Document:

exv10w4

 

EXHIBIT 10.4

PURCHASE CONTRACT

     This PURCHASE CONTRACT (this “Contract”) is made and entered into as of June 15, 2005, by and
between INTERSTATE PITTSBURGH HOTEL HOLDINGS, L.L.C., a Delaware limited liability company
(“Seller”), with its principal office at 4501 N. Fairfax Drive, Suite 800, Arlington, Virginia
22203, and APPLE SIX HOSPITALITY OWNERSHIP, INC., a Virginia corporation, with its principal office
at                      , or its permitted assigns (“Buyer”).

RECITALS

     A. Seller is the fee simple owner of the Residence Inn by Marriott hotel located at 1500 Park
Lane Drive, Pittsburgh, Pennsylvania.

     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 Contract
shall have the meanings set forth below unless the context otherwise requires:

     “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 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.

     “Assumed Contracts” shall have the meaning set forth in Section 8.11.

     “Assumed Obligations” shall have the meaning set forth in Section 8.11.

     “Bills of Sale” shall have the meaning set forth in Section 10.2(b).

     “Brand” shall mean Residence Inn by Marriott, 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 or the Commonwealth of Pennsylvania.

 

 

     “Ceiling Amount” shall have the meaning set forth in Section 8.8(d)(ii).

     “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.

     “Cutoff Time” shall have the meaning set forth in Section 12.1.

     “Damages” shall have the meaning set forth in Section 8.8(a).

     “Deductible Amount” shall have the meaning set forth in Section 8.8(d)(i).

     “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, without limitation, any reserves for replacement of FF&E and for capital repairs and/or
improvements), 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 2.5(a).

     “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(b).

     “Escrow Funds” shall have the meaning set forth in Section 8.9.

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

     “Executive Order” shall have the meaning set forth in Section 7.1(o).

     “Existing Franchise Agreement” shall mean that certain Franchise Agreement dated as of
November 1, 1999 between Seller and the Franchisor, granting Seller a franchise to operate the
Hotel under the Brand.

     “Existing Management Agreement” shall mean that certain Management Agreement dated as
of November 1, 1999 between Seller and the Existing Manager for the operation and management of the
Hotel.

     “Existing Manager” shall mean Crossroads Hospitality Management Company.

     “Extension Deposit” shall have the meaning set forth in Section 9.3.

     “Extension Period” shall have the meaning set forth in Section 9.3.

 

 

     “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.

     “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 Marriott International, Inc.

     “Hotel” shall mean the hotel located on the Land, including all Improvements and
Personal Property associated therewith, known generally as the Residence Inn by Marriott located at
1500 Park Lane Drive, Pittsburgh, Pennsylvania.

     “Hotel Contracts” shall mean all leases, license agreements, leasing agent’s
agreements, equipment leases, building service agreements, maintenance contracts, suppliers
contracts, warranty contracts, operating agreements or other agreements relating to the ownership,
occupancy, operation, management or maintenance of the Property to which Seller is a party (or an
assignee) or that are binding on the Property.

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

     “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).

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

     “Land” shall mean, collectively, a fee simple absolute interest in the real property
more fully described in Exhibit A hereto, 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 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.

     “Manager” shall mean the management company selected by Buyer to manage the Hotel from
and after the Closing.

     “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.

     “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 the 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
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, Contracts, Plans and Specs and FF&E Lease.

     “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 Existing 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), market
studies 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
Existing 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
construction budgets and contracts related to the development and construction of the Hotel and 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 Date” shall have the meaning set forth in Section 8.9.

     “Retained Obligations” shall have the meaning set forth in Section 8.11.

 

 

     “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 (which towels, linen and
bedding shall be 2-par level for all suites or rooms in the Hotel), guest cleaning, paper and other
supplies, upholstery material, carpets, rugs, furniture, engineers’ supplies, paint and painters’
supplies, employee uniforms, and all cleaning and maintenance supplies, including those used in
connection with the swimming pools, indoor and/or outdoor sports facilities, health clubs, spas,
fitness centers, restaurants, business centers, meeting rooms and other common areas and
recreational areas.

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

     “Tax Clearance Certificate” shall have the meaning set forth in Section 11.1.

     “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.

     “Utility Reservations” shall mean Seller’s interest, if any, in the right to receive
immediately on and after the Closing Date 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 as conducted prior to the Closing, 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, if any, 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, and Buyer
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,
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 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 Eleven Million and No/100 Dollars ($11,000,000.00) (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 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.

     2.4 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), less the Escrow Funds, shall be paid to Seller in cash,
certified funds or wire transfer of immediately available funds at the Closing. 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.

     2.5 Earnest Money Deposit.

          (a) Within one (1) Business Day after the date of this Contract, Buyer shall deposit
the sum of Two Hundred Fifty Thousand and No/100 Dollars ($250,000.00) 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, 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, no later than one (1) Business Day after the expiration of the Review Period, deposit the
sum of Two Hundred Fifty Thousand and No/100 Dollars ($250,000.00) in cash, certified bank check or
by wire transfer of immediately available funds (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, in the form attached as Exhibit G hereto (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) 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 to the extent within Seller’s possession or control or to which Seller has
access or which Seller can obtain upon request, 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 and for the Seller, for
the current year to date and each of the three (3) prior fiscal years and such other financial
information relating to the Hotel as Buyer may reasonably request (the “Financial Statements”),
provided that Seller also agrees to provide financial and other information as provided in Section
8.6;

          (c) All real estate and personal property tax statements with respect to the Hotel
and notices of assessed 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 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 since January 1, 2002, or of which Seller otherwise has
knowledge, from governmental authorities in connection with the Hotel and all other notices
received since January 1, 2002, or of which Seller otherwise has knowledge, 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 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 copies of such materials shall
be destroyed or returned 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.

     3.2 Due Diligence Examination. At any time during the Review Period, and
thereafter through Closing, 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 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 Existing Management Agreement. Buyer will
provide a copy of Buyer’s environmental report obtained with respect to the Property during the
Review Period.

     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 or employees, to substantially the condition such
portion(s) of the Property were in immediately prior to such examinations or studies. Buyer agrees
to indemnify and hold harmless Seller from any liabilities Seller may suffer by reason of damage to
persons or property resulting from such examinations or studies made by or at the request of Buyer.

     3.4 Seller Exhibits. Seller has provided to Buyer completed Exhibits B,
C, D, E and F, together with true, correct and complete copies of all documents and
instruments described and/or referred to therein. Buyer shall have until the end of the Review
Period to review and approve the information on Exhibits B, C, D, E and F and in
such documents and instruments. In the event Buyer does not approve any such Exhibit or the
information contained therein, Buyer shall be entitled to terminate this Contract prior to the
expiration of the Review Period 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. Within five (5) days after the date of this Contract, Seller
shall deliver to Buyer true, correct and complete copies of the most recent survey of the Real
Property of which Seller is aware (if any). In the event that an update of the survey or a new
survey (such updated or new survey being referred to as the “Survey”) is desired by Buyer, then
Buyer shall be responsible for all costs related thereto, and Buyer agrees to order such update or
new survey within three (3) Business Days after Buyer’s receipt of such survey from Seller.

     4.2 Title. Within five (5) days after the date of this Contract, Seller
shall deliver to Buyer Seller’s existing title insurance policy, including copies of all documents
referred to therein, for the Real Property. As soon as reasonably practicable after receipt
thereof, Buyer shall use commercially reasonable efforts to obtain (i) a Commitment for Title
Insurance (the “Title Commitment”) issued by LandAmerica American Title Company, 8201 Preston Road,
Suite 280, Dallas, Texas, 75225 (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 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 (collectively, 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 agrees to
place an order for the Title Commitment with the Title Company within three (3) Business Days after
Buyer’s receipt of Seller’s current title policy for the Property. Buyer shall promptly provide
Seller, at Seller’s expense, with a copy of the Title Commitment issued by the Title Company,
together with copies of the Exception Documents.

     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 within ten (10) days after receipt of both the Title Commitment (including all
Exception Documents) and the Survey (the “Title Review Period”). If

 

 

Buyer fails to so object in writing to any such matter set forth in the Survey or Title
Commitment, it shall be conclusively assumed that Buyer has approved same. 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 five (5) Business Days after Seller’s receipt of
notice from Buyer, and if Seller commits in writing to attempt to cure any such item, Seller shall
be given until the Closing Date to cure any such defect. In the event Seller shall fail to cure a
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
and such new title defect is not cured by Seller 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.” 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 covering 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

     At or prior to the Closing, Seller shall terminate the Existing Management Agreement and use
commercially reasonable efforts to terminate 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. Buyer shall use commercially reasonable efforts to enter into the New Management
Agreement and the New Franchise Agreement, effective as of the Closing Date, containing terms and
conditions reasonably 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 and fees (including attorneys fees) related to the termination
of the Existing Management Agreement and the Existing Franchise Agreement, including but not
limited to, the payment of all termination and cancellation fees and/or penalties, all costs and
fees of its attorneys and consultants, all costs associated with any releases or other provisions
requested by or for the benefit of Seller, provided, however, that, notwithstanding the foregoing,
Buyer shall pay the termination fee (if any) payable to the Franchisor pursuant to Section XVIII E
of the Existing Franchise Agreement (not to exceed the liquidated damages amount calculated
pursuant to such Section) in order to terminate the Existing Franchise Agreement as a result of a
sale of the Hotel pursuant to this Contract, provided further, that Buyer shall not be responsible
for payment of (x) any costs, expenses, fees or liabilities resulting from any default or other act
or omission by Seller under the Existing Franchise Agreement (including, without limitation, any
costs, expenses, fees or liabilities relating to termination of any franchise or license agreement
between Seller and the Franchisor and/or any Affiliate of either of them relating to any hotel
other than the Hotel), or (y) any accrued but unpaid monetary obligations or payments payable to
Franchisor or any of its Affiliates under the Existing Franchise Agreement up to the date of
termination thereof, all of which shall be the responsibility of, and shall be paid by, Seller.
Buyer shall also pay all license, application and similar fees related to the New Management
Agreement and the New Franchise Agreement and the costs of any PIP improvements required by the
Franchisor, where applicable, incurred in connection with the New Franchise Agreement. Buyer and
Seller shall use commercially reasonable efforts to promptly provide all information required by
the Manager or the Franchisor in connection with the New Management Agreement and the New Franchise
Agreement, and Buyer shall diligently pursue obtaining 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, except that
Seller has engaged O’Connell Hospitality Group, LLC (the “Broker”) to act on Seller’s behalf in
connection with the transactions contemplated hereby and Seller shall pay at Closing all fees and
amounts payable to the Broker in connection with

 

 

the transactions 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.

ARTICLE VII

REPRESENTATIONS, WARRANTIES AND COVENANTS

     7.1 Seller’s Representations, Warranties and Covenants. Seller hereby
represents, warrants and covenants 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 Delaware and is qualified to do
business and in good standing in the Commonwealth of Pennsylvania. Seller has duly authorized, by
all necessary limited liability company action, the execution, delivery and performance of this
Contract. This Contract has been duly executed and delivered by Seller and constitutes the valid
and legally binding obligation of Seller, enforceable against Seller in accordance with its terms,
except as the enforceability thereof may be limited by bankruptcy, insolvency, reorganization,
moratorium and other similar laws now or hereafter in effect relating to creditors’ rights and by
general principles of equity. 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 hereto and except for consents and approvals that, individually
or in the aggregate, (x) are not required to transfer any part of the Property to Buyer or its
permitted assigns, (y) are not necessary for the ownership, occupany and/or operation by Buyer, its
Affiliates, permitted assigns and/or Manager of the Property as a Residence Inn by Marriott, and
(z) if not obtained, would not have a material adverse effect on the Hotel’s business and/or
operations and/or the financial performance of the Property as reflected in the Financial
Statements. Neither the execution, delivery nor 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 the articles of organization or limited liability company agreement of Seller
or 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 promulgated thereunder).

          (c) Bankruptcy. None of Seller, nor, to Seller’s knowledge, any of its
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 as Exhibit C hereto. 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 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 and FF&E Leases disclosed on Exhibit C hereto
or to be delivered to Buyer pursuant to Section 3.1. The Service Contracts, Leases, Warranties and
FF&E Leases disclosed on Exhibit C hereto or to be delivered to Buyer pursuant to Section
3.1 are in full force and effect, and no default by Seller or, to Seller’s knowledge, any other
party has occurred and is continuing thereunder and, to Seller’s knowledge, no circumstances exist
which, with the giving of notice, the lapse of time or both, would constitute such a default. No
party has any right or option to acquire the Hotel or any portion thereof, other than Buyer and the
Franchisor pursuant to Section XV.D of the Existing Franchise Agreement to the extent Buyer is
deemed a “Competitor” as defined in such Section.

 

 

          (e) Pending Claims. To Seller’s knowledge, there are no: (i) claims,
demands, litigation, proceedings or governmental investigations pending or threatened (x) against
Seller, (y) against the Existing Manager or any Affiliate of Seller or the Existing Manager
(collectively with Seller, “Seller Parties”) related to the business or assets of the Hotel or (z)
otherwise 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 assessed against the Hotel or the business conducted with respect thereto, 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. Except as set forth on
Exhibit F, to Seller’s knowledge, 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 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, Etc. Seller has not received since January 1, 2002, and
Seller otherwise has no knowledge of, any written notice that Seller or the Property is in
violation of any applicable environmental, health or safety law, rule or regulation.

          (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 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 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, to Seller’s knowledge, currently
sufficient and available to service the Hotel as currently operated, and, to Seller’s knowledge,
all installation, connection or “tap-on”, usage and similar fees have been paid.

          (i) Licenses, Permits and Approvals. Seller has not received since January
1, 2002 any written notice, and Seller has no 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. Seller has
received all licenses, permits and approvals required or needed for the lawful conduct, occupancy
and operation of the business of the Hotel, except for licenses, permits and approvals that,
individually or in the aggregate, (x) are not required to transfer any part of the Property to
Buyer or its permitted assigns, (y) are not necessary for the ownership, occupancy and/or operation
by Buyer, its Affiliates, permitted assigns and/or Manager of the Property as a Residence Inn by
Marriott, and (z) if not obtained, would not have a material adverse effect on the Hotel’s business
and/or operations and/or the financial performance of the Property as reflected in the Financial
Statements, and each such license and permit is in full force and effect, and will be received and
in full force and effect as of the Closing. To Seller’s knowledge, 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.

          (j) Financial Statements. Seller has delivered copies of the Financial
Statements. Each of the Financial 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.

 

 

          (k) Employees. All employees employed at the Hotel are the employees of the
Existing Manager. There are, to Seller’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 Existing Manager or the
Hotel is bound with respect to any employees employed at the Hotel.

          (l) Operations. To Seller’s knowledge, the Hotel has been operated by the
Existing Manager in all material respects 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. 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 by Seller or, to Seller’s knowledge, any other party
has occurred and is continuing under the Existing Management Agreement or the Existing Franchise
Agreement, and, to Seller’s knowledge, no circumstances exist which, with the giving of notice, the
lapse of time or both, would constitute such a default.

          (n) Easements. To Seller’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.

          (o) Anti-Terrorism Compliance. Seller is not a person or entity described
in Section 1 of the Executive Order (No. 13, 224) Blocking Property and Prohibiting Transactions
With Persons Who Commit, Threaten to Commit, or Support Terrorism, 66 Fed. 49,079 (September 24,
2001) (the “Executive Order”).

     As used in this Contract, “Seller’s knowledge”, “known to Seller” or similar statements shall
mean the actual knowledge of (i) Susan Ridgeway, Vice President of Operations of the Existing
Manager, (ii) John Rubino, Regional Director of Operations for the Hotel, (iii) Christopher
Bennett, Senior Vice President and General Counsel of Interstate Hotels & Resorts, Inc. (an
Affiliate of Seller and the Existing Manager), and (iv) Colin Dunkley, Vice President –
Architecture and Construction for the Hotel, in each case, after due inquiry of the General Manager
of the Hotel.

     7.2 Buyer’s Representations, Warranties and Covenants. Buyer hereby
represents, warrants and covenants to Seller as follows:

          (a) Authority; No Conflicts. Buyer is a corporation duly formed, validly
existing and in good standing in the Commonwealth of Virginia. Buyer has received all necessary
authorization of the Board of Directors of Buyer to execute and deliver this Contract and 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. This Contract has been duly executed and delivered by Buyer and
constitutes the valid and legally binding obligation of Buyer, enforceable against Buyer in
accordance with its terms, except as the enforceability thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium and other similar laws now or hereafter in effect relating
to creditors’ rights and by general principles of equity. Neither the execution, delivery or
performance of, or compliance with, this Contract by Buyer has resulted, or will result, in any
violation of, or default under, or acceleration of, any obligation under the articles of
incorporation or by-laws of Buyer or under any mortgage indenture, lien, agreement, promissory
note, contract, or permit, or any judgment, decree, order, restrictive covenant, statute, rule or
regulation, applicable to Buyer.

 

 

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

          (c) Anti-Terrorism Compliance. Buyer is not a person or entity described in
Section 1 of the Executive Order.

     7.3 Survival. All of the representations and warranties are true, correct
and complete in all material respects as of the date hereof and the statements set forth therein
(without qualification or limitation as to a party’s knowledge thereof except as expressly provided
for in this Article VII) shall be true, correct and complete in all material respects as of the
Closing Date. All of the representations and warranties made herein shall survive Closing for a
period of one (1) year and shall not be deemed to merge into or be waived by any Seller’s Deed or
any other closing documents.

     7.4 AS-IS. BUYER ACKNOWLEDGES THAT IT IS EXPERIENCED IN THE ACQUISITION AND
OWNERSHIP OF PROPERTIES SIMILAR TO THE PROPERTY. BUYER ACKNOWLEDGES THAT IT IS RELYING ON BUYER’S
(OR BUYER’S REPRESENTATIVES’) INSPECTIONS, EXAMINATIONS AND EVALUATIONS OF THE PROPERTY AND NOT
UPON ANY STATEMENTS (ORAL OR WRITTEN) WHICH MAY HAVE BEEN MADE OR MAY BE MADE (OR PURPORTEDLY MADE)
BY SELLER OR ANY OF ITS REPRESENTATIVES, AGENTS, BROKERS, ATTORNEYS, OFFICERS, MANAGERS OR
EMPLOYEES, OTHER THAN AS EXPRESSLY SET FORTH HEREIN OR CONTEMPLATED HEREBY (SELLER EXPRESSLY
ACKNOWLEDGING THAT BUYER IS RELYING ON THE REPRESENTATIONS, WARRANTIES AND STATEMENTS MADE IN THIS
CONTRACT AND ON INFORMATION PROVIDED PURSUANT TO THIS CONTRACT TO BUYER BY SELLER OR ITS
REPRESENTATIVES, AGENTS, BROKERS, ATTORNEYS, OFFICERS, MANAGERS OR EMPLOYEES).

     AS A MATERIAL PART OF THE CONSIDERATION FOR THIS CONTRACT AND THE PURCHASE OF THE PROPERTY,
BUYER AGREES TO ACCEPT THE REAL PROPERTY, FF&E AND SUPPLIES ON THE CLOSING DATE IN ITS OR THEIR “AS
IS, WHERE IS” CONDITION AS OF THE LAST DATE INSPECTED BY BUYER, WITH ALL FAULTS, AND EXCEPT AS
OTHERWISE PROVIDED IN THIS CONTRACT OR IN THE DEED OR ANY OTHER CLOSING DOCUMENT OR CLOSING
INSTRUMENT PROVIDED PURSUANT TO THIS CONTRACT, WITHOUT REPRESENTATIONS OR WARRANTIES OF ANY KIND,
EXPRESS OR IMPLIED, OR ARISING BY OPERATION OF LAW.

     THE PROVISIONS OF THIS SECTION 7.4 SHALL SURVIVE CLOSING.

ARTICLE VIII

ADDITIONAL COVENANTS

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

     8.2 Operations. From and after the date hereof through the Closing, Seller
shall comply in all material respects 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 in all material respects with the Existing Management
Agreement and the Existing Franchise Agreement, including, without limitation, (i) using
commercially 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 and 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 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 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 at least as good a condition as on the date inspected by Buyer
during the Review Period; keep and maintain the Hotel generally in such state of repair and
condition; 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 Seller’s past business practice and prudent industry 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,
to Seller’s knowledge, threatened after the date of this Contract or if, to Seller’s knowledge, any
representation or warranty made by Seller in this Contract shall become false in any material
respect;

          (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 in all material
respects 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, other than any sales of inventory made in the ordinary course of business
consistent with Seller’s past practice and prudent industry practice; 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, if (I) any such expiration, cancellation or termination,
individually or in the aggregate, would (x) adversely affect the transfer of any part of the
Property to Buyer or its permitted assigns or (y) have a material adverse effect on the Hotel’s
business and/or operations and/or the financial performance of the Property as reflected in the
Financial Statements, or (II) any such permit, receipt, license, franchise or right is necessary
for the ownership, occupancy and/or operation by Buyer, its Affiliates, permitted assigns and/or
Manager of the Property as a Residence Inn by Marriott.

     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 Seller
or, to Seller’s knowledge, the Existing Manager prior to Closing, provided that Buyer shall not
assume, nor be deemed to assume, any of the foregoing not

 

 

disclosed to Buyer in writing at least five (5) Business Days prior to Closing. The proviso
set forth in the preceding sentence shall survive 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, conditioned or delayed, enter into, nor permit
Existing Manager to 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, at Seller’s
expense, shall use best efforts (i) to obtain any and all third party consents and approvals that,
individually or in the aggregate, (x) are required to transfer any part of the Property to Buyer or
its permitted assigns, (y) are necessary for the ownership, occupancy and/or operation by Buyer,
its Affiliates, permitted assigns and/or Manager of the Property as a Residence Inn by Marriott and
(z) if not obtained would have a material adverse effect on the Hotel’s business and/or operations
and/or the financial performance of the Property as reflected in the Financial Statements,
including, without limitation, all consents and approvals referred to on Exhibit D and (ii)
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 request and 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 Existing Manager, 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 after the end of
the Review Period and before Closing; provided, however, that communication with the Hotel’s
general manager, director of sales and engineering supervisor may occur (subject to the other
limitations in this Section 8.4) at any time before the Closing. Seller shall be entitled to have
a representative present at any such meeting. 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.

     8.5 Estoppel Certificates. In the event that there are Leases and/or FF&E
Leases, upon request of Buyer, Seller shall obtain from (i) each tenant under any Lease (but not
from current or prospective occupants of hotel rooms and suites within the Hotel) and (ii) each
lessor under each FF&E Lease identified by Buyer as a material FF&E Lease, the estoppel
certificates in a form reasonably acceptable to Buyer, which shall be delivered 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 shall cooperate, and Seller shall cause Existing Manager to 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.

     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 successors and assigns from and against all losses, judgments, liabilities, claims, damages or
expenses (including reasonable attorneys’ fees) of every kind, nature and description in existence
before, on or after Closing, whether known or unknown, absolute or continent, joint or several
(collectively, “Damages”), 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 other than the Assumed
Obligations; and

               (iv) 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 to indemnify, defend and hold harmless Seller
and its successors from and against all Damages 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 the Hotel or the
ownership, use or operation of the Property after the Closing; and

               (iii) the Assumed Obligations.

          (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 and shall
notify the Indemnifying Party at least ten (10) days prior to any proposed settlement of the
terms thereof. 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, unless a judicial
determination is made that the Indemnified Party is not entitled to indemnification pursuant
to this Section 8.8.

               (iv) In any Legal Action initiated by a third party and defended by the
Indemnified Party (w) the Indemnified Party shall have the right to be represented by
advisory counsel and accountants, at its own expense, (x) the Indemnifying Party shall keep
the Indemnified Party fully informed as to the status of such Legal Action at all stages
thereof, whether or not the Indemnified Party is represented by its own counsel, (y) the
Indemnifying Party shall make available to the Indemnified Party and its attorneys, accounts
and other representatives, all books and records of the Indemnifying Party 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 the Indemnified Party or its assets, employees, Affiliates or business, or
relief which the Indemnified Party reasonably believes could establish a custom or precedent
which will be adverse to the best interests of its continuing business.

          (d) Limitation of Seller’s Liability. Notwithstanding anything in this
Contract to the contrary, Seller’s obligation to indemnify Buyer pursuant to Section 8.8(a) shall
be subject to the following:

               (i) Deductible. Buyer shall not be entitled to recover Damages
pursuant to Section 8.8(a) until the aggregate of all Damages suffered by Buyer exceeds Ten
Thousand and No/100 Dollars ($10,000.00) (the “Deductible Amount”); provided, however, that
once such aggregate exceeds the Deductible Amount, Buyer may recover all Damages suffered by
Buyer in excess of the Deductible Amount.

               (ii) Ceiling. Buyer shall not be entitled to recover Damages
pursuant to Section 8.8(a) in excess of One Million One Hundred Thousand and No/100 Dollars
($1,100,000.00) (the “Ceiling Amount”).

 

 

               (iii) Time Limitation. No claim for the recovery of Damages may be
asserted by Buyer against Seller or its successors or permitted assigns pursuant to Section
8.8(a) after the date that is two (2) years after the Closing Date; provided, however, that
claims for Damages first asserted in writing by Buyer within such time period shall not
thereafter be barred.

               (iv) Exclusive Remedy. Except with respect to any claim for Damages
relating to any intentional or fraudulent breach of a representation, warranty or covenant
of Seller and except as otherwise proved in this Contract, indemnification under this
Section 8.8 shall be the exclusive remedy of Buyer subsequent to Closing with respect to any
legal, equitable or other claim for relief based upon this Contract or arising hereunder.

               (v) Exceptions. The limitations set forth in this Section 8.8(d)
shall not apply with respect to any claim for Damages relating to any Retained Obligations,
any obligations or liabilities subject to adjustment under Article XII or any intentional or
fraudulent breach of a representation, warranty or covenant of Seller, nor shall there be
any survival limitation for any such claim except as provided by applicable law.

          (e) Limitation of Buyer’s Liability. Notwithstanding anything in this
Contract to the contrary, Buyer’s obligation to indemnify Seller pursuant to Section 8.8(b) shall
be subject to the following:

               (i) Deductible. Seller shall not be entitled to recover Damages
pursuant to Section 8.8(b) until the aggregate of all Damages suffered by Seller exceeds the
Deductible Amount; provided, however, that once such aggregate exceeds the Deductible
Amount, Seller may recover all Damages suffered by Seller in excess of the Deductible
Amount.

               (ii) Ceiling. Seller shall not be entitled to recover Damages
pursuant to Section 8.8(b) in excess of the Ceiling Amount.

               (iii) Time Limitation. No claim for the recovery of Damages may be
asserted by Seller against Buyer or its successors or permitted assigns pursuant to clause
(i) of Section 8.8(b) after the date that is two (2) years after the Closing Date; provided,
however, that claims for Damages first asserted in writing by Seller within such time period
shall not thereafter be barred.

               (iv) Exclusive Remedy. Except with respect to any claim for Damages
relating to any intentional or fraudulent breach of a representation, warranty or covenant
of Buyer and except as otherwise provided in this Contract, indemnification under this
Section 8.8 shall be the exclusive remedy of Seller subsequent to Closing with respect to
any legal, equitable or other claim for relief based upon this Contract or arising
hereunder.

               (v) Exceptions. The limitations set forth in this Section 8.8(e)
shall not apply with respect to any claim for Damages relating to any Assumed Obligations,
any tax obligations or tax liabilities relating to Buyer, or its Affiliates, or the Property
payable or arising in respect of any period after the Closing, any obligations or
liabilities subject to adjustment under Article XII or any intentional or fraudulent breach
of a representation, warranty or covenant of Buyer, nor shall there be any survival
limitation for any such claim except as provided by applicable law.

          (f) Survival. The provisions of this Section 8.8 shall survive Closing,
subject to the limitations set forth herein.

     8.9 Escrow Funds. To provide for the timely payment of any post-closing
claims by Buyer against Seller hereunder, at Closing, an amount equal to Two Hundred Thousand and
No/100 Dollars ($200,000.00) (the “Escrow Funds”) shall be withheld from the Purchase Price payable
to Seller and shall be deposited until the later of (i) one hundred eighty (180) days after the
Closing Date or (ii) the date on which the Tax Clearance Certificate is delivered to Seller
pursuant to Section 11.1 (the “Release Date”) 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.
The Escrow Funds held on the Release Date shall be released to Seller, provided, that the Title
Company shall retain, hold and disburse pursuant to the Post-Closing Agreement Escrow Funds in an
amount equal to one hundred ten percent (110%) of the aggregate amount of the unresolved claims
asserted by Buyer as of the Release Date.

     8.10 Liquor Licenses. Seller represents and warrants that no liquor or
other alcoholic beverages are sold or served at the Hotel other than Existing Manager’s current
practice of serving complimentary liquor and alcoholic beverages at manager’s receptions. During
the Review Period, Seller shall cooperate with reasonable requests from Buyer to assist Buyer in
confirming that Buyer, its Affiliates and/or the Manager shall be permitted to continue the
Existing Manager’s practice of serving complimentary liquor and alcoholic beverages at the Hotel
without being required to obtain a liquor or alcoholic beverage license.

     8.11 Possession; Assignment and Assumption. Possession of the Property
shall be given by Seller to Buyer at Closing, and Seller shall deliver to Buyer at Closing, in
addition to all other deliveries of Seller provided for in Section 10.2 or otherwise pursuant to
this Contract, all Hotel Contracts assigned to and assumed by Buyer pursuant to the terms of this
Contract, together with evidence reasonably satisfactory to Buyer that all Hotel Contracts not
assigned to and assumed by Buyer have been terminated as of Closing. Buyer shall not assume, and
Seller shall sell the Property to Buyer free and clear of, all obligations and liabilities of
Seller, except that, unless otherwise agreed by Buyer and Seller, at Closing, Buyer shall assume
those obligations of Seller under the Hotel Contracts described on Exhibit C (collectively,
the “Assumed Contracts”) arising in respect of any period from and after the Closing Date (other
than any liability or obligation arising from or in any way related to any breach or default by
Seller or Existing Manager) (collectively, the “Assumed Obligations”). At Closing, Seller shall
assign to Buyer all rights and privileges in, under and to the Assumed Contracts. Seller agrees
that it is, and after Closing shall remain, liable for (i) all obligations and liabilities under
(x) the Assumed Contracts arising in respect of any period prior to the Closing Date and/or (y)
under all Hotel Contracts not assumed by Buyer at Closing, including, in each case, all obligations
and liabilities arising from or in any way related to any breach or default by Seller or Existing
Manager thereunder, (ii) all tax obligations and tax liabilities relating to Seller, or its
Affiliates or the Property payable or arising in respect of any period prior to Closing and (iii)
all obligations and liabilities arising with respect to the matter described on Exhibit F
hereto (collectively, the “Retained Obligations”). The provisions of the preceding sentence shall
survive Closing.

     8.12 Buyer’s Covenants. From and after the date hereof until the Closing,
Buyer shall 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 Buyer contained in
this Contract.

ARTICLE IX

CONDITIONS FOR CLOSING

     9.1 Buyer’s Conditions for Closing. Unless otherwise waived in writing, and
without prejudice to Buyer’s right to terminate 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. Notwithstanding the foregoing, in the
event of the failure of any of any condition set forth in this Section 9.1 as a result of a default
by Seller pursuant to Section 14.2, Buyer shall be entitled to exercise its remedies provided for
in such Section 14.2.

          (a) All of Seller’s representations and warranties contained in 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) Third Party Consents referred to in clause (i) of Section 8.3 in form and
substance reasonably satisfactory to Buyer shall have been obtained and furnished to Buyer.

          (e) 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.

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

          (g) 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.

     9.2 Seller’s Conditions for Closing. Unless otherwise waived in writing,
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
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. Notwithstanding the foregoing, in the event of the failure of any condition set
forth in this Section 9.2 as a result of a default by Buyer pursuant to Section 14.1, Seller shall
be entitled to exercise its remedy provided for in such Section 14.1.

          (a) All of Buyer’s representations and warranties contained in 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.

          (d) Third Party Consents referred to on Exhibit D in form and substance
reasonably satisfactory to Buyer shall have been obtained and furnished to Buyer.

          (e) The Existing Franchise Agreement shall have been terminated in accordance with
Article V.

     9.3 Return of Earnest Money Deposit. Notwithstanding anything to the
contrary in Section 9.1 or 9.2 or Article XIV, if the Closing does not occur solely as a result of
the New Franchise Agreement not having been executed and delivered at or prior to the Closing,
Buyer shall be entitled to extend the Closing Date up to thirty (30) days (the “Extension Period”);
provided, however, that in the event Closing does not occur within the first seven (7) days of the
Extension Period solely as a result of the New Franchise Agreement not having been executed and all
other conditions to Closing have been, or at Closing would have been, satisfied, on the next
Business Day, Buyer shall deposit the additional sum of Two Hundred Fifty Thousand and No/100
Dollars ($250,000,00), in cash,

 

 

certified bank check or by wire transfer of immediately available funds (the “Extension
Deposit”) with the Escrow Agent, which Extension Deposit, and all interest accrued thereon, shall
become part of and be held, applied to the Purchase Price and/or disbursed in accordance with all
terms and provisions applicable to the “Earnest Money Deposit” for all purposes under this Contract
and the Escrow Agreement, provided, further that in the event Closing does not occur at the end of
the Extension Period solely as a result of the New Franchise Agreement not having been executed and
all other conditions to Closing have been, or at Closing would have been, satisfied Seller shall be
entitled to the Earnest Money Deposit and any interest thereon and, unless otherwise agreed by
Buyer and Seller, this Contract shall be terminated and neither party shall have any obligations or
liabilities hereunder except pursuant to Sections 3.3 and 16.6.

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 not later than fifteen (15) days after
expiration of the Review Period. Buyer will provide Seller at least five (5) days prior written
notice of the Closing Date selected by Buyer. The date on which the Closing is to occur as
provided in this Section 10.1, or such other date as may be agreed upon by Buyer and 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. 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 in the form of Exhibit H hereto
(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), in the form of
Exhibit I hereto (the “Bills of Sale”).

          (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 Assumed Contracts, provided that Buyer shall only assume the Assumed
Obligations. 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, 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-S.

          (f) Title Company Documents. All affidavits, gap indemnity agreements and
other documents reasonably required by the Title Company from Seller.

          (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 material FF&E
Leases in form and substance reasonably 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 leased or owned by Seller or the Existing Manager and
used in connection with the Hotel’s operations.

          (i) Authority Documents. Certified copy of resolutions of Seller’s
constituent members 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 Commonwealth of Pennsylvania.

          (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
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 accuracy in all material respects (except where qualified as to materiality in this
Contract) of Seller’s representations and warranties hereunder as of the Closing Date.

     10.3 Deliveries of Buyer. 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 and less any sums to be deducted therefrom as provided in
Section 2.4 (provided that the Escrow Agent shall deliver the Earnest Money Deposit to Seller at
Closing if such amount is deducted from the portion of the Purchase Price funded at Closing by
Buyer).

          (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) Assumption. An assumption by Buyer of the Assumed Obligations.

          (d) 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.

          (e) Closing Statements. Buyer’s Closing Statement, and a certificate
confirming the accuracy in all material respects (except where qualified as to materiality in this
Contract), 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, all accrued taxes of Seller, all taxes relating to the Property or
the business conducted thereon payable in respect of any period prior to Closing and all income,
sales and use taxes and other such taxes of Seller attributable to the sale of the Property to
Buyer. In connection with the foregoing, Seller shall take any and all steps reasonably necessary
to prevent Buyer from incurring successor or transferee liability for any of the foregoing taxes,
including, without limitation, correctly filing all state tax reports and making all payments with
respect to all such taxes and providing to Buyer such documentation as Buyer may reasonably request
to evidence such filing and payment. Promptly after the expiration of the Review Period, and no
later than ten (10) days prior to Closing, Seller shall apply for a tax clearance certificate from
the Pennsylvania Department of Revenue reflecting that all state tax reports have been filed and
all payments have been made (the “Tax Clearance Certificate”), and Seller shall diligently pursue
receipt of, and use best efforts to obtain, the Tax Clearance Certificate at the earliest possible
date, all at Seller’s cost and expense. Upon Seller’s receipt of the Tax Clearance Certificate
from the Pennsylvania Department of Revenue, Seller shall promptly provide a copy of the Tax
Clearance Certificate to Buyer. Seller shall be responsible for all costs related to the
termination of the Existing Management Agreement and the Existing Franchise Agreement except as
expressly as provided in Article V. 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. The
provisions of this Section 11.1 shall survive Closing.

     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 new survey or update to Seller’s existing survey and the costs and expenses of
preparation of the Title Commitment and the issuance of the Title Policy contemplated by Article IV
and the per page recording charges for the Deed (if applicable). Buyer shall be responsible for
all license, application and similar fees payable in connection with the New Management Agreement
or the New Franchise Agreement and all costs to complete all PIP improvements required by the
Franchisor in connection with the New Franchise Agreement.

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. 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 Existing Manager and the Manager coordinate to 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. 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 Assumed Contracts applicable to the Property, and any deposits, prepayments and receipts
thereunder, shall be prorated between Buyer and Seller as of the Cutoff Time, provided that, except
as expressly provided herein with respect to the Existing Franchise Agreement, Seller shall be
responsible for all amounts payable under any Hotel Contracts not assigned to and assumed by Buyer
pursuant to the terms of this Contract (including, without limitation, all accrued and unpaid
amounts and all termination fees).

          (d) Accounts. All working capital accounts, reserve accounts and escrow
accounts shall remain the property of Seller.

          (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 credit at Closing equal to the reasonable expenses to be incurred by Buyer to clean
such guests’ rooms.

          (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 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,
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.

     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. 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 continue as employees of the Existing 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 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.

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 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 Two Hundred Thousand and No/100 Dollars ($200,000.00) in value.

     13.3 Procedure for Closing. If Buyer shall not timely elect to terminate
this Contract under Section 13.2, 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 use commercially reasonable efforts to repair
and restore the Property to its condition immediately prior to such damage or casualty and, if such
repair and restoration are not completed prior to Closing in a manner reasonably satisfactory to
Buyer, shall assign and pay to Buyer all excess insurance proceeds, plus an amount equal to the
insurance deductible.

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 (provided no notice
shall extend the time for Closing), Buyer may elect, as Buyer’s sole and exclusive remedy, either
(i) to terminate this Contract by written notice to Seller delivered to Seller, 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
Seller for damages, specific performance and all other rights and remedies available at law or in
equity, provided that in any action for damages Seller’s liability shall be limited to actual
out-of-pocket transactions costs (including, without limitation, legal fees) incurred by Buyer in
connection with the transactions contemplated hereby and Buyer’s proposed purchase of the Property,
but not to exceed Two Hundred Thousand and No/100 Dollars ($200,000.00) except in the case of any
claim for damages relating to any intentional or fraudulent breach of any representation, warranty
or covenant of Seller, in which event, the limitation set forth in this proviso shall not apply.

     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 Six Hospitality Ownership, Inc.
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Attention:	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	Fax No.:	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	with a copy to:	 	McGuireWoods LLP
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Attention:	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	Fax No.:	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	If to Seller:	 	Interstate Pittsburgh Hotel Holdings, L.L.C.
	 	 	 	 	c/o Interstate Hotels & Resorts, Inc.
	 	 	 	 	4501 N. Fairfax Drive, Suite 800
	 	 	 	 	Arlington, Virginia 22203
	 	 	 	 	Attention: Christopher Bennett, Senior Vice President
and General Counsel
	 	 	 	 	Fax No.: (703) 387-3389

 

 

	 	 	 	 	 	 	 	 	 
	 	 	 with a copy to:	 	Eckert Seamans Cherin & Mellott, LLC
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Attention:	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	Fax No.:	 	 	 	 
	 

	 	 	 	 	 	 	 	 

     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 permitted
assigns. Buyer may not assign this Contract without the prior written consent of Seller, which
consent shall not be unreasonably withheld, conditioned or delayed; provided, however, that Buyer
may assign its rights hereunder, without obtaining Seller’s consent, to an Affiliate of Buyer
provided that Buyer is not released from liability pursuant to Section 3.3. Buyer shall provide
Seller with written notice of such assignment to an Affiliate of Buyer within a reasonable period
of time prior to Closing. Seller shall not assign this Contract without the prior written consent
of Buyer.

     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 Pennsylvania (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.

          (a) 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 Existing
Manager, the Franchisor and the Title Company and except as necessitated by the Due Diligence
Examination 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 public 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.

          (b) Buyer shall keep confidential all information received from or on behalf of
Seller during or in connection with the Due Diligence Examination (not already in the public domain
or previously known to Buyer from other sources not bound by a confidentiality agreement with
Seller the existence of which has been disclosed in writing to Buyer by Seller) and shall not
disclose said information to any third party without Seller’s prior written consent.
Notwithstanding the immediately preceding sentence, Buyer may disclose such information and the
terms of this transaction (i) to the Franchisor and the Manager and to Buyer’s successors,
permitted assigns,

 

 

Affiliates, investors, lenders, employees, agents, attorneys, advisors and/or consultants
provided that such persons agree to maintain the confidentiality of such information and this
transaction, and (ii) as required by applicable law.

     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 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.

[Signatures Begin on Following Page]

 

 

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

	 	 	 	 	 
	 	 	SELLER:
	 
	 	 	 	 
	 	 	INTERSTATE PITTSBURGH HOTEL HOLDINGS, L.L.C., 
a
Delaware limited liability company
	 
	 	 	 	 
	 

	 	By:	 	/s/ CHRISTOPHER L. BENNETT
	 

	 	 	 	 
	 

	 	Name:	 	Christopher L. Bennett
	 

	 	 	 	 
	 

	 	Title:	 	Senior Vice President and General Counsel
	 

	 	 	 	 
	 
	 	 	 	 
	 	 	BUYER:
	 
	 	 	 	 
	 	 	APPLE SIX HOSPITALITY OWNERSHIP, INC., a Virginia
corporation
	 
	 	 	 	 
	 

	 	By:	 	/s/ AUTHORIZED SIGNATORY
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	 	 	 
	 

	 	Title:	 	Vice President 
	 

	 	 	 	 

 

 

FIRST AMENDMENT

TO

PURCHASE CONTRACT

     THIS FIRST AMENDMENT TO PURCHASE CONTRACT (this “Amendment”) is entered into as of July 29,
2005, by and between INTERSTATE PITTSBURGH HOTEL HOLDINGS, L.L.C., a Delaware limited liability
company (“Seller”), and APPLE SIX HOSPITALITY OWNERSHIP, INC., a Virginia corporation (“Buyer”).

RECITALS

     A. Seller and Buyer are parties to that certain Purchase Contract dated as of June 15,
2005 (the “Contract”), with respect to a Residence Inn hotel in Pittsburgh, Pennsylvania.

     B. Seller and Buyer desire to amend the Contract as hereinafter provided.

AGREEMENT

     NOW, THEREFORE, for and in consideration of the premises and the mutual agreements herein set
forth and further good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Seller and Buyer hereby agree as follows:

     1. Capitalized terms used but not otherwise defined herein shall have the meanings
given to such terms in the Contract.

     2. The Contract is modified by replacing Exhibit C in its entirety with the form of
Exhibit C attached hereto.

     3. Seller and Buyer acknowledge and agree that, except as amended herein, the
Contract is in full force and effect and is hereby ratified and confirmed.

     4. This Amendment (i) may be executed by facsimile signatures and in several
counterparts, and each counterpart when so executed and delivered shall constitute an original
of this Amendment, and all such separate counterparts shall constitute but one and the same
Amendment and (ii) embodies the entire agreement and understanding between the parties with
respect to the subject matter hereof and supercedes all prior agreements, consents and
understandings related to such subject matter.

[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK;

SIGNATURE PAGES FOLLOW]

 

 

     EXECUTED to be effective as of the date first above written.

	 	 	 	 	 	 	 
	 	 	SELLER:
	 
	 	 	 	 	 	 
	 	 	INTERSTATE PITTSBURGH HOTEL

HOLDINGS, L.L.C., a Delaware limited liability

company
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ JAMES A. CROLLE III	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	James A. Crolle III	 	 
	 

	 	Title:
	 	Senior Corporate Counsel	 	 
	 
	 	 	 	 	 	 
	 	 	BUYER:
	 
	 	 	 	 	 	 
	 	 	APPLE SIX HOSPITALITY OWNERSHIP, INC.
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ DAVID BUCKLEY	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	David Buckley 	 	 
	 

	 	 	 	 	 	 
	 

	 	Title:	 	Vice President 	 	 
	 

	 	 	 	 	 	 

2

 

EXHIBIT C

LIST OF HOTEL CONTRACTS

	1.	 	Security Services Agreement dated April 20, 1998, by and between ADT SECURITY
SERVICES, INC. and the SELLER.
	 
	2.	 	Waste Removal Agreement dated November 1, 2004, by and between BFI WASTE
SERVICES OF PITTSBURGH and the SELLER.
	 
	3.	 	Special Products Rental Agreement dated February 23, 2000, by and between CINTAS
CORPORATION and the SELLER.
	 
	4.	 	Elevator Maintenance Agreement dated June 3, 1999, by and between MARSHALL
ELEVATOR COMPANY and the SELLER.
	 
	5.	 	Airport Phone Board Agreement dated June 6, 2005, by and between JCDECAUX
AIRPORT and the SELLER.
	 
	6.	 	Telephone and Voicemail Maintenance & Service Agreement dated January 20, 2005, by
and between MIS ASSOCIATES, INC. and the SELLER
	 
	7.	 	Cable Service Agreement dated September 28, 2004, by and between ON COMMAND
VIDEO CORPORATION and the SELLER.
	 
	8.	 	Area Reservations Sales Office Shared Service Agreement dated January 1, 2005, by and
between MARRIOTT INTERNATIONAL, INC. and the SELLER.
	 
	9.	 	Two Way Radio Service Agreement dated November 6, 2002, by and between STALEY
COMMUNICATIONS, INC. and the SELLER.
	 
	10.	 	Fire Panel Monitoring Service Agreement dated April 22, 2005, by and between
SIMPLEXGRINNELL LP and the SELLER.
	 
	11.	 	Xerox Fax Order Agreement dated April 23, 2003, by and between XEROX
CORPORATION and the SELLER.
	 
	12.	 	Landscape Maintenance Agreement dated April 15, 2005, by and between
PLANTSCAPE, INC. and the SELLER.
	 
	13.	 	Agreement dated March 26, 1997 between Regional Industrial Development Corporation
of Southwestern Pennsylvania and IHC Realty Partnership, L.P. (Recorded March 27,
1997 in the Recorder’s Office of Allegheny County, Pennsylvania, in Deed Book 9910,
page 196.)

3exv10w5

 

EXHIBIT 10.5

AGREEMENT OF SALE AND PURCHASE

     THIS
AGREEMENT OF SALE AND PURCHASE (this
“Agreement”), dated as of November 12, 2004 (the
“Effective Date”), is made by and between HANFORD HOTELS, LLC, a California limited liability
company, having an address at ________ (“Seller”), and INTERSTATE CONCORD, LLC, a
Delaware limited liability company having an address c/o Interstate Hotels & Resorts, Inc., 4501 N.
Fairfax Drive, Arlington, VA 22203 (“Purchaser”).

I.

Definitions; Sale and Purchase

     1.01 Definitions. In addition to terms defined elsewhere in this Agreement, the
following terms shall have the meanings indicated:

     (a) Bookings shall mean contracts or reservations for the use or occupancy
of guest rooms, meeting rooms and/or the banquet facilities of the Hotel.

     (b) Books and Records shall mean all books, records, room rates, customer
lists and banquet and function room records with respect to the Hotel (whether in
electronic format or reduced to paper.

     (c) Closing Date shall mean the date specified in Section 7.01.

     (d) Consumables shall mean all opened and unopened food and beverages
(alcoholic and non-alcoholic) owned by Seller or its property manager and located at, or
purchased to be used or sold at but not yet delivered to, the Hotel.

     (e) Cut-off Time shall mean 11:59 p.m. on the date preceding the Closing
Date.

     (f) Effective Date shall mean the date of this Agreement.

     (g) Expendables shall mean all china, glassware, linens, silverware,
kitchen and bar small goods, paper goods, guest supplies, cleaning supplies, operating
supplies, printing, stationary and uniforms, and other operating supplies and
inventories whether in use or held in reserve storage for future use in connection with
the operation of the Hotel.

     (h) Existing Franchise Agreement shall mean the existing franchise
agreement between Hilton Inns, Inc. (“Hilton”), as franchisor, and Seller, as
franchisee, with respect to the Hotel.

     (i) Furnishings shall mean all fixtures, furniture, furnishings, fittings,
equipment, machinery, apparatus, appliances, vehicles and other articles of personal
property located on or used or usable in connection with any part of the Hotel.

     (j) Hotel shall mean the hotel located at 1970 Diamond Boulevard, Concord,
California 94520, and known as the Hilton Concord Hotel.

     (k) Hotel Contracts shall mean all service and maintenance contracts,
employment agreements, union contracts, purchase orders, equipment leases, volume
transient agreements and other

 

 

contracts or agreements relating to the maintenance,
operation, provisioning or equipping of the Hotel, together with all related written
warranties and guaranties.

     (l) Hotel Employees shall mean the persons employed to operate the Hotel.

     (m) Improvements shall mean the buildings, structures (surface and
sub-surface), installations and other improvements, including such fixtures and
appurtenances as shall constitute real property located on the Land.

     (n) Land shall mean the land and all appurtenances thereto, having a street
address at 1970 Diamond Boulevard, Concord, California 94520, Concord, California, more
particularly described in Exhibit A to this Agreement upon which the Hotel is situated
together with all appurtenances to the Land.

     (o) Miscellaneous Personal Property shall mean (i) any and all
trademarks, service marks, trade names and copyrights owned by Seller or any affiliate
of Seller relating to the Hotel, (ii) any and all goodwill associated with the
Hotel, (iii) the Hotel’s website and web address, if any, (iv) the
Hotel’s telephone numbers, and (v) printed marketing materials, if any,
relating to the Hotel, and any slides, proofs or drawings used to produce such
materials, to the extent such slides, proofs or drawings are in Seller’s possession.

     (p) Permits shall mean all licenses, franchises, permits, certificates of
occupancy, authorizations and approvals used in or relating to the ownership, occupancy
or operation of any part of the Hotel.

     (q) Property shall mean the Land and Improvements.

     (r) Space Leases shall mean all leases and other agreements (written or
oral) for the use of space at the Property, including but not limited to, agreements for
the use of rooftop space on the Hotel for the installation of cellular telephone
antennas.

     (s) Warranties shall mean any assignable warranties benefiting Seller with
respect to the Furnishings, Miscellaneous Personal Property and Improvements.

     1.02 Sale and Purchase. Seller agrees to sell and convey the Hotel to Purchaser, and
Purchaser agrees to purchase and accept the Hotel from Seller, for the price and subject to the
terms, covenants, conditions and provisions set forth in this Agreement. The sale and purchase
shall include the Property and all right, title and interest of Seller in and to the Bookings, the
Books and Records, the Furnishings, the Expendables, the Consumables, the Permits, the Space
Leases, the Hotel Contracts, the Miscellaneous Personal Property and the Warranties (the Property,
the Bookings, the Books and Records, the Furnishings, the Expendables, the Consumables, the
Permits, the Space Leases, the Hotel Contracts, the Miscellaneous Personal Property and the
Warranties being hereinafter collectively referred to as the “Purchased Assets”). Notwithstanding
anything to the contrary in Section 1.02, the following items are expressly excluded from the
Purchase Assets:

     (a) All cash on hand or on deposit other than deposits for advance Bookings,
operating account or other account or reserve, except for (i) security deposits held by
Seller as landlord with respect to any Lease, (ii) the house banks which are to be
transferred at Closing subject to the terms of this Agreement and (iii) other deposits
and amounts which are to be transferred or credited to Purchaser pursuant to this
Agreement;

     (b) Any tangible or intangible property owned by Seller’s property manager which
is described on Exhibit F attached hereto and made a part hereof; and

     (c) Any fixtures, personal property or intellectual property which is set forth on
Exhibit G, to the extent the same is owned by (A) the supplier, vendor, licensor, lessor
or other party under any

 

 

operating agreements, provided that any rights to purchase
contained in any operating agreements shall be considered part of the Purchased Assets,
(B) the tenant under any Leases, (C) any employees, or (D) any guests or customers of
the Hotel.

     1.03 Condition of Property. (a) Purchaser acknowledges for Purchaser and
Purchaser’s successors, heirs and assignees, (i) that Purchaser will be given a
reasonable opportunity to inspect and investigate the Property, all improvements thereon and all
aspects relating thereto, including, without limitation, all of the physical, environmental and
operational aspects of the Property, either independently or through agents and experts of
Purchasers choosing and (ii) that Purchaser will acquire the Property based upon
Purchasers own investigation and inspection thereof. SELLER AND PURCHASER AGREE THAT, EXCEPT AS
PROVIDED FOR IN THIS AGREEMENT OR ANY CLOSING DOCUMENT, THE PROPERTY SHALL BE SOLD AND THAT
PURCHASER SHALL ACCEPT POSSESSION OF THE PROPERTY ON THE CLOSING DATE AS IS, WHERE IS, WITH ALL
FAULTS WITH NO RIGHT OF SET-OFF OR REDUCTION IN THE PURCHASE PRICE, AND THAT, EXCEPT AS EXPRESSLY
PROVIDED IN THIS AGREEMENT OR ANY CLOSING DOCUMENT SUCH SALE SHALL BE WITHOUT REPRESENTATION OR
WARRANTY OF ANY KIND, WHETHER EXPRESS, IMPLIED, STATUTORY OR OTHERWISE, EXCEPT FOR THOSE SET FORTH
IN THIS AGREEMENT, INCLUDING, WITHOUT LIMITATION, WARRANTY OF INCOME POTENTIAL, OPERATING EXPENSES,
USES, MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. PURCHASER SPECIFICALLY ACKNOWLEDGES
THAT, EXCEPT AS PROVIDED FOR IN THIS AGREEMENT OR ANY CLOSING DOCUMENT, PURCHASER IS NOT RELYING
AND SHALL NOT RELY ON ANY REPRESENTATIONS OR WARRANTIES OF ANY KIND WHATSOEVER, WHETHER EXPRESS,
IMPLIED, STATUTORY OR OTHERWISE, FROM SELLER AS TO ANY MATTERS CONCERNING THE PROPERTY INCLUDING
WITHOUT LIMITATION: (A) THE CONDITION OR SAFETY OF THE PROPERTY OR ANY IMPROVEMENTS THEREON,
INCLUDING, BUT NOT LIMITED TO, PLUMBING, SEWER, HEATING AND ELECTRICAL SYSTEMS, ROOFING, AIR
CONDITIONING, IF ANY FOUNDATIONS, SOILS AND GEOLOGY INCLUDING HAZARDOUS MATERIALS, LOT SIZE, OR
SUITABILITY OF THE PROPERTY OR IMPROVEMENTS FOR A PARTICULAR PURPOSE; (B) WHETHER THE APPLIANCES,
IF ANY, PLUMBING OR UTILITIES AND ANY ASSOCIATED MATTERS ARE IN WORKING ORDER; (C) THE LIABILITY OR
SUITABILITY FOR OCCUPANCY OF ANY STRUCTURE AND THE QUALITY OF ITS CONSTRUCTION; (D) THE FITNESS OF
ANY PERSONAL PROPERTY; OR (E) WHETHER THE IMPROVEMENTS ARE STRUCTURALLY SOUND, IN GOOD CONDITION,
OR IN COMPLIANCE WITH APPLICABLE CITY, COUNTY, STATE OR FEDERAL STATUTES, CODES OR ORDINANCES.

     UNLESS SPECIFICALLY SET FORTH IN THIS AGREEMENT, PURCHASER REPRESENTS TO SELLER THAT PURCHASER
HAS OR WILL HAVE PRIOR TO CLOSING EXTENSIVE KNOWLEDGE OF AND FAMILIARITY WITH THE PROPERTY AND HAS
CONDUCTED, OR WILL CONDUCT PRIOR TO CLOSING, SUCH INVESTIGATIONS OF THE PROPERTY, INCLUDING BUT NOT
LIMITED TO, THE PHYSICAL AND ENVIRONMENTAL CONDITIONS THEREOF, AS PURCHASER DEEMS NECESSARY TO
SATISFY ITSELF AS TO THE CONDITION OF THE PROPERTY AND THE EXISTENCE OR NONEXISTENCE OR CURATIVE
ACTION TO BE TAKEN WITH RESPECT TO ANY HAZARDOUS OR TOXIC SUBSTANCES ON OR DISCHARGED FROM THE
PROPERTY, AND, EXCEPT AS EXPRESSLY PROVIDED FOR HEREIN OR IN ANY DOCUMENT DELIVERED TO PURCHASER BY
SELLER AT CLOSING, WILL RELY SOLELY UPON SAME AND NOT UPON ANY INFORMATION PROVIDED BY OR ON BEHALF
OF SELLER OR ITS AGENTS OR EMPLOYEES WITH RESPECT THERETO, OTHER THAN SUCH REPRESENTATIONS,
WARRANTIES AND COVENANTS OF SELLER AS ARE EXPRESSLY SET FORTH IN THIS AGREEMENT OR IN ANY DOCUMENT
DELIVERED TO PURCHASER BY SELLER AT CLOSING. UPON CLOSING, EXCEPT AS EXPRESSLY PROVIDED FOR HEREIN
OR IN ANY DOCUMENT DELIVERED TO PURCHASER BY SELLER AT CLOSING, PURCHASER SHALL ASSUME THE RISK
THAT ADVERSE MATTERS INCLUDING BUT NOT LIMITED TO, CONSTRUCTION DEFECTS AND ADVERSE PHYSICAL AND
ENVIRONMENTAL CONDITIONS, MAY NOT HAVE BEEN REVEALED BY PURCHASER’S INVESTIGATIONS.

     EXCEPT AS MAY BE EXPRESSLY PROVIDED IN THIS AGREEMENT OR IN ANY DOCUMENT DELIVERED TO
PURCHASER BY SELLER AT CLOSING, PURCHASER, FOR ITSELF AND ITS SUCCESSORS IN INTEREST, (X) RELEASES
SELLER FROM, AND WAIVES ALL CLAIMS AND LIABILITY AGAINST SELLER FOR, ANY ENVIRONMENTAL CONDITION AT
THE PROPERTY, AND (Y) RELEASES SELLER

 

 

FROM, AND WAIVES ALL LIABILITY AGAINST SELLER ATTRIBUTABLE
TO, THE ENVIRONMENTAL CONDITION OF THE PROPERTY, INCLUDING WITHOUT LIMITATION THE PRESENCE,
DISCOVERY OR REMOVAL OF ANY HAZARDOUS SUBSTANCES IN, AT, ABOUT OR UNDER THE PROPERTY, CONNECTED
WITH OR ARISING OUT OF ANY AND ALL CLAIMS OR CAUSES OF ACTION BASED UPON CERCLA (COMPREHENSIVE
ENVIRONMENTAL RESPONSE, COMPENSATION, AND LIABILITY ACT OF 1980, AS AMENDED BY SARA SUPERFUND
AMENDMENT AND REAUTHORIZATION ACT OF 1986 AND AS MAY BE FURTHER AMENDED FROM TIME TO TIME) OR ANY
RELATED CLAIMS OR CAUSES OF ACTION OR ANY OTHER FEDERAL OR STATE BASED STATUTORY OR REGULATORY
CAUSES OF ACTION FOR ENVIRONMENTAL CONTAMINATION AT, IN OR UNDER THE PROPERTY. THE PROVISIONS OF
THIS SECTION SHALL SURVIVE THE CLOSING.

II.

Consideration

     2.01 Purchase Price. The purchase price (“Purchase Price”) to be paid by Purchaser to
Seller at the closing of the purchase and sale of the Property (the “Closing”) shall be TWENTY NINE
MILLION ONE HUNDRED FIFTY THOUSAND DOLLARS ($29,150,000). The Purchase Price shall be payable by
Purchaser as follows:

     (a) FIVE HUNDRED THOUSAND DOLLARS ($500,000) as an earnest money deposit (together
with any interest earned thereon, the “First Deposit”), by check or wire transfer
payable to First American Title Insurance Company (in its capacity as holder of the
Earnest Money, the “Escrow Agent”), through its Washington, D.C. office, within two (2)
business days after the date hereof;

     (b) ONE MILLION FIVE HUNDRED THOUSAND DOLLARS ($1,500,000) by wire transfer of good
funds to the Escrow Agent as an additional earnest money deposit (together with any
interest earned thereon, the “Second Deposit”, and the First Deposit and after the
deposit thereof the Second Deposit being hereinafter collectively referred to as the
“Earnest Money”) within two (2) business days after the expiration of the Inspection
Period (as hereinafter defined), if Purchaser shall not have terminated this Agreement
as provided in this Agreement; and

     (c) The balance (as adjusted for the prorations and credits hereinafter set forth)
at the Closing by wire transfer of good funds to an account to be designated by Seller
prior to the Closing.

     2.02 Earnest Money. The Earnest Money shall be delivered to and held by Escrow Agent
in escrow in an interest-bearing account pursuant to terms of this Agreement. If the Closing
occurs in accordance with the terms and provisions of this Agreement, the Earnest Money shall be
paid to Seller and credited against the Purchase Price. If the Closing does not occur, the Earnest
Money shall be held and delivered as provided in this Agreement.

     2.03 Allocation. The Purchase Price shall be allocated between the Land, the
Improvements and the other Purchased Assets as set forth on Exhibit B attached hereto subject to
such changes as the parties may reasonably and in good faith agree upon prior to the expiration of
the Inspection Period.

 

 

III.

Survey

     3.01 Survey. Promptly after the Effective Date, Seller will obtain, at Purchaser’s
cost and expense, a current survey (the “Survey”) of the Property prepared by a licensed surveyor
approved by Purchaser. The Survey, which shall be certified to Purchaser, Purchaser’s lender, if
any, and Purchaser’s title insurer, shall indicate the metes and bounds of the Land, shall indicate
the Improvements and the location of any easements, utility lines, rights-of-way, water courses,
drains, sewers, driveways, roads and encroachments affecting the Property, and shall indicate that
all Improvements are located within the record and setback lines of the Property and that no
easements or other encroachments located on the Property interfere with the use of the Property and
shall otherwise be in accordance with the Minimum Standard Detail Requirements and Classifications
for ALTA/ACSM Land Title Surveys (including items 1, 2, 3, 6, 7A, 7B, 7C, 8, 9, 10, 11 and 13 of
Table A thereof) and the standards of any board or organization promulgating standards for surveys
in the State of California.

IV.

Title Insurance

     4.01 Title Commitment. Within ten days after the Effective Date, Purchaser will cause
First American Title Insurance Company (in its capacity as title insurer, the “Title Company”),
through its Washington, D.C. office to deliver to Purchaser an up-to-date and complete commitment
for an ALTA Owner’s Policy of Title Insurance with extended coverage (the “Title Commitment”)
accompanied by a legible copy of all recorded documents relating to liens, easements,
rights-of-way, restrictions and other matters affecting title to the Property.

     4.02 Title Objections. Purchaser shall have ten (10) days from the last to be
received of the Title Commitment and the Survey to notify Seller as to any items that are
unsatisfactory to Purchaser. Unless Purchaser or its attorney so notifies Seller within such
10-day period, Purchaser shall be deemed to have approved the condition of title to the Property as
reflected by the Title Commitment and Survey. If within such period Purchaser notifies Seller that
any of the items are unacceptable (“Objections”), Seller shall within five (5) business days after
receipt of such notice notify Purchaser whether Seller shall elect to cure any or all of such
Objections (provided, however, that Seller must satisfy and remove of record or cure, as the case
may be, and shall not have any right to elect not to cure, any matter which it is required to cure
pursuant to Section 4.04 below. If Seller elects to cure any such Objections, then Seller shall
promptly cure the Objections which it has elected to cure to Purchaser’s and the Title Company’s
satisfaction. If Seller elects not to cure any such Objections, or is unable to cure any such
Objections, then Purchaser at its sole and absolute option may either (i) accept title to
the Property subject to such Objections or (ii) terminate this Agreement by written
notice to Seller, whereupon the Earnest Money shall be promptly returned to Purchaser and the
parties shall have no further rights or liabilities under this Agreement other than those which
expressly survive the termination of this Agreement. Purchaser shall make such election by written
notice to Seller or on before the Closing Date or within five business days after Seller has
advised Purchaser in writing that has elected not to cure any such Objections or is unable to cure
any such Objections, whichever occurs first, and in the event Purchaser does not make such
election, Purchaser shall be conclusively deemed to have terminated this Agreement. Those
restrictions, liens, encumbrances, easements, rights of way and other matters as are not objected
to by Purchaser in the manner provided in this Section shall be deemed “Permitted Exceptions”.
Nothing herein shall be deemed to prohibit Purchaser from objecting to title defects revealed
subsequent to approval of the title reflected by the Title Commitment and the Survey and any such
objections will be treated as “Objections” in accordance with this Section.

     4.03 Title Conveyed. Seller shall, on the Closing Date, convey to Purchaser good,
marketable and insurable title to the Property subject only to the Permitted Exceptions.

     4.04 Monetary Liens. Notwithstanding anything to the contrary set forth in Section
4.02 above, Seller shall satisfy and remove of record or cure, as the case may be, at or before the
Closing (x) any mortgage or deed of trust lien

 

 

affecting the Property, (y) any liens for unpaid
taxes, and (z) any other Objection which may be removed by the payment of a liquidated sum of money
and which when aggregated with all other Objections to be cured under this clause (z) is equal to
or less than $100,000 in the aggregate, and Seller may not refuse to cure the same. Seller may use
all or any portion of the Purchase Price to affect such cure at the Closing.

     4.05 Searches. Promptly after the Effective Date, Seller shall furnish to Purchaser,
at Seller’s expense, written reports of searches (the “Searches”) of the records of the appropriate
governmental agencies confirming the absence of security interests, judgments, tax liens and
bankruptcy proceedings which affect or could affect the Purchased Assets or any interest therein
(except the Permitted Exceptions). If such Searches disclose the existence of any security
interests, judgments, tax liens or bankruptcy proceedings which affect or could affect the
Purchased Assets or any interest therein (except the Permitted Exceptions), Seller shall have
thirty (30) days from the date of delivery of such written reports to secure the release, or commit
in writing to secure the release, of all such security interests, judgments, tax liens and
bankruptcy proceedings and provide evidence of such release to Purchaser. If Seller fails to
secure all such releases or commit to secure such releases within such thirty (30) day period,
without limiting any other obligation which Seller may have under Section 4.05 or elsewhere in this
Agreement, and/or right or remedy which Purchaser may have with respect thereto under this
Agreement, Purchaser may elect, upon notice to Seller on or before the Closing Date, to (i)
terminate this Agreement, in which event the Earnest Money shall promptly be returned to Purchaser,
or (ii) accept title subject only to such then unreleased security interests, judgments and tax
liens with the further right to deduct from the Purchase Price amounts secured by any such security
interests, judgments and tax liens (other than the Permitted Exceptions) of a definite or
ascertainable amount. Said Searches shall be updated, at Seller’s sole cost and expense, as of a
date not earlier than three (10) days prior to the Closing Date confirming that there are no
security interests, judgments, tax liens or bankruptcy proceedings affecting the Purchased Assets
or any interest therein.

V.

Representations, Warranties, Covenants And Conditions Precedent

     5.01 Seller’s Representations and Warranties. Seller represents and warrants to
Purchaser that:

     (a) Seller is a duly organized and validly existing California limited liability
company, is in good standing in the State of California and in the state of its
formation, if different, and has full power to enter into this Agreement and to perform
its obligations under this Agreement.

     (b) The execution and delivery of this Agreement has been duly authorized by all
necessary and appropriate action of Seller. This Agreement constitutes a legal, valid
and binding obligation of Seller enforceable in accordance with its terms, subject to
bankruptcy, fraudulent conveyance, moratorium or other creditor’s rights and limitations
on equitable remedies.

     (c) No consent or approval of any person, entity, or governmental authority is
required with respect to the execution and delivery of this Agreement by Seller or the
consummation by Seller of the transactions contemplated hereby or the performance by
Seller of its obligations under this Agreement.

     (d) There are no Space Leases, ground leases, license agreements, occupancy
agreements or other similar agreements affecting all or any portion of the Property
except for the leases (collectively, the “Space Leases”) listed in Exhibit C (as
supplemented pursuant to Section 5.05(p) below) to this Agreement. All of the Space
Leases described in Exhibit C are in full force and effect, there are no defaults by any
party thereunder, and true and complete copies of the Space Leases and all instruments
and documents related to the Space Leases have been provided to Purchaser.

     (e) There are no Hotel Contracts or similar agreements affecting the Property
except as set forth in Exhibit D to this Agreement (as supplemented pursuant to Section
5.05(p) below). Any equipment leases set forth on Exhibit D (as supplemented pursuant
to Section 5.05(p) below) are specifically identified as such. All of the Hotel
Contracts are in full force and effect, there are no defaults

 

 

by Seller or, to Seller’s
knowledge, any other party thereunder, and true and complete copies of the Hotel
Contracts and all instruments and documents related to the Hotel Contracts have been
provided to Purchaser.

     (f) The Existing Franchise Agreement is in full force and effect and has not been
extended, amended, modified or otherwise supplemented. To Seller’s knowledge, after due
inquiry of Hilton, there are no defaults by Seller under the Existing Franchise
Agreement or, to the knowledge of Seller, by any other party thereunder, nor has any
event occurred which, with passage of time or the giving of notice or both, would
constitute a default by Seller or, to the knowledge of Seller, by any other party
thereunder. True and complete copies of the Existing Franchise Agreement have been
provided to Purchaser.

     (g) To Seller’s knowledge all Permits necessary for the operation of the Hotel are
set forth in Exhibit E to this Agreement. The Permits are in full force and effect,
Seller has received no notice of any violations thereof, and true and complete copies of
all of the Permits have been delivered to Purchaser.

     (h) All Hotel Employees are employed by Seller or the Hotel’s property manager.
There are no agreements relating to any representation, labor or collective bargaining
agreement affecting the Hotel, and no Hotel Employees are employed under union
agreements, collective bargaining, written or oral employment agreements or similar
arrangements. Neither Seller nor to Seller’s knowledge, Seller’s property manager has
received any notice from any labor union or group of employees that such union or group
represents or believes or claims it represents or intends to represent any of the Hotel
Employees. There are no current strikes or work stoppages at the Hotel nor, to Seller’s
knowledge, has any such strike or work stoppage been threatened.

     (i) Seller has received no notice of, and, to Seller’s knowledge, there are no
violations of laws, ordinances, orders or regulations (“Laws”) of governmental or
quasi-governmental authorities with respect to the Property (including, without
limitation, those related to environmental, labor or employment matters) and the current
use of the Property is in compliance with all zoning and land-use laws and ordinances.

     (j) To Seller’s knowledge, except as set forth on Exhibit I attached hereto no
asbestos or petroleum or any substances defined as hazardous materials or hazardous
wastes under any applicable Laws are or have been used, stored, generated or released at
the Property.

     (k) Except as set forth on Exhibit J attached hereto, there is no litigation,
action, or proceeding pending or, to the best of Seller’s knowledge, threatened relating
to the Property or the transactions contemplated by this Agreement, including, but not
limited to, those alleging the violation of any Laws pertaining to employment or
employment practices or those alleging violation of the Americans with
Disabilities Act, nor is the Hotel affected by any settlement agreement, consent
decree or other resolution to any prior litigation, action or proceeding.

     (l) Seller has provided to Purchaser (i) true and complete copies of all
bills for real estate and personal property taxes and assessments for the 2004 tax year
and the two immediately preceding tax years and (ii) a true and complete list
of the current Hotel Employees together with a schedule setting forth the compensation
and fringe benefits (including, but not limited to, benefit plans) accorded to such
Hotel Employees.

     (m) Seller has provided to Purchaser unaudited financial statements and STR reports
for the 2000, 2001, 2002 and 2003 calendar years and year-to-date financial statements
for the 2004 calendar year. All such statements for the Hotel are, and any financial
statements for later periods to be provided by Seller pursuant to this Agreement shall
be, true and correct and have, or will, accurately reflect in all material respects the
financial condition of the Hotel for the applicable period. There have been no material

 

 

adverse changes in the financial condition of the Hotel since the date of the last such
statement delivered to Purchaser prior to the execution of this Agreement.

     (n) Seller owns good and marketable title to the Purchased Assets, subject only to
the Permitted Exceptions.

     (o) Other than to Hilton pursuant to the Franchise Agreement, Seller has not
granted to any person or entity any options or other agreements of any kind, whereby any
person or entity other than Purchaser will have acquired or will have any right to
acquire title to all or any portion of the Purchased Assets.

     (p) Seller has paid all taxes (including, without limitation, transient occupancy
(bed) taxes), assessments and other governmental charges relating to the operation of
the Hotel that were due and payable prior to the Effective Date.

     (q) Other than the agreements disclosed in this Agreement, and to Seller’s
knowledge, there are no agreements, written or oral, affecting the Property, which would
be binding on Purchaser following the Closing.

     (r) Seller is not a “foreign person” as defined in the Internal Revenue Code of
1986, as amended.

     (s) Michael McGlone is President and Chief Operating Officer of Seller and Peter
Trapolino is Vice President — Development of Seller. Mr. McGlone and Mr. Trapolino are
the individuals employed by Seller having supervisory responsibility for and control of
the Hotel and are the employees of Seller having the most knowledge of the matters which
are the subject of the foregoing representations which are limited to Seller’s
knowledge.

     (t) Neither Seller nor any of its respective officers, directors, shareholders,
partners, members or affiliates (including the indirect holders of equity interests in
Borrower) is an entity or person: (i) that is listed in the Annex to, or is otherwise
subject to the provisions of Executive Order 13224 issued on September 24, 2001
(“EO13224”); (ii) whose name appears on the United States Treasury Department’s
Office of Foreign Assets Control (“OFAC”) most current list of “Specifically
Designated National and Blocked Persons” (which list may be published from time to time
in various mediums including, but not limited to, the OFAC website,
http:www.treas.gov/ofac/t11sdn.pdf)(the “OFAC List”); (iii) who commits,
threatens to commit or supports “terrorism”, as that term is defined in EO 13224; or
(iv) who is otherwise affiliated with any entity or person listed above.

     5.02 Purchaser’s Representations and Warranties. Purchaser represents and warrants to Seller that:

     (a) Purchaser is a duly organized and validly existing limited liability company,
is in good standing in the State of Delaware and has full power to enter into this
Agreement and to perform its obligations under this Agreement.

     (b) The execution and delivery of this Agreement has been duly authorized by all
necessary and appropriate limited liability company action of Purchaser. This Agreement
constitutes a legal, valid and binding obligation of Purchaser enforceable in accordance
with its terms, subject to bankruptcy, fraudulent conveyance, moratorium or other
creditor’s rights and limitations on equitable remedies.

     5.03 Knowledge Defined. For purposes of this Agreement, “knowledge” means (a) with
respect to Seller, the actual knowledge of Michael McGlone and/or Peter Trapolino and/or, if
different, the general manager of the Hotel, (provided that, in no event shall any such person have
any personal liability arising under this Agreement), without any duty of inquiry or investigation
other than reasonable inquiries of the general manager and executive staff of the Property,

 

 

and
expressly excluding the knowledge of any other shareholder, partner, member, trustee, beneficiary,
director, officer, manager, employee, agent or representative of Seller or any of its affiliates,
and (b) with respect to Purchaser, (i) the actual knowledge of C.A. Anderson and expressly
excluding the knowledge of any other shareholder, partner, member, trustee, beneficiary, director,
officer, manager, employee, agent or representative of Purchaser or any of its Affiliates and (ii)
any matter disclosed in any exhibits or schedules to this Agreement. For the purposes of this
definition, the term “knowledge” means, with respect to any person, the conscious awareness of such
person at or prior to the time in question, but expressly excludes any constructive or implied
knowledge of such person.

     5.04 Survival of and Other Matters with respect to Seller’s Representations and
Warranties.

     (a) The representations and warranties of Seller set forth in Section 5.01 as updated by the
certificate of Seller to be delivered to Purchaser at Closing, shall survive Closing for a period
of two hundred seventy (270) days. No claim for a breach of any representation or warranty of
Seller shall be actionable or payable (a) if the breach in question results from or is based on a
condition, state of facts or other matter which was actually known to Purchaser prior to Closing,
(b) unless the valid claims for all such breaches, if any, collectively aggregate more than Fifty
Thousand Dollars ($50,000), in which event the full amount of such claims shall be actionable, and
(c) unless written notice containing a reasonable description of the nature of such breach shall
have been given by Purchaser to Seller prior to the expiration of said two hundred seventy (270)
day period and an action shall have been commenced by Purchaser against Seller within ninety (90)
days after the termination of the survival period provided for above in this Section 5.04 (except
that if Purchaser is seeking recovery from any third party as provided in the following sentence
Purchaser shall only be required to provide written notice to Seller within the two hundred seventy
(270) day period and shall not be required to commence an action against Seller to preserve its
claims). As used herein, the term “Cap” shall mean the total aggregate amount of One Million Five
Hundred Thousand Dollars ($1,500,000). In no event shall (i) Seller’s aggregate liability to
Purchaser for breach of any representation or warranty of Seller in this Agreement (as modified by
any certificate to be delivered by Seller at Closing) exceed the amount of the Cap, or (ii) Seller
be liable for any consequential or punitive damages unless the same are payable to third parties.

     (b) By executing and delivering the documents required of such party in Section 7.04 below,
(i) Seller shall be deemed to have remade all of the foregoing representations and warranties of
Seller in Section 5.01 as of Closing and (ii) Purchaser shall be deemed to have made all of the
foregoing representations and warranties of Purchaser in Section 5.02 as of Closing. Should any of
such representations and warranties of Seller be found to be incorrect prior to Closing, Seller
shall attempt to cure the same by Closing. If Seller is unable to cure same by Closing, at
Purchaser’s option the Closing shall be postponed until five (5) business days following
Purchaser’s receipt of proof satisfactory to Purchaser that such matters have been cured,
provided, however, if Seller is unable to cure the same within thirty (30) days from the date of
notice of the same, Purchaser shall be entitled either to waive the same and close this
transaction, exercise its rights pursuant to Article VI of this Agreement or to terminate this
Agreement. In the event the Purchaser elects to terminate this Agreement, Escrow
Agent shall return the Earnest Money to Purchaser and neither party to this Agreement shall
thereafter have any further rights or liabilities under this Agreement.

     5.05 Seller’s Covenants. Seller covenants and agrees with Purchaser that prior to the
Closing:

     (a) Seller will assist Purchaser and Purchaser’s agents, on or before Closing, in
acquiring all information necessary to enable Purchaser’s agents and Seller’s agents to
compute the prorations described in Section 7.02 of this Agreement.

     (b) Seller will not sell, exchange, assign, transfer, convey, lease or otherwise
dispose of all or any part of the Purchased Assets or any interest therein except for
Furnishings, Consumables and Expendables which are sold or consumed in the ordinary
course of business.

     (c) Seller will keep the Space Leases, the Hotel Contracts, the Existing Franchise
Agreement and the Permits in full force and effect, will pay all charges when due
thereunder and will perform all of its material obligations thereunder.

 

 

     (d) Seller will keep the Purchased Assets free and clear of liens and encumbrances
other than the Permitted Exceptions and the lien of taxes not yet due and payable.

     (e) Seller will not enter into any contracts, leases, licenses, easements or other
agreements relating to the Purchased Assets which will obligate Purchaser or be a charge
or lien against the Property, except those necessary to continue the operation of the
Hotel in the ordinary course of business and which are terminable by the owner of the
Property without penalty on thirty days notice.

     (f) Seller will cause the Property to be operated and maintained in the manner in
which it is being operated and maintained as of the date of this Agreement which
undertaking includes, but is not limited to, (i) maintaining Expendables, Consumables
and Furnishings in those quantities and at those levels present as of the Effective Date
and (y) with respect to Expendables, also not less than the average levels maintained
with respect to each such Expendable over the five years previous to the Closing Date,
(ii) entering into Bookings in the ordinary course of business, (iii) performing all
repairs and maintenance necessary to keep the Property in good repair, to comply with
Laws and to maintain at least the same condition as exists on the Effective Date and
(iv) keeping the Hotel staffed with Hotel Employees in accordance with Seller’s current
practice.

     (g) Seller shall permit Purchaser and its representatives, employees, contractors
and agents to enter upon and inspect the Property and perform such investigations of the
Property and all applicable Books and Records as Purchaser may from time to time deem
desirable. Purchaser and Purchaser’s agents and contractors shall have the right during
the term of this Agreement to enter upon the Property at reasonable times and upon
reasonable prior notice to Seller. Purchaser acknowledges and agrees that any and all
inspections of the Property shall be conducted in a manner not unreasonably disruptive
to tenants, guests, or otherwise to the operation of the Property and shall be performed
upon reasonable prior notice to Seller. In the event Purchaser desires to conduct any
physically intrusive due diligence such as sampling of soils or drilling wells,
Purchaser will request Seller’s prior consent thereto, which consent shall not be
unreasonably withheld. Purchaser agrees to indemnify Seller and hold Seller, Seller’s
affiliates, officers, directors, employees, agents and representatives harmless from and
against any and all losses, costs, damages, claims or liabilities, including, without
limit, to mechanic’s and materialmen’s liens and attorneys fees arising out of or in
connection with the entry by Purchaser and/or any of Purchaser’s agents onto the
Property pursuant to this Section except to the extent the same arise from the
misconduct or negligence of Seller or Seller’s representatives. Purchaser’s indemnity
and hold harmless provisions pursuant to this Section shall survive the closing of this
transaction or earlier termination of this Agreement. In addition to the foregoing,
Seller shall assist Purchaser and provide such other information as shall be required to
enable an accounting firm of
Purchaser’s choosing to prepare audited financial statements of the Property for
calendar years 2000 through 2003, the cost of which shall be borne by Purchaser.

     (h) Within twenty (20) days after the end of each calendar month until the Closing
Date, Seller shall provide to Purchaser financial statements and STR reports for such
month and on a year-to-date basis which statements shall be prepared in accordance with
either generally accepted accounting principles or the Uniform System of Accounts for
Hotels and Motels, and otherwise in form reasonably acceptable to Purchaser.

     (i) Upon Purchaser’s request, Seller shall from time to time make available a
senior representative of Seller and the general manager of the Hotel at a reasonable
time to meet with an asset manager of Purchaser to review the operations of the Hotel in
reasonable detail

     (j) Seller will promptly notify Purchaser of any matter arising prior to Closing
which might materially and adversely affect the condition or operation of the Hotel
including, without limitation, the commencement of any litigation or proceeding or any
notice of a violation of Laws issued by any governmental or quasi-governmental
authority.

 

 

     (k) Seller will cooperate with Purchaser in all reasonable respects (which shall
include, without limitation, supplying information known to Seller and execution of such
documents as may be legally required) in connection with the application for transfer of
any existing alcoholic beverage licenses held by or on behalf of Seller or its agent in
connection with its operation of the Hotel (collectively, the “Liquor License”) to
Purchaser or Purchaser’s designee or Purchaser’s (or Purchaser’s designee’s) application
for a new Liquor License (as the case may be, the “Liquor Application”). Without
limiting the generality of the foregoing, Seller and either Purchaser or Purchaser’s
designee shall, if required, open a separate escrow (the “Liquor Escrow”) with an escrow
company selected by Purchaser and reasonably acceptable to Seller to effect the transfer
of the Liquor License and certain food and beverage inventory attendant to the alcoholic
beverage operation at the Hotel (collectively, “Liquor License Property”) with a
reasonable portion of the Purchase Price (not to exceed $20,000) designated as
consideration for transfer of the Liquor License Property. Seller shall satisfy through
the Liquor Escrow all claims of creditors of Seller relating to the purchase and sale of
alcoholic beverages at the Hotel arising prior to the Cut-Off Time. Prior to Closing,
Purchaser or Purchaser’s designee shall file with the Department of Alcoholic Beverage
Control (“ABC”) an application for a temporary permit (“Temporary License”) allowing
Purchaser to operate the Liquor License Property effective as of the Closing while the
transfer application for a permanent alcoholic beverage license or licenses (the
“Permanent License”) is pending. To the extent required by the ABC, Seller shall
surrender the Liquor License to the ABC as of the Closing in accordance with the ABC’s
rules and execute all necessary forms required by the ABC for the Purchaser or the
Purchaser’s designee to obtain a Temporary License. If a Temporary License is granted
to Purchaser or Purchaser’s designee, then as of the Closing Date and prior to the
issuance of a Permanent License, Purchaser shall operate the alcoholic beverage
operations pursuant to the Temporary License in a lawful manner. Purchaser or
Purchaser’s designee shall pay any application fees or other transfer costs required to
effectuate the transfer of the Liquor License, except that Seller and Purchaser shall
each pay one-half of the charges for the Liquor Escrow. If the Purchaser is unable to
obtain the transfer of the Liquor License, or obtain a Temporary License, or obtain a
new Permanent License prior to the Closing, then, on the Closing Date, Seller and
Purchaser shall enter into an interim arrangement (the
“Interim Arrangement”) whereby Seller shall operate the liquor concessions at the Hotel on
behalf of Purchaser pending the transfer or issuance of the Liquor License to Purchaser
and Purchaser shall indemnify Seller against any liabilities incurred in such operation.
Seller represents and warrants to Purchaser that it is unaware of any reason why the ABC
should deny the application to transfer the Liquor License or a Temporary License from
the Seller to the Purchaser or the Purchaser’s designee. The provisions of this Section
5.05(k) shall survive the Closing.

     (l) Seller will promptly provide Purchaser with notice of any actual or proposed
change in the assessed value of the Property or any portion of the Property (including
any tentative or preliminary assessment) and of the institution or proposed institution
of any proceeding (whether formal, informal, judicial
or administrative) relating to any such change or proposed change. Seller will not
take any action with respect to the contesting and/or resolution of the taxable assessed
value of the Land and Improvements without the prior written consent of Purchaser, which
consent shall not be unreasonably withheld.

     (m) Seller shall not request or initiate any proceeding or other action to change
any zoning classification applicable to the Property or any other Law which governs the
use or occupancy of the Property.

     (n) Seller shall prior to the Closing obtain an estoppel certificate, in the form
and substance required by Purchaser’s lender and reasonably acceptable to Purchaser and
dated no earlier than thirty (30) days prior to the Closing Date, from each tenant under
a Space Lease and from any owner’s association to which the Property is subject.

     (o) Seller shall within five (5) days after the Effective Date apply for, and
thereafter diligently seek to obtain from Hilton, Hilton’s written waiver of its
existing right to purchase the Property as set forth in the Existing Franchise
Agreement, and shall notify Purchaser in writing promptly upon Seller’s receipt of same,
which notice shall contain a copy of said waiver.

 

 

     (p) Seller shall within ten days after the Effective Date deliver to Purchaser a
supplement to Exhibits C and D listing, for each Space Lease and Hotel Contract set
forth thereon, (i) a brief description of (x) the space demised under each such Space
Lease and (y) the services or materials provided under each such
Hotel Contract, (ii) the
date on which the current term of such Space Lease or Hotel Contract expires, (iii) a
brief description of any automatic renewal provisions in each such Space Lease or Hotel
Contract and (iv) the current monthly rent payable under each such Space Lease and the
current payments due under each Hotel Contract (on a monthly or quarterly basis, as
applicable). To the extent any equipment lease is listed on Exhibit D and is not
identified as such on Exhibit D as attached hereto, such supplement shall specifically
identify such equipment lease as an equipment lease.

     5.06 Inspection Period. Purchaser and its representatives, employees, contractors and
agents shall have a period from the Effective Date through the close of business on the date (or,
if such date is not a business day, the next succeeding business day) forty-five (45) days after
the Effective Date (the “Inspection Period”) within which to undertake such inspections and
investigations of the Property (including, but not limited to, engineering and environmental
studies, financial analysis, and feasibility studies) as Purchaser deems desirable to evaluate the
financial and physical condition of the Property and such other matters that Purchaser may deem
relevant. If Purchaser shall, in its sole and absolute discretion, (x) determine that the Purchased
Assets or any matters related to the Purchased Assets and/or Purchaser’s acquisition thereof are
unsatisfactory in any respect, and/or (y) otherwise decide not to acquire the Purchased Assets for
any reason or no reason, then Purchaser may terminate this Agreement by written notice (the
“Termination Notice”) given to Seller prior to the end of the Inspection Period. Upon the giving
of the Termination Notice, this Agreement shall terminate, Escrow Agent shall return the Earnest
Money (less Fifty and no/100 Dollars ($50.00) to be disbursed to Seller as sole consideration
hereunder) to Purchaser and neither party to this Agreement shall thereafter have any further
rights or liabilities under this Agreement.

     5.07 Conditions Precedent to Purchaser’s Obligations. Purchaser’s obligations under
this Agreement are conditioned upon the satisfaction of the following conditions as of the Closing
Date:

     (a) Purchaser shall not have terminated this Agreement pursuant to Section 5.06 or
any other applicable provision of this Agreement.

     (b) Seller’s representations and warranties set forth in this Agreement shall
continue to be true and accurate in all material respects (provided, furthermore, and
notwithstanding any provision of this Agreement to the contrary, it shall be a condition
precedent to Purchaser’s obligation to close the transactions
set forth herein that each representation and warranty of Seller which is limited
to or by Seller’s knowledge be true and correct as if it were not so limited).

     (c) Seller shall have delivered all of the documents required under this Agreement
and performed all of its obligations under this Agreement in all material respects.

     (d) After payments made at Closing, there shall be no unpaid charges, judgments,
debts, liabilities, claims, liens or obligations which burden the Property other than
the Permitted Exceptions.

     (e) The Property shall on the Closing Date be in the same condition as on the last
day of the Inspection Period except as attributable to ordinary wear and tear.

     (f) There shall have been no material adverse change in the condition or operations
of the Hotel from the last day of the Inspection Period through the date of Closing
(which change may include, but shall not be limited to, the existence of violation of
any Laws or the revocation or suspension of any Permit or the right to operate the Hotel
or any of its facilities).

     (g) Hilton shall have waived in writing its existing right to purchase the Property
as set forth in the Existing Franchise Agreement and Purchaser shall have either (i)
obtained Hilton’s consent to the assumption by Purchaser of, and shall have assumed, the
Existing Franchise Agreement, or (ii) entered into a franchise or license agreement with
Hilton for the Hotel, such assumption or agreement to be on

 

 

terms satisfactory to
Purchaser in its sole discretion. In no event shall Purchaser be required to assume or
have any liability or obligation under the Existing Franchise Agreement for (x) any
franchise or other fees under the Existing Franchise Agreement accrued and unpaid with
respect to all periods on or prior to the Closing Date or (y) with respect to any
monetary or other default under the Existing Franchise Agreement, nor shall Purchaser be
required to agree to any amendment of the Existing Franchise Agreement or to any new
franchise agreement with Hilton, or to any capital or other improvements requested or
required by Hilton in connection with such assumption or new franchise agreement.

     (h) Purchaser shall have obtained the transfer or the issuance of the Liquor
License or Seller and Purchaser shall have entered into the Interim Arrangement.

The conditions precedent set forth in this Section 5.07 are solely for the benefit of Purchaser and
may be waived only by Purchaser, which waiver may be granted or withheld by Purchaser in its sole
and absolute discretion. Without limiting and without prejudice to any of Purchaser’s other rights
or remedies under this Agreement in the event any such failure of condition is the result of or
arises out of Seller’s default under this Agreement, if any condition precedent to Purchaser’s
obligations under this Agreement has not been satisfied as of the Closing Date or waived by
Purchaser, then Purchaser shall be entitled in its sole and absolute discretion to terminate this
Agreement by giving Seller and Escrow Agent written notice to such effect, whereupon Escrow Agent
shall return the Earnest Money to Purchaser and the parties shall thereafter have no further rights
or liabilities under this Agreement.

     5.08 Conditions Precedent to Seller’s Obligations. Seller’s obligations under this
Agreement are conditioned upon the satisfaction of the following conditions as of the Closing Date:

     (a) Purchaser’s representations and warranties set forth in this Agreement shall
continue to be true and accurate in all material respects.

     (b) Purchaser shall have performed all of its obligations under this Agreement in
all material respects.

     (c) Hilton shall have waived in writing its existing right to purchase the Property
as set forth in the Existing Franchise Agreement and Purchaser shall have either (i)
obtained Hilton’s consent to the
assumption by Purchaser of, and shall have assumed, the Existing Franchise
Agreement, or (ii) entered into a franchise or license agreement with Hilton for the
Hotel, such agreement to be on terms satisfactory to Purchaser.

The conditions precedent set forth in this Section 5.08 are solely for the benefit of Seller and
may be waived only by Seller, which waiver may be granted or withheld by Seller in its sole and
absolute discretion. Without limiting and without prejudice to any of Seller’s other rights or
remedies under this Agreement in the event any such failure of condition is the result of or arises
out of Purchaser’s default under this Agreement, if any condition precedent to Seller’s obligations
under this Agreement has not been satisfied as of the Closing Date or waived by Seller, then Seller
shall be entitled in its sole and absolute discretion to terminate this Agreement by giving
Purchaser and Escrow Agent written notice to such effect, whereupon Escrow Agent shall return the
Earnest Money to Purchaser and the parties shall thereafter have no further rights or liabilities
under this Agreement.

VI.

Remedies

     6.01 Seller’s Remedies IF PURCHASER DEFAULTS UNDER THIS AGREEMENT OR OTHERWISE FAILS
TO CLOSE THE TRANSACTIONS SET FORTH IN THIS AGREEMENT, FOR ANY REASON EXCEPT (A) THE FAILURE OF ANY
CONDITION PRECEDENT TO PURCHASER’S OBLIGATIONS UNDER THIS AGREEMENT OR (B) PURCHASER’S TERMINATION
OF THIS AGREEMENT IN ACCORDANCE WITH ITS TERMS, SELLER SHALL BE ENTITLED AS ITS SOLE REMEDY UNDER
THIS AGREEMENT TO TERMINATE

 

 

THIS AGREEMENT AND RECOVER THE EARNEST MONEY (IN ADDITION TO ATTORNEYS’
FEES PURSUANT TO SECTION 6.03 BELOW) AS LIQUIDATED DAMAGES AND NOT AS A PENALTY, IN FULL
SATISFACTION OF ANY CLAIMS AGAINST PURCHASER UNDER THIS AGREEMENT. IN CONNECTION THEREWITH, SELLER
WAIVES ITS RIGHT TO SEEK SPECIFIC PERFORMANCE OF THIS AGREEMENT FROM PURCHASER. SELLER AND
PURCHASER AGREE THAT THE SELLER’S DAMAGES RESULTING FROM PURCHASER’S DEFAULT ARE DIFFICULT TO
DETERMINE AND THE AMOUNT OF THE EARNEST MONEY IS A FAIR ESTIMATE OF THOSE DAMAGES. EACH PARTY
HEREBY WAIVES ANY AND ALL RIGHTS TO CONTEST THE VALIDITY OF THE FOREGOING LIQUIDATED DAMAGES
PROVISIONS FOR ANY REASON WHATSOEVER, INCLUDING, BUT NOT LIMITED TO, SUCH PROVISION BEING
UNREASONABLE UNDER CIRCUMSTANCES EXISTING ON THE EFFECTIVE DATE OR AT THE TIME OF DEFAULT. THE
PAYMENT OF SUCH AMOUNT AS LIQUIDATED DAMAGES IS NOT INTENDED AS A FORFEITURE OR PENALTY WITHIN THE
MEANING OF CALIFORNIA CIVIL CODE SECTIONS 3275 OR 3369, BUT IS INTENDED TO CONSTITUTE LIQUIDATED
DAMAGES TO SELLER PURSUANT TO CALIFORNIA CIVIL CODE SECTIONS 1671, 1676 AND 1677.

INITIALS:           SELLER                               PURCHASER                    

     6.02 Purchaser’s Remedies. If Seller fails to perform its obligations under this
Agreement for any reason except the failure of any condition precedent to Seller’s obligations
under this Agreement, then Purchaser’s sole remedies shall be: (a) to terminate this Agreement by
giving Seller written notice of such election prior to or at Closing whereupon (i) the Escrow Agent
shall promptly return to Purchaser the Earnest Money and (ii) Seller shall pay to Purchaser on
demand all out-of-pocket costs (including, but not limited to, due diligence costs and reasonable
attorneys’ fees) , incurred by Purchaser in connection with this Agreement and the transactions
contemplated by this Agreement (provided, however, that Seller shall not be required to pay more
than $85,000 pursuant to this clause 6.02(a)(ii)); (b) to waive the default and close; or (c) to
enforce specific performance of this Agreement, provided Purchaser initiates such specific
performance action within 60 days from the scheduled date of closing (as the same may have been
adjusted as permitted by this Agreement).

     6.03 Attorney’s Fees. In the event either party hereto is required to employ an
attorney because of the other party’s default, then the defaulting party shall pay the
nondefaulting party’s reasonable attorney’s fees incurred in the enforcement of this Agreement.

VII.

Closing Matters

     7.01 Closing Date. The delivery of the conveyancing instruments with respect to the
Purchased Assets and other documents required hereunder (the “Closing”) shall be held at the Title
Company’s offices or by mail, or through escrow with the Escrow Agent, on the date forty-five (45)
days after the expiration of the Inspection Period (provided that if such date is not a business
day then the Closing Date shall be the next succeeding business day) (the “Closing Date”), or such
earlier date as may be agreed to by Seller and Purchaser in their sole and absolute discretion.

     7.02 Adjustment and Prorations. The matters and items set forth below shall be
apportioned between Seller and Purchaser or, where applicable, credited in total to a particular
party:

     (a) Taxes. All real and personal property taxes and special assessments,
if any, whether payable in installments or not, shall be prorated as of the Cut-Off
Time. If such taxes for the tax year in which the Closing occurs have not been finally
determined on the Closing Date, then such taxes shall be prorated on an estimated basis
using the most current information available. When such taxes have been finally
determined, the parties shall recalculate such prorations and any amount payable by
Seller or Purchaser shall be paid to the other party within fifteen days after such
taxes are finally determined.

 

 

     (b) Room Rentals. One-half (50%) of the room rentals attributable to the
night prior to the Closing Date shall be the property of Seller and the remaining
one-half (50%) shall be the property of Purchaser. Room rentals attributable to any
night prior to the night prior to the Closing Date shall be the property of Seller.

     (c) Reservation Deposits. Prepaid and unearned reservation deposits and
other items prepaid by guests of the Hotel shall be transferred to Purchaser at the
Closing.

     (d) Utility Charges. Utility charges for telephone, gas, electricity,
sewer, water and other services shall not be prorated to the extent that Seller can make
arrangements for the rendering of final bills based on meter readings as of the Cut-Off
Time. Seller shall be responsible for the payment at the Closing of all bills for
utility charges up to and including the Cut-Off Time. To the extent that utility bills
cannot be rendered as of the Closing Date, such charges for the period through the
Cut-Off Time shall be prorated as of the Cut-Off Time based upon the most recent
available bills and readjusted on the basis of the actual bills as and when received.
Any utility deposits shall be either returned to Seller or transferred to Purchaser and
credited to Seller.

     (e) Operating Expenses and Trade Accounts. Seller shall be responsible for
all operating expenses and trade accounts of the Property (including charges and fees
payable under the Hotel Contracts) up to and including the Cut-Off Time. To the extent
the amounts of such items are then known, Seller shall pay such items at Closing and
shall pay the balance of such amounts in the ordinary course of business but in no event
later than 45 days after the Closing Date. Seller agrees to indemnify and hold
Purchaser harmless for and against any such amounts. Purchaser shall assume
responsibility for purchase orders made by Seller in the ordinary course of business for
Expendables or Consumables not delivered to the Hotel as of the Closing Date.

     (f) Food, Beverage and Other Income. Revenues from food, beverage and
banquet services, room service, public room revenues, health club revenues and other
services rendered to guests of the Hotel shall be prorated as of the Cut-Off Time, if,
as and when collected, provided that with respect to food, beverage and banquet
services, such revenues shall be prorated as of the end of the employee shift on the
night preceding the Closing.

     (g) Rents. All rentals under the Space Leases (including fixed rents and
charges in respect of electricity, operating expenses and taxes) shall be prorated as of
the Cut-Off Time if, as and when collected. Payments from tenants for electricity,
operating expenses and taxes which are billed to tenants in arrears or on an estimated
basis shall be prorated on such basis and readjusted if, as and when such amounts are
finally determined and collected.

     (h) Employees. Wages and fringe benefits (including, but not limited to,
accrued vacation pay) of Hotel Employees shall be paid or prorated as provided in
Section 7.07.

     (i) Security Deposits. Any security deposits under the Space Leases shall
be transferred to Purchaser at the Closing or credited against the Purchase Price.

     (j) Cash. All cash on hand in house banks on the morning of the Closing
Date shall become the property of Purchaser and the amount thereof shall be credited to
Seller.

     (k) Ledger and other receivables. All accounts receivable attributable to
guests in the Hotel on the night preceding the Closing (the “Ledger”) shall be prorated
as provided in this Agreement, Seller’s share shall be credited to Seller and the Ledger
shall become the property of Purchaser. All other accounts receivable that are the
property of Seller under this Agreement shall be set forth in a schedule on the Closing
Date and shall remain the property of Seller. Purchaser shall have no obligation to
collect such accounts receivable, but shall cooperate with Seller, at Seller’s cost, in
reasonable respects in connection

 

 

with any collection efforts. If any receivables which
are the property of Seller under this Agreement shall be collected by Purchaser,
Purchaser shall promptly remit the same to Seller.

     (l) The prepaid expenses paid by Seller set forth on Exhibit H attached hereto
shall be prorated as of the Cut-Off Time and Seller shall receive a credit for the
portion of said expenses which cover periods after the Cut-Off Time.

     7.03 Guest Property in Seller’s Possession on Closing Date. Property of guests of the
Hotel in Seller’s care, possession or control (excluding that in guest rooms) on the Closing Date
shall be handled in the following manner:

     (a) Safe Deposit Boxes. On the Closing Date, Seller shall cause notice to
be sent to all guests of the Hotel who have safe deposit boxes advising them of the
pending sale of the Property and requesting the removal and verification of the contents
of such safe deposit boxes within three days after the Closing Date. Seller may have a
representative present at the Hotel during such three-day period for the purpose of
viewing such removal and verification. Boxes of guests not responding to the written
notice shall be listed at the end of such three day period. Such boxes shall be opened
on the following day in the presence of representatives of Seller and Purchaser to be
agreed upon between Seller and Purchaser and the contents thereof shall be recorded.
Any property contained in the safe deposit boxes and so recorded and thereafter
remaining in the hands of Purchaser shall be the responsibility of Purchaser; and
Purchaser hereby agrees to indemnify and save and hold Seller harmless from and against
any claim or obligation arising out of or with respect to such property.

     (b) Baggage Inventory. All guest baggage checked and left in the
possession, care and control of Seller shall be listed in an inventory to be prepared in
duplicate and signed by Seller’s and Purchaser’s representatives on the Closing Date.
Purchaser shall be responsible from and after the Closing
Date for all baggage listed in inventory, and Purchaser hereby agrees to indemnify
and save and hold Seller harmless from and against any claim arising out of or with
respect to the baggage listed in the inventory.

     (c) Other Property. All other guest property left in the possession, care
or control of Seller prior to the Closing Date shall be returned by Seller to guests
prior to the Closing Date and if not so returned prior to the Closing Date shall be the
sole responsibility of Seller subsequent to the Closing Date.

     7.04 Closing Documents.

     (a) At Closing, Seller shall deliver or cause to be delivered to Purchaser the
following:

     (i) a grant deed (or local equivalent) with covenant against
grantor’s acts conveying the fee estate in the Property to Purchaser
subject only to the Permitted Exceptions.

     (ii) an owner’s policy of title insurance issued by the Title Company
in the amount of the Purchase Price meeting the requirements of the
commitment as provided in Article IV, and containing such affirmative
coverage and endorsements as Purchaser shall reasonably request.

     (iii) a warranty bill of sale transferring to Purchaser all of the
Furnishings, Consumables, Expendables, and other tangible personal property
free of all encumbrances except for the Permitted Exceptions.

     (iv) an assignment conveying and transferring to Purchaser all of the
Bookings, Books and Records, Space Leases, assignable Permits, Hotel
Contracts (to the extent set forth on Exhibit D), Miscellaneous Personal
Property and Warranties containing a provision pursuant to which Seller
shall indemnify Purchaser with respect to matters arising thereunder prior
to the Closing Date.

 

 

     (v) an appropriate instrument executed by Seller and other necessary
parties pursuant to which any existing management agreement will be
terminated as of the Cut-off Time.

     (vi) possession of the Property.

     (vii) a certified copy of such corporate or partnership authorizations,
approvals and incumbencies of Seller as Purchaser or the Title Company shall
reasonably require.

     (viii) a FIRPTA Affidavit in form required by the Internal Revenue
Service.

     (ix) all Books and Records relating to the Property and the Hotel in
Seller’s possession.

     (x) any and all plans and specifications for the Improvements on the
Property in Seller’s possession.

     (xi) the certificate of occupancy with respect to the Property.

     (xii) such notices of the sale to third parties as may be reasonably
requested by the Purchaser.

     (xiii) such affidavits, indemnities and related matters as the Title
Company may reasonably request including without limitation such affidavits
and indemnities as may be required to permit the Title Company to delete any
exceptions for mechanic’s liens.

     (xiv) tax clearance certificates from (i) the California Employment
Development Department, with respect to income tax withholding, disability,
and unemployment compensation premiums, and (ii) the California State Board
of Equalization, with respect to sales taxes.

     (xv) such documents and instruments as may be required or reasonably
desirable under California law to effectuate the Liquor Escrow, all to be in
form reasonably acceptable to Seller and Purchaser.

     (xvi) such transfer and sales tax returns as may be required by law to
be executed by Seller.

     (b) Purchaser shall deliver or cause to be delivered to Seller the following:

     (i) the balance of the Purchase Price.

     (ii) such corporate or partnership authorizations, approvals and
incumbencies as Seller or the Title Company shall reasonably require.

     (iii) an assumption of the obligations of Seller from and after the
Closing under the Bookings, the Space Leases, and Hotel Contracts containing
a provision whereby Purchaser shall indemnify Seller with respect to matters
arising thereunder after the Closing Date.

 

 

     (iv) such documents and instruments as may be required or reasonably
desirable under California law to effectuate the Liquor Escrow, all to be in
form reasonably acceptable to Seller and Purchaser.

     (v) such transfer and sales tax returns as may be required by law to be
executed by Purchaser.

     7.05 Closing Costs.

     (a) Purchaser shall pay (i) the premiums for the Title Policy, (ii) the cost of the
Survey, (iii) the costs of its due diligence investigation of the Purchased Assets, (iv)
all amounts incurred in connection with the issuance of a new franchise agreement or
license agreement for the Hotel, including, but not limited to, application fees,
transfer fees, costs of implementing a property improvement plan and (but without
limiting any of the provisions of Section 5.07(g) above) any termination fees payable to
Hilton under the Existing Franchise Agreement in connection with a termination of the
Existing Franchise Agreement, (v) any costs to obtain the Liquor License, (vi) sales
taxes imposed in connection with any items of personal property, (vii) one-half of the
escrow fees, if any, of the Escrow Agent and (vi) the fees and disbursements of
Purchaser’s attorneys.

     (b) Seller shall pay (i) any county or city transfer taxes, deed stamps, recording
fees and the like imposed in connection with the conveyance of the Property, (ii) any
costs of terminating any property management agreement affecting the Hotel, (iii)
one-half of the escrow fees, if any, of the Escrow Agent and (iv) the fees and
disbursements of Seller’s attorneys in connection with this transaction. Any other
closing cost not specifically allocated by this Agreement shall be allocated in
accordance with closing customs for similar properties in Contra Costa County,
California.

     (c) The provisions of this Section 7.05 shall survive the Closing or any
termination of this Agreement.

     7.06 Real Estate Commissions. Seller and Purchaser each represent and warrant to the
other that it has not dealt with any broker in the negotiation of this transaction. Each party
agrees to and does hereby indemnify and hold the other harmless against the payment of any
brokerage commission to any person or entity claiming by, through or under Seller or Purchaser, as
applicable.

     7.07 Staff. Seller shall terminate or arrange for the termination of all Hotel
Employees as of the Closing Date and shall pay all wages and fringe benefits, including, but not
limited to, accrued vacation and payroll taxes, through the Closing Date. Purchaser shall hire,
subject to its standard interview and qualification procedures, criteria and staffing guidelines,
the Hotel Employees employed in non-managerial capacities, which such Hotel Employees shall at or
in connection with the Closing be offered the standard health and fringe benefit package provided
by Interstate Management Company, as operator of the Hotel after the Closing, to the majority of
its other hotel employees in the area of the Hotel. If Purchaser or its management company shall
rehire any of such Hotel Employees pursuant to the foregoing sentence or otherwise, then such wages
and fringe benefits shall be apportioned as of the Cut-off Time. Seller will indemnify and hold
Purchaser harmless from and against any loss, damage, liability, claim, cost or expense (including,
without limitation, reasonable attorney’s fees) that may be incurred by, or asserted against,
Purchaser after Closing which involves any matter relating to a past or present Hotel Employee
concerning acts or omissions occurring prior to the Closing Date. Notwithstanding the foregoing,
Purchaser agrees to indemnify and hold Seller harmless from and against any loss, damage,
liability, claim, cost or expense (including, without limitation, reasonable attorney’s fees) that
may be incurred by, or asserted against, Seller arising out of or relating to Purchaser’s or
Seller’s failure, if any, to comply with the Worker Adjustment Retraining and Notification Act (the
“WARN Act”) with respect to the Hotel Employees and arising out of or in connection with the
transactions contemplated by this Agreement. Seller agrees not to give any termination notices
under the WARN Act to its Hotel Employees without the prior written consent of Purchaser, which
consent may be withheld in Purchaser’s sole and absolute discretion.

 

 

     7.08 Indemnities. (a) Purchaser shall indemnify, defend and hold Seller
harmless from any and all actual costs, loss, damages (excluding consequential and punitive
damages) or expenses (including without limitation reasonable attorneys fees) incurred by Seller
with respect to the breach by Purchaser of any provision of this Agreement which survives the
Closing and, except as may be the obligation of Seller pursuant to an express provision of this
Agreement, the existence, use, ownership, occupancy, operation and/or maintenance of the Property
arising from acts, commissions, omissions, occurrences or other matters that occur from and after
the Closing.

     (b) From and after the Closing, Seller shall indemnify, defend and hold Purchaser harmless
from any and all actual costs, loss, damages or expenses (including without limitation reasonable
attorneys fees) incurred by or asserted against Purchaser with respect to or arising out of (i)
any amounts due and owing to Purchaser pursuant to Section 7.02 above, (ii) any physical injury or
death caused to any person, or damage to property of unaffiliated third parties, which such injury,
death or damage occurred prior to the Closing Date in or about the Property, (iii) (subject to the
applicable limitations on Seller’s liability set forth in Section 5.04(a) above, including without
limitation the Cap, any breach of any representation or warranty of Seller set forth in this
Agreement, and/or (iv) any litigation arising with respect to matters or occurrences on or
affecting the Real Property, which first arose, occurred or were asserted or threatened prior to
the Closing Date, including without limitation those matters set forth on Exhibit J attached
hereto. The provisions of this Section shall survive the Closing.

     7.09 Survival. The provisions of Article VII shall survive the Closing.

VIII.

Condemnation and Risk of Loss

     8.01 Condemnation. If, prior to Closing, any governmental authority or other entity
having condemnation authority shall institute an eminent domain proceeding or take any steps
preliminary thereto (including the giving of any direct or indirect notice of intent to institute
such proceedings) with regard to the Property, and the same is not dismissed on or before ten (10)
days prior to Closing, Purchaser shall be entitled either to terminate this Agreement upon written
notice to Seller or to waive such right of termination and receive all such condemnation proceeds
or an assignment thereof at the Closing. In the event Purchaser elects to terminate this Agreement
under this Section 8.01, Escrow Agent shall promptly return to Purchaser the Earnest Money and
neither party to this Agreement shall thereafter have any further rights or obligations hereunder.

     8.02 Risk of Loss. Until Closing, Seller shall bear the risk of loss should there be
damage to any of the Improvements by fire or other casualty. If prior to the Closing any of the
improvements shall be damaged by fire or other casualty, Seller shall take all action necessary to
preserve and protect the Improvements from further loss or damage, and within ten (10) business
days after such loss deliver to Purchaser the following items (collectively “Casualty Loss
Information”): (a) copies of all casualty and business interruption policies relating to the
Property; (b) the names, addresses and telephone numbers of the adjustors assigned to adjust the
loss; (c) letters addressed to each insurance company issuing a policy covering such loss and
executed by Seller authorizing said company and its adjustors to discuss all matters relating to
such loss with purchaser, its agents and attorneys; and (d) a detailed written description of the
damages incurred and an estimate of the cost of restoration. If the Improvements suffer material
damage by a casualty, which, for the purpose of this Agreement, shall mean damage in excess of
$1,000,000 or damage of a lesser amount to any area of the Hotel necessary for the day to day
operation of the Hotel that cannot reasonably be expected to be repaired within ten business days,
Purchaser may within five business days after delivery of the Casualty Loss Information either:

     (a) terminate this Agreement by delivering written notice of same to Seller, in
which event Escrow Agent shall promptly return to Purchaser the Earnest Money and
neither party to this Agreement shall thereafter have any further rights or obligations
hereunder; or

 

 

     (b) waive its right of termination, by delivering written notice of same to Seller,
and proceed to close this transaction in accordance with the terms hereof.

At Closing, (i) all insurance proceeds received prior to Closing shall be delivered to
Purchaser at Closing, (ii) Purchaser and Seller shall each notify all appropriate
insurance companies of Purchaser’s interest in the insurance proceeds, (iii) all casualty
insurance proceeds payable as a result of the loss and Purchaser’s pro rata share of any rental or
business loss proceeds shall be assigned to Purchaser at Closing and Purchaser as a condition
precedent to its obligations to close hereunder in such event shall have received the written
recognition of and consent to such assignment (as well as to any assignment of such proceeds from
Purchaser to Purchaser’s lender), from the applicable insurance company or companies, in form
and content reasonably acceptable to Purchaser and acceptable to Purchaser’s lender, and
(iv) Purchaser shall receive a credit against the Purchase Price in the amount of any
applicable deductible or self-insured amounts.

IX.

Miscellaneous

     9.01 Entire Agreement. This Agreement contains the entire agreement of the parties hereto. There are no other
agreements, oral or written, and this Agreement can be amended only by written agreement signed by
Seller and Purchaser.

     9.02 Binding Effect; Assignment. This Agreement shall inure to the benefit of and be
binding upon the heirs, personal representatives, successors and assigns of each of the parties to
this Agreement. Purchaser may assign its rights under this Agreement without Seller’s consent to
(i) any successor of Purchaser or its direct or indirect parent entity or entities by merger,
reorganization or sale of assets; (ii) any entity directly or indirectly controlling, controlled by
or under common control with Purchaser or such successor or entity, (iii) any partnership or
limited liability company in which Purchaser or Interstate Operating Company, L.P. (“Interstate
OP”), or any entity directly or indirectly controlling, controlled by or under common control with
Purchaser or Interstate OP, is a partner or limited liability company member, (iv) any entity in
which Purchaser, or any entity which is a permitted assignee under any of the foregoing clauses
(i), (ii) or (iii), owns, directly or indirectly, an economic interest, or (v) any other entity
provided that such entity enters into (x) a sublease of the entire Property with an entity to whom
this Agreement could have been assigned under clauses (i), (ii) or (iii) above and/or (y) a
management agreement with respect to the entire Property with Interstate Management Company, LLC or
its successors or assigns; provided, however, that no such assignment shall relieve Purchaser of
its obligations hereunder. Except as set forth in the foregoing sentence, Purchaser may assign its
rights under this Agreement to any other entity only with the prior consent of Seller which shall
not be unreasonably withheld or delayed.

     9.03 Notices. Any notice, communication, request, reply or advice (collectively,
“Notice”) provided for or permitted by this Agreement to be made or accepted by either party must
be in writing except as otherwise provided in this Agreement. Written Notice shall be delivered by
overnight courier or by facsimile transmission. Notice by overnight courier shall be effective one
(1) business day after deposit with the courier service. Notice given by facsimile transmission
shall be effective on the business date delivered. For the purposes of Notice, the addresses of
the parties shall be:

 

 

	 	 	 	 	 	 	 	 	 
	 	 	Seller:	 	Hanford Hotels, LLC	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Attention:	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	with copy to:	 	Greenberg Traurig, LLP	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Attn:	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	Fax No.:	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	Purchaser:	 	4501 N. Fairfax Boulevard	 	 
	 	 	 	 	Arlington, VA 22203	 	 
	 	 	 	 	Attn: Christopher H. Bennett, Esq.	 	 
	 	 	 	 	Fax No.: 703-387-3389	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	with copy to:	 	DeCampo, Diamond & Ash	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Attn:	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	Fax No.:	 	 	 	 
	 

	 	 	 	 	 	 	 	 

The parties shall have the right from time to time to change their respective addresses for notice
by at least five days’ written notice to the other party.

     9.04 Governing Law. This Agreement shall be construed in accordance with the laws of the State of California.

     9.05 Section Headings. The section headings contained in this Agreement are for
convenience only and shall in no way enlarge or limit the scope or meaning of the various and
several sections of this Agreement.

     9.06 Obligations. To the extent necessary to carry out the terms and provisions of
this Agreement, the terms, conditions, warranties, representations, obligations, indemnities and
rights set forth in this Agreement shall not be terminated at the time of Closing, nor will they
merge into the various documents executed and delivered at the time of Closing.

     9.07 Counterparts; Facsimile Transmission. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original but all of which together shall
constitute one and the same instrument. Executed counterparts of this Agreement exchanged by
facsimile transmission shall be fully enforceable.

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

     9.09 Contract Construction. In the event of litigation between the parties hereto this
Agreement shall not be construed against any party on the basis of which party’s counsel drafted
this Agreement.

     9.10 Saturdays, Sundays, Legal Holidays. If the time period by which any right,
option, or election provided under this Agreement must be exercised or by which any acts or
payments required hereunder must be performed or paid, or by which the Closing must be held,
expires on a Saturday, Sunday, legal or bank holiday, then such time period shall be automatically
extended to the next regularly scheduled business day.

 

 

9.11 Confidentiality.

     (a) Purchaser and Seller agree that any materials provided by Seller in the course
of Purchaser’s investigations of the Property, other than materials which are otherwise
available to the public, shall be treated as confidential information by Purchaser and
its agents, employees and representatives, and shall not be disclosed by Purchaser or
such parties, except disclosures required by law to be made to Purchaser’s lenders (or
prospective lenders), investors (or prospective investors), underwriters, accountants,
attorneys, engineers and other professionals who need to know such information in
connection with making a loan to, sponsoring an offering for or otherwise advising
Purchaser, or as may be required by law, litigation or court order, or in connection
with the offering of securities or by any applicable rule, regulation or requirement of
the New York Stock Exchange. Purchaser may however make appropriate disclosures to its
investors and lenders and to its and their respective attorneys, accountants and
consultants engaged in connection with this transaction or to such other persons or
entities to which disclosure is legally required.

     (b) If Purchaser does not acquire the Property for any reason whatsoever, Purchaser
shall deliver to Seller promptly upon demand at no cost to Seller, all materials and
documents previously obtained by Purchaser from Seller (with no retention by Purchaser
of copies of any such materials and documents).

     (c) Prior to the Closing, neither party shall, without the prior written consent of
the other party (which consent shall not be unreasonably withheld), issue any press
release or other public statement (except such statements as may be required by law) in
connection with the transactions contemplated hereby. From and after the Closing, the
parties may issue such a press release or other public statement provided that the same
does not describe the economic terms of this transaction except to the extent required
by law.

     (d) Each party is authorized to disclose the tax treatment and tax structure of the
transactions set forth in this Agreement.

     (e) Notwithstanding any provision in this Agreement to the contrary, this Section
shall survive the expiration or termination of this Agreement for one (1) year or, if
the Closing shall occur, shall expire and terminate as of the Closing Date except for
the provisions of Section 9.11(c) and (d) above, which shall survive the Closing.

     9.12 Bulk Transfers. Purchaser and Seller specifically waive compliance with
California Uniform Commercial Code, Sections 6101, et seq., commonly referred to as the Uniform
Commercial Code — Bulk Transfers, with any similar provision under the laws of the State of
California and with any similar provisions under the in which the Property is located. In the
event that such waiver is ineffective, Seller shall indemnify Buyer for any claims made by
creditors under the applicable bulk sales laws relating solely to any pre-Closing payment
obligations to such creditors and only in the amount of the payments due such creditors. The
provisions of this Section 9.12 shall survive the Closing.

     IN WITNESS WHEREOF, Seller and Purchaser have executed this Agreement as of the date first
written above.

	 	 	 	 	 	 	 
	SELLER:
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	HANFORD HOTELS, INC., a California limited liability company	 	 
	 
	 	 	 	 	 	 
	By:
	 	/s/  WILLIAM A. CAINE, JR.	 	 	 	 
	 

	 	 	 	 	 	 
	Name:
	 	William A. Caine, Jr.	 	 	 	 
	Title:
	 	Executive Vice President	 	 	 	 

	 	 	 	 	 
	PURCHASER:
	 
	 	 	 	 
	INTERSTATE CONCORD, LLC, a Delaware limited liability company
	 
	 	 	 	 
	By:
	 	/s/  CHRISTOPHER L.
BENNETT	 
	 

	 	 	 
	Name:
	 	Christopher L. Bennett	 	 
	Title:
	 	Senior Vice President and General
Counsel

 

 

FIRST
AMENDMENT TO AGREEMENT OF SALE AND PURCHASE

     THIS
FIRST AGREEMENT TO AGREEMENT OF SALE AND PURCHASE (this “Amendment”), dated as of
December 27, 2004 (the “Effective Date”), is made by and between HANFORD HOTELS, LLC, a
California limited liability company, having an address at 4 Corporate Plaza Drive, Suite
102, Newport Beach, CA 92660 (“Seller”), and INTERSTATE CONCORD, LLC, a Delaware limited
liability company having an address c/o Interstate Hotels & Resorts, Inc., 4501 N. Fairfax
Drive, Arlington, VA 22203 (“Purchaser”).

     WHEREAS, Seller and Purchaser have entered into that certain Agreement of Sale and
Purchase (the “Purchase Agreement”), dated as of November 12, 2004, with respect to certain
property more particularly set forth therein;

     WHEREAS, the Inspection Period (as defined in the Purchase Agreement) is to terminate on
December 27, 2004;

     WHEREAS, Purchaser is satisfied with (i) the physical and environmental condition of the
Property as of the date hereof, (ii) the zoning of the Property as of the date hereof, (iii)
the Hotel Contracts set forth on Exhibit D of the Purchase Agreement (as revised pursuant to a
spreadsheet attached to an e-mail from William Caine to C,A. Anderson dated November 18, 2004)
and (iv) the Permits set forth on Exhibit E of the Purchase Agreement;

     WHEREAS, Purchaser among other things (1) has not yet obtained financing for the
transactions set forth in the Purchase Agreement on terms satisfactory to Purchaser, (2) has
not yet agreed with Hilton (as defined in the Purchase Agreement) on a product improvement
plan for the Property, and (3) has not finalized its announced Interstate Investors Fund, Inc.
or had a first closing thereof, and for those and other reasons will terminate the Purchase
Agreement on or prior to December 27, 2004 if the Inspection Period is not extended; and

     WHEREAS, Seller is willing to extend the Inspection Period for the Extension Payment as
provided herein; and

     WHEREAS, Purchaser and Seller now desire to amend the Purchase Agreement on the terms and
conditions more particularly set forth herein;

     NOW, THEREFORE, in consideration of Ten Dollars ($10.00) and other good and
valuable consideration, and the payment by Purchaser of the Extension Payment (as
defined below), the receipt and sufficiency of which are hereby acknowledged, Seller
and Purchaser hereby amend the Purchase Agreement as follows:

     1. In consideration of the Extension Payment, the Inspection Period (as such term is
defined in the Purchase Agreement; any capitalized term used herein and not otherwise
defined
herein having the meaning given to such term in the Purchase Agreement) is hereby
extended
through the close of business on January 24, 2005,

     2, Section 7,01 of the Purchase Agreement is deleted in its entirety and the
following Section 7.01 substituted therefore:

     “7.01 Closing Date, The delivery of the conveyancing instruments with respect to
the Purchased Assets and other documents required hereunder (the “Closing”) shall be
held at the Title Company’s offices or by mail, or through escrow with the

 

 

Escrow Agent, on the date seventeen (17) days after the expiration of the Inspection
Period (provided that if such date is not a business day then the Closing Date shall be the
next succeeding business day) (the “Closing Date”), or such earlier date as may be agreed to
by Seller and Purchaser in their sole and absolute discretion.

     3. Within one (1) business day after the date hereof, Purchaser shall pay to Seller an
amount (the “Extension Payment”) equal to Two Hundred Thousand Dollars ($200,000) in
consideration of such extension of the Inspection Period. In the event that the Closing
occurs,
such amount shall be credited against the Purchase Price payable under the Agreement. In the
event the Closing fails to occur due to the default of Seller under the Agreement, Seller
shall
repay the Extension Deposit to Purchaser within five (5) days after demand therefore by
Purchaser. Otherwise, the Extension Payment shall belong to Seller.

     4. The phrase “within five (5) business days” on the sixth line of Section 4.02 of the
Purchase Agreement is hereby deleted and replaced with the phrase “within fifteen (15)
business
days”.

     5. Nothing set forth in this Amendment shall limit or be construed to limit
Purchaser’s rights under Sections 5.06 (as amended only by Paragraph 1 above extending the
Inspection Period through January 24,2005) or 5.07 of the Purchase Agreement.

     6 Except as amended by this Amendment, the Purchase Agreement is unamended and remains
in full force and effect.

     7. This Amendment may be executed and delivered by counterparts and by facsimile
transmission.

     IN WITNESS WHEREOF, this Amendment has been entered into as of the ____ day of December, 2004.

SELLER:

HANFORD HOTELS, INC., a California limited liability company

	 	 	 	 	 
	By:

	 	/s/ WILLIAM A. CAINE, JR.
 

	 	 
	Name:

	 	William A. Caine, Jr.	 	 
	Title:

	 	Executive Vice President	 	 

PURCHASER:

INTERSTATE CONCORD, LLC, a Delaware limited liability company

	 	 	 	 	 
	By:

	 	/s/ ALICIA KABIRI
 

	 	 
	Name:

	 	Alicia Kabiri	 	 
	Title:

	 	Assistant General Counsel	 	 

 

 

SECOND AMENDMENT TO AGREEMENT OF SALE AND PURCHASE

     THIS SECOND AGREEMENT TO AGREEMENT OF SALE AND PURCHASE (this “Amendment”), dated
as of January 21, 2005 (the “Effective Date”), is made by and between HANFORD HOTELS,
LLC, a California limited liability company, having an address at 4 Corporate Plaza
Drive, Suite 102, Newport Beach, CA 92660 (“Seller”), INTERSTATE CONCORD, LLC, a
Delaware limited liability company having an address c/o Interstate Hotels & Resorts,
Inc., 4501 N. Fairfax Drive, Arlington, VA 22203 (“Purchaser”).

     WHEREAS, Seller and Purchaser have entered into that certain Agreement of Sale and
Purchase (as amended by the First Amendment (as hereinafter defined), the “Amended
Purchase Agreement”), dated as of November 12, 2004, as amended by that certain First
Amendment to Agreement of Sale and Purchase (the “First Amendment”) dated as of December
27, 2004 with respect to certain property more particularly set forth therein;

     WHEREAS, the Inspection Period (as such term is defined in the Amended Purchase
Agreement; any capitalized term used herein and not otherwise defined herein having the
meaning given to such term in the Amended Purchase Agreement) is to
terminate on January 24,
2004;

     WHEREAS, Purchaser is satisfied with, (i) the physical and environmental
condition of the Property as of the date hereof, (ii) the zoning of the Property as of the date
hereof, (iii) the Hotel Contracts set forth on Exhibit D of the Amended Purchase Agreement (as
revised pursuant to a spreadsheet attached to an e-mail from William Caine to C.A. Anderson dated
November 18, 2004), (iv) the Permits set forth on Exhibit E of the Amended Purchase Agreement;
and (v) has agreed with Hilton on a product improvement plan for
the property;

     WHEREAS, Purchaser among other things (1) has not yet obtained financing for
the transactions set forth in the Amended Purchase Agreement on terms satisfactory to
Purchaser, (2) has not finalized the announced Interstate Investors Fund, Inc. or had a
first closing thereof, and for those and other reasons will terminate the Amended
Purchase Agreement on or prior to January 24, 2004 if the Inspection Period is not further
extended; and

     WHEREAS, Seller is willing to further extend the Inspection Period for the
Second Extension Payment (as defined below) as provided herein; and

     WHEREAS, Purchaser and Seller now desire to further amend the Amended Purchase
Agreement on the terms and conditions more particularly set forth herein;

     NOW,
THEREFORE, in consideration of Ten Dollars ($10.00) and other good and
valuable consideration, and the payment by Purchaser of the Second Extension Payment,
the receipt and sufficiency of which are hereby acknowledged, Seller and

 

 

Purchaser hereby amend the Amended Purchase Agreement as follows:

     1. In consideration of the Second Extension Payment, the Inspection Period is hereby
further extended through the close of business on January 28,
2005.

     2. Section 7.01
of the Amended Purchase Agreement is deleted in its entircty and the following Section 7.01 substituted therefore:

     “7.01 Closing Date. The delivery of the conveyancing instruments with respect to the
Purchased Assets and other documents required hereunder (the “Closing”) shall be held at
the Title Company’s offices or by mail, or through escrow with the Escrow Agent, on the
date thirteen (13) days after the expiration of the Inspection Period (provided that if
such date is not a business day then the Closing Date shall be the next succeeding
business day) (the “Closing Date”), or such earlier date as may be agreed to by Seller and
Purchaser in their sole and absolute discretion.

     3. Within one (1) business day after the date hereof, Purchaser shall pay to Seller an
amount (the “Second Extension Payment”) equal to One
Hundred Thousand Dollars ($100,000) in
consideration of such extension of the Inspection Period. In the event that the Closing occurs,
such amount shall be credited against the Purchase Price payable under the Amended Purchase
Agreement. In the event the Closing fails to occur due to the default of Seller under the Amended
Purchase Agreement, Seller shall repay the Second Extension Deposit to Purchaser within five (5)
days after demand therefore by Purchaser. Otherwise, the Second Extension Payment shall belong to
Seller.

     4. Nothing set forth in this Amendment shall limit or be construed to limit
Purchaser’s rights under Sections 5.06 (as amended only by Paragraph 1 of the First
Amendment and by Paragraph 1 above extending the Inspection Period through January
28, 2005) or 5.07 of the Amended Purchase Agreement.

     5. Except as amended by this Amendment, the Amended Purchase
Agreement is unamended and remains in full force and effect.

 

 

     6. This Amendment may be executed and delivered by counterparts and by
facsimile transmission,

     IN WITNESS WHEREOF, this Amendment has been entered into as of the 20th day of January, 2004.

SELLER:

HANFORD HOTELS, INC., a California limited liability company

	 	 	 	 	 
	By:

	 	/s/ WILLIAM A. CAINE, JR.
 

	 	 
	Name:

	 	William A. Caine, Jr.	 	 
	Title:

	 	Executive Vice President	 	 

PURCHASER:

INTERSTATE CONCORD LLC., a Delaware limited liability company

	 	 	 	 	 
	By:

	 	/s/ CHRISTOPHER L. BENNETT
 

	 	 
	Name:

	 	Christopher L. Bennett	 	 
	Title:

	 	Senior Vice President and General Counsel

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00108-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00108-of-00352.parquet"}]]