Document:

exv10w4

Exhibit 10.4

AGREEMENT OF PURCHASE

AND SALE

dated as of June 17, 2010

between

HOLTSVILLE HOTEL GROUP LLC,

a Delaware limited liability company

and

FB HOLTSVILLE UTILITY LLC,

a Delaware limited liability company

as Seller,

and

CHATHAM HOLTSVILLE RI LLC,

a Delaware limited liability company

as Purchaser

Residence Inn Long Island Holtsville

Holtsville, New York

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	 	 	Page No.	 
	ARTICLE 1 DEFINITIONS; RULES OF CONSTRUCTION
	 	 	1	 
	 
	 	 	 	 
	1.1 Definitions
	 	 	1	 
	1.2 Rules of Construction
	 	 	7	 
	 
	 	 	 	 
	ARTICLE 2 PURCHASE AND SALE; DEPOSIT; PAYMENT OF PURCHASE PRICE
	 	 	7	 
	 
	 	 	 	 
	2.1 Purchase and Sale
	 	 	7	 
	2.2 Deposit
	 	 	7	 
	2.3 Study Period
	 	 	7	 
	2.4 Payment of Purchase Price
	 	 	11	 
	 
	 	 	 	 
	ARTICLE 3 SELLER’S REPRESENTATIONS, WARRANTIES AND COVENANTS
	 	 	11	 
	 
	 	 	 	 
	3.1 Organization and Power
	 	 	11	 
	3.2 Authorization and Execution
	 	 	11	 
	3.3 Noncontravention
	 	 	12	 
	3.4 No Special Taxes
	 	 	12	 
	3.5 Compliance with Existing Laws
	 	 	12	 
	3.6 Operative Agreements and Utility Operative Agreements
	 	 	12	 
	3.7 Warranties and Guaranties
	 	 	13	 
	3.8 Insurance
	 	 	13	 
	3.9 Condemnation Proceedings; Roadways
	 	 	14	 
	3.10 Litigation
	 	 	14	 
	3.11 Labor Disputes and Agreements
	 	 	14	 
	3.12 Operation of Property and Utility Property
	 	 	14	 
	3.13 Personal Property
	 	 	15	 
	3.14 Bankruptcy
	 	 	15	 
	3.15 Sewage Facilities
	 	 	15	 
	3.16 Intentionally Deleted
	 	 	15	 
	3.17 Hazardous Substances
	 	 	15	 
	3.18 Intentionally Deleted
	 	 	15	 
	3.19 Independent Audit
	 	 	15	 
	3.20 Bulk Sale Compliance
	 	 	15	 
	3.21 Liquor License
	 	 	15	 
	3.22 Holtsville Utility Ground Lease
	 	 	16	 
	3.23 Holtsville Retail Ground Lease
	 	 	16	 
	3.24 Reciprocal Easement Agreement
	 	 	16	 
	3.25 Money Laundering
	 	 	16	 
	 
	 	 	 	 
	ARTICLE 4 PURCHASER’S REPRESENTATIONS, WARRANTIES AND COVENANTS
	 	 	18	 
	 
	 	 	 	 
	4.1 Organization and Power
	 	 	18	 

ii

 

	 	 	 	 	 
	 	 	Page No.	 
	4.2 Authorization and Execution
	 	 	19	 
	4.3 Noncontravention
	 	 	19	 
	4.4 Litigation
	 	 	19	 
	4.5 Bankruptcy
	 	 	19	 
	4.6 Money Laundering
	 	 	19	 
	 
	 	 	 	 
	ARTICLE 5 CONDITIONS AND ADDITIONAL COVENANTS
	 	 	20	 
	 
	 	 	 	 
	5.1 Conditions to Purchaser’s Obligations
	 	 	20	 
	5.2 Conditions to Seller’s Obligations
	 	 	21	 
	 
	 	 	 	 
	ARTICLE 6 CLOSING
	 	 	21	 
	 
	 	 	 	 
	6.1 Closing
	 	 	21	 
	6.2 Seller’s Deliveries
	 	 	21	 
	6.3 Purchaser’s Deliveries
	 	 	23	 
	6.4 Closing Costs
	 	 	24	 
	6.5 Income and Expense Allocations
	 	 	24	 
	6.6 Guest Property
	 	 	26	 
	 
	 	 	 	 
	ARTICLE 7 CONDEMNATION; RISK OF LOSS
	 	 	26	 
	 
	 	 	 	 
	7.1 Condemnation
	 	 	26	 
	7.2 Risk of Loss
	 	 	27	 
	 
	 	 	 	 
	ARTICLE 8 LIABILITY OF PURCHASER; LIABILITY OF SELLER; TERMINATION RIGHTS
	 	 	27	 
	 
	 	 	 	 
	8.1 Liability of Purchaser and Seller
	 	 	27	 
	8.2 Intentionally Deleted
	 	 	27	 
	8.3 Indemnification by Purchaser
	 	 	27	 
	8.4 Termination by Purchaser
	 	 	27	 
	8.5 Termination by Seller
	 	 	28	 
	 
	 	 	 	 
	ARTICLE 9 “AS-IS” SALE
	 	 	28	 
	 
	 	 	 	 
	ARTICLE 10 MISCELLANEOUS PROVISIONS
	 	 	28	 
	 
	 	 	 	 
	10.1 Completeness; Modification
	 	 	28	 
	10.2 Assignments
	 	 	29	 
	10.3 Successors and Assigns
	 	 	29	 
	10.4 Days
	 	 	29	 
	10.5 Governing Law
	 	 	29	 
	10.6 Counterparts
	 	 	29	 
	10.7 Severability
	 	 	29	 
	10.8 Costs
	 	 	30	 
	10.9 Notices
	 	 	30	 
	10.10 Incorporation by Reference
	 	 	31	 
	10.11 Further Assurances
	 	 	31	 
	10.12 No Partnership
	 	 	31	 
	10.13 Time of Essence
	 	 	31	 
	10.14 Confidentiality
	 	 	31	 

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	 	 	Page No.	 
	10.15 No Third-Party Beneficiary
	 	 	32	 
	10.16 Waiver of Jury Trial
	 	 	32	 
	10.17 Exculpation
	 	 	32	 
	10.18 Title Company
	 	 	32	 
	10.19 Prevailing Party
	 	 	34	 
	10.20 [Intentionally Deleted]
	 	 	34	 
	10.21 Brokerage
	 	 	34	 
	10.22 Exchange Provisions
	 	 	35	 
	10.23 No Recording
	 	 	35	 
	10.24 No Continued Marketing of the Hotel for Sale
	 	 	35	 
	 
	 	 	 	 
	LIST OF EXHIBITS
	 	 	 	 
	 
	 	 	 	 
	Exhibit A — Seller and Property
	 	 	 	 
	Exhibit B — Legal Descriptions of Land
	 	 	 	 
	Exhibit C — Insurance Policies
	 	 	 	 
	Exhibit D — Operative Agreements
	 	 	 	 
	Exhibit E — Existing Warranties and Guaranties
	 	 	 	 
	Exhibit F — Form of Assignment and Assumption Agreement (Operative Agreements)
	 	 	 	 
	Exhibit G — Form of Assignment and Assumption Agreement (Ground Leases)
	 	 	 	 
	Exhibit H — Form of Bill of Sale (Inventory)
	 	 	 	 
	Exhibit I — Form of Bill of Sale (Personal Property)
	 	 	 	 
	Exhibit J — Form of Deed
	 	 	 	 
	Exhibit K — Permitted Exceptions
	 	 	 	 
	Exhibit L — Wiring Instructions
	 	 	 	 
	Exhibit M — Form of Representative Letter
	 	 	 	 
	Exhibit N — Form of Utility Assignment Assumption Agreement (Utility Operative Agreements)
	 	 	 	 
	Exhibit O — Form of Utility Assignment Assumption Agreement (Utility Ground Lease)
	 	 	 	 
	Exhibit P —  Form of Utility Bill of Sale
	 	 	 	 
	Exhibit Q — Form of Utility Deed
	 	 	 	 
	Exhibit R — Utility Insurance Policies
	 	 	 	 
	Exhibit S — Utility Operative Agreements
	 	 	 	 
	Exhibit T — Term Sheet for Ground Lease Amendment
	 	 	 	 
	Exhibit U — Term Sheet for Three Party Agreement
	 	 	 	 

iv

 

AGREEMENT OF PURCHASE AND SALE

THIS AGREEMENT OF PURCHASE AND SALE (“Agreement”), dated as of the 17th day of June, 2010,
between HOLTSVILLE HOTEL GROUP LLC, a Delaware limited liability company (the “Hotel
Seller”) FB HOLTSVILLE UTILITY LLC, a Delaware limited liability company (the “Utility
Seller” and, together with the Hotel Seller, the “Seller”), and CHATHAM HOLTSVILLE RI
LLC, a Delaware limited liability company (the “Purchaser”), provides:

ARTICLE 1

DEFINITIONS; RULES OF CONSTRUCTION

     1.1 Definitions.

     The following terms shall have the indicated meanings:

     “Act of Bankruptcy” means if a party hereto shall (a) apply for or consent to the
appointment of, or the taking of possession by, a receiver, custodian, trustee or liquidator of
itself or of all or a substantial part of its Property, (b) admit in writing its inability to pay
its debts as they become due, (c) make a general assignment for the benefit of its creditors, (d)
file a voluntary petition or commence a voluntary case or proceeding under the Federal Bankruptcy
Code (as now or hereafter in effect), (e) be adjudicated a bankrupt or insolvent, (f) file a
petition seeking to take advantage of any other law relating to bankruptcy, insolvency,
reorganization, winding-up or composition or adjustment of debts, (g) fail to controvert in a
timely and appropriate manner, or acquiesce in writing to, any petition filed against it in an
involuntary case or proceeding under the Federal Bankruptcy Code (as now or hereafter in effect),
or (h) take any limited liability company, trust or corporate action for the purpose of effecting
any of the foregoing; or if a proceeding or case shall be commenced, without the application or
consent of a party hereto, in any court of competent jurisdiction seeking (1) the liquidation,
reorganization, dissolution or winding-up, or the composition or readjustment of debts, of such
party, (2) the appointment of a receiver, custodian, trustee or liquidator of such party or all or
any substantial part of its assets, or (3) other similar relief under any law relating to
bankruptcy, insolvency, reorganization, winding-up or composition or adjustment of debts, and such
proceeding or case shall continue undismissed; or an order (including an order for relief entered
in an involuntary case under the Federal Bankruptcy Code, as now or hereafter in effect) judgment
or decree approving or ordering any of the foregoing shall be entered and continue unstayed and in
effect, for a period of sixty (60) consecutive days.

     “Additional Deposit” has the meaning set forth in Section 2.2.

     “Agreement” has the meaning set forth in the Preamble hereto.

     “Assignment and Assumption Agreement (Operative Agreements)” means the assignment and
assumption agreement whereby the Hotel Seller assigns and the Purchaser’s Hotel Lessee assumes the
Operative Agreements, in the form annexed hereto as Exhibit F.

     “Assignment and Assumption Agreement (Ground Leases)” means the assignment and
assumption agreement whereby the Hotel Seller assigns and Purchaser assumes the lessor’s

 

 

interest in the Holtsville Retail Ground Lease and the Holtsville Utility Ground Lease, in the
form annexed hereto as Exhibit G.

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

     “Bill of Sale (Inventory)” means the bill of sale conveying title to the Inventory to
the Purchaser’s Hotel Lessee, in the form annexed hereto as Exhibit H.

     “Bill of Sale (Personal Property)” means the bill of sale conveying title to the
Tangible Personal Property, and the Intangible Personal Property, to the extent assignable, from
the Hotel Seller to the Purchaser, in the form annexed hereto as Exhibit I.

     “Closing” means a consummation of a purchase and sale of the Property and the Utility
Property pursuant to this Agreement.

     “Closing Date” means the date on which a Closing occurs, but in no event later than
the dates identified in Section 6.1.

     “Commission” has the meaning set forth in Section 3.19.

     “Deed” means a bargain and sale deed [with] covenants against grantor’s acts conveying
title to the Real Property from the Hotel Seller to the Purchaser, subject only to Permitted Title
Exceptions, taxes not yet due and payable and matters identified by the Survey, in the form
attached hereto as Exhibit J.

     “Deposit” has the meaning set forth in Section 2.2.

     “Executive Order” has the meaning set forth in Section 3.25.

     “FIRPTA Certificate” means the affidavit of the Hotel Seller, pursuant to Section 1445
of the Internal Revenue Code, certifying that the Hotel Seller is not a foreign corporation,
foreign partnership, foreign trust, foreign estate or foreign person (as those terms are defined in
the Internal Revenue Code and the Income Tax Regulations), in such form and substance as the
Purchaser and the Hotel Seller shall mutually agree.

     “Franchise Agreement” means that certain Franchise Agreement dated as of February 3,
2003originally between Licensor and Holtsville Hotel Associates, LLC.

     “Governmental Body” means any federal, state, municipal or other governmental
department, commission, board, bureau, agency or instrumentality, domestic or foreign.

     “Government List” has the meaning set forth in Section 3.25.

     “Hazardous Substances” has the meaning set forth in Section 3.17.

     “Holtsville Retail Ground Lease” has the meaning set forth in Section 3.23.

2

 

     “Holtsville Utility Ground Lease” has the meaning set forth in Section 3.22.

     “Hotel” means the hotel named on Exhibit A hereto and the related amenities
and appurtenances thereto.

     “Hotel Land” means the Land excluding the portion thereof leased under the Holtsville
Retail Ground Lease and the Holtsville Utility Ground Lease.

     “Hotel Seller” has the meaning set forth in the preamble hereto.

     “Improvements” means the Hotel and all other buildings, improvements, fixtures and
other items of real estate located on the Hotel Land.

     “Initial Deposit” has the meaning set forth in Section 2.2.

     “Insurance Policies” means those certain policies of insurance described on
Exhibit C attached hereto.

     “Intangible Personal Property” means all intangible personal property owned by the
Hotel Seller and used in connection with the ownership, operation, leasing, occupancy or
maintenance of the Property, including, without limitation, to the extent of Hotel Seller’s rights
therein, the right to use the trade name associated with the Property and all variations thereof
(subject to the Licensor’s consent to the transfer of the Franchise Agreement), the Authorizations,
escrow accounts (only to the extent that the Hotel Seller receives a credit for amounts in any
escrow accounts), general intangibles, business records, plans and specifications, surveys
pertaining to the Real Property, all licenses, permits and approvals with respect to the
construction, ownership, operation, leasing, occupancy or maintenance of the Property (to the
extent transferable), any unpaid award for taking by condemnation or any damage to the Land by
reason of a change of grade or location of or access to any street or highway, and the share of the
Tray Ledger determined under Section 6.5, excluding (a) any of the aforesaid rights the
Purchaser elects not to acquire, (b) the Hotel Seller’s cash on hand, in bank accounts and invested
with financial institutions, and (c) accounts receivable except for the above described share of
the Tray Ledger.

     “Inventory” means all inventory located at the Hotel and owned by the Hotel Seller,
including without limitation, all mattresses, pillows, bed linens, towels, paper goods, soaps,
cleaning supplies and other such supplies, subject to such depletions, substitutions and
replacements as shall occur and be made in the ordinary course of business prior to the Closing
Date.

     “Knowledge” shall mean the actual knowledge of Susan Griffin after discussions with
the manager of the Hotel, without any other duty of inquiry or investigation. For the purposes of
this definition, the term “actual knowledge” means, with respect to any person, the conscious
awareness of such person at the time in question, and expressly excludes any constructive or
implied knowledge of such person.

3

 

     “Land” means the land legally described on Exhibit B attached hereto, together
with all easements, rights, privileges, remainders, reversions and appurtenances thereunto
belonging or in any way appertaining thereto, now or hereafter acquired.

     “Licensor” means Marriott International, Inc.

     “Management Agreement” means that certain Development and Management Agreement by and
between Manager and Hotel Seller (as successor in interest to Holtsville Hotel Associates, LLC, a
Delaware limited liability company), dated as of August 25, 2003, as assigned to the Hotel Seller,
respecting the management of the Property.

     “Manager” means Colwen Management, Inc.

     “Operative Agreements” means those contracts, supply contracts, leases and other
agreements listed on Exhibit D annexed hereto.

     “Owner’s Title Policy” means an owner’s policy of title insurance issued to the
Purchaser by the Title Company, pursuant to which the Title Company insures the Purchaser’s
ownership of fee simple title to the Real Property subject only to Permitted Title Exceptions.

     “Permitted Title Exceptions” means (i) those items listed on Exhibit K
attached hereto, and (ii) those exceptions to title to the Real Property and the Utility
Improvements that are not objected to or deemed waived by the Purchaser as provided for in
Section 2.3 hereof.

     “PIP” means the property improvement plan for the Hotel provided by the Licensor and
applied for by the Seller in connection with the transaction contemplated by this Agreement.

     “Property” means, collectively, the Real Property, the Inventory, the Tangible
Personal Property and the Intangible Personal Property.

     “Purchase Price” means Twenty-One Million Three Hundred Thousand and No/Dollars
($21,300,000.00).

     “Purchaser” has the meaning set forth in the Preamble hereto.

     “Purchaser’s Hotel Lessee” means Chatham Holtsville RI Leaseco LLC, a Delaware limited
liability company.

     “REA” has the meaning set forth in Section 3.24.

     “Real Property” means the Land and the Improvements.

     “Seller” has the meaning set forth in the Preamble hereto.

     “Seller’s Organizational Documents” means the current limited liability company
agreements and certificates of formation of the Seller.

     “Sewage Facilities” means the sewage treatment facilities located on the land leased
pursuant to the Holtsville Utility Ground Lease.

4

 

     “Study Period” means the period commencing at 9:00 a.m. on the date following the date
hereof, and continuing through 5:00 p.m. on the date that is thirty (30) days from the date hereof.

     “Survey” has the meaning set forth in Section 2.3(d). If there is a
discrepancy between the description of the Land attached hereto as Exhibit B and the
description of the Land as shown on the Survey, the survey shall confirm that the separate property
descriptions each identify the Property.

     “Survival Period” has the meaning set forth in the last paragraph of Article
3.

     “Tangible Personal Property” means the items of tangible personal property consisting
of all furniture, fixtures and equipment situated on, attached to, or used in the operation of the
Hotel, and all furniture, furnishings, equipment, machinery, and other personal property of every
kind located on the Property or used in the operation of the Hotel and owned by the Hotel Seller,
subject to such depletions, substitutions and replacements as shall occur and be made in the
ordinary course of business prior to the Closing Date.

     “Title Company” means Chicago Title Insurance Company, through its Washington, DC
office.

     “Tray Ledger” means the final night’s room revenue of the Hotel (revenue from rooms
occupied as of 12:01 a.m. on the Closing Date, exclusive of food, beverage, telephone and similar
charges which shall be retained by the Hotel Seller), including any sales taxes, room taxes or
other taxes thereon.

     “Utilities” means public sanitary and storm sewers, natural gas, telephone, public
water facilities, electrical facilities and all other utility facilities and services necessary for
the operation and occupancy of the Property as a hotel.

     “Utility Assignment and Assumption Agreement (Utility Operative Agreements)” means the
assignment and assumption agreement whereby the Utility Seller assigns and the Utility Purchaser
assumes the Utility Operative Agreements, in the form annexed hereto as Exhibit N.

     “Utility Assignment and Assumption Agreement (Utility Ground Lease)” means the
assignment and assumption agreement whereby the Utility Seller assigns and the Utility Purchaser
assumes the lessee’s interest in the Holtsville Utility Ground Lease, in the form annexed hereto as
Exhibit O.

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

     “Utility Bill of Sale” means the bill of sale conveying title to the Utility Tangible
Personal Property and the Utility Intangible Personal Property, to the extent assignable, from the
Utility Seller to the Utility Purchaser in the form annexed hereto as Exhibit P.

     “Utility Deed” means a bargain and sale deed with covenants against grantor’s acts
conveying title to the Utility Improvements from the Utility Seller to the Utility Purchaser,

5

 

subject only to Permitted Title Exceptions, taxes not yet due and payable and matters identified by
the Survey, in the form attached hereto as Exhibit Q.

     “Utility FIRPTA Certificate” means the affidavit of the Utility Seller, pursuant to
Section 1445 of the Internal Revenue Code, certifying that the Utility Seller is not a foreign
corporation, foreign partnership, foreign trust, foreign estate or foreign person (as those terms
are defined in the Internal Revenue Code and the Income Tax Regulations), in such form and
substance as the Purchaser and the Utility Seller shall mutually agree.

     “Utility Land” means the leasehold interest in the portion of the Land leased under
the Holtsville Utility Ground Lease.

     “Utility Improvements” means the Sewage Facilities and all other buildings,
improvements, fixtures and other items of real estate located on the Utility Land.

     “Utility Insurance Policies” means those certain policies of insurance described on
Exhibit R attached hereto.

     “Utility Intangible Personal Property” means all intangible personal property owned by
the Utility Seller and used in connection with the ownership, operation, or maintenance of the
Utility Property.

     “Utility Operative Agreements” means those contracts, supply contracts, leases and
other agreements listed on Exhibit S annexed hereto.

     “Utility Owner’s Title Policy” means an owner’s policy of title insurance issued to
the Utility Purchaser by the Title Company, pursuant to which the Title Company insures the Utility
Purchaser’s ownership of fee simple title to the Utility Improvements and leasehold title to the
Utility Land subject only to Permitted Title Exceptions.

     “Utility Property” means, collectively, the Utility Real Property, the Utility
Tangible Personal Property and the Utility Intangible Personal Property.

     “Utility Purchaser” means Chatham Holtsville RI Utility LLC.

     “Utility Real Property” means the Utility Land and the Utility Improvements.

     “Utility Seller” has the meaning set forth in the preamble hereto.

     “Utility Tangible Personal Property” means the items of tangible personal property
consisting of all furniture, fixtures and equipment situated on, attached to, or used in the
operation of the Sewage Facilities, and all furniture, furnishings, equipment, machinery, and other
personal property of every kind located on the Utility Property or used in the operation of the
Sewage Facilities and owned by the Utility Seller, subject to such depletions, substitutions and
replacements as shall occur and be made in the ordinary course of business prior to the Closing
Date.

     “WARN Act” means the Worker Adjustment and Retraining Notification Act of 1988.

6

 

     1.2 Rules of Construction.

     The following rules shall apply to the construction and interpretation of this Agreement:

          (a) Singular words shall connote the plural number as well as the singular and vice versa, and
the masculine shall include the feminine and the neuter.

          (b) All references herein to particular articles, sections, subsections, clauses or exhibits
are references to articles, sections, subsections, clauses or exhibits of this Agreement.

          (c) The table of contents and headings contained herein are solely for convenience of
reference and shall not constitute a part of this Agreement nor shall they affect its meaning,
construction or effect.

          (d) Each party hereto and its counsel have reviewed and revised (or requested revisions of)
this Agreement, and therefore any usual rules of construction requiring that ambiguities are to be
resolved against a particular party shall not be applicable in the construction and interpretation
of this Agreement or any exhibits hereto.

ARTICLE 2

PURCHASE AND SALE; DEPOSIT; PAYMENT OF PURCHASE PRICE

     2.1 Purchase and Sale. The Hotel Seller agrees to sell to the Purchaser the
Property and the Utility Seller agrees to sell to the Utility Purchaser the Utility Property and
the Purchaser agrees to purchase from the Hotel Seller the Property and to cause Utility
Purchaser to purchase from the Utility Seller the Utility Property, both for the Purchase Price,
in accordance with the terms and conditions set forth herein.

     2.2 Deposit. Simultaneously with the full execution of this Agreement, the
Purchaser will deposit in escrow with the Title Company, by wire transfer of immediately
available federal funds sent in accordance with the wiring instructions annexed hereto as
Exhibit L, the sum of Five Hundred Thousand and No/Dollars ($500,000.00) as an earnest
money deposit (the “Initial Deposit”). Not later than the last day of the Study Period,
if the Purchaser elects to proceed with the purchase of the Property in accordance with the terms
of this Agreement, the Purchaser will deposit in escrow with the Title Company, by wire transfer
of immediately available federal funds sent in accordance with the wiring instructions annexed
hereto as Exhibit L an additional sum of Five Hundred Sixty-Five Thousand and No/Dollars
($565,000.00) as additional earnest money (the “Additional Deposit”, and together with
the Initial Deposit, the “Deposit”). The Deposit shall be invested by the Title Company
in an interest-bearing account reasonably acceptable to the Purchaser and the Seller (the Seller
and the Purchaser acknowledge that an account at JPMorgan Chase Bank is acceptable). Following
the expiration of the Study Period, the Deposit shall be non-refundable to Purchaser, except in
the event of Seller default, failure of a condition precedent in favor of Purchaser or
termination of this Agreement pursuant to Section 2.3(d). All interest earned on the
Deposit shall be paid over to the party entitled to the receipt of the Deposit under the terms of
this Agreement.

     2.3 Study Period.

7

 

          (a) The Purchaser shall have the right during the Study Period (and thereafter if the
Purchaser notifies the Seller that the Purchaser has elected to proceed to Closing in the manner
described below) upon not less than one (1) business day prior notice to the Seller, to enter upon
the Real Property and the Utility Real Property and to perform, at the Purchaser’s expense, such
economic, surveying, engineering, environmental, topographic and marketing tests, studies and
investigations as the Purchaser may deem appropriate; provided, however, that (i)
the Purchaser shall not be permitted to enter upon the Real Property or the Utility Real Property
to perform any such tests, studies and investigations unless and until the Purchaser delivers to
Seller evidence that the Purchaser has obtained liability insurance in the amount of not less than
and Two Million and No/Dollars ($2,000,000.00) for property damage and bodily injury, which
insurance shall name the Seller and the Seller’s managing agent as additional insureds, and which
insurance shall be maintained by the Purchaser at all times as it shall enter on the Real Property
or the Utility Real Property, and (ii) in the event Closing does not occur, at Seller’s request,
the Purchaser shall provide the Seller with copies of all third party reports prepared by or for
the Purchaser or the Utility Purchaser. If such tests, studies and investigations warrant, in the
Purchaser’s sole, absolute and unreviewable discretion, the purchase of the Property for the
purposes contemplated by the Purchaser, then the Purchaser may elect to proceed to Closing and
shall so notify the Seller prior to the expiration of the Study Period (provided that the Closing
Date shall not be advanced if the Purchaser shall notify the Seller prior to the end of the
scheduled Study Period that it elects to proceed to Closing), in which event the Purchaser shall
also deposit the Additional Deposit with the Title Company by the last day of the Study Period in
accordance with the provisions of Section 2.2 above. If for any reason the Purchaser does
not (i) so notify the Seller of its determination to proceed to Closing prior to the expiration of
the Study Period and (ii) timely deposit the Additional Deposit with the Title Company in
accordance with provisions of Section 2.2 above, or if the Purchaser notifies the Seller, in
writing, prior to the expiration of the Study Period that it has determined not to proceed to
Closing, this Agreement shall automatically terminate, the Deposit shall be returned to the
Purchaser and upon return of the Deposit, the Purchaser shall be released from any further
liability or obligation under this Agreement, except those which expressly survive the termination
of this Agreement.

          (b) During the Study Period, the Seller shall make available to the Purchaser, its designated
agents, auditors, engineers, attorneys and other designees, for inspection copies of all existing
architectural and engineering studies, surveys, title insurance policies, zoning and site plan
materials, environmental audits, documentation and information related to the ownership or
operation of the Hotel and the Sewage Facilities, and other materials or information, if any,
relating to the Property or the Utility Property which are in the Seller’s possession or control.
Notwithstanding the foregoing or anything contained in this Agreement, the Seller shall not be
obligated to deliver to the Purchaser any materials of a proprietary or confidential nature.
Purchaser acknowledges that, except as otherwise herein provided, any such materials delivered to
the Purchaser pursuant to this provision shall be without warranty, representation or recourse.

          (c) The Purchaser shall indemnify, hold harmless and defend the Seller and the Seller’s
Affiliates (as hereinafter defined) against any loss, damage or claim arising from entry upon the
Real Property by the Purchaser or any agents, contractors, subcontractors or employees of the
Purchaser. The Purchaser understands and accepts that any on-site inspections of the Real Property
or the Utility Real Property shall occur at reasonable times agreed upon by

8

 

the Seller and the Purchaser after not less than one (1) business day prior notice to the
Seller and shall be conducted so as not to interfere unreasonably with the operation of the
Property or the Utility Property and the use of the Property by the tenants and the guests of the
Hotel. The Seller shall have the right to have a representative present during any such
inspections. If the Purchaser desires to do any invasive testing at the Real Property or the
Utility Real Property, the Purchaser shall do so only after obtaining the prior written consent of
Seller, which approval may be subject to reasonable terms and conditions as may be proposed by the
Seller. The Purchaser shall not permit any liens to attach to the Property or the Utility Real
Property by reason of such inspections. The Purchaser shall (i) restore the Property and the
Utility Real Property, at its own expense, to substantially the same condition which existed prior
to any inspections or other activities of the Purchaser thereon; and (ii) be responsible for and
pay and caused to be discharged any and all liens by contractors, subcontractors, materialmen, or
laborers performing the inspections or any work for the Purchaser or any agent, contractor,
subcontractor or employee of the Purchaser the Purchaser Parties on or related to the Property or
the Utility Real Property. The terms of this Section 2.3(c) shall survive the termination
of this Agreement.

          (d) During the Study Period, the Purchaser, at its expense, shall (i) cause an examination of
title to the Real Property and the Utility Real Property to be made by the Real Title Company, and
(ii) obtain and deliver to the Seller an update of the existing survey of the Real Property and the
Utility Real Property delivered to the Purchaser or a new survey (any such updated survey or new
survey being referred to as the “Survey”) and, five (5) business days prior to the
expiration of the Study Period, shall notify the Seller of any defects in title shown by such
examination or by such Survey that the Purchaser is unwilling to accept (other than those items
listed on Exhibit K attached hereto). Within four (4) business days after such
notification, the Seller shall notify the Purchaser whether the Seller is willing to cure such
defects. If the Seller is willing to cure such defects, the Seller shall cure such defects at its
expense prior to the Closing; provided that the Seller shall have the right to extend the
Closing Date for up to thirty (30) days in order to cure such defects. If such defects consist of
deeds of trust, mechanics’ liens, tax liens or other liens or charges in a fixed sum or capable of
computation as a fixed sum, the Seller shall pay and discharge (and the Title Company is authorized
to pay and discharge at Closing) such defects at Closing (provided that any mechanics’ liens may be
discharged by bonding or by depositing sufficient funds with the Title Company such that the Title
Company does not include such mechanics’ liens as exceptions to the title policy). If the Seller
is unwilling or unable to cure any other such defects by Closing, the Purchaser shall elect (1) to
waive such defects and proceed to Closing without any abatement in the Purchase Price or (2) to
terminate this Agreement and receive a full refund of the Deposit. If, with respect to defects
that Seller has notified Purchaser that it is unwilling to cure, Purchaser shall not notify Seller
of such election within two (2) days of Seller’s notice to Purchaser, Purchaser shall be deemed to
have elected to waive such defects and proceed to Closing. The Seller shall not, after the date of
this Agreement, subject the Property to any liens, encumbrances, covenants, conditions,
restrictions, easements or other title matters or seek any zoning changes or take any other action
which affect or modify the status of title without the Purchaser’s prior written consent. All
title matters revealed by the Purchaser’s title examination and by the Survey and not listed on
Exhibit K attached hereto or objected to by the Purchaser as provided above shall be deemed
Permitted Title Exceptions. If Purchaser shall fail to examine title and notify the Seller of any
such title objections and/or survey by the end of the Study Period, all such title and /or survey
exceptions (other than those that are to be paid at Closing as provided above) shall be deemed
Permitted Title Exceptions.

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          (e) If, despite Purchaser’s commercially reasonable efforts to obtain and review all third
party reports during the Study Period, Purchaser shall not have received a Phase I environmental
report or a property conditions report with respect to the Real Property and the Utility Real
Property (such Phase I environmental report and property conditions report being referred to herein
collectively as the “Environmental and Engineering Reports”), then (i) the Purchaser shall
have the right to extend the Study Period for ten (10) days solely in order to obtain and review
whichever or both of the Environmental and Engineering Reports the Purchaser did not receive during
the Study Period, (ii) the Study Period shall not be deemed extended as to any other action
required to be taken during the Study Period, and (iii) the Purchaser shall be deemed to have
elected to proceed to the Closing as set forth in Section 2.3(a) hereof unless either of
the Environmental and Engineering Reports not received prior to the originally scheduled end of the
Study Period shall disclose problems with the Property that would reasonably cause the Purchaser
not to proceed to the Closing and the Purchaser shall notify the Seller thereof (which notice shall
specify the applicable problem(s) and shall include a copy of the applicable report(s)) by the end
of such ten (10) day period.

          (f) Prior to the expiration of the Study Period, the Purchaser shall use commercially
reasonable efforts to obtain consent from the Licensor to the sale of the Property and to have a
final, agreed upon Property Improvement Plan for the Hotel. Additionally, the Purchaser shall use
commercially reasonable efforts to obtain the consent of the Licensor for the assignment and
assumption of the Franchise Agreement or the termination of the existing Franchise Agreement and
the replacement thereof with a new franchise agreement to which the Purchaser is a party, and shall
pay all costs and expenses associated therewith. The Seller shall assist the Purchaser in respect
thereto, but shall not be responsible for any costs or expenses. If, despite the Purchaser’s
commercially reasonable efforts, the Purchaser is unable to obtain the consent of Licensor
described in this Section 2.3(f) during the Study Period, then (i) the Purchaser shall have
the right to extend the Study Period for ten (10) days solely in order to make such arrangements,
(ii) the Study Period shall not be deemed extended as to any other action required to be taken
during the Study Period, and (iii) the Purchaser shall be deemed to have elected to proceed to the
Closing as set forth in Section 2.3(a) hereof unless the Purchaser is unable to obtain the
consent by the end of such ten (10) day period. If the Purchaser is unable to make such
arrangements by the end of such ten (10) day period, either party may terminate this Agreement.

          (g) Prior to the expiration of the Study Period, the Purchaser and the Seller shall negotiate
in good faith and use reasonable commercial efforts to (i) agree on the forms of amendments to the
Holtsville Retail Ground Lease and the Holtsville Utility Ground Lease (collectively, the
“Ground Lease Amendments”) to address the matters set forth in the term sheet attached as
Exhibit T in a manner acceptable to both Purchaser and Seller and (ii) to agree on a form
of three party agreement (the “Three Party Agreement”) to be entered into at Closing among
the Seller, the tenant under the Holtsville Retail Ground Lease and the Utility Purchaser to
address the future operation of the Sewage Facilities and the matters set forth in the term sheet
attached as Exhibit U hereto in a manner acceptable to both the Purchaser and the Seller.
In the event the parities have not agreed upon the forms of the Ground Lease Amendments and the
Three Party Agreement by the end of the original Study Period, then the Purchaser shall have the
right to extend the Study Period for one (1) business day for (i) each business day after four (4)
business days after the date of this Agreement that the Seller has not delivered initial drafts of
the

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Ground Lease Amendments and the Three Party Agreement to Purchaser (delivery of initial drafts
of the Ground Lease Amendments and the Three Party Agreement to the Purchaser’s attorney by
electronic mail shall constitute delivery to the Purchaser) and (ii) each business day after two
(2) business days from the Seller’s receipt of the Purchaser’s comments to the Ground Lease
Amendments or the Three Party Agreement (which comments shall be given not less than five (5)
business days after the delivery of such draft documents to Purchaser and may be by electronic mail
sent to Purchaser’s attorney) that the Seller has not responded in writing (which response may be
by electronic mail sent to the Seller’s attorney) to such comments solely in order to reach
agreement on the forms of the Ground Lease Amendments and the Three Party Agreement, (ii) the Study
Period shall not be deemed extended as to any other action required to be taken during the Study
Period, and (iii) each party shall be deemed to have elected to proceed to the Closing as set forth
in Section 2.3(a) hereof unless either party shall notify the other by the end of the Study
Period, as the same may have been extended pursuant to the provisions of this Section
2.3(g), that it wishes to terminate the Agreement because it has not agreed upon the forms of
the Ground Lease Amendments and the Three Party Agreement.

          (h) Not later than the last day of the Study Period, the Purchaser shall notify the Seller as
to which of the Operative Agreements and the Utility Operative Agreements it elects not to assume
at the Closing. In the event that the Purchaser shall not so notify the Seller as to any of the
Operative Agreements or Utility Operative Agreements by the last day of the Study Period, the
Purchaser shall be deemed to have elected to assume such agreements.

     2.4 Payment of Purchase Price. The Purchaser shall pay the balance of the Purchase
Price, as adjusted in the manner specified in Article 6, by confirmed wire transfer of
immediately available federal funds to the account of the Title Company, to be disbursed to the
Seller or other applicable parties at Closing.

ARTICLE 3

SELLER’S REPRESENTATIONS, WARRANTIES AND COVENANTS

     To induce the Purchaser to enter into this Agreement and to purchase the Property and to cause
Utility Purchaser to purchase the Utility Property, the Seller hereby makes the following
representations, warranties and covenants, upon each of which the Seller acknowledges and agrees
that the Purchaser is entitled to rely and has relied. Each such representation shall be materially
true and correct on the date hereof and shall be materially true and correct on the Closing Date.

     3.1 Organization and Power. Each of the Hotel Seller and the Utility Seller is a
limited liability company duly formed, validly existing and in good standing under the laws of its
state of formation and has all requisite powers and all governmental licenses, authorizations,
consents and approvals to carry on its business as now conducted and to enter into and perform its
obligations hereunder and under any document or instrument required to be executed and delivered on
behalf of such party hereunder.

     3.2 Authorization and Execution. This Agreement has been duly authorized by all
necessary action on the part of each of the Hotel Seller and the Utility Seller, has been duly
executed and delivered by each of the Hotel Seller and the Utility Seller, constitutes the valid
and

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binding agreement of each of the Hotel Seller and the Utility Seller and is enforceable in
accordance with its terms. There is no person or entity whose consent is required in connection
with the Seller’s performance of its obligations hereunder whose consent shall not be obtained by
the Closing.

     3.3 Noncontravention. Subject to any consent to the assignment of any particular
Operative Agreement required by the terms thereof or by applicable laws, the execution and delivery
of, and the performance by the Seller of its obligations under, this Agreement does not and will
not contravene, or constitute a default under, any provision of applicable law or regulation, the
Seller’s Organizational Documents or (except for the mortgage currently encumbering the Real
Property which will be released at Closing) any agreement, judgment, injunction, order, decree or
other instrument binding upon the Seller. Except as provided in Article 19 of the Holtsville
Retail Ground Lease, there are no outstanding agreements (written or oral) pursuant to which the
Seller (or, to the Seller’s Knowledge, any predecessor to or representative of the Seller) has
agreed to sell or has granted an option or right of first refusal to purchase the Property, the
Utility Property or any part thereof.

     3.4 No Special Taxes. The Seller has no Knowledge of, nor has it received any written
notice of, any special taxes or assessments relating to the Property or the Utility Property to be
sold hereunder by the Seller or any part thereof or any planned public improvements that may result
in a special tax or assessment against the Property or the Utility Property.

     3.5 Compliance with Existing Laws. To the Seller’s Knowledge, the Seller possesses
all Authorizations and Utility Authorizations, each of which is valid and in full force and effect,
and no provision, condition or limitation of any of the Authorizations or Utility Authorizations
has been breached or violated. To the Seller’s Knowledge, the Seller has not received written
notice within the past three (3) years, of any existing or threatened violation (which violation
has not been cured) of any provision of any applicable building, zoning, subdivision, environmental
or other governmental ordinance, resolution, statute, rule, order or regulation, including but not
limited to those of environmental agencies or insurance boards of underwriters, with respect to the
ownership, operation, use, maintenance or condition of the Property or the Utility Property or any
part thereof, or requiring any repairs or alterations other than those that have been made prior to
the date hereof.

     3.6 Operative Agreements and Utility Operative Agreements.

               (1) Subject to Seller’s rights to enter into or modify Operative Agreements pursuant to
Section 3.6(c) below, all of the Operative Agreements in force and effect as of the date
hereof are listed on Exhibit D attached hereto. A true, correct and complete copy of each
of the Operative Agreements has been delivered by the Seller to the Purchaser, each of the
Operative Agreements is in full force and effect and have not been modified or supplemented, and no
fact or circumstance has occurred that, by itself or with the giving of notice or the passage of
time or both, would constitute a default under any Operative Agreement.

          (b) Subject to Seller’s rights to enter into or modify Utility Operative Agreements pursuant
to Section 3.6(c) below, all of the Utility Operative Agreements in force and effect as of
the date hereof are listed on Exhibit S attached hereto. A true, correct and

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complete copy of each of the Utility Operative Agreements has been delivered by the Seller to
the Purchaser, each of the Utility Operative Agreements is in full force and effect and have not
been modified or supplemented, and no fact or circumstance has occurred that, by itself or with the
giving of notice or the passage of time or both, would constitute a default under any Utility
Operative Agreement.

          (c) Prior to the end of the Study Period, the Seller may enter into (i) any amendment,
modification, renewal or extension of any Operative Agreement or Utility Operative Agreement (a
“Contract Amendment”), or (ii) any new service or supply contract affecting any portion of
the Property or the Utility Property (a “New Contract”), provided that if any such Contract
Amendment or New Contract shall be binding on the Purchaser for any period of time after the
Closing the Seller shall send a copy thereof to the Purchaser at least two (2) business days prior
to the end of the Study Period. After the end of the Study Period, in the event that the Seller
desires to enter into (i) a Contract Amendment or a New Contract, the Seller shall deliver written
notice to the Purchaser requesting the Purchaser’s consent to such proposed Contract Amendment, or
proposed New Contract. Within five (5) business days after the Seller delivers such request to the
Purchaser, the Purchaser shall deliver written notice to the Seller approving or disapproving such
proposed Contract Amendment or such proposed New Contract (and if Purchaser disapproves any such
Proposed Contract Amendment, such Proposed New Contract, Purchaser shall specify in such notice the
reasons for such disapproval). The Purchaser shall not unreasonably withhold Purchaser’s consent
to any proposed Contract Amendment or proposed New Contract. In the event that the Purchaser fails
to deliver notice disapproving a proposed Contract Amendment or proposed New Contract, within the
five (5) business day period set forth above, the Purchaser shall be deemed to have approved such
proposed Contract Amendment or proposed New Contract. If the Purchaser shall approve a proposed
Contract Amendment or proposed New Contract, then the Seller shall have the right to execute such
proposed Contract Amendment or proposed New Contract. If the Purchaser shall reasonably disapprove
a proposed Contract Amendment or proposed New Contract, then Seller shall not enter into such
proposed Contract Amendment or proposed New Contract. Notwithstanding the foregoing, the Seller
shall have the right, without the necessity of obtaining the approval of the Purchaser, to execute
any Contract Amendment or New Contract after the end of the Study Period (x) if and to the extent
that such Contract Amendment or New Contract will not be binding upon the Purchaser after the
Closing, or (y) if such Contract Amendment or New Contract is terminable by the Purchaser on not
more than thirty (30) days notice without penalty (provided that the Seller shall give a copy of
any Contract Amendment or New Contract described in clause (y) prior to the Closing).

     3.7 Warranties and Guaranties. The Seller shall not before or after Closing, release
or modify any warranties or guarantees, if any, of manufacturers, suppliers and installers covering
to the Improvements, the Utility Improvements, the Personal Property and the Utility Personal
Property or any part thereof, except with the prior written consent of the Purchaser. A complete
list of all such warranties and guaranties in effect as of this date is attached hereto as
Exhibit E.

     3.8 Insurance. To the Seller’s Knowledge, all of the Insurance Policies and Utility
Insurance Policies are valid and in full force and effect, all premiums for such policies were paid
when due and all future premiums for such policies (and any replacements thereof) shall be paid by
the Seller on or before the due date therefor. The Seller shall pay all premiums on, and shall not
cancel or voluntarily allow to expire, any of the Insurance Policies or Utility Insurance

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Policies unless such policy is replaced, without any lapse of coverage, by another policy or
policies providing coverage at least as extensive as the policy or policies being replaced.

     3.9 Condemnation Proceedings; Roadways. Seller has not received any written notice of
any condemnation or eminent domain proceeding pending or threatened against the Property or the
Utility Property or any part thereof. The Seller has not received any written notice of any change
or proposed change in the route, grade or width of, or otherwise affecting, any street or road
adjacent to or serving the Real Property or the Utility Real Property.

     3.10 Litigation. Seller has not received any written notice of any action, suit or
proceeding pending or threatened against or affecting the Seller in any court, before any
arbitrator or before or by any Governmental Body which (a) in any manner raises any question
affecting the validity or enforceability of this Agreement or any other agreement or instrument to
which the Seller is a party or by which it is bound and that is to be used in connection with, or
is contemplated by, this Agreement, (b) could materially and adversely affect the ability of the
Seller to perform its obligations hereunder or (c) could otherwise materially adversely affect the
Property or the Utility Property, any part thereof or any interest therein, or the use, operating
condition or occupancy thereof.

     3.11 Labor Disputes and Agreements. Seller has no employees. Seller has no Knowledge
of any labor disputes pending or, threatened as to the operation or maintenance of the Property or
the Utility Property or any part thereof. The Seller is not a party to any union or other
collective bargaining agreement with employees employed in connection with the ownership, operation
or maintenance of the Property or the Utility Property. The Seller is not a party to any
employment contracts or agreements, and neither the Seller nor its managing agent will, between the
date hereof and the date of Closing, enter into any new employment contracts or agreements or hire
any new employees except with the prior written consent of the Purchaser. The Purchaser will not
be obligated to give or pay any amount to any employee of the Seller or the Seller’s managing agent
unless the Purchaser elects to hire that employee. The Purchaser shall not have any liability
under any pension or profit sharing plan that the Seller or its managing agent may have established
with respect to the Property or the Utility Property or their or its employees.

     3.12 Operation of Property and Utility Property. The Seller covenants that between
the date hereof and the date of Closing it will (a) operate the Property only in the usual, regular
and ordinary manner consistent with the Seller’s prior practice, (b) maintain its books of account
and records in the usual, regular and ordinary manner, in accordance with sound accounting
principles applied on a basis consistent with the basis used in keeping its books in prior years,
(c) use all reasonable efforts to preserve intact its present business organization, keep available
the services of its present officers, partners and employees and preserve its relationships with
suppliers and others having business dealings with it, and (d) comply with and perform all of the
material duties and obligations of the Seller under the Franchise Agreement. The Seller shall
continue to use commercially reasonable efforts to take guest room reservations and to book
functions and meetings and otherwise to promote the business of the Property in generally the same
manner as the Seller did prior to the execution of this Agreement. All advance room bookings and
reservations and all meetings and function bookings shall continue to be booked at rates, prices
and charges heretofore customarily charged by the Seller for such purposes.

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     3.13 Personal Property. All of the Tangible Personal Property, Intangible Personal
Property, Inventory, Utility Tangible Personal Property and Utility Intangible Personal Property
being conveyed by the Seller to the Purchaser, the Purchaser’s Hotel Lessee or the Utility
Purchaser, as applicable, are free and clear of all liens, leases and other encumbrances and will
be so on the date of Closing and the Seller has good, merchantable title thereto and the right to
convey same in accordance with the terms of the Agreement.

     3.14 Bankruptcy. No Act of Bankruptcy has occurred with respect to the Seller.

     3.15 Sewage Facilities. The Utility Seller will continue operation of the Sewage
Facilities consistent with the manner in it currently operates the Sewage Facilities through
Closing.

     3.16 Intentionally Deleted.

     3.17 Hazardous Substances. The Seller has not received written notice from any
governmental authority of the presence on the Property or the Utility Property of any Hazardous
Substances (as hereinafter defined) in violation of any law. As used herein, “Hazardous
Substances” shall mean any substance or material whose presence, nature, quantity or intensity
of existence, use, manufacture, disposal, transportation, spill, release or effect, either by
itself or in combination with other materials is either:

          (1) regulated, monitored or defined as a hazardous or toxic substance or waste by any
Governmental Body, or

          (2) a basis for liability of the owner of the Property or the Utility Property to any
Governmental Body or third party, and Hazardous Substances shall include, but not be limited
to, hydrocarbons, petroleum, gasoline, crude oil, or any products, by-products or components
thereof, and asbestos.

     3.18 Intentionally Deleted.

     3.19 Independent Audit. Seller shall provide access by Purchaser’s representatives to
all financial and other information relating to the Property which would be sufficient to enable
them to prepare audited financial statements in conformity with Regulation S-X of the Securities
and Exchange Commission (the “Commission”) and to enable them to prepare a registration
statement, report or disclosure statement for filing with the Commission. If such a filing is
necessary, as determined in good faith by the Purchaser, then Seller shall cause Manager to provide
to Purchaser’s representatives a signed representative letter, in the form attached hereto as
Exhibit M. This Section 3.19 shall survive for two (2) years after the Closing
Date.

     3.20 Bulk Sale Compliance. The Seller shall indemnify Purchaser against any claim,
loss or liability arising under the bulk sales law in connection with the transaction contemplated
herein.

     3.21 Liquor License. The Seller will, at no cost to the Seller, use commercially
reasonable efforts to cause Manager to cooperate with Purchaser to arrange for continued use of the
existing liquor license for the Hotel (and any restaurant located therein) until such time as the

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Purchaser is able to obtain a new liquor license for the Hotel (and any restaurant located
therein), provided that the Seller shall have no liability in connection with the continued use of
the liquor license or any action or failure to act by the holder of the existing liquor license for
the Hotel from and after the date of Closing.

     3.22 Holtsville Utility Ground Lease. A true, correct and complete copy of that
certain Ground Lease, dated as of January 30, 2004, by and between Seller (as successor in interest
to Holtsville Hotel Associates, LLC, a Delaware limited liability company), as landlord, and FB
Holtsville Utility LLC, a Delaware limited liability company, as tenant (the “Holtsville
Utility Ground Lease”), has been delivered by the Seller to the Purchaser, the Holtsville
Utility Ground Lease is in full force and effect and has not been modified or supplemented except
as contemplated in this Agreement, and no fact or circumstance has occurred that, by itself or with
the giving of notice or the passage of time or both, would constitute a default thereunder.

     3.23 Holtsville Retail Ground Lease. A true, correct and complete copy of that
certain Ground Lease, dated as of January 30, 2004, by and between Seller (as successor in interest
to Holtsville Hotel Associates, LLC, a Delaware limited liability company), as landlord, and FB
Holtsville Retail LLC, a Delaware limited liability company, as tenant (the “Holtsville Retail
Ground Lease”), has been delivered by the Seller to the Purchaser, the Holtsville Retail Ground
Lease is in full force and effect and has not been modified or supplemented except as contemplated
by this Agreement, and no fact or circumstance has occurred that, by itself or with the giving of
notice or the passage of time or both, would constitute a default thereunder.

     3.24 Reciprocal Easement Agreement. A true, correct and complete copy of that certain
Reciprocal Easement Agreement, dated as of May 2, 2003, by and between Holtsville Hotel Associates,
LLC, a Delaware limited liability company and FB Holtsville LLC, a Delaware limited liability
company (the “REA”), has been delivered by the Seller to the Purchaser, the REA is in full
force and effect and has not been modified or supplemented, and no fact or circumstance has
occurred that, by itself or with the giving of notice or the passage of time or both, would
constitute a default thereunder.

     3.25 Money Laundering. The Seller is not acting, directly or indirectly, for or on
behalf of any person, group, entity or nation named by the United States Treasury Department as a
Specifically Designated National and Blocked person, or for or on behalf of any person, group,
entity or nation designated in Presidential Executive Order 13224 (the “Executive Order”)
as a person who commits, threatens to commit, or supports terrorism; and it is not engaged in this
transaction directly or indirectly on behalf of, or facilitating this transaction directly or
indirectly on behalf of, any such person, group, entity or nation terrorists, terrorist
organizations or narcotics traffickers, including, without limitation, those persons or entities
that appear on the Annex to the Executive Order, or are included on any relevant lists maintained
by the Office of Foreign Assets Control of U.S. Department of Treasury, U.S. Department of State,
or other U.S. government agencies, all as may be amended from time to time. Neither Seller, nor any
person controlling or controlled by Seller, is a country, territory, individual or entity named on
a Government List, and the monies used in connection with this Agreement and amounts committed with
respect thereto, were not and are not derived from any activities that contravene any applicable
anti-money laundering or anti bribery laws and regulations (including, without limitation, funds
being derived from any person, entity, country or territory on a Government

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List or engaged in any unlawful activity defined under 18 USC §1956(c)(7)). For purposes of
this Agreement, “Government List” means of any of (i) the two lists maintained by the
United States Department of Commerce (Denied Persons and Entities), (ii) the list maintained by the
United States Department of Treasury (Specially Designated Nationals and Blocked Persons) and (iii)
the two lists maintained by the United States Department of State (Terrorist Organizations and
Debarred Parties).

     The representations and warranties in this Article 3 shall survive the Closing for a
period of twelve (12) months following the Closing Date (“Survival Period”).
Notwithstanding anything to the contrary contained in this Agreement, any claim that Purchaser may
have during the Survival Period against Seller for any breach of the representations and warranties
contained in this Article 3 will not be valid or effective, and the Seller shall have no
liability with respect thereto, unless the aggregate of all valid claims exceed Fifty Thousand and
No/Dollars ($50,000.00). Seller’s liability for damages resulting from valid claims during the
Survival Period shall in no event exceed two and one-half percent (2.5%) of the Purchase Price in
the aggregate. Purchaser agrees that, with respect to any alleged breach of representations in
this Agreement discovered after the Survival Period, the maximum liability of Seller for all such
alleged breaches is limited to One Hundred and No/Dollars ($100.00).

     In the event Purchaser obtains actual knowledge on or before Closing of any material
inaccuracy in any of the representations and warranties contained in this Article 3, it
shall notify Seller thereof within five (5) business days of obtaining such knowledge. In the
event that Seller shall (i) not provide written notice to the Purchaser within five (5) business
days of receipt of such notice from the Purchaser that it will correct or resolve such inaccuracy
prior to the Closing (and the Seller shall have the right to postpone the Closing for up to thirty
(30) days to effectuate such correction), or (ii) if the Seller provides such notice to the
Purchaser but fails to correct or resolve such inaccuracy prior to the Closing (as it may be so
extended), Purchaser may, as Purchaser’s sole and exclusive remedy either: (i) terminate this
Agreement, whereupon the Deposit shall be refunded to Purchaser and, solely in the event that a
Seller’s representation was actually false in any material respect when made on the date hereof (as
opposed to a Seller’s representation that first becomes untrue after the date hereof due to changed
circumstances or matters which arise or first come to Seller’s attention after the date hereof, in
which case Seller will provide written notice to Purchaser), Purchaser shall be entitled to receive
reimbursement from Seller for Purchaser’s out of pocket expenses actually incurred in connection
with the transaction contemplated by this Agreement, not to exceed One Hundred Thousand and
No/Dollars ($100,000.00), and neither party shall have any further rights or obligations pursuant
to this Agreement, other than as set forth herein with respect to rights or obligations that
survive termination; or (ii) waive any and all claims against Seller on account of such inaccuracy
and close the transaction. Notwithstanding the foregoing, if any representation contained in
Sections 3.4, 3.5, 3.10 or 3.17 becomes materially false between
the date of this Agreement and the Closing, the Seller may elect, by providing written notice to
the Purchaser within five (5) business days of receipt of the material falsehood from the
Purchaser, to (x) cure the condition causing such representation to be false (including, without
limitation, by posting a bond or escrowing sufficient funds to satisfy a claim), or (y) to
indemnify, defend and hold the Purchaser harmless against all claims, costs and damages arising in
connection with the subject matter of such representation, which indemnification shall be
personally guaranteed by Jay Furman, and if the Seller elects (x) or (y), the Purchaser shall not
have the right to terminate this Agreement in

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connection with the inaccuracy of such representations; provided, however, that (i) if any
representation contained in Section 3.10 becomes materially false between the date of this
Agreement and the Closing and the amount of the claim involved is $1,000,000 or less and the claim
is fully covered by insurance reasonably acceptable to the Purchaser, the Purchaser shall not have
the right to terminate this Agreement in connection with the inaccuracy of such representation, and
(ii) if any representation contained in Section 3.10 becomes materially false between the
date of this Agreement and the Closing and the amount of the claim involved is more than
$1,000,000, the Seller shall not have the right to prevent the Purchaser’s termination of this
Agreement by electing (x) or (y). The terms “material”, “materially” and “in any material respect”
when used in this paragraph shall mean that the subject modified by such term shall be reasonably
expected to result in liabilities, damages, costs or expenses to the Purchaser in an aggregate
amount of at least Fifty Thousand and No/Dollars ($50,000.00), except that with respect to
Section 3.10 such terms shall apply to a claim in the amount of more than $100,000 brought
after the date of this Agreement.

     In the event the Purchaser obtains knowledge on or before five (5) business days before the
expiration of the Study Period of any inaccuracy in any of the representations and warranties
contained in this Article 3, and Purchaser does not terminate this Agreement on or before
the expiration of the Study Period, Purchaser shall be deemed to have waived any and all claims
against Seller on account of such inaccuracy (including the right to terminate this Agreement
following the expiration of the Study Period). If the Purchaser obtains such knowledge less than
five (5) business days before the expiration of the Study Period, then the provisions of the
preceding paragraph shall apply.

     In the event the Seller notifies the Purchaser that the Purchaser has a right to terminate
this Agreement because of a material inaccuracy in any of the representations and warranties
contained in Article 3 and that the Seller will not or can not cure such inaccuracy, the
Purchaser will notify the Seller within three (3) business days of the Purchaser’s receipt of such
notice from the Seller whether or not the Purchaser will terminate this Agreement. If the
Purchaser shall not so timely notify the Seller, then the Purchaser shall be deemed to have waived
such right to terminate this Agreement.

ARTICLE 4

PURCHASER’S REPRESENTATIONS, WARRANTIES AND COVENANTS

     To induce the Seller to enter into this Agreement and to sell the Property and the Utility
Property, the Purchaser hereby makes the following representations, warranties and covenants, upon
each of which the Purchaser acknowledges and agrees that the Seller is entitled to rely and has
relied. Each such representation shall be materially true and correct on the date hereof and shall
be materially true and correct on the Closing Date.

     4.1 Organization and Power. The Purchaser is a limited liability company duly
organized, validly existing and in good standing under the laws of the State of Delaware, and has
all trust powers and all governmental licenses, authorizations, consents and approvals to carry on
its business as now conducted and to enter into and perform its obligations under this Agreement
and any document or instrument required to be executed and delivered on behalf of the Purchaser
hereunder. The Purchaser is wholly owned by Chatham Lodging, L.P., a limited liability

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company duly organized, validly existing and in good standing under the laws of the State of
Delaware. Chatham Lodging Trust, a real estate investment trust duly organized, validly existing
and in good standing under the laws of the State of Maryland is the general partner of Chatham
Lodging, L.P., and holds over ninety percent (90%) of the partnership interests in Chatham Lodging,
L.P.

     4.2 Authorization and Execution. This Agreement has been duly authorized by all
necessary action on the part of the Purchaser, has been duly executed and delivered by the
Purchaser, constitutes the valid and binding agreement of the Seller and is enforceable in
accordance with its terms. There is no person or entity whose consent is required in connection
with the Seller’s performance of its obligations hereunder whose consent shall not be obtained by
the Closing.

     4.3 Noncontravention. The execution and delivery of this Agreement and the
performance by the Purchaser of its obligations hereunder do not and will not contravene, or
constitute a default under, any provisions of applicable law or regulation, the Purchaser’s
declaration of trust or other trust document or any agreement, judgment, injunction, order, decree
or other instrument binding upon the Purchaser.

     4.4 Litigation. There is no action, suit or proceeding, pending or known by the
Purchaser to be threatened against or affecting the Purchaser in any court or before any arbitrator
or before any Governmental Body which (a) in any manner raises any question affecting the validity
or enforceability of this Agreement or any other agreement or instrument to which the Purchaser is
a party or by which it is bound and that is to be used in connection with, or is contemplated by,
this Agreement, or (b) could materially and adversely affect the ability of the Purchaser to
perform its obligations hereunder, or under any document to be delivered pursuant hereto.

     4.5 Bankruptcy. No Act of Bankruptcy has occurred with respect to the Purchaser.

     4.6 Money Laundering. The Purchaser is not acting, directly or indirectly, for or on
behalf of any person, group, entity or nation named by the United States Treasury Department as a
Specifically Designated National and Blocked person, or for or on behalf of any person, group,
entity or nation designated in the Executive Order as a person who commits, threatens to commit, or
supports terrorism; and it is not engaged in this transaction directly or indirectly on behalf of,
or facilitating this transaction directly or indirectly on behalf of, any such person, group,
entity or nation terrorists, terrorist organizations or narcotics traffickers, including, without
limitation, those persons or entities that appear on the Annex to the Executive Order, or are
included on any relevant lists maintained by the Office of Foreign Assets Control of U.S.
Department of Treasury, U.S. Department of State, or other U.S. government agencies, all as may be
amended from time to time. Neither Purchaser, nor any person controlling or controlled by
Purchaser, is a country, territory, individual or entity named on a Government List, and the monies
used in connection with this Agreement and amounts committed with respect thereto, were not and are
not derived from any activities that contravene any applicable anti-money laundering or anti
bribery laws and regulations (including, without limitation, funds being derived from any person,
entity, country or territory on a Government List or engaged in any unlawful activity defined under
18 USC §1956(c)(7)).

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     The representations and warranties in this Article 4 shall survive the Closing for a
period of twelve (12) months following the Closing Date.

ARTICLE 5

CONDITIONS AND ADDITIONAL COVENANTS

     5.1 Conditions to Purchaser’s Obligations. The Purchaser’s obligations hereunder are
subject to the satisfaction of the following conditions precedent and the compliance by the Seller
with the following covenants:

               (a) Seller’s Deliveries. The Seller shall have delivered to the Title Company or the
Purchaser, as the case may be, on or before the date of Closing, all of the documents and other
information required of the Seller pursuant to Section 6.2.

               (b) Representations, Warranties and Covenants; Obligations of the Seller; Certificate.
Subject to the provisions of Article 3, all of the Seller’s representations and warranties
made in this Agreement shall be materially true and correct as of the date hereof as of the date of
Closing as if then made (except to the extent that any such representations and warranties shall be
modified to reflect matters, if any, which arise subsequent to the date hereof, as set forth in
Article 3 hereof, and the Seller shall have executed and delivered to the Purchaser at
Closing a certificate to the foregoing effect; provided that a change in a Seller representation or
warranty that would not give the Purchaser the right to terminate this Agreement pursuant to
Article 3 hereof shall not constitute a failure of this condition to be satisfied.

               (c) Intentionally Deleted.

               (d) Management Agreement. The Seller shall, effective on or before the date of
Closing, effect the termination of the Management Agreement and pay all costs incurred in
connection therewith. The Seller shall indemnify and hold the Purchaser harmless from any claims
or liability relating to the Management Agreement.

               (e) Holtsville Utility Ground Lease Estoppel. The Seller shall have delivered to the
Purchaser a written statement from the lessee under the Holtsville Utility Ground Lease
acknowledging the commencement and termination dates of the Holtsville Utility Ground Lease, that
there is no material default except as otherwise noted in such written statement, that the
Holtsville Utility Ground Lease is in full force and effect except as otherwise noted in such
written statement, and that the Holtsville Utility Ground Lease has not been modified (or if it
has, stating such modification).

               (f) Holtsville Retail Ground Lease Estoppel. The Seller shall have delivered to the
Purchaser a written statement from the lessee under the Holtsville Retail Ground Lease
acknowledging the commencement and termination dates of the Holtsville Retail Ground Lease, that
there is no material default except as otherwise noted in such written statement, that the
Holtsville Retail Ground Lease is in full force and effect except as otherwise noted in such
written statement, and that the Holtsville Retail Ground Lease has not been modified except as
contemplated by this Agreement (or if it has, stating such modification).

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               (g) REA Estoppel. The Seller shall have delivered to the Purchaser a written
statement from the counterparty under the REA acknowledging the commencement and termination dates
of the REA, that there is no material default except as otherwise noted in such written statement,
that the REA is in full force and effect except as otherwise noted in such written statement, and
that the REA has not been modified (or if it has, stating such modification).

     5.2 Conditions to Seller’s Obligations. The Seller’s obligations hereunder are
subject to the satisfaction of the following conditions precedent and the compliance by the
Purchaser with the following covenants:

               (a) Purchaser’s Deliveries. The Purchaser shall have delivered to the Title Company
or the Seller, as the case may be, on or before the date of Closing, all of the documents and other
information required of the Seller pursuant to Section 6.3.

               (b) Representations, Warranties and Covenants; Obligations of the Seller; Certificate.
All of the Purchaser’s representations and warranties made in this Agreement shall be materially
true and correct as of the date hereof and as of the date of Closing as if then made, the Purchaser
shall have performed all of the covenants and other obligations under this Agreement applicable to
the Purchaser and the Purchaser shall have executed and delivered to the Purchaser at Closing a
certificate to the foregoing effect.

ARTICLE 6

CLOSING

     6.1 Closing. The Closing shall be conducted through the Title Company or in another
manner at a location that is mutually acceptable to the parties, on or before the date that is
twenty (20) days following the expiration of the Study Period, as it may be extended pursuant to
Sections 2.3(d), 2.3(e), and 2.3(g) and Article 3; but in no
event shall Closing occur after September 1, 2010. Possession of the Property and the Utility
Property shall be delivered to the Purchaser and the Utility Purchaser, respectively at the
Closing, subject only to Permitted Title Exceptions and guests of the Hotel.

     6.2 Seller’s Deliveries. At Closing, the Seller shall deliver to Purchaser all of
the following instruments (except where previously provided to Purchaser), each of which shall
have been, where applicable, duly executed and, where applicable, acknowledged on behalf of the
applicable Seller (except where otherwise noted) and shall be dated as of the date of Closing:

               (a) The certificate required by Section 5.1(b);

               (b) The Deed;

               (c) The Bill of Sale (Inventory);

               (d) The Bill of Sale (Personal Property);

               (e) The Assignment and Assumption Agreement (Operative Agreements);

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               (f) The Assignment and Assumption Agreement (Ground Leases);

               (g) The fully executed Ground Lease Amendments;

               (h) The Three Party Agreement (signed by the lessee under the Holtsville Retail Ground Lease);

               (i) The Utility Deed;

               (j) The Utility Bill of Sale;

               (k) The Utility Assignment and Assumption Agreement (Utility Operative Agreements);

               (l) The Utility Assignment and Assumption Agreement (Utility Ground Lease);

               (m) Certificate(s)/Registration of Title for any vehicle owned by the Seller and the Utility
and used in connection with the Property or the Utility Property;

               (n) Such agreements, affidavits or other documents as may be required by the Title Company to
issue the Owner’s Title Policy with affirmative coverage over mechanics’ and materialmen’s liens if
any shall exist;

               (o) The FIRPTA Certificate;

               (p) The Utility FIRPTA Certificate;

               (q) True, correct and complete copies of all warranties, if any and if in the Seller’s
possession, of manufacturers, suppliers and installers possessed by the Seller and relating to the
Improvements, the Personal Property, the Utility Improvements and the Utility Personal Property, or
any part thereof;

               (r) Two New York State Real Property Transfer Tax Returns (the “TP-584’s”) and two New
York State Equalization and Assessment Forms (the “RP-5217’s”);

               (s) Subject to Purchaser having made any required tax filings in compliance with applicable
law, an indemnification in a form reasonably acceptable to Purchaser from Seller with respect to
Seller’s compliance with the bulk sales laws or similar statutes;

               (t) A written instrument executed by the Seller, conveying and transferring to the Purchaser
all of the Seller’s right, title and interest (to the extent assignable, and without recourse to
the Seller) in any telephone numbers and facsimile numbers relating to the Property, and, if the
Seller maintains a post office box, conveying to the Purchaser all of its interest in and to such
post office box and the number associated therewith, so as to assure a continuity in operations and
communications;

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               (u) All current real estate and personal property tax bills in the Seller’s possession;

               (v) A complete set of all guest registration cards, guest transcripts, guest histories, and
all other available guest information;

               (w) A complete list of all advance room reservations, functions and the like, in reasonable
detail so as to enable the Purchaser to honor the Seller’s commitments in that regard;

               (x) A list of the Seller’s outstanding accounts receivable as of 11:59 p.m. on the date prior
to the Closing, specifying the name of each account and the amount due the Seller;

               (y) Written notice executed by the Seller notifying the tenant under the Holtsville Retail
Ground Lease and the tenant under the Holtsville Utility Ground Lease that the Property has been
conveyed to the Purchaser and directing that all payments, inquiries and the like be forwarded to
the Purchaser at the address to be provided by the Purchaser;

               (z) All keys for the Property, to the extent in Seller’s possession and control;

               (aa) An assignment, without recourse, of all warranties and guarantees from all contractors
and subcontractors, manufacturers, and suppliers in effect with respect to the Improvements; and

               (bb) Complete set of “as-built” drawings for the Improvements, if any in Seller’s possession.

Notwithstanding anything to the contrary contained herein, (i) the items described in (u)-(w) and
(z) may be delivered to the Purchaser at the Property, and (ii) copies of books, records, operating
reports, appraisal reports, files and other materials in the Seller’s possession or control which
are necessary in the Purchaser’s discretion to maintain continuity of operation of the Property and
which are specified in a notice from the Purchaser to the Seller shall be delivered to the
Purchaser promptly after the Closing.

     6.3 Purchaser’s Deliveries. At Closing, the Purchaser shall pay or deliver to the
Seller the following, each of which shall have been, where applicable, duly executed and, where
applicable, acknowledged on behalf of the Purchaser (except where otherwise noted) and shall be
dated as of the date of Closing:

               (a) The certificate required by Section 5.2(b);

               (b) The portion of the Purchase Price described in Section 2.4(b);

               (c) The Assignment and Assumption Agreement (Operative Agreements) (executed by the
Purchaser’s Hotel Lessee);

               (d) The Assignment and Assumption (Ground Leases);

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               (e) The Three Party Agreement (executed by the Purchaser and the Utility Purchaser);

               (f) The Utility Assignment and Assumption Agreement (Utility Operative Agreements) (executed
by the Utility Purchaser);

               (g) The Utility Assignment and Assumption Agreement (Utility Ground Lease) (executed by the
Utility Purchaser);

               (h) A guaranty of the Utility Purchaser’s obligations under the Three Party Agreement from
Purchaser, in a form reasonable acceptable to the Seller; and

               (i) The TP-584’s and the RP-5217’s (executed by the Purchaser and the Utility Purchaser, as
applicable).

     6.4 Closing Costs. All closing costs and expenses will be allocated between the
Purchaser and the Seller in accordance with the customary practice in the county in which the
Property is located, except as allocated specifically between the Purchaser and the Seller below.
The Seller and the Purchaser shall each be responsible for the payment of its own attorney’s fees
incurred in connection with transaction which is the subject of this Agreement.

               (a) Purchaser Costs. The Purchaser shall pay for: (i) all costs and expenses
associated with the inspection and due diligence of the Property and the Utility Property
(including, but not limited to, any new or updated surveys), (ii) all costs associated with the
assignment of the Franchise Agreement or the termination of the Franchise Agreement and issuance of
a new franchise agreement to which the Purchaser is a party (including, if Closing occurs, all
costs associated with the PIP, including all costs incurred by the Seller associated with the PIP),
(iii) the Purchaser’s title insurance policy, (iv) all state and other recordation taxes, and (v)
one-half of the fee charged by the Title Company to serve as escrow agent hereunder. If the Closing
occurs, all costs incurred by the Seller associated with the PIP shall be paid by Purchaser to the
Seller at the Closing.

               (b) Seller Costs. The Seller shall pay for: (i) the releases of any mortgages and
other financing encumbering the Property or the Utility Property and for any costs associated with
any corrective instruments, (ii) the New York State Transfer Tax due in connection with the
conveyance of the Property, (iii) one-half (.5) of the fee charged by the Title Company to serve as
escrow agent hereunder.

     6.5 Income and Expense Allocations.

               (a) All income, except any Intangible Personal Property, and expenses with respect to the
Property or the Utility Property, and applicable to the period of time before and after Closing,
determined in accordance with sound accounting principles consistently applied, shall be allocated
between the Seller and the Purchaser. The Seller shall be entitled to all income and responsible
for all expenses for the period of time up to but not including the Closing Date, and the Purchaser
shall be entitled to all income and responsible for all expenses for the period of time from, after
and including the Closing Date. Without limiting the generality of the foregoing, the following
items of income and expense shall be allocated at Closing:

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                 (i) Current and prepaid rents, including, without limitation, prepaid room receipts,
function receipts and other reservation receipts (the obligations with respect to which the
Purchaser hereby assumes);

                (ii) Real estate and personal property taxes;

               (iii) Amounts under Operative Agreements or Utility Operative Agreements to be assigned
to and assumed by the Purchaser or its lessee;

               (iv) License and permit fees, where transferable;

               (v) Value of fuel stored on the Property or the Utility Property at the price paid for
such fuel by the Seller, including any taxes;

               (vi) All prepaid reservations and contracts for rooms confirmed by the Seller prior to
the Closing Date for dates after the Closing Date, all of which Purchaser shall honor; and

               (vii) The Tray Ledger.

               (b) Prior to the Closing, the Purchaser and the Seller shall cooperate to arrange for utility
services to the Property to be discontinued in the Seller’s name, as of the day immediately prior
to the Closing Date, and to be reinstated in the Purchaser’s name, as of the Closing Date. In the
event that the foregoing cannot be effectuated, then the Seller shall furnish readings of the
applicable utility meters to a date not more than thirty (30) days prior to the Closing Date, and
the unfixed charges, if any, based thereon for the intervening time, shall be apportioned on the
basis of such last readings. The Seller shall receive a credit for the amounts of any deposits on
account with utility companies servicing the Property or the Utility Property (and the Seller and
the Purchaser each agrees to cooperate to effectuate the transfer of any such deposits), provided
that, at the Seller’s option, the Seller will obtain a refund of any such utility deposits in
effect and Purchaser shall provide Purchaser’s own utility deposits directly to the applicable
utility companies, in which event the Seller shall not receive a credit for the amount of any such
deposits. In addition, at the Closing the Seller shall transfer to the Purchaser any required
escrow or reserve accounts maintained by the Seller in connection with the Sewage Facilities, and
the Seller shall receive a credit for the aggregate amount of such escrow or reserve accounts.

               (c) The Seller shall receive a credit for any prepaid expenses accruing to periods on or after
the Closing Date. At Closing, the Seller shall sell to Purchaser, and Purchaser shall purchase
from the Seller, all petty cash funds located at the Property or the Utility Property.

               (d) The Seller shall be required to pay all sales taxes and similar impositions in respect of
the Property and the Utility Property applicable to the period prior to the Closing Date, and the
Purchaser shall be required to pay all sales taxes and similar impositions applicable to the
period from and after the Closing Date.

               (e) The Purchaser shall not be obligated to collect any accounts receivable or revenues
accrued prior to the Closing Date on behalf of the Seller, but shall cooperate, at the

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Seller’s cost, in connection with any collection efforts. If the Purchaser collects same, the
Purchaser will remit to the Seller such amounts in the form received within ten (10) days of such
collection.

               (f) If accurate allocations of any item cannot be made at Closing because current bills are
not obtainable, the parties shall allocate such income or expenses at Closing on the best available
information, subject to adjustment upon receipt of the final bill or other evidence of the
applicable income or expense. Any income received or expense incurred by the Seller or the
Purchaser with respect to the Property or the Utility Property after the date of Closing shall be
promptly allocated in the manner described herein and the parties shall promptly pay or reimburse
any amount due.

               (g) The provisions of this Section 6.5 shall survive the Closing for one (1) year.

     6.6 Guest Property.

               (a) On the Closing Date, safe deposit boxes in the Hotel shall be opened in the presence of
representatives of the Seller and the Purchaser and the contents thereof shall be recorded. Any
property contained in the safe deposit boxes and so recorded shall be the responsibility of the
Purchaser and the Purchaser hereby agrees to indemnify and hold harmless the Seller and each of the
Seller Affiliates from and against any claim, loss, damage or liability (including reasonable
attorneys’ fees and costs of enforcement of the foregoing indemnification obligation) arising out
of such property.

               (b) All guest baggage or other guest property checked and left in the possession, care and
control of the Seller shall be listed in an inventory to be prepared in duplicate and signed by
representatives of the Seller and the Purchaser on the Closing Date. The Purchaser shall be
responsible for all baggage listed in the inventory and the Purchaser hereby agrees to indemnify
and hold harmless Seller and each of the Seller Affiliates from and against any claim, loss, damage
or liability (including reasonable attorneys’ fees and costs of enforcement of the foregoing
indemnification obligation) arising out of such baggage listed in the inventory.

ARTICLE 7

CONDEMNATION; RISK OF LOSS

     7.1 Condemnation. In the event of any actual or threatened taking, pursuant to the
power of eminent domain, of all or any portion of the Real Property or the Utility Real Property,
or any proposed sale in lieu thereof, the Seller shall give written notice thereof to the
Purchaser (the “Condemnation Notice”) promptly after the Seller learns or receives notice
thereof. If all or any part of the Real Property or the Utility Real Property which would
materially interfere with the operation or use of the Hotel or the Sewage Facilities is, or is to
be, so condemned or sold, the Purchaser shall have the right to terminate this Agreement by
giving notice thereof to the Seller not later than ten (10) days after the Purchaser shall have
received the Condemnation Notice, in which event the Deposit shall be returned to the Purchaser
and all rights and obligations of the Seller and the Purchaser hereunder shall

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terminate, except those that specifically survive termination of this Agreement. If the
Purchaser elects not to terminate this Agreement, then there shall be no abatement of the
Purchase price and all proceeds, awards and other payments arising out of such condemnation or
sale (actual or threatened) shall be paid or assigned, as applicable, to the Purchaser at
Closing.

     7.2 Risk of Loss. In the event of any fire or other casualty affecting the Property
or the Utility Property, the Seller shall give written notice thereof to the Purchaser promptly
after the Seller learns or receives notice thereof (the “Casualty Notice”). If the fire
or other casualty causes damage to the Property (excluding any improvements on the portion of the
Land leased under the Holtsville Retail Ground Lease) which would cost in excess of One Million
Five Hundred Thousand and No/100 Dollars ($1,500,000.00) or would require more than one hundred
eighty (180) days to repair (as reasonably determined by the Seller and the Purchaser), the
Purchaser and the Seller shall each have the right to terminate this Agreement by giving notice
thereof to the other not later than ten (10) days after the Purchaser shall have received the
Casualty Notice, in which event the Deposit shall be returned to the Purchaser and all rights and
obligations of the Seller and the Purchaser hereunder shall terminate, except those that
specifically survive termination of this Agreement. If the neither the Purchaser nor the Seller
elects to terminate this Agreement, all insurance proceeds and rights to proceeds arising out of
such loss or damage shall be paid or assigned, as applicable, to the Purchaser at Closing (less
any expenses incurred by the Seller in connection with any adjustment of the proceeds), and
Seller shall pay to Purchaser the amount of any deductible, under applicable insurance policies.

ARTICLE 8

LIABILITY OF PURCHASER; LIABILITY OF SELLER;

TERMINATION RIGHTS

     8.1 Liability of Purchaser and Seller. Except for any obligation expressly assumed
or agreed to be assumed by the Purchaser hereunder, the Purchaser does not assume any obligation
of the Seller or any liability for claims arising out of any occurrence prior to Closing. The
Seller shall not be responsible for any obligation of the Purchaser or any liability for claims
arising out of any occurrence on or after Closing.

     8.2 Intentionally Deleted.

     8.3 Indemnification by Purchaser. The Purchaser hereby indemnifies and holds the
Seller harmless from and against any and all claims, costs, penalties, damages, losses,
liabilities and expenses (including reasonable attorneys’ fees), that may at any time be incurred
by the Seller after Closing as a result of Purchaser’s failure to honor advance bookings made by
the Seller prior to the Closing.

     8.4 Termination by Purchaser. If the Seller defaults in performing any of its
obligations under this Agreement (including its obligation to sell the Property), and the Seller
fails to cure any such matter within ten (10) business days after notice thereof from the
Purchaser, the Purchaser, at its option, may elect either (a) to terminate this Agreement, in
which event the Deposit shall be forthwith returned to the Purchaser and all other rights and

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obligations of the Seller and the Purchaser hereunder shall terminate immediately (except
those which expressly survive the termination of this Agreement), (b) to waive its right to
terminate and, instead, to proceed to Closing, or (c) seek specific performance of this
Agreement.

     8.5 Termination by Seller. If the Purchaser defaults in performing any of its
obligations under this Agreement (including its obligation to purchase the Property), and the
Purchaser fails to cure any such default within ten (10) business days after notice thereof from
the Seller (except that there shall be no cure period with respect to the Purchaser’s obligation
to close hereunder on the Closing Date), then the Seller’s sole remedy for such default shall be
to terminate this Agreement, in which event the Deposit shall be forthwith paid to the Seller and
all other rights and obligations of the Seller and the Purchaser hereunder shall terminate
immediately (except those which expressly survive the termination of this Agreement). The Seller
and the Purchaser agree that, in the event of such a default, the damages that the Seller would
sustain as a result thereof would be difficult if not impossible to ascertain. Therefore, the
Seller and the Purchaser agree that the Seller shall retain the Deposit as full and complete
liquidated damages and as the Seller’s sole remedy.

ARTICLE 9

“AS-IS” SALE

     AS IS, WHERE IS. PURCHASER EXPRESSLY ACKNOWLEDGES AND AGREES THAT, AS A MATERIAL PART
OF THE CONSIDERATION FOR THIS AGREEMENT, THE PROPERTY AND THE UTILITY PROPERTY IS BEING SOLD TO
PURCHASER, THE PURCHASER’S HOTEL LESSEE, AND THE UTILITY PURCHASER, AS APPLICABLE, AND PURCHASER
AGREES TO AND TO CAUSE THE UTILITY PURCHASER AND THE PURCHASER’S HOTEL LESSEE TO PURCHASE AND
ACCEPT THE PROPERTY AND THE UTILITY PROPERTY, AND EACH AND EVERY PART AND COMPONENT THEREOF, IN AN
“AS IS, WHERE IS” CONDITION AS OF THE CLOSING WITH NO REPRESENTATIONS OR WARRANTIES FROM SELLER,
EITHER EXPRESS OR IMPLIED EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT. PURCHASER AGREES THAT
PURCHASER IS NOT RELYING UPON, AND HAS NOT RECEIVED OR BEEN GIVEN, ANY REPRESENTATIONS (EXCEPT AS
EXPRESSLY SET FORTH IN THIS AGREEMENT), STATEMENTS OR WARRANTIES (ORAL OR WRITTEN, IMPLIED OR
EXPRESS) OF OR BY ANY OFFICER, EMPLOYEE, AGENT OR REPRESENTATIVE OF SELLER, OR ANY SALESPERSON OR
BROKER (IF ANY) INVOLVED IN THIS TRANSACTION, AS TO THE PROPERTY OR THE UTILITY PROPERTY OR ANY
PART OR COMPONENT THEREOF IN ANY RESPECT.

ARTICLE 10

MISCELLANEOUS PROVISIONS

     10.1 Completeness; Modification. This agreement constitutes the entire agreement
between the parties hereto with respect to the transactions contemplated hereby and supersedes all
prior discussions, understandings, agreements and negotiations between the parties hereto. This
Agreement may be modified only by a written instrument duly executed by the parties hereto.

28

 

     10.2 Assignments. The Purchaser shall neither assign its rights nor delegate its
obligations hereunder without obtaining the Seller’s prior written consent, which consent may be
granted or withheld in the Seller’s sole discretion. For purposes of further clarification, a
sale, conveyance, assignment or other transfer of any direct or indirect interest in the Purchaser
or any of its members or beneficial owners, regardless of the amount or type of interest so
transferred, shall not be permitted hereunder; provided, however, that the transfer
of the outstanding capital stock of Purchaser by persons or parties through the “over-the-counter”
market or any recognized national securities exchange shall not be prohibited. Any purported or
attempted assignment or delegation without obtaining the Seller’s prior written consent shall be
void and of no effect and shall constitute a default hereunder. Notwithstanding the foregoing, the
Purchaser may assign its rights hereunder to an entity under common control with the Purchaser (a
“Permitted Assignee”), provided that (i) the Purchaser shall provide the Seller with the
name of and other information pertaining to the proposed Permitted Assignee requested by Seller
(including, without limitation, evidence that the Permitted Assignee is in fact a Permitted
Assignee as defined above prior to the Closing Date, (ii) such Permitted Assignee assumes all of
the obligations of the Purchaser under this Agreement pursuant to an assignment and assumption
agreement in form reasonably acceptable to the Seller, (iii) no assignment of this Agreement to a
Permitted Assignee shall relieve the Purchaser from any of the Purchaser’s obligations hereunder,
and (iv) no such assignment shall have the effect of delaying the Closing in any respect.

     10.3 Successors and Assigns. This Agreement shall inure to the benefit of and bind
the Purchaser and the Seller and their respective successors and permitted assigns.

     10.4 Days. If any action is required to be performed, or if any notice, consent or
other communication is given, on a day that is a Saturday or Sunday or a legal holiday in the State
of New York, such performance shall be deemed to be required, and such notice, consent or other
communication shall be deemed to be given, on the first (1st) business day following
such Saturday, Sunday or legal holiday. Unless otherwise specified herein, all references herein
to a “day” or “days” shall refer to calendar days and not business days.

     10.5 Governing Law. This Agreement and all documents referred to herein shall be
governed by and construed and interpreted in accordance with the laws of the State of New York
without regard to the rules regarding conflicts of laws in such State.

     10.6 Counterparts. To facilitate execution, this Agreement may be executed in as many
counterparts as may be required. It shall not be necessary that the signature on behalf of both
parties hereto appear on each counterpart hereof. All counterparts hereof shall collectively
constitute a single agreement. Furthermore, pdf or facsimile transmissions of signed copies of
this Agreement shall be deemed originals.

     10.7 Severability. If any term, covenant or condition of this Agreement, or the
application thereof to any person or circumstance, shall to any extent be invalid or unenforceable,
the remainder of this Agreement, or the application of such term, covenant or condition to other
persons or circumstances, shall not be affected thereby, and each term, covenant or condition of
this Agreement shall be valid and enforceable to the fullest extent permitted by law.

29

 

     10.8 Costs. Regardless of whether Closing occurs hereunder, and except as otherwise
expressly provided herein, each party hereto shall be responsible for its own costs in connection
with this Agreement and the transactions contemplated hereby, including without limitation fees of
attorneys, engineers and accountants.

     10.9 Notices. All notices, requests, demands and other communications hereunder
(each, a “Notice”) shall be in writing and shall be to have been given (i) when delivered
by hand with signed receipt obtained, (ii) upon receipt when sent prepaid by Federal Express (or a
comparable overnight delivery service), (iii) three (3) days after the date mailed, when sent by
the United States mail, certified, postage prepaid, return receipt requested, or (iv) when
transmitted by facsimile machine during business hours on a business day (otherwise the next
business day), in each case at or to the addresses or facsimile numbers, as applicable, and with
such copies as designated below. Rejection or other refusal to accept or the inability to deliver
because of changed address of which no notice was given as herein required shall be deemed to be
receipt of the Notice sent.

	 	 	 

	If
to the Seller:

	 	Holtsville Hotel Group LLC
	 

	 	Holtsville Utility LLC
	 

	 	c/o RD Management LLC
	 

	 	810 Seventh Avenue
	 

	 	New York, New York 10019
	 

	 	Attn: Steven Nachman, Esq.
	 

	 	Fax: (212) 492-8469
	 
	 	 
	with a copy to:

	 	Wachtel & Masyr, LLP
	 

	 	One Dag Hammarskjold Plaza
	 

	 	885 Second Avenue
	 

	 	New York, New York 10017
	 

	 	Attn: Avram Posner, Esq.
	 

	 	Fax: (212) 909-9464
	 
	 	 
	and a copy to:

	 	Susan Griffin
	 

	 	Hospitality Investments LLC
	 

	 	123 Tunxis Village
	 

	 	Farmington, CT 06032
	 

	 	Fax:860-676-0106
	 
	 	 
	If to the Purchaser:

	 	Chatham Lodging Trust
	 

	 	50 Cocoanut Row
	 

	 	Suite 200
	 

	 	Palm Beach, Florida 33480
	 

	 	Attn: Jeffrey H. Fisher
	 

	 	Fax: (561) 650-0571
	 
	 	 
	with a copy to:

	 	Hunton & Williams
	 

	 	1900 K Street, N.W.
	 

	 	Washington, D.C. 20006
	 

	 	Attn:  John M. Ratino, Esq.
	 

	 	Fax:  (202) 778-2201

30

 

Or to such other address as the intended recipient may have specified in a notice to the other
party. Any party hereto may change its address or fax number or designate different or other
persons or entities to receive copies by notifying the other party in the manner described in this
Section 10.9, and such change of address or fax number or designation shall be effective
ten (10) days after Notice thereof shall be given to the notified party. Notices may be given by a
party’s attorney.

     10.10 Incorporation by Reference. All of the exhibits attached hereto are by this
reference incorporated herein and made a part hereof.

     10.11 Further Assurances. The Seller and the Purchaser each covenant and agree to
sign, execute and deliver, or cause to be signed, executed and delivered, and to do or make, or
cause to be done or made, upon the written request of the other party, any and all agreements,
instruments, papers, deeds, acts or things, supplemental, confirmatory or otherwise, as may be
reasonably required by either party hereto for the purpose of or in connection with consummating
the transactions described herein. The provisions of this Section 10.11 shall survive the
Closing.

     10.12 No Partnership. This Agreement does not and shall not be construed to create a
partnership, joint venture or any other relationship between the parties hereto except the
relationship of seller and purchaser specifically established hereby.

     10.13 Time of Essence. Time is of the essence with respect to every provision hereof.
Notwithstanding this Section 10.13, no provision of this Agreement shall prevent either
the Seller or the Purchaser from extending any deadline, cure period or other timeframe for
performance hereunder in accordance with the terms set forth herein.

     10.14 Confidentiality. The existence of this Agreement and the terms and provisions
of this Agreement shall remain confidential and shall not be disclosed, by either the Purchaser or
any affiliate thereof or the Seller, to any third (3rd) party other than: (a) as may be
required by law or regulation or to comply with the filing requirements of any applicable
legislation or rule; or (b) any counsel, consultant, or agent assisting the Seller with the sale of
the Property and any counsel, consultant, or agent assisting the Purchaser with the purchase of the
Property, provided that any such counsel, consultant or agent shall have been advised that the
terms and provisions of this Agreement are to remain confidential and not to be disclosed to any
other party; or (c) by Purchaser in any necessary (as determined by the Purchaser in good faith)
filing with the U.S. Securities and Exchange Commission; or (d) by the Purchaser in a limited press
release that discloses only the Purchase Price, that the Hotel is an upper, upscale extended stay
hotel, and that the Hotel is located in the State of New York; or (e) by the Borrower after the
Closing. If the Purchaser does not proceed with the purchase of the Property, the Purchaser shall
return to the Seller all materials and information furnished to it by the Seller or the Seller’s
agents in connection with the Purchaser’s review of the Property. The provisions of this
Section 10.14 shall survive any termination of this Agreement, provided that the Purchaser
may issue a limited press release describing the termination of this Agreement and identifying only
those items

31

 

described in clause (d) above in connection with any termination of this Agreement, but shall
not include in any such press release the reason(s) for the termination of this Agreement.

     10.15 No Third-Party Beneficiary. The provisions of this Agreement and of the
documents to be executed and delivered at Closing are and will be for the benefit of the Seller and
the Purchaser only and are not for the benefit of any third (3rd) party, and
accordingly, no third (3rd) party shall have the right to enforce the provisions of this
Agreement or of the documents to be executed and delivered at Closing.

     10.16 Waiver of Jury Trial. The Seller and the Purchaser each hereby waive any right
to jury trial in connection with the enforcement by the Purchaser, or the Seller, of any of their
respective rights and remedies hereunder.

     10.17 Exculpation. The Purchaser agrees, and agrees on behalf of Purchaser’s Hotel
Lessee and the Utility Purchaser (the Purchaser, the Purchaser’s Hotel Lessee and the Utility
Purchaser being collectively referred to herein as the “Purchaser Parties”), that the
Purchaser Parties do not have and will not have any claims or causes of action against any
disclosed or undisclosed officer, director, employee, agent, trustee, shareholder, partner, member,
manager, principal, parent, subsidiary or other affiliate of the Seller, or any officer, director,
employee, agent, trustee, trustee, shareholder, manager, member, partner or principal of any such
parent, subsidiary or other affiliate (collectively, “Seller’s Affiliates”), arising out of
or in connection with this Agreement or the transactions contemplated hereby. The Purchaser
Parties agree to look solely to the Seller and its assets for the satisfaction of any liability or
obligation arising under this Agreement or the transactions contemplated hereby, or for the
performance of any of the covenants, warranties or other agreements contained herein, and further
agrees not to sue or otherwise seek to enforce any personal obligation against any of Seller’s
Affiliates with respect to any matters arising out of or in connection with this Agreement or the
transactions contemplated hereby. Without limiting the generality of the foregoing provisions of
this Section 10.17, the Purchaser Parties hereby unconditionally and irrevocably waive any
and all claims and causes of action of any nature whatsoever it may now or hereafter have against
Seller’s Affiliates, and hereby unconditionally and irrevocably release and discharge Seller’s
Affiliates from any and all liability whatsoever which may now or hereafter accrue in favor of the
Purchaser Parties against Seller’s Affiliates, in connection with or arising out of this Agreement
or the transactions contemplated hereby. If any action is brought by any of the Purchaser Parties
against Seller’s Affiliates, relating to or arising out of this Agreement, the transaction or
subject matter described herein or the enforcement hereof, Seller’s Affiliates shall be entitled to
recover from the Purchaser attorneys’ fees, costs and expenses incurred in connection with the
defense of such action and the Purchaser Parties shall jointly and severally indemnify, and hold
harmless Seller’s Affiliates from and against any and all losses, expenses, damages, and liability
resulting from any claim or action brought against Seller’s Affiliates in violation of this
Section 10.17. The provisions of this Section 10.17 shall survive the Closing or
the termination of this Agreement.

     10.18 Title Company. The Title Company, in its capacity as escrow agent hereunder,
agrees to hold the Deposit in accordance with the terms hereof and to comply with additional
written instructions from the parties, to the extent that such instructions are not in conflict.

32

 

               (a) If the Closing occurs, then at Closing, the Deposit shall be released to Seller and shall
be credited against the Purchase Price.

               (b) In all other cases, any and all payments made by the Title Company from the Deposit shall
be made in accordance with this Section 10.18(c). If either the Purchaser or the Seller
delivers written notice to the Title Company requesting release of the Deposit (a “Disbursement
Notice”), the Title Company shall deliver a copy of such Disbursement Notice to the party who
did not deliver the Disbursement Notice. Unless within five (5) business days after delivery of
such Disbursement Notice by the Title Company, the Title Company receives from such party a notice
objecting to the release of the Deposit from escrow (an “Objection Notice”), the Title
Company shall disburse the Deposit as set forth in the Disbursement Notice. If an Objection Notice
is delivered within such five (5) Business-Day period, the Title Company shall continue to hold the
Earnest Money until otherwise directed by either (i) joint written instructions from the Purchaser
and the Seller, or (ii) a firm and final court order binding on the Title Company which has not
been stayed, vacated or appealed before disbursement of the Deposit; provided, however, that
notwithstanding the foregoing, the Title Company shall have the right in the event of such a
dispute to deposit the Deposit with any federal or state court then having jurisdiction over an
interpleader action with respect to the Deposit. The Title Company shall give written notice of
any such deposit to the Purchaser and the Seller. Upon such deposit or other disbursement in
accordance with the provisions of this Section 10.18(c), the Title Company shall be
relieved and discharged of all further obligations with respect to the amounts so deposited or
disbursed and all further obligations and liability to the parties hereto with respect to its
obligations under this Agreement.

               (c) Acceptance by the Title Company of its duties under this Agreement is subject to the
following terms and conditions:

          (i) The duties and obligations of the Title Company shall be determined solely by the
provisions of this Agreement and any written instruction from the parties consistent with
this Agreement that are not in conflict, and the Title Company shall not be liable except
for the performance of such duties and obligations as are specifically set out in this
Agreement or such instructions;

          (ii)

    The Seller and the Purchaser will jointly and severally reimburse and indemnify
the Title Company for, and hold it harmless against any loss, liability or expense,
including but not limited to reasonable attorneys’ fees, incurred without bad faith,
negligence or willful misconduct on the part of the Title Company, arising out of or in
connection with any dispute or conflicting claim by the Seller or the Purchaser under this
Agreement, as well as the costs and expense of defending against any claim or liability
arising out of or relating to this Agreement except where such claim or liability arises
from the bad faith, negligence or willful misconduct on the part of the Title Company; as
between the Seller (on the one hand) and the Purchaser (on the other hand) their obligations
under this subsection 10.18(d)(ii) shall be shared equally;

          (iii)

   The Title Company shall be fully protected in acting on and relying upon any
written notice, instruction, direction or other document which the Title

33

 

Company in good faith believes to be genuine and to have been signed or presented by
the proper party or parties;

               (iv) The Title Company may seek the advice of legal counsel in the event of any dispute
or question as to the construction of any of the provisions of this Agreement or its duties
hereunder, and it shall incur no liability and shall be fully protected in respect of any
action taken or suffered by it in good faith in accordance with the opinion of such counsel;

               (v) The Title Company may resign and be discharged from its duties hereunder at any
time by giving written notice of such resignation to each of the Purchaser and the Seller
specifying a date, not less than thirty (30) days after the date of such notice, when such
resignation will take effect. Upon the date hereof of such resignation, the Title Company
shall deliver the funds held in escrow to such person or persons as the Purchaser and the
Seller shall in writing jointly direct, and upon such delivery the Title Company shall be
relieved of all duties and liabilities thereafter accruing under this Agreement. The
Purchaser and the Seller shall have the right at any time upon joint action to substitute a
new Title Company by giving notice thereof to the Title Company then acting;

               (vi) Nothing contained in this Agreement shall in any way affect the right of the Title
Company to have at any time a judicial settlement of its accounts as Title Company under
this Agreement;

               (vii) All disbursements by Title Company shall be made by bank wire transfer of
immediately available federal funds to the account or accounts of the receiving party or its
designee(s), as such party may direct.

     10.19 Prevailing Party. If either party institutes a legal action against the other
arising out of this Agreement or any default hereunder, the party who does not substantially
prevail such action will reimburse the other party for the reasonable expenses of prosecuting or
defending such action, including without limitation attorneys’ fees and disbursements and court
costs. The obligations under this Section 10.19 shall survive the termination of this
Agreement.

     10.20 [Intentionally Deleted]

     10.21 Brokerage. The Purchaser and the Seller each represent and warrant to the other
that it has not dealt with any broker, consultant, finder or like agent who might be entitled to a
commission or compensation on account of introducing the parties hereto, the negotiation or
execution of this Agreement or the closing of the transactions contemplated hereby other than Felix
Cacciatto of Hotel Equity Advisors (the “Broker”). The Purchaser shall pay the One Hundred
Fifty Thousand and No/100 Dollars ($150,000.00) commission due the Broker pursuant to a separate
agreement with the Broker. Each party agrees to indemnify, defend and hold harmless the other
party, its successors, assigns and agents, from and against the payment of any commission,
compensation, loss, damages, costs, and expenses (including without limitation reasonable
attorneys’ fees and costs) incurred in connection with, or arising out of, claims for any broker’s,
agent’s or finder’s fees of any person claiming by or through such party other than

34

 

Broker. The obligations of the Seller and the Purchaser under this Section 10.21 shall
survive the Closing or the termination of this Agreement.

     10.22 Exchange Provisions. Either party shall be permitted to transfer the Property
(or interests in the Property) as part of a tax-free like-kind exchange (the “Exchange”)
under Section 1031 of the Internal Revenue Code (the “Code”). Accordingly, each party
shall cooperate with each other in structuring the transfer of the Property (or interests in the
Property)) as a tax-free like-kind exchange (forward and reverse type exchanges included); the
Purchaser’s or the Seller’s cooperation shall include, but not be limited to, permitting the
assignment by of rights under this Agreement to a qualified intermediary (as defined in Treasury
Regulation Section 1.1031 (k)-1(g)(4)(iii)), and/or entering into an agreement with a qualified
intermediary for the acquisition of the Property (or interests in the Property). Notwithstanding
the foregoing, the party entering into the Exchange shall fully reimburse, indemnify, defend and
hold harmless the other party for all costs and expenses it incurs in connection with the Exchange,
and nothing in this Section 10.22 shall permit either party to extend the Closing Date,
require either party to take title to any other property, or to incur any additional expenses or
liability. The provisions of this Section 10.22 shall survive Closing.

     10.23 No Recording. The parties hereto agree that neither this Agreement nor any
memorandum or notice hereof shall be recorded, and the Purchaser agrees not to file any lis pendens
or other instrument against the Property or the Utility Property in connection herewith. In
furtherance of the foregoing, the Purchaser (i) acknowledges that the filing of a lis pendens or
other evidence of the Purchaser’s rights or the existence of this Agreement against the Property or
the Utility Property, could cause significant monetary and other damages to Seller, and (ii) hereby
indemnifies the Seller and the Seller Affiliates from and against any and all liabilities, damages,
losses, costs or expenses (including, without limitation, reasonable attorneys’ fees and costs
incurred in the enforcement of the foregoing indemnification obligation) arising out of the breach
by the Purchaser of any of the Purchaser’s obligations under this Section 10.23, and (iii)
agrees that a breach of this provision by Purchaser shall immediately entitle Seller to terminate
this Agreement and keep the Deposit as liquidated damages. The filing of this Agreement with any
court in connection with any litigation hereunder shall not be deemed a breach of this Section
10.23. The provisions of this Section 10.23 shall survive the termination of this
Agreement.

     10.24 No Continued Marketing of the Hotel for Sale. The Seller shall not solicit,
negotiate, execute or otherwise pursue offers for the purchase and sale of the Property or the
Utility Property with any party, other than the Purchaser, during the term of this Agreement.

[SIGNATURES ON FOLLOWING PAGE]

35

 

     IN WITNESS WHEREOF, the Seller and the Purchaser have caused this Agreement to be executed in
their names by their respective duly-authorized representatives.

	 	 	 	 	 
	 	SELLER:

HOLTSVILLE HOTEL GROUP LLC, 

 	 
	 	By:  	/s/ Jay Furman
 	 
	 	 	Jay Furman, 	 
	 	 	President 	 
	 

	 	 	 	 	 
	 	FB HOLTSVILLE UTILITY LLC, 

 	 
	 	By:  	FBB Partners,
 	 
	 	 	its sole member 	 
	 	 	 	 
	 

					
	 	
 	 
	 	By:  	MFB Realty LLC,
 	 
	 	 	Managing General Partner 	 
	 	 	 	 
	 

					
	 	
 	 
	 	By:  	/s/ Jay Furman
 	 
	 	 	Jay Furman, Manager 	 
	 	 	 	 
	 

	 	 	 	 	 
	 	PURCHASER:

CHATHAM HOLTSVILLE RI LLC, 

 	 
	 	By:  	/s/ Peter M. Willis
 	 
	 	 	Peter M. Willis 	 
	 	 	Executive Vice President 	 
	 

As to Section 10.17 only:

					
	 	

CHATHAM HOLTSVILLE RI LEASECO LLC

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Party 	 
	 

					
	 	

CHATHAM HOLTSVILLE RI UTILITY LLC

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

[Purchase and Sale Agreement Signature Page]

 

Chatham Lodging Trust hereby guaranties to the Seller all of the obligations of the Purchaser that
survive the termination of this Agreement.

	 	 	 	 	 
	 	CHATHAM LODGING TRUST

 	 
	 	By:  	/s/ Peter M. Willis
 	 
	 	 	Peter M. Willis 	 
	 	 	Executive Vice President 	 
	 

Title Company executes this Agreement below solely for the purpose of acknowledging that it agrees
to be bound by the provisions of this Agreement relating to Title Company and the holding and
disbursement of the Deposit.

	 	 	 	 	 
	 	CHICAGO TITLE INSURANCE COMPANY

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

[Purchase and Sale Agreement Signature Page]exv10w1

Central Co-operative Bank

Senior Management Incentive Compensation Plan

Fiscal 2011

 

 

CENTRAL CO-OPERATIVE BANK

Somerville, Massachusetts

Since fiscal 2005, Thomas Warren and Associates was been retained by the Bank to update its Senior
Management Incentive Compensation Plan. The plan was adopted by the Board and the appropriate
incentive levels were also approved by the Board. As a result of not reaching goals under the
plan, no awards have been paid under this plan for several years. However, we do believe that the
plan has merit and that the plan should be re-approved by the Board with appropriate goals for
fiscal 2011. The incentive goals are based on the budget approved by the Board.

The highlights of the incentive plan follow:

	 	1.	 	The plan is competitive compared with similar sized banks and the banking
industry in general.
	 
	 	2.	 	The Board of Directors controls all aspects of the Plan
	 
	 	3.	 	The Plan is directed at the Bank’s senior executives
	 
	 	4.	 	The financial criterion necessary for plan operation consists of achievement of
specified levels of ROAA
	 
	 	5.	 	Incentive distributions range from 0% of base salary (did not meet goal) to 24%
of base salary (maximum performance of plan).
	 
	 	6.	 	Award distribution would be made during the fiscal 2012 for fiscal 2011
performance.
	 
	 	7.	 	The categories of incentive plan participants and the related bonus range are
as follows:

	 	 	 	 	 	 
	 	 	Position:	 	Range of Bonus Awards:
	 
	 	 	 	 	 
	 

	 	CEO & President
	 	 	0% - 24%
	 
	 	 	 	 	 
	 

	 	Senior Vice Presidents
	 	 	0% - 18%

1

 

Appendix A

CENTRAL CO-OPERATIVE BANK

Somerville, Massachusetts

Fiscal 2011 Performance Goals

The Board of Directors has established the following performance goals for the 2011 plan year:

	 	1.)	 	Meet or exceed a ROAA (Return on Average Assets) of .40%
	 
	 	2.)	 	In calculating ROAA, net income for the year excludes the following items: any
gains or losses on the sale or write-down of investment securities and bonus expense
calculated under this plan and any other bonus plan for the benefit of “exempt”
employees, all as computed on an after-tax basis.

2

 

Appendix B

CENTRAL BANK

Somerville, Massachusetts

Distribution of Awards

CEO and PRESIDENT AWARD

0 –24%

	 	 	 	 	 
	ROAA	 	Bonus %
	 

	0.40%
	 	 	4.00	%
	0.45
	 	 	9.00	 
	0.50
	 	 	14.00	 
	0.55
	 	 	19.00	 
	0.60
	 	 	24.00	 

SENIOR VICE PRESIDENT AWARD

0- 18%

	 	 	 	 	 
	ROAA	 	Bonus %
	 

	0.40%
	 	 	4.00	%
	0.45
	 	 	7.50	 
	0.50
	 	 	11.00	 
	0.55
	 	 	14.50	 
	0.60
	 	 	18.00	 

Note: Achievement of an actual ROAA level between .40% and .60% that is not equal to one of the
specified levels presented herein will be pro-rated in computing the actual bonus award.

3

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