Document:

Exhibit 10.49

Hotel: Huntsville H2/HI&S

PURCHASE CONTRACT

between

Larry G. Blumberg

Hayne Hollis

Barry Kraselsky

Watson & Downs Investments, LLC

Blumberg Family – E&M, LLC

Blumberg Futures, LLC

Hollis & Spann Futures, LLC

(“INTEREST OWNERS”),

SUNBELT – I2HA, LLC

(“COMPANY”)

AND

APPLE TEN HOSPITALITY OWNERSHIP, INC.

(“BUYER”)

Dated: November 1, 2011

	
  

 
	
  [CONSTRUCTION]

 
	
 TABLE OF CONTENTS

 

	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
 Page No.

 
	
  

 	
  

 	
  

 	
  

 	

 

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
 ARTICLE I

 	
 DEFINED TERMS

 	
  

 	
 1

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 1.1

 	
  

 	
 Definitions

 	
  

 	
 1

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
 ARTICLE II

 	
  

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

 	
  

 	
 9

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 2.1

 	
  

 	
 Purchase and
 Sale

 	
  

 	
 9

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 2.2

 	
  

 	
 Purchase
 Price

 	
  

 	
 9

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 2.3

 	
  

 	
 Allocation

 	
  

 	
 9

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 2.4

 	
  

 	
 Payment

 	
  

 	
 9

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
 ARTICLE III

 	
  

 	
 Review Period

 	
  

 	
 10

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 3.1

 	
  

 	
 Review
 Period

 	
  

 	
 10

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 3.2

 	
  

 	
 Due
 Diligence Examination

 	
  

 	
 12

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 3.3

 	
  

 	
 Restoration

 	
  

 	
 12

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
 ARTICLE IV

 	
  

 	
 SURVEY AND TITLE APPROVAL

 	
  

 	
 12

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 4.1

 	
  

 	
 Survey

 	
  

 	
 12

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 4.2

 	
  

 	
 Title

 	
  

 	
 12

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 4.3

 	
  

 	
 Survey or
 Title Objections

 	
  

 	
 13

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
 ARTICLE V

 	
  

 	
 ASSIGNMENT OF MANAGEMENT AGREEMENT AND
 FRANCHISE AGREEMENT

 	
  

 	
 13

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
 ARTICLE VI

 	
  

 	
 BROKERS

 	
  

 	
 14

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
 ARTICLE VII

 	
  

 	
 REPRESENTATIONS, WARRANTIES AND COVENANTS

 	
  

 	
 14

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 7.1

 	
  

 	
 Representations,
 Warranties and Covenants of the Interest Owners

 	
  

 	
 14

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 7.2

 	
  

 	
 Representations,
 Warranties and Covenants of Buyer

 	
  

 	
 23

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 7.3

 	
  

 	
 Survival

 	
  

 	
 23

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
 ARTICLE VIII

 	
  

 	
 ADDITIONAL COVENANTS

 	
  

 	
 24

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 8.1

 	
  

 	
 Subsequent
 Developments

 	
  

 	
 24

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 8.2

 	
  

 	
 Obligations
 of the Company and Interest Owners Before Closing

 	
  

 	
 24

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 8.3

 	
  

 	
 Third Party
 Consents

 	
  

 	
 25

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 8.4

 	
  

 	
 Estoppel
 Certificates

 	
  

 	
 25

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 8.5

 	
  

 	
 Access to
 Financial Information

 	
  

 	
 25

 

ii

	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 8.6

 	
  

 	
 Bulk Sales

 	
  

 	
 25

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 8.7

 	
  

 	
 Indemnification

 	
  

 	
 26

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 8.8

 	
  

 	
 Limitation
 of Liability of Interest Owners

 	
  

 	
 28

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 8.9

 	
  

 	
 Tax Matters

 	
  

 	
 28

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 8.10

 	
  

 	
 Construction
 of Hotel

 	
  

 	
 29

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 8.11

 	
  

 	
 Commencement
 of Construction; Substantial Completion

 	
  

 	
 29

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 8.12

 	
  

 	
 (Intentionally
 Omitted)

 	
  

 	
 29

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 8.13

 	
  

 	
 Inspections

 	
  

 	
 29

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 8.14

 	
  

 	
 Punch List

 	
  

 	
 29

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 8.15

 	
  

 	
 Pre-Opening
 Program

 	
  

 	
 30

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 8.16

 	
  

 	
 Construction
 Warranty

 	
  

 	
 30

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
 ARTICLE IX

 	
  

 	
 CONDITIONS FOR CLOSING

 	
  

 	
 31

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 9.1

 	
  

 	
 Buyer’s
 Conditions for Closing

 	
  

 	
 31

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 9.2

 	
  

 	
 Interest
 Owner’s Conditions for Closing

 	
  

 	
 32

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
 ARTICLE X

 	
  

 	
 CLOSING AND CONVEYANCE

 	
  

 	
 32

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 10.1

 	
  

 	
 Closing

 	
  

 	
 32

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 10.2

 	
  

 	
 Interest
 Owners’ Deliveries

 	
  

 	
 33

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 10.3

 	
  

 	
 Buyer’s
 Deliveries

 	
  

 	
 34

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 10.4

 	
  

 	
 Tax Matters

 	
  

 	
 34

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
 ARTICLE XI

 	
  

 	
 COSTS

 	
  

 	
 36

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 11.1

 	
  

 	
 Interest
 Owner’s Costs

 	
  

 	
 36

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 11.2

 	
  

 	
 Buyer’s
 Costs

 	
  

 	
 36

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
 ARTICLE XII

 	
  

 	
 ADJUSTMENTS

 	
  

 	
 36

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 12.1

 	
  

 	
 Adjustments

 	
  

 	
 36

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 12.2

 	
  

 	
 Reconciliation
 and Final Payment

 	
  

 	
 37

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 12.3

 	
  

 	
 Employees

 	
  

 	
 36

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
 ARTICLE XIII

 	
  

 	
 CASUALTY AND CONDEMNATION

 	
  

 	
 37

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 13.1

 	
  

 	
 Risk of
 Loss; Notice

 	
  

 	
 37

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 13.2

 	
  

 	
 Buyer’s
 Termination Right

 	
  

 	
 38

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 13.3

 	
  

 	
 Procedure
 for Closing

 	
  

 	
 38

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
 ARTICLE XIV

 	
  

 	
 DEFAULT REMEDIES

 	
  

 	
 38

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 14.1

 	
  

 	
 Buyer
 Default

 	
  

 	
 38

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 14.2

 	
  

 	
 Interest
 Owner/Company Default

 	
  

 	
 38

 

iii

	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 14.3

 	
  

 	
 Attorney’s
 Fees

 	
  

 	
 39

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
 ARTICLE XV

 	
  

 	
 NOTICES

 	
  

 	
 39

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
 ARTICLE XVI

 	
  

 	
 MISCELLANEOUS

 	
  

 	
 40

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 16.1

 	
  

 	
 Performance

 	
  

 	
 40

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 16.2

 	
  

 	
 Binding
 Effect; Assignment

 	
  

 	
 40

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 16.3

 	
  

 	
 Entire
 Agreement

 	
  

 	
 40

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 16.4

 	
  

 	
 Governing
 Law

 	
  

 	
 40

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 16.5

 	
  

 	
 Captions

 	
  

 	
 40

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 16.6

 	
  

 	
 Confidentiality

 	
  

 	
 40

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 16.7

 	
  

 	
 Closing
 Documents

 	
  

 	
 41

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 16.8

 	
  

 	
 Counterparts

 	
  

 	
 41

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 16.9

 	
  

 	
 Severability

 	
  

 	
 41

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 16.10

 	
  

 	
 Interpretation

 	
  

 	
 41

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 16.11

 	
  

 	
 Further Acts

 	
  

 	
 41

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 16.12

 	
  

 	
 Joint and
 Several Obligations

 	
  

 	
 41

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 16.13

 	
  

 	
 (Intentionally
 Omitted)

 	
  

 	
 41

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
 ARTICLE
 XVIII

 	
  

 	
 SUPPLEMENTAL PROVISIONS

 	
  

 	
 41

 

SCHEDULES:

	
  

 	
  

 
	
 Schedule 1

 	
 Hotel
 Specific Data

 
	
 Schedule 2

 	
 Supplemental
 Provisions

 
	
 Schedule
 7.1(k)

 	
 Leases

 
	
 Schedule
 7.1(l)

 	
 Company
 Intellectual Property

 
	
 Schedule
 7.1(n)

 	
 Tax Returns

 
	
 Schedule
 7.1(o)

 	
 Insurance

 
	
 Schedule
 7.1(p)

 	
 Agreements

 

EXHIBITS:

	
  

 	
  

 
	
 Exhibit A

 	
 Legal
 Description

 
	
 Exhibit B

 	
 Management
 Agreement

 
	
 Exhibit C

 	
 Environmental
 Reports

 
	
 Exhibit D

 	
 Consents and
 Approvals

 
	
 Exhibit E

 	
 Construction
 Warranty

 

iv

PURCHASE CONTRACT

          This
PURCHASE CONTRACT (this “Contract”) is made and entered into as of the
date set forth in Item 1 of Schedule 1 by and between the persons
and entities set forth in Item 2(a) of Schedule 1 (each, an “Interest Owner”
and, collectively, the “Interest Owners”), with an address c/o
Larry Blumberg & Associates, Inc., 2733 Ross Clark Circle, P.O. Box 5566,
Dothan, Alabama 36302; the entity set forth in Item 2(b) of Schedule
1 (the “Company”), with its principal office c/o Larry Blumberg
& Associates, Inc., 2733 Ross Clark Circle, P.O. Box 5566, Dothan, Alabama
36302; and APPLE TEN HOSPITALITY OWNERSHIP, INC., a Virginia corporation, with
its principal office at 814 East Main Street, Richmond, Virginia 23219, or its
affiliates or assigns (“Buyer”).  

RECITALS

          A.
The Company is the fee simple or leasehold owner of the land identified in
Exhibit A attached hereto and incorporated herein by this reference. The
Company is constructing on such land the hotel identified in Item 3 of Schedule 1
attached hereto and incorporated herein by reference.  

          B.
The Interest Owners are the sole owners of one hundred percent (100%) of the
limited liability company interests or stock, as applicable, in the Company. 

          C.
Buyer desires to purchase from the Interest Owners, and the Interest Owners
desire to sell to Buyer, all of Interest Owner’s interests in the Company for
the purchase price and upon terms and conditions hereinafter set forth. 

AGREEMENT:

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

ARTICLE I

DEFINED TERMS

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

          “Additional
Deposit” shall mean $2,500. 

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

1

          “Agreement”
means any agreement, contract, obligation, promise or undertaking (whether
written or oral and whether express or implied) that is or purports to be
legally binding. 

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

          “Brand”
shall mean the hotel brand or franchise identified in Item 4 of Schedule
1 and under which the Hotel operates. 

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

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

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

          “Construction
Warranty” shall have the meaning set forth in Section 8.16. 

          “Contractor”
shall mean the contractor for the Hotel identified in Item 12 of Schedule
1. 

          “Code”
means the Internal Revenue Code of 1986, as amended.  

          “Company
Intellectual Property” shall have the meaning set forth in Section
7.1(l). 

          “Contemplated
Transactions” shall mean all of the transactions contemplated by this
Contract and the Exhibits hereto. 

          “Contract”
shall mean this Purchase Contract, as amended from time to time pursuant to the
terms hereof. 

          “Contracts,
Plans and Specs” shall mean the Plans and Specifications and all other
contracts, plans, drawings, specifications, surveys, soil reports, engineering
reports, inspection reports, and other technical descriptions and reports. 

          “Deposits”
shall mean, to the extent assignable, all prepaid rents and deposits
(including, without limitation, any reserves for capital repairs and/or
improvements), including, but not limited to, refundable security deposits and
rental deposits and all other deposits for advance reservations, banquets or
future services, made in connection with the use or occupancy of the
Improvements, all reserves for replacement of FF&E, reserves for real property
taxes and insurance and utility deposits, credit for which shall be given to
the Interest Owners to the extent hereinafter provided. 

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

2

          “Earnest
Money Deposit” shall mean both the Initial Deposit defined below and
described in Section 2.5(a) hereof and the Additional Deposit defined above and
described in Section 2.5(a) hereof. 

          “Effective
Date” shall mean the date this Contract is fully executed by all of the
parties hereto, and an original of the executed document (which may be in the
form of counterparts, in which case the last counterpart) is deposited with the
Title Company. 

          “Effective
Time” shall have the meaning set forth in Section 10.1.  

          “Environment”
means soil, land surface or subsurface strata, surface waters (including
navigable waters and ocean waters), groundwaters, drinking water supply, stream
sediments, ambient air (including indoor air), plant and animal life and any
other environmental medium or natural resource. 

          “Environmental
Requirements” shall have the meaning set forth in Section 7.1(t)(iii).

          “Escrow
Agent” shall mean Chicago Title Company, the Person serving as escrow
agent for purposes of the Closing and the Earnest Money Deposit. 

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

          “Existing
Franchise Agreement” shall mean the franchise agreement identified in Item 6 of Schedule 1. 

          “Existing
Management Agreement” shall mean the management agreement identified in Item
5 of Schedule 1. 

          “FF&E”
shall mean all tangible personal property and fixtures of any kind (other than
personal property (i) owned by guests of the Hotel, or (ii) leased by the
Company pursuant to an FF&E Lease), including, but not limited to, all
furniture, fixtures, equipment, signs and related personal property; all
heating, lighting, plumbing, drainage, electrical, air conditioning, and other mechanical
fixtures and equipment and systems; all elevators, and related motors and
electrical equipment and systems; all hot water heaters, furnaces, heating
controls, motors and equipment, all shelving and partitions, all ventilating
equipment, and all disposal equipment; all spa, health club and fitness
equipment; all equipment used in connection with the use and/or maintenance of
the guestrooms, restaurants, lounges, business centers, meeting rooms, swimming
pools, indoor and/or outdoor sports facilities and other common areas and
recreational areas; all carpet, drapes, beds, furniture, televisions and other
furnishings; all stoves, ovens, freezers, refrigerators, dishwashers,
disposals, kitchen equipment and utensils, tables, chairs, plates and other dishes,
glasses, silverware, serving pieces and other restaurant and bar equipment,
apparatus and utensils. 

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

          “Force
Majeure”shall mean (i)
strikes, lockouts or labor disputes, (ii) the inability through no fault of the
Company to obtain labor or materials or reasonable substitutes therefor, 

3

(iii) acts of God and
adverse weather conditions, (iv) enemy or hostile governmental action or acts
of terrorism, (v) governmental restrictions such as embargoes, (vi) civil
commotion, (vii) fire or other casualty or (viii) other conditions similar to
those enumerated above that are beyond the reasonable control of the Company,
but in each case excluding any such events or conditions that merely result in
increased costs to the Company. 

          “Franchisor”
shall mean the franchisor identified in Item 6 of Schedule 1. 

          “Governmental
Body” means any (i) nation, state, county, city, town, borough, village,
district or other jurisdiction; (ii) federal, state, local, municipal, foreign
or other government; (iii) governmental or quasi–governmental authority of any
nature (including any agency, branch, department, board, commission, court,
tribunal or other entity exercising governmental or quasi–governmental powers);
(iv) multinational organization or body; (v) body exercising, or entitled or
purporting to exercise, any administrative, executive, judicial, legislative,
police, regulatory or taxing authority or power; or (vi) any official of any of
the foregoing. 

          “Hazardous
Material” shall have the meaning set forth in Section 7.1(t)(iii). 

          “Hotel”
shall mean the hotel being constructed on the Land, including all Improvements
and Personal Property associated therewith, known generally by the name and/or
identification set forth in Item 3(a) of Schedule 1. 

          “Improvements”
shall mean all buildings, structures, fixtures, parking areas and other
improvements now existing or to be constructed on the Land, including, without
limitation, all improvements and amenities described in Item 3 of Schedule
1 and all related facilities. 

          “Indemnified
Party” shall have the meaning set forth in Section 8.7(c)(i). 

          “Indemnifying
Party” shall have the meaning set forth in Section 8.7(c)(i). 

          “Initial
Deposit” shall mean the sum of $2,500 as set forth in Section 2.5(a)
hereof 

          
“Interest” shall mean the limited liability company interest or
corporate stock, as applicable, owned by each Interest Owner in the Company,
and “Interests” shall mean all of such limited liability company
interests or corporate stock. 

          “Interest
Lien” shall mean any claim, lien, pledge, charge, security interest,
equitable interest, option, warrant, right of first refusal, restriction on
use, voting, transfer, receipt of income or other attribute of ownership, or
other encumbrance of any kind, affecting any Interest. 

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

          “Leased
Premises” shall have the meaning set forth in Section 7.1(k). 

4

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

          “Legal
Action” shall have the meaning set forth in Section 8.8(c)(ii). 

          “Legal
Requirement” means any federal, state, local, municipal, foreign,
international, multinational or other constitution, law, ordinance, principle
of common law, code, regulation, rule, order, injunction, judgment, decree,
ruling, assessment or arbitration award of any Governmental Body or arbitrator.

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

          “Manager”
shall mean LBAM-Investors Group, L.L.C., an Alabama limited liability company
and an Affiliate of the Company as of the date of this Contract. 

          “New
Franchise Agreement” shall mean the franchise agreement to be entered into
by the Company and the Franchisor at the Closing. 

          “New
Management Agreement” shall mean the management agreement to be entered
into by the Company and the Manager at the Closing, in the form of the
agreement attached hereto as Exhibit B. 

          “Organizational
Documents” means (a) the articles or certificate of incorporation and the
bylaws of a corporation; (b) the partnership agreement and the certificate of
partnership of a partnership; (c) the articles of organization or certificate
of formation and any operating or limited liability company agreement of a
limited liability company; (d) any charter or similar document adopted or filed
in connection with the creation, formation, or organization of a Person, and
(e) any amendment to any of the foregoing. 

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

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

          “Person”
means an individual or any entity, including a corporation, partnership, joint
venture, limited liability company, trust, estate or other unincorporated
association, whether or not a legal entity. 

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

5

          “Plans
and Specifications” shall have the meaning set forth in Section
7.1(t)(viii), as the same may be revised during construction with the
approval of the Franchisor (to the extent such approval is required), provided
that any material revisions also shall be subject to the approval of Buyer,
which approval shall not be unreasonably withheld or delayed. 

          “Pre-Closing
Tax Period” shall have the meaning set forth in Section 10.4(a). 

          “Pre-Opening
Costs” shall have the meaning set forth in Section 8.15. 

          “Pre-Opening
Program” shall have the meaning set forth in Section 8.15. 

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

          “Property
Lien” means any deed of trust or mortgage, lien, security interest,
easement, right of way, encroachment, lease, purchase contract, option to
purchase, right of first refusal, servitude, restrictive covenant, limitation
on use or other encumbrance or title defect of any kind. 

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

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

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

          “Records”
shall mean all books, records, promotional material, tenant data, guest history
information (other than any such information owned exclusively by the
Franchisor), marketing and leasing material and forms (including but not
limited to any such records, data, information, material and forms in the form
of computerized files located at the Hotel), market studies prepared in
connection with the Company’s current annual plan and other materials,
information, data, legal or other documents or records (including, without
limitation, all documentation relating to any litigation or other proceedings,
all zoning and/or land use notices, relating to or affecting the Property, all
business plans and projections and all studies, plans, budgets and contracts
related to the development, construction and/or operation of the Hotel, and all
Tax Returns and work papers and filings related to Taxes for the current tax
year and the previous 

6

three (3) tax years) owned
by the Company and/or in the Company’s possession or control, or to which the
Company has access or may obtain from the Franchisor, that are used in or
relating to the Property and/or the operation of the Hotel, including the Land,
the Improvements or the FF&E, and the Company shall furnish to Buyer (and
the term “Records” shall include) a list of the general contractors,
architects and engineers providing goods and/or services in connection with the
construction of the Hotel, all construction warranties and guaranties currently
in effect and copies of the final plans and specifications for the Hotel, it
being understood that the Company may not have in its possession all change
orders and other modifications to the original plans and specifications. 

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

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

          “SEC”
shall have the meaning set forth in Section 8.5. 

          “Securities
Act” means the Securities Act of 1933, as amended. 

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

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

          “Straddle
Period” shall have the meaning set forth in Section 10.4(b). 

          “Substantial
Completion” including variations thereof such as “Substantially Complete”
and “Substantially Completed” shall mean: (i) the Company and the Contractor
have issued a certificate of substantial completion in form and substance
satisfactory to Buyer certifying that the Hotel has been constructed
substantially in accordance with the Plans and Specifications and the Legal
Requirements, (ii) a certificate of occupancy authorizing the opening of the
Hotel for business to the public and for operation under the Brand has been
issued by the local governing authority and is in full force and effect, (iii)
all other final and unconditional consents, approvals, licenses and operating
permits necessary or appropriate for the Hotel to open for business to the public
and to operate under the Brand have been issued by and obtained from all
applicable governmental and regulatory authorities, subject to Punch List
Items; (iv) the Hotel is fully furnished, fitted and equipped and ready to open
for business to the public and operate under the Brand, subject to Punch List
Items; (iii) all contractors, subcontractors, suppliers, mechanics, materialmen
and other persons or entities providing labor or materials for the construction
and development of the Hotel shall have been paid (or adequate provision for
payment of such persons or entities, which is not required to be an actual
escrow of funds, has been made to Buyer’s reasonable satisfaction), subject to
Punch List Items and (iv) the Franchisor has approved the completion,
furnishing and equipping of the Hotel and is prepared to commence (or authorize
the commencement of) operation of the Hotel, and all of the other conditions
set forth in the Management Agreement and the Franchise Agreement have been
satisfied, subject to Punch List Items. 

          “Supplemental
Provisions” shall have the meaning set forth in Article XVII. 

7

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

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

          “Tax”
or “Taxes” means any income, gross receipts, license, payroll,
employment, excise, severance, stamp, occupation, premium, property,
environmental, windfall profit, customs, vehicle, airplane, boat, vessel or
other title or registration, capital stock, franchise, employees’ income
withholding, foreign or domestic withholding, social security, unemployment,
disability, real property, personal property, sales, use, transfer, value
added, alternative, add-on minimum and other tax, fee, assessment, levy,
tariff, charge or duty of any kind whatsoever and any interest, penalty,
addition or additional amount thereon imposed, assessed or collected by or
under the authority of any Governmental Body or payable under any tax-sharing
agreement or any other Contract, including any interest, penalty, or addition
thereto, whether disputed or not and including any obligations to indemnify or
otherwise assume or succeed to the Tax liability of any other Person. 

          “Tax
Return” means any return (including any information return), report,
statement, schedule, notice, form, declaration, claim for refund or other
document or information filed with or submitted to, or required to be filed
with or submitted to, any Governmental Body in connection with the
determination, assessment, collection or payment of any Tax or in connection
with the administration, implementation or enforcement of or compliance with
any Legal Requirement relating to any Tax. 

          “Third
Party Consents” shall have the meaning set forth in Section 8.3. 

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

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

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

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

          “Tradenames”
shall mean all telephone exchanges and numbers, trade names, trade styles,
trade marks, and other identifying material, and all variations thereof,
together with all related goodwill (it being understood and agreed that all
franchise, license, management and other agreements granting a right to use the
name of such hotel chain or any other trademark or trade 

8

name and all waivers of any
brand standard shall remain in full force and effect after the acquisition of
the Interests by Buyer). 

          “Utility
Reservations” shall mean the Company’s interest in the right to receive
and continuously consume (including, without limitation, from and after
Closing) water service, sanitary and storm sewer service, electrical service,
gas service and telephone service on and for the Land and Improvements in
capacities that are adequate continuously to use and operate the Improvements
for the purposes for which they were intended, including, but not limited to
(i) any right to the present and future use of wastewater, drainage, water and
other utility facilities to the extent such use benefits the Real Property,
(ii) any reservations of or commitments covering any such use in the future,
and (iii) any wastewater capacity reservations relating to the Real Property. 

          “Warranties”
shall mean all warranties, guaranties, indemnities and claims, currently in
effect, for the benefit of the Company with respect to the Hotel, the Property
or any portion thereof, including, without limitation, all warranties and
guaranties of the development, construction, completion, installation,
equipping and furnishing of the Hotel, and all indemnities, bonds and claims of
the Company related thereto. 

ARTICLE II

PURCHASE AND SALE; PURCHASE PRICE; PAYMENT;

EARNEST MONEY DEPOSIT

          2.1
Purchase and Sale. Each Interest Owner agrees to sell and convey to
Buyer or its Affiliates and/or assigns, and Buyer or its assigns agrees to
purchase from the Interest Owners, all of the Interests, in consideration of
the Purchase Price, subject to and upon the terms and conditions hereof. All of
the Interests shall be conveyed, assigned, and transferred to Buyer at Closing,
free and clear of all Interest Liens. 

          2.2
Purchase Price. Buyer agrees to pay, and the Interest Owners agree to
accept, as consideration for the conveyance of all of the Interests, subject to
the adjustments provided for in this Contract, the amount set forth in Item
7 of Schedule 1; provided, however, that if the actual cost of
construction of the Hotel is less than the amount set forth in Item 14
of Schedule 1, the purchase price shall be reduced by an amount equal to
twenty percent (20%) of the difference between such actual construction costs
and the amount set forth in Item 14 of Schedule 1 (the “Purchase
Price”). 

          2.3
Allocation. The Purchase Price shall be allocated among the Interest
Owners in accordance with their percentage interest in the Company as set forth
in Item 2(a) of Schedule 1. 

          2.4
Payment. The Purchase Price, plus any positive adjustments under Section
12.1, less (i) the Earnest Money Deposit and interest earned thereon, if
any, which Buyer elects to have applied against the Purchase Price (as provided
below), (ii) any reserves, if any, provided in this Purchase Agreement and any
applicable reserve for Punch List Items as provided in Section 8.14 hereof and
(iii) any negative adjustments under Section 12.1, shall be paid to the
Interest Owners in cash, certified funds or wire transfer, at the Closing of
the purchase and sale of the Interests. At the Closing, the Earnest Money
Deposit, together with interest earned thereon, if 

9

any, shall, at Buyer’s
election, be returned to Buyer or shall be paid over to the Interest Owners by
Escrow Agent to be applied to the Purchase Price on behalf of Buyer. 

          2.5
Earnest Money Deposit. 

                    (a)
Upon the full execution and delivery of this Contract, Buyer shall deposit the
sum of Two Thousand Five Hundred and No/100 Dollars ($2,500.00) in cash,
certified bank check or by wire transfer of immediately available funds (the “Initial Deposit”) with the Title
Company, as escrow agent (“Escrow Agent”),
which sum shall be held by Escrow Agent as earnest money. If, pursuant to the
provisions of Section 3.1 of this Contract, Buyer elects to terminate this
Contract at any time prior to the expiration of the Review Period, then the
Escrow Agent shall return the Earnest Money Deposit to Buyer promptly upon
written notice to that effect from Buyer. If Buyer does not elect to terminate
this Contract on or before the expiration of the Review Period, Buyer shall,
within three (3) Business Days after the expiration of the Review Period
deposit the Additional Deposit with the Escrow Agent. The Initial Deposit and
the Additional Deposit, and all interest accrued thereon, shall hereinafter be
referred to as the “Earnest Money Deposit.”

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

ARTICLE III

REVIEW PERIOD

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

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

                    (b)
All real estate and personal property tax statements with respect to the Real Property
and notices of appraised value for the Real Property for the current year (if 

10

available) and for the
lesser of the time period the Real Property was owned or leased by the Company
or each of the three (3) calendar years prior to the current year; 

                    (c)
Engineering, mechanical, architectural and construction plans, drawings,
specifications and contracts, payment and performance bonds, title policies,
reports and commitments, zoning information and marketing and economic data relating
to the Real Property or the Hotel and the construction, development,
installation and equipping thereof, as well as copies of all environmental
reports and information, topographical, boundary or “as built” surveys,
engineering reports, subsurface studies and other Contracts, Plans and Specs
relating to or affecting the Hotel, which the Company has in its possession or
control. Buyer acknowledges that the Contracts, Plans and Specs in the
Company’s possession may not include all change orders and other modifications
made during the course of construction of the Hotel, but in such case the
Company will cause the general contractor for the Hotel to furnish copies of
such change orders and other modifications upon Buyer’s request at any time
during the Review Period; 

                    (d)
All agreements for real estate commissions, brokerage fees, finder’s fees or
other compensation payable by the Company in connection therewith; and 

                    (e)
All notices received from governmental authorities in connection with the Real
Property for the current year and for the lesser of the time period the Real
Property was owned or leased by the Company or each of the three (3) calendar
years prior to the current year and all other notices received from
governmental authorities received at any time that relate to any noncompliance
or violation of law that has not been corrected. 

          The
Company shall, upon request of Buyer, make available to Buyer and Buyer’s
representatives and agents, for inspection and copying during normal business
hours, Records located at the Company’s corporate offices, and the Company
agrees to provide Buyer copies of all other reasonably requested information
that is relevant to the management, operation, use, occupancy or leasing of or
title to the Real Property and the plans and specifications for development of
the Hotel. At any time during the Review Period, Buyer may, in its sole and
absolute discretion, elect not to proceed with the purchase of the Property for
any reason whatsoever by giving written notice thereof to the Company, in which
event: (i) the Initial Earnest Money Deposit shall be promptly returned by
Escrow Agent to Buyer together with all accrued interest, if any, (ii) this
Contract shall be terminated automatically, (ii) all materials supplied by the
Company to Buyer shall be returned promptly to the Company, and (iii) the
parties will be relieved of all other rights, obligations and liabilities
hereunder, except for the parties’ obligations pursuant to Sections 3.3
and 16.6 below. Upon expiration of the Review Period, Buyer may not
terminate this Contract and receive a refund of the Earnest Money Deposit for
any reason except the failure of any of the conditions set forth in Section
9.1. 

          Buyer
acknowledges and agrees that certain of the items requested to be delivered to
Buyer in this Section 3.1 have been delivered to and received by Buyer.
The Company agrees to cooperate with Buyer and to provide any documents or
instruments described herein which have not been delivered by the Company for
Buyer’s due diligence and review. 

11

          3.2
Due Diligence Examination. At any time during the Review Period, and
thereafter through Closing of the Property, Buyer and/or its representatives
and agents shall have the right to enter upon the Property at all reasonable
times for the purposes of reviewing all Records and other data, documents
and/or information relating to the Property and conducting such surveys,
appraisals, engineering tests, soil tests (including, without limitation, Phase
I environmental site assessments), inspections of construction and other
inspections and other studies as Buyer deems reasonable and necessary or
appropriate to evaluate the Property, subject to providing advance (not less
than 24 hours) notice to the Company unless otherwise agreed to by Buyer and
the Company (the “Due Diligence Examination”). The Company shall have
the right to have its representative present during Buyer’s physical
inspections of the Property, provided that failure of the Company to do so
shall not prevent Buyer from exercising its due diligence, review and
inspection rights hereunder. Buyer agrees to exercise reasonable care when
visiting the Property, in a manner which shall not materially adversely affect
the completion or operation of the Property. Buyer may not conduct a Phase II
environmental site assessment or any other invasive environmental procedure
without the prior written consent of the Company. 

          3.3
Restoration and Indemnity. Buyer covenants and agrees not to damage or
destroy any portion of the Property in conducting its examinations and studies
of the Property during the Due Diligence Examination and, if closing does not
occur, shall repair any portion of the Property damaged by the conduct of
Buyer, its agents or employees, to substantially the condition such portion(s)
of the Property were in immediately prior to such examinations or studies.
Buyer further hereby indemnifies and holds the Company and the Interest Owners
harmless from and against any damage, personal injury or death caused by or
arising from any action or omission by Buyer, its agents or employees in the
examination and study of the Property. 

ARTICLE IV

SURVEY AND TITLE APPROVAL

          4.1
Survey. The Company and the Interest Owners, at the Interest Owners’
sole cost and expense, prior to the execution hereof have delivered to Buyer,
true, correct and complete copies of the most recent survey of the Real
Property. In the event that an update of the survey or a new survey (such
updated or new survey being referred to as the “Survey”) are desired
by Buyer, then Buyer shall be responsible for all costs related thereto. 

          4.2
Title. The Company, at the Interest Owners’ sole cost and expense, prior
to the execution hereof have delivered to Buyer, within two (2) Business Days
after the execution in full of this Contract, the Company’s existing title
insurance policy, including copies of all documents referred to therein, for
the Real Property. Buyer’s obligations under this Contract are conditioned upon
Buyer being able to obtain (i) a Commitment for Title Insurance (the “Title
Commitment”) issued by Chicago Title Company, 5501 LBJ Freeway, Ste. 200,
Dallas, Texas 75240, Attention: Debby Moore (the “Title Company”), for
the most recent standard form of owner’s policy of title insurance in the state
in which the Real Property is located, covering the Real Property, setting
forth the current status of the title to the Real Property, showing all Property
Liens and pursuant to which the Title Company agrees to issue at Closing an
Owner’s Policy of Title Insurance on the most recent form of ALTA (where
available) owner’s policy 

12

available in the state in
which the Land is located, with extended coverage and, to the extent applicable
and available in such state, comprehensive, access, single tax parcel,
contiguity, Fairway and such other endorsements as may be required by Buyer
(collectively, the “Title Policy”); and (ii) true, complete, legible and,
where applicable, recorded copies of all documents and instruments (the “Exception
Documents”) referred to or identified in the Title Commitment, including,
but not limited to, all deeds, plats, surveys and Property Liens affecting the
Real Property. Buyer shall promptly provide the Company with a copy of the
Title Commitment issued by the Title Company. 

          4.3
Survey or Title Objections. If Buyer discovers any title or survey
matter which is objectionable to Buyer, Buyer may provide the Company and the
Interest Owners with written notice of its objection to same within fifteen
(15) Business Days after Buyer’s receipt of both the Survey and the Title
Commitment, together with copies of all exceptions noted therein (the “Title
Review Period”). If Buyer fails to so object in writing to any such matter
set forth in the Survey or Title Commitment, it shall be conclusively assumed
that Buyer has approved same, except as otherwise provided in Section 9.1(g).
If Buyer disapproves any condition of title, survey or other matters by written
objection to the Company and the Interest Owners on or before the expiration of
the Title Review Period, the Company and the Interest Owners shall elect either
to attempt to cure, at the Interest Owners’ sole cost and expense, or not cure
any such item by written notice sent to Buyer within five (5) days after
receipt by the Company and the Interest Owners of notice from Buyer, and if the
Company and the Interest Owners commit in writing to attempt to cure any such item,
the Company and the Interest Owners shall be given until the Closing Date to
cure any such defect. In the event the Company and the Interest Owners shall
fail to cure a defect which they have committed in writing to cure prior to
Closing, or if a new title defect arises after the date of Buyer’s Title
Commitment or Survey, as applicable, but prior to Closing, then Buyer may
elect, in Buyer’s sole and absolute discretion: (i) to waive such objection and
proceed to Closing, or (ii) to terminate this Contract, if the Interest Owners
are unable to cure said defect prior to Closing and receive a return of the
Earnest Money Deposit, and any interest thereon. The items shown on the Survey
or the Title Commitment or which are apparent by physical inspection of the
Property and which are not objected to by Buyer as set forth above (other than
(x) exceptions and title defects arising after the Title Review Period, (y)
those standard exceptions which are ordinarily and customarily omitted in the
state in which the Hotel is located, so long as the Company and/or the Interest
Owners, as the case may be, provide, at the Interest Owners’ sole cost and
expense, the appropriate owner’s affidavit, gap indemnity or other
documentation reasonably required by the Title Company for such omission, and
(z) as provided in Section 9.1(h)) are hereinafter referred to as the “Permitted
Exceptions.” In no event shall Permitted Exceptions include mortgages or
other documents evidencing or securing indebtedness or any mechanics’ or materialmen’s
lens or any claims or potential claims therefor covering the Property or any
portion thereof (“Seller Liens”), each of which shall be paid in full
by the Interest Owners, at the Interest Owners’ sole cost and expense, and
released at Closing. 

ARTICLE V

MANAGEMENT AGREEMENT AND FRANCHISE AGREEMENT

          The
Company has entered into the Existing Management Agreement and the Existing
Franchise Agreement for the operation and management of the Hotel. At the
Closing, subject to the approval of the Franchisor, (i) the Company and the
Existing Manager shall terminate the 

13

Existing Management Agreement, (ii) the Company and
the Franchisor shall terminate the Existing Franchise Agreement, (iii) the
Company and the Manager shall enter into the New Management Agreement and (iv)
the Company and the Franchisor shall enter into the New Franchise Agreement.
The Interest Owners shall be solely responsible for all claims and liabilities
arising under the Existing Management Agreement and the Existing Franchise
Agreement, whether accruing before or after the Closing. The Company and the
Interest Owners shall obtain the Existing Manager’s consent to the termination
of the Existing Management Agreement, and the Company and the Interest Owners
shall cause the Manager to enter into the New Management Agreement. Before the
Closing, the Company and Buyer shall request the Franchisor to approve the
transfer of the Interests to Buyer, the termination of the Existing Management
Agreement, the execution of the New Management Agreement and the execution of
the New Franchise Agreement. The Company and the Interest Owners shall use
their best efforts to promptly provide all information required by the
Franchisor in connection with the foregoing request for approval, and the
Company, the Interest Owners and Buyer shall diligently pursue obtaining the Franchisor’s
approval. The Interest Owners understand that Buyer expects the New Franchise
Agreement to be upon financial terms and conditions no less favorable to the
Company than the Existing Franchise Agreement. 

ARTICLE
VI

BROKERS

          Each Interest Owner, the Company and Buyer represents
and warrants to the other that it has not engaged any broker, finder or other
party in connection with the transaction contemplated by this Contract. Each
Interest Owner agrees to save and hold harmless Buyer from any and all losses,
damages, liabilities, costs and expenses (including, without limitation,
attorneys’ fees) involving claims made by any agent, broker, or other person by
or through the acts of any Interest Owner or the Company, as the case may be,
in connection with the Contemplated Transactions. Buyer agrees to save and hold
harmless each Interest Owner and the Company from any and all losses, damages,
liabilities, costs and expenses (including, without limitation, attorneys’
fees) involving claims made by any agent, broker, or other person by or through
the acts of Buyer in connection with the Contemplated Transactions.

ARTICLE
VII

REPRESENTATIONS, WARRANTIES AND COVENANTS

          7.1
Representations, Warranties and Covenants of Interest Owners.
Each Interest Owner represents, warrants and covenants to Buyer as follows:

                    (a)
Organization and Existence of the Company. The Company is a limited
liability company or corporation duly organized or incorporated and validly
existing under the laws of the state indicated in Item 2(b) of Schedule
1, and the Company has the full power and authority to own all of its
property and assets and to carry on its business as presently conducted. The
Company is not required to qualify to transact business in any jurisdiction
other than the state is which it is organized or incorporated. The copies of
the Company’s Organizational Documents that the Company has delivered to Buyer
or delivers to Buyer during the Review Period are or will be true, correct and
complete copies of the Organizational Documents of the Company as in effect as
of the date hereof and have not been amended or supplemented further. 

14

The Company is not a general or limited partner of, or
a party to any joint venture with, any other entity and does not, directly or
indirectly, own any interest in any other Person.

                    (b)
Authorization and Validity. Each Interest Owner and the Company have the
power and authority to execute and deliver this Contract and the other
agreements contemplated hereby and to consummate the Contemplated Transactions.
This Contract has been duly executed and delivered by and constitutes a valid
and binding agreement of the Company, each Interest Owner, enforceable in
accordance with its terms, subject to applicable bankruptcy, insolvency or
similar laws. The execution and delivery hereof by the Company and each
Interest Owner and the consummation by the Company and each Interest Owner of
such transactions have been fully authorized by the Company and each Interest
Owner.

                    (c)
Ownership of Interests. The Interest Owners are the owners of all of the
Interests, each owning the percentage set forth in Item 2(a) of Schedule
1, and have good and valid title thereto, with no restrictions on, or any
agreements with respect to, voting rights or any other incidents of ownership
thereof, except as set forth in the Company’s Organizational Documents. The
Interests represent one hundred percent (100%) of the record and beneficial
interests in the Company and all other right, title and interest in and to the
equity of the Company. The Interest Owners have the absolute right to sell and
transfer all of the Interests to Buyer free and clear of all Interest Liens.
Each Interest Owner acquired its Interest in compliance with all applicable
laws. On consummation of the Contemplated Transactions, in accordance with the
terms hereof, Buyer will acquire good and marketable title to the Interests
free and clear of all Interest Liens.

                    (d)
Related Party Transactions. No Interest Owner has any direct or indirect
interest in any property used by, or relating to, the Company, except through
the ownership of its Interest.

                    (e)
Non-Contravention. The execution and delivery by each Interest Owner and
the Company of this Contract and the other agreements contemplated hereby do
not, and the consummation by each Interest Owner and the Company of the
transactions contemplated hereby or thereby will not (i) violate any provision
of the any Organizational Documents of any Interest Owner or the Company, (ii)
violate, or result with the passage of time in a violation of, any provision
of, or result in the acceleration of or entitle any party to accelerate any
obligation under, or result in the creation or imposition of any Property Lien
upon, any of the property of any Interest Owner or the Company pursuant to any
provision of any mortgage, deed of trust, lease, agreement, license or
instrument to which any Interest Owner or the Company is a party or to which
any of them is subject (collectively, the “Restrictive Documents”)
except to the extent consents, waivers, satisfactions or terminations therefor
will be delivered on or before Closing, (iii) constitute an event permitting
termination of any mortgage, deed of trust, lease, agreement, license or
instrument to which any Interest Owner or the Company is a party, except for
those Restrictive Documents which represent obligations to be satisfied or for
which consents to assignment or waivers of termination will be delivered on or
before Closing or (iv) violate any judgment, order, writ, injunction, decree,
regulation or rule of any court or governmental authority applicable to any
Interest Owner or the Company or the assets of any of them.

15

                    (f)
Consents and Approvals. No consent, approval, notification,
authorization or order of, or declaration, filing or registration with, any
governmental agency, is required to be obtained or made by the Company or any
Interest Owner in connection with the consummation by the Company and each
Interest Owner of the Contemplated Transactions.

                    (g)
No Undisclosed Liabilities. The Company does not have, as of the date of
this Contract, any debts, liabilities or obligations, whether accrued,
absolute, contingent or otherwise, that are material to the financial
condition, assets, liabilities, income or prospects of the business of the
Company except as disclosed in this Contract or otherwise disclosed in writing
to Buyer on or before the date of this Contract.

                    (h)
Litigation. There are no actions, suits, claims, investigations or
proceedings (legal, administrative or arbitrative) pending or, to the knowledge
of any of the Interest Owners or the Company, threatened against any of the
Interest Owners or the Company, whether at law or in equity and whether civil
or criminal in nature, before or by any federal, state, municipal or other
court, arbitrator, governmental department, commission, agency or instrumentality,
domestic or foreign. There are no judgments, decrees or orders of any such
court, arbitrator, governmental department, commission, agency or
instrumentality outstanding against any of the Interest Owners or the Company,
(i) which relate to the Company or any Interest Owner and which have or could
reasonably be expected to have an adverse effect on the financial condition,
assets, liabilities, income or prospects of the business of the Company, or
(ii) which seek specifically to prohibit, restrict or delay consummation of the
transactions contemplated hereby or fulfillment of any of the conditions of
this Contract.

                    (i)
Title to Properties. The Company has good and marketable title to all of
the Property (whether real, fee or leasehold, personal or mixed, tangible or
intangible) and enjoys quiet possession of all such properties and interests,
free and clear of all mortgages and other encumbrances (except for Seller Liens
to be paid off at Closing, Permitted Exceptions and current taxes and liens
which arise by operation of law with respect to obligations not yet due and
payable). The Property includes all real estate, intangible assets and physical
assets of the Company and all of the property reasonably required to own and
operate the Hotel as it is contemplated to be operated and in accordance with
the Existing Franchise Agreement.

                    (j)
Condemnation and Special Assessments. There are no pending or, to the
knowledge of the Company or any Interest Owner, threatened proceedings for
condemnation or the exercise of the right of eminent domain as to any part of
the Real Property or for limiting or denying any right of access thereto. None
of the Interest Owners or the Company has any knowledge of any special taxes or
assessments relating to any part of the Real Property or any planned public
improvements that may result in a special assessment against any part of the
Real Property.

                    (k)
Lease of Real and Personal Property. Schedule 7.1(k) sets forth a
list of (a) all leases pursuant to which the Company leases, as lessee, real
property (the “Leased Premises”), (b) all leases pursuant to which the
Company leases, as lessor, real property, (c) all leases pursuant to which the
Company leases, as lessee, personal property and (d) all prepaid expenses,
rents and security deposits paid by or to the Company with respect to any of
the foregoing leases. The Company has performed all material obligations
required to be performed 

16

by it to date under all leases set forth in Schedule
7.1(k) and is not in default nor, to the best knowledge of the Company and
any Interest Owner, alleged to be in default in any material respect under any
thereof. To the best knowledge of [the Company and any Interest Owner, there
exists no default, or any event which upon the giving of notice or passage of
time would give rise to any default, in the performance of any obligation to be
performed by any other party to any of such leases. Immediately after the
Closing, Buyer will possess all right, title and interest of each Interest
Owner and the Company will continue to possess its right, title and interest,
as the case may be, in and to the leases set forth in Schedule 7.1(k). 

                    (l)
Trade Names, Trade Marks, Etc. Subject to the terms of the Existing
Franchise Agreement with respect to trade names, trademarks and service marks
licensed thereunder, the Company owns or has the right to use all trade marks,
trade names and/or business names used or useful in the business of the Company
(the “Company Intellectual Property”). There are no claims or
proceedings pending or, to the knowledge of the Interest Owners or the Company,
threatened against the Company asserting that its use of any Company
Intellectual Property infringes the rights of any other person. None of the
Interest Owners or the Company has knowledge of any use by the Company that
may, with notice or passage of time, give rise to such a claim. The Company has
not licensed or otherwise assigned any Company Intellectual Property to any
third party, and there are no existing infringing uses of the Company
Intellectual Property by any third parties. Other than the terms of the
Existing Franchise Agreement, there are no restrictions or other obligations of
the Company with respect to the ownership or use of the Company Intellectual
Property. The trade marks, trade names, service marks and/or business names
described on Schedule 7.1(l) include all of the Company Intellectual
Property.

                    (m)
Governmental Authorization and Compliance with Laws. Since the Company
was organized, its business has been and is strictly limited to acquisition of
the Land and construction and equipping of the Hotel. In addition, the Company
has been operated at all times in compliance with all laws, orders,
regulations, policies and guidelines of all governmental entities (including,
without limitation, those relating to building codes and zoning, environmental
and safety matters), (ii) the Company has all permits, certificates, licenses,
approvals and other authorizations required in connection with the operation of
its business as now conducted, such licenses, permits and approvals are in full
force and effect, and there is no reason to believe that any such license,
permit or approval will be recalled, and (iii) each Interest Owner and the
Company have complied in all material respects with all applicable laws,
regulations and restrictions relating to the business of the Company.

                    (n)
Taxes.

	
  

 	
  

 
	
  

 	
                     (i)
 Tax Status. At all times during its existence as a limited liability
 company, the Company has been treated as a partnership for Tax purposes or,
 if the Company is a corporation, the Company made an S election under Section
 1362 of the Code and, at the time of making such election and at all times
 thereafter, it qualified as a “small business corporation” within the meaning
 of Section 1361(b) of the Code.

 
	
  

 	
  

 
	
  

 	
                     (ii)
 Tax Returns. Each Interest Owner and the Company have filed all Tax Returns
 that they were required to file under applicable laws and regulations. All

 

17

	
  

 	
  

 
	
  

 	
 such Tax Returns were correct and complete in all
 respects and were prepared in substantial compliance with all applicable laws
 and regulations. All Taxes due and owing by each Interest Owner and the
 Company (if any), whether or not shown on any Tax Return, have been paid.
 Neither the Company nor any of the Interest Owners currently is the
 beneficiary of any extension of time within which to file any Tax Return. No claim
 has ever been made by an authority in a jurisdiction where Company or any of
 the Interest Owners does not file Tax Returns that Company or any of the
 Interest Owners is or may be subject to taxation by that jurisdiction. There
 are no liens for Taxes (other than Taxes not yet due and payable) upon any of
 the assets of the Company or upon any Interest of any of the Interest Owners.

 
	
  

 	
  

 
	
  

 	
                     (iii)
 Withholding. The Company withheld and paid all Taxes required to have
 been withheld and paid in connection with any amounts paid or owing to any
 employee, independent contractor, creditor, stockholder, or other third party

 
	
  

 	
  

 
	
  

 	
                     (iv)
 No Expected Assessments. No Interest Owner or manager or officer (or
 employee responsible for Tax matters) of the Company expects any authority to
 assess any additional Taxes for any period for which Tax Returns have been
 filed. No foreign, federal, state, or local tax audits or administrative or
 judicial Tax proceedings are pending or being conducted with respect to the
 Company or any of the Interest Owners with respect to any item of income,
 gain, loss, deduction, or credit from the Company. Neither the Company nor
 any of the Interest Owners has received from any foreign, federal, state, or
 local taxing authority (including jurisdictions where the Company or the
 Interest Owners have not filed Tax Returns) any (i) notice indicating an
 intent to open an audit or other review, (ii) request for information related
 to Tax matters, or (iii) notice of deficiency or proposed adjustment for any
 amount of Tax proposed, asserted, or assessed by any taxing authority against
 the Company or any of the Interest Owners with respect to any item of income,
 gain, loss, deduction, or credit from the Company. Schedule 7.1(n)
 attached hereto lists all federal, state, local, and foreign income Tax
 Returns filed with respect to the Company or any Interest Owner for taxable
 periods ended on or after December 31, 2007 indicates those Tax Returns that
 have been audited, and indicates those Tax Returns that currently are the
 subject of audit. The Company has delivered to Buyer correct and complete
 copies of all federal income Tax Returns, examination reports, and statements
 of deficiencies assessed against or agreed to by the Company or the Interest
 Owner filed or received since December 31, 2007; provided, however, that an
 Interest Owner is required to deliver such information only for a Tax Return
 for which there has been a notice of deficiency or proposed adjustment for
 any amount of Tax proposed, asserted, or assessed by any taxing authority
 against the Interest Owner with respect to any item of income, gain, loss,
 deduction, or credit from the Company.

 
	
  

 	
  

 
	
  

 	
                     (v)
 No Extension of Statute of Limitations. Neither the Company nor any of
 the Interest Owners has waived any statute of limitations in respect of Taxes
 or agreed to any extension of time with respect to any Tax assessment or
 deficiency with respect to any item of income, gain, loss, deduction, or
 credit from the Company.

 
	
  

 	
  

 
	
  

 	
                     (vi)
 Post Closing Inclusion of Income. Neither the Company nor any of the
 Interest Owners will be required to include any item of income in, or exclude
 any 

 

18

	
  

 	
  

 	
  

 
	
  

 	
 item of deduction from, taxable income for any taxable
 period (or portion thereof) ending after the Closing Date as a result of any:

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
           (A)
 change in method of accounting for a taxable period ending on or prior to the
 Closing Date;

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
           (B)
 “closing agreement” as described in Code § 7121 (or any corresponding or
 similar provision of state, local, or foreign income Tax law);

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
           (C)
 installment sale or open transaction disposition made on or prior to the
 Closing Date; or

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
           (D)
 prepaid amount received on or prior to the Closing Date. 

 

                    (o)
Insurance. Schedule 7.1(o) is a true and complete list, showing
company, type and amount of coverage, of all insurance policies carried by the
Company for the benefit of the Company or third parties. To the best of the
knowledge of the Interest Owners and the Company, the Company is not in default
with respect to any provision of any of its insurance policies and has not
failed to give any notice or present any claim thereunder in due or timely fashion
or as required by any of such insurance policies which would result in failure
to recover in full under such policies. To the best of the knowledge of the
Interest Owners and the Company, the Company has complied with the insurance
requirements of all leases and other Agreements to which it is a party.

                    (p)
Agreements. Except (i) as listed on Schedule 7.1(p) and Schedule
7.1(k) and (ii) for the Franchise Agreement, the Permitted Exceptions and
the Seller Liens to be released at Closing, the Company is not a party to and
neither the Company nor the Property is otherwise bound by any Agreements. No
Interest Owner has any interest in any of the Property other than the interest
of a member or shareholder under the provisions of the Company’s Organizational
Documents. All Agreements to which the Company is a party or by which it or any
of its assets or properties are bound or affected are in full force and effect
and binding obligations of the parties thereto. No event or condition has occurred
or exists, or is alleged by any of the other parties thereto to have occurred
or existed, which constitutes, or with lapse of time or giving of notice or
both might constitute, default or a basis for acceleration of any obligations,
force majeure or other claim of excusable delay or non-performance thereunder
or in respect thereof, whether on the part of the Company or any other party.
The Company is not a party to any Agreement or any arrangement (whether or not
in writing) with any of Interest Owners.

                    (q)
Full Disclosure. To the best knowledge of the Company and the Interest
Owners, no statement contained in any document, certificate or other writing
furnished or to be furnished by the Company or any of the Interest Owners to
Buyer pursuant to the provisions of this Contract contains or shall contain any
untrue statement of a material fact or shall omit to state any material fact
necessary, in the light of the circumstances under which it was made, to make
the statements therein not misleading.

19

                    (r)
FIRPTA. No Interest Owner is a foreign corporation, foreign partnership,
foreign trust or foreign estate (as those items are defined in the Code and
Income Tax Regulations).

                    (s)
Bankruptcy. Neither the Company nor any Interest Owner is insolvent or
the subject of any bankruptcy proceeding, receivership proceeding or other
insolvency, dissolution, reorganization or similar proceeding.

                    (t)
Representations as to the Hotel, Etc. 

	
  

 	
  

 
	
  

 	
                     (i)
 Property Agreements. There are no, and as of the Closing there shall
 be no, leases, license agreements, leasing agent’s agreements, equipment
 leases, building service agreements, maintenance contracts, suppliers
 contracts, warranty contracts, operating agreements, or other Agreements
 relating to the ownership, occupancy, operation, management or maintenance of
 the Real Property, FF&E, Supplies or Tradenames, (A) to which the Company
 is a party or an assignee, or (B) binding upon the Real Property, except
 for (x) those Service Contracts, Leases, Warranties and FF&E Leases to
 which the Company becomes a party with the approval of Buyer, (y) those which
 Buyer may enter into before the Closing, or (z) those which are disclosed on Schedule
 7.1(k) and Schedule 7.1(p). As of the Closing, any Service
 Contracts, Leases, Warranties and FF&E Leases to which the Company has
 become a party with the approval of Buyer shall be in full force and effect,
 and no default shall have occurred and be continuing thereunder and no
 circumstances shall exist which, with the giving of notice, the lapse of time
 or both, would constitute such a default. No party has, and as of the Closing
 no party shall have, any right or option to acquire the Real Property, the
 Hotel or any portion thereof, or any interest therein or in the Company,
 other than Buyer.

 
	
  

 	
  

 
	
  

 	
                     (ii)
 Pending Claims. To the knowledge of any of the Interest Owners, there
 are not (A) any claims, demands, litigation, proceedings or governmental
 investigations pending or threatened related to the Real Property, (B) any
 special assessments or extraordinary taxes except as set forth in the Title
 Commitment or (C) any pending or threatened condemnation or eminent domain
 proceeding which would affect the Property or any part thereof. There are no:
 pending arbitration proceedings or unsatisfied arbitration awards, or
 judicial proceedings or orders respecting awards, which might become a
 Property Lien on the Property or any portion thereof, pending unfair labor
 practice charges or complaints, unsatisfied unfair labor practice orders or
 judicial proceedings or orders with respect thereto, pending charges or
 complaints with or by city, state or federal civil or human rights agencies,
 unremedied orders by such agencies or judicial proceedings or orders with
 respect to obligations under city, state or federal civil or human rights or
 antidiscrimination laws or executive orders affecting the Real Property, or
 other pending, actual or, to the knowledge of the Company or any Interest
 Owner, threatened litigation claims, charges, complaints, petitions or
 unsatisfied orders by or before any administrative agency or court which
 affect the Real Property or might become a Property Lien on the Real Property
 or any portion thereof (collectively, the “Pending Claims”).

 

20

	
  

 	
  

 
	
  

 	
                     (iii)
 Environmental. With respect to environmental matters, except as
 otherwise disclosed in the environmental reports and documents identified in Exhibit
 C, (i) to the Company’s and each of the Interest Owner’s knowledge, there
 has been no Release or threat of Release of Hazardous Materials in, on,
 under, to, from or in the area of the Real Property, (ii) no portion of the
 Property is being used for the treatment, storage, disposal or other handling
 of Hazardous Materials or machinery containing Hazardous Materials other than
 standard amounts of cleaning supplies, gas-fired maintenance equipment and
 chlorine for the swimming pool to be constructed on the Land, all of which
 shall be stored on the Property in strict accordance with applicable
 Environmental Requirements and shall not exceed limits permitted under
 applicable laws, including without limitation Environmental Requirements,
 (iii) no underground storage tanks are currently located on or in the Real
 Property or any portion thereof, (iv) no environmental investigation,
 administrative order, notification, consent order, litigation, claim,
 judgment or settlement with respect to the Property or any portion thereof is
 pending or, to the knowledge of the Company and each of the Interest Owners,
 threatened, and (v) there are no reports or other documentation regarding the
 environmental condition of the Real Property in the possession of the
 Company, any Interest Owner or their Affiliates, consultants, contractors or
 agents except for those which have been or during the Review Period will be
 delivered to Buyer. Buyer acknowledges that the Property is located in a high
 humidity belt of the southern United States and that mold and mildew are
 common. The Company has treated, and until Closing will treat, the Property
 for mold and mildew as needed in the ordinary course of business to protect
 the health of guests and employees of the Hotel and so as to comply with
 applicable law. As used in this Contract: “Hazardous Materials”
 means (1) “hazardous wastes” as defined by the Resource Conservation and
 Recovery Act of 1976, as amended from time to time (“RCRA”), (2)
 “hazardous substances” as defined by the Comprehensive Environmental
 Response, Compensation and Liability Act of 1980 (42 U.S.C. 9601 et seq.),
 as amended by the Superfund Amendment and Reauthorization Act of 1986 and as
 otherwise amended from time to time (“CERCLA”); (3) “toxic
 substances” as defined by the Toxic Substances Control Act, as amended from
 time to time (“TSCA”), (4) “hazardous materials” as defined by the
 Hazardous Materials Transportation Act, as amended from time to time (“HMTA”),
 (5) asbestos, oil or other petroleum products, radioactive materials, urea
 formaldehyde foam insulation, radon gas and transformers or other equipment
 that contains dielectric fluid containing polychlorinated biphenyls and (6)
 any substance whose presence is detrimental or hazardous to health or the
 Environment, or is otherwise regulated by federal, state and local
 environmental laws (including, without limitation, RCRA, CERCLA, TSCA, HMTA),
 rules, regulations and orders, regulating, relating to or imposing liability
 or standards of conduct concerning any Hazardous Materials or environmental,
 health or safety compliance (collectively, “Environmental Requirements”).
 As used in this Contract: “Release” means spilling, leaking,
 pumping, pouring, emitting, emptying, discharging, injecting, escaping,
 leaching, dumping or disposing.

 
	
  

 	
  

 
	
  

 	
                     (iv)
 Title and Liens. The Company has good and marketable fee simple
 absolute title to the Real Property (or, if so indicated in Item 4 of Schedule
 1, leasehold title to the Land pursuant to the ground lease described
 therein and fee simple absolute title to the Improvements during the term of
 such ground lease), subject only to 

 

21

	
  

 	
  

 
	
  

 	
 the Permitted Exceptions. Except for the FF&E
 subject to the FF&E Leases and any applicable Permitted Exceptions, the
 Company has good and marketable title to the Personal Property, free and
 clear of all encumbrances except for the Permitted Exceptions, and there are
 no other encumbrances or other rights pending or of which the Company or any
 Interest Owner has received notice or which are otherwise known to the
 Company or any Interest Owner related to any other Personal Property.

 
	
  

 	
  

 
	
  

 	
                     (v)
 Utilities. All appropriate utilities, including sanitary and storm
 sewers, water, gas, telephone, cable and electricity, are available at the
 boundaries of the Land and the Company is entitled to connect the Hotel
 thereto, and upon connection to the Hotel and payment of all connection or
 “tap-on”, usage and similar fees to be paid by the Interest Owners or the
 Company, as applicable, such utilities shall be sufficient to and available
 to service the Hotel.

 
	
  

 	
  

 
	
  

 	
                     (vi)
 Licenses. To the knowledge of the Company and each of the Interest
 Owners the Real Property complies with, and upon construction of the Hotel
 the Real Property shall comply with, all applicable Licenses and Legal
 Requirements including, without limitation, those regarding zoning, land use,
 building, fire, health, safety, environmental, subdivision, water quality,
 sanitation controls and the Americans with Disabilities Act, and similar
 rules and regulations relating and/or applicable to the ownership, use and
 operation of the Property as it is contemplated to be operated. The Company
 has received, or by Closing shall have received, all Licenses required or
 needed for the lawful conduct, occupancy and operation of the business of the
 Hotel, and each License is in full force and effect, and will be received and
 in full force and effect as of the Closing. No Licenses necessary for the
 lawful conduct, occupancy or operation of the business of the Hotel shall
 require any approval of a Governmental Body for transfer of Interests except
 as set forth in Exhibit D.

 
	
  

 	
  

 
	
  

 	
                     (vii)
 Management Agreement and Franchise Agreement. The Company has furnished
 to Buyer true and complete copies of the Existing Management Agreement and
 the Existing Franchise Agreement, which constitute the entire agreement of
 the parties with respect to the subject matter thereof and which have not
 been amended or supplemented in any respect except as provided in Item 5
 and Item 6 of Schedule 1. There are no other management
 agreements, franchise agreements, license agreements or similar agreements
 for the operation or management of the Hotel or relating to the Brand, to
 which the Company is a party or which are binding upon the Property, except
 for the Existing Management Agreement and the Existing Franchise Agreement.
 The Existing Management Agreement and the Existing Franchise Agreement are in
 full force and effect. No default has occurred and is continuing under the
 Existing Management Agreement or the Existing Franchise Agreement, and no
 circumstances exist which, with the giving of notice, the lapse of time or
 both, would constitute such a default. 

 
	
  

 	
  

 
	
  

 	
                     (viii)
 Plans and Specifications. The plans and specifications for the
 construction of the Hotel that were submitted to Buyer before the execution
 of this Contract (the “Plans and Specifications”) have been approved
 by the Franchisor and have not been modified in any material respect except
 as approved by the Franchisor.

 

22

                    (u)
Hart Scott Rodino Filing. All of the assets owned by or in which the
Company or any of its Affiliates have an interest are hotels or motels, related
improvements such as golf, swimming, tennis, restaurant, health club or parking
facilities (but excluding ski facilities), and assets incidental to the
ownership and operation of hotels or motels (e.g., prepaid taxes or insurance,
management contracts and licenses to use trademarks associated with the hotel
or motel being acquired), as contemplated by the regulations promulgated under
the Hart Scott Rodino Act, except that the Company and its Affiliates each may
own other assets but the aggregate value thereof is less than $50,000,000.

                    (v)
Employees. Except as may be provided in the Supplemental Provisions, the
Company has never had, does not currently have, and shall not have on the
Closing Date, (i) any employees, (ii) any employee benefit plans or (iii) any
other trusts, escrows, agreements, liabilities or other arrangements related to
any type of employee benefits or plans, whether for any past, existing or
future employees, members, stockholders, officers, directors or other party
affiliated in any way with the Company.

          7.2
Representations, warranties and covenants of Buyer. Buyer
represents, warrants and covenants: 

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

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

          7.3
Survival. All of the representations and warranties are true,
correct and complete in all material respects as of the date hereof and the
statements set forth therein (without qualification or limitation as to a
party’s knowledge thereof except as expressly provided for in this Article
VII) shall be true, correct and complete in all material respects as of the
Closing Date. All of the representations and warranties made herein shall
survive Closing for a period of one year (i.e., 12 months) expiring on the
first anniversary date of the Closing; provided, however, that the
representations and warranties set forth in Section 7.1(n) shall survive
Closing for a period ending on the later of (i) three (3) years following the
date on which the Company files its Tax Return for the tax period ending
December 31st of the year of Closing or (ii) the expiration of any applicable
statute of limitations that may be extended.

23

ARTICLE
VIII

ADDITIONAL COVENANTS

          8.1
Subsequent Developments. After the date of this Contract and
until the Closing Date, the Company shall keep Buyer fully informed of all
subsequent developments (“Subsequent Developments”) which would cause
any of the representations or warranties of the Company or the Interest Owners
contained in this Contract to be no longer accurate in any material respect.

          8.2
Obligations of the Company and the Interest Owners Before Closing.
From and after the date hereof the Company and/or the Interest Owners, as
applicable, shall:

                    (a)
Continue to maintain the Property generally in accordance with past practices
and pursuant to and in compliance with the Existing Management Agreement and
the Existing Franchise Agreement, including, without limitation, (i) accepting
booking contracts for the use of the Hotel’s facilities and retaining such
bookings in accordance with the terms of the Existing Franchise Agreement, (ii)
maintaining the current level of advertising and other promotional activities
for the Hotel’s facilities, (iii) maintaining the present level of insurance
with respect to the Property in full force and effect until the Closing Date
and (iv) remaining in compliance in all material respects with all current
Licenses;

                    (b)
Keep, observe, and perform in all material respects all obligations under and
pursuant to the Leases, the Service Contracts, the FF&E Leases, the
Existing Management Agreement, the Existing Franchise Agreement, the Contracts,
Plans and Specs, the Warranties and all other applicable contractual
arrangements relating to the Hotel or the Company; 

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

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

                    (e)
Pay or cause to be paid all taxes, assessments and other impositions levied or
assessed on the Property or any part thereof prior to the delinquency date, and
comply with all Legal Requirements relating to the Property;

                    (f)
Not sell or assign, or enter into any agreement to sell or assign or create, or
permit to exist any Property Lien (other than a Permitted Exception) on, the
Property or any portion thereof;

                    (g)
Not allow any License currently in existence with respect to the construction,
operation, use, occupancy or maintenance of the Property to expire, be canceled
or otherwise terminated;

24

                    (h)
Not incur any indebtedness that will not be paid on or prior to the Closing
Date; and 

                    (i)
Not take any other action other than in the ordinary course of business
consistent with past practice.

          The
Company shall not, and the Interest Owners shall not permit the Company to,
without first obtaining the written approval of Buyer, which approval shall not
be unreasonably withheld, enter into any FF&E Leases, Service Contracts,
Leases or other contracts or agreements related to the Hotel other than those
leases and agreements listed on Schedule 7.1(k) and Schedule 7.1(p),
or extend any existing such agreements, unless such agreements (x) can be
terminated, without penalty, upon thirty (30) days’ prior notice or (y) will
expire prior to the Closing Date.

          8.3
Third Party Consents. Prior to the Closing Date, Interest Owners,
at their expense unless otherwise provided in Section 11.2, shall obtain
any and all other third party consents and approvals (x) required in order to
transfer all of the Interests to Buyer or (y) which, if not obtained, would
materially adversely affect the operation of the Hotel or the value of the
Company, including, without limitation, all consents and approvals referred to
on Exhibit D and (iii) use best efforts to obtain all other third party
consents and approvals (all of such consents and approvals in (i) and (ii)
above being referred to collectively as, the “Third Party Consents”).

          8.4
Estoppel Certificates. It shall be a condition to Buyer’s
obligations under this Contract that the Company obtain, and the Interest
Owners shall cause the Company to obtain, from (i) each tenant under any Lease
affecting the Hotel (but not from current or prospective occupants of hotel
rooms and suites within the Hotel) and (ii) each lessor under each FF&E
Lease for the Hotel identified by Buyer as a material FF&E Lease, the
estoppel certificates substantially in the forms provided by Buyer to the
Company during the Review Period, and deliver to Buyer not less than five (5)
days before the Closing.

          8.5
Access to Financial Information. Buyer’s representatives shall
have access to, and the Company and the Interest Owners and their Affiliates
shall cooperate with Buyer and furnish upon request, all financial and other
information relating to the Property to the extent necessary to enable Buyer’s
representatives to prepare audited financial statements in conformity with
Regulation S-X of the Securities and Exchange Commission (the “SEC”)
and other applicable rules and regulations of the SEC and to enable them to
prepare a registration statement, report or disclosure statement for filing
with the SEC on behalf of Buyer or its Affiliates, whether before or after Closing
and regardless of whether such information is included in the Records to be
transferred to Buyer hereunder. Each Interest Owner shall also provide to
Buyer’s representative a signed representation letter in form and substance
reasonably acceptable to Buyer sufficient to enable an independent public
accountant to render an opinion on the financial statements related to the
Property. The provisions of this Section shall survive Closing or termination
of this Contract.

          8.6
Bulk Sales. The Interest Owners, at their expense, shall take all
steps necessary to comply with the requirements of a transferor under all bulk
transfer laws, if any, that are applicable to the transactions contemplated by
this Contract. 

25

          8.7
Indemnification. If the transactions contemplated by this
Contract are consummated as provided herein:

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

	
  

 	
  

 
	
  

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

 
	
  

 	
  

 
	
  

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

 
	
  

 	
  

 
	
  

 	
                     (iii)
 any liability or obligation of the Company assumed or incurred prior to the
 Closing Date; and

 
	
  

 	
  

 
	
  

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

 

          The
indemnification under this Section 8.7(a) shall terminate and be of no
further force and effect, as to the matters described in clauses (i) through
(iv) above, on and after the first anniversary date of the Closing; provided,
however, that (A) to the extent any of the representations and warranties
survive for a longer period pursuant to Section 7.3, the foregoing
indemnification relating to such representations and warranties shall terminate
and be of no further force and effect on and after the expiration of such
longer period and (B) the indemnification shall not terminate as to claims
asserted in writing by Buyer or the Company before such first anniversary date
or longer period, as the case may be. Any other indemnification by Interest
Owners under this Agreement also shall terminate and be of further force and
effect on and after the first anniversary date of the Closing, except as to
claims asserted in writing by Buyer or the Company before such anniversary
date.

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

	
  

 	
  

 
	
  

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

 

26

	
  

 	
  

 
	
  

 	
                     (ii)
 the conduct and operation by the Company of its business at the Hotel after
 the Closing; and 

 
	
  

 	
  

 
	
  

 	
                     (iii)
 the failure of the Company after the Closing to pay any rent or otherwise
 comply with its obligations under the ground lease, if any, identified in Item
 4 of Schedule 1.

 

          The
indemnification under this Section 8.7(b) shall terminate and be of no
further force and effect on and after the first anniversary date of the Closing
except as to claims asserted in writing by an Interest Owner before such date.

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

	
  

 	
  

 
	
  

 	
                     (i)
 The party seeking indemnification (the “Indemnified Party”) shall
 give prompt written notice to the party or parties from which it is seeking
 indemnification (the “Indemnifying Party”) of any assertion of
 liability by a third party which might give rise to a claim for
 indemnification based on the foregoing provisions of this Section 8.7,
 which notice shall state the nature and basis of the assertion and the amount
 thereof, to the extent known; provided, however, that no delay on the part of
 the Indemnified Party in giving notice shall relieve the Indemnifying Party
 of any obligation to indemnify unless (and then solely to the extent that) the
 Indemnifying Party is prejudiced by such delay.

 
	
  

 	
  

 
	
  

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

 
	
  

 	
  

 
	
  

 	
                     (iii)
 Notwithstanding the provisions of the previous subsection of this Contract,
 until the Indemnifying Party shall have assumed the defense of the Legal
 Action, the defense shall be handled by the Indemnified Party. Furthermore,
 (x) if the Indemnified Party shall have reasonably concluded that there are
 likely to be defenses 

 

27

	
  

 	
  

 
	
  

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

 
	
  

 	
  

 
	
  

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

 
	
  

 	
  

 
	
  

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

 

          8.8
Limitations on Liability of Interest Owners. Notwithstanding
anything contained herein to the contrary the liability of each Interest Owner
with respect to its representations, warranties, covenants and indemnifications
contained in this Contract shall be limited to a percentage of the total
liability of the Interest Owners with respect thereto equal to such Interest
Owner’s percentage interest in the Company.

          8.9
Tax Matters. Without the prior
written consent of Buyer, neither the Company nor any of the Interest Owners
shall make or change any election, change an annual accounting period, adopt or
change any accounting method, file any amended Tax Return, enter into any
closing agreement, settle any Tax claim or assessment relating to the Company, surrender
any right to claim a refund of Taxes, consent to any extension or waiver of the
limitation period applicable to any Tax claim or assessment relating to the
Company, or take any other similar action relating to the filing of any Tax
Return or the payment of any Tax, if such election, adoption, change,
amendment, agreement, settlement, surrender, consent or other action would 

28

have the effect of increasing the Tax liability of the
Company for any period ending after the Closing Date or decreasing any Tax
attribute of the Company existing on the Closing Date. 

          8.10
Construction of the Hotel. Subject to the terms and conditions of this
Contract, the Company shall, and the Interest Owners shall cause the Company
to, (i) construct the Hotel on the Land (a) in a good, workmanlike and diligent
manner, (b) in accordance with development standards for comparable projects,
(c) in compliance in all material respects with the Plans and Specifications
and with all Legal Requirements and (d) in accordance with all requirements of
the Existing Franchise Agreement and (ii) cause the Hotel to be fully equipped
with the FF&E and otherwise fully furnished and stocked with merchandise,
supplies, inventory and other Personal Property as required by the Existing
Franchise Agreement, including, without limitation, linens, bath towels and
other supplies at least at a 2-par level for all suites or rooms of the Hotel,
in each case such that the Hotel can be opened for business to the public and
operated to full capacity under the Brand. All expenses of constructing,
equipping and furnishing the Hotel in accordance with this Contract shall be
the sole responsibility of the Interest Owners, and Buyer shall have no
obligation whatsoever to adjust the Purchase Price or pay any additional costs
as a result of unforeseen events or circumstances affecting the cost of
constructing, equipping or furnishing the Hotel.

          8.11 Commencement of Construction; Substantial
Completion. The Company shall use commercially reasonable efforts to obtain, or
cause the Contractor to obtain, a building permit and all other permits,
licenses and approvals of governmental authorities required for the
construction, equipping and furnishing of the Hotel in accordance with the
Plans and Specifications and this Contract. The Company shall diligently pursue
construction of the Hotel in accordance with this Contract and shall cause the
Contractor to Substantially Complete the Hotel no later than the date set forth
in Item 10 of Schedule 1 attached hereto, subject only to delays
caused by Force Majeure. The Company shall promptly notify Buyer of each event
or condition of Force Majeure and the anticipated delay caused thereby. 

          8.12 (Intentionally Omitted)

          8.13
Inspections. Buyer shall have the right to inspect the Property to
monitor and observe the development and construction of the Hotel. All such
inspections shall require reasonable prior notice to the Interest Owners and
shall be conducted in a manner that will minimize any interference with the
development and construction of the Hotel. Buyer shall indemnify, defend and
hold the Interest Owners harmless from and against any and all expenses, costs
and liabilities (including but not limited to reasonable attorneys’ fees) for
damage or injury to persons or property arising out of or relating to its entry
onto the Land for any such inspections.

          8.14
Punch List. Upon notification from the Contractor that the Hotel is
Substantially Completed and ready for inspection, the Company shall prepare a
“punch list” with the assistance of a representative of Buyer and the
Franchisor. The Company and the Interest Owners acknowledges that final
acceptance of the work on the Hotel shall be made only with the approval of
Buyer and the Franchisor. The costs of completing the Punch List Items that are
not completed as of the date of Closing, as reasonably estimated by the
Interest Owners with the approval of Buyer, such approval not to be
unreasonably withheld, plus fifty percent (50%) of 

29

such costs, shall be
reserved by Buyer from the Purchase Price and shall be disbursed to the
Interest Owners only upon Buyer’s reasonable determination that all of the
Punch List Items have been satisfactorily completed. The Interest Owners shall
correct or complete all Punch List Items, or cause the same to be corrected or
completed, at their expense, with all diligence and in any event within sixty
(60) days after Substantial Completion of the Hotel.

          8.15
Pre-Opening Program. It is contemplated that certain activities must be
undertaken prior to the Closing Date so that the Hotel can function in an
orderly and businesslike manner at the Effective Time (“Pre-Opening Program”).
The Company and the Interest Owners shall cooperate in good faith with the
Pre-Opening Program and shall provide the Franchisor and Buyer reasonable
access to the Property in advance of the Closing in order to conduct their
activities related to the Pre-Opening Program; provided that the Pre-Opening
Program shall not be permitted to interfere with or delay the activities of the
Interest Owners or the Company in completing the Hotel. The Interest Owners
shall pay in a timely manner all costs associated with the Pre-Opening Program
or otherwise related to the pre-opening operations of the Property up to but
not including the Effective Time, regardless of when such costs are payable
(the “Pre-Opening Costs”). The Interest Owners shall also fund all
reserve accounts and other accounts required under the Franchise Agreement, as
applicable, to be funded before the Effective Time. Notwithstanding the
foregoing, at the Closing, the Interest Owners shall receive a credit in an
amount equal to all such accounts funded by the Interest Owners before the
Closing Date, provided that (i) such accounts were required by the Franchisor
or otherwise approved by Buyer (which approval shall not be unreasonably
withheld), and (ii) the Interest Owners shall not receive a credit for any
account to the extent the same is intended to cover Pre-Opening Costs.

          8.16
Construction Warranty. At the Closing, the Company shall be the named
beneficiary of all construction warranties with respect to the Hotel, including
a warranty by the Contractor, for the period ending not sooner than one (1) year
after the date the Hotel is Substantially Completed, in the form of the
warranty attached hereto as Exhibit E (the “Construction Warranty”).

          8.17
Contingent Reserve for Claims. Contingent reserves shall be established
for the purposes and in the amounts specified below:

                    (a)
Notwithstanding anything contained in this Contract to the contrary, at the
Closing, Buyer shall be entitled to hold in reserve from the Purchase Price the
sum of One Hundred Thousand Dollars ($100,000.00) (the “Post-Closing Reserve”)
to pay for any Post-Closing Claims (as hereinafter defined) under this
Contract, as such sum may be reduced as hereinafter provided. For purposes of
this Section 8.17, “Post-Closing Claims” shall mean any post-Closing
claim by Buyer under this Contract, including (i) all claims under Section
8.7(a) hereof, (ii) all adjustments under Article XII thereof and (iii) all
other obligations of the Interest Owners thereunder that survive Closing, but
only if such claim is asserted by Buyer within six (6) months after the Closing
under this Purchase Contract (the “Post-Closing Claim Period”). Except
to the extent any Post-Closing Claims remain outstanding, any funds remaining
in the Post-Closing Reserve shall be paid to the Interest Owners upon
expiration of the Post-Closing Claim Period.

30

                    (b)
Nothing contained in this Section 8.17 shall limit the personal liability of
the Interest Owners for Post-Closing Claims under this Purchase Contract to the
extent the same may exceed in the aggregate the Post-Closing Reserve or to the
extent the same may be asserted to Buyer after any applicable Post-Closing
Claim Period, subject to any other limitations and conditions set forth in this
Contract. 

ARTICLE IX

CONDITIONS FOR CLOSING

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

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

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

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

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

                    (e)
The Existing Management Agreement and the Existing Franchise Agreement shall have
been terminated. The Manager and the Company shall have entered into the New
Management Agreement. The Franchisor and the Company shall have entered into
the New Franchise Agreement on terms and conditions acceptable to Buyer in its
sole discretion and in any event upon financial terms that are no less
favorable than the Existing Franchise Agreement. 

                    (f)
The Hotel shall be Substantially Completed. 

                    (g)
Buyer shall have obtained an as-built plat of survey of the Property as
completed, dated within 30 days of the Closing Date and prepared in compliance
with the then 

31

current
ALTA/ACSM standards for urban properties, and such plat of survey shall not
disclose any encroachments, boundary line discrepancies or other survey matters
that, in Buyer’s reasonable judgment, would materially and adversely affect the
use, operation or value of the Property. 

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

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

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

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

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

                    (d)
Buyer shall have received the consents of the Franchisor to the termination of
the Existing Management Agreement and the Existing Franchise Agreement. 

ARTICLE X

CLOSING AND CONVEYANCE

          10.1
Closing. Unless otherwise agreed by Buyer and the Interest Owners, the
Closing on the Property shall occur on the date on which the Hotel opens for
business to the public in 

32

accordance
with the Franchise Agreement, or as soon as practicable thereafter, but in no
event later than fifteen (15) Business Days after Substantial Completion of the
Hotel, provided that all conditions to Closing hereunder have been satisfied.
Buyer will provide Interest Owners at least five (5) days prior written notice
of the Closing Date selected by Buyer. The date on which the Closing is to
occur as provided in this Section 10.1, or such other date as may be
agreed upon by Buyer and the Interest Owners, is referred to in this Contract
as the “Closing Date” for the Property. The Closing shall be held at
10:00 a.m. at the offices of the Title Company, or as otherwise determined by
Buyer and the Interest Owners. Regardless of the Closing Date, the Closing
shall be effective as of 12:01 a.m. on the date which is the later of (i) the
Substantial Completion Date or (ii) the date on which the Hotel opens for
business to the public in accordance with the Franchise Agreement (the “Effective
Time”). 

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

                    (a)
An assignment or assignments duly executed and acknowledged transferring to
Buyer all of the Interests, free and clear of Interest Liens, in form and
substance acceptable to Buyer; 

                    (b)
Resignations of all officers, managers, directors and other agents of the
Company; 

                    (c)
The original Organizational Documents of the Company, including the articles of
organization or articles of incorporation certified by the appropriate official
of the state in which the Company is organized or incorporated, and a
certificate issued by such official that the Company is in valid existence and
good standing as of the Closing Date; 

                    (d)
Certified copies of resolutions and/or other evidence reasonably satisfactory
to Buyer that the person or persons executing the closing documents on behalf
of the Company and the Interest Owners have full right, power and authority to
do so, along with a certificate of good standing of each Interest Owner that is
an entity from the state in which Interest Owner is organized or incorporated; 

                    (e)
To the extent not previously delivered to and in the possession of Buyer, all
Contracts, Plans and Specs, all Warranties and all keys for the Hotel (which
keys shall be properly tagged for identification); 

                    (f)
A closing statement to evidence the parties’ agreement regarding the
allocations, pro-rations and hold-backs relating to the Property, the payment
of closing costs as allocated hereunder, and any resulting adjustment of the
Purchase Price; 

                    (g)
Evidence satisfactory to Buyer of the termination of the Existing Management
Agreement and the Existing Franchise Agreement and execution and delivery by
the Manager of the New Management Agreement; 

33

                    (h)
All affidavits, gap indemnity agreements and other documents reasonably
required by the Title Company. At Buyer’s sole expense, Buyer shall have
obtained an irrevocable commitment directly from the Title Company for issuance
of an Owner’s Policy of Title Insurance to the Company insuring good and marketable
fee simple absolute title (or leasehold title if so identified in Item 4
of Schedule 1) to the Real Property constituting part of the Property,
subject only to the Permitted Exceptions in the amount of the Purchase Price,
together with an nonimputation endorsement; and 

                    (i)
Such other instruments as are contemplated by this Contract to be executed or
delivered by the Company or any Interest Owner, or reasonably required by Buyer
or the Title Company, or customarily executed in the jurisdiction in which the
Hotel is located, to effectuate the assignment of all of the Interests to Buyer
and the other Contemplated Transactions, with the effect that, after the
Closing, Buyer will have succeeded to all of the rights, titles, and interests in
the Company and the Company will own good and marketable fee simple title to
the Land and the Hotel in accordance with this Contract. 

          10.3
Buyer’s Deliveries. On or prior to the Closing Date, Buyer shall pay the
Interest Owners the Purchase Price, as adjusted pursuant to this Contract, and
shall deliver or cause to be delivered to the Interest Owners the following
agreements, documents and other items, which shall be in form and substance
reasonably satisfactory to the Interest Owners: 

                    (a)
a closing statement to evidence the parties’ agreement regarding the
allocations, pro-rations and hold-backs relating to the Property, the payment
of closing costs as allocated hereunder, and any resulting adjustment of the
Purchase Price; and 

                    (b)
such additional documents as might be reasonably requested by the Interest
Owners to evidence Buyer’s authority to consummate the purchase of the
Interests from the Interest Owners. 

          10.4
Tax Matters. The following provisions shall govern the allocation of
responsibility as between Buyer and the Interest Owners for certain tax matters
following the Closing Date: 

                    (a)
Tax Indemnification. Each
of the Interest Owners shall indemnify Buyer, and hold it harmless from and
against (without duplication), any loss, claim, liability, expense, or other
damage attributable to (i) all Taxes (or the non-payment thereof) of the
Company for all taxable periods ending on or before the Closing Date and the
portion through the end of the Closing Date for any taxable period that
includes (but does not end on) the Closing Date (“Pre-Closing Tax Period”),
and (ii) any and all Taxes of any person (other than the Company) imposed on
the Company as a transferee or successor, by contract or pursuant to any law,
rule, or regulation, which Taxes relate to an event or transaction occurring
before the Closing. 

                    (b)
Straddle Period. In the case of any taxable period that includes (but
does not end on) the Closing Date (a “Straddle Period”), the amount of
any Taxes based on or measured by income or receipts of the Company for the
Pre-Closing Tax Period shall be determined based on an interim closing of the
books as of the close of business on the Closing Date (and for such purpose,
the taxable period of any partnership or other pass-through entity in which the

34

Company holds
a beneficial interest shall be deemed to terminate at such time) and the amount
of other Taxes of the Company for a Straddle Period that relates to the
Pre-Closing Tax Period shall be deemed to be the amount of such Tax for the
entire taxable period multiplied by a fraction the numerator of which is the
number of days in the taxable period ending on the Closing Date and the
denominator of which is the number of days in such Straddle Period. 

                    (c)
Responsibility for Filing Tax Returns. Buyer shall prepare or cause to be prepared and file or cause to be
filed all Tax Returns for the Company that are filed after the Closing Date.
Buyer shall permit the Interest Owners to review and comment on each such Tax
Return described in the preceding sentence prior to filing. 

                    (d)
Cooperation on Tax Matters. 

                    (i)
Buyer, the Company, and the Interest Owners shall cooperate fully, as and to
the extent reasonably requested by the other Party, in connection with the
filing of Tax Returns pursuant to this section and any audit, litigation or
other proceeding with respect to Taxes. Such cooperation shall include the
retention and (upon the other Party’s request) the provision of records and
information that are reasonably relevant to any such audit, litigation or other
proceeding and making employees available on a mutually convenient basis to
provide additional information and explanation of any material provided
hereunder. The Interest Owners agree (A) to retain all books and records with
respect to Tax matters pertinent to the Company relating to any taxable period
beginning before the Closing Date until the expiration of the statute of
limitations (and, to the extent notified by Buyer or the Company or Interest
Owners, any extensions thereof) of the respective taxable periods, and to abide
by all record retention agreements entered into with any taxing authority, and
(B) to give Buyer reasonable written notice prior to transferring, destroying
or discarding any such books and records and, if Buyer so requests, the
Interest Owners shall allow Buyer to take possession of such books and records.

                    (ii)
Buyer, the Company, and the Interest Owners further agree, upon request, to use
their best efforts to obtain any certificate or other document from any
governmental authority or any other Person as may be necessary to mitigate,
reduce or eliminate any Tax that could be imposed (including, but not limited
to, with respect to the transactions contemplated hereby). 

                    (iii)
Buyer, the Company, and the Interest Owners further agree, upon request, to
provide the other Party with all information that either Party may be required
to report pursuant to Code §6043 and all Treasury Regulations promulgated
thereunder. 

                    (e)
Survival. The provisions of this Section 10.4 shall survive the
Closing for a period ending on the later of (i) three (3) years after the date
on which the Company files its Tax Returns for the tax period ending December
31st of the year of Closing, or (ii) the expiration of any applicable statute
of limitations that may be extended. 

35

ARTICLE XI

COSTS

          All
Closing costs shall be paid as set forth below: 

          11.1
Interest Owner’s Costs. Interest Owners shall be responsible for all
transfer, recordation, sales, use, income, bulk transfer taxes or like taxes in
connection with the sale of the Interests hereunder and for all sales and use,
hotel occupancy and other taxes of the Company or the Hotel for the period
prior to Closing. Interest Owners shall be responsible for all costs related to
the termination of the Existing Management Agreement and the Existing Franchise
Agreement. Interest Owners shall also be responsible for the costs and expenses
of their and the Company’s attorneys, accountants, appraisers and other
professionals, consultants and representatives. Interest Owners shall also be
responsible for payment of all prepayment penalties, premiums and other charges
or amounts payable in connection with the pay-off of any Property Liens
encumbering the Property. Interest Owners shall be responsible for all
Pre-Opening Costs as provided in Section 8.15. 

          11.2
Buyer’s Costs. In connection with the purchase of the Interests
contemplated under this Contract, Buyer shall be responsible for the costs and
expenses of its attorneys, accountants and other professionals, consultants and
representatives. Buyer shall also be responsible for the costs and expenses in
connection with the preparation of any environmental report, any update to the
survey and the costs and expenses of preparation of the title insurance
commitment and the issuance of the title insurance policy contemplated by Article
IV. Buyer shall be responsible for costs related to the execution of the
New Franchise Agreement. Buyer shall also be responsible for the costs incurred
after the Effective Time as provided in Section 12.1. 

ARTICLE XII

ADJUSTMENTS

          12.1
Adjustments. Unless otherwise provided herein, at Closing, adjustments
between the parties of income and expenses related to the Property shall be
made as of the Effective Time, with the income and expenses accrued prior to
the Effective Time being allocated to the Interest Owners and the income and
expenses accruing on and after the Effective Time being allocated to Buyer, as
if the Contemplated Transactions were a transfer of the Hotel rather than a transfer
of the Interests, all as set forth below. Subject to the foregoing and except
as otherwise expressly provided herein, all apportionments and adjustments
shall be made on an accrual basis in accordance with the Uniform System of
Accounts for the Lodging Industry (9th Revised Edition) published by
the American Hotel & Lodging Association. 

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

36

                    (b)
Utilities. All suppliers of utilities shall be instructed to read meters
or otherwise determine the charges owing as of the Effective Time for services
prior thereto, which charges shall be allocated to the Interest Owners. Charges
accruing after the Effective Time shall be allocated to Buyer. 

                    (c)
Accounts. The Interest Owners shall be entitled to retain the Hotel’s
working capital account, if any, and to withdraw all funds contained therein as
of the Effective Time. The Interest Owners shall receive a credit in the amount
of the aggregate balance as of the Effective Time in the FF&E reserve
account and similar accounts, if any, and utility deposits, petty cash and cash
in registers, all of which shall remain with the Company after the Closing. All
other accounts, reserves and escrows, if any, held by the Company or any other
Person on the Company’s behalf shall remain the property of the Company and be
credited to Buyer, without additional charge to Buyer and without Buyer being
required to fund the same. 

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

                    (e)
Accounts Payable. Any indebtedness, accounts payable, liabilities or
obligations of any kind or nature related to the Company or the Property for
the periods prior to the Effective Time shall be allocated to the Interest
Owners, and Buyer shall not be or become liable therefor, except as expressly
assumed by Buyer pursuant to this Contract, and invoices received in the
ordinary course of business prior to Closing shall be allocated to the Interest
Owners at Closing. 

                    (f)
Other Costs. All other costs attributable to the period before the
Effective Time, including the cost of property and liability insurance and all
Pre-Opening Costs, shall be allocated to the Interest Owners, and all costs
attributable to the period after the Effective Time shall be allocated to
Buyer. 

          12.2
Reconciliation and Final Payment. The Interest Owners and Buyer shall
reasonably cooperate after Closing to make a final determination of the
allocations and prorations required under this Contract within sixty (60) days
after the Closing Date. Upon the final reconciliation of the allocations and
prorations under this Section, the party which owes the other party any sums
hereunder shall pay such party such sums within ten (10) days after the
reconciliation of such sums. The obligations to calculate such prorations, make
such reconciliations and pay any such sums shall survive the Closing. 

ARTICLE XIII

CASUALTY AND CONDEMNATION 

          13.1
Risk of Loss; Notice. Prior to Closing and the sale of the Interests to
Buyer in accordance with this Contract, all risk of loss to the Property (whether
by casualty, condemnation or otherwise) shall be borne by the Interest Owners.
In the event that (a) any loss or damage to the Hotel shall occur prior to the
Closing Date as a result of fire or other casualty, or (b) the Company receives
notice that a governmental authority has initiated or threatened to initiate a 

37

condemnation
proceeding affecting the Hotel, the Interest Owners shall give Buyer immediate
written notice of such loss, damage or condemnation proceeding (which notice
shall include a certification of (i) the amounts of insurance coverages in
effect with respect to the loss or damage and (ii) if known, the amount of the
award to be received in such condemnation). 

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

          13.3
Procedure for Closing. If Buyer shall not timely elect to terminate this
Contract under Section 13.2 above, or if the loss, damage or
condemnation is not substantial, all insurance proceeds or condemnation awards
which the Company has received as a result of the same, plus an amount equal to
the insurance deductible shall be paid or credited to Buyer, and all insurance
proceeds and condemnation awards payable as a result of the same shall be paid
or credited to Buyer, in which event the Closing shall occur without replacing
or repairing such damage. In the case of damage or casualty, at Buyer’s
election, the Property shall be repaired and restored to its condition
immediately prior to such damage or casualty, and all excess insurance proceeds
shall be credited to Buyer. 

ARTICLE XIV

DEFAULT REMEDIES

          14.1
Buyer Default. If Buyer defaults under this Contract after the Review
Period, and such default continues for ten (10) days following written notice
from the Company (provided no notice shall extend the time for Closing), then
at the election of a majority of the Interest Owners by written notice to
Buyer, (i) this Contract shall be terminated and of no effect, in which event
the Earnest Money Deposit, including any interest thereon, shall be paid to and
retained by the Interest Owners as the sole and exclusive remedy of the
Interest Owners and the Company hereunder, as liquidated damages for Buyer’s
default or failure to close, and both Buyer and the Interest Owners shall
thereupon be released from all obligations hereunder or (ii) compel specific
performance without prejudice to any other remedy it may have a law or in
equity. 

          14.2
Interest Owner/Company Default. If any Interest Owner or (before the
Closing) the Company defaults under this Contract, and such default continues
for ten (10) days following written notice from Buyer, Buyer may elect, as
Buyer’s sole and exclusive remedy, either (i) to terminate this Contract by
written notice to the Company delivered at any time prior to the 

38

completion of
such cure, in which event the Earnest Money Deposit, including any interest
thereon, shall be returned to the Buyer, and thereafter both the Buyer and the
Interest Owners shall thereupon be released from all obligations with respect
to this Contract, except as otherwise expressly provided herein; or (ii) to
treat this Contract as being in full force and effect by written notice to the
Company delivered at any time prior to the completion of such cure, in which
event the Buyer shall have the right to an action against the Interest Owners
and/or the Company for damages, specific performance and all other rights and
remedies available at law or in equity. 

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

ARTICLE XV

NOTICES

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

	
  

 	
  

 	
  

 
	
  

 	
 If to Buyer:

 	
 Apple Ten
 Hospitality Ownership, Inc.

 
	
  

 	
  

 	
 814 East
 Main Street

 
	
  

 	
  

 	
 Richmond,
 Virginia 23219

 
	
  

 	
  

 	
 Attention:
 Nelson Knight

 
	
  

 	
  

 	
 Fax No.:
 (804) 344-8129

 
	
  

 	
  

 	
 E-mail:
 nknight@applereit.com

 

	
  

 	
  

 	
  

 
	
  

 	
 with a copy
 to:

 	
 Apple REIT
 Ten, Inc.

 
	
  

 	
  

 	
 814 East
 Main Street

 
	
  

 	
  

 	
 Richmond,
 Virginia 23219

 
	
  

 	
  

 	
 Attention:
 Legal Dept.

 
	
  

 	
  

 	
 Fax No.:
 (804) 727-6349

 
	
  

 	
  

 	
 E-mail:
 dbuckley@applereit.com

 

39

	
  

 	
  

 	
  

 
	
  

 	
 If to the
 Company,

 the Interest Owners:

 	
 c/o Larry
 Blumberg & Associates, Inc.

 
	
  

 	
  

 	
 2733 Ross
 Clark Circle

 
	
  

 	
  

 	
 P.O. Box
 5566, Dothan, Alabama 36302

 
	
  

 	
  

 	
 Attn: Barry
 Kraselsky

 
	
  

 	
  

 	
 Fax No.:
 (334) 671-1356

 
	
  

 	
  

 	
 E-mail:
 barryk@lbaproperties.com

 

	
  

 	
  

 	
  

 
	
  

 	
 with a copy
 to:

 	
 Johnston,
 Hinesley, Flowers, Clenney & Turner, P.C.

 
	
  

 	
  

 	
 Post Office
 Box 2246 (36302)

 
	
  

 	
  

 	
 291 North
 Oates Street

 
	
  

 	
  

 	
 Dothan,
 Alabama 36303

 
	
  

 	
  

 	
 Attn:
 William W. Hinesley

 
	
  

 	
  

 	
 Fax No.:
 (334) 793-6603

 
	
  

 	
  

 	
 E-mail:
 whinesley@jhfc-law.com

 

          Addresses
may be changed by the parties hereto by written notice in accordance with this
Section. 

ARTICLE XVI

MISCELLANEOUS

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

          16.2
Binding Effect; Assignment. This Contract shall be binding upon and
shall inure to the benefit of each of the parties hereto, their respective
successors and assigns. 

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

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

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

          16.6
Confidentiality. Except as either party may reasonably determine is
required by law (including without limitation laws and regulations applicable
to Buyer or its Affiliates who may be public companies): (i) prior to Closing,
none of Buyer, any Interest Owner or the Company shall disclose the existence
of this Contract or their respective intentions to purchase and sell the
Property or generate or participate in any publicity or press release regarding
this transaction, except to those Persons necessary for a party to meet its
obligations hereunder, 

40

including
their respective legal counsel, consultants and agents, the Manager, the
Franchisor and the Title Company and except as necessitated by Buyer’s Due
Diligence Examination and/or shadow management, unless both Buyer and the
Company agree in writing and (ii) following Closing, the parties shall
coordinate any public disclosure or release of information related to the
transactions contemplated by this Contract, and no such disclosure or release
shall be made without the prior written consent of Buyer, and no press release
shall be made without the prior written approval of Buyer. Closing Documents. To
the extent any Closing documents are not attached hereto at the time of
execution of this Contract, Buyer and the Company shall negotiate in good faith
with respect to the form and content of such Closing documents prior to
Closing.  

          16.7
Counterparts. This Contract may be executed in counterparts by the
parties hereto, and by facsimile signature, and each shall be considered an
original and all of which shall constitute one and the same agreement. 

          16.8
Severability. If any provision of this Contract shall, for any reason,
be adjudged by any court of competent jurisdiction to be invalid or
unenforceable, such judgment shall not affect, impair or invalidate the
remainder of this Contract but shall be confined in its operation to the provision
or provisions hereof directly involved in the controversy in which such
judgment shall have been rendered, and this Contract shall be construed as if
such provision had never existed, unless such construction would operate as an
undue hardship on the Interest Owners or Buyer or would constitute a
substantial deviation from the general intent of the parties as reflected in
this Contract. 

          16.9
Interpretation. For purposes of construing the provisions of this
Contract, the singular shall be deemed to include the plural and vice versa
and the use of any gender shall include the use of any other gender, as the
context may require. 

          16.10
Further Acts. In addition to the acts, instruments and agreements
recited herein and contemplated to be performed, executed and delivered by
Buyer and the Interest Owners, Buyer and the Interest Owners shall perform,
execute and deliver or cause to be performed, executed and delivered at the
Closing or after the Closing, any and all further acts, deeds, instruments and
agreements and provide such further assurances as the other party or the Title
Company may reasonably require to consummate the transaction contemplated
hereunder. 

          16.11
Joint and Several Obligations. If any Interest Owner consists of more
than one person or entity, each such person or entity shall be jointly and
severally liable with respect to the obligations of such Interest Owner under
this Contract. 

ARTICLE XVII

SUPPLEMENTAL PROVISIONS

          All
of the terms, conditions, representations, warranties, covenants and other
provisions, if any, set forth in the supplemental provisions attached hereto as
Schedule 2 (the “Supplemental Provisions”) are hereby
incorporated into this Contract and shall be considered a part hereof. In the
event of any conflict or inconsistency between the Supplemental Provisions and
the other provisions of this Contract, the Supplemental Provisions shall
control. 

41

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

	
  

 	
  

 	
  

 	
  

 
	
  

 	
 INTERST
 OWNERS:

 	
  

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 /s/ Larry G. Blumberg

 	
  

 
	
  

 	

 

 	
  

 
	
  

 	
 Larry
 G. Blumberg

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 /s/ Hayne Hollis

 	
  

 
	
  

 	

 

 	
  

 
	
  

 	
 Hayne
 Hollis

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 /s/ Barry Kraselsky

 	
  

 
	
  

 	

 

 	
  

 
	
  

 	
 Barry
 Kraselsky

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 Watson
 & Downs Investments, LLC

 
	
  

 	
 An Alabama limited liability company

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 By:

 	
 /s/ John H. Watson

 	
  

 
	
  

 	
  

 	

 

 	
  

 
	
  

 	
 John H. Watson, Its Manager

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 Blumberg
 Family – E&M, LLC

 
	
  

 	
 An Alabama limited liability company

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 By:

 	
 /s/ Larry G. Blumberg

 	
  

 
	
  

 	
  

 	

 

 	
  

 
	
  

 	
 Larry G. Blumberg, Its Managing Member

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 Blumberg
 Futures, LLC

 
	
  

 	
 An Alabama limited liability company

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 By:

 	
 /s/ Larry G. Blumberg 

 	
  

 
	
  

 	
  

 	

 

 	
  

 
	
  

 	
 Larry G. Blumberg, Its Managing Member

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 Hollis
 & Spann Futures, LLC

 
	
  

 	
 An Alabama limited liability company

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 By:

 	
 /s/ Hayne Hollis

 	
  

 
	
  

 	
  

 	

 

 	
  

 
	
  

 	
 Hayne Hollis, Its Managing Member

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	

 

 

42

	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 BUYER: 

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 APPLE TEN HOSPITALITY OWNERSHIP, INC., a Virginia
 corporation

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 By:

 	
 /s/ David Buckley

 	
  

 
	
  

 	
  

 	

 

 	
  

 
	
  

 	
 Name: David Buckley

 
	
  

 	
 Title: Vice President

 

43

SCHEDULE
1

HOTEL
SPECIFIC DATA

1. Date of Purchase Contract: November 1, 2011

2. Interest Owners: 

	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 Name 

 	
 % Interest

 	
  

 
	
  

 	
 (a)

 	
 Larry G. Blumberg

 	
 23

 	
 %

 	
  

 
	
  

 	
  

 	
 Hayne Hollis

 	
 23

 	
 %

 	
  

 
	
  

 	
  

 	
 Barry Kraselsky

 	
 18

 	
 %

 	
  

 
	
  

 	
  

 	
 Watson & Downs Investments, LLC

 	
 23

 	
 %

 	
  

 
	
  

 	
  

 	
 Blumberg Family – E&M, LLC

 	
 5

 	
 %

 	
  

 
	
  

 	
  

 	
 Blumberg Futures, LLC

 	
 5

 	
 %

 	
  

 
	
  

 	
  

 	
 Hollis & Spann Futures, LLC

 	
 3 

 	
 %

 	
  

 
	
  

 	
  

 	
  

 
	
  

 	
 (b)

 	
 Company: Sunbelt – I2HA, LLC, an
 Alabama Limited Liability Company

 

3. Description of Hotel:

	
  

 	
  

 	
  

 
	
  

 	
 (a)

 	
 Name/Identification of Hotel: Combo
 – Hampton Inn & Suites and Home2 Suites 

 
	
  

 	
 (b)

 	
 Number of Rooms: 175 (98 Hampton
 Inn & Suites and 77 Home2 Suites)

 
	
  

 	
  

 	
  

 
	
  

 	
 (c)

 	
 Other Improvements/Amenities: 611
 sq. ft. aggregate meeting room space, 653 sq. ft. in 2 board rooms, outdoor
 swimming pool, exercise room, business center

 

4. Hotel Brand/Franchise: Hilton Worldwide

5. Manager and Management Agreement: Management
Agreement between Sunbelt – I2HA, LLC and LBAM – Investor Group, LLC dated
October 7, 2011.

6. Franchisor and Franchise Agreement:
Franchise Agreement between Hampton Inns Franchise LLC and Sunbelt – I2HA, LLC
dated June 8, 2011 (Hampton Inn & Suites) and between HLT ESP Franchise,
LLC and Sunbelt – I2HA, LLC dated June 8, 2011 (Home2 Suites).

44

	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
 7. Purchase Price: Twenty Million Five
 Hundred Eight-Seven Thousand and 00/100 Dollars ($20,587,000.00), allocated
 as follows:

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 (a) 

 	
 Land:

 	
  

 	
 $

 	
 2,050,000.00

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 (b) 

 	
 Building:

 	
  

 	
 $

 	
 15,059,000.00

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 (c) 

 	
 Furniture, Fixtures & Equipment:

 	
  

 	
 $

 	
 3,478,000.00

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 Total Purchase Price:

 	
  

 	
 $

 	
 20,587,000.00

 	
  

 
	
  

 	
  

 	
  

 	
  

 
	
 8. Interest Owners’ Tax Identification Numbers:

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 (a) 

 	
 Federal:          45-2769055

 
	
  

 	
  

 	
  

 
	
  

 	
 (b) 

 	
 State:                    N/A

 
	
  

 	
  

 	
  

 
	
 9. Construction Commencement Date: October
 17, 2011 

 
	
  

 	
  

 	
  

 
	
 10. Substantial Completion Date: February 16,
 2013

 

	
  

 	
  

 	
  

 	
  

 
	
 11. Architect:

 	
 Bradley & Schmidt Architectural, PLLC

 
	
  

 	
  

 	
 256 Honeysuckle Road, Suite #7

 
	
  

 	
  

 	
 Dothan, AL 36305

 
	
  

 	
  

 	
  

 	
  

 
	
 12. Contractor:

 	
 Hollis & Spann, Inc.

 
	
  

 	
 P. O. Box 1530

 
	
  

 	
  

 	
 Dothan, AL 36302

 
	
  

 	
  

 	
  

 	
  

 
	
 13. End of Review Period: 30 days after the
 date of this Contract

 
	
  

 	
  

 	
  

 	
  

 
	
 14. Construction Budget: $17,057,000

 

45

SCHEDULE 2

SUPPLEMENTAL PROVISIONS

None

Purchase Contract
Schedule 2 – Supplemental Provisions

1

EXHIBIT
A

LEGAL DESCRIPTION

THE LAND REFERRED TO HEREIN BELOW IS SITUATED IN THE
COUNTY OF MADISON, STATE OF ALABAMA AND IS DESCRIBED AS FOLLOWS:

	
  

 	
  

 
	
  

 	
 A 6.25+- Acre Tract being a part of Unit No. 1 of
 Resource Center of Research Park, a Condominium, created under the Alabama
 Uniform Condominium Act of 1991, Chapter 8A of Title 35 of the Code of Alabama, 1975, as amended, and as established by a
 Declaration of Condominium for Resource Center of Research Park, a Condominium recorded as Document No. 20100917000531180
 in the Office of the Judge of
 Probate of Madison County, Alabama, and as shown on the plat attached thereto to which reference is hereby
 made, and which plat is recorded as Document No. 20100917000531190 in said Probate Office., and being more particularly
 described in that certain survey dated May 3, 2011, prepared by Felton
 W. Berger, Alabama Professional Land Surveyor No. 26011, attached hereto as
 Exhibit “B” and made a part hereof by
 reference.

 
	
  

 	
  

 
	
  

 	
 SUBJECT
 TO the terms and provisions of that certain Easement Agreement by and between
 Attitude, LLC, an Alabama limited
 liability company and Research Park Property Development, LLC, an Alabama limited liability company dated the 17TH
 day of September, 2010 and recorded September 21, 2010, as Document No.20100921000536660,
 in the Office of the Judge of Probate of Madison County, Alabama.

 

	
  

 	
  

 
	
 **Note
 –

 	
 The exact legal description of the land to be as
 determined by an Amendment to the Declaration of Condominium for
 Resource Center of Research Park, a Condominium.

 

Also see
attached Resubdivision Plat for Unit 3

Purchase Contract

Exhibit
B – List of FF&E

EXHIBIT B

 (Intentionally Omitted)

Purchase Contract

Exhibit B – List of FF&E 

EXHIBIT C

EXISTING CONTRACTS AND LICENSES

None

Purchase Contract

Exhibit C – List of Hotel Contracts 

EXHIBIT D

CONSENTS AND APPROVALS

Hilton Worldwide

EXHIBIT E

ENVIRONMENTAL REPORTS

Phase I Environmental Site Assessment

Dated July 12, 2011

And Addendum

Dated July 15, 2011

As prepared by
Christopher S. Jones, E.I., Staff Engineer

And

John M. Ozier, P.E., Senior Engineer

Of OMI, Inc.

 

EXHIBIT F

 (Intentionally Omitted)

EXHIBIT G

 (Intentionally Omitted)

EXHIBIT H

CONSTRUCTION WARRANTY

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

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

          The
Contractor shall, within a reasonable time after receipt of written notice
thereof, and without reimbursement under the construction contract, make good
any defects in materials, equipment and workmanship which may develop within
periods for which said material, equipment and workmanship are guaranteed and
make good any damage to other work caused by the repairing of such defects.Exhibit 10.1

 

 

 

	 	 	 	 	 	 	 	 	 	 	David Jaffe
	 	 	 	 	 	 	 	 	 	 	CEO, President
	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	30 Dunnigan Drive
	 	 	 	 	 	 	 	 	 	 	Suffern, NY 10901
	 	 	 	 	 	 	 	 	 	 	845-369-4800
	 	 	 	 	 	 	 	 	 	 	David.Jaffe@ascenaretail.com

October 3, 2011

John J. Sullivan

15 Forest Drive

Morristown, NJ 07960

 

Dear John,

 

We are pleased to offer you the position of Executive Vice President,
Chief Operating Officer at Ascena Retail Group Inc., reporting to David Jaffe, Chief Executive Officer and President. This position
will oversee certain shared services (Information Technology, HRIS, and Logistics). This offer is contingent on a background check
and determination of a mutually agreeable start date.

 

This letter will provide additional details about your total compensation
and benefits package. The plan design of the company’s benefits package is subject to change.

 

BASE SALARY, BONUS AND STOCK OPTIONS

·        
Your annualized salary will be $575,000, paid bi-weekly. You will be eligible for annual merit evaluations beginning in
October 2012.

 

·        
Bonus eligibility for the EVP level is 75% of your annual base salary. You will be eligible for 100% of that bonus if the
Target level of Ascena financial results and individual performance is achieved for the fiscal year (ending in July 2012). Your
initial annual target level (100%) is $431,250. The maximum payout (200%) is $862,500. This amount would be prorated for the Fall
season and paid out following the Compensation Committee Meeting (March 2012). The bonus stipulates that you must be employed by
Ascena at the time of the bonus payout.

 

·        
You will be recommended to receive 25,000 non-qualified stock options of Ascena Common Stock (symbol ASNA) under the Company’s
stock option plan. This recommendation will be made at the next, regularly scheduled, quarterly Compensation Committee Meeting
of the Board of Directors. As of the date of this approval, these options will be granted and the price will be determined. Vesting
will begin on the one year anniversary of the approval date, with 25% (6,250) vesting each subsequent year for 4 years. You will
be eligible to be considered for other stock options in the fall of each year beginning in 2012.

 

1

·        
At the same Compensation Committee meeting you will also be recommended to receive 5,000 Restricted Stock Units (RSUs).
The full value of these shares will also begin to vest on the one year anniversary of the approval date with 50% (2,500) vesting
each subsequent year for 2 years. RSUs are not typically awarded annually.

 

·        
You will be eligible to participate in the Company’s Long Term Incentive Plan (LTIP). This Plan awards RSUs at the
end of a 3-year performance period based on the level of achievement of company financial goals established at the beginning of
the performance period. The RSUs vest 100% 30 days following the approval date. You will be eligible for 100% of Opportunity Share
Units in the 2014 LTI Plan (FY2012-FY2014). The Company will recommend to the Compensation Committee that your initial target (100%)
is 10,000 Opportunity Share Units. The maximum target (200%) is 20,000 Opportunity Share Units. Each year the company intends to
offer a new 3-year LTI Plan.

 

EXECUTIVE SEVERANCE POLICY

·        
You will receive an Executive Severance Plan that provides you with severance benefits if your employment is terminated
due to a Change of Control or for a termination without Cause. If you are terminated without Cause you will receive salary continuation
for 12 months with 100% company paid COBRA benefits during the severance period.

 

DEFERRED COMPENSATION

·        
You will be eligible to participate in the Executive Retirement Plan (ERP) in January 2012. ERP is a non-qualified deferred
compensation plan for Executives and Senior Management Team members sponsored by Ascena Retail Group, Inc. The ERP provides you
with the following benefits:

o       
Ability to defer up to 95% of your base salary and bonus through payroll deductions

o       
First 5% of your base salary and bonus that you defer will be matched at 100%

o       
Earnings accumulate tax deferred

o       
No excise tax penalties for early distribution

o       
Over 20 self-directed investment funds

·        
Since you are considered by the IRS to be a “Highly Compensation Associate”, your contribution rate is limited
to 2% in the Ascena Retail Group Inc.’s 401(k) plan.

 

TIME OFF AWARDS

·        
Vacation: you will accrue vacation time with each paycheck beginning immediately upon hire and will be eligible for
up to 20 days’ vacation annually.

·        
Choice Time: You are eligible for 5 choice time days to use by January 31, 2012. You will be eligible for 7 Choice
Days on February 2, 2012 to use by January 31, 2013.

·        
Company Holidays: You are eligible for the following paid Holidays: New Year’s Day, Memorial Day, Independence
Day, Labor Day, Thanksgiving, the day after Thanksgiving and Christmas.

2

ASSOCIATE DISCOUNT

·        
Upon hire, you and your eligible dependents will receive the following discount on merchandise purchased in dressbarn,
maurices and Justice locations:

o       
40% discount off regular-priced merchandise (all brands)

o       
40% discount off the promotional or markdown priced merchandise. Excludes entire store percent off events. Associates may
not receive, redeem or be eligible for JBucks, Fun Cards, JMC Catazine coupons or any other type of coupon (Justice)

o       
20% discount on sales prices (dressbarn)

o       
20% discount of permanent markdowns and POS sale items (maurices)

 

BENEFITS

·        
Details of the complete benefit package are included in our Benefits Guide, see attached. At a glance, these benefits include:

o       
Medical and Prescription

o       
Dental

o       
Vision

o       
Life Insurance

o       
Short-Term and Long-Term Disability

o       
Education Assistance

o       
Adoption Assistance

o       
Scholarship Program

o       
Dimes from the Heart Program

o       
Flexible Spending Account

John, this offer of employment does not constitute an employment
contract; however, it is intended to be a statement of our intent to employ you. We believe you will be an outstanding addition
to the Ascena team. I am confident that you will find the position challenging and that you will have the opportunity to continue
your professional growth.

If you wish to accept this offer, please sign both copies
and return one full copy to me postmarked on or before October 5, 2011 in the enclosed envelope.

Sincerely,

/s/ DAVID JAFFE

David Jaffe

Chief Executive Officer and President

If the terms of this offer are acceptable,
please sign below:

AGREED AND ACCEPTED:

 

	/s/ JOHN J. SULLIVAN                              	 	 	               10/3/11               	 	 
	John J. Sullivan	 	 	Date	 	          

 

3

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