exv10w4






Exhibit 10.4




PURCHASE AND SALE AGREEMENT AND ESCROW INSTRUCTIONS




between




The parties designated on Exhibit A




as Seller




and




CHATHAM LODGING TRUST




as Purchaser




Homewood Suites

35 Middlesex Turnpike

Billerica, Massachusetts 01821




Homewood Suites

2261 Killebrew Drive

Bloomington, Minnesota 55425



Homewood Suites

5107 Peter Taylor Park

Brentwood, Tennessee 37027




Homewood Suites

2747 North Stemmons Freeway

Dallas, Texas 75207




Homewood Suites

2 Farm Glen Boulevard

Farmington, Connecticut 06032




Homewood Suites

290 Southhall Lane

Maitland, Florida 32751




November 16, 2009




 









 





PURCHASE AND SALE AGREEMENT AND ESCROW INSTRUCTIONS




     This PURCHASE AND SALE AGREEMENT AND ESCROW INSTRUCTIONS (“Agreement”) is dated as of
this 16th day of November, 2009 (“Effective Date”), and is made by and between each of the
parties named on Exhibit A hereto (each, individually, “Seller” and, collectively,
“Sellers”), and CHATHAM LODGING TRUST, a Maryland real estate investment trust
(“Purchaser”).



RECITALS




     A. Sellers are the owners of all of the Properties, with the specific owner of each Property
as set forth on Exhibit A.



     B. Purchaser desires to purchase all of the Properties and to acquire all of Sellers’
respective right, title and interest in and to the Properties, on the terms and conditions set
forth in this Agreement.



     C. Sellers desire to sell to Purchaser all of the Properties and to convey to Purchaser all of
their respective right, title and interest in the Properties, on the terms and conditions set forth
in this Agreement.



     D. All capitalized terms used in this Agreement and not otherwise defined shall have the
meanings ascribed to such terms in Article I.



AGREEMENT




     NOW, THEREFORE, for valuable consideration, including the promises, covenants, representations
and warranties hereinafter set forth, the receipt and adequacy of which are hereby acknowledged,
the parties, intending to be legally and equitably bound, agree as follows.



I.




DEFINITIONS




     As used in this Agreement, the following terms have the meanings ascribed to them in this
Article I:



     “Alcoholic Beverages.” With respect to each Property, all unopened wine, beer and
other alcoholic beverages located at the Real Property and held for consumption and/or sale in the
operation of the Hotel.



     “Assignment of Contracts.” As set forth in Section 5.2(d) hereof.



     “Assignment of Intangibles.” As set forth in Section 5.2(c) hereof.



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     “Authorizations” shall mean all licenses, permits and approvals required by any
governmental or quasi-governmental agency, body or officer for the ownership, operation and use of
the Property or any part thereof.



     “Bill of Sale.” As set forth in Section 5.2(b) hereof.



     “Bookings.” With respect to each Property, all contracts or reservations for the use
or occupancy of guest rooms, meeting rooms and/or banquet facilities of the Hotel for periods on
and after the Closing Date which are made in Seller’s ordinary course of business for the Hotel.



     “Casualty.” As set forth in Section 12.13.1 hereof.



     “Casualty Notice.” As set forth in Section 12.13.1 hereof.



     “Casualty Renovation Cost.” As set forth in Section 12.13.1 hereof.



     “Close of Escrow.” As set forth in Section 5.1 hereof.



     “Closing Date.” As set forth in Section 5.1 hereof.



     “Contracts.” With respect to each Property, all leases of furniture and equipment,
all space leases, and all contracts and agreements used and/or executed in connection with the
construction, ownership, operation, occupancy and/or maintenance of the Hotel and/or the Property,
together with (a) all contracts, agreements and other obligations terminable on not more than
thirty (30) days prior notice without fee or penalty, (b) all Bookings, gift certificates, and
similar promotional arrangements entered into by Seller prior to the Effective Date, and (c) all
contracts and agreements entered into by Seller in the ordinary course of business, but only to the
extent expressly permitted, and disclosed to Purchaser as required, by the terms of this Agreement,
but excluding, in each case, the Franchise Agreement, provided Purchaser shall have the right, by
notice delivered to Seller during the Due Diligence Period, to require that, by Close of Escrow,
Seller terminate or give notice of termination with respect to any or all Contracts that can be
terminated without penalty, or with penalty if Purchaser agrees to assume the penalty. All of the
Material Contracts in effect as of the Effective Date are described on Exhibit “C” attached
hereto.



     “Cooperating Party.” As set forth in Section 12.5 hereof.



     “Cut-Off Time.” As set forth in Section 5.5.4 hereof.



     “Due Diligence Materials.” As set forth in Section 4.3 hereof.



     “Due Diligence Period.” As set forth in Section 4.3 hereof.



     “Earnest Money Deposit.” As set forth in Section 2.2.1 hereof.



     “Environmental Damages.” As set forth in Section 4.4.1(j) hereof.



     “Environmental Requirements.” As set forth in Section 4.4.1(k) hereof.



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     “Escrow.” As set forth in Section 3.1 hereof.



     “Escrow Holder.” Chicago Title Insurance Company



     “Exchangor.” As set forth in Section 12.15 hereof.



     “Excluded Assets.” With respect to each Property, the Proprietary Computer Systems,
the Excluded Documents, cash, cash equivalents, checks and other funds, including, without
limitation, till money, house banks, Seller’s Accounts Receivable, notes, securities and other
evidence of indebtedness held at the Hotel as of the Cut-Off Time, and balances on deposit to the
credit of Seller with banking institutions, all of which shall be retained by Seller.



     “Excluded Documents.” With respect to each Property, all (a) internal memoranda,
correspondence, analyses, documents or reports prepared by or for Seller or any affiliate of Seller
in connection with the sale of the Property or otherwise, including, without limitation, tax
returns or financial statements of Seller (exclusive of operating statements of the Hotel which
shall be available for review by Purchaser) for or in connection with its ownership or operation of
the Property (but excluding any historical sales/customer data used in the ordinary course of
business which shall be provided to Purchaser), (b) communications between Seller or any affiliate
and its attorneys or other agents or representatives, (c) employee personnel files of Seller and
the manager of the Hotel, (d) appraisals, assessments or other valuations of the Property in the
possession of Sellers, (e) original bills, invoices, receipts and checks relating to expenses
incurred prior to the Cut-Off Time (provided that Purchaser shall be entitled to copies of such
items), and (f) any confidential or proprietary information of any Seller in Seller’s possession,
in each case however embodied.



     “Food Inventory.” With respect to each Property, all unopened food, food stuffs, menu
stock and non-alcoholic beverages located at the Real Property and held for consumption and/or sale
in the operation of the Hotel.



     “Franchise Agreement.” With respect to each Property, the franchise agreement to be
entered into by Purchaser with Franchisor at or prior to Closing or, if an existing franchise
agreement is being assumed by Purchaser pursuant to the election of Franchisor, then the assumed
franchise agreement from and after Closing.



     “Franchisor.” With respect to each Property, the franchisor having entered into an
existing franchise agreement or which will enter into a new Franchise Agreement.



     “Good Funds.” A deposit of cashier’s check, certified funds, or confirmed wire
transfer of funds.



     “Hazardous Materials.” As set forth in Section 4.4.1(l) hereof.



     “Hotel.” With respect to each Property, the hospitality business (including restaurant
and lounge services and businesses) operated and conducted by Seller on the Real Property.



     “Improvements.” With respect to each Property, the buildings, structures, and other
permanent improvements located on the Land, including, without limitation, electrical



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distribution systems, HVAC systems, walkways, driveways, parking lots, recreational
facilities, plumbing, swimming pool, lighting, and mechanical equipment and fixtures installed
thereon, and all rights, benefits and privileges appurtenant thereto.




     “Intangible Property.” With respect to each Property, all (a) fictitious business
names and logos used by Seller in the operation of the Hotel and which are identified exclusively
with the Hotel, but excluding the franchise proprietary names, (b) local telephone and facsimile
exchange numbers identified exclusively with the Hotel, (c) transferable certificates (including
the Certificate of Occupancy for the Real Property), licenses (including liquor licenses, to the
extent transferable), permits and warranties now in effect with respect to the Property
(specifically excluding, however the franchise name for the Hotel) at no cost to Seller, (d)
internet sites and names associated with each hotel (URLs), (e) plans, specifications and surveys
and (f) all other intangible property located at the Real Property and used by Seller exclusively
in connection with the ownership and operation of the Hotel, but excluding the Excluded Assets.



     “Intermediary.” As set forth in Section 12.15.3 hereof.



     “Inventory.” With respect to each Property, all unopened operating inventories,
materials and supplies used in connection with the operation of the Hotel and located thereat,
including linens, bath towels, paper goods and guest supplies, and all gift shop inventory owned by
Seller, including without limitation, Alcoholic Beverages.



     “IPO Condition.” As set forth in Section 8.2(d) hereof.



     “Land.” With respect to each Property, the land, as more particularly described on
Exhibit “B” attached hereto and upon which the Improvements are located, including all
easements, rights-of-way, strips, zones, licenses, transferable hereditaments, privileges,
tenements and appurtenants belonging to the Land including any development rights, water rights and
mineral rights, and any right or interest in any open or proposed highways, streets, roads,
avenues, alleys, easements, strips, gores and rights-of-way in, across, in front of, contiguous to,
abutting or adjoining the Land, and other rights and benefits running with the Land and/or the
owner of the Land.



     “Liabilities.” As set forth in Section 12.15.2 hereof.



     “Liquor Licenses.” With respect to each Property, the liquor licenses relating to the
operation of the restaurant and lounge businesses at the Real Property, as described in Section 2.4
hereof.



     “Management Agreement” With respect to each Property, the management agreement with a
third-party manager currently in existence.



     “Material Contracts.” With respect to each Property, those Contracts which require
more than thirty (30) days’ notice of termination or the payment of a fee or penalty in connection
with such termination or which involve payment obligations by any Seller or third-party manager in
excess of Fifty Thousand Dollars ($50,000.00).



     “Non-Foreign Affidavit.” As set forth in Section 5.2(e) hereof.



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     “Notice.” As set forth in Article XI hereof.



     “Opening of Escrow.” As set forth in Section 3.1 hereof.



     “PCA Report.” As set forth in Section 4.3.9 hereof.



     “Permitted Exceptions.” As set forth in Section 4.2 hereof.



     “Personal Property.” With respect to each Property, all (a) keys and combinations to
all doors, cabinets, enclosures and other locks on or about the Real Property, (b) furniture,
equipment, appliances, televisions, telephone systems, artwork, machinery, tools, trade fixtures,
linens, towels, utensils, china, glassware, and theme park tickets and other personal property
owned by Seller, located on the Real Property, including those used in the operation of any
restaurants and other ancillary hotel operations, and which are used exclusively in connection with
the operation of the Hotel and/or the Real Property, (c) copies of files maintained or generated by
Seller and/or Seller’s Hotel manager in the course of, and related to, the operation of the Hotel
(excluding the Excluded Documents and other materials proprietary to Seller) which are located on
the Real Property, (d) the Restaurant Equipment, (e) the Food Inventory, (f) any vehicles owned by
Seller and used in the operation of the Hotel, (g) to the extent transferable to Purchaser, the
Liquor License, and (h) all other personal property located at the Real Property with respect to
which Seller is the owner thereof and which is used by Seller exclusively in connection with the
ownership and operation of the Hotel and/or the Real Property; but excluding, however, (i) the
Excluded Assets, (ii) the personal property owned by any tenant or guest on the Real Property,
(iii) all refunds and claims for refunds for real property and personal property taxes in
connection with the Property for any period prior to the Close of Escrow, and (iv) all tax and
utilities and other deposits.



     “Physical Condition.” A structural or environmental defect or defects identified by
an independent and qualified structural or environmental consultant (“Consultant”) in a
property condition assessment report or an environmental site assessment report issued by such
Consultant (either, an “Inspection Report”).



     “Property.” With respect to each Seller, the Improvements, the Hotel, the Personal
Property, the Inventory, and the Intangible Property owned by such Seller.



     “Proprietary Computer Systems.” With respect to each Property, the computer software,
hardware, programs, processes and procedures set forth for such Property on Exhibit “C”
attached hereto.



     “Proprietary Information.” As set forth in Section 12.18 hereof.



     “Purchase Price.” As set forth in Section 2.2 hereof.



     “Real Property.” With respect to each Property, the Land and the Improvements.



     “Registration Statement.” As set forth in Section 8.2(d) hereof.



     “Reports. As set forth in Section 4.4.1(e) hereof.



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     “Restaurant Equipment.” With respect to each Property, all equipment, furniture,
fixtures, utensils, glassware, silverware and china used in connection with the operation of all
restaurants and lounges on the Real Property.



     “Seller’s Accounts Receivable.” With respect to each Property, all accounts
receivable and other sums owing Seller in connection with the operation of the Hotel prior to the
Close of Escrow existing on and prior to the Close of Escrow.



     “Survey.” As set forth in Section 4.2 hereof.



     “Title Commitment.” As set forth in Section 4.1 hereof.



     “Title Insurer.” Chicago Title Insurance Company, 1129 20th Street, NW,
Suite 300, Washington, DC 20036



     “Title Policy.” As set forth in Section 4.2 hereof.



     “WARN Act.” As set forth in Section 6.3 hereof.



II.




SALE AND PURCHASE OF PROPERTY




     2.1 Purchase of Property. As of the Close of Escrow, and subject to the terms and
conditions of this Agreement, each Seller shall sell, assign, convey, transfer and deliver to
Purchaser, and Purchaser shall purchase and acquire from each Seller, such Seller’s fee title in
the Improvements, good and marketable title in the Land and the Personal Property and the
Inventory, and all of such Seller’s right, title and interest in and to the Contracts, and the
Intangible Property, free and clear of all monetary liens and encumbrances (other than the
Contracts and the Permitted Exceptions), at the purchase price provided in Section 2.2 hereof. For
the avoidance of doubt, this transaction is for a purchase and sale of all, and not less than all,
of the Properties owned by the Sellers.



     2.2 Purchase Price and Terms of Payment. The aggregate purchase price for the
Properties (“Purchase Price”) shall be Seventy-three Million Five Hundred Thousand Dollars
($73,500,000), allocated as indicated on Exhibit A-1 (which allocation shall be incorporated into
Exhibit A-1 by not later than ten (10) days following the date hereof), and shall consist of and be
payable as follows:



          2.2.1 Earnest Money Deposit. Within two (2) business days following the Effective
Date, Purchaser shall deliver to Escrow Holder, in Good Funds, the sum of One Million Five Hundred
Thousand Dollars ($1,500,000) (together with all interest accrued thereon, and the Additional
Deposit, if delivered, the “Earnest Money Deposit”). The Earnest Money Deposit shall be
fully refundable to Purchaser if Purchaser elects to terminate this Agreement for any reason on or
before the 30th day following the Effective Date (“Due Diligence Period”). If
Purchaser has not elected to terminate this Agreement and cancel the Escrow prior to the later of
(i) the end of the Due Diligence Period and (ii) the end of the Limited Due Diligence Period, if
any, then, within two (2) business days, Purchaser shall increase the Earnest Money Deposit to




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Two Million Five Hundred Thousand Dollars ($2,500,000) (without regard to any interest
earnings, provided that any interest earned thereon shall become part of the Earnest Money Deposit)
by delivery to Escrow Holder of the additional sum of One Million Dollars ($1,000,000) (the
“Additional Deposit”) in Good Funds. In the event of any failure by Purchaser to timely
deliver the Additional Deposit, if Purchaser has not remedied such failure within one (1) business
day following written notice of such failure from Seller to Purchaser, Seller shall have the
absolute right by written notice to Purchaser, given at any time prior to the posting of the
Additional Deposit, to terminate this Agreement, whereupon Seller shall be entitled to receive the
Earnest Money Deposit. Upon expiration of the later of (i) the Due Diligence Period and (ii) the
Limited Due Diligence Period, if any, unless Purchaser has timely terminated this Agreement, the
Earnest Money Deposit shall thereafter be non-refundable to Purchaser, except (a) in the event of a
material default by Seller of its obligations under this Agreement that is not cured within any
applicable cure period provided in this Agreement, (b) upon the failure of a condition precedent to
Purchaser’s obligations as set forth in this Agreement, or (c) as otherwise specifically provided
in this Agreement. The Earnest Money Deposit shall be applied to the Purchaser Price on the
Closing Date in the event Closing occurs.




          2.2.2 Existing Indebtedness. The Properties shall be sold free and clear of any
existing indebtedness.




          2.2.3 Balance of Purchase Price. Not later than 11:00 a.m. Washington, DC time on the
Closing Date, Purchaser shall deposit with Escrow Holder, in Good Funds, the balance of the
Purchase Price, reduced or increased by such amounts required to take into account by such
prorations, credits, costs or other adjustments which are required by this Agreement and which can
be computed and determined as of the time for the required deposit hereunder.




     2.3 Assumption of the Contracts. As additional consideration, Purchaser shall, on and
as of the Close of Escrow, at its sole cost and expense, assume and agree to pay all sums and
perform, fulfill and comply with all other covenants and obligations which are to be paid,
performed and complied with by Sellers under the Contracts, that Purchaser is, pursuant to the
provisions of this Agreement, required to assume, which first arise or accrue on and after the
Closing Date.



     2.4 Liquor Licenses and Alcoholic Beverages. Seller will cooperate in all reasonable
respects (which shall include, without limitation, supplying information known to Seller and
execution of such documents as may be legally required) with Purchaser in connection with
Purchaser’s application for transfer of the Liquor License to Purchaser or issuance of new liquor
licenses. If Purchaser is unable to obtain the transfer of the Liquor License or issuance of new
liquor licenses (temporary or permanent) prior to the Closing, provided that Purchaser has taken
all commercially reasonable measures to obtain cause such transfer or obtain such new license,
then, on the Closing Date, Seller shall cause the current licensee of the applicable Hotel
(“License Holder”) enter into a lease, concession or management agreement with Purchaser, to the
extent legally permissible, whereby License Holder shall, for a period not to exceed ninety (90)
days, operate the liquor concessions at the Hotel under Seller’s or License Holder’s existing
liquor license at no cost or expense to Purchaser pending the transfer or issuance of the Liquor
License to Purchaser. Purchaser shall indemnify, defend and hold the License Holder harmless



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from and against any and all claims, liabilities, costs and expenses (including, without
limitation, reasonable attorneys’ fees and costs) arising in connection with such operation, except
to the extent of any negligence or willful misconduct of License Holder or any of its agents or
employees in such respect, and provide insurance coverage naming License Holder as an additional
named insured.




III.




ESCROW




     3.1 Opening of Escrow. Purchaser and Sellers shall promptly open an escrow
(“Escrow”) with Escrow Holder by depositing with Escrow Holder the Earnest Money Deposit
and three (3) copies of this Agreement duly executed (in counterparts or otherwise) by Sellers and
Purchaser. The time when Escrow Holder so receives the Earnest Money Deposit and the copies of
this Agreement, fully executed by the parties and executes and delivers copies thereof to Sellers
and Purchaser, shall be deemed the “Opening of Escrow.” Purchaser and Sellers shall
execute and deliver to Escrow Holder, in a timely fashion, such instruments and funds as are
reasonably necessary to close the Escrow and consummate the sale and purchase of the Property (or
the exchange thereof, if applicable) in accordance with the terms and provisions of this Agreement.



     3.2 Escrow Holder’s General Provisions. In the event of any conflict between the
provisions of the typed portion of this Agreement and Escrow Holder’s General Provisions (if any),
the provisions of the typed portion of this Agreement shall be controlling and the General
Provisions will be deemed amended accordingly.



     3.3 Additional Escrow Holder Requirements. If there are any requirements imposed by
Escrow Holder relating to the duties or obligations of Escrow Holder, or if Escrow Holder requires
any other additional instructions, the parties agree to make such deletions, substitutions and
additions to this Agreement which do not cause more than a ministerial or de minimis change to this
Agreement or its intent. Any such changes requested by Escrow Holder shall be subject to written
approval of the parties, which approval shall not be unreasonably withheld or conditioned.



     3.4 Deposit of Funds. Except as otherwise provided in this Agreement, all funds
deposited into the Escrow by Purchaser shall be immediately deposited by Escrow Holder into
Treasury Bills or other short-term United States Government obligations, in repurchase contracts
for the same, or in a federally insured money market account, subject to the control of Escrow
Holder in a bank or savings and loan association, or such other institution approved by Purchaser;
provided, however, that such funds must be readily available as necessary to comply with the terms
of this Agreement and Escrow Holder’s escrow instructions (including the return of the Earnest
Money Deposit, or any portion thereof then on deposit with Escrow Holder, to Purchaser in
accordance with this Agreement), and for the Escrow to close within the time specified in Section
5.1 of this Agreement. Except as may be otherwise specifically provided herein, interest on
amounts placed by Escrow Holder in any such investments or interest bearing accounts shall accrue
to the benefit of Purchaser, and Purchaser shall promptly provide to Escrow Holder Purchaser’s Tax
Identification Number.



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     3.5 Release of Funds by Escrow Holder. Escrow Holder’s obligation, if any, under this
Agreement to release the Earnest Money Deposit, and any other funds, prior to the Close of Escrow
is subject to such funds having cleared through the bank, savings and loan, or other financial
institution on which such funds are drawn. Escrow Holder shall make such payments only in strict
accordance with the provisions of this Agreement, and Purchaser and Sellers agree to save and hold
Escrow Holder harmless in disbursing and releasing the funds as specified in this Agreement.
Purchaser and Sellers represent to Escrow Holder that the release instructions set forth in this
Agreement are made of their own free will, under no duress, and with full understanding of the
consequences thereof, not relying on any information furnished or statements made by Escrow Holder.



IV.




CONDITION OF TITLE




     4.1 Title Commitment. Within five (5) days after the Opening of Escrow, Escrow
Holder, at Purchaser’s sole cost and expense, shall cause to be furnished to Purchaser, with a copy
to Sellers, a current commitment for a 2006 A.L.T.A. Owner’s Policy of Title Insurance (standard
coverage) for each Property issued by Title Insurer (“Title Commitment”) reflecting the
status of title to the Real Property, and all exceptions, including easements, licenses,
restrictions, rights-of-way, leases, covenants, reservations and other conditions, if any,
affecting the Real Property, which would appear in a 2006 A.L.T.A. Owner’s Policy of Title
Insurance (standard coverage) if used, and committing to issue the 2006 A.L.T.A. Owner’s Policy of
Title Insurance (standard coverage) to Purchaser for the Real Property and the Improvements in the
full amount of the Purchase Price. Accompanying the Title Commitment, Escrow Holder shall cause to
be furnished to Purchaser, to the extent available, legible copies of the documents affecting the
Real Property referred to in the Title Commitment.



     4.2 Title to the Real Property. Effective as of the Closing Date, but conditioned
upon the Close of Escrow, Title Insurer shall issue to Purchaser for each Property Title Insurer’s
2006 A.L.T.A. Owner’s Policy of Title Insurance (standard coverage) (“Title Policy”), with
the liability under the Title Policies to be in an aggregate amount equal of the Purchase Price,
insuring the fee title in Real Property as vested in Purchaser subject only to the following
matters affecting title (“Permitted Exceptions”).




     (a) All general and special property taxes and assessments not yet delinquent, and all
improvement and assessment bonds;




     (b) Supplemental taxes, if any, assessed as a result of the sale of the Real Property
and the Improvements by Seller to Purchaser;




     (c) Subject to the provisions of Section 4.4 hereof, all liens, covenants, conditions,
restrictions, easements, rights of way, and all other exceptions to title as referenced in
the Title Commitments, except monetary liens and encumbrances (except as caused by
Purchaser) which Seller shall remove at or prior to the Close of Escrow;




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     (d) Subject to Section 4.4 hereof, all exceptions to title disclosed by the
Surveys (and any updates thereto) of the Real Property for the Title Policy (including,
without limitation, easements, encroachments and zoning);




     (e) Guests of the Hotels in the ordinary course of business and rights of parties in
possession not shown by the public records, but only with respect to those which Purchaser
has actual knowledge thereof prior to expiration of the Due Diligence Period or has
consented to thereafter;




     (f) Governmental laws, codes, ordinances and restrictions now or hereafter in effect so
far as these affect the Real Property or any part thereof, including, without limitation,
zoning ordinances (and amendments and additions relating thereto) and the Americans with
Disabilities Act of 1990, as amended;




     (g) Any exceptions created by Purchaser or its agents, employees and/or contractors,
including without limitation, any exceptions arising by reason of the entry on the Real
Property by Purchaser or by its agents, employees and/or contractors; and




     (h) All preprinted exceptions and exclusions contained in the Title Policies not
customarily removed upon receipt by the Title Company of its standard seller’s affidavit as
to liens and possession through the Close of Escrow, to be provided by Seller.


Purchaser shall have the right to obtain from Title Insurer such endorsements to the Title Policies
and/or such additional liability protection as Purchaser may elect to obtain; provided, however,
that Purchaser’s ability to obtain such title endorsements and/or such additional liability
protection shall not be a condition precedent to Purchaser’s obligations hereunder and shall not
extend or delay the Close of Escrow; provided further, however, that Seller shall execute and
deliver to the Title Insurer such certified organizational documents and consents, affidavits,
agreements, and undertakings (including, without limitation, gap undertakings), as may be required
by the Title Insurer in order to issue the Title Policies with affirmative coverage over mechanics
liens. Purchaser shall be solely responsible for negotiating with Title Insurer with respect to
the Title Policies and/or with respect to such title endorsements and/or such additional liability
protection as may be requested by Purchaser, if any. With respect to each Property, Seller will
deliver to Purchaser a copy of any survey of the Real Property in its possession, without warranty,
and Purchaser shall be solely responsible for, and shall assume the risk of, obtaining a survey (or
updating Seller’s survey) of the Real Property (“Survey”) acceptable to Title Insurer for
purposes of issuing the Title Policy.




     4.3 Inspection and Due Diligence Review.



          4.3.1 Purchaser shall have the right, in its sole discretion, until 5:00 p.m. Washington, DC
time on the 30th day following the Effective Date, to satisfy itself, in its sole and
absolute discretion, as to the condition and extent of the Property (“Due Diligence
Period”). Subject to the prior termination of this Agreement, during the term of this
Agreement, Sellers shall cooperate and provide Purchaser with reasonable and continuing access to
the Real Property or any due diligence materials required hereunder upon one (1) business day prior
Notice to Sellers for the purpose of Purchaser’s inspection and due diligence review. In





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connection with such review, Seller shall deliver to Purchaser or make available to Purchaser
at the respective Hotel during normal business hours during the Due Diligence Period, all records,
including non-proprietary financial reports, the instruments evidencing the Contracts pertaining to
the Hotels and any other documents, which are in or under Sellers’ or Sellers’ property manager’s
control and relate to the operation of the Hotels or any other matter affecting the Property
(“Due Diligence Materials”), except that Sellers shall have no obligation to deliver or
make available to Purchaser, and Purchaser shall have no right to review, the Excluded Assets and
the Excluded Documents. Neither Purchaser nor any of its employees, agents or representatives
shall contact or otherwise discuss this transaction and /or the operation of the Hotels with any
on-site employees of the Hotels; provided, however, that Purchaser may meet with any Hotel’s
General Manager (or other designee) upon not less than one (1) business day’s Notice to Sellers but
only in the presence of Sellers’ representative (unless waived).




          4.3.2 Purchaser acknowledges that prior to the date of this Agreement, Sellers have delivered
to Purchaser, or Sellers have provided Purchaser with access to, certain Due Diligence Materials.
Purchaser shall have until the expiration of the Due Diligence Period to review and approve the Due
Diligence Materials.




          4.3.3 During the Due Diligence Period, Purchaser shall also have the opportunity to conduct a
Phase I environmental audit/study of all Real Property, provided such Phase I environmental
audit/study is not invasive or intrusive. Any environmental audit/study, other than the Phase I,
proposed to be undertaken by Purchaser shall be subject to Sellers’ written approval, which shall
not be unreasonably withheld, prior to the commencement thereof. As a condition to any such
consent, Purchaser shall, or shall cause the entity conducting the Phase I environmental
audit/study to, obtain and maintain such public liability insurance in an amount of Two Million
Dollars ($2,000,000) for each Property, naming as an additional insured the Seller owning such Real
Property. At any time prior to 5:00 p.m. Washington, DC time on the last day of the Due Diligence
Period, Purchaser shall have the right in its sole discretion to terminate this Agreement for any
reason or no reason at all, in which event Escrow Holder shall deliver the Earnest Money Deposit to
Purchaser.




          4.3.4 Purchaser, at all times, will conduct such due diligence in compliance with all
applicable laws, and in a manner so as to not cause damage, loss, cost or expense to Sellers, any
Property or the tenants or guests of any Property, and without unreasonably interfering with or
disturbing any employee, tenant or guest at the Hotels. Purchaser will promptly restore any damage
to the Property caused by Purchaser’s inspection to its condition immediately preceding such
inspections and examinations and will keep the Property free and clear of any mechanic’s liens or
materialmen’s liens in connection with such inspections and examinations.




          4.3.5 The cost of the inspections and tests undertaken pursuant to this Section 4.3 shall be
borne solely by Purchaser. Purchaser shall indemnify, protect, defend, and hold Sellers, Sellers’
lenders, and their affiliates, owners, agents and employees harmless from and against any
obligation, liability, claim (including any claim for damage to property or injury to or death of
any persons), lien or encumbrance, loss, damage, cost or expense, including reasonable attorneys’
fees, whether or not legal proceedings are instituted, arising from the acts or omissions of
Purchaser or its agents, employees or contractors occurring in connection with, or as a result of,
such inspections, tests or examinations of any Property. In the event that




11









 







Purchaser elects to terminate this Agreement prior to the end of the Due Diligence Period or upon any other
termination of this Agreement, except by reason of Seller’s default, Purchaser shall deliver to
Seller copies of all third-party reports received by Purchaser with respect to the Property.




          4.3.6 Subject to Section 12.17, until Close of Escrow, Purchaser shall endeavor in good faith
not to disseminate any information or materials disclosed and/or delivered to it by Sellers, or
Sellers’ agents, employees and representatives which relate to the operations of the Property and
whose dissemination could harm the operations of the Property. Purchaser also agrees that in the
event the transactions contemplated in this Agreement are not consummated as provided herein,
Purchaser shall return all information and materials disclosed and/or delivered to it by Sellers,
or Sellers’ agents, employees and representatives, and all copies thereof, to Sellers promptly upon
Sellers’ request.




          4.3.7 Except as expressly provided in this Agreement, Sellers make no representations or
warranties as to the truth, accuracy or completeness of any materials, data or other information,
if any, supplied to Purchaser in connection with Purchaser’s inspection of the Property (e.g., that
such materials are complete, accurate or the final version thereof, or that all such materials are
in Sellers’ possession). It is the parties’ express understanding and agreement that any such
materials are to be provided only for Purchaser’s convenience in making its own examination and
determination prior to the expiration of the Due Diligence Period as to whether it wishes to
purchase the Properties, and, in doing so, Purchaser shall rely exclusively on its own independent
investigation and evaluation of every aspect of each Property and not on any materials supplied by
Sellers. Purchaser expressly disclaims any intent to rely on any such materials provided to it by
Sellers in connection with its inspection and agrees that it shall rely solely on its own
independently developed or verified information.




          4.3.8 The obligations of Purchaser under this Section 4.3 (including its indemnification
obligations) shall survive the Close of Escrow or the termination of this Agreement.




          4.3.9 Notwithstanding any provision herein to the contrary, so long as Purchaser has ordered
(i) the Phase I environmental audit/study (the “Environmental Report”) and (ii) an
engineering PCA report (the “PCA Report”) (together the Environmental Report and the PCA
Report are referred to as the “Reports”) by the seventh (7th) business days following the
Effective Date, then, in the event that any one or more of these items has not been delivered by
the date which is the fourth (4th ) business day prior to the expiration of the Due
Diligence Period (a “Late Report”), Purchaser shall have the right, by written notice to
Seller, given not later than the expiration of the third (3rd ) business day prior to
the expiration of the Due Diligence Period, to extend its right to terminate this Agreement (and to
receive a refund of the Deposit) for an additional fifteen (15) day period (the “Limited Due
Diligence Period”), but such extended right to terminate shall be exercisable solely by reason
of unsatisfactory matters disclosed in the Late Report during such Limited Due Diligence Period.





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     4.4 Notice of Non-Satisfaction.



          4.4.1 Within ten (10) business days of receipt of the Title Commitment and the Survey with
respect to a Property, Purchaser shall notify Sellers, by Notice, of any objections to
exceptions appearing in the Title Commitment. Within five (5) business days following
Purchaser’s Notice, Sellers shall notify Purchaser, by Notice, (i) that Sellers will, prior to the
Closing Date, eliminate the exceptions to which Purchaser objects, or (ii) that Sellers decline to
eliminate specified exceptions. If Sellers elect not to take such actions as may be required by
the Title Insurer to remove all exceptions to title to which Purchaser has objected, Purchaser may
within three (3) days terminate this Agreement in its sole discretion and receive a return of the
Earnest Money Deposit. If Sellers agree to take the actions necessary to eliminate all exceptions
to which Purchaser has objected, then such exceptions shall not be Permitted Exceptions, Sellers
shall cause such exceptions to be removed prior to or at Close of Escrow, and Seller’s failure to
do so shall be a default under this Agreement. If Purchaser fails to provide Notice of
cancellation within the Due Diligence Period as provided for herein, Purchaser shall be deemed to
have approved the state of the Properties and the condition of title, and shall be deemed to have
waived its rights to terminate this Agreement by reason of such title objections and cancel the
Escrow by reason of such title objections under this Section 4.4.




     4.5 Condition of the Property. SUBJECT TO THE EXPRESS PROVISIONS OF THIS AGREEMENT
AND EXCEPTING ALL REPRESENTATIONS AND WARRANTIES OF SELLER EXPRESSLY SET FORTH IN THIS AGREEMENT OR
ANY DOCUMENT DELIVERED AT CLOSING:




     (a) BY ENTERING INTO THIS AGREEMENT, PURCHASER HAS AGREED TO, AND WILL, PERFORM (AND
PURCHASER REPRESENTS AND WARRANTS TO SELLERS THAT PURCHASER IS CAPABLE OF PERFORMING) A
SOPHISTICATED, EXPERT, THOROUGH AND INDEPENDENT INVESTIGATION, ANALYSIS AND EVALUATION OF
THE LAND AND THE PROPERTY. PRIOR TO THE EXPIRATION OF THE DUE DILIGENCE PERIOD, PURCHASER
WILL HAVE DETERMINED, SUBJECT TO THE TERMS AND CONDITIONS OF THIS AGREEMENT, THAT THE LAND
AND THE PROPERTY ARE ACCEPTABLE TO PURCHASER. PRIOR TO THE EXPIRATION OF THE DUE DILIGENCE
PERIOD, PURCHASER WILL HAVE CONDUCTED ITS OWN THOROUGH AND INDEPENDENT INSPECTION,
INVESTIGATION, ANALYSIS AND EVALUATION OF ALL INSTRUMENTS, RECORDS AND DOCUMENTS WHICH
PURCHASER MAY DETERMINE TO BE APPROPRIATE OR ADVISABLE TO REVIEW IN CONNECTION WITH
PURCHASER’S ACQUISITION OF THE PROPERTY AND THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT,
AND PURCHASER WILL EITHER HAVE DETERMINED, SUBJECT TO THE TERMS AND CONDITIONS OF THIS
AGREEMENT, THAT THE INFORMATION AND DATA CONTAINED THEREIN OR EVIDENCED THEREBY ARE
SATISFACTORY TO PURCHASER, OR TERMINATED THIS AGREEMENT PRIOR TO THE EXPIRATION OF THE DUE
DILIGENCE PERIOD.




     (b) PURCHASER ACKNOWLEDGES THAT SELLERS ARE NOT THE DEVELOPERS OR THE ORIGINAL OWNERS
OF THE REAL PROPERTY OR THE HOTELS. PURCHASER FURTHER ACKNOWLEDGES THAT, PRIOR TO THE
EXPIRATION OF THE DUE DILIGENCE PERIOD, PURCHASER WILL HAVE



13









 






THOROUGHLY INSPECTED AND EXAMINED, AND, FAILING A TERMINATION OF THIS AGREEMENT PURSUANT TO SECTION 4.4,
UNCONDITIONALLY AND IRREVOCABLY APPROVED, ALL ELEMENTS COMPRISING THE LAND AND THE PROPERTY, AND ALL
FACTORS RELATED TO THEIR USE AND OPERATION. PURCHASER HEREBY RELEASES AND FOREVER
DISCHARGES SELLERS FROM ANY AND ALL CLAIMS, LOSSES, DAMAGES, LIABILITIES OR OBLIGATIONS
ARISING OUT OF OR IN ANY WAY RELATED TO ALL OF THE ITEMS LISTED IN THIS SECTION, WHICH
RELEASE AND DISCHARGE FROM LIABILITY SHALL SURVIVE THE CLOSE OF ESCROW.




     (c) PURCHASER ACKNOWLEDGES AND AGREES THAT PURCHASER’S FAILURE TO TERMINATE THIS
AGREEMENT AND CANCEL THE ESCROW PRIOR TO THE EXPIRATION OF THE DUE DILIGENCE PERIOD SHALL BE
CONCLUSIVELY DEEMED PURCHASER’S AFFIRMATION THAT IT HAS COMPLETED ITS INVESTIGATIONS AND DUE
DILIGENCE REVIEW OF THE LAND AND THE PROPERTY AND HAS APPROVED THE CONDITION AND STATE
THEREOF.




     (d) PURCHASER FURTHER ACKNOWLEDGES THAT PURCHASER HAS SUBSTANTIAL EXPERIENCE WITH REAL
PROPERTY, HOTELS AND HOTEL OPERATIONS, AND THAT PURCHASER WILL ACQUIRE THE PROPERTY IN
“AS IS, WHERE IS, WITH ALL FAULTS” CONDITION, AND SOLELY IN RELIANCE ON PURCHASER’S
OWN INSPECTION AND EXAMINATION AND SELLERS’ REPRESENTATIONS AND WARRANTIES CONTAINED HEREIN.
PURCHASER WAIVES ANY OBLIGATION ON THE PART OF SELLERS, OR ANY OTHER PERSON, TO DISCLOSE
ANY DEFECTS OR OTHER DEFICIENCIES OR LIABILITIES IN OR WITH RESPECT TO THE PROPERTY.




     (e) IT IS EXPRESSLY UNDERSTOOD AND AGREED THAT SELLERS MAKE NO REPRESENTATIONS,
WARRANTIES OR GUARANTIES OF ANY KIND, NATURE OR SORT, EXPRESS OR IMPLIED, WITH RESPECT TO
THE PHYSICAL CONDITION, PAST, PRESENT OR FUTURE OPERATION AND/OR PERFORMANCE, OR VALUE, OF
ANY PROPERTY. SELLERS CONVEY THE PROPERTY TO PURCHASER “AS IS AND WHERE IS, WITH ALL
FAULTS,” AND PURCHASER ACKNOWLEDGES THAT SELLERS MAKE NO REPRESENTATIONS, GUARANTIES OR
WARRANTIES WHATSOEVER, EXPRESS OR IMPLIED, AS TO THE QUALITY, CHARACTER, EXTENT,
PERFORMANCE, CONDITION OR SUITABILITY OF THE PROPERTY FOR ANY PURPOSE. PURCHASER
ACKNOWLEDGES THAT PURCHASER SHALL BE SOLELY RESPONSIBLE AND LIABLE FOR ASCERTAINING THE
TRANSFERABILITY OF ALL LICENSES, PERMITS AND OTHER GOVERNMENTAL CONSENTS FOR THE OWNERSHIP,
USE AND OPERATION OF THE PROPERTY, AND SHALL BE SOLELY RESPONSIBLE FOR OBTAINING THE
TRANSFERS THEREOF, PROVIDED SELLER SHALL USE COMMERCIALLY REASONABLE EFFORTS (BUT AT NO COST
TO SELLER) TO



14









 






COOPERATE WITH AND ASSIST PURCHASER IN OBTAINING THE TRANSFER OF OR NEW
LICENSES, PERMITS AND CONSENTS AS NECESSARY.




     (f) PURCHASER’S INSPECTION, INVESTIGATION AND SURVEY OF THE LAND AND THE PROPERTY,
DURING THE DUE DILIGENCE PERIOD, SHALL BE IN LIEU OF ANY NOTICE OR DISCLOSURE REQUIRED BY
ANY APPLICABLE LAW, RULE OR REGULATION, INCLUDING, WITHOUT LIMITATION, LAWS REQUIRING
DISCLOSURE BY SELLER OF FLOOD, FIRE, MOLD, SEISMIC HAZARDS, LEAD PAINT, MELLO ROOS,
LANDSLIDE AND LIQUEFACTION, OTHER GEOLOGICAL HAZARDS, RAILROAD AND OTHER UTILITY ACCESS,
SOIL CONDITIONS AND OTHER CONDITIONS WHICH MAY AFFECT THE USE OF THE REAL PROPERTY, AND
PURCHASER HEREBY WAIVES ANY REQUIREMENT FOR A NOTICE PURSUANT TO THOSE PROVISIONS AND HEREBY
ACKNOWLEDGES AND AGREES THAT IT IS FAMILIAR WITH SUCH DISCLOSURE REQUIREMENTS AND WILL
CONDUCT ITS OWN DUE DILIGENCE WITH RESPECT TO ALL MATTERS COVERED THEREBY, AND HEREBY
RELEASES SELLERS FROM LIABILITY IN CONNECTION WITH ANY SUCH MATTERS THAT ARE NOT THE SUBJECT
OF ANY OF SELLERS’ REPRESENTATIONS AND WARRANTIES. PURCHASER SHALL BE DEEMED TO HAVE
APPROVED ALL CONDITIONS PERTAINING TO THE PROPERTY UNLESS IT CANCELS THE ESCROW IN
ACCORDANCE HEREWITH ON OR BEFORE THE END OF THE DUE DILIGENCE PERIOD.




     (g) PURCHASER ALSO ACKNOWLEDGES AND AGREES THAT, ALTHOUGH SELLERS HAVE PROVIDED TO
PURCHASER CERTAIN REPORTS, STUDIES AND SURVEYS FOR OR REGARDING THE REAL PROPERTY
(“REPORTS”), SELLERS HAVE NOT VERIFIED THE ACCURACY THEREOF AND MAKES NO
REPRESENTATIONS OR WARRANTIES REGARDING THE MATTERS SET FORTH THEREIN, IT BEING THE
RESPONSIBILITY OF PURCHASER TO VERIFY THE ACCURACY OF SUCH REPORTS. PURCHASER HEREBY
RELEASES AND FOREVER DISCHARGES SELLERS FROM ANY AND ALL CLAIMS, LOSSES, DAMAGES,
LIABILITIES OR OBLIGATIONS ARISING OUT OF OR IN ANY WAY RELATED TO ALL OF THE ITEMS LISTED
IN THIS PARAGRAPH, WHICH RELEASE AND DISCHARGE FROM LIABILITY SHALL SURVIVE THE CLOSE OF
ESCROW.




     (h) FURTHERMORE, PURCHASER ACKNOWLEDGES THAT SELLERS HAVE NOT AND DO NOT MAKE ANY
REPRESENTATIONS OR WARRANTIES IN CONNECTION WITH THE PRESENCE OR INTEGRATION OF HAZARDOUS
MATERIALS UPON OR WITHIN THE REAL PROPERTY. IN THAT REGARD, PURCHASER WILL, PRIOR TO THE
EXPIRATION OF THE DUE DILIGENCE PERIOD, CONDUCT ITS OWN INVESTIGATION AND OBTAIN ITS OWN
ENVIRONMENTAL ASSESSMENT REPORT TO DETERMINE IF THE REAL PROPERTY CONTAINS ANY HAZARDOUS
MATERIALS OR TOXIC WASTE, MATERIALS, DISCHARGE, DUMPING OR CONTAMINATION, WHETHER SOIL,
GROUNDWATER OR OTHERWISE, WHICH VIOLATES ANY FEDERAL, STATE,



15









 






LOCAL OR OTHER GOVERNMENTAL LAW, REGULATION OR ORDER OR REQUIRES REPORTING TO ANY GOVERNMENTAL AUTHORITY.




     (i) PURCHASER, FOR ITSELF AND ITS OWNERS, SUCCESSORS AND ASSIGNS, HEREBY RELEASES AND
FOREVER DISCHARGES SELLERS, AND THEIR PAST, PRESENT AND FUTURE MEMBERS, AFFILIATES,
EMPLOYEES, AGENTS, ATTORNEYS, ASSIGNS, AND SUCCESSORS-IN-INTEREST FROM ALL PAST, PRESENT AND
FUTURE CLAIMS, DEMANDS, OBLIGATIONS, LOSSES AND CAUSES OF ACTION OF ANY NATURE WHATSOEVER,
WHETHER NOW KNOWN OR UNKNOWN, DIRECT OR INDIRECT, FORESEEN OR UNFORESEEN, SUSPECTED OR
UNSUSPECTED, WHICH ARE BASED UPON OR ARISE OUT OF OR IN CONNECTION WITH THE CONDITION OF THE
LAND OR THE PROPERTY, THE MATTERS ADDRESSED IN SUBSECTIONS (a), (b), (c), (d) AND (e) OF
THIS SECTION 4.5, AND WITH RESPECT TO THE PRESENCE OF ANY HAZARDOUS MATERIALS, ANY
ENVIRONMENTAL DAMAGES OR ENVIRONMENTAL REQUIREMENTS, INCLUDING, WITHOUT LIMITATIONS, THE
PHYSICAL, STRUCTURAL, GEOLOGICAL, MECHANICAL AND ENVIRONMENTAL (SURFACE AND SUBSURFACE)
CONDITION OF THE REAL PROPERTY (INCLUDING THE IMPROVEMENTS THEREON) OR ANY LAW OR REGULATION
RELATING TO HAZARDOUS MATERIALS. WITHOUT LIMITING THE FOREGOING, THIS RELEASE SPECIFICALLY
APPLIES TO ALL LOSSES AND CLAIMS ARISING UNDER THE COMPREHENSIVE ENVIRONMENTAL RESPONSE,
COMPENSATION AND LIABILITY ACT OF 1980, AS AMENDED, THE SUPERFUND AMENDMENTS AND
REAUTHORIZATION ACT OF 1986, (42 U.S.C. SECTIONS 9601 ET SEQ.), THE
RESOURCES CONSERVATION AND RECOVERY ACT OF 1976, (42 U.S.C. SECTIONS 6901 ET
SEQ.), THE CLEAN WATER ACT, (33 U.S.C. SECTIONS 466 ET SEQ.), THE
SAFE DRINKING WATER ACT, (14 U.S.C. SECTION 1401-1450), THE HAZARDOUS MATERIALS
TRANSPORTATION ACT, (49 U.S.C. SECTIONS 1801 ET SEQ.), THE TOXIC SUBSTANCE
CONTROL ACT, (15 U.S.C. SECTIONS 2601-2629), AND ANY OTHER FEDERAL, STATE OR LOCAL LAW OF
SIMILAR EFFECT, AS WELL AS ANY AND ALL COMMON LAW CLAIMS. IN ACCORDANCE WITH THE FOREGOING,
PURCHASER WAIVES ALL RIGHTS UNDER ANY STATUTES WHICH MAY HAVE PROVISIONS SIMILAR TO THE
FOLLOWING:




“A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES
NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING
THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS
SETTLEMENT WITH THE DEBTOR.”




     BY INITIALING THIS AGREEMENT CLAUSE, PURCHASER ACKNOWLEDGES THAT THIS SECTION HAS BEEN
READ AND FULLY UNDERSTOOD, AND THAT PURCHASER HAS HAD THE CHANCE TO ASK QUESTIONS OF ITS
COUNSEL ABOUT ITS MEANING AND SIGNIFICANCE.



	 	 	 	 	 
	 

	 	 

PURCHASER’S INITIALS
	 	 






16









 






     (j) “Environmental Damages” means all claims, judgments, damages, losses,
penalties, fines, liabilities (including strict liability), encumbrances, liens, costs, and
expenses of investigation and defense of any claim, whether or not such claim is ultimately
defeated, and of any good faith settlement of judgment, of whatever kind or nature,
contingent or otherwise matured or unmatured, foreseeable or unforeseeable, including
without limitation reasonable attorneys’ fees and disbursements and consultants’ fees, any
of which are incurred at any time as a result of the existence of Hazardous Materials upon,
about, beneath the Real Property or migrating or threatening to migrate to or from the Real
Property, or the existence of a violation of Environmental Requirements pertaining to the
Real Property, regardless of whether the existence of such Hazardous Materials or the
violation of Environmental Requirements arose prior to the present ownership or operation of
the Real Property.




     (k) “Environmental Requirements” means all applicable present and future
statutes, regulations, rules, ordinances, codes, licenses, permits, orders, approvals,
plans, authorizations, concessions, franchises, and similar items, of all governmental
agencies, departments, commissions, boards, bureaus, or instrumentalities of the United
States, states and political subdivisions thereof and all applicable judicial,
administrative, and regulatory decrees, judgments, and orders relating to the protection of
human health or the environment.




     (l) “Hazardous Materials” means mold, mildew, and any substance (i) the
presence of which requires investigation or remediation under any federal, state or local
statute, regulation, ordinance or policy; or (ii) which is defined as a “hazardous
waste” or “hazardous substance” under any federal, state or local statute,
regulation or ordinance, including without limitation the Comprehensive Environmental
Response, Compensation and Liability Act (42 U.S.C. Section 9601 et seq.)
and the Resource Conservation and Recovery Act (42 U.S.C. Section 6901 et
seq.) and amendments thereto and regulations promulgated thereunder; or (iii) which
is toxic, explosive, corrosive, infectious or otherwise hazardous or is regulated by any
federal, state or local governmental authority; or (iv) without limitation which contains
polychlorinated biphenyls (PCBs), asbestos or urea formaldehyde.



The provisions of this Section 4.6 shall survive the Close of Escrow.




V.




CLOSING




     5.1 Closing Date. The “Closing Date” for purposes of this Agreement shall be
the date which is the first business day following the later of (i) thirty (30) days after the
expiration of the Due Diligence Period, or (ii) three (3) business days following satisfaction of
the IPO Condition, or such earlier or later date as may be agreed upon, in writing, by Sellers and
Purchaser, and shall be the date on which the Close of Escrow occurs. The “Close of
Escrow”



17









 




for purposes of this Agreement is defined as the time when the Grant Deeds are recorded
in the Official Records, by Escrow Holder. It is agreed that if termination of the Escrow is
caused by the default of one party then such party shall be responsible for all escrow and title
cancellation charges, and if the termination occurs where neither party is in default or where both parties
are in default, then each party shall be responsible for one-half (1/2) of all title and Escrow
cancellation charges.




     5.2 Action Prior to the Close of Escrow by Seller. Sellers agree that, provided
Purchaser has complied with its obligations under Section 5.3 hereof, on or before 11:00 a.m.
Washington, DC time on the business day immediately preceding the Closing Date, Sellers will
deposit with Escrow Holder such funds and other items and instruments (executed and acknowledged,
if appropriate) as may be necessary in order for Escrow Holder to comply with this Agreement,
including, without limitation, the following:




     (a) For each Property, a grant deed in the form and content attached hereto as
Exhibit “D”, prepared and executed by Seller and acknowledged before a Notary Public
in the manner provided under the laws of the applicable state, reflecting the sale and
transfer to Purchaser of the Real Property and the Improvements, (“Grant Deed”).




     (b) For each Property, two (2) duplicate originals of a Bill of Sale, in the form and
content attached hereto as Exhibit “E”, prepared and executed by Seller, assigning,
conveying and transferring to Purchaser the Personal Property and the Inventory (“Bill
of Sale”);




     (c) For each Property, two (2) duplicate originals of an Assignment of Intangible
Property, in the form and content attached hereto as Exhibit “F”, prepared and
executed by Seller, assigning and conveying to Purchaser, at no cost or expense to Sellers,
and without representation or warranty, all of Seller’s right, title and interest in the
Intangible Property (“Assignment of Intangibles”);




     (d) For each Property, two (2) duplicate originals of an Assignment and Assumption of
Contracts (which shall include an assignment of any leases if applicable), in the form and
content attached hereto as Exhibit “G”, prepared and executed by Seller, assigning
and conveying to Purchaser, at no cost or expense to Sellers, and without representation or
warranty, all of Seller’s right, title and interest under the Contracts and any applicable
leases (“Assignment of Contracts”);




     (e) For each Property, a Non-Foreign Affidavit signed by Seller in the form to be
prepared by Escrow Holder (“Non-Foreign Affidavit”);




     (f) A certificate of Seller recertifying all of Seller’s representations and warranties
as true and correct as of Close of Escrow, subject to such modifications, if any, to the
extent permitted under this Agreement;




     (g) A closing settlement statement mutually approved by Purchaser and Seller (the
“Settlement Statement”);



18









 






     (h) Such other funds, instruments or documents as may be reasonably necessary to effect
or carry out the covenants and obligations to be performed by Sellers pursuant to this
Agreement;




     (i) Seller’s 1099-S;




     (j) Such other instruments or documents as may be reasonably required by the Title
Insurer as necessary to issue the Title Policy, but only to the extent required pursuant to
the provisions of Section 4.4;




     (k) Notices to tenants and contract parties notifying such parties of the transfer of
ownership (“Third Party Notices”);




     (l) An updated employee census;




     (m) Title to all vehicles, duly endorsed over to Purchaser; and




     (n) Evidence of termination of the Management Agreements.



     5.3 Action Prior to the Close of Escrow by Purchaser. Purchaser agrees that
Purchaser will deposit with Escrow Holder at such time as required to effect Close of Escrow on
the Closing Date, all additional funds (in Good Funds) and/or documents (executed and
acknowledged, if appropriate) which are necessary to comply with the terms of this Agreement,
including without limitation:



     (a) The funds referred to in Section 2.2.3 hereof;



     (b) For each Property, two (2) fully executed duplicate originals of the Assignment of
Contracts executed by Purchaser;



     (c) For each Property, two (2) fully executed duplicate originals of the Assignment of
Intangibles executed by Purchaser;



     (d) The Settlement Statement;



     (e) The Third Party Notices; and



     (f) Such other funds, instruments or documents as may be reasonably necessary to effect or
carry out the covenants and obligations to be performed by Purchaser pursuant to this Agreement.



     5.4 Recording of Grant Deeds. Escrow Holder will cause the Grant Deeds to be dated
and recorded in the Official Records, and all other conveyance documents deposited with Escrow
Holder dated as of the Closing Date, when (but in no event after the Closing Date) Title Insurer is
irrevocably committed to issue the Title Policies to be issued to Purchaser as contemplated in this
Agreement, and holds for the account of Sellers and Purchaser the items and funds (if any) to be
delivered to Sellers and Purchaser through the Escrow, after payment of




19












 




costs, expenses, disbursements and prorations chargeable to Sellers or Purchaser pursuant to the provisions of this
Agreement.




     5.5 Prorations.



          5.5.1 Taxes.




               5.5.1.1 With respect to each Property, all non-delinquent real estate and personal property
general and special taxes and assessments for the Property and the Land for the current assessment
year shall be prorated as of the Closing Date. It is understood that any supplemental property tax
bill issued as a result of the sale of any Property pursuant to the provisions of this Agreement,
shall be borne by Purchaser. Notwithstanding anything to the contrary in this Agreement, Sellers
shall retain all right, title and interest in and to any and all property tax (both real property
and personal property) refunds and claims for refunds with respect to the Properties for any period
prior to the Closing Date. Both Seller and Purchaser shall have the right to pursue claims for any
such refunds, with respect to their respective periods of ownership. With respect to each
Property, Purchaser and Sellers shall be equally responsible for, and shall pay equally, all sales,
use and other transfer taxes imposed in connection with the sale and transfer of the Personal
Property, the Inventory and the Intangible Property.



               5.5.1.2 If any proceeding for certiorari or other proceeding to determine the assessed value
of any Property or the real property taxes payable with respect to any Property is continuing as of
the Close of Escrow, Seller will be entitled to control the prosecution of such proceeding or
proceedings to completion and to settle or compromise any claim therein, subject to the reasonable
approval of Purchaser. Seller agrees to cooperate with Purchaser and to execute any and all
documents reasonably requested by Purchaser in furtherance of the foregoing. Any amounts recovered
in such settlement or proceeding, net of the expenses of recovery thereof, including any fee or
commission to any real property tax consultant due in connection with the real property tax
proceeding, shall be appropriately apportioned between Seller and Purchaser. Seller shall not
initiate any real property tax appeals or other proceedings after the conclusion of the Due
Diligence Period without the prior written consent of the Purchaser, which consent shall not be
unreasonably withheld or delayed.



          5.5.2 Advance Reservations. At the Close of Escrow, each Seller shall provide
Purchaser with a schedule of post-closing confirmed Bookings for such Seller’s Hotel. Purchaser
shall honor all such confirmed and Bookings, provided that such Bookings were booked by Sellers in
a manner consistent with normal business practices.




          5.5.3 Utility Service. With respect to each Property, Sellers shall request each
utility company providing utility service to the Real Property to cause all utility billings to be
closed and billed as of the Closing Date in order that utility charges may be separately billed for
the period prior to the Closing Date and the period on and after the Closing Date. In the event
any such utility charges are not separately billed, the same shall be prorated. In connection with
any such proration, it shall be presumed that utility charges were uniformly incurred during the
billing period in which the Close of Escrow occurs.




20









 








          5.5.4 Revenue From Operations. With respect to each Property, all revenues from Hotel
operations, including, without limitation, guest room rentals, revenue from the minibars (if any),
banquet rooms rentals, vending machines, coin telephones, and other income-producing equipment
arising through 12:01 a.m. local time on the Close of Escrow (“Cut-Off Time”) shall belong to Seller. All revenues from Hotel operations, including, without
limitation, guest room rentals, revenue from the minibars (if any), banquet rooms rentals, vending
machines, coin telephones, and other income producing equipment arising after the Cut-Off Time
shall belong to Purchaser. Revenue from guest room rentals for the evening before the date of the
Close of Escrow through to the day of the Close of Escrow shall be allocated one-half (1/2) to
Seller and one-half (1/2) to Purchaser. All prepaid rentals, room rental deposits, and all other
deposits for advance reservations and Bookings for the period after the Cut-Off Time, shall be
credited to Purchaser.




          5.5.5 Accounts Payable and Operating Expenses. With respect to each Property, all
obligations and liabilities (for services and materials ordered, or otherwise in the ordinary
course of business) and accounts payable for the Hotel and the Real Property owing as of the
Closing Date for merchandise, equipment, tour agents’ and travel agents’ commissions,
advertisements, supplies and other materials and services paid, incurred or ordered shall be
prorated between Sellers and Purchaser as of the Closing Date. Sellers shall receive a credit for
all prepaid expenses.




          5.5.6 Miscellaneous Permits and Taxes. With respect to each Property, all water and
sewer charges, taxes (other than ad valorem property taxes), including license taxes or fees for
licenses (other than the Liquor Licenses) which are assignable or transferable without added cost
and have a value which will survive Close of Escrow, including, but not limited to, any unpaid
taxes payable in arrears, shall be prorated as of the Closing Date. Sellers will be credited for
that portion of taxes and fees paid by Sellers allocable to the period after the Closing Date.




          5.5.7 Contracts/Leases. With respect to each Property, all payments and receipts, as
applicable, under the Contracts and any leases shall be prorated between Purchaser and Seller as of
the Closing Date. Sellers shall receive a credit for all prepayments and deposits under any
Contracts and Purchaser shall receive a credit for any security deposits under any leases.




          5.5.8 Other Income. With respect to each Property, all other income derived by Seller
from the Property accruing or relating to the period up to and including the Cut-Off-Time shall be
paid to Seller. All other income derived by Seller from the Property accruing or relating to the
period on and after the Cut-Off-Time shall be paid to Purchaser.




          5.5.9 Other Expenses. With respect to each Property, all other expenses and
obligations not otherwise specified in this Section 5.5 incurred in the ownership of the Property
and operation of the Hotel shall be prorated between Seller and Purchaser as of the Closing Date.




          5.5.10 Ticket and Gift Shop Inventory. With respect to each Property, Seller shall
receive a credit for all gift shop inventory, held by Seller for sale at the Hotel, in an amount
equal to Seller’s actual cost thereof.




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          5.5.11 House Banks. With respect to each Property, on the Close of Escrow, in
addition to the Purchase Price, Seller shall receive a credit through the Escrow for an amount
equal to all till money, cash-on-hand, and all sums in house banks for the Hotel, in which case all
right, title and interest to the till money, cash-on-hand and house banks shall be assigned
and conveyed by Seller to Purchaser. In the event Seller and Purchaser are unable to agree upon
the amount of the till money, cash-on-hand and house banks, the provisions of this Section 5.5.11
shall be inapplicable, and title to the till money, cash-on-hand and house banks shall remain with
Seller. The failure of Purchaser and Seller to agree on the amounts of the till money,
cash-on-hand and house banks shall not be deemed a condition precedent to the obligations of Seller
and Purchaser under this Agreement.




          5.5.12 Delayed Adjustments. If, at any time following the Closing Date, the amount of
an item listed in this Section 5.5 shall prove to be incorrect, the party in whose favor the error
was made shall pay to the other party within fifteen (15) days after request the sum necessary to
correct such error upon receipt of proof of such error, provided that such proof is delivered to
the party from whom payment is requested on or before one hundred fifty (150) days after the Close
of Escrow. The acceptance of the closing statement by either party shall not prevent later
readjustment pursuant to this Section 5.5.12. After the Close of Escrow, each party shall have
reasonable access to the books and records of the other party with respect to all matters set forth
in this Section 5.5 for the purposes of determining the accuracy of all adjustments and the
performance of the obligations of the parties under this Section 5.5.




          5.5.13 Proration Allocation. For proration purposes, the date of the Close of Escrow
shall be charged to Purchaser.




          5.5.14 Survival. The provisions of this Section 5.5 shall survive the Close of
Escrow.




     5.6 Guest Property. With respect to each Property, property of guests of the Hotel in
Seller’s care, possession or control (excluding that in guest rooms) on the Closing Date shall be
handled in the following manner:



          5.6.1 Safe Deposit Boxes. On the day prior to the Closing Date, Seller shall send
written notice to guests in the Hotel who have safe deposit boxes advising them of the sale of the
Hotel to Purchaser and the procedures to be followed pursuant to this Section 5.6.1. On the
Closing Date, Seller shall deliver to Purchaser all keys to the safe deposit boxes in the Hotel,
all receipts and agreements relating to such safe deposit boxes, and a complete list of the name
and room number of each depositor. Each box in use by a Hotel guest shall then be sealed by
representatives of Seller and Purchaser. At Purchaser’s option, guests may be requested to remove
and verify the contents of the sealed boxes prior to the Close of Escrow. All such removals and
verifications shall be under the supervision of a representative to be agreed upon between
Purchaser and Seller. Purchaser shall be responsible for all boxes once the seal is broken, and
for the contents of all boxes which are verified. Seller shall be responsible for any claims
pertaining to any property allegedly deposited in a safe deposit prior to the Closing Date, the
seal of which was not broken. Each of Seller and Purchaser shall indemnify and hold the other
harmless from and against all claims and losses arising from such indemnifying party’s obligations
under this Section 5.6.1.




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          5.6.2 Baggage Inventory. All guest baggage and other guest property checked and left
in the possession, care and control of Seller shall be listed in an inventory to be prepared
in duplicate and signed by Seller’s and Purchaser’s representatives on the Closing Date.
Purchaser shall be responsible from and after the Closing Date for all baggage (and the contents
thereof) and other guest property listed in inventory. Purchaser agrees to indemnify and save and
hold Seller harmless from and against any claim arising out of or with respect to the baggage
listed in the inventory, and Seller agrees to indemnify and save and hold Purchaser harmless from
and against any claim arising prior to the Closing Date out of or with respect to any guest baggage
or other guest property not listed in the inventory.




     5.7 Costs. Purchaser and Seller shall each pay one-half (1/2) of the premium for the
A.L.T.A coverage under the Title Policy. Purchaser shall pay the costs of all endorsements to the
Title Policy, all costs or premiums for any lender title policies, and for the Survey (or the
updating thereof). Purchaser and Seller shall each pay one-half (1/2) of the documentary transfer
taxes and the recording fee for the Grant Deed. Each of Seller and Purchaser shall pay one-half
(1/2) of all escrow fees for that portion of the Escrow pertaining to the sale of the Property.



     5.8 Real Estate Withholding. Sellers and Purchaser appoint Escrow Holder as the
withholding agent for purposes of compliance with any state statue respecting the withholding of
taxes. Prior to the Close of Escrow, Sellers will provide Escrow Holder with all information and
documentation reasonably required to determine the amount, if any, to be withheld from the proceeds
of the sale transaction contemplated herein for payment to the appropriate taxing authority.



     5.9 Distribution of Funds and Documents Following Close of Escrow. Following Close of
Escrow, Escrow Holder shall distribute the documents as follows:



          5.9.1 To Sellers. With respect to each Property:





     (a) The cash portion of the Purchase Price as set forth in Section 2.2, less costs,
offsets and prorations in accordance with the provisions of this Agreement;




     (b) A copy of the recorded Grant Deed;




     (c) One (1) fully executed duplicate original of the Bill of Sale;




     (d) One (1) fully executed duplicate original of the Assignment of Intangibles;




     (e) One (1) fully executed duplicate original of the Assignment of Contracts;




     (f) One (1) fully executed duplicate of the Settlement Statement;




     (g) One (1) fully executed duplicate of the Third Party Notices;




     (h) A copy of the Title Policy issued to Purchaser;



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     (i) One (1) duplicate original or conformed copy as appropriate, of any other document
to be received by Sellers through Escrow pursuant to the provisions of this Agreement; and




     (j) One (1) copy of any other document delivered to Escrow Holder by Purchaser or
Sellers pursuant to the terms of this Agreement.



          5.9.2 To Purchaser.





     (a) Any excess funds deposited by Purchaser which remain after disbursement to Sellers;




     (b) One (1) conformed copy of the Grant Deed, the original to be mailed to Purchaser
following the recordation thereof;




     (c) One (1) fully executed duplicate original of the Bill of Sale;




     (d) One (1) fully executed duplicate original of the Assignment of Intangibles;




     (e) One (1) fully executed duplicate original of the Assignment of Contracts;




     (f) One (1) fully executed duplicate of the Settlement Statement;




     (g) One (1) fully executed duplicate of the Third Party Notices;




     (h) One (1) duplicate original or conformed copy as appropriate, of any other document
to be received by Purchaser through Escrow pursuant to the provisions of this Agreement;




     (i) One (1) copy of any other document delivered to Escrow Holder by Purchaser or
Sellers pursuant to the terms of this Agreement; and




     (j) The original of the Title Policy.



     5.10 Possession. Purchaser shall be entitled to sole possession of each Property on
the Close of Escrow, subject to the possessory rights of any guests of the Hotel.



VI.




ADDITIONAL COVENANTS AND INDEMNITIES




     6.1 Purchaser’s Covenants.



          6.1.1 Indemnification. Purchaser covenants to defend, indemnify and hold harmless
Sellers, and their respective affiliates, owners, employees, agents and representatives, from and
against any and all claims, penalties, liabilities, fines, losses, causes of action, fees,
injuries, damages, liens, proceedings, judgments, actions, rights, demands, costs and expenses
(including, without limitation, reasonable attorneys’ fees and court and litigation costs, but
excluding consequential damages and loss of profits) (a) arising from the acts and omissions of




24









 







Purchaser and its agents, employees and contractors occurring in connection with or as a result of,
any inspections, tests or examinations of or to the Property and the Land, (b) arising from the
use, management, operation, rental, maintenance and ownership of the Property and the Land,
based upon acts, conduct or omissions (other than by Sellers) occurring, on or after the
Closing Date, including, without limitation, with respect to and under the Contracts, (c) caused by
or arising out of any material misrepresentation by Purchaser in connection with this Agreement,
and (d) and arising from any breach of this Agreement by Purchaser or any instrument or agreement
delivered or required to be delivered pursuant to the provisions of this Agreement, including under
the WARN Act. This indemnity shall survive the Close of Escrow.




          6.1.2 Seller’s Accounts Receivable. On the Closing Date, each Seller shall deliver to
Purchaser an update of Seller’s Accounts Receivable list. Thereafter, Purchaser, upon receipt,
shall promptly remit to such Seller all sums received by Purchaser in payment of any of Seller’s
Accounts Receivables. All sums received by Purchaser from a customer, guest or patron following
Closing shall be credited, unless otherwise designated by the payor, first, to the sums owing to
Purchaser, and then, to the extent any sums remain, to Seller for any Seller’s outstanding Accounts
Receivable. For a period of one (1) year after the Close of Escrow, Sellers shall have the right,
from time to time, to inspect and audit the books and records of the Hotels that pertain to income
and collections, at Sellers’ sole cost (unless it is determined from such audit or inspection that
Purchaser has withheld any Seller’s Accounts Receivable, then Purchaser shall pay the costs of such
audit and inspection), and Purchaser shall provide full and complete access thereto to Sellers upon
not less than three (3) business days prior Notice, to verify receipt and payment of Sellers’
Accounts Receivable. All information so obtained by Sellers or their agents shall be confidential
information which shall be disclosed solely on a need-to-know basis. Nothing in the foregoing
shall obligate Purchaser to pursue the collection of any outstanding Seller Account Receivables and
Purchaser shall have no obligation to Seller to do so.




          6.1.3 Public Offering. Purchaser shall use reasonable commercial efforts to finalize
and file with the Securities and Exchange Commission the Registration Statement and to cause the
Registration Statement to become effective under the Securities Act of 1933, as amended, and the
rules and regulations thereunder, by 5:00 p.m. on February 15, 2010 and thereafter to cause the
securities being offered pursuant to the Registration Statement to be sold (the “Public
Offering”). All costs related to the Public Offering, including any audit or accounting fees
incurred by Purchaser and/or Seller in causing any audits related to the Public Offering, shall be
borne solely by Purchaser regardless of whether Closing occurs.




     6.2 Seller Covenants. Each Seller (but solely for itself and its own Property, and
not for any other Seller or any other Property) covenants to Purchaser as follows:



          6.2.1 Indemnification. Seller covenants to defend, indemnify and hold harmless
Purchaser and its affiliates, owners, employees, agents and representatives from and against any
and all claims, penalties, liabilities, fines, losses, causes of action, fees, injuries, damages,
liens, proceedings, judgments, actions, rights, demands, costs and expenses (including, without
limitation, reasonable attorneys’ fees and court and litigation costs, but excluding consequential
damages and loss of profits) (a) arising from the use, management, rental, maintenance, ownership
and operations of the Property during the period of Seller’s ownership thereof (except as to, and
specifically excluding, the matters set forth in Section 6.1.1 hereof, Environmental




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Damages, Environmental Requirements, and the matters addressed in Section 0 hereof), (b) arising under the
Contracts and the Franchise Agreement during the period of Seller’s ownership, (c) caused by or
arising out of any material misrepresentation by Sellers in connection with this
Agreement, and (d) arising from any breach of this Agreement by Seller or any instrument or
agreement required to be delivered or to be delivered pursuant to the provisions of this Agreement.
This indemnity shall survive the Close of Escrow.




          6.2.2 Assumption of Franchise Agreement. At Closing, Purchaser shall either (i)
assume the Franchise Agreements or (ii) enter into new franchise agreements with the same
Franchisors, with the original Franchise Agreements being terminated and Seller being fully
released from any liability arising under the existing Franchise Agreements from and after Closing.




          6.2.3 Terminating the Management Agreements. Seller shall terminate or cause to be
terminated the Management Agreement affecting each Hotel effective upon the Close of Escrow. Any
payments required by any management company pursuant to the Management Agreements to so terminate
the Management Agreements shall be at Purchaser’s sole cost and expense.




          6.2.4 Operation of the Hotel. Subject to the terms of this Agreement, Seller, during
the term of this Agreement, shall carry on the business and operations of the Hotel in
substantially the same manner as heretofore carried on by it. Seller shall pay and perform all of
its material obligations and otherwise comply with all of the material terms and conditions of the
covenants and other agreements of record reflected in the Permitted Exceptions, the Contracts, the
Franchise Agreement, the Existing Indebtedness (and all documents evidencing, securing or relating
to the Existing Indebtedness (including, but not limited to, causing any guarantors and indemnitors
to perform their obligations thereunder)). Prior to the Closing Date, Seller shall maintain (or
replace with policies of like amounts) all existing insurance policies insuring the Property and
the operation of the Hotel. Seller shall not remove any of the Personal Property from the Real
Property, unless such removal is in the ordinary course of Seller’s business and Seller replaces
the same with like items that are of equal or better quality and condition. Seller shall maintain
the Inventory, the Food Inventory and the Alcoholic Beverages consistent with Seller’s past
practices, and will replenish the same consistent with its past practices. Following the Effective
Date of this Agreement, Seller may, extend, amend, modify or terminate any of the existing
Contracts, including any leases of furniture, fixtures or equipment for the Hotel, and may enter
into new Contracts as Seller deems appropriate to operate, service and maintain the Property
consistent with normal business practices, and may enter into new Contracts; provided, however,
that (i) Seller shall not enter into or amend, modify or extend any Material Contracts unless (a)
Seller provides Purchaser with a copy of such new Material Contract or amendment, modification or
extension of an existing Material Contract prior to or within two (2) business days after Seller’s
execution thereof, and (b) commencing two (2) business days prior to the expiration of the Due
Diligence Period and continuing through the Close of Escrow or earlier termination of this
Agreement, so long as Purchaser is not in default of any of its obligations under this Agreement,
Seller shall have obtained the prior written consent of Purchaser, which consent shall not be
unreasonably withheld or delayed, (ii) Seller shall not enter into, or amend, modify or extend any
leases of furniture, fixtures or equipment for the Hotel, (iii) other than with respect to the sale
of Food Inventory or liquor in the ordinary course of business at the Property,




26









 







no part of the Property, or any interest therein, will be sold or otherwise transferred or encumbered without
Purchaser’s prior written consent; and (iv) without the prior written approval of Purchaser (which
approval shall not be unreasonably withheld or delayed), Seller
shall not make any material alterations to the Property. Seller shall pay all of its debts,
liabilities and obligations as and when the same become due.




          6.2.5 Cooperation. Seller shall cooperate with Purchaser in all reasonable respects,
including by executing and delivering necessary or desirable applications and other documents, to
facilitate the issuance and/or transfer of the authorizations and other authorizations in
connection with the operation of the Hotel, including the Liquor Licenses. Purchaser shall
promptly reimburse Seller for all reasonable out-of-pocket expenses incurred by Seller in
connection with such cooperation. Except for the Liquor Licenses which are subject to the
provisions of Section 2.4 above, to the extent any license is not transferable, but is necessary
for any aspect of the operation of the Hotel, Seller shall cooperate with Purchaser by entering
into such arrangements as may be usual and customary in similar transactions, provided that any
such arrangements are in compliance with all applicable laws, rules and regulations, that Purchaser
promptly reimburses Seller for all reasonable out-of-pocket expenses incurred by Seller in
connection therewith, and that Purchaser indemnifies and holds Seller harmless from and against any
liabilities arising in connection therewith.




     6.3 Employee Matters.



          6.3.1 On the Closing Date, Seller shall pay all employee salaries, wages, fringe benefits and
other compensation, including any applicable federal, state and local taxes, for any employees of
the Hotel which have accrued up to the Cut-Off Time. Seller shall terminate all of the Hotel
employees effective at 11:00 a.m. local time on the Closing Date. Subject to the provisions of
Section 6.3.2 hereof, Seller shall indemnify, defend and hold harmless Purchaser against any and
all labor or employment claims, liabilities or obligations (including, without limitation,
attorneys’ fees and costs) which arise or accrue before, or arise out of events occurring before,
the Closing Date, which indemnity shall survive the Close of Escrow.




          6.3.2 As of the Close of Escrow, but effective at 8:00 a.m. local time on the Closing Date,
Purchaser shall hire (or cause its hotel management company to hire) not less than eighty percent
(80%) of the employees of each Hotel. Purchaser shall indemnify, defend and hold harmless Seller,
and its affiliates, owners and employees, against any and all labor or employment claims,
liabilities and obligations (including, without limitation, attorneys’ fees and costs) which arise
or accrue from or after, or arise out of events occurring from or after the Close of Escrow,
including, without limitation, all claims arising from the termination by Purchaser of any Hotel
employee or personnel performing services at or for the Hotel, and Purchaser’s decision to continue
or discontinue any employment policy or practice of Seller in existence or effect at the Hotel
prior to the Close of Escrow, which indemnity shall survive the Close of Escrow. The foregoing
indemnity shall survive the Close of Escrow.




          6.3.3 Purchaser acknowledges that Seller is not giving any notice under, or otherwise
complying with, the Worker Adjustment and Retraining Notification Act and/or any applicable state
law counterpart (together with all rules and regulations promulgated thereunder, the “WARN
Act”). Purchaser agrees to hire a sufficient number of the Hotel employees, and on




27









 







such terms and conditions, as to avoid any violation of the WARN Act in the absence of such notice, and agrees
to indemnify and defend Seller, and to hold Seller harmless, from and against any and all loss,
damage, liability, claim, cost or expense (including, without limitation,
reasonable attorneys fees) incurred by any of such parties as a result of the failure to give
such notice or otherwise comply with the WARN Act.




     6.4 Exclusive Dealings. Purchaser and Seller agree that, in consideration of the
payment of the Earnest Money Deposit, and Purchaser’s projected efforts and undertakings, and in
preparing the necessary legal documentation to complete the purchase transaction, neither Seller,
nor any of its affiliates, agents, representatives, officers, directors, partners or shareholders,
will engage in any negotiations, or accept any offers, regarding the sale, exchange, or other
conveyance of the Property until the later of the Closing Date, or the date Purchaser and Seller
mutually agree to extend the Closing Date, or such sooner date as Purchaser terminates this
Agreement and cancels the Escrow.



     6.5 No Obligations of Escrow Holder. Escrow Holder shall not be concerned with the
provisions of this Article VI.



     6.6 Property Improvement Plans. As soon as possible following the Effective Date,
Sellers shall arrange with the Franchisor for each Hotel for the inspection and creation of a
Product Improvement Plans (each, a “PIP”) for each Hotel and shall endeavor to have each
such PIP completed as promptly as possible. Purchaser shall be responsible for paying or
reimbursing Seller for any fees or expenses charged by the Franchisor for completing such
inspections and preparing the PIPs. To the extent permitted by the Franchisor, the PIP inspections
shall be scheduled in coordination with Purchaser, and Purchaser shall have the right to attend
such inspections, provided that Purchaser shall not have the right to modify the Franchisor’s
inspection schedule or otherwise change the timing of such inspections. In that regard, Sellers
hereby agree to request that Franchisor allow Purchaser to attend any such inspections and Sellers
shall provide Purchaser notice of any such inspections promptly after receiving notice thereof from
Franchisor. Purchaser shall be responsible for completing the work required by each PIP following
Closing and for paying all costs associated with any PIP (the “PIP Costs”), provided that,
if the aggregate of such PIP Costs exceed Nine Million Dollars ($9,000,000), then Purchaser and
Seller shall bear equally the next One Million Dollars ($1,000,000) in PIP Costs. Thereafter, all
PIP Costs shall be the sole responsibility of Purchaser.



     6.7 Defeasance of Existing Indebtedness. Seller shall use commercially reasonable
efforts to cause the defeasances of any existing defeasance to occur on the initially scheduled
Closing Date; provided, however, if Seller is unable to cause the defeasance to occur on or before
the Closing Date, Seller shall have the right, by written notice to Purchaser, given not later than
the third (3rd) business day prior to the Closing Date to postpone the Closing Date for
up to ten (10) business days. Furthermore, Purchaser agrees to cooperate in all reasonable
respects with Seller in order to permit Seller to defease any existing indebtedness on a Property
so as to minimize the cost and time for effecting such defeasance, using the proceeds of the sale
of the Property to effectuate such defeasance, including by depositing such proceeds in an
appropriate escrow in advance of Closing in accordance with the usual and customary procedures for
similar defeasances, provided that Purchaser is not required to incur any additional liability or
material expense.



28









 





     6.8 Independent Audit. From the Effective Date until two (2) years after the Closing,
Seller shall make the books and records of the Property available to Purchaser for
inspection, copying and audit by Purchaser’s designated accountants, and at Purchaser’s
expense. Seller shall provide Purchaser, but without third-party expense to Seller, with copies
of, or access to, such factual information as may be reasonably requested by Purchaser, and in the
possession or control of Seller, to enable Purchaser or any of its constituent members to file a
registration statement and otherwise comply with applicable filing requirements of the SEC.
Without limiting the foregoing, (x) Purchaser or its designated independent or other accountants
may audit the operating statements of the Property, and Seller shall supply such documentation in
its possession or control as Purchaser or its accountants may reasonably request in order to
complete such audit, and (y) Seller shall furnish Purchaser with such financial and other
information within Seller’s possession or control as may be reasonably required by Purchaser to
make any required filings with the SEC or other governmental authority. This Section 6.8 shall
survive the Closing.



     6.9 Bulk Transfers. Seller and Purchaser specifically waive compliance with the
applicable provisions of the Uniform Commercial Code — Bulk Transfers and with any similar
provision under the laws of the state, county and city in which any Property is located. Seller
shall indemnify Purchaser for any claims made by creditors under the applicable bulk sales laws
relating solely to any pre-Closing payment obligations to such creditors and only in the amount of
the payments due to or claimed to be due to such creditors.



VII.




REPRESENTATIONS AND WARRANTIES




     7.1 Purchaser’s Representations and Warranties. Purchaser represents and warrants to
Seller that as of the date hereof and the Close of Escrow:



          7.1.1 Organization and Standing. Purchaser is a real estate investment trust, duly
organized, validly existing, and in good standing under the laws of the State of Maryland and has
the full power and authority to enter into this Agreement and to carry out the transactions
contemplated hereby to be carried out by it.




          7.1.2 Due Authorization. The performance of this Agreement and the transactions
contemplated hereunder by Purchaser have been duly authorized by all necessary action on the part
of Purchaser, and this Agreement is binding on and enforceable against Purchaser in accordance with
its terms. Purchaser shall, on or prior to the Closing Date, furnish Seller with certified
resolutions evidencing that Purchaser has been duly authorized to enter into and perform this
Agreement and the transactions contemplated hereunder. No further consent of any shareholder,
creditor, board of directors, governmental authority or other party to such execution, delivery and
performance hereunder is required. The person(s) signing this Agreement, and any document pursuant
hereto on behalf of Purchaser, has full power and authority to bind Purchaser.




29









 








          7.1.3 Lack of Conflict. Neither the execution of this Agreement nor the consummation
of the transactions contemplated hereby will violate any restriction, court order, judgment, law,
regulation, charter, bylaw, instrument or agreement to which Purchaser is subject.




          7.1.4 Solvency/Bankruptcy. Purchaser has not (i) made any general assignment for the
benefit of creditors, (ii) filed any voluntary petition in bankruptcy or suffered the filing of an
involuntary petition in bankruptcy by Purchaser’s creditors, (iii) suffered the appointment of a
receiver to take possession of all, or substantially all, of Purchaser’s assets, (iv) suffered the
attachment or other judicial seizure of all, or substantially all, of Purchaser’s assets, (v)
admitted in writing its inability to pay its debts as they come due, or (vi) made any offer of
settlement, extension or compromise to its creditors generally, and has not considered doing or
undertaking, and has no current plans to do or undertake, any of the foregoing. Furthermore,
Purchaser has not taken, and does not contemplate taking, against it any such actions.




     7.2 Sellers’ Representations and Warranties. Each Seller represents and warrants (but
solely for itself and its own Property, and not for any other Seller or any other Property) to
Purchaser that as of the date hereof and, subject to the provisions of the paragraph following
Section 7.2.16 hereof, Close of Escrow:



          7.2.1 Organization and Standing. Each Seller is a limited liability company or
limited partnership, as reflected on “Exhibit “A” to this Agreement, duly organized under
the laws of the State of Delaware, is validly existing, and in good standing under the laws of the
State of Delaware, and has the full power and authority to enter into this Agreement and to carry
out the transactions contemplated hereby to be carried out by it.




          7.2.2 Due Authorization. The performance of this Agreement and the transactions
contemplated hereunder by Seller have been duly authorized by all necessary action on the part of
Seller, and this Agreement is binding on and enforceable against Seller in accordance with its
terms. Seller shall, on or prior to the Closing Date, furnish Purchaser with certified resolutions
evidencing that Seller has been duly authorized to enter into and perform this Agreement and the
transactions contemplated hereunder. No further consent of any member, manager, creditor,
governmental authority or other party to such execution, delivery and performance hereunder is
required. The person(s) signing this Agreement, and any document pursuant hereto on behalf of
Seller, has full power and authority to bind Seller.




          7.2.3 Lack of Conflict. Neither the execution of this Agreement nor the consummation
of the transactions contemplated herein will violate any restriction, court order, judgment, law,
regulation, charter, bylaw, instrument, or agreement to which Seller or the Property (or any
portion thereof) are subject.




          7.2.4 Non-Foreign Seller. Seller is not a foreign seller as defined in the “Foreign
Investment in Real Property Tax Act.”




          7.2.5 Solvency/Bankruptcy. Seller has not (i) made any general assignment for the
benefit of creditors, (ii) filed any voluntary petition in bankruptcy or suffered the filing of an
involuntary petition in bankruptcy by Seller’s creditors, (iii) suffered the appointment of a
receiver to take possession of all, or substantially all of Seller’s assets, (iv) suffered the




30









 







attachment or other judicial seizure of all or substantially all, of Seller’s assets, (v) admitted
in writing its inability to pay its debts as they come due, or (vi) made an offer of settlement,
extension or composition to its creditors generally, and has not considered doing or undertaking,
and has no current plans to do or undertake any of the foregoing. Furthermore, Seller has not
and does not contemplate taking or having taken against it, any such actions.




          7.2.6 Litigation. As of the date hereof, except as set forth on Exhibit “H” hereto,
Seller has not been served with any pending actions, suits, arbitrations, governmental
investigations or other proceedings, and to its best knowledge, none of the foregoing are pending
or threatened against Seller or affecting the Property before any court or governmental authority.




          7.2.7 Condemnation. As of the date hereof, Seller has not been served with notice of
any pending or threatened condemnation actions or special assessments of any nature with respect to
the Property or any part thereof, and has no knowledge of any of the foregoing being contemplated.




          7.2.8 Contracts. All Material Contracts to which Seller is currently a party (except
for Bookings, gift certificates and similar promotional arrangements), and all amendments thereto,
are listed on Exhibit “C” attached hereto. Seller has or will make available to Purchaser
true copies of all such Contracts. All such Contracts are in full force and effect, and to the
best of Seller’s knowledge, there are no material defaults or events that with notice or the
passage of time or both, would constitute a material default by Seller under any such Contracts,
nor by any other party thereto.




          7.2.9 Licenses and Permits. All authorizations have been obtained and are in full
force and effect. Seller has made or will make available to Purchaser true copies of each such
authorization. Seller has not received a written notice from any applicable governmental authority
(A) of any violation, default, intended or threatened non-renewal, suspension or revocation of any
of the authorizations, the loss of which would have a material adverse effect on the present use
and occupancy of the Real Property or (B) that it lacks any permits or licenses necessary for the
present use and occupancy of the Real Property.




          7.2.10 Real Property Tax Assessments. Seller has received no written notice from any
tax assessor of any proposed increase in real estate taxes with respect to the Hotel, other than
normal fiscal year increases.




          7.2.11 Employee Agreements. There are no agreements to which Seller is a party
relating to any labor or collective bargaining agreement affecting the Hotel. Seller has not
received any written notice from any labor union or group of employees that such union or group
represents or believes or claims it represents or intends to represent any of the employees of
Seller nor has it received any notice of any claim of unfair labor practices. Seller has and shall
maintain through the Closing Date a level of employment at the Hotel that is sufficient for the
normal business operations of the Hotel at standards required by the Franchise Agreement.




          7.2.12 Insurance. Seller has and shall maintain through the Closing Date insurance
policies equivalent in all material respects to those currently maintained by Seller, which
policies are consistent with the requirements of the lender under the existing financing and




31









 







under the Franchise Agreement. Seller has not received any notice of cancellation or threatened
cancellation of any insurance policy applicable to any Property.




          7.2.13 Ownership of Personal Property. Except as may otherwise be provided in any
Contracts, Seller is the sole owner of all Personal Property and, at Closing, none of the Personal
Property shall be encumbered by any lien or claim of any other person or entity, except for the
Existing Indebtedness.




          7.2.14 Food and Beverage Inventory. Except as may otherwise be provided in any
Contracts, all Food and Beverage Inventory is free and clear of any lien or claim, except for the
Existing Indebtedness.




          7.2.15 Violations. Seller has received no written notice of any violation of any
laws, including environmental laws with respect to any Property that has not been cured as required
by law.




          7.2.16 No Offers. Seller has not granted any right to purchase, option or other right
with respect to any Property.



Wherever the phrase “to Seller’s knowledge” or any similar phrase stating or implying a limitation
on the basis of knowledge appears in this Agreement, unless specifically otherwise qualified, such
phrase shall mean only the present actual knowledge of Thomas J. Baltimore, Jr. and of Howard
Isaacson, Senior Vice President, Asset Management, without any duty of inquiry, any imputation of
the knowledge of another to him, or independent investigation of the relevant matter by any of such
individual(s), and without any personal liability. Wherever the phrase “in Seller’s possession”,
“in the possession of Seller” or similar phrase appears in this Agreement, such phrase shall be
deemed to mean only to the extent the material or other item referred to by such phrase is located
at the Hotel or in Seller’s offices in Bethesda, Maryland. Notwithstanding any provision of this
Agreement to the contrary, should any of the foregoing representations and warranties of Seller
become false or inaccurate prior to the Close of Escrow (provided, however, that Seller shall have
the right to update such representations and warranties as a consequence of operating the
Properties in accordance with the provisions of this Agreement) and provided Seller discloses the
same to Purchaser, in writing, prior to the Close of Escrow, and provided any such representation
or warranty was not knowingly false when made or made to be false or inaccurate through acts or
omissions of Seller prior to Closing, then Purchaser’s sole recourse shall be to either (i)
terminate this Agreement and cancel the Escrow, in which case the Earnest Money Deposit shall be
returned to Purchaser and neither Seller nor Purchaser will have any further liability or
obligation under this Agreement (except for those obligations which survive in accordance with
their terms), or (ii) proceed with the closing, without reservation, in which case Purchaser shall
be deemed to have waived all claims against Sellers with respect to such false or inaccurate
representation and warranty. If any such representation or warranty was knowingly false when made
or made to be false or inaccurate through intentional acts or omissions of Seller prior to Closing,
then Purchaser shall be entitled to all damages (and subject to all limitations) available to
Purchaser as provided in this Agreement for a default of Seller hereunder.





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VIII.




CONDITIONS PRECEDENT TO CLOSE OF ESCROW




     8.1 Conditions to Seller’s Obligations. The obligation of Sellers to close the Escrow
shall be subject to the satisfaction or Notice of its waiver (delivered to Purchaser and Escrow
Holder), in whole or in part, by Sellers of each of the following conditions precedent:



          (a) Except by reason of a default by Sellers, Escrow Holder is in a position to and will
deliver to Sellers the instruments and funds accruing to Sellers pursuant to the provisions of this
Agreement;




          (b) There is no existing uncured material breach of any of the covenants, representations,
warranties or obligations of Purchaser set forth in this Agreement that has not been waived by
Seller;




          (c) The IPO Condition has been satisfied; and




          (d) With respect to each Property, Seller has been released from all obligations under the
Franchise Agreement by the franchisor thereunder, provided, Seller covenants to take all steps
reasonably required by the franchisor for such release and, to the extent this condition fails due
to Seller’s failure to execute and deliver franchisors’ customary termination agreements (which may
include, but not be limited to, a general release of the applicable franchisor by the applicable
Seller) and perform customary obligations thereunder (which may include, but not be limited, paying
any fees accrued under the franchise agreements through the date of closing), Seller shall be
deemed to be in default under this Agreement, unless Seller otherwise waives this condition.



The foregoing conditions contained in this Section 8.1 are intended solely for the benefit of
Sellers. Sellers shall at all times have the right to waive any condition precedent, provided that
such waiver is in writing and delivered to Purchaser and Escrow Holder. In the event that the IPO
Condition has not been fully satisfied and Close of Escrow has not occurred by March 31, 2010,
Seller shall have the right, in its sole discretion, to terminate this Agreement by written notice
to Purchaser at any time. If Sellers elect to terminate this Agreement as a result of Purchaser’s
failure to satisfy the IPO Condition, Purchaser shall reimburse Sellers for all reasonable
out-of-pocket costs and expenses, including reasonable legal fees, incurred by Sellers in
connection with the negotiation of, and the performance of Sellers’ obligations under, this
Agreement in an aggregate amount not to exceed Seventy Five Thousand Dollars ($75,000) and, in the
event of any such termination, the Earnest Money Deposit shall be delivered to Purchaser.
Notwithstanding any provision herein to the contrary, in the event that Close of Escrow has not
occurred by June 30, 2010, then either party, other than a party in default of its obligations
hereunder, may elect to terminate this Agreement by giving notice thereof to the other, whereupon
Purchaser shall reimburse Sellers for all reasonable out-of-pocket costs and expenses, including
reasonable legal fees, incurred by Sellers in connection with the negotiation of, and the
performance of Sellers’ obligations under, this Agreement in an aggregate amount not to exceed
Seventy Five Thousand Dollars ($75,000) and the Earnest Money Deposit shall be delivered to
Purchaser.




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     8.2 Conditions to Purchaser’s Obligations. The obligations of Purchaser to close the
Escrow shall be subject to the satisfaction or Notice of its waiver (delivered to Sellers and
Escrow Holder), in whole or in part, by Purchaser of each of the following condition precedent:




     (a) Except by reason of a default by Purchaser, Escrow Holder is in a position to and
will deliver to Purchaser the instruments and funds, if any, accruing to Purchaser pursuant
to the provisions of this Agreement;




     (b) If Purchaser is entering into new franchise agreements, the Franchise Agreements
have been terminated, effective as of the Closing Date, at no cost or expense to Purchaser;




     (c) There is no existing uncured material breach of any of the covenants,
representations, warranties or obligations of Sellers set forth in this Agreement that has
not been waived by Purchaser; and.




     (d) Purchaser shall have received proceeds of not less than $100,000,000 from the
closing of the public offering of securities contemplated by the draft registration
statement (the “Registration Statement”) on Form S-11 provided by Purchaser to
Seller prior to the date hereof (the “IPO Condition”).


The foregoing conditions contained in this Section 8.2 are intended solely for the benefit of
Purchaser. Purchaser shall at all times have the right to waive any condition precedent, provided
that such waiver is in writing and delivered to Seller and Purchaser.




     8.3 Failure of Conditions to Close of Escrow. Escrow Holder shall be responsible for
confirming, on or before the Close of Escrow, that the conditions to the Close of Escrow set forth
in Sections 8.1 and 8.2 hereof, and as set forth elsewhere in this Agreement, have been satisfied.
Purchaser and Sellers hereby agree to deliver their Notices to Escrow Holder, on or before the
Close of Escrow, of the satisfaction or waiver of all other conditions to the Close of Escrow
hereunder, and, in the event that both Purchaser and Sellers specifically notify and instruct
Escrow Holder, in writing, to proceed to the Close of Escrow hereunder, all such other conditions
to the Close of Escrow hereunder that are not otherwise satisfied shall be deemed to have been
waived by both Purchaser and Sellers Escrow Holder shall not proceed to the Close of Escrow
hereunder unless both Purchaser and Sellers specifically notify and instruct Escrow Holder to do
so.



IX.




LIQUIDATED DAMAGES




     9.1 Default by Purchaser. IN THE EVENT THE CLOSING AND THE CONSUMMATION OF THE
TRANSACTION HEREIN CONTEMPLATED DOES NOT OCCUR AS HEREIN PROVIDED BY REASON OF ANY MATERIAL DEFAULT
OF PURCHASER, PURCHASER AND SELLERS AGREE THAT IT WOULD BE IMPRACTICAL AND EXTREMELY DIFFICULT TO
ESTIMATE THE DAMAGES WHICH SELLER MAY SUFFER. THEREFORE, PURCHASER AND SELLERS DO HEREBY AGREE
THAT IN THE EVENT OF SUCH DEFAULT, IN ADDITION TO ATTORNEYS’



34









 




FEES AND COSTS PURSUANT TO SECTION 12.2 HEREOF, SELLERS MAY, AS ITS SOLE RECOURSE AND REMEDY
(AT LAW OR IN EQUITY), RETAIN THE EARNEST MONEY DEPOSIT, WHICH PURCHASER AND SELLERS AGREE IS A
REASONABLE ESTIMATE OF THE TOTAL DAMAGES THAT SELLERS WOULD SUFFER IN THE EVENT THAT PURCHASER
DEFAULTS AND FAILS TO COMPLETE THE PURCHASE OF THE PROPERTY SAID AMOUNT SHALL BE THE FULL, AGREED
AND LIQUIDATED DAMAGES FOR THE DEFAULT OF PURCHASER UNDER THIS AGREEMENT. ALL OTHER CLAIMS TO
DAMAGES OR OTHER REMEDIES IN CONNECTION WITH ANY DEFAULT BY PURCHASER UNDER THIS AGREEMENT ARE
EXPRESSLY WAIVED BY SELLERS (PROVIDED THIS LIMITATION SHALL NOT APPLY TO ANY INDEMNITY OF PURCHASER
THAT EXPRESSLY SURVIVES THIS AGREEMENT). THE PAYMENT OF SUCH AMOUNT AS LIQUIDATED DAMAGES IS NOT
INTENDED AS A FORFEITURE OR PENALTY, BUT IS INTENDED TO CONSTITUTE LIQUIDATED DAMAGES TO SELLER.
UPON DEFAULT BY PURCHASER, IF THIS AGREEMENT IS TERMINATED BY SELLERS, NEITHER PARTY SHALL HAVE ANY
FURTHER RIGHTS OR OBLIGATIONS HEREUNDER, EACH TO THE OTHER, EXCEPT ANY INDEMNIFICATION OBLIGATIONS,
THE RIGHTS OF SELLER RESERVED HEREIN, AND FOR THE RIGHT OF SELLERS TO COLLECT SUCH LIQUIDATED
DAMAGES FROM PURCHASER AND ESCROW HOLDER. IN THE EVENT PURCHASER WRONGFULLY FAILS TO AUTHORIZE
ESCROW HOLDER TO RELEASE THE EARNEST MONEY DEPOSIT WITHIN FIVE (5) BUSINESS DAYS OF THE DEMAND OF
SELLERS WHEN PURCHASER HAS DEFAULTED AND SELLERS ARE ENTITLED TO LIQUIDATED DAMAGES HEREUNDER, THE
PROVISIONS OF THIS ARTICLE IX SHALL BE VOIDABLE AT THE ELECTION OF SELLERS.




	 	 	 	 	 	 	 
	 

	 	 

SELLERS’ INITIALS
	 	 

PURCHASER’S INITIALS
	 	 






     9.2 Default by Sellers. IN THE EVENT THE CLOSING AND THE CONSUMMATION OF THE
TRANSACTION HEREIN CONTEMPLATED DOES NOT OCCUR AS HEREIN PROVIDED BY REASON OF ANY DEFAULT OF
SELLERS, PURCHASER AND SELLERS AGREE THAT IT WOULD BE IMPRACTICAL AND EXTREMELY DIFFICULT TO
ESTIMATE THE DAMAGES WHICH PURCHASER MAY SUFFER. THEREFORE, PURCHASER AND SELLERS DO HEREBY AGREE
THAT, IN THE EVENT OF SUCH DEFAULT, IN ADDITION TO ATTORNEYS’ FEES AND COSTS PURSUANT TO SECTION
12.2 HEREOF, PURCHASER MAY, AS ITS SOLE RECOURSE AND REMEDY (AT LAW OR IN EQUITY), EITHER: (a)
PURSUE AN ACTION AGAINST SELLER FOR SPECIFIC PERFORMANCE; OR (b) RECEIVE (i) THE RETURN OF THE
EARNEST MONEY DEPOSIT AND (ii) REIMBURSEMENT OF OUT OF POCKET EXPENSES ACCORDING TO PROOF NOT TO
EXCEED AN AGGREGATE OF TWO HUNDRED THOUSAND DOLLARS ($200,000). ALL OTHER CLAIMS TO DAMAGES OR
OTHER REMEDIES IN CONNECTION WITH SELLERS’ FAILURE TO CLOSE AND CONSUMMATE THE TRANSACTIONS
CONTEMPLATED HEREIN (OTHER THAN AS SPECIFIED IN (a) AND (b) HEREOF) ARE EXPRESSLY WAIVED BY
PURCHASER. THE REFUND OF THE EARNEST MONEY DEPOSIT AS LIQUIDATED DAMAGES IS NOT INTENDED AS A
FORFEITURE OR PENALTY, BUT IS INTENDED TO CONSTITUTE LIQUIDATED DAMAGES TO PURCHASER. UPON DEFAULT
BY SELLERS, IF THIS AGREEMENT IS TERMINATED BY PURCHASER, NEITHER PARTY SHALL HAVE



35









 





ANY FURTHER RIGHTS OR OBLIGATIONS HEREUNDER, EACH TO THE OTHER, EXCEPT ANY INDEMNIFICATION
OBLIGATIONS, THE RIGHTS OF PURCHASER RESERVED HEREIN, AND FOR THE RIGHT OF PURCHASER TO COLLECT
SUCH LIQUIDATED DAMAGES FROM SELLERS.



	 	 	 	 	 	 	 
	 

	 	 

	 	 

	 	 
	 

	 	SELLERS’ INITIALS
	 	PURCHASER’S INITIALS	 	 






X.




BROKERS




     Sellers and Purchaser each agree to indemnify, protect, defend and hold the other harmless
from and against any claims, actions, suits or demands for payment of any commission, finder’s fee
or other sum initiated by any other broker, commission agent or other person which such party or
its representatives has engaged or retained or with which it has had discussions concerning, in
connection with the transaction contemplated by this Agreement or the sale of the Property by
Sellers.



XI.




NOTICES




     Except as otherwise expressly provided in this Agreement, all notices, requests, demands and
other communications hereunder (“Notice”) shall be in writing and shall be deemed delivered
by (i) hand delivery upon receipt, (ii) registered mail or certified mail, return receipt
requested, postage prepaid, upon delivery to the address indicated in the Notice, (iii) by
confirmed telecopy or facsimile transmission when sent, and (iv) overnight courier (next business
day delivery) on the next business day at 12:00 noon, whichever shall occur first, as follows:



	 	 	 	 
	 	To Sellers:

	 	c/o RLJ DEVELOPMENT, LLC
	 	 

	 	Attention: Thomas J. Baltimore, Jr.
	 	 

	 	3 Bethesda Metro Center, Suite 1000
	 	 

	 	Bethesda, Maryland 20814
	 	 

	 	Telecopier: (301) 280-7782
	 
	 	 
	 	With a copy to:

	 	Gerard Leval, Esq.
	 	 

	 	Arent Fox, LLP
	 	 

	 	1050 Connecticut Avenue, N.W.
	 	 

	 	Washington D.C. 20036-5339
	 	 

	 	Telecopier: (202) 857-6395
	 
	 	 
	 	To Purchasers:

	 	CHATHAM LODGING TRUST.
	 	 

	 	50 Cocoanut Row, Suite 211
	 	 

	 	Palm Beach, FL 33480
	 	 

	 	Attention: Jeffrey H. Fisher
	 	 

	 	Telecopier: (561) 659-7318






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	 	With a copy to:

	 	HUNTON & WILLIAMS LLP
	 	 

	 	1900 K Street, NW
	 	 

	 	Washington, DC 20006
	 	 

	 	Attention: John M. Ratino, Esq.
	 	 

	 	Telecopier: 202-778-2201





Any correctly addressed Notice that is refused, unclaimed or undelivered because of an act or
omission of the party to be notified shall be considered to be effective as of the first day that
the Notice was refused, unclaimed or considered undeliverable by the postal authorities, messenger
or overnight delivery service. The parties hereto shall have the right from time to time, and at
any time, to change their respective addresses and each shall have the right to specify as its
address any other address within the United States of America, by giving to the other party at
least thirty (30) days prior Notice thereof, in the manner prescribed herein; provided, however,
that to be effective, any such change of address must be actually received (as evidenced by a
return receipt). Telephone numbers and email addresses, if listed, are listed for convenience
purposes only and not for the purposes of giving Notice pursuant to this Agreement.




XII.




MISCELLANEOUS




     12.1 Governing Law. This Agreement shall be governed by and construed in accordance
with the laws of the State of Maryland. If any legal action is necessary to enforce the terms and
conditions of this Agreement, the parties hereby agree that the courts located in Montgomery
County, Maryland shall be the sole jurisdiction and venue for the bringing of the action.



     12.2 Professional Fees and Costs. If a lawsuit, arbitration or other proceedings are
instituted by any party to enforce any of the terms or conditions of this Agreement against any
other party hereto, the prevailing party in such litigation, arbitration or proceedings shall be
entitled, as an additional item of damages, to such reasonable attorneys’ and other professional
fees and costs (including, but not limited to, witness fees), court costs, arbitrators’ fees,
arbitration administrative fees, travel expenses, and other out-of pocket expenses or costs of such
other proceedings, as may be fixed by any court of competent jurisdiction, arbitrator or other
judicial or quasi-judicial body having jurisdiction thereof, whether or not such litigation or
proceedings proceed to a final judgment or award. For the purposes of this section, any party
receiving an arbitration award or a judgment for damages or other amounts shall be deemed to be the
prevailing party, regardless of amount of the damage awarded or whether the award or judgment was
based on all or some of such party’s claims or causes of action, and any party against whom a
lawsuit, arbitration or other proceeding is instituted and later voluntarily dismissed by the
instituting party shall be deemed to be the prevailing party.



     12.3 Exhibits and Schedules a Part of This Agreement. The Exhibits and Schedules
attached hereto are incorporated in this Agreement by reference and are hereby made a part hereof.



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     12.4 Executed Counterparts. This Agreement may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed an original, but all such counterparts together shall
constitute but one and the same instrument; signature pages may be detached from multiple separate
counterparts and attached to a single counterpart so that all signature pages are physically
attached to the same document. This Agreement shall become effective upon the due execution and
delivery of this Agreement to the parties hereto.



     12.5 Assignment. Purchaser may not assign, convey and otherwise transfer all or any
part of its interest or rights herein without the prior written consent of Sellers, which consent
may be withheld in Sellers’ sole discretion. Notwithstanding the foregoing, however, Purchaser
may, not later than five (5) business days prior to the Closing Date, assign and transfer all of
its rights and obligations under this Agreement to one (1) or more wholly owned subsidiary(ies)
thereof, or to an Affiliate(s) thereof, or to any entity controlled (directly or indirectly,
through voting or equity ownership) by Purchaser or any Affiliate thereof; provided, however, that
Purchaser shall not be released of its obligations under this Agreement as a result of any such
assignment. Any assignment as permitted in the preceding sentence shall be conditioned upon
Purchaser delivering to Sellers and Escrow Holder, not later than five (5) days prior to the
Closing Date Notice thereof, together with a copy of such assignee’s organizational and formation
documents and instruments, a Certificate of Good Standing for such assignee, and copies of the
resolutions of Purchaser and such assignee authorizing such assignment. As a further condition to
any such permitted assignment, Purchaser shall cause its assignee to execute an assignment and
assumption agreement of Purchaser’s obligations under this Agreement (in form and content
reasonably and mutually acceptable), and such other documents and instruments as Escrow Holder may
reasonably request. “Affiliate” shall mean an entity that is majority-owned and controlled by
Purchaser or the members or partners of Purchaser or in which Purchaser is the general partner or
managing member.



     12.6 IRS — Form 1099-S. For purposes of complying with Section 6045 of the
Internal Revenue Code of 1986, as amended, Escrow Holder shall be deemed the “person
responsible for closing the transaction” and shall be responsible for obtaining the information
necessary to file with the Internal Revenue Service Form 1099-S, “Statement for Recipients of
Proceeds from Real Estate, Broker and Barter Exchange Transactions.”



     12.7 Successors and Assigns. Subject to the provisions of Section 12.5 hereof, this
Agreement shall be binding upon and inure to the benefit of the parties’ respective successors and
permitted assigns.



     12.8 Time is of the Essence. Time is of the essence of this Agreement.



     12.9 Entire Agreement. This Agreement, and Exhibits and Schedules and other documents
and instruments attached to or referenced herein, contain all representations and the entire
understanding and agreement between the parties hereto with respect to the purchase and sale of the
Property, and all prior and contemporaneous understandings, letters of intent, agreements and
representations, whether oral or written, are entirely superseded. In executing this Agreement,
Sellers and Purchaser each expressly disclaim any reliance on any oral or written representations,
warranties, comments, statements or assurances made by Sellers,



38









 







Purchaser, and any of their respective affiliates, and their respective agents, employees,
representatives, attorneys or brokers, as an inducement or otherwise, to Purchaser’s and Sellers’
respective execution hereof. No amendment of this Agreement shall be binding unless in writing and
executed by the parties hereto.



     12.10 Further Assurances. Whenever and so often as requested by a party, the other
party will promptly execute and deliver or cause to be executed and delivered all such other and
further instruments, documents or assurances, and promptly do or cause to be done all such other
and further things as may be necessary and reasonably required in order to further and more fully
vest in such requesting party all rights, interests, powers, benefits, privileges and advantages
conferred or intended to be conferred upon it by this Agreement, or to effectuate the termination
of this Agreement and cancellation of the Escrow (if otherwise permitted hereunder). The terms of
this section shall survive the Close of Escrow and/or termination of this Agreement.



     12.11 Waiver. Failure or delay by either party to insist on the strict performance of
any covenant, term, provision or condition hereunder, or to exercise any option herein contained,
or to pursue any claim or right arising herefrom, shall not constitute or be construed as a waiver
of such covenant, term, provision, condition, option, claim or right. Any waiver by either party
shall be effective only if in a writing delivered to the other party hereto and setting forth, with
specificity, the covenant, term, provision or condition so waived. Any such waiver shall not
constitute or be construed as a continuing waiver of any subsequent default.



     12.12 Headings. The headings of this Agreement are for purposes of convenience only
and shall not limit or define the meaning of the provisions of this Agreement.



     12.13 Risk of Loss. With respect to each Property, the risk of loss shall be as
follows:



          12.13.1 Risk of Loss. Until the Closing Date, Seller shall bear the risk of loss
should there be damage to any of the Improvements by fire or other casualty (collectively
“Casualty”). If, prior to the Closing Date, any of the Improvements shall be damaged by
any Casualty, Seller shall promptly deliver to Purchaser a Notice (“Casualty Notice”) of
such event. Upon Purchaser’s receipt of a Casualty Notice, Seller and Purchaser shall meet
promptly to estimate the cost to repair and restore the Improvements to good condition and to
replace the damaged Personal Property (“Casualty Renovation Cost”). If the parties are
unable to agree on the cost of restoration, the matter will be submitted to an engineer designated
by Seller and an engineer designated by Purchaser, each licensed to practice in the state in which
the Land is located, and the engineers shall resolve the dispute. Each party hereto shall bear the
costs and expenses of its own engineer.




          12.13.2 Material Loss. If the Casualty Renovation Cost exceeds in the aggregate (i)
One Million Five Hundred Thousand Dollars ($1,500,000.00) in the event the Casualty is insured
against, or (ii) Seven Hundred Fifty Thousand Dollars ($750,000.00) in the event the Casualty is
not insured against, either party hereto may, at its option, elect to terminate this Agreement by
Notice to the other party within five (5) days after the date that the Casualty Renovation Cost is
determined, in which case the Earnest Money Deposit shall be delivered to Purchaser, and neither
party shall have any further rights or obligations hereunder, except for any continuing
confidentially and indemnity obligations as provided in this Agreement. If both




39









 







parties hereto fail to timely make its election to terminate this Agreement, then the Close of
Escrow shall take place as provided herein without reduction of the Purchase Price, and Seller
shall assign the insurance proceeds to Purchaser in the event the Casualty is insured against and
shall pay to Purchaser the amount of any deductible, under applicable insurance policies, or have
the Purchase Price reduced by the Casualty Renovation Cost in the event the Casualty is not insured
against.




          12.13.3 Nonmaterial Loss. If the Casualty Renovation Cost is in the aggregate (i) One
Million Five Hundred Thousand Dollars ($1,500,000.00) or less in the event the Casualty is insured
against, or (ii) Seven Hundred Fifty Thousand Dollars ($750,000.00) or less in the event the
Casualty is not insured against, then, in any such event, neither party hereto shall have any right
to terminate this Agreement, but the Closing shall take place as provided herein without reduction
of the Purchase Price, and Seller shall assign the insurance proceeds to Purchaser and shall pay to
Purchaser the amount of any deductible in the event the Casualty is insured against or have the
Purchase Price reduced by the Casualty Renovation Cost in the event the Casualty is not insured
against.




          12.13.4 Eminent Domain. If, prior to the Close of Escrow, (i) all or substantially
all (or so much thereof so as to substantially and materially interfere with the operation of the
Hotel) of the Real Property, (ii) any portion of the parking areas on the Real Property which
results in there being insufficient parking for the operation of the Hotel as established by
applicable governmental codes and regulations, or (iii) any access-way to the Real Property or to
any part of any building with guest rooms is taken by condemnation or eminent domain, at the
election of Purchaser this Agreement shall, upon the giving of Notice of such event or of the
condemning authorities’ intention so to take the Real Property, terminate, and Purchaser shall
receive a full and prompt refund of all sums deposited by them with Escrow Holder and/or Seller.
If, prior to the Close of Escrow, less than all or substantially all of the Real Property shall be
taken by condemnation or eminent domain, then, if any of the foregoing, in Purchaser’s reasonable
opinion, materially impairs the value of the Real Property or any significant interest therein,
then Purchaser shall have the option to (A) accept title to the Real Property subject to such
taking, in which event at the Close of Escrow all of the proceeds of any award or payment made or
to be made by reason of such taking shall be assigned by Seller to Purchaser, and any money
theretofore received by Seller in connection with such taking shall be paid over to Purchaser,
whereupon Purchaser shall pay the Purchase Price without abatement by reason of such taking, or (B)
receive a full and prompt refund of all sums deposited by Purchaser with Escrow Holder and/or
Seller. Seller shall not settle, agree to, or accept any award or payment in connection with a
taking of less than all of the Real Property without obtaining Purchaser’s prior written consent in
each case, which consent shall not be unreasonably withheld or delayed.




     12.14 Construction of Agreement. The parties hereto have negotiated this Agreement at
length, and have had the opportunity to consult with, and be represented by, their own competent
counsel. This Agreement is, therefore, deemed to have been jointly prepared. In determining the
meaning of, or resolving any ambiguity with respect to, any word, phrase or provision of this
Agreement, no uncertainty or ambiguity shall be construed or resolved against any party under any
rule of construction, including the party primarily responsible for the drafting and preparation of
this Agreement. The words “herein,” “hereof,” “hereunder” and words of similar reference shall mean
this Agreement. The words “this Agreement” include the



40









 







exhibits, schedules addenda and any future written modifications, unless otherwise indicated
by the context. All words in this Agreement shall be deemed to include any number or gender as the
context or sense of the Agreement requires. The words “will,” “shall” and “must” in this Agreement
indicate a mandatory obligation. The use of the words “include,” “includes” and “including”
followed by one or more examples is intended to be illustrative and is not a limitation on the
scope of the description or term for which the examples are provided. All dollar amounts set forth
in this Agreement are stated in United States Dollars, unless otherwise specified. The words “day”
and “days” refer to calendar days unless otherwise stated. The words “business day” refer to a day
other than a Saturday, Sunday or legal holiday on which banking institutions are closed. The words
“month” and “months” refer to calendar months unless otherwise stated. The words “year” and
“years” refer to calendar years unless otherwise stated.



     12.15 Tax Deferred Exchange. The following provisions shall apply with respect to
each Property:



          12.15.1 Seller and Purchaser (“Cooperating Party”) each agree to fully cooperate with
the other (and any owner of such other party) (“Exchangor”) (including cooperation with any
Intermediary (as defined herein) selected by Exchangor) to structure the acquisition of the
Property and/or the Real Property as an exchange of property held for productive use in a trade or
business or for investment within the meaning of Section 1031 of the Internal Revenue Code of
1986 (as amended), and upon request, Cooperating Party agrees to execute additional escrow
instructions, documents, agreements or instruments to effect the exchange; provided, however, that
Cooperating Party shall incur no additional costs or expenses in this transaction, or be required
to incur any additional liability, acquire, accept or hold title to any property (other than the
Property), as a result of or in connection with any such exchange, unless because of Cooperating
Party’s default hereunder or under any agreement executed by reason of this Section 12.15.




          12.15.2 Exchangor agrees to indemnify, defend or hold Cooperating Party harmless from and
against any and all additional costs, expenses, claims, demands, liabilities, losses, obligations,
damages, recoveries, and deficiencies (such categories being collectively referred to herein as
“Liabilities”) in excess of those Liabilities that Cooperating Party would otherwise have
if the transaction contemplated in this Agreement closes as a sale transaction, and that
Cooperating Party may incur or suffer, as a result of or in connection with (i) the structuring of
the transaction contemplated in this Agreement as an exchange under Internal Revenue Code
Section 1031 and/or (ii) the execution of any documents in connection with the exchange.
Exchangor’s foregoing indemnity shall not indemnify Cooperating Party for any Liabilities arising
as a result of or in connection with any default by Cooperating Party under this Agreement or any
default by Cooperating Party under any of the documents or agreements entered into by Cooperating
Party in connection with the exchange or for any negligence or willful misconduct on the part of
Cooperating Party. Implementation of the exchange(s) contemplated in this Section 12.15 shall not
be a condition to the Close of Escrow.




          12.15.3 Exchangor, at its election, may substitute for any one or more of them, one or more
persons or entities (“Intermediary”) as a party(ies) to the Escrow and this Agreement, in
which event the Intermediary shall assume and perform the obligations of




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Exchangor under this Agreement (but without the release of liability of Exchangor for such
performance), and Cooperating Party agrees to accept the performance by Intermediary and shall
tender its performance to Intermediary.




     12.16 Covenants, Representations and Warranties. Except as otherwise set forth in
this Agreement, all of the covenants, representations and agreements of Sellers and Purchaser set
forth in this Agreement shall survive the Close of Escrow, except that all representations and
warranties shall survive only for a period of nine (9) months after the Close of Escrow. By
proceeding with the closing of the sale transaction, Sellers and Purchaser shall be deemed to have
waived, and so covenant to waive, any claims of defaults or breaches by the other party existing on
or as of the Close of Escrow whether under this Agreement or any other document or instrument
executed by the other party in connection with this transaction, of which the waiving party has
actual knowledge of prior to the Close of Escrow for which the other party shall have no liability.



     12.17 Confidentiality. Other than as required or permitted by the terms of this
Agreement, no party hereto shall release or cause or permit to be released any press notices or
releases or publicity (oral or written) or advertising promotion relating to, or otherwise announce
or disclose or cause or permit to be announced or disclosed, in any manner whatsoever, the terms
and conditions of the purchase and sale transaction for the Properties, nor shall Purchaser or its
agents or representatives disclose, in any manner whatsoever, (a) the information provided to
Purchaser by any Seller or its representatives, or (b) any analyses, compilations, studies or other
documents or records prepared by or on behalf of Purchaser, in connection with Purchaser’s due
diligence investigation of the Property, without first obtaining the written consent of Sellers
(collectively, “Proprietary Information”). The foregoing shall not preclude Purchaser (i)
from discussing the Proprietary Information with any person who is employed by Purchaser or who, on
behalf of Purchaser, is actively and directly participating in the purchase and sale of the
Property, including, without limitation, to Purchaser’s existing or prospective investors,
shareholders, partners, members, existing or prospective lenders, attorneys, accountants and other
consultants and advisors, or (ii) from complying with all laws, rules, regulations and court
orders, including, without limitation, governmental regulatory, disclosure, tax and reporting
requirements. Seller acknowledges that, in connection with the Public Offering and the future
operation of a public company, Purchaser shall be permitted to disclose to its underwriter and
prospective investors any and all information regarding the term of terms of this transaction and
the Properties that Purchaser determines in its sole, but reasonable, discretion to be material or
otherwise necessary or advisable in order to comply with its disclosure requirements.



     12.18 Limitation on Liability. In consideration of the benefits accruing hereunder,
Sellers and Purchaser agree that, in the event of any actual or alleged failure, breach or default
of this Agreement by Sellers or Purchaser:




     (a) The sole and exclusive remedy shall be against the defaulting party and its assets;




     (b) No owner of the defaulting party shall be sued or named as a party in any suit or
action;



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     (c) No service of process shall be made against any owner or employee of the defaulting
party (except as may be necessary to secure jurisdiction of the defaulting party);




     (d) No owner or employee of the defaulting party shall be required to answer or
otherwise plead to any service of process;




     (e) No judgment may be taken against any owner or employee of the defaulting party;




     (f) Any judgment taken against any owner or employee of the defaulting party may be
vacated and set-aside at any time without hearing;




     (g) No writ of execution will ever be levied against the assets of any owner or
employee of the defaulting party; and




     (h) These covenants and agreements are enforceable both by the defaulting party and
also by any owner or employee of the defaulting party.


In addition to the foregoing, and notwithstanding any other term or provision of this Agreement to
the contrary, except as to any Seller’s fraud, Sellers shall have no liability for the breach of
any representation, warranty, covenant, indemnity or other obligation expressly stated to survive
the Close of Escrow (collectively, “Sellers’ Post-Closing Obligations”), unless and until
the aggregate amount of Purchaser’s out-of-pocket damages and third party expenses directly
resulting from such breaches shall exceed, and then only to the extent the same exceeds, Twenty
Five Thousand Dollars ($25,000). Furthermore, Sellers’ aggregate liability under this Agreement
(or otherwise) for the breach of any and all of Sellers’ Post-Closing Obligations shall, in no
event individually or in the aggregate, exceed two and one-half percent (2.5%) of the Purchase
Price. In no event shall Seller have any liability for punitive damages, consequential damages, or
damages for diminution-in-value, but shall only be liable for Purchaser’s actual out-of-pocket
damages and third party expenses.




     12.19 No Third-Party Beneficiaries. Sellers and Purchaser agree that there are no
third parties who are intended to benefit from or who are entitled to rely on any of the provisions
of this Agreement. No third party shall be entitled to assert any claims or to enforce any rights
whatsoever pursuant to this Agreement. The covenants and agreements provided in this Agreement are
solely for the benefit of Sellers and Purchaser and their permitted successors and assigns
respectively.



     12.20 Facsimile Signatures. The execution of this Agreement and all Notices given
hereunder and all amendments hereto, may be effected by facsimile signatures, all of which shall be
treated as originals; provided, however, that the party receiving a document with a facsimile
signature may, by Notice to the other, require the prompt delivery of an original signature to
evidence and confirm the delivery of the facsimile signature. Purchaser and Sellers each intend to
be bound by its respective facsimile transmitted signature, and is aware that the other party will
rely thereon, and each party waives any defenses to the enforcement of the Agreement, and
documents, and any Notices delivered by facsimile transmission.



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[The remainder of this page is intentionally left blank]




[Signatures on following page]




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XIII.




EXECUTION




     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the
16th day of November, 2009.



	 	 	 	 	 	 	 
	 	 	SELLERS:	 	 
	 
	 	 	 	 	 	 
	 	 	RLJ BILLERICA HOTEL, L.L.C.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Thomas J. Baltimore, Jr.
 

	 	 
	 	 	Thomas J. Baltimore, Jr.

President	 	 
	 
	 	 	 	 	 	 
	 

	 	RLJ
	 	BLOOMINGTON HOTEL, L.L.C.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Thomas J. Baltimore, Jr.
 

	 	 
	 	 	Thomas J. Baltimore, Jr.	 	 
	 	 	President	 	 
	 
	 	 	 	 	 	 
	 	 	RLJ BRENTWOOD HOTEL, L.L.C.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Thomas J. Baltimore, Jr.
 

	 	 
	 	 	Thomas J. Baltimore, Jr.	 	 
	 	 	President	 	 
	 
	 	 	 	 	 	 
	 	 	RLJ DALLAS HOTEL LIMITED PARTNERSHIP	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	RLJ Dallas Hotel Gen-Par, L.L.C.	 	 
	 

	 	 	 	General Partner	 	 






	 	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Thomas J. Baltimore, Jr.
 

	 	 
	 	 	Thomas J. Baltimore, Jr.	 	 
	 	 	President	 	 






[Signatures continued on next page.]




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	 	 	RLJ FARMINGTON HOTEL, L.L.C.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Thomas J. Baltimore, Jr.
 

	 	 
	 	 	Thomas J. Baltimore, Jr.

President	 	 
	 
	 	 	 	 	 	 
	 

	 	RLJ
	 	MAITLAND HOTEL, L.L.C.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Thomas J. Baltimore, Jr.
 

	 	 
	 	 	Thomas J. Baltimore, Jr.

President	 	 
	 
	 	 	 	 	 	 
	 	 	PURCHASER:	 	 
	 
	 	 	 	 	 	 
	 	 	CHATHAM LODGING TRUST	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Jeffrey H. Fisher
 

	 	 
	 	 	Name: Jeffrey H. Fisher

Title: Chief Executive Officer	 	 






ESCROW HOLDER HEREBY ACKNOWLEDGES

AND AGREES TO THE ESCROW INSTRUCTIONS

SET FORTH IN THIS AGREEMENT.




CHICAGO TITLE INSURANCE COMPANY




	 	 	 	 	 
	BY:

	 	/s/ R. Eric Taylor
 

	 	 
	Name: R. Eric Taylor	 	 
	Title: Vice President and Senior Counsel	 	 






Dated: November 16, 2009





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