exv10w13






Exhibit 10.13




AGREEMENT OF PURCHASE AND SALE




OF




REAL PROPERTY COMMONLY KNOWN AS




THE SKAMANIA LODGE




STEVENSON, WASHINGTON




and




Joint Escrow Instructions




among




COMMONWEALTH WASHINGTON HOLDING, INC., a Delaware corporation

(“Holding”)




and




COMMONWEALTH WASHINGTON OPERATING , INC., a Delaware corporation

(“Operator”)




(jointly, “Seller”),




and




TERRAPINS OWNER LLC, a Delaware limited liability company




(“Buyer”).




Effective Date: September 22, 2010




 









 





AGREEMENT FOR PURCHASE AND SALE

OF REAL PROPERTY

AND




JOINT ESCROW INSTRUCTIONS




     THIS AGREEMENT OF PURCHASE AND SALE OF REAL PROPERTY AND JOINT ESCROW INSTRUCTIONS (“this
Agreement”) is made as of September 22, 2010 among COMMONWEALTH WASHINGTON HOLDING, INC., a
Delaware corporation (“Holding”), and COMMONWEALTH WASHINGTON OPERATING, INC., a Delaware
corporation (“Operator”), (collectively, “Seller”),



and




     TERRAPINS OWNER LLC, a Delaware limited liability company (“Buyer”).



     IN CONSIDERATION OF the mutual covenants and conditions contained herein, parties hereto
(together, the “Parties” and each, sometimes, a “Party”) do hereby agree and covenant with each
other as follows:



     1. DEFINITIONS.



          1.1 Affiliate. “Affiliate” means, with respect to an indicated person, any other person
which controls, is controlled by or is under common control with such indicated person.



          1.2 Approval Date. “Approval Date” means the 30th day after the Effective Date.



          1.3 Approved Capital Expenditures. “Approved Capital Expenditures” means those items of
capital improvements, repairs and replacements, if any, so identified on the Schedule of Approved
Capital Expenditures attached hereto as Exhibit Q.



          1.4 Assumed Contracts. “Assumed Contracts” means the Equipment Leases and Service
Contracts identified on the Schedule of Contracts attached hereto as Exhibit J.



          1.5 Bill of Sale. “Bill of Sale” means a bill of sale in the form attached hereto as
Exhibit C, together conveying the FF&E and Inventory to Buyer or Buyer’s nominee(s).



          1.6 Broker. “Broker” means Eastdil Secured



          1.7 Business Day. “Business Day” means a day other than Saturday, Sunday or other day
when commercial banks in California are authorized or required by Law to close.



          1.8 Cash Bank. “Cash Bank” means, with respect to the Hotel, cash on hand in house banks
and petty cash as of Closing.



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          1.9 Casualty. “Casualty” means damage, destruction or loss of the Hotel Premises or any
portion thereof by a casualty event or a taking under power of eminent domain.



          1.10 Claim. “Claim” means any claim, demand, liability, legal action or proceeding,
investigation, fine or other penalty, and loss, cost or expense related thereto (including, without
limitation, attorneys’ fees and disbursements actually and reasonably incurred).



          1.11 Closing. “Closing” means the concurrent delivery, in accordance with this Agreement,
(A) by Seller to Buyer of the Transfer Instruments and (B) by Buyer to Seller of the Purchase
Price.



          1.12 Closing Date. “Closing Date” means the date upon which Closing actually occurs.



          1.13 Closing Documents. “Closing Documents” means the Transfer Instruments, the FIRPTA
Certificate, and all the other documents to be delivered hereunder at, or for purposes of
effecting, Closing.



          1.14 Continuing Employees. “Continuing Employees” means all of the Hotel Employees who
are employed by Buyer or Buyer’s Hotel manager or operator after Closing.



          1.15 Contract Assignment. “Contract Assignment” means an assignment and assumption of
Assumed Contracts substantively in the form attached hereto as Exhibit E.



          1.16 Counsel. “Counsel” means each Party’s respective legal counsel for the transaction
contemplated by this Agreement: with respect to Seller, the law firm of Seyfarth Shaw LLP; and,
with respect to Buyer, the law firm of Honigman Miller Schwartz and Cohn LLP.



          1.17 Day. The term “day” means a calendar day.



          1.18 Deed. “Deed” means a special warranty deed in the form attached hereto as
Exhibit B, conveying the Hotel Premises to Buyer subject only to Permitted Exceptions.



          1.19 Deposit. “Deposit” has the meaning specified in Section 3.3.



          1.20 Disputed Payable. “Disputed Payable” means any amount that a third party claims to
be due or accrued as of Closing with respect to the operation of the Hotel, but that Seller or
Hotel Manager disputes (including the disputed portion of any bill, invoice or claim that Seller or
Hotel Manager otherwise acknowledges to be due and payable).



          1.21 Effective Date. “Effective Date” means the date specified in the initial paragraph of
this Agreement.



          1.22 Eligible Employees. “Eligible Employees” means all Hotel Employees, other than
Excluded Employees, whom the Hotel Manager employs at the Hotel immediately prior to Closing.



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          1.23 Employee Leave. “Employee Leave” means vacation, sick leave and any other paid leave
accrued or accruing with respect to Hotel Employees.



          1.24 Employee Liabilities. “Employee Liabilities” means all obligations and liabilities,
actual or contingent with respect to Hotel Employees, whether accruing before or after Closing,
including, without limitation, any and all obligations or liabilities: for (A) wages, salaries,
Employee Leave, fringe benefits, and payroll taxes; (B) contributions and other payments to Hotel
Employee Plans, (C) worker’s compensation claims based on any real or alleged occurrence prior to
Closing; and (D) claims or penalties under applicable Laws governing employer/employee relations
(including the National Labor Relations Act and other labor relations laws, fair employment
standards Laws, fair employment practices and anti-discrimination Laws, the Worker Adjustment and
Retraining Notification Act of 1988, ERISA, the Multi-Employer Pension Plan Amendments Act, and the
Consolidated Omnibus Budget Reconciliation Act of 1985).



          1.25 Environmental Report. “Environmental Report” means the “Phase 1” site assessment
report(s) and any other reports regarding the environmental condition of the Hotel Premises that
are identified on Exhibit N.



          1.26 Equipment Lease. “Equipment Lease” means a personal property lease covering any
item(s) of FF&E, including (without limitation) the leases identified as such in the schedule
attached hereto as Exhibit J.



          1.27 ERISA. “ERISA” means the Employee Retirement Income Security Act of 1974, as
amended.



          1.28 Escrow. “Escrow” means the escrow established pursuant to this Agreement for
purposes of holding the Deposit and, pending Closing, the balance of the Purchase Price and the
Transfer Instruments to be recorded at Closing.



          1.29 Escrow Agent. “Escrow Agent” means Chicago Title Insurance Company, National
Business Unit, acting through its office at 700 South Flower Street, Suite 800, Los Angeles,
California 90017, Attention: Maggie Watson, whenever acting in the capacity of an escrow holder
pursuant hereto.



          1.30 Excluded Employees. “Excluded Employees” means (A) the Hotel’s General Manager and
such other managerial Hotel Employees, if any, as Seller or Hotel Manager designates to Buyer in
writing before the Approval Date, and (B) not more than 25 Hotel Employees whom Buyer shall
designate to Seller and the Hotel Manager not later than ten Business Days before the Closing Date.



          1.31 Existing Survey. “Existing Survey” means the ALTA/ACSM Survey of the Hotel Parcel
identified on Exhibit N.



          1.32 Extended Coverage. “Extended Coverage” means the deletion from the Title Policy of
general exceptions for survey matters, unrecorded easements, mechanics’ liens, unrecorded liens for
taxes and assessments and rights of parties in possession (to the extent such



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deletions are customarily offered by the Title Company in the jurisdiction where the Hotel is
located).




          1.33 FF&E. “FF&E” means machinery, equipment, appliances, furniture, fittings, removable
fixtures, tools and other articles of durable personal property of every kind and nature, including
spare parts and reserve stock, which are owned or leased by or for the account of Seller and are
used or useable in the operation of the Hotel, including, without limitation and subject to
depletion and replacement in the Ordinary Course: (1) office furniture and equipment, (2) room
furnishings, including banquet chairs and tables used or usable in the conference facilities within
the Hotel, (3) art work and other decorative items, (4) televisions, radios, VCRs and other
consumer electronic equipment, (5) telecommunications equipment, including audio visual equipment
used or usable in connection with the conference facilities within the Hotel, (6) computer
equipment and software, (7) blankets, pillows, linens, towels and other bed clothing, (8) china,
crystal, dishware, glassware, silverware, flatware and other “operating inventory” as that term is
used in the Uniform System of Accounts, (9) kitchen appliances, cookware and other cooking
utensils, (10) vehicles, (11) manuals, schematics, plans and other written materials pertaining to
the use, operation, maintenance or repair of any item of FF&E, and (12) all equipment, machinery,
appliances, tools and other articles of durable personal property used or usable in connection with
the operation of the golf course which forms a portion of the Hotel; but excluding (a) personal
property owned by any Hotel guest, tenant, concessionaire, licensee or other third party except for
Skamania LLC (unless such person owns such property for the account or benefit of Seller), and (b)
manuals, records and other like materials owned by (and proprietary to) the Hotel Manager, unless
prepared or maintained solely for the Hotel, and (c) computer software licensed to Seller or Hotel
Manager, unless (A) such license is by its terms transferable in connection with the sale of the
Hotel to Buyer and (B) Buyer pays any fee or other charge imposed by the licensor in connection
with such a transfer.



          1.34 Final Statement. “Final Statement” has the meaning specified in Section
11.1.



          1.35 FIRPTA Certificate. “FIRPTA Certificate” means a certificate with respect to Holding
and Operator, substantively in the form attached as Exhibit G, confirming to Buyer that
each of Holding and Operator is not a foreign person or entity for purposes of § 1445 of the
Internal Revenue Code of 1986, as amended (with such supplemental statements as may be required to
exempt the transactions contemplated hereby from any withholding tax requirements under applicable
state Laws).



          1.36 General Assignment. “General Assignment” means a general assignment and assumption
agreement substantively in the form attached hereto as Exhibit F.



          1.37 Governmental Authority. “Governmental Authority” means any of the United States
Government, the government of any of the United States or any county or municipality therein, and
any executive department, legislative body, administrative or regulatory agency, court, officer
(whether elected, appointed or otherwise designated) or other authority thereof, whenever
purporting to act in an official capacity.



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          1.38 Hazardous Substance. “Hazardous Substance” means any substance defined as “waste”,
“hazardous waste”, “hazardous substance”, “hazardous material”, “toxic substance”, “pollutant”,
“contaminant” in, or which are otherwise specifically subject to regulation under, the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended by the
Superfund Amendments and Reauthorization Act of 1986, 42 U.S.C. § 9601 et seq.; the
Toxic Substance Control Act, 15 U.S.C. § 2601 et seq.; the Hazardous Materials
Transportation Act, 49 U.S.C. § 1802; or the Resource Conservation and Recovery Act, 42 U.S.C. §
6901 et seq., and any corresponding State of Washington laws, rules or regulations
governing the same, and any friable asbestos containing materials (but excluding non-friable
asbestos-containing materials), PCBs or formaldehyde foam insulation.



          1.39 Hotel. “Hotel” means all of the Hotel Premises, FF&E, the Leased Equipment, the
Inventory and Intangibles comprising the “Skamania Lodge”, located in Stevenson, Washington.



          1.40 Hotel Employee Leasing Agreement. “Hotel Employee Leasing Agreement” means that
certain employee leasing agreement dated as of January 1, 2008, by and between Hotel Employer and
Operator.



          1.41 Hotel Employees. “Hotel Employees” means all persons employed at the Hotel by Hotel
Employer.



          1.42 Hotel Employee Plan. “Hotel Employee Plan” means an employee benefit plan (as
defined in ERISA) to which any of Seller, Hotel Manager or an Affiliate of Seller or Hotel Manager
currently makes contributions on account of any Hotel Employees.



          1.43 Hotel Employer. “Hotel Employer” means Destination Washington Services, Inc., a
Washington corporation.



          1.44 Hotel Improvements. “Hotel Improvements” means all of the buildings, other immovable
structures and improvements and fixtures on the Hotel Parcel.



          1.45 Hotel Manager. “Hotel Manager” means Destination Washington Management, Inc.



          1.46 Hotel Management Agreement. “Hotel Management Agreement” means that certain
management agreement between Operator and Hotel Manager.



          1.47 Hotel Parcel. “Hotel Parcel” means (A) those certain parcels described in
Exhibit A hereto, together with (B) all appurtenant rights , including, without limitation:
(i) easements and rights-of-way, (ii) licenses and other privileges, (iii) rights in and to land
underlying adjacent highways, streets and other public rights-of-way and rights of access thereto,
(iv) rights in and to strips and gores of land within or adjoining any such parcel, (v) air rights,
excess floor area rights and other transferable development rights belonging to or useable with
respect to any such parcel, (vi) rights to utility connections and hook-ups, (vii) water rights,
(viii) riparian rights, and (ix) any other rights which any of Seller may have in or with respect
to land adjoining any such parcel (including land which is separated from any such parcel only by
public highway, street or other right-of-way).



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          1.48 Hotel Party. “Hotel Party” means, with respect to a Service Contract or Equipment
Lease, the owner, operator and/or manager of the Hotel (as applicable) obligated as vendee or
lessee under such contract or lease.



          1.49 Hotel Payable. “Hotel Payable” means any account payable outstanding as of Closing
for the Hotel, other than Disputed Payables.



          1.50 Hotel Premises. “Hotel Premises” means the Hotel Parcel and the Hotel Improvements.



          1.51 Hotel Records. “Hotel Records” means all of the books, records, correspondence and
other files, both paper and electronic (and including any accounting, database or other
record-keeping software used in connection with such books and records which Seller owns or
otherwise has the right freely to transfer) which have been received or generated and maintained in
the course of operation of the Hotel and which are in Seller’s possession or control.



          1.52 Indemnify. “Indemnify” means to hold harmless and indemnify an indemnified party
from and against a Claim and, where applicable, to defend such party by counsel reasonably
satisfactory to it, all at the sole expense and liability of the indemnifying party.



          1.53 Intangibles. “Intangibles” means Seller’s rights, title and interest, if any, in (A)
trade names, trademarks, service marks, logos and other forms of identification used to identify
the Hotel or any of its facilities or operations, including the name “Skamania Lodge” and “Skamania
Golf Course,” and the names used to designate the restaurant and bar facilities within the Hotel,
(B) the Hotel Records, (C) plans and specifications for the Hotel Improvements, (D) the Permits,
(E) Repair Warranties, to the extent assignable in connection with a sale of the Hotel, (F) all of
the membership interests in Skamania LLC, (G) studies, analyses, reports and other written
materials in Seller’s possession or control pertaining to the condition of the Hotel Improvements
and the Hotel Parcel, and (H) all websites and domain names associated with the Hotel, all to the
extent assignable in connection with a sale of the Hotel.



          1.54 Inventory. “Inventory” means (i) all goods held for sale to Hotel guests and others
in the Ordinary Course and (ii) the stock of supplies and other consumables used in the operation
and maintenance of the Hotel in the Ordinary Course, but excluding Liquor Inventory and excluding
“operating inventory” as that term is used in the Uniform System of Accounts.



          1.55 Last Closing Date. “Last Closing Date” means the 10th day after the Approval Date.



          1.56 Laws. “Laws” means any and all:



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               1.56.1 Constitutions, statutes, ordinances, rules (including rules of the Securities and
Exchange Commission), regulations, orders, rulings or decrees of any Governmental Authority.



               1.56.2 Agreements with or covenants or commitments to any Government Authority which are
binding upon Seller or any of the elements of the Hotel (including, without limitation, any
requirements or conditions for the use or enjoyment of any license, permit, approval, authorization
or consent legally required for the operation of the Hotel).



          1.57 Lease. “Lease” means any space lease, license, concession or other such arrangement
for use of space within the Hotel, including, but not limited to, those listed on Exhibit I
attached hereto other than (A) transient use of guest rooms, banquet rooms or conference rooms by
Hotel guests in the Ordinary Course and (B) the Operating Lease.



          1.58 Lease Assignment. “Lease Assignment” means an assignment and assumption of Leases
substantively in the form attached hereto as Exhibit D.



          1.59 Leased Equipment. “Leased Equipment” means any item of FF&E that is leased rather
than owned by Seller or Operator.



          1.60 Licensed Premises. “Licensed Premises” means the areas within the Hotel described or
otherwise identified in or with respect to the Liquor Licenses as licensed for Liquor Operations.



          1.61 Lien. “Lien” means any mortgage, deed of trust or other consensual lien, mechanic’s
or any materialman’s lien, judgment lien, lien for delinquent real property taxes or assessments,
other tax and statutory lien (other than liens for non delinquent real estate taxes, general and
special assessments or any lien arising out of any activity of Buyer) which affects any of the
Hotel Premises and is prior to any of Seller’s interests therein.



          1.62 Liquor Inventory. “Liquor Inventory” means all liquor, wine, beer and other
alcoholic beverages held for sale to Hotel guests and others in the Ordinary Course or otherwise
used in the operation of the Hotel.



          1.63 Liquor License. “Liquor License” means any government license, permit or other
authorization for the Liquor Operations.



          1.64 Liquor Operations. “Liquor Operations” means the sale and service of liquor, wine,
beer and other alcoholic beverages at the Hotel.



          1.65 Material Contract. “Material Contract” means a Service Contract or Equipment Lease
(A) for which scheduled payments due to the vendor or lessor thereunder during any 12-month period
occurring after Closing will exceed $15,000 or (B) whose unexpired term after Closing exceeds 12
months (excluding any portion of such term that may be cancelled by the Hotel party without
penalty, by notice given on the later of (i) the Closing Date or (ii) the date Buyer first
discovers such contract). Material Contracts do not include any contracts (a) that do not impose
any obligation on the Hotel Party to make any payments after Closing, (b) for which payment will be
due from the Hotel Party only if such party orders or otherwise requests



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goods or services under such contract or (c) which obligate the Hotel Party to make payments
solely out of, and as a percentage of, services performed by the other party for Hotel guests that
impose no out-of-pocket cost on the Hotel Party.




          1.66 Objectionable Title Matters. “Objectionable Title Matters” has the meaning specified
in Section 4.2.



          1.67 OFAC. “OFAC” has the meaning specified in Section 5.1.2.6.



          1.68 Operating Lease. “Operating Lease” means the lease between Holding and Operator,
under which Operator leases the Hotel Premises.



          1.69 Ordinary Course. “Ordinary Course” means the course of day to day operation of the
Hotel, in accordance with its current operating budget (a copy of which is attached hereto as
Exhibit M) and in a manner which does not materially vary from the policies, practices and
procedures in effect as of the Effective Date.



          1.70 Original. “Original” means any of (A) an original counterpart of any Lease or
Assumed Contract, (B) the Hotel Records or (C) other documents which comprise or evidence the
Intangibles, to the extent within Seller’s possession or control; and “the Originals” means all
such items.



          1.71 Paid Voucher. “Paid Voucher” means a Voucher, such as a gift certificate, issued in
return for money payment.



          1.72 Permit. “Permit” means any permit, certificate, license or other form of
authorization or approval issued by a government agency or authority and legally required for the
proper operation and use of the Hotel (including, without limitation, any certificates of occupancy
with respect to the Hotel Improvements, elevator permits, conditional use permits, zoning variances
and business licenses, but excluding Liquor Licenses) to the extent held and assignable by Seller
or otherwise transferable with the Hotel.



          1.73 Permitted Exceptions. “Permitted Exceptions” means (A) liens for real property taxes
and assessments not yet delinquent (but not personal property taxes), (B) liens or encumbrances
arising out of any activity of Buyer, (C) the Leases identified on the Schedule of Leases attached
hereto as Exhibit I or hereafter made in accordance with Section 6, (D) the Assumed
Contracts to the extent the same encumber title to any of the Hotel and (E) any other matter deemed
to be a Permitted Exception pursuant to Section 4.2 or 4.4.



          1.74 Place of Closing. “Place of Closing” has the meaning specified in Section
10.1.



          1.75 Pre-Approval License. “Pre-Approval License” means, with respect to the application
for re-issuance of the Liquor License to Buyer or Buyer’s designee, a Temporary Pre-Approval Permit
issued by the Washington State Liquor Control Board under which the Liquor Operations may be
continued after Closing for 60 days, pending comprehensive review and final decision on such
application.



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          1.76 Preliminary Statement. “Preliminary Statement” has the meaning specified in
Section 8.



          1.77 Proceeds. “Proceeds” means all insurance proceeds, condemnation awards or other
amounts paid or payable to Seller in connection with any casualty damage to or taking by eminent
domain of any of the Hotel Premises, including any amounts recoverable under rent loss or business
interruption insurance to the extent allocable to periods after Closing.



          1.78 Purchase Price. “Purchase Price” means the gross purchase price being paid by Buyer
to Seller for the Hotel, as set forth in Section 3.1.



          1.79 Repair Warranties. “Repair Warranties” means contractors’, manufacturers’ and
vendors’ written guaranties, warranties and other obligations (if any) for the repair or
maintenance of any component of the Hotel Improvements or the FF&E.



          1.80 Reservation. “Reservation” means any reservation, commitment or agreement for the
use of guest rooms, conference rooms, dining rooms, golf course, or other facilities in the Hotel,
to the extent pertaining to periods from and after Closing.



          1.81 Reservation Deposit. “Reservation Deposit” means any deposit or advance payment
received by Seller or the Hotel Manager in connection with a Reservation.



          1.82 Seller’s Knowledge. “Seller’s Knowledge” means the actual present (and not the
constructive) knowledge of Scott Spann (Hotel general manager) and Tom Luersen (Hotel managing
director), and does not imply that said individual (A) has or should have conducted any inspection,
examination or other inquiry to determine the accuracy of any representation, warranty or other
statement made “to Seller’s Knowledge” in this Agreement or in any other document delivered by
Seller prior to or at Closing or (B) has any personal liability with respect to any such
representation, warranty or other statement.



          1.83 Service Contract. “Service Contract” means any of the written contracts or other
written arrangements for the continuing provision of services relating to the improvement,
maintenance, repair, protection or operation of the Hotel, excluding the Hotel Management
Agreement.



          1.84 Skamania LLC. “Skamania LLC” means Skamania Lodge Furnishings, LLC, a Delaware
limited liability company.



          1.85 Survey. “Survey” means a survey of the Hotel Premises, certified by a duly licensed
surveyor as of date no earlier than the Effective Date, meeting the minimum requirements of the
American Land Title Association/American Congress of Surveying and Mapping.



          1.86 Taxes. “Taxes” has the meaning specified in Section 8.1.



          1.87 Title Company. “Title Company” means Chicago Title Insurance Company, together with
any agent through which it may act in issuing the Title Policy.



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          1.88 Title Documents. “Title Documents” has the meaning specified in Section 4.2.



          1.89 Title Report. “Title Report” means a preliminary title commitment describing the
condition of title to the Hotel Premises, issued by the Title Company as of a date no earlier than
30 days prior to the Effective Date.



          1.90 Title Policy. “Title Policy” means an ALTA (Form 2006 or its local equivalent)
owner’s policy of title insurance for the amount of the Purchase Price, insuring or committing to
insure fee title to the Hotel Premises in Buyer subject only to Permitted Exceptions.



          1.91 Transactor. “Transactor” means, with respect to each Party, the person(s) authorized
by such Party to execute and deliver Transfer Instruments and other Closing Documents on behalf of
such Party.



          1.92 Transfer Instruments. “Transfer Instruments” means all the instruments by which
Seller will convey the Hotel to Buyer and/or Buyer’s nominees hereunder, including (without
limitation) the Deed, the Bill of Sale, the Contract Assignment, the General Assignment and the
Lease Assignment.



          1.93 Uniform System of Accounts. “Uniform Systems of Accounts” means the most current
edition of the Uniform System of Accounts for the Lodging Industry, published by the American Hotel
and Motel Association.



          1.94 Voucher. “Voucher” means any written undertaking (such as a guest certificate,
coupon, letter of donation or “trade-out”) issued by Operator or Hotel Manager to permit the
bearer, or a Person named therein to use a Hotel guest room, or other Hotel facility or service for
which a charge is customarily imposed, without payment. Vouchers do not include any such
undertaking to provide a complimentary room upgrade, or to apply a discounted rate (unless, and
then only to the extent, that such discount is for more than 60% of applicable rack rates for guest
rooms or more than 30% with respect to purchase of food, beverages or other goods).



          1.95 Other Definitions. Terms defined in any other part of this Agreement (including,
without limitation, “Seller,” “Buyer,” “Party” and “Parties,” and “this Agreement,” defined in the
initial paragraph hereof) shall have the defined meanings wherever capitalized herein. As used in
this Agreement, (i) the terms “herein,” “hereof” and “hereunder” refer to this Agreement in its
entirety and are not limited to any specific sections; (ii) the term “person” means any natural
person, other legal entity, or combination of natural persons and/or other legal entities acting as
a unit and (iii) the term “including” shall be read as “including without limitation.” Wherever
appropriate in this Agreement, the singular shall be deemed to refer to the plural and the plural
to the singular, and pronouns of certain genders shall be deemed to comprehend either or both of
the other genders.



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     2. COVENANT OF PURCHASE AND SALE. On and subject to the terms and conditions set forth in
this Agreement, Seller shall sell, convey, assign and transfer to Buyer, and Buyer shall purchase
and accept from Seller, all of the real and personal property comprising the Hotel (except the FF&E
held by Skamania LLC), all of the membership interests in Skamania LLC and, except as otherwise
expressly provided herein, assume from and after Closing all obligations and liabilities
appertaining to such property (including, without limitation, Seller’s obligations and liabilities
under and with respect to the Leases, the Assumed Contracts, the Permits and any Permitted
Exceptions).



     3. PURCHASE PRICE AND DEPOSIT.



          3.1 Amount of Purchase Price. The Purchase Price shall be $56,000,000.00, but the net
amount thereof payable to Seller shall be subject to credits, prorations and other adjustments as
provided in Sections 8 and 11.



          3.2 Allocation of Price. The parties agree that the Purchase Price shall be allocated as
follows: (i) $8,550,500.00 to the Hotel Parcel, (ii) $43,926,559.00 to the Hotel Improvements and
(iii) $3,522,941.00 to the FF&E and other personalty. Allocations made pursuant to this Section
shall be used by the Parties for title insurance and all tax and other government reporting
purposes.



          3.3 Deposit.



               3.3.1 Amount and Delivery. Within two Business Days after the Effective Date, Buyer shall
deliver into Escrow via wire transfer of funds the amount of $1,000,000.00 (the “Initial Deposit”),
as a good faith deposit. Within one Business Day after the Approval Date, if Buyer elects to
proceed with the purchase of the Hotel, Buyer shall deliver into Escrow via wire transfer of funds
an additional cash deposit of $2,000,000.00 (the “Additional Deposit”). The Initial Deposit,
together with the Additional Deposit when and if made, all interest earned on the deposited funds
while in Escrow, shall comprise the “Deposit.”



               3.3.2 Investment. The Deposit, while held in Escrow, shall be held by the Escrow Agent in
a federally-insured, interest-bearing account with a national banking association.



               3.3.3 Disposition. If Buyer, in breach of its obligations under this Agreement, fails to
purchase the Hotel on or before the Last Closing Date, Seller upon termination of this Agreement
shall be entitled to receive and retain the Deposit as liquidated damages, in accordance with
Section 21. In all other circumstances, the Deposit shall remain the property of Buyer and,
together with interest earned thereon, shall either (A) at Closing, be applied against the Purchase
Price or (B) upon termination of this Agreement, be returned to Buyer, less only Buyer’s one half
share of any Escrow cancellation charges.



     4. TITLE AND DUE DILIGENCE CONDITIONS.



          4.1 Title Report and Survey. Buyer hereby acknowledges that it has received a copy of the
Title Report and the Existing Survey, together with copies of all recorded documents referenced in
the Title Report (the “Title Documents”). If Buyer desires Extended



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Coverage, Buyer may, at its sole expense, update or supplement the Existing Survey or replace
it with a new Survey, so long as it obtains such updated, supplemental Survey, and delivers a copy
of it to Seller, at least ten days before the Approval Date.




          4.2 Objectionable Title Matters and Permitted Exceptions. Except for any exceptions to or
defects in Seller’s title (“Objectionable Title Matters”) with respect to which Buyer gives Seller
and Escrow Agent written notice of objection (each a “Title Objection Notice”) within ten days
prior to the Approval Date (or, with respect to any defect or exception which is disclosed to Buyer
after it delivered its last Title Objection Notice, by the earlier of the Closing Date or five days
after such matter is disclosed to Buyer by an update to the Title Report or otherwise), Buyer shall
be deemed to have approved the state of Seller’s title to the Hotel Premises as disclosed by the
Title Report or the Title Documents or would be disclosed on the Effective Date by a Survey and
inspection of the Hotel Premises. All exceptions and other defects that are disclosed by the Title
Report or the Title Documents, or would be disclosed by such a Survey and inspection, to which
Buyer makes no timely objection in accordance with the provisions of this Section 4, and
all such exceptions and other defects to which Buyer timely objects but later waives such objection
as provided in this Section 4, shall be deemed Permitted Exceptions.



          4.3 Cure of Objectionable Title Matters; Removal of Liens. Seller shall use commercially
reasonable efforts to cure any Objectionable Title Matter (“Inapplicable Exceptions,” including,
without limitation, references to leases or tenancies that no longer exist, to instruments or
documents that on their face or by law are no longer effective and to matters that have no apparent
applicability to the Hotel Premises) or that is otherwise readily susceptible to cure, but Seller
shall not be obligated to expend more than $2,500 in the aggregate, or to extend the Last Closing
Date, in order to effect a cure of any Objectionable Title Matter, unless hereafter created by
Seller in breach of its covenants under this Agreement. Seller shall also cause the Title Company
to issue the Title Policy at Closing without exception for any Liens. Except as expressly provided
in this Section 4.3, Seller shall have no obligation to cure Objectionable Title Matters.



          4.4 Termination for Objectionable Title Matter. If, after giving Seller timely written
notice under this Section 4 of any Objectionable Title Matter, Buyer does not receive by
the earlier of (A) the Last Closing Date or (B) ten days after the date Seller receives the last
Title Objection Notice from Buyer (such earlier date, “Seller’s Title Response Date”) either:



               4.4.1 Where such Objectionable Title Matter would otherwise be within the scope of
coverage of the Title Policy, written confirmation from the Title Company that such Objectionable
Title Matter will not be scheduled as an exception in the Title Policy, or



               4.4.2 Written confirmation from the Title Company that it will affirmatively insure Buyer
against loss resulting from such Objectionable Title Matter, by an endorsement to the Title Policy
in a form satisfactory to Buyer in its reasonable discretion, and (if applicable)



Page 12









 





               4.4.3 Seller’s unconditional written undertaking to take, at or before Closing, such steps
as the Title Company specifies in its written confirmation are required for it either to omit such
Objectionable Title Matter as an exception in the Title Policy or to issue such endorsement,


Buyer shall have the right to terminate the Escrow and this Agreement by written notice of
termination given to Seller and Escrow Agent no later than the five days after the Seller’s Title
Response Date, whereupon Escrow Agent shall cancel Escrow, disburse the Deposit to Buyer and return
every other item in Escrow to the Party which deposited the same. If Buyer does not so elect to
terminate this Agreement, Buyer shall be deemed to have waived its objection to the Objectionable
Title Matter(s) in question and such title matter(s) shall then become Permitted Exceptions.




          4.5 Extension of Closing Date for Notice and Cure. If Buyer gives Seller notice of
objection to any title exception later than the 30th day preceding the Last Closing Date, the Last
Closing Date may be extended by Seller, to a date no more than 30 days after the date otherwise
specified herein as the Last Closing Date. Such extension shall be effected by a Seller’s giving
written notice of such extension to Buyer on or before the date otherwise specified herein as the
Last Closing Date.



          4.6 Access to Property and Records. During the period from the Effective Date to Closing,
Seller shall provide to Buyer, its agents, consultants and counsel, upon reasonable advance notice
but not less that one Business Day’s prior notice, access at all reasonable times to:



               4.6.1 The Hotel Records (excluding software and electronic data, but including print-outs
of such data) and all other books, records and documents in Seller’s possession or control related
to the Hotel and its development, operation, management, maintenance and repair which are of a
non-proprietary or non-privileged nature.



               4.6.2 The Hotel Premises, for purposes of conducting (at Buyer’s sole expense and
liability) any inspections, observations, examinations, surveys and tests that Buyer may reasonably
require (but Buyer shall not conduct any borings, drilling or other invasive or destructive testing
without Seller’s prior written consent and without first evidencing to Seller liability insurance
coverage for such activity satisfactory in scope and amount to Seller).


Such right of access, however, shall be subject to the rights of guests, tenants and licensees of
the Hotel, and Buyer in its activities under this Section 4.6 shall conduct its inspections
so as not to interfere with such rights or the operation of the Hotel in any material respect. In
no event shall Buyer communicate with any employees of or at the Hotel other than (A) the Hotel’s
general manager, director of sales and marketing and chief engineer, and (B) such other executive
Hotel Employees, if any, as Seller designates in writing from time-to-time (“Designees”), nor shall
Buyer disclose or permit to be disclosed to any Hotel Employees, other than the general manager,
director of sales and marketing and chief engineer and any Designees, the nature or reason for
Buyer’s presence on or about the Hotel Premises, without Seller’s prior written approval.







Page 13









 







As of the Effective Date, Seller has delivered to Buyer the following: (i) a rent roll for all
Leases within the Hotel Premises; (ii) copies of operating statements and a summary of capital
expenditures pertaining to the Hotel for the five most recent fiscal years preceding the Effective
Date and year to date for 2010; (iii) copies of all building, engineering, zoning and environmental
site assessment reports, studies and analyses in Seller’s possession or control relating to the
Hotel (such environmental reports are referred to herein as the “Environmental Reports”); (iv)
copies of the ad valorem tax statements relating to the Hotel for the three years preceding the
Effective Date and any correspondence relating to tax appeals filed with respect to that period;
(v) copies of all Service Contracts; and (vi) a copy of an agreement dated as of February 21, 2001
between Skamania County and Skamania Opco, LLC.




          4.7 Indemnification. Except as otherwise provided in this Agreement, Buyer shall Indemnify
Seller and Hotel Manager from and against any and all Claims (including Claims by Seller for damage
to the Hotel as well as third-party Claims) arising or asserted to arise out of any activity of
Buyer or Buyer’s representatives conducted at or about the Hotel Premises. Buyer shall, with
reasonable promptness, repair in a good and workmanlike manner any damage to the Hotel caused by
any such activity.



          4.8 Buyer’s Right of Termination. In addition to the right of termination provided in
Section 4.4, Buyer shall have the right, in its sole discretion, to notify Seller of its
satisfaction with its tests, studies and investigations of the Hotel and the Hotel Records on or
before 11:59 pm Pacific time on the Approval Date, failing of which notice, this Agreement shall
terminate, the Initial Deposit shall be returned to Buyer and neither party shall have any further
liability or obligations hereunder other than any such liability and obligations which are
expressly provided herein to survive such termination. Buyer hereby acknowledges that with respect
to this Section 4.8, time is of the essence, and failure to notify Seller on a timely basis
shall constitute an automatic termination of this Agreement.



     5. REPRESENTATIONS.



          5.1 By Seller.



               5.1.1 Regarding the Hotel. Seller hereby represents and warrants to Buyer that, as of the
Effective Date, except as disclosed in Exhibit H or any other Exhibit to this Agreement, in
the Title Report, the Existing Survey or in any new Survey, third party report or other written
document or notice obtained by or furnished to Buyer prior to the Approval Date:



                    5.1.1.1 To Seller’s Knowledge, Seller has not received written notice from any
Governmental Authority that the current condition, occupancy or use of the Hotel violates any
applicable Law, nor to Seller’s Knowledge has any such violation occurred, whether or not notice
thereof has been received.



                    5.1.1.2 There are no lawsuits filed and served upon Seller or, to Seller’s Knowledge,
otherwise pending or threatened, whose outcome could adversely affect title to or the use,
occupancy or operation of the Hotel or Seller’s ability to convey the Hotel or otherwise perform
its obligations under this Agreement (including, without limitation, actions for condemnation or
eminent domain).



Page 14









 





                    5.1.1.3 All Leases currently encumbering the Hotel Premises are identified on the Schedule of
Leases attached hereto as Exhibit I. To Seller’s Knowledge, neither Seller nor the tenant
is currently in material breach of any Lease nor has either Seller or the tenant given any written
notice of default thereunder. There are no oral understandings or side agreements with any tenant
of the Hotel Premises that have not been reduced to a writing and are not set forth among the
Leases on Exhibit I. To Seller’s Knowledge, there are no outstanding defenses,
counterclaims or offsets against the payment of rent or any other amount payable or against the
performance of any other obligation under any of the Leases.



                    5.1.1.4 The Schedule of Contracts attached hereto as Exhibit J identifies all of the
existing Material Contracts and, to Seller’s Knowledge, neither the Hotel Party nor any other
party to any Material Contract is currently in material breach thereof nor has any written notice
of default been given thereunder. There are no oral understandings or side agreements with
respect to any service or equipment that have not been reduced to a writing and are not set forth
among the Schedule of Contracts.



                    5.1.1.5 Hotel Manager holds the Liquor Licenses specified in Exhibit K hereto and
each such Liquor License is in full force and effect. Seller has not received any written notice
of violation, or threatened revocation, of any such Liquor License.



                    5.1.1.6 To Seller’s Knowledge, and subject to the information set forth in the Environmental
Reports: (i) Seller has not received written notice from any Governmental Authority (A) of any
pending or threatening proceeding or investigation concerning any alleged or suspected violations
of applicable Laws regarding the use, storage, transportation, release or disposal of Hazardous
Substances (“Environmental Laws”) or (B) of any alleged violation of Environmental Laws at the
Hotel Premises that remains uncured, (ii) Seller has not used, stored, disposed or released
Hazardous Substances at or about the Hotel Premises in violation of any Environmental Laws nor has
any use, storage, disposal or release of Hazardous Substances occurred at the Hotel Premises in
violation of any Environmental Laws, and (iii) there is no other condition existing at the Hotel
Premises in violation of any Environmental Law, and no underground storage tanks are currently in
use at the Hotel.



                    5.1.1.7 Seller is not a “foreign person” nor a “U.S. real property holding corporation”
for purposes of Section 1445 of the Internal Revenue Code or any applicable regulations
promulgated thereunder.



                    5.1.1.8 No attachments, execution proceedings, assignments for the benefit of creditors,
insolvency, bankruptcy, or other proceedings are pending or, to Seller’s knowledge, threatened
against Seller, nor is Seller contemplating commencing any such proceedings. Seller has not been
a debtor under any case commenced under the United States Bankruptcy Code.



                    5.1.1.9 To Seller’s Knowledge, Seller has not received any written notice from any of its
present insurance carriers of any defects or inadequacies in the



Page 15









 







Hotel which if left uncured or uncorrected could result in termination of Seller’s existing
insurance coverage with respect to its Hotel.



                    5.1.1.10 To Seller’s Knowledge, the Hotel Records provided by Seller to Buyer, including
without limitation, the operating statements, general ledger and reconciliations, are true,
correct and complete and fairly and accurately represent Seller’s financial position for the
periods covered thereby.



                    5.1.1.11 Seller owns, free and clear of all liens and encumbrances, the Inventory and
Intangibles, except for Permitted Exceptions.



                    5.1.1.12 Upon Seller’s Knowledge thereof, Seller shall promptly disclose in writing to
Buyer any change in any facts or circumstances which would make any of the representations and
warranties set forth in this Agreement inaccurate, incomplete or misleading in any material
respect.



                    5.1.1.13 The Hotel is not subject to any collective bargaining agreement and, to Seller’s
Knowledge, there have been no union organizing campaigns or activities related to the Hotel during
Seller’s ownership thereof.



                    5.1.1.14 Hotel Employer is an Affiliate of Hotel Manager.



                    5.1.1.15 Skamania LLC owns (or by Closing will own) the FF&E (excluding the Leased
Equipment), subject only to Permitted Exceptions.



                    5.1.1.16 Seller shall use commercially reasonable efforts to obtain a tax clearance
statement from the State of Washington Department of Revenue, dated no earlier than 30 days before
the Last Closing Date, stating that there are no known deficiencies in sales taxes owed by Seller
with respect to the Hotel as shown by filed sales tax returns. Buyer acknowledges that delivery
of such certificate is not a condition to Closing.



               5.1.2 Regarding Seller. Seller hereby represents to Buyer that:



                    5.1.2.1 Each of Seller is duly organized, validly existing and in good standing under the
laws of its State of incorporation; has full power to enter into this Agreement and to fulfill its
obligations hereunder; has authorized its execution, delivery and performance of this Agreement by
all necessary corporate action; and has caused this Agreement to be duly executed and delivered on
its behalf to Buyer.



                    5.1.2.2 Seller has full right and power to convey and deliver possession of the Hotel
Premises and to transfer all of the other property comprising the Hotel in accordance with this
Agreement.



                    5.1.2.3 Operator holds legal and beneficial title to all of the membership interests in
Skamania LLC, free and clear of all Liens and other encumbrances, and has full right and power to
sell and assign all such interests to Buyer. Skamania LLC has no assets other than the FF&E
(excluding the Leased Equipment), has engaged in no business other than holding such FF&E, and has
no liabilities. Within ten Business Days following the



Page 16









 







Effective Date, Seller will provide to Buyer true and complete copies of the organizational
documents of Skamania LLC.



                    5.1.2.4 As of the Effective Date, (i) no government, internal or other third party
approval or consent that has not already been obtained is required for Seller’s execution and
delivery of, or performance of obligations under, this Agreement and (ii) Seller’s execution,
delivery and performance of this Agreement do not and will not violate, and are not restricted by,
any other contractual obligation or any Law to which Seller is a party or by which Seller or any
of the property comprising the Hotel is bound.



                    5.1.2.5 Except for the Broker, Seller has not dealt with any broker, finder or similar
agent in connection with the transactions contemplated by this Agreement.



                    5.1.2.6 Neither Seller nor any of its affiliates, nor any of their respective partners,
members, shareholders or other equity owners, and none of their respective employees, officers,
directors, representatives or agents is, nor will they become, a person or entity with whom U.S.
persons or entities are restricted from doing business under regulations of the Office of Foreign
Asset Control (“OFAC”) of the Department of the Treasury (including those named on OFAC’s
Specially Designated and Blocked Persons List) or under any statute, executive order (including
the September 24, 2001, Executive Order Blocking Property and Prohibiting Transactions with
Persons Who Commit, Threaten to Commit, or Support Terrorism), or other governmental action and is
not engaging and will not engage in any dealings or transactions or be otherwise associated with
such persons or entities.



          5.2 By Buyer. Buyer hereby represents to Seller that:



               5.2.1 Buyer is a Delaware limited liability company, duly formed, validly existing and in
good standing under the laws of the state of its formation, is in good standing and qualified to do
business in every other jurisdiction in which such qualification is legally required; has full
power and authority to enter into this Agreement and to fulfill its obligations hereunder; has
authorized the execution, delivery and performance of this Agreement by all necessary company
action; and has caused this Agreement to be duly executed and delivered to Seller.



               5.2.2 No government, internal or other third party approval or consent that has not
already been obtained are required for Buyer’s execution and delivery of, or performance of
obligations under, this Agreement, and Buyer’s execution and performance of this Agreement do not
and will not violate, and are not restricted by, any other contractual obligation or applicable Law
to which Buyer is a party or by which Buyer is otherwise bound.



               5.2.3 As of the Effective Date, there are no lawsuits filed and served against Buyer or,
to Buyer’s knowledge, otherwise pending or threatened whose outcome could adversely affect Buyer’s
ability to purchase the Hotel and otherwise perform its obligations under this Agreement.



               5.2.4 Except for Broker, Buyer has not dealt with any broker, finder or similar agent in
connection with the transaction contemplated by this Agreement.



Page 17









 





               5.2.5 Buyer’s principals are experienced in the acquisition, ownership and operator of
hotels similar to the Hotel and is fully competent to assess and evaluate the Hotel.



               5.2.6 No attachments, execution proceedings, assignments for the benefit of creditors,
insolvency, bankruptcy, or other proceedings are pending or, to Buyer’s knowledge, threatened
against Buyer, nor is Buyer contemplating commencing any such proceedings. Buyer has not been a
debtor under any case commenced under the United States Bankruptcy Code.



               5.2.7 Buyer shall promptly disclose in writing to Seller any change in any facts or
circumstances which would make any of the representations and warranties set forth in this
Agreement inaccurate, incomplete or misleading in any material respect.



               5.2.8 Neither Buyer nor any of its affiliates, nor any of their respective partners,
members, shareholders or other equity owners, and none of their respective employees, officers,
directors, representatives or agents is, nor will they become, a person or entity with whom U.S.
persons or entities are restricted from doing business under regulations of OFAC of the Department
of the Treasury (including those named on OFAC’s Specially Designated and Blocked Persons List) or
under any statute, executive order (including the September 24, 2001, Executive Order Blocking
Property and Prohibiting Transactions with Persons Who Commit, Threaten to Commit, or Support
Terrorism), or other governmental action and is not engaging and will not engage in any dealings or
transactions or be otherwise associated with such persons or entities.


PRIOR TO THE APPROVAL DATE, BUYER WILL CONDUCT ITS OWN INVESTIGATION OF THE HOTEL AND MAKE ALL
INQUIRIES, INSPECTIONS, TESTS, AUDITS, STUDIES AND ANALYSES (“INQUIRIES”) IN CONNECTION WITH
PURCHASING THE HOTEL THAT BUYER DEEMS NECESSARY OR ADVISABLE AND BUYER WILL RELY ON SUCH
INSPECTIONS AND TESTS IN DETERMINING IF THE HOTEL IS SUITABLE FOR BUYER’S PURPOSES. IF FOR ANY
REASON BUYER IS UNABLE ON OR BEFORE THE APPROVAL DATE TO MAKE ANY INQUIRY THAT IT DESIRED TO MAKE,
OR THAT IS CUSTOMARILY MADE IN TRANSACTIONS OF THIS SORT, OR OTHERWISE FAILS TO OBTAIN INFORMATION
SUFFICIENT TO ANSWER ANY QUESTION REGARDING THE CONDITION AND SUITABILITY OF THE HOTEL, AND YET
NONETHELESS PROCEEDS WITH THE PURCHASE OF THE HOTEL, BUYER SHALL ASSUME ALL RISKS THAT, HAD IT
PERFORMED SUCH INQUIRY OR OBTAINED SUCH INFORMATION, IT WOULD HAVE ELECTED NOT TO PROCEED WITH THE
PURCHASE OF THE HOTEL ON THE TERMS CONTAINED HEREIN.




               5.2.9 EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT OR ANY TRANSFER INSTRUMENT, BUYER IS
BUYING THE HOTEL “AS IS, WHERE-IS AND WITH ALL FAULTS” AND WITHOUT ANY REPRESENTATIONS OR
WARRANTIES, EXPRESS, IMPLIED OR STATUTORY, OF ANY KIND WHATSOEVER, WHETHER BY SELLER OR BY ANY ONE
ACTING ON SELLER’S BEHALF (INCLUDING, WITHOUT LIMITATION, AGENTS, BROKERS, CONSULTANTS,



Page 18









 




COUNSEL, EMPLOYEES, OFFICERS, DIRECTORS, SHAREHOLDERS, PARTNERS, TRUSTEES OR BENEFICIARIES).




          5.3 WAIVER AND RELEASE. AS A MATERIAL PART OF THE CONSIDERATION TO SELLER FOR THE SALE OF
THE HOTEL HEREUNDER, EXCEPT FOR A CLAIM MADE UNDER THIS SECTION 5 FOR MONETARY DAMAGES DUE
TO A BREACH OF A REPRESENTATION OF SELLER EXPRESSLY SET FORTH IN THIS AGREEMENT OR AS OTHERWISE
EXPRESSLY PROVIDED IN THIS AGREEMENT, BUYER HEREBY WAIVES AND RELINQUISHES, AND RELEASES SELLER AND
ALL OF SELLER’S OFFICERS, DIRECTORS, SHAREHOLDERS, EMPLOYEES AND AGENTS (COLLECTIVELY, “SELLER
RELEASES”) FROM, ANY AND ALL CLAIMS AND REMEDIES (INCLUDING, WITHOUT LIMITATION, ANY RIGHT OF
RESCISSION) AGAINST SELLER RELEASEES OR ANY OF THEM BASED DIRECTLY OR INDIRECTLY ON (A) ANY PAST,
PRESENT OR FUTURE CONDITION OF THE HOTEL, INCLUDING, WITHOUT LIMITATION, THE RELEASE OR PRESENCE OF
ANY HAZARDOUS SUBSTANCES OR (B) ANY MISREPRESENTATION, OR FAILURE TO DISCLOSE TO BUYER ANY
INFORMATION, REGARDING THE HOTEL (INCLUDING, WITHOUT LIMITATION, ANY DEFECTIVE, HAZARDOUS OR
UNLAWFUL CONDITION WHICH SELLER SHOULD BE AWARE, WHETHER OR NOT SUCH CONDITION REASONABLY COULD
HAVE BEEN DISCOVERED BY BUYER THROUGH AN INSPECTION OF THE HOTEL OR THE PROPERTY RECORDS), OTHER
THAN SUCH A MISREPRESENTATION CONSTITUTING WILLFUL FRAUD. BUYER UNDERSTANDS THAT SUCH WAIVER AND
RELEASE INCLUDES STATUTORY AS WELL AS “COMMON LAW” AND EQUITABLE RIGHTS AND REMEDIES AND THAT IT
COVERS POTENTIAL CLAIMS OF WHICH BUYER MAY BE CURRENTLY UNAWARE OR UNABLE TO DISCOVER. BUYER
ACKNOWLEDGES THAT THE FOREGOING WAIVER AND RELEASE IS OF MATERIAL CONSIDERATION TO SELLER IN
ENTERING INTO THIS AGREEMENT, THAT BUYER’S COUNSEL HAS ADVISED BUYER OF THE POSSIBLE LEGAL
CONSEQUENCES OF MAKING SUCH WAIVER AND RELEASE AND THAT BUYER HAS TAKEN INTO ACCOUNT, IN AGREEING
TO PURCHASE THE HOTEL AT THE PURCHASE PRICE SPECIFIED HEREIN, SELLER’S DISCLAIMER OF ANY WARRANTIES
AND REPRESENTATIONS REGARDING THE HOTEL OTHER THAN THOSE EXPRESSLY SET FORTH HEREIN.


BUYER FURTHER AGREES AND ACKNOWLEDGES THAT, IN GIVING THE FOREGOING WAIVER AND RELEASE, IT HAS WITH
ITS LEGAL COUNSEL, CONSIDERED ANY STATUTE OR OTHER LAW THAT MIGHT APPLY TO AND LIMIT THE EFFECT OF
BUYER’S WAIVER AND RELEASE HEREIN AND HEREBY KNOWINGLY WAIVES THE BENEFITS OF ANY SUCH LAW AND
INTENDS THAT IT NOT BE APPLICABLE HERE.



BUYER REPRESENTS AND WARRANTS TO SELLER THAT NEITHER BUYER OR ANY OF ITS AFFILIATES IS (OR WILL BE)
A PERSON WITH WHOM SELLER IS RESTRICTED FROM TRANSACTING BUSINESS UNDER REGULATIONS OF OFAC
(INCLUDING, THOSE PERSONS NAMED ON OFAC’S SPECIALLY DESIGNATED AND BLOCKED PERSONS LIST) OR UNDER
ANY STATUTE, EXECUTIVE ORDER (INCLUDING, THE SEPTEMBER 23, 2001 EXECUTIVE ORDER BLOCKING PROPERTY






Page 19









 







AND PROHIBITING TRANSACTIONS WITH PERSONS WHO COMMIT, THREATEN TO COMMIT, OR SUPPORT TERRORISM),
OR OTHER GOVERNMENTAL ACTION.




          5.4 Survival and Limitations. The Parties’ representations set forth in this Section
5 (and their respective liability for any breach thereof) shall survive Closing and shall not
be deemed to merge into any of the Transfer Instruments; provided, however, that after Closing
Seller shall have no liability to Buyer for any breach of such representations unless:



               5.4.1 The facts constituting such breach have not been disclosed in writing to, discovered
by or otherwise become actually known to Buyer prior to Closing;



               5.4.2 Buyer has given Seller written notice claiming such breach, and stating in
reasonable detail the factual basis for such claim, within 270 days after the Closing Date;



               5.4.3 Buyer’s actual out-of-pocket loss from all such breaches exceeds $150,000; and



               5.4.4 Buyer commences a legal action on such claim, and serves Seller with notice thereof
in accordance with the applicable Law, within 365 days after the Closing Date.



          5.5 Notice of Subsequent Event or Discovery. Prior to Closing, each Party shall give the
other prompt notice of its discovery of any event or condition which has the effect of making any
of Seller’s representations contained in Section 5 materially inaccurate. If it is
reasonably likely that such event or condition can be remedied within 30 days, so as to remove such
material inaccuracy, and if Seller undertakes in writing to Buyer, within ten Days after receiving
such notice, to use all commercially reasonable efforts to effect such remedy, then so long as it
is making such efforts Seller shall have the right to extend the Last Closing Date by no more than
30 days to complete such remedy and Buyer shall not be entitled, prior to the Last Closing Date (as
so extended) or (if earlier) the cessation of such efforts, to terminate this Agreement by reason
of such inaccuracy.



     6. OPERATION OF THE HOTEL PENDING CLOSING. From the Effective Date until Closing, except
for emergencies, Seller shall use commercially reasonable efforts to operate the Hotel in the
Ordinary Course and shall not cause, approve or voluntarily permit any material change in the
operations of the Hotel without Buyer’s prior written approval (which shall not be unreasonably
withheld, conditioned or delayed), including:



          6.1 Material alterations or other material changes in the Hotel Improvements, except for
Approved Capital Expenditures and for alterations currently required by Law (which Seller may
elect, but shall not be obligated by this reference alone, to make).



          6.2 Cancellation or surrender of any existing Permit or Liquor License for the Hotel.



          6.3 Creation of any Lease, mortgage, deed of trust or other lien or encumbrance on
Seller’s title to the Hotel.



Page 20









 





          6.4 Entering into or materially modifying any Service Contract constituting a Material
Contract, unless the same is terminable upon Closing.



          6.5 Entering into or materially modifying any Lease materially affecting the operation,
revenues or expenses of the Hotel.



          6.6 Cancellation or material reduction in the amount or scope of coverage under any
insurance currently maintained with respect to the Hotel.



          6.7 Any material reduction in staff at the Hotel.



          6.8 Any material depletion or reduction in the FF&E, Inventory and Liquor Inventory
without the replacement of the same, except as may result from seasonal fluctuations in levels of
business or occupancy rates in the Ordinary Course.



          6.9 The assignment, transfer, pledge or other encumbrance of the membership interests in
Skamania LLC or the creation of any new membership interests therein; the dissolution of Skamania
LLC or its merger, conversion or consolidation with or into any other entity; the incurrence by
Skamania LLC of any liabilities; the acquisition by Skamania LLC of any assets other than the FF&E;
or the engagement by Skamania LLC in any business other than holding the FF&E.


If Buyer proceeds to Closing with actual knowledge of any breach by Seller of this Section
6, Buyer shall be deemed to have waived such breach and shall have no claim against Seller
after Closing on account of such breach.




     7. OTHER AGREEMENTS.



          7.1 Operating Lease; Property Management Agreement; Hotel Employee Leasing Agreement.
Buyer shall not assume any obligations under the Operating Lease, the Hotel Management Agreement or
the Hotel Employee Leasing Agreement. Seller shall cause each of the Operating Lease, the Hotel
Management Agreement and the Hotel Employee Leasing Agreement (and any franchise or other similar
agreements) to be terminated as of Closing and shall deliver possession of the Hotel to Buyer free
and clear of any possessory rights of the Hotel Manager or Operator. Seller shall remain
responsible for all amounts due under the Operating Lease, the Hotel Management Agreement and the
Hotel Employee Leasing Agreement (and any franchise or other similar agreements) and shall
Indemnify Buyer from and against any Claims therefor.



          7.2 Liquor License(s) and Liquor Inventory.



               7.2.1 Application for New Licenses. Buyer shall be responsible, at its expense, for
preparing, filing and prosecuting all applications before the relevant Governmental Authority for
the re-issuance of the Liquor License at the Hotel to Buyer or its designee upon or following
Closing. No later than five days after the Effective Date, Buyer shall file the Master Business
Application and the Liquor Control Board Addendum with the relevant Governmental Authority required
to obtain by the Last Closing Date at least the Pre-Approval License, and following such filing
shall diligently prosecute such application. Prior to Closing, Seller shall



Page 21









 




cooperate (and shall cause Hotel Manager to cooperate) with Buyer in such application as Buyer
may reasonably request (but without any obligation on the part of Seller to incur out-of-pocket
expense or liability in doing so). If Buyer has not been able to obtain the Pre-Approval License
by the Last Closing Date, Seller and, so long as Buyer has complied in all material respects with
this Section 7.2.1, Buyer shall each have the right to extend the Closing Date to a date no
later than 45 days after the Last Closing Date in order for Buyer to continue its efforts to obtain
the Pre-Approval License.




               7.2.2 Transfer of Liquor Inventory. Notwithstanding any other provision of this
Agreement, the Liquor Inventory shall be sold and transferred to Buyer (or Buyer’s nominee) only in
such manner as complies with applicable alcoholic beverage control Laws and the terms of the Liquor
License. In no event shall there be a reduction in the Purchase Price or a proration credit in
Buyer’s favor if, as of the Closing, the Liquor Inventory is not able to be sold and transferred in
a manner complying with the applicable alcoholic beverage control Laws and the terms of the Liquor
Licenses; provided, however, that if Seller is required by such Laws to dispose of the Liquor
Inventory other than by sale or transfer to Buyer or Buyer’s nominee, any net proceeds to Seller
from such disposition shall be credited against the Purchase Price at, or paid over to Buyer after,
Closing, unless prohibited by Law.



          7.3 Property of Guests. All baggage or other items checked or left in the care of Seller,
and any items in the “Lost and Found Bin” will be listed in an inventory, prepared in duplicate and
signed by representatives of Seller and Buyer on the Closing Date. Buyer will be responsible from
and after the Closing for all property so listed and shall hold harmless, indemnify and defend
Seller, from and against any and all Claims arising out of the subsequent loss of or damage to such
listed property. Seller shall indemnify Buyer from and against any and all Claims arising out of
any loss of or damage to property of guests at the Hotel prior to the Closing or not so listed in
such inventory. Seller and Buyer shall use reasonable efforts to have Hotel guests who have left
items in any of the Hotel’s safe deposit boxes (not including in-room safes) confirm on the Closing
Date that no such items are missing, but Seller shall not be deemed liable for any guest Claim made
after the Closing Date with respect to items allegedly left in a Hotel safe deposit box before
Closing merely because such items could not be listed on the above-described inventory.



Page 22









 





     8. PRORATIONS, CREDITS AND OTHER ADJUSTMENTS. At closing, the Parties shall make the
prorations and other adjustments provided below, and the net amount consequently owing to Seller or
Buyer shall be added to or subtracted from the proceeds of the Purchase Price payable to Seller at
closing. Beginning as close to the anticipated Closing Date as practicable, Seller shall, in
consultation with Buyer and with Buyer’s reasonable cooperation, cause to be prepared a prorations
and credits statement (the “Preliminary Statement”) which shall reflect all of the prorations,
credits and other adjustments in payment at Closing required under this Section 8 or under
any other provision of this Agreement. As soon as the Parties have agreed upon the Preliminary
Statement, they shall jointly deliver a mutually signed copy thereof to Escrow Agent. To the
extent the Parties are unable to agree by Closing on any item on the Preliminary Statement,
Seller’s estimation of such item shall be used and such item shall be finally resolved on the Final
Statement pursuant to Section 11.



          8.1 Proration of Taxes. All real estate ad valorem taxes and all personal
property ad valorem taxes assessed against the Hotel (generically, “Taxes”) prior
to the Closing Date shall be paid by Seller at or before Closing, and those payable during the
calendar year in which Closing occurs shall be prorated between Buyer and Seller as of the Closing
Date, such proration to occur on a calendar year basis (i.e., the Taxes payable during the calendar
year of Closing shall be prorated with Seller receiving a credit corresponding to the quotient of
such Taxes and 365 multiplied by the number of days between the Closing Date and December 31 of
such year). Taxes for all subsequent tax years shall be the responsibility of Buyer.



          8.2 Proration of Expenses. The following items of expense with respect to any portion or
aspect of the Hotel shall be prorated between Seller and Buyer as of the Closing Date:



               8.2.1 Periodic charges under Assumed Contracts (such as monthly rents or fixed periodic
charges), but not charges made on a per-order or per-call basis.



               8.2.2 Utility charges (but excluding any utility deposits). To the extent reasonably
practicable, though, in lieu of prorating the charges for any metered utility service, the Parties
shall endeavor to have the utility read the meter as early as possible on the Closing Date, render
a final bill to Seller based on such reading and bill all subsequent service to Buyer.



               8.2.3 Employee Liabilities for wages, salary, benefit payments and payroll taxes for the
pay period(s) in which Closing occurs and for accrued Employee Leave, except to the extent that
Seller is required by applicable Law or otherwise elects to determine and itself pay such
liabilities accrued through the day preceding Closing.



               8.2.4 All other Hotel operating expenses of a strictly periodic nature (and not based upon
specific orders for goods or services).



          8.3 Proration of Hotel Revenues.



               8.3.1 Guest Ledger. The open account (“Guest Ledger Account”) for each person who is a
guest at the Hotel on the night immediately preceding Closing (“Closing Eve”) shall be prorated
between Seller and Buyer as follows:



Page 23









 





                    8.3.1.1 Room and service charges (including, without limitation, room service charges,
in-house movie fees, health or fitness club charges and honor bar charges) for all times preceding
Closing Eve shall be credited to Seller.



                    8.3.1.2 Room and service charges for all times after Closing Eve shall belong to Buyer.



                    8.3.1.3 Room and service charges for Closing Eve shall be divided equally between Seller
and Buyer.



                    8.3.1.4 Other charges shall be allocated between Seller and Buyer as of the Closing Date,
based on the time such charges were actually incurred.



                    8.3.1.5 Any other charges for the 24-hour period including Closing Eve, which cannot be
fixed as to the actual time of incurrence, shall be apportioned equally between Seller and Buyer.



                    8.3.1.6 From the amounts apportioned to Seller under the foregoing clauses shall be
deducted all applicable taxes, travel and tour agent commissions, license, reservation and
franchise fees, and similar expenses. Any proration of revenues from Liquor Operations shall be
subject to such limitations and conditions as may be imposed by applicable alcoholic beverage
control Laws.


All Guest Ledger Accounts shall be assigned to Buyer at Closing, and Seller shall receive a
proration credit equal to its net aggregate prorated amount under this Section 8.3.1.
Buyer shall be responsible for paying any taxes and other amounts deducted from Seller’s
apportioned share under this Section 8.3.1.6.




               8.3.2 Rents and other Operating Revenues. Monthly rents and other fixed periodic payments
under the Leases, and any other operating revenues not otherwise provided for in this Section
8, shall be prorated between Buyer and Seller as of Closing.



               8.3.3 Other Receivables. Except as otherwise provided with respect to Guest Ledger
Accounts and payments under Leases, all Hotel receivables shall be retained by Seller. For at
least six months after Closing, Buyer shall cause its manager of the Hotel, in accordance with such
manager’s billing and collection practices and procedures, to use commercially reasonable efforts,
though at no out-of-pocket cost to Buyer (other than for administrative expenses, such as postage,
copies or telephone calls), to collect such retained receivables for Seller’s account, except for
any such receivables as Seller by written notice to Buyer excludes from such efforts; but neither
Buyer nor its Hotel manager shall be obligated to institute any legal action or incur any other
out-of-pocket expense in attempting to collect such receivables. Any payment at or relating to the
Hotel which is received or recovered after Closing from a person who then owes amounts both on such
a Seller-retained receivable and on an account to the Hotel accruing after Closing shall be applied
to the invoice(s) specified by the payor (and, if the payor makes such payment without reference to
a specific invoice, then such payment shall then be applied first to the most recent accruing
accounts).



Page 24









 





          8.4 Hotel Payables. At Closing, Buyer shall receive a proration credit equal to the
excess of (A) the aggregate estimated amount of all Hotel Payables in the Preliminary Statement
over (B) Buyer’s prorated share of such Hotel Payables under this Section 8, and Buyer
shall assume the obligation to satisfy Hotel Payables (1) included in such estimate (as evidenced
by a schedule which Seller shall prepare and submit to Buyer as part of the Preliminary Statement)
and (2) which otherwise are identified within the 90-day period following Closing. After Closing,
before paying any amount invoiced or otherwise claimed by a third party due with respect to the
Hotel operations prior to Closing which is not included on such schedule (or is claimed in an
amount larger than that shown on such schedule), Buyer shall first submit such invoice or claim to
Seller. Unless Seller, within 15 days after receiving such submission, objects to such invoice or
claim (thereby making it a Disputed Payable), Buyer may pay the same and take a credit for such
payment on the Final Statement. Seller shall remain responsible for all Disputed Payables and for
all Hotel Payables that are neither included on such schedule nor identified within the 90-day
period following Closing.



          8.5 Other Credits to Buyer.



               8.5.1 Credit for Reservation Deposits. Buyer shall receive a proration credit equal to
the aggregate amount of all outstanding Reservation Deposits.



               8.5.2 Credit for Security Deposits. Buyer shall receive a proration credit equal to the
aggregate amount of the unapplied balance of all cash (or cash equivalent) security, damage or
other deposits paid by any tenants to secure their obligations under Leases. With respect to any
security deposits that are not in the form of cash, Seller shall at its sole cost and expense cause
the same to be endorsed or transferred to or re-issued in the name of, Buyer, at or as soon as
practicable after Closing.



               8.5.3 Credit for Vouchers. Buyer shall receive a credit equal to (A) $10,000 for Paid
Vouchers issued prior to 2004, (B) 42.5% of the face value of all outstanding and unredeemed Paid
Vouchers issued from and after 2004, (C) $10,000 for all other outstanding Vouchers and (D) 50% of
the face value of all unredeemed outstanding Vouchers issued between the Effective Date and
Closing; and Buyer shall assume the obligation to honor all Vouchers with respect to which it has
received a proration credit under this Section 8.5.3 or Section 11.



          8.6 Other Credits to Seller.



               8.6.1 Credits for Cash Banks. Seller shall receive a proration credit equal to the
aggregate balance of all Cash Banks as of Closing.



               8.6.2 Credit for Prepaid Expenses. Seller shall receive a proration credit equal to the
book value, as of Closing, of all prepaid expenses, except to the extent that the goods, services
or other items for which such expenses were incurred are not usable by Buyer.



               8.6.3 Credit for Certain Inventories. Seller shall receive a credit equal to 75% of the
book value, as of Closing, of all goods then held by Operator for sale in the lobby gift shop, the
spa and the golf pro shop operated within the Hotel in the Ordinary Course. Seller shall receive
no credit for the value of the food and beverage inventories existing as of Closing, the price of
the same being deemed paid with delivery of the Purchase Price.



Page 25









 





          8.7 Regarding Hotel Prorations Generally. Unless this Section 8 expressly
provides otherwise: (A) all prorations hereunder with respect to the Hotel shall be made as of
12:00:01 a.m., local time (for the Hotel), on the Closing Date, (B) all prorations shall be made on
an actual daily basis, and (C), for purposes of such prorations, all items of revenue and expense
with respect to the Hotel’s operations shall be classified and determined in accordance with the
Uniform System of Accounts, as reasonably modified by Hotel Manager for use at the Hotel.



          8.8 Utility Deposits; Loan Impounds and Debt Service. Notwithstanding any other provision
of this Agreement, no prorations shall be made or credits allowed with respect to any utility
deposits, impound accounts with respect to any Lien, or any interest, prepayment premium or other
payments on any Lien, all of which shall remain the sole property or obligation of Seller.



     9. CONDITIONS TO CLOSING.



          9.1 In Buyer’s Favor. In addition to the conditions specified in Section 4,
Buyer’s obligation to close shall be subject to timely satisfaction of each of the following
conditions:



               9.1.1 Performance of Seller’s Obligations. Performance by Seller in all material respects
of its obligations under this Agreement to be performed at or before Closing.



               9.1.2 Accuracy of Representations. The accuracy in all material respects, as of Closing,
of each of the representations set forth in Section 5.1, subject to only changes that are
required or permitted hereunder or that are beyond Seller’s reasonable power to prevent.



               9.1.3 Satisfactory Title Policy. Issuance at Closing of the Title Policy (with Extended
Coverage, from title insurers in the jurisdiction where the Hotel is located and if Buyer timely
requests such coverage and furnishes the Title Company with the Survey; but, otherwise, the
availability of any other endorsement to the Title policy shall not be a condition to Buyer’s
obligation to close unless Seller has undertaken in writing to obtain such endorsement to cure an
Objectionable Title Matter). Seller agrees reasonably to cooperate with Buyer in obtaining any
Extended Coverage requested by Buyer in accordance with this Section 9.1.3.



               9.1.4 Temporary Liquor License. Approval or pre-approval of the re-issuance to Buyer or
its designee of the Liquor License; provided, however, that Buyer shall be conclusively deemed to
have waived this condition if Buyer breaches its obligations under Section 7.2.1.


If any of the conditions specified in this Section 9.1 is not timely satisfied (or waived
by Buyer in writing), Buyer shall have the right to terminate this Agreement by giving written
notice of such termination to Seller and Escrow Agent by the Last Closing Date (but, in any event,
before Closing actually occurs). After Closing, Buyer shall not have any right to terminate this
Agreement or rescind its purchase of the Hotel by reason of the failure of any such condition,
whether or not such failure was known to or discoverable by Buyer prior to Closing.







Page 26









 








          9.2 In Seller’s Favor. The obligation of Seller to close Escrow shall be subject to
timely satisfaction of each of the following conditions:



               9.2.1 Performance of Buyer’s Obligations. Performance by Buyer in all material respects of
Buyer’s obligations under this Agreement to be performed at or before Closing.



               9.2.2 Accuracy of Representations. The accuracy in all material respects, as of Closing,
of each of the representations of Buyer set forth in Section 5.2.


If any condition specified in this Section 9.2 is not satisfied (or waived by Seller in
writing) by the Last Closing Date, Seller shall have the right to terminate this Agreement by
giving written notice of such termination to Buyer and Escrow Agent by the Last Closing Date (but,
in any event, before Closing actually occurs). After Closing, Seller shall not have any right to
terminate this Agreement or rescind its purchase of the Hotel by reason of the failure of any such
condition, whether or not such failure was known to or discoverable by Seller prior to Closing.




          9.3 Pre Closing Damage or Destruction.



               9.3.1 Termination Rights. If, prior to Closing, a material Casualty occurs, Buyer shall
have the right, at its election, to terminate this Agreement, by written notice given to the Seller
prior to the Last Closing Date. If a material Casualty occurs fewer than ten Business Days before
the Last Closing Date, Buyer shall have the right to extend the Last Closing Date until the tenth
Business Day after the occurrence of such Casualty in order to make the election permitted by this
Section.



               9.3.2 If No Termination. If a Casualty occurs and Buyer either does not have or elects
not to exercise the right under Section 9.3.1 to terminate this Agreement, this Agreement
shall continue in force and, upon Closing, Buyer shall receive:




     (i) a credit against the Purchase Price equal to (A) the amount, if any, of
Proceeds received by Seller prior to Closing in connection with such Casualty, plus
(B) the lesser of the “deductible” or self retained limit under the property hazard
insurance covering the Property or the reasonably estimated cost of repairing,
restoring or replacing the portion of the Property damaged or destroyed by such
Casualty, minus (C) the amount (if any) actually expended by Seller to repair,
restore or replace the damaged portions of the Property; and




     (ii) an assignment of Seller’s rights to all Proceeds which may then be or
thereafter become payable.




If the credit formula specified in clause (A) above results in a negative number, then
Seller (rather than Buyer) shall be entitled to a credit, in the amount by which (i) the
amount actually expended by Seller to repair, restore or replace the damaged portions of the
Property exceeds (ii) the Proceeds received by Seller; but if such credit to Seller would
exceed the amount of Proceeds assigned to Buyer at Closing (or if there are no Proceeds to
assign), then Seller shall instead retain the right to receive such Proceeds (if any) and
receive no credit.



Page 27









 





               9.3.3 Material Part. For purposes of this Section 9.3, a Casualty shall be deemed
material if the extent of the damage, destruction or taking (measured by the cost of repairing or
replacing the damaged or destroyed portion of the Property or the fair market value of the taken
portion of the Property) exceeds $1,000,000.



     10. CLOSING.



          10.1 Time, Place and Manner. Closing shall occur on or before the Last Closing Date,
through Escrow, at the offices of the Escrow Agent. In order to confirm concurrent delivery of the
Purchase Price and delivery of title to the Hotel Premises, Buyer’s funds for Closing and the
Transfer Instruments to be recorded shall be delivered into Escrow for Closing, in accordance with
this Agreement.



          10.2 Seller’s Deliveries.



          On or before the Last Closing Date, Seller shall deliver to Escrow Agent the following
documents (“Seller’s Closing Documents”):



               10.2.1 The Deed and every other Transfer Instruments (if any) to be recorded at Closing,
each duly executed and acknowledged by Seller, for recording at Closing in the official land
records of the county where the Hotel is located.



               10.2.2 A counterpart of the FIRPTA Certificate for each of Holding and Operator, duly
executed.



               10.2.3 Such resolutions, incumbency certificates, certified bylaws, certified articles of
incorporation and good standing certificates as shall be reasonably necessary to evidence the
authority of Seller to enter into and consummate the transaction contemplated hereby.



               10.2.4 Two counterparts of each of the Transfer Instruments (except those delivered to
Escrow Agent pursuant to Section 10.2.1, which shall be constructively delivered to Buyer
at Closing by recording pursuant to Section 10.2.1), all duly executed by Seller.



               10.2.5 Letters to tenants under the Leases, in the form attached hereto as Exhibit
O, notifying each such tenant that the Hotel has been sold to Buyer and directing each tenant
to make all payments of rent and to send any notices or other correspondence regarding their
respective Leases to the persons and addresses to be determined by Buyer, and specified in writing
to Seller, at least five Business Days prior to the Closing Date.



               10.2.6 Letters to lessors, vendors or contractors under Assumed Contracts, and utility
companies serving the Hotel Premises, in the form attached hereto as Exhibit P, advising
them of the sale of the Hotel to Buyer and directing to Buyer (at the Hotel) all bills for the
services provided to the Hotel Premises on and after the Closing Date.



Page 28









 





               10.2.7 Such other documents as the Escrow Agent or the Title Company may reasonably
require from Seller in order to effect Closing in accordance with this Agreement.



          10.3 Buyer’s Deliveries.



          On or before the Last Closing Date (except as otherwise indicated), Buyer shall deliver to
Escrow Agent the following funds and documents (“Buyer’s Closing Documents”):



               10.3.1 By no later than noon Pacific Time on the Last Closing Date (the “Funds Deadline”),
good and immediately available funds in an amount (when added to the Deposit) equal at least to the
sum of (A) the Purchase Price, plus (B) Buyer’s share of Closing costs to be paid through Escrow,
plus or minus (C) the net amount owing Seller or Buyer (as the case may be) under Section
8, as shown by the Preliminary Statement. Time is of the essence with respect to Buyer’s
delivery of such funds by the Funds Deadline.



               10.3.2 Such documents as the Escrow Agent or the Title Company may reasonably require from
Buyer in order to effect Closing in accordance with this Agreement.



               10.3.3 Such resolutions, incumbency certificates, certified bylaws, certified articles of
incorporation and good standing certificates as shall be reasonably necessary to evidence the
authority of Buyer to enter into and consummate the transaction contemplated hereby.



               10.3.4 Two counterparts duly executed of each Transfer Instrument to be executed by Buyer.



          10.4 Closing Costs.



               10.4.1 Paid By Seller. Seller shall pay:



                    10.4.1.1 The realty transfer tax imposed by Skamania County and Washington State,
transfer taxes, stamp taxes, documenting taxes, sales taxes, use taxes and similar excises imposed
on the sale, conveyances and transfers under this Agreement.



                    10.4.1.2 The premium charge for an ALTA standard owner’s title insurance policy (or its
local equivalent) in the amount of the Purchase Price allocated to the Hotel Premises, plus the
premiums for any endorsements obtained by Seller to cure any Objectionable Title Matters pursuant
to Section 4.3.



                    10.4.1.3 One half of Escrow Agent’s fees and expenses for administering Escrow.



                    10.4.1.4 The commission owed to Broker pursuant to a separate agreement between Seller
and Broker.



               10.4.2 Paid by Buyer. Buyer shall pay:



Page 29









 





                    10.4.2.1 All charges for the Title Report and the Title Policy, including the charge for
Extended Coverage and any other endorsements requested by Buyer, except for the charges specified
to be paid by Seller under Sections 4.3 and 10.4.1.2.



                    10.4.2.2 The cost of up-dating, supplementing or obtaining a Survey.



                    10.4.2.3 All recording and filing fees and charges incurred in connection with the
recording or other filing of the Transfer Instruments.



                    10.4.2.4 One half of Escrow Agent’s fees and expenses for administering Escrow.



                    10.4.2.5 All fees, expenses and other costs associated with Buyer’s financing for the
purchase of the Hotel.



               10.4.3 Other Closing Costs. Any other charges and expenses incurred in effecting Closing
shall be allocated between the Parties in accordance with the custom for commercial real estate
transactions in the county where the Hotel is located.



          10.5 Completion of Closing. Closing shall be effected as follows:



               10.5.1 At such time as the Transactors and Counsel have confirmed (A) tender of delivery
of each of the items specified in Sections 10.2 and 10.3 (and provided Escrow Agent
has not advised the Parties of any apparent obstacle to issuing the Title Policy as of Closing),
the Parties through their respective Transactors or Counsel shall instruct Escrow Agent to record
the Deed (and any other Transfer Instruments to be recorded) in the appropriate place and (unless a
lawyers’ Closing) to complete Closing by disbursing funds in accordance with Sections
10.5.2.1 through 10.5.2.3 and, as appropriate, delivering Seller’s Closing Documents to
Buyer and Buyer’s Closing Documents to Seller.



               10.5.2 If a lawyers’ Closing, as soon as Escrow Agent confirms to the Parties that the
Title Company is irrevocably committed to issue the Title Policy to Buyer, the Parties through
their respective Transactors or Counsel shall instruct Escrow Agent to disburse funds from Escrow
as follows:



                    10.5.2.1 Disburse to Seller, in such respective amounts as Seller shall designate to
Escrow Agent in writing before Closing, the sum of (A) the Purchase Price, minus (B) Seller’s
share of Closing costs to be paid through Escrow, plus or minus (C) the net amount owing to Seller
or Buyer (as the case may be) under Section 8, as shown by the Preliminary Statement.



                    10.5.2.2 Pay the closing costs specified in Section 10.4.



                    10.5.2.3 Disburse any excess funds as directed by Buyer.


Disbursements to a Party shall be made by wire transfer of current funds to an account at a
commercial bank within the United States, as designated to Escrow Agent by such Party or its






Page 30









 







Counsel; but if no such account has been so designated to Escrow Agent by the Business Day
immediately following the Closing Date, Escrow Agent may instead disburse by its own check, for any
amount of $10,000 or less, sent on the Closing Date by messenger or overnight delivery service to
the applicable Party at the address for notices to such Party hereunder.




               10.5.3 If a lawyers’ Closing, concurrently with the direction to Escrow Agent to disburse
funds from Escrow as provided in Section 10.5.2, the Parties through their respective
Transactors and Counsel shall deliver to each other the items specified in Sections 10.2
and 10.3 and Closing shall be deemed completed.



               10.5.4 So long as the Title Company is irrevocably committed to issue the Title Policy as
of Closing, it shall not be a condition to disbursement of funds at Closing that the Deed or any
other Transfer Instrument have first been recorded.



          10.6 Escrow and Recording Instructions. This Agreement shall also serve as instructions
to Escrow Agent regarding the recording of instruments and disbursement of funds from Escrow; but
the Parties shall jointly execute and deliver to Escrow Agent such supplementary or general
instructions as may be required under any other provision of this Agreement or reasonably requested
by Escrow Agent. If there is any conflict between such supplementary general instructions and the
provisions of this Agreement, the latter shall control as between the Parties.



          10.7 Delivery of Possession. Seller shall cause possession of the Hotel to be delivered
to Buyer immediately upon Closing, free and clear of all leases, tenancies and occupancies except
for (A) Hotel guests, (B) the Leases and Assumed Contracts, and (C) possessory rights and interests
included among the Permitted Exceptions.



          10.8 Failure of Closing. If Closing fails to occur by the Last Closing Date, any Party,
if not then in default of its obligations under this Agreement, shall have the right to terminate
this Agreement at any time until Closing actually occurs, by giving written notice of such
termination to the other Parties and to Escrow Agent.



          10.9 Procedure for Termination of Escrow. Upon any termination of this Agreement, Seller
and Buyer shall each promptly give Escrow Agent written instructions to cancel Escrow and disburse
the Deposit and all other funds and items (if any) then held in Escrow in accordance with the
provisions of this Agreement. If, following termination of this Agreement, the Parties give Escrow
Agent conflicting instructions or one of the Parties fails to give Escrow Agent instructions:



               10.9.1 Escrow Agent shall promptly notify each Party in writing of such conflicting
instructions or of one Party’s failure to give instructions, and request that such conflict or
omission be promptly resolved.



               10.9.2 Where one Party has failed to give instruction, unless Escrow Agent receives
written instructions from such Party within five Business Days after giving notice of such failure,
Escrow Agent shall be free to comply with the instructions given by the other Party and both
Parties shall hold harmless, indemnify and defend Escrow Agent from any claim or liability
resulting from such compliance.



Page 31









 





               10.9.3 Where the Parties have given conflicting instructions, Escrow Agent shall take no
action to cancel Escrow or deliver funds or items out of Escrow except pursuant to further, joint
written instructions from the Parties or a final court order or judgment. If the Parties fail,
within 60 days after Escrow Agent has made requested such joint instructions, to deliver to Escrow
Agent joint written instructions resolving such disputed matter, Escrow Agent shall have the right
to file an action in interpleader against all the Parties in any court of competent jurisdiction
and to deposit with such court all of the funds and other items held in Escrow, whereupon Escrow
Agent shall be discharged from any further obligations or liability with respect to Escrow. The
Parties, jointly and severally, shall hold harmless and indemnify Escrow Agent from and against any
claim, liability and expenses resulting from such interpleader action (but, as between Seller and
Buyer, the costs of such interpleader action shall be assessed in accordance with Section
17.9).



          10.10 Maintenance of Confidentiality by Escrow Agent. Except as may be otherwise required
by applicable Law, Escrow Agent shall maintain the existence, terms and nature of this transaction
and the identities of the Parties in strictest confidence and shall not disclose any thereof to any
third party (including, without limitation, any broker) without the prior written consent of all
the Parties.



     11. POST CLOSING ADJUSTMENTS.



          11.1 Final Closing Statement. No later than 90 days after Closing, Buyer shall prepare
and deliver to Seller a final Closing statement (the “Final Statement”), which shall correct the
estimates and (if necessary) other amounts used in the Preliminary Statement, based on the Hotel’s
operating reports for the month immediately preceding Closing and the month in which Closing
occurred, on Buyer’s own post Closing examination of the books and records of the Hotel and on
other relevant facts discovered after Closing. Seller shall be deemed to have agreed to the Final
Statement as prepared by Buyer, except for such items as to which Seller specifically objects in a
written notice given to Buyer within 60 days after Buyer delivers the Final Statement to Seller.



          11.2 Disputes. If Seller gives timely and proper notice of objection to any item(s) on the
Final Statement, and Seller and Buyer are unable between themselves to resolve each such item
within 30 days after Buyer delivers the Final Statement to Seller, then any Party may submit the
unresolved items to a mutually agreeable national accounting firm (or, if the Parties are unable to
agree on such firm within 40 days after Buyer delivers the Final Statement to Seller or such firm
is unwilling to handle the dispute, to a qualified neutral party designated by the American
Arbitration Association office located in Los Angeles, California) for a determination which shall
be binding and conclusive upon all Parties and shall be deemed incorporated into the Final
Statement. Seller and Buyer shall pay in equal shares the fees and other expenses of such
accounting firm or other designated neutral party for making such determination.



          11.3 Settlement. Within ten Business Days after the Final Statement has been agreed (or
deemed agreed) between Seller and Buyer or after the last timely objection by Seller has been
resolved under Section 11.2, Buyer or Seller (as the case may be) shall pay to the other
the net amount shown to be due to such Party on the Final Statement, as agreed or as modified by



Page 32









 




the resolution of such objections. Except for mathematical error manifest on the face of the
Final Statement, no further adjustments or payments shall be required with respect to such
prorations, credits and other adjustments.




     12. THIRD PARTY CLAIMS AND OBLIGATIONS.



          12.1 Assumed and Retained Liabilities. Buyer shall Indemnify Seller from and against any
and all Claims that Seller incurs by reason of any obligation or liability assumed by Buyer
pursuant to this Agreement, including, without limitation (A) Employee Liabilities assumed by
Buyer, (B) the Assumed Contracts, (C) the Hotel Payables, (D) Reservations and (E) the Leases.
Seller shall Indemnify Buyer from and against any and all Claims that Buyer incurs by reason of any
obligation or liability retained by Seller pursuant to this Agreement, including, without
limitation (i) Employee Liabilities retained by Seller and (ii) Disputed Payables.



          12.2 Employee Liabilities.



               12.2.1 Buyer’s Obligations. Upon Closing Buyer shall:



                    12.2.1.1 Offer (or cause Buyer’s Hotel manager or operator to offer) a sufficient number
of Eligible Employees employment at the Hotel, in the same or similar position or job
classification and at substantially similar wage rates or salaries as such Hotel Employees held
and enjoyed immediately prior to Closing, and with reasonably equivalent benefits, so as to avoid
the notice requirements under the Worker Adjustment and Retraining Notification Act of 1988 (the
“WARN Act”). Buyer shall cause each such offer to be expressly conditioned upon the Hotel
Employee’s signing a written application form, in which such employee accepts the offer of new
employment and concurrently gives Hotel Employer notice that he or she is terminating employment
with Hotel Employer, effective as of Closing.



                    12.2.1.2 Assume (A) all Employee Liabilities with respect to the Continuing Employees
accruing or first arising on and after the Closing Date, or triggered by a termination of
employment after Closing (except to the extent that such Employee Liabilities arise under or
relate to any Hotel Employee Plan) and (B) all Employee Liabilities accrued as of Closing for
which Buyer has received a proration credit under Section 8, except that Buyer does not
assume any Employee Liabilities arising from Seller’s or Hotel Employer’s failure to pay such
Employee Liabilities before Closing where such payments are required under any applicable Laws.


Notwithstanding anything herein to the contrary, nothing in this Section 12.2.1 shall
require Buyer to (i) be responsible for, (ii) withhold or cause to be withheld any deductions from
compensation payable by Buyer or Buyer’s Hotel manager to any Continuing Employee for purposes of
contributing to, or (iii) make or cause to be made any payments on behalf of any Continuing
Employee to, any Hotel Employee Plan. Seller shall cause Hotel Manager’s parent entity to take any
and all actions necessary, including, but not limited to, amending the “Section 401(k) plan”
maintained by Hotel Manager’s parent entity (“Hotel Manager 401(k) Plan”), to (i) cause each
Continuing Employee who as of the Closing Date maintains an account balance in Hotel Manager 401(k)
Plan, to be fully vested as of the Closing Date in his or her account






Page 33









 







balance under Hotel Manager 401(k) Plan; (ii) permit each Continuing Employee to receive, as soon
as practicable after the Closing Date, a distribution of his or her account balance in Hotel
Manager 401(k) Plan upon a severance from employment resulting from his or her termination of
employment as required by Section 12.2.2, and (iii) provide that, at the election of each
such Continuing Employee, each distribution made from Hotel Manager 401(k) Plan which is an
“eligible rollover distribution” (as defined in section 402(c)(4) of the Code) may be directly
rolled over into a similar plan maintained or established by Buyer (or by Buyer’s Hotel manager).
To the extent designated by such Continuing Employee and if required by applicable Laws, Buyer will
cause a tax-qualified defined contribution plan maintained by Buyer (or by Buyer’s Hotel manager or
operator) to accept any portion of such Continuing Employee’s distribution which constitutes an
“eligible rollover distribution” (as defined in section 402(c)(4) of the Code).




               12.2.2 Seller’s Obligations. Seller shall cause Hotel Employer to terminate the
employment of all Hotel Employees (other than Excluded Employees) effective as of Closing. Seller
Indemnifies Buyer from and against any and all Claims arising out of any and all (A) Employee
Liabilities with respect to Continuing Employees accruing prior to Closing (except those which are
triggered by a termination of employment after Closing or for which Buyer has received a credit
under Section 8) and (B) Employee Liabilities with respect to Hotel Employees who are not
Continuing Employees.



               12.2.3 WARN Act Liability. Buyer acknowledges that, in light of Buyer’s intention to
continue operation of the Hotel with substantially the same staff after Closing and the Parties’
desire for a prompt Closing, it is Buyer’s interest that Seller not take the precautionary step of
giving Hotel Employees notice of possible termination of employment at the Hotel under the WARN
Act. Accordingly, Seller shall not give such notice with respect to the sale of the Hotel to
Buyer, and Buyer shall Indemnify Seller and Hotel Employer from and against any and all Claims
arising out of any real or alleged violation of the WARN Act for failure to give such notice to the
extent based on Buyer’s failure, on and after the Closing Date, to offer employment at the Hotel to
Eligible Employees in accordance with Section 12.2.1. Notwithstanding anything to the
contrary herein, Buyer does not assume and Seller shall Indemnify Buyer for any and all liability
caused by Seller’s or Hotel Manager’s failure to disclose the actual number of employment losses
experienced at the Hotel in the 90 day period prior to Closing.



          12.3 Indemnification of Related Persons. Any indemnification of a Party against third
person Claims contained herein shall also run in favor of such Party’s partners, shareholders,
beneficial owners, directors, officers, employees, Affiliates, agents and managers (including,
without limitation, Hotel Manager), all of whom are intended by the Parties to be third party
beneficiaries of this Section 12.



          12.4 Survival. The Parties’ indemnities set forth in this Section 12 and
elsewhere in this Agreement shall survive Closing and shall not be deemed to merge into any of the
Transfer Instruments; provided, however, Seller’s liability shall be subject to the limitations set
forth in Section 20.3.



Page 34









 





     13. HOTEL RECORDS. As reasonably required for tax filings, preparation and auditing of
financial statements, other reporting and similar purposes, Seller shall have the right to make and
retain copies of the Hotel Records which are transferred to Buyer at Closing and to disclose
information contained therein. Buyer shall also make the Hotel Records available to Seller and its
authorized representatives at the Hotel, at reasonable times and upon reasonable prior notice, and
allow Seller to make copies thereof; and Buyer shall not dispose of any Hotel Records prior to the
fifth anniversary of Closing without giving Seller at least 30 days’ prior written notice and
opportunity to recover the same.



     14. AUDIT. From the Effective Date until the date two (2) years after the Closing, Seller
shall, to the extent such items are in Seller’s possession or control, make all of its
property-level books and records for the years ended December 31, 2007, 2008 and 2009 and interim
periods as required by the rules and regulations of the Securities and Exchange Commission (“SEC”)
available to Buyer and Buyer’s independent accountants for inspection, copying and audit at the
sole expense of the Buyer. Seller shall, at no expense to Seller, provide Buyer with copies of, or
access to, such factual information, accounting records and financial information as may be
reasonably requested in writing by Buyer or its auditors, and in the possession or control of
Seller, to enable Buyer or its affiliates to file reports or registration statements in compliance
with the rules and regulations of the SEC. Seller also shall, upon written request, at no expense
to Seller, supply to Buyer letters of representation to such accountants, in form and substance
reasonably satisfactory to Buyer. This paragraph shall survive the Closing for a period of two (2)
years.



     15. ASSIGNMENT. Neither this agreement nor any of Buyer’s rights hereunder may be
assigned, encumbered or transferred without Seller’s prior written consent. Notwithstanding the
foregoing, prior to Closing, Buyer shall have the right to assign or transfer its rights under this
agreement to a corporation, partnership, limited liability company or other entity which is wholly
owned and controlled, directly or indirectly, by Buyer, provided Buyer gives Seller at least ten
days’ prior written notice of such assignment and that such assignee concurrently with such
assignment assumes, in a written instrument delivered and satisfactory in form to Seller, all of
the obligations and liabilities of Buyer hereunder.



     16. NOTICES. Except in the case (if any) where this Agreement expressly provides for an
alternate form of communication, any notice, consent, demand or other communication to be delivered
to a Party hereunder shall be deemed delivered and received when made in writing and transmitted to
the applicable Party either by receipted courier service, or by the United States Postal Service,
first class registered or certified mail, postage prepaid, return receipt requested, by electronic
mail or facsimile transmission (“Fax”), at the address or addresses indicated for such party below
(and/or to such other address as such party may from time to time by written notice designate to
the other):



	 	 	 

	     If to Seller:

	 	c/o Lowe Enterprises Investment Management, Inc.
	 

	 	11777 San Vicente Blvd., Suite 900
	 

	 	Los Angeles, California 90049
	 

	 	Attention: Kerri O’Neill
	 

	 	Fax: (310) 207-1132
	 

	 	E-mail: koneill@loweenterprises.com






Page 35









 






	 	 	 

	     with a copy to:

	 	Lowe Hospitality Group, Inc.
	 

	 	10333 East Dry Creek Road, Suite 450
	 

	 	Englewood, CO 80112
	 

	 	Attention: Michael Everett
	 

	 	Fax: (303) 799-6011
	 

	 	E-mail: meverett@destinationhotels.com
	 
	 	 
	     and a copy to:

	 	Seyfarth Shaw LLP
	 

	 	333 S. Hope St., Suite 3900
	 

	 	Los Angeles, CA 90071
	 

	 	Attention: J. Dean Heller and Amadeo F. Cantú
	 

	 	Fax: (213) 270-9601
	 

	 	E-mail: dheller@seyfarth.com and acantu@seyfarth.com
	 
	 	 
	     If to Buyer:

	 	c/o Pebblebrook Hotel Trust
	 

	 	Two Bethesda Metro Center, Suite 1530
	 

	 	Bethesda, MD 20814
	 

	 	Attention: Thomas C. Fisher
	 

	 	Fax: (240) 396-5763
	 

	 	E-mail: tfisher@pebblebrookhotels.com
	 
	 	 
	     and a copy to:

	 	Honigman Miller Schwartz and Cohn LLP
	 

	 	38500 Woodward Avenue, Suite 100
	 

	 	Bloomfield Hills, MI 48304-5048
	 

	 	Attention: J. Adam Rothstein
	 

	 	Fax: (248) 566-8479
	 

	 	E-mail: arothstein@honigman.com





and shall be deemed delivered and received (A), if delivered or transmitted before 5:00 p.m.
recipient’s local time on a Business Day, or if tendered for delivery between the hours 9:00 a.m.
and 5:00 p.m. recipient’s local time on a Business Day and refused, then on the date of actual (or
refused) delivery or actual transmission as evidenced by postal or courier receipt (or by a
completed transmission log sheet generated by the sending telecopier) and (B), otherwise, on the
Business Day next following the date of actual delivery or transmission; provided, however, that
any communication delivered by Fax must be confirmed within three Business Days by duplicate notice
delivered as otherwise provided herein and any refused delivery must re-tendered within two
Business Days.




     17. GENERAL PROVISIONS.



          17.1 Confidentiality. Except for Permitted Disclosures (defined below), (A) each Party
shall keep confidential the terms of this Agreement, and (B) until and unless the Closing occurs,
Buyer shall keep confidential all information regarding the Hotel. In addition, except as required
by Law, neither Party shall issue press release or communication with the



Page 36









 




public prior to Closing without the prior written consent of the other. As used herein,
“Permitted Disclosures” include only (i) disclosures by a Party to its attorneys, accountants and
other consultants as reasonably necessary in negotiation of this Agreement, the conduct of due
diligence, the consummation of the transactions contemplated hereby and the exercise of Buyer’s
rights and the performance of its duties hereunder, (ii) disclosure by Seller to its parent entity
or entities and investors therein, (iii) disclosure to any government regulatory agency which
requests the information in question in the course of its regulatory functions, and (iv) any other
disclosure required by Law (including, without limitation, in response to any subpoena). In the
case of any Permitted Disclosure described in clause (i) above, the disclosing Party shall advise
the person to whom such disclosure is made of the confidential nature of any information disclosed
and obtain from such person an undertaking to respect such confidentiality. Any confidentiality
agreement regarding the Hotel or the transaction contemplated by this Agreement previously made
between the Parties or their agents shall continue in full force and effect and shall not be deemed
to have merged into, or been superseded by, this Agreement.




          17.2 Effect of Termination. Upon any termination of this Agreement, neither Party shall
have any further obligation or liability to the other hereunder except (i) as provided below
(regarding Buyer’s return or destruction of materials received from Seller), (ii) any liability
which a Party may have hereunder by reason of the fact that termination either (A) was wrongfully
made by it or (B) resulted from a breach of its covenants or other obligations hereunder and (iii)
any obligation under Sections 4.7 or 17.9. Within ten Business Days after
termination of this Agreement without Closing, Buyer shall either return to Seller all materials of
a confidential nature which Buyer has received from Seller pursuant to this Agreement or confirm to
Seller in writing that Buyer has destroyed all such materials. Within ten Business Days after
Seller’s request following the termination of this Agreement without Closing, Buyer shall deliver
to Seller all reports, studies and analyses prepared by third parties at Buyer’s request or
direction relating to the Hotel Premises (unless this Agreement has been terminated due to the
default of Seller).



          17.3 Construction; Participation in Drafting. Each Party acknowledges that it and its
Counsel have participated substantially in the drafting of this Agreement and agree that,
accordingly, in the interpretation and construction of this Agreement, no ambiguity, real or
apparent, in any provision hereof shall be construed against a Party by reason of the role of such
Party or its Counsel in the drafting of such provision.



          17.4 No Third Party Beneficiaries. Except as expressly provided in Section 12.3,
nothing in this Agreement is intended or shall construed to confer any rights or remedies on any
person other than the Parties and their active successors and assigns, or to relieve, discharge or
alter the obligations of any third person to either Party or to give any third person any right of
subrogation or action over against Party. Without limiting the generality of the foregoing, no
Hotel Employee shall be deemed a third party beneficiary of any provision of this Agreement.



          17.5 Integration and Binding Effect. This Agreement constitutes the entire agreement
among the Parties pertaining to the subject matter hereof and supersedes all prior agreements,
understandings and representations of the Parties with respect to the subject matter hereof
(including, without limitation, any letter of intent, offer sheet, broker’s set-up, disclosure
materials, offering circular or other such written materials of any kind). This Agreement may



Page 37









 




not be modified, amended, supplemented or otherwise changed, except by a writing executed by
all Parties. Except as otherwise expressly provided herein, this Agreement shall bind and inure to
the benefit of the Parties and their respective successors and assigns.




          17.6 Computation of Time. Any time period specified in this Agreement which would
otherwise end on a non Business Day shall automatically be extended to the immediately following
Business Day.



          17.7 Captions. Article and Section headings used herein are for convenience of reference
only and shall not affect the construction of any provision of this Agreement.



          17.8 Further Assurances. The Parties shall cooperate with each other as reasonably
necessary to effect the provisions of this Agreement, shall use reasonable and good faith efforts
to satisfy conditions to Closing and, at and after Closing, shall each execute and deliver such
additional instruments or other documents as the other Party may reasonably request to accomplish
the purposes and intent of this Agreement; provided, however, that nothing in this Section shall be
deemed to enlarge the obligations of the Parties hereunder or to require any to incur any material
expense or liability not otherwise required of it hereunder.



          17.9 Consents and Approvals. Wherever this Agreement requires a Party’s consent or
approval, then unless expressly provided otherwise, such consent of approval (i) may be given or
withheld in such Party’s sole and absolute discretion and (ii) to be effective, must be given in a
writing signed by such Party and expressly identifying the specific matter to which such consent or
approval applies.



          17.10 Enforcement Costs. Should either Buyer or Seller institute any action or proceeding
to enforce any provision of this Agreement or for damages by reason of any alleged breach of any
provision hereof, the prevailing Party shall be entitled to recover from the other Party all costs
and expenses (including attorneys’ fees) incurred by such prevailing Party in connection with such
action or proceeding. A Party also shall be entitled to recover all costs and expenses (including
attorneys’ fees) incurred in the enforcement of any judgment or settlement in its favor obtained in
such action or proceeding (and in any such judgment provision shall be made for the recovery of
such post judgment costs and expenses.)



          17.11 Governing Law. This Agreement shall be deemed to be an agreement made under the
Laws of the State where the Hotel Premises are located and for all purposes shall be governed by
and construed in accordance with such Laws.



          17.12 Counterparts, Electronic Delivery. This Agreement, and any amendment hereto, may be
executed in any number of counterparts and by each Party on separate counterparts, each of which
when executed and delivered shall be deemed an original and all of which taken together shall
constitute but one and the same instrument. A Party may deliver this Agreement by electronically
transmitting to the other Party (either by Fax or email) a facsimile copy of its executed
counterpart, but such Party shall also promptly deliver to the other Party an original executed
counterpart hereof.



Page 38









 





     18. EXHIBITS. Each of the following exhibits is hereby incorporated into and made an
integral of this agreement:



	 	 	 

	A

	 	Legal Description of Hotel Parcel
	 
	B

	 	Form of Deed
	 
	C

	 	Form of Bill of Sale
	 
	D

	 	Form of Assignment and Assumption of Leases
	 
	E

	 	Form of Assignment and Assumption of Assumed Contracts
	 
	F

	 	Form of General Assignment and Assumption
	 
	G

	 	Form of FIRPTA Certificate
	 
	H

	 	Exceptions to Seller Representations
	 
	I

	 	Schedule of Leases
	 
	J

	 	Schedule of Material Contracts
	 
	K

	 	Schedule of Liquor Licenses
	 
	L

	 	Intentionally Deleted.
	 
	M

	 	Current Operating Budget
	 
	N

	 	Schedule of Environmental Report and Existing Survey
	 
	O

	 	Form of Tenant Notification
	 
	P

	 	Form of Vendor Notification
	 
	Q

	 	Approved Capital Expenditures





Seller shall have until (and including) ten Days after the Effective Date to modify and deliver to
Buyer an amended Exhibit J. Any modification of such Exhibit that Seller timely delivers
shall supplement or supersede (as the case may be) the prior version of such Exhibit for all
purposes of this Agreement.




     19. SIGNERS’ WARRANTY. Each individual executing and delivering this agreement on behalf
of a corporate party hereby warrants and represents to the other parties that he or she is duly
authorized and empowered to do so.



     20. LIMITATION ON SELLER’S LIABILITY.



          20.1 Seller’s Breach of Obligation to Close; Prohibition on Specific Performance and Lis
Pendens. Subject to Section 20.2, in the event Seller in breach of this Agreement fails to
close, Buyer shall be limited to the recovery of Buyer’s Costs (not to exceed $250,000) only and
shall have no right to seek damages or specific performance or to record a lis pendens against the
Hotel Premises. Except as expressly permitted by Section 20.2, this provision shall be an
absolute bar to any action by Buyer for any other damages arising out of such a breach under and/or
for specific performance of this Agreement, and Seller shall be entitled to the immediate
expungement of any lis pendens filed by Buyer against the Hotel Premises. If Buyer, except as
expressly permitted by Section 20.2, brings an action for damages of a kind or in an amount
in excess of those permitted under this Section 20.1, or for specific performance of this
Agreement, or records a lis pendens against the Hotel Premises, or otherwise creates any cloud on
Seller’s title to the Hotel Premises, Buyer shall Indemnify Seller from and against all costs,
expenses (including attorneys’ fees) and losses which Seller incurs by reason thereof. As used
herein, “Costs” means Buyer’s actual and reasonable costs incurred in



Page 39









 




connection with the transaction contemplated by this Agreement, including, but not limited to,
legal, accounting, engineering and consulting fees and costs.




          20.2 Exception for Willful Breach. Notwithstanding Section 20.1, if Seller, in
breach of this Agreement, fails to close, Buyer may in lieu of an action for monetary damages bring
an action for specific performance of Seller’s obligation to close, subject to strict compliance
with each of the following conditions:



               20.2.1 Buyer gives Seller at least ten Business Days’ prior written notice of its
intention to commence such an action;



               20.2.2 Buyer commences such action, and serves Seller with a complaint therein, within 30
days after the Last Closing Date (which 30-day period shall be extended, day for day, for any
period of time during which Buyer is barred from filing such action by reason of a temporary
restraining order, injunction or other order of court obtained by Seller);



               20.2.3 Such action, to the extent seeking specific performance (or other equitable relief)
is limited to an action to compel Seller to deliver into Escrow the Deed and other Seller’s Closing
Documents actually required to convey the Hotel free of Liens and to perform Seller’s other
obligations to be performed at Closing and does not seek specific performance of any other covenant
or warranty of Seller hereunder (including, without limitation, any covenant or warranty contained
in Sections 5.1 or 6), or the correction of any condition respecting the Hotel, or
any abatement of the Purchase Price; provided, however, that the foregoing shall not bar Buyer,
after it has acquired the Hotel, from bringing an action to recover monetary damages for any breach
of covenant or representation contained in Sections 5.1 or 6 or any provision
hereof intended to survive Closing as provided in Section 12.4, to the extent otherwise
permitted to do so; and



               20.2.4 During the pendency of such action, the Deposit remains in Escrow (or is deposited
with the court hearing such action); provided, however, that if Seller, at any time during the
pendency of such action, delivers the Deed and other required Seller’s Closing Documents into
Escrow (or into the court before which such action is pending), including (if a Casualty has
occurred) an assignment or delivery (as applicable) to Buyer of Proceeds to the extent required
under Section 9.3, and authorizes Closing in accordance with Section 10 (other than
as to time of Closing), including instructions to Escrow Agent to apply the proceeds of the
Purchase Price to the payment of any Lien that would otherwise appear as an exception on the Title
Policy and that Seller is obligated to discharge (altogether, “Seller’s Compliance”), Buyer shall
either proceed immediately to close the purchase of the Hotel or immediately to dismiss such action
to the extent it seeks specific performance or other equitable relief and expunge from the record
any lis pendens Buyer has filed. By electing to seek specific performance under this Section
20.2, Buyer shall be deemed to have waived any claim or right to monetary damages for Seller’s
failure to close, other than such damages for delay as are customarily awarded in conjunction with
specific performance of an obligation to sell real property (but, if such action results in Buyer’s
purchasing the Hotel, such waiver shall not apply to any claim for damages for Seller’s subsequent
breach of any of its post-Closing obligations under this Agreement or which Buyer is otherwise
permitted to make pursuant to the proviso contained in Section 20.2.3). If Buyer brings or
maintains an action for specific performance



Page 40









 




other than as expressly permitted under this Section 20.2, or fails to close the
purchase of the Hotel within 30 days after Seller’s Compliance, Seller shall have the right to
terminate this Agreement and recover the Deposit as liquidated damages under Section 21.




          20.3 Other Seller’s Breaches. Seller shall have no liability to Buyer under the
indemnities contained in Section 12 or elsewhere, or for breach of any covenant,
representation or warranty contained in Section 5.1 or elsewhere, or otherwise, unless
Buyer has given Seller written notice of a specific indemnity claim or claim of breach, stating in
reasonable detail the factual basis for such claim, within 270 days after the Closing Date, and
unless Buyer commences legal action on such claim, and serves Seller with notice of such claim in
accordance with applicable Law, within 365 days after the Closing Date. Further, and
notwithstanding anything to the contrary herein, (i) Seller shall in no event be liable to Buyer
for any such claim unless and until the aggregate amount of Buyer’s actual out-of-pocket losses
from all such valid claims exceeds $150,000, and (ii) in no event shall the aggregate amount of
Seller’s liability exceed five percent of the Purchase Price. The limitations in clauses (i) and
(ii) of this Section 20.3 are in addition to, and not in derogation of, the limitations in
Section 5.4.3 with respect to Seller’s liability for breaches of its representations and
warranties. The limitations in this Section 20.3 shall not apply to the Seller’s liability
under Section 11.



     21. LIQUIDATED DAMAGES AND LIMITATIONS OF REMEDIES FOR BUYER’S BREACH. If Buyer in breach
of this agreement fails to close, then upon written notice of termination (a “Termination Notice”)
from Seller to Buyer and escrow agent, this agreement shall terminate (except for this section and
buyer’s obligations pursuant to Sections 4.7, 17.2 and 17.9). The parties
acknowledge and agree by initialing this Section 21 that:



          21.1 IF BUYER FAILS TO CLOSE IN BREACH OF THIS AGREEMENT, SELLER WILL INCUR CERTAIN COSTS
AND OTHER DAMAGES IN AN AMOUNT THAT WOULD BE EXTREMELY DIFFICULT OR IMPRACTICAL TO ASCERTAIN.



          21.2 THE DEPOSIT, TOGETHER WITH ALL INTEREST EARNED THEREON, BEARS A REASONABLE
RELATIONSHIP TO THE DAMAGES WHICH THE PARTIES ESTIMATE MAY BE SUFFERED BY SELLER BY REASON OF SUCH
A FAILURE OF CLOSING TO OCCUR, AND THE DEPOSIT AND INTEREST IS NOT AN AMOUNT WHICH IS UNREASONABLE
UNDER THE CIRCUMSTANCES EXISTING AT THE TIME THIS AGREEMENT IS MADE (BUYER ACKNOWLEDGING AND
AGREEING THAT BUYER HAS FULLY CONSIDERED THE PROVISIONS OF THIS SECTION 21 AND SUCH
CIRCUMSTANCES PRIOR TO ENTERING INTO THIS AGREEMENT AND HAS CONSULTED WITH BUYER’S COUNSEL WITH
RESPECT THERETO).



          21.3 UPON DELIVERY TO ESCROW AGENT BY SELLER OF A PROPERLY GIVEN TERMINATION NOTICE,
SELLER SHALL BE ENTITLED TO RECEIVE AND RETAIN THE DEPOSIT, TOGETHER WITH ALL INTEREST EARNED
THEREON, AS LIQUIDATED DAMAGES, WHICH DAMAGES SHALL BE SELLER’S SOLE REMEDY HEREUNDER IF BUYER IN
BREACH OF THIS AGREEMENT FAILS TO CLOSE, AND BUYER SHALL FORTHWITH INSTRUCT ESCROW AGENT TO RELEASE
THE DEPOSIT AND ALL INTEREST EARNED THEREON TO SELLER AND TO RETURN TO SELLER ALL DOCUMENTS AND
INSTRUMENTS THERETOFORE DEPOSITED



Page 41









 




INTO THE ESCROW BY OR ON BEHALF OF THEM; PROVIDED, HOWEVER, THAT THE DEPOSIT SHALL BE IN
ADDITION TO AND NOT IN LIEU OF ANY AMOUNTS OWED TO SELLER BY BUYER AS A RESULT OF BUYER’S
OBLIGATIONS PURSUANT TO SECTIONS 4.7, 17.2 AND 17.9; AND PROVIDED FURTHER
THAT SELLER SHALL BE ENTITLED TO RECOVER FROM BUYER ATTORNEYS’ FEES AND OTHER DIRECT OUT OF POCKET
COSTS INCURRED BY THEM IN CONNECTION WITH THE ENFORCEMENT OR DEFENSE OF OBLIGATIONS CONTAINED IN
THIS SECTION 21.




     IN FURTHER EVIDENCE OF THEIR AGREEMENT TO THIS LIQUIDATED DAMAGES PROVISION, SELLER AND BUYER
HAVE INITIALED BELOW:






	 	 	 

	     SELLER:___KO/SP_______

	 	 BUYER:__T.C.F._____





[SIGNATURES ON FOLLOWING PAGE]




Page 42









 





     IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed and delivered, each
by its own representative thereunto duly authorized, as of the date first above written.



	 	 	 	 	 
	SELLER:          	COMMONWEALTH WASHINGTON HOLDING, INC.,

 a Delaware corporation

 	 
	 	By:  	/s/ Kerri O’Neill
 	 
	 	 	Name:  	Kerri O’Neill 	 
	 	 	Title:  	Vice President 	 
	 
	 	COMMONWEALTH WASHINGTON OPERATING, INC.,
 a Delaware corporation

 	 
	 	By:  	/s/ Salve A. Pennya
 	 
	 	 	Name:  	Salve A. Pennya 	 
	 	 	Title:  	Sr. Vice President 	 
	 
	BUYER:           	TERRAPINS OWNER LLC,

 a Delaware limited liability company

 	 
	 	By:  	/s/ Thomas C. Fisher
 	 
	 	 	Name:  	Thomas C. Fisher 	 
	 	 	Title:  	Vice President 	 
	 



{ESCROW AGENT’S SIGNATURE ON THE FOLLOWING PAGE







 









 







The undersigned hereby accepts this Agreement as its escrow instructions and agrees to act as
Escrow Agent hereunder, in accordance with the terms and conditions hereof.




					
	 	


CHICAGO TITLE INSURANCE COMPANY

 	 
	 	By:  	/s/ Maurice Neri
 	 
	 	 	Name:  	Maurice Neri 	 
	 	 	Title:  	AVP	 
	 	 	Date: 	
___9/23________________, 2010___ 	 
	 








 









 







EXHIBITS:




	 	 	 

	A

	 	Legal Description of Hotel Parcel
	 
	 	 
	B

	 	Form of Deed
	 
	 	 
	C

	 	Form of Bill of Sale
	 
	 	 
	D

	 	Form of Assignment and Assumption of Leases
	 
	 	 
	E

	 	Form of Assignment and Assumption of Assumed Contracts
	 
	 	 
	F

	 	Form of General Assignment and Assumption
	 
	 	 
	G

	 	Form of FIRPTA Certificate
	 
	 	 
	H

	 	Exceptions to Seller Representations
	 
	 	 
	I

	 	Schedule of Leases
	 
	 	 
	J

	 	Schedule of Contracts
	 
	 	 
	K

	 	Schedule of Liquor Licenses
	 
	 	 
	L

	 	Intentionally Deleted
	 
	 	 
	M

	 	Current Operating Budget
	 
	 	 
	N

	 	Schedule of Environmental Report and Existing Survey
	 
	 	 
	O

	 	Form of Tenant Notification
	 
	 	 
	P

	 	Form of Vendor Notification
	 
	 	 
	Q

	 	Approved Capital Expenditures







- i -