Document:

Exhibit 10.1

Exhibit
10.1

UNISOURCE ENERGY CORPORATION

2011 Omnibus Stock and Incentive Plan

 

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	ARTICLE I ESTABLISHMENT, PURPOSE, AND EFFECTIVE DATE OF PLAN
	 	 	1	 
	1.1 Establishment
	 	 	1	 
	1.2 Effective Date
	 	 	1	 
	 
	 	 	 	 
	ARTICLE II PLAN OVERVIEW
	 	 	1	 
	2.1 Purpose
	 	 	1	 
	2.2 Glossary
	 	 	1	 
	 
	 	 	 	 
	ARTICLE III ADMINISTRATION
	 	 	2	 
	3.1 Administration
	 	 	2	 
	3.2 Actions of the Committee
	 	 	2	 
	3.3 Authority of the Committee
	 	 	2	 
	 
	 	 	 	 
	ARTICLE IV STOCK SUBJECT TO PLAN
	 	 	3	 
	4.1 Number
	 	 	3	 
	4.2 Lapsed Awards
	 	 	3	 
	4.3 Adjustment in Capitalization
	 	 	4	 
	4.4 Replacement Awards
	 	 	4	 
	 
	 	 	 	 
	ARTICLE V DURATION OF PLAN
	 	 	4	 
	5.1 Duration of Plan
	 	 	4	 
	 
	 	 	 	 
	ARTICLE VI STOCK OPTIONS
	 	 	5	 
	6.1 Grant of Options
	 	 	5	 
	6.2 Incentive Stock Options
	 	 	5	 
	6.3 Option Award Agreement
	 	 	6	 
	6.4 Exercise Price; No Repricing
	 	 	6	 
	6.5 Duration of Options
	 	 	6	 
	6.6 Exercise of Options
	 	 	7	 
	6.7 Payment
	 	 	7	 
	6.8 Termination of Service
	 	 	7	 
	6.9 Non-Transferability of Options
	 	 	7	 

 

A-i

 

	 	 	 	 	 
	ARTICLE VII STOCK APPRECIATION RIGHTS
	 	 	7	 
	7.1 Grant of Stock Appreciation Rights
	 	 	7	 
	7.2 SAR Award Agreement
	 	 	8	 
	7.3 Duration of SAR
	 	 	8	 
	7.4 Exercise of SARs
	 	 	8	 
	7.5 Payment of SAR Amount
	 	 	8	 
	7.6 Termination of Service
	 	 	9	 
	7.7 Non-Transferability of SARs
	 	 	9	 
	 
	 	 	 	 
	ARTICLE VIII RESTRICTED STOCK, RESTRICTED STOCK UNITS, STOCK GRANTS, STOCK UNITS AND
DIVIDEND EQUIVALENTS
	 	 	9	 
	8.1 Grant of Restricted Stock and Restricted Stock Units
	 	 	9	 
	8.2 Period of Restriction and Vesting Conditions
	 	 	10	 
	8.3 Stock Grant Awards
	 	 	10	 
	8.4 Stock Unit Awards
	 	 	10	 
	8.5 Transferability
	 	 	11	 
	8.6 Voting Rights
	 	 	11	 
	8.7 Dividends and Other Distributions
	 	 	11	 
	8.8 Dividend Equivalents
	 	 	11	 
	8.9 Termination of Service
	 	 	12	 
	 
	 	 	 	 
	ARTICLE IX PERFORMANCE UNIT, PERFORMANCE SHARE, AND PERFORMANCE CASH AWARDS
	 	 	12	 
	9.1 Grant of Performance Units or Performance Shares
	 	 	12	 
	9.2 Performance Cash Awards
	 	 	13	 
	9.3 Conditions on Awards
	 	 	13	 
	9.4 Performance Criteria
	 	 	13	 
	9.5 Termination of Service
	 	 	13	 
	9.6 Non-Transferability
	 	 	13	 
	 
	 	 	 	 
	ARTICLE X PERFORMANCE-BASED COMPENSATION AWARDS
	 	 	14	 
	10.1 Purpose and Applicability
	 	 	14	 
	10.2 Types of Performance-Based Compensation Awards
	 	 	14	 
	10.3 Committee Discretion with Respect to Performance-Based Compensation
Awards
	 	 	14	 
	10.4 Establishment of Performance Goals
	 	 	15	 
	10.5 Performance Evaluation; Adjustment of Goals
	 	 	16	 
	10.6 Adjustment of Performance Compensation Awards
	 	 	16	 

 

A-ii

 

	 	 	 	 	 
	10.7 Continued Employment Required
	 	 	17	 
	10.8 Certification by Committee
	 	 	17	 
	10.9 Maximum Award
	 	 	17	 
	10.10 Miscellaneous
	 	 	17	 
	 
	 	 	 	 
	ARTICLE XI BENEFICIARY DESIGNATION
	 	 	17	 
	11.1 Beneficiary Designation
	 	 	17	 
	 
	 	 	 	 
	ARTICLE XII

RIGHTS AND OBLIGATIONS OF PARTIES
	 	 	18	 
	12.1 No Guarantee of Employment or Service Rights
	 	 	18	 
	12.2 Participation
	 	 	18	 
	12.3 Right of Setoff
	 	 	18	 
	12.4 Section 83(b) Election
	 	 	18	 
	12.5 Forfeiture and Recapture of Awards
	 	 	18	 
	12.6 Rights of Shareholder
	 	 	19	 
	 
	 	 	 	 
	ARTICLE XIII

CHANGE IN CONTROL
	 	 	20	 
	13.1 In General
	 	 	20	 
	13.2 Exceptions
	 	 	20	 
	 
	 	 	 	 
	ARTICLE XIV

AMENDMENT, MODIFICATION, AND TERMINATION OF PLAN
	 	 	21	 
	 
	 	 	 	 
	ARTICLE XV

TAX WITHHOLDING
	 	 	21	 
	15.1 Tax Withholding
	 	 	21	 
	15.2 Form of Payment
	 	 	21	 
	 
	 	 	 	 
	ARTICLE XVI

INDEMNIFICATION
	 	 	22	 
	16.1 Indemnification
	 	 	22	 
	 
	 	 	 	 
	ARTICLE XVII

REQUIREMENTS OF LAW
	 	 	22	 
	17.1 Requirements of Law
	 	 	22	 
	17.2 Governing Law
	 	 	22	 
	17.3 Securities Law Compliance
	 	 	22	 
	17.4 Restrictions
	 	 	22	 
	17.5 Stock Certificates
	 	 	23	 
	17.6 Section 409A of the Code
	 	 	23	 
	17.7 Severability
	 	 	24	 

 

A-iii

 

	 	 	 	 	 
	ARTICLE XVIII

MISCELLANEOUS
	 	 	24	 
	18.1 Funding of Plan
	 	 	24	 
	18.2 Successors
	 	 	24	 
	18.3 Fractional Shares
	 	 	24	 
	18.4 Gender and Number
	 	 	24	 
	18.5 Titles and Headings
	 	 	24	 
	18.6 Survival of Provisions
	 	 	24	 

GLOSSARY

 

A-iv

 

UNISOURCE ENERGY CORPORATION

2011 OMNIBUS STOCK AND INCENTIVE PLAN

ARTICLE I

Establishment, Purpose, and Effective Date of Plan

1.1 Establishment. Subject to the approval of the shareholders of UniSource Energy
Corporation, an Arizona corporation (“UniSource” or the “Company”), the Company hereby establishes
the UniSource Energy Corporation 2011 Omnibus Stock and Incentive Plan (the “Plan”). The Plan
supersedes and replaces the UniSource Energy Corporation 2006 Omnibus Stock and Incentive Plan (the
“2006 Omnibus Plan”) and all other prior equity compensation plans or programs maintained by the
Company (collectively the “Prior Plans”). The Prior Plans, however, shall remain in effect until
all stock options and other awards granted under such Prior Plans have been exercised, forfeited,
canceled, expired or otherwise terminated in accordance with the terms of such awards.

1.2 Effective Date. The Plan is effective as of the date it is approved by the
Company’s Board of Directors (the “Effective Date”), but is subject to approval by the Company’s
shareholders at its 2011 Annual Meeting. Any Awards granted prior to such shareholder approval
shall be expressly conditioned upon such shareholder approval of the Plan.

ARTICLE II

Plan Overview

2.1 Purpose. The purpose of the Plan is to permit the Committee established pursuant
to Section 3.1 or the Board, as the case may be, to grant Awards to certain present and future
Employees, Directors and consultants, thereby giving them a stake in the growth and prosperity of
the Company and encouraging the continuance of their service with the Company or its subsidiaries.
The Awards that may be granted pursuant to the Plan include: Options, Stock Appreciation Rights,
Restricted Stock, Restricted Stock Units, Performance Units, Performance Shares, Performance Cash,
Stock Grants, Stock Units and Dividend Equivalents.

2.2 Glossary. When a word or phrase appears in the Plan with the initial letter
capitalized, and the word or phrase does not commence a sentence, the word or phrase shall
generally be a term defined in the Introduction or in the attached Glossary, which is incorporated
into and made part of this Plan, unless a clearly different meaning is required by the context in
which the word or phrase is used or the word or phrase is defined for a limited purpose elsewhere
in the Plan document.

 

A-1

 

ARTICLE III

Administration

3.1 Administration. The Committee shall be responsible for the administration of the
Plan. The Committee shall consist of not less than two Directors of the Company who are
“non-employee directors” within the meaning of
Rule 16b-3 of the Securities Exchange Act of 1934, “outside directors” within the meaning of Section 162(m) of the Code and regulations
thereunder, and “independent directors” as described in the NYSE’s Listed Company Manual, as each
such rule or regulation is in effect from time to time. The Board may, from time to time, remove
members from, or add members to, the Committee. Any vacancies on the Committee shall be filled by
members of the Board. The foregoing notwithstanding, the Board shall perform the functions of the
Committee for purposes of granting Awards to non-Employee Directors, except to the extent that the
Board delegates some or all of these functions to the Committee.

3.2 Actions of the Committee. A majority of the members of the Committee shall
constitute a quorum. The Committee may act at a meeting, including a telephonic meeting, by action
of a majority of the members present, or without a meeting by unanimous written consent.

3.3 Authority of the Committee. The Committee is authorized to interpret the Plan and
any Award Agreement issued under the Plan; to prescribe, amend, and rescind rules and regulations
relating to the Plan; to provide for conditions and assurances deemed necessary or advisable to
protect the interests of the Company; and to make all other determinations necessary or advisable
for the administration of the Plan, but only to the extent not contrary to the express provisions
of the Plan. Determinations, interpretations, or other actions made or taken by the Committee in
good faith pursuant to the provisions of the Plan shall be final, binding and conclusive for all
purposes and upon all persons whomsoever. In addition, the Committee may prescribe, amend and
rescind such rules and regulations as may be necessary or appropriate to provide different terms
and conditions for awards to participants who are foreign nationals or employees outside of the
U.S. if necessary or desirable to recognize differences in local law or tax policy.

The Committee shall have the authority, subject to the express provisions of the Plan, in its
discretion, (a) to determine the Employees, Directors and consultants to whom Awards shall be
granted; (b) to determine the times when such Awards shall be granted, the size and type of Awards,
the purchase price or exercise price of Awards, the period(s) during which such Awards shall be
exercisable (whether in whole or in part), and any other terms, restrictions and conditions
applicable to Awards (which need not be identical); and (c) to amend or modify any outstanding
Awards under the Plan to the extent the terms of such Award are within the discretion of the
Committee as provided under the Plan. As permitted by law and the rules of the New York Stock
Exchange or any other established securities market on which the Stock is traded, the Committee may
delegate any authority granted to it herein; provided, however, that the Committee may not delegate
to the Company’s executive officers the power and authority to make, cancel, or suspend Awards to
executive officers or Directors.

All authority of the Board and the Committee with respect to Awards issued pursuant to this
Plan, including the authority to amend outstanding Awards, shall continue after the term of this
Plan so long as any Award remains outstanding.

 

A-2

 

ARTICLE IV

Stock Subject to Plan

4.1 Number. The Shares to be delivered under the Plan may consist, in whole or in
part, of authorized but unissued Stock or treasury Stock not reserved for any other purpose.
Subject to adjustment as provided in Sections 4.2 and 4.3, a total of one million two hundred
thousand (1,200,000) Shares shall be authorized for issuance or to be used for reference purposes
pursuant to Awards granted under the Plan. The number of Shares authorized for issuance shall be
reduced by one Share for each Share subject to awards granted under any Prior Plan on or after
January 1, 2011; provided, however, that no awards will be granted under any Prior Plan on or after
the Effective Date. In addition to the above aggregate limitation:

(a) No Participant shall be granted Options or Stock Appreciation Rights in any 12-month
period covering more than six hundred thousand (600,000) Shares.

(b) No Participant shall be eligible to earn a Performance Unit and/or a Performance Cash
Award for any 12-month Performance Period with a potential value in excess of two million Dollars
($2,000,000). If the Performance Period is less than or exceeds 12 months, the dollar limit
expressed in the preceding sentence shall be reduced or increased proportionately, as the case may
be. For example, if the Performance Period is three years, the limit shall be increased by
multiplying it by three.

(c) The maximum number of Shares that may be issued under the Plan as Incentive Stock Options
is one million two hundred thousand (1,200,000).

4.2 Lapsed Awards. In the event any Awards granted under this Plan, or any awards
outstanding under any Prior Plan after December 31, 2010, shall be forfeited, terminate, be
canceled or expire, the number of Shares subject to such Awards, to the extent of any such
forfeiture, termination, cancellation or expiration, shall thereafter again be available for grant
under the Plan. In addition, if Shares are not delivered pursuant to a Restricted Stock Unit,
Stock Unit, Dividend Equivalent, Performance Unit, or a SAR Award that is not related to an Option,
because the Award is paid in cash, such Shares shall not be deemed to have been delivered for
purposes of determining the maximum number of Shares available for delivery under the Plan. The
exercise of a stock-settled SAR or broker-assisted “cashless” exercise of an Option (or a portion
thereof) will reduce the number of Shares of Stock available for issuance pursuant to Section 4.1
by the entire number of Shares of Stock subject to that SAR or Option (or applicable portion
thereof), even though a smaller number of Shares of Stock will be issued upon such an exercise.
Shares of Stock tendered to pay the exercise price of an Option or tendered or withheld to satisfy
a tax withholding obligation arising in connection with an Option, SAR or any other Award will not
become available for grant or sale under the Plan. Moreover, Shares purchased on the open market
with the cash proceeds generated by the exercise of an Option will not increase or replenish the
number of Shares available for issuance pursuant to Section 4.1.

 

A-3

 

4.3 Adjustment in Capitalization. In the event of any change in corporate
capitalization, such as a stock split, or a corporate transaction, such as any merger,
consolidation, separation, including a spin-off, or other distribution of stock or property of the
Company, extraordinary cash dividend, any reorganization (whether or not such reorganization comes
within the definition of such term in Section 368 of the Code) or any partial or complete
liquidation of the Company, an adjustment shall be made in the number and class of Shares available
for Awards, the number and class of and/or price of Shares subject to outstanding Awards granted
under the Plan and the number of Shares set forth in Sections 4.1 and 4.2, as may be determined to
be appropriate and equitable by the Committee, in its sole discretion, to prevent dilution or
enlargement of rights; provided, however, that the number of Shares subject to any Award shall
always be a whole number by rounding any fractional Share to the nearest whole Share. Moreover, in
the event of such transaction or event, the Committee, in its discretion, may provide in
substitution for any or all outstanding Awards under the Plan such alternative consideration
(including cash) as it, in good faith, may determine to be equitable under the circumstances and
may require in connection therewith the surrender of all Awards so replaced. Any adjustment to an
Incentive Stock Option shall be made consistent with the requirements of Section 424 of the Code.
Further, with respect to any Option or Stock Appreciation Right that otherwise satisfies the
requirements of the stock rights exception to Section 409A of the Code, any adjustment pursuant to
this Section 5.3 shall be made consistent with the requirements of the final regulations
promulgated pursuant to Section 409A of the Code.

4.4 Replacement Awards. In the event of any corporate transaction in which the Company
or a Subsidiary acquires a corporate entity which, at the time of such transaction, maintains an
equity compensation plan pursuant to which awards of stock options, stock appreciation rights,
performance shares, performance units, restricted stock, restricted stock units, stock units or
dividend equivalents are then outstanding (the “acquired plan”), the Committee may, in its
discretion, make Awards under this Plan to assume, substitute or convert such outstanding awards in
such manner as may be determined to be appropriate and equitable by the Committee, in its sole
discretion, to prevent dilution or enlargement of rights; provided, however, that the number of
Shares subject to any Award shall always be a whole number by rounding any fractional Share to the
nearest whole Share. Options or SARs issued pursuant to this Section 4.4 shall not be subject to
the requirement that the exercise price of such Award not be less than the Fair Market Value of
Stock on the date the Award is granted. Shares used in connection with an Award granted in
substitution for an award outstanding under an acquired plan under this Section 4.4 shall not be
counted against the number of Shares reserved under this Plan under Section 4.1. Any shares
authorized and available for issuance under the acquired plan shall, subject to adjustment as
described in Section 4.3, be available for use in making Awards under this Plan with respect to
persons eligible under such acquired plan, by virtue of the Company’s assumption of such acquired
plan, consistent with Rule 303A(8) of the NYSE Listed Company Manual, as such Rule may be amended
or replaced from time to time.

ARTICLE V

Duration of Plan

5.1 Duration of Plan. The Plan shall remain in effect, subject to the right of the
Company’s Board of Directors to amend or terminate the Plan at any time pursuant to Section 14.1,
until all Shares subject to the Plan shall have been purchased or granted according to the Plan’s
provisions. However, in no event may an Award be granted under the Plan on or after the
tenth anniversary of the Effective Date unless the shareholders of the Company approve an
extension of the Plan.

 

A-4

 

ARTICLE VI

Stock Options

6.1 Grant of Options. Subject to the terms and provisions of the Plan, Options may be
granted to one or more Participants in such number, upon such terms and conditions, and at any time
and from time to time, as determined by the Committee in its sole discretion. The Committee may
grant either Nonqualified Stock Options or Incentive Stock Options and shall have complete
discretion in determining the number of Options of each granted to each Participant, subject to the
limitations of Article IV.

6.2 Incentive Stock Options. Incentive Stock Options shall be granted only to
Participants who are Employees. The terms of any Incentive Stock Options granted pursuant to the
Plan must comply with the following provisions of this Section 6.2:

(a) Exercise Price. Subject to Section 6.2(e), the exercise price per Share of Stock shall be
set by the Committee, provided that the exercise price for any Incentive Stock Option may not be
less than the Fair Market Value of one Share of Stock on the Grant Date.

(b) Exercise. In no event may any Incentive Stock Option be exercisable for more than ten
years from the Grant Date.

(c) Lapse of Option. An Incentive Stock Option shall lapse in the following circumstances:

(i) The Incentive Stock Option shall lapse ten years from the Grant Date, unless an earlier
time is set in the Award Agreement.

(ii) The Incentive Stock Option shall lapse upon termination for Cause or for any other
reason, other than the Participant’s death or Disability, unless otherwise provided in the Award
Agreement.

(iii) Unless otherwise provided in the Award Agreement, if the Participant terminates
employment on account of Disability or death before the Option lapses pursuant to paragraph (i) or
(ii) above, the Incentive Stock Option shall lapse, unless it is previously exercised, on the
earlier of (a) the scheduled expiration date of the Option; or (b) 12 months after the date of the
Participant’s Termination of Employment on account of Disability or death. Upon the Participant’s
Disability or death, any Incentive Stock Options exercisable at the Participant’s Disability or
death may be exercised by the Participant’s legal representative or representatives, by the person
or persons entitled to do so pursuant to the Participant’s last will and testament in the case of
death, or, if the Participant fails to make testamentary disposition of such Incentive Stock Option
or dies intestate, by the person or persons entitled to receive the Incentive Stock Option pursuant
to the applicable laws of descent and distribution.

 

A-5

 

(d) Individual Dollar Limitation. The aggregate Fair Market Value (determined as of the time
an Award is made) of all Shares of Stock with respect to which Incentive Stock Options are first
exercisable by a Participant in any calendar year may not exceed $100,000.00 or such other
limitation as may be imposed by Section 422(d) of the Code, as it may be amended or replaced. To
the extent that Incentive Stock Options are first exercisable by a Participant in excess of such
limitation, the excess shall be considered Non-Qualified Stock Options.

(e) Ten Percent Owners. An Incentive Stock Option may be granted to any individual who, at the
Grant Date, owns stock possessing more than ten percent of the total combined voting power of all
classes of Stock of the Company only if such Option is granted at a price that is not less than
110% of Fair Market Value on the Grant Date and the Option is exercisable for no more than five
years from the Grant Date.

(f) Expiration of Incentive Stock Options. No Award of an Incentive Stock Option may be made
pursuant to this Plan after the tenth anniversary of the Effective Date, unless the shareholders of
the Company vote to approve an extension of the Plan.

(g) Right to Exercise. Except as provided in Section 6.2(c)(iii), during a Participant’s
lifetime, an Incentive Stock Option may be exercised only by the Participant.

6.3 Option Award Agreement. Each Option shall be evidenced by an Award Agreement that
shall specify the type of Option granted, the Option price, the duration of the Option, the number
of Shares of Stock to which the Option pertains, and such other terms and conditions (which need
not be identical among Participants) as the Committee shall determine in its sole discretion. The
Award Agreement shall specify whether the Option is to be treated as an ISO within the meaning of
Section 422 of the Code. If such Option is not designated as an ISO, such Option shall be deemed a
NQSO.

6.4 Exercise Price; No Repricing. Except as otherwise provided in Section 4.4 with
respect to replacement Awards, no Option shall be granted pursuant to the Plan at an exercise price
that is less than the Fair Market Value of the Stock on the Grant Date of the Option.
Notwithstanding any other provision in the Plan to the contrary, an Option may not be amended or
modified to reduce the exercise price after the Grant Date, and may not be surrendered in
consideration of or exchanged for cash, other Awards or a new Option having an exercise price below
that of the Option being surrendered or exchanged, except in connection with a Change in Control or
as otherwise provided in Section 4.3 with respect to an adjustment in capitalization, without
approval of the Company’s shareholders.

6.5 Duration of Options. Each Option shall expire at such time or times as the
Committee shall determine at the time it is granted, provided, however, that no Option shall be
exercisable later than ten years from the Grant Date.

 

A-6

 

6.6 Exercise of Options. Options granted under the Plan shall vest at such time or
times and in such manner, and be subject to such restrictions and conditions, as the Committee
shall in each instance approve, which need not be the same for all Participants; provided,
however, that an Option shall not be fully vested prior to the third anniversary of the Grant
Date of the Option, except (in the Committee’s discretion) in the case of death, Disability or a
Change in Control or in any replacement Award granted pursuant to Section 4.4. An incremental
portion of the Option may become vested at the end of each year of the three-year vesting period in
accordance with the terms of the Award Agreement. For example, if the Option vests over a
three-year period, each year the Option may become vested with respect to one-third of the total
Shares available for purchase pursuant to the Option. For purposes of this Plan, no Option is
exercisable until it vests.

6.7 Payment. The Committee shall determine: (a) the methods by which the exercise
price of an Option may be paid; (b) the form of payment, including, without limitation, cash,
Shares of Stock, any net-issuance arrangement or other property acceptable to the Committee
(including broker-assisted “cashless exercise” arrangements); and (c) the methods by which Shares
of Stock shall be delivered or deemed to be delivered to Participants.

6.8 Termination of Service. The Committee shall set forth in the applicable Award
Agreement the extent to which a Participant shall have the right to exercise the Option or Options
following the Participant’s Termination of Employment or Termination of Service. Such provisions
shall be in the sole discretion of the Committee, need not be uniform among all Options issued
pursuant to the Plan, and may reflect distinctions based on the reasons for such termination,
including, but not limited to, termination for Cause or reasons relating to the breach or
threatened breach of restrictive covenants.

6.9 Non-Transferability of Options. No Option granted under the Plan may be sold,
transferred, pledged, assigned, or otherwise alienated or hypothecated, otherwise than by will or
by the laws of descent and distribution. Further, all Incentive Stock Options and, except as
otherwise provided in the applicable Award Agreement, Nonqualified Stock Options, granted to a
Participant under the Plan shall be exercisable only by such Participant during his or her
lifetime. Notwithstanding the foregoing, the Committee may, in its sole discretion, permit the
transfer of an Option to a family member or family trust or partnership, or to a charitable
organization, provided that no value or consideration is received by the Participant with respect
to such transfer.

ARTICLE VII

Stock Appreciation Rights

7.1 Grant of Stock Appreciation Rights. Subject to the terms and provisions of the
Plan, Stock Appreciation Rights may be granted to one or more Participants in such number, upon
such terms and conditions, and at any time and from time to time, as determined by the Committee in
its sole discretion. The Committee may grant Non-Tandem SARs, Tandem SARs, or any combination of
these forms of SARs. The Committee shall designate, at the time of grant, the grant price of a
Non-Tandem SAR, which grant price shall be at least equal to the Fair Market Value of a Share on
the Grant Date of the SAR (or, if applicable, on the Grant Date of an Option with respect to a
Non-Tandem SAR granted in exchange for, but subsequent to, the Option (subject to the requirements
of Section 409A of the Code)), except as otherwise provided in Section 4.4 with respect to
replacement awards. The grant price of Tandem SARs shall equal the exercise price of the related Option. Notwithstanding any other provision in the Plan to
the contrary, a SAR may not be amended or modified to reduce the grant price after the Grant Date,
and may not be surrendered in consideration of or exchanged for cash, other Awards or a new SAR
having a grant price below that of the SAR being surrendered or exchanged, except in connection
with a Change in Control or as otherwise provided in Section 4.3 with respect to an adjustment in
capitalization, without shareholder approval.

 

A-7

 

7.2 SAR Award Agreement. Each SAR shall be evidenced by an Award Agreement that shall
specify the type of SAR granted, the SAR grant price, the duration of the SAR, the number of Shares
of Stock to which the Award pertains, and such other terms and conditions (which need not be
identical among Participants) as the Committee shall determine in its sole discretion.

7.3 Duration of SAR. The term of a SAR granted under the Plan shall not exceed ten
years. A Tandem SAR shall have the same term as the Option to which it relates.

7.4 Exercise of SARs. SARs granted under the Plan shall vest at such time or times and
in such manner, and be subject to such restrictions and conditions, as the Committee shall in each
instance approve, which need not be the same for all Participants; provided, however, that a SAR
shall not be fully vested prior to the third anniversary of the date on which the SAR was granted,
except (in the Committee’s discretion) in the case of death, Disability, or a Change in Control or
in any replacement Award granted pursuant to Section 4.4. An incremental portion of the SAR may
become vested at the end of each year of the three-year vesting period in accordance with the terms
of the Award Agreement. For example, if the SAR becomes vested over a three-year period, each year
the SAR may become vested with respect to one-third of the total SARs. Tandem SARs may be
exercised for all or part of the Shares subject to the related Option upon the surrender of the
right to exercise the equivalent portion of the related Option. A Tandem SAR may be exercised only
with respect to the Shares for which its related Option is then exercisable. Notwithstanding any
other provision of the Plan to the contrary, with respect to a Tandem SAR granted in connection
with an ISO: (a) the Tandem SAR will expire no later than the expiration of the underlying ISO;
(b) the value of the payout with respect to the Tandem SAR may be for no more than 100% of the
difference between the Option exercise price of the underlying ISO and the Fair Market Value of the
Shares subject to the underlying ISO at the time the Tandem SAR is exercised; and (c) the Tandem
SAR may be exercised only when the Fair Market Value of the Shares subject to the ISO exceeds the
Option exercise price of the ISO. For purposes of this Plan, no SAR is exercisable until it vests.

7.5 Payment of SAR Amount. Upon exercise of the SAR, the holder shall be entitled to
receive payment of an amount determined by multiplying (a) the difference between the Fair Market
Value of a Share of Stock at the date of exercise over the price fixed by the Committee at the
Grant Date, by (b) the number of Shares with respect to which the SAR is exercised. Payment shall
be made in the manner and at the time designated by the Committee in the Award Agreement. In the
exercise of its discretion, the Committee may provide in the Award Agreement that payment for the
SARs will be made in cash or Stock, or deferred cash or Stock, or in a combination thereof. The
payment provisions shall be structured to either qualify for an
exception to or to comply with the provisions of Section 409A of the Code and applicable
regulations.

 

A-8

 

7.6 Termination of Service. The Committee shall set forth in the applicable Award
Agreement the extent to which a Participant shall have the right to exercise the SARs following
Termination of Employment or Termination of Service. Such provisions shall be in the Committee’s
discretion, need not be uniform among all SAR Awards issued pursuant to the Plan, and may reflect
distinctions based on the reasons for such termination, including, but not limited to, termination
for Cause or reasons relating to the breach or threatened breach of restrictive covenants.

7.7 Non-Transferability of SARs. No SAR granted under the Plan may be sold,
transferred, pledged, assigned, or otherwise alienated or hypothecated, otherwise than by will or
by the laws of descent and distribution. Further, except as otherwise provided in the Award
Agreement, all SARs granted to a Participant under the Plan shall be exercisable only by such
Participant during his or her lifetime. Notwithstanding the foregoing, the Committee may, in its
sole discretion, permit the transfer of a SAR to a family member or family trust or partnership, or
to a charitable organization, provided that no value or consideration is received by the
Participant with respect to such transfer.

ARTICLE VIII

Restricted Stock, Restricted Stock Units, Stock Grants, Stock Units and Dividend Equivalents

8.1 Grant of Restricted Stock and Restricted Stock Units. Subject to the terms and
provisions of the Plan, Restricted Stock and/or Restricted Stock Units may be granted to one or
more Participants in such number, upon such terms and conditions, and at any time and from time to
time, as determined by the Committee in its sole discretion. Each Restricted Stock or Restricted
Stock Unit Award will be evidenced by an Award Agreement that shall specify the Period or Periods
of Restriction, the number of Shares of Restricted Stock or the number of Restricted Stock Units
granted and such other provisions as the Committee shall determine.

Payment for Restricted Stock Units shall be made in the manner and at the time designated by
the Committee in the Award Agreement. In the Award Agreement, the Committee may provide that
payment will be made in cash or Stock, or in deferred cash or Stock, or in a combination thereof.
The payment provisions described in the Award Agreement shall be structured to either qualify for
an exception to or to comply with the provisions of Section 409A of the Code and the applicable
regulations.

Restricted Stock granted pursuant to the Plan may be evidenced in such manner as the Committee
shall determine. If certificates representing Shares of Restricted Stock are registered in the
name of the Participant, the certificates must bear an appropriate legend referring to the terms,
conditions, and restrictions applicable to such Restricted Stock, and the Company may, in its
discretion, retain physical possession of the certificate until such time as all applicable
restrictions lapse.

 

A-9

 

8.2 Period of Restriction and Vesting Conditions. The Committee may impose such
conditions and/or restrictions on any Shares of Restricted Stock and/or Restricted Stock Units
granted pursuant to the Plan as it may deem advisable, including, without limitation, a requirement
that Participants pay a stipulated purchase price for each Share of Restricted Stock, restrictions
based upon the achievement of specific Performance Goals, time-based restrictions on vesting, which
may or may not follow the attainment of the Performance Goals, sales restrictions, and/or
restrictions under applicable Federal or state securities laws.

As a general rule, the Period of Restriction for any Restricted Stock or Restricted Stock
Units with respect to which the restrictions lapse solely based on the passage of time shall not be
less than three years and the Period of Restriction for any Restricted Stock or Restricted Stock
Units with respect to which the restrictions lapse based on the satisfaction of Performance
Criteria shall not be less than one year. In either case, incremental amounts of the Restricted
Stock or Restricted Stock Units may be released from restriction at the end of each year of the
Period of Restriction in accordance with the provisions of the Award Agreement. The Period of
Restriction for Restricted Stock or Restricted Stock Unit Awards issued to newly hired Employees in
order to replace forfeited awards granted by a prior employer shall not be less than one year. The
Period of Restriction, if any, for Restricted Stock or Restricted Stock Units granted to a Director
shall be as determined by the Committee and set forth in the Award Agreement.

8.3 Stock Grant Awards. Stock Grant Awards may be granted to Participants at any time
and from time to time as shall be determined by the Committee. A Stock Grant Award grants a
Participant the right to receive (or purchase at such price as determined by the Committee) Shares
of Stock free of any vesting restrictions. The purchase price, if any, for a Stock Grant Award
shall be payable in cash or in any other form of consideration acceptable to the Committee. A
Stock Grant Award may be granted or sold as described in the preceding sentence in respect of past
services or other valid consideration, or in lieu of any cash compensation due to such Participant.
All Stock Grant Awards will be evidenced by an Award Agreement that shall specify the number of
Shares of Stock granted and such other provisions as the Committee shall determine. The payment
provisions described in the Award Agreement shall be structured to either qualify for an exception
to, or to comply with, the provisions of Section 409A of the Code and the applicable regulations.

8.4 Stock Unit Awards. Stock Unit Awards also may be granted to Participants at any
time and from time to time as shall be determined by the Committee. A Stock Unit Award grants a
Participant the right to receive Shares of Stock, or a cash payment equal to the Fair Market Value
of a designated number of Shares of Stock, in the future free of any vesting restrictions. A Stock
Unit Award may be granted as described in the preceding sentence in respect of past services or
other valid consideration, or in lieu of any cash compensation due to such Participant. All Stock
Unit Awards will be evidenced by an Award Agreement that shall specify the number of Shares of
Stock to which the Award relates, whether the Stock Units will be settled in Stock or cash, and
such other provisions as the Committee shall determine. The payment provisions described in the
Award Agreement shall be structured either to qualify for an exception to or to comply with the
provisions of Section 409A of the Code and the applicable regulations.

 

A-10

 

8.5 Transferability. Restricted Stock and/or Restricted Stock Units granted under the
Plan may not be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated,
during the Period of Restriction, except as otherwise provided in the Award Agreement or by will or
by the laws of descent and distribution. Shares issued pursuant to a Stock Grant shall not be
subject to any restrictions other than those imposed by applicable law, if any. Stock Units
granted under the Plan may not be sold, transferred, pledged, assigned or otherwise alienated or
hypothecated prior to payment, except as otherwise provided in the Award Agreement or by will or by
the laws of descent and distribution. All rights with respect to Restricted Stock and/or
Restricted Stock Units granted to a Participant under the Plan shall be available during his or her
lifetime only to such Participant. Except as otherwise provided in the Plan or in any Award
Agreement, Restricted Stock shall become freely transferable by the Participant after the last day
of the applicable Period of Restriction.

8.6 Voting Rights. Except as otherwise provided in the Award Agreement, Participants
holding Shares of Restricted Stock granted hereunder may exercise full voting rights with respect
to those Shares during the Period of Restriction. Participants shall not have any voting rights
with respect to Shares underlying a Restricted Stock Unit or Stock Unit.

8.7 Dividends and Other Distributions. Unless otherwise designated by the Committee,
Participants holding Restricted Stock granted hereunder shall be credited with regular cash
dividends declared by the Company with respect to the underlying Shares during the Period of
Restriction. Any other distributions with respect to the underlying Shares shall be held (without
provision for interest accrual) subject to the Period of Restriction applicable to the underlying
Shares. The Committee may apply any restrictions to such dividends or other distributions as it
deems appropriate.

In no event may dividends on Restricted Stock Awards that vest based on the achievement of a
Performance Goal be paid unless and until the Award is earned by satisfaction of the Performance
Goal. Pending a determination of whether the Performance Goal has been satisfied, the dividends
shall be accumulated without interest. Any dividends that become payable will be paid in the form
of cash or additional Shares of Stock in accordance with the provisions of the Award Agreement.

No cash dividends shall be paid or provided with respect to any Option or SAR Award.

8.8 Dividend Equivalents. The Committee, in its discretion, may grant a Dividend
Equivalent Award to a Participant in connection with any Restricted Stock Unit, Stock Unit,
Performance Unit or Performance Share Award granted pursuant to this Article VIII or Article IX, as
the case may be. A Dividend Equivalent Award grants a Participant the right to receive a payment
based on the dividends declared on the Shares of Stock that are subject to any Restricted Stock
Unit, Stock Unit, Performance Unit or Performance Share Award, to be credited as of dividend
payment dates, during the period between the date such Award is granted and the date such Award is
exercised, vests or expires, as determined by the Committee. In no event may a Dividend Equivalent
Award made with respect to a Restricted Stock Unit Award that vests based on the achievement of
Performance Goals, or with respect to a

 

A-11

 

Performance Unit or Performance Share Award be paid unless
and until such Award vests or is earned by satisfaction of the applicable Performance Goals. A Dividend Equivalent Award shall initially be expressed
in terms of cash or Shares of Stock, depending on the way in which the dividends to which it
relates are declared. Such Award shall be converted to cash or Shares of Stock, as the case may
be, by such formula and at such time and subject to such limitations as may be determined by the
Committee. A Dividend Equivalent Award may not be made in connection with any Option or SAR Award.
Any Dividend Equivalent Award shall be structured either to qualify for an exception to or to
comply with the provisions of Section 409A of the Code and the applicable regulations.

8.9 Termination of Service. The Committee shall set forth in the applicable Award
Agreement the extent to which a Participant shall have the right to retain Restricted Stock or
Restricted Stock Units (including any related Dividend Equivalent Award) following Termination of
Employment or Termination of Service during the Period of Restriction. Such provisions shall be in
the sole discretion of the Committee, need not be uniform among all Restricted Stock or Restricted
Stock Unit Awards issued pursuant to the Plan, and may reflect distinctions based on the reasons
for such termination, including, but not limited to, termination for Cause or reasons relating to
the breach or threatened breach of restrictive covenants.

ARTICLE IX

Performance Unit, Performance Share, and Performance Cash Awards

9.1 Grant of Performance Units or Performance Shares. Subject to the terms and
provisions of the Plan, Performance Units or Performance Shares may be granted to one or more
Participants in such number, upon such terms and conditions, and at any time and from time to time,
as shall be determined by the Committee in its sole discretion. Each Performance Unit or
Performance Share Award shall be evidenced by an Award Agreement that shall specify the Performance
Period, the Performance Goal or Goals, the number of Performance Units or Performance Shares
granted, the payment provisions, the vesting provisions, and such other provisions as the Committee
shall determine in its sole discretion. The Committee may provide in the Award Agreement for any
Performance Unit that payment will be made in cash or Stock, or in deferred cash or Stock, or in a
combination thereof. The payment provisions described in the Award Agreement shall be structured
either to qualify for an exception to or to comply with the provisions of Section 409A of the Code
and the applicable regulations.

Except as set forth below, no Performance Shares or Performance Units may fully vest during
the one-year period following the Grant Date for such Performance Shares or Performance Units.
Nevertheless, the Performance Shares or Performance Units may vest in increments during such
one-year period in accordance with the provisions of the Award Agreement. The Committee, in its
discretion, also may provide in the Award Agreement for any Performance Share or Performance Unit
Award that such Performance Shares or Performance Units will vest in whole or in part in the event
of a Termination of Employment due to death, Disability, retirement or the occurrence of a Change
in Control.

 

A-12

 

9.2 Performance Cash Awards. Subject to the terms and provisions of the Plan,
Performance Cash Awards also may be granted to Participants at any time and from time to time as
determined by the Committee. A Performance Cash Award grants a Participant the right to
receive an amount of cash depending on the satisfaction of one or more Performance Goals for a
particular Performance Period, as determined by the Committee. Each Performance Cash Award shall
be evidenced by an Award Agreement that shall specify the Performance Period, the Performance Goal
or Goals, the payment provisions and such other provisions as the Committee shall determine in its
sole discretion. The payment provisions described in the Award Agreement shall be structured
either to qualify for an exception to or to comply with the provisions of Section 409A of the Code
and the applicable regulations.

9.3 Conditions on Awards. The Committee may impose such conditions and/or restrictions
on any Performance Unit, Performance Share, or Performance Cash Award granted pursuant to the Plan
as it may deem advisable, in its discretion, including, without limitation, restrictions based upon
the achievement of specific Performance Goals (Company-wide, Subsidiary-wide, divisional, and/or
individual), time-based restrictions on vesting, which may or may not commence following the
attainment of the Performance Goals, sales restrictions, and/or restrictions under applicable
Federal or state securities laws. The time period during which any Performance Goals must be met
shall be called a Performance Period and shall be determined by the Committee in its sole
discretion; provided, however, that the Performance Period for a Performance Unit or Performance
Share Award shall not be less than one year.

9.4 Performance Criteria. The Performance Goal or Goals applicable to any Performance
Share, Performance Unit or Performance Cash Award shall be based on the Performance Criteria
selected by the Committee and designated in the Award Agreement. The Performance Criteria
applicable to any Performance Share, Performance Unit or Performance Cash Award granted to a
Covered Employee that is designated as, or deemed to be, a Performance-Based Compensation Award
pursuant to Section 10.1 shall be limited to the Performance Criteria listed in Section 10.4(a).
The Performance Criteria applicable to any other Performance Share, Performance Unit or Performance
Cash Award shall include the Performance Criteria listed in Section 10.4(a) and such other criteria
or factors as may be determined by the Committee and specified in the Award Agreement.

9.5 Termination of Service. The Committee shall set forth in the applicable Award
Agreement the extent to which a Participant shall have the right to receive Performance Unit or
Performance Share Awards (including any Dividend Equivalent Award related to either of them) or
Performance Cash Awards following Termination of Employment or Termination of Service. Such
provisions shall be in the discretion of the Committee, need not be uniform among all Performance
Unit, Performance Share, or Performance Cash Awards issued pursuant to the Plan, and may reflect
distinctions based on the reasons for such termination, including, but not limited to, termination
for Cause or reasons relating to the breach or threatened breach of restrictive covenants.

9.6 Non-Transferability. No Performance Unit, Performance Share, or Performance Cash
Award granted under the Plan may be sold, transferred, pledged, assigned, or otherwise alienated or
hypothecated, otherwise than by will or by the laws of descent and distribution. All rights with
respect to a Performance Unit, Performance Share, or Performance Cash Award granted to a
Participant under the Plan shall be exercisable only by such Participant during his or her
lifetime.

 

A-13

 

ARTICLE X

Performance-Based Compensation Awards

10.1 Purpose and Applicability. Section 162(m) of the Code limits the amount of the
Company’s deductions for compensation payable to Covered Employees to $1,000,000 per year.
“Performance-based compensation” that meets the requirements set forth in Section 162(m) and the
applicable regulations is not subject to this limitation.

The purpose of this Article X is to enable the Committee, in the exercise of its discretion,
to make performance-based Awards (the Performance-Based Compensation Awards) to Covered Employees
that will satisfy all of the requirements of the performance-based compensation exception to the
deduction limitation provisions of Section 162(m). If the Committee, in its discretion, decides
that a particular Award to a Covered Employee should qualify as “performance-based compensation,”
the Committee will provide in the Award Agreement that the Award is intended to be a
Performance-Based Compensation Award. If the Committee concludes that a particular Award to a
Covered Employee should not be qualified as “performance-based compensation,” the Committee will
indicate in the Award Agreement that the Award is not intended to be a Performance-Based
Compensation Award. Unless the Award Agreement evidencing an Award to a Covered Employee
specifically indicates that the Award is not intended to be a Performance-Based Compensation Award,
the Award will be considered to be a Performance-Based Compensation Award and will be subject to
all of the requirements of this Article X.

This Article X shall apply only to Performance-Based Compensation Awards. If this Article X
applies, its provisions control over any contrary provision contained in any other Section of this
Plan or an Award Agreement. The provisions of this Article X and any Award Agreement for a
Performance-Based Compensation Award shall be interpreted in a manner consistent with the
requirements of Section 162(m) and the applicable regulations. If any provision of this Plan or
any Award Agreement for a Performance-Based Compensation Award does not comply with or is
inconsistent with the requirements of Section 162(m) or the applicable regulations, such provision
shall be construed or deemed amended to the extent necessary to conform to such requirements.

10.2 Types of Performance-Based Compensation Awards. Options granted to Covered
Employees pursuant to Article VI and SARs granted to Covered Employees pursuant to Article VII
should, by their terms, qualify for the performance-based compensation exception to the deduction
limitations of Section 162(m) of the Code. The Committee, in the exercise of its discretion, also
may choose to designate some or all of the Restricted Stock Unit or Restricted Stock Awards granted
to Covered Employees pursuant to Article VIII and/or some or all of the Performance Share,
Performance Unit or Performance Cash Awards granted to Covered Employees pursuant to Article IX as
Performance-Based Compensation Awards.

10.3 Committee Discretion with Respect to Performance-Based Compensation Awards. With
regard to a particular Performance Period, the Committee shall have full discretion to select the
length of the Performance Period, the type of Performance-Based Compensation Awards to be issued,
the kind and/or level of the Performance Goal or Goals and
whether the Performance Goal or Goals apply to the Company, an Affiliate, or any division or
business unit thereof or the Participant or any group of Participants. Depending on the
Performance Criteria used to establish the Performance Goals, the Performance Goals may be stated
in terms of absolute levels or relative to another company or companies or to an index or indices.

 

A-14

 

10.4 Establishment of Performance Goals. A Performance-Based Compensation Award shall
provide for payment only upon the attainment of one or more pre-established, objective Performance
Goals. The Performance Goals, and the process by which they are established, shall satisfy all of
the requirements of Section 162(m) and the applicable regulations. By way of illustration, but not
limitation, the following requirements must be satisfied:

(a) The Performance Goals shall be based solely on the following Performance Criteria, as
selected by the Committee in the exercise of its discretion: revenue; revenue growth; earnings
(including earnings before taxes, earnings before interest and taxes or earnings before interest,
taxes, depreciation and amortization); operating income; pre- or after-tax income; cash flow
(before or after dividends); cash flow per share (before or after dividends); net earnings;
earnings per share; return on equity; return on capital (including return on total capital or
return on invested capital); cash flow return on investment; return on assets or net assets;
economic value added (or an equivalent metric); share price performance; total shareholder return;
improvement in or attainment of expense levels; and improvement in or attainment of working capital
levels. Measurement of performance against goals may exclude, in the Committee’s sole discretion,
the impact of charges for restructurings, discontinued operations, extraordinary items, and other
unusual or non-recurring items, and the cumulative effects of tax or accounting changes, each as
defined by generally accepted accounting principles and as identified in the financial statements,
notes to the financial statements, management’s discussion and analysis or other SEC filings.

(b) The Performance Goals shall be considered to be pre-established only if the Performance
Goals are established by the Committee in writing not later than ninety (90) days after the
commencement of the Performance Period for such Award; provided that (i) the outcome must be
substantially uncertain at the time the Committee establishes the Performance Goals; and (ii) in no
event may the Committee establish the Performance Goals for any Performance-Based Compensation
Award after 25% of the Performance Period for such Award has elapsed.

(c) A Performance Goal will be considered to be objective only if a third party having
knowledge of the relevant facts could determine whether the Performance Goal has been met.

(d) The Performance Goal must state, in terms of an objective formula or standard, the method
for computing the amount of compensation payable to the Covered Employee if the Goal is attained.
For this purpose, the formula will be considered to be objective only if a third party having
knowledge of the relevant performance results could calculate the amount to be paid to the Covered
Employee.

(e) The objective formula or standard must preclude discretion to increase the amount of
compensation payable that would otherwise be due upon attainment of the Performance Goal.

 

A-15

 

10.5 Performance Evaluation; Adjustment of Goals. At the time that a Performance-Based
Compensation Award is first issued, the Committee, in the Award Agreement or in another written
document, may specify whether performance will be evaluated including or excluding the effect of
any of the following events that occur during the Performance Period, as the Committee, in its
discretion, deems to be appropriate including:

(a) Judgments entered or settlements reached in litigation;

(b) The write down of assets;

(c) The impact of any reorganization or restructuring;

(d) The impact of changes in tax laws, accounting principles, regulatory actions or other laws
affecting reported results;

(e) Extraordinary non-recurring items, as described in Accounting Principles Board Opinion No.
30 or any successor or replacement publication or pronouncement, and/or in management’s discussion
and analysis of financial condition and results of operations appearing in the Company’s annual
report to shareholders or Annual Report on Form 10-K, as the case may be, for the applicable year;

(f) The impact of any mergers, acquisitions, spin-offs or other divestitures; and

(g) Foreign exchange gains and losses.

The inclusion or exclusion of these items shall be expressed in a form that satisfies the
requirements of Section 162(m) and the applicable regulations. The Committee, in its discretion,
also may, within the time prescribed by Section 162(m) and the applicable regulations, adjust or
modify the calculation of Performance Goals for such Performance Period in order to prevent the
dilution or enlargement of the rights of Participants: (i) in the event of, or in anticipation of,
any unusual or extraordinary corporate item, transaction, event, or development; or (ii) in
recognition of, or in anticipation of, any other unusual or nonrecurring events affecting the
Company, or the financial statements of the Company, or in response to, or in anticipation of,
changes in applicable laws, regulations, accounting principles, or business conditions.

10.6 Adjustment of Performance Compensation Awards. The Committee shall have the sole
discretion to adjust the determinations of the degree of attainment of the pre-established
Performance Goals. Notwithstanding any provision herein to the contrary, the Committee may not
make any adjustment or take any other action with respect to any Performance-Based Compensation
Award that will increase the amount payable under any such Award. The Committee shall retain the
sole discretion to adjust Performance-Based Compensation Awards
downward or to otherwise reduce the amount payable with respect to any Performance-Based
Compensation Award.

 

A-16

 

10.7 Continued Employment Required. Unless otherwise provided in the relevant Award
Agreement, a Participant must be an Employee of the Company or an Affiliate on the day a
Performance-Based Compensation Award for such Performance Period is paid to the Participant.

10.8 Certification by Committee. The payment for a Performance-Based Compensation
Award shall not occur until the Committee certifies, in writing, that the pre-established
Performance Goals and any other material terms and conditions precedent to such payment have been
satisfied. Committee certification is not required for compensation that is attributable solely to
the increase in the value of the Company’s Stock.

10.9 Maximum Award. If a Performance-Based Compensation Award is payable in Stock, the
maximum Performance-Based Compensation Award a Participant may be eligible to earn for any 12-month
Performance Period is one hundred fifty thousand (150,000) Shares of Stock. If a Performance-Based
Compensation Award is payable in cash, the maximum Performance-Based Compensation Award a
Participant may be eligible to earn for any 12-month Performance Period is two million Dollars
($2,000,000). If the Performance Period is less than or exceeds 12 months, the limits described in
the preceding sentences shall be reduced or increased proportionately. For example, if the
Performance Period is three years, the limit shall be increased by multiplying it by three.

10.10 Miscellaneous. The designation of a Covered Employee as a Participant for any
Performance Period shall not in any manner entitle the Participant to receive a Performance-Based
Compensation Award for such Performance Period. Moreover, designation of a Covered Employee as a
Participant for a particular Performance Period shall not require designation of such Covered
Employee as a Participant for any subsequent Performance Period.

ARTICLE XI

Beneficiary Designation

11.1 Beneficiary Designation. Each Participant under the Plan may, from time to time,
name any beneficiary or beneficiaries (who may be named contingently or successively) to whom any
benefit under the Plan is to be paid in case of his or her death before he or she receives any or
all of such benefit. Each such designation shall revoke all prior designations by the same
Participant, shall be in a form prescribed by the Company, and will be effective only when filed by
the Participant in writing with the Secretary of the Company during the Participant’s lifetime. In
the absence of any such designation, benefits remaining unpaid at the Participant’s death shall be
paid to the Participant’s estate.

 

A-17

 

ARTICLE XII

Rights and Obligations of Parties

12.1 No Guarantee of Employment or Service Rights. Nothing in the Plan shall interfere
with or limit in any way the right of the Company to terminate any Participant’s employment or
service at any time, nor confer upon any Participant any right to continue as a Director of the
Company, or to continue in the employ of or continue to provide services pursuant to a consulting
arrangement with the Company or any Subsidiary. Similarly, nothing in the Plan shall confer upon
any Director the right to continue to serve as a Director.

12.2 Participation. No Employee, Director or consultant shall have the right to be
selected to receive an Award under the Plan, or, having been so selected, to be selected to receive
a future Award. The provisions of any Award granted to a prospective Director, Employee or
consultant must specifically provide that no portion of the Award will vest, become exercisable or
be issued prior to the date on which such individual begins providing the anticipated services to
the Company or any Affiliates.

12.3 Right of Setoff. The Company or any Affiliate may, to the extent permitted by
applicable law, deduct from and set off against any amounts the Company or Affiliate may owe to the
Participant from time to time (including amounts payable in connection with any Award, owed as
wages, fringe benefits, or other compensation owed to the Participant) such amounts as may be owed
by the Participant to the Company. The Participant shall remain liable for any part of the
Participant’s payment obligation not satisfied through such deduction and setoff. By accepting any
Award granted under this Plan, the Participant agrees to any deduction or set off pursuant to this
Section 12.3. In the context of an Award that is subject to the requirements of Section 409A, any
set off rights shall be included in the Award Agreement and shall be designed to comply with the
requirements of Section 409A.

12.4 Section 83(b) Election. No election under Section 83(b) of the Code (to include
in gross income in the year of transfer the amounts specified in Section 83(b) of the Code) or
under a similar provision of the laws of a jurisdiction outside the United States may be made,
unless expressly permitted by the terms of the Award Agreement or by action of the Committee in
writing before the making of such election. In any case in which a Participant is permitted to
make such an election in connection with an Award, the Participant shall notify the Company of such
election within ten days of filing notice of the election with the Internal Revenue Service or
other governmental authority, in addition to any filing and notification required pursuant to
regulations issued under Section 83(b) of the Code or other applicable provision.

12.5 Forfeiture and Recapture of Awards. In an Award Agreement, the Committee may, in
its sole discretion, include provisions calling for the forfeiture or recapture of all or any
portion of an Award in certain designated circumstances. For example, an Award Agreement may
provide for the forfeiture or recapture of all or any portion of an Award in the event of an
accounting restatement due to material noncompliance by the Company with any financial reporting
requirement under the securities laws which reduces the amount of any Award that would have been
earned had the financial results been properly reported, as determined by the Committee. By
accepting an Award, the Participant will agree to be bound by the terms of the
forfeiture or recapture provisions. Upon the occurrence of any forfeiture or recapture event
specified by the Committee in the Award Agreement, except as otherwise provided by the Committee in
the Award Agreement:

(a) All or a portion (as designated in the Award Agreement) of the unexercised portion of any
Option, whether or not vested, and any other Award not then settled will be immediately forfeited
and canceled upon the occurrence of the designated forfeiture or recapture event; and

 

A-18

 

(b) The Participant will be obligated to repay to the Company upon demand, in cash, all or a
portion (as designated in the Award Agreement) of the total amount of “award gain” (as defined
below) realized by the Participant upon each exercise of an Option or SAR or settlement of an Award
that occurred within the period beginning 12 months prior to the earlier of the designated
forfeiture or recapture event or the date of the Participant’s Termination of Service, and ending
on the date of the Company’s demand (or such other period required by law).

For purposes of this Section, the term “award gain” shall mean with respect to a given Option
exercise, the product of (i) the Fair Market Value per Share at the date of such exercise (without
regard to any subsequent change in the market price of Shares) minus the Option exercise price
times (ii) the number of Shares as to which the Option was exercised at that date. With respect to
any other settlement of an Award granted to the Participant, the term “award gain” shall mean (i)
the Fair Market Value of the cash or Shares paid or payable to the Participant less (ii) any cash
or the Fair Market Value of any Shares or property (other than an Award that would have itself then
been forfeitable hereunder and excluding any payment of tax withholding) paid by the Participant to
the Company as a condition of or in connection such settlement. In any case, if so provided in the
Award Agreement, the award gain may include actual earnings on such award gain through the date of
payment of the Company’s demand hereunder.

In addition to any forfeiture or other restrictions imposed by the terms of an Award
Agreement, every Award issued pursuant to the Plan shall be subject to potential forfeiture or
“claw back” to the fullest extent called for by applicable federal or state law. Each Participant,
by accepting an Award pursuant to the Plan, agrees to return the full amount required by applicable
law.

12.6 Rights of Shareholder. No Participant shall have any rights as a shareholder of
the Company with respect to any Award under the Plan, unless and until unrestricted Shares are
issued to the Participant or the restrictions on any Shares previously issued lapse, except as
specifically otherwise provided in the Plan or the Award Agreement.

 

A-19

 

ARTICLE XIII

Change in Control

13.1 In General. Unless otherwise provided in an Award Agreement, if a Change in
Control occurs in which the successor company assumes an Award or provides a substitute award (or
in which the Company is the ultimate parent corporation and continues the Award)
and, within 24 months following such Change in Control, an Employee Participant’s employment
with the Company and all Affiliates is terminated in a “qualifying termination,” the following
provisions will apply:

(a) Any and all Options and SARs granted hereunder shall become immediately exercisable, and
shall remain exercisable throughout their entire then remaining term;

(b) Any Period of Restriction and other restrictions imposed on Restricted Stock or Restricted
Stock Units shall lapse; and

(c) Awards of Performance Units and Performance Shares shall be converted to Restricted Stock,
which shall vest over the then-remaining Performance Period (or upon earlier Termination of
Service, death or Disability as provided in the Award Agreement). If 50% or more of the
Performance Period has elapsed as of the date of the Change in Control, such conversion shall be
based upon the value of the Performance Units and/or Performance Shares determined based upon
actual performance to date; and if less than 50% of the Performance Period has elapsed as of the
date of the Change in Control, such conversion shall be made based upon the target value of the
Performance Units and/or Performance Shares.

For purposes of this Section, the term “qualifying termination” means a termination by the
Company or the applicable Affiliate without Cause, or by the Participant for “good reason” (as
“good reason” is defined in any agreement between the Participant and the Company or the applicable
Affiliate) if the Participant is entitled to terminate his or her employment for “good reason”
pursuant to any such agreement.

The Committee, in its discretion, may prescribe different vesting provisions that will apply
in the event of a Change in Control in which the successor company does not assume an Award or does
not provide a substitute award (or in which the Company is the ultimate parent corporation and does
not continue the Award).

13.2 Exceptions. Notwithstanding the foregoing provisions of Section 13.1, the Board,
prior to a Change in Control, may determine that no Change in Control shall be deemed to have
occurred or that some or all of the enhancements to the rights of Participants under outstanding
Awards upon a Change in Control, as provided under Section 13.1 or the Award Agreement, shall not
apply to specified Awards. The preceding sentence shall apply only if, before or immediately upon
the occurrence of the specified event that would otherwise constitute a Change in Control (the
“Event”), both the Board of the Company prior to the Change in Control, and the Board of the
Company (or any successor thereto) after the Change in Control reasonably conclude, in good faith,
that Participants holding Awards affected by action of the Board under this Section 13.2 shall be
protected by legally binding obligations of the Company because such Awards either shall remain
outstanding following consummation of all transactions involved in or contemplated by such Change
in Control or shall be assumed and adjusted by the surviving entity resulting from such
transactions, and that changes in the terms of the Award resulting from such transactions will not
materially impair the value of the Awards to the Participants or their opportunity for future
appreciation in respect of such Awards.

 

A-20

 

ARTICLE XIV

Amendment, Modification, and Termination of Plan

Except as described in Sections 6.4 and 7.1, the Board may amend, suspend or terminate the
Plan or the Committee’s authority to grant Awards under the Plan without the consent of
shareholders or Participants, unless shareholder approval of a particular amendment is required by
any federal or state law or regulation or the rules of any stock exchange or automated quotation
system on which the Shares may then be listed or quoted. Further, the Board may not amend the Plan
or any Award without shareholder approval if such approval is required in order to satisfy the
requirements of the performance-based compensation exception to the deduction limitations imposed
by Section 162(m) of the Code and applicable regulations, unless the Board concludes that the
deduction limitations of Section 162(m) of the Code will not become applicable or that the
amendment is appropriate despite the deduction limitations imposed by Section 162(m) of the Code.
If shareholder approval is required, the amendment shall be submitted to the Company’s shareholders
for approval not later than the earliest annual meeting for which the record date is after the date
of the Board’s action.

Except as provided in the next sentence, no amendment, modification, or termination of the
Plan or any Award Agreement shall in any material manner adversely affect any Award previously
granted under the Plan without the consent of the holder of the Award. The consent of the holder
of an Award is not needed if the change is required to cause the benefits under the Plan (a) to
qualify as performance-based compensation within the meaning of Section 162(m) of the Code and
applicable regulations or other interpretive authority or (b) to comply with the provisions of
Section 409A of the Code. Additional rules relating to amendments to the Plan or any Award
Agreement to assure compliance with Section 409A of the Code are set forth in Section 17.6.

The Committee shall have no authority to waive or modify any other Award term after the Award
has been granted to the extent that the waived or modified term was mandatory under the Plan.

ARTICLE XV

Tax Withholding

15.1 Tax Withholding. The Company shall have the power to withhold, or require a
Participant to remit to the Company, an amount sufficient to satisfy federal, state, and local
withholding tax requirements on any Award under the Plan. To the extent that alternative methods
of withholding are available under applicable tax laws, the Company shall have the power to choose
among such methods.

15.2 Form of Payment. To the extent permissible under applicable tax, securities, and
other laws, the Company may, in its sole discretion, permit the Participant to satisfy a tax
withholding requirement by (a) using already owned Shares; (b) a broker-assisted “cashless”
transaction; (c) directing the Company to apply Shares of Stock to which the Participant is
entitled pursuant to the Award (including, for this purpose, the filing of an election under
Section 83(b) of the Code), to satisfy the required minimum statutory withholding amount; or (d)
personal check or other cash equivalent acceptable to the Company.

 

A-21

 

ARTICLE XVI

Indemnification

16.1 Indemnification. Each person who is or shall have been a member of the Committee
or of the Board shall be indemnified and held harmless by the Company against and from any loss,
cost, liability, or expense that may be imposed upon or reasonably incurred by him or her in
connection with or resulting from any claim, action, suit, or proceeding to which he or she may be
a party or in which he may be involved by reason of any action taken or failure to act under the
Plan and against and from any and all amounts paid by him in settlement thereof, with the Company’s
approval, or paid by him or her in satisfaction of any judgment in any such action, suit, or
proceeding against him or her, provided he or she shall give the Company an opportunity, at its own
expense, to handle and defend the same before he or she undertakes to handle and defend it on his
or her own behalf. The foregoing right of indemnification shall not be exclusive of any other
rights of indemnification to which such persons may be entitled under the Company’s Articles of
Incorporation or Bylaws, as a matter of law, or otherwise, or any power that the Company may have
to indemnify them or hold them harmless.

ARTICLE XVII

Requirements of Law

17.1 Requirements of Law. The granting of Awards and the issuance of Stock in
connection with any Award shall be subject to all applicable laws, rules, and regulations, and to
such approvals by any governmental agencies or national securities exchanges as may be required.

17.2 Governing Law. The Plan, and all agreements hereunder, shall be construed in
accordance with and governed by the laws of the State of Arizona.

17.3 Securities Law Compliance. With respect to any Participant who is, on the
relevant date, obligated to file reports pursuant to Section 16 of the Securities Exchange Act,
transactions pursuant to this Plan are intended to comply with all applicable conditions of Rule
16b-3 or its successors pursuant to the Securities Exchange Act. Notwithstanding any other
provision of the Plan, the Committee may impose such conditions on the exercise of any Award as may
be required to satisfy the requirements of Rule 16b-3 or its successors pursuant to the Securities
Exchange Act. To the extent any provision of the Plan or action by the Committee fails to so
comply, it shall be void to the extent permitted by law and voidable as deemed advisable by the
Committee.

17.4 Restrictions. The Committee shall impose such restrictions on any Awards under
the Plan as it may deem advisable, including without limitation, restrictions under applicable
federal securities law, under the requirements of the New York Stock Exchange or any other exchange
or automated quotation system upon which the Stock is then listed, quoted or traded and under any
blue sky or state securities laws applicable to such Awards.

 

A-22

 

17.5 Stock Certificates. Notwithstanding anything herein to the contrary, the Company
shall not be required to issue or deliver any certificates evidencing Shares of Stock pursuant to
the exercise of any Award, unless and until the Committee has determined, with advice of counsel,
that the issuance and delivery of such certificates is in compliance with all applicable laws,
regulations of governmental authorities and, if applicable, the requirements of any exchange or
quotation system on which the Shares of Stock are listed, quoted or traded. All Stock certificates
delivered pursuant to the Plan are subject to any stop-transfer orders and other restrictions as
the Committee deems necessary or advisable to comply with federal, state, or foreign jurisdiction
securities or other laws, rules and regulations and the rules of any exchange or automated
quotation system on which the Stock is listed, quoted, or traded. The Committee may place legends
on any Stock certificate to reference restrictions applicable to the Stock. In addition to the
terms and conditions provided herein, the Board may require that a Participant make such reasonable
covenants, agreements, and representations as the Board, in its discretion, deems advisable in
order to comply with any such laws, regulations, or requirements.

17.6 Section 409A of the Code.

(a) General Compliance. Some of the Awards that may be granted pursuant to the Plan
(including, but not necessarily limited to, Restricted Stock Unit Awards, Performance Share Awards,
Performance Unit Awards, Performance Cash Awards and Stock Grant Awards) may be considered to be
“non-qualified deferred compensation” subject to Section 409A of the Code. If an Award is subject
to Section 409A of the Code, the Company intends (but cannot and does not guarantee) that the Award
Agreement and this Plan comply fully with and meet all of the requirements of Section 409A of the
Code or an exception thereto and the Award Agreement shall include such provisions, in addition to
the provisions of this Plan, as may be necessary to assure compliance with Section 409A of the Code
or an exception thereto. An Award subject to Section 409A of the Code also shall be administered
in good faith compliance with the provisions of Section 409A of the Code as well as applicable
guidance issued by the Internal Revenue Service and the Department of Treasury. To the extent
necessary to comply with Section 409A of the Code, any Award that is subject to Section 409A of the
Code may be modified, replaced or terminated in the discretion of the Committee. Notwithstanding
any provision of this Plan or any Award Agreement to the contrary, in the event that the Committee
determines that any Award is or may become subject to Section 409A of the Code, the Company may
adopt such amendments to the Plan and the related Award Agreements, without the consent of the
Participant, or adopt other policies and procedures (including amendments, policies and procedures
with retroactive effective dates), or take any other action that the Committee determines to be
necessary or appropriate to either comply with Section 409A of the Code or to exclude or exempt the
Plan or any Award from the requirements of Section 409A of the Code.

(b) Delay for Specified Employees. If, at the time of a Participant’s Separation from
Service, the Company has any Stock which is publicly traded on an established securities market or
otherwise, and if the Participant is considered to be a Specified Employee, to the extent any
payment for any Award is subject to the requirements of Section 409A of the Code and is payable
upon the Participant’s Separation from Service, such payment shall not commence prior to the first
business day following the date which is six months after the Participant’s Separation from Service
(or if earlier than the end of the six month period, the date
of the Participant’s death). Any amounts that would have been distributed during such six
month period will be distributed on the day following the expiration of the six month period.

 

A-23

 

(c) Prohibition on Acceleration or Deferral. Under no circumstances may the time or schedule
of any payment for any Award that is subject to the requirements of Section 409A of the Code be
accelerated or subject to further deferral except as otherwise permitted or required pursuant to
regulations and other guidance issued pursuant to Section 409A of the Code. If the Company fails
to make any payment pursuant to the payment provisions applicable to an Award that is subject to
Section 409A of the Code, either intentionally or unintentionally, within the time period specified
in such provisions, but the payment is made within the same calendar year, such payment will be
treated as made within the time period specified in the provisions. In addition, in the event of a
dispute with respect to any payment, such payment may be delayed in accordance with the regulations
and other guidance issued pursuant to Section 409A of the Code.

17.7 Severability. In the event any provision of the Plan shall be held illegal or
invalid for any reason, the illegality or invalidity shall not affect the remaining parts of the
Plan, and the Plan shall be construed and enforced as if the illegal or invalid provision had not
been included.

ARTICLE XVIII

Miscellaneous

18.1 Funding of Plan. Except in the case of Awards of Restricted Stock, the Plan shall
be unfunded. The Company shall not be required to segregate any of its assets to assure the
payment of any Award under the Plan. Neither the Participant nor any other persons shall have any
interest in any fund or in any specific asset or assets of the Company or any other entity by
reason of any Award, except to the extent expressly provided hereunder. The interest of each
Participant and former Participant hereunder are unsecured and shall be subject to the general
creditors of the Company.

18.2 Successors. All obligations of the Company under the Plan with respect to Awards
granted hereunder shall be binding on any successor to the Company, whether the existence of such
successor is the result of a direct or indirect merger, consolidation, purchase of all or
substantially all of the business and/or assets of the Company or otherwise.

18.3 Fractional Shares. No fractional Shares shall be issued or delivered pursuant to
the Plan or any Award. The Committee shall determine whether cash, other Awards or other property
shall be issued or paid in lieu of such fractional Shares or whether such fractional Shares or any
rights thereto shall be forfeited or otherwise eliminated.

18.4 Gender and Number. Except where otherwise indicated by the context, any masculine
term used herein also shall include the feminine; the plural shall include the singular and the
singular shall include the plural.

18.5 Titles and Headings. The titles and headings of the Articles and Sections in the
Plan are for convenience of reference only and, in the event of any conflict, the text of the Plan,
rather than such titles or headings, shall control.

18.6 Survival of Provisions. The rights, remedies, agreements, obligations and
covenants contained in or made pursuant to this Plan, any Award Agreements and any notices or
agreements made in connection with this Plan shall survive the execution and delivery of such
notices and agreements and the delivery and receipt of such Shares of Stock.

 

A-24

 

GLOSSARY

(a) “Affiliate” means any subsidiary or parent of the Company that is: (i) a member of a
“controlled group of corporations” (within the meaning of Section 414(b) of the Code as modified by
Section 415(h) of the Code) that includes the Company as a member of the group; or (ii) a member of
a group of trades or businesses under common control (within the meaning of Section 414(c) of the
Code as modified by Section 415(h) of the Code) that includes the Company as a member of the group.
In applying Section 1563(a)(1), (2) and (3) of the Code for purposes of determining the members of
a controlled group of corporations under Section 414(b) of the Code, the language “at least 50
percent” shall be used instead of “at least 80 percent” each place it appears in Section
1563(a)(1), (2) and (3) and in applying Treasury Regulation Section 1.414(c)-2 for purposes of
determining the members of a group of trades or businesses (whether or not incorporated) that are
under common control for purposes of Section 414(c) of the Code, the language “at least 50 percent”
shall be used instead of “at least 80 percent” each place it appears in Treasury Regulation Section
1.414(c)-2.

(b) “Award” means any Option, Stock Appreciation Right, Restricted Stock, Restricted Stock
Unit, Performance Unit, Performance Share, Performance Cash, Stock Grant, Stock Unit or Dividend
Equivalents granted under this Plan.

(c) “Award Agreement” means a written agreement, or other document, including an electronic
agreement or document, between the Company and a Participant that sets forth the terms and
provisions applicable to an Award granted to the Participant under the Plan.

(d) “Board” means the Board of Directors of the Company.

(e) “Cause” means any of the following, unless otherwise provided in an Award Agreement:

(1) The Participant’s willful failure to perform any of the Participant’s duties which
continues after the Company has given the Participant written notice describing the Participant’s
failure and provided to the Participant an opportunity to cure such failure within 30 days (or such
longer period as may be specified by the Board) of such written notice; or

(2) The Participant’s material violation of Company policy; or

(3) Any act of fraud or dishonesty resulting or intended to result in the Participant’s
personal enrichment at the Company’s or any Affiliate’s expense; or

(4) The Participant’s gross misconduct in the performance of the Participant’s duties that
results in material economic harm to the Company or any Affiliate; or

(5) The Participant’s conviction of, or plea of guilty or no contest (or its equivalent) to, a
felony; or

(6) The Participant’s material breach of the Participant’s employment agreement with the
Company, if any.

 

A-25

 

(f) “Change in Control” means and shall be deemed to have occurred, except as otherwise
provided in an applicable Award Agreement, as of the date of the occurrence of any of the following
events:

(1) Any person, or more than one person acting as a group (as determined in accordance with
Treas. Reg. § 1.409A-3(i)(5)), acquires (or has acquired during the 12-month period ending on the
most recent acquisition by such person or persons) ownership of stock of Company possessing 40% or
more of the total voting power of the stock of Company, unless such person is, or shall be, a
trustee or other fiduciary holding securities under an employee benefit plan of Company or a
corporation owned, directly or indirectly, by the stockholders of Company in substantially the same
proportion as their ownership of stock of Company;

(2) The closing of a merger or consolidation of Company or its subsidiary, Tucson Electric
Power Company (“TEP”), with another entity that is not affiliated with Company immediately before
the Change in Control; provided, however, that, in the case of a merger or consolidation involving
Company, if the merger or consolidation results in the voting securities of Company outstanding
immediately prior thereto continuing to represent, either by remaining outstanding or by being
converted into voting securities of the surviving entity, more than 50% of the combined voting
power of the voting securities of Company or such surviving entity outstanding immediately after
such merger or consolidation, the merger or consolidation will be disregarded; and provided further
that, in the case of a merger or consolidation involving TEP, if Company continues to hold more
than 50% of the combined voting power of the voting securities of TEP or the surviving entity
outstanding immediately after such merger or consolidation, the merger or consolidation will be
disregarded;

(3) During any period of 12 consecutive months, excluding any period prior to the adoption of
this Plan by the Board, the majority of members of the Board is replaced by directors whose
appointment or election is not endorsed by a majority of the members of the Board before the date
of such appointment or election; or

(4) Company’s execution of an agreement for the sale or disposition by Company of all or
substantially all of Company’s assets.

Notwithstanding the foregoing, a Change in Control will not be deemed to have occurred until:
(1) any required regulatory approval, including any final non-appealable regulatory order, has been
obtained; and (2) the transaction that would otherwise be considered a Change in Control closes.
Further, to the extent required by Section 409A of the Code, a transaction will not be considered a
Change in Control for purposes of this Plan unless the transaction also constitutes a “change in
control event” as such term is used in Treas. Reg. § 1.409A-3(i)(5).

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

(h) “Committee” means the Compensation Committee of the Board, or such other person or persons
as the Board shall designate to administer the Plan, as provided in Article III.

 

A-26

 

(i) “Company” means UniSource Energy Corporation, an Arizona Corporation and (except for
purposes of determining whether a Change in Control has occurred) any successor corporation.

(j) “Covered Employee” means an Employee who is, or could be, a “covered employee” as defined
by Section 162(m) of the Code.

(k) “Director” means any individual who is a member of the Board.

(l) “Disability” means that a Participant who is an Employee (a) is unable to engage in any
substantial gainful activity by reason of any medically determinable physical or mental impairment
that can be expected to result in death or to last for a continuous period of not less than 12
months; (b) is, by reason of any medically determinable physical or mental impairment that can be
expected to result in death or can be expected to last for a continuous period of not less than 12
months, receiving income replacement benefits for a period of not less than three months under an
accident and health plan covering employees of the Company; or (c) has been determined to be
totally disabled by the Social Security Administration.

(m) “Dividend Equivalent” means a right granted to a Participant pursuant to Article VIII to
receive the equivalent value (in cash or Stock) of dividends paid on Stock. A Dividend Equivalent
shall be payable without interest, unless otherwise provided in an Award Agreement.

(n) “Employee” means any full time or part time employee of the Company or one of its
Affiliates (including any officer or Director who is also an employee).

(o) “Fair Market Value” determined as of any particular date means the last sales price for
that date as reported on the consolidated tape for securities listed on the New York Stock Exchange
(“NYSE”) (or, if the Stock is not listed on the NYSE, such other established securities market on
which the Stock is traded). In the event that there are no Stock transactions on such date, the
Fair Market Value shall be determined by the formula above as of the immediately preceding date on
which there were Stock transactions.

(p) “Grant Date” means, as determined by the Committee, the latest to occur of (i) the date as
of which the Committee approves an Award, (ii) the date on which an Award to a prospective
Employee, officer, Director or consultant first becomes effective, or (iii) such other date as may
be specified by the Committee in the Award Agreement.

(q) “Incentive Stock Option” or “ISO” means the right to purchase Stock pursuant to terms and
conditions that provide that such right will be treated as an incentive stock option within the
meaning of Section 422 of the Code, as described in Article VI.

(r) “Nonqualified Stock Option” or “NQSO” means the right to purchase Stock pursuant to terms
and conditions that provide that such right will not be treated as an Incentive Stock Option, as
described in Article VI.

(s) “Non-Tandem SAR” means an SAR that is granted independently of any Options, as described
in Article VII.

 

A-27

 

(t) “Option” means the right to purchase Stock at a stated price for a specified period of
time. For purposes of the Plan, an Option may be either an Incentive Stock Option or a
Nonqualified Stock Option.

(u) “Participant” means a current or prospective Employee, Director or consultant who has
outstanding an Award granted under the Plan, and includes those former Employees, Directors or
consultants who have certain post-termination rights under the terms of an Award granted under the
Plan.

(v) “Performance-Based Compensation Award” means an Award intended to satisfy the requirements
of the performance-based compensation exception to the limitations imposed by Section 162(m) of the
Code on the tax deductibility of compensation payable to Covered Employees.

(w) “Performance Cash Award” means an Award granted to a Participant in accordance with
Article IX evidencing the right to receive a payment in cash as determined by the Committee.

(x) “Performance Criteria” means the criteria that the Committee may employ for purposes of
establishing the Performance Goal or Performance Goals for a Participant for a Performance Period.
The Performance Criteria that may be selected by the Committee are listed in Section 9.4 and
Section 10.4.

(y) “Performance Goals” means the goal or goals established in writing by the Committee for a
Performance Period based on the Performance Criteria.

(z) “Performance Period” means the period of time over which satisfaction or achievement of a
Performance Goal will be measured.

(aa) “Performance Share” means a right granted to a Participant pursuant to Article IX to
receive Stock, the payment of which is contingent upon achieving certain Performance Goals
established by the Committee.

(bb) “Performance Unit” means a right granted to a Participant pursuant to Article IX to
receive Stock or cash, the payment of which is contingent upon achieving certain Performance Goals
established by the Committee

(cc) “Period of Restriction” means the period during which Restricted Stock or Restricted
Stock Units are subject to restrictions pursuant to the applicable provisions of the Plan.

(dd) “Plan” means the UniSource Energy Corporation 2011 Omnibus Stock and Incentive Plan, as
set forth herein.

(ee) “Prior Plans” means the UniSource Energy Corporation 2006 Omnibus Stock and Incentive
Plan, the UniSource Energy Corporation 1994 Omnibus Stock and Incentive Plan
and the UniSource Energy Corporation Amended and Restated 1994 Outside Directors Stock Option
Plan, or any one of such plans, depending on the context in which such term is used.

 

A-28

 

(ff) “Restricted Stock” means Stock granted to a Participant pursuant to Article VIII that is
subject to certain restrictions and to the risk of forfeiture.

(gg) “Restricted Stock Unit” means the right granted to a Participant pursuant to Article VIII
to receive cash or Stock in the future, the payment of which is subject to certain restrictions and
to the risk of forfeiture.

(hh) “Retirement”
(including “Early Retirement” and “Normal Retirement”) means, with respect
to an Employee, Termination of Service of the Employee after he or she has become eligible for an
immediate early, normal or late retirement benefit under the terms of a defined benefit pension
plan sponsored by the Company and applicable to such Employee.

(ii) “Separation from Service” means either: (a) the termination of a Participant’s employment
with the Company and all Affiliates due to death, retirement or other reasons; or (b) a permanent
reduction in the level of bona fide services the Participant provides to the Company and all
Affiliates to an amount that is 20% or less of the average level of bona fide services the
Participant provided to the Company and all Affiliates in the immediately preceding 36 months, with
the level of bona fide service calculated in accordance with Treasury Regulation Section
1.409A-1(h)(1)(ii).

Solely for purposes of determining whether a Participant has a “Separation from Service,” a
Participant’s employment relationship is treated as continuing while the Participant is on military
leave, sick leave, or other bona fide leave of absence (if the period of such leave does not exceed
six months, or if longer, so long as the Participant’s right to reemployment with the Company or an
Affiliate is provided either by statute or contract). If the Participant’s period of leave exceeds
six months and the Participant’s right to reemployment is not provided either by statute or by
contract, the employment relationship is deemed to terminate on the first day immediately following
the expiration of such six-month period. Whether a Termination of Employment has occurred will be
determined based on all of the facts and circumstances and in accordance with regulations issued by
the United States Treasury Department pursuant to Section 409A of the Code.

In the case of a non-Employee Director, Separation from Service means that such Director has
ceased to be a member of the Board. Whether an independent contractor consultant has incurred a
Separation from Service will be determined in accordance with Treasury Regulation Section
1.409A-1(h).

(jj) “Share” means a share of Stock.

(kk) “Specified Employee” means certain officers and highly compensated Employees of the
Company as defined in Treasury Regulation Section 1.409A-1(i).

(ll) “Stock” means the common stock of the Company, no par value.

 

A-29

 

(mm) “Stock Appreciation Right” or “SAR” means the right to receive a payment from the Company
equal to the excess of the Fair Market Value of a Share of Stock at the date of exercise over a
specified price fixed by the Committee in the Award Agreement, as provided in Section 7.1. In the
case of a Stock Appreciation Right which is granted in conjunction with an Option, the specified
price shall be the Option exercise price.

(nn) “Stock Grant” means the grant of Stock to a Participant as described in Article VIII.

(oo) “Stock Unit” means a non-voting unit of measurement which is deemed for bookkeeping
purposes to be equivalent to one outstanding Share of Stock (subject to adjustment), granted to a
Participant pursuant to Article VIII.

(pp) “Tandem SAR” means a SAR that is granted in connection with a related Option pursuant to
Article VII, the exercise of which shall require forfeiture of the right to purchase a Share under
the related Option (and when a Share is purchased under the Option, the Tandem SAR shall similarly
be forfeited).

(qq) “Termination of Service” or “Termination of Employment” means the cessation of
performance of services for the Company, as determined by the Committee. For this purpose,
transfer of a Participant among the Company and any Subsidiary, or transfer from a position as
Director or consultant to Employee, shall not be considered a Termination of Service or a
Termination of Employment with the Company. In the context of an Award that is subject to the
requirements of Section 409A of the Code, the terms “Termination of Service” or “Termination of
Employment” means a Separation from Service.

 

A-30exv10w1

Exhibit 10.1

AGREEMENT OF PURCHASE

AND SALE

dated as of January 28, 2011

between

SCHENLEY CENTER ASSOCIATES, L.P.,

a Pennsylvania limited partnership

as Seller,

and

CHATHAM LODGING TRUST,

a Maryland real estate investment trust

as Purchaser

Residence Inn by Marriott

Pittsburgh, PA

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	 	 	Page No.	 
	ARTICLE 1 DEFINITIONS; RULES OF CONSTRUCTION
	 	 	1	 
	 
	1.1 Definitions
	 	 	1	 
	1.2 Rules of Construction
	 	 	5	 
	 
	ARTICLE 2 PURCHASE AND SALE; DEPOSIT; PAYMENT OF PURCHASE PRICE
	 	 	6	 
	 
	2.1 Purchase and Sale
	 	 	6	 
	2.2 Deposit
	 	 	6	 
	2.3 Study Period
	 	 	6	 
	2.4 Payment of Purchase Price
	 	 	8	 
	2.5 Assumption of Assumed Loan
	 	 	9	 
	 
	ARTICLE 3 SELLER’S REPRESENTATIONS, WARRANTIES AND COVENANTS
	 	 	9	 
	 
	3.1 Organization and Power
	 	 	9	 
	3.2 Authorization and Execution
	 	 	9	 
	3.3 Noncontravention
	 	 	10	 
	3.4 No Special Taxes
	 	 	10	 
	3.5 Compliance with Existing Laws
	 	 	10	 
	3.6 Operative Agreements
	 	 	10	 
	3.7 Warranties and Guaranties
	 	 	10	 
	3.8 Insurance
	 	 	11	 
	3.9 Condemnation Proceedings; Roadways
	 	 	11	 
	3.10 Litigation
	 	 	11	 
	3.11 Labor Disputes and Agreements
	 	 	11	 
	3.12 Financial Information
	 	 	12	 
	3.13 Operation of Property
	 	 	12	 
	3.14 Personal Property
	 	 	12	 
	3.15 Bankruptcy
	 	 	12	 
	3.16 No Brokers
	 	 	13	 
	3.17 Hazardous Substances
	 	 	13	 
	3.18 License
	 	 	13	 
	3.19 Independent Audit
	 	 	13	 
	3.20 Bulk Sale Compliance
	 	 	13	 
	3.21 Liquor License
	 	 	13	 
	3.22 Money Laundering
	 	 	14	 
	3.23 Sewer Facilities
	 	 	14	 
	3.24 Fire Damage
	 	 	14	 

ii

 

	 	 	 	 	 
	 	 	Page No.	 
	ARTICLE 4 PURCHASER’S REPRESENTATIONS, WARRANTIES AND COVENANTS
	 	 	15	 
	 
	4.1 Organization and Power
	 	 	15	 
	4.2 Noncontravention
	 	 	16	 
	4.3 Litigation
	 	 	16	 
	4.4 Bankruptcy
	 	 	16	 
	4.5 No Brokers
	 	 	16	 
	4.6 Money Laundering
	 	 	16	 
	4.7 AS IS, WHERE IS.
	 	 	17	 
	 
	ARTICLE 5 CONDITIONS AND ADDITIONAL COVENANTS
	 	 	19	 
	 
	5.1 Conditions to Purchaser’s Obligations
	 	 	19	 
	5.2 Conditions to Seller’s Obligations
	 	 	21	 
	 
	ARTICLE 6 CLOSING
	 	 	22	 
	 
	6.1 Closing
	 	 	22	 
	6.2 Seller’s Deliveries
	 	 	22	 
	6.3 Purchaser’s Deliveries
	 	 	23	 
	6.4 Closing Costs
	 	 	23	 
	6.5 Income and Expense Allocations
	 	 	24	 
	 
	ARTICLE 7 CONDEMNATION; RISK OF LOSS
	 	 	24	 
	 
	7.1 Condemnation
	 	 	25	 
	7.2 Risk of Loss
	 	 	25	 
	 
	ARTICLE 8 LIABILITY OF PURCHASER; LIABILITY OF SELLER; TERMINATION RIGHTS
	 	 	26	 
	 
	8.1 Liability of Purchaser and Seller
	 	 	26	 
	8.2 Intentionally Deleted
	 	 	26	 
	8.3 Termination by Purchaser
	 	 	26	 
	8.4 Termination by Seller
	 	 	27	 
	 
	ARTICLE 9 MISCELLANEOUS PROVISIONS
	 	 	27	 
	 
	9.1 Completeness; Modification
	 	 	27	 
	9.2 Assignments
	 	 	27	 
	9.3 Successors and Assigns
	 	 	27	 
	9.4 Days
	 	 	27	 
	9.5 Governing Law
	 	 	27	 
	9.6 Counterparts
	 	 	27	 
	9.7 Severability
	 	 	28	 
	9.8 Costs
	 	 	28	 
	9.9 Notices
	 	 	28	 
	9.10 Incorporation by Reference
	 	 	29	 
	9.11 Survival
	 	 	29	 
	9.12 Further Assurances
	 	 	29	 
	9.13 No Partnership
	 	 	29	 
	9.14 Time of Essence
	 	 	29	 

 

	 	 	 	 	 
	 	 	Page No.	 
	9.15 Confidentiality
	 	 	29	 
	9.16 No Third-Party Beneficiary
	 	 	30	 
	9.17 Waiver of Jury Trial
	 	 	30	 
	9.18 Title Company
	 	 	30	 
	9.19 Tax Deferred Exchange
	 	 	31	 
	9.18 Future Conveyance Parcel
	 	 	32	 

LIST OF EXHIBITS

	 	 	 	 	 

	Exhibit A

	 	-
	 	Seller and Property
	Exhibit B

	 	-
	 	Legal Description of Condominium Unit
	Exhibit C

	 	-
	 	Due Diligence Checklist
	Exhibit D

	 	-
	 	Insurance Policies
	Exhibit E

	 	-
	 	Operative Agreements
	Exhibit F

	 	-
	 	Existing Warranties and Guaranties
	Exhibit G

	 	-
	 	Assumed Loan
	Exhibit H

	 	-
	 	Future Conveyance Parcel

 

AGREEMENT OF PURCHASE AND SALE

     THIS AGREEMENT OF PURCHASE AND SALE (“Agreement”), dated as of the 28th day of
January, 2011 (“Effective Date”), between SCHENLEY CENTER ASSOCIATES, L.P., a Pennsylvania
limited partnership (the “Seller”), and CHATHAM LODGING TRUST, a Maryland real estate
investment trust (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” means the assignment and assumption agreement
whereby the Seller assigns and the Purchaser assumes the Operative Agreements, in such form and
substance as Purchaser and Seller shall mutually agree.

     “Assumed Loan” means any loan identified on Exhibit G hereto.

     “Assumption Application” has the meaning set forth in Section 2.5.

 

     “Assumption Fee” has the meaning set forth in Section 2.5.

     “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
such Property or any part thereof.

     “Bill of Sale (Inventory)” means the bill of sale conveying title to the Inventory to
the Purchaser’s property manager, lessee or designee, in such form and substance as Purchaser and
Seller shall mutually agree.

     “Bill of Sale (Personal Property)” means the bill of sale conveying title to the
Tangible Personal Property, and Intangible Personal Property, to the extent assignable, from the
Seller to the Purchaser.

     “Building Codes” has the meaning set forth in Section 4.7.

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

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

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

     “Condominium Unit” means the condominium unit legally described on Exhibit B
attached hereto, together with all easements, rights, privileges, remainders, reversions and
appurtenances thereunto belonging or in any way appertaining, and all of the estate, right, title,
interest, claim or demand whatsoever of the Seller therein, in the common elements, either at law
or in equity, in possession or expectancy, now or hereafter acquired

     “Deed” means a special warranty deed conveying title to the Real Property from the
Seller to the Purchaser, subject only to Permitted Title Exceptions, taxes not yet due and payable
and matters identified by the applicable Survey, in such form and substance as Purchaser and Seller
shall mutually agree.

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

     “Due Diligence Checklist” has the meaning set forth in Section 2.3.

     “Effective Date” has the meaning set forth in the Preamble hereto.

     “Environmental Conditions” has the meaning set forth in Section 4.7.

     “Executive Order” has the meaning set forth in Section 3.22.

     “Fire Damaged Rooms” has the meaning set forth in Section 3.24.

     “FIRPTA Certificate” means the affidavit of each Seller conveying Real Property under
Section 1445 of the Internal Revenue Code certifying that such Seller is not a foreign

2

 

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 Purchaser and Seller shall mutually agree.

     “Financial Information” has the meaning set forth in Section 3.12.

     “Future Conveyance” has the meaning set forth in Section 9.20.

     “Future Conveyance Parcel” has the meaning set forth in Section 9.20.

     “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 3.22.

     “Guest Ledger” means the collection of all open balances, whether secured by some form
of payment or unsecured, for all in house Hotel guests remaining as of the Closing Date.

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

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

     “Improvements” means the Hotel and all other buildings, improvements, fixtures and
other items of real estate pursuant to the Condominium Unit.

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

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

     “Intangible Personal Property” means all intangible personal property owned by the
Seller and used in connection with the ownership, operation, leasing, occupancy or maintenance of
the Property, including, without limitation, the right to use the trade name associated with the
Property and all variations thereof, the Authorizations, escrow accounts, insurance policies,
general intangibles, business records, plans and specifications, surveys and title insurance
policies pertaining to the Real Property and the Personal Property, all licenses, permits and
approvals with respect to the construction, ownership, operation, leasing, occupancy or maintenance
of the Property, any unpaid award for taking by condemnation or any damage to the Condominium Unit
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 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.

     “Interim Liquor Agreement” has the meaning set forth in Section 3.21.

3

 

     “Inventory” means all inventory located at the Hotel and owned by Seller,
including without limitation, all mattresses, pillows, bed linens, towels, paper goods, soaps,
cleaning supplies and other such supplies.

     “Knowledge” shall mean the actual knowledge of Marc Kossman, Curtis Kossman, and
Lynnette Niro 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.

     “License” has the meaning set forth in Section 3.18.

     “Licensor” means the franchisor issuing the License.

     “Liquor License” means that certain liquor license with the Pennsylvania Liquor
Control Board bearing license number H 5840 and any other liquor licenses required by applicable
governing bodies for lawful service of liquor at Hotel.

     “Loan Assumption” has the meaning set forth in Section 2.5.

     “Operative Agreements” means the service contracts, supply contracts, leases and other
agreements in effect with respect to the construction, ownership, operation, occupancy or
maintenance of the Property.

     “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 (including the marketability thereof) subject
only to Permitted Title Exceptions. The Owner’s Title Policy shall insure the Purchaser in the
amount of the Purchase Price and shall be acceptable in form and substance to the Purchaser. The
description of the Condominium Unit in the Owner’s Title Policy shall be the legal description and
bounds and shall be identical to the description shown on the Survey.

     “Permitted Title Exceptions” means those exceptions to title to the Real Property that
are satisfactory to the Purchaser as determined pursuant to Section 2.3.

     “PIP” has the meaning set forth in Section 5.1(f).

     “PIP Costs” has the meaning set forth in Section 5.1(f).

     “PIP Delivery Date” has the meaning set forth in Section 5.1(f).

     “Property” means collectively the Real Property, the Inventory, the Tangible Personal
Property and the Intangible Personal Property owned by such Seller.

     “Purchase Price” means Twenty Four Million Nine Hundred Thousand and No/Dollars
($24,900,000).

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

4

 

     “Real Property” means the Condominium Unit and the Improvements.

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

     “Seller’s Organizational Documents” means the current limited partnership agreement
and certificate of formation of the Seller.

     “Study Period” means the period commencing at 9:00 a.m. on the Effective Date, and
continuing through 5:00 p.m. on the date which is forty-five (45) days thereafter, except as
otherwise herein provided.

     “Survey” means the survey prepared delineating the location of the Improvements, all
rights of way and easements and contiguous public roads, the same prepared for the benefit of and
certified to Purchaser and the Title Company. The Survey shall be adequate for the Title Company
to delete any exception for general survey matters in the Owner’s Title Policy. If there is a
discrepancy between the description of the Condominium Unit attached hereto as Exhibit B
and the description of the Condominium Unit as shown on the Survey, the survey shall confirm that
the property description identifies 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 or used in the operation of the Hotel and owned by the Seller; provided,
however, that the Purchaser agrees that, all Inventory shall be conveyed to the Purchaser’s
property manager for such Hotel.

     “Title Company” means Chicago Title Insurance Company, Washington, DC.

     “Tray Ledger” means the final night’s room revenue (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 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.

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

     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.

5

 

          (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 Seller agrees to sell to the Purchaser and the
Purchaser agrees to purchase from the Seller the Property 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 the sum of One Hundred Twenty Five
Thousand Dollars ($125,000) as an earnest money deposit (the “Initial Deposit”). Upon
the expiration 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 an additional sum of One Hundred Twenty Five Thousand Dollars ($125,000)
as additional earnest money (the “Additional Deposit”, and together with the Initial
Deposit, the “Deposit”). The Deposit shall be in the form of cash and shall be invested
by the Title Company in an interest-bearing account reasonably acceptable to the Purchaser and
the Seller. 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.

          (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 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. If such tests, studies and investigations warrant, in the
Purchaser’s sole, absolute and unreviewable discretion, the purchase of the Property for the
purposes of operating a Hotel, then the Purchaser may elect to proceed to Closing and shall so
notify the Seller prior to the expiration of the Study Period. If for any reason the Purchaser
does not so notify the Seller of its determination to proceed to Closing prior to the expiration
of the Study Period, 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

6

 

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) On or before the execution of this Agreement, the Seller shall make available to the
Purchaser, its agents, auditors, engineers, attorneys and other designees, copies of all
existing architectural and engineering studies, surveys, title insurance policies, zoning and
site plan materials, environmental audits and other related materials or information, if any,
relating to the Property which are in, or come into, the Seller’s possession or control
including but not limited to the documents listed in the due diligence checklist (“Due Diligence
Checklist” attached as Exhibit C). Notwithstanding the foregoing, Seller shall not be
obligated to deliver to the Purchaser any materials of a proprietary 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 against any loss,
damage or claim arising from entry upon the Real Property by the Purchaser or any agents,
contractors or employees of the Purchaser. The Purchaser understands and accepts that any
on-site inspections of the Real Property shall occur at reasonable times agreed upon by the
Seller and the Purchaser after not less than one (1) business day prior notice to Seller and
shall be conducted so as not to interfere unreasonably with the operation of the 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, 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 by reason of such inspections. The Purchaser shall (i) restore the 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 any and all liens
by contractors, subcontractors, materialmen, or laborers performing the inspections or any work
for the Purchaser or the Purchaser Parties on or related to the Property. The terms of this
Section 2.3(c) shall survive the termination of this Agreement.

          On and after the Effective Date, Purchaser shall, at its expense, procure and continue in
force, general liability insurance with a reputable insurance company or companies, covering any
and all claims for injuries to persons and any and all claims for damage to property in, on, or
about the Real Property. Such insurance shall at all times be not less than Five Hundred
Thousand ($500,000.00) Dollars for injury to any one person, not less than One Million
($1,000,000.00) Dollars for injuries to more than one person in one accident, and not less than
Five Hundred Thousand ($500,000.00) Dollars for damage to property. Such insurance shall be
written with a reputable company or companies authorized to engage in the business of general
liability insurance in the Commonwealth of Pennsylvania. Policies of insurance issued by said
companies shall bear an endorsement holding and saving Seller free and harmless and indemnified
against any and all claims

7

 

whatsoever arising out of injury to or death of any person or damage to any property
resulting from Purchaser’s entry upon the Real Property. Purchaser shall furnish Seller with
customary insurance certificates evidencing such insurance, which name Seller as additional
insured, and which provide that Seller shall receive at least thirty (30) days prior notice in
writing of the cancellation of any such insurance policy, and which recognizes that Purchaser’s
insurance shall be primary.

          (d) During the Study Period, the Purchaser, at its expense, shall cause an examination of
title to the Property to be made, and, prior to the expiration of the Study Period, shall notify
the Seller of any defects in title shown by such examination that the Purchaser is unwilling to
accept. Within ten (10) 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 act promptly and diligently to cure such defects at its expense. 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. 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. 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 may 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 not
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 by the
end of the Study Period, all such title exceptions (other than those rendering title
unmarketable and those that are to be paid at Closing as provided above) shall be deemed
Permitted Title Exceptions.

          (e) If, despite Purchaser’s commercially reasonable efforts to obtain and review all third
party reports during the Study Period, including but not limited to any property condition
reports or Phase I environmental site assessments, Purchaser shall not have received any such
reports, Purchaser shall have the right to extend the Study Period for seven (7) days solely in
order to obtain and review the third party reports Purchaser did not receive during the Study
Period. If Seller has not delivered the PIP to Purchaser as provided by Section 5.1(f), the
Purchaser shall have the right to extend the Study Period for one (1) additional day for each
day after the PIP Delivery Date the PIP was actually delivered to Purchaser.

     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, in cash or 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. Such wire transfer shall be
sent by the Purchaser to the Title Company for the account of the Seller no later than 12:01
p.m., Pittsburgh, Pennsylvania time on the Closing Date

8

 

     2.5 Assumption of Assumed Loan. At the closing, Purchaser shall assume the Assumed
Loan. With respect to Purchaser’s assumption of the Assumed Loan, (a) not later than five (5)
business days after the Effective Date, Purchaser shall, with the cooperation of Seller, use
commercially reasonable efforts to commence its efforts to process the assumption of the Assumed
Loan by Purchaser (“Loan Assumption”), including but not limited to providing all
reasonable information concerning the transfer of the Property to the applicable lender
(“Assumption Application”), (b) Purchaser and Seller shall cooperate and use all
reasonable and diligent efforts to cause the applicable lender (or its loan servicer) to consent
to the Loan Assumption and to cause the applicable Seller and all applicable guarantors, if any,
to be released from any and all liability under the Assumed Loans following the Closing Date,
and to cause Seller to be released from its obligations under that certain Environmental
Indemnity Agreement dated August 16, 2006 in favor of Principal Commercial Funding, LLC, (c) for
purposes of determining the amount of the Assumed Loan to be credited toward the Purchase Price,
the aggregate of the outstanding principal balance of the Assumed Loan and all accrued and
unpaid interest and late charges or other similar fees, if any, as of the Closing Date (but
expressly excluding the Assumption Fee, as defined below shall be aggregated and determined and
shall be credited to the Purchase Price and (d) Purchaser shall be exclusively liable for and
shall pay as the same are incurred (i) the assumption fees and/or costs required by the Lender
(or the loan servicer), and (ii) all fees, expenses and/or costs required by the lender to
process the Assumption Application and the Loan Assumption including but not limited to the
initial application fee of Fifteen Thousand Dollars and No Cents ($15,000.00) (collectively, the
“Assumption Fee”).

ARTICLE 3

SELLER’S REPRESENTATIONS, WARRANTIES AND COVENANTS

     To induce the Purchaser to enter into this Agreement and to purchase the Property, 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 Effective Date and shall be materially
true and correct on the Closing Date.

     3.1 Organization and Power. Seller is a limited partnership 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 the Seller hereunder.

     3.2 Authorization and Execution. This Agreement has been duly authorized by all
necessary action on the part of the Seller, has been duly executed and delivered by the Seller,
constitutes the valid and binding agreement of the Seller and is enforceable in accordance with
its terms. There is no other person or entity who has an ownership interest in the Property to
be sold hereunder by the Seller or whose consent is required in connection with the Seller’s
performance of its obligations hereunder.

9

 

     3.3 Noncontravention. Subject to any consent to the assignment of any particular
Operative Agreement or management 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 do not and will not contravene, or constitute a default under, any provision of
applicable law or regulation, the Seller’s Organizational Documents or any agreement, judgment,
injunction, order, decree or other instrument binding upon the Seller. There are no outstanding
agreements (written or oral) pursuant to which the Seller (or 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 or any part thereof.

     3.4 No Special Taxes. The Seller has no Knowledge of, nor has it received any
notice of, any special taxes or assessments relating to the 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.

     3.5 Compliance with Existing Laws. To Seller’s Knowledge, the Seller possesses all
Authorizations, each of which is valid and in full force and effect, and no provision, condition
or limitation of any of the Authorizations has been breached or violated. The Seller has not
misrepresented or failed to disclose any relevant fact in obtaining all Authorizations, and the
Seller has no Knowledge of any change in the circumstances under which those Authorizations were
obtained that result in their termination, suspension, modification or limitation. The Seller
has no Knowledge, nor has it received notice within the past three (3) years, of any existing or
threatened violation 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 any part thereof, or requiring any repairs or alterations other than those that have
been made prior to the date hereof.

     Seller represents that the Real Property is in the RM-VH Residential Multi-Unit, Very High
Density zoning district, that the operation of the Hotel is not a permitted use in such zoning
district, and that Seller has an occupancy permit for the operation of the Hotel thereby making
the operation of the Hotel a legal non-conforming use. Seller shall, at Seller’s expense,
furnish at Closing a Certificate of Zoning Classification and Legality of Use issued by the City
of Pittsburgh, which certifies the legal non-conforming use.

     3.6 Operative Agreements. The Seller will not enter into any new management
agreement, maintenance or repair contract, supply contract, lease in which it is lessee or other
agreements with respect to the Property, nor shall the Seller enter into any agreements
modifying the Operative Agreements, unless (a) any such agreement or modification will not bind
the Purchaser or the Property after the date of Closing or (b) the Seller has obtained the
Purchaser’s prior written consent to such agreement or modification. All of the Operative
Agreements in force and effect as of the date hereof are listed on Exhibit E attached
hereto.

     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 relating to the Improvements and the Personal Property or any part thereof, except
with the

10

 

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 F.

     3.8 Insurance. To Seller’s Knowledge, all of the Seller’s 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 Seller’s Insurance 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 no Knowledge of any notice of
any condemnation or eminent domain proceeding pending or threatened against the Property or any
part thereof. The Seller has no Knowledge 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.

     3.10 Litigation. Seller has no Knowledge 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 or 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 under any document to be delivered pursuant
hereto, (c) could create a lien on the Property, any part thereof or any interest therein, (d)
the subject matter of which concerns any past or present employee of the Seller or (e) could
otherwise materially adversely affect the Property, any part thereof or any interest therein or
the use, operation, condition or occupancy thereof.

     Purchaser is aware of the following two (2) pending matters of litigation of which Seller
is a party (collectively, the “Pending Litigation”):

          (a) Schenley Center Associates, L.P. et al. v. Astorino Branch Engineers Inc. et al.,
GD-02-011612 in the Court of Common Pleas of Allegheny County, Pennsylvania.

          (b) Whitaker et al. v. Schenley Center Associates, L.P. d/b/a Residence Inn by Marriott et
al., GD-08-008790 in the Court of Common Pleas of Allegheny County, Pennsylvania.

     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 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. 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

11

 

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 their or its employees.

     3.12 Financial Information. To the best of Seller’s Knowledge, all of the Seller’s
financial information, including, without limitation, all books and records and financial
statements (“Financial Information”) is correct and complete in all respects and
presents accurately the results of the operations of the Property for the periods indicated.
Since the date of the last financial statement included in the Seller’s Financial Information,
there has been no material adverse change in the financial condition or in the operations of the
Property.

     3.13 Operation of 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
and (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 comply with and perform
all of the duties and obligations of licensee under the License. The Seller shall continue to
use its best 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, and in accordance with the
Seller’s published rate schedules. Except as otherwise permitted hereby, from the date hereof
until Closing, the Seller shall not take any action or fail to take action the result of which
(i) would have a material adverse effect on the Property or the Purchaser’s ability to continue
the operation thereof after the date of Closing in substantially the same manner as presently
conducted, (ii) reduce or cause to be reduced any room rents or any other charges over which the
Seller has operational control, or (iii) would cause any of the representations and warranties
contained in this Article 3 to be untrue as of Closing. Seller shall deliver to the
Purchaser daily reports showing the income and expenses of the Hotel and all departments
thereof, together with such periodic information with respect to room reservations and other
bookings, as the Seller customarily keeps internally for its own use.

     3.14 Personal Property. All of the Tangible Personal Property, Intangible Personal
Property and Inventory being conveyed by the Seller to the Purchaser or to the Purchaser’s
managing agent, lessee or designee, 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.

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

12

 

     3.16 No Brokers. Other than Town Real Estate Enterprises, LLC, the Seller has
not engaged the services of, nor is it or will it become liable to, any real estate agent,
broker, finder or any other person or entity for any brokerage or finder’s fee, commission or
other amount with respect to the transaction described herein. The Seller will indemnify
Purchaser with respect to the claims of Town Real Estate Enterprises, LLC, and of any other
broker or person with whom the Seller dealt in connection with this transaction.

     3.17 Hazardous Substances. The Seller has no Knowledge:

          (a) of the presence of any “Hazardous Substances” (as defined in Section 4.7) on the
Property, or any portion thereof in violation of applicable law, or,

          (b) of any spills, releases, discharges, or disposal of Hazardous Substances that have
occurred or are presently occurring on or onto the Property, or any portion thereof, the amount
or volume of which is in violation of applicable law, or

          (c) of the presence in violation of applicable law of any PCB transformers serving, or
stored on, the Property, or any portion thereof, and Seller has no knowledge of any failure to
comply with any applicable local, state and federal environmental laws, regulations, ordinances
and administrative and judicial orders relating to the generation, recycling, reuse, sale,
storage, handling, transport and disposal of any Hazardous Substances.

     3.18 License. To Seller’s Knowledge, the franchise license with respect to the
Hotel (the “License”) is valid and in full force and effect, and Seller is not in
default with respect thereto (with or without the giving of any required notice and/or lapse of
time).

     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. Seller
shall also provide to Purchaser’s representatives a signed representative letter which would be
sufficient to enable an independent public accountant to render an opinion on the financial
statements related to the Property. This shall survive for two years after the last 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. To Seller’s Knowledge, the liquor license for the Hotel (and
any restaurant located therein) is in full force and effect and validly licensed to the
person(s) required to be licensed under the law of the State in which the Hotel is located. If,
on the Closing Date, the Purchaser is unable to (1) obtain the permanent transfer of the Liquor
License; or (2) obtain another arrangement pending the permanent transfer of the Liquor License
to the Purchaser, then, on the Closing Date, the Seller shall use commercially reasonable
efforts to enter into an agreement with the Purchaser, to the extent legally permissible and on
terms and conditions reasonably acceptable to the Purchaser and the

13

 

Seller, providing for an interim arrangement (the “Interim Liquor Agreement”) of up
to six (6) months whereby the Seller shall allow the Purchaser, the Purchaser’s Lessee or the
Purchaser’s hotel management company, as applicable, to operate all food and beverage areas
within the Hotel under the existing Liquor License pending the temporary or permanent transfer
of the Liquor License to the Purchaser, the Purchaser’s Lessee or the Purchaser’s hotel
management company, as applicable. The Interim Liquor Agreement may be structured in the form
of a short term lease or other agreement to consummate the intent of the parties, cancelable at
any time by the Purchaser. The Purchaser shall indemnify, defend and hold the Seller and its
affiliates harmless against any liabilities incurred in such operation (unless caused by the
Seller’s willful or grossly negligent conduct or omission or material breach of the Interim
Liquor Agreement) and provide adequate insurance (including, without limitation, liquor
liability insurance) naming the Seller as an additional insured.

     3.22 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 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).

     3.23 Sewage Facility. The Pennsylvania Sewage Facilities Act of January 24, 1966,
No. 537, P.L. 1535, as amended, requires that there be a statement regarding the availability of
a community sewage system. The Property is serviced by a community sewage system.

     3.24 Fire Damage. The Hotel is currently in a condition sufficient to meet
standards of Licensor except for those rooms damaged as a result of the negligence of a Hotel
guest in Room #617 on or about December 11, 2010 which caused damage (including water damage
from the sprinkler system) to hallways and stairways on the first through sixth floors and
damage to rooms including but not limited to rooms numbered 131, 133, 135, 215, 217,

14

 

315, 317, 413, 415-421, 515, 517-521, 613, 615-621 (“Fire Damaged Rooms”). The
damage to the Fire Damaged Rooms was an insurable loss, and repairs are or shall be completed by
Seller or its designee on or before February 15, 2011. Upon substantial completion of the work
to repair the Fire Damaged Rooms, Seller will give Purchaser two (2) business days’ notice of an
inspection to confirm the status of the work, and Purchaser shall have the right to attend said
inspection and provide punch items for Seller to repair in order to reasonably satisfy
Purchaser.

     The representations and warranties in this Article 3 shall survive the Closing for a period
of one (1) year 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 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, and such material inaccuracy
is not promptly corrected or resolved by Seller following notice from Purchaser, Purchaser may
as Purchaser’s sole and exclusive remedy either: (i) terminate this Agreement, whereupon the
Deposit and the initial loan assumption application fee of Fifteen Thousand Dollars ($15,000.00)
referred to in Section 2.5 shall be refunded to Purchaser 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. In the event Purchaser
obtains knowledge on or 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). The
provisions of this Article 3 shall survive the Closing.

ARTICLE 4

PURCHASER’S REPRESENTATIONS, WARRANTIES AND COVENANTS

     To induce the Seller to enter into this Agreement and to sell the 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 Effective Date and shall be
materially true and correct on the Closing Date.

     4.1 Organization and Power. The Purchaser is a real estate investment trust duly
organized, validly existing and in good standing under the laws of the State of Maryland, and
has all trust powers and all governmental licenses, authorizations, consents and approvals to

15

 

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.

     4.2 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.

     4.3 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, (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, (c) could create a lien on the Property, any part thereof or any interest therein or (d)
could adversely affect the Property, any part thereof or any interest therein or the use,
operation, condition or occupancy thereof.

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

     4.5 No Brokers. Other than CB Richard Ellis, the Purchaser has not engaged the
services of, nor is it or will it become liable to, any real estate agent, broker, finder or any
other person or entity for any brokerage or finder’s fee, commission or other amount with
respect to the transaction described herein. The Purchaser will indemnify Seller with respect
to the claims of CB Richard Ellis, and of any other broker or person with whom the Purchaser
dealt in connection with this transaction.

     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,

16

 

country or territory on a Government List or engaged in any unlawful activity defined under
18 USC §1956(c)(7)).

     4.7 AS IS, WHERE IS.

     PURCHASER EXPRESSLY ACKNOWLEDGES AND AGREES THAT, AS A MATERIAL PART OF THE CONSIDERATION
FOR THIS AGREEMENT, THE PROPERTY IS BEING SOLD TO PURCHASER AND PURCHASER AGREES TO PURCHASE AND
ACCEPT THE 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 ANY PART OR COMPONENT THEREOF IN ANY
RESPECT, INCLUDING, BUT NOT LIMITED TO, ANY REPRESENTATIONS, STATEMENTS OR WARRANTIES AS TO THE
PHYSICAL OR ENVIRONMENTAL CONDITION OF THE PROPERTY, THE FITNESS OF THE PROPERTY FOR USE AS A
HOTEL, THE FINANCIAL PERFORMANCE OR POTENTIAL OF THE PROPERTY, THE COMPLIANCE OF THE PROPERTY
WITH APPLICABLE BUILDING, ZONING, SUBDIVISION, ENVIRONMENTAL, LIFE SAFETY OR LAND USE LAWS,
CODES, ORDINANCES, RULES, ORDERS, OR REGULATIONS, OR THE STATE OF REPAIR OF THE PROPERTY, AND
PURCHASER, FOR ITSELF AND ITS HEIRS, LEGAL REPRESENTATIVES, SUCCESSORS AND ASSIGNS, WAIVES ANY
RIGHT TO ASSERT ANY CLAIM OR DEMAND AGAINST SELLER AT LAW OR IN EQUITY RELATING TO ANY SUCH
MATTER, WHETHER LATENT OR PATENT, DISCLOSED OR UNDISCLOSED, KNOWN OR UNKNOWN, NOW EXISTING OR
HEREAFTER ARISING EXCEPTING ANY CLAIM OR DEMAND RELATING TO REPRESENTATIONS AND WARRANTIES
EXPRESSLY SET FORTH IN THIS AGREEMENT. EXCEPT FOR ANY TITLE OR SURVEY MATTERS CREATED SOLELY BY
SELLER IN VIOLATION OF THIS AGREEMENT, PURCHASER AGREES THAT IT SHALL HAVE NO RECOURSE
WHATSOEVER AGAINST SELLER, AT LAW OR IN EQUITY, SHOULD THE SURVEY OR THE TITLE INSURANCE
COMMITMENTS OR THE TITLE POLICIES FAIL TO DISCLOSE ANY MATTER AFFECTING THE PROPERTY OR REVEAL
ANY SUCH MATTER IN AN INACCURATE, MISLEADING OR INCOMPLETE FASHION OR OTHERWISE BE IN ERROR.
PURCHASER ACKNOWLEDGES THAT IT SHALL REVIEW THE SURVEY AND THE TITLE INSURANCE COMMITMENTS (AS
SAME MAY BE MARKED AT CLOSING) AND TO DISCUSS THEIR CONTENTS WITH THE INDEPENDENT CONTRACTORS
WHO PREPARED OR ISSUED EACH OF THEM. PURCHASER ACCORDINGLY AGREES TO LOOK SOLELY TO THE
PREPARER OF THE SURVEY AND THE ISSUER OF THE TITLE INSURANCE COMMITMENTS AND TITLE POLICIES FOR
ANY CLAIM ARISING OUT OF OR IN CONNECTION WITH SUCH

17

 

INSTRUMENTS AND HEREBY RELEASES SELLER FROM ANY SUCH CLAIM (EXCEPT FOR ANY CLAIM THAT
SELLER AGREES TO CURE AS SET FORTH IN THIS AGREEMENT).

     Purchaser recognizes that the Hotel and Personal Property are not new and that there exists
a possibility that the Property is not in compliance with the requirements which would be
imposed on a newly constructed hotel by presently effective federal, state and local building,
plumbing, electrical, fire, health, handicap, environmental and life safety laws, codes,
ordinances, rules, orders and/or regulations (collectively, the “Building Codes”). The
Hotel and other improvements may contain substances or materials no longer permitted to be used
in newly constructed buildings including, without limitation, asbestos or other insulation
materials, lead or other paints, wiring, electrical, or plumbing materials and may not contain
other materials or equipment required to be installed in a newly constructed building.
Purchaser will have the opportunity, as provided for in Section 2.3, to investigate and
inspect the Property and review the results of such investigations and inspections of the
Property as Purchaser deemed necessary with respect to all such matters. Except as otherwise
set forth in this Agreement, Purchaser agrees to accept and shall the Property in an “AS-IS,
WHERE IS” condition and at Closing to accept and assume the risk of noncompliance of the
Property with all such building codes. Except with respect to those representations set forth
in Article 3 hereof, Purchaser waives any right to excuse (except as specifically set
forth in this Agreement) or delay performance of its obligations under this Agreement or to
assert any claim against Seller (before or after Closing) arising out of any failure of the
Property to comply with any such building codes.

     Except with respect to those representations set forth in Article 3, it is
specifically understood and agreed by Seller and Purchaser that Seller does not make, and shall
not be deemed to have made, any representation, warranty or covenant with respect to (i) any
Environmental Laws that may affect any of the Property or (ii) the presence or absence of any
Hazardous or Toxic Substances in, on, above, under or about any of the Property
(“Environmental Conditions”). From and after Closing, Purchaser agrees for itself and
for its heirs, successors and assigns, to waive all of its rights under this Agreement, if any,
and any Environmental Laws to require Seller to remediate or “clean up” the Property and
releases Seller from any liability of any kind or nature arising with respect to any
Environmental Conditions at the Property. As used in this Agreement, (A) the term
“Environmental Laws” means all federal, State and local laws, codes, ordinances, rules, orders
and regulations now or hereafter in effect relating to pollution or the protection of the
environment, including without limitation, all laws, codes, ordinances, rules, orders and
regulations governing the generation, use, collection, treatment, storage, transportation,
recovery, removal, discharge, spill or disposal of any or all Hazardous or Toxic Substances, and
(B) the term “Hazardous Substances” or “Toxic Substances” means materials and substances defined
as “hazardous substances”, “hazardous wastes”, “toxic substances” or “toxic wastes” in (I) the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, 42 U.S.C. Sections
9601-9675, as amended by the Superfund Amendments and Reauthorization Act of 1988, and any
further amendments thereto and rules, orders and regulations thereunder; (II) the Resource
Conservation and Recovery Act of 1976, 42 U.S.C. Sections 6901-6992, as amended by the Hazardous
and Solid Waste Amendments of 1984, and any further amendments thereto and rules, orders and
regulations thereunder; or (III) any other

18

 

Environmental Laws. Purchaser acknowledges and agrees that: (a) Purchaser is an
experienced and sophisticated owner of real property; (b) Purchaser has expressly negotiated the
limitations of liability contained in this Section; and (c) the limitations contained in this
Section are reasonable. Purchaser acknowledges and agrees that Seller has agreed to enter into
this Agreement in consideration for and in reliance upon the foregoing limitations of liability,
and that the consideration under this Agreement is based in part on the limitations of
liability.

     It is understood and agreed by Seller and Purchaser that in the event of any conflict
between the terms and provisions of this Section 4.7 and any other term or provision to this
Agreement, the relevant term or provision of this Section 4.7 shall control and govern. The
provisions of this Article 4 shall survive Closing.

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 with respect to the
Property and the compliance by the Seller with the following covenants, to the extent applicable
to the Seller:

          (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. All of the Seller’ representations and warranties made in this Agreement shall
be true and correct as of the date hereof and as of the date of Closing as if then made, there
shall have occurred no material adverse change in the condition of the Property since the date
hereof, the Seller shall have performed all of the covenants and other obligations under this
Agreement applicable to the Seller and the Seller shall have executed and delivered to the
Purchaser at Closing a certificate to the foregoing effect.

          (c) Condition of Improvements. Except to the extent that repair or restoration of a
Property is required hereunder, in which case the Improvements and the Tangible Personal
Property shall be in the condition required by this Agreement, the Improvements and the Tangible
Personal Property (including but not limited to the mechanical systems, plumbing, electrical,
wiring, appliances, fixtures, heating, air conditioning and ventilating equipment, elevators,
boilers, equipment, roofs, structural members and furnaces) shall be in the same or better
condition at Closing as they are as of the date hereof, reasonable wear and tear excepted.
Prior to Closing, the Seller shall not have diminished the quality or quantity of maintenance
and upkeep services heretofore provided to the Real Property and the Tangible Personal Property
and the Seller shall not have diminished the Inventory (except as may be diminished in the
normal course of business). The Seller shall not have removed or caused or permitted to be
removed any part or portion of the Real Property or the Tangible Personal

19

 

Property unless the same is replaced, prior to Closing, with similar items of at least
equal quality and acceptable to the Purchaser.

          (d) Environmental Report; Property Condition Report. Provided Purchaser has used
commercially reasonable and diligent efforts, the Purchaser shall have obtained, at Purchaser’s
expense, a current Phase I environmental report and a current property condition report, each of
which shall be satisfactory to the Purchaser in its reasonable discretion.

          (e) Franchise License. The Licensor shall have consented to the sale of the
Property, and the Purchaser and Licensor shall have arranged for the assignment and assumption
of the License or the termination of the existing License and the replacement thereof with a new
License to which the Purchaser is a party. The Purchaser will use commercially reasonable
efforts to obtain such License 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.

          (f) Property Improvement Plan. To the extent required by the Licensor and provided
that Purchaser has used commercially reasonable and diligent efforts, the Purchaser shall have
obtained a Property Improvement Plan (“PIP”) from Licensor by and at the cost of the
Purchaser. As soon as possible following the Effective Date, the Seller shall arrange for the
inspection and creation of a PIP by the Licensor for the Property (to the extent such PIP has
not already been initiated), and the Seller shall endeavor to have each such PIP document (but
not the work specified therein) completed as promptly as possible and delivered to Purchaser
within fifteen (15) days following the Effective Date (“PIP Delivery Date”). The
Purchaser shall be responsible for any fees or expenses charged by the franchisors for
completing such inspections and preparing the PIPs except that if Purchaser shall terminate this
Agreement due to a material breach by Seller, Seller shall reimburse Purchaser all such costs.
The Purchaser shall be responsible for the completion of such PIP work and all costs associated
therewith (“PIP Costs”).

          (g) 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 use its commercially reasonable good faith efforts to
negotiate the notice requirements relating to the termination of the Management Agreement on or
before Closing and will bear all costs associated therewith, including but not limited to any
payments to the manager in connection with such negotiations and all costs for early termination
or failure to satisfy notice requirements of the Management Agreement. The Seller shall
indemnify and hold the Purchaser harmless from any claims or liability relating to the
Management Agreement.

          (h) Liquor. It shall be legally permissible to serve alcohol to Hotel guests
after Closing in accordance with all applicable laws and the transfer of the Liquor License to
the Purchaser.

          (i) Assumption of Assumed Loan. Purchaser shall have received the applicable
lender’s approval of the assumption of the Assumed Loan.

20

 

          (j) Fire Damage. Seller shall have caused all Fire Damaged Rooms to be returned to
condition sufficient to meet Licensor’s standards. To the extent the Fire Damaged Rooms have
not been returned to such condition as of Closing, Seller agrees to assign to Purchaser such
unused portion of its insurance claim attributable to the unfinished work to entitle Purchaser
to be the beneficiary of said portion of the claim in order to cause the Fire Damaged Rooms
repairs to be completed.

          (k) Common Areas. Seller shall have used its commercially reasonable good faith
efforts to modify that certain Declaration of Condominium dated October 15, 1998, recorded in
the Recorder’s Office of Allegheny County, Pennsylvania, in Deed Book Volume 10321, Page 369, as
amended on August 10, 2006, (the “Condo Declaration”) as may be necessary to resolve all
issues relating to condominium Common Elements (as that term is defined in the Condo
Declaration) including but not limited to providing mechanics for the resolution of disputes and
allocating use of and cost sharing obligations as to the parking garage and trellis areas. Such
efforts shall include, but not be limited to, causing the Condo Declaration to be amended to the
extent necessary to accomplish the foregoing, and full cooperation in obtaining any consents
(including the consent of any lender) required in connection with such modifications or
amendments.

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

          (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 Purchaser;
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, there shall have occurred no material adverse change in the financial condition of
the Purchaser since the date hereof, 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.

          (c) Franchise License. The Licensor shall have consented to the sale of such
Property, and the Purchaser, Seller and Licensor shall have arranged for the assignment and
assumption of the License or the termination of the existing License and the replacement thereof
with a new License to which the Purchaser is a party. The Seller, its manager and, if
applicable, any guarantor, and each of their respective affiliates, shall have been released
from all future duties, liabilities and obligations under the License and any guarantee(s)
thereof, in such form and to such an extent that Licensor customarily provides, if any.

21

 

          (d) Liquor License. Purchaser shall make application for the transfer of the
Liquor License promptly following the Effective Date and will use commercially reasonable
efforts to cause the transfer to be effective on or after the Closing Date.

ARTICLE 6

CLOSING

     6.1 Closing.

          (a) 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 later of the date that is fifteen
(15) business days following the expiration of the Study Period, as it may be extended pursuant
to Section 2.3(e), and the closing date of Purchaser’s assumption of the Assumed Loan.
Possession of the Property shall be delivered to the Purchaser at the applicable Closing,
subject only to Permitted Title Exceptions and guests of the Hotel.

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

          (a) The certificates required by Section 5.1(b) and Section 3.5;

          (b) The Deed;

          (c) The Bill of Sale (Inventory);

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

          (e) The Assignment and Assumption Agreement;

          (f) Certificate(s)/Registration of Title for the following vehicles owned by the Seller and
used in connection with the Property;

          (i) 2006 Chevrolet Express; Title #64264746602 SC; VIN# 1GAHG39U661218493

          (ii) 2006 Chevrolet Express; Title #64264717502 SC; VIN# 1GAHG39U261220919

          (g) 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;

          (h) The FIRPTA Certificate;

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

22

 

          (j) Copies of certificate(s) of occupancy for the Real Property and Improvements, issued by
the appropriate governmental authority;

          (k) Such proof as the Purchaser may reasonably require with respect to Seller’s compliance
with the bulk sales laws or similar statutes;

          (l) A written instrument executed by the Seller, conveying and transferring to the
Purchaser all of the Seller’s right, title and interest 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;

          (m) All current real estate and personal property tax bills in the Seller’s possession or
that Seller may reasonably obtain;

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

          (o) 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;

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

          (q) Written notice executed by the Seller notifying all interested parties, including all
tenants under any leases of the Property, 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;

          (r) All keys for the Property;

          (s) All 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;

          (t) An assignment of all warranties and guarantees from all contractors and subcontractors,
manufacturers, and suppliers in effect with respect to the Improvements;

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

          (v) Any other document or instrument reasonably requested by the Purchaser or required
hereby.

     6.3 Purchaser’s Deliveries. At Closing, the Purchaser shall pay or deliver to the
Seller the following:

23

 

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

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

          (c) The Bill of Sale (Inventory);

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

          (e) The Assignment and Assumption Agreement; and

          (f) Any other document or instrument reasonably requested by the Seller or required hereby.

     6.4 Closing Costs. Seller and Purchaser shall 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. Purchaser shall pay for: all costs and expenses associated
with the inspection and due diligence of the Property (including, but not limited to, any
updated surveys and environmental reports), all costs associated with the assignment/ new
License, title insurance, one-half (.5) of Commonwealth of Pennsylvania, municipal and school
district realty transfer tax; recording cost of the Deed (and mortgage, if any).

          (b) Seller’s Costs. The Seller shall pay for: the releases of any deeds of trust,
mortgages and other financing encumbering the Property and for any costs associated with any
corrective instruments, and one-half (.5) of Commonwealth of Pennsylvania, municipal and school
district realty transfer tax.

     6.5 Income and Expense Allocations.

          (a) All income, except any Intangible Personal Property, and expenses with respect to the
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:

               (i) Current and prepaid rents, including, without limitation, prepaid room receipts,
function receipts and other reservation receipts;

               (ii) Real estate and personal property taxes;

               (iii) Amounts under Operative Agreements to be assigned to and assumed by Purchaser,
Purchaser’s property manager, lessee or designee;

24

 

               (iv) Utility charges (including but not limited to charges for water, sewer and
electricity);

               (v) License and permit fees, where transferable;

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

               (vii) 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;

               (viii) The Tray Ledger, which shall be divided equally between the parties; and

               (ix) All secured balances on the Guest Ledger which Purchaser will purchase at face amount
subject to a three percent (3%) discount for any balances secured by credit cards.

          (b) 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.

          (c) The Seller shall be required to pay all sales taxes, hotel occupancy taxes, and similar
impositions through the date of Closing.

          (d) 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 if the Purchaser collects same,
the Purchaser will promptly remit to the Seller such amounts in the form received.

          (e) 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 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.

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 any proposed sale in
lieu thereof, the Seller shall give written notice thereof to the Purchaser promptly after the
Seller learns or receives notice thereof. If all or any part of the Real Property which would

25

 

materially interfere with the operation or use of the Hotel is, or is to be, so condemned
or sold, the Purchaser shall have the right to terminate this Agreement pursuant to Section
8.3. If the Purchaser elects not to terminate this Agreement, 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, the Seller shall give
written notice thereof to the Purchaser promptly after the Seller learns or receives notice
thereof. If any such loss or damage occurs prior to Closing and is in excess of One Million and
No/Dollars ($1,000,000.00) or would require more than sixty (60) days to repair, the Purchaser
shall have the right to terminate this Agreement pursuant to Section 8.3. If the
Purchaser elects not 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 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 Indemnification.

          (a) Indemnification by Seller. The Seller covenants to defend, indemnify and hold
harmless the Purchaser and its affiliates, owners, employees, agents and representatives,
successors and assigns from and against any and all claims, penalties, liabilities, obligations,
fines, losses, causes of action, fees, injuries, damages, liens, proceedings, judgments,
actions, rights, demands, costs and expenses (including, without limitation, reasonable
attorneys’ fees and court and litigation costs) arising prior to the Closing Date. This
indemnity shall survive the Closing.

          (b) Indemnification by Purchaser. Purchaser covenants to defend, indemnify and
hold harmless each Seller, and their respective affiliates, owners, employees, agents and
representatives, successors and assigns from and against any and all claims, penalties,
liabilities, obligations, fines, losses, causes of action, fees, injuries, damages, liens,
proceedings, judgments, actions, rights, demands, costs and expenses (including, without
limitation, reasonable attorneys’ fees and court and litigation costs) arising from and after
the Closing Date. This indemnity shall survive the Closing.

     8.3 Termination by Purchaser. If the Seller materially 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

26

 

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

     8.4 Termination by Seller. If the Purchaser materially 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, then the Seller’s sole remedy for such default shall be to terminate this
Agreement and retain the Deposit. 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’ sole remedy.

ARTICLE 9

MISCELLANEOUS PROVISIONS

     9.1 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.

     9.2 Assignments. The Purchaser may assign its rights hereunder without the consent
of the Seller to any party under common control of the Purchaser. No such assignment shall
relieve the Purchaser of its obligations under this Agreement.

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

     9.4 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
jurisdiction in which the action is required to be performed or in which is located the intended
recipient of such notice, consent or other communication, 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.

     9.5 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 Commonwealth of
Pennsylvania.

     9.6 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

27

 

of both parties hereto appear on each counterpart hereof. All counterparts hereof shall
collectively constitute a single agreement.

     9.7 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.

     9.8 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.

     9.9 Notices. All notices, requests, demands and other communications hereunder
shall be in writing and shall be delivered by hand, transmitted by facsimile transmission, sent
prepaid by Federal Express (or a comparable overnight delivery service) or sent by the United
States mail, certified, postage prepaid, return receipt requested, at the addresses and with
such copies as designated below. Any notice, request, demand or other communication delivered
or sent in the manner aforesaid shall be deemed given or made (as the case may be) when actually
delivered to the intended recipient.

	 	 	 

	If
to the Seller:

	 	Schenley Center Associates, L.P.
	 

	 	Eleven Parkway Center
	 

	 	Suite 300
	 

	 	Pittsburgh, PA 15220
	 

	 	Attn: Marc Kossman, Curtis Kossman, Lynnette Niro
	 

	 	Fax: 412-921-0913
	 
	 	 
	If
to the Purchaser:

	 	Chatham Lodging Trust
	 

	 	50 Cocoanut Row
	 

	 	Suite 211
	 

	 	Palm Beach, Florida 33480
	 

	 	Attn: Jeffrey H. Fisher
	 

	 	Fax: (561) 659-7318
	 
	 	 
	with a copy to:

	 	Hunton & Williams
	 

	 	1900 K Street, N.W.
	 

	 	Washington, D.C. 20006
	 

	 	Attn: John M. Ratino, Esq.
	 

	 	Fax: (202) 778-2201

     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 designate different or other

28

 

persons or entities to receive copies by notifying the other party in the manner described
in this Section.

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

     9.11 Survival. All of the representations, warranties, covenants and agreements of
the Seller and the Purchaser made in, or pursuant to, this Agreement shall survive for a period
of one (1) year following Closing and shall not merge into any Deed or any other document or
instrument executed and delivered in connection herewith.

     9.12 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.

     9.13 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.

     9.14 Time of Essence. Time is of the essence with respect to every provision
hereof.

     9.15 Confidentiality. The terms and provisions of this Agreement shall remain
confidential and shall not be disclosed, by either the Purchaser 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; or (c) by Purchaser in any
filing with the U.S. Securities and Exchange Commission. Prior to the issuance of any public
statement (including a press release) regarding the existence of this Agreement, the party
making such statement shall provide written notice to the other party together with a copy of
the proposed statement, and the party issuing such statement will reasonably consider comments
from the other party. Notwithstanding the foregoing, the Seller acknowledges that the Purchaser
will issue a press release following the execution of this Agreement announcing that the
Purchaser has executed an agreement to purchase an upscale, extended stay hotel in the
Pittsburgh market; provided that such press release and any other announcements made by the
Purchaser regarding the existence of this Agreement shall not, prior to the deposit by the
Purchaser of the Additional Deposit, include the name of the Hotel or the Seller. If the
Purchaser does not proceed with the purchase of the Property, following written request by the
Seller, the Purchaser shall return to the Seller all materials and information furnished to the
Purchaser by the Seller or the Seller’s agents in connection with the Purchaser’s review of the
Property, together with copies of all third party reports relating to the Property that the
Purchaser has had prepared (other than work product, proprietary or confidential materials).
The Purchaser acknowledges that the Seller may solicit additional

29

 

offers for the purchase of the Property in the event that the Purchaser is unwilling or
unable to consummate the Closing.

     9.16 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.

     9.17 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.

     9.18 Title Company.

          (a) The Title Company 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.

          (b) If the Title Company is uncertain for any reason whatsoever as to its duties or rights
hereunder, the Title Company shall continue to hold the Deposit until the Title Company receives
a written agreement of both parties with respect to disposition of the Deposit, in which event
Title Company shall distribute the Deposit in accordance with such agreement; or in the event of
litigation between or among the parties, the Title Company shall continue to hold the Deposit
until such time as the parties resolve their dispute or such dispute is resolved by judicial or
other proceedings.

          (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 9.18(c)(ii) shall be shared equally;

30

 

               (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 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 effective date 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 to the
account of the receiving party, as such party may direct;

               (viii) The Title Company shall, at the Closing, deliver by overnight express delivery
(or hold for personal pickup, if requested), each non-recorded document received hereunder
by Title Company to the payee or person acquiring rights under said document or for whose
benefit said document was acquired; and

               (ix) The Title Company shall, at the Closing, hold for personal pickup or arrange for
wire transfer, (i) to Seller, or order, as instructed by Seller, all sums and any proration
or other credits to which Seller is entitled and less any appropriate proration or other
charges, and (ii) to Purchaser, or order, any excess funds theretofore delivered to Title
Company by Purchaser and all sums and any proration or other credits to which Purchaser is
entitled and less any appropriate proration or other charges.

          9.19 Tax Deferred Exchange. Each party acknowledges having been advised that the
other party will or may elect to treat the within transaction as part of a tax-deferred exchange
transaction under Internal Revenue Code Section 1031. Each party agrees that they will make and
execute any and all additional documents that may reasonably be required in connection with the
tax-deferred exchange transaction and will otherwise fully cooperate with each other and with
any Qualified Intermediary designated by either party provided that

31

 

neither party shall thereby assume any additional burdens or obligations and further
provided that neither party shall incur any additional cost or expense.

     9.20 Future Conveyance Parcel. The parties acknowledge that Seller desires to
cause the future transfer and conveyance (the “Future Conveyance”), at Seller’s sole cost and
expense, of a certain parcel of land (the “Future Conveyance Parcel”) in the northeasterly
portion of the real estate upon which the Condominium is situated to Schenley Center Developers,
L.P. The Future Conveyance Parcel is depicted on Exhibit “H” attached hereto. Purchaser
covenants and agrees, following reasonable prior notice by Seller, to reasonably cooperate, at
no cost to Purchaser, with Seller in connection with Seller’s efforts to consummate the Future
Conveyance, including but not limited to entering into an Agreement of Sale and such ancillary
documents which will provide and accomplish the following, inter alia:

          (a) the transferee will be Schenley Center Developers, L.P. or its designee owned or
controlled by Marc Kossman and/or Curtis Kossman or their immediate families.

          (b) the Future Conveyance Parcel will contain approximately 0.6 acres.

          (c) the Future Conveyance Parcel will be subdivided from the land owned by the Condominium
Association.

          (d) the purchase price shall be One ($1.00) Dollar and other good and valuable
consideration.

          (e) transferee will be responsible for the payment of all costs of the Future Conveyance
including but not limited to Purchaser’s reasonable attorneys’ fees incurred in connection the
Future Conveyance and all Pennsylvania Realty Transfer taxes; there shall be no proration of
real estate taxes at settlement.

          (f) obtaining consent or release as necessary, from any mortgagee, encumbrance holder or
other lien holder so as to grant free and clear title to transferee.

          (g) on or before Closing, Seller and/or transferee, as applicable, shall execute and
deliver to Purchaser an instrument in form and substance acceptable to Purchaser (and such
instrument will be recorded among the land records contemporaneous with the recording of the
Deed) that prohibits the use or development by Seller and transferee of the Future Conveyance
Parcel and any adjacent land owned by Seller or transferee as a business or businesses that (i)
operate a motel, hotel or guest quarters; (ii) create strong, unusual or offensive odors, fumes,
dust or vapors; (iii) are a public or private nuisance; (iv) emit noise or sounds that are
objectionable due to intermittence, beat, frequency, shrillness or loudness; (v) are used in
whole or in part, for the warehousing, dumping or disposing of garbage or refuse; (vi) sell
indecent or pornographic literature or provide adult entertainment or any other form of sexually
oriented business; or (vii) operate gasoline refining and/or twenty-four (24) hour manufacturing
operations.

          (h) transferee will not request or demand any right to park vehicles on transferor’s
property.

32

 

          (i) the Declaration of Condominium and such other Condominium Documents will be
amended accordingly.

          (j) Purchaser will not object to any zoning change, variance, special exception,
conditional use or other governmental procedure that transferee may require to develop the
Future Conveyance Parcel or adjacent land unless Purchaser reasonably believes that such zoning
change, variance, special exception, conditional use or other governmental procedure will
violate the prohibitions listed in Section 9.20(g) or fail to comply with all applicable
laws as detailed in Section 9.20(l).

          (k) settlement of the conveyance to transferee shall not be a condition to Seller’s
obligation to proceed to Closing of this Agreement and may occur after the Closing Date under
this Agreement.

          (l) Purchaser shall have no obligation to consummate the Future Conveyance unless and until
Purchaser, in its reasonable business judgment, had determined that the Future Conveyance
complies with all applicable laws and that all consents and approvals required in connection
with the Future Conveyance have been obtained.

     The agreements and covenants herein will survive the Closing Date under this Agreement.

[SIGNATURES ON FOLLOWING PAGE]

33

 

     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:

Schenley Center Associates, L.P. , a

pennsylvania Limited Partnership

By Schenley Center, Inc., General
Partner

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	PURCHASER:

Chatham Lodging Trust, a Maryland Real Estate

Investment Trust

 	 
	 	By:  	 	 
	 	 	Name:  	Jeffrey H. Fisher 	 
	 	 	Title:  	President 	 
	 

[Purchase and Sale Agreement Signature Page]

 

 

     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.

	 	 	 	 	 
	 	TITLE COMPANY:

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

[Purchase and Sale Agreement Signature Page]

 

 

EXHIBIT A

SELLER AND PROPERTY

	 	 	 	 	 
	Seller	 	Site Name	 	Location
	SCHENLEY CENTER
ASSOCIATES, L.P., A
PENNSYLVANIA
LIMITED PARTNERSHIP
	 	Residence Inn by Marriott

Pittsburgh, Pennsylvania
	 	3896 Bigelow Boulevard

Pittsburgh, Pennsylvania 15213

A-1

 

EXHIBIT B

LEGAL DESCRIPTIONS OF THE REAL PROPERTY

See attached.

C-1

 

EXHIBIT C

DUE DILIGENCE CHECKLIST

See attached.

C-1

 

EXHIBIT D

INSURANCE POLICIES

To be delivered by Seller within three (3) business days following the date of this
Agreement.

D-1

 

EXHIBIT E

OPERATIVE AGREEMENTS

To be delivered by Seller within three (3) business days following the date of this Agreement.

D-1

 

EXHIBIT F

EXISTING WARRANTIES AND GUARANTIES

To be delivered by Seller within three (3) business days following the date of this Agreement.

D-2

 

EXHIBIT G

ASSUMED LOAN

	 	 	 
	Lender	 	Loan Description
	Principal Commercial 

Funding, LLC

	 	Loan memorialized by that certain
Mortgage Note in the original
principal sum of $9,000,000 dated
effective as of August 16, 2006
originally given by Schenley Center
Associates LP (“Original Borrower”)
for the benefit of Principal
Commercial Funding, LLC (“Original
Lender”) and secured by that certain
Mortgage and Security Agreement,
Assignment of Leases and Rents, and
UCC Filings dated even therewith by
Original Borrower for Original
Lender

D-3

 

EXHIBIT H

FUTURE CONVEYANCE PARCEL

See attached.

D-4

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00189-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00189-of-00352.parquet"}]]