ and Buyer’s
respective conditions to Closing set forth in Sections 8.01(c) and 8.02(b). If
any Assumed Contract cannot be assigned or transferred to Buyer without the
consent or approval of a third party, and if such consent or approval is not
obtained prior to the applicable Closing Date, then such Assumed Contract shall
not be assigned to Buyer on the applicable Closing Date and, at the election of
Buyer, Sellers and Buyer will cooperate in a mutually agreeable arrangement
under which Buyer would obtain the benefits and assume the obligations
thereunder in accordance with this Agreement, including subcontracting,
sublicensing, or subleasing such Assumed Contract to Buyer; provided that the
Parties shall exercise reasonable efforts after Closing to obtain the consent or
approval of the applicable third parties in order to effect the assignment or
transfer of each Assumed Contract to Buyer. In addition, in the event
(x) Sellers or their Affiliates shall enter into, after the date of this
Agreement but prior to the applicable Closing Date, any Contract that would be
an Assumed Contract under the terms of this Agreement (in which case Sellers
shall provide notice thereof to Buyer), or (y) any Party shall identify or
become aware of, at any time after the date of this Agreement, any Contract that
would be an Assumed Contract under the terms of this Agreement but that is not
identified on any of the Schedules attached to this Agreement, Buyer in each
case may elect to acquire such Contract as a “Purchased Asset” and an “Assumed
Contract” hereunder in its sole discretion upon notice of such election to
Sellers.

 

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Section 2.06 Purchase Price; Allocation of Purchase Price.

(a)     (i) Subject to adjustment as provided herein, the aggregate purchase
price (the “Purchase Price”) for the Purchased Assets shall equal $281,850,000;
provided that notwithstanding the foregoing, the aggregate amount payable to
Sellers hereunder shall be reduced by the aggregate Assumed Indebtedness and by
any amounts paid in connection with the discharge of Liens in accordance with
this Section 2.06(a). A calculation of the estimated Assumed Indebtedness as of
the date of this Agreement is set forth on Exhibit E. Sellers shall deliver to
Buyer an updated statement of Assumed Indebtedness as of each Closing Date no
later than two Business Days prior to such Closing Date.

(ii) Subject to reduction in accordance with the terms and conditions of this
Agreement (including Sections 5.06, 5.13, 5.14, 5.15, 5.16 and 6.03), on the
date of the Initial Closing (the “Initial Closing Date”), Buyer shall pay to
Sellers an amount (the “Closing Payment”) equal to: (A) (1) $281,850,000, plus
(2) any amounts payable by Buyer to Sellers in accordance with Section 5.17
minus (B) the Assumed Indebtedness, minus (C) $31,400,000 (the portion of the
Purchase Price attributable to the Construction Hotels, as set forth on Schedule
2.06(b)), and plus or minus, as the case may be, (D) the net amount of any
apportionments between Buyer and Sellers made as of the Initial Closing Date in
accordance with Section 12.01.

(iii) On the date of each Delayed Closing (each a “Delayed Closing Date”), Buyer
shall pay to Sellers an amount (each a “Delayed Closing Payment”) equal to:
(A) the portion of the Purchase Price attributable to the Purchased Hotel
included in the Delayed Closing, as set forth on Schedule 2.06(b), plus or
minus, as the case may be, (B) the net amount of any apportionments between
Buyer and Sellers made as of the applicable Delayed Closing Date in accordance
with Section 12.01 with respect to the applicable Purchased Hotel.

Notwithstanding the foregoing, (x) in the case of clauses (ii) and (iii) above,
Buyer may in its sole discretion use a portion of the Closing Payment or Delayed
Closing Payment, as applicable, due to any Seller to pay and discharge, on the
applicable Seller’s behalf, any Liens (other than Permitted Liens and other than
Assumed Indebtedness) upon any of the Purchased Assets that can be discharged
upon payment of a liquidated sum of money and that have not been discharged by
Sellers prior to or simultaneously with the Initial Closing or a Delayed
Closing, as applicable, including the repayment of any Non-Assumed Indebtedness
and the discharge of any Liens associated therewith, and (y) Buyer shall have
the right to set off against the Purchase Price, and to deduct from any amounts
of Purchase Price payable to Sellers hereunder, any amounts payable by Sellers
to Buyer under this Agreement, including pursuant to Sections 5.06 and 5.13 and
Article IX.

(b) The Purchase Price (and the Assumed Indebtedness, to the extent properly
taken into account for Tax purposes) shall be allocated for purposes of this
Agreement, as of each Closing Date, among the Purchased Assets in accordance
with Schedule 2.06(b) (the “Allocation Statement”).

(c) Seller and Buyer agree to (i) be bound by the Allocation Statement and
(ii) act in accordance with the Allocation Statement in the preparation, filing
and audit of any Tax Return (including filing Form 8594 with its federal income
Tax Return for each taxable year that includes a Closing Date).

 

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(d) Not later than 30 days prior to the filing of their respective Forms 8594
relating to this transaction, each Party shall deliver to the other Party a copy
of its Form 8594.

(e) Within one Business Day after full execution of this Agreement by Buyer,
Sellers and Guarantor, Buyer shall deliver to Fidelity National Title Insurance
Company (the “Escrow Agent” or “Title Company”) the sum of $2,500,000 (the
“Initial Deposit”) by wire transfer of immediately available funds. It shall be
a condition precedent to the effectiveness of this Agreement that Buyer shall
have delivered the Initial Deposit to the Escrow Agent within one Business Day
after the date of this Agreement. Within one Business Day after the last day of
the Due Diligence Period, Buyer shall deliver to the Escrow Agent the additional
sum of $2,500,000 (the “Additional Deposit”), by wire transfer of immediately
available funds. The Initial Deposit and the Additional Deposit, and all accrued
interest thereon, are collectively referred to herein as the “Deposit”). At
Closing, the Deposit shall be paid to Seller by the Escrow Agent for credit
against the Closing Payment. The Deposit shall be held and disbursed by the
Escrow Agent in accordance with the terms and conditions of this Agreement and
of an escrow agreement to be entered into by the Parties substantially in the
form attached hereto as Exhibit H (the “Escrow Agreement”).

Section 2.07 Closing Transactions and Deliveries.

(a) Each consummation of the purchase and sale of the Purchased Assets, the
assumption of the Assumed Liabilities and the other transactions contemplated
hereunder is referred to herein individually as a “Closing” and collectively as
the “Closing,” as the context so requires.

(i) Subject to the terms of this Agreement, including Sections 5.15 and 5.16,
the initial Closing of the purchase and sale of all of the Purchased Assets
other than the Construction Hotels and their related Purchased Assets, and the
assumption of all Assumed Liabilities other than those Assumed Liabilities
related to the Construction Hotels (the “Initial Closing”) shall take place at a
location mutually acceptable to the Parties at 10:00 a.m., local time, on the
date that is the earlier of (A) 30 days after the expiration of the Due
Diligence Period or (B) May 22, 2008; provided that notwithstanding the
foregoing, if any of the conditions to such Closing set forth in Article 8 shall
not have been satisfied as of such date, the Initial Closing shall take place on
the date that is three Business Days following the date on which the last of the
conditions precedent to such Closing set forth in Article 8 of this Agreement
has been either satisfied or waived by the Party for whose benefit such
conditions precedent exist, or such other date as the Parties may mutually
agree.

(ii) Each Closing other than the Initial Closing (each, a “Delayed Closing”)
shall occur within three Business Days following the date on which the last of
the conditions precedent to such Closing set forth in Article 8 of this
Agreement has been either satisfied or waived by the Party for whose benefit
such conditions precedent exist, or such other date as the Parties may mutually
agree (it being understood that each

 

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Construction Closing is intended to take place within 30 days after Sellers’ or
their Affiliates’ receipt of the applicable Certificate of Occupancy for the
applicable Construction Hotel, provided that all of the conditions to such
Construction Closing set forth in Article 8 applicable thereto shall otherwise
have been satisfied).

Each Closing shall be conducted through the delivery of closing documents and
funds to the Escrow Agent or another nationally recognized title insurance
company acceptable to the Parties pursuant to customary escrow instructions
reasonably acceptable to Buyer and Sellers. Each Closing shall be effective as
of 12:01 a.m. on the applicable Closing Date; provided that if the Closing
Payment or a Delayed Closing Payment, as applicable, is received by the Escrow
Agent after 1:00 p.m. on the Closing Date or a Delayed Closing Date, as
applicable, the applicable closing shall be effective as of 12:01 a.m. on the
next Business Day following the Closing Date or a Delayed Closing Date, as
applicable, and such next Business Day shall become the “Closing Date” or
“Delayed Closing Date,” as applicable, for purposes of this Agreement.

(b) At each Closing:

(i) Buyer shall deliver to Sellers the Closing Payment or the Delayed Closing
Payment, as applicable, in immediately available funds by wire transfer to an
account designated by Sellers;

(ii) The applicable Seller and Buyer shall enter into a Bill of Sale, Assignment
and Assumption Agreement (the “Assignment and Assumption Agreements”) with
respect to the Purchased Assets and Assumed Liabilities included in the
applicable Closing substantially in the form attached hereto as Exhibit F;

(iii) The applicable Seller shall deliver to Buyer a special warranty deed
(each, a “Deed”) substantially in the form attached hereto as Exhibit G with
respect to each parcel of Owned Real Property included in the Closing conveying
to Buyer fee simple interest in the applicable land and any appurtenant easement
or other rights therewith free and clear of Liens other than Permitted
Exceptions;

(iv) The applicable Seller shall deliver to Buyer an assignment of lease with
respect to each parcel of Leased Real Property included in the applicable
Closing and with respect to each Ground Lease, the applicable Seller and Buyer
shall execute and deliver an assignment of Ground Lease in the form attached
hereto as Exhibit K;

(v) Sellers shall deliver a schedule of all bookings or reservations for guest,
conference or banquet rooms or other facilities at each Purchased Hotel included
in the applicable Closing that are scheduled to occur, in whole or in part,
after the applicable Closing and a schedule of all deposits held by Sellers and
their Affiliates related thereto;

(vi) Sellers shall deliver a schedule of purchase orders for items to be used
at, or in connection with, each Purchased Asset included in the applicable
Closing that are scheduled for delivery following the applicable Closing;

(vii) Guarantor and each Seller shall deliver a certificate, dated as of the
applicable Closing Date, in the form attached hereto as Exhibit I to establish
that each of Guarantor and such Seller is not a foreign person for the purposes
of the Foreign Investment in Real Property Tax Act;

 

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(viii) To the extent in Sellers’ possession, Sellers shall deliver the original
Transferred Permits, warranties, Assumed Contracts included in the applicable
Closing and other instruments which are to be assigned to Buyer, or true and
correct copies, as certified by Seller, of each of the foregoing if originals
are not available;

(ix) Sellers shall deliver possession of the Purchased Assets included in the
applicable Closing to Buyer, together with all books and records in Sellers’
possession necessary for the operation of such Purchased Assets, and all keys,
including keys for all security systems, rooms and offices;

(x) Sellers and Buyer shall deliver such other documents and instruments as may
be required hereby or otherwise reasonably requested by Sellers, Buyer or the
Title Company to effectuate the transactions contemplated by this Agreement
(including gap indemnity affidavits) and to induce the Title Company to insure
title to the Purchased Hotels and the other real property constituting Purchased
Assets as described herein, including any transfer tax and other forms required
to record the deed of conveyance and any Virginia and/or North Carolina transfer
forms;

(xi) Each Seller shall deliver a Secretary’s Certificate attaching and
certifying for such Seller (i) true and complete copies of, and no amendments
to, such Seller’s certificate of formation and operating agreement (or other
equivalent governing documents), (ii) to the extent required under such Seller’s
organizational documents, resolutions duly adopted by the board of directors (or
equivalent governing body) of, and by the members or other equity owners of,
such Seller authorizing the execution, delivery and performance of this
Agreement, the Transaction Agreements and all other agreements, documents,
certificates and transactions contemplated hereby, and (iii) the incumbency of
the officers or other representatives of such Seller executing this
Agreement, the Transaction Agreements and the other agreements, documents and
certificates to be delivered hereunder; and

(xii) Seller and Buyer shall enter into each of the other Transaction
Agreements.

ARTICLE 3

REPRESENTATIONS AND WARRANTIES OF SELLERS AND GUARANTOR

Each Seller, with respect only to itself and each of its respective Purchased
Assets as reflected on Schedule A, and Guarantor (for purposes of Sections 3.02,
3.03 and 3.04 only) represents and warrants to Buyer as follows:

Section 3.01 Corporate Existence and Power. Each Seller is a corporation,
limited liability company, limited partnership or other business entity, as the
case may be, duly organized, validly existing and in good standing under the
laws of its jurisdiction of organization.

 

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Each Seller is duly qualified to do business and is in good standing in the
jurisdiction of its organization and as a foreign corporation or other legal
entity in each jurisdiction where the character of the properties owned or
leased by it or the nature of the business transacted by it requires it to be so
qualified, except where any such failure could not reasonably be expected to
result in a material adverse effect on such Seller’s assets, properties,
business or operations. Each Seller has all corporate, limited liability company
or partnership power and authority necessary to enable it to own, lease or
otherwise hold its properties and assets and to carry on its business as
presently conducted.

Section 3.02 Corporate Authorization. The execution, delivery and performance by
each Seller of this Agreement and the other Transaction Agreements to which it
is a party and the consummation of the transactions contemplated hereby and
thereby are within each Seller’s corporate, limited liability company or
partnership powers and have been duly authorized by all requisite corporate,
limited liability company or partnership action on the part of each Seller. This
Agreement and each of the other Transaction Agreements have been or will be duly
executed and delivered by each such Seller and (assuming due authorization,
execution and delivery by Buyer) this Agreement constitutes, and (assuming due
authorization, execution and delivery by the other parties thereto) each of the
other Transaction Agreements when executed and delivered will constitute, a
legal, valid and binding obligation of each such Seller enforceable in
accordance with its terms, except as such enforceability may be limited by
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or
similar Applicable Laws relating to or affecting creditors’ rights generally or
by general equitable principles (whether considered in a proceeding in equity or
at law). The execution, delivery and performance by Guarantor of this Agreement
and the consummation of the transactions contemplated hereby are within
Guarantor’s powers and have been duly authorized by all requisite action on the
part of Guarantor. This Agreement and each of the other Transaction Agreements
to which Guarantor is a party have been or will be duly executed and delivered
by Guarantor and (assuming due authorization, execution and delivery by Buyer)
this Agreement constitutes, and (assuming due authorization, execution and
delivery by the other parties thereto) each of the other Transaction Agreements
when executed and delivered will constitute, a legal, valid and binding
obligation of Guarantor enforceable in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium or similar Applicable Laws relating to or affecting
creditors’ rights generally or by general equitable principles (whether
considered in a proceeding in equity or at law).

Section 3.03 Governmental Authorization. Except as described on Schedule 3.03,
the execution, delivery and performance by each Seller and by Guarantor of this
Agreement and the other Transaction Agreements and the consummation of the
transactions contemplated hereby and thereby require no action by or in respect
of, consent or approval of, or filing with, any Governmental Authority.

Section 3.04 Noncontravention. Except as set forth on Schedule 3.04, the
execution, delivery and performance by each Seller any by Guarantor of this
Agreement and the other Transaction Agreements and the consummation of the
transactions contemplated hereby and thereby do not and will not (i) contravene
or violate the charter or certificate of formation (or similar organizational
documents) or operating agreement or bylaws (or similar organizational

 

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documents) of any Seller, (ii) assuming compliance with the matters referred to
in Section 3.03, contravene or violate any Applicable Law or any judgment,
order, injunction, or decree of any Governmental Authority, (iii) constitute a
default under or give rise to any right of consent, revocation, suspension,
termination, withdrawal, cancellation, modification or acceleration of any right
or obligation or to a loss of any benefit under any provision of any Material
Assumed Contract or Management Company Contract or (iv) result in the creation
or imposition of any Lien on any Purchased Asset.

Section 3.05 Intentionally Omitted.

Section 3.06 Financial Statements. Schedule 3.06 sets forth the following
financial statements (the “Financial Statements”): (i) the audited balance sheet
of each of the Purchased Hotels, the Management Company Business, the Laundry
Facility and the Parking Lot as at December 31, 2005 and 2006 (including the
notes thereto), and the related statements of income, stockholders’ equity and
cash flows for the years ended December 31, 2005 and December 31, 2006, together
with any accountants’ report thereon, and (ii) the unaudited balance sheet of
each of the Purchased Hotels, the Management Company Business, the Laundry
Facility and the Parking Lot as at December 31, 2007 and the related statements
of income, stockholders’ equity and cash flows for the twelve month period ended
December 31, 2007. Except as may be indicated in the notes to the audited
Financial Statements, the Financial Statements were prepared in accordance with
GAAP and fairly present, in all material respects, the financial position of
each Purchased Hotel, the Laundry Facility and the Management Company Business
as of the date thereof and its results of operations and cash flows for the
period then ended. The Financial Statements have been prepared from, and are in
accordance with, the books and records of the Purchased Hotels, the Laundry
Facility and the Management Company Business, as applicable, which books and
records are maintained in accordance with GAAP consistently applied throughout
the periods indicated, and such books and records have been maintained on a
basis consistent with the past practice of the applicable entity. Except as
disclosed in Schedule 3.06, none of the Purchased Hotels, the Laundry Facility
or the Management Company Business has any liabilities or obligations (whether
accrued, contingent, absolute, determined, determinable or otherwise) that are
of a nature required to be set forth on the face of a balance sheet prepared in
accordance with GAAP and are not adequately reflected or provided for in the
Financial Statements, except for liabilities and obligations that have been
incurred since December 31, 2006 in the ordinary course of business and are not
(individually or in the aggregate) material to the applicable Purchased Asset.

Section 3.07 Absence of Certain Changes. Except as disclosed in Schedule 3.07,
since December 31, 2006, the Acquired Business has been conducted in the
ordinary course consistent with past practices and there has not been:

(a) any event, occurrence or development which, individually or in the
aggregate, has had or could reasonably be expected to have a material adverse
effect on the assets, liabilities, properties, business, operations or condition
(financial or otherwise) any of the Purchased Hotels (collectively or
individually), the Management Company Business, the Laundry Facility or the
Parking Lot;

 

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(b) any transaction or commitment made, or any contract or agreement entered
into, by Seller or any of its Affiliates relating to any Purchased Asset that
will not be terminated or discharged before Initial Closing or the Delayed
Closing, as applicable, other than transactions and commitments in the ordinary
course of business consistent with past practices and those contemplated by this
Agreement and the other Transaction Agreements;

(c) any material and uninsured damage, destruction, loss or casualty to any
Purchased Asset; or

(d) any action or inaction described in Sections 5.01(e), (f) or (g) which, had
such action occurred after the date of this Agreement, would be in violation of
such Section.

Section 3.08 Title. Sellers have good and marketable title to all tangible
personal property constituting Purchased Assets subject only to (i) Liens
disclosed on Schedule 3.08, (ii) Liens for Taxes, assessments and similar
charges that are not yet due and payable, or (iii) mechanics’, materialmen’s,
carriers’, repairers’ and other similar Liens arising or incurred in the
ordinary course of business or that are not yet due and payable or are being
contested in good faith (clauses (i), (ii) and (iii) together with the Permitted
Exceptions, the “Permitted Liens”); provided that no representation or warranty
with respect to title to any parcel of Owned Real Property that shall be insured
under a Title Policy to be issued to Buyer in accordance with the provisions of
this Agreement shall be deemed made by Sellers under this Section 3.08. The
Purchased Assets will constitute all of the assets that are necessary to permit
Buyer to continue the operation of the business of each of the Purchased Hotels,
the Management Company Business, the Laundry Facility and the Parking Lot
following the Closing Date or the Delayed Closing Date, as applicable, in
substantially the same manner as such operations have heretofore been conducted
by Sellers and their Affiliates. Except as disclosed on Schedule 3.08, with
respect to each Seller, no Person other than such Seller owns any right, title
or interest in or to such Seller’s respective Purchased Assets as reflected on
Schedule A.

Section 3.09 Material Contracts.

(a) Schedule 3.09(a) sets forth a true, correct and complete list of all
Contracts of the following types with respect to any of the Purchased Assets
(collectively, “Material Contracts”):

(i) (A) Hotel Contracts, (B) Equipment Leases, and (C) Space Leases;

(ii) Management Company Contracts;

(iii) Franchise Agreements;

(iv) leases with respect to any Leased Real Property (including the Ground
Leases);

(v) any material licenses or other usage agreements with respect to Intellectual
Property Rights;

 

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(vi) any partnership, joint venture or other agreements among any Seller (or its
Affiliates) and third parties providing for any right or interest of any third
party with respect to any of the Purchased Assets;

(vii) any agreements relating to the acquisition or disposition of any Purchased
Assets (whether by merger, sale of stock, sale of assets or otherwise), and/or
any Contract that imposes an option, right of first refusal or other similar
restriction with respect to any Purchased Asset;

(viii) Contracts with Sellers or any of their Related Parties that will not be
terminated at the Initial Closing or a Delayed Closing, as applicable, or would
otherwise be binding upon Buyer following the Initial Closing or a Delayed
Closing, as applicable;

(ix) all (A) Contracts evidencing Indebtedness, including loan agreements,
notes, mortgages, indentures, security agreements, letters of credit or other
contracts for the borrowing or lending of money, including all Contracts
relating to the Assumed Indebtedness, the JP Indebtedness, the Retained
Indebtedness and any Indebtedness that will be repaid at or prior to the Initial
Closing or a Delayed Closing, as applicable, and (B) Contracts granting a Lien
upon any Purchased Asset;

(x) any (A) collective bargaining Contract or other Contract with any labor
association, employee representative, organization or union, or (B) employment
Contract, consulting agreement, termination, retention, or severance agreement,
change of control agreement, employee lease, independent contractor or similar
agreement;

(xi) any Contract providing for indemnification (other than for breach thereof)
of any Person with respect to any Purchased Assets or Assumed Liabilities, and
any Contract that would limit the freedom of Sellers, Buyer, the Purchased
Assets or any Affiliate of the foregoing to compete in any line of business or
with any Person or in any area;

(xii) any power of attorney that would be binding on the Buyer or with respect
to any Purchased Asset or Assumed Liability after the Initial Closing or a
Delayed Closing, as applicable;

(xiii) any Contract to make any capital additions or improvements or capital
expenditures and any construction or related Contract with respect to any of the
Purchased Hotels;

(xiv) any Contract providing for the services of any dealer, distributor,
franchisee, sales representative or similar representative or a Contract
providing for payments to any Person based on profits, purchases or sales, other
than direct payments for goods;

(xv) any Contract to the extent a Seller receives or is required to pay under
such Contract more than $50,000 on an annual basis or $100,000 in the aggregate,
including (1) any supply Contract or other Contract for the provision of goods
or services to any of the Purchased Assets, and (2) hotel management agreements,
hotel marketing or sale agreements, franchise agreements, license agreements,
agreements with tour operators or travel agencies and related Contracts; or

 

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(xvi) any Contracts not otherwise described in this Section 3.09(a) the
termination or loss of which would be reasonably likely to result in a material
adverse effect on the assets, liabilities, properties, business, operations or
condition of any Purchased Hotel, or of the Management Company Business, the
Laundry Facility or the Parking Lot, as the case may be.

(b) Sellers have made available to Buyer true and complete copies of each
Material Contract. Each Material Contract that is an Assumed Contract (each, a
“Material Assumed Contract”) is a valid and binding agreement of Sellers, is in
full force and effect and is enforceable against Sellers in accordance with its
terms (except as such enforceability is limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws now or hereafter in effect relating
to creditors’ rights generally or general principles of equity). There are no
defaults or events that, with notice or the passage of time or both, would
constitute a default under the terms of any Material Assumed Contract or any
Management Company Contract.

(c) Sellers have made available to Buyer true and complete copies of each Ground
Lease including all amendments thereto. Neither the applicable Seller nor, to
the knowledge of Sellers, the applicable Ground Landlord is in default under the
applicable Ground Lease and no event has occurred which with the giving of
notice or passage of time or both would be a default under any Ground Lease. The
current use of all real property subject to a Ground Lease is permitted by the
terms of the applicable Ground Lease.

Section 3.10 Litigation. Except as set forth in Schedule 3.10, there are no
Proceedings pending or, to the knowledge of Sellers, threatened against or
involving any of the Purchased Assets or Sellers before any Governmental
Authority or other third party. Except as set forth on Schedule 3.10, to the
Sellers’ knowledge, none of the Acquired Business or Purchased Assets are under
investigation by any Governmental Authority. The Purchased Assets are not
subject to any material judgment, decree, injunction, rule or order of any court
or arbitration panel. There is no Proceeding pending, or to the knowledge of
Sellers, threatened against or affecting, Guarantor, Sellers or any of their
Affiliates before any court or arbitrator or any Governmental Authority which
challenges or seeks to prevent, enjoin, alter or materially delay the
transactions contemplated by this Agreement or the other Transaction Agreements.

Section 3.11 Compliance with Laws; Permits. Except with respect to Environmental
Laws (which are covered in Section 3.18 below) or as set forth on Schedule 3.11,
to the Sellers’ knowledge, the Acquired Business has been conducted in
compliance in all material respects with, and Sellers and the Purchased Assets
are in compliance in all material respects with, all Applicable Laws and with
all requests of Governmental Authorities. Except as set forth on Schedule 3.11,
all material Permits have been obtained and are in full force and effect. No
Seller nor any of Sellers’ Affiliates has received a written notice from any
applicable Governmental Authority or third party (A) of any violation, default,
intended or threatened non-renewal, suspension or revocation of any Permits or
(B) that it lacks any Permits necessary for the present use and occupancy of any
of the Purchased Hotels or any other operation of the Acquired Business.

 

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Section 3.12 Real Property.

Exhibit A, Exhibit A-1, Exhibit A-2, Exhibit A-3 and Exhibit A-4 together set
forth the legal description of each parcel of real property underlying the
Purchased Hotels. Schedule 3.12(a) sets forth (i) the legal description of each
additional parcel of real property constituting a Purchased Asset (collectively
with the Purchased Hotels, the “Owned Real Property”), and (ii) each parcel of
real property leased by Sellers and used by the Acquired Business or otherwise
in connection with the Purchased Assets (the “Leased Real Property” and,
together with the Owned Real Property, the “Real Property”). Sellers do not own,
lease, sublease, license, occupy or use any real property in respect of the
Acquired Business other than the Real Property.

To the knowledge of Sellers, the Owned Real Property is not subject to any
easements, rights, duties, obligations, covenants, conditions, restrictions,
limitations or agreements that are not of record. To the knowledge of Sellers,
the Owned Real Property is in compliance with, and no Seller (nor any of
Sellers’ Affiliates) has received notice of any violation of, any restrictive
covenant, easement or other agreement applicable to the Owned Real Property.
Other than Sellers, there are no Persons in possession of any portion of Real
Property, whether as lessees, tenants at will, occupants or otherwise (other
than tenants under the Space Leases and transient guests of the Purchased Hotels
in the ordinary course of business).

With respect to all buildings, structures (surface and sub-surface), fixtures
and improvements (collectively, “Improvements”) on each Real Property, to the
knowledge of Sellers, (i) such Improvements are in good working condition,
except for ordinary wear and tear, (ii) all mechanical systems therein are in
good operating condition, except for ordinary wear and tear, (iii) all FF&E
therein are in good operating condition, except for ordinary wear and tear,
(iv) all of the guest rooms of the Purchased Hotels are available for regular
occupancy and the lobby, restaurant(s), lounge(s), board rooms, meeting and
banquet rooms, “back-of-house” areas, parking facilities and other public areas
are available for regular use, with FF&E fully installed, (v) all are accessible
to and from public access ways over improved, paved roads adequate to provide
all necessary vehicular and pedestrian ingress and egress for the use thereof
for its intended purpose, (vi) all utilities, including water, gas, heat,
drainage, storm and sanitary septic facilities, telecommunication (including
telephone, internet and cable), electrical systems and fire protection
(collectively, the “Utilities”), in each case as is necessary for the conduct of
the Acquired Business as currently conducted, are available and operable in
adequate capacity to permit the use thereof for its intended purpose and Sellers
have paid all introduction and connection charges, and (vii) all have adequate
signs in place. The buildings located on each Real Property are operating and
are open for business to the public.

To the knowledge of Sellers, each Real Property and each Improvement thereon has
been completed in all material respects in accordance with all applicable zoning
and land use regulations and permits and all restrictions and/or conditions
contained in any zoning or land use variance or other similar approval relating
to such Real Property or Improvement (collectively, “Zoning Permits”) and
neither Sellers nor their Affiliates have received any written notice from any
Governmental Authority that any Real Property or Improvement is in violation of
any applicable fire, health, building, use, occupancy or zoning laws or other
statute, ordinance law or code bearing on the construction or operation of the
Real Property or any part thereof where such violation remains outstanding. To
the knowledge of Sellers, all such Zoning Permits are in full force and effect
and Sellers and their Affiliates have complied with all material obligations
thereunder. To the knowledge of Sellers, each Owned Real Property is duly and
properly zoned or otherwise in a land use category to permit use as a fully
functioning hotel, and is not subject to

 

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any building or use restriction that prevents its operation in any material
respect as a fully functioning hotel. There are no pending or, to the knowledge
of Sellers, threatened proceedings to change the current zoning classification
of the Owned Real Property or the conditions applicable thereto.

None of Sellers of their Affiliates (nor, to the knowledge of the Sellers, any
other Person) has made any binding commitments to any Governmental Authority or
any other Person that would impose an obligation to dedicate any of the Owned
Real Property for public purposes or to construct, install or maintain any
improvements of a public or private nature on or off the Owned Real Property.

No Owned Real Property is subject to any agreement or other restriction of any
nature whatsoever (recorded or unrecorded) restricting the owner’s right to
convey or to use it. There are no outstanding purchase contracts, options,
rights of first refusal or other agreements of any kind whereby any Person will
have the right to acquire the Real Property or any of the Purchased Assets, or
any portion thereof or interest therein.

Neither Sellers nor their Affiliates have received any written (or to Sellers’
knowledge, other) notice of any pending condemnation or special assessment
proceedings or suits or actions relating to the Real Property and, to Sellers’
knowledge, no such condemnation or special assessment proceedings or suits or
actions have been threatened relating to the Real Property.

No work has been performed or materials supplied on or to any Real Property,
except for (i) work or materials for which full payment has been made and
(ii) work or materials in connection with the Construction Hotels for which
payment is not yet due and payable.

With respect to the Leased Real Property, each lease leasing the Leased Real
Property is valid, binding and enforceable against Sellers in accordance with
its terms and is in full force and effect, Sellers have a valid leasehold
interest in the Leased Real Property, free and clear of any Liens other than
Permitted Liens, each Seller has paid all rents and other charges to the extent
due and payable under all leases and there are no existing defaults, or matters
that, with notice or the passage of time, would be defaults, under any leases or
other agreements relating to the Leased Real Property. Sellers have delivered to
Buyer true and correct copies of each lease covering any portion of Leased Real
Property.

Section 3.13 Intentionally Omitted.

Section 3.14 Management. Each Purchased Hotel and each Excluded Hotel is
currently and has been at all times managed by Tidewater pursuant to a
Management Company Contract, true and complete copies of which have been
provided to Buyer. Tidewater has at all times operated each Purchased Hotel and
each Excluded Hotel in a good and businesslike fashion.

Section 3.15 Insurance. Schedule 3.15 sets forth a complete and correct list of
all material insurance policies (other than title insurance policies) currently
in force with respect to the Acquired Business, including a description of
whether such policies are “claims made” or “occurrence based” policies. Except
as set forth in Schedule 3.15, such policies of insurance are in full force and
effect and are valid, outstanding and enforceable, all premiums due thereon have
been paid in full and Sellers and their Affiliates have complied in all material
respects with the provisions of all such policies. No insurer under any such
policy has cancelled or generally disclaimed liability thereunder or indicated
any intent to do so or not renew any such policy. To the knowledge of Sellers,
all claims under any such policies have been filed in a timely fashion.

 

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Section 3.16 Employee Matters. Except as described on Schedule 3.16, all
Employees are employed by their respective Purchased Hotel, the Laundry Facility
or Tidewater. Except as set forth in Schedule 3.16, (i) to the knowledge of
Sellers, each of Sellers and its Affiliates is in compliance with all Applicable
Laws respecting employment and employment practices, terms and conditions of
employment, wages and hours, and occupational safety and health, and is not
engaged in any unfair labor practice within the meaning of Section 8 of the
National Labor Relations Act, (ii) to the knowledge of Sellers, neither Sellers
nor their Affiliates are liable for the payment of any compensation, damages,
taxes, fines, penalties or other amounts, however designated, for failure to
comply with Applicable Laws, (iii) no Employees are subject to a collective
bargaining agreement and there is no labor strike, dispute, slowdown, or
stoppage actually pending or, to the knowledge of Sellers, threatened which
relates to the Employees, and no such strike, dispute, slowdown, or stoppage has
occurred during the preceding five years, (iv) neither Sellers nor their
Affiliates have received any written notice from any labor union or group of
employees that such union or group represents or believes or claims it
represents or intends to represent any of the Employees of Sellers or their
Affiliates, (v) all persons with whom Sellers and/or their Affiliates have
engaged as independent contractors are properly classified as independent
contractors for Tax, immigration, and employee benefit purposes, (vi) to the
knowledge of Sellers, all of Sellers’ and their Affiliates’ current procedures,
policies, and training practices with respect to employee matters, including
those relating to hiring and termination of employees and worker safety, conform
in all material respects to all Applicable Laws; (vii) to the knowledge of
Sellers, Sellers and their Affiliates are not subject to any pending claim for
overtime compensation due to any employee and, to Sellers’ knowledge, no such
claim has been threatened. No consent of any labor union is required to
consummate the transactions contemplated by this Agreement.

Section 3.17 Employee Benefit Plans.

(a) Schedule 3.17 identifies each Seller Employee Plan. Sellers have made
available to Buyer copies of the Seller Employee Plans (and, if applicable,
related trust agreements) and all amendments thereto and summary plan
descriptions. To the knowledge of Sellers, each Seller Employee Plan has been
maintained in substantial compliance with its terms and with the requirements
prescribed by any and all Applicable Laws, including ERISA and the Code.

(b) To the knowledge of Sellers, each Seller Employee Plan which is intended to
be qualified within the meaning of Section 401(a) of the Code is so qualified
and has received a favorable determination letter as to its qualification.

(c)(i) No Seller Employee Plan is a “Multiemployer Plan” within the meaning of
ERISA Section 3(37); (ii) none of Sellers, their Affiliates, nor any entity
required to be aggregated with either Sellers or their Affiliates pursuant to
Code Section 414 has (an “ERISA Affiliate”), at any time during the past six
(6) years, has contributed to, been obligated to contribute to or otherwise
participated in a Multiemployer Plan; and (iii) none of Sellers, their
Affiliates, or any ERISA Affiliate has incurred any liability as a result of a
partial or complete withdrawal from a Multiemployer Plan, as defined in Part I
of Title IV of ERISA. No Seller Employee Plan is a “multiple employer welfare
arrangement” within the meaning of ERISA Section 3(40) or a multiple employer
plan pursuant to Code Section 413(c).

 

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(d) None of Sellers, their Affiliates, or any ERISA Affiliate has ever
sponsored, contributed to or participated in a “Defined Benefit Plan” within the
meaning of ERISA Section 3(35), and none of Sellers, their Affiliates, or any
ERISA Affiliate has or is reasonably expected to incur any liability under Title
IV of ERISA.

Section 3.18 Environmental Matters.

(a) To the knowledge of Sellers, except as disclosed on Schedule 3.18(a), in
connection with the Purchased Assets:

(i) Sellers and their Affiliates have, and the Acquired Business has, materially
complied and are in material compliance with all Environmental Laws and have no
liability under Environmental Laws;

(ii) there are no facts, circumstances, conditions or Releases existing,
initiated or occurring prior to the Closing Date or Delayed Closing Date, as
applicable, which have or will result in material liability to Sellers or their
Affiliates, or to the Acquired Business, under Environmental Law;

(iii) there are no pending or, to the knowledge of Sellers, threatened Claims,
Liens or Proceedings under Environmental Laws; and

(iv) none of the following are present at any of the Purchased Assets:
(A) underground storage tanks or other improvements used currently or in the
past for the management of Hazardous Materials; (B) any dump or landfill or
other unit for the treatment or disposal of Hazardous Materials; (C) filled in
land or wetlands; (D) PCBs; (E) toxic mold; (F) lead-based paint; or
(G) asbestos-containing materials.

(b) A true and complete list of all Permits required under Environmental Laws
(“Environmental Permits”) held by Sellers or their Affiliates in connection with
the Acquired Business, all of which are valid and in full force and effect, is
set forth on Schedule 3.18(b).

(c) Sellers have (or, prior to the termination of the Due Diligence Period,
shall have) furnished to Buyer copies of all environmental assessments, reports,
audits and other material documents in their possession or under their control
that relate to Sellers’ or their Affiliates’ compliance with Environmental Laws
or the environmental condition of any other real property that Sellers or their
Affiliates currently or formerly have owned, operated or leased in connection
with the Purchased Assets as historically owned and operated. To Sellers’
knowledge, any information Sellers have furnished to Buyer concerning the
environmental condition of any real property or compliance with Environmental
Laws is accurate and complete.

Section 3.19 Bankruptcy. No Seller is insolvent within the meaning of Title 11
of the United States Code, as amended (the “Bankruptcy Code”), nor has any
Seller ceased to pay its debts as they become due. No Seller has filed or taken
any action to file a voluntary petition, case or proceeding under any section or
chapter of the Bankruptcy Code, or under any similar law or statute of the
United States or any state thereof, relating to bankruptcy, insolvency,
reorganization, winding up or composition or adjustment of their respective
debts, and no such petition, case or proceeding has been filed against any
Seller which has not been dismissed,

 

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vacated or stayed on appeal, and no Seller has been adjudicated as a bankrupt or
insolvent or consented to, nor filed an answer admitting or failing reasonably
to contest an allegation of bankruptcy or insolvency. No Seller has sought, or
consented to or acquiesced in, the appointment of any receiver, trustee,
liquidator or other custodian of it or a material part of its assets, and has
not made or taken any action to make a general assignment for the benefit of
creditors and no attachment or execution has been levied and no tax lien or
other governmental or similar lien has been filed, against any Seller or a
material part of its respective properties, which has not been duly and fully
discharged prior to the date hereof.

Section 3.20 Taxes. Except as set forth on Schedule 3.20:

(a) Sellers have timely filed or caused to be timely filed all material Tax
Returns required to be filed with respect to the Acquired Business, and have
paid all Taxes required to be paid as shown on such returns and, to the
knowledge of Sellers, all such Tax Returns were, when filed, complete and
accurate in all material respects;

(b) no material deficiencies for any Taxes have been or are currently being
proposed, asserted or assessed in writing, or to Sellers’ knowledge, threatened
by any Tax Authority against or with respect to the Acquired Business;

(c) no Tax Authority has asserted in writing any Tax deficiency, lien, interest
or penalty against Sellers or any portion of the Acquired Business or the
Purchased Assets, in each case that has not been paid, and there is no pending
audit or inquiry from any Tax Authority that might reasonably be expected to
result in a material Tax deficiency, lien, interest, penalty or other assessment
against any of the Purchased Assets, and to Sellers’ knowledge, no event has
occurred and no condition or circumstance exists that presents a material risk
that any Tax deficiency, lien, interest, penalty or other assessment will be
imposed against any of the Purchased Assets;

(d) no Seller has received any notice of proposed increases in property Tax with
respect to any of the Purchased Assets for the current or future assessment
periods;

(e) none of the Purchased Assets are subject to any Tax allocation or
Tax-sharing agreement with any other Person; and

(f) Sellers have not waived any statute of limitations in respect of Taxes with
respect to the Acquired Business or agreed to any extension of time with respect
to a Tax assessment or deficiency with respect to the Acquired Business.

Section 3.21 Related Party Transactions. Except as described on Schedule 3.21,
no Related Party has any direct or indirect interest in (a) any Assumed
Contract, (b) any property used by the Acquired Business, or (c) any Person that
is, or is engaged in business as, a competitor, lessor, lessee, supplier,
distributor, sales agent, customer or client of the Acquired Business (excepting
less than 5% stock holdings for investment purposes in securities of publicly
held and traded companies).

 

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Section 3.22 Intentionally Omitted.

Section 3.23 Intellectual Property Matters. Except as set forth on Schedule
3.23, Sellers do not own any Intellectual Property Rights. Sellers
possess (through licenses or otherwise) adequate valid rights to use all
Intellectual Property Rights used in the Acquired Business.

Section 3.24 Finders’ Fees. There is no investment banker, broker, finder or
other intermediary that has been retained by or is authorized to act on behalf
of Sellers or any of their Affiliates who will be entitled to any fee or
commission from Buyer or its Affiliates in connection with the transactions
contemplated by this Agreement.

ARTICLE 4

REPRESENTATIONS AND WARRANTIES OF BUYER

Buyer represents and warrants to Sellers and Guarantor as follows:

Section 4.01 Corporate Existence and Power. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Maryland. Buyer is duly qualified to do business and is in good standing in the
State of Maryland and as a foreign corporation or other legal entity in each
jurisdiction where the character of the properties owned or leased by it or the
nature of the business transacted by it requires it to be so qualified.

Section 4.02 Corporate Authorization. Except as described on Schedule 4.02, the
execution, delivery and performance by Buyer of this Agreement and the other
Transaction Agreements to which it is a party and the consummation of the
transactions contemplated hereby and thereby are within Buyer’s corporate powers
and have been duly authorized by all requisite corporate action on the part of
Buyer. This Agreement and each of the other Transaction Agreements to which
Buyer is a party have been or will be duly executed and delivered by Buyer and
(assuming due authorization, execution and delivery by Sellers) this Agreement
constitutes, and (assuming due authorization, execution and delivery by the
other parties thereto) each of the other Transaction Agreements to which Buyer
is a party when executed and delivered will constitute, a legal, valid and
binding obligation of Buyer, enforceable in accordance with its terms, except as
such enforceability may be limited by bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium or similar Applicable Laws relating to or
affecting creditors’ rights generally or by general equitable principles
(whether considered in a proceeding in equity or at law).

Section 4.03 Governmental Authorization. Except as described on Schedule 4.03,
the execution, delivery and performance by Buyer of this Agreement and the other
Transaction Agreements and the consummation of the transactions contemplated
hereby and thereby require no action by or in respect of, consent or approval of
or filing with, any Governmental Authority.

Section 4.04 Noncontravention. Except as described on Schedule 4.04, the
execution, delivery and performance by Buyer of this Agreement and the other
Transaction Agreements and the consummation of the transactions contemplated
hereby and thereby do not and will not (i) contravene or violate the certificate
of incorporation of Buyer, or (ii) assuming compliance with the matters referred
to in Section 4.03, contravene or violate any Applicable Law or any judgment,
order, injunction, or decree of any Governmental Authority.

 

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Section 4.05 Litigation. There is no Proceeding pending against, or to the
knowledge of Buyer, threatened against or affecting, Buyer before any court or
arbitrator or any Governmental Authority which in any manner challenges or seeks
to prevent, enjoin, alter or materially delay the transactions contemplated by
this Agreement and the other Transaction Agreements.

Section 4.06 Finders’ Fees. There is no investment banker, broker, finder or
other intermediary that has been retained by or is authorized to act on behalf
of Buyer or any of its Affiliates, other than CB Richard Ellis, the fees of
which shall be compensated by Buyer.

ARTICLE 5

PRE-CLOSING COVENANTS, AGREEMENTS AND MATTERS

Section 5.01 Conduct of Business. Between the date of this Agreement and each
applicable Closing Date, Sellers shall continue to carry on the Acquired
Business as currently conducted and use commercially reasonable efforts to
preserve the goodwill and ongoing business of the Acquired Business, and shall
cause the applicable Purchased Assets to be maintained in their present order
and condition, normal wear and tear excepted, so that the applicable Purchased
Assets shall, except for normal wear and tear, be in substantially the same
condition on the Closing Date as on the date of this Agreement. Without limiting
the foregoing, except as described on Schedule 5.01 or with the prior consent of
Buyer (which consent shall not be unreasonably withheld; provided that no such
consent shall be required to the extent inconsistent with Applicable Law) prior
to each applicable Closing Date, Sellers shall, and shall cause their Affiliates
to, with respect to the Purchased Assets:

(a) operate, manage, and maintain the Purchased Hotels in accordance with the
applicable Franchise Agreement, including (i) using reasonable efforts to keep a
level of employment at the Purchased Hotels sufficient for the normal operations
of the Purchased Hotels as currently conducted and to preserve relations with
guests, suppliers and other parties doing business with the Purchased Hotels,
(ii) accepting booking contracts for the use of the Purchased Hotel facilities
on terms not less favorable than the terms typically arranged by Sellers as of
the date of this Agreement and using reasonable efforts to retain such bookings,
and (iii) maintaining the current level of advertising and other promotional
activities for the Purchased Hotels;

(b) use reasonable efforts to retain the services of the Employees;

(c) keep, observe, and perform all its material obligations under each of the
Material Contracts;

(d) keep merchandise, supplies and inventory adequately stocked, consistent with
the applicable Franchise Agreement;

 

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(e) not (i) make (or have made) any election relating to Taxes, including any
change in accounting method for Tax purposes and/or change in Tax
classification, or (ii) file any Tax Return other than in a manner consistent
with past practice;

(f) not make any changes to its accounting methods, principles or practices,
except as required by Applicable Law or GAAP;

(g) except for the pending matters listed on Schedule 5.01, not pay, discharge
or satisfy any claims, liabilities or obligations other than in the ordinary
course of business consistent with past practice, or fail to pay or otherwise
satisfy any accounts payable, liabilities or obligations when due and payable;

(h) not initiate any litigation, action, suit or proceeding (other than routine
collection of bills) or settle or, except for the matters listed on Schedule
5.01, agree to settle any litigation, action, suit or proceeding other than in
the ordinary course of business;

(i) not grant any bonus, free rent, rebate or other concession to any present or
future tenant, other than in the ordinary course of business;

(j) not directly or indirectly sell, pledge, assign, dispose of or encumber any
of the Purchased Assets to any Person other than Buyer;

(k) not permit or suffer any Liens which will not be released prior to the
applicable Closing, other than the Permitted Liens;

(l) not incur any Indebtedness other than Indebtedness incurred in the ordinary
course of business and not secured by any of the Purchased Assets (it being
understood that any such incurred Indebtedness shall be an Excluded Liability);

(m) make or cause to be made timely payment in full for all goods and services
which have been provided in connection with the Purchased Assets and all debt,
if any, secured by the Purchased Assets;

(n) not enter into, terminate or materially amend any Material Contract or new
Contract that would be a Material Contract hereunder other than in the ordinary
course of business;

(o) not remove nor permit to be removed any of the personal property from any of
the Purchased Hotels other than in the ordinary course of business unless any
such item is (i) replaced by a substitute of equal or greater value or (ii) an
obsolete item of personal property;

(p) not make any commitments with respect to capital expenditures to be paid
after the Closing Date or Delayed Closing Date, as applicable, in excess of
$200,000 per Purchased Hotel;

(q) deliver to Buyer internal reports for each month showing the performance of
the Purchased Hotels, which delivery shall occur within three Business Days
after preparation and/or receipt of such reports by Sellers and their
Affiliates;

continue all insurance policies with respect to the Acquired Business in full
force and effect;

 

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(r) comply in all material respects with Applicable Laws; and

(s) not enter into any Contract or other agreement with respect to any of the
matters set forth in this Section 5.01.

Section 5.02 Inspection; Due Diligence Period.

(a) Buyer shall have the right, at its own risk, cost and expense (except as
otherwise provided in this Agreement) and at any time, and from time to time
prior to Closing, to enter, or cause its agents or representatives to enter,
upon the Purchased Hotels and the premises of the other Acquired Businesses at
any reasonable time and upon at least one Business Day prior notice to Sellers,
for the purpose of making surveys or other tests, inspections, investigations
and/or studies of all or any part of the Purchased Assets. In addition, Buyer
may, at its own risk, cost and expense, conduct such architectural,
environmental, economic, zoning and other assessments and studies of the
Purchased Assets as Buyer may, in its sole discretion, deem desirable. Buyer
shall conduct, and shall ensure that each of its agents, employees, contractors
or representatives conducts, each such entry in a manner that does not
materially interfere with the guests of the Purchased Hotels or the operation of
the Acquired Business. Buyer shall have reasonable access to all documentation,
agreements and other information in the possession of Sellers or Sellers’ agents
or Affiliates related to the Purchased Assets and shall have the right to make
copies of same; provided that Sellers shall be entitled to withhold any
materials that constitute privileged attorney/client communications or with
respect to which Sellers are obligated to a third party to maintain in
confidence; provided further that in such cases Sellers shall exercise
reasonable efforts to give Buyer the benefit of disclosure of such materials,
including by redacting privileged information only, obtaining the consent of
third parties to disclosure, or otherwise. In addition, Sellers shall make
available to Buyer Sellers’ senior management team, which shall include the
General Manager, the Controller, the Chief Engineer and the Director of Sales of
each of the Purchased Hotels and Tidewater, as well as the Laundry Facility and
the Parking Lot, to the extent applicable. To the extent not already made
available, Sellers and Guarantor shall make available to Buyer, as soon as
practicable and in any event within five Business Days of the date of this
Agreement, copies of the following documents and materials relating to the
Purchased Assets: (i) Sellers’ existing title policy and survey of each parcel
of Owned Real Property, (ii) all Material Contracts, (iii) all material Permits,
(iv) all environmental reports obtained by Sellers or in Sellers’ possession
with respect to the Owned Real Property, (v) any existing surveys of the
Purchased Hotels, (vi) all certificates of occupancy and (vii) such other
materials and information as Buyer may reasonably request, including materials
related to the Excluded Hotels, to the extent related to the management of such
Excluded Hotels (collectively, “Due Diligence Materials”). Unless otherwise
permitted by Sellers or their representatives, Buyer shall not contact or have
any discussions with any Employees unless Buyer shall give Tidewater at least
one day prior notice thereof and provided that a designated representative of
Tidewater shall have the right to be present at all times during such
discussions. Buyer shall use reasonable efforts not to damage any portion of the
Purchased Assets, and Buyer shall use reasonable efforts to restore any damage
caused by Buyer or its employees, agents, contractors or other persons acting on
behalf of Buyer. In conducting any inspections, Buyer and its representatives
shall at all times comply with the terms of all Applicable Laws. Buyer shall
furnish Seller with a certificate of general liability and property

 

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damage insurance with coverage of at least $1,000,000 per occurrence and
$3,000,000 in the aggregate naming Sellers as additional insureds. Buyer agrees
to indemnify and hold Sellers harmless from and against any and all Damages
incurred by any of the Sellers to the extent they relate to, arise out of or are
the result of Buyer’s or its employees’, contractors’ or representatives’ access
to, or inspection of, the Purchased Assets, or any tests, inspections, or other
due diligence conducted pursuant to this Agreement.

(b) Buyer shall have a period of 60 days from the date of this Agreement (the
“Due Diligence Period”) to conduct due diligence with respect to the Purchased
Assets and the Acquired Business in its sole discretion, including inspection of
the Due Diligence Materials and conduct of the inspections and investigations
referenced in Section 5.02(a). Buyer shall have the right to terminate this
Agreement in its sole discretion, for any reason or for no reason, at any time
prior to the expiration of the Due Diligence Period by delivering written
notification of termination (a “Termination Notice”) to Sellers at any time
prior to 5:00 p.m. Eastern Time on the last day of the Due Diligence Period (or
if the last day of the Due Diligence Period falls on a day that is not a
Business Day, the next Business Day thereafter). In the event Buyer shall so
deliver any Termination Notice to Sellers, this Agreement shall terminate
(except for those provisions that expressly survive termination), whereupon the
Deposit shall be returned to Buyer and neither Party shall have any further
liability to the other under this Agreement, except pursuant to those provisions
that expressly survive termination. In the event that a Termination Notice is
not delivered to Sellers by 5:00 p.m. Eastern Time on the last day of the Due
Diligence Period, Buyer shall be deemed to have elected to proceed hereunder,
and this Agreement shall remain in full force and effect in accordance with its
terms. Notwithstanding the foregoing, Buyer shall have the continuing right to
terminate this Agreement, in whole or in part, as provided herein, including in
accordance with Sections 5.03, 5.05, 5.06, 5.09, 5.13, 5.14 and 10.01, to the
extent applicable, without regard to the expiration of the Due Diligence Period.

Section 5.03 Title Insurance and Surveys.

(a) Buyer shall obtain (and Sellers shall reasonably cooperate with Buyer in
obtaining), at Buyer’s sole cost, (i) a binding commitment for owner’s policy of
title insurance relating to each parcel of Owned Real Property, to be issued by
the Title Company, on American Land Title Association Form 1992 (each, a “Title
Commitment”) committing to insure Buyer’s good and marketable fee simple title
to the Owned Real Property and easement interest in any easements benefiting the
Owned Real Property, and (ii) a survey of any Purchased Hotel or other Purchased
Assets designated by Buyer, certified to Buyer, Buyer’s lenders and the Title
Company, by a land surveyor or professional engineer (the “Surveyor”) chosen by
Buyer (each, a “Survey”).

(b) Buyer agrees to order the Title Commitments and Surveys within 10 Business
Days following the date of this Agreement and (x) to direct the Title Company to
deliver a copy of the Title Commitments (accompanied by copies of all documents
listed therein as proposed exceptions to coverage) to Sellers at the same time
that the Title Commitments are delivered to Buyer, and (y) to direct the
Surveyors to deliver a copy of the Surveys to Sellers at the same time that the
Surveys are delivered to Buyer. With respect to each parcel of Owned Real
Property, not later than 10 days prior to expiration of the Due Diligence
Period, Buyer shall notify Sellers in writing of any objections to exceptions
appearing in the Title Commitment that

 

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are unacceptable to Buyer in its sole discretion (an “Objection Notice”). Within
five days following receipt of an Objection Notice with respect to a particular
Owned Real Property, Sellers shall notify Buyer either (i) that they will, prior
to the Closing Date or Delayed Closing Date, as applicable, eliminate the
exceptions to which Buyer has objected or (ii) that they decline to eliminate
specified exceptions; provided, however, that Sellers shall be obligated in any
event to, and shall, at Sellers’ sole expense: (A) remove any exceptions that
may be removed by the payment of a liquidated sum of money (other than any
Assumed Indebtedness), (B) deliver to the Title Company evidence of the
authority and good standing of Sellers and similar items as may be required by
the Title Company and (C) deliver to the Title Company such affidavits and
certifications as may be required to enable to the Title Company to delete the
so-called “standard exceptions.”

(c) If Sellers elect to decline to eliminate any exceptions to title to which
Buyer has objected, or if Sellers fail to deliver an election to Buyer within
the five day period referenced in Section 5.02(b) (each, a “Refusal”), Buyer
shall have a period of three Business Days from receipt of Sellers’ Refusal (the
“Title Termination Period”), to elect, in Buyer’s sole discretion, to
(i) terminate this Agreement in its entirety (except for those provisions of
this Agreement that expressly survive termination), in which case the Deposit
shall be returned to Buyer and the parties will have no further liability to the
other under this Agreement, except pursuant to those provisions of this
Agreement that expressly survive termination, or (ii) acquire the applicable
Purchased Assets subject to such exceptions to title.

(d) Any exceptions to title reflected in the Title Commitment with respect to a
parcel of Owned Real Property (i) to which Buyer does not object in accordance
with this Section 5.03, or (ii) to which Buyer objects but Sellers refuse to
eliminate, and which Buyer subsequently elects to accept notwithstanding its
previous objection, shall be permitted exceptions with respect to such Owned
Real Property (“Permitted Exceptions”); provided that Permitted Exceptions shall
not include those matters that Sellers are required to eliminate hereunder. If
Sellers agree to take the actions necessary to eliminate any exceptions to which
Buyer has objected, then such exceptions shall not be Permitted Exceptions and
Sellers shall cause such exceptions to be removed prior to or at the Initial
Closing or the Delayed Closing, as applicable.

(e) If Buyer fails to provide notice of termination prior to expiration of the
Title Termination Period with respect to any Owned Real Property as provided for
in this Section 5.03, Buyer shall be deemed to have approved the condition of
title of such Owned Real Property, and shall be deemed to have waived its rights
to terminate this Agreement by reason of such title objections; provided that
notwithstanding the foregoing, the Buyer shall have the termination rights
contemplated in this Agreement, including Sections 5.02, 5.06, 5.09, 5.13, 5.14
and 10.01, to the extent applicable; and provided further that Buyer’s failure
to terminate this Agreement in accordance with this Section 5.03 shall not
constitute an approval of any exceptions that Sellers have agreed to eliminate
in accordance with this Section 5.03.

Section 5.04 Franchise Agreements. Promptly after the date of this Agreement,
Buyer shall submit its application to each franchisor or licensor under the
Franchise Agreements with respect to each of the Purchased Hotels for (i) the
transfer or assignment of the subject Franchise Agreement to Buyer (each such
transferred Franchise Agreement, an “Assumed Franchise

 

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Agreement”), or (ii) the issuance of a new franchise agreement to Buyer and the
termination of the existing Franchise Agreement (each such terminated Franchise
Agreement, a “Terminated Franchise Agreement”), as applicable in accordance with
the terms and conditions of each Franchise Agreement. Buyer shall be responsible
for and shall pay customary application fees due to franchisors under the
Franchise Agreements (the “Franchise Application Fees”). Buyer shall use
diligent and commercially reasonable efforts to obtain all necessary approvals
for the transfer or assignment of the Assumed Franchise Agreements and/or the
issuance of new franchise agreements to replace the Terminated Franchise
Agreements, as applicable, in each case on terms and conditions reasonably
acceptable to Buyer, and Sellers shall cooperate with Buyer in connection
therewith. In connection with Buyer’s negotiations with each franchisor and
licensor with respect to each Purchased Hotel, Buyer shall be entitled to elect
either to assume the existing Franchise Agreement for such Purchased Hotel, or
to enter into a new franchise agreement on the applicable Closing Date; provided
that in each case, Buyer shall exercise commercially reasonable efforts to
obtain from the applicable franchisor and/or licensor the release of the
applicable Seller and any guarantor from all liabilities and obligations under
such Seller’s respective Franchise Agreement with respect to actions and
omissions occurring after the applicable Closing Date.

Section 5.05 Certificates of Occupancy; Construction Hotels. Sellers shall use
reasonable commercial efforts to obtain certificates of occupancy in accordance
with all Applicable Laws (“Certificates of Occupancy”) with respect to each of
the Marriott Chesapeake and the Fairfield Inn Wilmington (the “Construction
Hotels”) prior to December 31, 2008 and June 30, 2009, respectively.
Notwithstanding any provision of this Agreement to the contrary, it is
acknowledged and agreed that the closing of the purchase and sale of the
Construction Hotels and the Purchased Assets related thereto shall not take
place at the time of the Initial Closing, but shall be postponed until 30 days
after receipt of the applicable Certificate of Occupancy with respect to each
Construction Hotel and the satisfaction of the other conditions set forth herein
with respect to each Construction Hotel (each, a “Construction Closing”). During
the period between the Initial Closing and each Construction Closing, each
Construction Hotel shall be subject to all covenants, obligations and provisions
applicable to Purchased Hotels hereunder as if the Initial Closing had not yet
occurred. In the event the Construction Closing for any Construction Hotel shall
not occur for any reason, such Construction Hotel shall be an Excluded Hotel for
all purposes of this Agreement, including Sections 6.02 and 6.03.

Section 5.06 Property Improvement Plans; Franchise Agreement Costs.

(a) In the event any franchisor under a Franchise Agreement shall require any
improvements of any of the Purchased Hotels in connection with the transactions
contemplated herein, including the transfer and assignment of any Assumed
Franchise Agreement, or the replacement of any Terminated Franchise Agreement,
the Parties shall cooperate to agree upon a plan and budget with respect to such
property improvements (each, a “Property Improvement Plan”). The Parties shall
exercise reasonable commercial efforts to agree upon a Property Improvement Plan
with each franchisor under the Franchise Agreements as promptly as practicable
following the date of this Agreement.

 

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(b) Subject to the remaining provisions of this Section 5.06, (i) 100% of the
aggregate costs associated with the Property Improvement Plans, together with
any transfer fees, termination fees, penalties or other costs or fees imposed by
or required to be paid to or on behalf of a franchisor or licensor in connection
with the transfer or assignment of the Assumed Franchise Agreements, or the
issuance of new franchise agreements in replacement of the Terminated Franchise
Agreements, other than the Franchise Application Fees (collectively with the
costs associated with the Properties Improvement Plans, the “Franchise Agreement
Costs”), in each case for all of the Purchased Hotels up to and including an
aggregate amount of $4,500,000 shall be borne by Buyer, (ii) 50% of the
aggregate Franchise Agreement Costs for all of the Purchased Hotels greater than
$4,500,000 and up to and including $6,000,000 shall be borne by each of Sellers
and Buyer, and (iii) 100% of the aggregate Franchise Agreement Costs for all of
the Purchased Hotels greater than $6,000,000 shall be borne by Sellers.

(c) In the event the aggregate Franchise Agreement Costs for all of the
Purchased Hotels shall exceed $7,500,000, Sellers shall have the right to
terminate this Agreement prior to the Closing; provided that in the event
Sellers shall so determine to terminate this Agreement, Sellers shall provide
written notice of such election to Buyer, and Buyer shall have a period of 10
Business Days in which to elect either (a) to assume all Franchise Agreement
Costs in excess of $7,500,000 and to cause Sellers to consummate the Closing (in
which case this Agreement shall not terminate but shall remain in full force and
effect in accordance with its terms), or (b) to terminate this Agreement in its
entirety (except for those provisions that expressly survive termination), in
which case the Deposit shall be returned to Buyer and Sellers shall be jointly
and severally liable to Buyer, and shall promptly pay and reimburse Buyer, for
Buyer’s Expenses, whereupon none of the Parties shall have any further liability
to the other, except pursuant to those provisions that expressly survive
termination. If Buyer fails to make an election pursuant to this Section 5.06(c)
within such 10 Business Day period, Buyer shall be deemed to have elected to
terminate this Agreement in accordance with the foregoing sentence.

(d) In addition to the provisions of Section 5.06(c), in the event the Franchise
Agreement Costs for the Purchased Hotel known as the “Sheraton Oceanfront” shall
exceed $1,500,000, Sellers shall have the right to exclude the Sheraton
Oceanfront from the purchase and sale contemplated in this Agreement and to
reduce the Purchase Price accordingly; provided that Sellers must exercise such
right during the initial 45-day period following the date of this Agreement and
shall have no right to so exclude the Sheraton Oceanfront from the purchase and
sale in this Agreement after the expiration of such initial 45-day period (it
being understood that Sellers shall have the right to so exclude the Sheraton
Oceanfront from the purchase and sale contemplated in this Agreement if the
applicable Seller shall not have received a Property Improvement Plan request
from the applicable franchisor prior to expiration of such 45-day period); and
provided further that in the event Sellers shall so determine to exclude the
Sheraton Oceanfront from the transactions contemplated in this Agreement,
Sellers shall provide written notice of such election to Buyer, and Buyer shall
have a period of 10 Business Days in which to elect either (a) to assume all
Franchise Agreement Costs for the Sheraton Oceanfront in excess of $1,500,000
and to cause Sellers to consummate the Closing with respect to such Purchased
Hotel (in which case this shall Agreement remain in full force and effect with
respect to the Sheraton Oceanfront in accordance with its terms), or (b) accept
Sellers’ exclusion of the Sheraton Oceanfront from the purchase and sale
transactions contemplated in this Agreement. In the event Buyer shall accept
Sellers’ exclusion of the Sheraton Oceanfront from the purchase and

 

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sale transactions contemplated herein, (i) Sellers shall be jointly and
severally liable to Buyer, and shall promptly pay and reimburse Buyer for
Buyer’s costs and expenses (including attorneys’ fees and expenses) incurred in
connection with the Sheraton Oceanfront up to an aggregate amount of $50,000,
(ii) the Sheraton Oceanfront shall become an Excluded Hotel for all purposes of
this Agreement, including Sections 6.02 and 6.03, and (iii) the dollar values
set forth in Section 5.06(b) shall each be reduced by $500,000, such that
(A) 100% of the aggregate Franchise Agreement Costs for all of the Purchased
Hotels, up to and including an aggregate amount of $4,000,000 shall be borne by
Buyer, (B) 50% of the aggregate Franchise Agreement Costs for all of the
Purchased Hotels greater than $4,000,000 and up to and including $5,500,000
shall be borne by each of Sellers and Buyer, and (C) 100% of the aggregate
Franchise Agreement Costs for all of the Purchased Hotels greater than
$5,500,000 shall be borne by Sellers. If Buyer fails to make an election
pursuant to this Section 5.06(d) within such 10 Business Day period, Buyer shall
be deemed to agree to the exclusion of the Sheraton Oceanfront from the purchase
and sale transactions under this Agreement in accordance with the foregoing
sentence.

Section 5.07 Assumption of Assumed Indebtedness; Payment of Non-Assumed
Indebtedness. Subject to consent of the applicable lenders, Buyer shall assume
Sellers’ obligations under the Assumed Indebtedness on and after the Closing
Date. Buyer shall be responsible for any loan assumption fees and costs of the
applicable lenders associated with the assumption of the Assumed Indebtedness.
Sellers shall, at Buyer’s sole cost and expense, cooperate with Buyer in
connection with the assumption of the Assumed Indebtedness, including executing
such documents, certificates and other materials as necessary to evidence such
assumption, obtaining and providing legal opinions and other taking all such
actions as may be reasonably required in order to effect such assumption.
Promptly after the date of this Agreement, Buyer shall submit to the applicable
lenders applications to assume the Assumed Indebtedness. Buyer shall pay all
application fees and shall provide to each of the applicable lenders such
financial and other information as such lenders may reasonably request as a
condition to consenting to Buyer’s assumption of the Assumed Indebtedness. Buyer
shall use diligent and commercially reasonable efforts to obtain such consents
from the applicable lenders. Without limiting the foregoing, with respect to all
Indebtedness on the Purchased Assets other than the Assumed Indebtedness (the
“Non-Assumed Indebtedness”), Sellers shall deliver notice of the prepayment of
such Non-Assumed Indebtedness in accordance with the terms thereof on the last
day of the Due Diligence Period unless the Parties shall agree to deliver such
notice on another date.

Section 5.08 Liquor Licenses. Promptly following the date of this Agreement,
Buyer shall make an application to the appropriate Governmental Authorities to
have a new liquor licenses issued in the name of Buyer or an entity designated
by Buyer in compliance with local law for those Purchased Hotels which currently
sell alcoholic beverages, and Sellers shall cooperate with Buyer in this regard,
at Buyer’s sole cost and expense. Buyer shall use all diligent and reasonable
efforts, at its sole cost and expense, to obtain the approval of applicable
Governmental Authorities for the issuance of the new liquor licenses prior to,
or contemporaneously with, the Initial Closing or the Delayed Closing, as
applicable. If such issuance has not been approved by the Closing Date or the
Delayed Closing Date, as applicable, Sellers agree to execute such documents as
are legal and customary, and reasonably acceptable to Sellers, to permit the
continued sale of alcoholic beverages for up to 180 days after the Initial

 

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Closing or the Delayed Closing, as applicable, pending such approval. In such
event, Buyer shall maintain liquor liability insurance in amounts currently
maintained by Sellers naming Sellers as an additional insureds, and further
agrees to indemnify, defend and hold Sellers harmless from and against any
liability, cost or expense arising out of Sellers’ cooperation with Buyer during
such interim period.

Section 5.09 Ground Landlord Estoppels. Sellers shall exercise commercially
reasonable efforts to deliver to Buyer, no later than three Business Days prior
to the Initial Closing Date, a copy of a statement in writing from each Ground
Landlord substantially in the form attached hereto as Exhibit L (each a “Ground
Landlord Estoppel”). In the event that either (x) Buyer has not received the
Ground Landlord Estoppels on or before the date that is three Business Days
prior to the Initial Closing Date, or (y) a Ground Landlord Estoppel is
unacceptable to Buyer’s lender, in its reasonable discretion, then Buyer may, in
its sole and absolute discretion, elect either to: (i) terminate this Agreement
by giving written notice to Sellers and Escrow Agent on or before the Closing
Date, in which event the Deposit shall be paid to Buyer and, thereafter, the
Parties shall have no further rights or obligations hereunder except for those
obligations which expressly survive the termination of this Agreement,
(ii) extend the Initial Closing Date for such additional period of time as may
be reasonably required to allow Sellers to deliver the Ground Landlord Estoppels
to Buyer, or (iii) waive such requirement, in which event the Initial Closing
shall occur as herein provided without any reduction of or credit against the
Purchase Price.

Section 5.10 Notices of Certain Events. Sellers shall promptly notify Buyer of:

(a) any notice or other communication to Sellers or their Affiliates from any
Person alleging that the consent of such Person is or may be required in
connection with, or seeking to enjoin or otherwise interfere with, the
transactions contemplated by this Agreement or the other Transaction Agreements;

(b) any notice of any violations of zoning, building, fire, health environmental
or other Applicable Laws relating or referring to any of the Purchased Assets;

(c) any material action, suit, claim or investigation commenced related to the
Purchased Assets or which in any manner challenges or seeks to prevent, enjoin,
alter or materially delay the transactions contemplated by this Agreement or the
other Transaction Agreements; or

(d) any event, circumstance, action or inaction that would make untrue any
representation or warranty provided by Sellers under this Agreement.

Sellers will send a copies of any related materials to Buyer of any such notice,
event or circumstance upon Buyer’s request, and Sellers will use reasonable
efforts to correct the same or cause the same to be corrected.

Section 5.11 Intentionally Omitted.

 

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Section 5.12 Seller Cooperation. Sellers shall use reasonable efforts to deliver
to lenders designated by the Buyer due diligence materials with respect to the
Acquired Business and to make available officers, directors and employees of the
Sellers and the Acquired Business as necessary to respond to inquiries by the
Buyer’s lenders, and Sellers shall execute and deliver such documents,
certificates or other agreements in connection with the Initial Closing or the
Delayed Closing, as applicable, as necessary to implement the Buyer’s desired
financing of the acquisition of the Acquired Business and any assumption and/or
refinancing of any of the Assumed Indebtedness.

Section 5.13 Jefferson Pilot Land.

(a) Sellers shall, prior to the Closing Date, acquire from Jefferson Pilot or
its Affiliates all right, title and interest in, to and under the parcel of land
described on Exhibit J hereto (the “Jefferson Pilot Land”). In the event the
Sellers have not, on or prior to the date that is 30 days after the date of this
Agreement, entered into a binding agreement with Jefferson Pilot to acquire the
Jefferson Pilot land on the Closing Date (which purchase and sale shall be
subject to no conditions other than delivery of the purchase price, the transfer
by deed of the Jefferson Pilot Land and the consummation of the applicable
Closing hereunder), Sellers shall have the right to exclude the Purchased Hotel
known as “Courtyard North” and its related Purchased Assets from the purchase
and sale contemplated in this Agreement and to reduce the Purchase Price
accordingly; provided that Sellers must exercise such right during the initial
30-day period following the date of this Agreement and shall have no right to so
exclude the Courtyard North from the purchase and sale in this Agreement after
the expiration of such initial 30-day period. In the event Sellers shall exclude
the Courtyard North from the purchase and sale transactions contemplated herein
in accordance with this Section 5.13(a), (i) Sellers shall pay to Buyer on the
Initial Closing Date Buyer’s costs and expenses (including attorneys’ fees and
expenses) incurred in connection with the transactions contemplated in this
Agreement up to an aggregate amount of $250,000, and (ii) the Courtyard North
shall become an Excluded Hotel for all purposes of this Agreement, including
Sections 6.02 and 6.03.

(b) From and after the expiration of the 30-day period contemplated in
Section 5.13(a) until the Closing Date, Buyer shall have the right to exclude
the Courtyard North and its related Purchased Assets from the purchase and sale
transactions contemplated herein upon notice to Sellers if, at the time of
Buyer’s delivery of such notice, Sellers have not entered into a binding
agreement with Jefferson Pilot to acquire the Jefferson Pilot Land on the
Closing Date (which purchase and sale shall be subject to no conditions other
than delivery of the purchase price, the transfer by deed of the Jefferson Pilot
Land and the consummation of the applicable Closing hereunder). In the event
Buyer shall exclude the Courtyard North from the purchase and sale transactions
contemplated herein in accordance with this Section 5.13(b), (i) Sellers shall
pay to Buyer on the Initial Closing Date Buyer’s costs and expenses (including
attorneys’ fees and expenses) incurred in connection with the transactions
contemplated in this Agreement up to an aggregate amount of $250,000, and
(ii) the Courtyard North shall become an Excluded Hotel for all purposes of this
Agreement, including Sections 6.02 and 6.03.

Section 5.14 Suffolk Indebtedness. In the event that Sellers shall not have
obtained all necessary consents and approvals of the lender under the Assumed
Indebtedness encumbering the Purchased Hotels known as “Courtyard Suffolk” and
“Towneplace Suites Suffolk” (collectively, the “Suffolk Assumed Indebtedness”)
prior to the Closing Date sufficient to satisfy the condition to Closing
contemplated in Section 8.01(c), Buyer or Sellers shall have the right to

 

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exclude the Courtyard Suffolk and Towneplace Suites Suffolk hotels, and their
related Purchased Assets, from the assets to be acquired by Buyer hereunder and
to adjust the Purchase Price and Closing Payment to reflect such exclusion, in
which event such hotels shall become “Excluded Hotels” for all purposes of this
Agreement, including Sections 6.02 and 6.03 hereof; provided that
notwithstanding the foregoing, Sellers shall only have the right to exclude the
Courtyard Suffolk and Towneplace Suites Suffolk hotels from the purchase and
sale transactions contemplated hereunder under this Section 5.14 during the
initial 30-day period following the date of this Agreement and thereafter, Buyer
shall have the sole right to so exclude the Courtyard Suffolk and Towneplace
Suites Suffolk hotels from the purchase and sale transactions contemplated
hereunder under this Section 5.14.

Section 5.15 Holiday Inn Oceanside. Sellers shall exercise reasonable efforts
(and Buyer shall cooperate with Sellers) to deliver required notices with
respect to the discharge of Indebtedness related to the Purchased Hotel known as
“Holiday Inn Oceanside” (the “Oceanside Indebtedness”) or to otherwise enter
into an arrangement with the trustee under the Oceanside Indebtedness so as to
permit the Closing of the purchase and sale of the Holiday Inn Oceanside to
occur simultaneously with the Initial Closing. Without limiting the foregoing,
Sellers shall deliver notice of the prepayment of the Oceanside Indebtedness in
accordance with the terms thereof on the last day of the Due Diligence Period
unless the Parties shall agree to deliver such notice on another date. In the
event the 30-day notice period for prepayment of the Oceanside Indebtedness
shall not have expired on such date as all conditions to the Initial Closing
shall have been satisfied (or Sellers shall not have otherwise arranged for the
prepayment of the Oceanside Indebtedness on the Initial Closing Date), the
closing of the Holiday Inn Oceanside and its related Purchased Assets shall not
occur on the Initial Closing Date but shall be postponed until the date upon
which the Oceanside Indebtedness is permitted to be discharged in full (the
“Oceanside Closing”) and the Closing Payment paid on the Initial Closing Date
shall be reduced accordingly; provided that all conditions to Closing set forth
herein shall be applicable to the Oceanside Closing as if the Oceanside Closing
were the Initial Closing hereunder. In such event, Sellers shall deliver notice
to holders of the Oceanside Indebtedness with respect to the repayment thereof
on or prior to the Initial Closing Date. During the period between the Initial
Closing and the Oceanside Closing, the Holiday Inn Oceanside shall be subject to
all covenants, obligations and other provisions under this Agreement pending the
Oceanside Closing as if the Initial Closing had not yet occurred; provided that
the Holiday Inn Oceanside shall be managed by Buyer (or an Affiliate of Buyer)
during such period as if the Holiday Inn Oceanside were an Excluded Hotel
hereunder. In the event this Agreement is terminated after the Initial Closing
but prior to the Oceanside Closing for any reason, the Holiday Inn Oceanside
shall be an “Excluded Hotel” for all purposes of this Agreement, including
Sections 6.02 and 6.03.

Section 5.16 Charlottesville Courtyard. Sellers shall exercise reasonable
efforts (and Buyer shall cooperate with Sellers) to obtain the consent of the
lender under the Indebtedness related to the Purchased Hotel known as
“Charlottesville Courtyard” (the “Charlottesville Indebtedness”) to discharge
the Charlottesville Indebtedness on the Closing Date notwithstanding the lockout
period for prepayment of such Indebtedness; provided that such arrangement shall
be acceptable to Buyer and Sellers (provided that Sellers shall approve any
arrangement with the lender under the Charlottesville Indebtedness providing for
the repayment and discharge of the Charlottesville Indebtedness on the Initial
Closing Date upon the payment of all principal, interest thereon through the end
of the lockout period and any applicable

 

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prepayment premium or other prepayment consideration in accordance with the
provisions of the applicable loan documents). In the event the Parties are
unable to enter into such an arrangement with the lender under the
Charlottesville Indebtedness prior to the Closing Date on terms reasonably
acceptable to Buyer and Sellers, the closing of the Charlottesville Courtyard
and its related Purchased Assets shall not occur on the Initial Closing Date but
shall be postponed until the date upon which the Charlottesville Indebtedness is
permitted to be discharged in full (the “Charlottesville Closing”) and the
Closing Payment paid on the Initial Closing Date shall be reduced accordingly;
provided that all conditions to Closing set forth herein shall be applicable to
the Charlottesville Closing as if the Charlottesville Closing were the Initial
Closing hereunder. Notwithstanding any provision of this Agreement to the
contrary, in the event the Charlottesville Closing shall not take place
simultaneously with the Initial Closing, the Purchase Price shall be reduced in
the amount of $500,000, representing an estimate of the net operating income
(less debt service) of the Charlottesville Courtyard attributable to the period
between the Initial Closing and the Charlottesville Closing. During the period
between the Initial Closing and the Charlottesville Closing, the Charlottesville
Courtyard shall be subject to all covenants, obligations and other provisions
under this Agreement pending the Charlottesville Closing as if the Initial
Closing had not yet occurred; provided that the Charlottesville Courtyard shall
be managed by Buyer (or an Affiliate of Buyer) during such period as if the
Charlottesville Courtyard were an Excluded Hotel hereunder. In the event this
Agreement is terminated after the Initial Closing but prior to the
Charlottesville Closing for any reason, the Courtyard Charlottesville shall be
an “Excluded Hotel” for all purposes of this Agreement, including Sections 6.02
and 6.03.

Section 5.17 JP Expenses. With respect to any amounts actually paid by Sellers
to Jefferson Pilot or its Affiliates, either (A) as purchase price for the
Jefferson Pilot Land or (B) as a prepayment fee due in connection with the
repayment of the JP Indebtedness, including associated fees and expenses,
including legal fees (collectively, the “JP Expenses”):

(a) Buyer shall pay 100% of such JP Expenses up to a maximum amount of
$8,000,000; and

(b) Buyer shall pay 50% of such JP Expenses greater than $8,000,000 and less
than or equal to $10,000,000;

provided that it is acknowledged and agreed that Sellers shall be solely
responsible, and Buyer shall have no liability, for (x) any JP Expenses in
excess of $10,000,000 or (y) any amounts of principal, interest or other amounts
(other than prepayment fees) paid by Sellers in connection with the repayment of
the JP Indebtedness. Prior to the Closing Date, Sellers shall deliver to Buyer
an invoice of all JP Expenses hereunder, together with documentary or other
evidence reasonably acceptable to Buyer evidencing such JP Expenses.

ARTICLE 6

FURTHER COVENANTS AND AGREEMENTS OF THE PARTIES

Section 6.01 Noncompetition. Each of the Guarantor and each Seller agrees that
from the Initial Closing Date until the second anniversary of the Initial
Closing Date, neither it nor any

 

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of its Affiliates shall directly or indirectly control, engage in, finance,
invest in, construct, manage, operate or own any hotel, hotel management company
or related business anywhere in the Commonwealth of Virginia or Wilmington,
North Carolina (collectively, “Competing Operations”); provided that with
respect to any Purchased Hotel subject to a Delayed Closing, the applicable
Sellers shall be permitted to own and operate such Purchased Hotel in the
ordinary course of business (and subject to the provisions of Section 5.01)
between the Initial Closing Date and the applicable Closing Date for such
Purchased Hotel. Notwithstanding the foregoing, this Section 6.01 shall not
prohibit Guarantor, Sellers or their Affiliates, directly or indirectly, from
continuing to own and operate the Excluded Hotels. Guarantor shall be permitted
to redevelop the Excluded Hotel known as the Holiday Inn Sunspree, located on
39th Street in Virginia Beach, Virginia (the “Holiday Inn Sunspree”), including
partial and complete demolition and reconstruction and redevelopment under any
brand.

Section 6.02 Right of First Refusal. In the event Guarantor, Sellers or any of
their Affiliates shall, at any time prior to or after the Initial Closing, and
for a period of 10 years after the Initial Closing Date, desire to sell any of
the Excluded Hotels (other than the Comfort Inn, Buxton) or any of Guarantor’s,
Sellers’ or their Affiliates’ ownership interests in the Excluded Hotels (other
than the Comfort Inn, Buxton) Buyer shall have a right of first refusal with
respect to such sale and purchase in accordance with the procedures set forth on
Schedule 6.02.

Section 6.03 Management of Excluded Hotels. At the Closing, Buyer shall assume
the applicable Management Company Contract for each Excluded Hotel. Tidewater
and Guarantor shall use commercially reasonable efforts to obtain, prior to the
applicable Closing, the consent and approval of each of the franchisors and
lenders to the Excluded Hotels, if applicable, with respect to the assumption by
Buyer of the Management Company Contracts for the Excluded Hotels at Closing. At
the Initial Closing, Buyer and each Construction Hotel shall enter into a
services agreement pursuant to which Buyer (or an Affiliate of Buyer) shall
provide “pre-opening” services to such Construction Hotel (collectively, the
“Pre-Opening Services Agreements”). It is acknowledged and agreed that if any
Construction Hotel that becomes an Excluded Hotel hereunder shall be sold by the
applicable Seller to a third party (and Buyer shall have refused the right to
purchase such Construction Hotel in accordance with Section 6.02), the
applicable Seller shall have the right to terminate the Management Company
Contract associated therewith simultaneously with the closing the sale of such
Construction Hotel upon written notice to Buyer.

Section 6.04 Laundry Services. After the Closing Date, Buyer, through the
Laundry Facility, shall provide laundry services to each of the Purchased Hotels
and Excluded Hotels currently serviced by the Laundry Facility. Such laundry
services with respect to the Excluded Hotels shall be provided under the
applicable Management Company Contract. Buyer shall provide the laundry services
to all Purchased Hotels and Excluded Hotels serviced by the Laundry Facility at
rates based on an equitable “per occupied room” allocation of costs among all of
such hotels.

Section 6.05 Parking Lot Lease. At the Closing, the Buyer and LaPlaya Investment
Associates, LLC (the “Parking Lot Lessee”) will enter into a lease agreement
(the “Parking Lot Lease Contract”) pursuant to which the Buyer shall lease
parking spaces to the Residence Inn located at 3217 Atlantic Avenue, Virginia
Beach, Virginia 23451(the “Residence Inn”). The

 

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terms of the Parking Lot Lease Contract shall be substantially similar to those
set forth in the existing lease between the applicable Seller and the Parking
Lot Lessee; provided that the Parking Lot Lease Contract shall provide that the
Parking Lot Lessee shall, upon not less than 90 days’ notice to Buyer, be
entitled to terminate the Parking Lot Lease Contract, or to reduce the number of
parking spaces leased thereunder, in the event the Parking Lot Lessee shall
purchase or lease another parking lot for use in connection with the operation
of such Residence Inn and shall provide that the Parking Lot Lessee shall be
entitled to assign the Parking Lot Lease Contract in connection with the Parking
Lot Lessee’s sale of the Residence Inn.

Section 6.06 Mechanics Liens. If at any time after the Closing Date or the
Delayed Closing, as applicable, any mechanics’, laborers’, or materialmen’s lien
is filed against any Real Property or any part thereof for work attributable to
the period before the Closing Date, Sellers shall cause such lien to be
discharged by payment, bonding or otherwise as provided by law within 10 days
after receipt of notice that such lien was filed. Sellers, upon notice and
written request from Buyer, shall also defend Buyer, at Sellers’ expense,
against any action, suit, or proceeding brought for the enforcement of any such
lien and shall pay damages and satisfy and discharge any judgment entered in
such action, suit, or proceeding and save Buyer harmless from any liability,
claims or damages resulting therefrom.

Section 6.07 Confidentiality. All confidential or proprietary information
(collectively, “Confidential Information”) acquired (x) by Buyer or any of its
representatives with respect to Sellers or the Purchased Assets, whether
delivered by Sellers or any of their representatives or obtained by Buyer as a
result of its inspection of the Purchased Assets or otherwise, or (y) by Sellers
or any of their representatives with respect to Buyer or its Affiliates, whether
delivered by Buyer or any of its representatives or otherwise obtained by
Sellers, shall be maintained in confidence by the receiving party and shall not
be disclosed unless, upon the advice of counsel, such receiving party is
required by Applicable Law to disclose any such Confidential Information (in
which the case the receiving party shall notify the disclosing party of such
requirement and shall use reasonable commercial efforts to obtain confidential
treatment of such Confidential Information); provided that, notwithstanding the
foregoing, Buyer is entitled to disclose the Confidential Information to
potential lenders, investors and to advisors and consultants assisting Buyer in
this transaction provided Buyer has advised such lenders, investors, advisors
and consultants of the confidential nature of the Confidential Information and
used commercially reasonable efforts to obtain the agreement of such lenders,
investors, advisors and consultants to maintain such confidentiality.

Section 6.08 Employees and Offers of Employment. At least 10 Business Days prior
to each Closing Date, Sellers shall deliver to Buyer a true and complete list of
the name, address, date of hire, title, location, compensation and benefits
coverage (including under all Seller Employee Plans) of each Employee associated
with the Purchased Assets being purchased and sold at such Closing (the
“Employee Schedule”), which shall indicate any Employees on a leave of absence
or otherwise not actively performing services for the applicable Sellers or
their Affiliates as of the Closing Date. On or prior to each Closing Date, Buyer
shall offer immediate employment in writing to each of the Employees identified
on the Employee Schedule who are employed by the applicable Sellers or their
Affiliates as of such Closing Date, which employment shall be effective upon the
Closing Date. With respect to any Employee identified on such Employee Schedule
who is not actively at work on the applicable Closing Date, Buyer

 

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shall offer employment in writing to such Employee on the applicable Closing
Date, which employment shall be effective as of the date on which such Employee
is prepared to return to active employment (provided that each such inactive
Employee must return to active employment within three months following the
applicable Closing Date). Each such written offer shall: (i) advise the
Employees of the terms and conditions of such employee’s position with Buyer;
(ii) state, among other things, an annual base salary (or, in the case of hourly
Employees, the base hourly wage rate payable to such person); and (iii) include
a summary of benefits to which the Employee would be entitled, which benefits
shall be comparable, when taken as a whole, to those to which similarly situated
employees of Buyer and its Affiliates are entitled. The employees who accept
Buyer’s offer of employment and are employed by Buyer are hereinafter
collectively referred to as the “Transferred Employees.” Buyer agrees to
indemnify and hold harmless Sellers and their Affiliates from and against any
and all claims, penalties, damages, liabilities, actions, costs and expenses
(including attorneys fees) under the Worker Adjustment and Retraining
Notification Act, 29 U.S.C. Section 2101 et seq. (“WARN”) arising out of Buyer’s
actions after the Closing Date.

Section 6.09 Nonsolicitation. Guarantor and Sellers agree that until the second
anniversary of the Closing Date or the Delayed Closing Date, as applicable,
neither Guarantor, Sellers nor any of their Affiliates shall induce, solicit, or
encourage any Transferred Employee to leave the employ of Buyer or its
Affiliates; provided that, the foregoing provision will not prevent Guarantor,
Sellers or any of their Affiliates from employing any Transferred Employee who
contacts Guarantor, Sellers or such Affiliates in response to a general
solicitation of employment made by Guarantor, Sellers or their Affiliate in a
trade journal or other publication not targeted at any Transferred Employees.

Section 6.10 Commercially Reasonable Efforts; Further Assurances. Subject to the
terms and conditions of this Agreement, Buyer, Guarantor and Sellers (i) will
use their commercially reasonable efforts to take, or cause to be taken, all
actions and to do, or cause to be done, all things necessary or desirable under
Applicable Laws or otherwise to consummate the transactions contemplated by this
Agreement and the other Transaction Agreements, and (ii) agree to execute and
deliver, or cause to be executed and delivered, such other documents,
certificates, agreements and other writings as may be reasonably necessary after
the Initial Closing or the Delayed Closing, as applicable, to implement
expeditiously the transactions contemplated by this Agreement and to vest in
Buyer good, valid and marketable title to the Purchased Assets.

Section 6.11 Public Announcements. Neither Party will issue any press release or
make any public statement with respect to this Agreement, the other Transaction
Agreements or the transactions contemplated hereby or thereby without the prior
written consent of the other Party unless required under Applicable Law.

 

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ARTICLE 7

TAX MATTERS

Section 7.01 Tax Cooperation; Allocation of Taxes.

(a) Sellers and Buyer agree to furnish or cause to be furnished to each other,
upon request, as promptly as practicable, such information and assistance
relating to the Purchased Assets (including access to books and records) as is
reasonably necessary for the filing of all Tax Returns, the making of any
election relating to Taxes, the preparation for any audit by any Tax Authority,
and the prosecution or defense of any claim, suit or proceeding relating to any
Tax; provided, however, neither Party shall be required to provide copies of any
Tax Returns to the other Party. Sellers and Buyer shall retain all books and
records with respect to Taxes pertaining to the Purchased Assets for a period of
at least six years following the Closing Date or the Delayed Closing Date, as
applicable. Sellers and Buyer shall cooperate with each other in the conduct of
any audit or other proceeding relating to Taxes involving the Purchased Assets.

(b) All real property Taxes, personal property Taxes, special and general
assessments, vault charges, retail sales, occupancy and liquor Taxes and similar
ad valorem obligations levied with respect to the Real Property or the Purchased
Assets for a taxable period that begins before and ends on or after the
applicable Closing Date (collectively, the “Apportioned Tax Obligations”), shall
be apportioned between Sellers and Buyer based on the number of days of such
taxable period included in the Pre-Closing Tax Period and the number of days of
such taxable period after the applicable Closing Date (with respect to any such
taxable period, the “Post-Closing Tax Period”). Sellers shall be liable for the
proportionate amount of such Taxes that is attributable to the Pre-Closing Tax
Period, and Buyer shall be liable for the proportionate amount of such Taxes
that is attributable to the Post-Closing Tax Period.

(c) All excise, sales, use, value added, VAT, stamp duty, registration stamp,
recording, documentary, conveyancing, franchise, property, bulk sales, transfer,
grantor’s and similar Taxes, levies, charges and fees (collectively, “Transfer
Taxes”) incurred in connection with the purchase and sale of the Purchased
Assets in accordance with this Agreement shall be borne one-half by Sellers and
one-half by Buyer; provided that Guarantor and Sellers shall be solely
responsible for any federal, state, local or foreign, income, gain or similar
Taxes incurred as a result of the sale of the Purchased Assets to Buyer
hereunder. Buyer and Sellers shall cooperate in providing each other with any
appropriate resale exemption certifications and other similar documentation.

(d) Apportioned Tax Obligations and Transfer Taxes shall be timely paid, and all
applicable filings, reports and returns shall be filed, as provided by
Applicable Law. The paying Party shall be entitled to reimbursement from the
non-paying Party in accordance with Section 7.01(b) or 7.01(c), as the case may
be. Upon payment of any such Apportioned Tax Obligation or Transfer Tax, the
paying Party shall present a statement to the non-paying Party setting forth the
amount of reimbursement to which the paying Party is entitled under
Section 7.01(b) or 7.01(c), as the case may be, together with such supporting
evidence as is reasonably necessary to calculate the amount to be reimbursed.
The non-paying Party shall make such reimbursement promptly but in no event
later than 10 days after the presentation of such statement. Any payment not
made within such time shall bear interest from and including the Closing Date or
the Delayed Closing Date, as applicable, to and including the date of payment at
a rate per annum equal to the Prime Rate as published in the Wall Street
Journal, Eastern Edition in effect on the Closing Date plus 1.0%. Such interest
shall be payable at the same time as the payment to which it relates and shall
be calculated daily on the basis of a calendar year of 360 days and the actual
number of days elapsed.

 

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ARTICLE 8

CONDITIONS TO CLOSING

Section 8.01 Conditions to Obligations of Each Party. The obligations of each
Party to consummate each Closing are subject to the satisfaction (or waiver by
each Party) of the following conditions on or prior to the Closing Date for such
Closing:

(a) no provision of any Applicable Law and no judgment, injunction, order or
decree issued by a court or other Governmental Authority of competent
jurisdiction shall prohibit the Closing;

(b) no action or proceeding shall be pending by any Governmental Authority that
seeks to prohibit the Closing, or to impose damages or obtain other relief in
connection with the transactions contemplated by this Agreement;

(c) the Parties shall have obtained the consent and approval of each of the
lenders under the Assumed Indebtedness with respect to the assumption of such
Assumed Indebtedness by Buyer, together with a release by each such lender of
the applicable Seller under such Assumed Indebtedness with respect to actions or
omissions occurring from and after the applicable Closing; and

(d) prior to or simultaneously with the Closing, (i) Sellers shall have acquired
the Jefferson Pilot Land from Jefferson Pilot or its Affiliates, (ii) the
Courtyard North shall have been excluded from the purchase and sale transactions
contemplated herein by Sellers in accordance with Section 5.13(a), or (iii) the
Courtyard North shall have been excluded from the purchase and sale transactions
contemplated herein by Buyer in accordance with Section 5.13(b).

Section 8.02 Conditions to Obligations of Buyer. The obligations of Buyer to
consummate the Initial Closing are subject to the satisfaction (or waiver by
Buyer) of the following further conditions:

(a) (i) Guarantor and Sellers shall have performed in all material respects all
of their obligations under this Agreement required to be performed by Guarantor
and Sellers at or prior to the Initial Closing, (ii) the representations and
warranties of Guarantor and Sellers contained in this Agreement shall be true
and correct in all material respects (except that representations and warranties
that by their terms are qualified by materiality or similar qualifications shall
be true and correct in all respects) at and as of the date of this Agreement and
as of the Closing Date, as if made at and as of each such date, except that
those representations and warranties that by their express terms are made as of
a specific date shall be required to be true and correct only as of such date,
and (iii) Buyer shall have received a certificate signed by Guarantor, and by an
officer or other authorized representative of each Seller, to the foregoing
effect;

 

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(b) Sellers shall have obtained each of the Required Consents;

(c) upon payment of the premiums therefor, Buyer shall be able to obtain a Title
Policy pursuant to the applicable Title Commitment for each parcel of Owned Real
Property included in the applicable Closing (each, a “Title Policy”), which
Title Policy shall (i) be in an amount at least equal to the portion of the
Purchase Price allocable to the value of such Owned Real Property, as shown in
Schedule 2.06(b), (ii) show no Liens of any kind, other than (A) applicable
zoning regulations and ordinances, (B) liens for Taxes, assessments and
governmental charges not yet due and payable, (C) liens for water and sewer
service not yet due and payable and (D) the Permitted Exceptions, if any,
(iii) include such additional endorsements as Buyer reasonably may request, and
(iv) with respect to any Permitted Exceptions, affirmatively insure that use of
such Owned Real Property as constructed does not violate such Permitted
Exceptions and that any future violation thereof will not result in a forfeiture
of Buyer’s interest in such Owned Real Property;

(d) if Sellers shall have agreed to take the actions necessary to eliminate any
exceptions to title to which Buyer has objected in accordance with Section 5.03
or which Sellers are required to eliminate, such exceptions shall have been
removed prior to or at Closing;

(e) all Non-Assumed Indebtedness shall have been repaid and discharged in full
and any Liens upon any of the Purchased Assets (other than Liens with respect to
Assumed Indebtedness) shall have been released and discharged in full prior to
or simultaneously with the Closing;

(f) with respect to each Purchased Hotel included in the Initial Closing, either
(i) the applicable Seller shall have transferred and assigned to Buyer the
Assumed Franchise Agreement for such Purchased Hotel, or (ii) Buyer shall have
entered into a franchise agreement reasonably acceptable to Buyer to replace the
Terminated Franchise Agreement for such Purchased Hotel, as the case may be;

(g) Sellers shall have obtained the consent of each Ground Landlord under the
Ground Leases to the assignment of the Ground Leases to Buyer (to the extent
required by such Ground Lease) and shall have delivered to Buyer each Ground
Landlord Estoppel; and

(h) Sellers (or their applicable Affiliates) shall have executed and delivered,
on or before the Closing Date, each of the Transaction Agreements and the other
Closing deliveries that are required to be executed and/or delivered by Sellers
and their Affiliates.

Section 8.03 Conditions to Obligations of Sellers and Guarantor. The obligations
of Sellers and Guarantor to consummate the Initial Closing are subject to the
satisfaction (or waiver by Sellers and Guarantor) of the following further
conditions:

(a) (i) Buyer shall have performed in all material respects all of its
obligations under this Agreement required to be performed by it at or prior to
the Initial Closing, (ii) the representations and warranties of Buyer contained
in this Agreement shall be true and correct in all material respects (except
that representations and warranties that by their terms are qualified by
materiality or similar qualifications shall be true and correct in all respects)
at and as of the date of this Agreement and as of the Closing Date as if made at
and as of each such date, except

 

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that those representations and warranties that by their express terms are made
as of a specific date shall be required to be true and correct only as of such
date, and (iii) Sellers shall have received a certificate signed by an officer
or other authorized representative of Buyer to the foregoing effect;

(b) Buyer (or its applicable Affiliates) shall have executed and delivered, on
or before the Closing Date, each of the Transaction Agreements and the other
Closing deliveries that are required to be executed and/or delivered by Buyer
and its Affiliates;

(c) the Terminated Franchise Agreements related to the Purchased Hotels included
in the Initial Closing shall have been terminated; and

(d) subject to Section 8.05, with respect to each Excluded Hotel, the applicable
franchisor and lender to such Excluded Hotel shall have consented to and
approved the assumption by Buyer of the Management Company Contract for such
Excluded Hotel (to the extent required).

Section 8.04 Conditions to Delayed Closings. In addition to the conditions to
the obligations of the Parties set forth in Section 8.01 above:

(a) the obligations of Buyer to consummate each Delayed Closing are subject to
the satisfaction (or waiver by Buyer) of the following conditions:

(i) (A) Guarantor and Sellers shall have performed in all material respects all
of their obligations under this Agreement required to be performed by Guarantor
and Sellers at or prior to such Delayed Closing, (B) the representations and
warranties of Guarantor and Sellers contained in this Agreement shall be true
and correct in all material respects (except that representations and warranties
that by their terms are qualified by materiality or similar qualifications shall
be true and correct in all respects) at and as of the date of this Agreement and
as of such Delayed Closing Date (but only with respect to the applicable
Construction Hotel and related Purchased Assets), as if made at and as of each
such date, except that those representations and warranties that by their
express terms are made as of a specific date shall be required to be true and
correct only as of such date, and (C) Buyer shall have received a certificate
signed by Guarantor, and by an officer or other authorized representative of
each Seller, to the foregoing effect;

(ii) upon payment of the premiums therefor, Buyer shall be able to obtain a
Title Policy pursuant to the applicable Title Commitment for each parcel of
Owned Real Property included in such Delayed Closing, which Title Policy shall
(A) be in an amount at least equal to the portion of the Purchase Price
allocable to the value of such Owned Real Property, as shown in Schedule
2.06(b), (B) show no Liens of any kind, other than (1) applicable zoning
regulations and ordinances, (2) liens for Taxes, assessments and governmental
charges not yet due and payable, (3) liens for water and sewer service not yet
due and payable and (4) the Permitted Exceptions, if any, (C) include such
additional endorsements as Buyer reasonably may request, and (D) with respect to
any Permitted Exceptions, affirmatively insure that use of such Owned Real
Property as constructed does not violate such Permitted Exceptions and that any
future violation thereof will not result in a forfeiture of Buyer’s interest in
such Owned Real Property;

 

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(iii) if Sellers shall have agreed to take the actions necessary to eliminate
any exceptions to title to which Buyer has objected in accordance with
Section 5.03 or which Sellers are required to eliminate, such exceptions shall
have been removed prior to or at such Delayed Closing;

(iv) with respect to the Construction Closings, each Construction Hotel included
in the applicable Delayed Closing shall have received a valid Certificate of
Occupancy on or before December 31, 2008, with respect to the Marriott
Chesapeake, and on or before June 30, 2009, with respect to the Fairfield Inn
Wilmington;

(v) with respect to the Construction Closings, each Construction Hotel shall
have been completed in compliance with the applicable “brand” standards, to be
determined by Buyer using its reasonable discretion; and

(vi) with respect to the Construction Closings, (i) with respect to the Marriott
Chesapeake, such Construction Hotel shall contain not fewer than 225 guest
rooms, and (ii) with respect to the Fairfield Inn Wilmington, such Construction
Hotel shall contain not fewer than 122 guest rooms;

(vii) any Liens (other than Permitted Liens) upon applicable Purchased Hotels or
any of their Purchased Assets related to any Indebtedness shall have been
released and discharged in full prior to or simultaneously with the Delayed
Closing;

(viii) with respect to each Purchased Hotel included in the Delayed Closing,
either (i) the applicable Seller shall have transferred and assigned to Buyer
the Assumed Franchise Agreement for such Purchased Hotel, or (ii) Buyer shall
have entered into a franchise agreement reasonably acceptable to Buyer to
replace the Terminated Franchise Agreement for such Purchased Hotel, as the case
may be (provided that Buyer shall exercise commercially reasonable efforts to
reach agreement with each franchisor with respect to each Purchased Hotel prior
to the Initial Closing); and

(ix) Sellers (or their applicable Affiliates) shall have executed and delivered,
on or before the Delayed Closing Date, each of the Transaction Agreements and
the other Closing deliveries that are required to be executed and/or delivered
by Sellers and their Affiliates in connection with such Delayed Closing.

(b) the obligations of Sellers and Guarantor to consummate each Delayed Closing
are subject to the satisfaction (or waiver by Sellers and Guarantor) of the
following condition: (i) Buyer shall have performed in all material respects all
of its obligations under this Agreement required to be performed by Buyer at or
prior to such Delayed Closing, (ii) the representations and warranties of Buyer
contained in this Agreement shall be true and correct in all material respects
(except that representations and warranties that by their terms are qualified by
materiality or similar qualifications shall be true and correct in all respects)
at and as of the date of this Agreement and as of such Delayed Closing Date, as
if made at and as of each such date, except that those representations and
warranties that by their express terms are made as of a

 

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specific date shall be required to be true and correct only as of such date, and
(iii) Sellers and Guarantor shall have received a certificate signed by an
officer or other authorized representative of Buyer to the foregoing effect.

Notwithstanding anything herein to the contrary (i) in the event Sellers fail to
receive a Certificate of Occupancy for the Marriott Chesapeake on or before
June 30, 2009, Buyer shall have no further obligation to purchase such hotel
hereunder and such hotel shall become an Excluded Hotel for all purposes of this
Agreement, and (ii) in the event that Sellers fail to receive a Certificate of
Occupancy for the Fairfield Inn Wilmington on or before December 31, 2009, Buyer
shall have no further obligation to purchase such hotel hereunder and such hotel
shall become an Excluded Hotel for all purposes of this Agreement.

Section 8.05 Management Agreements for Excluded Hotels. Notwithstanding the
provisions of Section 8.03(d), in the event all conditions to the Initial
Closing other than the condition set forth in Section 8.03(d) as to any Excluded
Hotel shall be satisfied, and if Buyer shall agree to assume on the applicable
Closing Date the existing Management Company Contract with respect to such
Excluded Hotel in accordance with its terms, the condition to Sellers’
obligation to consummate the Closing set forth in Section 8.03(d) shall be
deemed satisfied in all respects with respect to such Excluded Hotel. In such
event, if Sellers are unable to obtain any required consent or approval of the
applicable franchisor or lender to any such Excluded Hotel to Buyer’s assumption
of the Management Company Contract with respect to such Excluded Hotel, neither
Buyer nor its Affiliates shall provide management services to such Excluded
Hotel after the applicable Closing Date and the Purchase Price shall be reduced
in the amount attributed to the management of such Excluded Hotel on Schedule
2.06(b) hereto; provided that (i) the failure of such franchisor or lender to
approve or consent to Buyer’s assumption of the Management Company Contract
shall not constitute a condition to Sellers’ obligation to consummate the
Closing, (ii) to the extent requested by the applicable Seller or Guarantor,
Buyer shall license back to the applicable Seller or Guarantor the name
“Tidewater Hotels & Resorts” for purposes of allowing such applicable Seller or
Guarantor to provide management services to such Excluded Hotel, and (iii) any
such provision by the applicable Seller or Guarantor of management services to
such Excluded Hotel shall not constitute a violation of the provisions of
Section 6.01 hereof.

ARTICLE 9

SURVIVAL; INDEMNIFICATION

Section 9.01 Survival. The covenants and agreements contained in this Agreement
that, by their terms, are to have effect after the Closing Date or Delayed
Closing Date, as applicable, shall survive for the period contemplated by such
covenants and agreements, or if no period is so contemplated, indefinitely. The
representations and warranties of the Parties contained in this Agreement, and
the right to make indemnification claims with respect thereto, shall survive the
Initial Closing or the Delayed Closing, as applicable, until the date that is 12
months after the Closing Date or the Delayed Closing Date, as applicable;
provided that the representations and warranties, and the right to make
indemnification claims with respect thereto (i) made by Sellers in Sections 3.01
(Corporate Existence and Power), 3.02 (Corporate Authorization) and 3.08 (Title)
shall survive the Closing indefinitely, (ii) made by Buyer in Sections 4.01
(Corporate

 

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Existence and Power) and 4.02 (Corporate Authorization) shall survive the
Closing indefinitely, and (iii) made by Seller in Sections 3.16 (Employee
Matters), 3.17 (Employee Benefit Plans), 3.18 (Environmental Matters) and 3.20
(Taxes) shall survive the Closing until 90 days after expiration of the statute
of limitations applicable to the matters covered thereby (giving effect to any
waiver, mitigation or extension thereof), if later. Notwithstanding the
preceding sentence, any representation or warranty in respect of which indemnity
may be sought under this Agreement shall survive the time at which it would
otherwise terminate pursuant to the preceding sentence, if notice of the
inaccuracy thereof giving rise to such right of indemnity shall have been given
to the Party against whom such indemnity may be sought in accordance with
Section 9.03(a) prior to such time.

Section 9.02 Indemnification.

(a) After each Closing, each Seller, with respect to its itself and each of its
Purchased Assets only, and Guarantor, with respect to itself only, shall
indemnify Buyer and its Affiliates, and each of such Person’s agents, including
accountants, counsel, directors, officers, employees and consultants (“Buyer
Indemnified Parties”) against and hold each of them harmless from any and all
damage, loss, liability and expense (including reasonable expenses of
investigation and reasonable attorneys’ fees and expenses in connection with any
action, suit or proceeding), whether or not arising due to third party claims
(“Damages”) incurred or suffered by any Buyer Indemnified Parties caused by,
resulting from, arising out of or relating to:

(i) any misrepresentation or breach of any representation or warranty made by
Sellers or Guarantor in this Agreement;

(ii) any failure by Sellers or Guarantor to perform or otherwise fulfill any
agreement or covenant to be performed by Sellers or Guarantor hereunder;

(iii) any Excluded Liability;

(iv) the ownership or operation of the Purchased Assets prior to the Closing
Date or Delayed Closing Date, as applicable, including (1) actions or claims
relating to damage to property or injury to or death of any person prior to the
Closing Date or the Delayed Closing Date, as applicable, or (2) any actions or
claims for any debts, liabilities or obligations with respect to actions or
omissions occurring prior to the Closing Date or the Delayed Closing Date, as
applicable;

(v) any liability for Taxes (A) of Sellers, Guarantor or any of their Affiliates
or direct or indirect investors, whether arising from the transactions
contemplated in this Agreement or the Transaction Agreements or otherwise;
(B) of the Acquired Business or the Purchased Assets to the extent attributable
to the applicable Pre-Closing Tax Period; or (C) arising from any of the matters
described on Schedule 3.20; or

(vi) Applicable Laws with respect to fraudulent transfer or the failure to
comply with Applicable Laws relating to bulk sales and transfers;

 

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provided that, with respect to indemnification by Sellers for any
misrepresentation or breach of any representation or warranty pursuant to
Section 9.02(a)(i), (1) each Seller shall not be liable unless the aggregate
amount of Damages exceeds the threshold amount designated for such Seller on
Schedule 9.02 hereto (the “Basket”); provided that in such event the Buyer
Indemnified Parties shall be entitled to collect the amount of the Basket in
addition to any Damages exceeding the Basket; (2) each Sellers’ maximum
liability for such indemnification shall not exceed the cap amount designated
for such Seller on Schedule 9.02 hereto (the “Cap”); and (3) Sellers shall only
have liability arising out of a misrepresentation or breach of a representation
or warranty if the matter subject to indemnification was the subject of a
written notice given by the Indemnified Party pursuant to Section 9.03(a) within
the period following the Closing Date or Delayed Closing Date, as applicable,
specified for such matter in Section 9.01. Notwithstanding the foregoing, the
Basket and Cap do not apply with respect to (I) any Claims with respect to any
misrepresentation or breach of any representation or warranty set forth in any
of Sections 3.01 (Corporate Existence and Power), 3.02 (Corporate Authorization)
or 3.08 (Title), or (II) any Claims made pursuant to Sections 9.02(a)(ii)
through (vi).

(b) After each Closing, Buyer will indemnify Guarantor, the applicable Sellers
and their Affiliates, and each of such Person’s agents, including accountants,
counsel, directors, officers and employees (“Seller Indemnified Parties”)
against and hold each of them harmless from any and all Damages incurred or
suffered by any such Seller Indemnified Parties caused by, resulting from,
arising out of or relating to:

(i) any misrepresentation or breach of any representation or warranty made by
Buyer in this Agreement;

(ii) any failure by Buyer to perform or otherwise fulfill any agreement or
covenant to be performed by Buyer hereunder;

(iii) any Assumed Liability; or

(iv) actions or omissions of Buyer with respect to the Franchise Agreements, to
the extent occurring after the Closing Date or Delayed Closing Date, as
applicable (and for the avoidance of doubt, the Buyer’s indemnification
obligations with respect to such actions or omissions shall survive
indefinitely);

provided that, with respect to indemnification by Buyer for any
misrepresentation or breach of any representation or warranty pursuant to
Section 9.02(b)(i), Buyer shall only have liability arising out of a
misrepresentation or breach of a representation or warranty if the matter
subject to indemnification was the subject of a written notice given by the
Indemnified Party pursuant to Section 9.03(a) within the period following the
Closing Date or Delayed Closing Date, as applicable, specified for such matter
in Section 9.01.

Section 9.03 Procedures.

(a) The Party seeking indemnification under Section 9.02 (the “Indemnified
Party”) agrees to give written notice to the Party against whom indemnity is
sought (the “Indemnifying Party”) promptly (and in any event within 30 days)
after the Indemnified Party becomes aware of the facts giving rise to such claim
for indemnification, or the assertion of any

 

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claim or the commencement of any suit, action or proceeding in respect of which
indemnity may be sought under such Section, and will provide the Indemnifying
Party such information with respect thereto that the Indemnifying Party may
reasonably request. The failure to so notify the Indemnifying Party shall not
relieve the Indemnifying Party of its obligations hereunder, except to the
extent such failure shall have adversely prejudiced the Indemnifying Party or
such notice is not delivered to the Indemnifying Party prior to the expiration
of the applicable survival period set forth in Section 9.01.

(b) The Indemnifying Party shall be entitled at its expense to control and
appoint lead counsel for any claim asserted by any third party (“Third Party
Claim”) by providing notice of its election to defend such Third Party Claim
within 30 days of its receipt of notice of such Third Party Claim; provided,
that any such assumption of the defense and control of a Third Party Claim shall
constitute an acknowledgement and acceptance by the Indemnifying Party of its
obligation to indemnify the Indemnified Party for all Damages arising out of
such Third Party Claim under this Article 9. If notice is given to an
Indemnifying Party of the assertion of any Third Party Claim and the
Indemnifying Party does not, within 30 days after receipt of the Indemnified
Party’s notice, give notice to the Indemnified Party of its election to assume
the defense of such Third Party Claim, the Indemnified Party may defend such
Third Party Claim and seek indemnification from the Indemnifying Party under
this Agreement for any Damages incurred in connection therewith. Notwithstanding
the provisions of this Section 9.02(b), the Indemnifying Party shall not be
entitled to control and appoint lead counsel with respect to any Third Party
Claim seeking relief other than monetary damages, including injunctive relief
and criminal penalties, and in such case, the Indemnified Party shall have the
right to control the defense and the Indemnifying Party shall cooperate with the
Indemnified Party; provided that the foregoing exception shall not apply to
Third Party Claims by or on behalf of Employees in which the equitable relief
sought is reinstatement with Sellers or equitable or injunctive relief against
Sellers.

(c) The Indemnifying Party shall not, without the prior written consent of the
Indemnified Party (which shall not be unreasonably withheld), settle any Third
Party Claim, unless the settlement releases the Indemnified Party from all
liabilities and obligations with respect to such Third Party Claim or consent to
entry of any judgment (or make any admission in connection therewith) against
such Indemnified Party or its Affiliates which (i) does not include as an
unconditional term thereof the release of the Indemnified Party and its
Affiliates from all liability with respect thereto or (ii) imposes injunctive or
other equitable relief against the Indemnified Party or any of its Affiliates.
The Indemnified Party shall be entitled at its expense to participate in the
defense of such Third Party Claim and to employ separate counsel of its choice
for such purpose. The Indemnified Party shall not settle any claim (or make any
admission or concession in connection therewith) without the prior written
consent of the Indemnifying Party (which shall not be unreasonably withheld).

(d) If the Indemnifying Party notifies the Indemnified Party in accordance with
Section 9.03(b) that the Indemnifying Party intends to defend the Indemnified
Party with respect to a Third Party Claim pursuant to this Section 9.03, upon
request by the Indemnifying Party, the Indemnified Party will, at the sole cost
and expense of the Indemnifying Party, cooperate with the Indemnifying Party and
its counsel in defending or settling the Third Party Claim the defense or
settlement of which the Indemnifying Party elects to control (including by

 

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furnishing or causing to be furnished such records, information and testimony,
and attending such conferences, discovery proceedings, hearings, trials or
appeals), as may be reasonably requested in connection therewith, and, if
appropriate and related to the Third Party Claim in question, in making any
counterclaim against the Person asserting the Third Party Claim, or any
cross-claim against any Person; provided, that neither the Indemnifying Party
nor the Indemnified Party shall have any obligation to file any amended Tax
return or Tax refund claim.

(e) In the event that an Indemnified Party determines that it has a claim for
Damages against an Indemnifying Party hereunder (other than as a result of a
Third Party Claim), the Indemnified Party shall give prompt written notice
thereof to the Indemnifying Party, specifying the amount of such claim and any
relevant facts and circumstances relating thereto. The Indemnified Party and the
Indemnifying Party shall negotiate in good faith regarding the resolution of any
disputed claims for Damages. Promptly following the final determination of the
amount of any Damages claimed by the Indemnified Party, the Indemnifying Party
shall pay such Damages to the Indemnified Party by wire transfer or check made
payable to the order of the Indemnified Party. In the event that the Indemnified
Party is required to institute legal proceedings in order to recover Damages
hereunder, the cost of such proceedings (including costs of investigation and
reasonable attorneys’ fees and disbursements) shall be added to the amount of
Damages payable to the Indemnified Party if the Indemnified Party prevails in
such proceeding, and if the Indemnifying Party prevails, the cost of such
proceedings (including costs of investigation and reasonable attorneys’ fees and
disbursements) shall be borne by the Indemnified Party and promptly reimbursed
or otherwise paid to the Indemnifying Party.

Section 9.04 Calculation of Damages.

(a) The amount of any Damages payable under Section 9.02 by the Indemnifying
Party shall be net of any amounts recovered or recoverable by the Indemnified
Party under applicable insurance policies (less any deductible) and, insofar as
permitted by Applicable Law, shall be treated as an adjustment to the Purchase
Price.

(b) The Indemnifying Party shall not be liable under Section 9.02 for any
consequential, indirect, special or punitive Damages or any amounts for lost
profits, except to the extent payable by the Indemnified Party to a Third Party.

(c) For purposes of calculating the dollar amount of Damages to which an
Indemnified Party is entitled under this Article 9 (but not for purposes of
determining whether a representation or warranty has been breached), the terms
“material,” “materiality” and similar qualifiers shall be disregarded.

Section 9.05 Exclusivity. After each Closing, Article 9 shall provide the
exclusive remedy for any misrepresentation or breach of any representation,
warranty, covenant or other agreement or other claim arising out of this
Agreement or the transactions contemplated hereby with respect to the Purchased
Assets included in such Closing; provided that notwithstanding the foregoing,
nothing in this Agreement shall limit (a) the right of any Party (i) to pursue
an action for or to seek remedies with respect to claims for fraud or (ii) to
seek specific performance or other equitable relief, or (b) the provisions of
Section 13.14.

 

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ARTICLE 10

TERMINATION

Section 10.01 Termination.

(a) In addition to the rights of the Parties to terminate this Agreement
contained elsewhere herein, this Agreement may be terminated at any time prior
to the Initial Closing:

(i) by mutual written agreement of the Parties, in which case the Deposit shall
be returned to Buyer;

(ii) by either Party if the Initial Closing shall not have been consummated by
May 31, 2008 (the “Drop Dead Date”), in which case the Deposit shall be returned
to Buyer; provided, however, that (A) neither Party may terminate this Agreement
pursuant to this clause (ii) if the Initial Closing shall not have been
consummated by the Drop Dead Date by reason of the failure of such Party to
perform, or to cause its Affiliates to perform, in all material respects any of
its or their respective covenants or agreements contained in this Agreement; and
(B) without limiting the provisions of clause (A), Sellers may not terminate
this Agreement pursuant to this clause (ii) if the Initial Closing shall not
have been consummated by the Drop Dead Date by reason of the failure of the
conditions set forth in Sections 8.02(c) or (d) (relating to title matters) to
have been satisfied; or

(iii) by either Party in the event of a material breach by the other Party of
any representation, warranty, covenant or agreement under this Agreement, where
the effect of such breach would be to cause the conditions to the obligation to
consummate the Closing of the terminating Party to be incapable of satisfaction,
and such breach is not cured by the breaching Party within 10 Business Days of
receiving written notice from the terminating Party of the breach or alleged
breach, which written notice shall state that unless such breach is cured in
accordance with this Section 10.01(a)(iii) the terminating Party intends to
terminate this Agreement (it being understood that such 10 Business Day cure
period shall not extend the date set forth in Section 10.01(a)(ii)).

(b) This Agreement may be terminated, with respect to the obligation of the
Parties to consummate a Delayed Closing only, at any time prior to the
consummation of such Delayed Closing:

(i) by mutual written agreement of the Parties; or

(ii) by either Party in the event of a material breach by the other Party of any
representation, warranty, covenant or agreement under this Agreement, where the
effect of such breach would be to cause the conditions to the obligation to
consummate the Delayed Closing of the terminating Party to be incapable of
satisfaction, and such breach is not cured by the breaching Party within 10
Business Days of receiving written notice from the terminating Party of the
breach or alleged breach, which written notice shall state that unless such
breach is cured in accordance with this Section 10.01(b)(ii) the terminating
Party intends to terminate this Agreement.

 

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Section 10.02 Effect of Termination. If this Agreement is terminated prior to
the Initial Closing:

(a) this Agreement shall forthwith become void and of no further force or
effect, except for the following provisions, which shall remain in full force
and effect: (i) Section 6.07 (relating to confidentiality), (iii) Section 6.11
(relating to publicity), (iv) this Section 10.02, (v) Section 10.03 (Deposit),
(iv) Section 13.03 (Expenses), (v) Section 13.09 (Entire Agreement),
(vi) Section 13.05 (Governing Law), and (viii) Section 13.06 (Jurisdiction);
provided that this subsection (a) shall not apply to a termination after the
Initial Closing but before any Delayed Closing (it being understood that this
Agreement may not be terminated after the Initial Closing except with respect
only to a termination of the obligation of the Parties to consummate a Delayed
Closing, in accordance with Section 10.01(b)); and

(b) such termination shall be without liability of any Party (or any Affiliate,
stockholder, employee, director, consultant, agent or representative of such
Party) to the other Parties to this Agreement, except as otherwise provided in
this Agreement (including Section 10.03).

Section 10.03 Deposit.

(a) If this Agreement shall be terminated (x) by Buyer pursuant to
Section 10.01(a)(iii), or (y) by any Party pursuant to Section 10.01(a)(ii) and
(in the case of this clause (y)), at the time of such termination the condition
to Closing set forth in Section 8.01(d)(i) shall not have been satisfied, then
in either case Buyer, as its sole remedy in connection with any such termination
(in lieu of prosecuting an action for damages or proceeding with any other legal
course of conduct, the right to bring such actions or proceedings being
expressly and voluntarily waived by Buyer) shall have the right to receive a
return of the Deposit, and Sellers, jointly and severally, shall pay to Buyer
all of Buyer’s Expenses.

(b) If this Agreement shall be terminated by Sellers pursuant to
Section 10.01(a)(iii), Sellers and Guarantor, as their sole remedy in connection
with such termination (in lieu of prosecuting an action for damages or
proceeding with any other legal course of conduct, the right to bring such
actions or proceedings being expressly and voluntarily waived by Sellers and
Guarantor) shall have the right, subject to the provisions of this section, to
receive the Deposit as liquidated damages for Buyer’s default hereunder, it
being agreed that the damages by reason of Buyer’s default are difficult, if not
impossible, to ascertain.

(c) If this Agreement shall be terminated for any reason other than as
contemplated in Section 10.03(b), in addition to any other rights contained
herein, the Deposit shall be returned to Buyer in its entirety and neither
Sellers nor Guarantor shall have any right to receive any portion of the
Deposit.

 

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ARTICLE 11

CASUALTY OR CONDEMNATION

Section 11.01 Notice to Buyer. Each Seller agrees to give Buyer prompt notice of
any material fire or other casualty occurring at the Purchased Hotels or with
respect to any of the other Purchased Assets between the date of this Agreement
and each Closing Date.

Section 11.02 Condemnation or Casualty. If, prior to any Closing,
(a) condemnation proceedings are commenced against all or any material portion
of the Purchased Hotels, or (b) any of the Purchased Hotels are damaged by fire
or other casualty to the extent that the cost of repairing such damage shall be
$200,000 or more for any affected Purchased Hotel (or an aggregate amount of
$1,000,000 or more if more than one Purchased Hotel is affected), Buyer shall
have the right, upon notice in writing to Sellers delivered within 15 days after
actual notice of such condemnation, fire or other casualty or litigation, to
terminate this Agreement in whole or in part only as to the affected Purchased
Hotels. If a Purchased Hotel is so damaged, but Buyer elects not to terminate
this Agreement with respect to the Purchased Hotel, Buyer shall be entitled to
an assignment of all of Sellers’ direct or indirect share of the condemnation
award or the proceeds of any fire or other casualty insurance plus the amount of
any deductible under such insurance and all rent insurance proceeds (if any)
payable with respect to the Purchased Hotels relating to the period after the
applicable Closing, and Sellers shall have no obligation to repair or restore
the applicable Purchased Hotel.

Section 11.03 Risk of Loss. Subject to the provisions of this Article 11, the
risk of loss or damage to each Purchased Asset shall remain with Sellers until
the applicable Closing Date.

ARTICLE 12

APPORTIONMENTS

Section 12.01 Apportionments. Except as otherwise provided in this Agreement,
the following assets and liabilities with respect to the Acquired Business and
the Purchased Assets included in a Closing shall be apportioned between Sellers,
on one hand, and Buyer, on the other hand, as of the close of business on the
day immediately prior to the applicable Closing Date (the “Apportionment Date”):

(a) Room Revenue. All revenues received or to be received from transient guests
on account of room rents with respect to the Purchased Hotels for the period
prior to and including the Apportionment Date shall belong to Sellers (with
Buyer to remit such revenues to Seller to the extent any such revenues are paid
to Buyer following Closing; provided that any such revenues received by Buyer
shall be applied first to any indebtedness owing by the Person paying such
amount to Buyer and thereafter to such Person’s indebtedness to Sellers), and
for the period beginning on the day immediately following the Apportionment Date
such revenues shall belong to Buyer; provided, however, that room revenues for
the night beginning at “check in” time on the Apportionment Date and ending at
“check out” time on the Closing Date shall be divided evenly between Sellers and
Buyer.

 

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(b) Receivables and Payables. All accounts receivable and accounts payable
relating to the Purchased Hotels in respect of the period prior to and including
the Apportionment Date shall be for Sellers’ sole account, and Buyer shall not
be responsible to Sellers for the collection or payment of the same. All
accounts receivable and accounts payable relating to the Purchased Hotels in
respect of the period after the Apportionment Date shall be for Buyer’s sole
account, and Sellers shall not be responsible to Buyer for the collection or
payment of the same. The accounts receivable of registered guests at the
Purchased Hotels who have not checked out and were occupying rooms as of 12:01
a.m. on the Closing Date are collectively called the “Current Ledger,” and Buyer
shall pay over to Sellers, as and when received by Buyer, Sellers’ share of the
proceeds of the Current Ledger as determined in accordance with
Section 12.01(a). In the event that an amount less than the total amount due
from a guest reflected on the Current Ledger is collected by Buyer and the guest
continued in occupancy after the Apportionment Date, such amount shall be
applied first to any indebtedness owing by such person to Sellers and thereafter
to such person’s indebtedness to Buyer, except that if Sellers or any of their
Affiliates knew prior to Closing of any questions or disputes concerning any
bill on which a receivable reflected on the Current Ledger is based, then
partial payments on such bills shall be paid first to Buyer.

(c) Food and Beverage Revenue; Vending Machine Revenue. All monies received in
connection with bar and restaurant services, if any, at the Purchased Hotels
(other than amounts due from any guest) prior to and including the Apportionment
Date shall belong to Sellers. Vending machine proceeds shall be counted as close
to 11:59 p.m. on the Apportionment Date as is possible and the net amount
thereof shall be credited to Sellers at Closing.

(d) Rents and Deposits. The total amount of all prepaid room receipts and
deposits (including any interest thereon due to the Person making such deposit,
if applicable) from guests or others made as security or in connection with
future services to be rendered after the Apportionment Date, including function
receipts, deposits made under rooms agreements, deposits and advance payments
from lessees, agencies, tour operators, service providers, timesharing deposits,
and advance payments, and bonds of any kind, shall be liabilities of Sellers and
credited to the Buyer at Closing.

(e) Guests’ Property. All baggage or other property of patrons of the Purchased
Hotels checked or left in care of Sellers shall be listed in an inventory to be
prepared in duplicate and signed by the applicable Sellers’ and Buyer’s
representatives on the Closing Date. Buyer shall take possession and control of
such baggage and property as of the Closing Date, and be responsible from and
after the Closing Date and will indemnify and hold Sellers harmless from and
against all claims for all baggage and property listed in such inventory.

(f) Utilities. All Utilities, including fuel oil in the tank at the Purchased
Hotels, if any (based upon invoice cost, first in, first out), water and sewer
service charges and charges for gas, electricity and telephone, shall be
apportioned on the basis of actual current readings or, if such readings have
not been made as of the applicable Closing Date, on the basis of the most recent
bills that are available. If any apportionment is not based on an actual current
reading, then upon the taking of a subsequent actual reading, the Parties shall,
within 10 Business Days following notice of the determination of such actual
reading, readjust such apportionment and Sellers shall promptly deliver to
Buyer, or Buyer shall promptly deliver to Sellers, as the case may be, the
amount determined to be due upon such adjustment.

 

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(g) Leased Real Property. Rents and all other amounts payable by any Seller or
its Affiliates under any lease relating to Leased Real Property included in a
Closing shall be apportioned as of the Apportionment Date based on the number of
days in the month in which the Closing occurs. To the extent that any such
amounts cannot be finally determined on the applicable Closing Date, the parties
shall estimate in good faith any such amounts on the applicable Closing Date,
which shall be adjusted pursuant to Section 12.02 below.

(h) Taxes. Liabilities for Taxes shall be apportioned between Buyer and Sellers
in accordance with Section 7.01.

(i) Ground Lease. All rents and other amounts (to the extent not addressed under
another subsection of this Section 12.01) prepaid, accrued or due and payable
under the Ground Leases shall be prorated as of the applicable Apportionment
Date between Sellers and Buyer. Sellers shall receive a credit for all
assignable security deposits made by Sellers under the Ground Leases (together
with any interest thereon) that are transferred to Buyer or that remain on
deposit for the benefit of Buyer.

(j) Assumed Indebtedness. Interest accrued but unpaid under any Assumed
Indebtedness shall be apportioned between Buyer and the applicable Seller as of
the Apportionment Date. At Closing, Sellers shall receive a credit for all
amounts that are escrowed with any lender under any Assumed Indebtedness except
to the extent that a lender agrees to return such amounts to the applicable
Seller.

Section 12.02 Post-Closing Adjustment. Except as otherwise expressly provided
herein, all apportionments and adjustments shall be made in accordance with the
Uniform System of Accounts, and to the extent not inconsistent therewith, GAAP
(the “Apportionment Principles”). A computation of the adjustments shall be
jointly prepared by Sellers and Buyer prior to the applicable Closing Date and,
to the extent the exact amount of any adjustment item provided for in this
Article 12 cannot be precisely determined on the applicable Closing Date, the
Parties shall estimate the amount thereof, for purposes of computing the net
amount due Sellers or Buyer pursuant to this Article 12. Each adjustment amount
shown on the computation prepared by the Parties prior to the applicable Closing
Date, as well as each estimate made by the Parties in accordance with the
foregoing sentence, shall be paid by the applicable Party to the other on the
applicable Closing Date. With respect to each estimate made by the Parties, the
Parties shall determine the exact amount to be apportioned between the Parties
hereunder as soon as practicable upon availability of necessary bills,
assessments or other documentation, and any net credit due Buyer or Sellers, as
the case may be, shall be paid within 10 days after the final determination
thereof. Upon the request of either Buyer or Sellers, the computations provided
herein shall be reviewed by a mutually acceptable reputable accounting firm (the
“Accountants”) and reviewed by representatives of both Buyer and Sellers. All
determinations made by the Accountants shall be binding on both Sellers and
Buyer. The fees and expenses of the Accountants shall be borne one-half each by
Sellers and Buyer.

 

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ARTICLE 13

MISCELLANEOUS

Section 13.01 Notices. All notices, requests and other communications to either
Party hereunder shall be in writing (including facsimile transmission) and shall
be given or delivered personally, by facsimile with confirmation of receipt, by
mail (first class, postage prepaid), by overnight delivery using a nationally
recognized carrier or by email, to the Parties at the following addresses:

if to Buyer to:

Barceló Crestline Corporation

8405 Greensboro Drive, Suite 500

McLean, Virginia 22102

Attn: General Counsel

Fax No.: (571) 382-1754

Email: pierre.donahue@crestlinehotels.com

with a copy to:

Hogan & Hartson LLP

555 Thirteenth Street, NW

Washington, DC 20004

Attn: Elizabeth M. Donley; Bruce W. Gilchrist

Fax No.: (202) 637-5910

Email: edonley@hhlaw.com; bwgilchrist@hhlaw.com

if to Sellers or Guarantor, to:

c/o Tidewater Hotels & Resorts, Inc.

3600 Pacific Avenue

P.O. Box 718

Virginia Beach, VA 23451

Attn: Timothy. J. Stiffler, President

Fax No: (757) 428-6885

Email: tstiffler@thrvb.com

with a copy to:

Robert E. Farmer, III, Esq.

Kaufman & Canoles, PC

2101 Parks Avenue, Suite 700

Virginia Beach, VA 23451

Fax No: (757) 491-4020

Email: refarmer@kaufcan.com

 

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or to such other representative or at such other address as a Party may furnish
to the other Party in writing. All such notices, requests and other
communications shall be deemed received on the date of receipt by the recipient
thereof if received prior to 5:00 p.m. in the place of receipt and such day is a
Business Day in the place of receipt. Otherwise, any such notice, request or
communication shall be deemed not to have been received until the next
succeeding Business Day in the place of receipt.

Section 13.02 Amendments and Waivers.

(a) Any provision of this Agreement may be amended or waived if, but only if,
such amendment or waiver is in writing, which writing specifically references
the section of this Agreement to be amended or waived, and is signed, in the
case of an amendment, by each Party or in the case of a waiver, by the Party
against whom the waiver is to be effective.

(b) No failure or delay by any Party in exercising any right, power or privilege
hereunder shall operate as a waiver thereof nor shall any single or partial
exercise thereof preclude any other or further exercise thereof or the exercise
of any other right, power or privilege.

Section 13.03 Expenses. Except as otherwise provided herein, all costs and
expenses incurred in connection with negotiating, preparing and executing this
Agreement shall be paid by the Party incurring such cost or expense.

Section 13.04 Successors and Assigns. The provisions of this Agreement shall be
binding upon and inure to the benefit of the Parties hereto and thereto and
their respective successors and assigns. Sellers may not assign, delegate or
otherwise transfer any of their rights or obligations under this Agreement
without the consent of Buyer. Buyer shall have the right either to nominate one
or more Affiliates or other Persons to take title to the Purchased Assets or to
assign this Agreement in whole or in part to an Affiliate or other Person
without Sellers’ consent, upon written notice to Sellers no later than two days
prior to the Closing Date or the Delayed Closing Date, as applicable; provided
that no such assignment shall relieve Barceló Crestline Corporation of its
indemnification obligation set forth in Section 9.02(b)(iv). Following the
Initial Closing or the Delayed Closing, as applicable, each Person that takes
title to a Purchased Asset shall have all of the rights and obligations of
“Buyer” hereunder with respect to such Purchased Asset (but not with respect to
any other Purchased Asset), and Buyer shall have no further rights or
obligations hereunder with respect to such Purchased Asset.

Section 13.05 Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the Commonwealth of Virginia without regard to
the conflicts of law rules of such state.

Section 13.06 Jurisdiction. Except as otherwise expressly provided in this
Agreement, the Parties hereto agree that any suit, action or proceeding seeking
to enforce any provision of, or based on any matter arising out of or in
connection with, this Agreement or the transactions contemplated hereby shall be
brought in a federal or state court located in the Commonwealth of Virginia and
that any cause of action arising out of this Agreement shall be deemed to have
arisen from a transaction of business in the Commonwealth of Virginia, and each
of the Parties

 

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hereby irrevocably consents to the jurisdiction of such courts (and of the
appropriate appellate courts therefrom) in any such suit, action or proceeding
and irrevocably waives, to the fullest extent permitted by law, any objection
that it may now or hereafter have to the laying of the venue of any such suit,
action or proceeding in any such court or that any such suit, action or
proceeding which is brought in any such court has been brought in an
inconvenient forum. Process in any such suit, action or proceeding may be served
on any party anywhere in the world, whether within or without the jurisdiction
of any such court.

Section 13.07 Waiver of Jury Trial. EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY.

Section 13.08 Counterparts; Third Party Beneficiaries. This Agreement may be
signed in one or more counterparts, each of which shall be an original, with the
same effect as if the signatures hereto and thereto were upon the same
instrument. Any change made to any counterpart but not made to all counterparts
shall have no effect. This Agreement shall become effective when each party
hereto or thereto shall have received a counterpart hereof or thereof signed by
the other party hereto. Signatures provided by facsimile transmission shall be
deemed to be original signatures. No provision of this Agreement is intended to
confer upon any Person other than the parties hereto any rights or remedies
hereunder or thereunder.

Section 13.09 Entire Agreement. This Agreement, together with the other
Transaction Agreements, constitutes the entire agreement among the parties
hereto with respect to the subject matter hereof and supersedes all prior
agreements and understandings, both oral and written, among the parties hereto
with respect to the subject matter of this Agreement. This Agreement shall not
be construed as if prepared by one Party, but rather according to its fair
meaning as a whole, as if all Parties had prepared it.

Section 13.10 Captions. The captions herein are included for convenience of
reference only and shall be ignored in the construction or interpretation
hereof.

Section 13.11 No Other Representations. THE EXPRESS REPRESENTATIONS OF SELLER
CONTAINED IN THIS AGREEMENT ARE EXCLUSIVE AND ARE IN LIEU OF ANY OTHER
REPRESENTATION OR WARRANTY WITH RESPECT TO THE PURCHASED ASSETS. WITHOUT
LIMITING THE GENERALITY OF THE FOREGOING, EXCEPT AS EXPRESSLY SET FORTH IN THIS
AGREEMENT OR ANY AGREEMENTS ENTERED INTO BETWEEN BUYER AND SELLERS IN CONNECTION
WITH EACH CLOSING, BUYER HEREBY ACKNOWLEDGES AND AGREES THAT IT IS PURCHASING
THE PURCHASED ASSETS AND EACH PORTION THEREOF IN ITS PRESENT “AS IS/WHERE IS”
CONDITION AND WITH ALL DEFECTS AND, NEITHER SELLERS NOR ANY EMPLOYEE OR AGENT OF
SELLERS HAS MADE OR WILL MAKE, EITHER EXPRESSLY OR IMPLIEDLY, ANY
REPRESENTATIONS, GUARANTIES, PROMISES, STATEMENTS, ASSURANCES OR WARRANTIES OF
ANY KIND CONCERNING ANY OF THE FOLLOWING MATTERS (COLLECTIVELY REFERRED TO
HEREIN AS THE “PURCHASED ASSETS CONDITIONS”): (I) THE SUITABILITY OR CONDITION
OF THE PURCHASED ASSETS FOR ANY PURPOSE OR

 

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ITS FITNESS FOR ANY PARTICULAR USE, INCLUDING BUYER’S INTENDED USE; (II) THE
PROFITABILITY AND/OR FEASIBILITY OF OWNING, DEVELOPING, OPERATING AND/OR
IMPROVING THE PURCHASED ASSETS; (III) THE PHYSICAL CONDITION OF THE PURCHASED
ASSETS, INCLUDING THE CURRENT OR FORMER PRESENCE OR ABSENCE OF ENVIRONMENTAL
HAZARDS OR HAZARDOUS MATERIALS, ASBESTOS, RADON GAS, UNDERGROUND STORAGE TANKS,
ELECTROMAGNETIC FIELDS, OR OTHER SUBSTANCES OR CONDITIONS WHICH MAY AFFECT THE
PURCHASED ASSETS OR ITS CURRENT OR FUTURE USES, HABITABILITY, VALUE OR
DESIRABILITY; (IV) THE RENTAL, INCOME, COSTS OR EXPENSES THEREOF; (V) THE NET OR
GROSS ACREAGE, USABLE OR UNUSABLE, CONTAINED THEREIN; (VI) THE CONDITION OF
TITLE; (VII) THE COMPLIANCE BY THE PURCHASED ASSETS WITH APPLICABLE ZONING OR
BUILDING LAWS, CODES OR ORDINANCES, OR OTHER LAWS, RULES AND REGULATIONS,
INCLUDING ENVIRONMENTAL AND SIMILAR LAWS GOVERNING OR RELATING TO ENVIRONMENTAL
HAZARDS OR HAZARDOUS MATERIALS, ASBESTOS, RADON GAS, UNDERGROUND STORAGE TANKS,
ELECTROMAGNETIC FIELDS, OR OTHER SUBSTANCES OR CONDITIONS WHICH MAY AFFECT THE
PURCHASED ASSETS OR ITS CURRENT OR FUTURE USES, HABITABILITY, VALUE OR
DESIRABILITY; (VIII) WATER OR ANY OTHER UTILITY AVAILABILITY OR USE
RESTRICTIONS; (IX) GEOLOGIC/ SEISMIC CONDITIONS, SOIL AND TERRAIN STABILITY, OR
DRAINAGE; (X) SEWER, SEPTIC AND WELL SYSTEMS AND COMPONENTS; (XI) OTHER
NEIGHBORHOOD CONDITIONS, INCLUDING SCHOOLS, PROXIMITY AND ADEQUACY OF LAW
ENFORCEMENT AND FIRE PROTECTION, CRIME STATISTICS, NOISE OR ODOR FROM ANY
SOURCES, LANDFILLS, PROPOSED FUTURE DEVELOPMENTS, OR OTHER CONDITIONS OR
INFLUENCES WHICH MAY BE SIGNIFICANT TO CERTAIN CULTURES OR RELIGIONS; AND
(XII) ANY OTHER PAST, PRESENT OR FUTURE MATTER RELATING TO THE PURCHASED ASSETS
WHICH MAY AFFECT THE PURCHASED ASSETS OR ITS CURRENT OR FUTURE USE,
HABITABILITY, VALUE OR DESIRABILITY; PROVIDED THAT THIS SECTION 13.11 DOES NOT
AMEND, LIMIT OR OTHERWISE MODIFY ANY PROVISION OF THIS AGREEMENT, INCLUDING THE
PROVISIONS OF ARTICLE III HEREOF OR THE LIABILITIES AND OBLIGATIONS OF SELLERS
WITH RESPECT TO THE PAYMENT, PERFORMANCE, SATISFACTION, RETENTION AND DISCHARGE
IN FULL OF ALL EXCLUDED LIABILITIES.

Section 13.12 Severability. If any term or other provision of this Agreement is
held by a court of competent jurisdiction to be invalid, illegal or incapable of
being enforced under any rule of law in any particular respect or under any
particular circumstances, such term or provision shall nevertheless remain in
full force and effect in all other respects and under all other circumstances,
and all other terms, conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the Parties shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the Parties as closely as possible in an acceptable manner to the end
that the transactions contemplated hereby are fulfilled to the fullest extent
possible.

 

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Section 13.13 Individual Seller and Individual Purchased Assets. For purposes of
this Agreement, except as otherwise provided herein, (i) each of the Sellers
shall only have liability, responsibility, covenants and obligations with
respect to its portion of the Purchased Assets and shall have no liability,
responsibility, covenants or obligations whatsoever as to any Purchased Assets
owned by another Seller, (ii) subject to Section 13.14, Buyer’s rights,
interests and claims as to a portion of the Purchased Assets shall be limited to
the Seller that owns, leases or licenses, or is in possession of, such Purchased
Asset, (iii) each Purchased Hotel shall have a separate sub-closing statement
attached as schedules to the final closing statement for all Purchased Hotels,
and all charges, prorations, credits and adjustments shall be done on a separate
Purchased Hotel basis, and (iv) as between Buyer and each of the Sellers, this
Agreement shall be an independent and separate agreement with the term Purchased
Assets meaning the Purchased Assets owned, leased or licensed by, or in the
possession of, each Seller and its respective Affiliates.

Section 13.14 Guaranty. Guarantor, in his individual capacity and together with
any of his heirs, successors and assigns, hereby absolutely, unconditionally and
irrevocably guarantees, as principal obligor, and not merely as surety, to Buyer
and each of the Buyer Indemnified Parties, together with their respective
successors and assigns, the due and punctual payment in full of all obligations
of Sellers hereunder, including Sellers’ indemnification obligations under
Article 9 (collectively, the “Obligations”); provided that Guarantor’s liability
for the Obligations under this Section 13.14 shall be limited, with respect to
each Purchased Hotel, and with respect to each of the Management Company
Business, the Laundry Facility and the Parking Lot, together in each case with
all Purchased Assets related thereto, to the applicable limitations upon
liability reflected on Schedule 13.14 hereto. The foregoing obligation of
Guarantor constitutes a continuing guaranty of payment, and not of collection,
and is and shall be absolute and unconditional under any and all circumstances,
including circumstances which might otherwise constitute a legal or equitable
discharge of a surety or guarantor. Guarantor waives any right to require that
resort for payment first be had by Buyer against Sellers. The obligation of
Guarantor hereunder shall not be discharged, impaired or otherwise affected by
the failure of Buyer to assert any claim or demand against Sellers or to enforce
any remedy hereunder. Notwithstanding the foregoing, nothing in this
Section 13.14 shall create any liabilities or obligations for Guarantor to the
extent Sellers would not have liability or otherwise be responsible to Buyer
hereunder.

[Signature pages follow]

 

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IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be duly
executed by their respective authorized officers as of the day and year first
above written.

 

BARCELÓ CRESTLINE CORPORATION, a Maryland corporation By:   /s/ David L. Durbin
Name:   David L. Durbin Title:   EVP

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TIDEWATER HOTELS & RESORTS, INC., a Virginia corporation By:   /s/ Thomas J.
Lyons, Jr. Name:   Thomas J. Lyons, Jr. Title:   Chairman

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OCEANSIDE INVESTMENT ASSOCIATES, L.P., a Virginia limited partnership By:  

Oceanside, L.C.,

a Virginia limited liability company,

its General Partner

  By:   /s/ Thomas J. Lyons, Jr.   Name:   Thomas J. Lyons, Jr.   Title:  
Managing Member

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BEACHSIDE, L.C., a Virginia limited liability company By:   /s/ Thomas J. Lyons,
Jr. Name:   Thomas J. Lyons, Jr. Title:   Managing Member

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

CLEARWATER INVESTMENT ASSOCIATES, L.P., a Virginia limited partnership By:  

Clearwater Investment Associates, Inc.,

a Virginia corporation,

its General Partner

  By:   /s/ Thomas J. Lyons, Jr.   Name:   Thomas J. Lyons, Jr.   Title:  
Managing Member

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LEEWARD-PRINCESS ANNE INVESTMENT ASSOCIATES, L.L.C., a Virginia limited
liability company By:   /s/ Thomas J. Lyons, Jr. Name:   Thomas J. Lyons, Jr.
Title:   Managing Member

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

EASTWARD INVESTMENT ASSOCIATES, LLC, a Virginia limited liability company By:  
/s/ Thomas J. Lyons, Jr. Name:   Thomas J. Lyons, Jr. Title:   Managing Member

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

RIVANNA RIVER INVESTMENT ASSOCIATES, LLC, a Virginia limited liability company
By:  

Rivanna River I, LLC,

a Virginia limited liability company,

its Manager

  By:   /s/ Thomas J. Lyons, Jr.   Name:   Thomas J. Lyons, Jr.   Title:  
Managing Member

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

CAROLINA BEACH INVESTMENT ASSOCIATES, LLC, a Virginia limited liability company,
By:  

Carolina Beach Manager, Inc.,

a Virginia corporation,

its Manager

  By:   /s/ Thomas J. Lyons, Jr.   Name:   Thomas J. Lyons, Jr.   Title:  
Managing Member

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NANSEMOND CY INVESTMENT ASSOCIATES, LLC, a Virginia limited liability company
By:   /s/ Thomas J. Lyons, Jr. Name:   Thomas J. Lyons, Jr. Title:   Managing
Member

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

JAMES RIVER TPS INVESTMENT ASSOCIATES, LLC, a Virginia limited liability company
By:   /s/ Thomas J. Lyons, Jr. Name:   Thomas J. Lyons, Jr. Title:   Managing
Member

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LAKESIDE INVESTMENT ASSOCIATES, L.P.,

a Virginia limited partnership,

By:  

Lakeside, L.C.,

a Virginia limited liability company,

its General Partner

  By:   /s/ Thomas J. Lyons, Jr.   Name:   Thomas J. Lyons, Jr.   Title:  
Managing Member

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CAPE FEAR INVESTMENT ASSOCIATES, LLC, a Virginia limited liability company By:  
/s/ Thomas J. Lyons, Jr. Name:   Thomas J. Lyons, Jr. Title:   Managing Member

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

WOODLAKE INVESTMENT ASSOCIATES, LLC, a Virginia limited liability company By:  
/s/ Thomas J. Lyons, Jr. Name:   Thomas J. Lyons, Jr. Title:   Managing Member

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ATLANTIC LOT, LLC, a Virginia limited liability company By:   /s/ Thomas J.
Lyons, Jr. Name:   Thomas J. Lyons, Jr. Title:   Managing Member

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BLUEWATER CENTRAL SERVICES, LLC, a Virginia limited liability company By:   /s/
Thomas J. Lyons, Jr. Name:   Thomas J. Lyons, Jr. Title:   Managing Member