Document:

exv10w6

 

Exhibit 10.6

EXECUTION VERSION

FOURTH AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT

     This FOURTH AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT (hereinafter referred to
as the “Amendment”) executed as of the 30th day of September, 2005, by and among
RANGE RESOURCES CORPORATION, a Delaware corporation (“Company”), GREAT LAKES ENERGY
PARTNERS, L.L.C., a Delaware limited liability company (“GLEP”, and together with the
Company and each of their respective successors and permitted assigns, the “Borrowers” and
each a “Borrower”), JPMORGAN CHASE BANK, N.A. (successor by merger to Bank One, N.A.
(Illinois)), a national banking association (“JPMorgan Chase”), each of the financial
institutions which is a party hereto (as evidenced by the signature pages to this Amendment) or
which may from time to time become a party to the Credit Agreement pursuant to the provisions of
Section 29 thereof or any successor or permitted assignee thereof (hereinafter collectively
referred to as “Lenders”, and individually, “Lender”), JPMorgan Chase, as
Administrative Agent (in its capacity as Administrative Agent and together with its successors in
such capacity, “Agent”). Capitalized terms used but not defined in this Amendment have the
meanings assigned to such terms in that certain Second Amended and Restated Credit Agreement dated
as of June 23, 2004, by and among Borrower, Agent and Lenders (as amended, supplemented or
otherwise modified from time to time, the “Credit Agreement”).

WITNESSETH:

     WHEREAS, the Borrowers have requested that the Agent and the Lenders amend the Credit
Agreement to (i) modify certain Collateral requirements and (ii) reaffirm the Borrowing Base; and
Agent and the Lenders have agreed to do so on the terms and conditions hereinafter set forth; and

     NOW, THEREFORE, for and in consideration of the mutual covenants and agreements herein
contained and other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged and confessed, the Borrowers, Agent and the Lenders, hereby agree as follows:

SECTION 1. Amendments to Credit Agreement. Subject to the satisfaction or waiver in writing of
each condition precedent set forth in Section 2 hereof, and in reliance on the
representations, warranties, covenants and agreements contained in this Amendment, the Credit
Agreement shall be amended in the manner provided in this Section 1.

     1.1 Additional Definition. The following definition shall be and it hereby is added to
Section 1 of the Credit Agreement in correct alphabetical order:

     Fourth Amendment means that certain Fourth Amendment to Second Amended and Restated
Loan Agreement, dated September 30, 2005, by and among the Borrowers, the Agent

Fourth Amendment to Second Amended and Restated Credit Agreement — Page 1

DALLAS 1573842v3

 

 

and the Lenders.

     1.2 Amended Definition. The following definition set forth in Section 1 of the Credit
Agreement shall be and it hereby is amended in its entirety to read as follows:

     Oil and Gas Properties means all oil, gas and mineral properties and interests, and
all related personal properties of any Borrower or any Guarantor which are evaluated by the Lenders
for purposes of determining the Borrowing Base.

     1.3 Collateral Security. The second sentence of the first paragraph of Section 6 of
the Credit Agreement shall be and it hereby is amended in its entirety to read as follows:

     The Oil and Gas Properties heretofore and hereafter assigned and mortgaged to the Agent by
Borrowers and the Guarantors shall represent not less than 70% of the Engineered Value (as
hereinafter defined) of Borrowers’ and Guarantors’ Oil and Gas Properties, taken as a whole.

     1.4 Collateral Security. The last sentence of the second paragraph of Section 6 of
the Credit Agreement shall be and it hereby is amended in its entirety to read as follows:

Borrowers will cause to be executed and delivered to the Agent, in the future, additional Security
Instruments if the Agent reasonably deems such are necessary to insure perfection or maintenance of
Lenders’ security interests and Liens in not less than 70% of the Engineered Value of the Oil and
Gas Properties or any part thereof of Borrowers and Guarantors, taken as a whole.

     1.5 Borrowing Base. Section 7(a) of the Credit Agreement shall be and it hereby is
amended in its entirety to read as follows:

     (a) Borrowing Base. Subject to Section 7(b) hereof, during the period from the
date of the Fourth Amendment to the first Determination Date after the date of the Fourth
Amendment, the Borrowing Base shall be $600,000,000.

     1.6 Borrowing Base. Section 7 of the Credit Agreement shall be and it hereby is
amended by inserting the following as clause (c) of such section:

     (c) Notice of Redetermination. Promptly following any redetermination of the
Borrowing Base pursuant to this Section 7, the Agent shall notify the Borrowers of the amount
of the redetermined Borrowing Base, which Borrowing Base shall be effective as of the
Determination Date specified in such notice, and such Borrowing Base shall remain in effect
for all purposes of this Agreement until the next Determination Date.

     1.7 Additional Collateral. The first sentence of Section 12(v) of the Credit
Agreement shall be and it hereby is amended in its entirety to read as follows:

Borrowers agree to regularly monitor engineering data covering all producing oil and gas properties
and interests owned or acquired by Borrowers and the Guarantors on or after the

Fourth Amendment to Second Amended and Restated Credit Agreement — Page 2

DALLAS 1573842v3

 

 

date hereof and to mortgage or cause to be mortgaged such of the same to Agent for the ratable
benefit of the Lenders in substantially the form of the Security Instruments, as applicable, to the
extent that the Lenders shall at all times during the existence of the Commitment be secured by
perfected Liens and security interests covering not less than seventy percent (70%) of the
Engineered Value of the Oil and Gas Properties of Borrowers and the Guarantors, taken as a whole.

     1.8 Additional Collateral. The third sentence of Section 12(v) of the Credit
Agreement shall be and it hereby is amended in its entirety to read as follows:

In order to assist Borrowers in monitoring its mortgage coverage, Agent agrees to notify Borrowers
if the Lenders determine that the coverage required by this paragraph ever falls below 70%.

     1.9 Additional Collateral. The last sentence of Section 12(v) of the Credit Agreement
shall be and it hereby is amended in its entirety to read as follows:

     Upon receipt of any such notice from the Agent, Borrowers shall, within thirty (30) days of
receipt of such notice, execute and deliver, or cause to be executed and delivered, Security
Instruments in form and substance satisfactory to the Agent covering sufficient additional Oil and
Gas Properties to bring the coverage to at least 70%.

SECTION 2. Conditions. The amendments to the Credit Agreement contained in Section 1 of
this Amendment shall be effective upon the satisfaction of each of the conditions set forth in this
Section 2.

     2.1 Execution and Delivery. Each Borrower and each Guarantor shall have executed and
delivered this Amendment.

     2.2 Representations and Warranties. The representations and warranties of each Borrower under
this Amendment are true and correct in all material respects as of such date, as if then made
(except to the extent that such representations and warranties relate solely to an earlier date).

     2.3 No Event of Default. No Event of Default shall have occurred and be continuing nor shall
any event have occurred or failed to occur which, with the passage of time or service of notice, or
both, would constitute an Event of Default.

     2.4 Other Documents. The Agent shall have received such other instruments and documents
incidental and appropriate to the transaction provided for herein as the Agent or its special
counsel may reasonably request, and all such documents shall be in form and substance satisfactory
to the Agent.

     2.5 Legal Matters Satisfactory. All legal matters incident to the consummation of the
transactions contemplated hereby shall be reasonably satisfactory to special counsel for the Agent
retained at the expense of the Borrowers.

Fourth Amendment to Second Amended and Restated Credit Agreement — Page 3

DALLAS 1573842v3

 

 

SECTION 3. Representations and Warranties of Borrowers. To induce the Lenders to enter
into this Amendment, the Borrowers hereby represent and warrant to the Lenders as follows:

     3.1 Reaffirmation of Representations and Warranties/Further Assurances. After giving effect
to the amendments herein, each representation and warranty of any Borrower or any Guarantor
contained in the Credit Agreement or in any of the other Loan Documents is true and correct in all
material respects on the date hereof (except to the extent such representations and warranties
relate solely to an earlier date).

     3.2 Corporate Authority; No Conflicts. The execution, delivery and performance by each
Borrower and each Guarantor (to the extent a party hereto or thereto) of this Amendment and all
documents, instruments and agreements contemplated herein are within each such Borrower’s or such
Guarantor’s corporate or other organizational powers, have been duly authorized by necessary
action, require no action by or in respect of, or filing with, any court or agency of government
and do not violate or constitute a default under any provision of any applicable law or other
agreements binding upon any Borrower or any Guarantor or result in the creation or imposition of
any Lien upon any of the assets of any Borrower or any Guarantor except for Permitted Liens and
otherwise as permitted in the Credit Agreement.

     3.3 Enforceability. This Amendment constitutes the valid and binding obligation of each
Borrower and each Guarantor enforceable in accordance with its terms, except as (i) the
enforceability thereof may be limited by bankruptcy, insolvency or similar laws affecting
creditor’s rights generally, and (ii) the availability of equitable remedies may be limited by
equitable principles of general application.

SECTION 4. Miscellaneous.

     4.1 Reaffirmation of Loan Documents and Liens. Any and all of the terms and provisions of the
Credit Agreement and the Loan Documents shall, except as amended and modified hereby, remain in
full force and effect. Each Borrower hereby agrees that the amendments and modifications herein
contained shall in no manner affect or impair the liabilities, duties and obligations of such
Borrower or any Guarantor under the Credit Agreement and the other Loan Documents or the Liens
securing the payment and performance thereof.

     4.2 Parties in Interest. All of the terms and provisions of this Amendment shall bind and
inure to the benefit of the parties hereto and their respective successors and assigns.

     4.3 Legal Expenses. The Borrowers hereby agree, jointly and severally, to pay all reasonable
fees and expenses of special counsel to the Agent incurred by the Agent in connection with the
preparation, negotiation and execution of this Amendment and all related documents.

     4.4 Counterparts. This Amendment may be executed in one or more 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

Fourth Amendment to Second Amended and Restated Credit Agreement — Page 4

DALLAS 1573842v3

 

 

and attached to a single counterpart so that all signature pages are physically attached to
the same document. However, this Amendment shall bind no party until the Borrowers, the Lenders,
and the Agent have executed a counterpart. Delivery of photocopies of the signature pages to this
Amendment by facsimile or electronic mail shall be effective as delivery of manually executed
counterparts of this Amendment.

     4.5 Complete Agreement. THIS AMENDMENT, THE CREDIT AGREEMENT, AND THE OTHER LOAN DOCUMENTS
REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN
THE PARTIES.

     4.6 Headings. The headings, captions and arrangements used in this Amendment are, unless
specified otherwise, for convenience only and shall not be deemed to limit, amplify or modify the
terms of this Amendment, nor affect the meaning thereof.

[Signature Pages Follow]

Fourth Amendment to Second Amended and Restated Credit Agreement — Page 5

DALLAS 1573842v3

 

 

     IN WITNESS WHEREOF, the parties have caused this Fourth Amendment to Amended and Restated
Credit Agreement to be duly executed as of the date first above written.

	 	 	 	 	 	 	 
	 	 	BORROWER:	 	 
	 
	 	 	 	 	 	 
	 	 	RANGE RESOURCES CORPORATION

a Delaware corporation	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Name:
	 	 

Roger S. Manny
	 	 
	 

	 	Title:
	 	Senior Vice President	 	 
	 
	 	 	 	 	 	 
	 	 	GREAT LAKES ENERGY PARTNERS, L.L.C.

a Delaware limited liability company	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	Range Holdco, Inc.	 	 
	 

	 	 	 	Its member	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	Roger S. Manny	 	 
	 

	 	Title:
	 	Senior Vice President	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	Range Energy I, Inc.	 	 
	 

	 	 	 	Its member	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	Roger S. Manny	 	 
	 

	 	Title:
	 	Senior Vice President	 	 

Fourth Amendment to Second Amended and Restated Credit Agreement — Signature Page

DALLAS 1573842

 

 

	 	 	 	 	 	 	 
	 	 	JPMORGAN CHASE BANK, N.A.,
formerly known as JPMorgan Chase Bank and
(successor by merger to Bank One, N.A. (Illinois)),
as Agent and a Lender	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	Title:
	 	 

	 	 
	 

	 	 	 	 	 	 

Fourth Amendment to Second Amended and Restated Credit Agreement — Signature Page

DALLAS 1573842

 

 

	 	 	 	 	 	 	 
	 	 	BANK OF SCOTLAND	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Name:
	 	 

	 	 
	 

	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 	 	 

Fourth Amendment to Second Amended and Restated Credit Agreement — Signature Page

DALLAS 1573842

 

 

	 	 	 	 	 	 	 
	 	 	CALYON NEW YORK BRANCH	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Name:
	 	 

	 	 
	 

	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 	 	 

Fourth Amendment to Second Amended and Restated Credit Agreement — Signature Page

DALLAS 1573842

 

 

	 	 	 	 	 	 	 
	 	 	COMPASS BANK	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Name:
	 	 

	 	 
	 

	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 	 	 

Fourth Amendment to Second Amended and Restated Credit Agreement — Signature Page

DALLAS 1573842

 

 

	 	 	 	 	 	 	 
	 	 	FLEET NATIONAL BANK	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Name:
	 	 

	 	 
	 

	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 	 	 

Fourth Amendment to Second Amended and Restated Credit Agreement — Signature Page

DALLAS 1573842

 

 

	 	 	 	 	 	 	 
	 	 	FORTIS CAPITAL CORP.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Name:
	 	 

	 	 
	 

	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 	 	 

Fourth Amendment to Second Amended and Restated Credit Agreement — Signature Page

DALLAS 1573842

 

 

	 	 	 	 	 	 	 
	 	 	NATEXIS BANQUES POPULAIRES	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Name:
	 	 

	 	 
	 

	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 	 	 

Fourth Amendment to Second Amended and Restated Credit Agreement — Signature Page

DALLAS 1573842

 

 

	 	 	 	 	 	 	 
	 	 	COMERICA BANK	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	Title:
	 	 

	 	 
	 

	 	 	 	 	 	 

Fourth Amendment to Second Amended and Restated Credit Agreement — Signature Page

DALLAS 1573842

 

 

	 	 	 	 	 	 	 
	 	 	HIBERNIA NATIONAL BANK	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Name:
	 	 

	 	 
	 

	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 	 	 

Fourth Amendment to Second Amended and Restated Credit Agreement — Signature Page

DALLAS 1573842

 

 

	 	 	 	 	 	 	 
	 	 	AMEGY BANK N.A. (f/k/a Southwest Bank of Texas N.A.)	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	Title:
	 	 

	 	 
	 

	 	 	 	 	 	 

Fourth Amendment to Second Amended and Restated Credit Agreement — Signature Page

DALLAS 1573842

 

 

	 	 	 	 	 	 	 
	 	 	HARRIS NESBITT FINANCING, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Name:
	 	 

	 	 
	 

	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 	 	 

Fourth Amendment to Second Amended and Restated Credit Agreement — Signature Page

DALLAS 1573842

 

 

	 	 	 	 	 	 	 
	 	 	KEY BANK	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Name:
	 	 

	 	 
	 

	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 	 	 

Fourth Amendment to Second Amended and Restated Credit Agreement — Signature Page

DALLAS 1573842

 

 

	 	 	 	 	 	 	 
	 	 	WACHOVIA BANK, NATIONAL ASSOCIATION	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Name:
	 	 

	 	 
	 

	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 	 	 

Fourth Amendment to Second Amended and Restated Credit Agreement — Signature Page

DALLAS 1573842

 

 

	 	 	 	 	 	 	 
	 	 	UNION BANK OF CALIFORNIA, N.A.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	Title:
	 	 

	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 	 	 

Fourth Amendment to Second Amended and Restated Credit Agreement — Signature Page

DALLAS 1573842

 

 

	 	 	 	 	 	 	 
	 	 	THE BANK OF NOVA SCOTIA	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Name:
	 	 

	 	 
	 

	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 	 	 

Fourth Amendment to Second Amended and Restated Credit Agreement — Signature Page

DALLAS 1573842

 

 

	 	 	 	 	 	 	 
	 	 	THE FROST NATIONAL BANK	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Name:
	 	 

	 	 
	 

	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 	 	 

Fourth Amendment to Second Amended and Restated Credit Agreement — Signature Page

DALLAS 1573842

 

 

CONSENT AND REAFFIRMATION

     The undersigned (each a “Guarantor”) hereby (i) acknowledges receipt of a copy of the
foregoing Fourth Amendment to Second Amended and Restated Credit Agreement (the “Fourth
Amendment”); (ii) consents to Borrower’s execution and delivery thereof; (iii) agrees to be
bound thereby; (iv) affirms that nothing contained therein shall modify in any respect whatsoever
its guaranty of the obligations of the Borrower to Lenders pursuant to the terms of its Guaranty in
favor of Agent and the Lenders (the “Guaranty”) and (v) reaffirms that the Guaranty is and
shall continue to remain in full force and effect. Although Guarantor has been informed of the
matters set forth herein and has acknowledged and agreed to same, Guarantor understands that the
Lenders have no obligation to inform Guarantor of such matters in the future or to seek Guarantor’s
acknowledgment or agreement to future amendments or waivers, and nothing herein shall create such
duty.

     IN WITNESS WHEREOF, the undersigned has executed this Consent and Reaffirmation on and as of
the date of this Fourth Amendment.

	 	 	 	 	 	 	 
	 	 	GUARANTORS:	 	 
	 
	 	 	 	 	 	 
	 	 	RANGE ENERGY I, INC.

a Delaware corporation	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Name:
	 	 

Roger S. Manny
	 	 
	 

	 	Title:
	 	Senior Vice President	 	 
	 
	 	 	 	 	 	 
	 	 	RANGE HOLDCO, INC.

a Delaware corporation	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	Roger S. Manny	 	 
	 

	 	Title:
	 	Senior Vice President	 	 
	 
	 	 	 	 	 	 
	 	 	RANGE PRODUCTION COMPANY

a Delaware corporation	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	Roger S. Manny	 	 
	 

	 	Title:
	 	Senior Vice President	 	 

Fourth Amendment to Second Amended and Restated Credit Agreement — Consent and Reaffirmation

DALLAS 1573842

 

 

	 	 	 	 	 	 	 
	 	 	RANGE ENERGY VENTURES

CORPORATION, a Delaware corporation	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Name:
	 	 

Roger S. Manny
	 	 
	 

	 	Title:
	 	Senior Vice President	 	 
	 
	 	 	 	 	 	 
	 	 	GULFSTAR ENERGY, INC.

a Delaware corporation	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	Roger S. Manny	 	 
	 

	 	Title:
	 	Senior Vice President	 	 
	 
	 	 	 	 	 	 
	 	 	RANGE ENERGY FINANCE CORPORATION

a Delaware corporation	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	Roger S. Manny	 	 
	 

	 	Title:
	 	Senior Vice President	 	 

Fourth Amendment to Second Amended and Restated Credit Agreement — Consent and Reaffirmation

DALLAS 1573842

 

 

	 	 	 	 	 	 	 
	 	 	RANGE PRODUCTION I, L.P.

a Texas limited partnership	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	RANGE PRODUCTION COMPANY	 	 
	 

	 	 	 	Its general partner	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Name:
	 	 

Roger S. Manny
	 	 
	 

	 	Title:
	 	Senior Vice President	 	 
	 
	 	 	 	 	 	 
	 	 	RANGE RESOURCES, L.L.C.

a Oklahoma limited liability company	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	RANGE PRODUCTION COMPANY	 	 
	 

	 	 	 	Its member	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	Roger S. Manny	 	 
	 

	 	Title:
	 	Senior Vice President	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	RANGE HOLDCO, INC.	 	 
	 

	 	 	 	Its member	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	Roger S. Manny	 	 
	 

	 	Title:
	 	Senior Vice President	 	 

Fourth Amendment to Second Amended and Restated Credit Agreement — Consent and Reaffirmation

DALLAS 1573842exv10w28

 

Exhibit 10.28

THE PAN PACIFIC HOTEL SAN FRANCISCO

PURCHASE AND SALE AGREEMENT AND JOINT ESCROW INSTRUCTIONS

BETWEEN

W2001 PAC REALTY, L.L.C.,

a Delaware limited liability company,

AS SELLER

AND

ASHFORD HOSPITALITY LIMITED PARTNERSHIP,

a Delaware limited partnership,

AS PURCHASER

As of February 16, 2006

 

 

PURCHASE AND SALE AGREEMENT AND JOINT ESCROW INSTRUCTIONS

     THIS PURCHASE AND SALE AGREEMENT AND JOINT ESCROW INSTRUCTIONS (this “Agreement”) is
made as of February 16, 2006 (the “Effective Date”), by and between W2001 PAC REALTY,
L.L.C., a Delaware limited liability company (“Seller”), and ASHFORD HOSPITALITY LIMITED
PARTNERSHIP, a Delaware limited partnership (“Purchaser”).

W I T N E S S E T H:

     A. Seller is the owner of the Property (defined below). The Property is located in the County
of San Francisco, State of California.

     B. Seller desires to sell the Property and Purchaser desires to purchase the Property, on the
terms and conditions set forth in this Agreement.

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

ARTICLE I

PURCHASE AND SALE

	1.1	 	Agreement of Purchase and Sale. Subject to the terms and conditions hereinafter set
forth, Seller agrees to sell and convey and Purchaser agrees to purchase, all of Seller’s
right, title and interest in and to the following:

(a) Seller’s leasehold interest in the real property commonly known as 500 Post Street, San
Francisco, California, as more particularly described on Schedule 1.1(a)(i)
attached hereto, which leasehold interest is governed by that certain Indenture of Lease
described on Schedule 1.1(a)(ii) attached hereto (as defined thereon, the
“Ground Lease”), together with all of the right, title and interest of Seller
pertaining to such leased real property, including without limitation all appurtenant
rights, rights of way, easements, water or littoral rights, all rights to any minerals,
oil, gas and other hydrocarbon substances, or any portion thereof and Seller’s right, title
and interest in and to all streets, alleys, strips and gores abutting the real property
(the property described in this clause (a) of Section 1.1 being herein referred to
collectively as the “Land”);

(b) the buildings, structures, fixtures and other improvements on the Land, including
specifically, without limitation, that certain hotel commonly known as “The Pan Pacific
Hotel San Francisco” (the “Hotel”), including without limitation any and all hotel
rooms, meeting facilities, conference rooms, parking facilities,

2

 

restaurants, spa and pool facilities (the property described in this clause (b) of this
Section 1.1 being herein referred to collectively as the “Improvements”);

(c) all tangible personal property owned by Seller and located upon the Land or within the
Improvements and used solely in connection with the operation of the Land and Improvements,
including, without limitation, appliances, furniture, furnishings, equipment, carpeting,
draperies and curtains, tools and supplies, decorations, china, glassware, linens, silver,
utensils, all vehicles (if any), and other items of personal property (excluding cash and
deposit accounts) in all cases subject to (i) depletion, resupply, substitution,
replacement and disposition in the ordinary course of business and (ii) the provision of
subparagraph (g) below and the provisions of Section 4.4.7 regarding unopened
inventories, but specifically excluding all personal property listed on Schedule
1.1(c) attached hereto, if any (the “Excluded Personal Property”) (the included
property set forth in this Section 1.1(c) being herein referred to collectively as
the “Personal Property”);

(d) subject to Section 4.4 below, all contracts or reservations for the use of
guest rooms, ballroom and banquet facilities, conference facilities, meeting rooms or other
facilities of the Hotel or located within the Improvements (“Bookings”);

(e) all assignable contracts and agreements (collectively, the “Service Contracts”)
relating to the upkeep, repair, maintenance or operation of the Land, the Improvements or
the Personal Property or other property used in connection with the operation of the Hotel
which are (i) listed on Schedule 1.1(e)-1 attached hereto but excluding the
Management Agreement (defined below) and any Service Contracts that are terminated on or
before Closing pursuant to the terms of this Agreement, (ii) listed on Schedule
1.1(e)-2 (the “Equipment Leases”) and (iii) entered into after the Effective
Date, which Seller is permitted to enter into under the terms of this Agreement.

(f) (i) all assignable existing warranties and guaranties (expressed or implied) issued to
Seller in connection with the Improvements or the Personal Property; (ii) all transferable
names, marks, logos and designs, used in the operation or ownership of the Land, the
Improvements or the Personal Property or any part thereof, if any, but specifically
excluding the name “Pan Pacific” and all derivatives and cognates thereof and any logos or
other identification or trade marks relating thereto; (iii) all transferable licenses,
franchises and permits owned by Seller and used in or relating to the ownership, occupancy
or operation of the Land, the Improvements or the Personal Property or any part thereof,
subject to Purchaser’s compliance with any limitations or restrictions on transfer or
assignment of any computer-related materials or software which are contained in any license
or similar agreement; (iv) all assignable telephone numbers, TWX numbers, post office
boxes, signage rights, utility and development rights and privileges, general intangibles,
business records, site plans, surveys,

3

 

environmental and other physical reports, plans and specifications pertaining to the Land
and the Personal Property; and (v) all assignable websites and domains used exclusively for
the Hotel, including access to the FTP files of the websites to obtain website information
and content pertaining to the Hotel (the property described in this clause (f) of this
Section 1.1 being herein referred to collectively as the “Intangibles”);

(g) subject to Section 4.4.7 below, (i) all food and beverages (subject to any
legal restrictions pertaining to the sale or transfer of alcoholic beverages); (ii)
inventory held for sale to Hotel guests and others in the ordinary course of business
including all opened and unopened retail inventory in any area at the Hotel conducting
retail sales (collectively, “Retail Inventory”); (iii) engineering, maintenance and
housekeeping supplies, including soap and cleaning materials, fuel and materials;
stationery and printing items and supplies; and (iv) other supplies of all kinds, whether
used, unused or held in reserve storage for future use in connection with the maintenance
and operation of the Land, the Improvements or the Personal Property, in each case wherever
located, together with any additions thereto prior to Closing (defined below) and subject
to depletion, resupply, substitution, replacement and disposition in the ordinary course of
business (all of the foregoing being referred to herein as the “Consumable
Inventory” and, to the extent contained in unopened boxes, bottles, jars or containers
of any type as of the Closing Date, shall collectively be referred to, together with
unopened packages of china, glass, silver and linens, as the “Unopened Inventory”);

(h) all leases for the lease and occupancy of space at the Hotel (collectively, the
“Leases”) listed and described on Schedule 1.1(h) attached hereto and made
a part hereof, including any deposits relating to such Leases held by Seller and not
applied to the tenant’s obligations as of the Closing Date. For purposes of this
Agreement, “Leases” do not include Bookings;

(i) all accounts receivable of the Hotel and all related operations which are outstanding
as of the Closing Date for not more than ninety (90) days (collectively, the
“Receivables”) (with such receivables to be purchased by Purchaser at Closing for
an amount equal to 100% of the amount of those accounts receivable as set forth on the
Hotel’s most current balance sheet and are not included in the Purchase Price) (and Seller
shall retain ownership of all receivables which are outstanding for more than ninety (90)
days as of the Closing Date);

(j) subject to Section 4.4.9 hereof, Seller’s interest in the funds contained in
“house banks” for the Hotel as of the Cut-Off Time (defined in Section 4.4.10
below), whether held in the name of Seller, the Hotel or Manager and owned by Seller
(collectively, the “House Bank Funds”). Purchaser expressly acknowledges

4

 

and agrees that the Property to be transferred to Purchaser pursuant to this Agreement does
not include any reserve or other accounts created or maintained by Seller or Manager in
connection with the ownership or operation of the Hotel; and

(k) files and records (including but not limited to all files and records relating to the
Hotel and the development, operation, management, maintenance, repair, marketing and
promotion thereof, such as financial records and statements, maintenance records, building
plans, specifications and drawings, group and individual guest history records and all
reservation and booking records for rooms and meeting space, regardless of whether such
files and records are stored in paper form, on computer hard drive, computer disk, CD Rom,
DVD or other medium).

	1.2	 	Property Defined.

(a) The Land and the Improvements are sometimes collectively referred to herein as the
“Real Property” and the Real Property, the Personal Property, the Bookings, the
Service Contracts, the Intangibles, the Consumable Inventory, the Leases, the Receivables
and the House Bank Funds are hereinafter sometimes referred to collectively as the
“Property”; provided that, the Purchase Price does not include, and shall be
adjusted with respect to, the Receivables, the House Bank Funds, the Unopened Inventory and
the other adjustment items described in Section 4.4 below.

(b) Notwithstanding anything to the contrary in Section 1.1 or Section
1.2(a) above, the following items are expressly excluded from the Property:

(i) All cash on hand or on deposit in any operating account or other account or
reserve, except for security deposits held by Seller as landlord with respect to
any Lease and the House Bank Funds which are to be transferred at Closing subject
to the terms of this Agreement;

(ii) The Excluded Personal Property; and

(iii) Any tangible or intangible property (including, without limitations,
fixtures, personal property or intellectual property) owned by (A) the supplier,
vendor, licensor, lessor or other party under any Service Contracts, (B) the tenant
under any Leases, (C) Manager, (D) any employees, (E) any guests or customers of
the Hotel, or (F) any other third party.

	1.3	 	Permitted Exceptions. The Property shall be conveyed subject to all matters which
are, or are deemed to be, Permitted Exceptions pursuant to Article II hereof (collectively,
the “Permitted Exceptions”).

5

 

	1.4	 	Purchase Price. Seller is to sell and Purchaser is to purchase the Property for a
total of NINETY-FIVE MILLION AND NO/100 DOLLARS ($95,000,000) (the “Purchase Price”).

	1.5	 	Payment of Purchase Price.

(a) On the scheduled Closing Date (but in no event later than the Outside Closing Date
(defined below), Purchaser shall deliver to Escrow Agent (defined below) by wire transfer
an amount equal to the Purchase Price, as increased or decreased by prorations and
adjustments as herein provided, less the Earnest Money (as such term is defined below)
previously delivered to Escrow Agent.

(b) The Purchase Price, as increased or decreased by prorations and adjustments as herein
provided, shall be payable in full at Closing in cash by wire transfer of immediately
available federal funds to a bank account designated by Seller in writing to Purchaser and
Escrow Agent prior to the Closing.

	1.6	 	Earnest Money.

(a) Within two (2) business days following the full execution of this Agreement by Seller
and Purchaser, Purchaser shall deposit with Chicago Title Insurance Company (“Escrow
Agent”) having its office at 700 South Flower, Suite 3305, Los Angeles, CA 90017,
Attention: Marley Harrill, the sum of FOUR MILLION AND NO/100 DOLLARS ($4,000,000) (the
“Earnest Money”) in good funds, either by certified bank or cashier’s check or by
federal wire transfer. The full amount of the Earnest Money is deemed earned by Seller
when delivered pursuant hereto by Purchaser and is fully non-refundable to Purchaser except
in the event (A) of the Ground Lessor’s exercise of the right of first refusal set forth in
Section 3.4, if applicable, or (B) that this Agreement is timely terminated as a
result of Purchaser’s election to terminate strictly in accordance with and pursuant to
Section 2.3(b), Section 4.6, Section 4.8, Section 6.2, or
Section 7.2 below, in which case the full amount of the Earnest Money shall be
refunded to Purchaser within two (2) business days after receipt of the notice of exercise
of such right or notice of such termination.

(b) [Intentionally Omitted].

(c) Escrow Agent shall hold the Earnest Money in an interest-bearing account in accordance
with the terms and conditions of this Agreement. All interest accruing on such sums shall
become a part of the Earnest Money and shall be distributed as Earnest Money in accordance
with the terms of this Agreement. Notwithstanding any provision of this Agreement to the
contrary, in no event shall Seller have any responsibility or liability to Purchaser in
connection with the accrual or payment of interest on any portion of the Earnest Money.

6

 

(d) Time is of the essence for the delivery of Earnest Money under this Agreement and the
failure of Purchaser to timely deliver any portion of the same shall be a material default,
and shall entitle Seller, at Seller’s sole option, to terminate this Agreement immediately
and to pursue all remedies available to Seller under this Agreement and applicable law.

	1.7	 	Escrow Instructions. The terms and conditions set forth in this Agreement shall
constitute both an agreement between Seller and Purchaser and escrow instructions for Escrow
Agent. Seller and Purchaser shall promptly execute and deliver to Escrow Agent any separate
or additional escrow instructions requested by Escrow Agent that are consistent with the terms
of this Agreement. Any separate or additional instructions shall not modify or amend this
Agreement unless expressly set forth by the mutual consent of Seller and Purchaser and to the
extent of any conflict between this Agreement and any such separate/additional instructions,
the provisions of this Agreement shall control.

	1.8	 	Management Agreement. Purchaser acknowledges that (i) the Hotel is being operated
and managed by Pan Pacific Hotels and Resorts America Inc., a California corporation (the
“Manager”) pursuant to that certain Management Agreement dated as of May 18, 2003, by
and between Seller and Manager, as amended by that certain First Amendment to Management
Agreement dated as of June 25, 2003 (collectively, as amended, the “Management
Agreement”), and (ii) the Management Agreement will be terminated by Seller at Closing, at
Seller’s sole cost and expense.

	1.9	 	Assumed Liabilities. At Closing, to the extent and only to the extent either (a)
arising or accruing after the Closing or (b) Purchaser receives a credit to the Purchase Price
with respect to such Liabilities (as defined below) at Closing, Purchaser shall assume all
liability, obligation, damage, loss, diminution in value, cost or expense of any kind or
nature whatsoever, whether accrued or unaccrued, actual or contingent, known or unknown,
foreseen or unforeseen (collectively, “Liabilities”) arising from, relating to, or in
connection with the Property or the Hotel, including, without limitation, all Liabilities with
respect to the condition of the Property (including, without limitation, the design,
construction, engineering, maintenance and repair or environmental condition of the Property
(collectively, the “Assumed Obligations”), but subject to Seller’s express
representations and warranties in Section 5.1). In addition, at Closing Purchaser
shall assume all obligations to pay for, and no proration shall be made or credit given for,
any Consumable Inventory ordered by Seller or Manager in the ordinary course of business, but
which has not been delivered to the Hotel or paid for as of the Closing Date. Seller and
Purchaser agree that Purchaser is not assuming (and Seller shall remain responsible for) any
other Liabilities arising or accruing during the period prior to the Effective Date arising
from, relating to, or in connection

7

 

	 	 	with the Property or this Hotel, other than the Assumed Obligations. The parties’ rights
and obligations under this Section 1.9 shall survive the Closing.

ARTICLE II

TITLE AND SURVEY

	2.1	 	Title Report. Seller has obtained and delivered to Purchaser, a title report dated
February 6, 2006 (Order No. 06-36902134-MB) (the “Title Report”) covering the Land and
the Improvements from Chicago Title Company (the “Title Company”) (to be coordinated
with both Seller and Purchaser’s title representatives) and, promptly following execution of
this Agreement, shall deliver a copy of each document referenced in the Title Report as an
exception to title to the Real Property. Purchaser shall deliver to Seller, within five (5)
days after receipt by Purchaser, a copy of any updates (each a “Title Update”) to the
Title Report.

	2.2	 	Survey. Seller has obtained and delivered to Purchaser and the Title Company, at
Purchaser’s expense, an ALTA survey of the Real Property prepared by Martin M. Ron Associates
dated October 23, 2002 (Job No. S-5161) (the “Survey”). Purchaser may cause a
licensed surveyor to update the Survey or prepare a new ALTA survey of the Real Property
(“Updated Survey”), which Updated Survey shall be prepared at Purchaser’s expense.

	2.3	 	Title and Survey Updates.

(a) Except for Monetary Encumbrances (defined below), Purchaser has approved all matters
disclosed by the Title Report and the Survey and all title exceptions and survey matters so
disclosed shall constitute “Permitted Exceptions”.

(b) Purchaser shall have five (5) days after receipt of a Title Update, if any, or Updated
Survey to notify Seller, in writing, of such objections as Purchaser may have to anything
contained in such Title Update or the Updated Survey. In the event Purchaser shall notify
Seller, in writing, of objections to title or to matters shown on a Title Update or the
Updated Survey, Seller shall have the right, but not the obligation, to cure such
objections. Within five (5) days after receipt of Purchaser’s notice of objections, Seller
shall notify Purchaser in writing whether Seller elects to attempt to cure any or all of
such objections. If Seller elects to attempt to cure, Seller shall have the right to
attempt to remove, satisfy or cure the same and for this purpose Seller shall, at Seller’s
election, be entitled to a reasonable adjournment of the Closing if additional time is
required, but in no event shall the adjournment exceed sixty (60) days after the Outside
Closing Date. If Seller elects not to cure any objections specified in Purchaser’s notice,
or if Seller is unable to effect a cure of those objections which it elected to cure prior
to the Closing (or any date to which the Closing has been adjourned) and so notifies
Purchaser in writing, or if Seller fails to respond to Purchaser’s notice within said

8

 

ten (10) day period, Purchaser shall have the following options: (i) to accept a conveyance
of the Property subject to the Permitted Exceptions and any matter objected to by Purchaser
which Seller is unwilling or unable to cure (each of which shall also be deemed to be
Permitted Exceptions), and without reduction of the Purchase Price; or (ii) only if the
title exception is materially adverse to the ownership or operation of the Real Property,
to terminate this Agreement by sending written notice thereof to Seller, and upon delivery
of such notice of termination, this Agreement shall terminate and the Earnest Money shall
be returned to Purchaser, and thereafter neither party hereto shall have any further
rights, obligations or liabilities hereunder except to the extent that any right,
obligation or liability set forth herein expressly survives termination of this Agreement.
If Seller notifies Purchaser that Seller does not intend to attempt to cure any title
objection or fails to respond to Purchaser’s notice within said ten (10) day period; or if,
having commenced attempts to cure any objection, Seller later notifies Purchaser in writing
that Seller will be unable to effect a cure thereof; Purchaser shall, within five (5) days
after such notice has been given, notify Seller in writing whether Purchaser shall elect to
accept the conveyance under clause (i) or to terminate this Agreement under clause (ii).
Purchaser’s failure to notify Seller of termination of this Agreement within such 5-day
period shall be deemed to be an irrevocable election under clause (i) to accept conveyance
of the Property. Notwithstanding any provision of this Agreement to the contrary, in no
event shall Seller have any obligation to cure any title matter objected to by Purchaser;
provided, however, if any of the objections (a) consist of delinquent taxes, mortgages,
deeds of trust, security agreements, construction or mechanics’ liens, tax liens or other
liens or charges in a fixed sum or capable of computation as a fixed sum and (b) were
caused, assumed or created by Seller (collectively, “Monetary Encumbrances”), then,
to that extent, Seller shall be obligated to pay and discharge (or cause the Title Company
to insure over such objections) any such objections and Escrow Agent is authorized to pay
and discharge at Closing such objections.

	2.4	 	Conveyance of Title. At Closing, Seller shall convey and transfer to Purchaser its
leasehold interest in the Land and fee title to the Improvements subject to the Permitted
Exceptions. Notwithstanding anything contained herein to the contrary, the Real Property
shall be conveyed subject to the following matters, all of which shall be deemed to be
Permitted Exceptions:

(a) the lien of all ad valorem real estate taxes and assessments not yet due and payable as
of the Closing Date, subject to adjustment as herein provided;

(b) local, state and federal laws, ordinances or governmental regulations, including but
not limited to, building and zoning laws, ordinances and regulations, now or hereafter in
effect relating to the Real Property;

9

 

(c) items appearing of record or shown on the Survey and, in either case, not objected to
by Purchaser or waived or deemed waived by Purchaser in accordance with Section 2.3
hereof;

(d) the rights and interest of Ground Lessor (as defined below) under the Ground Lease;

(e) the rights of Hotel guests which occupy the Hotel or have a reservation for rooms, food
and beverages, meetings and other customary Hotel uses relating to periods subsequent to
the Closing Date;

(f) the 0.28 feet gap between the two parcels of the Property as disclosed on the Survey,
if any such gap exists; and

(g) the rights of the tenants under the Leases.

	2.5	 	Title Policy. At Closing, Seller and Purchaser shall request that Title Company
issue an ALTA owner’s title insurance policy Form B 1970 (“Title Policy”) to Purchaser
in accordance with the Title Report, insuring Purchaser’s leasehold interest in and to the
Real Property as of the Closing Date (with appropriate gap coverage to date of recordation, if
applicable), subject only to the Permitted Exceptions. Purchaser may request the deletion of
standard exceptions and issuance of endorsements to the Title Policy as may required by
Purchaser, at Purchaser’s expense, but deletion of such matters and issuance of such
endorsements (except with respect to Seller’s delivery of an owner’s affidavit in the form
attached hereto as Exhibit J hereto, which delivery is an obligation of Seller
hereunder) (the “Owner’s Affidavit”), shall not be a condition to Purchaser’s
obligation to purchase the Property under this Agreement.

ARTICLE III

INSPECTION

	3.1	 	Right of Inspection. Purchaser acknowledges that it (a) has completed its due
diligence review of the Property, (b) is satisfied with such review in all respects, and (c)
has no right to terminate this Agreement (or obtain a refund of the Earnest Money) in
connection with any further diligence review or inspection. Notwithstanding the foregoing,
beginning on the Effective Date, Purchaser shall, subject to the rights of the Manager under
the Management Agreement, guests of the Hotel and the tenants under the Leases, have the right
to make a physical inspection of the Real Property and to examine at such place or places at
the Hotel or elsewhere as the same may be located, any operating files maintained by or for
the benefit of Seller in connection with the leasing, operation, current maintenance and/or
management of the Property (“Property Information”), including, without limitation,
the Leases, the Service Contracts, insurance

10

 

	 	 	policies, bills, invoices, receipts and other general records relating to the income and
expenses of the Hotel, correspondence, surveys, plans and specifications, warranties for
services and materials provided to the Hotel, environmental audits and similar materials
and any other documents relating to the Property in Seller’s or Manager’s possession or
control, but excluding materials not directly related to the current maintenance and/or
management of the Property such as, without limitation, Seller’s financial projections,
forecasts, budgets, appraisals, accounting and tax records, internal memoranda,
correspondence and reports and similar proprietary, elective or confidential information.
Purchaser shall keep all Property Information strictly confidential, provided that
Purchaser may deliver copies of Property Information to its attorneys, accountants and
other advisors in connection with the acquisition of the Property and to current and
prospective lenders and partners provided that such parties agree to maintain the
confidentiality of such Property Information. Purchaser understands and agrees that any
on-site inspections of the Property shall be conducted upon at least twenty-four (24)
hours’ prior written notice to Seller. Seller may have its respective representatives
attend any such inspections. Such physical inspection shall not disturb Hotel guests or
tenants under the Leases nor unreasonably interfere with the use of the Property by Seller
or Manager. Such physical inspection shall not be invasive in any respect (unless
Purchaser obtains Seller’s prior written consent, which shall not be unreasonably
withheld), and in any event shall be conducted in accordance with standards customarily
employed in the industry and in compliance with all governmental laws, rules and
regulations. Following each entry by Purchaser with respect to inspections and/or tests on
the Real Property, Purchaser shall restore the Property to a condition which is as near to
its original condition as existed prior to any such inspections and/or tests, at
Purchaser’s sole cost and expense. Seller shall reasonably cooperate with Purchaser in its
due diligence but shall not be obligated to incur any liability or expense in connection
therewith. Purchaser shall not disrupt Seller’s or Manager’s or any tenant’s or guest’s
activities on the Real Property and shall not contact Manager, any of its employees, or any
other employees working at the Hotel, any guests of the Property, any party to an Operating
Agreement, any tenants under the Leases or any governmental authority without (a) providing
reasonable advance notice in writing to Seller describing the timing, nature, subject and
means of any desired communication, (b) in each instance obtaining Seller’s prior written
consent, and (iii) irrespective of whether Purchaser delivers such notice, providing Seller
with the option to either attend or participate in any meetings, conversations or
communications between Purchaser and such party or expressly waiving its right to do so in
writing and Purchaser shall not communicate in any manner with any such party without
satisfying the foregoing. Purchaser agrees to indemnify against, defend, protect and hold
Seller harmless from and against any claim for liabilities, losses, costs, expenses
(including reasonable attorneys’ fees actually incurred), damages or injuries arising out
of or resulting from or in connection with the inspection of the Property by Purchaser

11

 

or its agents, employees, representatives, consultants or contractors and notwithstanding
anything to the contrary in this Agreement, such obligation to indemnify, defend, protect
and hold harmless Seller shall survive Closing or any termination of this Agreement. All
inspections shall occur at reasonable times agreed upon by Seller and Purchaser. Purchaser
agrees (i) that prior to entering the Property to conduct any inspection, Purchaser shall
obtain and maintain, and shall cause each of its contractors and agents to maintain (and
shall deliver evidence satisfactory to Seller thereof), at no cost or expense to Seller,
commercial general liability insurance from an insurer reasonably acceptable to Seller in
the amount of One Million Dollars ($1,000,000) with combined single limit for personal
injury or property damage per occurrence, such policies to name Seller as an additional
insured party, which insurance shall provide coverage against any claim for personal injury
or property damage caused by Purchaser or its agents, representatives or consultants in
connection with any such tests and investigations, and (ii) to keep the Property free from
all liens and encumbrances. Purchaser’s insurance may not be canceled or amended except
upon thirty (30) days’ prior written notice to Seller.

	3.2	 	Seller Due Diligence Materials. PURCHASER ACKNOWLEDGES THAT INFORMATION RELATED TO
THE PROPERTY CONTAINED IN THE SECURE WEBSITE (THE “E-ROOM”) TO WHICH PURCHASER HAS
PREVIOUSLY BEEN GRANTED ACCESS HAS BEEN MADE AVAILABLE TO PURCHASER IN THE E-ROOM BY SELLER.
BY EXECUTING THIS AGREEMENT, PURCHASER ACKNOWLEDGES ITS RECEIPT THEREOF OR THE AVAILABILITY OF
IT THEREOF AND THAT (1) PURCHASER HAS RECEIVED COPIES OF THE ENVIRONMENTAL, ENGINEERING, SOILS
AND OTHER REPORTS REGARDING THE CONDITION OF THE PROPERTY (COLLECTIVELY, THE
“REPORTS”) LISTED ON SCHEDULE 3.2 ATTACHED HERETO, (2) IF SELLER DELIVERS ANY
ADDITIONAL REPORTS OR OTHER DOCUMENTS TO PURCHASER, PURCHASER WILL ACKNOWLEDGE IN WRITING THAT
IT HAS RECEIVED SUCH REPORTS OR OTHER DOCUMENTS PROMPTLY UPON RECEIPT THEREOF, AND (3) ANY
REPORTS OR OTHER DOCUMENTS DELIVERED OR TO BE DELIVERED BY SELLER OR ITS AGENTS OR CONSULTANTS
TO PURCHASER ARE BEING MADE AVAILABLE SOLELY AS AN ACCOMMODATION TO PURCHASER AND WITHOUT ANY
REPRESENTATION OR WARRANTY OF SELLER AS TO THEIR ACCURACY OR COMPLETENESS OF FACTS OR OPINIONS
SET FORTH THEREIN EXCEPT AS EXPRESSLY SET FORTH IN SECTION 5.1 AND THAT ANY RELIANCE BY
PURCHASER ON SUCH REPORTS OR OTHER DOCUMENTS IN CONNECTION WITH THE PURCHASE OF THE PROPERTY
IS UNDERTAKEN AT PURCHASER’S SOLE RISK. PURCHASER AGREES THAT SELLER SHALL HAVE NO LIABILITY
OR OBLIGATION WHATSOEVER FOR ANY INACCURACY IN OR OMISSION

12

 

FROM THE OFFERING MATERIALS PREPARED IN
CONNECTION WITH THE SALE OF THE PROPERTY OR ANY
REPORT OR OTHER DOCUMENTS MADE AVAILABLE TO
PURCHASER OR ITS REPRESENTATIVES SUBJECT TO
SELLER’S REPRESENTATIONS AND WARRANTIES SET FORTH
IN SECTION 5.1. PURCHASER HAS CONDUCTED ITS OWN
INVESTIGATION OF THE CONDITION OF THE PROPERTY TO
THE EXTENT PURCHASER DEEMS SUCH AN INVESTIGATION
TO BE NECESSARY OR APPROPRIATE. For purposes of
this Agreement, the term “Seller Due Diligence
Materials” shall mean (i) the Reports, the
Property Information and all other documents and
materials provided or otherwise made available by
Seller to Purchaser pursuant to Section 3.1 and
the other provisions of this Agreement or
otherwise, together with any copies or
reproductions of such documents or materials, or
any summaries, abstracts, compilations, or other
analyses made by Purchaser based on the
information in such documents or materials, and
(ii) all information set forth in this Agreement
and the exhibits and schedules attached hereto
and hereby made a part hereof.

3.3 [Intentionally Deleted.]

	3.4	 	Olympic Club Right of First Refusal. Seller and Purchaser acknowledge that the
Closing of this transaction, and the respective rights and obligations of the parties relating
to the consummation of the purchase of the Property by Purchaser, may be subject and
subordinate to the rights and interests of The Olympic Club, a California nonprofit
corporation (“Ground Lessor”), under the right of first refusal provisions set forth
in Section 9.3. of the Ground Lease. In the event that Seller is unable to obtain Ground
Lessor’s execution of the Fourth Amendment to Lease (as defined below) by such time, Seller
shall deliver written notice to Ground Lessor of the potential sale of the Property under this
Agreement within two (2) business days following the complete execution and delivery of this
Agreement by Seller and Purchaser. Seller has delivered notice of its intent to sell the
Property in a written notice to Ground Lessor dated December 2, 2005. Seller believes that
the period in which the Ground Lessor could exercise its right of first refusal period has
lapsed and Ground Lessor’s rights have been deemed waived pursuant to Section 9.3 of the
Ground Lease, but does not make any representations or warranties in regard to any aspect of
Ground Lessor’s right of first refusal.

ARTICLE IV

CLOSING

	4.1	 	Time and Place. Subject to the provisions of Sections 4.6 and 4.7
below, the consummation of the transaction contemplated hereby (“Closing”), as
evidenced by the payment and release of the Purchase Price to Seller, shall occur on or

13

 

before 12:00 p.m. (local time at the Real Property) April 4, 2006 (“Outside Closing
Date”) (with the actual date of Closing being referred to herein as the “Closing
Date”). The Closing shall occur through an escrow administered by Escrow Agent with the
Purchase Price and all documents (unless otherwise mutually agreed) shall be deposited with
the Escrow Agent as escrowee. If requested by Seller, a pre-closing shall be held one (1)
business day preceding the scheduled Closing Date at the offices of Paul, Hastings,
Janofsky & Walker LLP, 515 South Flower Street, 25th Floor, Los Angeles, California 90071.
At Closing, Seller and Purchaser shall perform the obligations set forth in, respectively,
Section 4.2 and Section 4.3, the performance of which obligations shall be
concurrent conditions. Seller and Purchaser acknowledge that, if a “special” recording is
not available, the Closing shall occur to pursuant to a “gap closing” whereby the
Assignment of Ground Lease (defined below) is recorded after the Closing Date.

	4.2	 	Seller’s Closing Obligations and Deliveries. At Closing, Seller shall through Escrow
Agent make the following deliveries and take the following actions (with each item to be
delivered to Escrow Agent not later than one (1) business day prior to the scheduled Closing
Date or, if applicable, at the pre-closing described in Section 4.1 above):

(a) Execute and deliver to Purchaser two (2) original counterparts of an assignment of
Seller’s interest in the Ground Lease subject to the Permitted Exceptions (the
“Assignment of Ground Lease”) in the form attached hereto as Exhibit A;

(b) Execute and deliver to Purchaser one (1) original grant deed in the form attached
hereto as Exhibit B and made part hereof, conveying fee title in and to the
Improvements subject to the Permitted Exceptions, together with any required real estate
transfer tax declarations or any other similar documentation required to evidence the
payment of any tax imposed by the State of California, the County of San Francisco or the
City of San Francisco on the transaction contemplated hereby;

(c) Execute and deliver to Purchaser two (2) original counterparts of a bill of sale in the
form attached hereto as Exhibit C and made a part hereof conveying the Personal
Property and Consumable Inventory without warranty of title or use and without warranty,
expressed or implied, as to merchantability and fitness for any purpose but subject to the
representations and warranties of Seller expressly set forth in Section 5.1 of this
Agreement;

(d) Execute and deliver to Purchaser two (2) original counterparts of an assignment of
Seller’s interest in the Service Contracts, the Bookings and the other Intangibles (in each
case to the extent assignable) (“Assignment of Contracts”) in the form attached
hereto as Exhibit D and made a part hereof; 

14

 

(e) Execute and deliver to Purchaser two (2) original counterparts of an assignment of
Seller’s interest in the Leases in the form attached hereto as Exhibit E and made a
part hereof;

(f) Deliver to Purchaser a certificate, dated as of the Closing Date and executed on behalf
of Seller by a duly authorized officer thereof, stating that the representations and
warranties of Seller contained in this Agreement are true and correct in all material
respects as of the Closing Date (with appropriate modifications of those representations
and warranties made in Section 5.1 hereof to reflect any changes therein including
without limitation any changes resulting from actions under Section 5.4 hereof) or
identifying any representation or warranty which is not, or no longer is, true and correct
and explaining the state of facts giving rise to the change. In no event shall Seller be
liable to Purchaser for, or be deemed to be in default hereunder by reason of, any breach
of representation or warranty which results from any change that (i) occurs between the
Effective Date and the Closing Date and (ii) is permitted under the terms of this Agreement
or is beyond the reasonable control of Seller to prevent; provided, however, any of the
foregoing (other than those that are permitted under the terms of this Agreement) shall, if
materially adverse to Purchaser, constitute the non-fulfillment of the condition set forth
in Section 4.6(a). If, despite changes or other matters described in such
certificate, the Closing occurs, Seller’s representations and warranties set forth in this
Agreement shall be deemed to have been modified by all statements made in such certificate;

(g) Deliver to Purchaser and the Title Company such evidence as the Title Company may
reasonably require as to the authority of the person or persons executing documents on
behalf of Seller;

(h) Deliver to Purchaser an affidavit duly executed by Seller stating (i) that Seller is
not a “foreign person” as defined in the Federal Foreign Investment in Real Property Tax
Act of 1980 and the 1984 Tax Reform Act, and (ii) satisfying the requirements of California
Form 593-W under California law disclosure requirements, in the form attached hereto as
Exhibit F and made a part hereof;

(i) If not already delivered to Purchaser, deliver to Purchaser, originals of the Leases,
the Service Contracts and the licenses and permits, if any, in the possession of Seller or
Seller’s agents, together with such leasing and property files and records which are
material in connection with the continued operation, leasing and maintenance of the
Property and any keys to security deposit boxes. For a period of seven (7) years after
Closing in case of Seller’s need in response to any legal requirement, a tax audit, tax
return preparation or litigation threatened or brought against Seller, Purchaser shall
allow Seller and its agents or representatives access, upon reasonable advance notice
(which notice shall identify the nature of the information sought by Seller), at all
reasonable times to

15

 

examine and make copies of any and all instruments, files and records, which right shall
survive the Closing;

(j) Deliver to the Escrow Agent an executed closing statement consistent with this
Agreement and in a customary form;

(k) Deliver two (2) original copies of the Designation Agreement (defined below);

(l) Deliver such additional documents as shall be reasonably required to consummate the
transaction expressly contemplated by this Agreement;

(m) Deliver to Manager a notice which has the effect of terminating the Management
Agreement and Manager’s management of the Hotel to be effective as of the Closing Date;

(n) Deliver the certificate(s)/registration of title for any vehicle owned by Seller and
used in connection with the Property;

(o) Deliver to Title Company the Owner’s Affidavit;

(p) Deliver written notice executed by Seller notifying all interested parties, including,
without limitation, all tenants under the Leases, that the Property has been conveyed to
Purchaser and directing all payments, inquiries and the like be forwarded to Purchaser at
the address to be provided by Purchaser; and

(q) Deliver to Purchaser possession and occupancy of the Property subject to the Permitted
Exceptions.

	4.3	 	Purchaser’s Closing Obligations and Deliveries. At Closing, Purchaser shall through
Escrow Agent make the following deliveries and take the following actions (with each item to
be delivered to Escrow Agent on the Closing Date as to the Purchase Price, and not later than
one (1) business day prior to the scheduled Closing Date or, if applicable, at the pre-closing
described in Section 4.1 above as to all the other items):

(a) Pay to the Escrow Agent the full amount of the Purchase Price, as increased or
decreased by prorations and adjustments as herein provided, in immediately available wire
transferred funds pursuant to Section 1.5 above, it being agreed that at Closing
the Earnest Money shall be applied towards payment of the Purchase Price;

(b) Join Seller in execution of (or deliver original executed counterparts of) the
instruments described in clauses (a), (d), (e), (j), (k), and (l) of Sections 4.2
above;

16

 

(c) Deliver to Seller a certificate, dated as of the Closing Date and executed on behalf of
Purchaser by a duly authorized officer thereof, stating that the representations and
warranties of Purchaser contained in this Agreement are true and correct in all material
respects as of the Closing Date;

(d) Deliver to Seller and Title Company such evidence as Title Company may reasonably
require as to the authority of the person or persons executing documents on behalf of
Purchaser; and

(e) Deliver such additional documents as shall be reasonably required to consummate the
transaction contemplated by this Agreement.

	4.4	 	Prorations, Credits and Other Adjustments. At Closing, Purchaser and Seller shall
prorate all items of income and expense which are customarily prorated between a purchaser and
seller for hotel properties comparable to the Hotel including, without limitation, the
prorations and other adjustments provided below, and the net amount consequently owing to
Seller or Purchaser shall be added to or subtracted from the proceeds of the Purchase Price
payable to Seller at Closing. Beginning as close to the anticipated Closing Date as
practicable, Seller shall, in consultation with Purchaser and with Purchaser’s reasonable
cooperation, cause to be prepared a prorations and credit statement (the “Preliminary
Statement”) which shall reflect all of the prorations, credits and other adjustments to
the Purchase Price at Closing required under this Section 4.4 or under any other
provision of this Agreement. As soon as Purchaser and Seller have agreed upon the Preliminary
Statement, they shall jointly deliver a mutually signed copy thereof to Escrow Agent. To the
extent Purchaser and Seller are unable to agree by Closing on any item on the Preliminary
Statement, Seller’s estimation of such item shall be used and such item shall be finally
resolved on the Final Statement (defined below) pursuant to Section 4.4.14 below.

     4.4.1 Proration of Taxes. All real estate ad valorem taxes,
general assessments and special assessments and all personal property ad
valorem taxes assessed against the Hotel (generically, “Taxes”) and payable
during the tax year commencing July 1, 2005 and ending June 30, 2006 shall be prorated
between Purchaser and Seller as of the Closing Date. Taxes for all subsequent tax years
shall be the responsibility of Purchaser. Seller retains the right to commence, continue
and settle any proceeding to contest any taxes for any taxable period which encompasses any
period prior to the date of the Closing, and shall be entitled to any refunds or abatements
of Taxes awarded in such proceedings.

     4.4.2 General Proration of Expenses.

(a) The following items of expense with respect to any portion or aspect of the
Hotel shall be prorated between Seller and Purchaser as of the Closing Date:

17

 

(i) All charges and expenses under any Service Contracts.

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

(iii) Prepaid expenses of the Hotel, excluding insurance and advertising
which incorporates the Pan Pacific name but including without limitation,
(1) amounts incurred to pay for natural gas held in storage pending use at
the Hotel and (2) the expense of all licenses and permits obtained in
connection with the operation of the Hotel.

(iv) All base, percentage or other rental payable under the Ground Lease
for the lease month and/or year in which the Closing occurs.

(v) All other Hotel operating expenses, other than employment expenses
(which are covered by Section 4.4.3 below).

4.4.3 Employment Expenses.

Seller shall pay to all Hotel Employees (as defined below), upon their termination
of employment by Seller at or prior to Closing, all salaries and employment
benefits for unused vacation, holiday, sick leave, and personal days that are
accrued prior to the Date of Closing, and Purchaser shall have no obligation to
such Hotel Employees with respect to such accrued salaries and benefits, even if
such employees are Rehired Employees (as defined in Section 5.8).
Purchaser shall pay the salaries and related benefits that are payable to any Hotel
Employees for work performed at the Hotel on the Date of Closing, whether prior to
or following the time of Closing, regardless of whether such persons are employees
of Seller or Purchaser.

4.4.4 Hotel Revenues.

(a) At Closing, Seller and Purchaser shall share equally all revenues from the
Hotel guest rooms and facilities occupied on the evening immediately preceding the
Closing Date, including any sales taxes, room taxes, occupancy taxes and other
taxes charged to guests in such rooms, all parking charges, sales from mini-bars,
in-room food and beverage, telephone, facsimile and data communications, in-room
movie, laundry,

18

 

and other service charges allocable to such rooms with respect to the evening
immediately preceding the Closing Date. All revenues from restaurants, lounges,
vending machines and other service operations conducted at the Property shall be
allocated based on whether the same accrued before or after the Cut-Off Time as
described in the preceding sentence, and Seller shall cause the Manager to
separately record sales occurring before and after the Cut-Off Time at the
Property. The foregoing amounts are referred to collectively as “Guest
Revenues”. Notwithstanding the foregoing, all revenues from any bars and
lounges at the Property shall be prorated based on the actual closing time for such
bar or lounge. For example, if such bar or lounge closes at 2 a.m. on the Closing
Date, Seller shall retain the revenues from such services and operations even
though such revenues were generated two (2) hours after the Cut-Off Time.

(b) Revenues from conferences, receptions, meetings, and other functions occurring
in any conference, banquet or meeting rooms in the Hotel, or in any adjacent
facilities owned or operated by Seller, including usage charges and related taxes,
food and beverage sales, valet parking charges, equipment rentals, and
telecommunications charges, shall be allocated between Seller and Purchaser, based
on when the function therein commenced, with (i) one-day functions commencing prior
to the Cut-Off Time being allocable to Seller, (ii) functions commencing after the
Cut-Off Time being allocable to Purchaser, and (iii) multi-day functions being
allocated between Seller and Purchaser according to when the event commences and is
scheduled to end. The foregoing amounts are referred to collectively as
“Conference Revenues.”

(c) At Closing, all Receivables not actually collected by Seller or Manager prior
to the Cut-Off Time shall be assigned to Purchaser and Seller shall receive a
proration credit in an amount equal to 100% of face value of such receivables as
set forth on Manager’s books including, without limitation, receivables accrued in
connection with hotel reservations, the use of guest rooms, banquet and meeting
room receivables (including any cancellation fees due to Seller in connection with
any of the foregoing) as reflected on the city ledger, guest ledger or any other
receivable ledger. Purchaser shall have no right to any adjustment to the
prorations with respect to the Receivables on or after Closing, for inability to
collect outstanding Receivables or otherwise and Seller shall retain all
Receivables which are outstanding more than ninety (90) days as of the Closing Date
(a “Delinquent Receivable”) and shall be permitted to take such action to
collect any Delinquent Receivables as Seller may determine in its reasonable
discretion. In the event that Purchaser or Manager receive any payments made in
connection with any

19

 

Delinquent Receivables, Purchaser shall pay (or cause Manager to pay) such amounts
to Seller within thirty (30) days of receipt.

(d) Any operating revenues not otherwise provided for in this Section 4.4,
shall be prorated between Purchaser and Seller as of Closing.

     4.4.5 Rent. Rent and other payments payable by tenants, licensees,
concessionaires, and other persons using or occupying the Real Property or any part thereof
under a Lease or otherwise, if any, for or in connection with such use or occupancy,
including, without limitation, fixed monthly rentals, additional rentals, percentage
rentals, escalation rentals, retroactive rentals, operating cost pass-throughs, common area
maintenance charges, HVAC charges, payments of taxes and insurance expenses,
promotional/marketing charges, construction receivables and other sums and charges payable
by the tenants under the Leases (collectively, “Rent”) shall be prorated as of the
Closing such that Seller will be entitled to Rent attributable to periods prior to the
Closing and Purchaser will be entitled to Rent attributable to periods from and after the
Closing, all as more particularly set forth below:

(a) All Rent, other than Percentage Rent (as defined below), owed under
the Leases for the month in which the Closing occurs (“Current
Rent”) shall be prorated as of the Closing Date; provided, however,
that Current Rent shall not include Rent for any tenant that is more than
thirty (30) days past due in the payment of fixed monthly Rent.

(b) All Rent other than Current Rent (“Rent Arrears”) shall not be
prorated at Closing. In the event that either Purchaser or Seller
receives Rent from a tenant after the Closing Date, such Rent shall be
applied in the following order of priority (after deduction of actual
out-of-pocket costs of collection paid by Purchaser to third parties): (a)
first to current rent due to Purchaser, (b) second to delinquent rent due
to Purchaser, and (c) thereafter to Rent Arrears due to Seller from such
tenant. Any sums owed to Seller pursuant to the foregoing shall be paid
by Purchaser within thirty (30) days following receipt by Purchaser.
Seller’s rights to Rent Arrears shall terminate as of the first
anniversary of the Closing Date. Purchaser shall pursue all Rent Arrears
in the ordinary course of business (but under no circumstances shall have
any liability to Seller for its failure to pursue such Rent Arrears) and
shall have the right to negotiate settlements with tenants who have Rent
Arrears as it may determine in good faith; provided that, at its sole cost
and expense (x) Seller shall have the unrestricted right to pursue
collection from any tenant not in possession of its space as of the

20

 

Closing Date in Seller’s sole discretion including, without limitation,
initiating and prosecuting a lawsuit against the applicable tenant, and
(y) in the event that after Closing Purchaser evicts or otherwise
terminates the possession of any tenant with Rent Arrears, if Purchaser
has neither released the tenant nor pursued eviction to judgment, Seller
shall have the unrestricted right to pursue collection from such tenant in
Seller’s sole discretion including, without limitation, initiating and
prosecuting a lawsuit against the applicable tenant. Should Seller take
the action permitted in either item (x) or (y), Purchaser shall be
relieved of and shall have no obligation to pursue the applicable Rent
Arrears.

(c) Percentage rent or overage rent (referred to herein as “Percentage
Rent”) under the Leases shall be prorated between Purchaser and Seller
on a Lease by Lease basis with Seller entitled to the portion of total
Percentage Rent paid under each Lease for the portion of the current Lease
Year (as defined below) in which the Closing occurs (the “Subject
Lease Year”) occurring prior to the Closing Date and Purchaser being
entitled to the balance of Percentage Rent for the remainder of the
Subject Lease Year, based on the monthly accruals of Percentage Rents
under the Leases for the period through the month in which the Closing
Date occurs, with an adjustment to be made post-closing to account for any
Percentage Rent attributable to the month in which the Closing Date
occurs. As used herein, the term “Lease Year” means the twelve
(12) month period (or, as to tenants for which the Closing occurs during a
partial Lease Year, such applicable shorter period) as to which annual
Percentage Rent is owed under each Lease.

     4.4.6 Hotel Payables. At Closing, Purchaser shall receive a proration credit
equal to the excess of (a) the aggregate estimated amount of all outstanding accounts
payable for the Hotel as of the Closing Date (“Hotel Payables”) in the Preliminary
Statement over (b) Purchaser’s prorated share of such Hotel Payables under Section
4.4.2, and Purchaser shall assume the obligation to satisfy all Hotel Payables. After
Closing, before paying any amount invoiced or otherwise claimed by a third party due with
respect to the Hotel operations prior to Closing which is not included on such schedule (or
is claimed in an amount larger than that shown on such schedule), Purchaser shall first
submit such invoice or claim to Seller. Unless Seller, within ten (10) days after
receiving such submission, objects to such invoice or claim (thereby making it a
“Seller Disputed Payable”), Purchaser may pay the same and take a credit for such
payment on the Final Statement. Notwithstanding the foregoing, upon Closing Purchaser
shall assume all obligations of Seller to pay for any (i) consumables or other items
ordered by

21

 

or for the benefit of Seller in the ordinary course of business but which are not yet
received as of the Closing Date, and (ii) items or services listed on a purchase order log
prepared by Manager, which list shall be updated by Manager immediately prior to Closing;
provided that, there shall not be any adjustment to the Purchase Price in connection with
Purchaser’s assumption of the liabilities described in clauses (i) and (ii) of this
sentence.

     4.4.7 Credit for Certain Inventories. As of the date immediately prior to the
Closing Date, Seller and Purchaser shall jointly conduct or cause the Manager to conduct an
inventory of all (a) Unopened Inventory, and (b) all Retail Inventory in the Hotel gift
shop, spa, fitness center or any other area at the Hotel conducting retail sales, and shall
deliver a written report thereon to Seller and Purchaser. Such report shall reflect the
cost of the Unopened Inventory and the Retail Inventory at the acquisition cost thereof.
On account of Purchaser’s purchase of the Unopened Inventory and the Retail Inventory,
Seller shall receive a credit at Closing in an amount equal to the total cost of the
Unopened Inventory and the Retail Inventory, as reflected in such report.

     4.4.8 Credit for Reservation Deposits. Purchaser shall receive a proration
credit equal to the aggregate amount of advance deposits that shall have been received by
Seller prior to the Cut-Off Time on account of reservations for use or occupancy of the
Property after the Cut-Off Time.

     4.4.9 Credit for Cash Banks. Seller shall receive a credit at Closing in an
amount equal to all House Bank Funds.

     4.4.10 Regarding Hotel Prorations Generally. Unless this Section 4.4
expressly provides otherwise: (A) all prorations hereunder with respect to the Hotel
shall be made as of 12:00:01 a.m., local time (for the Hotel) (“Cut-Off Time”) on
the Closing Date, (B) all prorations shall be made on an actual daily basis, and (C) for
purposes of such prorations, all items of revenue and expense with respect to the Hotel’s
operations shall be classified and determined in accordance with the Uniform System of
Accounts for the Lodging Industry, as reasonably modified by Manager for use at the Hotel
consistent with past practices and otherwise in accordance with generally accepted
accounting principles. Except as otherwise expressly provided herein, in any case in which
Purchaser receives a credit at Closing on account of any obligation of Seller hereunder,
Seller shall have no further liability for such obligation to the extent of the credit so
given, and Purchaser shall pay and discharge the same.

     4.4.11 Vouchers. Purchaser shall (a) honor all outstanding unexpired gift
certificates, coupons or other writings issued by Seller set forth in Schedule
4.4.11 attached hereto and incorporated herein by this reference that entitles the
holder or bearer thereof to a credit (whether in a specified dollar amount as for a
specified item, such as room night or meals) to be applied against the usual charge for

22

 

rooms, meals and/or goods and services at the Hotel (collectively, “Vouchers”)
and shall assume all liability, if any, for all outstanding Vouchers as of the Closing Date
regardless of any purported expiration, (b) receive a credit against the Purchase Price
payable at Closing as set forth in Schedule 4.4.11 attached hereto and incorporated
herein by this reference, as updated as of the Closing Date, but Purchaser shall not
receive a credit for any complimentary or discounted room nights or Hotel or spa goods or
services to the extent issued by either the sale office or the executive office, and (c)
indemnify, defend and hold Seller harmless from and against all claims, liabilities, costs
and expenses arising out of the Vouchers from and after the Closing Date.

     4.4.12 Utility and Other Deposits.

          (a) At Closing, Seller shall receive a credit for all refundable cash or other
deposits posted with utility companies serving the Property or any governmental agencies or
authorities or posted pursuant to any Operating Agreement, or, at Seller’s option, Seller
shall be entitled to receive and retain such refundable cash and deposits.

          (b) Purchaser shall be entitled to a credit for all unapplied and refundable security
and other deposits retained by Seller as of the Closing Date with respect to any Leases at
the Hotel.

     4.4.13 Final Statement; Post-Closing Adjustments. Except for prorations for
real estate taxes and other assessments, which shall be adjusted within fifteen (15)
business days of receipt of the tax bill for the tax year in which the Closing occurs,
Purchaser and Seller shall make a one-time post-Closing adjustment of any item of income
and expense subject to adjustment as provided above which was either incomplete or
incorrect (whether as a result of an error in calculation or a lack of complete and
accurate information) as of the Closing. Purchaser will prepare and deliver to Seller for
its review and approval a statement of prorations (the “Final Statement”) within
forty-five (45) days following the Closing Date, and the party in whose favor the original
incorrect adjustment or error was made (“Adjusting Party”) shall pay to the other
party (“Requesting Party”) the sum necessary to correct such prior incorrect
adjustment or error within ten (10) days after completion of the Final Statement.
Notwithstanding any provision of this Agreement to the contrary, all items required to be
adjusted pursuant to this Section 4.4 shall be adjusted within sixty (60) days of
Closing (except real estate taxes, which shall be re-adjusted within the period set forth
above), and such adjustment shall be final and no further adjustment to the prorations or
the Purchase Price shall be made.

     4.4.14 Resolution of Disputes. In the case of a dispute, the parties shall
attempt to resolve such dispute, but if for any reason such dispute is not resolved by the
date that is thirty (30) days after the delivery of the original notice of the

23

 

claimed adjustment by Purchaser or Seller, but not to exceed sixty (60) days after Closing,
then the parties shall submit such dispute to PricewaterhouseCoopers, LLC (“Outside
Accountants”), and the determination of the Outside Accountants, which shall be made
within a period of fifteen (15) days after such submittal by the parties, shall be
conclusive. The fees and expenses of the Outside Accountants shall be paid equally by
Purchaser and Seller. At such time as the amount of any adjustment or dispute shall be
determined (either by agreement or by determination of the Outside Accountants), any amount
that shall be payable by the Requesting Party to the Adjusting Party as a result of such
adjustment or determination shall be paid within ten (10) business days after the date on
which such agreement or determination shall have been made.

     4.4.15 Seller Tax Appeal. Purchaser acknowledges that Seller has a pending
appeal of the real property tax assessment for tax years related to the period of Seller’s
ownership of the Real Property, and that Seller may take related action which Seller deems
appropriate in connection therewith. Purchaser shall cooperate with Seller in connection
with such appeal (at Seller’s expense if requested by Seller) and collection of a refund of
real property taxes paid. Seller owns and holds (and shall retain following the Closing)
all right, title and interest in and to such appeal and refund, and all amounts payable in
connection therewith shall be paid directly to Seller by the applicable authorities. If
such refund or any part thereof is received by Purchaser, Purchaser shall promptly pay such
amount to Seller. Any refund received by Seller (or Purchaser in connection with any
appeal initiated by Seller) shall be distributed as follows (subject, however, to any
conflicting provisions of any Lease): first, to reimburse Seller for all costs incurred in
connection with the appeal; second, with respect to refunds payable to tenants of the Real
Property pursuant to the Leases, to such tenants in accordance with the terms of such
Leases; and third, to Seller to the extent such appeal covers the period prior to the
Closing Date, and to Purchaser to the extent such appeal covers the period as of the
Closing Date and thereafter. Purchaser shall have the right to direct any appeal of the
real property tax assessment, if any, for the tax years occurring after the Closing Date.

     4.4.16 The provisions of this Section 4.4 shall survive Closing.

	4.5	 	Closing Costs. Seller shall pay (a) the fees of any counsel representing it in
connection with this transaction, and (b) the documentary transfer tax or conveyance tax
payable by reason of the transfer of the Real Property. Purchaser shall pay (i) the fees of
any counsel representing Purchaser in connection with this transaction, (ii) 100% of the (A)
premium for the Title Policy, (B) cost of any endorsements to the Title Policy, and (C) cost
of any title insurance provided to
Purchaser’s lender, (iii) the cost of the Updated Survey (and any update thereto), (iv) all
bulk sales taxes, sales tax on the sale of the Personal Property (or any part thereof) and
any taxes other than those required to be paid by Seller as set forth

24

 

above, (v) any
escrow fees charged by the Escrow Agent, and (vi) the fees for recording the Assignment of
Ground Lease and any other recordable documents. All other costs and expenses incident to
this transaction and the closing thereof shall be paid in a manner consistent with custom
for similar transactions in San Francisco, California. Notwithstanding the foregoing, in
the event that this Agreement is terminated as a result of a party’s default, such
defaulting party shall pay all escrow and title cancellation fees charged in connection
with such cancellation.

	4.6	 	Conditions Precedent to Obligation of Purchaser. The obligation of Purchaser to
consummate the transaction hereunder shall be subject to the fulfillment on or before the
Closing Date of all of the following conditions, any or all of which may be waived by
Purchaser in its sole discretion:

(a) All of the representations and warranties of Seller contained in this Agreement shall
be true and correct in all material respects as of the Closing Date (with appropriate
modifications permitted under this Agreement or not materially adverse to Purchaser).

(b) Seller shall have performed and observed, in all material respects, all covenants and
agreements of this Agreement to be performed and observed by Seller as of the Closing Date.

(c) Ground Lessor shall have executed and delivered that certain Fourth Amendment to
Indenture of Lease (“Fourth Amendment to Lease”) in substantially the form attached
hereto as Exhibit H.

(d) Seller shall have delivered to Purchaser an executed Ground Lease Estoppel (as defined
below) which is substantially in the form of Exhibit I, without qualification in
any material respect; provided, however, that the exclusion of the estoppel provisions set
forth in Paragraphs 3, 7, 9 and 10 of Exhibit I, and shall not be deemed to be
material qualifications or otherwise defeat this condition.

(e) Title Company shall be irrevocably committed to issue the Title Policy as required in
Section 2.5.

(f) Seller shall have terminated the Management Agreement at the sole cost and expense of
Seller.

(g) Seller shall have arranged to pay at Closing (a) the Five Hundred Thousand and No/100
Dollar ($500,000) payment to Ground Lessor required under the Fourth Amendment to Lease,
and (b) the payment to Ground Lessor required
under that certain Third Amendment to Indenture of Lease dated as of August 3, 2003
(“Third Amendment to Lease”).

25

 

	4.7	 	Conditions Precedent to Obligation of Seller. The obligation of Seller to consummate
the transaction hereunder shall be subject to the fulfillment on or before the of Closing Date
of all of the following conditions, any or all of which may be waived by Seller in writing in
its sole discretion:

(a) Seller shall have received the Purchase Price as adjusted pursuant to and payable in
the manner provided for in this Agreement.

(b) All of the representations and warranties of Purchaser contained in this Agreement
shall be true and correct in all material respects as of the Closing Date.

(c) Purchaser shall have performed and observed, in all material respects, all covenants
and agreements of this Agreement to be performed and observed by Purchaser as of the
Closing Date.

(d) Ground Lessor shall have executed and delivered the Fourth Amendment to Lease in
substantially the form attached hereto as Exhibit H.

(e) Purchaser shall have complied with its covenant in Section 5.7(g) below
regarding the requirements of Section 3 of the Third Amendment to Lease.

	4.8	 	Failure or Waiver of Conditions Precedent. In the event any of the conditions set
forth in Sections 4.6 or 4.7 are not fulfilled or waived on or before the
Outside Closing Date, the party benefited by such conditions may, by written notice to the
other party, terminate this Agreement, whereupon all rights and obligations hereunder of each
party shall be at an end except those that expressly survive any termination. Either party
benefited by a condition set forth in Sections 4.6 and 4.7 above may, at its
election, at any time or times on or before the date specified for the satisfaction of the
condition, waive in writing the benefit of such condition. Purchaser’s consent to the Closing
pursuant to this Agreement shall waive any remaining unfulfilled conditions, and any liability
on the part of Seller for breaches of representations and warranties of which Purchaser had
knowledge as of the Closing. If Purchaser terminates this Agreement due to the failure of any
condition set forth in Section 4.6 not being satisfied (or if Seller terminates this
Agreement due to the failure of the condition set forth in Section 4.7(d) not being
satisfied), then the Earnest Money shall be refunded to Purchaser.
	 
	4.9	 	Alcoholic Beverage License.

(a) Purchaser acknowledges that Oxford SF Beverage Company, LLC, a Delaware limited
liability company (“BevCo”), Seller’s affiliate, is the owner of the current
alcoholic beverage license(s) for the Hotel (collectively, the “Existing
Liquor License”). The Existing Liquor License and the alcoholic beverages on hand
at the Hotel, whether issued to the food and beverage departments or held in reserve
storage (“Alcoholic Beverages”) shall be transferred pursuant to a

26

 

separate escrow
(“Liquor Escrow”) between Seller, BevCo and Purchaser and the parties shall execute
customary escrow instructions in connection therewith and consistent with the terms of this
Agreement.

(b) The Existing Liquor License shall be included in the Purchase Price, but a value of
Twenty Thousand Dollars ($20,000) (“Liquor License Purchase Price”) shall be
separately allocated to it for the purposes of the Liquor Escrow. The cost of the
Alcoholic Beverages in not included in the Purchase Price. A value shall be separately
allocated to it for the purposes of the Liquor Escrow at Closing and, collectively with the
Liquor License Purchase Price, shall constitute the “Liquor Purchase Price”.

(c) The Liquor Escrow shall be established at Chicago Title Insurance Company (the
“Liquor Escrow Holder”), unless the parties mutually agree otherwise. The parties
acknowledge that the terms and conditions of the Liquor Escrow shall be conducted under
Sections 24049 and 24070-24082 of the California Business & Professions Code (“B & P
Code”), and the Liquor Escrow Holder shall be authorized and instructed to publish and
record all required notices, handle creditor claims, and to obtain tax releases in
accordance therewith. Liquor Escrow Holder shall further be directed to handle funds in
the Liquor Escrow in accordance with Section 24049 and 24070-24082 of the B & P Code. The
Liquor Escrow shall close and the Liquor License Price shall be paid over and released to
Seller, without further claim by Purchaser, on the date that the California Department of
Alcoholic Beverage Control (“ABC”) approves the transfer of the Liquor License to
Purchaser. The closing of the Liquor Escrow shall not be a condition precedent to Closing.

(d) Within fifteen (15) days following the Effective Date, Purchaser shall file all
necessary applications and supporting materials with the ABC as may be required to obtain a
permanent or temporary liquor license for the Hotel and shall diligently pursue the
issuance of such liquor license. Seller agrees to, and shall cause BevCo to, promptly
execute and deposit into the Liquor Escrow all other documents and instruments (including,
but not limited to, liquor license applications and transfer agreements) that may be
required by the Liquor Escrow Holder and/or the ABC.

(e) Seller agrees to cause to be prepared a certified schedule of the inventory of
Alcoholic Beverages on hand at the Hotel as of 11:59 p.m. of the day before the Closing
Date. Such schedule shall list all items of Alcoholic Beverages and shall set forth the
amount of each item on hand and the net cost paid by Seller for each item. If the net cost
for any item cannot be established, then the current
replacement cost for such item shall be used based upon the price lists from the Hotel’s
suppliers then in effect. The total cost of the Alcoholic Beverages as

27

 

established above
shall be the portion of the Purchase Price allocated to the Alcoholic Beverages.

(f) On the Closing Date, the Escrow Agent shall transfer the Liquor Purchase Price to the
Liquor Escrow Holder for deposit into the Liquor Escrow and the Liquor Escrow shall close
on the terms and conditions set forth in the separate Liquor Escrow instructions executed
by Seller and Purchaser. Purchaser shall pay any sales tax attributable to the sale of the
Liquor License and Alcoholic Beverages or any other personal property transferred through
the Liquor Escrow. Liquor Escrow fees charged by Liquor Escrow Holder shall be paid
equally by Seller and Purchaser. Purchaser shall pay all fees and costs payable to the ABC
in connection with transferring the Liquor License and all license and transfer fees, costs
of recordation and publication. If (i) the ABC disapproves the transfer of the Liquor
License to Purchaser or (ii) Purchaser purchases the Hotel pursuant to this Agreement but
the Liquor Escrow does not close by the expiration of eight (8) calendar months from the
Closing Date, then, in either case, the Liquor Escrow shall terminate and the Liquor
License Purchase Price shall be released to Seller. The value assigned to the Alcoholic
Beverages shall be returned to Purchaser.

	4.10	 	Designation Agreement. On or before the Closing Date, Seller and Purchaser shall
each execute an original counterpart of a Designation Agreement, substantially in the form of
Exhibit G attached hereto, which Designation Agreement names the Title Company as the
“Reporting Person” under Section 6045(e) of the Internal Revenue Code (the
“Designation Agreement”).

	4.11	 	Disbursements and Other Actions by Escrow Agent. Upon the Closing, Escrow Agent
shall promptly undertake all of the following in the following order and manner:

(a) Cause the Assignment of Ground Lease and Grant Deed and any other documents which the
parties hereto may mutually direct to be recorded in the Official Records of San Francisco
County, California in the order directed by the parties;

(b) Disburse to Seller from funds deposited by Purchaser with Escrow Agent towards payment
of all items (including, without limitation, the Purchase Price) chargeable to the account
of Purchaser;

(c) Deliver to Seller a fully executed original of the instruments described in clauses
(c), (d), (e), (j), (k) and (l) of Section 4.2 above and clauses (c), (d) and (e)
of Section 4.3 above and conformed copies of the Assignment of Ground Lease and
Grant Deed;

28

 

(d) Deliver to Purchaser a fully executed original of the instruments described in clauses
(c), (d), (e), (f), (h), (j), (k) and (l) of Section 4.2 above and conformed copies
of the Assignment of Ground Lease and Grant Deed;

(e) Direct the Title Company to issue the Title Policy to Purchaser; and

(f) File the Designation Agreement.

ARTICLE V

REPRESENTATIONS, WARRANTIES AND COVENANTS

	5.1	 	Representations and Warranties of Seller. Seller hereby makes the following
representations and warranties to Purchaser as of the Effective Date, subject to the
qualifications and exceptions set forth below:

(a) Organization and Authority. Seller has been duly organized and is validly
existing and in good standing under the laws of Delaware. Seller has the full right and
authority to enter into this Agreement and to transfer all of the Property to be conveyed
by Seller pursuant hereto and to consummate or cause to be consummated the transactions
contemplated herein to be made by Seller. The person signing this Agreement on behalf of
Seller is authorized to do so.

(b) No Breach. The execution, delivery and performance of this Agreement by Seller
and the consummation of the transaction contemplated herein will not: (i) result in a
breach or acceleration of or constitute a default or event of termination under the
provisions of any agreement or instrument by which the Property is bound or affected which
would have a material adverse impact on the ownership and operation of the Property by
Purchaser; (ii) result in the creation or imposition of any lien, charge or encumbrance,
against the Property or any portion thereof; or (iii) constitute or result in the violation
or breach by Seller of any judgment, order, writ, injunction or decree issued against or
imposed upon Seller or result in the violation of any applicable law, rule or regulation of
any governmental authority which, with respect to any of the foregoing, would have a
material adverse impact on the ownership or operation of the Property by Purchaser.

(c) Litigation/Condemnation. Except as set forth on Schedule 5.1(c)
attached hereto, Seller has not received written notice of any litigation which has been
filed against Seller that arises out of the ownership of the Property and would materially
and adversely affect the Property or use thereof, or Seller’s ability to perform its
obligations hereunder, nor has Seller received written notice of any condemnation
proceedings. To Seller’s knowledge, there is no threatened litigation that arises out of
the ownership of the Property and would materially and adversely affect the Property or use
thereof, or Seller’s ability to perform its obligations hereunder.

29

 

(d) Leases. To Seller’s knowledge, the list of Leases attached hereto as
Schedule 1.1(h) is accurate and lists all Leases currently affecting the Hotel, and
Seller has delivered (or otherwise made available to Purchaser) a true and correct copy of
such Leases and no uncured notice of default has been delivered by Seller or received by
Seller with respect to any Leases. Any and all brokerage, leasing and other commissions
and tenant improvement credits or contributions due under any such Leases have been fully
performed in all material respects and all amounts due from Seller as of the Closing Date
have been (or will be) paid in full by the Closing Date.

(e) No Violations. Except as set forth on Schedule 5.1(f) attached hereto,
to Seller’s knowledge, Seller has not received prior to the Effective Date any written
notification from any governmental or public authority that the Property is in violation of
any applicable fire, health, building, use, occupancy or zoning laws or other statute,
ordinance, law or code (including without limitation Environmental Laws and the Americans
with Disabilities Act, as amended) bearing on the construction, operation or use of the
Property or any part thereof where such violation remains outstanding and, if unaddressed,
would have a material adverse effect on the use of the Property as currently owned and
operated.

(f)  Ground Lease. To Seller’s knowledge, (i) Seller has delivered or made
available to Purchaser true and complete copies of the Ground Lease and (ii) neither Seller
nor the Ground Lessor is in default of any material obligation under the terms of the
Ground Lease.

(g) Service Contracts and Equipment Leases. To Seller’s knowledge, there are no
Service Contracts or Equipment Leases which will affect the Property after the Closing Date
except as set forth on the Schedule 1.1(e)-1 and Schedule 1.1(e)-2,
respectively, and no Service Contracts or Equipment Leases have been amended except as set
forth in said Schedules. To Seller’s knowledge, no uncured written notice of default has
been delivered by Seller or received by Seller with respect to any Service Contracts or
Equipment Leases. To Seller’s Knowledge, the copies of Service Contracts and Equipment
Leases delivered or made available to Purchaser by Seller are true and complete.

(h) Personal Property. To Seller’s knowledge, Seller owns the Personal Property,
other than any leased Personal Property under the Equipment Leases and other than the lien
of the landlord under the Ground Lease, free of all liens and encumbrances.

(i) No Consents. No consent, approval or action of, filing with or notice to any
governmental or regulatory authority or any other person or entity on the part of Seller is
required in connection with the execution, delivery and performance of Agreement or the
consummation of the transactions contemplated.

30

 

(j) Patriot Act Compliance. Neither Seller nor any individual or entity having an
interest in Seller is a person or entity either (i) described by Section 1 of the Executive
Order (No. 13,224) Blocking Property and Prohibiting Transactions With Persons Who Commit,
Threaten to Commit, or Support Terrorism, 66 Fed. Reg. 49,079 (September 24, 2001), or (ii)
is listed on the current list of Specially Designated Nationals and Blocked Persons issued
by the U.S. Department of the Treasury, and does not engage in any dealings or
transactions, and is not otherwise associated, with any such persons or entities.

(k) No Other Property Interests. There are no property interests, buildings,
structures or other improvements or personal property owned by Seller which are necessary
for the operation of the Hotel that are not being conveyed pursuant to this Agreement.

(l) Employees. To Seller’s knowledge, Seller does not employ any persons in
connection with the operation of the Hotel other than those individuals identified on
Schedule 5.1(l). Schedule 5.1(l) identifies each Hotel Employee (as
defined below) as of the date specified on such list, showing the name and annual base
salary or hourly wage for each such Hotel Employee and whether each such Hotel Employee is
enrolled in medical and/or dental coverage.

Notwithstanding the foregoing, if Purchaser has knowledge of a breach of any representation
or warranty made by Seller in this Agreement prior to Closing and Purchaser nevertheless
proceeds to close the purchase of the Property, such representation or warranty by Seller
shall be deemed to be qualified or modified to reflect Purchaser’s knowledge of such breach
and Seller shall have no liability whatsoever respecting the same.

	5.2	 	Knowledge Defined. For purposes of this Agreement, “knowledge” means (a)
with respect to Seller, the actual knowledge of Robert D. Kline, who is President of Oxford
Lodging Advisory & Investment Group, LLC and Cody Bradshaw, who is the asset manager for
Seller (provided that, in no event shall such persons have any personal liability arising
under this Agreement), without any duty of inquiry or investigation, and expressly excluding
the knowledge of any other shareholder, partner, member, trustee, beneficiary, director,
officer, manager, employee, agent or representative of Seller or any of its affiliates, and
(b) with respect to Purchaser, (i) the actual knowledge of David A. Brooks (provided that, in
no event shall such person(s) have any personal liability arising under this Agreement), (ii)
any matter disclosed in any exhibits or schedules to this Agreement, (iii) any matter
disclosed in any of the Seller Due Diligence Materials or any other documents or materials
provided or made available by Seller or its agents to Purchaser prior to Closing, (iv) any
matter disclosed by Purchaser’s inspections or investigations of the Property, and (v) any
matter disclosed by the Ground Lease Estoppel.

31

 

	5.3	 	Survival of Seller’s Representations and Warranties. The representations and
warranties of Seller set forth in Section 5.1 as updated by the certificate of Seller
to be delivered to Purchaser at Closing in accordance with Section 4.2(f) hereof,
shall survive Closing for a period of two-hundred seventy (270) days. No claim for a breach
of any representation or warranty of Seller shall be actionable or payable unless each of the
following conditions is satisfied: (a) the breach in question results from or is based on a
condition, state of facts or other matter which was not known to Purchaser prior to Closing,
(b) the valid claims for all such breaches, if any, collectively aggregate more than One
Hundred Fifty Thousand and No/100 Dollars ($150,000), in which event the amount in excess of
such amount of such claims shall be actionable, and (c) written notice containing a
description of the specific nature of such breach shall have been given by Purchaser to Seller
prior to the expiration of said two hundred seventy (270) day period and an action shall have
been commenced by Purchaser against Seller within thirty (30) days after the termination of
the survival period provided for above in this Section 5.3. To the extent applicable,
Purchaser agrees to first seek recovery under any insurance policies, the Title Policy and the
Service Contracts prior to seeking recovery from Seller, and Seller shall not be liable to
Purchaser if Purchaser’s claim is satisfied from such insurance policies, title policies or
agreements. As used herein, the term “Cap” shall mean the total aggregate amount of
One Million Five Hundred Thousand and No/100 Dollars ($1,500,000). Notwithstanding any
provision of this Agreement to the contrary, in no event shall (i) Seller’s aggregate
liability to Purchaser for breach of any representation or warranty of Seller in this
Agreement or the certificate to be delivered by Seller at Closing pursuant to Section
4.2(f) hereof, taken in the aggregate with any other claims by Purchaser against Seller
(including any indemnification obligations), exceed the amount of the Cap, or (ii) Seller be
liable for any consequential damages of Purchaser or any punitive damages.

	5.4	 	Covenants of Seller. Notwithstanding any other provisions of this Agreement to the
contrary, Purchaser acknowledges and agrees that, pursuant to the Management Agreement,
Manager is vested with decision making authority over the Hotel and therefore Seller’s ability
to control the management and operation of the Hotel is circumscribed by and must be exercised
in accordance with its rights as “Owner” under the Management Agreement; provided, however,
Seller shall enforce its rights under the Management Agreement to the extent such enforcement
would effectuate Manager complying with the covenants contained in this Agreement. Subject to
the foregoing, Seller hereby covenants with Purchaser as follows:

(a) From the Effective Date hereof until the Closing or earlier termination of this
Agreement, Seller shall use reasonable efforts to cause Manager to operate and maintain the
Hotel in a manner generally consistent with the manner in which Seller has operated and
maintained the Hotel prior to the date hereof, in good

32

 

condition consistent with past practice, reasonable wear and tear excepted and so as to
maintain levels of Retail Inventory and Consumable Inventory consistent with past practice.

(b) From the Effective Date hereof until Closing or the earlier termination of this
Agreement, Seller shall use commercially reasonable efforts to perform its material
obligations under the Management Agreement, the Service Contracts and other agreements that
may affect the Property.

(c) Promptly following the Effective Date, Seller shall deliver to Ground Lessor an
estoppel certificate (the “Ground Lease Estoppel”), in the form of Exhibit
I attached hereto, and shall request that Ground Lessor complete and sign a Ground
Lease Estoppel in such form.

(d) Seller shall not enter into any new management agreement or Service Contracts or other
agreements or encumbrances with respect to the Property, nor shall Seller enter into any
agreements modifying the Service Contracts, Permitted Exceptions or Leases unless (a) any
such agreement or modification will not bind Purchaser or the Property after the date of
Closing or is subject to termination on not more than thirty (30) days’ notice without
penalty, or (b) Seller has obtained Purchaser’s prior written consent to such agreement or
modification. Seller agrees to cancel and terminate effective as of the Closing Date any
Service Contracts requested in writing by Purchaser to the extent permissible under the
terms of such Service Contracts, provided any fee or penalty for such cancellation shall be
paid for by Purchaser.

Failure of Seller to deliver an executed Ground Lease Estoppel shall not be deemed a Seller
default, but is a condition precedent to Purchaser’s obligations to consummate this
transaction as specified in Section 4.6(d) above.

(e) Seller shall maintain all of its current insurance policies in place until Closing.

	5.5	 	Representations and Warranties of Purchaser. Purchaser hereby represents and
warrants to Seller:

(a) ERISA. Purchaser is not acquiring the Property with the assets of an employee
benefit plan as defined in Section 3(3) of the Employee Retirement Income Security Act of
1974.

(b) Organization and Authority. Purchaser has been duly organized and is validly
existing and in good standing under the laws of Delaware and is qualified to do business in
California. Purchaser has the full right, power and authority to purchase the Property as
provided in this Agreement and to carry out Purchaser’s obligations hereunder, and all
requisite action necessary to authorize Purchaser to enter into this Agreement and to carry
out its obligations hereunder have been, or

33

 

by the Closing will have been, taken. The person signing this Agreement on behalf of
Purchaser is authorized to do so, and this Agreement is enforceable against Purchaser in
accordance with its terms, subject to bankruptcy, insolvency and similar laws.

(c) No Breach. The execution, delivery and performance of this Agreement by
Purchaser and the consummation of the transaction contemplated herein will not: (i) result
in a breach or acceleration of or constitute a default under any agreement or instrument by
which Purchaser is bound or affected which would have a material adverse impact on the
ability of Purchaser to timely close the acquisition of the Property pursuant to the terms
of this Agreement; or (ii) constitute or result in the violation or breach by Purchaser of
any judgment, order, writ, injunction or decree issued against or imposed upon Purchaser or
result in the violation of any applicable law, rule or regulation of any governmental
authority which, with respect to any of the foregoing, would have a material adverse impact
on the ability of Purchaser to timely complete the acquisition of the Property pursuant to
this Agreement.

(d) No Consents. No consent, approval or action of, filing with or notice to any
governmental or regulatory authority or any other person or entity on the part of Purchaser
is required in connection with the execution, delivery and performance of Agreement or the
consummation of the transactions contemplated.

(e) Pending Actions. There is no action, suit, arbitration, unsatisfied order or
judgment, government investigation or proceeding pending against Purchaser which, if
adversely determined, could individually or in the aggregate materially interfere with the
consummation of the transaction contemplated by this Agreement.

(f) Patriot Act Compliance. Neither Purchaser nor any individual or entity having
an interest in Purchaser is a person or entity either (i) described by Section 1 of
the Executive Order (No. 13,224) Blocking Property and Prohibiting Transactions With
Persons Who Commit, Threaten to Commit, or Support Terrorism, 66 Fed. Reg. 49,079
(September 24, 2001), or (ii) is listed on the current list of Specially Designated
Nationals and Blocked Persons issued by the U.S. Department of the Treasury, and does not
engage in any dealings or transactions, and is not otherwise associated, with any such
persons or entities.

(g) Tax Identification Number. Purchaser’s valid tax identification number is
20-0110897.

(h) Bankruptcy. No petition in bankruptcy (voluntary or otherwise), assignment for
the benefit of creditors, or petition seeking reorganization or arrangement or other action
under federal or state bankruptcy laws is pending against or

34

 

contemplated by Purchaser or its general partner(s) or controlling shareholders or members.

	5.6	 	Survival of Purchaser’s Representations and Warranties. The representations and
warranties of Purchaser set forth in Sections 5.5(a) and (f) shall survive
Closing and shall be a continuing representation and warranty without limitation. All other
representations and warranties of Purchaser shall survive Closing for a period of two hundred
seventy (270) days.
..

	5.7	 	Covenants of Purchaser.

(a) Purchaser may at its election (but subject to the limitations of Section 3.1
above), inspect the Property for the presence of Hazardous Substances (as defined below),
and, at Seller’s request, shall furnish to Seller copies of any reports received by
Purchaser in connection with any such inspection. Purchaser hereby assumes full
responsibility for such inspections and irrevocably waives any claim against Seller and
releases Seller from all liability arising from the presence of Hazardous Substances on the
Property. Purchaser shall also furnish to Seller copies of any other reports received by
Purchaser relating to any other inspections of the Property conducted on Purchaser’s
behalf, if any (including, specifically, without limitation, any reports analyzing
compliance of the Property with the provisions of the Americans with Disabilities Act
(“ADA”), 42 U.S.C. §12101, et seq., if applicable). As used herein, “Hazardous
Substances” means all hazardous or toxic materials, substances, pollutants,
contaminants, or wastes currently identified as a hazardous substance or waste in the
Comprehensive Environmental Response, Compensation and Liability Act of 1980 (commonly
known as “CERCLA”), as amended, the Superfund Amendments and Reauthorization Act (commonly
known as “SARA”), the Resource Conservation and Recovery Act (commonly known as “RCRA”), or
any other federal, state or local legislation or ordinances applicable to the Property
(collectively, “Environmental Laws”). The provisions of this Section
5.7(a) shall survive Closing.

(b) Without limiting anything herein to the contrary, Purchaser waives any right of
contribution with respect to, and hereby agrees to indemnify, defend (with counsel
reasonably acceptable to Seller), protect and hold Seller harmless from, all responsibility
and liability and from all matters, claims, suits, allegations, judgments, fines, penalties
from events arising out of the physical condition, valuation or utility of the Property
including, without limitation, any matter arising from, or relating to the existence of,
Hazardous Substances or the violation or enforcement of Environmental Laws in connection
with the Property or operation thereof; provided that the foregoing indemnity shall apply
only with respect to matters, claims, suits, allegations, judgments, fines and penalties
arising from and after Closing. Without limiting the generality of any of the other
provisions set forth in this Agreement, Seller makes no representations or

35

 

warranties as to whether the Property or any portion thereof contains asbestos, harmful or
toxic substances or other Hazardous Substances or is in compliance with Environmental Laws.
The provisions of this Section 5.7(b) shall survive Closing or any termination of
this Agreement.

(c) Not later than two (2) days prior to the Closing, Seller shall send, or cause the
Manager to send, written notice to guests or other persons who have safe deposit boxes at
the Hotel advising of the sale of the Hotel and requesting verification or removal of the
contents within five (5) days. The safe deposit boxes of guests or other persons not
responding to said written notice shall be opened only in the presence of the Manager or
representatives of both Seller and Purchaser. The contents of all boxes opened as
aforesaid shall be listed at the time such boxes are opened and each such list shall be
signed by or on behalf of the Manager or by or on behalf of Seller and Purchaser, and
Purchaser shall not be liable or responsible for any items claimed to have been in said
boxes unless such items are included in such list. Seller agrees to indemnify, defend and
hold Purchaser harmless from and against any liability or responsibility for any items
claimed to have been in said boxes but not included on such list and Purchaser agrees to
indemnify, defend and hold Seller harmless from and against any liability or responsibility
for items claimed to have been in said boxes and included in such list and all claims,
losses and liabilities with respect thereto arising out of the acts or omissions of
Purchaser after the Closing Date. The provisions of this Section 5.7(c) shall
survive Closing.

(d) All baggage or other property of guests of the Hotel which has been checked with or
left in the care of Seller and remains in Seller’s care as of the Cut-Off Time shall be
inventoried and tagged jointly by Seller and Purchaser. Purchaser hereby agrees to defend,
indemnify and hold harmless Seller against any claims, losses or liabilities in connection
with such baggage and property arising out of the acts or omissions of Purchaser from and
after the Closing Date. Seller hereby agrees to defend, indemnify and hold harmless
Purchaser against all claims, losses and liabilities with respect to such baggage and
property arising out of the acts or omissions of Seller prior to the Closing Date. This
Section 5.7(d) shall survive Closing.

(e) Purchaser shall honor (and shall cause its manager to honor) all reservations at the
Hotel (including honoring the rates at which such reservations were made, including
reservations made on a wholesale, reward points redemption, or other basis), or for any
related conference, banquet, or meeting space or any other facilities in connection with
the Hotel made by Seller on or prior to the Cut-Off Time for periods on or after the
Closing Date. The provisions of this Section 5.7(e) shall survive Closing.

36

 

(f) Purchaser shall expend a sum not less than Three Million and 00/100 Dollars
($3,000,000) during the period commencing on the Effective Date and ending June 30, 2008
for the rehabilitation of the Hotel as required under the Ground Lease. The provisions of
this Section 5.7(f) shall survive Closing.

(g) Purchaser shall comply with the requirements of Section 3 of the Third Amendment to
Lease as of the Closing, including the delivery of the Letter of Credit or Guaranty (as
both are defined in the Third Amendment to Lease) to Ground Lessor at Closing.

	5.8	 	Employees.

(a) Effective at and upon the Closing, Seller shall terminate, or cause the termination of,
the employment of all individuals employed at the Hotel by Manager and/or Seller as of the
day immediately prior to the Closing Date, irrespective of whether such individuals are
active or on leaves of absence or otherwise inactive (“Hotel Employees”).

(b) Without limiting subparagraph (c) below, Purchaser agrees that it will offer to hire or
cause to be hired effective at and upon the Closing, and after the Closing will offer to
maintain or cause to be maintained the employment of, all Rehired Employees (as defined
below). As used herein, “Rehired Employees” means not fewer than ninety-five
percent (95%) of all of the Hotel Employees. All such offers to rehire shall be made in a
manner consistent with satisfying the requirements of paragraph (c) of this Section
5.8. Without limiting the foregoing, it is agreed that the precise terms of the
employment of each Rehired Employee by Purchaser, or any designee or management company
engaged by Purchaser to employ Hotel personnel, relating to compensation, seniority, health
benefits and vacation benefits shall be determined by Purchaser or such designee or
management company, provided that Purchaser agrees to rehire or cause to be rehired the
Rehired Employees on terms and conditions, including compensation, seniority and benefits,
that are substantially similar to the employment terms and conditions that are applicable
to such Rehired Employees in their employment by Seller prior to the Closing. Purchaser
further agrees that, absent good cause (as determined solely by Purchaser) for terminating
any Rehired Employee, the employment of each Rehired Employee on the terms described above
shall continue for at least ninety (90) days following the Closing (the “Post-Closing
Employment Period”). Promptly following the end of the Post-Closing Employment Period,
Purchaser shall deliver to Seller a certificate, duly executed by an officer of Purchaser,
confirming that Purchaser has fully complied with the terms and requirements of this
Section 5.8(b) and Section 5.8(c) below.

(c) Without limiting subparagraph (b) above, Purchaser agrees that it will offer to hire or
cause to be offered to be hired effective at and upon the Closing, and after
the Closing will maintain or cause to be maintained the employment of, a

37

 

sufficient number
of Rehired Employees so that Seller shall not be required to give any layoff, closing or
other termination notices or otherwise incur any liability pursuant to the provisions of
the Federal Worker Adjustment and Retraining Notification Act. 29 U.S.C. 2101-2109 and/or
the California Worker Notification Law (California Assembly Bill 2957, effective January 1,
2003) (collectively, the “WARN Act”). If Purchaser, or any designee or management
company engaged by Purchaser to employ Hotel personnel, elects not to rehire a particular
Hotel Employee at Closing, or if following the Closing Purchaser or such designee or
management company desires to terminate the employment of any Rehired Employee, Purchaser
shall be solely responsible for complying or causing compliance with all applicable
provisions of federal, state and municipal laws and regulations relating to such action,
including without limitation any applicable provisions of the WARN Act.

(d) The parties agree to cooperate in scheduling and otherwise handling the termination of
the Hotel Employees by Seller pursuant to paragraph (a) of this Section 5.8, and
the rehiring of such employees by Purchaser, or any designee or management company engaged
by Purchaser to employ Hotel personnel, pursuant to paragraphs (b) and (c) of this
Section 5.8, so as to minimize prior to Closing any potential employee morale
problems arising from the sale of the Hotel to Purchaser and any resulting disruption to
Hotel services or the quality thereof. Without limiting the foregoing, and at the request
of Purchaser, Seller agrees to cause the general manager and any of his assistant(s) in
charge of personnel matters to assist Purchaser or Purchaser’s designee or management
company in its rehiring efforts as may reasonably be necessary or appropriate to facilitate
a smooth transition of employment responsibilities to Purchaser or Purchaser’s designee or
management company, the scope and nature of such assistance to be mutually determined by
Purchaser and Seller (provided that Seller shall not have any liability for any act or
omission of the general manager or any of his assistants in connection with the provision
of such assistance, and provided that such assistance shall be provided at no out-of-pocket
cost to Seller). During the period prior to Closing the parties shall also consult on a
regular basis and coordinate their activities relating to employee matters so as to
facilitate a smooth transition of Hotel operations and the continued proper performance by
the Hotel Employees of their respective duties up to the Closing. The parties hereto agree
that (i) Purchaser will not be subject to any of the debts, obligations and/or liabilities
of Seller which may exist with respect to the employment or termination of any Hotel
Employees prior to the Closing, or which are attributable to the termination of such
employees by Seller at or prior to Closing (“Seller’s Employee Obligations”),
except to the extent that such debts, obligations and/or liabilities are expressly covered
by a credit against the Purchase Price specifically provided in this Agreement; and (ii)
Seller will not be subject to any of the debts, obligations and/or liabilities of
Purchaser, or Purchaser’s designee or management company engaged by Purchaser to employ
Hotel personnel, which are attributable

38

 

to any actions or omissions of Purchaser or such
designee or management company, or any agents or representatives thereof, in the process of
the hiring or rehiring of any employees, including, without limitation, any claims arising
out of or relating to whether, and upon which terms and conditions, any such employees are
offered employment by Purchaser or such designee or management company, or are hired or
rehired by Purchaser or such designee or management company, or which may otherwise exist
regarding the employment of employees at the Hotel by Purchaser or such designee or
management company from and after the Closing (“Purchaser’s Employee Obligations”).

(e) Purchaser agrees to indemnify, defend and hold harmless the Seller, its officers,
directors, members, owners and affiliates (herein, the “Seller-Related Parties”)
from and against any claim, liability, or judgment asserted against any of the
Seller-Related Parties on account of or with respect to any of Purchaser’s Employee
Obligations, including, without limitation, (i) any causes of action, damages, complaints,
judgments, orders and/or claims, whatsoever, and all costs and expenses (including, without
limitation, reasonable attorneys’ fees and costs) incurred in connection therewith, which
may be asserted against any of the Seller-Related Parties on account of any violation of
any the National Labor Relations Act, Title VII of the Civil Rights Act, the Fair Labor
Standards Act, the Age Discrimination in Employment Act, the Vocational Rehabilitation Act
of 1973, the Federal WARN Act and/or the California WARN Act (other than as expressly
provided in paragraph (c) of this Section 5.8), California State Wage/Hour laws,
the California Fair Employment and Housing Act, the California Labor Code, and/or any other
applicable federal or state employment statutes, rules and regulations (collectively,
“Employment Laws”) by Purchaser, or any designee or management company engaged by
Purchaser to employ Hotel personnel, and (ii) any claims or liabilities (A) arising under
the federal Employee Retirement Income Security Act, as amended, and/or any other
applicable federal or state law or regulation concerning employee benefit plans with
respect to the employment of employees by Purchaser or such designee or management company
from and after the Closing, or (B) arising from or under any employee benefit plan
applicable to any Rehired Employee or any other employee hired by Purchaser or such
designee or management company to perform services at or for the Hotel, to the extent that
any such claim or liability relates solely to any period of employment from and after the
Closing.

(f) Seller shall settle, with respect to any Hotel Employees employed by Seller prior to
Closing, any and all claims and obligations which may be due and owing to any such Hotel
Employees which have accrued or are otherwise payable with respect to any period prior to
the Closing or in connection with their termination
of employment by Seller prior to Closing, including, without limitation, all wages and/or
benefits payable to such Hotel Employees for periods prior to the Closing, all accrued but
unpaid vacation, holidays or holiday pay, personal days, sick leave

39

 

and/or any other
benefit entitlement payable with respect to any period prior to the Closing, and any
charges or other compensation owing by reason of the termination of such employees by
Seller.

(g) Purchaser shall also ensure that service with Seller by Hotel Employees who are hired
by Purchaser shall be deemed to have been in service with Purchaser for purposes of any
length of service requirements, waiting periods, vesting periods, or differential benefits
based on length of service in any benefit plan established or maintained by or on behalf of
Purchaser for which such Hotel Employees may be eligible after the Closing, such that
Seller shall not have any COBRA obligations for Rehired Employees hired by Purchaser; (ii)
Purchaser shall ensure that any pre-existing conditions, restrictions or waiting periods
under any benefit plan established by or on behalf of Purchaser providing medical, dental,
vision, or prescription drug coverage or benefits are waived to the extent necessary to
provide immediate coverage for Hotel employees who are hired for the Hotel following
termination of such Hotel Employees’ coverage under the benefit plans maintained by or on
behalf of Seller, such that Seller shall not have COBRA obligations for any such Hotel
Employees who are hired by Purchaser; (iii) Purchaser shall indemnify, defend and hold
Seller harmless from and against all loss, expense (including reasonable attorneys’ fees
and disbursements incurred to enforce this indemnity), damage and liability resulting from
any COBRA claims or obligations arising in respect of Rehired Employees and any claims or
disputes with Rehired Employees regarding employee benefits arising from and after the
Closing Date.

(h) Without limiting any other provision of this Section 5.8, following the Closing
Purchaser shall recognize and assume all of Seller’s obligations, arising from and after
the Closing Date, under the existing collective bargaining agreement with the International
Union of Operating Engineers, Stationary Local 39 (the “Union”), a copy of which
agreement has previously been delivered to Purchaser (the “Collective Bargaining
Agreement”). Purchaser further agrees to recognize the Union as the exclusive
bargaining representative for the employees covered under the Collective Bargaining
Agreement (the “Union Employees”), and to execute a copy of the Collective
Bargaining Agreement and such other documents, if any, as are required to be executed
pursuant to the express provisions of the Collective Bargaining Agreement if requested by
the Union. Under the Collective Bargaining Agreement, Seller currently contributes to
health and welfare, pension and annuity trust funds (collectively, the “Union Employee
Benefit Funds”) on a monthly basis. Purchaser shall receive at Closing a credit
against the Purchase Price, on a pro rata basis for the month in which the Closing occurs,
for any of the monthly Union Employee Benefit Fund contributions that
have accrued to Seller prior to Closing but for which payment is not yet due under the
Collective Bargaining Agreement. Seller also currently contributes to an apprentice
training fund on an annual basis, which contribution has been paid in

40

 

full by Seller for
the calendar year 2005. Purchaser shall be obligated to pay Seller at Closing, in addition
to the Purchase Price, Purchaser’s pro rata share of such annual contribution for the
apprentice training fund for the applicable annual period in which the Closing Date occurs,
determined on a 365-day year.

(i) Seller and Purchaser agree that during the Contribution Period (as defined below),
Purchaser shall make contributions to the Stationary Engineers Local 39 Pension Trust Fund
(“Retirement Plan”), in accordance with the Collective Bargaining Agreement, for
substantially the same number of contribution base units, within the meaning of Section
4001(a)(11) of ERISA, for which Seller had an obligation to contribute with respect to the
Hotel. If, as a result of Purchaser’s failure to comply with the foregoing requirement or
as a result of any other action by Purchaser, Seller incur any withdrawal liability under
the Retirement Plan with respect to the Hotel, or Seller incur any other liability in
connection with the Retirement Plan for any reason, the Purchaser shall indemnify, defend,
and hold Seller and any of its ERISA affiliates harmless from and against any such
liability and all related costs and expenses, including reasonable attorneys’ fees.

(j) Subject to Section 5.8(m), during the period commencing on the first day of the
plan year following the Closing Date and ending on the expiration of the fifth such plan
year (the “Contribution Period”), Purchaser shall provide to the Retirement Plan
either a bond, letter of credit, or an escrow in an amount and manner meeting the
requirements of Section 4204 of ERISA; provided that Purchaser shall not be required to
provide a bond, letter of credit, escrow, or other security to the Retirement Plan if no
withdrawal liability (after giving effect to the de minimis rules under Section 4209 of
ERISA) would be assessed against Seller with respect to such plan. The cost of any bond,
letter of credit, or escrow provided under this Section 5.8(j) shall be paid by
Purchaser.

(k) To the extent required pursuant to Section 4204(a)(3) of ERISA, Seller shall provide to
the Retirement Plan a bond or escrow equal to the present value of the withdrawal liability
Seller would have had to the Retirement Plan with respect to the assets acquired by
Purchaser pursuant to this Agreement (but for the provisions of Section 4204 of ERISA),
reduced to the extent provided under Section 4204(a)(3) of ERISA in the event only a
portion of Seller’ assets are distributed during the Contribution Period.

(l) If Purchaser at any time withdraws from the Retirement Plan in a complete or partial
withdrawal with respect to the assets acquired by Purchaser pursuant to this Agreement
during the Contribution Period, Purchaser shall be primarily liable and pay, and Seller
shall be secondarily liable for any withdrawal liability Seller
would have had to the Retirement Plan with respect to the Hotel (but for the provisions of
Section 4204 of ERISA) if the withdrawal liability of Purchaser with respect to such
Retirement Plan is not paid. Purchaser agrees to provide

41

 

Seller with reasonable advance notice of any action or event which could result in the imposition of any withdrawal
liability contemplated by this Section 5.8(i), and in any event Purchaser shall
immediately furnish Seller with a copy of any notice including, but not limited to a notice
of withdrawal liability, it may receive with respect to the Retirement Plan, together with
all the pertinent details. If any such withdrawal liability shall be assessed against
Purchaser, Purchaser further agrees to provide Seller with reasonable advance notice of any
intention on the part of Purchaser not to make full payment of any withdrawal liability
when the same shall become due. Any proposed notice or communication to the Retirement
Plan relating to Purchaser’s obligations under this Section shall be provided to Seller at
least ten (10) days before such notice is provided to the Retirement Plan, and the form of
such notice and communication shall be subject to Seller’s written approval, which approval
shall not be unreasonably withheld.

(m)Notwithstanding anything contained in Section 5.8(j) to the contrary, Purchaser
shall not be obligated to provide any bond, letter of credit, or escrow in the event and to
the extent Purchaser obtains from the Retirement Plan or the Pension Benefit Guaranty
Corporation a proper variance or exemption under Section 4204(c) of ERISA and the
applicable regulations thereunder, provided any and all requirements of said variance or
exemption are met and Purchaser approves such exception.

(n)Purchaser’s obligations under this Section 5.8 shall survive the Closing.

ARTICLE VI

DEFAULT

	6.1	 	Default by Purchaser. If Purchaser defaults under this Agreement, Seller shall be
entitled, as its sole remedy (without limiting Seller’s rights with respect to any
indemnification obligations of Purchaser under this Agreement or under Section 10.19
below), to terminate this Agreement and receive the Earnest Money as liquidated damages for
the breach of this Agreement, it being agreed between the parties hereto that the actual
damages to Seller in the event of such breach are impractical to ascertain and the amount of
the Earnest Money is a reasonable estimate thereof. THEREFORE, BY PLACING THEIR INITIALS
BELOW, THE PARTIES ACKNOWLEDGE THAT THE EARNEST MONEY HAS BEEN AGREED UPON, AFTER NEGOTIATION,
AS THE PARTIES’ REASONABLE ESTIMATE OF SELLER’S DAMAGES AND AS SELLER’S EXCLUSIVE REMEDY
AGAINST PURCHASER, AT LAW OR IN EQUITY, IN THE EVENT OF A DEFAULT UNDER THIS AGREEMENT ON THE
PART OF PURCHASER. THE PARTIES ACKNOWLEDGE THAT THE PAYMENT OF SUCH LIQUIDATED DAMAGES IS NOT
INTENDED AS A

42

 

FORFEITURE OR PENALTY, BUT IS INTENDED TO CONSTITUTE
LIQUIDATED DAMAGES TO SELLER.

	 	 	 	Initials: Seller                      Purchaser                     

Nothing contained in this Section 6.1 shall limit or prevent Seller from (a)
asserting any legal or equitable claims against Purchaser for Purchaser’s obligation to pay
attorneys’ fees and other amounts under Section 10.19, or (b) enforcing any
indemnity obligation of Purchaser under this Agreement or preclude Seller from obtaining a
damage award in connection therewith, or (c) enforcing Purchaser’s other obligations and
liabilities which survive Closing or a termination of this Agreement.

6.2 Default by Seller. In the event that Seller fails to consummate this Agreement for
any reason other than Purchaser’s default or the permitted termination of this Agreement by
Seller or Purchaser as herein expressly provided, Purchaser shall be entitled, as its sole
remedy, either (a) to receive the return of the Earnest Money, which return shall operate to
terminate this Agreement and release Seller from any and all liability hereunder, or (b) to
enforce specific performance of Seller’s obligation to execute the documents required to
convey the Property to Purchaser, it being understood and agreed that the remedy of specific
performance shall not be available to enforce any other obligation of Seller hereunder.
Purchaser expressly waives its rights to seek damages in the event of Seller’s default
hereunder. Purchaser shall be deemed to have elected to terminate this Agreement and receive
back the Earnest Money if Purchaser fails to file suit for specific performance against Seller
in a court having jurisdiction in the county and state in which the Property is located, on or
before thirty (30) days following the date upon which Closing was to have occurred.

6.3 Seller’s Right to Cure Defaults. Notwithstanding anything to the contrary in this
Agreement, Purchaser shall not have the right to exercise its remedies under Section
6.2 for a Seller default unless Purchaser has provided written notice to Seller specifying
in reasonable detail the nature of the Seller default, and Seller has not cured the same
within thirty (30) days after Seller’s receipt of such notice (the “Seller Cure
Period”), in which case the Outside Closing Date shall be extended until the date which is
five (5) business days after the expiration of the Seller Cure Period.

ARTICLE VII

RISK OF LOSS

	7.1	 	Minor Damage. In the event of loss or damage to the Real Property or any portion
thereof which is not “major” (as hereinafter defined), this Agreement shall

43

 

remain in full force and effect provided Seller performs any necessary repairs or, at Seller’s option,
assigns to Purchaser all of Seller’s right, title and interest to any claims and proceeds
Seller may have with respect to any casualty insurance policies or condemnation awards
relating to the premises in question (other than business interruption proceeds attributable
to the period prior to Closing). In the event that Seller elects to perform repairs upon the
Real Property, Seller shall use reasonable efforts to complete such repairs promptly and the
Outside Closing Date shall be extended a reasonable time in order to allow for the completion
of such repairs. If Seller elects to assign a casualty claim to Purchaser, the Purchase Price
shall be reduced by an amount equal to the deductible amount under Seller’s insurance policy.
Upon Closing, full risk of loss with respect to the Property shall pass to Purchaser.

	7.2	 	Major Damage. In the event of a “major” loss or damage to the Real Property,
Purchaser may terminate this Agreement by written notice to Seller, in which event the Earnest
Money shall be returned to Purchaser. If Purchaser fails for any reason to deliver written
notice of termination to Seller within ten (10) days after Seller sends Purchaser written
notice of the occurrence of major loss or damage, then Purchaser shall be deemed to have
elected to proceed with Closing, in which event Seller shall, at Seller’s option, either (a)
perform any necessary repairs, or (b) assign to Purchaser all of Seller’s right, title and
interest to any claims and proceeds Seller may have with respect to any casualty insurance
policies or condemnation awards relating to the premises in question. In the event that
Seller elects to perform repairs upon the Real Property, Seller shall use reasonable efforts
to complete such repairs promptly and the Outside Closing Date shall be extended a reasonable
time in order to allow for the completion of such repairs. If Seller elects to assign a
casualty claim to Purchaser, the Purchase Price shall be reduced by an amount equal to the
deductible amount under Seller’s insurance policy and Seller shall assign all of its rights to
proceeds under the applicable policy with respect to any claim for the applicable loss (other
than business interruption proceeds attributable to the period prior to Closing). Upon
Closing, full risk of loss with respect to the Property shall pass to Purchaser.

	7.3	 	Definition of “Major” Loss or Damage. For purposes of Sections 7.1 and
7.2, “major” loss or damage refers to the following: (a) loss or damage to the Real
Property or any portion thereof such that the cost of repairing or restoring the premises in
question to a condition substantially identical to that of the premises in question prior to
the event of damage would be, in the opinion of an architect
selected by Seller and reasonably approved by Purchaser, equal to or greater than Two
Million Five Hundred Thousand and No/100 Dollars ($2,500,000), and (b) any loss due to a
condemnation which permanently and materially impairs the current use of the Real Property.
If Purchaser does not give notice to Seller of Purchaser’s reasons for disapproving an
architect within five (5) business days

44

 

after receipt of notice of the proposed architect,
Purchaser shall be deemed to have approved the architect selected by Seller.

ARTICLE VIII

COMMISSIONS

	8.1	 	Brokerage Commissions. In the event the transaction contemplated by this Agreement
is consummated, but not otherwise, Seller agrees to pay to Sonnenblick-Goldman Company
(“Broker”) at Closing a brokerage commission pursuant to a separate written agreement
between Seller and Broker and Seller shall indemnify and hold Purchaser harmless with respect
to any payments due and owing to Broker in connection with this transaction under such
agreement. Each party agrees that should any claim be made for brokerage commissions or
finder’s fees by any broker or finder other than the Broker by, through or on account of any
acts of said party or its representatives, said party will indemnify, defend, protect and hold
the other party free and harmless from and against any and all loss, liability, cost, damage
and expense in connection therewith. The provisions of this Section 8.1 shall survive
Closing or earlier termination of this Agreement.

ARTICLE IX

DISCLAIMERS AND WAIVERS

	9.1	 	No Reliance on Documents. Except as expressly set forth in Section 5.1
above, Seller makes no representation or warranty as to the truth, accuracy or completeness of
any materials, data or information delivered by or on behalf of Seller or its brokers to
Purchaser in connection with the transaction contemplated hereby including, without
limitation, the Reports and other Seller Due Diligence Materials. Purchaser acknowledges and
agrees that all materials, data and information delivered by Seller to Purchaser in connection
with the transaction contemplated hereby are provided to Purchaser as a convenience only and
that any reliance on or use of such materials, data or information by Purchaser shall be at
the sole risk of Purchaser, except as otherwise expressly stated herein. Without limiting the
generality of the foregoing provisions, Purchaser acknowledges and agrees that (a) any
environmental or other report with respect to the Property which is delivered by Seller to
Purchaser shall be for general informational purposes only, (b) Purchaser shall not have any
right to rely on any such report delivered by Seller to Purchaser, but rather will rely on its own inspections and
investigations of the Property and any reports commissioned by Purchaser with respect
thereto, and (c) neither Seller nor any affiliate of Seller nor the person or entity which
prepared any such report delivered by Seller to Purchaser shall have

45

 

any liability to Purchaser for any inaccuracy in or omission from any such report or other materials
provided to Purchaser in connection with this Agreement.

	9.2	 	DISCLAIMERS. EXCEPT AS EXPRESSLY SET FORTH IN SECTION 5.1 OF THIS AGREEMENT,
IT IS UNDERSTOOD AND AGREED THAT SELLER IS NOT MAKING AND HAS NOT AT ANY TIME MADE ANY
WARRANTIES OR REPRESENTATIONS OF ANY KIND OR CHARACTER, EXPRESSED OR IMPLIED, WITH RESPECT TO
THE PROPERTY, INCLUDING, BUT NOT LIMITED TO, ANY WARRANTIES OR REPRESENTATIONS AS TO
HABITABILITY, MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, TITLE, ZONING, TAX
CONSEQUENCES, LATENT OR PATENT PHYSICAL OR ENVIRONMENTAL CONDITION, UTILITIES, OPERATING
HISTORY OR PROJECTIONS, VALUATION, GOVERNMENTAL APPROVALS, THE COMPLIANCE OF THE PROPERTY WITH
GOVERNMENTAL LAWS, THE TRUTH, ACCURACY OR COMPLETENESS OF THE PROPERTY DOCUMENTS OR ANY OTHER
INFORMATION PROVIDED BY OR ON BEHALF OF SELLER TO PURCHASER, OR ANY OTHER MATTER OR THING
REGARDING THE PROPERTY. PURCHASER ACKNOWLEDGES AND AGREES THAT UPON CLOSING SELLER SHALL SELL
AND CONVEY TO PURCHASER AND PURCHASER SHALL ACCEPT THE PROPERTY “AS IS, WHERE IS, WITH ALL
FAULTS”, EXCEPT TO THE EXTENT EXPRESSLY PROVIDED OTHERWISE IN SECTION 5.1 OF THIS AGREEMENT.
PURCHASER HAS NOT RELIED AND WILL NOT RELY ON, AND SELLER IS NOT LIABLE FOR OR BOUND BY, ANY
EXPRESSED OR IMPLIED WARRANTIES, GUARANTIES, STATEMENTS, REPRESENTATIONS OR INFORMATION
PERTAINING TO THE PROPERTY OR RELATING THERETO (INCLUDING SPECIFICALLY, WITHOUT LIMITATION,
PROPERTY INFORMATION PACKAGES DISTRIBUTED WITH RESPECT TO THE PROPERTY AND ANY ACTUAL OR
PROPOSED BUDGETS FOR THE REAL PROPERTY) MADE OR FURNISHED BY SELLER, THE MANAGER OF THE
PROPERTY, OR ANY REAL ESTATE BROKER OR AGENT REPRESENTING OR PURPORTING TO REPRESENT SELLER,
TO WHOMEVER MADE OR GIVEN, DIRECTLY OR INDIRECTLY, ORALLY OR IN WRITING, UNLESS SPECIFICALLY
SET FORTH IN THIS AGREEMENT. PURCHASER REPRESENTS TO SELLER THAT PURCHASER IS A SOPHISTICATED
INSTITUTIONAL INVESTOR WITH SUBSTANTIAL EXPERIENCE AND EXPERTISE WITH INVESTMENT PROPERTIES
AND HAS CONDUCTED, OR WILL CONDUCT PRIOR TO CLOSING, SUCH INVESTIGATIONS OF THE PROPERTY,
INCLUDING BUT NOT LIMITED TO, THE PHYSICAL AND ENVIRONMENTAL CONDITIONS THEREOF, AS PURCHASER DEEMS
NECESSARY TO SATISFY ITSELF AS TO THE CONDITION OF THE PROPERTY AND THE EXISTENCE OR
NONEXISTENCE OR CURATIVE ACTION TO BE TAKEN

46

 

WITH RESPECT TO ANY HAZARDOUS OR TOXIC SUBSTANCES ON OR DISCHARGED FROM THE PROPERTY, AND WILL RELY SOLELY UPON SAME AND NOT UPON
ANY INFORMATION PROVIDED BY OR ON BEHALF OF SELLER OR ITS AGENTS OR EMPLOYEES WITH RESPECT
THERETO, OTHER THAN SUCH REPRESENTATIONS, WARRANTIES AND COVENANTS OF SELLER AS ARE
EXPRESSLY SET FORTH IN THIS AGREEMENT AND THE DOCUMENTS DELIVERED AT CLOSING. UPON CLOSING
AND SUBJECT TO THE REPRESENTATIONS AND WARRANTIES OF SELLER EXPRESSLY SET FORTH IN
SECTION 5.1 AND THE DOCUMENTS DELIVERED AT CLOSING, PURCHASER SHALL ASSUME THE RISK
THAT ADVERSE MATTERS, INCLUDING BUT NOT LIMITED TO, CONSTRUCTION DEFECTS AND ADVERSE
PHYSICAL AND ENVIRONMENTAL CONDITIONS, MAY NOT HAVE BEEN REVEALED BY PURCHASER’S
INVESTIGATIONS, AND PURCHASER, UPON CLOSING, SHALL BE DEEMED TO HAVE WAIVED, RELINQUISHED
AND RELEASED SELLER (AND SELLER’S OFFICERS, DIRECTORS, SHAREHOLDERS, EMPLOYEES AND AGENTS)
FROM AND AGAINST ANY AND ALL CLAIMS, DEMANDS, CAUSES OF ACTION (INCLUDING CAUSES OF ACTION
IN TORT), LOSSES, DAMAGES, LIABILITIES, COSTS AND EXPENSES (INCLUDING ATTORNEYS’ FEES AND
COURT COSTS) OF ANY AND EVERY KIND OR CHARACTER, KNOWN OR UNKNOWN, WHICH PURCHASER MIGHT
HAVE ASSERTED OR ALLEGED AGAINST SELLER (AND SELLER’S OFFICERS, DIRECTORS, SHAREHOLDERS,
EMPLOYEES AND AGENTS) AT ANY TIME BY REASON OF OR ARISING OUT OF ANY LATENT OR PATENT
CONSTRUCTION DEFECTS OR PHYSICAL CONDITIONS, VIOLATIONS OF ANY APPLICABLE LAWS (INCLUDING,
WITHOUT LIMITATION, ANY ENVIRONMENTAL LAWS) AND ANY AND ALL OTHER ACTS, OMISSIONS, EVENTS,
CIRCUMSTANCES OR MATTERS REGARDING THE PROPERTY EXCEPT FOR FRAUD AND OBLIGATIONS OF SELLER
UNDER THIS AGREEMENT OR ANY AGREEMENTS EXECUTED AND DELIVERED BY SELLER AT CLOSING.
PURCHASER AGREES THAT SHOULD ANY CLEANUP, REMEDIATION OR REMOVAL OF HAZARDOUS SUBSTANCES OR
OTHER ENVIRONMENTAL CONDITIONS ON THE PROPERTY BE REQUIRED AFTER THE CLOSING DATE, SUCH
CLEAN-UP, REMOVAL OR REMEDIATION SHALL BE THE RESPONSIBILITY OF AND SHALL BE PERFORMED AT
THE SOLE COST AND EXPENSE OF PURCHASER.

     The waivers and releases set forth in Sections 5.7(a) and (b) and in
the immediately preceding paragraph include claims of which Purchaser is presently unaware
or which Purchaser does not presently suspect to exist which, if known by Purchaser, would
materially affect Purchaser’s waiver or release of Seller and the other parties referenced
in this Section. Purchaser specifically waives the

47

 

provisions of California Civil Code Section 1542, which provides as follows:

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

INITIALS: Purchaser                     

	9.3	 	Repairs, Reserves, and Capital Expenditures. Purchaser acknowledges and agrees that
except as provided in Section 5.4 of this Agreement, (a) Seller shall have no
obligation to make any repairs, replacements, improvements or alterations to the Property or
to expend any funds therefor, including, without limitation, any reserves that may be held for
such purpose, and (b) Purchaser shall not be entitled to a credit to the Purchase Price at
Closing in the event capital expenditures actually made at the Hotel for any year are less
than the budgeted amount as of the date of the Closing.

	9.4	 	Effect and Survival of Disclaimers. Seller and Purchaser acknowledge that the
compensation to be paid to Seller for the Property has been decreased to take into account
that the Property is being sold subject to the provisions of this Article IX. Seller
and Purchaser agree that the provisions of this Article IX shall survive Closing.

ARTICLE X

MISCELLANEOUS

	10.1	 	Confidentiality. This Agreement, the terms hereof and the Property Information shall
be treated in accordance with that certain Pan Pacific Hotel Confidentiality Agreement
executed by Purchaser in favor of Seller (the “Confidentiality Agreement”). The
provisions of this Section 10.1 shall survive the Closing.

	10.2	 	Public Disclosure. Any release to the public, at any time prior to or after Closing,
of information with respect to the sale contemplated herein or any matters set forth in this
Agreement will be made only in the form approved by Purchaser and Seller and their respective
counsel. The provisions of this Section 10.2 shall survive the Closing.
Notwithstanding the foregoing, it is acknowledged that Purchaser is, or is an affiliate of, a
real estate investment trust (the “REIT”), and the REIT has and will seek to sell shares to the general public; consequently,
Purchaser shall have the absolute and unbridled right disclose any information regarding
the transaction contemplated by this Agreement required by law or as necessary to satisfy
Purchaser’s disclosure and reporting obligations as required by law. On or at any time
following the Effective Date, Purchaser may file with

48

 

the United States Securities Exchange Commission information regarding the transaction
contemplated by this Agreement to the extent required by law, and make a press release
reasonably acceptable to Seller in connection therewith.

	10.3	 	Discharge of Obligations. The acceptance of the Assignment of Ground Lease by
Purchaser shall be deemed to be a full performance and discharge of every representation and
warranty made by Seller herein and every agreement and obligation on the part of Seller to be
performed pursuant to the provisions of this Agreement, except those which are herein
specifically stated to survive Closing.

	10.4	 	Assignment. Purchaser may not assign its rights under this Agreement without first
obtaining Seller’s written approval which may be given or withheld in Seller’s sole
discretion; provided that, Purchaser may assign all or any portion of this Agreement (a) to
one or more entities which are directly or indirectly controlled by, or under common control
with, Purchaser, and (b) pursuant to a 1031 exchange as set forth in Section 10.25
hereof. Any assignment by Purchaser of this Agreement shall not relieve Purchaser of its
obligations under this Agreement and any permitted assignee must expressly assume the
obligations of Purchaser in writing. Without limiting the foregoing, in no event shall
Purchaser assign this Agreement to any assignee which, in the reasonable judgment of Seller,
will cause the transaction contemplated hereby or any party thereto to violate the
requirements of ERISA.

	10.5	 	Notices. Any notice pursuant to this Agreement shall be given in writing by (a)
personal delivery, or (b) reputable overnight delivery service with proof of delivery, or (c)
United States Mail, postage prepaid, registered or certified mail, return receipt requested,
or (d) legible facsimile transmission completed before 5:00 p.m. (local time at the Real
Property) on a business day sent to the intended addressee at the address set forth below, or
to such other address or to the attention of such other person as the addressee shall have
designated by written notice sent in accordance herewith, and shall be deemed to have been
given either at the time of personal delivery, or, in the case of expedited delivery service
or mail, as of the date of first attempted delivery at the address and in the manner provided
herein, or, in the case of facsimile transmission, as of the date of the facsimile
transmission provided that an original of such facsimile is also sent to the intended
addressee by means described in clauses (a), (b) or (c) above. Unless changed in accordance
with the preceding sentence, the addresses for notices given pursuant to this Agreement shall
be as follows:

49

 

If to Seller:

c/o Oxford Lodging Advisory & Investment Group, LLC

50 California Street, Suite 3300

San Francisco, California 94111

Attention: Mr. Robert D. Kline

Facsimile no. (415) 946-2322

With a copy to:

Paul, Hastings, Janofsky & Walker LLP

515 South Flower Street, 25th Floor

Los Angeles, California 90071

Attention: Alan Weakland, Esq.

Facsimile no. (213) 996-3241

If to Purchaser:

Ashford Hospitality Limited Partnership

14185 Dallas Parkway, Suite 4100

Dallas, Texas 75254

Attention: David A. Brooks and Christopher Peckham

Facsimile no. (972) 490-9605

With a copy to:

Andrews Kurth LLP

1717 Main Street, Suite 3700

Dallas, Texas 75201-4605

Attention: Brigitte Gawenda Kimichik, Esq.

Facsimile no. 214/659-4401 (Direct: 4777)

	10.6	 	Modifications. This Agreement cannot be changed orally, and no executory agreement
shall be effective to waive, change, modify or discharge it in whole or in part unless such
executory agreement is in writing and is signed by the parties against whom enforcement of any
waiver, change, modification or discharge is sought.
	 
	10.7	 	Calculation of Time Periods; Time is of the Essence. Unless otherwise specified, in
computing any period of time described in this Agreement, the day of the act or event after
which the designated period of time begins to run is not to be included and the last day of
the period so computed is to be included, unless such last day is a Saturday, Sunday or legal
holiday under the laws of the State in which the Real Property is located, in which event the
period shall run until the end of the

50

 

next day which is neither a Saturday, Sunday or legal holiday. The final day of any such
period shall be deemed to end at 5:00 p.m., local time where the Real Property is located.
Time is of the essence with respect to each and every term and provision of this Agreement.

	10.8	 	Successors and Assigns. Subject to the limitations on assignment set forth in
Section 10.4 above, the terms and provisions of this Agreement are to apply to and
bind the permitted successors and assigns of the parties hereto.
	 
	10.9	 	Entire Agreement. This Agreement, including the Exhibits, the Schedules and the
Confidentiality Agreement contain the entire agreement between the parties pertaining to the
subject matter hereof and fully supersedes all prior written or oral agreements and
understandings between the parties pertaining to such subject matter.
	 
	10.10	 	Further Assurances. Each party agrees that it will without further consideration
execute and deliver such other documents and take such other action, whether prior or
subsequent to Closing, as may be reasonably requested by the other party to consummate more
effectively the purposes or subject matter of this Agreement. Without limiting the generality
of the foregoing, Purchaser shall, if requested by Seller, (a) execute acknowledgments of
receipt with respect to any materials delivered by Seller to Purchaser with respect to the
Property, and (b) obtain sellers’ permits for any sales activities conducted at the Property
prior to Closing and/or obtain “sale for resale certificates” for any Personal Property that
may be sold after the Closing. The provisions of this Section 10.10 shall survive
Closing.
	 
	10.11	 	Counterparts; Facsimile Signatures. This Agreement may be executed in counterparts,
and all such executed counterparts shall constitute the same agreement. It shall be necessary
to account for only one such counterpart in proving this Agreement. In order to expedite the
transaction contemplated herein, telecopied or facsimile signatures may be used in place of
original signatures on this Agreement. Seller and Purchaser intend to be bound by the
signatures on the telecopied document, are aware that the other party will rely on the
telecopied signatures, and hereby waive any defenses to the enforcement of the terms of this
Agreement based on the form of signature.
	 
	10.12	 	Severability. If any provision of this Agreement is determined by a court of
competent jurisdiction to be invalid or unenforceable, the remainder of this Agreement shall
nonetheless remain in full force and effect.
	 
	10.13	 	Applicable Law. THIS AGREEMENT IS PERFORMABLE IN THE STATE IN WHICH THE LAND IS
LOCATED AND SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
SUBSTANTIVE FEDERAL LAWS OF THE UNITED STATES AND THE LAWS OF SUCH STATE. SELLER AND
PURCHASER HEREBY

51

 

IRREVOCABLY SUBMIT TO THE JURISDICTION OF ANY STATE OR FEDERAL COURT SITTING IN THE STATE
IN WHICH THE LAND IS LOCATED IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT AND HEREBY IRREVOCABLY AGREE THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR
PROCEEDING SHALL BE HEARD AND DETERMINED IN A STATE OR FEDERAL COURT SITTING IN THE STATE
IN WHICH THE LAND IS LOCATED. PURCHASER AND SELLER AGREE THAT THE PROVISIONS OF THIS
SECTION 10.13 SHALL SURVIVE THE CLOSING OF THE TRANSACTION CONTEMPLATED BY THIS
AGREEMENT.

	10.14	 	No Third Party Beneficiary. The provisions of this Agreement and of the documents
to be executed and delivered at Closing are and will be for the benefit of Seller and
Purchaser only and are not for the benefit of any third party, and accordingly, no third party
shall have the right to enforce the provisions of this Agreement or of the documents to be
executed and delivered at Closing.

	10.15	 	Exhibits and Schedules. The following schedules or exhibits attached hereto shall
be deemed to be an integral part of this Agreement:

	 	 	 	 	 	 	 
	 

	 	Schedule 1.1(a)(i)
	 	-
	 	Legal Description of the Land
	 

	 	Schedule 1.1(a)(ii)
	 	-
	 	Description of Ground Lease
	 

	 	Schedule 1.1(c)
	 	-
	 	Excluded Personal Property
	 

	 	Schedule 1.1(e)-1
	 	-
	 	Service Contracts
	 

	 	Schedule 1.1(e)-2
	 	-
	 	Equipment Leases
	 

	 	Schedule 1.1(h)
	 	-
	 	List of Leases
	 

	 	Schedule 3.2
	 	-
	 	Reports
	 

	 	Schedule 4.4.11
	 	-
	 	Vouchers
	 

	 	Schedule 5.1(c)
	 	-
	 	Litigation
	 

	 	Schedule 5.1(f)
	 	-
	 	Violations
	 

	 	Schedule 5.1(l)
	 	-
	 	Employees
	 
	 	 	 	 	 	 
	 

	 	Exhibit A
	 	-
	 	Assignment of Ground Lease
	 

	 	Exhibit B
	 	-
	 	Grant Deed
	 

	 	Exhibit C
	 	-
	 	Bill of Sale
	 

	 	Exhibit D
	 	-
	 	Assignment and Assumption of Contracts
	 

	 	Exhibit E
	 	-
	 	Assignment and Assumption of Leases
	 

	 	Exhibit F
	 	-
	 	FIRPTA Certificate
	 

	 	Exhibit G
	 	-
	 	Designation Agreement
	 

	 	Exhibit H
	 	-
	 	Fourth Amendment to Lease
	 

	 	Exhibit I
	 	-
	 	Form of Ground Lease Estoppel
	 

	 	Exhibit J
	 	-
	 	Form of Owner’s Affidavit

52

 

	10.16	 	Captions. The section headings appearing in this Agreement are for convenience of
reference only and are not intended, to any extent and for any purpose, to limit or define the
text of any section or any subsection hereof.

	10.17	 	Construction. The parties acknowledge that the parties and their counsel have
reviewed and revised this Agreement and that the normal rule of construction to the effect
that any ambiguities are to be resolved against the drafting party shall not be employed in
the interpretation of this Agreement or any exhibits, schedules or amendments hereto.
Singular words shall connote the plural as well as the singular, and plural words shall
connote the singular as well as the plural, and the masculine shall include the feminine and
the neuter, as the context may require.

	10.18	 	Termination of Agreement. It is understood and agreed that if either Purchaser or
Seller terminates this Agreement pursuant to a right of termination granted hereunder, such
termination shall operate to relieve Seller and Purchaser from all obligations under this
Agreement, except for such obligations as are specifically stated herein to survive the
termination of this Agreement.

	10.19	 	Attorneys Fees.  If any action or proceeding is commenced by either party to enforce
their rights under this Agreement or to collect damages as a result of the breach of any of
the provisions of this Agreement, the prevailing party in such action or proceeding, including
any bankruptcy, insolvency or appellate proceedings, shall be entitled to recover all
reasonable costs and expenses, including, without limitation, reasonable attorneys’ fees and
court costs, in addition to any other relief awarded by the court.

	10.20	 	Arbitration of Disputes. NOTICE: BY INITIALING IN THE SPACE BELOW YOU ARE AGREEING
TO HAVE ANY DISPUTE ARISING OUT OF THIS AGREEMENT DECIDED BY NEUTRAL ARBITRATION AS PROVIDED
BY CALIFORNIA LAW AND YOU ARE GIVING UP ANY RIGHTS YOU MIGHT POSSESS TO HAVE THE DISPUTE
LITIGATED IN A COURT OR JURY TRIAL. BY INITIALING IN THE SPACE BELOW YOU ARE GIVING UP YOUR
JUDICIAL RIGHTS TO DISCOVERY AND APPEAL, UNLESS SUCH RIGHTS ARE SPECIFICALLY INCLUDED IN THE
“ARBITRATION OF DISPUTES” PROVISION. IF YOU REFUSE TO SUBMIT TO ARBITRATION AFTER AGREEING TO
THIS PROVISION, YOU MAY BE COMPELLED TO ARBITRATE UNDER THE AUTHORITY OF THE CALIFORNIA CODE
OF CIVIL PROCEDURE. YOUR AGREEMENT TO THIS ARBITRATION PROVISION IS VOLUNTARY.
	 
	 	 	(a) Any dispute, controversy or claim expressly required pursuant to the terms of this
Agreement to be submitted to arbitration shall be submitted to and settled by binding
arbitration in the City of San Francisco, California, pursuant to the rules of the Judicial
Arbitration and Mediation Services, Inc., then in effect (or at any other place or under
any other form of arbitration mutually acceptable to the

53

 

parties). Notwithstanding the foregoing, the parties hereto agree that any such
arbitration shall be governed by the following requirements:

(b)
A single neutral arbitrator (with at least five (5) years experience in real property
transactions in the location of Purchaser Property) mutually selected by the parties shall
conduct the arbitration proceedings. If the parties are unable to agree upon a single
neutral arbitrator within fifteen (15) days from the date of any notice of demand for
arbitration, the parties shall each select a neutral arbitrator within ten (10) days. The
two (2) arbitrators so selected shall then choose a third neutral arbitrator within five
(5) days. The three neutral arbitrators (“Arbitrators”) so selected shall conduct
the arbitration proceeding and render the arbitration decision.

(c)
Any arbitration decision shall be in writing, with the bases of such decision specified
in reasonable detail.

(d) Each party shall submit to the other party, not less than five (5) business days (or
such longer period as the Arbitrators may specify) prior to the commencement of the
arbitration hearing, (i) a list of the persons whose testimony the other party intends to
elicit at the arbitration hearing, (ii) copies of any and all documents to be offered into
evidence, and (iii) a description in reasonable detail of any other evidence such party
intends to offer into evidence. The foregoing shall not limit the parties’ rights to such
other discovery as may be permitted pursuant to the rules of the arbitrating entity.

(e)
If the Parties elect arbitration, any award rendered shall be final and conclusive upon
the parties and a judgment thereon may be entered in the highest court of the state forum
having jurisdiction over the subject matter of such arbitration. The expenses of the
arbitration shall be borne equally by the parties to the arbitration, provided that each
party shall pay for and bear the cost of its own experts, evidence and counsel’s fees; and
provided, further, that the Arbitrators may award all or any portion of the costs of either
party to be borne by the other party where the Arbitrators find that such other party’s
claim or defense was manifestly unreasonably maintained.

WE HAVE READ AND UNDERSTAND THE FOREGOING AND AGREE TO SUBMIT DISPUTES ARISING OUT OF THE
MATTERS INCLUDED IN THE “ARBITRATION OF DISPUTES” PROVISION TO NEUTRAL ARBITRATION.

	 	 	 	 	 	 	 
	 

	 	 

	 	 

	 	 
	 

	 	SELLER’S INITIALS
	 	BUYER’S INITIALS	 	 

	 	 	The foregoing shall not apply to or limit the right of Purchaser to bring suit for specific
performance in an appropriate court of law in accordance with the terms

54

 

of this Agreement.

	10.21	 	No Waiver. Failure of either party at any time to require performance of any
provision of this Agreement shall not limit the party’s right to enforce the provision.
Waiver of any breach of any provision shall not be a waiver of any succeeding breach of the
provision or a waiver of the provision itself or any other provision.

	10.22	 	No Reservation of Property. The preparation and/or delivery of unsigned drafts of
this Agreement shall not create any legally binding rights in the Property and/or obligations
of the parties, and Purchaser and Seller acknowledge that this Agreement shall be of no effect
until it is duly executed by both Purchaser and Seller. Purchaser understands and agrees that
Seller shall have the right to continue to market the Property and/or to negotiate with other
potential purchasers of the Property until the satisfaction or waiver in writing of all
conditions to the obligations of Purchaser under this Agreement.

	10.23	 	No Recordation. Purchaser shall not record this Agreement, nor any memorandum or
other notice of this Agreement, in any public records.

	10.24	 	Liability under Assignment. Purchaser agrees that if Purchaser has any right or
claim against Seller pursuant to the warranties in the Assignment of Ground Lease, if any,
Purchaser shall exhaust all of its rights and remedies against the Title Company pursuant to
the Title Policy prior to bringing any claim or action against Seller in respect of such
warranties.

	10.25	 	Like-Kind Exchange. Notwithstanding anything to the contrary in this Agreement,
Purchaser or Seller may elect to exchange the Property for other real estate of a like kind in
accordance with Section 1031 of the Internal Revenue Code of 1986, as amended (the
“Code”. To the extent possible, the provisions of this Section shall be interpreted
consistently with this intent. To exercise any rights under this Section, the party electing
to exchange the Property shall provide the other with a written statement stating its intent
to enter into an exchange at least five (5) days prior to Closing. Either party’s election to
exchange, rather than sell or buy, the Property for other real estate of a like kind shall be
at no cost or liability to the other. Should this Agreement become part of a 1031 transaction,
the party electing to exchange the Property (the “Exchanger”) hereby agrees that the
other party may enforce any and all representations, warranties, covenants and other
obligations of the Exchanger under this Agreement directly against Exchanger, and the other
party agrees that Exchanger may enforce any and all representations, warranties, covenants and
other obligations of the other party under this Agreement directly against the other party.

[SIGNATURE PAGE FOLLOWS]

55

 

     IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the Effective
Date.

SELLER:

W2001 PAC REALTY, L.L.C.,

a Delaware limited liability company

	 	 	 	 	 	 	 	 	 	 	 
	By:	 	Whitehall Parallel Global Real Estate Limited Partnership 2001,
	 	 	a Delaware limited partnership	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	By:	 	WH Parallel Advisors, L.L.C. 2001,	 	 
	 	 	 	 	a Delaware limited liability company	 	 
	 	 	 	 	General Partner	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	By:	 	/S/ PAT TRIBOLET	 	 
	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	Pat Tribolet,	 	 
	 

	 	 	 	 	 	 	 	Vice President	 	 

PURCHASER:

ASHFORD HOSPITALITY LIMITED PARTNERSHIP,

a Delaware limited partnership

	 	 	 	 	 	 	 	 	 
	By:	 	Ashford OP General Partner LLC,
	 	 	a Delaware limited liability company
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	/S/ DAVID A. BROOKS	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	 	 	David A. Brooks	 	 
	 

	 	 	 	 	 	Vice President	 	 

56

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00098-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00098-of-00352.parquet"}]]