Document:

exv10w2

 

EXHIBIT 10.2

AGREEMENT OF SALE AND PURCHASE

     THIS AGREEMENT OF SALE AND PURCHASE (this “Agreement”), dated as of March 10, 2006 (the
“Effective Date”), is made by and between HOWELL PLACE HOTEL, LLC, an Arkansas limited liability
company, having an address at                                                                           
       (“Seller”), and INTERSTATE
OPERATING COMPANY. L.P., a Delaware limited partnership having an address at 4501 N. Fairfax Drive,
Arlington, VA 22203 (“Purchaser”).

I.

Definitions; Sale and Purchase

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

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

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

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

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

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

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

     (g) Expendables shall mean all expendable supplies including but not limited to
china, glassware, linens, silverware, kitchen and bar small goods, paper goods, guest
supplies, cleaning supplies, operating supplies, printing, stationary and uniforms, and
other operating supplies and inventories whether in use or held in reserve storage for
future use in connection with the operation of the Hotel.

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

     (i) Furnishings shall mean all fixtures, furniture, furnishings, fittings,
equipment, machinery, apparatus, appliances, computer hardware and equipment, software,
reservations terminals, vehicles, building materials, telephones and other communication
equipment, copiers, facsimile machines, postal machines, televisions, signs, vacuum
cleaners, video equipment and other articles of personal property located on or used or
usable in connection with any part of the Hotel.

     (j) Hotel shall mean the hotel located at 3330 Harding Boulevard, Baton Rouge,
Louisiana 70807, and known as the Hilton Garden Inn – Baton Rouge.

     (k) Hotel Contracts shall mean all service and maintenance contracts,
employment agreements, union contracts, purchase orders, equipment leases, volume transient
agreements and other contracts or agreements relating to the maintenance, operation,
provisioning or equipping of the Hotel, together with all related written warranties and
guaranties.

 

 

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

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

     (n) Land shall mean the land and all appurtenances thereto, having a street
address at 3330 Harding Boulevard, Baton Rouge, Louisiana 70807, more particularly described
in Exhibit A to this Agreement upon which the Hotel is situated together with all
appurtenances to the Land.

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

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

     (q) Property shall mean the Land and Improvements.

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

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

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

     1.03 Condition of Property. (a) Purchaser acknowledges for Purchaser and
Purchaser’s successors, heirs and assignees, (i) that Purchaser will be given a reasonable
opportunity to inspect and investigate the Property, all improvements thereon and all aspects
relating thereto, including, without limitation, all of the physical, environmental and operational
aspects of the Property, either independently or through agents and experts of Purchaser’s choosing
and (ii) that Purchaser will acquire the Property based upon Purchaser’s own investigation and
inspection thereof. SELLER AND PURCHASER AGREE THAT, EXCEPT AS PROVIDED FOR IN THIS AGREEMENT OR
ANY CLOSING DOCUMENT, THE PROPERTY SHALL BE SOLD AND THAT PURCHASER SHALL ACCEPT POSSESSION OF THE
PROPERTY ON THE CLOSING DATE AS IS, WHERE IS, WITH ALL FAULTS WITH NO RIGHT OF SET-OFF OR REDUCTION
IN THE PURCHASE PRICE, AND THAT, EXCEPT AS EXPRESSLY PROVIDED IN THIS AGREEMENT OR ANY CLOSING
DOCUMENT SUCH SALE SHALL BE WITHOUT REPRESENTATION OR WARRANTY OF ANY KIND, WHETHER EXPRESS,
IMPLIED, STATUTORY OR OTHERWISE, EXCEPT FOR THOSE SET FORTH IN THIS AGREEMENT OR ANY CLOSING
DOCUMENT, INCLUDING, WITHOUT LIMITATION, WARRANTY OF INCOME POTENTIAL, OPERATING EXPENSES, USES,
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. PURCHASER SPECIFICALLY ACKNOWLEDGES THAT,
EXCEPT AS PROVIDED FOR IN THIS AGREEMENT OR ANY CLOSING DOCUMENT, PURCHASER IS NOT RELYING AND
SHALL NOT RELY ON ANY REPRESENTATIONS OR WARRANTIES OF ANY KIND WHATSOEVER, WHETHER EXPRESS,
IMPLIED, STATUTORY OR OTHERWISE, FROM SELLER AS TO ANY MATTERS CONCERNING THE PROPERTY
INCLUDING WITHOUT LIMITATION: (A) THE CONDITION OR

 

 

SAFETY OF THE PROPERTY OR ANY IMPROVEMENTS
THEREON, INCLUDING, BUT NOT LIMITED TO, PLUMBING, SEWER, HEATING AND ELECTRICAL SYSTEMS, ROOFING,
AIR CONDITIONING, IF ANY FOUNDATIONS, SOILS AND GEOLOGY INCLUDING HAZARDOUS MATERIALS, LOT SIZE, OR
SUITABILITY OF THE PROPERTY OR IMPROVEMENTS FOR A PARTICULAR PURPOSE; (B) WHETHER THE APPLIANCES,
PLUMBING OR UTILITIES AND ANY ASSOCIATED MATTERS ARE IN WORKING ORDER; (C) THE LIABILITY OR
SUITABILITY FOR OCCUPANCY OF ANY STRUCTURE AND THE QUALITY OF ITS CONSTRUCTION; (D) THE FITNESS OF
ANY PERSONAL PROPERTY; OR (E) WHETHER THE IMPROVEMENTS ARE STRUCTURALLY SOUND, IN GOOD CONDITION,
OR IN COMPLIANCE WITH APPLICABLE CITY, PARISH, STATE OR FEDERAL STATUTES, CODES OR ORDINANCES.
EXCEPT AS EXPRESSLY PROVIDED IN THIS AGREEMENT OR ANY CLOSING DOCUMENT, PURCHASER WAIVES ANY
WARRANTY TO WHICH IT MIGHT BE ENTITLED UNDER ARTICLE 2524 OF THE LOUISIANA CIVIL CODE THAT THE
PROPERTY BE REASONABLY FIT FOR ITS ORDINARY USE. EXCEPT AS EXPRESSLY PROVIDED IN THIS AGREEMENT OR
ANY CLOSING DOCUMENT PURCHASER HEREBY EXPRESSLY WAIVES ALL RIGHTS IN REDHIBITION PURSUANT TO
LOUISIANA CIVIL CODE ARTICLE 2520, ET SEQ., THE WARRANTIES OF OWNERSHIP AND PEACEABLE POSSESSION OF
THE PROPERTY, THE WARRANTIES AGAINST HIDDEN OR REDHIBITORY DEFECTS IN THE PROPERTY, AND THE
WARRANTY THAT THE PROPERTY IS FIT FOR ITS INTENDED USE, EACH OF WHICH WOULD OTHERWISE BE IMPOSED
UPON SELLER BY LOUISIANA CIVIL CODE ARTICLE 2475. EXCEPT AS EXPRESSLY PROVIDED IN THIS AGREEMENT
OR ANY CLOSING DOCUMENT PURCHASER HEREBY RELEASES SELLER FROM ANY LIABILITY FOR HIDDEN, REDHIBITORY
OR LATENT DEFECTS OR VICES UNDER LOUISIANA CIVIL CODE ARTICLE 2520 THROUGH 2549.

II.

Consideration

     2.01 Purchase Price. The purchase price (“Purchase Price”) to be paid by Purchaser to
Seller at the closing of the purchase and sale of the Property (the “Closing”) shall be FOURTEEN
MILLION FIVE HUNDRED THOUSAND DOLLARS ($14,500,000). The Purchase Price shall be payable by
Purchaser as follows:

     (a) FIVE HUNDRED THOUSAND DOLLARS ($500,000) as a deposit (together with any interest
earned thereon, the “Deposit”), by check or wire transfer payable to First American Title
Insurance Company (in its capacity as holder of the Deposit, the “Escrow Agent”), through
its Washington, D.C. office, within three (3) business days after the date hereof; and

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

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

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

 

III.

Survey

     3.01 Survey. Within fifteen (15) business days after the Effective Date, Seller will
obtain, at Seller’s cost and expense, a current survey (the “Survey”) of the Property prepared by a
surveyor licensed in the State of Louisiana and approved by Purchaser. The Survey, which shall be
certified to Purchaser, Purchaser’s lender, if any, and Purchaser’s title insurer, shall indicate
the metes and bounds of the Land, shall indicate the Improvements and the location of any
easements, servitudes, utility lines, rights-of-way, water courses, drains, sewers, driveways,
roads and encroachments affecting the Property, and shall indicate that all Improvements are
located within the record and setback lines of the Property and that no easements, servitudes or
other encroachments located on the Property interfere with the use of the Property and shall
otherwise be in accordance with the Minimum Standard Detail Requirements and Classifications for
ALTA/ACSM Land Title Surveys (including without limitation items 1, 2, 3, 6, 7A, 7B, 7C, 8, 9, 10,
11 and 13 of Table A thereof) and the standards of any board or organization promulgating standards
for surveys in the State of Louisiana.

IV.

Title Insurance

     4.01 Title Commitment. Within five (5) business days after the Effective Date, Seller
will cause First American Title Insurance Company (in its capacity as title insurer, the “Title
Company”), through its National Accounts Office in Washington, D.C., to deliver to Purchaser an
up-to-date and complete commitment for an ALTA Owner’s Policy of Title Insurance with extended
coverage (the “Title Commitment”) accompanied by a legible copy of all recorded documents relating
to liens, easements, servitudes, rights-of-way, restrictions and other matters affecting title to
the Property.

     4.02 Title Objections. Purchaser shall have thirty (30) days from the last to
be received of the Title Commitment and the Survey to notify Seller as to any items that are
unsatisfactory to Purchaser. Unless Purchaser or its attorney so notifies Seller within such
30-day period, Purchaser shall be deemed to have approved the condition of title to the Property as
reflected by the Title Commitment and Survey. If within such period Purchaser notifies Seller that
any of the items are unacceptable (“Objections”), Seller shall within five (5) business days after
receipt of such notice notify Purchaser whether Seller shall elect to cure any or all of such
Objections (provided, however, that Seller must satisfy and remove of record or cure, as the case
may be, and shall not have any right to elect not to cure, any matter which it is required to cure
pursuant to Section 4.04 below). If Seller elects to cure any such Objections, then Seller shall
promptly cure the Objections which it has elected to cure to Purchaser’s and the Title Company’s
satisfaction. If Seller elects not to cure any such Objections, or is unable to cure any such
Objections, then Purchaser at its sole and absolute option may either (i) accept title to the
Property subject to such Objections or (ii) terminate this Agreement by written notice to Seller,
whereupon the Deposit shall be promptly returned to Purchaser and the parties shall have no further
rights or liabilities under this Agreement other than those which expressly survive the termination
of this Agreement. Purchaser shall make such election by written notice to Seller or on before the
Closing Date or within five business days after Seller has advised Purchaser in writing that has
elected not to cure any such Objections or is unable to cure any such Objections, whichever occurs
first, and in the event Purchaser does not make such election, Purchaser shall be conclusively
deemed to have waived such Objections. Those restrictions, liens, encumbrances, easements,
servitudes, rights of way and other matters as are not objected to or are waived by Purchaser in
the manner provided in this Section shall be deemed “Permitted Exceptions”. Nothing herein shall
be deemed to prohibit Purchaser from objecting to title or survey matters revealed subsequent to
approval of the title reflected by the Title Commitment and the Survey, and any such objections
will be treated as “Objections” in accordance with this Section.

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

     4.04 Monetary Liens. Notwithstanding anything to the contrary set forth in Section
4.02 above, Seller shall satisfy and remove of record or cure, as the case may be, at or before the
Closing any mortgage or deed of trust lien affecting the Property and any other Objection which may
be removed by the payment of a liquidated sum of money,

 

 

including without limitation any liens for
unpaid taxes, and Seller may not refuse to cure the same. Seller may use all or any portion of the
Purchase Price to affect such cure at the Closing.

     4.05 Searches. Promptly after the Effective Date, Purchaser shall have the right to
obtain, at Purchaser’s expense, written reports of searches (the “Searches”) of the records of the
appropriate governmental agencies confirming the absence of security interests, judgments, tax
liens and bankruptcy proceedings which affect or could affect the Purchased Assets or any interest
therein. If such Searches disclose the existence of any security interests, judgments, tax liens
or bankruptcy proceedings which affect or could affect the Purchased Assets or any interest
therein, Purchaser shall notify Seller thereof in writing and Seller shall have thirty (30) days
from the date of such notice to secure the release, or commit in writing to secure on or prior to
the Closing the release, of all such security interests, judgments, tax liens and bankruptcy
proceedings and provide evidence of such release to Purchaser. Purchaser shall have the right to
update said Searches, at Purchaser’s expense, on or prior to the Closing Date confirming that there
are no security interests, judgments, tax liens or bankruptcy proceedings affecting the Purchased
Assets or any interest therein. If Seller fails to secure all such releases or commit to secure
such releases within such thirty (30) day period, and/or (with respect to any releases Seller has
committed to securing or releases with respect to any security interests, judgments, tax liens or
bankruptcy proceedings affecting the Purchased Assets or any interest therein shown by the
aforesaid update of said Searches) fails to secure such releases on or prior to the Closing)
without limiting any other obligation which Seller may have under this Agreement, and/or right or
remedy which Purchaser may have with respect thereto under this Agreement, Purchaser may elect,
upon notice to Seller on or before the Closing Date, to (i) terminate this Agreement, in which
event the Deposit shall promptly be returned to Purchaser, or (ii) accept title subject only to
such then unreleased security interests, judgments and tax liens with the further right to deduct
from the Purchase Price amounts secured by any such security interests, judgments and tax liens of
a definite or ascertainable amount.

V.

Representations, Warranties, Covenants

And Conditions Precedent

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

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

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

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

     (d) There are no Space Leases, ground leases, license agreements, occupancy agreements
or other similar agreements affecting all or any portion of the Property except for the
leases (collectively, the “Space Leases”) listed in Exhibit C to this Agreement. All of the
Space Leases described in Exhibit C are in full force and effect, there are no defaults by
any party thereunder nor has any event occurred which, with passage of time or the giving of
notice or both, would constitute a default by Seller or, to the knowledge of Seller, by any
other party thereunder, and true and complete copies of the Space Leases and all instruments
and documents related to the Space Leases have been provided to Purchaser.

     (e) There are no Hotel Contracts or similar agreements affecting the Property except as
set forth in Exhibit D to this Agreement. All of the Hotel Contracts are in full force and
effect, there are no defaults by

 

 

any party thereunder nor has any event occurred which, with
passage of time or the giving of notice or both, would constitute a default by Seller or, to
the knowledge of Seller, by any other party thereunder, and true and complete
copies of the Hotel Contracts and all instruments and documents related to the Hotel
Contracts have been provided to Purchaser.

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

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

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

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

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

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

     (l) Seller has provided to Purchaser (i) true and complete copies of all bills for real
estate and personal property taxes and assessments for the 2006 tax year and the two
immediately preceding tax years and (ii) a true and complete list of the current Hotel
Employees together with a schedule setting forth the compensation and fringe benefits
(including, but not limited to, benefit plans) accorded to such Hotel Employees.

     (m) Seller has provided to Purchaser unaudited financial statements and STR reports for
the period from the opening of the Hotel through December 31, 2005 and year-to-date
financial statements for the 2006 calendar year. All such statements for the Hotel are, and
any financial statements for later periods to be provided by Seller pursuant to this
Agreement shall be, true and correct and accurately reflect in all material respects the
financial condition of the Hotel for the applicable period. There have been no material
adverse changes in the financial condition of the Hotel since the date of the last such
statement delivered to Purchaser prior to the execution of this Agreement.

 

 

     (n) No Hotel Employees are employed under union agreements, collective
bargaining, written or oral employment agreements or similar arrangements.

     (o) Seller owns good, merchantable and marketable fee simple title to the Purchased
Assets subject only to the Permitted Exceptions.

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

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

     (r) Other than the agreements disclosed in this Agreement, there are no agreements,
written or oral, affecting the Property, which would be binding on Purchaser following the
Closing.

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

     (t) Neither Seller nor any person who owns a controlling interest in or otherwise
controls Seller, nor to the best knowledge of Seller any other person or entity to whom
Purchaser directly or indirectly pays amounts on behalf of or for the benefit of Seller
pursuant to a provision of this Agreement, is (i) listed on the Specially Designated
Nationals and Blocked Persons List or any similar list maintained by the Office of Foreign
Assets Control, Department of the Treasury, pursuant to any authorizing statute, executive
order or regulation, (ii) a “specially designated global terrorist” or other person listed
in Appendix A to Chapter V of 31 C.F.R., as the same has been from time to time updated and
amended, or (iii) a person either (A) included within the term “designated national” as
defined in the Cuban Assets Control Regulations, 31 C.F.R. Part 515 or (B) designated under
Sections 1(a), 1(b), 1(c) or 1(d) of Executive Order No. 13224, 66 Fed. Reg. 49079
(published September 25, 2001) or a person similarly designated under any related enabling
legislation or any other similar Executive Orders.

As used in this Agreement, the term “Seller’s knowledge” or “known to Seller” shall mean the
current actual knowledge of Seller on the particular date that the representation or warranty is
deemed to be made, without independent inquiry or investigation of third parties other than
inquiries of the general manager and executive staff of the Property. Notwithstanding the foregoing
or any other provision of this Agreement to the contrary, however, it shall be a condition
precedent to Purchaser’s obligation to close the transactions set forth herein that each
representation and warranty of Seller which is limited to or by Seller’s knowledge be true and
correct as if it were not so limited.

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

     (a) Purchaser is a duly organized and validly existing Delaware limited partnership, is
in good standing in the State of Delaware; has full power to enter into this Agreement and
to perform its obligations under this Agreement; and is or will be as of the Closing Date in
good standing in Louisiana.

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

     5.03 Remedies Regarding Representations and Warranties. By executing and
delivering the documents required of such party in Section 7.04 below, (i) Seller shall be deemed
to have remade all of the foregoing representations and warranties of Seller in Section 5.01 as of
Closing and (ii) Purchaser shall (subject to changes in such representations and warranties
resulting from any assignment of this Agreement permitted pursuant to Section 9.02 below) be deemed
to have made all of the foregoing representations and warranties of Purchaser in Section 5.02 as of

 

 

Closing. Should any of such representations and warranties of Seller be found to be incorrect
prior to Closing, Seller shall attempt to cure the same by Closing. If Seller is unable to cure
same by Closing, at Purchaser’s option the Closing shall be postponed until five (5)
business days following Purchaser’s receipt of proof satisfactory to Purchaser that such
matters have been cured, provided, however, if Seller is unable to cure the same within thirty (30)
days from the date of notice of the same, Purchaser shall be entitled either to waive the same and
close this transaction, exercise its rights pursuant to Article VI of this Agreement or to
terminate this Agreement. In the event Purchaser elects to terminate this Agreement, Escrow Agent
shall return the Deposit to Purchaser and neither party to this Agreement shall thereafter have any
further rights or liabilities under this Agreement. The representations and warranties of each
party shall survive the Closing for a period of two (2) years. Seller shall indemnify and hold
Purchaser harmless from and against any loss, damage, liability, claim, cost or expense (including,
without limitation, reasonable attorneys’ fees) that may be incurred by or asserted against
Purchaser and arises from a breach of Seller’s representation or warranty. The provisions of this
Section 5.03 shall survive the Closing.

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

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

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

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

     (d) Seller will keep the Purchased Assets free and clear of liens and encumbrances
other than the Permitted Exceptions and the lien of taxes not yet due and payable and other
than such items a will be cured or removed by Seller pursuant to Section 4.02.

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

     (f) Seller will cause the Property to be operated and maintained in the manner in which
it is being operated and maintained as of the date of this Agreement which undertaking
includes, but is not limited to, (i) maintaining Consumables, Expendables and Furnishings in
those quantities and at those levels present as of the Effective Date and, with respect to
Expendables subject to measurement on a PAR basis, not less than 3.0 PAR of each applicable
Expendable on the Closing Date, (ii) entering into Bookings in the ordinary course of
business and in accordance with Seller’s historical practice at the Hotel, (iii) performing
all repairs and maintenance necessary to keep the Property in good repair, to comply with
Laws and to maintain at least the same condition as exists on the Effective Date and (iv)
keeping the Hotel staffed with Hotel Employees in accordance with Seller’s historical
practice at the Hotel.

     (g) Seller shall permit Purchaser and its representatives, employees, contractors and
agents to enter upon and inspect the Property and perform such investigations of the
Property and all applicable Books and Records as Purchaser may from time to time deem
desirable. Purchaser and Purchaser’s agents and contractors shall have the right during the
term of this Agreement to enter upon the Property at reasonable times and upon reasonable
prior notice to Seller. Purchaser acknowledges and agrees that any and all inspections of
the Property shall be conducted in a manner not unreasonably disruptive to tenants, guests,
or otherwise to the operation of the Property and shall be performed upon reasonable prior
notice to Seller. In the event Purchaser desires to conduct any physically intrusive due
diligence such as sampling of soils or drilling wells, Purchaser

 

 

will request Seller’s prior
consent thereto, which consent shall not be unreasonably withheld. Purchaser agrees to
indemnify Seller and hold Seller, Seller’s affiliates, officers, directors, employees,
agents and representatives harmless from and against any and all losses, costs, damages,
claims or liabilities, including reasonable attorneys fees but excluding
consequential and punitive damages, arising out of any personal injury or property
damage resulting from such entry and/or activities upon the Property by Purchaser, its
agents, contractors and/or subcontractors pursuant to this Section except to the extent the
same arise from the misconduct or negligence of Seller or Seller’s agents and/or
representatives. Purchaser’s indemnity and hold harmless provisions pursuant to this
Section shall survive the closing of this transaction or earlier termination of this
Agreement. In addition to the foregoing, Seller shall assist Purchaser and provide such
other information as shall be required to enable an accounting firm of Purchaser’s choosing
to prepare audited financial statements of the Property for calendar years 2004 through
2005, the cost of which shall be borne by Purchaser.

     (h) Within fifteen (15) days after the end of each calendar month until the Closing
Date, Seller shall provide to Purchaser financial statements and STR reports for such month
and on a year-to-date basis which statements shall be prepared in accordance with the
Uniform System of Accounts for Hotels and Motels and otherwise in form reasonably acceptable
to Purchaser.

     (i) Upon Purchaser’s request, Seller shall from time to time make available a senior
representative of Seller and the general manager of the Hotel at a reasonable time to meet
with an asset manager of Purchaser to review the operations of the Hotel in reasonable
detail, provided that Purchaser shall not contact the general manager or other executives of
the Hotel until they have been advised by Purchaser of the pending sale. Seller shall advise
such persons of the pending sale with reasonable promptness.

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

     (k) Seller will cooperate with Purchaser in all reasonable respects (which shall
include, without limitation, supplying information known to Seller and execution of such
documents as may be legally required) in connection with the transfer of any alcoholic
beverage licenses used in connection with the operation of the Hotel (the “Liquor License”)
to Purchaser to Purchaser or Purchaser’s application for a new Liquor License. If the
Purchaser does not obtain the transfer of the Liquor License or obtain a new Liquor License
on or prior to the Closing Date then, on the Closing Date, Seller shall enter, or if Seller
is not the holder of the existing Liquor License cause the holder of the existing Liquor
License to enter, into an agreement (the “Interim Arrangement”) with Purchaser, in form and
content reasonably acceptable to Purchaser and Seller, providing for an interim arrangement
whereby Seller or such holder, as applicable, shall operate (or if legally permissible allow
Purchaser or its manager to operate) the alcoholic beverage concessions at the Hotel under
the existing Liquor License on behalf of Purchaser pending the transfer or issuance of the
Liquor License to Purchaser or its designee. Purchaser shall indemnify, defend and hold
such licensee harmless against any liabilities incurred in such operation (unless caused by
such licensee’s willful or negligent conduct or omission or breach of its agreement with
Purchaser) and provide adequate dram-shop insurance naming Seller and the licensee as
additional insureds.

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

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

 

 

     (n) Seller shall terminate and pay off all equipment leases with respect to the
Property and shall deliver to Purchaser at the Closing all equipment or other items leased
thereunder free and clear of all liens and encumbrances.

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

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

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

     5.06 Conditions Precedent to Purchaser’s Obligations. Purchaser’s obligation to close
the transactions set forth in this Agreement are conditioned upon the satisfaction of the following
conditions as of the Closing:

     (a) Purchaser shall not have terminated this Agreement pursuant to Section 5.05 or any
other applicable provision of this Agreement.

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

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

     (d) There shall be no unpaid charges, judgments, debts, liabilities, claims, liens or
obligations which burden the Property other than the Permitted Exceptions other than such
items as Seller shall cause to be cured or removed at Closing.

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

 

 

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

     (g) Purchaser shall as of the Closing have either (i) obtained Hilton’s consent to the
assumption by Purchaser of, and assumed, the Existing Franchise Agreement, or (ii) entered
into a franchise or license agreement with Hilton with respect to the Hotel, in either case
on terms satisfactory to Purchaser in Purchaser’s sole and absolute discretion. In no event
shall Purchaser be required to assume or have any liability or obligation under the Existing
Franchise Agreement for (x) any franchise or other fees under the Existing Franchise
Agreement accrued and unpaid with respect to all periods on or prior to the Closing Date or
(y) with respect to any monetary or other default under the Existing Franchise Agreement.

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

The conditions precedent set forth in this Section 5.06 are solely for the benefit of Purchaser and
may be waived only by Purchaser, which waiver may be granted or withheld by Purchaser in its sole
and absolute discretion. Without limiting and without prejudice to any of Purchaser’s other rights
or remedies under this Agreement in the event any such failure of condition is the result of or
arises out of Seller’s default under this Agreement, if any condition precedent to Purchaser’s
obligation to close the transactions set forth in this Agreement has not been satisfied as of the
Closing Date or waived by Purchaser, then Purchaser shall be entitled in its sole and absolute
discretion to terminate this Agreement by giving Seller and Escrow Agent written notice to such
effect, whereupon Escrow Agent shall return the Deposit to Purchaser and the parties shall
thereafter have no further rights or liabilities under this Agreement.

     5.07 Conditions Precedent to Seller’s Obligations. Seller’s obligation to close the
transactions set forth in this Agreement are conditioned upon the satisfaction of the following
conditions as of the Closing Date:

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

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

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

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

 

 

VI.

Remedies

     6.01 SELLER’S REMEDIES. IF PURCHASER DEFAULTS UNDER THIS AGREEMENT OR OTHERWISE FAILS
TO CLOSE THE TRANSACTIONS SET FORTH IN THIS AGREEMENT, FOR ANY REASON EXCEPT (A) THE FAILURE OF ANY
CONDITION PRECEDENT TO PURCHASER’S OBLIGATION TO CLOSE THE TRANSACTIONS SET FORTH IN THIS AGREEMENT
OR (B) PURCHASER’S TERMINATION OF THIS AGREEMENT IN ACCORDANCE WITH ITS TERMS, SELLER SHALL BE
ENTITLED AS ITS SOLE REMEDY UNDER THIS AGREEMENT TO TERMINATE THIS AGREEMENT AND RECOVER THE
DEPOSIT (IN ADDITION TO ATTORNEYS’ FEES PURSUANT TO SECTION 6.03 BELOW) AS LIQUIDATED DAMAGES AND
NOT AS A PENALTY, IN FULL SATISFACTION OF ANY CLAIMS AGAINST PURCHASER UNDER THIS AGREEMENT. IN
CONNECTION THEREWITH, SELLER WAIVES ITS RIGHT TO SEEK SPECIFIC PERFORMANCE OF THIS AGREEMENT FROM
PURCHASER. SELLER AND PURCHASER AGREE THAT THE SELLER’S DAMAGES RESULTING FROM PURCHASER’S DEFAULT
ARE DIFFICULT TO DETERMINE AND THE AMOUNT OF THE DEPOSIT IS A FAIR ESTIMATE OF THOSE DAMAGES. EACH
PARTY HEREBY WAIVES ANY AND ALL RIGHTS TO CONTEST THE VALIDITY OF THE FOREGOING LIQUIDATED DAMAGES
PROVISIONS FOR ANY REASON WHATSOEVER, INCLUDING, BUT NOT LIMITED TO, SUCH PROVISION BEING
UNREASONABLE UNDER CIRCUMSTANCES EXISTING ON THE EFFECTIVE DATE OR AT THE TIME OF DEFAULT.

     6.02 PURCHASER’S REMEDIES. IF SELLER DEFAULTS UNDER THIS AGREEMENT, OR OTHERWISE
FAILS TO PERFORM ITS OBLIGATIONS UNDER THIS AGREEMENT FOR ANY REASON EXCEPT THE FAILURE OF ANY
CONDITION PRECEDENT TO SELLER’S OBLIGATION TO CLOSE THE TRANSACTIONS SET FORTH IN THIS AGREEMENT,
THEN PURCHASER’S SOLE REMEDIES SHALL BE: (A) TO TERMINATE THIS AGREEMENT BY GIVING SELLER WRITTEN
NOTICE OF SUCH ELECTION PRIOR TO OR AT CLOSING WHEREUPON (X) THE ESCROW AGENT SHALL PROMPTLY RETURN
TO PURCHASER THE DEPOSIT AND (Y) SELLER SHALL PAY TO PURCHASER ON DEMAND ALL OUT-OF-POCKET COSTS
(INCLUDING, BUT NOT LIMITED TO, DUE DILIGENCE COSTS AND REASONABLE ATTORNEYS’ FEES) INCURRED BY
PURCHASER IN CONNECTION WITH THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT;
(B) TO WAIVE THE DEFAULT AND CLOSE; OR (C) TO ENFORCE SPECIFIC PERFORMANCE OF THIS AGREEMENT.

     6.03 Attorney’s Fees. In the event either party hereto is required to employ an
attorney because of the other party’s default, then the defaulting party shall pay the
nondefaulting party’s reasonable attorney’s fees incurred in the enforcement of this Agreement. The
provisions of this Section 6.03 shall be in addition to and not limited by the provisions of
Sections 6.01 and/or 6.02 above.

VII.

Closing Matters

     7.01 Closing Date. The delivery of the conveyancing instruments with respect to the
Purchased Assets and other documents required hereunder (the “Closing”) shall be held at the Title
Company’s offices or by mail, or through escrow with the Escrow Agent, on the date thirty (30) days
after the expiration of the Inspection Period (provided that if such date is not a business day
then the Closing Date shall be the next succeeding business day) (the “Closing Date”), or such
earlier date as may be agreed to by Seller and Purchaser in their sole and absolute discretion.

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

 

 

     (a) Taxes. All real and personal property taxes and special assessments, if
any, whether payable in installments or not, shall be prorated as of the Cut-Off Time. If
such taxes for the tax year in which the Closing occurs have not been finally determined on
the Closing Date, then such taxes shall be prorated on an estimated basis using the most
current information available. When such taxes have been finally determined, the parties
shall recalculate such prorations and any amount payable by Seller or Purchaser shall be
paid to the other party within fifteen days after such taxes are finally determined. Seller
shall pay or cause to be paid, in accordance with Louisiana law and on or before the dates
the same are due, any sales and use taxes with respect to the Purchased Assets which arise
out of sales at the Property prior to the Closing Date.

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

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

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

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

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

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

     prorated on such basis and readjusted if, as and when such amounts are finally determined
and collected.

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

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

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

 

 

     (k) Ledger and other receivables. All accounts receivable attributable to
guests in the Hotel on the night preceding the Closing (the “Ledger”) shall be prorated as
provided in this Agreement, Seller’s share shall be
credited to Seller and the Ledger shall become the property of Purchaser. All other
accounts receivable that are the property of Seller under this Agreement shall be set forth
in a schedule on the Closing Date and shall remain the property of Seller. Purchaser shall
have no obligation to collect such accounts receivable, but shall cooperate with Seller, at
Seller’s cost, in reasonable respects in connection with any collection efforts. If any
receivables which are the property of Seller under this Agreement shall be collected by
Purchaser, Purchaser shall remit the same to Seller within 90 days after the Closing Date,
provided that Purchaser may offset against such collections any amounts unpaid by Seller
under Section 7.02(e).

     (l) Gift Certificates. On the Closing Date, Seller will provide Purchaser with a
complete schedule of all outstanding (i) gift certificates, donations and other similar
obligations which have been distributed by Seller and (ii) trade credits, trade-out or
barter arrangements payable by Seller to any other party for services rendered in the past
or to be rendered in the future. Purchaser shall receive a credit at Closing for all
obligations of Seller pursuant to any trade-out or barter arrangements with any other party
with respect to the Hotel. In addition, Purchaser shall receive a credit at Closing for the
value of any outstanding gift certificates, donations or other similar obligations with
respect to the Hotel which have been distributed by Seller prior to Closing. Seller shall
indemnify, defend, and hold Purchaser harmless against any liability arising prior to the
Closing Date out of or with respect to any such trade-out or barter arrangements and any
such gift certificates, donations or other similar obligations not credited to Purchaser at
Closing.

     (m) Consumables and Expendables. Seller shall not receive a credit for any item of
Consumables, Furnishings or Expendables.

     (n) Prepaid Advertising. Seller shall not receive a credit for any
prepaid advertising.

     (o) Delayed Adjustments. If at any time following the Closing Date the amount of an
item listed in this Section 7.02 shall prove to be incorrect, the party in whose favor the
error was made shall pay to the other party within fifteen (15) days after request the sum
necessary to correct such error upon receipt of proof of such error, provided that such
proof is delivered to the party from whom payment is requested on or before sixty (60) days
after the Closing Date. The acceptance of the closing statement by either party shall not
prevent later readjustment pursuant to this Section. After the Closing Date, each party
shall have reasonable access to the books and records of the other party with respect to all
matters set forth in this Section 7.02 for the purposes of determining the accuracy of all
adjustments and the performance of the obligations of the parties under this Section.

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

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

     (b) Baggage Inventory. All guest baggage checked and left in the possession,
care and control of Seller shall be listed in an inventory to be prepared in duplicate and
signed by Seller’s and Purchaser’s representatives on the Closing Date. Purchaser shall be
responsible from and after the Closing Date for all

 

 

baggage listed in inventory, and Purchaser hereby agrees to indemnify and save and hold Seller harmless from and against any
claim arising out of or with respect to the baggage listed in the inventory.

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

     7.04 Closing Documents.

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

          (i) an Act of Sale in the form attached to this Agreement as Exhibit F conveying the
fee estate in the Property to Purchaser subject only to the Permitted Exceptions.

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

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

          (iv) an assignment conveying and transferring to Purchaser all of the Bookings, Books
and Records, Space Leases, assignable Permits and Hotel Contracts, Miscellaneous Personal
Property and Warranties, and containing an indemnity by Seller benefiting Purchaser with
respect to matters arising under the Bookings, Books and Records, Space Leases, assignable
Permits and Hotel Contracts, Miscellaneous Personal Property and Warranties prior to the
Closing Date.

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

          (vi) possession of the Property.

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

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

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

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

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

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

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

          (xiv) tax clearance certificates from the applicable regulatory authorities.

 

 

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

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

     (i) the balance of the Purchase Price.

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

     (iii) an assumption of the obligations of Seller from and after the Closing under the
Bookings, the Space Leases, and Hotel Contracts, and containing an indemnity by Purchaser
benefiting Seller with respect to matters arising under the Bookings, the Space Leases, and
Hotel Contracts prior to the Closing Date.

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

     7.05 Closing Costs.

     (a) Purchaser shall pay (i) the premiums for the Title Policy, (ii) the costs of its
due diligence investigation of the Purchased Assets, (iii) all amounts incurred in
connection with the issuance of a new franchise agreement or license agreement for the
Hotel, including, but not limited to, application fees, transfer fees, and costs of
implementing a property improvement plan (but specifically excluding any cost of terminating
the Existing Franchise Agreement), (v) any costs to obtain the Liquor License, (vi) one-half
of the escrow fees, if any, of the Escrow Agent and (vi) the fees and disbursements of
Purchaser’s attorneys.

     (b) Seller shall pay (i) any parish or city transfer taxes, deed stamps, documentary
stamps, recording fees and the like imposed in connection with the conveyance of the
Property, (ii) all sales taxes payable in connection with the transactions set forth in this
Agreement, (iii) the cost of the Survey, (iii) any costs of terminating the Existing
Franchise Agreement and any property management agreement affecting the Hotel, (v) one-half
of the escrow fees, if any, of the Escrow Agent and (vi) the fees and disbursements of
Seller’s attorneys.

     (c) Any other closing cost not specifically allocated by this Agreement shall be
allocated in accordance with closing customs for similar properties in Baton Rouge,
Louisiana.

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

     7.06 Real Estate Commissions. Seller and Purchaser each represent and warrant to the
other that it has not dealt with any broker in the negotiation of this transaction other than The
Lodging Group, Inc. (the “Broker”). Each party agrees to and does hereby indemnify and hold the
other harmless against the payment of any brokerage commission to any person or entity claiming by,
through or under Seller or Purchaser, as applicable. Seller shall pay the commission of Broker
pursuant to separate agreement. The provisions of this Section 7.06 shall survive the Closing.

     7.07 Staff. Seller shall terminate or arrange for the termination of
all Hotel Employees as of the Closing Date and shall pay all wages and fringe benefits, including,
but not limited to, accrued vacation and sick pay (whether earned or not) and payroll taxes,
through the Closing Date. Purchaser shall hire, subject to its standard interview and
qualification procedures, criteria and staffing guidelines, the Hotel Employees employed in
non-managerial capacities, which such Hotel Employees shall at or in connection with the Closing be
offered the standard health and fringe benefit package provided by Interstate Management Company,
as operator of the Hotel after the Closing, to the majority of its other hotel employees in the
area of the Hotel. If Purchaser or its management company shall rehire any of such Hotel
Employees pursuant to the foregoing sentence or otherwise, then such wages and fringe benefits
shall be

 

 

apportioned as of the Cut-off Time. Seller will indemnify and hold Purchaser harmless
from and against any loss, damage, liability, claim, cost or expense (including, without
limitation, reasonable attorney’s fees) that may be incurred by, or asserted against, Purchaser
after Closing which involves any matter relating to a past or present Hotel Employee concerning
acts or omissions occurring prior to the Closing Date. Notwithstanding the foregoing, Purchaser
agrees to indemnify and hold Seller harmless from and against any loss, damage, liability, claim,
cost or expense (including, without limitation, reasonable attorney’s fees) that may be incurred
by, or asserted against, Seller arising out of or relating to Purchaser’s or Seller’s failure, if
any, to comply with the Worker
Adjustment Retraining and Notification Act (the “WARN
Act”) with respect to the
Hotel Employees and arising out of or in connection with the transactions contemplated by this
Agreement. Seller agrees not to give any termination notices under the WARN Act to its Hotel
Employees without the prior written consent of Purchaser, which consent may be withheld in
Purchaser’s sole and absolute discretion.

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

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

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

VIII.

Condemnation and Risk of Loss

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

     8.02 Risk of Loss. Until Closing, Seller shall bear the risk of loss should there be
damage to any of the Improvements by fire or other casualty. If prior to the Closing any of the
improvements shall be damaged by fire or other casualty, Seller shall take all action necessary to
preserve and protect the Improvements from further loss or damage, and within ten (10) business
days after such loss deliver to Purchaser the following items (collectively “Casualty Loss
Information”): (a) copies of all casualty and business interruption policies relating to the
Property; (b) the names, addresses and telephone numbers of the adjustors assigned to adjust the
loss; (c) letters addressed to each insurance company issuing a policy covering such loss and
executed by Seller authorizing said company and its adjustors to discuss all matters relating to
such loss with purchaser, its agents and attorneys; and (d) a detailed written description of the
damages incurred and an estimate of the cost of restoration. If the Improvements suffer material
damage by a casualty, which, for the purpose of this Agreement, shall mean damage in excess of
$300,000 or damage of a lesser amount to any area of the Hotel necessary for the day to day
operation of the Hotel that cannot reasonably be expected to be repaired within ten business days,
Purchaser may within five business days after delivery of the Casualty Loss Information either:

 

 

	 	(a)	 	terminate this Agreement by delivering written notice of same to Seller, in
which event Escrow Agent shall promptly return to Purchaser the Deposit and neither
party to this Agreement shall thereafter have any further rights or obligations
hereunder; or
	 
	 	(b)	 	waive its right of termination, by delivering written notice of same to Seller,
and proceed to close this transaction in accordance with the terms hereof.

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

IX.

Miscellaneous

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

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

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

 

 

	 	 	 	 	 	 	 	 
	 	Seller:	 	Howell Place Hotel, LLC	 	 
	 	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	 	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	 	 

	 	Attn:	 	 	 	 
	 	 

	 	Fax No.:
	 	 

	 	 
	 	 

	 	 	 	 

	 	 
	 	 
	 	 	 	 	 	 
	 	with copy to:	 	Kenneth R. Mourton, Esq.	 	 
	 	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	 	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	 	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	 	 

	 	Fax. No:	 	 	 	 
	 	 

	 	 	 	 

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

	 	Attn:	 	 	 	 
	 	 

	 	 	 	 

	 	 
	 	 

	 	Fax No.:	 	 	 	 
	 	 

	 	 	 	 

	 	 

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

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

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

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

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

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

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

     9.10 Saturdays, Sundays, Legal Holidays. If the time period by which any right,
option, or election provided under this Agreement must be exercised or by which any acts or
payments required hereunder must be

 

 

performed or paid, or by which any notice must be given, or by
which the Closing must be held, expires on a Saturday, Sunday, legal or bank holiday, then such
time period shall be automatically extended to the next regularly scheduled business day.

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

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

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

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

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

     9.12 Bulk Transfers. Seller and Purchaser specifically waive compliance with the Uniform
Commercial Code of the State in which the Property is located with respect to bulk transfers, with
any similar provision under any applicable law of such State or the county and city in which the
Property is located. In the event such waiver is ineffective, Seller shall indemnify Purchaser for
any claims made by creditors under the applicable bulk sales laws relating solely to any
pre-Closing payment obligations to such creditors and only in the amount of the payments due such
creditors. The provisions of this Section 9.12shall survive the Closing.

     9.13 Exclusivity. From the Effective Date through the Closing or the earlier termination of
this Agreement, Seller shall (i) discontinue any marketing activities with respect to the Property
and any current negotiations for the sale or lease of the Property with any party other than
Purchaser, (ii) not enter into any new marketing activities with respect to the Property or any
negotiations with any third parties for the sale or lease of the Property, and (iii) not solicit or
accept any offers from third parties with respect to the sale or lease of the Property.

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

HOWELL PLACE HOTEL, LLC, an Arkansas limited liability company

	 	 	 	 	 
	By:
	 	/s/ KENNETH R. MOURTON	 	 
	Name:

	 	 
Kenneth R. Mourton
	 	 
	Title:
	 	Authorized Member	 	 

 

INTERSTATE OPERATING COMPANY, L.P., a Delaware limited partnership

	 	 	 	 	 	 	 
	By:	 	Interstate Hotels & Resorts, Inc., a Delaware corporation, general partnership
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ CHRISTOPHER L. BENNETT	 	 
	 

	 	Name:
	 	 
Christopher L. Bennett
	 	 
	 

	 	Title:	 	Senior Vice President and General Counsel	 	 

 

 

AMENDMENT TO AGREEMENT OF SALE AND PURCHASE

     THIS AMENDMENT TO AGREEMENT OF SALE AND PURCHASE (“Amendment”) is made as of
April 21, 2006, between HOWELL PLACE HOTEL, LLC (“Seller”) and INTERSTATE OPERATING COMPANY, L.P.
(“Purchaser”).

     WHEREAS:

     A. Seller and Purchaser entered into that certain Agreement of Sale and Purchase
(the “Agreement”), dated as of March 10, 2006, relating to the property known as the Hilton
garden Inn — Baton Rouge.

     B. Seller and Purchaser desire to amend the Agreement as set forth in this
Amendment.

     NOW, THEREFORE, Seller and Purchaser agree as follows:

     1. The “Inspection Period” (as defined in Section 5.05 of the Agreement) is hereby
extended by twenty-one (21) days and shall expire on May 15, 2006.

     2. As amended hereby, the Agreement is ratified and shall remain in full force and
effect.

     IN WITNESS WHEREOF, the parties have executed and delivered this Amendment as of the date
first written above.

HOWELL PLACE HOTEL, LLC, an Arkansas limited liability company

	 	 	 	 	 
	By:
	 	/s/ KENNETH R. MOURTON	 	 
	 

	 	 	 	 
	Name:
	 	Kenneth R. Mourton	 	 
	Title:
	 	Authorized Member	 	 

INTERSTATE OPERATING COMPANY, L.P., a Delaware limited partnership

By: Interstate Hotels & Resorts, Inc., a Delaware corporation, general partnership

	 	 	 	 	 	 	 
	 

	 	By:
	 	/s/ CHRISTOPHER L. BENNETT	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	Christopher L. Bennett	 	 
	 

	 	Title:
	 	Senior Vice President and General Counsel	 	 

 

 

SECOND AMENDMENT TO AGREEMENT OF SALE AND PURCHASE

     THIS SECOND AMENDMENT TO AGREEMENT OF SALE AND PURCHASE (“Amendment”) is made as of May 10,
2006, between HOWELL PLACE HOTEL, LLC (“Seller”) and INTERSTATE OPERATING COMPANY, L.P.
(“Purchaser”).

     WHEREAS:

     A. Seller and Purchaser entered into that certain Agreement of Sale tad Purchase (as
amended, the “Agreement”), dated as of March 10, 2006, and amended by Amendment dated
April 21, 2006, relating to the property known as the Hilton
Garden Inn — Baton Rouge.

     B. Seller and Purchaser desire to amend the Agreement as set forth in this
Amendment.

     NOW,
THEREFORE, Seller and Purchaser agree as follows:

     1. The “Inspection Period” (as defined in Section 5.05 of the Agreement) is hereby
extended for seven (7) days and shall expire on May 22,
2006.

     2. The “Purchase Price” (as defined in Section 2.01 of the Agreement) is hereby
reduced by the amount of One Hundred Thousand Dollars ($100,000) and shall be Fourteen
Million Four Hundred Thousand Dollars ($14,400,000).

     3. As
amended hereby, the Agreement is ratified and shall remain in full force and
effect.

     IN WITNESS WHEREOF, the parties have executed and delivered this Amendment as of the date
first written above.

HOWELL PLACE HOTEL, LLC, an Arkansas limited liability company

	 	 	 	 	 
	By:

	 	/s/ KENNETH R. MOURTON	 	 
	 

	 	 	 	 
	Name:

	 	Kenneth R. Mourton	 	 
	Title:

	 	Authorized Member	 	 

INTERSTATE OPERATING COMPANY, L.P., a Delaware limited partnership

By: Interstate Hotels & Resorts, Inc., a Delaware corporation, general partnership

	 	 	 	 	 	 	 
	 

	 	By:	 	/s/ LAURA E. FITZRANDOLPH	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	Laura E. Fitzrandolph	 	 
	 

	 	Title:	 	Vice President Human Resources and Senior Corporate Counselexv10w3

 

EXHIBIT 10.3

PURCHASE AND SALE AGREEMENT

HILTON DURHAM, DURHAM, NORTH CAROLINA

     THIS PURCHASE AND SALE AGREEMENT (this “Agreement”), dated as of October 31, 2005, is made by
and between MeriStar Hospitality Operating Partnership, L.P. (successor by name change to American
General Hospitality Operating Partnership, L.P.) (“Seller”), a Delaware limited partnership, having
an address at                     , and Interstate Durham, LLC (“Purchaser”), a Delaware
limited liability company, having an address at 4501 N. Fairfax Drive, Suite 800, Arlington, VA
22203.

RECITALS

     A. Seller is the owner of the hotel located at 3800 Hillsborough Road, Durham, North Carolina,
and known as the Hilton Durham near Duke University (the “Hotel”); and

     B. Seller desires to sell the Hotel and certain related assets to Purchaser, and Purchaser
desires to acquire the same from Seller, on the terms and conditions set forth in this Agreement.

     NOW, THEREFORE, in consideration of ten ($10.00) dollars and the agreements hereinafter set
forth, and intending to be legally bound hereby, the parties agree as follows:

I.

Definitions; Sale and Purchase

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

	 	(a)	 	“Bookings” shall mean contracts or reservations for the use or occupancy of
guest rooms, meeting rooms and/or the banquet facilities of the Hotel, including
without limitation (i) volume transient agreements, and (ii) any assignable internet
and travel agent reservation agreements and promotions, if any, in effect with respect
to the Hotel.
	 
	 	(b)	 	“Books and Records” shall mean all books, records, room rates, customer lists
and banquet and function room records with respect to the Hotel (whether in electronic
format or reduced to paper, but with respect to items in electronic format (i)
excluding software which is proprietary to Seller, MHL, the Manager, their respective
affiliates or any third party, or subject to a non-transferable license, (ii) only in
such form as they exist on the Closing Date, (iii) only to the extent the same are not
consolidated with items from other hotels owned, leased or managed by Seller, MHL,
Manager or any of their respective affiliates not being conveyed to Purchaser and (iv)
without any representation or warranty that the same are compatible with Purchaser’s
software), to the extent the same (x) are owned by Seller or MHL, (y) reflect
operations at the Hotel and not at other properties owned, leased or managed by Seller,
MHL, Manager or any of their respective affiliates, and (z) are in Seller’s or MHL’s
possession.
	 
	 	(c)	 	“Closing Date” shall mean the date specified in Section 6.01.
	 
	 	(d)	 	“Consumables” shall mean all opened and unopened food and beverages (alcoholic
and non-alcoholic) owned by Seller or MHL and located at, or purchased to be used or
sold at but not yet delivered to, the Hotel, excluding any alcoholic beverages which
may not legally be transferred to Purchaser under applicable law.
	 
	 	(e)	 	“Cut-off Time” shall mean 11:59 p.m. on the date preceding the Closing Date.

 

 

	 	(f)	 	“Effective Date” shall mean the date of this Agreement.
	 
	 	(g)	 	“Environmental Laws” shall mean any and all federal, state and local laws,
statutes, ordinances, rules, regulations, judgments, orders, decrees, permits, licenses
or other governmental restrictions or requirements now or hereafter in effect with
respect to the Property and relating to the environment and/or Hazardous Substances,
including without limitation the Comprehensive Environmental Response, Compensation and
Liability Act of 1986, as amended (42 U.S.C. §9601 et seq.), the Resource Conservation
Recovery Act, as amended by the Hazardous and Solid Waste Amendments of 1984, as now or
hereafter amended (42 U.S.C. §6901 et seq.), the Hazardous Materials Transportation
Act, as amended (49 U.S.C. §1801 et seq.), the Clean Air Act, as amended (42 U.S.C.
§7401 et seq.), the Clean Water Act, as amended (33 U.S.C. §1251 et seq.), and the
Toxic Substances and Control Act, as amended (15 U.S.C. §2601 et seq.).
	 
	 	(h)	 	“Escrow Agent” shall mean First American Title Insurance Company, through its
National Accounts Office in Washington, DC, in its capacity as holder of the Earnest
Money described in Section 2.02, with which Purchaser and Seller shall enter into a
separate escrow agreement substantially in the form of Exhibit H.
	 
	 	(i)	 	“Expendables” shall mean all expendable supplies, including, but not limited
to, all china, glassware, linens, towels, washcloths, bedding, napkins, tablecloths,
silverware, kitchen and bar small goods, paper goods, guest supplies, cleaning and
maintenance supplies, office supplies, operating supplies, printing, stationery and
uniforms owned by Seller or MHL and located at, or purchased for use at but not yet
delivered to, the Hotel. In no event shall Expendables include any such items which
bear the trade name, trademark, service mark, logo or other identification of the
Franchisor, but only to the extent that at Closing all of such items are removed from
the Hotel, transferred to the Franchisor, and otherwise dealt with in accordance with
the Franchise Agreement.
	 
	 	(j)	 	“Franchisor” shall mean Hilton Hospitality, Inc. or its successor under the
Franchise Agreement.
	 
	 	(k)	 	“Franchise Agreement” shall mean that certain Franchise Agreement dated
November 21, 1986 between Franchisor and Seller.
	 
	 	(l)	 	“Furnishings” shall mean all fixtures, furniture, furnishings, fittings,
equipment, machinery, apparatus, appliances, computer hardware and equipment, software
(to the extent such software is not proprietary to either Seller, MHL or Manager or
subject to a non-transferable license), reservations terminals (to the extent not
licensed to Seller by Franchisor under the Franchise Agreement or other applicable
documentation), vehicles, building materials, telephones and other communication
equipment, copiers, facsimile machines, postal machines, televisions, signs, vacuum
cleaners, video equipment and other similar articles of personal property (to the
extent Seller or MHL have title to such items and such items are not leased pursuant to
any Hotel Contract), located on or at the Property and used or usable in connection
with the operation of the Hotel, subject to such depletions, substitutions and
replacements as shall occur and be made in the ordinary course of business consistent
with past practices prior to the Closing Date and in accordance with the terms of this
Agreement, excluding therefrom all items of personal property owned by Manager set
forth on Exhibit A or a tenant under a Space Lease. In no event shall
Furnishings include any such items which bear the trade name, trademark, service mark,
logo or other identification of the Franchisor, but only to the extent that at Closing
all of such items are removed from the Hotel, transferred to the Franchisor, and
otherwise dealt with in accordance with the Franchise Agreement.
	 
	 	(m)	 	“Hazardous Substance” shall mean any substance, material or waste which is
regulated, or governed by any Environmental Law, including without limitation (a) any
substance, material or waste defined, used or listed as “hazardous waste”, “extremely
hazardous waste”, “restricted hazardous waste”, “hazardous substance”, “hazardous
material”, “toxic substance” or similar or related term as defined, used or listed in
any Environmental Laws, (b) any asbestos or asbestos

 

 

	 	 	 	containing materials, (c) any underground storage tanks or similar facilities, (d)
petroleum, petroleum-based substances or polychlorinated biphenyl, (e) mold and
similar organisms, and (f) any additional substances or materials which are
hazardous or toxic substances under any Environmental Laws.
	 
	 	(n)	 	“Hotel Contracts” shall mean all service and maintenance contracts, employment
agreements, purchase orders and other contracts or agreements, including without
limitation equipment leases, relating to the maintenance, operation, provisioning or
equipping of the Hotel, together with all related written warranties and guaranties, as
the same may change after the date hereof but only to the extent permitted under this
Agreement. Hotel Contracts shall not include (i) the Franchise Agreement, (ii)
Bookings or agreements relating to Bookings, (iii) the Management Agreement, (iv) any
contracts, equipment leases or purchase orders (except to the extent of Consumables,
Expendables and/or Furnishings ordered prior to the Closing in the ordinary course of
business consistent with past practices and not yet delivered to the Property) under
which, or which are subject to master agreements under which, goods and/or services are
supplied or leased to more than one hospitality property owned, leased or managed by
Seller, MHL, Manager or any of its or their respective affiliates, unless the same is
specifically set forth on Exhibit D, (v) the MHL Lease or (vi) the Space
Leases.
	 
	 	(o)	 	“Hotel Employees” shall mean the persons employed at the Hotel, whether by
Seller, MHL or Manager, to operate the Hotel.
	 
	 	(p)	 	“Improvements” shall mean the buildings, structures (surface and sub-surface),
installations and other improvements, including such fixtures and appurtenances as
shall constitute real property located on the Land.
	 
	 	(q)	 	“Land” shall mean the land described on Exhibit B, together with all
property rights, easements, tenements, hereditaments, rights-of-way, development
rights, entitlements, unused densities, privileges and appurtenances thereto; all
leases, rents, and profits derived therefrom; all right, title and interest of Seller
in and to any land lying in the bed of any street, road, highway or avenue, open or
proposed, public or private, in front of or adjoining all or any part of the land to
the center line thereof; subject to the limitations herein, all right, title and
interest of Seller in and to any unpaid award or payment which may now or hereafter be
payable in respect of any taking by condemnation and all right, title and interest of
Seller in and to any unpaid award for damage to the Land or any part thereof by reason
of change of grade of any street, road, highway or avenue adjacent to such land and all
strips and gores adjoining and adjacent to such land.
	 
	 	(r)	 	“Management Agreement” shall mean that certain Hotel Management Agreement dated
as of January 1, 2001 between MHL and Manager.
	 
	 	(s)	 	“Manager” shall mean Interstate Management Company, L.L.C., an affiliate of
Purchaser which is the current manager of the Hotel.
	 
	 	(t)	 	“MHL” shall mean MeriStar Hotel Lessee, Inc., an affiliate of Seller which is
the current lessee of the Property.
	 
	 	(u)	 	“MHL Lease” shall mean that certain operating lease with respect to the
Property between Seller, as owner, and MHL, as tenant, which such operating lease shall
be terminated at or prior to Closing.
	 
	 	(v)	 	“Miscellaneous Personal Property” shall mean the Hotel’s website and web
address (if any, and only to the extent such website and/or web address, relates solely
to the Hotel), the Hotel’s telephone numbers, printed marketing materials, if any,
relating solely to the Hotel, and any slides, proofs or drawings used by Seller or MHL
to produce such materials, to the extent such slides, proofs or drawings are in
Seller’s or MHL’s possession and without any express or implied

 

 

	 	 	 	warranty of any kind by Seller or MHL in connection therewith. In no event shall
Miscellaneous Personal Property include any property licensed for use under the
Franchise Agreement, but only to the extent that at Closing all of such items are
removed from the Hotel, transferred to the Franchisor, and otherwise dealt with in
accordance with the Franchise Agreement.
	 
	 	(w)	 	“Permits” shall mean all governmental licenses, permits, certificates,
authorizations and approvals used in or relating to the ownership, occupancy or
operation of any part of the Hotel, including, without limitation, those necessary for
the sale and on-premises consumption of liquor and other alcoholic beverages.
	 
	 	(x)	 	“Property” shall mean the Land and Improvements.
	 
	 	(y)	 	“Space Leases” shall mean all leases and other agreements (written or oral) for
the use of space at the Property, including but not limited to, agreements for the use
of rooftop space on the Hotel for the installation of cellular telephone antennas (but,
with respect to such cellular antenna leases, net of brokerage commissions to third
parties). The term “Space Leases” shall not include the MHL Lease or Bookings.
	 
	 	(z)	 	“Title Company” shall mean First American Title Insurance Company, through its
National Accounts Office in Washington, DC, in its capacity as title insurer.
	 
	 	(aa)	 	“Warranties” shall mean any assignable warranties benefiting Seller or MHL with
respect to the Furnishings, Miscellaneous Personal Property and Improvements.

     1.02 Sale and Purchase. Seller agrees to sell, transfer and convey the Property, the
Furnishings, the Consumables, the Expendables, the Hotel Contracts, the Bookings, the Books and
Records, the Space Leases, the Warranties, the Miscellaneous Personal Property and the assignable
Permits (all of the foregoing collectively, the “Purchased Assets”) to Purchaser, and Purchaser
agrees to purchase the Purchased Assets from Seller, subject to the terms, covenants, conditions
and provisions set forth in this Agreement. Purchaser acknowledges and agrees that notwithstanding
anything to the contrary in this Agreement, Seller is not conveying as part of such sale any cash,
cash equivalents, bank accounts, reserve accounts, deposits and the like owned or held by Seller,
Manager or MHL, other than cash in house banks being apportioned pursuant to Section 6.02(j) and,
to the extent the same are credited to Seller and assigned to Purchaser pursuant to Section 6.02,
accounts receivable and deposits.

     1.03 Condition of Property. Purchaser acknowledges that (i) Manager is an affiliate of
Purchaser and Purchaser is knowledgeable about the Purchased Assets, (ii) Purchaser will have a
reasonable opportunity to inspect and investigate the Property, the other Purchased Assets and all
matters relating thereto, including, without limitation, all of the physical, environmental and
operational aspects of the Purchased Assets, either independently or through agents and experts of
Purchaser’s choosing and (iii) Purchaser will acquire the Purchased Assets based upon Purchaser’s
own knowledge, investigation and inspection. SELLER AND PURCHASER AGREE THAT, EXCEPT AS EXPRESSLY
PROVIDED FOR IN THIS AGREEMENT, THE PURCHASED ASSETS SHALL BE SOLD, AND PURCHASER SHALL ACCEPT THE
PURCHASED ASSETS, ON THE CLOSING DATE “AS IS”, “WHERE IS”, “WITH ALL FAULTS” WITH NO RIGHT OF
SET-OFF OR REDUCTION IN THE PURCHASE PRICE, AND THAT, EXCEPT AS EXPRESSLY PROVIDED IN THIS
AGREEMENT, SUCH SALE SHALL BE WITHOUT REPRESENTATION OR WARRANTY OF ANY KIND, WHETHER EXPRESS,
IMPLIED, STATUTORY OR OTHERWISE, INCLUDING, WITHOUT LIMITATION, WARRANTY OF INCOME POTENTIAL,
OPERATING EXPENSES, USES, MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, AND SELLER DOES
HEREBY DISCLAIM AND RENOUNCE ANY SUCH REPRESENTATION OR WARRANTY, EXCEPT AS EXPRESSLY PROVIDED IN
THIS AGREEMENT. PURCHASER SPECIFICALLY ACKNOWLEDGES THAT, EXCEPT AS PROVIDED FOR IN THIS
AGREEMENT, PURCHASER IS NOT RELYING AND SHALL NOT RELY ON ANY REPRESENTATIONS OR WARRANTIES OF ANY
KIND WHATSOEVER, WHETHER EXPRESS, IMPLIED, STATUTORY OR OTHERWISE, FROM SELLER AS TO ANY MATTERS
CONCERNING THE PURCHASED ASSETS, INCLUDING WITHOUT LIMITATION: (A) THE CONDITION OR SAFETY OF THE
PURCHASED ASSETS, INCLUDING, BUT NOT LIMITED TO, PLUMBING, SEWER, HEATING AND ELECTRICAL SYSTEMS,
ROOFING, AIR CONDITIONING, FOUNDATIONS, SOILS AND GEOLOGY INCLUDING HAZARDOUS

 

 

SUBSTANCES, LOT SIZE, OR SUITABILITY OF THE PROPERTY FOR A PARTICULAR PURPOSE; (B) THE
HISTORICAL OR PROJECTED REVENUES, EXPENSES, OCCUPANCY RATES, ROOM RATES, PROFITABILITY OR OTHER
FINANCIAL STATISTICS OF THE PURCHASED ASSETS; (C) THE LIVABILITY OR SUITABILITY FOR OCCUPANCY OF
ANY STRUCTURE AND THE QUALITY OF ITS CONSTRUCTION; (D) THE FITNESS OF ANY PERSONAL PROPERTY; OR (E)
WHETHER THE IMPROVEMENTS ARE STRUCTURALLY SOUND, IN GOOD CONDITION, OR IN COMPLIANCE WITH
APPLICABLE CITY, COUNTY, STATE OR FEDERAL STATUTES, CODES OR ORDINANCES (INCLUDING, WITHOUT
LIMITATION, THE AMERICANS WITH DISABILITIES ACT OR ANY SIMILAR STATE OR LOCAL LAW). PURCHASER
FURTHER ACKNOWLEDGES AND AGREES THAT, EXCEPT AS EXPRESSLY PROVIDED IN THIS AGREEMENT, SELLER SHALL
BE UNDER NO DUTY TO MAKE ANY AFFIRMATIVE DISCLOSURE REGARDING ANY MATTER WHICH MAY BE KNOWN TO
SELLER, ITS OFFICERS, DIRECTORS, CONTRACTORS, AGENTS OR EMPLOYEES, AND THAT PURCHASER IS RELYING
SOLELY UPON ITS OWN INSPECTION OF THE PROPERTY AND NOT UPON ANY REPRESENTATIONS MADE TO IT BY ANY
PERSON WHOMSOEVER. ANY REPORTS, REPAIRS OR WORK REQUIRED BY PURCHASER ARE TO BE THE SOLE
RESPONSIBILITY OF PURCHASER. PURCHASER AGREES THAT THERE IS NO OBLIGATION ON THE PART OF SELLER
PURSUANT TO THIS AGREEMENT TO MAKE OR TO PAY FOR ANY CHANGES, ALTERATIONS, OR REPAIRS TO THE
PROPERTY PRIOR TO OR AFTER THE CLOSING. PURCHASER AGREES AND ACKNOWLEDGES THAT PURCHASER’S
OBLIGATIONS HEREUNDER SHALL REMAIN IN FULL FORCE AND EFFECT WITH PURCHASER HAVING NO RIGHT TO DELAY
THE CLOSING OR TERMINATE THIS AGREEMENT, EXCEPT AS EXPRESSLY PROVIDED IN THIS AGREEMENT, REGARDLESS
OF ANY FACTS OR INFORMATION LEARNED BY PURCHASER AFTER THE EFFECTIVE DATE.

     Seller’s Initials:                     Purchaser’s Initials:                     

     1.04 CERCLA Release. Except as may be expressly provided in this Agreement, Purchaser, for
itself and its successors in interest, releases Seller from, and waives all claims and liability
against Seller for, any structural, physical and/or environmental condition at the Property, and
hereby releases Seller from, and waives all liability against Seller attributable to, the
structural, physical and/or environmental condition of the Property, including without limitation
the presence, discovery or removal of any Hazardous Substances in, at, about or under the Property,
or connected with or arising out of any and all claims or causes of action based upon the
Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended by SARA
Superfund Amendment and Reauthorization Act of 1986 and as may be further amended from time to time
(“CERCLA”) or any related claims or causes of action or any other federal or state based statutory
or regulatory causes of action for environmental contamination at, in or under the Property. The
provisions of this Section shall survive the Closing.

II.

Consideration

     2.01 Purchase Price. In consideration of the sale of the Purchased Assets, Purchaser shall
pay to Seller the amount of Fourteen Million Fifty Thousand Dollars ($14,050,000) (the “Purchase
Price”).

     2.02 Payments. The Purchase Price shall be payable by Purchaser as follows:

	 	(a)	 	Five Hundred Thousand Dollars ($500,000) as an earnest money
deposit (together with any interest earned thereon, the “Earnest Money”), by
check or wire transfer of good funds to the Escrow Agent within two (2)
business days after the Effective Date;
	 
	 	(b)	 	At Closing, the termination fee owed by Seller to Manager under
the Management Agreement, in the amount of Seven Hundred Fifty Thousand Dollars
($750,000), will be waived by Manager;

 

 

	 	(c)	 	At Closing, Seller will receive a credit from Manager in the
amount of One Hundred Thousand Dollars ($100,000), which Seller and its
affiliates may apply, at any time prior to the second anniversary of the
Closing Date, to termination fees owed to Manager in connection with the
termination of any other hotel management agreement, provided that no more than
Twenty-Five Thousand Dollars ($25,000) shall be applied to the termination of
any individual hotel management agreement (the parties hereby agreeing that
this credit shall be reflected in an amendment to that certain Master Fee
Agreement dated as of January 1, 2001, as amended, between MHL (together with
other affiliates of Seller) and Manager, in form and substance reasonably
satisfactory to the parties thereto, which shall be entered into at the
Closing); and
	 
	 	(d)	 	The balance of the Purchase Price (adjusted based on the
prorations set forth herein) by wire transfer of immediately available good
funds to Seller at the Closing.

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

     2.04 Allocation. The Purchase Price shall be allocated between the Property and the other
Purchased Assets as the parties may reasonably agree upon prior to the Closing.

III.

Title Matters

     3.01 Survey. Seller, at Purchaser’s cost, ordered from S.D. Puckett & Associates, Inc. an
ALTA (or local equivalent) survey of the Property (the “Survey”) dated August 8, 2005, and
delivered the Survey to Purchaser and the Title Company. On September 15, 2005, Seller provided
Purchaser with Seller’s Survey Objections.

     3.02 Title Commitment. Seller, at Purchaser’s cost, caused the Title Company to issue to
Purchaser a commitment for ALTA Owner’s Policy of Title Insurance or local equivalent, with
extended coverage and customary owner endorsements dated August 26, 2005 (the “Title Commitment”),
with respect to the Property accompanied by, to the extent available, a legible copy of all
recorded documents relating to liens, easements, rights-of-way, restrictions and other matters
affecting title to the Property.

     3.03 Title Objections. Purchaser acknowledges that it has received and reviewed the Title
Commitment and all recorded documents referenced therein, and, in a letter dated August 18, 2005,
Purchaser notified Seller of any items therein which are unacceptable to Purchaser (“Title
Objections”). Seller has agreed to cure all such Title Objections prior to Closing. Seller may
cure any Title Objection by causing the Title Company, at Seller’s cost and expense, to omit such
Title Objection from Purchaser’s and Purchaser’s lender’s title policy issued pursuant to the Title
Commitment (the “Title Policy”) or to “insure over” such Title Objection. If Seller fails to cure
such Title Objections at or before Closing, then Purchaser may as its sole remedy either (i) accept
title to the Property subject to such Title Objections or (ii) terminate this Agreement by written
notice to Seller, whereupon the Earnest Money shall be promptly returned to Purchaser and the
parties shall have no further rights or liabilities under this Agreement except with respect to
those provisions that specifically provide that they survive the termination of this Agreement.
Subject to the provisions of Section 3.06, any restrictions, liens, encumbrances, easements, rights
of way and other matters shown on the Title Commitment which are waived or are not objected to by
Purchaser in the manner provided in this Section shall be deemed “Permitted Exceptions”.

     3.04 Survey Objections. Purchaser acknowledges that it has received and reviewed the Survey,
and, in a letter dated September 15, 2005, Purchaser notified Seller of any items therein which are
unacceptable to Purchaser (“Survey Objections”). Seller has agreed to cure all such Survey
Objections prior to Closing. Seller may cure any Survey Objection by causing the Title Company, at
Seller’s cost and expense, to omit such Survey Objection from the Title Policy or to “insure over”
such Survey Objection. If Seller fails to cure such Survey

 

 

Objections at or before Closing, then Purchaser may as its sole remedy either (i) accept title
to the Property subject to such Survey Objections or (ii) terminate this Agreement by written
notice to Seller, whereupon the Earnest Money shall be promptly returned to Purchaser and the
parties shall have no further rights or liabilities under this Agreement except with respect to
those provisions that specifically provide that they survive the termination of this Agreement.
Subject to the provisions of Section 3.06, any restrictions, liens, encumbrances, easements, rights
of way and other matters shown on the Survey which are waived or are not objected to by Purchaser
in the manner provided in this Section shall be deemed “Permitted Exceptions”.

     3.05 Title Conveyed. Subject to Sections 3.03 and 3.04, Seller shall on the Closing Date
convey to Purchaser good and marketable title to the Property, subject only to the Permitted
Exceptions.

     3.06 Mortgage Liens. Seller, at its expense, shall cure (by payment, bonding or escrow
deposit in a manner reasonably acceptable to the Title Company) at or before the Closing any
mortgage, deed of trust or other monetary lien constituting a Title Objection, and Seller may not
refuse to cure the same.

IV.

Representations; Covenants and Conditions

     4.01 Seller’s Representations and Warranties. Seller represents and warrants to Purchaser
that as of the Effective Date and as of the Closing Date:

	 	(a)	 	Seller is a duly organized and validly existing corporation in
good standing in the state of its formation and in the state in which the
Property is located. Seller has full power and authority to enter into this
Agreement, to perform its obligations under this Agreement and to own and
operate the Hotel and the Purchased Assets.
	 
	 	(b)	 	The execution and delivery of this Agreement has been duly
authorized by all necessary and appropriate action of Seller. This Agreement
constitutes a legal, valid and binding obligation of Seller, enforceable
against Seller in accordance with its terms.
	 
	 	(c)	 	The execution, delivery and performance of this Agreement by
Seller and the consummation by Seller of the transactions contemplated hereby
will not: (i) violate any organizational document of Seller; (ii) result in a
breach or acceleration of or constitute a default or event of termination under
the provisions of any agreement or instrument by which the Hotel or Property is
bound or affected (other than the Franchise Agreement) which would have a
material impact on the ownership or operation of the Property by Purchaser,
provided that Purchaser and Seller obtain all Required Consents; (iii) result
in the creation or imposition of any lien, charge or encumbrance, against the
Hotel or Property or any portion thereof; or (iv) constitute or result in the
violation or breach by Seller of any judgment, order, writ, injunction or
decree issued against or imposed upon Seller or result in the violation of any
applicable law, rule or regulation of any governmental authority which, with
respect to any of the foregoing, would have a material impact on the ownership
or operation of the Hotel or Property by Purchaser.
	 
	 	(d)	 	No consent or approval of any person, entity, or governmental
authority is required with respect to the execution and delivery of this
Agreement by Seller or the consummation by Seller of the transactions
contemplated hereby or the performance by Seller of its obligations under this
Agreement, other than (i) consents or approvals listed on Exhibit I
(collectively, the “Required Consents”), (ii) such consents or approvals as may
be required pursuant to the Franchise Agreement and (iii) such consents or
approvals as may be required under the Hotel Contracts which, if not obtained,
would not have a material

 

 

	 	 	 	adverse effect on Purchaser’s ownership and operation of the Hotel or the
Property after the Closing.
	 
	 	(e)	 	There are no Space Leases affecting all or any portion of the
Property except as set forth on Exhibit C. To Seller’s knowledge, (i)
all of the Space Leases are in full force and effect, (ii) each of the Space
Leases delivered, or to be delivered, to Purchaser is true and complete, and
(iii) except as set forth on Exhibit C, there are no material defaults
by Seller or, to Seller’s knowledge, any other party under any of the Space
Leases. The MHL Lease and the Management Agreement will be terminated by
Seller on or prior to the Closing Date. Purchaser acknowledges and agrees that
rents received under any antenna leases encumbering the Property are net of
commissions due to third party brokers arranging such leases.
	 
	 	(f)	 	There are no Hotel Contracts affecting all or any portion of
the Property except as set forth in Exhibit D, other than certain
multi-property agreements pursuant to which goods and/or services are supplied
to more than one property owned, leased or managed by Seller, MHL or Manager or
its or their affiliates, which multi-property agreements Purchaser and Seller
acknowledge and agree are not being assigned to Purchaser unless the same are
set forth on Exhibit D. To Seller’s knowledge, (i) each of the Hotel
Contracts is in full force and effect, (ii) each of the Hotel Contracts
delivered, or to be delivered, to Purchaser is true and complete, and (iii)
except as set forth on Exhibit D, there are no material defaults by
Seller or, to Seller’s knowledge, any other party under any of the Hotel
Contracts. If there exists any Hotel Contract which is not reflected on
Exhibit D, the foregoing representation shall not be deemed incorrect
to the extent such Hotel Contract is entered into after the Effective Date as
permitted hereunder.
	 
	 	(g)	 	To Seller’s knowledge, all material Permits required for and
relating to the operation of the Hotel are set forth in Exhibit E. To
Seller’s knowledge (i) the Permits are in full force and effect, (ii) except as
set forth on Exhibit F, Seller has received no written notice of any
violations of the Permits, and (iii) each of the Permits delivered, or to be
delivered, to Purchaser is true and complete.
	 
	 	(h)	 	Except as set forth on Exhibit F, Seller has not
received written notice of any violation of laws within the past two (2) years
for any violation which has not been remedied. To Seller’s knowledge, Seller
is not currently in violation of, any laws, ordinances, building codes, zoning
codes, orders, regulations or legal requirements, including without limitation
Environmental Laws (“Laws”), of governmental or quasi-governmental authorities
with respect to the Property or the ownership, use, maintenance or operation of
the Hotel.
	 
	 	(i)	 	Except as set forth in Exhibit G, there is no
litigation, action, investigation or proceeding (including, but not limited to,
proceedings in respect to a condemnation) pending or, to Seller’s knowledge,
threatened in writing relating to the Purchased Assets, the Hotel or the
Property or the transactions contemplated by this Agreement.
	 
	 	(j)	 	Seller and/or MHL owns good and marketable title to the
Furnishings, Consumables, Expendables and Miscellaneous Personal Property, free
and clear of all liens, claims and encumbrances other than (i) the Permitted
Exceptions, (ii) items which are leased as indicated in the Hotel Contracts
(including without limitation any equipment leases for certain Furnishings set
forth on Exhibit D) and (iii) the rights, if any, of the Franchisor
under the Franchise Agreement therein or thereto.
	 
	 	(k)	 	Seller is not a “foreign person” as defined in the Internal
Revenue Code of 1986, as amended.

 

 

	 	(l)	 	Neither Seller nor any of its affiliates, or, to Seller’s
knowledge, the funding sources for any of them, is a Specially Designated
National or Blocked Person (as defined herein). Neither Seller nor any
affiliate is directly or indirectly owned or controlled by the government of
any country that is subject to an embargo by the United States government.
Neither Seller nor any affiliate is acting on behalf of a government of any
country that is subject to such an embargo. Seller agrees that it will notify
Purchaser in writing immediately upon the occurrence of any event which would
render the foregoing representations and warranties incorrect. For purposes of
this Agreement, “Specially Designated National or Blocked Person” means (a) a
person or entity designated by the U.S. Department of Treasury’s Office of
Foreign Assets Control from time to time as a “specially designated national or
blocked person” or similar status, (b) a person or entity described in Section
1 of U.S. Executive Order 13224, issued on September 23, 2001 (the “Executive
Order”), or (c) a person or entity otherwise identified by government or legal
authority as a person or entity with whom a United States Person (as defined
below) is prohibited from transacting business. As of the date hereof, a list
of such designations and the text of the Executive Order are published under
the internet website address www.ustreas.gov/offices/enforcement/ofac.
“United States Person” shall mean: (1) any individual or business entity,
regardless of location, that is a resident of the United States; (2) any
individual or business entity physically located within the United States; (3)
any company or business entity organized under the laws of the United States or
of any state, territory, possession, or district thereof; and (4) any
individual or business entity, wheresoever organized or doing business, which
is owned or controlled by those specified in (1) or (3) above.

     4.02 Seller’s Knowledge. Wherever the phrase “to Seller’s knowledge” or any similar phrase
stating or implying a limitation on the basis of knowledge appears in this Agreement, unless
specifically otherwise qualified, such phrase shall mean the present actual knowledge, after due
inquiry, of John Plunket, Bruce G. Wiles, Michael Linch and/or Kirk Pederson.

     4.03 Seller’s Possession. Wherever the phrase “in Seller’s possession”, “in the possession of
Seller” or similar phrase appears in this Agreement, such phrase shall be deemed to mean to the
extent the material or other item referred to by such phrase is located at the Hotel or in the
corporate headquarters of Seller.

     4.04 Imputation of Manager’s Knowledge to Purchaser. Purchaser acknowledges that Manager is
an affiliate of Purchaser. All information, documents and knowledge of Manager concerning the
Purchased Assets shall be imputed to Purchaser. In no event shall Seller be in breach of any of
its representations and warranties for failure to provide Purchaser with any information or
documents concerning the Purchased Assets to the extent such information, documents or knowledge
are in the possession of Manager.

     4.05 Purchaser’s Representations and Warranties. Purchaser represents and warrants to Seller
that as of the Effective Date and as of the Closing Date:

	 	(a)	 	Purchaser is a duly organized and validly existing limited
liability company, is in good standing in the state of its formation and, as of
the Closing Date, the state in which the Property is located, and has full
power and authority to enter into this Agreement and to perform its obligations
under this Agreement.
	 
	 	(b)	 	The execution and delivery of this Agreement has been duly
authorized by all necessary and appropriate action of Purchaser. This
Agreement constitutes a legal, valid and binding obligation of Purchaser,
enforceable against Purchaser in accordance with its terms.
	 
	 	(c)	 	The execution, delivery and performance of this Agreement by
Purchaser and the consummation by Purchaser of the transactions contemplated
hereby will not: (i) violate any organizational document of Purchaser; (ii)
result in a breach or acceleration of or constitute a default or event of
termination under the provisions of any agreement or instrument by which
Purchaser is bound or affected which would have a material impact

 

 

	 	 	 	on the ownership or operation of the Property by Purchaser; or (iii)
constitute or result in the violation or breach by Purchaser of any judgment,
order, writ, injunction or decree issued against or imposed upon Purchaser or
result in the violation of any applicable law, rule or regulation of any
governmental authority which, with respect to any of the foregoing, would
have a material impact on the ownership or operation of the Hotel or Property
by Purchaser.

	 	(d)	 	No consent or approval of any person, entity, or governmental
authority is required with respect to the execution and delivery of this
Agreement by Purchaser or the consummation by Purchaser of the transactions
contemplated hereby or the performance by Purchaser of its obligations under
this Agreement, other than such consents or approvals as are contemplated by
Section 4.11 and on Exhibit I.
	 
	 	(e)	 	Neither Purchaser nor any of its affiliates, or, to Purchaser’s
knowledge, the funding sources for any of them, is a Specially Designated
National or Blocked Person. Neither Purchaser nor any affiliate is directly or
indirectly owned or controlled by the government of any country that is subject
to an embargo by the United States government. Neither Purchaser nor any
affiliate is acting on behalf of a government of any country that is subject to
such an embargo. Purchaser agrees that it will notify Seller in writing
immediately upon the occurrence of any event which would render the foregoing
representations and warranties incorrect.

     4.06 Remedies Regarding Representations and Warranties.

	 	(a)	 	Each party shall promptly after obtaining actual knowledge
thereof disclose to the other any changes which results in any of its
representations and warranties or the other party’s representations and
warranties becoming untrue or incorrect in any material respect. At the
Closing, each of Seller and Purchaser shall deliver to the other a certificate
affirming, subject only to exceptions specified in such certificate, that the
representations and warranties of such party contained in Section 4.01 or 4.05
(as the case may be) are true and correct in all material respects as of the
Closing, which such certificate shall be subject to all of the provisions of
this Section 4.06.

	 	(i)	 	Pre-Closing. In the event that Seller
becomes aware (either upon written notice from Purchaser or otherwise)
prior to Closing that any of Seller’s warranties or representations set
forth in this Agreement are not true or accurate in any material
respect, Seller may attempt to cure the same by Closing. If Seller is
unable or unwilling to cure same by Closing, then Purchaser shall be
entitled, as its sole remedy and subject to Section 5.02, either to
waive the same and close this transaction or to terminate this
Agreement. If Purchaser elects to terminate this Agreement, Purchaser
shall give written notice thereof to Seller and Escrow Agent, Escrow
Agent shall return the Earnest Money to Purchaser and neither party to
this Agreement shall thereafter have any further rights or liabilities
under this Agreement, except as provided in Section 5.02 and with
respect to those provisions that specifically survive the termination
of this Agreement. Notwithstanding the foregoing, Purchaser shall have
no right or remedy with respect to Seller’s breach of any
representation or warranty if Purchaser had actual knowledge of such
breach as of the date hereof.
	 
	 	(ii)	 	Post-Closing. The representations and
warranties of Purchaser and Seller shall survive Closing for a period
of one (1) year, and, subject to the provisions of Sections 4.06(b) and
4.06(c), Seller shall indemnify, defend and hold Purchaser harmless
from and against any loss, damage, liability, claim, demand, cause of
action, cost or expense (including, without limitation, reasonable
attorneys’ fees) that may be incurred by or asserted against Purchaser
after the Closing and arises from a breach of Seller’s representation
or warranty, provided that

 

 

	 	 	 	Purchaser shall advise Seller in writing in reasonable detail of such
breach within fifteen (15) months after Closing.

	 	(b)	 	Notwithstanding any provision of this Agreement or of the
certificate delivered pursuant to Section 4.06(a) above to the contrary, Seller
shall have no liability to Purchaser, and shall not be required to indemnify
Purchaser, for any breach or breaches by Seller of any representation or
warranty set forth in this Agreement or such certificate unless (i) the Closing
occurs, (ii) Purchaser had no actual knowledge of such breach at or prior to
Closing and (iii) the aggregate monetary loss to Purchaser resulting from all
breaches of representations or warranties by Seller is more than Twenty-Five
Thousand Dollars ($25,000). Notwithstanding any provision of this Agreement or
of the certificate delivered pursuant to Section 4.06(a) above to the contrary,
Purchaser shall have no liability to Seller, and shall not be required to
indemnify Seller, for any breach or breaches by Purchaser of any representation
or warranty set forth in this Agreement or such certificate unless (i) the
Closing occurs, (ii) Seller had no actual knowledge of such breach at or prior
to Closing and (iii) the aggregate monetary loss to Seller resulting from all
breaches of representations or warranties by Purchaser is more than Twenty-Five
Thousand Dollars ($25,000).
	 
	 	(c)	 	Notwithstanding any provision of this Agreement or of the
certificate delivered pursuant to Section 4.06(a) above to the contrary, the
aggregate liability of Seller to Purchaser with respect to any and all breaches
by Seller of representations and warranties under this Agreement and/or under
such certificate shall not exceed Seven Hundred Fifty Thousand Dollars
($750,000). Notwithstanding any provision of this Agreement or of the
certificate delivered pursuant to Section 4.06(a) above to the contrary, the
aggregate liability of Purchaser to Seller with respect to any and all breaches
by Purchaser of representations and warranties under this Agreement and/or
under such certificate shall not exceed Seven Hundred Fifty Thousand Dollars
($750,000).
	 
	 	(d)	 	The provisions of this Section 4.06 shall survive the Closing.

     4.07 Seller’s Covenants. Seller covenants and agrees with Purchaser that prior to the Closing
(and with respect to the applicable covenants in Section 4.07(f) below, from and after the Closing
to the extent set forth therein):

	 	(a)	 	Seller will not sell, exchange, assign, transfer, convey, lease
or otherwise dispose of all or any part of the Purchased Assets or any interest
therein except for any Furnishings, Consumables and Expendables which are sold,
replaced or consumed in the ordinary course of business consistent with past
practices, and shall maintain Furnishings, Consumables and Expendables at the
Property in a manner substantially consistent with Seller’s customary operating
practices (taking occupancy levels into account) and historical practice at the
Property, it being understood that on the Closing Date, the levels of
Inventory, Furnishings or Consumables at the Property may be greater or less
than those levels on the Effective Date.
	 
	 	(b)	 	Seller will keep the material Hotel Contracts and the Permits
(including any such items entered into after the Effective Date in accordance
with Section 4.07(c), but excluding those which may be terminated in the
ordinary course of business consistent with past practices or as a result of a
default by the other party or which may expire by their terms) in full force
and effect, will pay all charges when due under such agreements and will
perform all of its material obligations under such Hotel Contracts and Permits.
Seller will comply with and pay all charges under the Franchise Agreement
consistent with past practices.
	 
	 	(c)	 	Seller will not enter into, amend or (excluding those which may
be terminated in the ordinary course of business consistent with past practices
or as a result of a default by the

 

 

	 	 	 	other party or which may expire by their terms) terminate any contracts,
leases, licenses, easements or other agreements relating to the Property,
which will obligate Purchaser or be a charge or lien against the Property,
except those which (i) are necessary to continue the operation of the Hotel
in the ordinary course of business consistent with past practices, (ii) are
terminable without payment or penalty on thirty (30) or fewer days notice or
(iii) have otherwise been approved by Purchaser in its sole discretion.
Purchaser shall advise Seller of its approval or rejection of any such
proposed contract, lease, license, easement or other agreement within five
(5) business days after Seller has delivered the same to Purchaser.
Purchaser’s failure to approve or reject the same within such five (5)
business day period shall be deemed to be an acceptance of the submission
and an authorization for Seller to execute the applicable contract, lease,
license, easement or other agreement. Nothing contained in this Section
4.07 shall limit Seller’s rights to accept or contract for essential
Property services, room reservations, bookings or other advanced commitments
for use of the Property’s facilities in accordance with its existing
standard of operation as of the Effective Date.

	 	(d)	 	Seller will operate and maintain, or cause to be operated and
maintained, the Property in substantially the same manner in which it is being
operated and maintained as of the Effective Date.
	 
	 	(e)	 	Seller will permit Purchaser and its representatives,
contractors, agents, personnel, lenders, employees, investors and partners to
enter upon and inspect the Property and perform such investigations of the
Purchased Assets and all Books and Records as Purchaser may from time to time
deem desirable. Provided Purchaser gives Seller reasonable prior notice,
Seller shall arrange for Purchaser and Purchaser’s agents to have reasonable
access to the Property during regular business hours until the Closing Date to
conduct Purchaser’s due diligence, to prepare for Closing and to verify any
change in the condition of the Property since the Effective Date. Purchaser
does hereby acknowledge and agree, regardless of whether such entry and/or
activities occurred before or after the Effective Date, that (i) the costs and
expenses of Purchaser’s access, whenever incurred, shall be borne solely by
Purchaser, (ii) Purchaser has been obligated during all entries made prior to
the Effective Date and shall be obligated with respect to all entries made from
and after the Effective Date not to unreasonably disturb or interfere with the
operation, management or use of the Property by Seller, Seller’s agents, any
tenant or any tenant’s customers, invitees or guests, (iii) Purchaser has been
obligated during all entries made prior to the Effective Date, and shall be
obligated with respect to all entries made from and after the Effective Date,
not to damage or adversely affect the physical structure or any of the
mechanical, electrical, plumbing or HVAC systems of the Property and/or the
Furnishings and (iv) Purchaser shall be obligated with respect to all entries
made from and after the Effective Date to give prior notice to Seller of any
such entry and Seller shall have the right to require that Purchaser’s
representative be accompanied by a representative of Seller during any such
visit to the Property. Purchaser hereby agrees to indemnify, defend, and hold
Seller, MHL, Manager and the Property harmless from any and all actual costs,
loss, damages (excluding consequential and punitive damages) or expenses
(including reasonable attorneys’ fees) arising out of any personal injury or
property damage resulting from such entry and/or activities upon the Property
by Purchaser, its agents, contractors and/or subcontractors, regardless of
whether such entry and/or activities occurred before or after the Effective
Date, which indemnity shall survive the Closing or any termination of this
Agreement. At all times that Purchaser is given access to the Property in
connection with its investigations under this Section 4.07(e), Purchaser shall
carry, and Purchaser shall cause all of its agents and contractors to carry,
reasonably adequate liability insurance covering their respective activities at
the Property and Purchaser shall deliver evidence of such insurance to Seller
upon Seller’s request. In no event shall Purchaser or its agents undertake any
invasive testing at the Property, other than a standard Phase I environmental
type test, without the prior consent of Seller, which consent shall not be
unreasonably conditioned, withheld or delayed.

 

 

	 	 	 	Purchaser shall have the right to communicate with Hotel Employees, provided
the same is coordinated through Seller, without the prior consent of Seller.
	 
	 	(f)	 	Purchaser is the current holder of the liquor license for the
Hotel. Seller will cooperate with Purchaser in all reasonable respects in
connection with Purchaser’s retention of all liquor licenses used in connection
with the operation of the Hotel.
	 
	 	(g)	 	Until Closing (or any earlier termination of this Agreement),
Seller shall not, directly or indirectly, solicit, discuss or negotiate with
any person or entity (other than Purchaser), or accept, any proposal for the
acquisition of Seller, the Hotel or the Property in whole or in part.

     4.08 Intentionally Omitted.

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

	 	(a)	 	Purchaser shall not have terminated this Agreement.
	 
	 	(b)	 	Seller’s representations and warranties set forth in this
Agreement shall continue to be true and accurate in all material respects as of
the Closing Date subject to (i) Seller’s right to cure the same prior to the
Closing as set forth in Section 4.06(a) above, (ii) any changes permitted
pursuant to this Agreement, and (iii) such changes in such representations and
warranties as are actually known to Purchaser as of the date hereof.
	 
	 	(c)	 	Seller shall have delivered all of the documents required under
this Agreement and performed in all material respects all of its covenants and
obligations under this Agreement.
	 
	 	(d)	 	The Title Company shall be prepared, upon or simultaneously
with compliance by Purchaser of all requirements of Purchaser set forth in the
Title Report, to issue to Purchaser an owner’s policy of title insurance in the
amount of the Purchase Price meeting the requirements of Section 3.03.
	 
	 	(e)	 	Purchaser shall have received approval by Franchisor of an
assignment of the Franchise Agreement or shall have received a new license or
franchise agreement from Franchisor or an Other Franchisor, in form and
substance satisfactory to Purchaser in its sole discretion.
	 
	 	(f)	 	Between the Effective Date and the Closing Date, there shall
not have been any material adverse change in the condition (financial or
otherwise) or results of operations of the Hotel, the Property or the Purchased
Assets.

The conditions precedent set forth in this Section 4.09 are solely for the benefit of Purchaser and
may be waived only by Purchaser, which waiver may be granted or withheld by Purchaser in its sole
discretion. Without limiting and without prejudice to any of Purchaser’s other rights or remedies
under this Agreement in the event any such failure of condition is the result of or arises out of
Seller’s default under this Agreement, if any condition precedent to Purchaser’s obligations under
this Agreement has not been satisfied as of the Closing Date or waived by Purchaser, then Purchaser
shall be entitled in its sole discretion to terminate this Agreement by giving Seller and Escrow
Agent written notice to such effect, whereupon Escrow Agent shall return the Earnest Money to
Purchaser.

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

 

 

	 	(a)	 	Purchaser’s representations and warranties set forth in this
Agreement shall continue to be true and accurate in all material respects,
subject to such changes as are permitted under this Agreement.
	 
	 	(b)	 	Franchisor shall have (i) either (A) approved Purchaser’s
change of ownership application with respect to the Hotel, and agreed to
Purchaser’s assumption of, and Purchaser shall have assumed, the Franchise
Agreement, or Franchisor shall have entered into a new license or franchise
agreement with Purchaser with respect to the Hotel, as required by Franchisor,
or (B) terminated the Franchise Agreement, and, in either case, (ii) delivered
to Seller and any guarantor of or party to the Franchise Agreement a release
(the “Release”) of their respective obligations under the Franchise Agreement
(to the extent the same arise from and after the Closing), executed by
Franchisor in Franchisor’s customary form, with such changes as may be
reasonably requested by Seller.
	 
	 	(c)	 	Purchaser shall have paid the Purchase Price, delivered all of
the documents required under this Agreement and performed in all material
respects all of its other covenants and obligations under this Agreement.

The conditions precedent set forth in this Section 4.10 are solely for the benefit of Seller and
may be waived only by Seller, which waiver may be granted or withheld by Seller in its sole
discretion. Without limiting and without prejudice to any of Seller’s other rights or remedies
under this Agreement in the event any such failure of condition is the result of or arises out of
Purchaser’s default under this Agreement, if any condition precedent to Seller’s obligations under
this Agreement has not been satisfied as of the Closing Date or waived by Seller, then Seller shall
be entitled in its sole discretion to terminate this Agreement by giving Purchaser and Escrow Agent
written notice to such effect, in which event the Earnest Money shall be paid to the party entitled
thereto under this Agreement.

     4.11 Franchise Agreement.

	 	(a)	 	Purchaser acknowledges that the Franchise Agreement provides
that, in the event of a proposed sale or lease of the Hotel, Franchisor shall
have a right of first offer with respect thereto. Promptly following the
Effective Date, Seller shall use commercially reasonable efforts to obtain
Franchisor’s waiver of such right. If Franchisor asserts that it has the right
to purchase the Hotel and notifies Seller that it intends to exercise its right
to purchase the Hotel, Seller shall so notify Purchaser within two (2) business
days, this Agreement shall terminate, neither party to this Agreement shall
thereafter have any further rights or liabilities under this Agreement except
with respect to those provisions that specifically provide that they survive
the termination of this Agreement, and Escrow Agent shall return the Earnest
Money to Purchaser and Purchaser shall be entitled to payment from Seller of
(i) Purchaser’s actual third-party out of pocket due diligence costs, including
outside legal fees, in connection with this transaction in an amount not to
exceed Fifty Thousand Dollars ($50,000) and (ii) Purchaser’s actual
non-refundable fees and costs paid by Seller to Franchisor in connection with
obtaining a new license or franchise agreement for the Property, in an amount
not to exceed Seventy Five Thousand Dollars ($75,000). If Franchisor exercises
its right to purchase the Hotel, but fails to consummate the purchase, then
Purchaser shall have the option (which may be exercised in Purchaser’s sole
discretion within thirty (30) days after Purchaser’s receipt of notice that
Franchisor has failed to consummate the purchase) to reinstate the
effectiveness of this Agreement and to complete the purchase of the Hotel, in
which case the date of reinstatement shall become the new Effective Date.
	 
	 	(b)	 	Purchaser shall promptly and in good faith seek to obtain a new
license or franchise agreement from Franchisor or from another hotel franchisor
(“Other Franchisor”), or to assume the existing Franchise Agreement from the
Franchisor, in accordance with all applicable provisions of the Franchise
Agreement, including without limitation providing such financial and other
information regarding Purchaser as may be reasonably required by the Franchisor
or by the Other Franchisor, as appropriate. In connection therewith,

 

 

	 	 	 	Seller shall, at no cost to Seller, cooperate in all reasonable respects
with Purchaser in connection with such application for a new license or
franchise agreement or for the assumption of the existing Franchise
Agreement. At Seller’s expense, Seller has caused Franchisor to inspect
the Hotel and issue a property improvement plan which identifies
improvements necessary to maintain a franchise agreement with Franchisor
upon a sale of the Hotel (the “PIP”). Purchaser acknowledges and agrees
that it shall be Purchaser’s obligation to diligently pursue a transfer of
the Franchise Agreement or a new license or franchise agreement for the
Hotel from Franchisor or an Other Franchisor. Purchaser shall pay all
application fees, transfer fees and similar amounts as may be required by
Franchisor or by such Other Franchisor, as appropriate, in connection with
the issuance of a new license or franchise agreement to Purchaser or the
assumption of the existing Franchise Agreement by Purchaser; provided,
however, that Seller shall pay any and all termination fees or termination
costs relating to the existing Franchise Agreement, if any. Seller shall
have no obligation with respect to the PIP or other work requirement agreed
to by Purchaser.
	 
	 	(c)	 	Notwithstanding anything to the contrary set forth in Section
4.11(b), Purchaser shall have the right not to assume the existing Franchise
Agreement or not to obtain a new license or franchise agreement from Franchisor
or an Other Franchisor, as applicable.
	 
	 	(d)	 	If Purchaser shall neither assume the Franchise Agreement nor
obtain a new license or franchise agreement from Franchisor, then at the
Closing, Seller shall be entitled to remove from the Property and return to
Franchisor in accordance with the Franchise Agreement all items of personal
property marked with Franchisor’s name or other marks, such items shall not be
a part of the Purchased Assets and Purchaser shall receive no credit against
the Purchase Price as a result of the removal of such items from the Property.

V.

REMEDIES

     5.01 PURCHASER’S DEFAULT/SELLER’S REMEDIES. IF PURCHASER DEFAULTS UNDER THIS AGREEMENT OR
OTHERWISE FAILS TO CLOSE THE TRANSACTIONS SET FORTH IN THIS AGREEMENT, FOR ANY REASON EXCEPT (A)
THE FAILURE OF ANY CONDITION PRECEDENT TO PURCHASER’S OBLIGATIONS UNDER THIS AGREEMENT OR (B)
PURCHASER’S TERMINATION OF THIS AGREEMENT IN ACCORDANCE WITH ITS TERMS, SELLER SHALL BE ENTITLED AS
ITS SOLE REMEDY UNDER THIS AGREEMENT TO TERMINATE THIS AGREEMENT AND RECOVER THE EARNEST MONEY (IN
ADDITION TO ATTORNEYS’ FEES PURSUANT TO SECTION 5.03 BELOW, IF APPLICABLE) AS LIQUIDATED DAMAGES
AND NOT AS A PENALTY (WHICH EARNEST MONEY SHALL BE PROMPTLY PAID BY ESCROW AGENT TO SELLER UPON
SELLER’S AND PURCHASER’S JOINT WRITTEN NOTICE THEREOF TO ESCROW AGENT), IN FULL SATISFACTION OF ANY
CLAIMS AGAINST PURCHASER UNDER THIS AGREEMENT. IN CONNECTION THEREWITH, SELLER WAIVES ITS RIGHT TO
SEEK SPECIFIC PERFORMANCE OF THIS AGREEMENT FROM PURCHASER. SELLER AND PURCHASER AGREE THAT THE
SELLER’S DAMAGES RESULTING FROM PURCHASER’S DEFAULT ARE DIFFICULT TO DETERMINE AND THE AMOUNT OF
THE EARNEST MONEY IS A FAIR ESTIMATE OF THOSE DAMAGES. EACH PARTY HEREBY WAIVES ANY AND ALL RIGHTS
TO CONTEST THE VALIDITY OF THE FOREGOING LIQUIDATED DAMAGES PROVISIONS FOR ANY REASON WHATSOEVER,
INCLUDING, BUT NOT LIMITED TO, SUCH PROVISION BEING UNREASONABLE UNDER CIRCUMSTANCES EXISTING ON
THE EFFECTIVE DATE OR AT THE TIME OF DEFAULT. NOTWITHSTANDING THE FOREGOING, THE ASSERTION OR
PAYMENT OF THE FOREGOING LIQUIDATED DAMAGES SHALL NOT BE DEEMED TO BE A WAIVER OF ANY RIGHTS OR
REMEDIES THAT SELLER MAY HAVE AGAINST PURCHASER PURSUANT TO ANY PROVISION OF THIS AGREEMENT THAT
SPECIFICALLY PROVIDES THAT IT SURVIVES THE TERMINATION OF THIS AGREEMENT.

 

 

     Seller’s Initials:                     Purchaser’s Initials:                     

     5.02 SELLER DEFAULT/PURCHASER’S REMEDIES. IF SELLER DEFAULTS UNDER THIS AGREEMENT OR
OTHERWISE FAILS TO PERFORM ITS OBLIGATIONS UNDER THIS AGREEMENT ON OR PRIOR TO THE CLOSING, FOR ANY
REASON EXCEPT THE FAILURE OF ANY CONDITION PRECEDENT TO SELLER’S OBLIGATIONS UNDER THIS AGREEMENT,
THEN ANY ONE OF THE FOLLOWING, AND ONLY THE FOLLOWING, SHALL BE AVAILABLE TO PURCHASER AS ITS SOLE
AND EXCLUSIVE REMEDY: (A) TO TERMINATE THIS AGREEMENT BY GIVING SELLER WRITTEN NOTICE OF SUCH
ELECTION PRIOR TO OR AT CLOSING WHEREUPON THE ESCROW AGENT SHALL PROMPTLY RETURN TO PURCHASER THE
EARNEST MONEY, AND THE PARTIES SHALL HAVE NO FURTHER RIGHTS OR LIABILITIES UNDER THIS AGREEMENT
EXCEPT (1) FOR THOSE PROVISIONS WHICH SPECIFICALLY PROVIDE THAT THEY SURVIVE THE TERMINATION OF
THIS AGREEMENT AND (2) SELLER SHALL REIMBURSE PURCHASER FOR (i) PURCHASER’S ACTUAL THIRD-PARTY OUT
OF POCKET DUE DILIGENCE COSTS AND OUTSIDE LEGAL FEES, IN AN AMOUNT NOT TO EXCEED FIFTY THOUSAND
DOLLARS ($50,000) and (ii) PURCHASER’S ACTUAL NON-REFUNDABLE FEES AND COSTS PAID BY SELLER TO
FRANCHISOR IN CONNECTION WITH OBTAINING A NEW LICENSE OR FRANCHISE AGREEMENT FOR THE PROPERTY, IN
AN AMOUNT NOT TO EXCEED SEVENTY FIVE THOUSAND DOLLARS ($75,000); OR (B) TO WAIVE THE DEFAULT AND
CLOSE; OR (C) TO ENFORCE SPECIFIC PERFORMANCE OF THIS AGREEMENT.

     Seller’s Initials:                     Purchaser’s Initials:                     

     5.03 Attorneys’ Fees. If any litigation between Seller and Purchaser shall arise in
connection with this Agreement, then the prevailing party shall be entitled to the payment by the
other party of the prevailing party’s actual reasonable attorneys’ fees and costs related to such
litigation. The provisions of this Section 5.03 shall be in addition to and not limited by the
provisions of Sections 5.01 and/or 5.02 above.

VI.

Closing Matters

     6.01 Closing Date. The delivery of the Deed and other documents required hereunder (the
“Closing”) shall be held at the Title Company’s offices or by mail, or through escrow with the
Escrow Agent, on the earlier of (i) November 10, 2005 and (ii) two (2) business days after
Purchaser receives Franchisor’s approval to assume the Franchise Agreement or Purchaser receives a
new license from Franchisor (the “Closing Date”), or such other date as may be agreed to by Seller
and Purchaser in their sole discretion.

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

	 	(a)	 	Taxes. All real and personal property taxes and special
assessments, if any, whether payable in installments or not, payable in the tax
year in which the Closing Date occurs shall be prorated as of the Cut-Off Time.
If such taxes for the tax year in which the Closing Date occurs have not been
finally determined on the Closing Date, then such taxes shall be prorated on an
estimated basis using the most current information available and shall not be
subject to further adjustment (unless an actual bill is received within ninety
(90) days after the Closing Date).
	 
	 	(b)	 	Room Rentals. One-half (50%) of the room rentals and related
taxes attributable to the night prior to the Closing Date shall be credited at
Closing to Seller and the remaining one-half (50%) shall be credited to
Purchaser at Closing. Room rentals attributable to any night prior to the
night prior to the Closing Date shall be credited to Seller at Closing.
	 
	 	(c)	 	Reservation Deposits. Prepaid and unearned reservation
deposits and other items prepaid by guests of the Hotel shall be credited or
transferred to Purchaser at the Closing.

 

 

	 	(d)	 	Utility and Permit Charges. Utility charges for telephone,
gas, electricity, sewer, water and other services shall not be prorated to the
extent that Seller can make arrangements for the rendering of final bills based
on meter readings as of the Cut-Off Time. Seller shall be responsible for the
payment at the Closing of all bills for utility charges up to and including the
Cut-Off Time. To the extent that utility bills cannot be rendered as of the
Closing Date, such charges for the period through the Cut-Off Time shall be
prorated as of the Cut-Off Time based upon the most recent available bills and
readjusted on the basis of the actual bills as and when received. If Purchaser
elects, any transferable utility deposits shall be transferred to Purchaser and
credited to Seller. Seller shall receive a credit at Closing for any prepaid
Permit fees and similar prepaid expenses.
	 
	 	(e)	 	Operating Expenses and Trade Accounts. Seller shall be
responsible for all operating expenses and trade accounts of the Property
(including charges and fees payable under the Hotel Contracts) up to and
including the Cut-Off Time. To the extent the amounts of such items are then
known, Seller shall pay such items at Closing and shall pay the balance of such
amounts in the ordinary course of business consistent with past practices, but
in no event later than forty-five (45) days after the Closing Date. Purchaser
shall assume responsibility for purchase orders made by Seller prior to the
Closing Date in the ordinary course of business consistent with past practices
for Expendables or Consumables not delivered to the Hotel as of the Closing
Date. Purchaser shall be deemed to have assumed any and all operating expenses
and trade accounts to the extent Purchaser shall have received a credit
therefor under this Section 6.02. All prepaid expenses shall be credited to
Seller.
	 
	 	(f)	 	Food, Beverage and Other Income. Revenues from food, beverage
and banquet services, room service, public room revenues, health club revenues,
vending machine revenues belonging to Seller or MHL, and other services
rendered to guests of the Hotel shall be prorated as of the Cut-Off Time, if,
as and when collected.
	 
	 	(g)	 	Rents. All rentals under any Space Leases (including fixed
rents and charges in respect of electricity, operating expenses and taxes)
shall be prorated as of the Cut-Off Time if, as and when collected. Payments
from tenants under the Space Leases for electricity, operating expenses and
taxes which are billed to tenants in arrears or on an estimated basis shall be
prorated on such basis and readjusted if, as and when such amounts are finally
determined and collected.
	 
	 	(h)	 	Employees. All wages and earned but unpaid fringe benefits of
Hotel Employees through the Cut-Off Time shall be paid to such Hotel Employees
by Seller as provided in Section 6.07 and shall not be prorated.
	 
	 	(i)	 	Security Deposits. Any security deposits under the Space
Leases shall be transferred to Purchaser at the Closing or credited against the
Purchase Price.
	 
	 	(j)	 	Cash. All cash on hand in house banks on the morning of the
Closing Date shall become the property of Purchaser and the amount thereof
shall be credited to Seller.
	 
	 	(k)	 	Ledger and Other Receivables. All accounts receivable
attributable to guests in the Hotel on the night preceding the Closing (the
“Ledger”) shall be prorated as provided in this Agreement, Seller’s share shall
be credited to Seller and the Ledger shall become the property of Purchaser.
All other accounts receivable shall be transferred and conveyed to Purchaser at
Closing, and Seller shall be paid by Purchaser at Closing an amount equal to
the total amount of all such receivables, less a credit of Twenty-eight
Thousand Dollars ($28,000) on account of the receivables set forth on
Exhibit J (the “Scheduled Receivables”). From and after Closing,
Purchaser shall undertake commercially reasonable efforts to collect the
Scheduled Receivables, and shall remit to Seller all such

 

 

	 	 	 	funds collected on account of the Scheduled Receivables promptly after
receipt of payment.
	 
	 	(l)	 	Unopened Cases of Consumables. Seller shall receive a credit
for the cost (i.e., the amount paid by Seller) of all unopened and unused cases
of Consumables which are as of the Closing Date stored at the Hotel.
	 
	 	(m)	 	Delayed Adjustments. If at any time following the Closing Date
the amount of an item listed in this Section 6.02 shall prove to be incorrect,
the party in whose favor the error was made shall pay to the other party within
fifteen (15) days after request the sum necessary to correct such error upon
receipt of proof of such error, provided that such proof is delivered to the
party from whom payment is requested on or before ninety (90) days after the
Closing Date. The acceptance of the closing statement by either party shall
not prevent later readjustment pursuant to this Section. After the Closing
Date, each party shall have reasonable access to the books and records of the
other party with respect to all matters set forth in this Section 6.02 for the
purposes of determining the accuracy of all adjustments and the performance of
the obligations of the parties under this Section.

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

	 	(a)	 	Safe Deposit Boxes. On the Closing Date, Seller shall cause
notice to be sent to all guests of the Hotel who have safe deposit boxes
advising them of the pending sale of the Property and requesting the removal
and verification of the contents of such safe deposit boxes within three (3)
days after the Closing Date. Seller may have a representative present at the
Hotel during such three (3) day period for the purpose of viewing such removal
and verification. Boxes of guests not responding to the written notice shall
be listed at the end of such three (3) day period. Such boxes shall be opened
on the following day in the presence of representatives of Seller and Purchaser
to be agreed upon between Seller and Purchaser and the contents thereof shall
be recorded. Any property contained in the safe deposit boxes and so recorded
and thereafter remaining in the hands of Purchaser shall be the responsibility
of Purchaser, and Purchaser hereby agrees to indemnify and save and hold Seller
harmless from and against any claim or obligation arising out of or with
respect to such property.
	 
	 	(b)	 	Baggage Inventory. All guest baggage checked and left in the
possession, care and control of Seller shall be listed in an inventory to be
prepared in duplicate and signed by Seller’s and Purchaser’s representatives on
the Closing Date. Purchaser shall be responsible from and after the Closing
Date for all baggage listed in inventory, and Purchaser hereby agrees to
indemnify and save and hold Seller harmless from and against any claim arising
out of or with respect to the baggage listed in the inventory.
	 
	 	(c)	 	Other Property. All other guest property left in the
possession, care or control of Seller prior to the Closing Date shall be
returned by Seller to guests prior to the Closing Date and if not so returned
prior to the Closing Date shall be the sole responsibility of Seller subsequent
to the Closing Date.

     The provisions of this Section 6.03 shall survive the Closing.

     6.04 Closing Documents.

	 	(a)	 	In addition to any other deliveries required of Seller pursuant
to the terms of this Agreement, at Closing Seller shall deliver, or cause to be
delivered, to Purchaser the following:

 

 

	 	(i)	 	a special warranty deed (or local equivalent)
conveying the fee estate in the Property to Purchaser as set forth in
Section 3.05 (the “Deed”).
	 
	 	(ii)	 	bills of sale transferring to Purchaser all of
the Furnishings, Expendables, Consumables, Miscellaneous Personal
Property, Books and Records and Warranties owned by Seller or MHL with
respect to the Property free of all encumbrances except for the
Permitted Exceptions, without representation or warranty other than as
provided herein.
	 
	 	(iii)	 	one or more assignments conveying and
transferring to Purchaser all of the Bookings, the Space Leases, the
Hotel Contracts and any other Hotel Contract which Seller was permitted
to enter between the date hereof and the Closing pursuant to a
provision of this Agreement, and the assignable Permits.
	 
	 	(iv)	 	possession of the Property (subject to the
rights of tenants, guests and invitees).
	 
	 	(v)	 	evidence reasonably acceptable to Purchaser and
acceptable to the title company of the termination of the MHL Lease and
the Management Agreement.
	 
	 	(vi)	 	a certified copy of such good standing
certificates, authorizations, approvals and incumbencies of Seller as
the Title Company shall reasonably require.
	 
	 	(vii)	 	a FIRPTA Affidavit in form required by the
Internal Revenue Service.
	 
	 	(viii)	 	original counterparts of the Hotel Contracts, Space Leases and
assignable Permits, all to the extent in Seller’s possession, and all
Books and Records relating to the Property and the Hotel in Seller’s
possession (provided that Seller shall have the right to make copies of
such Hotel Contracts, Space Leases and assignable Permits and such
books and records, and after Closing to have reasonable access to the
same, to the extent required by Seller for accounting, tax reporting or
other reporting purposes).
	 
	 	(ix)	 	any and all plans and specifications for the
Improvements on the Property in Seller’s possession.
	 
	 	(x)	 	such notices of the sale to third parties as
may be reasonably requested by the Purchaser.
	 
	 	(xi)	 	such affidavits, indemnities and related
matters as the Title Company may reasonably request, including without
limitation such affidavits and indemnities as may be required to permit
the Title Company to delete any exceptions for mechanic’s liens.
	 
	 	(xii)	 	a certificate restating and reaffirming
Seller’s representations and warranties pursuant to Section 4.06(a)
hereof, with such changes as shall be necessary to make such
representations true, complete, and accurate in all material respects
as of the Closing Date.
	 
	 	(xiii)	 	an amendment to the Master Fee Agreement as contemplated by Section
2.02(c).
	 
	 	(xiv)	 	all of the Required Consents for which Seller
is responsible as set forth on Exhibit I.

 

 

	 	(b)	 	In addition to any other deliveries required of Purchaser
pursuant to the terms of this Agreement, at Closing Purchaser shall deliver or
cause to be delivered to Seller the following:

	 	(i)	 	the balance of the Purchase Price payable
pursuant to Section 2.02(d).
	 
	 	(ii)	 	such good standing certificates,
authorizations, approvals and incumbencies as the Title Company shall
reasonably require.
	 
	 	(iii)	 	an assumption of the obligations (but not the
obligations relating to any breach or default existing as of the
Closing or which arose due to actions or events occurring prior to the
Closing) of Seller from and after the Closing under the Bookings, Space
Leases and Hotel Contracts (including those which Seller was permitted
to enter into between the date hereof and the Closing pursuant to a
provision of this Agreement), and assignable Permits (collectively, the
“Assumed Obligations”).
	 
	 	(iv)	 	a certificate restating and reaffirming
Purchaser’s representations and warranties pursuant to Section 4.06(a)
hereof, with such changes as shall be necessary to make such
representations true, complete, and accurate in all material respects
as of the Closing Date.
	 
	 	(v)	 	an amendment to the Master Fee Agreement as
contemplated by Section 2.02(c).
	 
	 	(vi)	 	all of the Required Consents for which
Purchaser is responsible as set forth on Exhibit I.

     6.05 Closing Costs.

	 	(a)	 	Purchaser shall pay (i) all recording fees imposed in
connection with the recordation of the Deed and any deed of trust or mortgage
on the Property securing Purchaser’s lender, (ii) Survey costs, (iii) the
premiums for the Title Policy, (iv) the costs of its due diligence
investigation of the Purchased Assets, (v) all amounts incurred in connection
with the issuance of a new license or franchise agreement for the Hotel,
including, but not limited to, application fees, transfer fees, and costs of
implementing a property improvement plan, but excluding any and all termination
fees or costs, and (vi) the fees and disbursements of Purchaser’s attorneys.
Purchaser shall pay one-half of the escrow fees of Escrow Agent.
	 
	 	(b)	 	Seller shall pay (i) all transfer taxes and deed stamps imposed
in connection with the conveyance of the Property, (ii) all recording fees
imposed in connection with the recordation of documents necessary to remove
encumbrances, (iii) the termination fees and costs payable under the Management
Agreement, (iv) the termination fees and costs payable under the Franchise
Agreement, (v) sales taxes imposed in connection with any items of personal
property, (vi) all fees and costs in connection with obtaining any Required
Consent, and (vii) the fees and disbursements of Seller’s attorneys. Seller
shall pay one-half of the escrow fees of Escrow Agent.
	 
	 	(c)	 	Any other closing cost not specifically allocated by this
Agreement shall be allocated in accordance with closing customs for similar
properties in the metropolitan area of the Property.

 

 

	 	(d)	 	The provisions of this Section 6.05 shall survive the Closing
or any termination of this Agreement.

     6.06 Real Estate Commissions. Seller and Purchaser each represent and warrant to the other
that it has dealt with no broker or finder in the negotiation of this transaction other than Jones,
Lang LaSalle (the “Brokers”). Each party agrees to and does hereby indemnify and hold the other
harmless against the payment of any commission or finder’s fee to any person or entity claiming by,
through or under Seller or Purchaser, as applicable. Seller shall pay the commission of Brokers
pursuant to separate agreement. The provisions of this Section 6.06 shall survive Closing.

     6.07 Staff.

	 	(a)	 	Seller shall pay all wages, payroll taxes and fringe benefits
(including vacation pay and sick pay to the extent actually earned) as well as
social security, unemployment compensation, health, life and disability
insurance and pension fund contributions, if any, through the Closing Date.
Except as set forth in Section 6.07(b), Seller will indemnify, defend and hold
Purchaser harmless from and against any loss, damage, liability, claim, cost or
expense (including, without limitation, reasonable attorneys’ fees) that may be
incurred by, or asserted against, Purchaser after Closing which involves any
matter relating to a past or present Hotel Employee concerning acts or
omissions occurring up to the Cut-Off Time, including, but not limited to, the
payments required under the prior sentence. Purchaser will indemnify, defend
and hold Seller, MHL and Manager harmless from and against any loss, damage,
liability, claim, cost or expense (including, without limitation, reasonable
attorney’s fees) that may be incurred by, or asserted against, any such party
after Closing which involves any matter relating to a Hotel Employee concerning
acts or omissions occurring after the Cut-Off Time, including, without
limitation, any payment required to be made by Purchaser under this Section
6.07.
	 
	 	(b)	 	Purchaser acknowledges that Seller shall not be employing the
Hotel Employees upon the Closing and that Seller is not giving any notice
under, or otherwise complying with, the Worker Adjustment and Retraining
Notification Act (together with all rules and regulations promulgated
thereunder, the “WARN Act”). Purchaser agrees to hire a sufficient number of
the Hotel Employees, and on such terms and conditions, as to avoid any
violation of the WARN Act and/or any other similar state or local Laws in the
absence of such notice, and agrees to indemnify and defend Seller, MHL and
Manager, and hold them harmless, from and against any and all loss, damage,
liability, claim, cost or expense (including, without limitation, reasonable
attorneys’ fees) incurred by any of such parties as a result of the failure to
give such notice or otherwise comply with the WARN Act and/or any other similar
state or local Laws (including, but not limited to, the closing of the Hotel by
Purchaser within a period of sixty (60) days after the Closing Date which would
result in either (a) a “plant closing” as defined in the WARN Act or (b) a
violation under other applicable Laws); provided, however, and without limiting
the foregoing, that Purchaser shall (i) not close the Hotel within sixty (60)
days after the Closing Date and (ii) rehire at least eighty percent (80%) of
the Hotel Employees.
	 
	 	(c)	 	The provisions of Section 6.07 shall survive the Closing.

     6.08 Further Assurances. Each party agrees that it will without further consideration execute
and deliver such other documents and take such other action, whether prior or subsequent to
Closing, as may be reasonably requested by the other party to consummate more effectively the
purposes or subject matter of this Agreement.

     6.09 Release. Reference is made to that certain letter dated September 27, 2005 from Bruce G.
Wiles of MeriStar Hospitality Company (“MeriStar”) to William Richardson of Interstate Hotels &
Resorts, Inc. (“Interstate”) regarding management contracts for various hotels specified therein,
as well as issues regarding the operation and sale of the Hotel (the “Letter”). Seller, on behalf
of itself and each of its affiliates (including without

 

 

limitation MeriStar) (collectively, the “Releasing Parties”), hereby releases Interstate and each
of its affiliates (including without limitation Purchaser and the Manager), and their respective
directors, officers, shareholders, members, partners, managers, representatives, agents and
employees, from any and all claims, causes of action, liability, losses and damages which any of
the Releasing Parties may have pursuant to the Letter or, except as otherwise provided in this
Agreement, in connection with the subject matter thereof, but only to the extent related to the
Hotel. The provisions of this Section shall survive the Closing or termination of this Agreement,
as applicable.

VII.

Condemnation and Risk of Loss

     7.01 Condemnation. If, prior to Closing, any governmental authority or other entity having
condemnation authority shall institute an eminent domain proceeding or take any steps preliminary
thereto (including the giving of any direct or indirect notice of intent to institute such
proceedings) with regard to any material portion of the Property (including without limitation the
taking of any parking spaces or any access to the Property), and the same is not dismissed prior to
Closing, Seller shall promptly notify Purchaser thereof, and Purchaser shall be entitled either to
terminate this Agreement upon written notice to Seller or to waive such right of termination and
receive all such condemnation proceeds or an assignment thereof at the Closing. In the event
Purchaser elects to terminate this Agreement under this Section 7.01, Escrow Agent shall promptly
return to Purchaser the Earnest Money and the parties shall have no further rights or liabilities
under this Agreement except for those provisions which specifically provide that they survive the
termination of this Agreement.

     7.02 Risk of Loss. Until Closing, Seller shall bear the risk of loss should there be damage
to any of the Improvements by fire or other casualty. If prior to the Closing the Improvements
shall be damaged by fire or other casualty, Seller shall promptly take all actions reasonably
necessary to preserve and protect the Improvements from further loss or damage, and within five (5)
business days after such loss deliver to Purchaser the following items (collectively “Casualty Loss
Information”): (a) copies of all casualty and business interruption policies relating to the
Property; (b) the names, addresses and telephone numbers of the adjustors assigned to adjust the
loss; (c) letters addressed to each insurance company issuing a policy covering such loss and
executed by Seller authorizing said company and its adjustors to discuss all matters relating to
such loss with Purchaser, its agents and attorneys; and (d) a reasonable written description of the
damages incurred and a good faith estimate of the cost of restoration. If the Improvements suffer
material damage by a casualty, which, for the purpose of this Section, shall mean damage which
would require an expenditure in excess of five percent (5%) or more of the Purchase Price to
repair, Purchaser may within five (5) business days after delivery of the Casualty Loss Information
either:

	 	(a)	 	terminate this Agreement by delivering written notice of same
to Seller, in which event Escrow Agent shall promptly return to Purchaser the
Earnest Money and the parties shall have no further rights or liabilities under
this Agreement except for those provisions which specifically provide that they
survive the termination of this Agreement; or
	 
	 	(b)	 	waive its right of termination, by delivering written notice of
same to Seller, and proceed to close this transaction in accordance with the
terms hereof.

At Closing, (i) the amount of any deductibles under the applicable insurance policies and all
insurance proceeds received prior to Closing shall be delivered to Purchaser other than such
proceeds as shall have been applied to the restoration of the Property, (ii) Purchaser may notify
all appropriate insurance companies of its interest in the insurance proceeds, (iii) all casualty
insurance proceeds payable as a result of the loss and Purchaser’s pro rata share of any rental or
business loss proceeds shall be assigned to Purchaser at Closing and (iv) Purchaser shall assume
all contracts or other agreements entered into by Seller with non-affiliated third parties to
preserve and protect the Improvements pursuant to the second sentence of this Section and any other
contracts entered into by Seller and approved in writing by Purchaser with respect to the
restoration of the Property.

 

 

VIII.

Indemnities

     8.01 Seller’s Indemnity. For a period of two (2) years from and after the Closing, Seller
shall indemnify, defend and hold Purchaser harmless from any and all actual costs, loss, damages
(excluding consequential and punitive damages) or expenses (including without limitation reasonable
attorneys’ fees) incurred by Purchaser with respect to (i) any breach by Seller of any of its
covenants in this Agreement, (ii) Seller’s failure to duly perform, pay and discharge any liability
or obligation of Seller, other than the Assumed Obligations, and (iii) Seller’s ownership and
operation of the Hotel and the Property prior to the Closing.

     8.02 Purchaser’s Indemnity. For a period of two (2) years from and after the Closing,
Purchaser shall indemnify, defend and hold Seller harmless from any and all actual costs, loss,
damages (excluding consequential and punitive damages) or expenses (including without limitation
reasonable attorneys’ fees) incurred by Seller with respect to (i) any breach by Purchaser of any
of its covenants in this Agreement, (ii) Purchaser’s failure to duly perform, pay and discharge any
of the Assumed Obligations, and (iii) Purchaser’s ownership and operation of the Hotel and the
Property after the Closing.

IX.

Miscellaneous

     9.01 Entire Agreement. This Agreement supercedes the terms of the letter agreement between
Seller and Purchaser dated July 7, 2005, and contains the entire agreement of the parties with
respect to the subject matter of this Agreement. There are no other agreements, oral or written,
and this Agreement can be amended only by written agreement signed by Seller and Purchaser.

     9.02 Binding Effect; Assignment. This Agreement shall inure to the benefit of and be binding
upon the successors and assigns of each of the parties to this Agreement. Purchaser may not assign
this Agreement without the prior written consent of Seller which may be withheld in Seller’s sole
discretion, provided, however, that Purchaser may, with five (5) days prior notice to Seller,
assign its rights under this Agreement without Seller’s consent to any entity, partnership or
limited liability company wholly owned (directly or indirectly) by Interstate Hotels & Resorts,
Inc., provided that (a) no further assignment after the initial assignment by Purchaser shall be
permitted without Seller’s consent, (b) Purchaser shall remain primarily liable in all respects for
its liabilities and obligations under this Agreement, (c) such assignment will not delay the
Closing nor require Seller to obtain any additional third party consents, certificates or
approvals, and (d) Purchaser’s assignee must have a net worth reasonably acceptable to Seller. No
assignment of this Agreement shall release Purchaser from its obligations under this Agreement.
Any assignee of this Agreement shall be jointly and severally liable for all obligations of
Purchaser hereunder.

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

	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 
	 

	 	Seller:	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 

	 	 	 	Fax No.:	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	Phone:	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	Attn:	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	with copy to:	 	Arnold & Porter LLP	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 

 

 

	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	Fax No.:	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	Phone:	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	Attn:	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	Purchaser:	 	4501 N. Fairfax Drive	 	 	 	 
	 	 	 	 	Arlington, VA 22203	 	 	 	 
	 	 	 	 	Fax No.: (703) 387-3389	 	 	 	 
	 	 	 	 	Phone: (703) 387-3332	 	 	 	 
	 	 	 	 	Attn: Christopher L. Bennett, Senior Vice President and General Counsel
	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	with copy to:	 	Eckert Seamans Cherin & Mellott, LLC	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 

	 	 	 	Fax No.:	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	Phone:	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	Attn:	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 

The parties shall have the right from time to time to change their respective addresses for notice
by providing at least five (5) days’ written notice to the other party.

     9.04 Governing Law; Waiver of Jury Trial. This Agreement shall be construed in accordance
with the laws of the state in which the Property is located, without regard to its conflict of laws
principles. Seller and Purchaser each hereby waives any right to jury trial in the event any party
files an action relating to this Agreement or to the transactions or obligations contemplated by
this Agreement.

     9.05 Section Headings. The section headings contained in this Agreement are for convenience
only and shall in no way enlarge or limit the scope or meaning of the various and several sections
of this Agreement. Any reference in this Agreement to “Sections,” or “Exhibits” shall be
references to Sections or Exhibits of this Agreement unless otherwise specified.

     9.06 Time of the Essence. Time shall be of the essence with respect to the performance of all
obligations of the parties under this Agreement.

     9.07 Nonrecordation. Neither this Agreement nor any memorandum thereof shall be recorded.

     9.08 Confidentiality.

	 	(a)	 	Purchaser agrees that, until after the Closing, all
documentation or other information delivered to Purchaser or its
representatives or agents by Seller or Seller’s representatives or agents
pertaining to the Purchased Assets shall be kept strictly confidential and will
not be used by Purchaser or its representatives or agents, directly or
indirectly, for any purpose other than evaluating the Purchased Assets.
Purchaser may however make appropriate disclosures to its investors and lenders
and to its and their respective attorneys, accountants and consultants engaged
in connection with this transaction or to such other persons or entities to
which disclosure is legally required.
	 
	 	(b)	 	If Purchaser does not acquire the Property for any reason
whatsoever, Purchaser shall deliver to Seller, promptly upon demand at no cost
to Seller, all materials and documents previously obtained by Purchaser from
Seller (with no retention by Purchaser of copies of any such materials and
documents), and copies of all third-party engineering work, soils reports,
environmental/biological studies, appraisals, and other materials pertaining to
the Property (other than information generated by its counsel) as Purchaser has
prepared or caused to be prepared. Such delivery shall be made without
representation or warranty by Purchaser as to the contents of such items and
Seller shall not be entitled to rely on such items.

 

 

	 	(c)	 	Prior to the Closing, neither party shall, without the prior
written consent of the other party (which consent shall not be unreasonably
withheld), issue any press release or other public statement (except such
statements as may be required by law) in connection with the transactions
contemplated hereby. From and after the Closing, the parties may issue such a
press release or other public statement provided that the same does not
describe the economic terms of this transaction except to the extent required
by law.
	 
	 	(d)	 	Each party is authorized to disclose the tax treatment and tax
structure of the transactions set forth in this Agreement.
	 
	 	(e)	 	This Section 9.08 shall survive the Closing or any termination
of this Agreement.

     9.09 Counterparts; Execution by Facsimile. This Agreement may be executed in two (2) or more
counterparts, each of which shall be deemed an original but all of which together shall constitute
one and the same instrument. Executed counterparts of this Agreement exchanged by facsimile
transmission shall be fully enforceable.

     9.10 1031 Exchange. Purchaser acknowledges that Seller has advised Purchaser that Seller is
reserving its right to exchange the Property for other property of like kind and qualifying use
within the meaning of Section 1031 of the Internal Revenue Code of 1986, as amended, and the
regulations promulgated thereunder. Seller expressly reserves the right to assign its rights, but
not its obligations, under this Agreement to a “Qualified Intermediary” as provided in such
regulations on or before the Closing Date; provided, however, that the exchange contemplated by
this Section 9.10 shall in no event delay the Closing beyond the Closing Date. Purchaser agrees to
cooperate with Seller to effectuate such exchange but Purchaser shall assume no liability or incur
any expense in connection therewith. Seller shall pay all costs and advance all funds required in
connection with such exchange and shall indemnify, defend, and hold Purchaser harmless from all
claims, damages, liabilities, costs and expenses (including, but not limited to reasonable legal
fees) in connection with such exchange. Purchaser shall in no event be required to take title to
the exchanged property.

     9.11 Bulk Transfers. Seller and Purchaser specifically waive compliance with the Uniform
Commercial Code of the State in which the Property is located with respect to bulk transfers, with
any similar provision under any applicable law of such State or the county and city in which the
Property is located. In the event such waiver is ineffective, Seller shall indemnify Purchaser for
any claims made by creditors under the applicable bulk sales laws relating solely to any
pre-Closing payment obligations to such creditors and only in the amount of the payments due such
creditors. The provisions of this Section 9.11 shall survive the Closing.

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

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

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

[Signatures appear on the following page.]

 

 

     IN WITNESS WHEREOF, this Agreement has been duly executed in multiple counterparts by the
parties hereto as of the date and year first above written.

	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	 	 	SELLER:	 	 
	 
	 	 	 	 	 	 
	 	 	MERISTAR HOSPITALITY OPERATING	 	 
	 	 	PARTNERSHIP, L.P.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	MeriStar Hospitality Corporation,	 	 
	 

	 	 	 	          its general partner	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ DONALD D. OLINGER	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	Donald D. Olinger	 	 
	 

	 	 	 	 	 	 
	 

	 	Title:	 	Chief Financial Officer	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	PURCHASER:	 	 
	 
	 	 	 	 	 	 
	 	 	INTERSTATE DURHAM, LLC	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ CHRISTOPHER L. BENNETT	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	Christopher L. Bennett	 	 
	 

	 	 	 	 	 	 
	 

	 	Title:	 	Senior Vice President and General Counsel
	 

	 	 	 	 	 	 

 

 

FIRST AMENDMENT TO PURCHASE AND SALE AGREEMENT

     THIS
FIRST AMENDMENT TO PURCHASE AND SALE AGREEMENT (this
“Amendment”) is made and
entered into as of November 10, 2005, by and between MERISTAR HOSPITALITY OPERATING PARTNERSHIP,
L.P., Delaware limited partnership (“Seller”), and INTERSTATE DURHAM, LLC, a Delaware limited
liability company (“Purchaser”).

RECITALS:

     WHEREAS, Purchaser and Seller are parties to that certain Purchase and Sale
Agreement dated as of October 31, 2005 (the “Agreement”); and

     WHEREAS, Purchaser and Seller now desire to amend the Agreement to extend the date on or
before which the Closing must occur, all upon the terms and conditions set forth below.

     NOW, THEREFORE, in consideration of the mutual promises and covenants herein contained,
the parties hereto, intending to be legally bound hereby, agree as follows:

     1. Defined
Terms. Capitalized terms used but not defined herein have the
meanings ascribed to them in the Agreement.

     2. Amendment
of Section 6.01. Section 6.01 of the Agreement is hereby
amended by deleting “November 10, 2005” and replacing it with “November 22, 2005.”

     3. No
Other Amendment. All other provisions of the Agreement not
specifically referenced in this Amendment shall remain in full force and effect.

     4. Entire
Agreement. The Agreement, as amended by this Amendment,
constitutes the entire agreement between the parties hereto with respect to the subject matter
thereof and together supersede all prior agreements and understandings, whether oral or
written, between the parties hereto with respect to the subject matter thereof.

     5. Governing
Law. This Amendment shall be governed by and construed in
accordance with the laws of the State of North Carolina, without regard to its conflicts of
law principles.

     6. Counterparts. This Amendment may be executed in any number of
counterparts, each of which shall, when executed, be deemed to be an original and all of which
shall be deemed to be one and the same instrument. Signatures on this Amendment transmitted
by facsimile shall be deemed to be original signatures for all purposes of this Amendment.

[Signatures appear on the following page.]

 

 

     IN WITNESS WHEREOF, the parties have executed and delivered this Amendment as of the date
first above written.

	 	 	 	 	 	 	 	 	 
	 	 	MERISTAR HOSPITALITY OPERATING

     PARTNERSHIP, L.P.	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	MeriStar Hospitality Corporation, its

general partner	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:	 	/s/ JOHN PLUNKET	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	Name:	 	John Plunket	 	 
	 

	 	 	 	Title:	 	Senior Vice President	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	INTERSTATE DURHAM, LLC	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By:	 	/s/ CHRISTOPHER L. BENNETT	 	 
	 	 	 	 	 	 	 
	 

	 	Name:	 	Christopher L. Bennett	 	 
	 	 	 	 	 	 	 
	 

	 	Title:	 	Senior Vice President and General Counsel	 	 
	 	 	 	 	 	 	 

2

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