Document:

Exhibit 10.72

 

Embassy Suites

Anchorage, AK

 

 

PURCHASE AGREEMENT

 

by and between

 

DENALI LODGING, LLC

 

as “SELLER”

 

and

 

APPLE NINE SERVICES ANCHORAGE, LLC

 

as “BUYER”

 

Dated as of March 16, 2010

 

i

 

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

  	
   

  	
  6

  
	
   

  	
   

  	
   

  
	
  2.1

  	
  Purchase and Sale

  	
   

  	
  6

  
	
   

  	
   

  	
   

  	
   

  
	
  2.2

  	
  Purchase Price

  	
   

  	
  7

  
	
   

  	
   

  	
   

  	
   

  
	
  2.3

  	
  Allocation

  	
   

  	
  7

  
	
   

  	
   

  	
   

  	
   

  
	
  2.4

  	
  Payment

  	
   

  	
  7

  
	
   

  	
   

  	
   

  	
   

  
	
  2.5

  	
  Earnest Money Deposit

  	
   

  	
  7

  
	
   

  	
   

  	
   

  
	
  ARTICLE III

  	
  REVIEW PERIOD

  	
   

  	
  8

  
	
   

  	
   

  	
   

  
	
  3.1

  	
  Review Period

  	
   

  	
  8

  
	
   

  	
   

  	
   

  	
   

  
	
  3.2

  	
  Due Diligence
  Examination

  	
   

  	
  9

  
	
   

  	
   

  	
   

  	
   

  
	
  3.3

  	
  Restoration

  	
   

  	
  9

  
	
   

  	
   

  	
   

  	
   

  
	
  3.4

  	
  Seller Exhibits

  	
   

  	
  10

  
	
   

  	
   

  	
   

  	
   

  
	
  3.5

  	
  Extension of Closing
  Date

  	
   

  	
  10

  
	
   

  	
   

  	
   

  
	
  ARTICLE IV

  	
  SURVEY AND TITLE
  APPROVAL

  	
   

  	
  10

  
	
   

  	
   

  	
   

  
	
  4.1

  	
  Survey

  	
   

  	
  10

  
	
   

  	
   

  	
   

  	
   

  
	
  4.2

  	
  Title

  	
   

  	
  10

  
	
   

  	
   

  	
   

  	
   

  
	
  4.3

  	
  Survey or Title
  Objections

  	
   

  	
  11

  
	
   

  	
   

  	
   

  
	
  ARTICLE V

  	
  MANAGEMENT AGREEMENT
  AND FRANCHISE AGREEMENT

  	
   

  	
  11

  
	
   

  	
   

  	
   

  
	
  ARTICLE VI

  	
  BROKERS

  	
   

  	
  12

  
	
   

  	
   

  	
   

  
	
  ARTICLE VII

  	
  REPRESENTATIONS,
  WARRANTIES AND COVENANTS

  	
   

  	
  12

  
	
   

  	
   

  	
   

  
	
  7.1

  	
  Representations,
  Warranties and Covenants of Seller

  	
   

  	
  12

  
	
   

  	
   

  	
   

  	
   

  
	
  7.2

  	
  Deleted

  	
   

  	
  17

  
	
   

  	
   

  	
   

  	
   

  
	
  7.3

  	
  Buyer’s
  Representations, Warranties and Covenants

  	
   

  	
  17

  
	
   

  	
   

  	
   

  	
   

  
	
  7.4

  	
  No Implied
  Representations or Warranties

  	
   

  	
  17

  
	
   

  	
   

  	
   

  	
   

  
	
  7.5

  	
  Survival

  	
   

  	
  17

  
	
   

  	
   

  	
   

  	
   

  
	
  7.6

  	
  Notice of Breach

  	
   

  	
  18

  
	
   

  	
   

  	
   

  
	
  ARTICLE VIII

  	
  ADDITIONAL COVENANTS

  	
   

  	
  18

  
	
   

  	
   

  	
   

  
	
  8.1

  	
  Subsequent Developments

  	
   

  	
  18

  
						

 

ii

 

	
  8.2

  	
  Operations

  	
   

  	
  18

  
	
   

  	
   

  	
   

  	
   

  
	
  8.3

  	
  Third Party Consents

  	
   

  	
  19

  
	
   

  	
   

  	
   

  	
   

  
	
  8.4

  	
  Employees

  	
   

  	
  20

  
	
   

  	
   

  	
   

  	
   

  
	
  8.5

  	
  Estoppel Certificates

  	
   

  	
  20

  
	
   

  	
   

  	
   

  	
   

  
	
  8.6

  	
  Access to Financial
  Information

  	
   

  	
  20

  
	
   

  	
   

  	
   

  	
   

  
	
  8.7

  	
  Bulk Sales

  	
   

  	
  20

  
	
   

  	
   

  	
   

  	
   

  
	
  8.8

  	
  Indemnification

  	
   

  	
  20

  
	
   

  	
   

  	
   

  	
   

  
	
  8.9

  	
  PIP Escrow

  	
   

  	
  23

  
	
   

  	
   

  	
   

  	
   

  
	
  8.10

  	
  Liquor Licenses

  	
   

  	
  23

  
	
   

  	
   

  	
   

  
	
  ARTICLE IX

  	
  CONDITIONS FOR CLOSING

  	
   

  	
  24

  
	
   

  	
   

  	
   

  
	
  9.1

  	
  Buyer’s Conditions for
  Closing

  	
   

  	
  24

  
	
   

  	
   

  	
   

  	
   

  
	
  9.2

  	
  (Intentionally Omitted)

  	
   

  	
  25

  
	
   

  	
   

  	
   

  
	
  ARTICLE X

  	
  CLOSING AND CONVEYANCE

  	
   

  	
  25

  
	
   

  	
   

  	
   

  
	
  10.1

  	
  Closing

  	
   

  	
  25

  
	
   

  	
   

  	
   

  	
   

  
	
  10.2

  	
  Deliveries of Seller

  	
   

  	
  25

  
	
   

  	
   

  	
   

  	
   

  
	
  10.3

  	
  Buyer’s Deliveries

  	
   

  	
  27

  
	
   

  	
   

  	
   

  
	
  ARTICLE XI

  	
  COSTS

  	
   

  	
  27

  
	
   

  	
   

  	
   

  
	
  11.1

  	
  Seller’s Costs

  	
   

  	
  27

  
	
   

  	
   

  	
   

  	
   

  
	
  11.2

  	
  Buyer’s Costs

  	
   

  	
  28

  
	
   

  	
   

  	
   

  
	
  ARTICLE XII

  	
  ADJUSTMENTS

  	
   

  	
  28

  
	
   

  	
   

  	
   

  
	
  12.1

  	
  Adjustments

  	
   

  	
  28

  
	
   

  	
   

  	
   

  	
   

  
	
  12.2

  	
  Reconciliation and
  Final Payment

  	
   

  	
  30

  
	
   

  	
   

  	
   

  	
   

  
	
  12.3

  	
  Employees

  	
   

  	
  30

  
	
   

  	
   

  	
   

  
	
  ARTICLE XIII

  	
  CASUALTY AND
  CONDEMNATION

  	
   

  	
  30

  
	
   

  	
   

  	
   

  
	
  13.1

  	
  Risk of Loss; Notice

  	
   

  	
  30

  
	
   

  	
   

  	
   

  	
   

  
	
  13.2

  	
  Buyer’s Termination
  Right

  	
   

  	
  31

  
	
   

  	
   

  	
   

  	
   

  
	
  13.3

  	
  Procedure for Closing

  	
   

  	
  31

  
	
   

  	
   

  	
   

  
	
  ARTICLE XIV

  	
  DEFAULT REMEDIES

  	
   

  	
  31

  
	
   

  	
   

  	
   

  
	
  14.1

  	
  Buyer Default

  	
   

  	
  31

  
	
   

  	
   

  	
   

  	
   

  
	
  14.2

  	
  Seller Default

  	
   

  	
  31

  
	
   

  	
   

  	
   

  	
   

  
	
  14.3

  	
  Attorney’s Fees

  	
   

  	
  32

  
	
   

  	
   

  	
   

  
	
  ARTICLE XV

  	
  NOTICES

  	
   

  	
  32

  
	
   

  	
   

  	
   

  
	
  ARTICLE XVI

  	
  MISCELLANEOUS

  	
   

  	
  33

  
					

 

iii

 

	
  16.1

  	
  Performance

  	
   

  	
  33

  
	
   

  	
   

  	
   

  	
   

  
	
  16.2

  	
  Binding Effect;
  Assignment

  	
   

  	
  33

  
	
   

  	
   

  	
   

  	
   

  
	
  16.3

  	
  Entire Agreement

  	
   

  	
  33

  
	
   

  	
   

  	
   

  	
   

  
	
  16.4

  	
  Governing Law

  	
   

  	
  33

  
	
   

  	
   

  	
   

  	
   

  
	
  16.5

  	
  Captions

  	
   

  	
  33

  
	
   

  	
   

  	
   

  	
   

  
	
  16.6

  	
  Confidentiality

  	
   

  	
  33

  
	
   

  	
   

  	
   

  	
   

  
	
  16.7

  	
  Closing Documents

  	
   

  	
  34

  
	
   

  	
   

  	
   

  	
   

  
	
  16.8

  	
  Counterparts

  	
   

  	
  34

  
	
   

  	
   

  	
   

  	
   

  
	
  16.9

  	
  Severability

  	
   

  	
  34

  
	
   

  	
   

  	
   

  	
   

  
	
  16.10

  	
  Interpretation

  	
   

  	
  34

  
	
   

  	
   

  	
   

  	
   

  
	
  16.11

  	
  (Intentionally Omitted)

  	
   

  	
  34

  
	
   

  	
   

  	
   

  	
   

  
	
  16.12

  	
  Further Acts

  	
   

  	
  34

  
	
   

  	
   

  	
   

  	
   

  
	
  16.13

  	
  Joint and Several Obligations

  	
   

  	
  34

  
	
   

  	
   

  	
   

  	
   

  
	
  SCHEDULES:

  
	
   

  	
   

  
	
  Schedule 1

  	
  Hotel Specific Data

  
	
   

  	
   

  
	
  EXHIBITS:

  
	
   

  	
   

  
	
  Exhibit A

  	
  Legal Description

  
	
  Exhibit B

  	
  List of FF&E

  
	
  Exhibit C

  	
  List of Hotel Contracts

  
	
  Exhibit D

  	
  Consents and Approvals

  
	
  Exhibit E

  	
  Environmental Reports

  
	
  Exhibit F

  	
  Claims or Litigation
  Pending

  
	
  Exhibit G

  	
  List of Vehicles to be
  Conveyed

  
	
  Exhibit H

  	
  Excluded Assets

  
	
  Exhibit I

  	
  New Management Contract

  

 

iv

 

PURCHASE
CONTRACT

 

This PURCHASE CONTRACT (this “Contract”) is
made and entered into as of the 16th day of March, 2010, by and between DENALI
LODGING, LLC, a Colorado limited liability company (“Seller”), with its
principal office c/o Stonebridge Companies, 9100 East Panorama Drive, Suite 300,
Englewood, Colorado 80112, and APPLE NINE 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.            Seller is the fee
simple owner of the hotel property known as the Embassy Suites Anchorage
located at 600 East Benson Boulevard, Anchorage, Alaska 99503

 

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

 

AGREEMENT:

 

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

 

ARTICLE I

DEFINED TERMS

 

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

 

“Advance Bookings” shall mean and include any payments or
reservations for a date or time period following Closing for future public
functions, banquets or rooms in the Hotel.

 

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

 

“Affiliated Manager” means a Manager who is an Affiliate of
Seller.

 

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

 

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

 

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

 

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

 

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

 

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

 

“Deposits” shall mean, to the extent assignable, all prepaid
rents and deposits, 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.

 

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

 

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

 

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

 

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

 

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

 

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

 

“Excluded Assets” shall mean the property described in Exhibit “H”

 

“Extension Notice” shall have the meaning set forth in Section 3.5.

 

“FF&E” shall mean all tangible personal property and
fixtures of any kind used at, on or in connection with the Property
(specifically excluding personal property (i) owned by guests of the
Hotel, (ii) leased by Seller pursuant to an FF&E Lease or (iii) constituting
Excluded Assets attached to, or located upon and used in connection with the
ownership, maintenance, use or operation of the Land or Improvements as of the
date hereof (or acquired by Seller and so employed prior to Closing)),
including, but not limited to, all furniture, fixtures, equipment, signs and
related personal property; all heating, lighting, plumbing, drainage, electrical,
air conditioning, and other mechanical fixtures and equipment and systems; all
elevators, and related motors and electrical equipment and systems; all hot
water heaters, furnaces, heating controls, 

 

2

 

motors and equipment, all shelving and partitions, all ventilating
equipment, and all disposal equipment; all spa, health club and fitness
equipment; all equipment used in connection with the use and/or maintenance of
the guestrooms, restaurants, lounges, business centers, meeting rooms, swimming
pools, indoor and/or outdoor sports facilities and other common areas and
recreational areas; all carpet, drapes, beds, furniture, televisions and other
furnishings; all stoves, ovens, freezers, refrigerators, dishwashers,
disposals, kitchen equipment and utensils, tables, chairs, plates and other
dishes, glasses, silverware, serving pieces and other restaurant and bar
equipment, apparatus and utensils.  A
current list of FF&E is attached hereto as Exhibit B.

 

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

 

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

 

“Franchise Agreement” shall mean the franchise agreement dated June 23,
2003 between Seller and Franchisor.

 

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

 

“Hotel” shall mean the hotel located on the Land, including all
Improvements and Personal Property associated therewith, known generally as the
Embassy Suites Anchorage.

 

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

 

“Improvements” shall mean all buildings, structures, fixtures,
parking areas and other improvements to the Land, including, without limitation,
all improvements and amenities and facilities related to the Hotel.

 

“Indemnified Party” shall have the meaning set forth in Section 8.8(c)(i).

 

“Indemnifying Party” shall have the meaning set forth in Section 8.8(c)(i).

 

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

 

“Knowledge” or “known to” or similar statements shall
mean, with reference to Seller, the actual knowledge of Navin C. Dimond and the
knowledge after reasonable inquiry by Seller of the general manager of the
Hotel, the Senior Vice President of Hotel Operations and the Vice President of
Hotel Operations of the Manager.

 

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

 

“Leases” shall mean all leases, franchises, licenses, occupancy
agreements, “trade-out” agreements, Advance Bookings, convention reservations,
or other agreements demising space in, providing for the use or occupancy of,
or otherwise similarly affecting or relating to the use or 

 

3

 

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).

 

“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.

 

“Liquor Licenses” shall have the meaning set forth in Section 8.10.

 

“Management Agreement” shall mean the management agreement
between to be executed by Buyer and Manager on or before Closing in the form
agreed upon by the parties.

 

“Manager” shall mean Stonebridge Realty Advisors, Inc.
d/b/a Stonebridge Companies.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

4

 

prepared in connection with Seller’s current annual plan and other
materials, information, data, legal or other documents or records (including,
without limitation, all documentation relating to any litigation or other
proceedings, all zoning and/or land use notices relating to or affecting the
Property, all business plans and projections and all studies, plans, budgets
and contracts related to the development, construction and/or operation of the
Hotel) owned by Seller and/or in Seller’s possession or control, or to which
Seller has access or may obtain from the Manager or which are readily available
to Seller or obtainable by Seller upon request (including, without limitation,
any of the foregoing that may be obtainable 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, but excluding Seller’s partnership tax
returns, financial information, business plans and projections prepared for
internal partnership disclosure purposes and partner’s K-1 and any and all
appraisals and internal communications of Seller, provided that Seller 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 in effect at Closing and copies of the final plans and
specifications for the Hotel.

 

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

 

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

 

“SEC” shall have the meaning set forth in Section 8.6.

 

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

 

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

 

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

 

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

 

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

 

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

 

5

 

“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.

 

“Tradenames” shall mean all telephone exchanges and numbers,
trade names, trade styles, trade marks and other identifying material and all
variations thereof used in connection with the Property, together with all
related goodwill (it being understood and agreed that the Brand or the name of
the hotel chain to which the Hotel is affiliated by franchise, license or
management agreement is a protected name or registered service mark of such
hotel chain and cannot be transferred to Buyer by this Contract, provided that
all such franchise, license, management and other agreements granting a right
to use the name of such hotel chain or any other trademark or trade name and
all waivers of any brand standard shall be assigned to Buyer), but excluding
Tradenames and marks associated with “Pi” restaurant and bar which shall remain
with Seller.  Notwithstanding the
aforesaid exclusion, Buyer shall have the right to use, at no cost, the
Tradenames and marks associated with “Pi” restaurant and bar so long as Manager
is managing the Hotel.

 

“Utility Reservations” shall mean the right to receive
immediately on and after Closing and consume thereafter (subject to payment of
customary consumption charges) 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 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.  Seller
shall be responsible for (or shall cause Manager to be responsible for) any
requests or documents to transfer the Utility Reservations, at Buyer’s sole
cost and expense.

 

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

 

ARTICLE II

PURCHASE AND SALE; PURCHASE PRICE; PAYMENT;

EARNEST MONEY DEPOSIT

 

2.1           Purchase
and Sale.  Seller agrees to sell and convey to Buyer or
its Affiliates and/or assigns, and Buyer or its assigns agrees to purchase from
Seller, the Property, in consideration of the Purchase Price and upon the terms
and conditions hereof.  All of the
Property shall be conveyed, assigned, and transferred to Buyer at Closing, free
and clear of all mortgages, liens, encumbrances, licenses, franchises (other
than any Hotel franchises assumed by Buyer), concession agreements, security
interests, prior assignments or conveyances, 

 

6

 

conditions, restrictions, rights-of-way, easements, encroachments,
claims and other matters affecting title or possession, except for the
Permitted Exceptions.

 

2.2           Purchase
Price.  Buyer agrees to pay, and Seller agrees to
accept, as consideration for the conveyance of the Property, subject to the
adjustments provided for in this Contract, the amount of Forty-two Million and
00/100 Dollars ($42,000,000.00) (the “Purchase Price”).

 

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

 

2.4           Payment. 
The portion of the Purchase Price, less the Earnest Money Deposit and
interest earned thereon, if any, which Buyer elects to have applied against the
Purchase Price (as provided below), and taking into account any adjustments to
the Purchase Price provided for in this Contract, shall be paid to Seller in
cash or immediately available funds by wire transfer at the Closing of the
Property.  At the Closing, the Earnest
Money Deposit, together with interest earned thereon, if any, shall, at Buyer’s
election, be returned to Buyer or shall be paid over to Seller by Escrow Agent
to be applied to the portion of the Purchase Price on behalf of Buyer.

 

2.5           Earnest
Money Deposit.

 

(a)           Within two (2) Business
Days following the full execution and delivery of this Contract, Buyer shall
deposit the sum of Fifty Thousand and No/100 Dollars ($50,000.00) in cash,
certified bank check or by wire transfer of immediately available funds (the “Initial
Earnest Money Deposit”) with the Title Company (“Escrow Agent”).  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
Initial Earnest Money Deposit to Buyer promptly upon written notice to that
effect from Buyer.

 

(b)           If Buyer has not
elected to terminate this Contract on or before the expiration of the Review
Period, Buyer, within two (2) Business Days after the expiration of the
Review Period, shall deposit with the Escrow Agent the additional sum of One
Hundred Fifty Thousand and No/100 Dollars ($150,000.00) in cash, certified bank
check or by wire transfer of immediately available funds (the “Second
Earnest Money Deposit”), which sum shall be held by Escrow Agent, together
with the Initial Earnest Money Deposit, as earnest money.  The Initial Earnest Money Deposit, the Second
Earnest Money Deposit and the Extension Deposit (if any) deposited pursuant to Section 3.5,
together with all interest earned thereon, are collectively referred to as the “Earnest
Money Deposit”.

 

(c)           Upon the expiration
of the Review Period, the Earnest Money Deposit shall become non-refundable and
shall either be applied to the Purchase Price at Closing as provided in Section 2.4
of this Contract, or refunded to Buyer or paid over to Seller as provided in Article III,
Article IV, Article V, Article IX and Article XIV of this
Contract.

 

7

 

(d)           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 the Earnest Money Deposit 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 Daylight Time on the date that is thirty (30) days after the date of
this Contract, unless a longer period of time is otherwise provided for in this
Contract and except as otherwise agreed to in writing by Buyer and Seller (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 five (5) days
following the date of this Contract, Seller, at Seller’s sole cost and expense,
will deliver to Buyer (or make available at the Hotel) for Buyer’s review, to
the extent not previously delivered to Buyer and, with respect to the items
listed in paragraphs (a), (c), (d) and (f) of this Section 3.1,
to the extent within Seller’s possession and control or readily available to or
obtainable upon request of Seller or to which Seller has access or may obtain
from Manager, true, correct and complete copies of the following, together with
all amendments, modifications, renewals or extensions thereof:

 

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

 

(b)           Income and expense
statements and budgets for the Hotel, for the current year to date and for two (2) prior
years, including all income and expense statements prepared or provided by the
existing manager or any affiliated or third party auditor or other financial
advisor (collectively, the “Financial Statements”); provided, however,
the foregoing shall not, in any manner, be deemed to relieve Seller of its
obligation to provide to Buyer’s auditors and representatives all financial and
other information necessary or appropriate for preparation of audited financial
statements for Buyer and/or its Affiliates as provided in Section 8.6
below;

 

(c)           All real estate and
personal property tax statements with respect to the Hotel and notices of
appraised value for the Real Property for the current year (if available) and
each of the three (3) calendar years prior to the current year;

 

(d)           Engineering,
mechanical, architectural and construction plans, drawings, specifications and
contracts, payment and performance bonds, title policies, reports and
commitments, zoning information and marketing and economic data relating to the
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 

 

8

 

affecting the
Hotel.  If the Hotel is purchased by
Buyer, all such documents and information relating to the Hotel shall thereupon
be and become the property of Buyer without payment of any additional
consideration therefor;

 

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

 

(f)            All notices
received from governmental authorities in connection with the Hotel for the
current year and 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.

 

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

 

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

 

3.3           Restoration. 
Buyer shall defend, indemnify and save harmless Seller and Manager from
and against any loss, expense (including reasonable attorneys’ fees) or damage
incurred or suffered by Seller, by reasons arising out of, caused by or
connected with the examinations and studies of the Property conducted by Buyer,
its agents or contractors; provided, however, Buyer shall not be responsible
for any pre-existing conditions that may be encountered 

 

9

 

during the activities conducted by Buyer or its agents on the Property
during the Review Period.  Buyer
covenants and agrees, prior to performing any intrusive activities on the
Property during the Due Diligence Examination, to provide reasonable prior
notice to Seller of the nature of such activities and to obtain the approval of
Seller with respect to such activities, which approval shall not be
unreasonably withheld, conditioned or delayed. 
Buyer further 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.

 

3.4           Seller
Exhibits.  Buyer shall have until the end of the Review
Period to review and approve the information on Exhibits B, C, D-1, D-2, E
and F.  In the event Buyer does not
approve any such Exhibit or the information contained therein, Buyer shall
be entitled to terminate this Contract by notice to Seller and the Earnest
Money Deposit shall be returned to Buyer with all interest thereon and both
parties shall be relieved of all rights, obligations and liabilities hereunder
except for the parties’ obligations pursuant to Sections 3.3 and 16.6.

 

ARTICLE IV

SURVEY AND TITLE APPROVAL

 

4.1           Survey. 
Seller has 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. 
Seller has delivered to Buyer Seller’s existing title insurance policy,
including copies of all documents referred to therein, for the Real
Property.  Buyer’s obligations under this
Contract are conditioned upon Buyer being able to obtain (i) a Commitment
for Title Insurance (the “Title Commitment”) issued by Chicago Title
Company - 5501 LBJ Freeway, Ste. 200, 
Dallas, Texas 75240 Attn: 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 liens,
claims, encumbrances, easements, rights of way, encroachments, reservations,
restrictions and any other matters affecting the Real Property and pursuant to
which the Title Company agrees to issue to Buyer at Closing an Owner’s Policy
of Title Insurance on the most recent form of ALTA (where available) owner’s
policy available in the state in which the Land is located, with extended
coverage and, to the extent applicable and available in such state,
comprehensive, access, single tax parcel, contiguity, 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,
lien instruments, leases, plats, surveys, reservations, restrictions, and
easements affecting the Real Property. 
Buyer shall promptly provide Seller with a copy of the Title Commitment
issued by the Title Company.

 

10

 

4.3           Survey
or Title Objections.  If Buyer discovers any title or survey matter
which is objectionable to Buyer (each such objectionable title or survey matter
a “Title Defect”), Buyer may provide Seller with written notice of its
objection to any such Title Defect at any time prior to the expiration of the
Review Period, together with copies of all exceptions noted in such Title
Commitment or on such Survey.  If Buyer
fails to so object in writing to any Title Defect set forth in the Survey or
Title Commitment, it shall be conclusively assumed that Buyer has approved
same.  If Buyer disapproves any condition
of title, survey or other matters by written objection to Seller on or before
the expiration of the Review Period, Seller shall elect either to attempt to
cure or not cure any Title Defect by written notice sent to Buyer within five (5) days
after Seller’s receipt of notice from Buyer, and if Seller commits in writing
to attempt to cure any Title Defect, Seller shall be given until the Closing
Date to cure any such Title Defect.  In
the event Seller shall fail to cure a Title Defect which Seller has committed
in writing to cure prior to Closing, or if a new Title Defect arises after the
date of Buyer’s Title Commitment or Survey, as applicable, but prior to
Closing, such events shall not constitute a default by Seller hereunder;
however, in such case Buyer may elect, in Buyer’s sole and absolute discretion:
(i) to waive such objection and proceed to Closing, or (ii) to
terminate this Contract and receive a return of the Earnest Money Deposit, and
any interest thereon.  The items shown on
the Title Commitment which are not objected to by Buyer as set forth above
(other than exceptions and Title Defects arising after the Review Period or
which are not disclosed by the Title Commitment and other than those standard
exceptions which are ordinarily and customarily omitted in the state in which
the Hotel is located, so long as Seller provides the appropriate owner’s
affidavit, gap indemnity or other documentation reasonably required by the
Title Company for such omission) are hereinafter referred to as the “Permitted
Exceptions.”  In no event shall
Permitted Exceptions include liens, or documents evidencing liens, securing any
indebtedness or any mechanics’ or materialmen’s liens or any claims or potential
claims therefor encumbering the Property or any portion thereof (“Seller
Liens”), each of which shall be paid in full by Seller and released at
Closing.

 

ARTICLE V

MANAGEMENT AGREEMENT AND FRANCHISE AGREEMENT

 

Seller has entered into the Franchise Agreement for the operation of
the Hotel.  At the Closing, Seller shall
assign its interest in the Franchise Agreement to Buyer (although Seller shall
remain liable for all of its obligations arising under the Franchise Agreement
prior to the Closing Date), and Buyer shall assume Seller’s obligations
thereunder arising or required to be performed on and after the Closing Date,
subject to the consent of the Franchisor, where applicable, to such assignment
and assumption and subject to such amendments thereto as may be required or
otherwise agreed to by Buyer (including, without limitation, such amendments as
may be required to accommodate Buyer’s and/or Buyer’s Affiliates’ REIT
structure).  Notwithstanding the
foregoing, Buyer covenants and agrees to request that the Franchisor enter into
a new franchise agreement with Buyer, effective as of the Closing Date, to
replace the existing Franchise Agreement, and, if permitted by the Franchisor
without additional cost, expense or delay, Buyer shall, in lieu of taking an assignment
of Seller’s interest in the Franchise Agreement, enter into a new franchise
agreement with the Franchisor, effective as of the Closing Date, replacing the
existing Franchise Agreement and containing terms and conditions acceptable to
Buyer.  In such case, Seller and the
Manager and the Franchisor shall terminate the 

 

11

 

existing management agreement for the Hotel and the Franchise Agreement
as of the Closing Date, and Seller shall be solely responsible for all claims
and liabilities arising thereunder. 
Seller shall convey the Property free and clear of any existing
management agreement and/or rights of the Manager and shall obtain the Manager’s
consent to the termination of Seller’s existing management agreement, and
Seller shall cause the Manager to enter into a new Management Agreement with
Buyer at Closing in the form attached hereto as Exhibit “I”.  With respect to the Franchise Agreement,
Buyer agrees to apply for and use reasonable efforts, and Seller shall
cooperate in all reasonable respects with Buyer, to obtain the Franchisor’s
written consent to the Manager and the new Management Agreement (if required)
and to the assignment to Buyer of the Franchise Agreement (or to a new
franchise agreement, as the case may be), together with the assignment to Buyer
of all waivers of any brand standard necessary or appropriate for the operation
of the Hotel under the Brand, and it shall be a condition to Closing for Buyer
and Seller that the Franchisor provide such consents.  Any fees charged by the Franchisor related to
the assignment and amendment of the Franchise Agreement (or to the termination
of the Franchise Agreement, as applicable, and the execution of a new franchise
agreement, as the case may be), including but not limited to, the payment of
license, application, transfer and similar fees thereunder, shall be paid by
Buyer, and Buyer shall pay all costs and fees of its attorneys and consultants
and all costs associated with any releases or other provisions requested by or
for the benefit of Buyer, in each case, incurred in connection with such
assignment and/or termination and execution of new agreements.  Seller shall be responsible for (i) all
costs of terminating Seller’s existing management agreement with the Manager
(including without limitation all termination and cancellation fees and/or
penalties), (ii) all costs of entering into a new Management Agreement
with the Manager (except for Buyer’s attorneys fees, which shall be paid by
Buyer).  Seller shall use best efforts to
promptly provide all information required by the Franchisor in connection with
each such assignment and amendment (or in connection with a new franchise
agreement, as the case may be), and Seller and Buyer shall diligently pursue
obtaining each the same.

 

ARTICLE
VI

BROKERS

 

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

 

ARTICLE VII

REPRESENTATIONS, WARRANTIES AND COVENANTS

 

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

 

(a)           Authority; No
Conflicts.  Seller is a limited
liability company and is duly formed, validly existing and in good standing in
the state of Colorado.  Seller has
obtained all necessary consents to enter into and perform this Contract and is
fully authorized 

 

12

 

to enter into and
perform this Contract and to complete the transactions contemplated by this
Contract.  No consent or approval of any
person, entity or governmental authority is required for the execution, delivery
or performance by Seller of this Contract, except as set forth in Exhibit D,
and this Contract is hereby binding and enforceable against Seller.  Neither the execution nor the performance of,
or compliance with, this Contract by Seller has resulted, or will result, in
any violation of, or default under, or acceleration of, any obligation under
any existing corporate charter, certificate of incorporation, bylaw, articles
of organization, limited liability company agreement or regulations,
partnership agreement or other organizational documents and under any, mortgage
indenture, lien agreement, promissory note, contract, or permit, or any
judgment, decree, order, restrictive covenant, statute, rule or
regulation, applicable to Seller or to the Hotel.

 

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

 

(c)           Bankruptcy.  Neither Seller nor, to the knowledge of Navin
C. Dimond, any of Seller’s partners or members, is insolvent or the subject of
any bankruptcy proceeding, receivership proceeding or other insolvency,
dissolution, reorganization or similar proceeding.

 

(d)           Property
Agreements.  A complete list of all
FF&E Leases, Service Contracts and Leases used in or otherwise relating to
the operation and business of the Hotel is attached hereto as Exhibit C-1,
and a complete list of all other FF&E Leases, Service Contracts and Leases
used in or otherwise relating to the operation and business of the Hotel is
attached hereto as Exhibit C-2. 
The assets constituting the Property to be conveyed to Buyer hereunder
constitute all of the property and assets of Seller used in connection with the
operation and business of the Hotel.  There are no leases, license agreements,
leasing agent’s agreements, equipment leases, building service agreements,
maintenance contracts, suppliers contracts, warranty contracts, operating
agreements, or other agreements (i) to which Seller is a party or an
assignee, or (ii) binding upon the Hotel, relating to the ownership,
occupancy, operation, management or maintenance of the Real Property, FF&E,
Supplies or Tradenames, except for those Service Contracts, Leases, Warranties
and FF&E Leases disclosed on Exhibit C or to be delivered to
Buyer pursuant to Section 3.1.  The
Service Contracts, Leases, Warranties and FF&E Leases disclosed on Exhibit C
or to be delivered to Buyer pursuant to Section 3.1 are in full force and
effect, and, to the knowledge of Seller, no default has occurred and is
continuing thereunder and no circumstances exist which, with the giving of
notice, the lapse of time or both, would constitute such a default, and Seller
has received no notice of any such default or circumstances.  No party has any right or option to acquire
the Hotel or any portion thereof, other than Buyer.

 

(e)           Pending Claims.  To the knowledge of Seller, there are no, and
Seller has not received any notice of any: (i) claims, demands,
litigation, proceedings or governmental investigations pending or threatened
against Seller, the Manager or any managing member or general partner of any of
them (collectively, “Seller Parties”) or related to the business or
assets of the Hotel, except as set forth on Exhibit F attached hereto
and incorporated herein by reference, (ii) special assessments or
extraordinary taxes, except as set 

 

13

 

forth in the Title
Commitment, or (iii) 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 lien on the Property or any portion thereof,
pending unfair labor practice charges or complaints, unsatisfied unfair labor
practice orders or judicial proceedings or orders with respect thereto, pending
charges or complaints with or by city, state or federal civil or human rights
agencies, unremedied orders by such agencies or judicial proceedings or orders
with respect to obligations under city, state or federal civil or human rights
or antidiscrimination laws or executive orders affecting the Hotel, or other
pending, actual or, to the knowledge of Seller, threatened litigation claims,
charges, complaints, petitions or unsatisfied orders by or before any
administrative agency or court which affect the Hotel or might become a lien on
the Hotel (collectively, the “Pending Claims”).

 

(f)            Environmental.  To the knowledge of Seller, with respect to
environmental matters: (i) 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, except as disclosed in the reports and documents set forth on Exhibit E
attached hereto and incorporated herein by reference, (ii) no portion of
the Property is being used for the treatment, storage, disposal or other
handling of Hazardous Materials or machinery containing Hazardous Materials
other than standard amounts of cleaning supplies and chlorine for the swimming
pool, all of which are stored on the Property in strict accordance with
applicable Environmental Requirements and do not exceed limits permitted under
applicable laws, including without limitation Environmental Requirements, (iii) no
underground storage tanks are currently located on or in the Real Property or
any portion thereof, (iv) no environmental investigation, administrative
order, notification, consent order, litigation, claim, judgment or settlement
with respect to the Property or any portion thereof is pending or threatened, (v) there
is not currently and never has been any mold, fungal or other microbial growth
in or on the Real Property, or existing conditions within buildings, structures
or mechanical equipment serving such buildings or structures, that could
reasonably be expected to result in material liability or material costs or
expenses to remediate the mold, fungal or microbial growth, or to remedy such
conditions that could reasonably be expected to result in such growth, and (vi) except
as disclosed on Exhibit E, there are no reports or other
documentation regarding the environmental condition of the Real Property in the
possession of Seller or Manager or the Affiliates, consultants, contractors or
agents of Seller or the Manager.  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, (6) microbial
or fungal matter or mold, or (7) any other 

 

14

 

substance that is
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 protection of human health, safety or the environment (collectively,
“Environmental Requirements”).  As
used in this Contract, “Release” means spilling, leaking, pumping,
pouring, emitting, emptying, discharging, injecting, escaping, leaching,
dumping or disposing.

 

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

 

(h)           Utilities.  All appropriate utilities, including sanitary
and storm sewers, water, gas, telephone, cable and electricity, are currently
available to service the Hotel and, to the knowledge of Seller are available in
sufficient quantities to operate the Hotel as currently operated and all
installation, connection or “tap-on”, and currently due and owing usage and
similar fees have been paid.

 

(i)            Licenses,
Permits and Approvals.  Seller has
not received any notice, nor has any knowledge, that the Property fails to
comply with all applicable licenses, permits and approvals and federal, state
or local statutes, laws, ordinances, rules, regulations, requirements and codes
including, without limitation, those regarding zoning, land use, building, fire,
health, safety, environmental, subdivision, water quality, sanitation controls
and the Americans with Disabilities Act, and similar rules and regulations
relating and/or applicable to the ownership, use and operation of the Property
as it is now operated.  To the knowledge
of Seller, Seller has received all licenses, permits and approvals required or
needed for the lawful conduct, occupancy and operation of the business of the
Hotel, and each license and permit is in full force and effect, and will be received
and in full force and effect as of the Closing, except as set forth in Exhibit D-1.  No licenses, permits or approvals necessary
for the lawful conduct, occupancy or operation of the business of the Hotel
requires any approval of a governmental authority for transfer of the Property,
except as set forth in Exhibit D-2.

 

(j)            Financial
Statements.  Seller has delivered
copies of all prior and current Financial Statements for the Hotel, including
all operating statements and monthly financial statements for the Hotel.  Each of such statements is complete and
accurate in all material respects and, except in the case of budgets prepared
in advance of the applicable operating period to which such budgets relate,
fairly presents the results of operations of the Hotel for the respective
periods represented thereby.  Seller has
relied upon the Financial Statements in connection with its ownership and
operation of the Hotel, and there are no other independent audits or financial
statements prepared by third parties relating to the 

 

15

 

operation of the
Hotel other than the Financial Statements, all of which have been provided to
Buyer.

 

(k)           No Material
Adverse Change.  Since the end of the
period covered by the Financial Statements, there has not been any material
adverse change in the business, operations, properties, prospects, results of
operations or condition (financial or otherwise) of the Hotel, and no event has
occurred or circumstance exists that may result in such a material adverse
change.

 

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

 

(m)          Operations.  The Hotel has, to the knowledge of Seller, at
all times during the period of the ownership thereof by Seller or its
Affiliates been operated by the Manager in accordance with all applicable laws,
rules, regulations, ordinances and codes.

 

(n)           Management
Agreement and Franchise Agreement. 
Seller has furnished to Buyer a true and complete copy of the Franchise
Agreement which constitutes the entire agreement of the parties with respect to
the subject matter thereof and which has not been amended or supplemented in
any respect except.  Except for the
existing management agreement and the Franchise Agreement, there are no other
franchise agreements, license agreements or similar agreements for the
operation or management of the Hotel or relating to the Brand, to which Seller
is a party or which are binding upon the Property.  The Improvements comply with, and the Hotel
is being operated in accordance with, all requirements of the existing
management agreement and the Franchise Agreement and all other requirements of
the existing manager and the Franchisor, including all “brand standard”
requirements of the Franchisor.  The
existing management agreement and the Franchise Agreement are in full force and
effect.  No default has occurred and is
continuing under the existing management agreement or the Franchise Agreement
and no circumstances exist which, with the giving of notice, the lapse of time
or both, would constitute such a default.

 

(o)           Construction of
Hotel.

 

(i)            To the knowledge of
Navin C. Dimond, the Hotel has been constructed in a good and workmanlike
manner without encroachments and in accordance in all material respects with
the Contracts, Plans and Specs, and all building permits and certificates of
occupancy therefor and all applicable zoning, platting, subdivision, health,
safety and similar laws, rules, regulations, ordinances and codes.

 

16

 

(ii)           To the knowledge of Seller, the Personal
Property is in good condition and operating order.

 

(iii)          To the knowledge of Seller, all easements
necessary or desirable for ingress and egress, drainage, signage and utilities
serving the Hotel have either been dedicated to the public, conveyed to the
appropriate utility or will be conveyed to Buyer along with the Property.

 

(p)           Disclosure.  No
representation or warranty or other statement made by Seller in this Contract
or the certificates delivered pursuant hereto contains any untrue statement of
a material fact or omits to state a material fact necessary to make any of
them, in light of the circumstances in which it was made, not misleading.  Seller has no knowledge of any fact that has
specific application to the Hotel (other than general economic or industry
conditions) and that may materially adversely affect the assets, business,
prospects, financial condition or results of operations of the Hotel that has
not been set forth in this Contract.

 

7.2           Deleted.

 

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

 

(a)           Authority; No Conflicts. 
Buyer is a corporation duly formed, validly existing and in good
standing in the Commonwealth of Virginia. 
Buyer has obtained all necessary consents of the Board of Directors of
Buyer and is fully authorized to enter into and 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.  Neither the execution nor the performance of,
or compliance with, this Contract by Buyer has resulted, or will result, in a
violation of or conflict with Buyer’s articles of incorporation or bylaws or
any agreement, order, decree, ruling or injunction to which Buyer is subject or
a party or by which Buyer is bound, except where such violation or conflict
would not have a material adverse effect on Buyer or Buyer’s ability to
consummate the transactions contemplated hereby.

 

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

 

7.4           No Implied Representations or Warranties. 
Buyer acknowledges and agrees that, except as expressly set forth
herein, Seller shall not be deemed to have made any additional representations
or warranties with respect to the Property and the subject matter of this
Contract, whether express or implied.

 

7.5           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 

 

17

 

Date.  All of
the representations and warranties made herein shall survive Closing for a
period of one (1) year and shall not be deemed to merge into or be waived
by any Seller’s Deed or any other closing documents.

 

7.6           Notice of Breach.  Each of the
parties hereto shall give to the other party prompt written notice with
particularity upon receipt of notice or having knowledge of any matter that
would constitute a breach of any representation, warranty, agreement or
covenant contained in this Contract.

 

ARTICLE
VIII

ADDITIONAL COVENANTS

 

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

 

8.2           Operations.  From and
after the date hereof through the Closing on the Property, Seller shall comply
with the existing management agreement and the Franchise Agreement and keep the
same in full force and effect and shall perform and comply with all of the
following subject to and in accordance with the terms of the existing
management agreement and the Franchise Agreement:

 

(a)           Continue to maintain the Property
generally in accordance with past practices of Seller and pursuant to and in
compliance with the existing management agreement and the Franchise Agreement,
including, without limitation, (i) using reasonable efforts to keep
available the services of all present employees at the Hotel and to preserve
its relations with guests, suppliers and other parties doing business with
Seller with respect to the Hotel, (ii) accepting booking contracts and
Advance Bookings for the use of the Hotel’s facilities and retaining such
bookings in accordance with the terms of the existing management agreement and
the Franchise Agreement, (iii) maintaining the current level of
advertising and other promotional activities for the Hotel’s facilities, (iv) maintaining
the present level of insurance with respect to the Hotel in full force and
effect until the Closing Date for the Hotel and (v) remaining in
compliance in all material respects with all current Licenses;

 

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

 

(c)           Not cause or permit the removal of
FF&E from the Hotel except for the purpose of discarding worn and valueless
items that have been replaced with FF&E of equal or better quality; timely
make all repairs, maintenance, and replacements to keep all FF&E and all
other Personal Property and all Real Property in good operating condition; keep
and maintain the Hotel in a good state of repair and condition, reasonable and
ordinary wear and tear excepted; and not commit waste of any portion of the
Hotel;

 

18

 

(d)           Maintain the levels and quality of the
Personal Property generally at the levels and quality existing on the date
hereof and keep merchandise, Supplies and inventory adequately stocked, consistent
with good business practice, as if the sale of the Hotel hereunder were not to
occur, including, without limitation, maintaining linens and bath towels at
least at a 2-par level for all suites or rooms of the Hotel;

 

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

 

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

 

(g)           Pay or cause to be paid all taxes,
assessments and other impositions levied or assessed on the Hotel or any part
thereof prior to the date any of the same may become delinquent, and comply
with all federal, state, and municipal laws, ordinances, regulations and orders
relating to the Hotel;

 

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

 

(i)            Not allow any permit, receipt, license,
franchise or right currently in existence with respect to the operation, use,
occupancy or maintenance of the Hotel to expire, be canceled or otherwise
terminated without the prior written consent of Buyer.

 

Seller shall promptly furnish to Buyer copies of all new, amended or
extended FF&E Leases, Service Contracts, Leases and other contracts or
agreements (other than routine Hotel room bookings entered into in the ordinary
course of business) relating to the Hotel and entered into by the Manager prior
to Closing.  Buyer shall have the right
to extend the Review Period for a period of five (5) Business Days in
order to review any of the foregoing that are not received by Buyer at least
five (5) Business Days prior to the expiration of the Review Period.  Seller shall not, without first obtaining the
written approval of Buyer, which approval shall not be unreasonably withheld,
enter into any new FF&E Leases, Service Contracts, Leases or other
contracts or agreements related to the Hotel (other than routine Hotel room
bookings or Advance Bookings entered into in the ordinary course of business as
provided in paragraph (a) of this Section 8.2), 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, Seller shall, at Seller’s expense, (i) obtain any and all
third party consents and approvals (x) required in order to transfer the
Hotel to Buyer (provided that it shall be a condition to Closing for Buyer and
Seller that the Franchisor provide the consents contemplated by Article V),or
(y) which, if not obtained, would materially adversely affect the
operation of the Hotel, including, without limitation, all consents and 

 

19

 

approvals referred to on Exhibit D-2 and (ii) use
best efforts to obtain all other third party consents and approvals (all of
such consents and approvals in (i) and (ii) above being referred to
collectively as, the “Third Party Consents”).

 

8.4           Employees.  Upon
reasonable prior notice to Seller by Buyer, Buyer and its employees,
representatives and agents shall have the right to communicate with Seller’s
staff, the Hotel staff and the existing manager’s staff, including without
limitation the general manager, the director of sales, the engineering staff
and other key management employees of the Hotel, at any time before
Closing.  Buyer shall not interfere with
the operations of the Hotel while engaging in such communication in a manner
that materially adversely affects the operation of the Property or the existing
management agreement or the Franchise Agreement.

 

8.5           Estoppel Certificates.  Seller shall
obtain from 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 Seller during the Review Period and reasonably
acceptable to Seller, and deliver such certificates to Buyer not less than five
(5) days before the Closing.

 

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

 

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

 

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

 

(a)           Indemnification of Buyer. 
Without in any way limiting or diminishing the warranties,
representations or agreements herein contained or the rights or remedies
available to Buyer for a breach hereof, Seller hereby agrees to indemnify,
defend and hold harmless Buyer and its respective designees, successors and
assigns from and against all losses, judgments, liabilities, claims, damages or
expenses (including reasonable attorneys’ 

 

20

 

fees) of every
kind, nature and description in existence before, on or after Closing, whether
known or unknown, absolute or continent, joint or several, arising out of or
relating to:

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(ii)           the conduct and operation by or on behalf
of Buyer of its business at the Hotel or Buyer’s ownership or use of the
Property after the Closing; provided, however, that in no event shall Buyer be
obligated to indemnify Seller from or against any loss, judgment, liability,
claim, damage or expense arising out of or relating to any acts or omissions of
the Manager; and

 

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

 

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

 

(i)            The party seeking indemnification (the “Indemnified
Party”) shall give prompt written notice to the party or parties from which
it is seeking indemnification (the “Indemnifying Party”) of any
assertion of liability by a third party which might give rise to a claim for
indemnification based on the foregoing provisions of 

 

21

 

this Section 8.8,
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 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 Indemnifying 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 

 

22

 

Indemnified Party
and its attorneys, accounts and other representatives, all books and records of
Seller relating to such Legal Action and (z) the parties shall render to
each other such assistance as may be reasonably required in order to ensure the
proper and adequate defense of such Legal Action.

 

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

 

(d)           Cut-off Date for Claims. 
The indemnification obligations of Seller and Buyer pursuant to this Section 8.8
shall terminate on the date which is one (1) year after the Closing Date,
except as to claims asserted in writing within such one (1) year period.

 

(e)           Security for Seller’s Indemnification
Obligations.  To ensure the timely payment by Seller of any
indemnification obligations of Seller that might arise pursuant to this Section 8.8,
from and after the Closing Date, Seller shall maintain on deposit in Seller’s
deposit account(s) the minimum sum of Two Hundred Thousand and No/100
Dollars ($300,000.00) to fund any indemnification obligations of Seller under Section 8.8
of this Contract.  Seller’s obligation to
maintain such amount in Seller’s deposit account(s) shall terminate
thirteen (13) full calendar months after the Closing Date; provided, however,
if there are any claims then pending for which Seller may be required to
indemnify Buyer pursuant to this Section 8.8, Seller shall continue to
maintain in Seller’s deposit account(s) until such claims are resolved an
amount sufficient to cover Seller’s potential liability under this Section 8.8
(but not in excess of $300,000.00).  At
any time during which Seller is required to maintain the sums provided herein
in Seller’s deposit account(s), Seller shall, within two (2) Business Days
after receipt of Buyer’s written request therefor, provide evidence reasonably
acceptable to Buyer in order to demonstrate Seller’s compliance with the terms
of this Section 8.8(e).

 

8.9           Deleted.

 

8.10         Liquor Licenses.  As a
condition to Buyer’s obligations under this Contract, (i) the Manager (or
an affiliate thereof identified to Buyer during the Review Period) shall have
or shall have obtained all liquor licenses and alcoholic beverage licenses
necessary or desirable to operate any restaurants, bars and lounges presently
located within the Hotel (collectively, the “Liquor Licenses”) and, in
the case of an affiliate of the Manager, the Hotel has the right to use such
Liquor License, and (ii) if permitted under the laws of the jurisdiction
in which the Hotel is located, the Manager shall execute and file any and all
necessary forms, applications and other documents (and Seller shall cooperate
with reasonable requests from the Manager in filing such forms, applications
and other documents) with the appropriate liquor and alcoholic beverage
authorities prior to Closing so that the Liquor Licenses remain in full force
and effect upon 

 

23

 

completion of Closing. 
If Alaska or local law requires Buyer to obtain Liquor Licenses in its
own name, then the foregoing condition to closing shall be of no force and
effect.

 

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 the foregoing, however, in
the event the failure of any condition is not the result of Seller’s refusal or
inability to perform any of its duties and obligations hereunder, the Earnest
Money Deposit and any interest earned thereon shall be paid to Seller.

 

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

 

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

 

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

 

(d)           All Liquor Licenses shall be in full
force and effect and shall remain in full force and effect following Closing
and shall have been or shall be transferred to, or new Liquor Licenses issued
to, Manager (or an affiliate thereof identified to Buyer during the Review
Period), at or as of Closing, and Buyer shall have received satisfactory
evidence thereof.

 

(e)           Third Party Consents (if any are
required) in form and substance reasonably satisfactory to Buyer shall have
been obtained and furnished to Buyer.

 

(f)            Assignment of the Franchise Agreement or,
if the Franchise Agreement is to be terminated as provided in Article V,
such agreement shall have been terminated and a new franchise agreement, upon
terms and conditions acceptable to Buyer, shall have been executed by the
Franchisor; provided, however, if this condition has not been satisfied as of
the date set for Closing pursuant to Section 10.1 hereof, Buyer and Seller
may 

 

24

 

elect to mutually
extend the Closing Date pursuant to Section 10.1 hereof.  Notwithstanding anything contained in this
Agreement to the contrary, the Closing Date (defined below) may be extended
unilaterally by Buyer in the event the condition contained in this Section 9.1(f) has
not been satisfied.

 

(g)           As provided in Article V hereof, the
existing management agreement shall have been terminated and the new Management
Agreement shall have been executed by the Manager.

 

(h)           All accounts, escrow, reserves and cash
required to be transferred by the terms of this Contract shall have been
transferred to and become the property of Buyer.

 

ARTICLE X

CLOSING AND CONVEYANCE

 

10.1         Closing.

 

(a)           Unless otherwise agreed by Buyer and
Seller, the Closing on the Property shall occur on a date selected by Buyer
that is not later than ten (10) days after expiration of the Review
Period, provided that all conditions to Closing by Buyer and Seller hereunder
have been satisfied including, without limitation, receipt of a new, or
assignment of the existing, Franchise Agreement by or to Buyer as the case may
be.  The date on which the Closing is to
occur as provided in this Section 10.1, or such other date as may be
agreed upon by Buyer and Seller, is referred to in this Contract as the “Closing
Date” for the Property.  The Closing
shall be held at 10:00 a.m., Central Time, at the offices of the Title
Company, or as otherwise determined by Buyer and Seller.  The parties acknowledge and agree that it
shall not be necessary for either Buyer or Seller to be physically present at
the Closing.

 

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

 

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

 

(b)           Bills of Sale. 
Bills of sale to Buyer and/or its designated lessee, conveying title to
the tangible Personal Property (other than the alcoholic beverage inventories,
which, at Buyer’s election, shall be transferred by Seller to the Manager as
holder of the Liquor Licenses required for operation of the Hotel).

 

(c)           Management Agreement and Franchise
Agreement.  Evidence satisfactory to Buyer of the
termination of the existing management agreement and execution and delivery by
the Manager of a new Management Agreement with Buyer or its designated lessee,
and an assignment of Seller’s interest in the Franchise Agreement to Buyer or
its 

 

25

 

designated lessee
(unless the existing Franchise Agreement is to be terminated as provided in Article V,
in which case Buyer shall have received evidence of such termination and Buyer
shall have entered into a new franchise agreement with the Franchisor).

 

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

 

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

 

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

 

(g)           Possession; Estoppel Certificates. 
Possession of the Property, subject only to rights of guests in
possession and tenants pursuant to written leases included in the Leases.  Estoppel certificates from tenants under
Leases and the lessors under FF&E Leases in form and substance reasonably
acceptable to Buyer.

 

(h)           Vehicle Titles. 
The necessary certificates of title duly endorsed for transfer together
with any required affidavits and other documentation necessary for the transfer
of title or assignment of leases from Seller to Buyer of any motor vehicles
used in connection with the Hotel’s operations and more particularly described
on Exhibit G.

 

(i)            Authority Documents. 
Certified copies of resolutions of the partners or members, as
applicable, of Seller and the Manager authorizing the sale of the Property and
the other transactions contemplated by this Contract, and/or other evidence
reasonably satisfactory to Buyer and the Title Company that the person or
persons executing the closing documents on behalf of Seller and the Manager
have full right, power and authority to do so, along with  certificates of good standing of the Manager
from the State of its organization and of Seller from the State of its
organization and the State in which the Property is located.

 

(j)            Miscellaneous. 
Such other instruments as are contemplated by this Contract to be
executed or delivered by Seller and/or the Manager, reasonably required by
Buyer or the Title Company, or customarily executed in the jurisdiction in
which the Hotel is located, to effectuate the transactions contemplated by this
Contract, including the

 

26

 

conveyance of
property similar to the Hotel, with the effect that, after the Closing, Buyer
will have succeeded to all of the rights, titles, and interests of Seller
related to the Hotel and Seller will no longer have any rights, titles, or
interests in and to the Hotel.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

ARTICLE
XI

COSTS

 

All Closing costs shall
be paid as set forth below:

 

11.1         Seller’s
Costs.  In connection with the sale of the Property
contemplated under this Contract, Seller shall be responsible for all transfer
and recordation taxes, including, without limitation, all transfer, sales, use
or bulk transfer taxes or like taxes on or in connection with the transfer of
the Personal Property constituting part of the Property pursuant to the Bill of
Sale and all accrued taxes of Seller prior to Closing and income, sales and use
taxes and other such taxes of Seller attributable to the sale of the Property
to Buyer, provided that Buyer and Seller shall 

 

27

 

share equally all transfer and recordation taxes
payable in connection with the recordation of the Deed.  Seller shall be responsible for all costs
related to the termination of the existing management agreement with the Manager
and execution of a new Management Agreement with the Manager (other than Buyer’s
legal fees).  Seller shall also be
responsible for the costs and expenses of its attorneys, accountants,
appraisers and other professionals, consultants and representatives.  Seller shall also be responsible for payment
of all prepayment penalties and other amounts payable in connection with the
pay-off of any liens and/or indebtedness encumbering the Property.

 

11.2         Buyer’s
Costs.  In connection with the purchase of the Property
contemplated under this Contract, Buyer shall be responsible for the costs and
expenses of its attorneys, accountants and other professionals, consultants and
representatives.  Buyer shall also be
responsible for the costs and expenses in connection with the preparation of
any environmental report, any update to the survey and the costs and expenses
of preparation of the Title Commitment and the issuance of the title insurance
policy contemplated by Article IV, the per page recording charges for
the Deed (if applicable) and one half (1⁄2) of all transfer and recordation taxes
payable in connection with the recordation of the Deed.  As provided in Article V, Buyer shall
also be responsible for costs related to the assignment and amendment of the
Franchise Agreement or the termination of the Franchise Agreement and the
execution of a new franchise agreement, as applicable.

 

ARTICLE
XII

ADJUSTMENTS

 

12.1         Adjustments. 
Unless otherwise provided herein, at Closing, adjustments between the
parties shall be made as of 12:01 a.m. on the Closing Date (the “Cutoff
Time”), with the income and expenses accrued prior to the Closing Date
being allocated to Seller and the income and expenses accruing on and after the
Closing Date being allocated to Buyer, all as set forth below.  All of such adjustments and allocations shall
be made in cash at Closing and shall be collected through and/or adjusted in
accordance with the terms of the Management Agreement and/or as settlement
statement items as mutually directed by the parties.  Except as otherwise expressly provided
herein, all apportionments and adjustments shall be made on an accrual basis in
accordance with generally accepted accounting principles.  Buyer and Seller shall request that the
Manager  determine the apportionments,
allocations, prorations and adjustments as of the Cutoff Time.

 

(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 Cutoff 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.

 

(b)           Utilities.  All suppliers of utilities shall be instructed
to read meters or otherwise determine the charges owing as of the Closing Date
for services prior thereto, 

 

28

 

which charges
shall be allocated to Seller.  Charges
accruing after Closing shall be allocated to Buyer.  Seller shall be given credit, and Buyer shall
be charged, for any utility deposits transferred to and received by Buyer at
Closing.

 

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

 

(d)           Accounts.  Seller shall fund at Closing the working
capital account in the amount of $45,000. 
Seller shall be entitled to a credit at Closing for amounts held in the
following accounts to the extent transferred to and assumed by Buyer at
Closing: (i) amounts held in reserve accounts and escrow accounts
(including FF&E accounts, tax and insurance escrow accounts and utility
deposits and (ii) petty cash, cash in cash registers and cash in vending
machines, whether such accounts and/or amounts are held by or on behalf of the
existing manager or any Lender or any other person or entity, all of which
shall become the property of Buyer without Buyer being required to fund the
same and without additional charge to Buyer. 
Seller shall cause all such accounts and amounts to be transferred to
Buyer at Closing.

 

(e)           Guest Ledger.  Subject to (f) below, all accounts
receivable of registered guests at the Hotel who have not checked out and were
occupying rooms as of the Cutoff Time, shall be prorated as provided herein.

 

(f)            Room Rentals.  All receipts from guest room rentals and
other suite revenues for the night in which the Cutoff Time occurs shall belong
to Seller, but Seller shall provide Buyer a credit at Closing in an amount
equal to $35.00 per room to cover the expenses to be incurred by Buyer to clean
such guests’ rooms.

 

(g)           Deposits.  To the extent Seller has received and not
transferred to Buyer any portion of the Deposits, Buyer shall be entitled to a
credit at Closing in an amount equal to that portion of the Deposits.  To the extent Seller has not received or has
received and is transferring to Buyer at Closing any portion of the Deposits,
Buyer shall not be entitled to a credit at Closing for that portion of the
Deposits.

 

(h)           Accounts
Receivable.  To the extent not
apportioned at Closing and subject to (e) and (f) above, all accounts
receivable and credit card claims as of the Cutoff Time shall remain the
property of Seller, and collection thereof shall be the sole responsibility of
Seller.

 

(i)            Accounts Payable.  To the extent not apportioned at Closing, any
indebtedness, accounts payable, liabilities or obligations of any kind or
nature related to Seller or the Property for the periods prior to the Closing
Date shall be retained by Seller and promptly allocated to Seller and evidence
thereof shall be provided to Buyer, 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 Seller at Closing.

 

29

 

(j)            Restaurants,
Bars, Machines, Other Income.  All
monies received in connection with bar, restaurant, banquet and similar and
other services at the Hotel (other than amounts due from any guest and included
in room rentals) prior to the close of business for each such operation for the
night in which the Cutoff Time occurs shall belong to Seller, and all other
receipts and revenues (not previously described in this Section 12.1) from
the operation of any department of the Hotel shall be prorated between Seller
and Buyer at Closing.

 

12.2         Reconciliation
and Final Payment.  Seller and Buyer shall reasonably cooperate
after Closing to make a final determination of the allocations and prorations
required under this Contract within 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.

 

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

 

ARTICLE
XIII

CASUALTY AND CONDEMNATION

 

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

 

30

 

13.2         Buyer’s
Termination Right.  If, prior to Closing and the delivery of
possession of the Property to Buyer in accordance with this Contract, (a) any
condemnation proceeding shall be pending against a substantial portion of the
Hotel or (b) there is any substantial casualty loss or damage to the
Hotel, Buyer shall have the option to terminate this Contract, provided Buyer
delivers written notice to Seller of its election within twenty (20) days after
the date Seller has delivered Buyer written notice of any such loss, damage or
condemnation as provided above, and in such event, the Earnest Money Deposit,
and any interest thereon, shall be delivered to Buyer and thereafter, except as
expressly set forth herein, no party shall have any further obligation or
liability to the other under this Contract. 
In the context of condemnation, “substantial” shall mean
condemnation of such portion of the Hotel (or access thereto) as could, in
Buyer’s reasonable judgment, render use of the remainder impractical or
unfeasible for the uses herein contemplated, and, in the context of casualty loss
or damage, “substantial” shall mean a loss or damage in excess of One
Hundred Thousand and No/100 Dollars ($100,000.00) 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, Seller agrees to pay to Buyer at the Closing
all insurance proceeds or condemnation awards which Seller has received as a
result of the same, plus an amount equal to the insurance deductible, and assign
to Buyer all insurance proceeds and condemnation awards payable as a result of
the same, in which event the Closing shall occur without Seller replacing or
repairing such damage.  In the case of
damage or casualty, at Buyer’s election, Seller shall repair and restore the
Property to its condition immediately prior to such damage or casualty and any
excess insurance proceeds shall remain the property of Seller, provided (i) Buyer
has reviewed and approved the plans and specifications and proposed budget for any
such repair and restoration work and (ii) the Manager guarantees to Buyer
the quality of such repair and restoration work.

 

ARTICLE
XIV

DEFAULT REMEDIES

 

14.1         Buyer
Default.  If Buyer defaults under this Contract after
the Review Period by failing to close as required hereunder, and such default
continues for ten (10) days following written notice from Seller (provided
no notice shall extend the time for Closing and provided further that, in the
case of a failure by Buyer to deposit the Initial Earnest Money Deposit, the
Second Earnest Money Deposit or the Extension Deposit (if any) with the Escrow
Agent within the applicable time frames set forth in Section 2.5 and Section 3.5
above, the aforementioned ten (10) day period shall be reduced to five (5) days
and Seller shall not be required to provide notice of such failure to Buyer),
then at Seller’s election by written notice to Buyer, this Contract shall be
terminated and of no effect, in which event the Earnest Money Deposit,
including any interest thereon, shall be paid to and retained by the Seller as
Seller’s sole and exclusive remedy hereunder, and as liquidated damages for
Buyer’s default or failure to close, and both Buyer and Seller shall thereupon
be released from all obligations hereunder.

 

14.2         Seller
Default.  If Seller defaults under this Contract by
failing to close as required hereunder, 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 Seller delivered to Seller at any time prior to the completion of such cure,
in which event the Earnest Money Deposit, including any interest thereon, shall
be returned 

 

31

 

to the Buyer, and Seller shall pay to Buyer the
additional sum of Two Hundred Fifty Thousand and No/100 Dollars ($250,000.00)
as liquidated damages, and thereafter both the Buyer and Seller shall thereupon
be released from all obligations with respect to this Contract, except as
otherwise expressly provided herein; or (ii) to treat this Contract as
being in full force and effect by written notice to Seller delivered to Seller
at any time prior to the completion of such cure, in which event the Buyer shall
have the right to an action against Seller for damages, specific performance
and all other rights and remedies available at law or in equity.  Notwithstanding the foregoing, the parties
hereto acknowledge and agree that the failure of the Franchisor to provide the
consents required pursuant to Article V hereof shall not constitute a
default by Seller under this Contract.

 

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

 

ARTICLE
XV

NOTICES

 

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

 

	
  If
  to Buyer:

  	
   

  	
  Apple Nine Hospitality
  Ownership, Inc.

  814 East Main Street 

  Richmond, Virginia
  23219 

  Attention: Justin G.
  Knight, President 

  Fax No.: (804) 344-8129

  
	
   

  	
   

  	
   

  
	
  with
  a copy to:

  	
   

  	
  Apple Nine Hospitality
  Ownership, Inc. 

  814 East Main Street 

  Richmond, Virginia
  23219 

  Attention: Legal Dept. 

  Fax No.: (804) 727-6349

  

 

32

 

	
  If
  to Seller:

  	
   

  	
  Denali Lodging, LLC 

  c/o Stonebridge Companies 

  9100 East Panorama Drive, Suite 300 

  Englewood, Colorado 80112 

  Attention: Navin C. Dimond 

  Fax No.: (303) 785-3107

  
	
   

  	
   

  	
   

  
	
  with
  a copy to:

  	
   

  	
   

  
	
   

  	
   

  	
  Brownstein Hyatt
  Farber & Schreck, LLP 

  410 Seventeenth Street,
  Suite 2200 

  Denver, CO 80202 

  Attention: Howard
  Pollack 

  Fax No.: (303) 223-1111

  

 

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 Buyer and Seller with respect to the subject
matter hereof.  No modification of this
Contract shall be binding unless signed by both Buyer and Seller.

 

16.4         Governing
Law.  The validity, construction, interpretation
and performance of this Contract shall in all ways be governed and determined
in accordance with the laws of the 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, Buyer and Seller shall not disclose the
existence of this Contract or their respective intentions to purchase and sell
the Property or generate or participate in any publicity or press release
regarding this transaction, except to Buyer’s and Seller’s legal counsel, Buyer’s
consultants and agents, the Manager, the Franchisor, the Lender (if any) and
the Title Company and except as necessitated by Buyer’s Due Diligence
Examination 

 

33

 

and/or shadow management, unless both Buyer and Seller
agree in writing and as necessary to effectuate the transactions contemplated
hereby and (ii) following Closing, the parties shall coordinate any public
disclosure or release of information related to the transactions contemplated
by this Contract, and no such disclosure or release shall be made without the
prior written consent of Buyer, and no press release shall be made without the
prior written approval of Buyer and Seller.

 

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

 

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

 

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

 

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

 

16.11       (Intentionally
Omitted)

 

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

 

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

 

[Signatures Begin
on Following Page]

 

34

 

	
   

  	
  SELLER:

  
	
   

  	
   

  
	
   

  	
  DENALI LODGING, LLC, a Colorado limited

  
	
   

  	
  liability company

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Navin C.Dimond

  
	
   

  	
  Name:

  	
  Navin C. Dimond

  
	
   

  	
  Title:

  	
  Manager

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  BUYER:

  
	
   

  	
   

  
	
   

  	
  APPLE NINE HOSPITALITY
  OWNERSHIP,

  
	
   

  	
  INC., a Virginia corporation

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Justin G. Knight

  
	
   

  	
  Name:

  	
  Justin G. Knight

  
	
   

  	
  Title:

  	
  President

  

 

35Exhibit 10.73

 

Boise, Idaho (Hampton Inn & Suites)

 

 

PURCHASE
CONTRACT

 

 

between

 

BOISE
LODGING INVESTORS, LLC (“SELLER”)

 

(“SELLER”)

 

 

AND

 

 

APPLE
NINE HOSPITALITY OWNERSHIP, INC. (“BUYER”)

 

 

AND

 

 

RAYMOND
MANAGEMENT COMPANY, INC.

(“INDEMNITOR”)

 

 

Dated:  March 16, 2010

 

 

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

  	
  7

  
	
   

  	
   

  	
   

  
	
  2.1

  	
  Purchase and Sale

  	
  7

  
	
   

  	
   

  	
   

  
	
  2.2

  	
  Intentionally Omitted

  	
  7

  
	
   

  	
   

  	
   

  
	
  2.3

  	
  Purchase Price

  	
  7

  
	
   

  	
   

  	
   

  
	
  2.4

  	
  Allocation

  	
  7

  
	
   

  	
   

  	
   

  
	
  2.5

  	
  Payment

  	
  7

  
	
   

  	
   

  	
   

  
	
  2.6

  	
  Earnest Money Deposit

  	
  7

  
	
   

  	
   

  	
   

  
	
  ARTICLE III

  	
  REVIEW PERIOD

  	
  8

  
	
   

  	
   

  	
   

  
	
  3.1

  	
  Review Period

  	
  8

  
	
   

  	
   

  	
   

  
	
  3.2

  	
  Due Diligence
  Examination

  	
  9

  
	
   

  	
   

  	
   

  
	
  3.3

  	
  Restoration

  	
  9

  
	
   

  	
   

  	
   

  
	
  3.4

  	
  Seller Exhibits

  	
  10

  
	
   

  	
   

  	
   

  
	
  ARTICLE IV

  	
  SURVEY AND TITLE
  APPROVAL

  	
  10

  
	
   

  	
   

  	
   

  
	
  4.1

  	
  Survey

  	
  10

  
	
   

  	
   

  	
   

  
	
  4.2

  	
  Title

  	
  10

  
	
   

  	
   

  	
   

  
	
  4.3

  	
  Survey or Title
  Objections

  	
  10

  
	
   

  	
   

  	
   

  
	
  ARTICLE V

  	
  TERMINATION OF
  MANAGEMENT AGREEMENT

  	
  11

  
	
   

  	
   

  	
   

  
	
  ARTICLE VI

  	
  BROKERS

  	
  11

  
	
   

  	
   

  	
   

  
	
  ARTICLE VII

  	
  REPRESENTATIONS,
  WARRANTIES AND COVENANTS

  	
  12

  
	
   

  	
   

  	
   

  
	
  7.1

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

  	
  12

  
	
   

  	
   

  	
   

  
	
  7.2

  	
  Buyer’s
  Representations, Warranties and Covenants

  	
  17

  
	
   

  	
   

  	
   

  
	
  7.3

  	
  Survival

  	
  17

  
	
   

  	
   

  	
   

  
	
  ARTICLE VIII

  	
  ADDITIONAL COVENANTS

  	
  17

  
	
   

  	
   

  	
   

  
	
  8.1

  	
  Subsequent Developments

  	
  17

  
	
   

  	
   

  	
   

  
	
  8.2

  	
  Operations

  	
  17

  
	
   

  	
   

  	
   

  
	
  8.3

  	
  Third Party Consents

  	
  19

  
	
   

  	
   

  	
   

  
	
  8.4

  	
  Employees

  	
  19

  

 

i

 

	
  8.5

  	
  Estoppel Certificates

  	
  19

  
	
   

  	
   

  	
   

  
	
  8.6

  	
  Access to Financial
  Information

  	
  19

  
	
   

  	
   

  	
   

  
	
  8.7

  	
  Bulk Sales

  	
  20

  
	
   

  	
   

  	
   

  
	
  8.8

  	
  Indemnification

  	
  20

  
	
   

  	
   

  	
   

  
	
  8.9

  	
  Escrow Funds

  	
  22

  
	
   

  	
   

  	
   

  
	
  8.10

  	
  Liquor Licenses

  	
  22

  
	
   

  	
   

  	
   

  
	
  ARTICLE IX

  	
  CONDITIONS FOR CLOSING

  	
  23

  
	
   

  	
   

  	
   

  
	
  9.1

  	
  Buyer’s Conditions for
  Closing

  	
  23

  
	
   

  	
   

  	
   

  
	
  9.2

  	
  Seller’s Conditions for
  Closing

  	
  24

  
	
   

  	
   

  	
   

  
	
  ARTICLE X

  	
  CLOSING AND CONVEYANCE

  	
  24

  
	
   

  	
   

  	
   

  
	
  10.1

  	
  Closing

  	
  24

  
	
   

  	
   

  	
   

  
	
  10.2

  	
  Deliveries of Seller
  and Indemnitor

  	
  24

  
	
   

  	
   

  	
   

  
	
  10.3

  	
  Buyer’s Deliveries

  	
  26

  
	
   

  	
   

  	
   

  
	
  ARTICLE XI

  	
  COSTS

  	
  26

  
	
   

  	
   

  	
   

  
	
  11.1

  	
  Seller’s Costs

  	
  26

  
	
   

  	
   

  	
   

  
	
  11.2

  	
  Buyer’s Costs

  	
  27

  
	
   

  	
   

  	
   

  
	
  ARTICLE XII

  	
  ADJUSTMENTS

  	
  27

  
	
   

  	
   

  	
   

  
	
  12.1

  	
  Adjustments

  	
  27

  
	
   

  	
   

  	
   

  
	
  12.2

  	
  Reconciliation and
  Final Payment

  	
  29

  
	
   

  	
   

  	
   

  
	
  12.3

  	
  Employees

  	
  29

  
	
   

  	
   

  	
   

  
	
  ARTICLE XIII

  	
  CASUALTY AND
  CONDEMNATION

  	
  29

  
	
   

  	
   

  	
   

  
	
  13.1

  	
  Risk of Loss; Notice

  	
  29

  
	
   

  	
   

  	
   

  
	
  13.2

  	
  Buyer’s Termination
  Right

  	
  29

  
	
   

  	
   

  	
   

  
	
  13.3

  	
  Procedure for Closing

  	
  30

  
	
   

  	
   

  	
   

  
	
  ARTICLE XIV

  	
  DEFAULT REMEDIES

  	
  30

  
	
   

  	
   

  	
   

  
	
  14.1

  	
  Buyer Default

  	
  30

  
	
   

  	
   

  	
   

  
	
  14.2

  	
  Seller Default

  	
  30

  
	
   

  	
   

  	
   

  
	
  14.3

  	
  Attorney’s Fees

  	
  30

  
	
   

  	
   

  	
   

  
	
  ARTICLE XV

  	
  NOTICES

  	
  31

  
	
   

  	
   

  	
   

  
	
  ARTICLE XVI

  	
  MISCELLANEOUS

  	
  32

  
	
   

  	
   

  	
   

  
	
  16.1

  	
  Performance

  	
  32

  
	
   

  	
   

  	
   

  
	
  16.2

  	
  Binding Effect;
  Assignment

  	
  32

  
	
   

  	
   

  	
   

  
	
  16.3

  	
  Entire Agreement

  	
  32

  

 

ii

 

	
  16.4

  	
  Governing Law

  	
  32

  
	
   

  	
   

  	
   

  
	
  16.5

  	
  Captions

  	
  32

  
	
   

  	
   

  	
   

  
	
  16.6

  	
  Confidentiality

  	
  32

  
	
   

  	
   

  	
   

  
	
  16.7

  	
  Closing Documents

  	
  32

  
	
   

  	
   

  	
   

  
	
  16.8

  	
  Counterparts

  	
  32

  
	
   

  	
   

  	
   

  
	
  16.9

  	
  Severability

  	
  32

  
	
   

  	
   

  	
   

  
	
  16.10

  	
  Interpretation

  	
  33

  
	
   

  	
   

  	
   

  
	
  16.11

  	
  (Intentionally Omitted)

  	
  33

  
	
   

  	
   

  	
   

  
	
  16.12

  	
  Further Acts

  	
  33

  
	
   

  	
   

  	
   

  
	
  16.13

  	
  Joint and Several
  Obligations

  	
  33

  
	
   

  	
   

  	
   

  
	
  ARTICLE XVII

  	
  JOINDER BY INDEMNITOR

  	
  33

  
	
   

  	
   

  	
   

  
	
  17.1

  	
  Indemnification by
  Indemnitor

  	
  33

  
	
   

  	
   

  	
   

  
	
  SCHEDULES:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  7.1

  	
  Exception to
  Outstanding Purchase Rights

  	
   

  
	
   

  	
   

  	
   

  
	
  EXHIBITS:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Exhibit A

  	
  Legal Description

  	
   

  
	
  Exhibit B

  	
  List of FF&E

  	
   

  
	
  Exhibit C

  	
  List of Hotel Contracts

  	
   

  
	
  Exhibit D

  	
  Consents and Approvals

  	
   

  
	
  Exhibit E

  	
  Environmental Reports

  	
   

  
	
  Exhibit F

  	
  Claims or Litigation
  Pending

  	
   

  
	
  Exhibit G

  	
  Escrow Agreement

  	
   

  

 

iii

 

PURCHASE
CONTRACT

 

This PURCHASE CONTRACT
(this “Contract”) is made and entered into
as of March 16, 2010, by and between BOISE LODGING INVESTORS, LLC, a
Wisconsin limited liability company (“Seller”)
with a principal office at 8333 Greenway Boulevard, Suite 200, Middleton,
Wisconsin 53562 and APPLE NINE HOSPITALITY OWNERSHIP, INC., a Virginia
corporation, with its principal office at 814 East Main Street, Richmond,
Virginia 23219, or its affiliates or assigns (“Buyer”),
and joined in by Raymond Management Company, Inc., a Wisconsin Corporation
(“Indemnitor”), with its principal
office at 8333 Greenway Boulevard, Suite 200, Middleton, Wisconsin 53562.

 

RECITALS

 

A.                                   Seller is the fee simple owner of that
certain 186-room hotel property commonly known as the Hampton Inn &
Suites Boise-Downtown located at 495 S. Capitol Blvd., Boise, Idaho 83702 (the “Hotel”) identified in Exhibit A attached hereto and
incorporated by reference.

 

B.                                     Buyer is desirous of purchasing the Hotel
from Seller, and Seller is desirous of selling the Hotel to Buyer, for the
purchase price and upon terms and conditions hereinafter set forth.

 

AGREEMENT:

 

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

 

ARTICLE I

DEFINED TERMS

 

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

 

“Additional Deposit” shall mean $125,000.00.

 

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

 

“Appurtenances” shall mean all rights, titles,
and interests of a Seller appurtenant to the Land and Improvements, including,
but not limited to, (i) all easements, rights of way, rights of ingress
and egress, tenements, hereditaments, privileges, and appurtenances in any way 

 

1

 

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 Hampton Inn &
Suites, the hotel brand or franchise under which the Hotel operates.

 

“Business Day” shall mean any day other than a
Saturday, Sunday or legal holiday in the Commonwealth of Virginia.

 

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

 

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

 

“Contracts, Plans and Specs” shall mean all
construction plans, drawings, specifications, surveys, soil reports,
engineering reports, inspection reports, and other technical descriptions and
reports, in Seller’s possession or control.

 

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

 

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

 

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

 

“Earnest Money Deposit” shall have the meaning
set forth in Section 2.6(a).

 

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

 

“Escrow Agent” shall have the meaning set forth
in Section 2.6(a).

 

“Escrow Agreement” shall have the meaning set
forth in Section 2.6(b).

 

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

 

2

 

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

 

“Existing Management Agreement” shall mean that
certain management agreement between the Seller and the Manager for the
operation and management of the Hotel.

 

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

 

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

 

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

 

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

 

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

 

“Improvements” shall mean all buildings,
structures, fixtures, parking areas and other improvements to the Land, and all
related facilities.

 

“Indemnification Agreement” shall have the
meaning set forth in Article XVII.

 

“Indemnified Party” shall have the meaning set
forth in Section 8.8(c)(i).

 

“Indemnifying Party” shall have the meaning set
forth in Section 8.8(c)(i).

 

“Initial Deposit” shall have the meaning set
forth in Section 2.6(a).

 

“Land” shall mean, collectively, a fee simple
absolute interest in the real property more fully described in Exhibit A,
which is attached hereto and incorporated herein by reference, 

 

3

 

together with all rights (including without limitation
all air rights and development rights), alleys, streets, strips, gores,
privileges, appurtenances, advantages and easements belonging thereto or in any
way appertaining thereto.

 

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

 

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

 

“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.

 

“Liquor Licenses” shall have the meaning set
forth in Section 8.10.

 

“Manager” shall mean Raymond Management Company, Inc.

 

“New Franchise Agreement” shall mean the
franchise license agreement to be entered into between Buyer and the
Franchisor, granting to Buyer a franchise to operate the Hotel under the Brand
on and after the Closing Date.

 

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

 

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

 

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

 

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

 

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

 

“PIP” shall mean a product improvement plan for
any Hotel, as required by the Manager or the Franchisor, if any.

 

“Post-Closing Agreement” shall have the meaning
set forth in Section 8.9.

 

“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 

 

4

 

Contracts, Warranties, Licenses, FF&E Leases,
Contracts, Plans and Specs, Tradenames, Utility Reservations, as well as all
other real, personal or intangible property of Seller related to any of the
foregoing and (ii) any and all of the following that relate to or affect
in any way the design, construction, ownership, use, occupancy, leasing,
maintenance, service or operation of the Real Property, FF&E, Supplies,
Leases, Deposits or Records:  Service
Contracts, Warranties, Licenses, Tradenames (except “Cool Pool” tm, the right to which Seller shall retain), Contracts,
Plans and Specs and FF&E Leases.

 

“Purchase Price” shall have the meaning set
forth in Section 2.3.

 

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

 

“Records” shall mean all books, records,
promotional material, guest history information (other than any such
information owned exclusively by the Manager), 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), any
marketing plan prepared in connection with Seller’s current annual operating
budget (including, without limitation, all documentation relating to any
pending litigation or other proceedings, all zoning and/or land use notices,
relating to or affecting the Property owned by Seller and/or in Seller’s
possession or control, or to which Seller has access or may obtain from the
Manager, that are used in or relating to the Property and/or the operation of
the Hotel, including the Land, the Improvements or the FF&E, and proforma
budgets and projections and all construction warranties and guaranties in
effect at Closing and copies of the record plans and specifications for the Hotel,
as available.

 

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

 

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

 

“SEC” shall have the meaning set forth in Section 8.6.

 

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

 

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

 

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

 

“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 

 

5

 

connection with the swimming pools, indoor and/or
outdoor sports facilities, health clubs, spas, fitness centers, restaurants,
business centers, meeting rooms and other common areas and recreational areas.

 

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

 

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

 

“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 the name of the hotel chain to which the Hotel
is affiliated by franchise, license or management agreement is a protected name
or registered service mark of such hotel chain and cannot be transferred to
Buyer by this Contract, provided that all such franchise, license, management
and other agreements granting a right to use the name of such hotel chain or
any other trademark or trade name and all waivers of any brand standard shall
be assigned to Buyer to the extent Seller has any right to make such
assignment).

 

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

 

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

 

6

 

ARTICLE II

PURCHASE AND SALE; PURCHASE PRICE; PAYMENT;

EARNEST MONEY DEPOSIT

 

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

 

2.2                               Intentionally Deleted.

 

2.3                               Purchase Price. 
Buyer agrees to pay, and Seller agrees to accept, as consideration for
the conveyance of the Property, subject to the adjustments provided for in this
Contract, the amount of Twenty-two Million Three Hundred Seventy Thousand and
No/100 Dollars ($22,370,000.00) (the “Purchase Price”).

 

2.4                               Allocation.  Buyer and
Seller shall acting reasonably, in good faith, and based on objective standards
and appraisals of value, on an “open-book” basis, attempt to agree, prior to
the expiration of the Review Period, on an allocation of the Purchase Price
among Real Property, tangible Personal Property and intangible property related
to the Property.  In the event Buyer and
Seller do not agree, each party shall be free to allocate the Purchase Price to
such items as they deem appropriate, subject to and in accordance with
applicable laws.

 

2.5                               Payment.  The portion
of the Purchase Price, less the Earnest Money Deposit and interest earned thereon,
if any, which Buyer elects to have applied against the Purchase Price (as
provided below), less the Escrow Funds, shall be paid to Seller in cash,
certified funds or wire transfer, at the Closing of the Property.  At the Closing, the Earnest Money Deposit,
together with interest earned thereon, if any, shall, at Buyer’s election, be
returned to Buyer or shall be paid over to Seller by Escrow Agent to be applied
to the portion of the Purchase Price on behalf of Buyer, and the Escrow Funds
shall be deposited into an escrow account pursuant to the Post-Closing
Agreement as contemplated by Section 8.9.

 

2.6                               Earnest Money Deposit.

 

(a)                                 Within three (3) Business Days after
the full execution and delivery of this Contract, Buyer shall deposit the sum
of One Hundred Twenty-five Thousand and No/100 Dollars ($125,000.00) in cash,
certified bank check or by wire transfer of immediately available funds (the “Initial Deposit”) with the Title
Company, as escrow agent (“Escrow Agent”),
which sum shall be held by Escrow Agent as earnest money.  If, pursuant to the provisions of Section 3.1
of this Contract, Buyer elects to terminate this Contract at any time prior to
the expiration of the 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 

 

7

 

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 forty-five (45) days after the date of this Contract, unless a
longer period of time is otherwise provided for in this Contract and except as
otherwise agreed to by Buyer and Seller (the “Review
Period”), to evaluate the legal, title, survey, construction,
physical condition, structural, mechanical, environmental, economic, permit
status, franchise status, financial and other documents and information related
to the Property.  Within five (5) Business
Days following the date of this Contract, Seller, at Seller’s sole cost and
expense, will deliver to Buyer (or make available at the Hotel) for Buyer’s
review, to the extent not previously delivered to Buyer, true, correct and
complete copies of the following, together with all amendments, modifications,
renewals or extensions thereof:

 

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

 

(b)                                 Income and expense statements and budgets
for the Hotel, for the current year to date and each of the three (3) prior
fiscal years (the “Financial Statements”),
and Seller shall provide to Buyer copies of all income and expense statements
generated by Seller or any third party that relate to the operations of the
Hotel and that contain information not included in the financial statements, if
any, provided to Buyer by the Manager, provided that Seller also agrees to
provide to Buyer’s auditors and representatives all financial and other
information necessary or appropriate for preparation of audited financial
statements for Buyer and/or its Affiliates as provided in Section 8.6,
below;

 

(c)                                  All real estate and personal property tax
statements with respect to the Hotel and notices of appraised value for the
Real Property for the current year (if available) and each of the three (3) calendar
years prior to the current year;

 

(d)                                 To the extent available and in Seller’s
possession, engineering, mechanical, architectural and construction plans,
drawings, specifications and contracts, payment and performance bonds, title
policies, reports and commitments, zoning information, as well as copies of all
environmental reports and information, topographical, boundary or “as built”
surveys, engineering reports, subsurface studies and other Contracts, Plans and
Specs relating to or affecting the Hotel. 
If the Hotel is purchased by Buyer, all such documents and information 

 

8

 

relating to the Hotel shall thereupon be and become
the property of Buyer without payment of any additional consideration therefor;

 

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

 

(f)                                   All notices received from governmental
authorities in connection with the Hotel that relate to any noncompliance or
violation of law that has not been corrected.

 

Seller shall, upon request of Buyer, make available to
Buyer and Buyer’s representatives and agents, for inspection and copying during
normal business hours or as otherwise agreed, Records located at Seller’s
corporate offices including items identified in 3.1(a)-(f) above, and
Seller agrees to provide Buyer copies of all other reasonably requested
information that is relevant to the management, operation, use, occupancy or
leasing of or title to the applicable Hotel and the plans specifications for
development of the Hotel.  At any time
during the Review Period, Buyer may, in its sole and absolute discretion, elect
not to proceed with the purchase of the Property for any reason whatsoever by giving
written notice thereof to Seller, in which event:  (i) the Earnest Money Deposit shall be
promptly returned by Escrow Agent to Buyer together with all accrued interest,
if any, (ii) this Contract shall be terminated automatically, (iii) all
materials supplied by Seller to Buyer shall be returned promptly to Seller, and
(iv) both parties will be relieved of all other rights, obligations and
liabilities hereunder, except for the parties’ obligations pursuant to Sections
3.3 and 16.6 below.

 

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

 

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

 

9

 

3.4                               Seller Exhibits. 
Buyer shall have until the end of the Review Period to review and
approve the information on Exhibits B, C, D, E and F.  In the event Buyer does not approve any such Exhibit or
the information contained therein prior to the end of the Review Period, Buyer
shall be entitled to terminate this Contract by notice to Seller and the
Earnest Money Deposit shall be returned to Buyer with all interest thereon and
both parties shall be relieved of all rights, obligations and liabilities
hereunder except for the parties’ obligations pursuant to Sections 3.3 and
16.6. Silence by Buyer through the end of the Review Period shall be deemed approval
of all information on the foregoing exhibits.

 

ARTICLE IV

SURVEY AND TITLE APPROVAL

 

4.1                               Survey.  Seller has
delivered to Buyer true, correct and complete copies of the most recent surveys
of the Real Property.  In the event that
an update of the survey or a new survey (such updated or new surveys being
referred to as the “Survey”)
are desired by Buyer, then Buyer shall be responsible for all costs related
thereto.

 

4.2                               Title.  Seller has
delivered to Buyer its existing title insurance policy, including copies of all
documents referred to therein, for its Real Property.  Buyer’s obligations under this Contract are
conditioned upon Buyer being able to obtain, at its sole cost and expense, for
the Property (i) a Commitment for Title Insurance (the “Title Commitment”) issued by
Chicago Title Company, Attn: Debby Moore, 5501 LBJ Freeway, Suite 200,
Dallas, TX 75240 (the “Title Company”),
for the most recent standard form of owner’s policy of title insurance in the
state in which the Real Property is located, covering the Real Property,
setting forth the current status of the title to the Real Property, showing all
liens, claims, encumbrances, easements, rights of way, encroachments,
reservations, restrictions and any other matters affecting the Real Property
and pursuant to which the Title Company agrees to issue to Buyer at Closing an
Owner’s Policy of Title Insurance on the most recent form of ALTA (where
available) owner’s policy available in the state in which the Land is located,
with extended coverage and, to the extent applicable and available in such
state, comprehensive, access, single tax parcel, contiguity, 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, lien instruments, leases, plats, surveys, reservations,
restrictions, and easements affecting the Real Property.  Buyer shall promptly provide Seller with a
copy of the Title Commitment issued by the Title Company.

 

4.3                               Survey or Title Objections. 
If Buyer discovers any title or survey matter which is objectionable to
Buyer, Buyer may provide Seller with written notice of its objection to same on
or before the expiration of the Review Period (the “Title
Review Period”).  If Buyer
fails to so object in writing to any such matter set forth in the Survey or
Title Commitment during the Title Review Period, it shall be conclusively
assumed that Buyer has approved same.  If
Buyer disapproves any condition of title, survey or other matters by written
objection to Seller on or before the expiration of the Title Review Period,
Seller shall elect either to attempt to cure or not cure any such item by
written notice sent to Buyer within ten (10) days after its receipt of
notice from Buyer, and if Seller commits in writing to attempt to cure any such
item, then Seller shall be given until the Closing Date to cure any such
defect.  In the event Seller shall fail
to cure a 

 

10

 

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

 

ARTICLE V

MANAGEMENT AGREEMENT AND FRANCHISE AGREEMENT

 

At or prior to the Closing, Seller shall terminate the
Existing Management Agreement and the Existing Franchise Agreement, and Seller
shall be solely responsible for all claims and liabilities arising thereunder
on, prior to or following the Closing Date. 
As a condition to Closing, Buyer shall enter into the New Management
Agreement and the New Franchise Agreement, effective as of the Closing Date,
containing terms and conditions acceptable to Buyer (including, without
limitation, such terms and conditions as may be required to accommodate Buyer’s
and/or Buyer’s Affiliates’ REIT structure). 
Seller shall be responsible for paying all costs related to the
termination of the Existing Management Agreement.  Buyer shall be responsible for paying all
reasonable and actual costs of the Franchisor related to the assignment or
termination, as applicable, of the Existing Franchise Agreement.   Seller shall use best efforts to promptly provide
all information required by the Franchisor in connection with the New Franchise
Agreement, and Seller and Buyer shall diligently pursue obtaining the
same.  As a condition to Buyer’s and
Seller’s obligation to close under this Contract, Buyer and Manager shall
agree, on or before the expiration of the Review Period, on the form and
substance of the New Management Agreement.

 

ARTICLE VI

BROKERS

 

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

 

11

 

ARTICLE VII

REPRESENTATIONS, WARRANTIES AND COVENANTS

 

7.1                               Seller’s and Indemnitor’s
Representations, Warranties and Covenants.  Seller and
the Indemnitor hereby represent, warrant and covenant to Buyer as follows:

 

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

 

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

 

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

 

(d)                                 Property Agreements. 
A complete list of all FF&E Leases, Service Contracts and Leases
(other than those entered into by the Manager on its own behalf) used in or
otherwise relating to the operation and business of the Hotel is attached
hereto as Exhibit C-1, and, to Seller’s knowledge, a complete list
of all other FF&E Leases, Service Contracts and Leases used in or otherwise
relating to the operation and business of the Hotel is attached hereto as Exhibit C-2.  The assets constituting the Property to be
conveyed to Buyer hereunder constitute all of the property and assets of Seller
used in connection with the operation and business of the Hotel.  There are no leases, license agreements,
leasing agent’s agreements, equipment leases, building service agreements,
maintenance contracts, suppliers contracts, warranty contracts, operating
agreements, or other agreements (i) to which Seller is a party or an
assignee, or (ii) to Seller’s or Indemnitor’s knowledge, binding upon the
Hotel, relating to the ownership, occupancy, operation, management or maintenance
of the Real Property, FF&E, Supplies or Tradenames, except for those
Service Contracts, Leases, Warranties, FF&E Leases and other agreements
disclosed on Exhibit C or to be delivered to Buyer pursuant to Section 3.1.  The Service Contracts, Leases, Warranties,  FF&E Leases and other agreements
disclosed on 

 

12

 

Exhibit C or to be delivered to Buyer pursuant to Section 3.1
are in full force and effect, and no default has occurred and is continuing
thereunder and no circumstances exist which, with the giving of notice, the
lapse of time or both, would constitute such a default.  Except as disclosed on Schedule 7.1 attached
hereto, no party has any right or option to acquire the Hotel or any portion
thereof, other than Buyer.

 

(e)                                  Pending Claims. 
There are no:  (i) claims,
demands, litigation, proceedings or governmental investigations pending or
threatened against Seller, Indemnitor, the Manager or any Affiliate of any of
them (collectively, “Seller Parties”)
or related to the business or assets of the Hotel, except as set forth on Exhibit F
attached hereto and incorporated herein by reference, (ii) special
assessments or extraordinary taxes except as set forth in the Title Commitment
or (iii) pending or threatened condemnation or eminent domain proceedings
which would affect the Property or any part thereof.  There are no: 
pending arbitration proceedings or unsatisfied arbitration awards, or
judicial proceedings or orders respecting awards, which might become a lien on
the Property or any portion thereof, pending unfair labor practice charges or
complaints, unsatisfied unfair labor practice orders or judicial proceedings or
orders with respect thereto, pending charges or complaints with or by city,
state or federal civil or human rights agencies, unremedied orders by such
agencies or judicial proceedings or orders with respect to obligations under
city, state or federal civil or human rights or antidiscrimination laws or
executive orders affecting the Hotel, or other pending, actual or, to Seller’s
or Indemnitor’s knowledge, threatened litigation claims, charges, complaints,
petitions or unsatisfied orders by or before any administrative agency or court
which affect the Hotel or might become a lien on the Hotel (collectively, the “Pending Claims”).

 

(f)                                   Environmental. 
With respect to environmental matters, to Seller’s and Indemnitor’s
knowledge and except as described in Exhibit “E,” (i) 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, except as disclosed in the reports and
documents set forth on Exhibit E attached hereto and incorporated
herein by reference, (ii) no portion of the Property is being used for the
treatment, storage, disposal or other handling of Hazardous Materials or
machinery containing Hazardous Materials other than standard amounts of
cleaning supplies, equipment maintenance supplies, and chlorine and other
chemicals for the swimming pool, all of which are stored on the Property in
strict accordance with applicable Environmental Requirements and do not exceed
limits permitted under applicable laws, including without limitation
Environmental Requirements, (iii) no underground storage tanks are
currently located on or in the Real Property or any portion thereof, (iv) no
environmental investigation, administrative order, notification, consent order,
litigation, claim, judgment or settlement with respect to the Property or any
portion thereof is pending or threatened, (v) except as disclosed on Exhibit “E”
there is not currently and, to Seller’s and Indemnitor’s knowledge, never has
been any mold, fungal or other microbial growth in or on the Property, or
existing conditions within the Property that could reasonably be expected to
result in material liability or material costs or expenses to remediate the
mold, fungal or microbial growth, or to remedy such conditions that could
reasonably be expected to result in such growth, and (vi) except as
disclosed on Exhibit E, there are no reports or other documentation
regarding the environmental condition of the Real Property in the possession of
Seller or Seller’s Affiliates, consultants, contractors or agents.  As used in this Contract:  “Hazardous Materials”
means (1) “hazardous wastes” as defined by the Resource 

 

13

 

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

 

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

 

(h)                                 Utilities.  All
appropriate utilities, including sanitary and storm sewers, water, gas,
telephone, cable and electricity, are, to Seller’s and Indemnitor’s knowledge,
currently sufficient and available to service the Hotel and all installation,
connection or “tap-on”, usage and similar fees have been paid.

 

(i)                                     Licenses, Permits and Approvals. 
Neither Seller nor Indemnitor has received any written notice, and
neither Seller nor Indemnitor has knowledge that the Property fails to comply
with all applicable licenses, permits and approvals and federal, state or local
statutes, laws, ordinances, rules, regulations, requirements and codes
including, without limitation, those regarding zoning, land use, building,
fire, health, safety, environmental, subdivision, water quality, sanitation
controls and the Americans with Disabilities Act, and similar rules and
regulations relating and/or applicable to the ownership, use and operation of
the Property as it is now operated. To Seller’s and Indemnitor’s knowledge,
Seller has received all material licenses, permits and approvals required or
needed for the lawful conduct, occupancy and operation of the business of the
Hotel, and each license and permit is in full force and effect, and will be
received and in full force and effect as of the Closing.  No licenses, permits or approvals necessary
for the lawful conduct, occupancy or operation of the business of the Hotel, 

 

14

 

to Seller’s or Indemnitor’s
knowledge requires any approval of a governmental authority for transfer of the
Property except as set forth in Exhibit D.

 

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

 

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

 

(l)                                     Operations.  To Seller’s
and Indemnitor’s knowledge, the Hotel has at all times been operated by Manager
in accordance with all applicable laws, rules, regulations, ordinances and
codes.

 

(m)                             Existing Management and Franchise Agreements. 
Seller has furnished to Buyer true and complete copies of the Existing
Management Agreement and the Existing Franchise Agreement, which constitutes
the entire agreement of the parties with respect to the subject matter thereof
and which have not been amended or supplemented in any respect.  There are no other management agreements,
franchise agreements, license agreements or similar agreements for the
operation or management of the Hotel or relating to the Brand, to which Seller
is a party or which are binding upon the Property, except for the Existing
Management Agreement and the Existing Franchise Agreement.  To Seller’s knowledge, the Improvements
comply with, and the Hotel is being operated in accordance with, all
requirements of such Existing Management Agreement and the Existing Franchise
Agreement and all other requirements of the Manager and the Franchisor,
including all “brand standard” requirements of the Manager and the
Franchisor.  The Existing Management
Agreement and the Existing Franchise Agreement are in full force and effect,
and shall remain in full force and effect until the termination of the Existing
Management Agreement and the Existing Franchise Agreement at Closing, as
provided in Article V hereof.  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.

 

15

 

(n)                                 Construction of Hotel.

 

(i)                                     To Seller’s and Indemnitor’s knowledge
the Hotel has been constructed in a good and workmanlike manner without
encroachments not disclosed on the Survey and in accordance in all material
respects with the record plans and specs, and all building permits and
certificates of occupancy therefor and all applicable zoning, platting,
subdivision, health, safety and similar laws, rules, regulations, ordinances
and codes.

 

(ii)                                  To Seller’s and Indemnitor’s knowledge
the Personal Property is in good condition and operating order.

 

(iii)                               To Seller’s and Indemnitor’s knowledge,
necessary easements for ingress and egress, drainage, signage and utilities
serving the Hotel have either been dedicated to the public, conveyed to the appropriate
utility or will be conveyed to Buyer along with the Property, or otherwise
provided for such that the Hotel may operate.

 

Notwithstanding the
foregoing, Buyer acknowledges that it is being given a full opportunity to
completely inspect the Property, the operation thereof, and the financial and
other information in connection therewith. In addition, Buyer
represents and warrants that it will inspect the Property and, if it elects to
close the transaction, will be familiar with and satisfied with the condition
of Property including, without limitation, the
location, condition, layout and physical condition of the Property and
surrounding areas, geotechnical data,
surface, soil and subsurface conditions of the Property and all
structural matters related thereto. Therefore, except as specifically provided in this
Agreement, Seller is conveying and Buyer is accepting the property in strictly “AS
IS” condition with all faults and, except for the specific warranties and
representations provided in this Agreement, Seller is not making any further
warranties or representations, express or implied, including, without
limitation, any warranty of merchantability or fitness for a particular
purpose. Buyer represents and warrants that, Buyer is experienced in the acquisition
of real property, including lodging properties, and that as of the Closing
Date, Buyer will be familiar with the Property and will have made such
independent investigations as Buyer deems necessary or appropriate concerning
the Property. If Buyer elects to proceed with the purchase of the Property, any
objections which Buyer may have with respect to the Property shall be waived by
the Buyer. All warranties and representations contained in this Agreement shall
survive the Closing of this transaction for a period of twelve (12) months
after Closing. No suit, cause of action, demand or other claim of any nature
whatsoever shall be made under the foregoing representations, warranties and
covenants unless the aggregate amount of Buyer’s direct out-of-pocket losses
(not including, by way of example only, any diminution in the value of the
Property) resulting from the inaccuracy or breach of such representations,
warranties and covenants exceeds, in the aggregate, Fifty Thousand and
no/100ths ($50,000.00) dollars. (the Agreed-Upon Limit”).
The Agreed-Upon Limit shall not apply to subsections 7.1(d), (e), (g), and (i) above,
Section 8.8 below (except as provided in 8.8(a)(ii)) or errors in the
proper calculation of closing credits or changes including, but not limited to,
Seller’s Costs and Buyer’s Costs under Article XI, below, and Adjustments
under Article XII, below.

 

16

 

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

 

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

 

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

 

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, warranties and covenants made herein shall survive Closing
for a period of one (1) years and shall not be deemed to merge into or be
waived by the Deed or any other closing documents.

 

ARTICLE VIII

ADDITIONAL COVENANTS

 

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

 

8.2                               Operations.  From and
after the date hereof through the Closing on the Property, Seller shall comply
with the Existing Management Agreement and the Existing Franchise Agreement and
keep the same in full force and effect and shall perform and comply with all of
the following subject to and in accordance with the terms of such agreements:

 

(a)                                 Continue to maintain the Property
generally in accordance with past practices of Seller and pursuant to and in
compliance with the Existing Management Agreement and the Existing Franchise
Agreement, including, without limitation, (i) using reasonable efforts to
keep available the services of all present employees at the Hotel and to
preserve its relations with guests, suppliers and other parties doing business
with Seller with respect to the Hotel, (ii) accepting booking contracts
for the use of the Hotel’s facilities retaining such bookings in accordance
with the terms of the Existing Management Agreement and the Existing Franchise
Agreement, (iii) maintaining the current level of advertising and other promotional
activities for the Hotel’s facilities, (iv) maintaining the present level
of insurance with respect to the Hotel in full force and effect until the
Closing Date for the Hotel and (v) remaining in compliance in all material
respects with all current Licenses;

 

17

 

(b)           Keep, observe, and perform in all
material respects all its 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;

 

(c)           Not cause or permit the removal of
FF&E from the Hotel except for the purpose of discarding worn and valueless
items that have been replaced with FF&E of equal or better quality; timely
make all repairs, maintenance, and replacements to keep all FF&E and all
other Personal Property and all Real Property in good operating condition; keep
and maintain the Hotel in a good state of repair and condition, reasonable and
ordinary wear and tear excepted; and not commit waste of any portion of the
Hotel;

 

(d)           Maintain the levels and quality of the
Personal Property generally at the levels and quality existing on the date
hereof and keep merchandise, supplies and inventory adequately stocked,
consistent with good business practice, as if the sale of the Hotel hereunder
were not to occur, including, without limitation, maintaining linens and bath
towels at least at a 2-par level for all suites or rooms of the Hotel;

 

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

 

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

 

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

 

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

 

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

 

Seller shall promptly furnish to Buyer copies of all new, amended or
extended FF&E Leases, Service Contracts, Leases and other contracts or
agreements (other than routine hotel room bookings entered into in the ordinary
course of business) relating to the Hotel and entered into by the Manager prior
to Closing; provided, however, that in the case of any of the foregoing entered
into by the Manager on its own behalf, only to the extent Seller has knowledge
thereof or a copy of which is obtainable from the Manager.  Buyer shall have the right to extend the
Review Period for a period of five (5) Business Days in order to review
any of the foregoing that are not received by Buyer at least five (5) Business
Days prior to the expiration of the Review Period.  Seller shall not, without first obtaining the
written approval of Buyer, which approval 

 

18

 

shall not be unreasonably withheld, delayed or
conditioned enter into any new FF&E Leases, Service Contracts, Leases or
other contracts or agreements related to the Hotel, or extend any existing such
agreements, unless such agreements (x) can be terminated, without penalty,
upon thirty (30) days’ prior notice or (y) will expire prior to the
Closing Date.

 

8.3           Third Party Consents. 
Prior to the Closing Date, Seller shall, at its expense, (i) obtain
any and all third party consents and approvals (x) required in order to
transfer the Hotel to Buyer (other than the Franchisor, liquor licenses, and
all related licenses, permits or approvals which require issuance in Buyer’s
name) or (y) which, if not obtained, would materially adversely affect the
operation of the Hotel, including, without limitation, all consents and
approvals referred to on Exhibit D and (ii) use best efforts
to obtain all other third party consents and approvals (all of such consents
and approvals in (i) and (ii) above being referred to collectively
as, the “Third Party Consents”).

 

8.4           Employees.  Upon
reasonable prior notice to Seller by Buyer, Buyer and its employees,
representatives and agents shall have the right to communicate with Seller’s
staff, and, subject to the approval of the Manager, the Hotel staff and the
Manager’s staff, including without limitation the general manager, the director
of sales, the engineering staff and other key management employees of the
Hotel, at any time before Closing.  Buyer
shall not interfere with the operations of the Hotel while engaging in such
communication in a manner that materially adversely affects the operation of
any Property or the Existing Management Agreements.

 

8.5           Estoppel Certificates. 
Seller shall obtain from (i) each tenant under any Lease affecting
the Hotel which results in annual revenue greater than $12,000 (but not from
current or prospective occupants of hotel rooms and suites within the Hotel)
and (ii) each lessor under any FF&E Lease in excess of $100,000 for
the Hotel identified by Buyer as a material FF&E Lease, the estoppel
certificates substantially in the forms provided by Buyer to Seller during the
Review Period, and deliver to Buyer not less than five (5) days before the
Closing.

 

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

 

19

 

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

 

8.8           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 (except as expressly provided therein),
Seller hereby agrees to indemnify, defend and hold harmless Buyer, its
Affiliates and its and such Affiliates’ officers, shareholders and employees
from and against all losses, judgments, liabilities, claims, damages or
expenses (including reasonable attorneys’ fees) of every kind, nature and
description in existence before, on or after Closing, whether known or unknown,
absolute or continent, joint or several, arising out of or relating to:

 

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

 

(ii)           the breach of any representation, warranty, covenant
or agreement of Seller contained in this Contract but subject to the
Agreed-Upon Limit;

 

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

 

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

 

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

 

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

 

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

 

(ii)           the conduct and operation by Buyer of its business at
the Hotel or the ownership, use of or operation of its Property after the
Closing; and

 

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

 

20

 

(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 8.8, 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 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 

 

21

 

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, accountants and other representatives, all books and records of
Seller relating to such Legal Action and (z) the parties shall render to
each other such assistance as may be reasonably required in order to ensure the
proper and adequate defense of such Legal Action.

 

(v)           In any Legal Action initiated by a third party and
defended by the Indemnifying Party, the Indemnifying Party shall not make
settlement of any claim without the written consent of the Indemnified Party,
which consent shall not be unreasonably withheld, delayed or conditioned.  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.

 

8.9           Escrow Funds. 
To provide for the timely payment of any post-closing claims by Buyer
against Seller hereunder, at Closing, Seller shall deposit an amount equal to
One Hundred Fifty Thousand and No/100 Dollars ($150,000.00) (the “Escrow Funds”) which shall be
withheld from the Purchase Price payable to Seller and shall be deposited for a
period of one (1) year in an escrow account with the Title Company
pursuant to an escrow agreement reasonably satisfactory in form and substance
to Buyer and Seller (the “Post-Closing Agreement”),
which escrow and Post-Closing Agreement shall be established and entered into
at Closing and shall be a condition to Buyer’s obligations under this Contract.
All earnings accrue to Seller and Seller may direct investment thereof.  If no claims have been asserted by Buyer
against Seller, or all such claims have been satisfied, within such 1-year
period, the Escrow Funds deposited by Seller shall be released to Seller.

 

8.10         Liquor Licenses. 
As a condition to Buyer’s obligations under this Contract, (i) the
Manager or an Affiliate thereof approved by Buyer shall have or shall have
obtained all liquor licenses and alcoholic beverage licenses necessary or
desirable to operate any restaurants, bars and lounges presently located within
the Hotel (collectively, the “Liquor Licenses”)
and, in the case of an Affiliate of the Manager, the Hotel has the right to use
such Liquor License, (ii) if permitted under the laws of the jurisdiction
in which the Hotel is located, the Manager shall execute and file any and all
necessary forms, applications and other documents (and Seller shall cooperate
with the Manager in filing such forms, applications and other documents) with
the appropriate liquor and alcoholic beverage authorities prior to Closing so
that the Liquor Licenses remain in full force and effect upon completion of
Closing.

 

22

 

ARTICLE IX

CONDITIONS FOR CLOSING

 

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

 

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

 

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

 

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

 

(d)           All Liquor Licenses shall be in full
force and effect and shall remain in full force and effect following Closing
and shall have been or shall be transferred to, or new Liquor Licenses issued
to, the Manager or an Affiliate thereof approved by Buyer at or as of Closing,
and Buyer shall have received satisfactory evidence thereof.

 

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

 

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

 

(g)           The Existing Management Agreement and the
Existing Franchise Agreement shall have been terminated.

 

(h)           Buyer and the Manager shall have executed
and delivered the New Management Agreement and Buyer and the Franchisor shall
have executed and delivered the New Franchise Agreement, in each case upon
terms and conditions acceptable to Buyer in its sole and absolute discretion.

 

23

 

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

 

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

 

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

 

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

 

ARTICLE X

CLOSING AND CONVEYANCE

 

10.1         Closing.  Unless
otherwise agreed by Buyer and Seller, the Closing on the Property shall occur
on a date selected by Buyer that is the later to occur of (a) fifteen (15)
business days after expiration of the Review Period or (b) receipt by
Buyer of the New Franchise Agreement, provided that in each case all conditions
to Closing by Buyer hereunder have been satisfied.  The date on which the Closing is to occur as
provided in this Section 10.1, or such other date as may be agreed upon by
Buyer and Seller, is referred to in this Contract as the “Closing
Date” for the Property. 
The Closing shall be held at 10:00 a.m. at the offices of the Title
Company, or as otherwise determined by Buyer and Seller.

 

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

 

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

 

(b)           Bills of Sale. 
Bills of sale to Buyer and/or its designated Lessee, conveying title to
the tangible Personal Property (other than the alcoholic beverage inventories,
which, at Buyer’s election and if permitted by applicable law, shall be
transferred by Seller to the Manager as holder of the Liquor Licenses required
for operation of the Hotel).

 

24

 

(c)           Existing Management and Franchise
Agreements.  The termination of the Existing Management
Agreement and the Existing Franchise Agreement.

 

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

 

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

 

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

 

(g)           Possession; Estoppel Certificates. 
Possession of the Property, subject only to rights of guests in
possession and tenants pursuant to written leases included in the Leases, and
estoppel certificates from tenants under Leases and the lessors under FF&E
Leases in form and substance acceptable to Buyer.

 

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

 

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

 

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

 

(k)           Plans, Keys, Records, Etc. 
To the extent not previously delivered to and in the possession of Buyer,
all Contracts, Plans and Specs, all keys for the Hotel (which keys 

 

25

 

shall be properly tagged for identification), all
Records, including, without limitation, all Warranties, Licenses, Leases,
FF&E Leases and Service Contracts for the Hotel.

 

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

 

(m)          Indemnification Agreement. 
At Closing, Indemnitor shall deliver to Buyer the Indemnification
Agreement.

 

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

 

(a)           Purchase Price. 
The balance of the Purchase Price, adjusted for the adjustments provided
for in Section 12.1, below, and less any sums to be deducted therefrom as
provided in Section 2.3.

 

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

 

(c)           Counterpart to assignments of the Hotel
Contracts pursuant to which Buyer agrees to perform assumed contracts and to
hold Seller harmless therefrom.

 

(d)           Counterpart to Indemnification Agreement.

 

(e)           Execution of a new Franchise Agreement.

 

(f)            Execution of Management Agreement with
Indemnitor.

 

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

 

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

 

ARTICLE XI

COSTS

 

All Closing costs shall
be paid as set forth below:

 

11.1         Seller’s Costs. 
In connection with the sale of the Property contemplated under this
Contract, Seller shall be responsible for costs and expenses of its attorneys,
accountants, appraisers and other professionals, consultants and representatives
as well as all transfer and 

 

26

 

recordation taxes (except any related to the clerk’s
fee or per page fee for recording of the deed), including, without
limitation, all transfer, mansion, sales, use or bulk transfer taxes or like
taxes on or in connection with the transfer of the Real Property and the
Personal Property constituting part of the Property pursuant to the Bill of
Sale, and all accrued taxes of Seller prior to Closing and income, sales and
use taxes and other such taxes of Seller attributable to the sale of the
Property to Buyer.  Seller shall be
responsible for all costs related to the termination of the Existing Management
Agreement as provided in Article V. 
Seller shall also be responsible for payment of all prepayment penalties
and other amounts payable in connection with the pay-off of any liens and/or
indebtedness encumbering the Property including, without limitation, all
mortgages, liens, vehicle loans/leases and all other loans.

 

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

 

ARTICLE XII

ADJUSTMENTS

 

12.1         Adjustments. 
Unless otherwise provided herein, at Closing, adjustments between the
parties shall be made as of 11:59 p.m. on the Closing Date (the “Cutoff Time”), with the income and
expenses accrued prior to the Closing Date being allocated to Seller and the
income and expenses accruing on and after the Closing Date being allocated to
Buyer, all as set forth below.  All of
such adjustments and allocations shall be made in cash at Closing and shall be
collected through and/or adjusted in accordance with the terms of the Existing
Management Agreement.  Except as
otherwise expressly provided herein, all apportionments and adjustments shall
be made on an accrual basis in accordance with generally accepted accounting principles.  Buyer and Seller shall request that the
Manager  determine the apportionments,
allocations, prorations and adjustments as of the Cutoff Time.

 

(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 Cutoff 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.

 

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

 

27

 

If elected by Seller, Seller shall be given credit,
and Buyer shall be charged, for any utility deposits transferred to and
received by Buyer at Closing.

 

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

 

(d)           Accounts.  All Lender
Required Reserves, as well as all FF&E accounts, and all PIP accounts, but
excluding amounts held in tax and insurance escrow accounts and utility
deposits to the extent excluded from the definition of Deposits, shall become
the property of Buyer, without additional charge to Buyer and without Buyer
being required to fund the same.

 

(e)           Guest Ledger. 
Subject to (f) below, all accounts receivable of registered guests
at the Hotel who have not checked out and were occupying rooms as of the Cutoff
Time, shall be prorated as provided herein.

 

(f)            Room Rentals. 
All receipts from guest room rentals and other suite revenues for the
night in which the Cutoff Time occurs shall be split equally between Buyer and
Seller.

 

(g)           Advance Deposits. 
All prepaid rentals, room rental deposits, and all other deposits for
advance registration, banquets or future services to be provided on and after
the Closing Date shall be credited to Buyer.

 

(h)           Accounts Receivable. 
To the extent not apportioned at Closing and subject to (e) and (f) above,
all accounts receivable and credit card claims as of the Cutoff Time shall
remain the property of Seller, and Seller and Buyer agree that the monies
received from debtors owing such accounts receivable balances after Closing,
unless otherwise provided in the New Management Agreement, shall be applied as
expressly provided in such remittance, or if not specified then to the Seller’s
outstanding invoices to such account debtors in chronological order beginning
with the oldest invoices, and thereafter, to Buyer’s account.

 

(i)            Accounts Payable. 
To the extent not apportioned at Closing, any indebtedness, accounts
payable, liabilities or obligations of any kind or nature related to Seller or
the Property for the periods prior to and including the Closing Date shall be
retained by Seller and promptly allocated to Seller and evidence thereof shall
be provided to Buyer, and Buyer shall not be or become liable therefor, except
as expressly assumed by Buyer pursuant to this Contract or otherwise, and
invoices received in the ordinary course of business prior to Closing shall be
allocated to Seller at Closing.

 

(j)            Restaurants, Bars, Machines, Other Income. 
All monies received in connection with bar, restaurant, banquet and similar
and other services at the Hotel (other than amounts due from any guest and
included in room rentals) prior to the close of business for each such
operation for the night in which the Cutoff Time occurs shall belong to Seller,
and all other receipts and revenues (not previously described in this Section 12.1)
from the operation of any department of the Hotel shall be prorated between
Seller and Buyer at Closing.

 

28

 

12.2         Reconciliation
and Final Payment.  Seller and Buyer shall reasonably cooperate
after Closing to make a final determination of the allocations and prorations
required under this Contract within one hundred eighty (180) days after the
Closing Date; provided, however, failure to make a final reconciliation within
180 days shall not relieve the parties’ obligations under this section to make
a final reconciliation.  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.

 

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

 

ARTICLE XIII

CASUALTY AND CONDEMNATION

 

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

 

13.2         Buyer’s
Termination Right.  If, prior to Closing and the delivery of
possession of the Property to Buyer in accordance with this Contract, (a) any
condemnation proceeding shall be pending against a substantial portion of the
Hotel or (b) there is any substantial casualty loss or damage to the
Hotel, Buyer shall have the option to terminate this Contract, provided Buyer
delivers written notice to Seller of its election within twenty (20) days after
the date Seller has delivered Buyer written notice of any such loss, damage or
condemnation as provided above, and in such event, the Earnest Money Deposit,
and any interest thereon, shall be delivered to Buyer 

 

29

 

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 a 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 One Hundred Thousand and No/100 Dollars ($100,000.00) 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, each applicable Seller agrees to pay to Buyer
at the Closing all insurance proceeds or condemnation awards which Seller has
received as a result of the same, plus an amount equal to the insurance
deductible, and assign to Buyer all insurance proceeds and condemnation awards
payable as a result of the same, in which event the Closing shall occur without
Seller replacing or repairing such damage. 
In the case of damage or casualty, at Buyer’s election, Seller shall
repair and restore the Property to its condition immediately prior to such
damage or casualty and shall assign to Buyer all excess insurance proceeds.

 

ARTICLE XIV

DEFAULT REMEDIES

 

14.1         Buyer
Default.  If Buyer defaults under this Contract after
the Review Period, and such default continues for thirty (30) days following
written notice from Seller (provided no notice shall extend the time for
Closing), then at Seller’s election by written notice to Buyer, this Contract
shall be terminated and of no effect, in which event the Earnest Money Deposit,
including any interest thereon, shall be paid to and retained by the Seller as
Seller’s sole and exclusive remedy hereunder, and as liquidated damages for
Buyer’s default or failure to close, and both Buyer and Seller shall thereupon
be released from all obligations hereunder.

 

14.2         Seller
Default.  If Seller defaults under this Contract, and
such default continues for thirty (30) 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 Seller delivered to that Seller at
any time prior to the completion of such cure, in which event the Earnest Money
Deposit, including any interest thereon, shall be returned to the Buyer, and
thereafter both the Buyer and Seller shall thereupon be released from all
obligations with respect to this Contract, except as otherwise expressly
provided herein; or (ii) to treat this Contract as being in full force and
effect by written notice to Seller delivered to Seller at any time prior to the
completion of such cure, in which event the Buyer shall have the right to an
action against the defaulting Seller for damages, specific performance and all
other rights and remedies available at law or in equity. In the absence of an
election of remedy on or before the end of any cure period (but in no event
later than thirty (30)  days after
initial notice of default), the remedy set forth in 14.2(i) above shall be
deemed elected.

 

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

 

30

 

14.4         Limitation
of Claims. No
claim on account of a Seller default under Section 14.2 above, shall be
brought against Seller unless damages exceed the Agreed-Upon Limit. Any such
claim of Seller default which does not result in the termination of this Offer
must be asserted within one (1) year of the Closing Date or it shall be
deemed waived.

 

ARTICLE XV

NOTICES

 

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

 

	
  If to Buyer:

  	
  Apple Nine Hospitality
  Ownership, Inc.

  
	
   

  	
  814 E. Main Street

  
	
   

  	
  Richmond, Virginia
  23219

  
	
   

  	
  Attention: Sam Reynolds

  
	
   

  	
  Fax No.: (804) 344-8129

  
	
   

  	
   

  
	
  with a copy to:

  	
  Apple REIT
  Nine, Inc.

  
	
   

  	
  814 E. Main Street

  
	
   

  	
  Richmond, Virginia
  23219

  
	
   

  	
  Attention: Legal Dept.

  
	
   

  	
  Fax No.: (804) 344-8129

  
	
   

  	
   

  
	
  If to Seller:

  	
  Boise Lodging Investors, LLC

  
	
   

  	
  c/o Raymond Management Company

  
	
   

  	
  8333 Greenway Blvd., Ste. 200

  
	
   

  	
  Middleton, WI 53562

  
	
   

  	
  Attention: Bob Bruni

  
	
   

  	
  Fax No.: (608) 662-8365

  
	
   

  	
   

  
	
  If to Indemnitor

  	
  Raymond Management
  Company

  
	
   

  	
  8333 Greenway Blvd.,
  Ste 200

  
	
   

  	
  Middleton, WI 53562

  
	
   

  	
  Attn: Bob Bruni

  
	
   

  	
  Fax No.: (608) 662-8365

  

 

31

 

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 Buyer and Seller with respect to the subject
matter hereof.  No modification of this
Contract shall be binding unless signed by both Buyer and Seller.

 

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

 

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

 

16.6         Confidentiality. 
Except as either party may reasonably determine is required by law (including
without limitation laws and regulations applicable to Buyer or its Affiliates
who may be public companies):  (i) prior
to Closing, Buyer and Seller shall not disclose the existence of this Contract
or their respective intentions to purchase and sell the Property or generate or
participate in any publicity or press release regarding this transaction,
except to Buyer’s and Seller’s legal counsel and lender, Buyer’s consultants
and agents, the Manager, the Manager, the Franchisor and the Title Company and
except as necessitated by Buyer’s Due Diligence Examination, unless both Buyer
and Seller agree in writing and as necessary to effectuate the transactions
contemplated hereby and (ii) following Closing, the parties shall
coordinate any public disclosure or release of information related to the
transactions contemplated by this Contract, and no such disclosure or release
shall be made without the prior written consent of Buyer, and no press release
shall be made without the prior written approval of Buyer and Seller.

 

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

 

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

 

16.9         Severability.  If
any provision of this Contract shall, for any reason, be adjudged by any court
of competent jurisdiction to be invalid or unenforceable, such judgment shall
not affect, impair or invalidate the remainder of this Contract but shall be
confined in its operation to 

 

32

 

the provision or provisions hereof directly involved
in the controversy in which such judgment shall have been rendered, and this
Contract shall be construed as if such provision had never existed, unless such
construction would operate as an undue hardship on Seller or Buyer or would
constitute a substantial deviation from the general intent of the parties as
reflected in this Contract.

 

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

 

16.11       (Intentionally
Omitted)

 

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

 

16.13       Joint
and Several Obligations.  If Seller consists of more
than one person or entity (but not including member or members of Seller), each
such person or entity shall be jointly and severally liable with respect to the
obligations of Seller under this Contract.

 

ARTICLE XVII

JOINDER BY INDEMNITOR

 

17.1         Indemnification by Indemnitor. 
Indemnitor hereby covenants and agrees that:

 

(a)           Indemnitor is and shall be jointly
and severally liable with Seller for the performance of all of Seller’s
obligations and liabilities under this Contract and all documents and
instruments executed in connection therewith, including, without limitation,
all of Seller’s obligations and liabilities that survive Closing;

 

(b)           The obligations of Indemnitor hereunder
shall not be limited, diminished or impaired in any way by virtue of any right
or remedy Buyer may have against Seller under this Contract or by virtue of any
other provision of this Contract;

 

(c)           Buyer shall not be obligated to
proceed first against Seller before resorting to Indemnitor under this Article XVII
for payment and performance;

 

Indemnification claims
and procedures with respect to the indemnification obligations of Indemnitor
under this Article XVII shall be consistent with those provided for in Section 8.8(c) of
this Contract.  Seller shall cause
Indemnitor to provide, and Indemnitor shall provide, at Closing an
indemnification agreement in form and substance satisfactory in form and
substance to Buyer with respect to the foregoing indemnifications (the “Indemnification Agreement”), which
shall be a condition to Buyer’s obligation to close under this Contract.  Except as provided in this Contract, the
covenants, agreements, representations and warranties of Indemnitor set 

 

33

 

forth in this Article XVII
shall be continuing, and shall not be deemed to merge into or be waived by the
Deeds or other closing documents and shall survive Closing on the Property.

 

[Signatures Begin
on Following Page]

 

34

 

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

 

 

	
   

  	
  SELLER:

  
	
   

  	
   

  
	
   

  	
  BOISE LODGING
  INVESTORS, LLC, a Wisconsin limited liability company

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ C.J. Raymond

  
	
   

  	
  Name: C.J. Raymond

  
	
   

  	
  Title: Managing Member

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  INDEMNITOR:

  
	
   

  	
   

  
	
   

  	
  RAYMOND MANAGEMENT
  COMPANY, INC, a Wisconsin Corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ C.J. Raymond

  
	
   

  	
  Name: C.J. Raymond

  
	
   

  	
  Title: President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  BUYER:

  
	
   

  	
   

  
	
   

  	
  APPLE NINE HOSPITALITY
  OWNERSHIP, INC., a Virginia corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Justin G. Knight

  
	
   

  	
  Name:

  	
  Justin G. Knight

  
	
   

  	
  Title:

  	
  President

  
				

 

35

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00172-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00172-of-00352.parquet"}]]