Exhibit 10.22

North Charleston, SC (Home2)

PURCHASE CONTRACT

between

THE GENERATION COMPANIES, LLC (“SELLER”)

AND

APPLE SUITES REALTY GROUP, INC. (“BUYER”)

Dated: November 5, 2010

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TABLE OF CONTENTS

 

 

 

 

 

 

 

 

 

 

 

 

 

Page No.

 

 

 

 

 

 

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ARTICLE I

 

 

DEFINED TERMS

 

1

 

1.1

 

Definitions

 

1

 

 

 

 

 

 

ARTICLE II

 

 

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

 

8

 

2.1

 

Purchase and Sale

 

8

 

2.2

 

Purchase Price

 

8

 

2.3

 

Allocation

 

8

 

2.4

 

Payment

 

8

 

2.5

 

Earnest Money Deposit

 

8

 

 

 

 

 

 

ARTICLE III

 

 

REVIEW PERIOD

 

9

 

3.1

 

Review Period

 

9

 

3.2

 

Due Diligence Examination

 

10

 

3.3

 

Restoration

 

11

 

 

 

 

 

 

ARTICLE IV

 

 

SURVEY AND TITLE APPROVAL

 

11

 

4.1

 

Survey

 

11

 

4.2

 

Title

 

11

 

4.3

 

Survey or Title Objections

 

11

 

 

 

 

 

 

ARTICLE V

 

 

MANAGEMENT AGREEMENT AND FRANCHISE AGREEMENT

 

12

 

 

 

 

 

 

ARTICLE VI

 

 

BROKERS

 

13

 

 

 

 

 

 

ARTICLE VII

 

 

REPRESENTATIONS, WARRANTIES AND COVENANTS

 

13

 

7.1

 

Seller’s and Indemnitor’s Representations, Warranties and Covenants

 

13

 

7.2

 

Buyer’s Representations, Warranties and Covenants

 

17

 

7.3

 

Survival

 

17

 

 

 

 

 

 

 

ARTICLE VIII

 

 

ADDITIONAL COVENANTS

 

17

 

8.1

 

Subsequent Developments

 

17

 

8.2

 

Construction of Hotel

 

18

 

8.3

 

Plans and Specifications

 

18

 

8.4

 

Commencement of Construction; Substantial Completion

 

18

 

8.5

 

Inspections

 

19

 

8.6

 

Punch List

 

19

 

8.7

 

Pre-Opening Program

 

19

 

8.8

 

Construction Warranty

 

20

 

8.9

 

Other Obligations of Seller Before Closing

 

20

 

8.10

 

Third Party Consents

 

20

 

8.11

 

Access to Financial Information

 

21

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8.12

 

Bulk Sales

 

21

 

8.13

 

Indemnification

 

21

 

8.14

 

Escrow Funds

 

23

 

 

 

 

 

 

ARTICLE IX

 

 

CONDITIONS FOR CLOSING

 

24

 

9.1

 

Buyer’s Conditions for Closing

 

24

 

9.2

 

Seller’s Conditions for Closing

 

25

 

 

 

 

 

 

ARTICLE X

 

 

CLOSING AND CONVEYANCE

 

25

 

10.1

 

Closing

 

25

 

10.2

 

Deliveries of Seller

 

26

 

10.3

 

Buyer’s Deliveries

 

27

 

 

 

 

 

 

ARTICLE XI

 

 

COSTS

 

28

 

11.1

 

Seller’s Costs

 

28

 

11.2

 

Buyer’s Costs

 

28

 

 

 

 

 

 

 

ARTICLE XII

 

 

ADJUSTMENTS

 

28

 

12.1

 

Adjustments

 

28

 

12.2

 

Reconciliation and Final Payment

 

29

 

12.3

 

Employees

 

30

 

 

 

 

 

 

 

ARTICLE XIII

 

 

CASUALTY AND CONDEMNATION

 

30

 

13.1

 

Risk of Loss; Notice

 

30

 

13.2

 

Buyer’s Termination Right

 

30

 

13.3

 

Procedure for Closing

 

31

 

 

 

 

 

 

 

ARTICLE XIV

 

 

DEFAULT REMEDIES

 

31

 

14.1

 

Buyer Default

 

31

 

14.2

 

Seller Default

 

31

 

14.3

 

Attorney’s Fees

 

31

 

 

 

 

 

 

 

ARTICLE XV

 

 

NOTICES

 

32

 

 

 

 

 

 

ARTICLE XVI

 

 

MISCELLANEOUS

 

33

 

16.1

 

Performance

 

33

 

16.2

 

Binding Effect; Assignment

 

33

 

16.3

 

Entire Agreement

 

33

 

16.4

 

Governing Law

 

33

 

16.5

 

Captions

 

33

 

16.6

 

Confidentiality

 

33

 

16.7

 

Closing Documents

 

34

 

16.8

 

Counterparts

 

34

 

16.9

 

Severability

 

34

 

16.10

 

Interpretation

 

34

 

16.11

 

(Intentionally Omitted)

 

34

 

16.12

 

Further Acts

 

34

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16.13

 

Joint and Several Obligations

 

34

 

16.14

 

Notice of Proposed Listing

 

34

 

16.15

 

Construction Loan

 

35

 

16.16

 

Title to Land

 

35

SCHEDULES:

EXHIBITS:

 

 

Exhibit A

Legal Description

Exhibit B

List of FF&E

Exhibit C

List of Hotel Contracts

Exhibit D

Consents and Approvals

Exhibit E

Environmental Reports

Exhibit F

Claims or Litigation Pending

Exhibit G

Escrow Agreement

Exhibit H

Construction Warranty

Exhibit I

Pre-Opening Budget

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PURCHASE CONTRACT

This PURCHASE CONTRACT (this “Contract”) is made and entered into as of November
5, 2010, by and between THE GENERATION COMPANIES, LLC, a North Carolina limited
liability company (“Seller”) with a principal office at 1822 N.C. Highway 54
East, Suite 300, Durham, North Carolina 27713, and APPLE SUITES REALTY GROUP,
INC., a Virginia corporation, with its principal office at 814 East Main Street,
Richmond, Virginia 23219, or its affiliates or assigns as permitted under
Section 16.2 herein (“Buyer”).
RECITALS

          A. Seller is or will become the fee simple owner of the land located
in the City of North Charleston, County of Charleston, South Carolina,
identified in on Exhibit A attached hereto and incorporated herein by reference.
Seller intends to construct a hotel on such land containing 122 suites to be
operated as a Home2 by Hilton hotel.

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

AGREEMENT:

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

ARTICLE I
DEFINED TERMS

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

“Additional Deposit” shall mean $100,000.

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

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

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alleys, easements and rights-of-way, if any, abutting, adjacent, contiguous to
or adjoining the Land. If Seller owns contiguous parcels of land,
“Appurtenances” shall apply only to the Land and not any such contiguous
parcels.

“Architect” shall mean the architect for the Hotel, The Neil Luton Planning
Group.

          “Brand” shall mean Home2 by Hilton, the hotel brand or franchise under
which the Hotel will operate.

          “Business Day” shall mean any day other than a Saturday, Sunday or
legal holiday in the Commonwealth of Virginia or the state in which the Real
Property is located.

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

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

“Construction Lender” shall mean RBC Bank (USA).

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

“Contractor” shall mean the contractor for the Hotel, Tri Construction
Associates, Inc.

“Contracts, Plans and Specs” shall mean all construction and other contracts,
plans, drawings, specifications, surveys, soil reports, engineering reports,
inspection reports, and other technical descriptions and reports in the
possession or control of Seller at the time of mutual acceptance of this
Contract and those created during the term of this Contract.

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

“Deposits” shall mean, to the extent assignable, all prepaid rents and deposits,
refundable security deposits and rental deposits, and all other deposits for
advance reservations, banquets or future services, made in connection with the
use or occupancy of the Improvements; provided, however, that to the extent
Seller has not received or does not hold all of the prepaid rents and/or
deposits attributable to the Leases related to the Property, Buyer shall be
entitled to a credit against the cash portion of the Purchase Price allocable to
the Property in an amount equal to the amount of the prepaid rents and/or
deposits attributable to the Leases transferred at the Closing of such Property,
and provided further, that “Deposits” shall exclude (i) reserves for real
property taxes and insurance, in each case, to the extent pro rated on the
settlement statement such that Buyer receives a credit for (a) taxes and
premiums in respect of any period prior to Closing and (b) the amount of
deductibles and other self-insurance and all other potential liabilities and
claims in respect of any period prior to Closing, and (ii) utility deposits.

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

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

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

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

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

“Escrow Funds” shall have the meaning set forth in Section 8.14.

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

“Existing Franchise Agreement” shall mean that certain franchise license
agreement between the Seller and the Franchisor, granting Seller a franchise to
operate its Hotel under the Brand.

“FF&E” shall mean all tangible personal property and fixtures of any kind (other
than personal property (i) owned by guests of the Hotel or (ii) leased by Seller
pursuant to an FF&E Lease) attached to, or located upon and used in connection
with the ownership, maintenance, use or operation of the Land or Improvements as
of the date hereof (or acquired by Seller and so employed prior to Closing),
including, but not limited to, all furniture, fixtures, equipment, signs and
related personal property; all heating, lighting, plumbing, drainage,
electrical, air conditioning, and other mechanical fixtures and equipment and
systems; all elevators, and related motors and electrical equipment and systems;
all hot water heaters, furnaces, heating controls, motors and equipment, all
shelving and partitions, all ventilating equipment, and all disposal equipment;
all spa, health club and fitness equipment; all equipment used in connection
with the use and/or maintenance of the guestrooms, restaurants, lounges,
business centers, meeting rooms, swimming pools, indoor and/or outdoor sports
facilities and other common areas and recreational areas; all carpet, drapes,
beds, furniture, televisions and other furnishings; all stoves, ovens, freezers,
refrigerators, dishwashers, disposals, kitchen equipment and utensils, tables,
chairs, plates and other dishes, glasses, silverware, serving pieces and other
restaurant and bar equipment, apparatus and utensils. A current list of FF&E
will be attached hereto as Exhibit B at least 15 days prior to Closing.

“FF&E Leases” shall mean all leases of any FF&E and other contracts permitting
the use of any FF&E at the Improvements that are assumed by Buyer.

“Financial Statements” shall have the meaning set forth in Section 3.1(b).

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

“Franchise Agreement” shall mean the franchise license agreement, in form
reasonably acceptable to Buyer, between Franchisor and Buyer.

“Franchisor” shall mean Hilton Worldwide, Inc. or its affiliate.

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“Hotel” shall mean the hotel to be constructed on the Land, including all
Improvements and Personal Property associated therewith, to be known generally
as the “North Charleston Home2 Suites by Hilton”.

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

“Improvements” shall mean all buildings, structures, fixtures, parking areas and
other improvements now existing or to be constructed on the Land, and all
related facilities, provided, however, that the term “Improvements” shall not
include any buildings, structures, fixtures, parking areas and other
improvements that are or will be demolished or removed in connection with the
construction and development of the Hotel.

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

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

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

“Knowledge”, “knowledge” or “known to” or similar statements shall mean, with
respect to Seller, the actual knowledge of H. Mark Daley, III or Jeffrey P.
Castleberry, and with respect to Buyer, the actual knowledge of Nelson Knight.

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

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

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

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

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

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“Management Agreement” means the management agreement to be entered into between
Buyer and the Manager for the operation and management of the Hotel on and after
the Closing Date.

“Manager” shall mean the management company chosen by Buyer to operate the Hotel
from and after Closing.

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

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

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

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

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

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

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

“Post-Closing Agreement” shall have the meaning set forth in Section 8.14.

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

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

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

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

“Records” shall mean all books, records, promotional material, tenant data,
guest history information (other than any such information owned exclusively by
the Franchisor), marketing

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and leasing material and forms (including but not limited to any such records,
data, information, material and forms in the form of computerized files located
at the Hotel), market studies prepared in connection with Seller’s current
annual plan and other materials, information, data, legal or other documents or
records (including, without limitation, all documentation relating to any
litigation or other proceedings, all zoning and/or land use notices, relating to
or affecting the Property, all business plans and projections and all studies,
plans, budgets and contracts related to the development, construction and/or
operation of the Hotel) owned by Seller and/or in a Seller’s possession or
control, or to which a Seller has access or may obtain from the Franchisor, that
are used in or relating to the Property and/or the operation of the Hotel,
including the Land, the Improvements or the FF&E, and proforma budgets and
projections and construction budgets and contracts related to the development
and construction of the Hotel and a list of the general contractors, architects
and engineers providing goods and/or services in connection with the
construction of the Hotel, all construction warranties and guaranties in effect
at Closing and copies of the final Plans and Specifications for the Hotel.

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

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

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

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

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

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

          “Substantial Completion,” including variations thereof such as
“Substantially Complete” and “Substantially Completed” shall mean: (i) the
Architect and the Contractor have issued a certificate of substantial completion
in form and substance satisfactory to Buyer certifying that the Hotel has been
constructed substantially in accordance with the Plans and Specifications and
the Legal Requirements, (ii) at least a temporary certificate of occupancy
authorizing the opening of the Hotel for business to the public and for
operation under the Brand has been issued by the local governing authority and
is in full force and effect, (iii) all other final and unconditional consents,
approvals, licenses and operating permits necessary or appropriate for the Hotel
to open for business to the public and to operate under the Brand have been
issued by and obtained from all applicable governmental and regulatory
authorities, subject to Punch List Items; (iv) the Hotel is fully furnished,
fitted and equipped and ready to open for business to the public and operate
under the Brand, subject to Punch List Items; (v) all contractors,
subcontractors, suppliers, mechanics, materialmen and other persons or entities
providing labor or materials for the construction and development of the Hotel
shall have been paid in full (or adequate provision for payment of such persons
or entities has been made to Buyer’s satisfaction), subject to Punch List Items
and (vi) the Franchisor has approved the completion, furnishing and equipping of
the Hotel and is prepared to commence (or authorize the commencement of)
operation of the Hotel, and all of the other conditions set forth in the
Franchise Agreement have been satisfied, subject to Punch List Items.

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

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

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

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

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

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

“Title Review Period” shall have the meaning set forth in Section 4.3.

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

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

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

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installation, equipping and furnishing of the Hotel, and all indemnities, bonds
and claims of Seller related thereto.

ARTICLE II
PURCHASE AND SALE; PURCHASE PRICE; PAYMENT;
EARNEST MONEY DEPOSIT

          2.1 Purchase and Sale. Seller agrees to sell and convey to Buyer or
its affiliates and/or assigns (as permitted under Section 16.2 below), and Buyer
or its assigns agrees to purchase from Seller, the Property, in consideration of
the Purchase Price and upon the terms and conditions hereof. All of the Property
shall be conveyed, assigned, and transferred to Buyer at Closing, free and clear
of all mortgages, liens, encumbrances, licenses, franchises (other than any
hotel franchises assumed by Buyer), concession agreements, security interests,
prior assignments or conveyances, conditions, restrictions, rights-of-way,
easements, encroachments, claims and other matters affecting title or
possession, except for the Permitted Exceptions and FF&E Leases.

          2.2 Purchase Price. Buyer agrees to pay, and Seller agrees to accept,
as consideration for the conveyance of the Property, subject to the adjustments
provided for in this Contract, the amount of Thirteen Million Nine Hundred Eight
Thousand and No/100 Dollars ($13,908,000.00) (the “Purchase Price”) based upon a
room count of 122. The purchase price shall be reduced by (i) an amount equal to
twenty percent (20%) of the amount $10,401,898.00 exceeds the actual
construction costs and (ii) an amount equal to forty percent (40%) of the amount
$2,031,676.00 exceeds FF&E costs.

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

          2.4 Payment. The portion of the Purchase Price, less: (a) the Earnest
Money Deposit and interest earned thereon, if any, which Buyer elects to have
applied against the Purchase Price (as provided below) and (b) the Escrow Funds,
shall be paid to Seller in cash, certified funds or wire transfer, at the
Closing of the Property. At the Closing, the Earnest Money Deposit, together
with interest earned thereon, if any, shall, at Buyer’s election, be returned to
Buyer or shall be paid over to Seller by Escrow Agent to be applied to the
portion of the Purchase Price on behalf of Buyer, and the Escrow Funds shall be
deposited into an escrow account pursuant to the Post-Closing Agreement as
contemplated by Section 8.14.

          2.5 Earnest Money Deposit.

                    (a) Within three (3) Business Days after the full execution
and delivery of this Contract, Buyer shall deposit the sum of One Hundred
Thousand and No/100 Dollars ($100,000.00) in cash, certified bank check or by
wire transfer of immediately available funds (the “Initial Deposit”) with the
Title Company, as escrow agent (“Escrow Agent”), which sum shall be held by
Escrow Agent as earnest money. If, pursuant to the provisions of Section 3.1 of
this Contract, Buyer elects to terminate this Contract at any time prior to the
expiration of the

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Review Period, then the Escrow Agent shall return the Earnest Money Deposit to
Buyer promptly upon written notice to that effect from Buyer. If Buyer does not
elect to terminate this Contract on or before the expiration of the Review
Period, Buyer shall subject to Section 16.16 below, within three (3) Business
Days after the later to occur of (a) the expiration of the Review Period or (b)
the date Seller closes the Construction Loan (defined below), deposit the
Additional Deposit with the Escrow Agent. The Initial Deposit and the Additional
Deposit, and all interest accrued thereon, shall hereinafter be referred to as
the “Earnest Money Deposit.”

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

ARTICLE III
REVIEW PERIOD

          3.1 Review Period. Buyer shall have a period through 6:00 p.m. Eastern
Time on the date that is thirty (30) days following the date of this Contract,
unless a longer period of time is otherwise provided for in this Contract and
except as otherwise agreed to by Buyer and Seller (the “Review Period”), to
evaluate the legal, title, survey, construction, physical condition, structural,
mechanical, environmental, economic, permit status, franchise status, financial
and other documents and information related to the Property. Within two (2)
Business Days following the date of this Contract, Seller, at Seller’s sole cost
and expense, will deliver to Buyer (or make available at the Hotel) for Buyer’s
review, to the extent not previously delivered to Buyer, true, correct and
complete copies of the following, together with all amendments, modifications,
renewals or extensions thereof:

                    (a) All Warranties currently in effect and Licenses relating
to the Hotel or any part thereof;

                    (b) If there is an existing Hotel, income and expense
statements and budgets for the Hotel, for the current year to date (the
“Financial Statements”), and the Seller shall provide to Buyer copies of all
income and expense statements generated by the Seller or any third party that
relate to the operations of the Hotel and that contain information not included
in the financial statements, if any, provided to Buyer by the Manager, provided
that Seller also agrees to provide to Buyer’s auditors and representatives all
financial and other information necessary or appropriate for preparation of
audited financial statements for Buyer and/or its Affiliates as provided in
Section 8.11, below;

                    (c) To the extent existing, all real estate and, if
applicable, personal property tax statements, with respect to the Hotel and
notices of appraised value for the Real Property for the current year (if
available) and each of the three (3) calendar years prior to the current year,
or for such years as Seller has owned the Property;

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

                    (e) To the extent existing, all FF&E Leases, Services
Contracts, Leases and, if applicable, a schedule of such Leases of space in the
Hotel, and all agreements, if any, for real estate commissions, brokerage fees,
finder’s fees or other compensation payable by Seller in connection therewith;
and

                    (f) All notices received from governmental authorities in
connection with the Land for the current year and each of the two(2) calendar
years prior to the current year (or for such years as Seller has owned the
Property) and all other notices received from governmental authorities received
at any time during Seller’s ownership of the Property that relate to any
noncompliance or violation of law that has not been corrected.

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

          3.2 Due Diligence Examination. At any time during the Review Period,
and thereafter through Closing of the Property, Buyer and/or its representatives
and agents shall have the right to enter upon the Property at all reasonable
times for the purposes of reviewing all Records and other data, documents and/or
information relating to the Property and conducting such surveys, appraisals,
engineering tests, soil tests (including, without limitation, Phase I and Phase
II environmental site assessments), inspections of construction and other
inspections and other studies as Buyer deems reasonable and necessary or
appropriate to evaluate the Property, subject to providing reasonable advance
notice to Seller unless otherwise agreed to by Buyer and Seller (the “Due
Diligence Examination”). Seller shall have the right to have its representative
present during Buyer’s physical inspections of its Property, provided that
failure of such Seller to do so shall not prevent Buyer from exercising its due
diligence, review and inspection rights hereunder. Buyer agrees to exercise
reasonable care when visiting the Property, in a manner which shall not
materially adversely affect the operation of the Property or the construction of

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the Improvements, and pay the costs of all such inspections. Buyer shall perform
any physical inspections of the Property at its own risk. Buyer may not conduct
a Phase II environmental site assessment or any other invasive environmental
procedure without the prior written consent of Seller.

          3.3 Restoration. Buyer covenants and agrees not to damage or destroy
any portion of the Property in conducting its examinations and studies of the
Property during the Due Diligence Examination and, if closing does not occur,
shall repair any portion of the Property damaged by the conduct of Buyer, its
agents or employees, to substantially the condition such portion(s) of the
Property were in immediately prior to such examinations or studies.

ARTICLE IV
SURVEY AND TITLE APPROVAL

          4.1 Survey. Seller has delivered to Buyer true, correct and complete
copies of the most recent surveys of the Real Property. In the event that an
update of a survey or a new survey (such updated or new surveys being referred
to as the “Surveys”) are desired by Buyer, then Buyer shall be responsible for
all costs related thereto; provided, however, Seller shall provide, at its sole
cost and expense, an as-built survey when the Hotel is substantially complete.

          4.2 Title. Seller has delivered to Buyer Seller’s existing title
insurance policy, including copies of all documents referred to therein, for the
Real Property. Buyer’s obligations under this Contract are conditioned upon
Buyer being able to obtain for the Property (i) a Commitment for Title Insurance
(each, a “Title Commitment”) issued by Chicago Title Company, Attn: Debby Moore,
5501 LBJ Freeway, Suite 200, Dallas, Texas 75240 (the “Title Company”), for the
most recent standard form of owner’s policy of title insurance in the state in
which the Real Property is located, covering the Real Property, setting forth
the current status of the title to the Real Property, showing all liens, claims,
encumbrances, easements, rights of way, encroachments, reservations,
restrictions and any other matters affecting the Real Property and pursuant to
which the Title Company agrees to issue to Buyer at Closing an Owner’s Policy of
Title Insurance on the most recent form of ALTA (where available) owner’s policy
available in the state in which the Land is located, with extended coverage and,
to the extent applicable and available in such state, comprehensive, access,
single tax parcel, contiguity, and such other endorsements as may be required by
Buyer (collectively, the “Title Policy”); and (ii) true, complete, legible and,
where applicable, recorded copies of all documents and instruments (the
“Exception Documents”) referred to or identified in the Title Commitment,
including, but not limited to, all deeds, lien instruments, leases, plats,
surveys, reservations, restrictions, and easements affecting the Real Property.
If requested by Seller, Buyer shall promptly provide Seller with a copy of the
Title Commitment issued by the Title Company.

          4.3 Survey or Title Objections. If Buyer discovers any title or survey
matter which is objectionable to Buyer, Buyer may provide Seller with written
notice of its objection to same on or before the expiration of the Review Period
(the “Title Review Period”). If Buyer fails to so object in writing to any such
matter set forth in the Survey or Title Commitment, it shall be conclusively
assumed that Buyer has approved same, except as otherwise provided in Section
9.1. If Buyer disapproves any condition of title, survey or other matters by
written objection to Seller on or before the expiration of the Title Review
Period, Seller shall elect either to attempt

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to cure or not cure any such item by written notice sent to Buyer within five
(5) days after Seller’s receipt of notice from Buyer, and if Seller commits in
writing to attempt to cure any such item, then Seller shall be given until the
Closing Date to cure any such defect. In the event Seller shall fail to cure a
defect which Seller has committed in writing to cure prior to Closing, or if a
new title defect arises after the date of Buyer’s Title Commitment or Survey, as
applicable, but prior to Closing, then Buyer may elect, in Buyer’s sole and
absolute discretion: (i) to waive such objection and proceed to Closing, or (ii)
to terminate this Contract and receive a return of the Earnest Money Deposit,
and any interest thereon. The items shown on the Title Commitment which are not
objected to by Buyer as set forth above (other than exceptions and title defects
arising after the Title Review Period and other than those standard exceptions
which are ordinarily and customarily omitted in the state in which the Hotel is
located, so long as Seller provides the appropriate owner’s affidavit, gap
indemnity or other documentation reasonably required by the Title Company for
such omission) and all Leases showing on the Title Commitment are hereinafter
referred to as the “Permitted Exceptions.” In no event shall Permitted
Exceptions include liens, or documents evidencing liens, securing any
indebtedness or any mechanics’ or materialmen’s liens or any claims or potential
claims therefor covering the Property or any portion thereof (“Seller Liens”),
each of which shall be paid in full by Seller and released at Closing.

ARTICLE V
MANAGEMENT AGREEMENT AND FRANCHISE AGREEMENT

At or prior to the Closing, Seller shall terminate any existing management
agreement and the Existing Franchise Agreement, and Seller shall be solely
responsible for all claims and liabilities arising thereunder on, prior to or
following the Closing Date. As a condition to Closing, Buyer shall enter into
the Franchise Agreement, effective as of the Closing Date, containing terms and
conditions acceptable to Buyer (including, without limitation, such terms and
conditions as may be required to accommodate Buyer’s and/or Buyer’s Affiliates’
REIT structure), provided, however, that Buyer shall use its commercially
reasonable efforts to obtain such Franchise Agreement, and provided, further,
that Buyer shall not be entitled, as a condition to Closing, to require a new
Franchise Agreement containing economic terms more favorable to the owner or
franchisee than the economic terms of the Existing Franchise Agreement or that
differ in any other material respect from the form of franchise agreement which
Buyer and Franchisor have negotiated previously as their standard form of
franchise agreement. Seller shall negotiate a one-time free right of transfer in
the Existing Franchise Agreement which shall permit Buyer to obtain a new
Franchise Agreement at no cost to Buyer (other than Buyer’s costs of review),
and Buyer shall cooperate with Seller in this respect and shall make good faith
efforts to obtain a waiver of all fees from Franchisor. In the event Seller is
unable to secure this one-time free right of transfer, Seller shall reimburse
Buyer at Closing for any franchise/application fees imposed by Franchisor on
Buyer. Seller shall be responsible for paying all costs related to the
termination of any existing management agreement and shall indemnify and hold
Buyer harmless from and against any and all claims from any persons claiming
under any management agreement other than the management agreement entered into
between Buyer and Manager. Seller shall be responsible for paying all reasonable
and actual costs of the Franchisor related to the termination of the Existing
Franchise Agreement. Seller shall use best efforts to promptly provide all
information required by the Franchisor in connection with the new Franchise
Agreement, and Seller and Buyer shall diligently pursue obtaining each the same.

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ARTICLE VI
BROKERS

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

ARTICLE VII
REPRESENTATIONS, WARRANTIES AND COVENANTS

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

                    (a) Authority; No Conflicts. Seller is a limited liability
company duly formed, validly existing and in good standing in the State of North
Carolina. Seller has obtained all necessary consents to enter into and perform
this Contract and is fully authorized to enter into and perform this Contract
and to complete the transactions contemplated by this Contract. No consent or
approval of any person, entity or governmental authority is required for the
execution, delivery or performance by Seller of this Contract, and this Contract
is hereby binding and enforceable against Seller. Neither the execution nor the
performance of, or compliance with, this Contract by Seller has resulted, or
will result, in any violation of, or default under, or acceleration of, any
obligation under any existing corporate charter, certificate of incorporation,
bylaw, articles of organization, limited liability company agreement or
regulations, partnership agreement or other organizational documents and under
any, mortgage indenture, lien agreement, promissory note, contract, or permit,
or any judgment, decree, order, restrictive covenant, statute, rule or
regulation, applicable to Seller or to the Seller’s Hotel.

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

                    (c) Bankruptcy. None of Seller, or, to Seller’s knowledge,
any of its or their partners or members, is insolvent or the subject of any
bankruptcy proceeding, receivership proceeding or other insolvency, dissolution,
reorganization or similar proceeding.

                    (d) Property Agreements. The assets constituting the
Property to be conveyed to Buyer hereunder shall constitute all of the property
and assets to be used in connection with the operation and business of the
Hotel. There are no, and as of the Closing there shall be no, leases, license
agreements, leasing agent’s agreements, equipment leases, building service
agreements, maintenance contracts, suppliers contracts, warranty contracts,
operating agreements, or other agreements (i) to which Seller is a party or an
assignee, or (ii) binding upon the Property, relating to the ownership,
occupancy, operation, management or maintenance of the Real Property, FF&E,
Supplies or Tradenames, except for those Service Contracts, Leases, Warranties
and FF&E Leases to which Seller becomes a party with the approval of Buyer or

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which Buyer may enter into before the Closing. As of the Closing, any Service
Contracts, Leases, Warranties and FF&E Leases to which Seller has become a party
with the approval of Buyer shall be in full force and effect, and no default
shall have occurred and be continuing thereunder and no circumstances shall
exist which, with the giving of notice, the lapse of time or both, would
constitute such a default. No party has, and as of the Closing no party shall
have, any right or option to acquire the Property or any portion thereof, other
than Buyer.

                    (e) Pending Claims. Seller has not received written notice
of: (i) claims, demands, litigation, proceedings or governmental investigations
pending or threatened against Seller, the Manager or any Affiliate of any of
them (collectively, “Seller Parties”) or related to the business or assets of
the Hotel, except as set forth on Exhibit F attached hereto and incorporated
herein by reference, (ii) special assessments or extraordinary taxes except as
set forth in the Title Commitment or (iii) pending or threatened condemnation or
eminent domain proceedings which would affect the Property or any part thereof.
There are no: pending arbitration proceedings or unsatisfied arbitration awards,
or judicial proceedings or orders respecting awards, which might become a lien
on the Property or any portion thereof, pending unfair labor practice charges or
complaints, unsatisfied unfair labor practice orders or judicial proceedings or
orders with respect thereto, pending charges or complaints with or by city,
state or federal civil or human rights agencies, unremedied orders by such
agencies or judicial proceedings or orders with respect to obligations under
city, state or federal civil or human rights or antidiscrimination laws or
executive orders affecting the Hotel, or other pending, actual or, to Seller’s
knowledge, threatened litigation claims, charges, complaints, petitions or
unsatisfied orders by or before any administrative agency or court which affect
the Hotel or might become a lien on the Hotel (collectively, the “Pending
Claims”).

                    (f) Environmental. With respect to environmental matters, to
Seller’s knowledge and except as otherwise disclosed in the environmental
reports and documents identified in Exhibit E, (i) there has been no Release or
threat of Release of Hazardous Materials in, on, under, to or from the Real
Property, except as disclosed in the reports and documents set forth on Exhibit
E attached hereto and incorporated herein by reference, (ii) no portion of the
Property is being used for the treatment, storage, disposal or other handling of
Hazardous Materials or machinery containing Hazardous Materials other than
standard amounts of cleaning supplies and chlorine for the swimming pool, all of
which are stored on the Property in strict accordance with applicable
Environmental Requirements and do not exceed limits permitted under applicable
laws, including without limitation Environmental Requirements, (iii) no
underground storage tanks are currently located on or in the Real Property or
any portion thereof, (iv) no environmental investigation, administrative order,
notification, consent order, litigation, claim, judgment or settlement with
respect to the Property or any portion thereof is pending or threatened, (v)
there is not currently and, to Seller’s actual knowledge, never has been any
mold, fungal or other microbial growth in or on the Real Property, or existing
conditions within buildings, structures or mechanical equipment serving such
buildings or structures, that could reasonably be expected to result in material
liability or material costs or expenses to remediate the mold, fungal or
microbial growth, or to remedy such conditions that could reasonably be expected
to result in such growth, and (vi) except as disclosed on Exhibit E, there are
no reports or other documentation regarding the environmental condition of the
Real Property in the possession of Seller or Seller’s Affiliates, consultants,
contractors or agents. As used in this

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Contract: “Hazardous Materials” means (1) “hazardous wastes” as defined by the
Resource Conservation and Recovery Act of 1976, as amended from time to time
(“RCRA”), (2) “hazardous substances” as defined by the Comprehensive
Environmental Response, Compensation and Liability Act of 1980 (42 U.S.C. 9601
et seq.), as amended by the Superfund Amendment and Reauthorization Act of 1986
and as otherwise amended from time to time (“CERCLA”); (3) “toxic substances” as
defined by the Toxic Substances Control Act, as amended from time to time
(“TSCA”), (4) “hazardous materials” as defined by the Hazardous Materials
Transportation Act, as amended from time to time (“HMTA”), (5) asbestos, oil or
other petroleum products, radioactive materials, urea formaldehyde foam
insulation, radon gas and transformers or other equipment that contains
dielectric fluid containing polychlorinated biphenyls and (6) any substance
whose presence is detrimental or hazardous to health or the environment,
including, without limitation, microbial or fungal matter or mold, or is
otherwise regulated by federal, state and local environmental laws (including,
without limitation, RCRA, CERCLA, TSCA, HMTA), rules, regulations and orders,
regulating, relating to or imposing liability or standards of conduct concerning
any Hazardous Materials or environmental, health or safety compliance
(collectively, “Environmental Requirements”). As used in this Contract:
“Release” means spilling, leaking, pumping, pouring, emitting, emptying,
discharging, injecting, escaping, leaching, dumping or disposing.

                    (g) Title and Liens. Except for Seller Liens to be released
at Closing, Seller has good and marketable fee simple absolute title to the Real
Property, subject only to the Permitted Exceptions. Except for the FF&E subject
to the FF&E Leases and any applicable Permitted Exceptions, Seller has good and
marketable title to the Personal Property, free and clear of all liens, claims,
encumbrances or other rights whatsoever (other than the Seller Liens to be
released at Closing), and there are no other liens, claims, encumbrances or
other rights pending or of which any Seller Party has received notice or which
are otherwise known to any Seller Party related to any other Personal Property.

                    (h) Utilities. All appropriate utilities, including sanitary
and storm sewers, water, gas, telephone, cable and electricity, are available at
the boundaries of the Land and Seller is entitled to connect the Hotel thereto,
and upon connection to the Hotel and payment of all connection or “tap on”,
usage and similar fees to be paid by Seller, which Seller hereby agrees to pay,
such utilities shall be sufficient and available to service the Hotel.

                    (i) Licenses, Permits and Approvals. Seller has not received
any written notice, and Seller has no Knowledge that the Property fails to
comply with all applicable licenses, permits and approvals and federal, state or
local statutes, laws, ordinances, rules, regulations, requirements and codes
including, without limitation, those regarding zoning, land use, building, fire,
health, safety, environmental, subdivision, water quality, sanitation controls
and the Americans with Disabilities Act, and similar rules and regulations
relating and/or applicable to the ownership, use and operation of the Property
as it is now operated. Seller has or by Closing shall have received all
licenses, permits and approvals required or needed for the lawful conduct,
occupancy and operation of the business of the Hotel, and each license and
permit is in full force and effect, and will be received and in full force and
effect as of the Closing. Subject to Section 8.10 below, no licenses, permits or
approvals necessary for the

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lawful conduct, occupancy or operation of the business of the Hotel, to Seller’s
knowledge requires any approval of a governmental authority for transfer of the
Property.

                    (j) Financial Statements. If the Property consists of an
existing hotel, Seller has delivered copies of all (i) Financial Statements for
the Hotel, (ii) operating statements prepared by the Manager for the Hotel,
(iii) monthly financial statements prepared by the Manager for the Hotel and
(iv) independently audited financial statements for the Hotel (“Audits”). Each
of such statements is, to Seller’s knowledge, complete and accurate in all
material respects and, except in the case of budgets prepared in advance of the
applicable operating period to which such budgets relate, fairly presents the
results of operations of the Hotel for the respective periods represented
thereby. Seller has relied upon the Financial Statements and Audits in
connection with its ownership and operation of the Hotel, and there are no other
independent audits or financial statements prepared by third parties relating to
the operation of the Hotel other than the Financial Statements and Audits
prepared by or on behalf of the Manager, all of which have been provided to
Buyer.

                    (k) Employees. All employees employed at the Hotel are the
employees of the Seller. There are, to Seller’s knowledge, no (i) unions
organized at the Hotel, (ii) union organizing attempts, strikes, organized work
stoppages or slow downs, or any other labor disputes pending or threatened with
respect to any of the employees at the Hotel, or (iii) collective bargaining or
other labor agreements to which Seller or the Hotel is bound with respect to any
employees employed at the Hotel.

                    (l) Operations. If the Property consists of an existing
hotel, the Hotel has at all times been operated by Manager in accordance with
all applicable laws, rules, regulations, ordinances and codes.

                    (m) Existing Management and Franchise Agreements. If the
Property consists of an existing hotel, Seller has furnished to Buyer true and
complete copies of the any existing management agreement and the Existing
Franchise Agreement, which constitutes the entire agreement of the parties with
respect to the subject matter thereof and which have not been amended or
supplemented in any respect. There are no other management agreements, franchise
agreements, license agreements or similar agreements for the operation or
management of the Hotel or relating to the Brand, to which Seller is a party or
which are binding upon the Property, except for any Existing management
agreement and the Existing Franchise Agreement. If the Property consists of an
existing hotel, the Improvements comply with, and the Hotel is being operated in
accordance with, all requirements of the Existing Franchise Agreement and all
other requirements of the Franchisor, including all “brand standard”
requirements of the Franchisor. The Existing Franchise Agreement is in full
force and effect, and shall remain in full force and effect until the
termination of the Existing Franchise Agreement at Closing, as provided in
Article V hereof. No default has occurred and is continuing under any existing
management agreement or the Existing Franchise Agreement, and no circumstances
exist which, with the giving of notice, the lapse of time or both, would
constitute such a default.

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

          7.2 Buyer’s Representations, Warranties and Covenants. Buyer
represents, warrants and covenants:

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

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

                    (c) Financial Ability. Buyer has the financial ability to
perform its obligations under this Contract and to close the transaction
contemplated by this Contract. Buyer is not now insolvent and will not be
rendered insolvent by the transaction contemplated by this Contract. As used in
this section, “insolvent” means that the sum of the debts and other probable
liabilities of Buyer exceeds the present fair saleable value of Buyer’s assets.

                    (d) Actions, Suits, Proceedings, Investigations. There is no
pending or, to the Knowledge of Buyer, threatened action, suit, proceeding or
investigation before or by any court, governmental body or agency to restrain or
prevent the consummation of the transactions contemplated under this Contract or
that might affect the right of Buyer to perform its obligations under this
Contract.

          7.3 Survival. All of the representations and warranties are true,
correct and complete in all material respects as of the date hereof and the
statements set forth therein (without qualification or limitation as to a
party’s knowledge thereof except as expressly provided for in this Article VII)
shall be true, correct and complete in all material respects as of the Closing
Date. All of the representations and warranties made herein shall survive
Closing for a period of one (1) year and shall not be deemed to merge into or be
waived by any Seller’s Deed or any other closing documents.

ARTICLE VIII
ADDITIONAL COVENANTS

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

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          8.2 Construction of Hotel.

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

          8.3 Plans and Specifications. Prior to the expiration of the Review
Period, Seller shall submit to Buyer and Franchisor the then-current versions of
the plans and specifications for the construction of the Hotel prepared by the
Architect. When finalized by the Architect, but no later than sixty (60) days
after the date of this Contract, Seller shall submit such plans and
specifications to Buyer and Franchisor for approval. Buyer’s approval of such
plans and specifications shall not be unreasonably withheld, conditioned or
delayed, provided such plans and specifications comply with the schematic design
drawings approved by Buyer during the Review Period, comply with all applicable
building codes and comply with Franchisor’s requirements for the Home2 Suites
brand. Buyer shall have thirty (30) days after receipt thereof in which to
approve of such plans and specifications. If Buyer objects to any part of such
plans and specifications, Buyer may provide Seller with written notice of its
objection to same within such thirty (30) day period and Buyer shall deliver a
copy of such written notice simultaneously to Construction Lender. If Buyer
fails to so object in writing to any such matter within such time, it shall be
conclusively assumed that Buyer has approved same and at such time, Seller shall
provide notice of the same to Construction Lender. If Buyer disapproves any part
of the plans and specifications by written objection to Seller within such
thirty (30) day period, Seller shall have the opportunity to cure such item
within thirty (30) days of receiving Buyer’s written notice of objection. In the
event Seller shall fail to cure such item within such thirty (30) day period,
then Buyer may elect: (i) to waive such objection and proceed to Closing, or
(ii) to terminate this Contract and receive a return of the Earnest Money
Deposit, and any interest thereon and Buyer shall notify Construction Lender in
writing of its decision, if applicable. Seller shall obtain the approval of the
Franchisor and Buyer with respect to all subsequent material changes to such
plans and specifications, such approval by Buyer not to be unreasonably
withheld, conditioned or delayed. Such plans and specifications and all
revisions thereto, as approved by the Franchisor and Buyer, shall constitute the
“Plans and Specifications” for purposes of this Contract.

          8.4 Commencement of Construction; Substantial Completion. Seller shall
use commercially reasonable efforts to obtain, or cause the Contractor to
obtain, a building permit and all other permits, licenses and approvals of
governmental authorities required for the

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construction, equipping and furnishing of the Hotel in accordance with the Plans
and Specifications and this Contract, and, if construction has not already
commenced, shall cause the Contractor to commence construction of the Hotel not
later than December 31, 2010. Thereafter, Seller shall diligently pursue
construction of the Hotel in accordance with this Contract and shall cause the
Contractor to Substantially Complete the Hotel no later than March 31, 2012,
subject only to delays caused by Force Majeure. Seller shall promptly notify
Buyer of each event or condition of Force Majeure and the anticipated delay
caused thereby.

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

          8.6 Punch List. Upon notification from the Contractor that the Hotel
is Substantially Completed and ready for inspection, Seller shall prepare a
“punch list” with the assistance of the Architect and the Franchisor. Seller
acknowledges that final acceptance of the work on the Hotel shall be made only
with the approval of Buyer and the Franchisor. The costs of completing the Punch
List Items that are not completed as of the date of Closing, as reasonably
estimated by the Seller with the approval of Buyer, such approval not to be
unreasonably withheld, plus fifty percent (50%) of such costs, shall be retained
by the Title Company from the Purchase Price and shall be disbursed to Seller
only upon Buyer’s reasonable determination that all of the Punch List Items have
been satisfactorily completed. Seller shall correct or complete all Punch List
Items, or cause the same to be corrected or completed, at Seller’s expense, with
all diligence and in any event within sixty (60) days after Substantial
Completion of the Hotel.

          8.7 Pre-Opening Program. It is contemplated that certain activities
must be undertaken prior to the Closing Date so that the Hotel can function in
an orderly and businesslike manner at the Effective Time (“Pre-Opening
Program”), which Pre-Opening Program shall be developed by Buyer and Buyer’s
proposed manager. Seller shall cooperate in good faith with and be responsible
for the costs of the Pre-Opening Program (subject to the limitation contained
below) and shall provide the Franchisor and Buyer reasonable access to the
Property at least six (6) months in advance of the Closing in order to conduct
their activities related to the Pre-Opening Program; provided that the
Pre-Opening Program shall not be permitted to interfere with or delay the
activities of Seller in completing the Hotel. Seller shall pay in a timely
manner all costs associated with the Pre-Opening Program or otherwise related to
the pre-opening operations of the Property, in accordance with the Pre-Opening
Budget attached hereto as Exhibit “I”, up to but not including the Effective
Time, regardless of when such costs are payable, provided, however, that in no
event shall Seller be responsible for such costs in excess of Two Hundred
Forty-One Thousand Eight Hundred Dollars ($241,800.00) (the “Pre-Opening
Costs”). Seller shall also fund all working capital accounts, reserve accounts
and other accounts required under the Management Agreement or the Franchise
Agreement, to be funded before the Effective Time. Notwithstanding the
foregoing, at the Closing, Seller shall receive a credit in an amount equal to
all such accounts funded by Seller before the Closing Date, provided that (i)

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such accounts were required by the Franchisor or otherwise approved by Buyer
(which approval shall not be unreasonably withheld), and (ii) Seller shall not
receive a credit for any account to the extent that the same is intended to
cover Pre-Opening Costs.

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

          8.9 Other Obligations of Seller Before Closing. From and after the
date hereof through the Closing on the Property Seller shall comply with the
existing management agreement and the Existing Franchise Agreement and keep the
same in full force and effect and shall perform and comply with all of the
following subject to and in accordance with the terms of such agreements:

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

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

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

                    (d) Except with respect to utility and related easements and
agreements that do not interfere with the operation of the Hotel and do not
affect the marketability of title to the Real Property, not sell or assign, or
enter into any agreement to sell or assign, or create or permit to exist any
lien or encumbrance (other than a Permitted Exception) on, the Property or any
portion thereof; and

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

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

          8.10 Third Party Consents. Prior to the Closing Date, Seller shall, at
its expense, (i) obtain any and all third party consents and approvals (x)
required in order to transfer the Hotel to

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Buyer, or (y) which, if not obtained, would materially adversely affect the
operation of the Hotel and (ii) use best efforts to obtain all other third party
consents and approvals (all of such consents and approvals in (i) and (ii) above
being referred to collectively as, the “Third Party Consents”).

          8.11 Access to Financial Information. Buyer’s representatives shall
have access to, and Seller and its affiliates shall cooperate with Buyer and
furnish upon request, all financial and other information relating to the
Hotel’s operations to the extent necessary to enable Buyer’s representatives to
prepare audited financial statements in conformity with Regulation S-X of the
Securities and Exchange Commission (the “SEC”) and other applicable rules and
regulations of the SEC and to enable them to prepare a registration statement,
report or disclosure statement for filing with the SEC on behalf of Buyer or its
Affiliates, whether before or after Closing and regardless of whether such
information is included in the Records to be transferred to Buyer hereunder.
Seller shall also provide to Buyer’s representative a signed representation
letter in form and substance reasonably acceptable to Seller sufficient to
enable an independent public accountant to render an opinion on the financial
statements related to the Hotel. Buyer will reimburse Seller for costs
reasonably incurred by Seller to comply with the requirements of the preceding
sentence to the extent that Seller is required to incur costs not in the
ordinary course of business for third parties to provide such representation
letter. The provisions of this Section shall survive Closing or termination of
this Contract.

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

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

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

 

 

 

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

 

 

 

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

 

 

 

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

 

 

 

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

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

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

 

 

 

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

 

 

 

                    (ii) the conduct and operation by or on behalf of Buyer of
the Hotel or the ownership, use or operation of the Property after the Closing;
and

 

 

 

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

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

 

 

 

                    (i) The party seeking indemnification (the “Indemnified
Party”) shall give prompt written notice to the party or parties from which it
is seeking indemnification (the “Indemnifying Party”) of any assertion of
liability by a third party which might give rise to a claim for indemnification
based on the foregoing provisions of this Section 8.13, which notice shall state
the nature and basis of the assertion and the amount thereof, to the extent
known; provided, however, that no delay on the part of the Indemnified Party in
giving notice shall relieve the Indemnifying Party of any obligation to
indemnify unless (and then solely to the extent that) the Indemnifying Party is
prejudiced by such delay.

 

 

 

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

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request from time to time. If the Indemnifying Party undertakes to settle,
compromise or defend any such asserted liability, it shall notify such
Indemnified Party in writing of its intention to do so within thirty (30) days
of notice from such Indemnified Party provided above.

 

 

 

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

 

 

 

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

 

 

 

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

          8.14 Escrow Funds. To provide for the timely payment of any
post-closing claims by Buyer against Seller hereunder, at Closing, an amount
equal to Two Hundred Thousand and No/100 Dollars ($200,000.00) (the “Escrow
Funds”) shall be withheld from the Purchase Price payable to a Seller and shall
be deposited for a period of one (1) year in an escrow account with the Title
Company pursuant to an escrow agreement reasonably satisfactory in form and

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substance to Buyer and Seller (the “Post-Closing Agreement”), which escrow and
Post-Closing Agreement shall be established and entered into at Closing and
shall be a condition to Buyer’s obligations under this Contract. If no claims
have been asserted by Buyer against Seller, or all such claims have been
satisfied, within such one-year period, the Escrow Funds deposited by the Seller
shall be released to the Seller.

ARTICLE IX
CONDITIONS FOR CLOSING

          9.1 Buyer’s Conditions for Closing. Unless otherwise waived in
writing, and without prejudice to Buyer’s right to cancel this Contract during
the Review Period, the duties and obligations of Buyer to proceed to Closing
under the terms and provisions of this Contract are and shall be expressly
subject to strict compliance with, and satisfaction or waiver of, each of the
conditions and contingencies set forth in this Section 9.1, each of which shall
be deemed material to this Contract. In the event of the failure of any of the
conditions set forth in this Section 9.1 or of any other condition to Buyer’s
obligations provided for in this Contract, which condition is not waived in
writing by Buyer, Buyer shall have the right at its option to declare this
Contract terminated, in which case the Earnest Money Deposit and any interest
thereon shall be immediately returned to Buyer and each of the parties shall be
relieved from further liability to the other, except as otherwise expressly
provided herein, with respect to this Contract.

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

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

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

                    (d) Third Party Consents in form and substance satisfactory
to Buyer shall have been obtained and furnished to Buyer.

                    (e) The Escrow Funds shall have been deposited in the escrow
account pursuant to the Post-Closing Agreement and the parties thereto shall
have entered into the Post-Closing Agreement.

                    (f) The Hotel shall be Substantially Completed.

                    (g) Any existing management agreement and the Existing
Franchise Agreement shall have been terminated

                    (h) The Franchisor shall have executed and delivered the
Franchise Agreement as provided in Article V.

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                    (i) Buyer shall have obtained an as-built plat of survey of
the Property completed, dated within 30 days of the Closing Date and prepared in
compliance with the then-current ALTA/ACSM standards for urban properties, and
such plat of survey shall not disclose any encroachments, boundary line
discrepancies or other survey matters that, in Buyer’s reasonable judgment,
would materially adversely affect the use, operation or value of the Property
and did not exist as of the date that Buyer first received such survey.

                    (j) Buyer shall have obtained an ALTA owner’s title
insurance policy (or, if an ALTA form of policy is not customarily issued in the
state in which the Real Property is located, in the form customarily issued in
such state), issued by the Title Company pursuant to the Title Commitment,
insuring Buyer’s fee simple ownership in the Real Property (i) with an effective
date as of the Closing Date, (ii) with no exceptions for filed or unfiled
mechanics’ and materialmen’s liens, (iii) with no exceptions for encroachments
or other matters of survey unless existing as of the date that Buyer first
received the Title Commitment and disclosed by the Title Commitment or approved
by Buyer and (iv) with no other exceptions to title other than the Permitted
Exceptions and normal and customary utility and similar easements and
agreements.

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

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

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

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

ARTICLE X
CLOSING AND CONVEYANCE

          10.1 Closing. Unless otherwise agreed by Buyer and Seller, the Closing
on the Property shall occur on the date on which the Hotel opens for business to
the public in accordance with the Franchise Agreement, or as soon as practical
thereafter, but in no event later

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than fifteen (15) Business Days after Substantial Completion of the Hotel,
provided that all conditions to Closing by Buyer hereunder have been satisfied.
Buyer will provide Seller at least five (5) days prior written notice of the
Closing Date selected by Buyer. The date on which the Closing is to occur as
provided in this Section 10.1, or such other date as may be agreed upon by Buyer
and Seller, is referred to in this Contract as the “Closing Date” for the
Property. The Closing shall be held at 10:00 a.m. at the offices of the Title
Company, or as otherwise determined by Buyer and Seller. Regardless of the
Closing Date, the Closing shall be effective as of 12:01 a.m. on the date which
is the later of (i) the Substantial Completion Date or (ii) the date on which
the Hotel opens for business to the public in accordance with the Franchise
Agreement (the “Effective Time”).

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

                    (a) Deed. A General Warranty Deed conveying to Buyer fee
simple title to the Real Property, subject only to the Permitted Exceptions (the
“Deed”).

                    (b) Bills of Sale. A Bill of sale to Buyer and/or its
designated Lessee, conveying title to the tangible Personal Property.

                    (c) Existing Management and Franchise Agreement. The
termination of the existing management agreement and the Existing Franchise
Agreement.

                    (d) General Assignments. Assignments of all of Seller’s
right, title and interest in and to all FF&E Leases, Service Contracts and
Leases identified on Exhibit C hereto (the “Hotel Contracts”). The assignment
shall also be a general assignment and shall provide for the assignment of all
of Seller’s right, title and interest in all Records, Warranties, Licenses,
Tradenames, Contracts, Plans and Specs and all other intangible Personal
Property applicable to the Hotel.

                    (e) FIRPTA; 1099. A FIRPTA Affidavit or Transferor’s
Certificate of Non-Foreign Status as required by Section 1445 of the Internal
Revenue Code and an IRS Form 1099.

                    (f) Title Company Documents. All affidavits, gap indemnity
agreements and other documents reasonably required by the Title Company. At
Buyer’s sole expense, Buyer shall have obtained an irrevocable commitment
directly from the Title Company (or in the event the Title Company is not
willing to issue said irrevocable commitment, then from such other national
title company as may be selected by either Buyer or Seller) for issuance of an
Owner’s Policy of Title Insurance to Buyer insuring good and marketable fee
simple absolute title to the Real Property constituting part of the Property,
subject only to the Permitted Exceptions in the amount of the Purchase Price.

                    (g) Possession; Estoppel Certificates. Possession of the
Property, subject only to rights of guests in possession and tenants pursuant to
written leases included in the Leases,

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and estoppel certificates from tenants under Leases and the lessors under FF&E
Leases in form and substance acceptable to Buyer.

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

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

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

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

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

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

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

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

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

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

ARTICLE XI
COSTS

All Closing costs shall be paid as set forth below:

          11.1 Seller’s Costs. In connection with the sale of the Property
contemplated under this Contract, Seller shall be responsible for all transfer
and recordation taxes, including, without limitation, all transfer, sales, use
and bulk transfer taxes or like taxes on or in connection with the transfer of
the Real Property and the Personal Property constituting part of the Property
pursuant to the Bill of Sale, in each case except as otherwise provided in
Section 12, and all accrued taxes of Seller prior to Closing and income, sales
and use taxes and other such taxes of Seller attributable to the sale of the
Property to Buyer. Seller shall be responsible for all costs related to the
termination of any existing management agreement and the Existing Franchise
Agreement as provided in Article V. Seller shall also be responsible for any
costs and expenses of its attorneys, accountants, appraisers and other
professionals, consultants and representatives. Seller shall also be responsible
for payment of all prepayment penalties and other amounts payable in connection
with the pay-off of any liens and/or indebtedness encumbering the Property.
Seller shall also be responsible for all Pre-Opening Costs to the extent
provided in Section 8.7. Seller shall pay the sales/use taxes attributed to the
transfer of the Personal Property.

          11.2 Buyer’s Costs. In connection with the purchase of the Property
contemplated under this Contract, Buyer shall be responsible for the costs and
expenses of its attorneys, accountants and other professionals, consultants and
representatives. Buyer shall also be responsible for the costs and expenses in
connection with the preparation of any environmental report, any update to the
survey and the costs and expenses of preparation of the title insurance
commitment and the issuance of the title insurance policy contemplated by
Article IV and the per page recording charges for the Deed (if applicable).

ARTICLE XII
ADJUSTMENTS

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

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

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estimated on the basis of the best available information for such taxes and
assessments that will be due and payable on the Hotel for the calendar year in
which Closing occurs.

                    (b) Utilities. All suppliers of utilities shall be
instructed to read meters or otherwise determine the charges owing as of the
Effective Time for services prior thereto, which charges shall be allocated to
Seller. Charges accruing after the Effective Time shall be allocated to Buyer.
If elected by Seller, Seller shall be given credit, and Buyer shall be charged,
for any utility deposits transferred to and received by Buyer at Closing.

                    (c) Income/Charges. All rents, income and charges receivable
or payable under any Leases and Hotel Contracts applicable to the Property, and
any deposits, prepayments and receipts thereunder, shall be prorated between
Buyer and Seller as of the Effective Time.

                    (d) Accounts. All working capital accounts, reserve accounts
and escrow accounts (including all FF&E accounts), petty cash, cash in cash
registers and cash in vending machines but excluding amounts held in tax and
insurance escrow accounts and utility deposits to the extent excluded from the
definition of Deposits) held by or on behalf of Seller, the Manager or the
Franchisor with respect to the Hotel shall become the property of Buyer at
Closing without Buyer being required to fund the same. Notwithstanding the
foregoing, at the Closing, Seller shall receive a credit in an amount equal to
all such accounts funded by Seller before the Closing Date, provided that (i)
such accounts were required by the Franchisor or otherwise approved by Buyer
(which approval shall not be unreasonably withheld), and (ii) Seller shall not
receive a credit for any account to the extent the same is intended to cover
Pre-Opening Costs for which Seller is responsible and which have not been paid
as of the Closing.

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

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

                    (g) Accounts Payable. Any indebtedness, accounts payable,
liabilities or obligations of any kind or nature related to the Seller or the
Property for the periods prior to the Effective Time shall be allocated to the
Seller.

          12.2 Reconciliation and Final Payment. Seller and Buyer shall
reasonably cooperate after Closing to make a final determination of the
allocations and prorations required under this Contract within one hundred
twenty (120) days after the Closing Date. Upon the final reconciliation of the
allocations and prorations under this Section, the party which owes the other
party any sums hereunder shall pay such party such sums within ten (10) days
after the reconciliation of such sums. The obligations to calculate such
prorations, make such reconciliations and pay any such sums shall survive the
Closing.

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

ARTICLE XIII
CASUALTY AND CONDEMNATION

          13.1 Risk of Loss; Notice. Prior to Closing and the delivery of
possession of the Property to Buyer in accordance with this Contract, all risk
of loss to the Property (whether by casualty, condemnation or otherwise) shall
be borne by Seller. In the event that (a) any loss or damage to the Hotel shall
occur prior to the Closing Date as a result of fire or other casualty, or (b)
Seller receives notice that a governmental authority has initiated or threatened
to initiate a condemnation proceeding affecting the Hotel, Seller shall give
Buyer immediate written notice of such loss, damage or condemnation proceeding
(which notice shall include a certification of (i) the amounts of insurance
coverages in effect with respect to the loss or damage and (ii) if known, the
amount of the award to be received in such condemnation).

          13.2 Buyer’s Termination Right. If, prior to Closing and the delivery
of possession of the Property to Buyer in accordance with this Contract, (a) any
condemnation proceeding shall be pending against a substantial portion of the
Hotel or (b) there is any substantial casualty loss or damage to the Hotel,
Buyer shall have the option to terminate this Contract, provided Buyer delivers
written notice to Seller of its election within twenty (20) days after the date
Seller has delivered Buyer written notice of any such loss, damage or
condemnation as provided above, and in such event, the Earnest Money Deposit,
and any interest thereon, shall be delivered to Buyer and thereafter, except as
expressly set forth herein, no party shall have any further obligation or
liability to the other under this Contract. In the context of condemnation,
“substantial” shall mean condemnation of such portion of the Hotel (or access
thereto) as could, in Buyer’s reasonable judgment, render use of the remainder
impractical or unfeasible for the uses herein contemplated, and, in the context
of casualty loss or damage, “substantial” shall mean a loss or damage in excess
of Three Hundred Thousand and No/100 Dollars ($300,000.00) in value, provided,
however, that no casualty loss or damage shall be “substantial” if such casualty
loss or damage is capable of being cured by Seller prior to Closing.

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          13.3 Procedure for Closing. If Buyer shall not timely elect to
terminate this Contract under Section 13.2 above, or if the loss, damage or
condemnation is not substantial, Seller agrees to pay to Buyer at the Closing
all insurance proceeds or condemnation awards which Seller has received as a
result of the same, plus an amount equal to the insurance deductible (if such
amount shall not have already been paid to the insurer) and assign to Buyer all
insurance proceeds and condemnation awards payable as a result of the same
(subject to Construction Lender’s approval), in which event the Closing shall
occur without Seller replacing or repairing such damage. In the case of damage
or casualty, at Buyer’s election, Seller shall repair and restore the Property
to its condition immediately prior to such damage or casualty and shall assign
to Buyer all excess insurance proceeds. Notwithstanding anything to the contrary
in this Section 13.3, all insurance proceeds and condemnation awards shall be
paid to Construction Lender pursuant to the Construction Loan documents, until
such time as the Construction Loan has been paid in full.

ARTICLE XIV
DEFAULT REMEDIES

          14.1 Buyer Default. If Buyer defaults under this Contract after the
Review Period, and such default continues for fifteen (15) days following
written notice from Seller (provided no notice shall extend the time for
Closing), then at Seller’s election by written notice to Buyer, (i) this
Contract shall be terminated and of no effect, in which event the Earnest Money
Deposit, including any interest thereon, shall be paid to and retained by the
Seller as Seller’s sole and exclusive remedy hereunder, and as liquidated
damages for Buyer’s default or failure to close, and both Buyer and Seller shall
thereupon be released from all obligations hereunder or (ii) Seller may treat
this Contract as being in full force and effect by written notice to Buyer
delivered to Buyer at any time prior to the completion of such cure, in which
event the Seller shall have the right to an action against Buyer for specific
performance.

          14.2 Seller Default. If Seller defaults under this Contract, and such
default continues for thirty (30) days following written notice from Buyer to
Seller and Construction Lender, Buyer may elect, as Buyer’s sole and exclusive
remedy, either (i) to terminate this Contract by written notice to Seller and
Construction Lender, delivered to Seller and Construction Lender at any time
prior to the completion of such cure, in which event the Earnest Money Deposit,
including any interest thereon, shall be returned to the Buyer, and thereafter
both the Buyer and Seller shall thereupon be released from all obligations with
respect to this Contract, except as otherwise expressly provided herein; or (ii)
to treat this Contract as being in full force and effect by written notice to
Seller and Construction Lender, delivered to Seller and Construction Lender at
any time prior to the completion of such cure, in which event the Buyer shall
have the right to an action against Seller for specific performance and all
other rights and remedies available at law or in equity.

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

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ARTICLE XV
NOTICES

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

 

 

 

 

 

If to Buyer:

 

Apple Suites Realty Group, Inc.
814 E. Main Street
Richmond, Virginia 23219
Attention: Sam Reynolds
Fax No.: (804) 344-8129

 

 

 

 

 

with a copy to:

 

Apple Suites Realty Group, Inc.
814 E. Main Street
Richmond, Virginia 23219
Attention: Legal Dept.
Fax No.: (804) 344-8129

 

 

 

 

 

 

 

AND

 

 

 

 

 

 

 

RBC Bank (USA)
131 N. Church Street
Rocky Mount, NC 27807
Attention: W. Mahler Thorp

 

 

 

 

 

If to Seller:

 

The Generation Companies, LLC
1822 N.C. Highway 54 East, Suite 300
Durham, North Carolina 27713
Attention: H. Mark Daley, III
Fax No.: (919) 361-9009

 

 

 

 

 

with a copy to:

 

Poyner Spruill LLP
301 Fayetteville Street, Suite 1900
Raleigh, North Carolina 27601
Attention: Joseph B. Dempster, Jr.
Fax No.: (919) 783-1075

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AND

 

 

 

 

 

 

 

RBC Bank (USA)
131 N. Church Street
Rocky Mount, NC 27807
Attention: W. Mahler Thorp

Addresses may be changed by the parties hereto by written notice in accordance
with this Section. Any notice allowed hereunder may be given by a party’s legal
counsel.

ARTICLE XVI
MISCELLANEOUS

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

          16.2 Binding Effect; Assignment. This Contract shall be binding upon
and shall inure to the benefit of each of the parties hereto, their respective
successors and assigns. Notwithstanding the foregoing, neither Buyer nor Seller
may assign its interest in this Contract or any of its rights or duties
hereunder without the prior written consent of the other party, which consent
shall not be unreasonably withheld, conditioned or delayed, except as follows

                    (a) Seller may assign, and Buyer’s consent shall not be
required in connection with: (i) an assignment of Seller’s interests hereunder
to a newly-formed entity in which Seller has an ownership interest and is the
controlling officer or member, and (ii) an assignment of Seller’s interests
hereunder to Construction Lender (as defined below).

                    (b) Buyer may assign, and neither Seller’s nor Construction
Lender’s consent shall be required in connection with an assignment of Buyer’s
interests hereunder to a newly-formed entity in which Buyer or its upstream
affiliates has a 100% ownership interest; provided, however, no assignment shall
relieve Buyer of its obligations hereunder.

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

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

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

          16.6 Confidentiality. Except as either party may reasonably determine
is required by law (including without limitation laws and regulations applicable
to Buyer or its Affiliates who may be public companies): (i) prior to Closing,
Buyer and Seller shall not disclose the existence of this Contract or their
respective intentions to purchase and sell the Property or generate or
participate in any publicity or press release regarding this transaction, except
to Buyer’s and

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Seller’s legal counsel and lender, Buyer’s consultants and agents, the Manager,
the Franchisor and the Title Company and except as necessitated by Buyer’s Due
Diligence Examination and/or shadow management, unless both Buyer and Seller
agree in writing and as necessary to effectuate the transactions contemplated
hereby and (ii) following Closing, the parties shall coordinate any public
disclosure or release of information related to the transactions contemplated by
this Contract, and no such disclosure or release shall be made without the prior
written consent of Buyer, and no press release shall be made without the prior
written approval of Buyer and Seller.

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

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

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

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

          16.11 (Intentionally Omitted)

          16.12 Further Acts. In addition to the acts, deeds, instruments and
agreements recited herein and contemplated to be performed, executed and
delivered by Buyer and Seller, Buyer and Seller shall perform, execute and
deliver or cause to be performed, executed and delivered at the Closing or after
the Closing, any and all further acts, deeds, instruments and agreements and
provide such further assurances as the other party or the Title Company may
reasonably require to consummate the transaction contemplated hereunder provided
that such acts, deeds, instruments or agreements are at no expense to the
parties hereto, do not waive any right or remedy of the parties hereto and do
not submit the parties hereto to liability.

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

          16.14 Notice of Proposed Listing. In the event that the sale of the
Property contemplated by this Contract is consummated, if at any time during the
five (5) year period commencing on the date of execution of this Contract by
Buyer and Seller, Seller or any of its

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Affiliates propose to list for sale any Hilton or Marriott-branded hotel
property or properties owned, acquired, constructed or developed by Seller or
its Affiliates and located within a ten (10)-mile radius of the Hotel (any such
other hotel property being referred to as an “Other Property”), Seller shall
promptly deliver to Buyer written notice thereof and Buyer shall have the right
to see and participate in the offering and/or otherwise make an offer to
purchase any such Other Property.

          16.15 Construction Loan.

                    (a) As a condition to Closing in favor of Buyer and Seller,
Seller shall have secured financing sufficient for the construction of the Hotel
(the “Construction Loan”) on terms and conditions acceptable to Seller in its
sole and absolute discretion. Should Seller be unable to secure such financing
on terms acceptable to Seller in its sole and absolute discretion, on or before
December 31, 2010, then any time prior to January 31, 2011 Buyer or Seller may
terminate this Contract by written notice to the other, whereupon: (i) the
Earnest Money Deposit shall be promptly returned by Escrow Agent to Buyer
together with all accrued interest, if any, (ii) Seller shall reimburse Buyer
for its out of pocket diligence costs in an amount not to exceed $25,000, (iii)
this Contract shall be terminated automatically, (iv) all materials supplied by
Seller to Buyer shall be returned promptly to Seller, and (v) both parties will
be relieved of all other rights, obligations and liabilities hereunder, except
for the parties’ respective obligations pursuant to Sections 3.3 and 16.6 above.

          16.16 No Third Party Beneficiary. No agreement or funding arrangement
between Seller and Construction Lender shall be construed as existing for the
benefit of Buyer or be enforceable by Buyer.

          16.17 Title to Land. Buyer acknowledges that as of the date of this
Contract, Seller does not own legal title to the Land; however, Seller warrants
that it has entered into a contract to acquire the Land on or about December 31,
2010 (the “Land Agreement”). If this Contract has not been earlier terminated,
Seller shall provide Buyer with not more than 10 days prior notice of imminent
closing on the Land pursuant to the Land Agreement whereupon Buyer shall within
two (2) business days prior to the closing under the Land Agreement, deposit the
Additional Deposit with Escrow Agent. Notwithstanding anything contained herein
to the contrary, if Seller does not acquire legal title to the Land on or before
December 31, 2010, then any time prior to January 31, 2011(but in any event
before Seller acquires legal title to the Land), Buyer may terminate this
Contract by written notice to Seller, whereupon: (i) the Earnest Money Deposit
shall be promptly returned by Escrow Agent to Buyer together with all accrued
interest, if any, (ii) Seller shall reimburse Buyer for its out of pocket
diligence costs in an amount not to exceed $50,000, (iii) this Contract shall be
terminated automatically, (iv) all materials supplied by Seller to Buyer shall
be returned promptly to Seller, and (v) both parties will be relieved of all
other rights, obligations and liabilities hereunder, except for the parties’
respective obligations pursuant to Sections 3.3 and 16.6 above.

[Signatures Begin on Following Page]

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

 

 

 

 

 

BUYER:

 

 

 

 

APPLE SUITES REALTY GROUP, INC., a Virginia corporation

 

 

 

 

By:

/s/ David Buckley

 

 

 

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

 

 

Name: David Buckley

 

Title: Vice President

 

 

 

 

SELLER:

 

 

 

 

THE GENERATION COMPANIES, LLC,

 

a North Carolina limited liability company

 

 

 

 

By:

/s/ H. Mark Daley III

 

 

 

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

 

 

Name: H. Mark Daley III

 

Title: President

36

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EXHIBIT “A”

LEGAL DESCRIPTION OF LAND

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

EXHIBIT B

LIST OF FF&E

To be provided by Seller at least 15 Business Days prior to Closing

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

EXHIBIT C

LIST OF HOTEL CONTRACTS

EXHIBIT C-1 - Seller’s Hotel Contracts

To be provided by Seller and approved by Buyer during the Review Period

EXHIBIT C-2 - Other Hotel Contracts

To be provided by Seller and approved by Buyer during the Review Period

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

EXHIBIT D

CONSENTS AND APPROVALS

          A. Consents Under Hotel Contracts

To be provided by Seller and approved by Buyer during the Review Period

          B. Consents Under Other Contracts

To be provided by Seller and approved by Buyer during the Review Period

          C. Governmental Approvals and Consents

To be provided by Seller and approved by Buyer during the Review Period

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

EXHIBIT E

ENVIRONMENTAL REPORTS

To be provided by Seller and approved by Buyer during the Review Period

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

EXHIBIT F

CLAIMS OR LITIGATION PENDING

To be provided by Seller and approved by Buyer during the Review Period

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

EXHIBIT G

ESCROW AGREEMENT

 

 

 

          THIS ESCROW AGREEMENT (this “Agreement”) made the ___ day of _______,
2010 by and among THE GENERATION COMPANIES, LLC, a North Carolina limited
liability company (“Seller”), APPLE __________________________, a Virginia
corporation, or its assigns (“Buyer”), and CHICAGO TITLE COMPANY (“Escrow
Agent”).

 

R E C I T A L S

 

 

 

          WHEREAS, pursuant to the provisions of Section 2.5 of that certain
Purchase Contract dated _______ ___, 2010 (the “Contract”) between Seller and
Buyer (the “Parties”), the Parties have requested Escrow Agent to hold in escrow
in accordance with the provisions, upon the terms, and subject to the
conditions, of this Agreement, the Earnest Money Deposit as defined in the
Contract (the “Deposit”); and

 

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

 

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

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

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

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

                         B. If at any time after the expiration of the Review
Period, Buyer claims entitlement to all or any portion of the Deposit, Buyer
shall give written notice to Escrow Agent stating that Seller has defaulted in
the performance of its obligations under the Contract beyond the applicable
grace period, if any, or that Buyer is otherwise entitled to the return of the
Deposit or applicable portion thereof and shall direct Escrow Agent to return
the Deposit or applicable portion thereof to Buyer (the “Buyer’s Notice”).
Escrow Agent shall promptly deliver a copy of Buyer’s Notice to Seller. Seller
shall have five (5) business days after receipt of the copy of Buyer’s Notice to
deliver written notice to Escrow Agent and Buyer objecting to the

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release of the Deposit or applicable portion thereof to Buyer (“Seller’s
Objection Notice”). If Escrow Agent does not receive a timely Seller’s Objection
Notice, Escrow Agent shall release the Deposit or applicable portion thereof to
Buyer. If Escrow Agent does receive a timely Seller’s Objection Notice, Escrow
Agent shall release the Deposit or applicable portion thereof only upon receipt
of, and in accordance with, written instructions signed by Seller and Buyer, or
the final order of a court of competent jurisdiction.

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

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

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

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

                         C. Escrow Agent shall not be bound or in any way
affected by any notice of any modification or cancellation of this Agreement, or
of any fact or circumstance affecting or alleged to affect rights or liabilities
hereunder other than as is herein set forth, or affecting or alleged to affect
the rights and liabilities of any other person, unless notice of the

2

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same is delivered to Escrow Agent in writing, signed by the proper parties to
Escrow Agent’s satisfaction and, in the case of modification, unless such
modification shall be approved by Escrow Agent in writing.

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

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

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

 

 

 

 

 

(i)

If addressed to Seller, to:

 

 

 

 

 

 

 

The Generation Companies, LLC
1822 N.C. Highway 54 East, Suite 300
Durham, North Carolina 27713
Attention: H. Mark Daley, III
Fax No.: (919) 361-9009

3

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with a copy to:

 

 

 

 

 

 

 

Poyner Spruill LLP
301 Fayetteville Street, Suite 1900
Raleigh, North Carolina 27601
Attention: Joseph B. Dempster, Jr.
Fax No.: (919) 783-1075

 

 

 

 

 

(ii)

If addressed to Buyer, to:

 

 

 

 

 

Apple Suites Realty Group, Inc.

 

 

814 E. Main Street

 

 

Richmond, Virginia 23219

 

 

Attn: Nelson Knight

 

 

Fax No.: (804) 344-8129

 

 

 

 

 

with a copy to:

 

 

 

 

 

Apple Suites Realty Group, Inc.

 

 

814 E. Main Street

 

 

Richmond, Virginia 23219

 

 

Attn: Legal Dept.

 

 

Fax No.: (804) 344-8129

 

 

 

 

(iii)

If addressed to Escrow Agent, to:

 

 

 

 

 

 

Chicago Title Company

 

 

Attn: Debby Moore

 

 

5501 LBJ Freeway, Ste. 200

 

 

Dallas, Texas 75240

 

 

Fax No.: (214) 570-0210

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

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

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

[Signature on Next Page]

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

 

 

 

 

 

 

SELLER:

 

 

 

THE GENERATION COMPANIES, LLC

 

 

 

By:

 

 

 

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

 

Name:

 

 

 

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

 

Title:

 

 

 

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

 

 

 

BUYER:

 

 

 

APPLE SUITES REALTY GROUP, INC.

 

 

 

By:

 

 

 

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

 

Name:

 

 

 

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

 

Title:

 

 

 

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

 

 

 

ESCROW AGENT:

 

 

 

CHICAGO TITLE COMPANY

 

 

 

By:

 

 

 

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

 

Name:

 

 

 

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

 

Title:

 

 

 

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5

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EXHIBIT H

CONSTRUCTION WARRANTY

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

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

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

1

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EXHIBIT I

PRE-OPENING BUDGET

 

 

 

 

 

 

 

 

 

 

 

 

 

BUDGET

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

Guest Supply--Rooms

 

 

 

 

$

40,000

 

Guest Room & Pool Linen

 

 

 

 

$

55,000

 

Restaurant/ Displayware/Flatware/Small Wares

 

 

 

 

$

15,000

 

P & G--Laundry & Housekeeping Supplies

 

 

 

 

$

2,800

 

Rising Signs/Focus Services

 

 

 

 

$

5,000

 

Snack Shop Supplies

 

 

 

 

$

2,300

 

Business Center Computers/Printer

 

 

 

 

$

2,200

 

Sysco--Breakfast food

 

 

 

 

$

2,500

 

HD Supply-Maintenance

 

 

 

 

$

9,000

 

Staff Uniforms

 

 

 

 

$

5,000

 

Front Desk

 

 

 

 

$

7,000

 

Memberships & Promotional items

 

 

 

 

$

4,000

 

Pre-Opening Advertising/Sales

 

 

 

 

$

6,000

 

Hilton Training

 

 

 

 

$

22,000

 

Preopening Payroll **

 

 

 

 

$

60,000

 

Pre-Opening Travel

 

 

 

 

$

4,000

 

 

 

 

 

 

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

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

 

 

Total

 

 

Total

 

$

241,800

 

 

 

 

 

 

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

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

 

 

 

 

 

 

** Pre Opening Payroll

 

Budget

 

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

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

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

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

 

 

 

 

 

General Manager

 

$

23,000

 

Director of Sales

 

$

13,300

 

Guest Service Manager

 

$

3,500

 

House Keeping Manager

 

$

2,500

 

Maintenance Engineer

 

$

2,500

 

Front Desk& Audit

 

$

7,200

 

Room Attendant & Laundry

 

$

7,000

 

Houseman

 

$

1,000

 

Total

 

$

60,000

 

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