Document:

Exhibit 10.34

 

 

PURCHASE AND SALE AGREEMENT

 

 

ASTON KAUAI BEACH AT MAKAIWA

 

 

between

 

 

Waipouli Owner, LLC

(“Seller”)

 

 

and

 

 

JMI Realty, LLC

(“Purchaser”)

 

 

June 17, 2010

 

 

TABLE OF CONTENTS

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  
	
  ARTICLE 1 THE PROJECT

  	
  1

  
	
   

  	
   

  
	
  1.1

  	
  Agreement to Sell and Purchase

  	
  1

  
	
   

  	
  1.1.1

  	
  Real Property

  	
  1

  
	
   

  	
  1.1.2

  	
  Improvements

  	
  2

  
	
   

  	
  1.1.3

  	
  Personal Property

  	
  2

  
	
   

  	
  1.1.4

  	
  Leases

  	
  2

  
	
   

  	
  1.1.5

  	
  Advance Bookings

  	
  2

  
	
   

  	
  1.1.6

  	
  Governmental Permits

  	
  2

  
	
   

  	
  1.1.7

  	
  Operating Contracts

  	
  3

  
	
   

  	
  1.1.8

  	
  Equipment Leases

  	
  3

  
	
   

  	
  1.1.9

  	
  Intangible Property

  	
  4

  
	
  1.2

  	
  Petty Cash

  	
  4

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 2 PURCHASE AND
  CLOSING

  	
  4

  
	
   

  	
   

  
	
  2.1

  	
  Purchase Price and Earnest Money

  	
  4

  
	
  2.2

  	
  Closing

  	
  5

  
	
  2.3

  	
  Escrow Agreement

  	
  5

  
	
  2.4

  	
  Allocation of Purchase Price

  	
  5

  
	
   

  	
   

  
	
  ARTICLE 3 TITLE

  	
  6

  
	
   

  	
   

  
	
  3.1

  	
  Title Commitment and Survey

  	
  6

  
	
   

  	
  3.1.1

  	
  Title Commitment

  	
  6

  
	
   

  	
  3.1.2

  	
  Survey

  	
  6

  
	
  3.2

  	
  Title Review

  	
  6

  
	
   

  	
  3.2.1

  	
  Generally

  	
  6

  
	
   

  	
  3.2.2

  	
  Objections

  	
  6

  
	
  3.3

  	
  New Title Matters

  	
  7

  
	
  3.4

  	
  Title Insurance

  	
  8

  
	
   

  	
   

  
	
  ARTICLE 4 RISK OF LOSS

  	
  8

  
	
   

  	
   

  	
   

  
	
  4.1

  	
  Casualties

  	
  8

  
	
   

  	
  4.1.1

  	
  Material Casualty

  	
  8

  
	
   

  	
  4.1.2

  	
  Casualty Not Material

  	
  8

  
	
  4.2

  	
  Takings

  	
  9

  
	
   

  	
  4.2.1

  	
  Material Taking

  	
  9

  
	
   

  	
  4.2.2

  	
  Taking Not Material

  	
  9

  
	
  4.3

  	
  Materiality

  	
  9

  
	
  4.4

  	
  Notice

  	
  10

  

 

i

 

	
  ARTICLE 5 INSPECTION AND
  CONDITION OF PROJECT

  	
  10

  
	
   

  	
   

  
	
  5.1

  	
  Purchaser’s Inspection

  	
  10

  
	
   

  	
  5.1.1

  	
  Inspection

  	
  10

  
	
   

  	
  5.1.2

  	
  Seller Deliveries

  	
  10

  
	
   

  	
  5.1.3

  	
  Insurance Requirements

  	
  11

  
	
   

  	
  5.1.4

  	
  Interview Rights

  	
  12

  
	
   

  	
  5.1.5

  	
  As Is Condition

  	
  12

  
	
   

  	
  5.1.6

  	
  Disclaimer

  	
  12

  
	
  5.2

  	
  No Obligation to Improve

  	
  13

  
	
  5.3

  	
  Purchaser’s Responsibility and Indemnity

  	
  13

  
	
  5.4

  	
  Due Diligence Period

  	
  13

  
	
   

  	
   

  
	
  ARTICLE 6 CLOSING PROCEDURE
  AND CONDITIONS PRECEDENT

  	
  14

  
	
   

  	
   

  
	
  6.1

  	
  Seller’s Performance

  	
  14

  
	
   

  	
  6.1.1

  	
  Deed

  	
  14

  
	
   

  	
  6.1.2

  	
  Bill of Sale and Assignment

  	
  14

  
	
   

  	
  6.1.3

  	
  Good Standing, Tax Clearance Certificates for Seller

  	
  15

  
	
   

  	
  6.1.4

  	
  HARPTA Affidavit

  	
  15

  
	
   

  	
  6.1.5

  	
  Originals

  	
  15

  
	
   

  	
  6.1.6

  	
  Notices of Closing

  	
  15

  
	
   

  	
  6.1.7

  	
  FIRPTA Certificate

  	
  15

  
	
   

  	
  6.1.8

  	
  Seller’s Authority Documents

  	
  15

  
	
   

  	
  6.1.9

  	
  Closing Statement

  	
  15

  
	
   

  	
  6.1.10

  	
  Payment of Certain Costs

  	
  15

  
	
   

  	
  6.1.11

  	
  Other Assets

  	
  15

  
	
   

  	
  6.1.12

  	
  Advance Bookings

  	
  16

  
	
   

  	
  6.1.13

  	
  Termination of Management Agreement

  	
  16

  
	
   

  	
  6.1.14

  	
  Termination of UCC-1 Financing Statements

  	
  16

  
	
   

  	
  6.1.15

  	
  Tenant Estoppel Letters

  	
  16

  
	
  6.2

  	
  Purchaser’s Performance

  	
  16

  
	
   

  	
  6.2.1

  	
  Payment of Purchase Price

  	
  16

  
	
   

  	
  6.2.2

  	
  Payment of Certain Costs

  	
  16

  
	
   

  	
  6.2.3

  	
  Assumption

  	
  16

  
	
   

  	
  6.2.4

  	
  Certification

  	
  16

  
	
   

  	
  6.2.5

  	
  Closing Statement

  	
  17

  
	
   

  	
  6.2.6

  	
  Notices of Closing

  	
  17

  
	
   

  	
  6.2.7

  	
  A Certificate of Good Standing for Purchaser

  	
  17

  
	
   

  	
  6.2.8

  	
  Financing Documents

  	
  17

  
	
   

  	
  6.2.9

  	
  Notice of Mortgage, Pledge or Purchase

  	
  17

  
	
  6.3

  	
  Concurrent Transactions

  	
  17

  
	
  6.4

  	
  Conditions to Obligations of Purchaser

  	
  17

  
	
  6.5

  	
  Conditions to Obligations of Seller

  	
  18

  
	
  6.6

  	
  Failure of Conditions of Purchaser or Seller

  	
  19

  
	
  6.7

  	
  Transaction Costs

  	
  19

  
	
  6.8

  	
  Financing Contingency

  	
  19

  

 

ii

 

	
  6.9

  	
  Form G-8A, Report of Bulk Sale or Transfer

  	
  19

  
	
   

  	
   

  	
   

  
	
  ARTICLE 7 PRORATIONS AND
  ADJUSTMENTS

  	
  20

  
	
   

  	
   

  
	
  7.1

  	
  Prorations

  	
  20

  
	
   

  	
  7.1.1

  	
  Accounts Receivable

  	
  20

  
	
   

  	
  7.1.2

  	
  Accounts Payable

  	
  20

  
	
   

  	
  7.1.3

  	
  Cash

  	
  20

  
	
   

  	
  7.1.4

  	
  Room Revenues

  	
  20

  
	
   

  	
  7.1.5

  	
  Advance Deposits

  	
  21

  
	
   

  	
  7.1.6

  	
  Taxes, Assessments and Sewer Charges

  	
  21

  
	
   

  	
  7.1.7

  	
  Deposits and Rentals

  	
  21

  
	
   

  	
  7.1.8

  	
  Water Charges Fuel and Utilities

  	
  22

  
	
   

  	
  7.1.9

  	
  Fees for Licenses and Permits

  	
  22

  
	
   

  	
  7.1.10

  	
  Prepaid Expenses

  	
  22

  
	
   

  	
  7.1.11

  	
  Operating Agreements

  	
  22

  
	
   

  	
  7.1.12

  	
  Management Agreement

  	
  22

  
	
   

  	
  7.1.13

  	
  Gift Certificates/Discount Coupons

  	
  22

  
	
   

  	
  7.1.14

  	
  Employee Expenses

  	
  23

  
	
   

  	
  7.1.15

  	
  Intent of Proration Provisions

  	
  23

  
	
   

  	
  7.1.16

  	
  Miscellaneous

  	
  23

  
	
  7.2

  	
  Procedures for Prorations

  	
  23

  
	
   

  	
  7.2.1

  	
  Preliminary Closing Statement

  	
  23

  
	
   

  	
  7.2.2

  	
  Final Settlement

  	
  23

  
	
   

  	
   

  
	
  ARTICLE 8 OPERATIONS PRIOR
  TO CLOSING SPECIAL AGREEMENTS

  	
  24

  
	
   

  	
   

  
	
  8.1

  	
  Maintenance

  	
  24

  
	
  8.2

  	
  Operations

  	
  24

  
	
  8.3

  	
  Title Matters

  	
  24

  
	
  8.4

  	
  Employees

  	
  25

  
	
  8.5

  	
  Cooperation

  	
  25

  
	
  8.6

  	
  Leasing Activities

  	
  25

  
	
  8.7

  	
  Operating Contracts and Equipment Leases

  	
  25

  
	
  8.8

  	
  Zoning

  	
  25

  
	
  8.9

  	
  Reservations

  	
  25

  
	
  8.10

  	
  Notice of Litigation

  	
  25

  
	
  8.11

  	
  Actions of the Receiver

  	
  26

  
	
   

  	
   

  
	
  ARTICLE 9 HOTEL EMPLOYEES

  	
  26

  
	
   

  	
   

  
	
  9.1

  	
  Termination of Operator’s Employees

  	
  26

  
	
  9.2

  	
  Plant Closing Law

  	
  26

  
	
  9.3

  	
  Schedule of Employees

  	
  26

  
	
   

  	
   

  
	
  ARTICLE 10 REAL ESTATE
  COMMISSION

  	
  26

  
	
   

  	
   

  
	
  10.1

  	
  Real Estate Broker

  	
  26

  

 

iii

 

	
  10.2

  	
  Indemnity

  	
  27

  
	
   

  	
   

  
	
  ARTICLE 11 DEFAULT AND
  REMEDIES

  	
  27

  
	
   

  	
   

  
	
  11.1

  	
  Earnest Money Deposit; Payment to Seller at Closing

  	
  27

  
	
  11.2

  	
  Purchaser’s Pre-Closing Default; Liquidated Damages

  	
  27

  
	
  11.3

  	
  Seller’s Pre-Closing Default

  	
  27

  
	
  11.4

  	
  Post-Closing Remedies of Purchaser

  	
  28

  
	
  11.5

  	
  Post-Closing Remedies of Seller

  	
  28

  
	
  11.6

  	
  Attorneys’ Fees

  	
  28

  
	
   

  	
   

  
	
  ARTICLE 12 [RESERVED]

  	
  29

  
	
   

  	
   

  
	
  ARTICLE 13 REPRESENTATIONS
  AND WARRANTIES OF SELLER

  	
  29

  
	
   

  	
   

  
	
  13.1

  	
  Seller’s Representations

  	
  29

  
	
   

  	
  13.1.1

  	
  Organization

  	
  29

  
	
   

  	
  13.1.2

  	
  Orders and Litigation

  	
  29

  
	
   

  	
  13.1.3

  	
  Project Related Matters

  	
  30

  
	
   

  	
  13.1.4

  	
  Bankruptcy

  	
  30

  
	
   

  	
  13.1.5

  	
  Agreements in Effect

  	
  30

  
	
   

  	
  13.1.6

  	
  Environmental

  	
  30

  
	
   

  	
  13.1.7

  	
  ADA

  	
  30

  
	
   

  	
  13.1.8

  	
  No “Foreign Person”

  	
  31

  
	
   

  	
  13.1.9

  	
  Operating Contracts

  	
  31

  
	
   

  	
  13.1.10

  	
  Special Assessments

  	
  31

  
	
   

  	
  13.1.11

  	
  Leases

  	
  31

  
	
   

  	
  13.1.12

  	
  Advance Bookings

  	
  31

  
	
   

  	
  13.1.13

  	
  Governmental Permits

  	
  31

  
	
   

  	
  13.1.14

  	
  No Occupancy Rights

  	
  31

  
	
   

  	
  13.1.15

  	
  No Undisclosed Governmental Agreements

  	
  32

  
	
   

  	
  13.1.16

  	
  Title to Personal Property

  	
  32

  
	
   

  	
  13.1.17

  	
  Taxes

  	
  32

  
	
   

  	
  13.1.18

  	
  Books

  	
  32

  
	
   

  	
  13.1.19

  	
  Condemnation

  	
  32

  
	
   

  	
  13.1.20

  	
  Financial Statements

  	
  32

  
	
   

  	
  13.1.21

  	
  Labor Actions

  	
  32

  
	
  13.2

  	
  Seller’s Knowledge Defined; Inquiry of Operator

  	
  32

  
	
  13.3

  	
  Updating Representations of Seller; Inaccuracies in
  Representations and Warranties of Seller

  	
  33

  
	
   

  	
   

  	
   

  
	
  ARTICLE 14 REPRESENTATIONS
  AND WARRANTIES OF PURCHASER

  	
  33

  
	
   

  	
   

  
	
  14.1

  	
  Purchaser’s Representations

  	
  33

  
	
   

  	
  14.1.1

  	
  Organization

  	
  33

  
	
   

  	
  14.1.2

  	
  Consents

  	
  34

  
	
   

  	
  14.1.3

  	
  Bankruptcy

  	
  34

  

 

iv

 

	
   

  	
  14.1.4

  	
  Property Condition

  	
  34

  
	
   

  	
  14.1.5

  	
  Experience

  	
  35

  
	
  14.2

  	
  Updating Representations of Purchaser; Inaccuracies in
  Representations and Warranties of Purchaser

  	
  35

  
	
   

  	
   

  
	
  ARTICLE 15 MISCELLANEOUS

  	
  35

  
	
   

  	
   

  
	
  15.1

  	
  Post-Closing Cooperation

  	
  35

  
	
   

  	
  15.1.1

  	
  Transition Cooperation

  	
  35

  
	
   

  	
  15.1.2

  	
  Collection of Seller’s Accounts Receivable

  	
  35

  
	
   

  	
  15.1.3

  	
  Utilization of Advance Bookings

  	
  35

  
	
  15.2

  	
  Notices

  	
  36

  
	
  15.3

  	
  Successors and Assigns

  	
  38

  
	
  15.4

  	
  No Third Party Beneficiary

  	
  38

  
	
  15.5

  	
  Waiver; Modification

  	
  38

  
	
  15.6

  	
  Governing Law

  	
  38

  
	
  15.7

  	
  Merger of Prior Agreements and Confidentiality

  	
  38

  
	
  15.8

  	
  Partial Invalidity

  	
  39

  
	
  15.9

  	
  Liquor Licenses

  	
  39

  
	
  15.10

  	
  Guest Baggage

  	
  39

  
	
  15.11

  	
  Safe Deposits

  	
  39

  
	
  15.12

  	
  Counterparts

  	
  40

  
	
  15.13

  	
  Further Assurances

  	
  40

  
	
  15.14

  	
  Headings

  	
  40

  
	
  15.15

  	
  Including

  	
  40

  
	
  15.16

  	
  No Recordation

  	
  40

  
	
  15.17

  	
  Financial Statements

  	
  40

  

 

	
  EXHIBIT A

  	
  PROPERTY
  DESCRIPTION

  
	
  EXHIBIT B

  	
  ESCROW
  AGREEMENT

  
	
  EXHIBIT C

  	
  DEED

  
	
  EXHIBIT D

  	
  ASSIGNMENT
  OF TENANT LEASES

  
	
  EXHIBIT E

  	
  BILL
  OF SALE

  
	
  EXHIBIT F

  	
  [INTENTIONALLY
  OMITTED]

  
	
  EXHIBIT G

  	
  MIDLAND
  TERM SHEET

  
	
  SCHEDULE 1.1.3

  	
  EXCLUDED
  PERSONAL PROPERTY

  
	
  SCHEDULE 1.1.4

  	
  LEASES

  
	
  SCHEDULE 1.1.6

  	
  GOVERNMENTAL
  PERMITS

  
	
  SCHEDULE 1.1.7

  	
  OPERATING
  CONTRACTS

  
	
  SCHEDULE 1.1.8

  	
  EQUIPMENT
  LEASES

  
	
  SCHEDULE 1.1.9

  	
  OPERATOR’S
  PROPRIETARY SOFTWARE

  
	
  SCHEDULE 13.1.3

  	
  CERTAIN
  EXCEPTIONS TO REPRESENTATIONS

  
	
  SCHEDULE 13.1.6

  	
  ENVIRONMENTAL
  VIOLATIONS

  
	
  SCHEDULE 13.1.16

  	
  CERTAIN
  TITLE EXCEPTIONS RELATING TO PERSONAL PROPERTY AND OPERATING LEASES

  

 

v

 

INDEX OF DEFINED TERMS

 

	
   

  	
  Page

  
	
  ADA

  	
  30

  
	
  Adjustment Time

  	
  20

  
	
  Advance Bookings

  	
  2

  
	
  Agreement

  	
  1

  
	
  applicable laws

  	
  30

  
	
  Audit Period

  	
  40

  
	
  Balance

  	
  5

  
	
  Balance Sheet Inventories

  	
  2

  
	
  Bookings Update

  	
  2

  
	
  Books

  	
  4

  
	
  Capital Leases

  	
  3

  
	
  Closing

  	
  5

  
	
  Closing Date

  	
  5

  
	
  Closing Documents

  	
  13

  
	
  Code

  	
  30

  
	
  Confidential Information

  	
  38

  
	
  Confidentiality Agreement

  	
  38

  
	
  Courier

  	
  36

  
	
  Deed

  	
  14

  
	
  Department

  	
  19

  
	
  Deposits

  	
  2

  
	
  DLC

  	
  39

  
	
  Due Diligence Period

  	
  13

  
	
  DWA

  	
  14

  
	
  Earnest Money

  	
  5

  
	
  Eastdil

  	
  26

  
	
  Effective Date

  	
  1

  
	
  Election Notice

  	
  13

  
	
  Escrow Agent

  	
  5

  
	
  Escrow Agreement

  	
  4

  
	
  Existing Survey

  	
  6

  
	
  Final Closing Statement

  	
  23

  
	
  Final Settlement

  	
  23

  
	
  Financing Condition

  	
  19

  
	
  Financing Terms

  	
  19

  
	
  Foreclosure

  	
  1

  
	
  Gaylord

  	
  11

  
	
  Governmental Permits

  	
  3

  
	
  Hotel

  	
  1

  
	
  Improvements

  	
  2

  
	
  Initial Deposit

  	
  4

  
	
  Intangible Property

  	
  4

  
	
  Leases

  	
  2

  

 

1

 

	
  Lenders

  	
  11

  
	
  Management Agreement

  	
  3

  
	
  Management Termination Notice

  	
  13

  
	
  Material

  	
  8, 9

  
	
  New Survey

  	
  6

  
	
  Notice of Violation

  	
  30

  
	
  Operating Contracts

  	
  3

  
	
  Operator

  	
  2

  
	
  Owner’s Policy

  	
  8

  
	
  Permitted Exceptions

  	
  6, 7

  
	
  Personal Property

  	
  2

  
	
  Plans and Studies

  	
  4

  
	
  Preliminary Closing Statement

  	
  23

  
	
  Project

  	
  1

  
	
  Property

  	
  1

  
	
  Purchase Price

  	
  4

  
	
  Purchaser

  	
  1

  
	
  Purchaser’s Post-Closing Matters

  	
  28

  
	
  Qualified Third Party

  	
  9

  
	
  Receiver

  	
  1

  
	
  Receiver Condition

  	
  18

  
	
  Sale

  	
  38

  
	
  Seller

  	
  1

  
	
  Seller Account Receivable

  	
  35

  
	
  Seller Liens

  	
  6

  
	
  Seller’s Knowledge

  	
  32

  
	
  Senior Lender

  	
  1

  
	
  Title Commitment

  	
  6

  
	
  Title Cure Period

  	
  6

  
	
  Title Insurer

  	
  6

  
	
  Vehicle Certificates

  	
  15

  
	
  WARN

  	
  14

  
	
  Warranties and Guaranties

  	
  4

  

 

2

 

PURCHASE AND SALE AGREEMENT

 

ASTON KAUAI BEACH AT MAKAIWA

 

THIS
PURCHASE AND SALE AGREEMENT (the “Agreement”)
made as of the        day of June, 2010 (the “Effective Date”),
between WAIPOULI OWNER, LLC, a Delaware limited liability company (the “Seller”), whose address is c/o RREEF
America L.L.C., 280 Park Avenue, 22nd Floor, New York, New York
10017, Attention Peggy DaSilva, and JMI REALTY, LLC, a Delaware limited
liability company (the “Purchaser”),
whose address is 111 Congress Avenue, Suite 2600, Austin, Texas, 78701,
Attention Gregory W. Clay.

 

WHEREAS,
Seller is the owner of all of that certain parcel of land located at Waipouli
Beach, Island of Kauai, State of Hawaii, more particularly described on Exhibit A
attached hereto and incorporated herein, together with all rights, easements,
interests, privileges and estates in any way benefiting and/or appurtenant thereto
(the “Property”);

 

WHEREAS,
Seller has maintained and operated on the Property a hotel commonly known as
the Aston Kauai Beach at Makaiwa, consisting of approximately 311 guest rooms
(the “Hotel”) and certain other
on-site improvements and facilities with an address at 650 Aleka Loop, Kapaa,
Waipouli Beach, Kauai, Hawaii (collectively, the Property, Improvements,
Personal Property, Leases, Governmental Permits, Operating Contracts, Equipment
Leases, Books, Warranties and Guaranties, Intangible Property, Plans and
Studies, and FF&E Account (all as herein or hereinafter defined) are
hereafter referred to as the “Project”);

 

WHEREAS,
Wells Fargo Bank, N.A., as Trustee for the Morgan Stanley Capital I Inc.
Commercial Mortgage Pass-Through Certificates Series 2006-XLF (the “Senior Lender” ) has commenced a
mortgage foreclosure action under applicable Hawaii law in the Circuit Court of
the Fifth Circuit, State of Hawaii, Civil No.09-1-0110 (the “Foreclosure” ), and has obtained the
appointment of Joseph Toy as the receiver of the Hotel (the “Receiver” ); and

 

WHEREAS,
Seller desires to sell to Purchaser and Purchaser desires to purchase from
Seller the Project on the terms and conditions hereinbelow set forth.

 

NOW,
THEREFORE, in consideration of the foregoing, and the mutual agreements herein
set forth, and other good and valuable consideration, the receipt and legal
sufficiency of which are hereby acknowledged, Seller and Purchaser agree as
follows:

 

ARTICLE 1

THE PROJECT

 

1.1          Agreement to Sell and Purchase.  Seller agrees to sell, assign, transfer,
grant and convey to Purchaser and Purchaser agrees to purchase from Seller, the
Project for the purchase price and upon the terms and conditions herein set
forth, which Project consists of the following property:

 

1.1.1                 Real Property.  All of the Property.

 

1

 

1.1.2                 Improvements. 
All of the buildings, fixtures, structures and improvements located on
the Property, including the Hotel, together with any and all facilities,
amenities and other improvements located thereon (the “Improvements”).

 

1.1.3                 Personal Property.  All of Seller’s right, title and interest in
the personal property owned by the Seller and located on or in the Property and
used in the ownership, operation and maintenance of the Project, including,
without limitation, all fixtures, chattels, artwork, furniture, furnishings,
appliances, machinery, building supplies, pools, files, records, vehicles,
inventory and supplies (including beverages, food, consumables, expendables,
mini bar items, spa retail merchandise, and Hotel logo merchandise customarily
carried as “inventories” on the balance sheet for the Project whether unopened
or in actual use (collectively the “Balance Sheet Inventories”)),
apparatus, equipment and fittings, consumables and expendables in actual use
and no longer carried as inventories, as well as (except as hereinafter
provided) all other personal property presently located on the Property and
used in the operation of the Project (but specifically excluding any items of
personal property owned by tenants, hotel guests, or the hotel manager, Aston
Hotels & Resorts LLC (the “Operator”).
The excluded personal property owned by the Operator is listed on Schedule 1.1.3
attached hereto. In addition, the term “Personal Property” shall include all
other items of personalty owned by Seller that are now, or later may be, placed
upon or attached to and used in connection with the operation of the Project
regardless of whether enumerated herein. The term “Personal
Property” shall not include utility deposits (except to the
extent Seller receives a credit for the utility deposits under Section 7.1.8),
accounts receivable, operating bank accounts or cash on deposit. “Personal
Property” shall not include information considered proprietary by the Operator
or pertaining to Seller’s company, financing, tax and other concerns not
necessary to operate the Project after Closing.

 

1.1.4                 Leases. 
To the extent assignable, all of Seller’s right, title and interest in,
under and to all leases, subleases, licenses, concessions, agreements and other
agreements for use and occupancy of any portion of the Project (the “Leases”), together with all security
deposits and damage deposits, if any, deposited by tenants in connection with
the Leases (“Deposits”). The Leases are
more particularly described in Schedule 1.1.4 attached hereto. The
term “Lease” shall not include bookings for rooms, banquet facilities and other
services of the Hotel.

 

1.1.5                 Advance Bookings. All agreements and
reservations for the use or occupancy of guest rooms, banquet facilities or
other facilities at the Hotel, including any off-site catering, for any period
after the Adjustment Time (as hereinafter defined), including all deposits held
by Seller or Operator with respect thereto (the “Advance
Bookings”). Seller will request the Receiver to furnish
Purchaser with a current schedule of Advance Bookings promptly after the
execution of this Agreement, and if Purchaser proceeds to Closing then Seller will
also request an updated schedule (the “Bookings Update”
) as of one (1) day prior to the Closing Date.

 

1.1.6                 Governmental Permits.  Except for the Liquor License (as hereafter
defined), all of Seller’s right, title and interest in any transferable consents,
authorizations, variances, waivers, licenses, or permits for the discharge of
treated waste, use of the Project or otherwise, and approvals from any
governmental or quasi governmental agency,

 

2

 

department, board, commission, bureau or other
entity or instrumentality in respect of the Project heretofore or hereafter
held by or granted to Seller, Seller’s agents or Seller’s predecessors in
interest with respect to the Project to the extent assignable, granted to
Seller or the Operator, used in or related to the ownership, occupancy and
operation of all or any part of the Project, including the Special Management
Area Permit and any certificate of occupancy or equivalent thereof
(collectively, the “Governmental Permits”), all
of which are described in Schedule 1.1.6 attached hereto. Purchaser
acknowledges and agrees that it is the responsibility of Purchaser to obtain
from the applicable governmental authorities any consents, authorizations,
variances, waivers, licenses, or permits, or approval of the transfer of any of
the Governmental Permits as shall be necessary or desirable to own or operate
the Project. Purchaser further acknowledges and agrees that it is the
responsibility of Purchaser to give any required notice to the applicable
governmental authorities of the transfer of any of the Governmental Permits.
Purchaser agrees to file the necessary applications, notices and other
supporting documents with the appropriate governmental agencies, at Purchaser’s
sole cost, risk and expense. Seller agrees to cooperate with and assist
Purchaser, at no cost to Seller, in Purchaser’s pursuit of the items described
in this subsection.

 

1.1.7                  Operating Contracts. All of Seller’s right,
title and interest in any purchase, service, maintenance, repair and utility
contracts or agreements, and all other contracts and agreements of Seller or
its agents on behalf of Seller respecting the ownership, maintenance,
management, service, use and operation of the Project to the extent
transferable (“Operating Contracts”), but
excluding the existing agreement with Operator for the management of the Hotel
(the “Management Agreement”) and
any employment contracts. A list of each of the Operating Contracts is set
forth in Schedule 1.1.7 attached hereto (provided that, with
respect to purchase orders only such purchase orders over $5,000 and purchase
orders less than $5,000 not entered into in the ordinary course of operation of
the Hotel are required to be listed thereon). Purchaser shall assume the
Operating Contracts and the Equipment Leases as of the Closing Date. Purchaser
acknowledges and agrees that it is the responsibility of Purchaser to review
the Operating Contracts and, if Purchaser delivers the Election Notice as hereinafter
provided then to obtain any approvals from third parties of the transfer of any
of the Operating Contracts identified on Schedule 1.1.7 and
Equipment Leases identified on Schedule 1.1.8 as shall be necessary
or desirable in Purchaser’s judgment to own or operate the Project. Purchaser
further acknowledges and agrees that it is the responsibility of Purchaser to
give any required notice to third parties of the transfer of any of the
existing Operating Contracts and Equipment Leases and to obtain any required
approvals for the transfer of the Operating Contracts and Equipment Leases.
Purchaser agrees that if Purchaser does not obtain any required approval of the
transfer of any Operating Contracts or Equipment Leases then Purchaser shall be
responsible for paying any amounts payable under such Operating Contracts or
Equipment Leases after Closing as a result of the failure to obtain such
approval. Seller agrees to cooperate with and assist Purchaser, at no cost to
Seller, in Purchaser’s pursuit of the items described in this subsection.

 

1.1.8                  Equipment Leases. All of Seller’s right,
title and interests in and to the Equipment Leases listed on Schedule 1.1.8
attached hereto. Any Equipment Leases (i) that are not listed on said Schedule 1.1.8,
and (ii) that would be required to be accounted for as capital leases
under generally accepted accounting principles are hereinafter referred to as “Capital Leases”.

 

3

 

1.1.9                  Intangible Property. All of Seller’s right,
title and interest in the books, records, accounts, ledgers, files, guest
registers, maintenance records, goodwill, rental and reservation records, and
guest incentive program information used in connection with the operation,
management and maintenance of the Project in the possession or control of the
Seller or, to the extent held as agent for Owner, the Operator (collectively, “Books”); to the extent transferable
all warranties and guaranties relating to the Project (“Warranties
and Guaranties”); all of the Seller’s right, title and interest,
if any, to the extent transferable, in (i) computer software (excluding
Operator’s proprietary software listed on Schedule 1.1.9 attached
hereto), (ii) all computer related and other data concerning the Project;
(iii) various plans, data, and other information pertaining to any
proposed or contemplated timeshare project for any portion of the property; and
(iv) any and all concepts, trademarks, logos, internet domain names,
telephone and telephone numbers, service marks, license agreements and other
intellectual property rights not owned by the Operator associated with the
Project, and any other intangible property not listed above in this Section 1.1.9
in which Seller or its agents have acquired an interest in connection with the
Project (collectively, “Intangible Property”);
all plans, specifications, drawings, engineering, environmental and soils
reports or test results and similar materials in the possession or control of
the Seller to the extent transferable (collectively, “Plans
and Studies”); and any registrations, entitlements, approvals or
pending ad valorem real estate tax appeal or related proceeding for the tax
year in which the Closing occurs and thereafter to the extent transferable, it
being agreed and intended by the parties that the entirety of the transferable
assets located at or used in connection with the Project shall be conveyed to
Purchaser. The term “Books” shall not include information pertaining to Seller’s
company financing, tax (other than ad valorem taxes relating to the Project)
and other concerns not necessary to operate the Project after Closing.

 

1.2           Petty Cash. Any and all till money and cash in
house banks to the extent Seller receives a credit as set forth in Section 7.1.3.

 

ARTICLE 2

 

PURCHASE AND CLOSING

 

2.1           Purchase
Price and Earnest Money.

 

(a)           The purchase price is Thirty-Eight Million and No/100ths
Dollars ($38,000,000.00) (the “Purchase Price”),
subject to the terms of subsection 2.1(e) below. Seller,
Purchaser and Escrow Agent (as hereafter defined) shall concurrently herewith
execute an escrow agreement (the “Escrow Agreement”)
in the form attached hereto as Exhibit B.

 

(b)           Upon the execution of this Agreement Purchaser has
deposited with the Escrow Agent initial earnest money in the amount of Two
Hundred Fifty Thousand Dollars ($250,000), which sum (the “Initial
Deposit” ) shall be held in accordance with the Escrow
Agreement.

 

(c)           If Purchaser does not terminate this Agreement pursuant to
and in accordance with Section 5.4 below, Purchaser shall, at or
prior to the expiration of 

 

4

 

the Due Diligence Period,
deposit with the Escrow Agent additional earnest money in the sum of Two
Hundred Fifty Thousand and No/100ths Dollars ($250,000.00) to be held in
accordance with the Escrow Agreement.

 

(d)           The earnest money, together with any interest earned
thereon net of investment costs, are referred to in this Agreement as the “Earnest Money”. The Earnest Money
shall be invested as Purchaser directs in one or more investments reasonably
acceptable to Seller. Any and all interest earned on the Earnest Money shall be
reported to Purchaser’s federal tax identification number. Failure to make such
Earnest Money deposit on said date shall be deemed to effect the immediate
termination of this Agreement.

 

(e)           At the Closing, Purchaser shall, in addition to paying the
Purchase Price, execute such documents as may be required to satisfy the
Financing Condition, including making the deliveries and/or deposits with the
Senior Lender thereunder.  The parties
acknowledge and agree that the Purchase Price, before adjustment pursuant to
the terms of this Agreement, shall be equal to the principal loan amount to be
assumed by Purchaser at the Closing as provided in the Financing Condition, and
that by assuming such principal loan amount the Purchaser shall be deemed to
have paid the Purchase Price in full.

 

2.2           Closing.
Unless otherwise agreed by Seller and Purchaser, the closing and the
consummation of the purchase and sale of the Property (the “Closing”) shall take place through
the Escrow Agent commencing at 8:01 A.M. Hawaii Standard Time on the next
business day that is at least seventy-five (75) days following Receiver’s
giving the Management Termination Notice (the “Closing
Date” ). At least two (2) business days prior to the
Closing, Purchaser shall pay to Escrow Agent, with current, federal funds wire
transferred to Escrow Agent’s account, the excess of (i) Purchaser’s share
of the closing costs as hereinafter provided, (ii) the closing prorations
and adjustments to be made pursuant to ARTICLE 7 below, and
(iii) the deposits to be delivered to Senior Lender in order to satisfy
the Financing Condition, over the sum of the Earnest Money (such amount payable
by Purchaser being referred to hereinafter as the “Balance”).

 

2.3           Escrow Agreement. The Earnest Money shall be paid
to and held in escrow by Title Guaranty Escrow Services, Inc., 235 Queen
Street, Honolulu HI 96813, Attn. Barbara Paulo, Vice President (the “Escrow Agent”) pursuant to the
Escrow Agreement until the Closing or sooner termination of this Agreement.

 

2.4           Allocation of Purchase Price. For purposes of
filing the Report of Bulk Sale or Transfer (Form G-8A), Seller and Purchaser
shall report “Inventory of Stock in Trade” based upon the original net invoice
price paid by Seller for such inventory.

 

5

 

ARTICLE 3

 

TITLE

 

3.1           Title Commitment and Survey.

 

3.1.1                  Title Commitment. No later than two
(2) business days after the Effective Date, Purchaser shall order a
current title report issued by Chicago Title Insurance Company (the “Title Insurer”), ordered through the
Title Insurer’s National Commercial Services Office in San Diego,
California using Title Guaranty of Hawaii, Inc. as their local agent, showing
title to the Property and Improvements (as vested in Seller) and a commitment
(subject to standard conditions) to insure such title to the Property and
Property Improvements in Purchaser upon the Closing by the issuance of an ALTA
form of standard coverage policy of owner’s title insurance in the amount of
the Purchase Price (collectively, the “Title Commitment”).
Purchaser shall have the right to require the issuance of extended coverage
and/or additional endorsements to such title policy at its sole expense, if
Purchaser deems such endorsements reasonably necessary for its protection.

 

3.1.2                  Survey. Seller has delivered to Purchaser an
ALTA/ACSM land title survey of the Property and Improvements dated
April 25, 2008 (the “Existing Survey”),
prepared by Walter P. Thompson, Inc. 
Purchaser shall have the right to have the Existing Survey updated and
any such updated survey obtained at or prior to the delivery of the Election
Notice is hereinafter referred to as the “New Survey”
).

 

3.2           Title Review.

 

3.2.1                  Generally. 
All matters affecting title to the Property as of the date of the
Election Notice (including any matters shown in the Existing Survey or any New
Survey) are “Permitted Exceptions;” provided, however, that in no event will
any mortgage, deed of trust, financing statements, tax liens or judgments,
mechanics’ or suppliers’ lien resulting from work performed by or on behalf of
Seller, or other monetary lien in a liquidated amount made by or on behalf of
Seller encumbering any portion of the Property or Improvements (“Seller Liens”) constitute a
Permitted Exception. Notwithstanding the foregoing, the following shall be
deemed to be Permitted Exceptions and not to be Seller Liens: (i) the lien
securing the existing first mortgage lien, as modified as described below in
Section 6.8 in satisfaction of the Financing Condition, and (ii) the
lien for non-delinquent taxes or other amounts to be prorated as set forth in
Section 7.1.6.

 

3.2.2                  Objections. 
If Purchaser finds any exceptions to the title other than (i) the
Permitted Exceptions, (ii) the Seller Liens (which will be paid by Seller
at Closing) or (iii) such other matters as are provided herein to be or
become Permitted Exceptions, Seller shall have five (5) days after receipt
of Purchaser’s notice (the “Title Cure Period”)
in which to elect, by written notice to Purchaser, either (I) to cure Purchaser’s
objections, or (II) not to cure Purchaser’s objections; provided, however,
notwithstanding the foregoing, Seller shall have no obligation whatsoever to
cure or attempt to cure any of Purchaser’s objections, except for Seller Liens,
unless it affirmatively elects in writing to cure Purchaser’s objections. In
the event that Seller fails to provide such written notice of its election to
proceed under either clause (I) or (II) above, Seller shall be deemed to have
elected clause (II) above.

 

(a)           If Purchaser provides objections and all of Purchaser’s
objections are not cured (or agreed to be cured by Seller prior to Closing) for
any reason, then, within five (5) days after the last day of the Title
Cure Period, Purchaser shall, as its sole and exclusive remedy, waiving all
other remedies, either: 

 

6

 

(x) terminate this
Agreement by giving a termination notice to Seller, at which time Escrow Agent
shall return the Earnest Money to Purchaser and the parties shall have no
further rights, liabilities, or obligations under this Agreement (other than
those that expressly survive termination); or (y) waive the uncured
objections by proceeding to Closing and thereby be deemed to have approved the
Purchaser’s title as shown in the Title Commitment, the title exception
documents, the Existing Survey, any New Survey, and any such uncured objections
(excluding Seller Liens) shall become “Permitted Exceptions”.

 

(b)           If Seller does not timely receive notice of Purchaser’s
election to terminate under this Section, Purchaser will be deemed to have
waived the uncured objections and to approve the title as shown in the Title
Commitment, the title exception documents, the Existing Survey, any New Survey,
and such uncured objections shall become Permitted Exceptions.

 

(c)           In addition to those matters hereinabove described,
Permitted Exceptions will include: (a) all applicable laws, rules,
decisions and regulations, including without limitation, public building,
environmental, special management area, land use, zoning and subdivision laws,
landmark, historic and wetland designations, and other public restrictions and
regulations, and all amendments thereof and additions thereto; (b) the
Leases to the extent assignable; (c) any liens for non-delinquent real
estate taxes, water charges, sewer rents, and the like, provided that an apportionment
of them is made at the Closing as set forth in Section 7.1; and
(d) any assessment or other public, governmental or quasi governmental tax
or charge that constitutes a lien on the Project as of or after the Closing but
not due and payable until after the Closing; provided that an apportionment of
the same is made at Closing.

 

3.3           New Title Matters.

 

(a)           If any update of the Title Commitment or the New Survey
obtained by Purchaser prior to Closing shall show any exceptions that are not
Permitted Exceptions or contain any additional requirements not shown in the
Title Commitment to which Purchaser objects within five (5) business days
following Purchaser’s receipt of notice thereof together with legible copies of
related recorded documents, Seller shall have three (3) business days from
receipt of Purchaser’s written objection notice to notify Purchaser which
additional matters Seller agrees to cure, provided that Seller’s failure to
provide any written notice shall be deemed requisite notice to cure none.
Purchaser shall then have two (2) business days from receipt of Seller’s
notice of which additional matters Seller agrees to cure to either
(i) accept by written notice to Seller the status of title, subject to
Seller’s obligation to cure any matters that Seller has agreed to cure and
subject to Title Insurer’s obligation to insure over any matters over which
Title Insurer has agreed to insure (if Title Insurer has so agreed and the same
is reasonably acceptable to Purchaser), or to waive the additional matters and
proceed to Closing, or (ii) terminate this Agreement by written notice to
Seller, and in the event of such termination the Earnest Money (less Purchaser’s
share of 

 

7

 

any escrow charges) shall be
returned to Purchaser and the parties shall have no further rights, liabilities
or obligations under this Agreement (other than those that expressly survive
termination).

 

(b)           If Purchaser does not terminate this Agreement as a result
of the application of the provisions referenced to in the previous sentence,
then (i) this Agreement shall remain in full force and effect in
accordance with its terms, and (ii) Purchaser shall have no right to
terminate this Agreement and to receive a refund of the Earnest Money for any
matter described in this Section. Notwithstanding the foregoing, all Seller
Liens must be satisfied by Seller on or prior to the Closing Date.

 

3.4           Title Insurance. At Closing, Purchaser shall cause
the Title Commitment to be updated for purposes of issuance of an ALTA Owner’s
Policy of Title Insurance (the “Owner’s Policy”)
insuring fee simple title to the Property and the Improvements with such
endorsements as have been agreed to by Purchaser and the Title Insurer during
the Due Diligence Period.

 

ARTICLE 4

 

RISK OF LOSS

 

4.1           Casualties.

 

4.1.1                  Material Casualty. If any “Material” (as
defined below) damage to the Property and Improvements shall occur prior to the
Closing Date by reason of fire, windstorm, earthquake, hail, explosion or other
casualty, Purchaser may elect to either (i) terminate this Agreement by
giving written notice to Seller, in which event the Earnest Money shall be
returned to Purchaser and neither party shall have any further Obligations or
liability whatsoever to the other hereunder (except as otherwise expressly
provided herein) or (ii) close without adjustment to the Purchase Price
(in which event (i) Senior Lender shall credit against the amounts payable
by Purchaser to Senior Lender pursuant to the Financing Condition, only, any
applicable deductible amount and the proceeds of insurance will be held by the
Senior Lender pursuant to its first mortgage, as modified in satisfaction of
the Financing Condition). If prior to Closing a Material portion of the
Property shall be damaged or destroyed and such casualty is not then covered by
Seller’s insurance, then either Seller or Purchaser may terminate this
Agreement, in which event the Earnest Money (less Purchaser’s share of escrow
charges) shall be returned to Purchaser and neither party shall have any
further obligations or liability to the other hereunder (except as otherwise
expressly provided herein).

 

4.1.2                  Casualty Not Material. If any damage that is
not Material shall occur prior to Closing, the amount of any applicable
deductible under Seller’s insurance policies shall be credited against the
amounts payable by Purchaser to Senior Lender pursuant to the Financing
Condition and the net proceeds of any payment to Seller under such insurance
policies (including business interruption proceeds for any period after the
Closing Date to the extent that Purchaser shall suffer the loss for which such
proceeds were paid) shall be applied toward such payments to the extent such
insurance payments have been received by Seller or Seller shall assign to
Purchaser all of Seller’s right, title and interest in any such payments to the
extent such 

 

8

 

insurance payments have not been received by Seller.
If any damage that is not Material shall occur prior to Closing and such
casualty is not then covered by Seller’s insurance, then this Agreement shall
remain in effect, and the amount reasonably anticipated to be required to
restore the Project from such casualty shall be credited against the amounts
payable by Purchaser to Senior Lender pursuant to the Financing Condition.

 

4.2           Takings. If, prior to the Closing Date, any portion
or all of the Property is taken by eminent domain or by an act of governmental
authority, Seller shall promptly give Purchaser written notice thereof, and the
following shall apply:

 

4.2.1                  Material Taking. If a Material part of the
Property is taken, Purchaser shall have the option of either (i) (A)
applying the net proceeds of any condemnation award toward the payment of the
amounts payable by Purchaser to Senior Lender pursuant to the Financing
Condition to the extent such condemnation awards have been received by Senior
Lender, or (B) receiving an assignment from Seller of Seller’s right, title and
interest in any such awards to the extent such condemnation awards have not
been received by Seller, or (ii) terminating this Agreement by delivering
written notice of such termination to Seller. In the event that Purchaser
elects to terminate this Agreement, the Earnest Money shall be returned to
Purchaser whereupon this Agreement shall terminate and neither party hereto
shall have any further rights or obligations hereunder (except as otherwise
expressly provided herein).

 

4.2.2                  Taking Not Material. If a part of the Property
that is not Material is taken by an act of governmental authority, neither
party shall have any right to terminate this Agreement, and the parties shall
nonetheless proceed to the Closing in accordance with this Agreement, without
any abatement of the Purchase Price or any liability or obligation on the part
of Seller by reason of such taking, provided, however, that Seller shall, at
the Closing, assign and turn over, and Purchaser shall be entitled to receive
and keep, the net proceeds of any award or other proceeds of such taking that
may have been collected by Seller as a result of such taking and all claims
related thereto.

 

4.3           Materiality.
For the purposes hereof, “Material”  shall mean any damage or destruction to the
Project that would (a) take more than one hundred twenty (120) days to
repair; (b) result in the aggregate cost to repair and the cost due to
business interruption being in excess of Seven Hundred Fifty Thousand Dollars
($750,000.00); (c) render the lobby, reception area or front desk
unavailable for use for a period longer than thirty (30) days following the
scheduled Closing; (d) materially interfere with the operation of the
Project for a period longer than thirty (30) days following the scheduled
Closing; or (e) any condemnation of any portion or all of the Property and
Improvements that materially interferes with the current operation of the
Hotel, including any taking that (i) eliminates the sole or any required
means of legal ingress and/or egress from the Property, to public roads or
adjacent beach or shoreline, with no comparable, convenient, legal substitute
ingress and/or egress being available, or (ii) that results in a loss of
such parking on the Property as renders the Property noncompliant with then
current zoning and similar laws. The time or cost to repair any casualty damage
and the cost due to business interruption will be determined based on a written
good faith estimate by a Qualified Third Party setting forth such Qualified
Third Party’s estimate of the cost and time to repair such damage or
destruction, as confirmed in writing (on an estimated basis, only) by a
reputable general contractor willing and able to perform such work. For this
purpose, a “Qualified Third Party” 

 

9

 

shall
mean a professional cost estimator or insurance adjuster selected by Seller and
approved by Purchaser, which approval shall not be unreasonably withheld.

 

4.4           Notice. Within two (2) days upon learning
thereof, Seller shall give Purchaser written notice of any condemnation, damage
or destruction of the Property occurring prior to the Closing.

 

ARTICLE 5

 

INSPECTION AND CONDITION
OF PROJECT

 

5.1           Purchaser’s Inspection.

 

5.1.1                  Inspection. Seller shall, upon receipt of
reasonable notice from Purchaser, request that the Receiver cause Operator to
permit Purchaser to come upon the Property for the purpose of making such
non-destructive inspections as Purchaser shall deem necessary or desirable.

 

5.1.2                  Seller Deliveries. Promptly after the
execution of this Agreement, Seller shall authorize the Receiver to make
available to Purchaser, to the extent in the possession or control of Receiver,
Seller and/or Operator, all materials, reports, studies, permits or similar
items related to the Project, including but not limited to the following, in
order to facilitate Purchaser’s review:

 

(a)                                  Soils,
geotechnical and environmental reports;

 

(b)                                 The title
policy issued to Seller for the Property and Improvements and the Existing
Survey;

 

(c)                                  Topographic
maps of the site;

 

(d)                                 Development-related
applications submitted to governmental authorities, if any, and any
resolutions, recorded agreements, side letters or other agreements or
correspondence related thereto;

 

(e)                                  Documentation
relating to environmental mitigation and monitoring requirements, if any;

 

(f)                                    As-built plans
and specifications;

 

(g)                                 Copies of real
estate tax bills for the past three (3) years;

 

(h)                                 Operating
Statements for the past three (3) years;

 

(i)                                     Repair and
maintenance reports for the past three (3) years;

 

(j)                                     Equipment
warranties and operating manuals;

 

10

 

(k)                                  Existing Senior
Lender loan documents;

 

(l)                                     Copies of
utility bills for the most recent twelve (12) months;

 

(m)                               Copies of
Governmental Permits;

 

(n)                                 A copy of the
most recent inventory for the Hotel;

 

(o)                                 Shoreline
surveys;

 

(p)                                 Any reports or
studies regarding historical trails or archaeological matters;

 

(q)                                 Copies of all
insurance policies in place with respect to the Project; and

 

(r)                                    The documents
contained on the due diligence request list attached hereto as Exhibit F.

 

Purchaser
acknowledges that the documents assembled and/or delivered by Seller pursuant
to this Section are done for the purpose of aiding in Purchaser’s review
and, absent intentional concealment or a breach of one of the express
representations of Seller set forth in ARTICLE 13 below, Seller
shall have no liability for any inaccuracies, errors or omissions in such
materials.

 

5.1.3                  Insurance Requirements. Purchaser’s right of
inspection pursuant to this Section 5.1 shall be subject to the
rights of tenants under the Leases and other occupants and users of the
Property. Before entering upon the Property, Purchaser shall furnish to Seller
a certificate of insurance evidencing: (a) general liability insurance
coverage of not less than One Million Dollars ($1,000,000.00) per occurrence
and Two Million Dollars ($2,000,000.00) in the aggregate, (b) commercial
automobile insurance coverage of not less than One Million Dollars ($1,000,000.00)
per occurrence which shall cover liability arising in connection with any
automobile at the Property (including owned, hired and non-owned automobiles),
and (iii) workers’ compensation insurance as required by statute in the
state where the Property is located and employer’s liability insurance of not
less than One Million Dollars ($1,000,000.00) per accident. With respect to the
coverage required by subsections (a) and (b) immediately
preceding, each of Receiver, Seller, Gaylord Hotels, Inc. (“Gaylord”), RREEF Global
Opportunities Fund II, LLC Wells Fargo, N.A., as trustee for the Mortgage
Pass-Through Certificates Series 2006-XLF and Morgan Stanley Mortgage Capital
Holdings LLC (collectively, the “Lenders”)
and their respective agents and affiliates shall be named as additional
insureds. Further, such insurance coverage shall (i) be issued by an
insurance company licensed to do business in the state where the Property is
located having a rating of at least “AVIII” by A.M. Best Company, (ii) be
primary and any insurance maintained by Seller as to costs, expenses or
liabilities arising from Purchaser’s inspection shall be excess and
noncontributory, (iii) include contractual liability coverage with respect
to Purchaser’s indemnity obligations set forth in this Agreement (it being
understood, however, that the availability of such insurance shall not serve to
limit or define the scope of Purchaser’s indemnity obligations under this
Agreement in any manner whatsoever), and (iv) not contain any exclusions
for work performed at hotel properties, or for “insured versus insured” claims
as respects any potential claim by Seller against Purchaser. Such certificate
shall also provide that the coverage may not be cancelled, non-

 

11

 

renewed or reduced without at least thirty (30) days’
prior written notice to Seller. Seller shall have the right to be present at
any or all inspections. Neither Purchaser nor its agents or representatives
shall contact any tenants without the prior consent of Seller, which consent
shall not be withheld or delayed unreasonably. No inspection shall involve the
taking of samples or other physically invasive procedures without the prior
written consent of Seller in its reasonable discretion, nor shall the same
either unreasonably interfere with the normal operations of the Property or
require Operator’s personnel to work overtime hours to accommodate Purchaser.
Such right of inspection shall continue from the Effective Date until the first
to occur of (i) the termination of this Agreement and (ii) the
Closing.

 

5.1.4                  Interview Rights. In order to facilitate
Purchaser’s inspection, Seller will request that the Receiver cause the
Operator to permit Purchaser, or its representatives, upon not less than two
(2) business days’ notice to Seller, to interview and otherwise meet with
all Hotel executive managers after delivery of the Election Notice; provided,
however, that Seller will request such interview rights with the general
manager and director of sales of the Hotel following the Effective Date.
Seller, or its representative will have the right to be present at any of such
meetings, but Purchaser may proceed with the meetings if Seller is provided the
required notice and does not attend the meeting.

 

5.1.5                  As Is Condition. Subject to the terms of
this Agreement, including Seller’s covenants in ARTICLE 8 and
Seller’s representations and warranties in ARTICLE 13, DELIVERY OF
THE PROJECT AT CLOSING WILL BE AS IS, WHERE IS AND WITH ALL FAULTS.

 

5.1.6                  Disclaimer. Except for the representations
and warranties of Seller contained in this Agreement or in the Closing
Documents executed by Seller, SELLER HAS DISCLAIMED ANY EXPRESS OR IMPLIED
WARRANTIES WITH RESPECT TO THE PROJECT OR ANY ECONOMIC RESULTS TO BE OBTAINED
IN THE FUTURE FROM THE OWNERSHIP AND OPERATION OF THE PROJECT OR ANY OF THE
OTHER MATTERS DESCRIBED ABOVE.

 

EXCEPT
FOR THE EXPRESS REPRESENTATIONS AND WARRANTIES MADE BY SELLER IN THIS AGREEMENT
OR THE CLOSING DOCUMENTS EXECUTED BY SELLER, SELLER MAKES NO WARRANTY, EXPRESS
OR IMPLIED, AS TO THE PROJECT, THE CONDITION OR STATE OF REPAIR OF THE PROJECT
OR ANY PORTION THEREOF, INCLUDING, BUT NOT LIMITED TO ANY PHYSICAL, ENGINEERING
OR ENVIRONMENTAL CONDITION OF THE PROJECT, OR OF VISIBLE OR HIDDEN DEFECTS IN
MATERIAL, WORKMANSHIP OR CAPACITY OF THE PROJECT OR ANY PORTION THEREOF, OR OF
ANY ECONOMIC RESULTS TO BE OBTAINED OR PREDICTED IN THE OWNERSHIP AND OPERATION
OF THE PROJECT, INCLUDING, BUT NOT LIMITED TO ANY REVENUES GENERATED BY THE PROJECT
AND EXPENSES INCURRED IN ITS OPERATION, AND THE OTHER MATTERS DESCRIBED ABOVE,
AND THERE ARE NO IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE AS TO THE PROJECT OR ANY PORTION THEREOF.

 

12

 

As
used herein the term “Closing Documents”
shall mean the Deed, the Bill of Sale and Lease Assignment (as such are defined
in Section 6.1 below) or any other document, certificate or
instrument delivered by Seller to Purchaser at or in connection with the
Closing. This Section shall survive the Closing indefinitely.

 

5.2           No Obligation to Improve. Except as Seller may
otherwise agree herein, Purchaser acknowledges and agrees that Seller is under
no obligation to alter, repair (other than in the usual course of business and
normal wear and tear excluded), or improve the Project or any portion thereof.

 

5.3           Purchaser’s Responsibility and Indemnity. Purchaser
is solely responsible for and hereby agrees to indemnify, defend (with counsel
acceptable to Seller) and hold harmless Seller, Gaylord, RREEF Global
Opportunities Fund II, LLC, the Lenders and each of their respective past,
present and future affiliates from and against (a) all injuries to persons
and (b) physical damage to the Project that, in either case, results from
the acts or omissions of Purchaser or its representatives, agents, designees
and/or contractors during any inspection, test or investigation conducted by
any such parties in connection with Purchaser’s inspection of the Project or
any part thereof. Purchaser hereby acknowledges and agrees that it shall carry,
or cause its representatives, agents, designees and/or contractors to carry
sufficient insurance to cover its obligations pursuant to this Section 5.3.
In the event of physical damage to the Project covered by this indemnity,
Purchaser shall repair such damage to substantially the condition as existed
immediately prior to such inspection. Notwithstanding anything to the contrary
contained in this Agreement, Purchaser’s indemnification obligations shall not
include injuries or physical damages that result from existing conditions
discovered by Purchaser or that are caused by the negligence or willful
misconduct of Seller or Operator. The indemnification obligation of Purchaser
in this Section 5.3 shall survive the Closing or earlier
termination of this Agreement.

 

5.4           Due Diligence Period.

 

(a)           Purchaser shall have until 5:00 PM Hawaii Standard Time on
the date that is thirty (30) days from the Effective Date (the “Due Diligence Period” ) within which
to inspect the Project.

 

(b)           If, prior to the expiration of the Due Diligence Period,
(i) Purchaser determines that the Project is suitable for its purposes, in
Purchaser’s sole and absolute discretion, (ii) Purchaser delivers to
Seller a written notice (the “Election Notice”
) of its election to proceed with its purchase hereunder, and
(iii) Purchaser deposits the additional earnest money as provided in Section 2.1(c),
then this Agreement shall continue in effect. Promptly after receipt of the Election
Notice Seller shall notify the Receiver of the same and request that the
Receiver (1) send to the Operator a notice (the “Management
Termination Notice”) terminating the Management Agreement on the
first business day that is at least seventy-five (75) days thereafter (i.e.,
the Closing Date), directing the Operator to give the employees at the
Property, the Director of the State of Hawaii Department of Labor and
Industrial Relations and the Mayor of the County of Kauai the notices required
pursuant to the Hawaii Dislocated Worker Act (Chapter 394B, Hawaii Revised
Statutes “DWA”) and the Workers 

 

13

 

Adjustment and Retraining
Notification Act (29 U.S.C. §2101 et seq — “WARN”),
and directing the Operator to terminate all employees at the Property (except
such employees who may continue as employees of Operator at other properties
following Closing) as of the Closing Date and (2) give a copy of such
notice to each of Seller and Purchaser.

 

(c)           If Purchaser shall fail to deliver the Election Notice and
deposit with Escrow Agent the additional earnest money as provided in
Section 2.1(c) prior to the expiration of the Due Diligence Period,
then the Earnest Money theretofore held by Escrow Agent shall be returned to
Purchaser, net of Purchaser’s share of escrow fees, and upon such return this
Agreement shall terminate and neither party shall have any further rights or
obligations under this Agreement, except those that expressly survive
termination.

 

ARTICLE 6

 

CLOSING PROCEDURE AND
CONDITIONS PRECEDENT

 

6.1           Seller’s Performance. At Closing, Seller shall,
when appropriate, execute and acknowledge, and deliver to Escrow Agent,
pursuant to a separate letter of escrow or the applicable party described
below, all of the following, the delivery of which shall be a condition to
Purchaser’s obligation to consummate the purchase of the Project:

 

6.1.1                  Deed. Execute, acknowledge and deliver to
Escrow Agent for recording a deed in the form attached hereto as Exhibit C
(the “Deed”) conveying the Property, Improvements,
and any other portion of the Project comprised of real estate in compliance
with ARTICLE 3 hereof.  If
the New Survey reflects a discrepancy from the legal description pursuant to
which Seller took title to the Property, Seller shall upon request of Purchaser
execute a quitclaim deed referencing said survey legal description.

 

6.1.2                  Bill of Sale and Assignment. Execute,
acknowledge (to the extent applicable) and deliver to Escrow Agent: (a) an
Assignment and Assumption of Leases and Deposits in the form attached hereto as
Exhibit D that transfers and assigns the Leases and Deposits to
Purchaser, and (b) a Bill of Sale, General Assignment and Assumption in
the form attached hereto as Exhibit E (the “Bill
of Sale”) that transfers and assigns the Personal Property,
Advance Bookings, Plans and Studies, Warranties and Guaranties, and the
Operating Contracts identified on Schedule 1.1.7 (as well as
additional Operating Contracts, if any entered into subsequent thereto in
accordance with the provisions of ARTICLE 8) and purchase orders in
the amount of less than $10,000 not listed on Schedule 1.1.7
(provided, however, Seller shall not be obligated to list or identify such
purchase orders if they were entered into in the ordinary course of business
and the aggregate amount thereof does not exceed a sum identified to Purchaser
in writing by Seller or Operator on or before the Seller Delivery Date or, if
no such identification is made, $10,000.00), the Equipment Leases, Governmental
Permits, Books and other Personal Property and Intangible Property, to
Purchaser. If the Project includes any owned vehicles, Seller shall deliver the
Certificates of Title therefor assigned to Purchaser in accordance with Hawaii
law (the “Vehicle Certificates” ) to
the extent in Seller’s possession or control.

 

14

 

6.1.3                  Good Standing, Tax Clearance Certificates for
Seller. Deliver to Escrow Agent (a) Certificates of Good Standing for
Seller issued by (i) the Department of Commerce and Consumer Affairs of
the State of Hawaii, and (ii) the State of Delaware, and (b) a Tax
Clearance Certificate for Seller issued by the Department of Taxation of the
State of Hawaii, all of which shall be dated not earlier than ten
(10) days prior to the Closing Date.

 

6.1.4                  HARPTA Affidavit. Execute and deliver to
Escrow Agent a Hawaii Department of Taxation Form N 289 (or any successor
to such form) to the effect that Seller is a “resident person” as that term is
defined in Section 235-68 of the Hawaii Revised Statutes or other evidence
reasonably satisfactory to Purchaser that the transaction is exempt from
withholding under HRS Chapter 235.

 

6.1.5                  Originals. Deliver to Purchaser the original
Governmental Permits, Books, Plans and Studies (including the “As Built” plans
and specifications for the Project), Leases, Equipment Leases, Warranties and
Guaranties, and Operating Contracts being assigned or transferred at Closing,
to the extent originals are in the possession or control of Seller or its
agents, including Operator, and if any of them are not in the possession of
Seller or its agents, then copies of such documents, to the extent they are in
Seller’s or Operator’s possession or control.

 

6.1.6                  Notices of Closing. Execute and deliver to
Purchaser notices of the Closing to Tenants, utility companies, and such other
third parties as Purchaser may deem reasonably necessary or shall reasonably
request, all in such form as Purchaser and Seller shall reasonably agree.

 

6.1.7                  FIRPTA Certificate. Execute and deliver to
Escrow Agent a certificate with respect to Section 1445 of the Internal
Revenue Code stating that Seller is not a foreign entity as defined in the
Internal Revenue Code and I.R.S. Regulations.

 

6.1.8                  Seller’s Authority Documents. Execute and
deliver to Escrow Agent copies of resolutions of the requisite members or
managers of Seller consenting to this sale, certified as true, complete and
unrevoked by the managing member of Seller, evidencing the power and authority
of Seller to enter into and consummate this Agreement and to execute and
deliver all documents, instruments or certificates required to be executed and
delivered by Seller.

 

6.1.9                  Closing Statement. A counterpart, executed
by Seller, of the Preliminary Closing Statement under Section 7.2.1
conforming to the payments, apportionments and adjustments to be made pursuant
to the provisions of this Agreement.

 

6.1.10                Payment of Certain Costs.
Credit against the payment of the Purchase Price or other costs and expenses
owed by Purchaser hereunder or in satisfaction of the Closing Condition, or
deliver to the Escrow Agent or other applicable party, the amount of money
required for the payment of such costs, expenses and other items as are
required to be paid by Seller hereunder, or evidence of such payment having
been made.

 

6.1.11                Other Assets. Seller
shall deliver or cause to be delivered to Purchaser at the Project, to the
extent they are in Seller’s or the Receiver’s possession or control, 

 

15

 

(a) all keys and combinations to all locks for
the Project, and (b) any other asset, item or component of the Project
contemplated hereby.

 

6.1.12                Advance Bookings. Seller
shall request that the Receiver cause to be delivered to Purchaser a current
list of Advance Bookings as of the Adjustment Time.

 

6.1.13                Termination of Management
Agreement. Deliver to Purchaser evidence reasonably satisfactory to
Purchaser that the Management Agreement has been terminated.

 

6.1.14                Termination of UCC-1
Financing Statements. Deliver to Purchaser evidence reasonably satisfactory
to Purchaser that all UCC-1 Financing Statements (other than those showing
Senior Lender as the Secured Party to the extent the existing mortgage
financing is assumed by Purchaser), except those relating to Capital Leases,
filed against any of the Project will be released in full upon Purchaser’s
payment of the Purchase Price.

 

6.1.15                Tenant Estoppel Letters.
Deliver to Purchaser such of the Tenant Estoppel Letters as may have been
signed by tenants and received by Seller.

 

6.2           Purchaser’s Performance. At Closing, Purchaser
shall, when appropriate, execute and acknowledge and deliver to Escrow Agent or
the applicable party described below, or to such other account or accounts
designated by Seller pursuant to Section 2.1 of this Agreement, all
of the following, the delivery and acknowledgement of which shall be a
condition to Seller’s obligation to consummate the sale of the Project.

 

6.2.1                  Payment of Purchase Price. Not later than
two (2) business days prior to the Closing, pay to Escrow Agent the
Balance and such other sums as Purchaser is required to deposit hereunder or in
satisfaction of the Financing Condition by wire transfer of immediately
available federal funds.

 

6.2.2                  Payment of Certain Costs. Credit as an
addition to the Purchase Price, or deliver to the Escrow Agent or other
applicable party, the amount of money required for the payment of such costs,
expenses and other items as are required to be paid by Purchaser hereunder, or
evidence of such payment having been made.

 

6.2.3                  Assumption. Deliver to Escrow Agent duly
executed and acknowledged (to the extent applicable) Lease Assignments and Bill
of Sale in the forms attached hereto as Exhibits D and E,
respectively.

 

6.2.4                  Certification. A copy of the resolutions or
other evidence of authority of Purchaser, certified as true, complete and
unrevoked by an officer or managing member of Purchaser, approving the
transaction contemplated herein and evidencing and confirming the power and
authority of the party or parties executing and delivering any instruments,
documents or certificates on behalf of Purchaser.

 

16

 

6.2.5                  Closing Statement. A counterpart, executed
by Purchaser, of the Preliminary Closing Statement (as required by Section 7.2.1)
conforming to the payments, apportionments and adjustments to be made pursuant
to the provisions of this Agreement.

 

6.2.6                  Notices of Closing. Notices of the Closing
to tenants, utility companies, and such other third parties as Seller may deem
reasonably necessary or shall reasonably request, all in such form as Purchaser
and Seller shall reasonably agree.

 

6.2.7                  A Certificate of Good Standing for Purchaser.
At Closing, Purchaser shall deliver such certificate, issued by each of the
DCCA of the State of Hawaii and the relevant agency of the State of Purchaser’s
organization, as applicable, dated not earlier than twenty (20) days prior to
the Closing Date.

 

6.2.8                  Financing Documents. Such other documents
and instruments as may be reasonably required to satisfy the Financing
Condition.

 

6.2.9                  Notice of Mortgage, Pledge or Purchase. At
Closing Purchaser shall deliver to Escrow Agent a signed Notice of Mortgage,
Pledge or Purchase (Form D-37).

 

6.3           Concurrent Transactions. All documents or other
deliveries required to be made by Purchaser or Seller at Closing, and all
transactions required to be consummated concurrently with Closing, shall be
deemed to have been delivered and to have been consummated simultaneously with
all other transactions and all other deliveries.

 

6.4           Conditions to Obligations of Purchaser. The
obligations of Purchaser to execute and deliver the applicable Closing
Documents, to pay the Purchase Price and to perform Purchaser’s other
obligations at the Closing under this Agreement are and shall be subject to the
satisfaction of each of the following conditions at or prior to the Closing,
unless otherwise specified:

 

(a)           Title to the Property and the Improvements shall be free
of encumbrances other than Permitted Exceptions and the Title Insurer shall be
willing to issue the Owner’s Policy at regular rates for an amount of insurance
equal to the Purchase Price, and (ii) title to all items of the Project
not consisting of the Property and the Improvements shall be free and clear of
all liens, encumbrances, and security agreements, except the terms of the
Equipment Leases;

 

(b)           All of the representations and warranties of Seller
contained in this Agreement shall be true and correct in all material respects
on the Closing Date with the same effect as if made on and as of such date;

 

(c)           The Financing Condition (described below) has been
satisfied;

 

(d)           Seller shall have performed, observed, and complied in all
material respects with all covenants, agreements, and conditions required by
this Agreement to be performed, observed, and complied with on Seller’s part
prior to 

 

17

 

or as of the Closing Date,
including the performance and deliveries required by Section 6.1;

 

(e)           The Governmental Permits, to the extent transferrable,
shall have been effectively assigned or transferred to Purchaser;

 

(f)            The Liquor License shall have been transferred to
Purchaser or its designee, or Purchaser or its designee shall have obtained a
new or temporary liquor license;

 

(g)           Subject to the terms of ARTICLE 4, there shall
not have been any material adverse change in the condition of the Project or
any material adverse change or proposed material adverse change in any Laws
applicable to the Project after the delivery of the Election Notice;

 

(h)           Seller shall have delivered the Bookings Update, the
Vehicle Certificates and Tenant Estoppel Certificates signed by each tenant at
the Project;

 

(i)            The “Mortgaged Property” (as such term is defined in the
order appointing the Receiver) shall have reverted to Seller (from the
Receiver) sufficient to permit delivery of possession of the Project to
Purchaser at the Closing (the “Receiver Condition”);
and

 

(j)            The Department of Taxation certificate described in Section 6.9
shall have been delivered to Purchaser.

 

6.5           Conditions to Obligations of Seller. The
obligations of Seller to execute and deliver the applicable Closing Documents
and to perform Seller’s other obligations at the Closing under this Agreement
are and shall be subject to the satisfaction of each of the following
conditions at or prior to the Closing, unless otherwise specified:

 

(a)           All of the representations and warranties of Purchaser
contained in this Agreement shall be true and correct in all material respects
on the Closing Date with the same effect as if made on and as of such date;

 

(b)           The Financing Condition has been satisfied;

 

(c)           Senior Lender shall have received (i) clearance for
Purchaser, its guarantors and related entities from the U.S. Treasury’s Office
of Foreign Assets Control and (ii) updated flood zone certifications
acceptable to Senior Lender in its sole discretion;

 

(d)           Purchaser shall have performed, observed and complied in
all material respects with all covenants, agreements, and conditions required
by this Agreement to be performed, observed, and complied with on Purchaser’s
part prior to or on the Closing Date, including the performance and deliveries
required by Section 6.2; and

 

18

 

(e)           The Receiver Condition shall have been satisfied; and

 

(f)            The Senior Lender shall have made available to Seller
such sums as may be required to permit Seller to pay, discharge or deposit any
amounts required to be paid, discharged or deposited hereunder, it being
acknowledged by Purchaser that Seller has no access to such funds except as so
made available through Senior Lender.

 

6.6           Failure of Conditions of Purchaser or Seller. In
the event of failure of any or all of the conditions precedent in either Section 6.4
or 6.5 that is not waived by or deemed to be approved by Purchaser or
Seller, as applicable, within the time periods provided, and which failure is
not a result of a breach of or default under this Agreement by Seller (as to
conditions under Section 6.5) or Purchaser (as to conditions under Section 6.4),
this Agreement shall terminate without liability of any kind to either party
(other than any liability that expressly survives termination of this
Agreement), whereupon the Escrow Agent shall immediately return the Earnest
Money to Purchaser. If the failure of such condition is the result of or
relates to a breach or default by Seller or Purchaser, the party not in breach
of or default under this Agreement may pursue its remedies set forth in ARTICLE 11.

 

6.7           Transaction Costs. Each party shall pay all
attorneys’ fees, accounting fees, and other expenses incurred by it in
connection with the transactions contemplated in this Agreement. Seller shall
pay (i) one-half of the fees of the Escrow Agent and (ii) the cost of
the New Survey and the cost of termination of the Management Agreement,
(iii) one-half of the standard owner’s title insurance policy premium, and
(iv) State of Hawaii conveyance tax. Purchaser shall pay (1) the
premium for the Owner’s Policy and the costs of any endorsements or extended
coverage’s obtained by the Purchaser in connection with the Owner’s Policy, in
excess of the amount required to be borne by Seller in accordance with the
preceding sentence, (2) one-half of the fees of the Escrow Agent and
(3) the premiums for the endorsement for the modification to the Lenders’
mortgage and UCC title policies. All other closing costs shall be apportioned
in the manner customary in the county where the Property is located.

 

6.8           Financing Contingency.  Purchaser intends to assume the existing
mortgage loan with Senior Lender on the terms described in Exhibit G
attached hereto or such other terms as may be agreed upon by Purchaser and
Senior Lender — such terms, as modified by Agreement with the Senior Lender
prior to the Election Notice, are hereinafter referred to the “Financing Terms”) in satisfaction of
the Purchase Price.  Purchaser agrees, as
and when requested by Senior Lender, to submit to the Senior Lender such
documents and amounts as may be reasonably required in order to process and/or
commit to such modification of its loan. Purchaser further agrees to take all
commercially reasonable actions required to assume (and modify to the extent
necessary to conform with the Financing Terms) the existing loan related to the
Property currently held by the Senior Lender on the Financing Terms.  If Purchaser takes such commercially reasonable
actions, Purchaser’s obligation to close hereunder is subject to the condition
(the “Financing Condition”) that
the Senior Lender approves the assumption of such loan by Purchaser.

 

6.9           Form G-8A, Report of Bulk Sale or Transfer.
Subject to the Receiver cooperating with Seller by arranging for and causing
the preparation and filing of any Hawaii general excise 

 

19

 

tax and/or transient accommodations tax returns
required under applicable law, Seller shall file the report of bulk sale or
transfer required pursuant to HRS Section 237-43 and obtain prior to the
Closing a copy of the certificate issued by the Department of Taxation (the “Department” ) described in HRS
Section 237-43(b).  Seller has
requested that Senior Lender advance, and Senior Lender has confirmed to Seller
that Senior Lender will advance, and subject to receipt of such advance Seller
shall pay when due the full amount of the taxes required for the Director of
Taxation to issue the certificate to the effect that all taxes, penalties and
interest levied or accrued under title 14 HRS for taxes administered by the
Department of Taxation against the Seller or constituting a lien on the
Property, or any portion thereof, have been paid.

 

ARTICLE 7

 

PRORATIONS AND ADJUSTMENTS

 

7.1           Prorations. At Closing, the following adjustments
and prorations shall be computed as of 12:01 a.m. (all times in this ARTICLE 7
being Hawaii Standard Time) on the Closing Date (hereinafter called the “Adjustment Time”), and the Purchase
Price shall be adjusted to reflect such prorations. All prorations shall be
subject to Section 7.2. All items of revenue, cost and expense of
the Project with respect to the period prior to the Adjustment Time shall be
for the account of Seller. All items of revenue, cost and expense of the
Project with respect to the period after the Adjustment Time shall be for the
account of Purchaser.

 

7.1.1                  Accounts Receivable. Purchaser is not
acquiring accounts receivable relating to the operation of the Hotel prior to
the Adjustment Time, and all such accounts receivable shall remain the property
of Seller.

 

7.1.2                  Accounts Payable. Purchaser shall receive a
credit at Closing in the amount of all accounts payable as of the Adjustment
Time, a list of which shall be provided by Seller to Purchaser at the Closing,
and Purchaser shall pay such accounts payable thereafter.

 

7.1.3                  Cash. Seller shall receive a credit for all
cash in the cash registers, vaults, safes (other than that belonging to guests)
and “petty cash boxes,” certified as complete and accurate by Operator.

 

7.1.4                  Room Revenues. At Closing Seller shall
receive (i) a credit in an amount equal to all charges accrued to the open
accounts of any guests or customers staying at the Hotel as of the Proration
Time for all room nights up to (but not including) the night during which the
Adjustment Time occurs and Purchaser shall be entitled to retain all deposits
made and amounts collected with respect to such charges. The final night’s room
revenue (all revenue related to rooms occupied on the evening preceding the
Closing Date as well as movie revenues and parking for such evening) shall be
adjusted at Closing and Seller shall receive a credit at Closing in such sum as
represents 50% thereof, net of 50% of related credit card company or other commissions
to be deducted therefrom by the remitting party with Purchaser entitled to the
remaining 50% thereof. From and after the Adjustment Time, revenue from the
Hotel attributable to food and beverage and other sales or services shall
belong to Purchaser. Purchaser shall receive a credit at Closing in the amount
of any unpaid sales and/or hotel/motel 

 

20

 

occupancy taxes, travel agent commissions and fees
and similar costs for the period prior to the Adjustment Time with respect to
Hotel guests departing after the Adjustment Time, which Purchaser shall report
and pay to the taxing authority.

 

7.1.5                  Advance Deposits. On the Closing Date Seller
shall provide to Purchaser a complete schedule of post-closing Advance
Bookings, including all confirmed guest reservations listing or advance
reservations for banquets and food services to be provided after the Closing
Date. Seller shall credit to Purchaser the amount of such prepayments and
deposits that have been received by Seller in connection with such
reservations, as well as the amount of any commissions due to credit and
referral organizations relating thereto. Any post-Closing prepayments made to
Seller or Operator on account of services to be provided at the Hotel after the
Adjustment Time shall be forwarded to Purchaser upon receipt.

 

7.1.6                  Taxes, Assessments and Sewer Charges.
Non-delinquent real and personal property taxes, assessments and all other
public or governmental charges (including charges, assessments, liens or
encumbrances for sewer, water, drainage or other public improvements completed
or commenced on or prior to the date of Closing) with respect to the Project
shall be adjusted and apportioned as of the Adjustment Time. Seller
acknowledges its responsibility for the payment at or prior to Closing (or
giving Purchaser credit therefor at Closing) of the items listed in the
preceding sentence that are payable for any time period in which Seller has
title to the Project. If the exact amount of taxes is not known at Closing, the
proration will be based on the prior year’s taxes, subject to adjustment
between the parties upon the receipt of the final bill for taxes of the year in
which the Closing occurs. In the event that a tax appeal for any of the items
described in the first sentence hereof is pending at Closing by Seller,
(i) Seller shall consult with Purchaser regarding the prosecution of such
appeal and shall not settle such appeal without Purchaser’s approval not to be
unreasonably withheld, and (ii) a subsequent adjustment will be made
between Seller and Purchaser based upon a re-proration of real estate taxes in
accordance with the results of such appeal, including, without limitation, the
reasonable costs and fees of any third party, person, or company retained by
Seller to appeal such taxes and assessments. Seller shall be responsible for
all of its federal or local income, franchise, bulk sales tax (if any), sales
or similar taxes applicable to the transaction contemplated by this Agreement.
Seller shall also be responsible for sales, use, hotel, room, occupancy, excise
and similar taxes for the Hotel relating to periods before the Closing Date.
Purchaser shall immediately forward to Seller any tax refunds or payments
belonging to Seller that Purchaser receives. Seller shall immediately forward
to Purchaser any tax refunds or payments belonging to Purchaser that Seller
receives. The adjustments in this Section 7.1.6 shall not be
subject to the final Settlement under Section 7.2.2.

 

7.1.7                  Deposits and Rentals. Purchaser shall
receive a transfer from the Receiver of all Deposits and rents, if any, held by
the Receiver that relate to the period following the Adjustment Time. During
the period from and after the Closing Date, Purchaser shall cause to be
delivered promptly to Seller any and all rents (including actual payments of
operating expenses, tax or insurance reimbursements) accrued but uncollected as
of the Closing Date to the extent subsequently collected by Purchaser;
provided, however, Purchaser and Seller agree that (a) they shall adjust
at Closing only for rentals actually paid under the Leases for the month of
Closing, and (b) Purchaser shall otherwise apply rents received after
Closing under any Lease (including actual payments of operating expenses, tax
or insurance reimbursements) in the 

 

21

 

following order: (i) first, to the rent due
under such Lease for the month in which the Closing occurs, adjusted between
Purchaser and Seller as of the Adjustment Time; (ii) then to Purchaser for
any other arrearages accruing under such Lease subsequent to the Adjustment
Time, and (iii) then, the remainder to Seller to the extent of any accrued
by unpaid rent due from the tenant as of the Adjustment Time. From and after
the Closing Date, Purchaser and Seller shall promptly deliver to the other any
and all rents due under any Lease (including actual payments of operating
expenses, tax or insurance reimbursements) collected from any tenant that are payable
to the other party as set forth herein.

 

7.1.8                  Water Charges Fuel and Utilities. Telephone
contracts and contracts for the supply of water, heat, steam, electric power,
gas, lighting, fuel and any other utility service shall be prorated as of the
Adjustment Time, with Seller receiving a credit for each deposit, if any, made
by Seller as security under any such utility service contracts if the same is
transferable and provided such deposit remains on account for the benefit of
Purchaser (with credit to Seller at Closing in the amount of the deposit).
Notwithstanding the foregoing, Seller shall request each utility company
providing utility service to the Property to cause all utility billings to be
closed and billed as of the Closing Date in order that any utility charges may
be separately billed for the period prior to the Closing Date, in which case no
proration will be made with respect to such charges. In connection with any
proration of utility charges, the parties shall presume that any utility charges
were uniformly incurred during the billing period in which Closing occurs.
Where possible, readings as of the Adjustment Time (or as close thereto as
practicable) will be secured for all utilities on the Closing Date (or as close
thereto as practicable).

 

7.1.9                  Fees for Licenses and Permits. Fees paid or
payable, if any, in the year of Closing for Licenses and Permits to the extent
such Licenses and Permits are transferred to Purchaser shall be adjusted and
apportioned as of the Adjustment Time.

 

7.1.10                Prepaid Expenses. Prepaid
expenses, including without limitation, resort association and subdivision dues
and fees, trade association dues and trade subscriptions, to the extent
transferable and actually transferred to Purchaser, and deposits held by third
parties for the benefit of the Project, to the extent that the same are
assignable and remain on deposit for the benefit of Purchaser, and commissions
of credit and referral organizations to the extent available for Purchaser’s
benefit shall be adjusted and apportioned as of the Adjustment Time.

 

7.1.11                Operating Agreements.
Amounts paid or payable under any continuing Operating Contracts or Equipment
Leases, if any, shall be adjusted and apportioned as of the Adjustment Time.

 

7.1.12                Management Agreement. All
amounts payable to the Operator under the Management Agreement, including all
payments in connection with the termination thereof, shall be the sole
obligation of Seller.

 

7.1.13                Gift Certificates/Discount
Coupons. Purchaser shall receive a credit in the amount of all gift
certificates and discount coupons sold or given away prior to Closing to the
extent not utilized prior to Closing.

 

22

 

7.1.14                Employee Expenses. No
proration shall be made with respect to amounts payable to employees of Seller
or Operator and Purchaser shall have no obligation as to any payments relating
thereto.

 

7.1.15                Intent of Proration
Provisions. The intent of the prorations and adjustments provided for
herein is that Seller shall bear all expenses of ownership and operation of the
Project and shall receive all income therefrom accruing through the Adjustment
Time, and Purchaser shall bear all such expenses and receive all such income
accruing thereafter. To the extent further adjustments are required beyond
those provided for in order to effectuate the intent of this ARTICLE 7,
Purchaser and Seller shall complete the adjustments within the one-hundred
twenty (120) day period as set forth in Section 7.2.2.

 

7.1.16                Miscellaneous. All other
charges and fees customarily prorated and adjusted in similar transactions and
not specifically limited or provided for herein shall be prorated at Closing
and thereafter be assumed by Purchaser (to the extent of the credit received by
Purchaser), except with respect to obligations and agreements that Seller and
Purchaser agree in writing that Purchaser will not assume. In the event that
accurate prorations and other adjustments cannot be made at Closing because
current bills or statements are not obtainable (as, for example, utility
bills), the parties shall prorate on the best available information, subject to
adjustment upon receipt of the final bill or statement.

 

7.2           Procedures for Prorations.

 

7.2.1                  Preliminary Closing Statement. No later than
five (5) days prior to the Closing Date, Purchaser and Seller shall
prepare a schedule of tentative prorations. Any net credit to Seller reflected
in the prorations agreed upon as of Closing, shall be paid by Purchaser to
Seller, and any net credit to Purchaser in the prorations agreed upon as of
Closing shall be paid by Seller to Purchaser, by increasing or reducing the
cash to be paid by Purchaser to Senior Lender at Closing pursuant to the
Financing Condition. All prorations and adjustments shall be made on the
Closing Date based on the best available information. A copy of the schedule of
prorations (the “Preliminary Closing Statement”)
as agreed upon by Purchaser and Seller shall be approved by the parties at
Closing.

 

7.2.2                  Final Settlement. A final settlement (the “Final Settlement”) of Closing
prorations and adjustments shall take place as follows:

 

(a)           No later than 120 days following the Closing Date,
Purchaser shall deliver a schedule of the prorations (the “Final
Closing Statement”) to Seller setting forth Purchaser’s
determination of all adjustments to the Preliminary Closing Statement it
believes are necessary to complete the prorations as set forth in this ARTICLE 7.

 

(b)           Purchaser and Seller shall cooperate in good faith to
reconcile all items included on the Final Closing Statement. The Final Closing
Statement shall be binding and conclusive on all parties hereto, unless within
ten (10) business days after receipt by Seller of the Final Closing
Statement Seller notifies Purchaser in writing that it seeks an adjustment in
the Final Closing Statement, 

 

23

 

and specifies in reasonable
detail the items that it seeks to adjust and the reasons therefor. The parties
shall attempt to resolve such dispute; however, if Purchaser and Seller have
not resolved the request for adjustment within ten (10) business days
after delivery of the original notice by Seller to Purchaser, then the parties
shall submit such dispute to Pricewaterhouse Coopers, certified public
accountants. The determination of such accountants, which shall be made within
thirty (30) days after submission, shall be conclusive. The fees and expenses
of such accountants shall be paid equally by Seller and Purchaser.

 

(c)           Within ten (10) days after the Final Closing
Statement is agreed to or otherwise becomes binding, Senior Lender shall pay to
Purchaser or credit Purchaser against amounts owed by Purchaser to Senior
Lender pursuant to the Financing Condition, or Purchaser shall pay to Senior
Lender, as applicable, the amount to which it is entitled under the Final
Settlement.

 

ARTICLE 8

 

OPERATIONS PRIOR TO
CLOSING SPECIAL AGREEMENTS

 

8.1           Maintenance. Subject to the provisions herein
concerning repairs and replacements in the event of condemnation or casualty,
until Closing, Seller shall cooperate with and take no action to interfere with
Receiver’s maintenance of the Project and the Hotel substantially in its
present condition, subject to normal wear and tear.  Seller shall request that the Receiver
maintain the insurance on the Project in full force and effect as existed on
the Effective Date and to notify Purchaser of any material change, including
any change in coverage or termination.

 

8.2           Operations. Until Closing, Seller shall cooperate
with and take no action to interfere with Receiver’s maintenance of or
operation of the Project and the Hotel in substantially the same manner as
prior to the execution of this Agreement. Notwithstanding anything to the
contrary contained in this Section 8.2, however, nothing herein
shall be construed so as to prevent the Operator from meeting its obligations
under any capital plan for the Hotel approved prior to the date hereof, from
expending such sums out of and from any FF&E account as may be necessary
and customary for the ongoing management and operation of the Hotel as a
first-class hotel. Seller will not remove from the Hotel any items of Personal
Property owned by Seller, provided that said commitment will not apply to
dispositions by Seller, Receiver or Operator in the ordinary course of business
or items for which replacements or substitutions of approximately equal utility
and value are provided to the Hotel. Seller will request that the Receiver
maintain normal inventories of Personal Property up to the Closing Date, and it
shall be a condition to Purchaser’s obligation to close hereunder that such
normal inventories be so maintained.

 

8.3           Title Matters. Seller shall not (a) voluntarily
grant any lien or similar encumbrance to be placed against the Property, and
shall use commercially reasonable efforts to promptly discharge any such
encumbrance that may arise, or (b) grant or enter into any easement,
restrictive covenant or similar agreement affecting title to the Property or
Improvements.

 

24

 

8.4           Employees. Seller shall not approve any request
from Operator to alter the terms and conditions of the employment of any
Employees. Seller shall not approve any request from Operator to enter into any
employment contracts with any employees for the performance of services at the
Hotel that cannot be terminated at or prior to Closing.

 

8.5           Cooperation. Seller shall, to the extent within
Seller’s power, cooperate with respect to all of Purchaser’s reasonable
inquiries relative to the Project, including requests for information about
Schedules and Exhibits to this Agreement and requests relevant to
Purchaser’s efforts under this Agreement to obtain Project-related permits,
licenses and approvals that Purchaser is required to obtain.

 

8.6           Leasing Activities. Until the Closing or earlier
termination of this Agreement, Seller shall not, without the prior consent of
Purchaser, amend or modify any Leases or enter into new leases for all or any
portion of the Property. Seller shall advise Purchaser of any notices of
default received by Seller from tenants under Leases promptly after receipt of
any such notice. If requested by Purchaser in writing prior to the Election
Notice, Seller shall deliver to and request of Receiver that Receiver deliver
to tenants under Leases having a term in excess of ninety (90) days such
estoppel letters (the “Tenant Estoppel
Certificates”) as may be furnished to Seller by Purchaser, that
Receiver request that all such tenants complete the requested information and
return the same to Purchaser prior to the Closing Date.

 

8.7           Operating Contracts and Equipment Leases. Until the
Closing or earlier termination of this Agreement, without the prior consent of
the Purchaser Seller shall (a) not enter into, modify, terminate or renew
any Operating Contracts or Equipment Leases, except in the ordinary course or
any that may be terminable by Purchaser on notice of thirty (30) days or less to
the other party, (b) not renew or modify the Management Agreement, and
(c) not enter into any new management agreement.

 

8.8           Zoning. 
Seller shall not take any action prior to the Closing that would
adversely affect the current zoning classification of the Property.

 

8.9           Reservations. Seller shall request that, until the
Closing or earlier termination of this Agreement, Receiver cause Operator to,
continue to accept booking contracts and reservations for the Hotel and the
Project in the ordinary course, and that, after delivery of the Election
Notice, Receiver permit Purchaser to approve any group bookings consisting of
twenty rooms or more (i) for dates more than nine months after the
Effective Date, (ii) that are at a materially discounted rate, or (iii) that
are likely to displace substantially higher revenue business.

 

8.10         Notice of Litigation. 
Seller shall request that Receiver provide to Purchaser copies of
written notices received by Receiver or Operator regarding (a) any
litigation, arbitration or administrative hearing before any governmental
agency concerning the Project, (b) any alleged breach of any Lease,
Operating Contract or Equipment Lease or violation of any law or legal
requirement applicable to the Project, or (c) any alleged violation of any
Governmental Permit or the threatened revocation, suspension or termination of
any Governmental Permit.

 

25

 

8.11         Actions of the Receiver. Seller shall not be
responsible for the actions of Receiver in its capacity as such, and no such
action by Receiver shall be deemed a breach of an obligation of Seller under
this Agreement. Where this Agreement provides that the Seller shall request
certain actions or deliveries by the Receiver, or words of like import, the
same shall be deemed satisfied by (i) delivery by Purchaser to Receiver of
a copy of this Agreement and (ii) the transmission to Receiver of such
further requests for information required to be made available to Purchaser
hereunder as and when requested by Purchaser in writing. Notwithstanding the
foregoing, if the Receiver shall take any action inconsistent with the
undertakings of Seller expressed herein and the same shall materially and
adversely affect the value, operation or use of the Project then Purchaser may
elect to terminate this Agreement and decline to close hereunder and receive
the return of the Earnest Money (less Purchaser’s share of escrow charges) and
the parties shall have no further rights, liabilities or obligations under this
Agreement (other than those that expressly survive termination).

 

ARTICLE 9

 

HOTEL EMPLOYEES.

 

9.1           Termination of Operator’s Employees. Upon receipt
of the Election Notice and the payment to Escrow of the additional earnest
money required in connection therewith, Seller shall notify Receiver of such
event and direct the Receiver (i) to send the Management Termination
Notice as hereinabove provided and (ii) to direct the Operator to send
notices to its employees at the Project, the Director of the State of Hawaii
Department of Labor and Industrial Relations and the Mayor of the County of
Kauai as may be required by DWA and WARN.

 

9.2           Plant Closing Law. Seller acknowledges that
Purchaser is not intended to have any responsibility for (i) any
obligations arising under DWA, WARN or for any persons employed by the
Operator, Receiver or Seller at the Project prior to the Closing or
(ii) for providing notices or continuation coverage to qualified
beneficiaries (within the meaning of Section 4980 of the Code) under any
benefit plan maintained by Seller.

 

9.3           Schedule of Employees. Seller shall request
that Receiver prepare and provide to Seller copies of all employment contracts
and collective bargaining agreements, and all pension, bonus, profit-sharing,
stock option, or other agreements or arrangements providing for employee
remuneration or benefits relating to employees at the Project to which Seller
is a party or by which Seller is bound.

 

ARTICLE 10

 

REAL ESTATE COMMISSION

 

10.1         Real Estate Broker. Each party represents and
warrants to the other that other than Eastdil Secured, L.L.C. and/or Green
Street Advisors (collectively, “Eastdil” ),
who are advisers to the Seller, neither it nor any of its respective officers,
directors, shareholders, members, affiliates, partners, agents, or employees,
as the case may be, have employed the services of any real estate broker,
investment banker, agent or finder (howsoever characterized) in connection with
this Agreement or the sale of the Project or any part thereof. Seller shall be
solely 

 

26

 

responsible for any payment to Eastdil, but only
with respect to those services provided as real estate broker, and not for any
fees or costs with respect to Purchaser’s financing of the Project, in the
event Purchaser should engage Eastdil or any affiliate thereof in such capacity
in the future.

 

10.2         Indemnity. Each party agrees to indemnify and hold
the other and its agents and affiliates, harmless from all claims, actual or
threatened, of any broker, investment banker, agent or finder (howsoever
characterized) arising by reason of such party’s breach of the representation
and warranty set forth in Section 10.1 of this Agreement. The
indemnities provided in this Section 10.2 shall survive any
termination of this Agreement for any reason whatsoever and the Closing and
delivery of the Deed hereunder.

 

ARTICLE 11

 

DEFAULT AND REMEDIES

 

11.1         Earnest Money Deposit; Payment to Seller at ClosingAt
Closing, the Earnest Money shall be paid by the Escrow Agent first to the
payment of closing charges payable by Purchaser hereunder and any balance
thereof as a partial payment of the sums due to Senior Lender pursuant to the
Financing Condition. If the Closing does not occur, the Earnest Money shall be
paid over in accordance with the terms of this Agreement and the Escrow
Agreement. Purchaser acknowledges that Seller has assigned its interest in the
Purchase Price, including without limitation the Earnest Money, to Senior
Lender and that Seller irrevocably directs Escrow Agent to pay over the same as
stated in the first sentence of this Section.

 

11.2         Purchaser’s Pre-Closing Default; Liquidated Damages.
In the event that prior to the Closing, Purchaser fails, refuses or is unable
to consummate the purchase and sale contemplated by this Agreement for any
reason, other than as a result of termination of this Agreement by Purchaser as
permitted herein, a default by Seller or the failure of a condition to
Purchaser’s obligations under Section 6.4, then Senior Lender, on
behalf of Seller, shall receive the Earnest Money from the Escrow Agent as full
liquidated damages and as the sole and exclusive remedy to Seller and/or Senior
Lender for such failure. In the event of such default prior to Closing, Seller
shall give the Escrow Agent and Purchaser written notice of Purchaser’s
default, in which event the Escrow Agent, unless Purchaser objects in writing
within ten (10) business days after the receipt of such written notice
from Seller, promptly shall pay the Earnest Money to Senior Lender. The Earnest
Money shall be liquidated damages and not a penalty. Purchaser and Seller each
acknowledge that it would be difficult to ascertain the actual damages as to
loss of the value of the bargain, certain carrying costs and other indirect
costs that would be suffered by Seller if Purchaser defaulted in consummating
the purchase and sale contemplated by this Agreement. It is agreed by the
parties that the Earnest Money represents a reasonable estimate of the probable
loss to Seller resulting from any such default by Purchaser prior to Closing.
Upon payment of the Earnest Money to Senior Lender (on behalf of Seller),
neither party to this Agreement shall have any further liability to the other
and this Agreement shall be and become null and void and of no further force
and effect, either at law or in equity, except for the provisions hereof that
expressly survive the termination of this Agreement.

 

11.3         Seller’s Pre-Closing Default. In the event that
Seller is in breach of a warranty, representation or covenant in any material
respect at Closing or Purchaser elects not to 

 

27

 

consummate the purchase and sale contemplated by
this Agreement due to the failure of a condition to Purchaser’s obligations as
provided in Section 6.4, then in either such case Purchaser shall
have the right, as Purchaser’s sole remedy, either: (a) to terminate the
Agreement, and receive the Earnest Money, in which event Purchaser shall give
the Escrow Agent and the Seller written notice of Seller’s default, and the
Escrow Agent, unless Seller objects in writing within ten (10) business
days after the receipt of such written notice from Purchaser, promptly shall
pay the Earnest Money to Purchaser, in which event this Agreement shall be
terminated and the parties shall be released and relieved of all obligations
hereunder except the provisions hereof that expressly survive the termination
of this Agreement (including the rights under Section 11.6 with
respect to any action brought by Purchaser to recover the amounts due to
Purchaser under this clause (a)), or (b) if, and only if, the failure is a
failure by Seller to deliver an instrument required to be delivered by Seller
hereunder, to commence an action requiring Seller to specifically perform its
obligations under this Agreement.

 

11.4         Post-Closing Remedies of Purchaser. The Closing of
the transactions contemplated by this Agreement shall be deemed a full
satisfaction by Seller of all of its obligations and covenants under this
Agreement and all obligations of Seller under this Agreement shall be deemed to
terminate immediately upon Closing.

 

11.5         Post-Closing Remedies of Seller. The Closing of the
transactions contemplated by this Agreement shall be deemed a full satisfaction
by Purchaser of all of its obligations and covenants under this Agreement
(other than any post-Closing obligations of Purchaser expressly set forth
herein —collectively, “Purchaser’s Post-Closing
Matters”), and except for such Purchaser’s Post-Closing Matters
all obligations of Purchaser under this Agreement and any representations and
warranties of Purchaser shall be deemed to terminate immediately upon Closing.
Purchaser’s Post-Closing Matters shall specifically include any and all
liabilities, claims, demands, and expenses of any kind or nature of the
Purchaser or Purchaser’s manager of the Hotel that arise during or relate to
the period on or after the Closing Date and that are in any way related to the
ownership, maintenance, or operation of the Property and Improvements by
Purchaser or to events that occurred on or after the Closing Date, as well as
amounts expressly assumed by or are expressly the responsibility of Purchaser
relating to Seller’s ownership and operation of the Property and Improvements
only to the extent Purchaser has received proration credit therefor at Closing.
Seller shall have no right to maintain any action against Purchaser for breach
of this Agreement after the Closing, except for an action in connection with
Purchaser’s Post-Closing Matters. Notwithstanding the foregoing, in no event
shall Seller be entitled to consequential or punitive damages for any breach of
representation or warranty, or breach of any obligation of Purchaser hereunder.

 

11.6         Attorneys’ Fees. If either Purchaser or Seller shall
employ an attorney to enforce its rights pursuant to this Agreement and there
is a court proceeding, then, in addition to the other amounts and remedies to
which the prevailing party may be entitled pursuant to the other provisions of
this ARTICLE 11, the prevailing party shall be reimbursed by the
non-prevailing party for reasonable attorneys’ fees and expenses including the
costs of any litigation. Purchaser acknowledges and agrees that Senior Lender
shall in no event be responsible for any such costs or fees.

 

28

 

ARTICLE 12

 

[RESERVED]

 

ARTICLE 13

 

REPRESENTATIONS AND
WARRANTIES OF SELLER

 

13.1         Seller’s Representations. Seller hereby represents
and warrants the following as of the Effective Date and (subject to Section 13.4)
the Closing Date, unless otherwise expressly stated herein:

 

13.1.1                Organization. Seller is a
Delaware limited liability company, duly organized, validly existing and in
good standing under the laws of the States of Delaware and Hawaii. This
Agreement and all other documents executed and delivered, or to be executed and
delivered, by Purchaser in connection with the transactions contemplated herein
have been or will be at Closing duly executed and delivered and constitute the
legal, valid and binding obligations of Purchaser enforceable in accordance
with their respective terms and provisions, except as limited by applicable
bankruptcy, insolvency, moratorium, reorganization and laws affecting the rights
of creditors generally, and except as limited by equitable principles of
general application. Seller has taken all action, corporate, partnership,
membership, or otherwise, required to authorize its execution, delivery and
performance of this Agreement and such other documents as are appropriate to
sell the Project in accordance with the terms and conditions of this Agreement.
Neither the execution nor delivery of this Agreement nor the consummation of
the transactions contemplated herein will conflict with, or result in a breach
of, the terms, conditions or provisions of, or constitute a default under, the
articles of organization or operating agreement of Seller or any agreement or
instrument to which Seller is a party or by which the Project is bound, or any
court order, judgment, statute, ordinance, rule, regulation, order or other
government requirement. Except as disclosed by the terms of any Operating
Contract, Lease or Equipment Lease, no unobtained consent or approval of any
third party or governmental authority is required to be obtained by Seller in
order for Seller to enter into this Agreement or any of the documents set forth
herein, or to perform fully all of Seller’s obligations under this Agreement or
under any such other document, and to transfer the Project to Purchaser.

 

13.1.2                Orders and Litigation.
Neither Seller nor, to Seller’s Knowledge (as hereinafter defined), Operator or
Receiver has received any written notice of any suits, actions, arbitration
proceedings, government investigations, orders, decrees, claims, writs,
injunctions, or proceedings with respect to the Seller or materially affecting
all or any part of the Project (other than the Foreclosure and the proceedings
therein) that, if adversely determined, would have an adverse effect upon
either the ability of Seller to perform its obligations under this Agreement or
the operation, condition or value of all or any portion of the Project, nor, to
Seller’s Knowledge, has Seller, Operator or Receiver received any written
notice of intent to commence any such suits, actions, arbitration proceedings,
government investigations, orders, decrees, claims, writs, injunctions, or
proceedings that, if adversely determined, would have an adverse effect on the
Project.

 

29

 

13.1.3                Project Related Matters.
Except as disclosed to Purchaser in the Title Commitment or in Schedule 13.1.3
attached hereto: (a) neither Seller nor to Seller’s Knowledge, Operator or
Receiver has received a written notice from the applicable governmental
authority of any existing or potential violations of any Governmental Permit or
any applicable federal, state or local law, rule or regulation (including
the Americans with Disabilities Act, 42 U.S.C. §§ 12102, et sec., the “ADA”) or in connection with the
Project (herein referred to as “applicable laws”)
(collectively, a “Notice of Violation” ),
(b) neither Seller nor to Seller’s Knowledge Operator or Receiver has
received any written notice from the applicable governmental authority of any
zoning violations (including parking), encroachments of or on the Project or
related easements, any violations of required setbacks or other site
restrictions of a permanent nature or that could have an adverse effect on the
use of the Project; (c) to Seller’s Knowledge, there are no oral or
written leases, or subleases affecting the Project other than the Leases;
(d) to Seller’s knowledge, there are no real estate or other
Project-related tax proceedings pending; and (e) neither Seller nor, to
Seller’s Knowledge, Operator or Receiver has received any written notice of
default under any of the covenants, conditions, restrictions, rights of way or
easements affecting the Project.

 

13.1.4                Bankruptcy. Seller is not
the subject debtor under any federal, state or local bankruptcy or insolvency
proceeding, or any other proceeding for dissolution, liquidation or winding up
of its assets, other than the Foreclosure.

 

13.1.5                Agreements in Effect. To
Seller’s Knowledge, the Equipment Leases, the Leases, the Governmental Permits
and the Operating Contracts are in full force and effect. To Seller’s
Knowledge, none of Seller, Operator or any other party to the Leases,
Governmental Permits, Operating Contracts or Equipment Leases is in material
default under any of the terms of, or any of the agreements, duties or
obligations under such agreements.

 

13.1.6                Environmental. Except as
listed on Schedule 13.1.6 attached hereto, neither Seller nor, to
Seller’s Knowledge, Operator has received any notice from any applicable
governmental authority that any violation of any applicable environmental law
exists in connection with the Project. Except as may be described in the
Environmental Reports, Seller has no knowledge of (i) the presence of any
materials that constitute hazardous materials under any federal, state, or
local law, rule, or regulation on the Property, or any portion thereof,
(ii) any spills, releases, discharges or disposal of any such hazardous
materials that have occurred or are presently occurring on the Property, or any
portion thereof; or (iii) any on-site containment, storage, treatment, or
disposal facilities for such hazardous materials including, without limitation,
underground storage tanks, sumps, fill and disposal areas, impoundments and subsurface
structures.  To Seller’s Knowledge,
Seller has provided to Purchaser correct and complete copies of the
Environmental Reports prior to the date of this Agreement. To Seller’s
Knowledge except as set forth in Schedule 13.1.6, neither Seller
nor, to Seller’s Knowledge, Operator has any written environmental reports in
Seller’s or Operator’s actual possession, copies of which have not been given
to Purchaser.

 

13.1.7                ADA. Seller makes no
representations as to whether the Project is in compliance with the ADA or any
rules, regulations and official interpretations promulgated pursuant thereto.

 

30

 

13.1.8                No “Foreign Person”.
Seller is not a “foreign person” under Section 1445 of the Internal
Revenue Code of 1986, as amended (the “Code”). The
sale transaction herein contemplated is not subject to Section 897 of the
Code or to the withholding requirements of Section 1445 of the Code.
Seller is a “resident person,” as such term is defined in Section 235-68
of the Hawaii Revised Statutes. The sale transaction herein contemplated is not
subject to the withholding requirements of Section 235-68 of the Hawaii
Revised Statutes. Seller will furnish such required certifications at the
Closing.

 

13.1.9                Operating Contracts. Except
for purchase orders for less than $15,000.00 entered into in the ordinary
course of business, to Seller’s Knowledge Schedule 1.1.7 is a true
and complete list of Operating Contracts affecting the Project, and Schedule 1.1.8
is a true and complete list of all Equipment Leases affecting the Project, in
each case including all amendments, modifications, terminations, guaranties and
side letters that are currently in effect. To Seller’s Knowledge, no uncured
notice of default has been delivered by any party with respect to any Operating
Contract or Equipment Lease.

 

13.1.10              Special Assessments.
Neither Seller nor, to Seller’s Knowledge, Operator has received any written
notice of any pending special assessment with respect to the Project that is
current. Seller shall notify Purchaser of any written notice Seller receives
after the date hereof with respect to any pending special assessments with
respect to the Project that are or may become due and payable with respect
thereto.

 

13.1.11              Leases.  To Seller’s Knowledge, Schedule 1.1.4
is a true and complete list of all Leases currently affecting the Project,
including all amendments and modifications, terminations guaranties and side
letters in effect as of the date of this Agreement. Seller has provided Purchaser
with true and complete copies of all of the Leases prior to the date of this
Agreement. To Seller’s Knowledge, no uncured notice of default has been
delivered by any party with respect to any Lease and no leasing commissions,
finders’ fees or similar compensation is or will be due and payable to any
broker, real estate agent or other person in connection with the Leases or the
exercise by the tenants thereunder of any renewal, expansion or similar option.

 

13.1.12              Advance Bookings. At
Purchaser’s request, Seller will request that Receiver obtain from Operator and
furnish to Purchaser a true and complete list of all Advance Bookings as of the
applicable date, including any deposits received by Operator in connection
therewith.

 

13.1.13              Governmental Permits.  To Seller’s Knowledge, Schedule 1.1.6
is a true and complete list of all Governmental Permits used (whether or not in
the name of Seller or Operator) in connection with the operation of the Hotel.

 

13.1.14              No Occupancy Rights. To
Seller’s Knowledge, there are no leases, subleases, tenancy or other occupancy
agreements, no right to occupancy or possession made or suffered by Seller or,
to Seller’s Knowledge, made or suffered by any predecessor in title of Seller,
held by any person other than Seller with respect to all or any portion of the
Property and Improvements, except for the rights of guests in the operation of
the Hotel in the ordinary course of business, the rights of tenants under the
Leases, and the rights of Operator 

 

31

 

under the Management Agreement (which rights of
Operator will be terminated by Seller at or prior to Closing).

 

13.1.15              No Undisclosed Governmental
Agreements. Seller has not entered into any unrecorded written commitment
or written agreement with any governmental authority affecting the Property or
Improvements relating to the ownership or operation thereof.

 

13.1.16              Title to Personal Property.
Except as set forth in Schedule 13.1.16 or the liens in favor of
Senior Lender, Seller has good and valid title to all of the tangible Personal
Property, which shall be free and clear of all liens and encumbrances as of the
Closing. Schedule 13.1.16 sets forth a correct and complete list of
all material equipment and other Personal Property leased by Seller pursuant to
Operating Contracts as well as a correct and complete list of equipment and
other Personal Property leased by Seller pursuant to Equipment Leases.

 

13.1.17              Taxes. Neither Seller nor,
to Seller’s Knowledge, Operator has received within the 12-month period
preceding the date of this Agreement any notice of any audit of any taxes
payable or tax delinquency with respect to the Property that has not been
resolved or completed, and neither Seller nor Operator is currently contesting
any such taxes or seeking an abatement or rollback of any taxes.

 

13.1.18              Books. To Seller’s
Knowledge, there are no documents in Seller’s possession that disclose any
material adverse condition not disclosed in the Books that has not been fully
remedied or repaired.

 

13.1.19              Condemnation.  To Seller’s Knowledge, Seller has not
received, nor to Seller’s Knowledge has Operator received, written notice
during the 12-month period preceding the date of this Agreement concerning
condemnation, eminent domain, or other similar proceedings affecting or
threatened against any portion of the Property or Improvements.

 

13.1.20              Financial Statements. The
Financial Statements delivered by Seller to Purchaser are, to Seller’s
Knowledge, correct (in all material respects) and complete copies of the
Financial Statements as prepared by Operator and as delivered to Seller.

 

13.1.21              Labor Actions. To Seller’s
Knowledge, there is no pending or threatened labor dispute, strike, or work
stoppage affecting Seller’s business at the Project.

 

13.2         Seller’s Knowledge Defined; Inquiry of Operator.

 

(a)           References to “Seller’s Knowledge”
or words of similar effect, shall mean the actual knowledge, without duty of
inquiry, of Todd Siefert, Peggy DaSilva and Erik Lassar. Seller represents that
the individuals referenced in the preceding sentence are the representatives of
Seller most likely to have knowledge of the matters set forth in this ARTICLE 13.
For the purposes of determining matters known to Operator or Receiver (but not
Seller), Seller will make inquiry of Receiver promptly after the execution
hereof and disclose the response to Purchaser as and when received; Seller has
no authority to direct the

 

32

 

actions of Operator or
Receiver and Seller’s representation is limited by the results of said inquiry.

 

(b)           Purchaser acknowledges that the following disclosures have
been made to Seller by Receiver, and Seller shall have no liability to
Purchaser as to the accuracy or effect of any of such disclosures:

 

(i)            The luau facility was, in the past, damaged by fire and
has not been repaired (and will not be repaired by Seller in connection with
this transaction). The ability to repair or reconstruct the same is subject to
such requirements as may be imposed by the County of Kauai Planning Department.

 

(ii)           A tent has been removed from the premises and the existing
permit for the same will expire in September 2011.

 

(iii)          The County of Kauai Planning Department may require a
laundry facility that launders items for sites other than the Property to
obtain a separate Shoreline Management Area Permit, not presently held by the
Seller or in effect for the Property, inasmuch as doing so may be deemed a “change
in the intensity of use of land which [sic] was not present when the SMA law
first became effective.” The existing Property obtained its required permits
and approvals prior to the effectiveness of the law governing use of Shoreline
Management Areas.

 

13.3         Updating Representations of Seller; Inaccuracies in
Representations and Warranties of Seller. Seller shall provide to
Purchaser, promptly after receipt by Seller, any and all information that
renders inaccurate the representations of Seller herein. Notwithstanding the
foregoing, (i) the termination or default by a tenant following the
Effective Date under one of the Leases or the receipt by Seller or Operator
following the Effective Date of a claim that the Hotel is not in compliance
with the ADA will not result in the failure of the condition precedent under Section 6.4(b) to
be satisfied unless either of the foregoing results from the breach by Seller
of its obligations under ARTICLE 8, and (ii) no such change in
condition shall be deemed a breach by Seller hereunder unless caused or
suffered by Seller in violation of an express obligation of Seller herein set
forth.

 

ARTICLE 14

 

REPRESENTATIONS AND
WARRANTIES OF PURCHASER

 

14.1         Purchaser’s Representations. Purchaser hereby
represents and warrants the following as of the Effective Date and the Closing
Date:

 

14.1.1                Organization. Purchaser
is a limited liability company duly organized, validly existing and in good
standing under the laws of the State of Delaware. This Agreement and all other
documents executed and delivered, or to be executed and delivered, by Purchaser
in connection with the transactions contemplated herein have been or will be at

 

33

 

Closing duly executed and delivered and constitute
the legal, valid and binding obligations of Purchaser enforceable in accordance
with their respective terms and provisions, except as limited by applicable
bankruptcy, insolvency, moratorium, reorganization and laws affecting the
rights of creditors generally, and except as limited by equitable principles of
general application. Purchaser has taken all action, corporate, partnership,
membership, or otherwise, required to authorize its execution, delivery and
performance of this Agreement and such other documents as are appropriate to
purchase the Project in accordance with the terms and conditions of this
Agreement. Neither the execution nor delivery of this Agreement nor the
consummation of the transactions contemplated herein will conflict with, or
result in a breach of, the terms, conditions or provisions of, or constitute a
default under, the organizational documents of Purchaser or any agreement or
instrument to which Purchaser is a party or any court order, judgment, statute,
ordinance, rule, regulation, order or other government requirement. No
unobtained consent or approval of any third party or governmental authority is
required to be obtained by Purchaser in order for Purchaser to enter into this
Agreement or any of the documents set forth herein, or to perform fully all of
Purchaser’s obligations under this Agreement or under any such other document,
and to purchase the Project.

 

14.1.2                Consents.  Except with respect to permits and licenses
to be assigned to Purchaser pursuant to this Agreement, any authorization,
consent or approval of, or registration or filing with, any governmental
authority that is required to have been obtained or made by Purchaser in
connection with the execution, delivery or performance of this Agreement has
been (or will be as of the Closing Date) duly obtained or made. If the consent
of any governmental authority is required for the assignment or transfer of any
permit or license to be assigned to Purchaser pursuant to this Agreement, such
assignment or transfer shall be subject to Purchaser obtaining such consent, at
Purchaser’s sole cost and expense.

 

14.1.3                Bankruptcy. Purchaser is
not the subject debtor under any federal, state or local bankruptcy or
insolvency proceeding, or any other proceeding for dissolution, liquidation or
winding up its assets.

 

14.1.4                Property Condition.

 

(a)     No Other Representations. 
Except for the representations and warranties of Seller contained in
this Agreement or in the Closing Documents executed by Seller, neither Seller
nor anyone acting on behalf of Seller, including, without limitation,
attorneys, consultants, brokers or Operator, has made any representations or
warranties with respect to the Project, the physical condition, the state of
repair or maintenance, the income received by Seller therefrom, or the costs
and expenses for the operation or maintenance, thereof, including without
limitation, the matters described above.

 

(b)     Purchaser’s Satisfaction. 
Subject to the terms of this Agreement, Purchaser will, as a condition
to its delivery of the Election Notice, be satisfied with the physical
condition thereof and the economic and financial prospects of the Project and
the other matters described above.

 

34

 

14.1.5                Experience. Purchaser is
experienced in sophisticated real estate matters and has made its own
evaluation concerning the value of the Project and the other matters described
above (including its physical condition and income potential).

 

14.2         Updating Representations of Purchaser; Inaccuracies in
Representations and Warranties of Purchaser. Purchaser shall provide to
Seller, promptly after receipt by Purchaser, any and all information that
renders inaccurate the representations of Purchaser herein.

 

ARTICLE 15

 

MISCELLANEOUS

 

15.1         Post-Closing Cooperation.

 

15.1.1                Transition Cooperation.
At the Closing, Seller will cause Operator to cooperate with Purchaser in
completing the orderly transition of the Hotel operations from Operator to
Purchaser’s manager of the Hotel, and to cooperate as reasonably requested for
a period not to exceed three (3) months after the Closing in connection
with the transition of accounting and operating records to the systems in use
by Purchaser or its manager of the Hotel. In connection therewith, Seller will
cause Operator to transfer the portion of the Books maintained in electronic
form to Purchaser’s manager in such manner as Purchaser’s manager reasonably
requests.

 

15.1.2                Collection of Seller’s
Accounts Receivable. Purchaser shall use all commercially reasonable efforts
(without resorting to any telephone calls, demand letters, use of a collection
agency or litigation) to effect the collection of accounts receivable relating
to the Hotel that are to be retained by Seller (“Seller
Account Receivable”). If Purchaser receives any payment from any
party in payment of a Seller Account Receivable, Purchaser shall remit the
amount collected promptly to Senior Lender on behalf of Seller. However, if
Purchaser receives a payment from a party that owes an amount to Purchaser and
also owes an amount to Seller with respect to a Seller Account Receivable, such
payment shall be applied as follows:

 

(a)           If the payor refers to a specific invoice of Purchaser or
Seller or the payor otherwise designates the payment as being made with respect
to an amount owed to Purchaser or Seller, the payment shall be applied as
specified by the payor;

 

(b)           if the payor does not refer to a specific invoice or does
not otherwise designate how the payment is to be applied, such payment shall be
applied first to amounts owing by such payor to Purchaser and the remaining
amount shall be applied in payment of any outstanding amounts owing by the
payor on a Seller Account Receivable.

 

15.1.3                Utilization of Advance
Bookings. In order for Seller to perform a surviving obligation to
Operator, upon Seller’s written request, Purchaser will provide Seller with a
report of which of the Advance Bookings as of the Closing actually materialize
during the six (6) month period following Closing, and the rooms revenue
(only) realized from 

 

35

 

such Advance Bookings; provided, however, that
Purchaser will not be required to provide such information more frequently than
monthly.

 

15.2         Notices. Any notices required or permitted to be
given under this Agreement shall be in writing and delivered by hand or sent by
an internationally recognized courier service (e.g., Federal Express) (“Courier”) and addressed as follows,
or sent by email or facsimile transmission to the email address or facsimile
numbers set out below, and shall be deemed to have been given, if given by hand
delivery or Courier, upon the date of delivery (or refusal to accept delivery)
at the address specified below as indicated on the return receipt or, if given
by email or facsimile transmission, upon the date of receipt (provided that the
sender of such communication shall orally confirm receipt thereof by the
appropriate parties and send a physical copy of such communication via hand
delivery or Courier to the appropriate parties within one (1) day of such
email or facsimile transmission):

 

	
  If
  to Seller:

  	
  Waipouli
  Owner, LLC

  c/o RREEF America L.L.C.

  280 Park Avenue, 22nd Floor

  New York, New York 10017

  Attention: Peggy DaSilva

  Fax: 212-454-6205

  
	
   

  	
   

  
	
  with
  a copy to:

  	
  Waipouli
  Owner, LLC

  c/o RREEF Real Estate Global Opportunity Funds

  101 California Street, Suite 2600

  San Francisco, California 94111

  Attention: Erik Lassar

  Fax: 415-986-6248

  
	
   

  	
   

  
	
  and
  to:

  	
  Dechert
  LLP

  90 State House Square

  Hartford, Connecticut 06103

  Attention: Laura G. Ciabarra

  Fax: 860-524-3930

  
	
   

  	
   

  
	
  and
  to:

  	
  Starn
  O’Toole Marcus & Fisher, a law corporation

  733 Bishop Street, 19th floor

  Honolulu, Hawaii 96813

  Attention: Kenneth B. Marcus

  Fax: 808-537-5434

  
	
   

  	
   

  
	
  and
  to:

  	
  Wells
  Fargo Bank, N.A., as Trustee for

  Morgan Stanley Series 2006-XLF

  C/o Midland Loan Services, Inc.

  10851 Mastin

  Overland Park, Kansas 66210

  Attention: Kevin Semon

  

 

36

 

	
   

  	
  Facsimile:
  913-253-9723

  
	
   

  	
   

  
	
  and
  to:

  	
  Polsinelli
  Shalton Flanigan Suelthaus P.C.

  700 W. 47th Street

  Kansas City, Missouri 64112

  Attention: Michael B. Hickman

  Facsimile: (816) 753-1536

  
	
   

  	
   

  
	
  and
  to:

  	
  Morgan
  Stanley Mortgage Capital Holdings LLC

  1221 Avenue of the Americas, 27th Floor

  New York, New York 10020

  Attention: David Oliner

  Facsimile: (212) 762-6220

  
	
   

  	
   

  
	
  and
  to:

  	
  Cadwalader,
  Wickersham & Taft LLP

  227 West Trade Street, Suite 2400

  Charlotte, North Carolina 28202

  Attention: James Hassan, Esq.

  Facsimile: (704) 348-5200

  
	
   

  	
   

  
	
  If
  to Purchaser:

  	
  JMI
  Realty LLC

  111 Congress Avenue, Suite 2600

  Austin, Texas 78701

  Attention: Greg Clay

  Facsimile: (512) 539-3612

  
	
   

  	
   

  
	
  with
  a copy to:

  	
  JMI
  Realty LLC

  111 Congress Avenue, Suite 2600

  Austin TX 78701

  Attention: Bryant Burke, Esq.

  Facsimile: (512) 539-3601

  
	
   

  	
   

  
	
  and
  to:

  	
  Sheppard
  Mullin Richter & Hampton

  12275 El Camino Real, Suite 200

  San Diego CA 92130

  Attention: Domenic C. Drago, Esq.

  Facsimile: (858) 506-3691

  
	
   

  	
   

  
	
  and
  to:

  	
  Cades
  Schutte LLP

  1000 Bishop Street, Suite 1200

  Honolulu HI 96813

  Attention: Gino Gabrio, Esq.

  Facsimile: (808) 540-5029

  

 

or
such other address as either party may from time to time specify in writing to
the other in the manner aforesaid. A notice may be given by a party or by a
party’s attorney at law. Any notice intended to initiate a response period
shall be effective to do so only if such notice identifies such response
period.

 

37

 

15.3         Successors and Assigns. This Agreement shall be
binding upon, and inure to the benefit of, the parties hereto and their
respective successors, heirs, administrators and permitted assigns. Neither
Seller nor Purchaser shall assign this Agreement without the prior written
consent of the other, except that (i) Purchaser will be entitled to assign
this Agreement to an entity controlled (by contract or otherwise) or managed
(by contract or otherwise) by Purchaser, or an entity controlled by, under
common control with or controlling Purchaser, and (ii) Seller will be
entitled to assign this Agreement to the Senior Lender or its designee or
nominee as additional collateral.

 

15.4         No Third Party Beneficiary. Nothing in this
Agreement, express or implied, shall give to anyone, other than the parties
hereto and their respective permitted successor and assigns, any benefit, or
any legal or equitable right, remedy or claim, under or in respect of this
Agreement or the escrow contemplated hereby.

 

15.5         Waiver; Modification. Failure by Purchaser or Seller
to insist upon or enforce any of their respective rights hereunder shall not
constitute a waiver thereof, except as provided for herein. No waiver of or
modification or amendment to any of the provisions of this Agreement shall be
valid unless in writing and executed by the parties against whom such waiver,
modification or amendment is sought to be enforced.

 

15.6         Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of Hawaii. Additionally,
Purchaser and Seller hereby agree that with respect to all obligations and time
requirements set forth in this Agreement, time is of the essence.

 

15.7         Merger of Prior Agreements and Confidentiality. This
Agreement (including the exhibits and any schedules hereto) constitutes the
entire agreement between and understanding of the parties with respect to the
purchase and sale of the Project and, except as provided in the next sentence,
supersedes all prior and contemporaneous (whether oral or written) agreements
and understandings between the parties hereto relating to the specific subject
matter hereof. Seller and Purchaser have each agreed to respect and preserve
the confidentiality of all “Confidential Information”,
as defined and more particularly agreed to in any confidentiality agreement
heretofore entered into between them (the “Confidentiality Agreement”).
Notwithstanding the preceding sentence and the Confidentiality Agreement,
Seller and Purchaser agree that either Seller or Purchaser may after the
Closing issue press releases and public statements disclosing the sale of the
Hotel contemplated by this Agreement (the “Sale”);
provided that either (i) any such releases or statements are approved by
the other party and the terms of this Agreement, including the Purchase Price,
are not disclosed or (ii) Gaylord or Purchaser may issue press releases
and/or make such filings as may be, in its reasonable judgment, required by
applicable law. Not less than twenty-four (24) hours prior to the issuance of
any press release, Seller and Gaylord, on the one hand, and Purchaser, on the
other, shall each provide the other with a copy of the proposed press release
and the opportunity to comment thereon and, subject to Gaylord’s and Purchaser’s
rights as described in the preceding sentence, to object thereto. The
Confidentiality Agreement shall automatically terminate and be of no further
force or effect as of Closing, but the terms of this Section shall survive
the Closing and without limitation as to time.

 

38

 

15.8         Partial Invalidity. If any provision or provisions in
this Agreement are found by a court of law to be in violation of any applicable
local, state or federal ordinance, statute, law, administrative or judicial
decision, or public policy, and if such court should declare such portion,
provision or provisions of this Agreement to be illegal, invalid, unlawful,
void or unenforceable as written, then such portion, provision or provisions
shall be given force to the fullest possible extent that they are legal, valid
and enforceable, that the remainder of this Agreement shall be construed as if
such illegal, invalid, unlawful, void or unenforceable portion, provision or
provisions were not contained therein, and that the rights, obligations and
interest of Purchaser and Seller under the remainder of this Agreement shall
continue in full force and effect, provided that such declarations do not
materially change the nature of the parties’ intent regarding the Agreement
viewed as a whole.

 

15.9         Liquor Licenses. Purchaser and Seller shall use
diligent, good faith efforts to obtain temporary approval from the Kauai County
Department of Liquor Control (the “DLC”) for
the transfer of the existing Liquor License(s) to Purchaser or its
designee on the Closing Date. Purchaser agrees to pay all fees and other
amounts payable to any governmental authority in connection with any such
application. The parties acknowledge that federal and state tax clearances are
required for either transfer of the existing license or a new license and the
parties shall secure and exchange such certificates on a timely basis. If (i) the
existing Liquor License has not been transferred to Purchaser effective as of
the Closing Date, or (ii) a temporary liquor license has not been issued,
then the Closing Date shall be extended until one of such events has occurred
but in no event for a period in excess of thirty (30) days. Purchaser reserves
the right to have the license held by its manager or other designee to the
extent permitted by applicable law, rule and regulation.

 

15.10       Guest Baggage. All baggage of guests who are still in
the Hotel on the Closing Date that has been checked with or left in the care of
Seller shall be inventoried, sealed, and tagged jointly by Seller and Purchaser
on the Closing Date. Purchaser shall be obligated to account for all such
inventoried, sealed and tagged items and deliver the same to the owners thereof
on demand. Purchaser hereby indemnifies and agrees to defend Seller and its
Indemnified Parties against any Liabilities in connection with such baggage
arising out of the acts of omissions of Purchaser or its Affiliates (or any of
their employees or agents) after the Closing Date. Seller hereby indemnifies
and agrees to defend Purchaser and its Indemnified Parties against any
Liabilities in connection with baggage arising out of the acts or omissions of
Seller or its Affiliates (or any of their employees or agents) prior to or on
the Closing Date.

 

15.11       Safe Deposits. Immediately after the Closing, Seller
shall send written notice to guests or tenants or other persons who have safe
deposit boxes (other than in-room safe deposit boxes), if any, advising of the
sale of the Hotel to Purchaser and requesting immediate removal of the contents
thereof or the removal thereof and concurrent re-deposit of such contents
pursuant to new safe deposit agreements with Purchaser. Seller shall have a
representative present when the boxes are opened, in the presence of the
depositor and a representative of the Purchaser. Any property contained in the
safe deposit boxes after such re-deposit shall be the responsibility of Purchaser,
and Purchaser agrees to defend, indemnify and hold harmless Seller and its
Indemnified Parties from and against any Liabilities arising out of or with
respect to such property. Upon Closing, Seller shall deliver to Purchaser all
keys in Seller’s possession or control for all safe deposit boxes not then in
use and a list of all safe deposit boxes that are then 

 

39

 

in use but where the contents have not been removed
and re-deposited as set forth above, including the name and room number of such
depositor. Seller and Purchaser shall continue to use reasonable efforts to
cause such depositors to remove the contents and re-deposit such contents
pursuant to new safe deposit agreements with Purchaser as set forth above.
Seller shall continue to be responsible for, and shall defend, indemnify and
hold harmless Purchaser and its Indemnified Parties from and against any
Liabilities arising out of or with respect to the contents of any safe deposit
box prior to the time that the contents thereof are removed and re-deposited
pursuant to a new safe deposit agreement with Purchaser as set forth above.

 

15.12       Counterparts. This Agreement may be executed in several
counterparts, each of which shall constitute an original and all of which, when
taken together, shall constitute one agreement. Execution of this Agreement or
any counterparts may be by facsimile signature or electronic delivery of
documents in PDF format; provided, however, that any party executing this Agreement
by facsimile or electronically will send four (4) original signature pages to
the other party within one (1) business day of the facsimile execution or
electronic delivery of signature pages.

 

15.13       Further Assurances. The parties hereto agree to execute,
acknowledge, deliver and record such certificates, amendments, instruments and
documents and to take such other action as may be necessary to carry out the
intent and purposes of this Agreement; provided, however, that there shall be
no material increase in cost or liability to either party as a result thereof

 

15.14       Headings. The paragraphs or section headings
herein are for convenience of reference only and shall not be deemed to vary
the content of this Agreement or terms, provisions, covenants or conditions
hereof.

 

15.15       Including. The word “including” shall be deemed
followed by the phrase “without limitation” where the context requires or
permits unless already followed by words of similar effect.

 

15.16       No Recordation. Neither party shall file of record
against the Property or otherwise this Agreement or any memorandum thereof.

 

15.17       Financial Statements.

 

(a)           If Purchaser completes its purchase of the Project, it
wishes to obtain or prepare audited financial statements in respect of the
Project for the period January 1, 2007 through the Closing Date (the “Audit Period”).

 

(b)           Purchaser acknowledges that Seller has heretofore
furnished to Purchaser audited financial statements in respect of the Property
for calendar years 2006 and 2007.

 

(c)           Purchaser further acknowledges that Seller has not had
possession of the Premises since January 2008, and accordingly that Seller
does not have financial statements for calendar years 2008, 2009 or 2010, and
does not have access to such information. Seller (i) has advised Purchaser
that Seller believes that the Senior Lender has had audited reports (the “Lender Reports”), without

 

40

 

formal opinions, compiled
for 2008 and 2009, and has the information required to prepare such a report
for 2010, and (ii) to the extent that Purchaser requires authorization
from Seller, hereby authorizes Purchaser to obtain copies of the Lender Reports
and related information directly from Senior Lender.

 

(d)           It is understood and agreed that Seller shall have no
liability to Purchaser should Senior Lender decline to honor any request made
as described in this Section.

 

[Remainder of Page Intentionally Left Blank; Signature Page Follows]

 

41

 

IN
WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the
day and year first above written.

 

	
   

  	
  SELLER

  
	
   

  	
   

  
	
   

  	
  WAIPOULI
  OWNER, LLC, a Delaware limited liability company

  
	
   

  	
   

  
	
   

  	
  By:

  	
  WAIPOULI
  SENIOR MEZZANINE, LLC, a Delaware limited liability company

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  WAIPOULI
  JUNIOR MEZZANINE, LLC, a Delaware limited liability company, its sole member

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
  WAIPOULI
  HOLDINGS, LLC, a Delaware limited liability company, its sole member

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  By:

  	
  RREEF
  GLOBAL OPPORTUNITIES FUND II, LLC, a Delaware limited liability company, its
  managing member

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  By:

  	
  RREEF
  AMERICA L.L.C., a Delaware limited liability company, as attorney-in-fact

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  By:

  	
  /s/
  Peggy DaSilva

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Name:

  	
  Peggy
  DaSilva

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Title:

  	
  Managing
  Director

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  By:

  	
  /s/
  Erik Lassar

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Name:

  	
  Erik
  Lassar

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Title:

  	
  Director

  

 

[Signature page to Kauai Purchase and Sale agreement]

 

42

 

PURCHASER

 

	
   

  	
  JMI
  REALTY, LLC, a Delaware limited liability company

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Bryant W. Burke

  
	
   

  	
   

  	
  Bryant
  W. Burke, Vice President

  
	
   

  	
   

  	
  Its:
  Manager

  

 

 

[Signature page to Kauai Purchase and Sale Agreement]

 

 

	
  SENIOR
  LENDER

  	
  MIDLAND
  LOAN SERVICES, INC., as special servicer for Wells Fargo Bank N.A., as
  trustee for the Morgan Stanley Mortgage Capital I, Inc. Commercial
  Mortgage Pass Through Certificate Series 2006-XLF

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Kevin
  C. Donahue

  
	
   

  	
  Name:

  	
  Kevin
  C. Donahue

  
	
   

  	
  Its:

  	
  Senior
  Vice President and Servicing Officer

  

 

43

 

EXHIBIT A

 

PROPERTY DESCRIPTION

 

All
of that certain parcel of land situate at Waipouli, District of Puna, Island
and County of Kauai, State of Hawaii, described as follows:

 

Lot
3, area 10.377 acres, as shown on Map 2, filed with Land Court Application
No. 889 of Edward Henry Walton Broadbent.

 

Together
with a right of way to Kuhio Highway over Lot 6, as shown on Map 2, filed with
Land Court Application 889, and Lot 9, as shown on Map 6, filed with Land Court
Application No. 1166 and an easement for pedestrian access to the beach
over and across beach access Lot 8, as shown on Map 6, filed with Land Court
Application No. 1166, as set forth in Amendment and Restatement of
Declaration of Easements and Covenants recorded as Land Court Document
No. 2007394, as amended, subject to the terms and covenants contained
therein.

 

Excepting
any portion of the above described property lying below the line of high water,
said line of high water being defined by Sections 205A-41 to 205A-43.6 of
the Hawaii Revised Statutes, as amended, and also excepting any artificial
accretions to said property waterward of said high water line.

 

Together
also with the rights provided for as an appurtenance to said Lot 3, as set
forth in that certain Declaration of Easements and Covenants recorded
February 6, 1986 as Land Court Document No. 1351484 of Official
Records, as amended and restated by Amendment and Restatement of Declaration of
Easements and Covenants Recorded March 19, 1993 as Land Court Document
No. 2007394 of Official Records, and as further amended by First Amendment
to the Amended and Restated Declaration of Easements and Covenants recorded
June 21, 2004 as Land Court Document No. 3124940 of Official Records.

 

Being
all of the premises described in and covered by transfer Certificate of Title
No. 829,487.  Issued to:  Waipouli Owner, LLC, a Delaware limited
liability company.

 

(Limited
Warranty Deed with Covenants recorded October 20, 2006 as Land Court
Document No. 3501706 of Official Records.)

 

TMK:  (4) 4-3-007-028

 

— END OF EXHIBIT A —

 

 

EXHIBIT B

 

ESCROW AGREEMENT

 

 

ESCROW AGREEMENT

 

ESCROW AGREEMENT (this “Agreement”),
dated as of June     , 2010, by and among: (a) JMI REALTY LLC, a Delaware limited liability company, whose
address is 111 Congress Avenue, Suite 2600, Austin, Texas, 78701,
Attention Gregory W. Clay (the “Purchaser”);
(b) WAIPOULI OWNER, LLC, a Delaware limited
liability company, whose address is c/o RREEF America L.L.C., 280 Park Avenue, 22nd
Floor, New York, New York 10017, Attention: Peggy DaSilva (the “Seller”); and (c) Title
Guaranty Escrow Services, Inc., 235 Queen Street, Honolulu HI 96813, Attn.
Barbara Paulo, Vice President (“Escrow Agent”).

 

W I T N E S S E T H:

 

WHEREAS, the parties hereto, other than the Escrow Agent,
have entered into that certain Purchase and Sale Agreement dated
June               ,
2010 (the “Purchase Agreement”), and
pursuant thereto the Purchaser is required to deposit FIVE HUNDRED THOUSAND
DOLLARS ($500,000.00) of Earnest Money at or prior to the expiration of the Due
Diligence Period, in the form of cash (as described in the Purchase Agreement),
all to be held in escrow (such sum, plus any interest earned thereon, the “Escrowed Property”); and

 

WHEREAS, Escrow Agent is willing to serve as escrow agent
and hold the Escrowed Property in accordance with the terms and conditions
hereof.

 

NOW, THEREFORE, in consideration of the foregoing and other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:

 

1.             Escrow
Agent shall deposit the Escrowed Property (to the extent from time to time
deposited in cash) in direct obligations of, or obligations guaranteed by, the
United States of America, or certificates of deposit or interest bearing
accounts of any bank or trust company, incorporated under the laws of the
United States of America or any state, which has combined capital and surplus
of not less than $100,000,000, all as selected by Purchaser in its sole
discretion.

 

2.             Escrow Agent shall only release the Escrowed Property as
follows:

 

a.             to
the Seller or Purchaser pursuant to a written notice executed by both the
Seller and the Purchaser in the form attached hereto as Exhibit A;

 

b.             to the Seller or Purchaser pursuant to a written notice
sent to the Escrow Agent by the Seller or Purchaser (such sending party, the “Sending
Party”, and such notice, the “Pay Notice”); provided, however:

 

(i)            upon
receipt of a Pay Notice, Escrow Agent shall promptly send a copy of the Pay
Notice to the Seller or Purchaser who is not the “Sending Party” (such
party, the “Other Party”);

 

(ii)           If Escrow Agent shall not, within five (5) Business
Days (as defined in Paragraph 11 below) of giving a copy of the Pay
Notice to the Other Party, receive a 

 

Exhibit B-1

 

notice from the Other Party disputing the
instructions in the Pay Notice (such notice, a “Dispute Notice”) then
the Escrow Agent shall follow the instructions set forth in the Pay Notice;

 

(iii)          If the Escrow Agent shall have received a Dispute Notice
within the time frame set forth in Section 3(b)(ii) above, then the
Escrow Agent shall proceed pursuant to Section 7 of this Agreement.

 

3.             Escrow Agent shall be entitled to rely upon, and shall
be fully protected from all liability, loss, cost, damage or expense in acting
or omitting to act pursuant to, any instruction, order, judgment,
certification, affidavit, demand, notice, opinion, instrument or other writing
delivered to it hereunder without being required to determine the authenticity
of such document, the correctness of any fact stated therein, the propriety of
the service thereof or the capacity, identity or authority of any party
purporting to sign or deliver such document.

 

4.             The duties of Escrow Agent are only as herein
specifically provided, and are purely ministerial in nature. Escrow Agent shall
neither be responsible for, or under, nor chargeable with knowledge of, the
terms and conditions of any other agreement, instrument or document in
connection herewith, including, without limitation, the Purchase Agreement
referred to in the preamble to this Agreement and shall be required to act in
respect of the Escrowed Property only as provided in this Agreement. This
Agreement sets forth all the obligations of Escrow Agent with respect to any
and all matters pertinent to the escrow contemplated hereunder and no
additional obligations of Escrow Agent shall be implied from the terms of this
Agreement or any other agreement. Escrow Agent shall incur no liability in
connection with the discharge of its obligations under this Agreement or
otherwise in connection therewith, except such liability as may arise from the
gross negligence or willful misconduct of Escrow Agent.

 

5.             Escrow Agent shall not be bound by any modification,
cancellation or rescission of this Agreement unless in writing and signed by
Escrow Agent.

 

6.             Escrow Agent shall have no tax reporting duties with
respect to the Escrowed Property or income thereon, such duties being the
responsibility of the party or parties that receive, or have the right to
receive, any taxable income hereunder. Notwithstanding the foregoing, Escrow
Agent has the authority to comply with the provisions of Section 468B(g) of
the Internal Revenue Code of 1986, as amended, and any regulations promulgated
thereunder. Such authority shall include, without limitation, (i) the
filing of tax returns (including information returns) with respect to the
Escrowed Property or income thereon, (ii) the payment of any tax, interest
or penalties imposed thereon, (iii) the withholding of any amounts that
are required to be withheld and (iv) the payment over of such withheld
amounts to the appropriate taxing authority. The parties to this Agreement,
other than the Escrow Agent, shall provide the Escrow Agent with all
information necessary to enable Escrow Agent to comply with the foregoing.
Escrow Agent may withdraw from the Escrowed Property amounts necessary to pay
all applicable income or withholding taxes (plus interest and penalties
thereon) that are required to be paid for or on the account of the party for
whom the Escrowed Property is being held.

 

7.             Escrow Agent is acting as a stakeholder only with
respect to the Escrowed Property. If any dispute arises as to whether Escrow
Agent is obligated to deliver the Escrowed

 

Exhibit B-2

 

Property or as to whom the Escrowed Property is to
be delivered or the amount thereof, Escrow Agent shall not be required to make
any delivery, but in such event Escrow Agent shall hold the Escrowed Property
until receipt by Escrow Agent of instructions in writing, signed by all parties
that have, or claim to have, an interest in the Escrowed Property, directing the
disposition of the Escrowed Property, or in the absence of such authorization,
Escrow Agent shall hold the Escrowed Property until receipt of a copy of a
final judgment or order of a court of competent jurisdiction, certified by the
clerk of such court or other appropriate official, providing for the
disposition of the Escrowed Property. A judgment or order under this Agreement
shall not be deemed to be final until the time within which to take an appeal
therefrom has expired and no appeal has been taken, or until the entry of a
judgment or order from which no appeal may be taken. Escrow Agent may require,
as a condition to the disposition of the Escrowed Property pursuant to written
instructions or a final judgment or order, indemnification and/or opinions of
counsel, reasonably acceptable to the Escrow Agent, to the effect that such
written instructions are valid and binding on each party or that such judgment
or order is final within the meaning of this Agreement, in form and substance
satisfactory to Escrow Agent, from each party providing such instructions or
from the party to whom the Escrowed Property is to be delivered pursuant to a
final judgment or order. If such written instructions, indemnification and
opinions are not received, or proceedings for such determination are not
commenced, within thirty (30) days after receipt by Escrow Agent of notice of
any such dispute and diligently continued, or if the Escrow Agent is uncertain
as to which party or parties are entitled to the Escrowed Property, Escrow
Agent shall either (i) hold the Escrowed Property until receipt of (X) such
written instructions and indemnification or (Y) a certified copy of a
final judgment of a court of competent jurisdiction providing for the
disposition of the Escrowed Property, or (ii) deposit the Escrowed
Property in the registry of a court of competent jurisdiction; provided, however, that notwithstanding the foregoing,
Escrow Agent may, but shall not be required to, institute legal proceedings of
any kind.

 

8.             Escrow Agent and any successor escrow agent may at any
time resign as such by delivering the Escrowed Property to either (i) any
successor escrow agent designated by all the parties hereto (other than Escrow
Agent) in writing, or (ii) any court having competent jurisdiction. Upon
its resignation and delivery of the Escrowed Property as set forth in this
paragraph, Escrow Agent shall be discharged of, and from, any and all further
obligations arising in connection with the escrow contemplated by this
Agreement.

 

9.             This Agreement shall inure to the benefit of, and be
binding upon, the parties hereto and their respective successors and assigns.
Nothing in this Agreement, express or implied, shall give to anyone, other than
the parties hereto and their respective permitted successors and assigns, any
benefit, or any legal or equitable right, remedy or claim, under or in respect
of this Agreement or the escrow contemplated hereby.

 

10.           All notices required or permitted to be given hereunder
shall be in writing and deemed given when delivered by hand or by recognized
overnight courier that provides receipt of delivery to the parties at their
respective addresses shown in this Agreement, or transmitted by telecopier to
their respective telecopier numbers as shown in this Agreement, if sent during
regular business hours or, if sent thereafter, on the next Business Day, (with
a copy of any telecopied notice to be sent by hand or by overnight courier
within one (1) Business Day 

 

Exhibit B-3

 

thereafter). Notices shall be deemed given
when received or upon refusal of a party to accept delivery of such notice.
Notices shall be given at the following addresses:

 

	
  If
  to Seller:

  	
  Waipouli
  Owner, LLC

  c/o RREEF America L.L.C.

  280 Park Avenue, 22nd Floor

  New York, New York 10017

  Attention: Peggy DaSilva

  Fax: 212-454-6205

  
	
   

  	
   

  
	
  with
  a copy to:

  	
  Waipouli
  Owner, LLC

  c/o RREEF Real Estate Global Opportunity Funds

  101 California Street, Suite 2600

  San Francisco, California 94111

  Attention: Erik Lassar

  Fax: 415-986-6248

  
	
   

  	
   

  
	
  and
  to:

  	
  Dechert
  LLP

  90 State House Square

  Hartford, Connecticut 06103

  Attention: Laura G. Ciabarra

  Fax: 860-524-3930

  
	
   

  	
   

  
	
  and
  to:

  	
  Starn
  O’Toole Marcus & Fisher, a law corporation

  733 Bishop Street, 19th floor

  Honolulu, Hawaii 96813

  Attention: Kenneth B. Marcus

  Fax: 808-537-5434

  
	
   

  	
   

  
	
  and
  to:

  	
  Wells
  Fargo Bank, N.A., as Trustee for

  Morgan Stanley Series 2006-XLF

  C/o Midland Loan Services, Inc.

  10851 Mastin

  Overland Park, Kansas 66210

  Attention: Kevin Semon

  Facsimile: 913-253-9723

  
	
   

  	
   

  
	
  and
  to:

  	
  Polsinelli
  Shalton Flanigan Suelthaus P.C.

  700 W. 47th Street

  Kansas City, Missouri 64112

  Attention: Michael B. Hickman

  Facsimile: (816) 753-1536

  
	
   

  	
   

  
	
  and
  to:

  	
  Morgan
  Stanley Mortgage Capital Holdings LLC

  1221 Avenue of the Americas, 27th Floor

  New York, New York 10020

  Attention: David Oliner

  

 

Exhibit B-4

 

	
   

  	
  Facsimile:
  (212) 762-6220

  
	
   

  	
   

  
	
  and
  to:

  	
  Cadwalader,
  Wickersham & Taft LLP

  227 West Trade Street, Suite 2400

  Charlotte, North Carolina 28202

  Attention: James Hassan, Esq.

  Facsimile: (704) 348-5200

  
	
   

  	
   

  
	
  If
  to Purchaser:

  	
  JMI
  Realty LLC

  111 Congress Avenue, Suite 2600

  Austin, Texas 78701

  Attention: Greg Clay

  Facsimile: (512) 539-3612

  
	
   

  	
   

  
	
  with
  a copy to:

  	
  JMI
  Realty LLC

  111 Congress Avenue, Suite 2600

  Austin TX 78701

  Attention: Bryant Burke, Esq.

  Facsimile: (512) 539-3601

  
	
   

  	
   

  
	
  and
  to:

  	
  Sheppard
  Mullin Richter & Hampton

  12275 El Camino Real, Suite 200

  San Diego CA 92130

  Attention: Domenic C. Drago, Esq.

  Facsimile: (858) 506-3691

  
	
   

  	
   

  
	
  and
  to:

  	
  Cades
  Schutte LLP

  1000 Bishop Street, Suite 1200

  Honolulu HI 96813

  Attention: Gino Gabrio, Esq.

  Facsimile: (808) 540-5029

  
	
   

  	
   

  
	
  If
  to Escrow Agent:

  	
  Title
  Guaranty Escrow Services, Inc.

  235 Queen Street

  Honolulu HI 96813

  Attention: Barbara Paulo, Vice President

  Fax: (808) 521-0280

  

 

11.           Each party and their respective attorneys shall have the
right to change its address and/or telecopy number for the receipt of notices,
upon the giving of proper notice to all other parties in accordance with the
terms of this Paragraph 11. “Business Day” shall mean any day other
than a Saturday, Sunday or legal holiday on which banks in the State of Hawaii
are authorized or obligated, by law, governmental decree or executive order, to
be closed.

 

12.           This Agreement shall be construed and enforced in accordance
with the laws of the State of Hawaii. All actions against Escrow Agent arising
under or relating to this Agreement shall be brought against Escrow Agent
exclusively in the appropriate court in the City and County of Honolulu, State
of Hawaii. Each of the parties hereto agree to submit to

 

Exhibit B-5

 

personal jurisdiction and to waive any objection as
to venue in the City and County of Honolulu, State of Hawaii. Service of
process on any party hereto in any action arising out of or relating to this
Agreement shall be effective if mailed to such party as set forth in Paragraph 11.

 

13.           TO THE FULL EXTENT
PERMITTED BY LAW, EACH OF THE PARTIES HERETO HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVES THE RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT
TO ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH
THIS AGREEMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS
(WHETHER ORAL OR WRITTEN) OR ACTIONS OF ANY PARTY HERETO. THIS PROVISION IS A
MATERIAL INDUCEMENT FOR ESCROW AGENT ENTERING INTO THIS AGREEMENT.

 

14.           This Agreement may be executed in any number of separate
counterparts, each of which shall, collectively and separately, constitute one
agreement.

 

15.           All pronouns and any variations thereof shall be deemed to
refer to the masculine, feminine or neuter, singular or plural, as the identity
of the parties hereto taken within context may require.

 

16.           The rights of Escrow Agent contained in this Agreement,
including without limitation the right to indemnification, shall survive the
resignation of Escrow Agent and the termination of the escrow contemplated
hereunder.

 

17.           All capitalized terms used, but not defined herein, shall
have the meanings ascribed to them in the Purchase Agreement.

 

[REMAINDER OF PAGE LEFT INTENTIONALLY BLANK

 

SIGNATURE PAGES TO FOLLOW]

 

Exhibit B-6

 

IN WITNESS WHEREOF, the parties hereto have
caused this Agreement to be duly executed as of the day and year first written
above.

 

 

	
   

  	
  SELLER

  
	
   

  	
   

  
	
   

  	
  WAIPOULI
  OWNER, LLC, a Delaware limited liability company

  
	
   

  	
   

  
	
   

  	
  By:

  	
  WAIPOULI
  SENIOR MEZZANINE, LLC, a Delaware limited liability company, its sole member

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  WAIPOULI
  JUNIOR MEZZANINE, LLC, a Delaware limited liability company, its sole member

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
  WAIPOULI
  HOLDINGS, LLC, a Delaware limited liability company, its sole member

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  By:

  	
  RREEF
  GLOBAL OPPORTUNITIES FUND II, LLC, a Delaware limited liability company, its
  managing member

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  By:

  	
  RREEF
  AMERICA L.L.C., a Delaware limited liability company, as attorney-in-fact

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Title:

  	
   

  

 

	
   

  	
  PURCHASER

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  JMI
  REALTY, LLC, a Delaware limited liability company

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  

 

Exhibit B-7

 

	
   

  	
  ESCROW
  AGENT

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  TITLE
  GUARANTY ESCROW SERVICES, INC.

  
	
   

  	
   

  
	
   

  	
  a
  Hawaii corporation

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Barbara
  Paulo

  	
   

  
	
   

  	
  Title:

  	
  Vice
  President

  	
   

  

 

Exhibit B-8

 

Exhibit
A

 

                        ,
2010

 

                                        

                                        

Attention:                        

 

Re:                               Case
No.                               ;
Sale of property (the “Sale”) by WAIPOULI OWNER, LLC,
a Delaware limited liability company, whose address is c/o RREEF America
L.L.C., 280 Park Avenue, 22nd Floor, New York, New York 10017,
Attention: Peggy DaSilva (“Seller”) to JMI REALTY
LLC, a Delaware limited liability company (the “Purchaser”),
whose address is 111 Congress Ave., 26th Floor, Austin, TX 78701, Attention
Gregory W. Clay, or an assignee thereof (“Purchaser”), located at 650
Aleka Loop, Kapaa, Waipouli Beach, on the Island of Kauai, County of Kauai,
State of Hawaii, known as the ResortQuest Kauai Beach at Makaiwa (the “Property”)

 

Ladies
and Gentlemen:

 

Pursuant
to Paragraph 2 of that certain Escrow Agreement by and between Seller,
Purchaser, and
                                                 ,
whose address is
                                              
(“Escrow Agent”), dated as of
June       , 2010 (the “Escrow Agreement”),
such Escrow Agreement as is attached hereto as Exhibit A, this
letter shall constitute joint instructions to you from Seller and Purchaser for
the disbursement of the Escrowed Property (as defined in the Escrow Agreement),
including all interest, if any, earned thereon, deposited with Escrow Agent in
connection with the Sale.

 

Seller
and Purchaser hereby instruct Escrow Agent to immediately disburse the Escrowed
Property, including all interest earned thereon pursuant to Paragraph 1 of
the Escrow Agreement, to
                                                                      
in the following manner:

 

Wire
Instructions for
                                                            :

 

[Name
of Bank]

[Address
of Bank]

 

Attn:                                                      

Account
Number:                                                      

ABA
Number                                                      

 

Name
of Account Holder(s)

Contact
                                                  
at                                                   
once wire has been initiated.

 

Exhibit B-9

 

Please
acknowledge and confirm your agreement to comply with the foregoing
instructions by signing the attached copy of this letter in the space provided
below and returning it to
[                                  ],
counsel for Seller.

 

	
   

  	
  Very
  truly yours,

  
	
   

  	
   

  
	
   

  	
  [                                                                ],
  as counsel for Seller

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  [                                                                ],
  as counsel for Purchaser

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  

 

AGREED
TO AND ACCEPTED:

[                                                  ]

ESCROW
AGENT

 

 

	
  By:

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  

 

Exhibit B-10

 

EXHIBIT C

 

DEED

 

 

Return
by Mail ( ) Pickup ( ) To:

 

Document contains         
pages

TMK
No. (4)4-3-007-028

 

DEED

 

This
indenture, is made this          day of
                    ,
2010 between WAIPOULI OWNER, LLC, a Delaware
limited liability company, whose address is c/o RREEF America L.L.C., 280 Park
Avenue, 22nd Floor, New York, New York 10017, Attention Peggy DaSilva
(“Grantor”) and JMI REALTY LLC, a Delaware limited
liability company, whose address is 111 Congress Avenue, Suite 2600,
Austin, Texas, 78701, Attention Gregory W. Clay (“Grantee”).

 

WHEREAS,
Grantor

 

NOW
THEREFORE, Grantor, in consideration of TEN DOLLARS, and other good and
valuable consideration paid by Grantee, the receipt and sufficiency of which is
hereby acknowledged,  does hereby grant,
bargain, sell, and convey unto Grantee, and Grantee’s successors and assigns
forever:

 

All
of that certain property located at 650 Aleka Loop, Kapaa, Waipouli Beach, on
the Island of Kauai, County of Kauai, State of Hawaii, more commonly known as
the ResortQuest Kauai Beach at Makaiwa, identified as Tax Map Kay
No. (4) 4-3-007-028, and as more particularly described in Exhibit “A”
attached hereto and made a part hereof;

 

AND
the reversions, remainders, rents, issues and profits thereof, together with
all buildings, improvements, tenements, rights, easements, privileges and
appurtenances to the same belonging or appertaining or held and enjoyed
therewith (all of which shall collectively be called the “Property”);

 

Exhibit C-2

 

TOGETHER
WITH and all of the estate, right, title, and interest, if any, of the Grantor
therein and thereto.

 

TO
HAVE AND TO HOLD the Property unto Grantee, its successors and assigns,
forever.

 

The
terms “Grantor” and “Grantee”, as and when used herein, or any pronouns used in
place thereof, shall mean and include the masculine, feminine or neuter, the
singular or plural number, individuals, partnerships, trustees or corporations
and their and each of their respective successors, heirs, personal
representatives, successors in trust, and assigns, according to the context
thereof.

 

[THE REMAINDER OF THIS PAGE IS INTENTIONALLY BLANK;

 

SIGNATURE PAGES TO FOLLOW.]

 

Exhibit C-3

 

IN
WITNESS WHEREOF, Grantor hereto has executed these presents as of the day and
year first above written.

 

	
   

  	
  GRANTOR:

  
	
   

  	
   

  
	
   

  	
  WAIPOULI
  OWNER, LLC, a Delaware limited liability company

  
	
   

  	
   

  
	
   

  	
  By:

  	
  WAIPOULI
  SENIOR MEZZANINE, LLC, a Delaware limited liability company, its sole member

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  WAIPOULI
  JUNIOR MEZZANINE, LLC, a Delaware limited liability company, its sole member

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
  WAIPOULI
  HOLDINGS, LLC, a Delaware limited liability company, its sole member

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  By:

  	
  RREEF
  GLOBAL OPPORTUNITIES FUND II, LLC, a Delaware limited liability company, its
  managing member

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  By:

  	
  RREEF
  AMERICA L.L.C., a Delaware limited liability company, as attorney-in-fact

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Title:

  

 

	
  STATE
  OF

  	
  )

  	
   

  
	
   

  	
  )
  

  	
  SS.

  
	
  COUNTY
  OF

  	
  )

  	
   

  

 

On
                                          ,
2010, before me personally appeared
                                                      
and
                                                                  ,
to me personally known, who, being by me duly sworn or affirmed, did say that
said persons executed this     -page DEED dated
                        
      , 2010, in the                     
Circuit of the State of
                    ,
as the free act and deed of said persons, and if applicable in the capacity
shown, having been duly authorized to execute such instrument in such capacity.

 

(Stamp & Seal)

 

	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Print
  Name:

  	
   

  
	
   

  	
  Notary
  Public, State of

  
	
   

  	
   

  
	
   

  	
  My
  commission expires:

  

 

Exhibit C-4

 

Exhibit “A”

 

Property Description

 

All
of that certain parcel of land situate at Waipouli, District of Puna, Island
and County of Kauai, State of Hawaii, described as follows:

 

Lot
3, area 10.377 acres, as shown on Map 2, filed with Land Court Application
No. 889 of Edward Henry Walton Broadbent.

 

Together
with a right of way to Kuhio Highway over Lot 6, as shown on Map 2, filed with
Land Court Application 889, and Lot 9, as shown on Map 6, filed with Land Court
Application No. 1166 and an easement for pedestrian access to the beach
over and across beach access Lot 8, as shown on Map 6, filed with Land Court
Application No. 1166, as set forth in Amendment and Restatement of
Declaration of Easements and Covenants recorded as Land Court Document
No. 2007394, as amended, subject to the terms and covenants contained
therein.

 

Excepting
any portion of the above described property lying below the line of high water,
said line of high water being defined by Sections 205A-41 to 205A-43.6 of
the Hawaii Revised Statutes, as amended, and also excepting any artificial
accretions to said property waterward of said high water line.

 

Together
also with the rights provided for as an appurtenance to said Lot 3, as set
forth in that certain Declaration of Easements and Covenants recorded
February 6, 1986 as Land Court Document No. 1351484 of Official
Records, as amended and restated by Amendment and Restatement of Declaration of
Easements and Covenants Recorded March 19, 1993 as Land Court Document
No. 2007394 of Official Records, and as further amended by First Amendment
to the Amended and Restated Declaration of Easements and Covenants recorded June 21,
2004 as Land Court Document No. 3124940 of Official Records.

 

Being
all of the premises described in and covered by transfer Certificate of Title
No. 829,487.  Issued to:  Waipouli Owner, LLC, a Delaware limited
liability company.

 

(Limited
Warranty Deed with Covenants recorded October 20, 2006 as Land Court
Document No. 3501706 of Official Records.)

 

TMK:  (4) 4-3-007-028

 

— End of Exhibit “A” —

 

Exhibit C-5

 

EXHIBIT D

 

ASSIGNMENT OF TENANT LEASES

 

 

Return
by Mail ( ) Pickup ( ) To:

 

Document contains
         pages

TMK
No. (4)4-3-007-028

 

ASSIGNMENT AND ASSUMPTION OF LEASES AND DEPOSITS

 

THIS
ASSIGNMENT AND ASSUMPTION OF LEASES AND DEPOSITS (this “Assignment”) is
made as of
                      
      , 2010, by and between WAIPOULI
OWNER, LLC, a Delaware limited liability company, whose address is
c/o RREEF America L.L.C., 280 Park Avenue, 22nd Floor, New York,
New York 10017, Attention Peggy DaSilva (the “Assignor”) and JMI REALTY LLC, a Delaware limited liability company, whose
address is 111 Congress Avenue, Suite 2600, Austin, Texas, 78701,
Attention Gregory W. Clay (the “Assignee”).

 

W I T N E S S E T H:

 

WHEREAS,
Assignor and Assignee are parties to that certain Purchase and Sale Agreement
dated as of June             ,
2010 (the “Agreement”), which provides, among other things, for the sale
by Assignor to Assignee of those certain parcels of land located at 650 Aleka
Loop, Kapaa, Waipouli Beach, on the Island of Kauai, County of Kauai, State of
Hawaii, more commonly known as the ResortQuest Kauai Beach at Makaiwa, as more
particularly described in Exhibit “A” attached to this Assignment,
together with the improvements located thereon;

 

WHEREAS,
capitalized terms not defined in this Assignment shall have the meanings given
them in the Agreement;

 

WHEREAS,
the Agreement requires Assignor to assign to Assignee all of Assignor’s rights,
obligations and interests in, under and to all leases, subleases, licenses,
concessions, agreements and other agreements for use and occupancy of any
portion of the

 

Exhibit D-2

 

Property
(the “Leases”, as that term is further defined in the Agreement),
together with all security deposits and damage deposits, if any, deposited by
tenants in connection with the Leases (“Deposits”), and requires
Assignee to assume Assignor’s obligations under such Leases and Deposits;

 

WHEREAS,
the Leases are more particularly described in Exhibit “1” attached
hereto and incorporated herein;

 

THEREFORE,
in consideration of the foregoing and the agreements and covenants herein set
forth, together with the sum of Ten Dollars ($10.00) and other good and
valuable consideration this day paid and delivered by Assignee to Assignor, the
receipt and legal sufficiency of which are hereby acknowledged, Assignor does
hereby grant, convey, assign, transfer and set over unto Assignee, subject to
the terms and conditions of the Agreement, all of Assignor’s right, title and
interest in and to the Leases and the Deposits;

 

TO
HAVE AND TO HOLD unto Assignee, and Assignee’s successors and assigns for the
unexpired residue of the Leases, together with the rents, issues, profits,
revenues and benefits of and from the Leases arising or accruing after the date
hereof, and together with the right to enforce the covenants of the Leases.

 

Assignee
hereby assumes and agrees to perform all of the terms, covenants and conditions
of the Leases and the Deposits on the part of Assignor required to be performed
thereunder, from and after the date hereof (but not those required to be
performed prior thereto).

 

Assignee
hereby agrees to indemnify, defend and hold Assignor harmless from and against
any and all loss, liability, cost claim, damage or expense (including, without
limitation, any attorney’s fees or other cost or expense incurred to enforce
any rights and secure any remedies under this Assignment) resulting by reason
of (i) Assignee’s failure to perform its obligations under the Leases or
with respect to the Deposits from and after the date hereof and
(ii) Assignee’s failure to perform its obligations under this Assignment.

 

All
of the covenants, terms and conditions set forth herein shall be binding upon
and shall inure to the benefit of the parties hereto and their respective
successors and permitted assigns. This Assignment may only be modified,
altered, amended, or terminated by the written agreement of Assignor and
Assignee. If any provision or provisions in this Assignment are found by a
court of law to be in violation of any applicable local, state or federal
ordinance, statute, law, administrative or judicial decision, or public policy,
and if such court should declare such portion, provision or provisions of this
Assignment to be illegal, invalid, unlawful, void or unenforceable as written,
then (i) such portion, provision or provisions shall be given force to the
fullest possible extent that they are legal, valid and enforceable,
(ii) the remainder of this Assignment shall be construed as if such
illegal, invalid, unlawful, void or unenforceable portion, provision or
provisions were not contained in this Assignment and (iii) the rights,
obligations and interest of Assignor and Assignee under the remainder of this
Assignment shall continue in full force and effect, provided that such
declarations do not materially change the nature of the parties’ intent
regarding the Assignment viewed as a whole. This Assignment shall be governed
by and construed under the laws of the State of Hawaii without regard to
principles of conflicts of law.

 

Exhibit D-3

 

This
Assignment and all or any related documents may be executed in two or more
counterparts, and each counterpart, when executed, shall be deemed an original.
All such counterparts, together, shall constitute one agreement or one document
binding on all the parties hereto, notwithstanding that all the parties are not
signatory to the original or the same counterpart.

 

[THE REMAINDER OF THIS PAGE IS INTENTIONALLY BLANK;

 

SIGNATURE PAGES TO FOLLOW.]

 

Exhibit D-4

 

IN
WITNESS WHEREOF, Assignor and Assignee have duly executed this Assignment as of
the day and year first above written.

 

	
   

  	
  ASSIGNOR:

  
	
   

  	
   

  
	
   

  	
  WAIPOULI
  OWNER, LLC, a Delaware limited liability company

  
	
   

  	
   

  
	
   

  	
  By:

  	
  WAIPOULI
  SENIOR MEZZANINE, LLC, a Delaware limited liability company, its sole member

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  WAIPOULI
  JUNIOR MEZZANINE, LLC, a Delaware limited liability company, its sole member

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
  WAIPOULI
  HOLDINGS, LLC, a Delaware limited liability company, its sole member

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  By:

  	
  RREEF
  GLOBAL OPPORTUNITIES FUND II, LLC, a Delaware limited liability company, its
  managing member

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  By:

  	
  RREEF
  AMERICA L.L.C., a Delaware limited liability company, as attorney-in-fact

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Title:

  

 

	
  STATE
  OF

  	
  )

  	
   

  
	
   

  	
  )
  

  	
  SS.

  
	
  COUNTY
  OF

  	
  )

  	
   

  

 

On
                                          ,
2010, before me personally appeared
                                                      
and
                                                                  ,
to me personally known, who, being by me duly sworn or affirmed, did say that
said persons executed this     -page ASSIGNMENT AND
ASSUMPTION OF LEASES AND DEPOSITS dated
                        
      , 2010, in the
                    
Circuit of the State of                     ,
as the free act and deed of said persons, and if applicable in the capacity
shown, having been duly authorized to execute such instrument in such capacity.

 

(Stamp & Seal)

 

	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Print
  Name:

  	
   

  
	
   

  	
  Notary
  Public, State of

  
	
   

  	
   

  
	
   

  	
  My
  commission expires:

  

 

Exhibit D-5

 

	
   

  	
  ASSIGNOR:

  
	
   

  	
   

  
	
   

  	
  JMI
  REALTY, LLC, a Delaware limited liability company

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  

 

	
  STATE
  OF

  	
  )

  	
   

  
	
   

  	
  )
  

  	
  SS.

  
	
  COUNTY
  OF

  	
  )

  	
   

  

 

On
                                          ,
2010, before me personally appeared
                                                      
and
                                                                  ,
to me personally known, who, being by me duly sworn or affirmed, did say that
such person executed this     -page ASSIGNMENT AND
ASSUMPTION OF LEASES AND DEPOSITS dated
                        
      , 2010, in the
                    
Circuit of the State of
                    ,
as the free act and deed of such person, and if applicable in the capacity
shown, having been duly authorized to execute such instrument in such capacity.

 

(Stamp & Seal)

 

	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Print
  Name:

  	
   

  
	
   

  	
  Notary
  Public, State of

  
	
   

  	
   

  
	
   

  	
  My
  commission expires:

  

 

Exhibit D-6

 

EXHIBIT E

 

BILL OF SALE

 

 

BILL OF SALE, GENERAL ASSIGNMENT AND ASSUMPTION

 

THIS
BILL OF SALE, GENERAL ASSIGNMENT AND ASSUMPTION (this “Assignment”) is
made as of
                      
      , 2010 (the “Effective Date”), by and
between WAIPOULI OWNER, LLC, a Delaware limited
liability company, whose address is c/o RREEF America L.L.C., 280 Park Avenue,
22nd Floor, New York, New York 10017, Attention Peggy DaSilva (the “Assignor”),
and JMI REALTY LLC, a Delaware limited
liability company, whose address is 111 Congress Avenue, Suite 2600,
Austin, Texas, 78701, Attention Gregory W. Clay (the “Assignee”).

 

W I T N E S S E T H:

 

WHEREAS,
Assignor and Assignee are parties to that certain Purchase and Sale Agreement
dated as of
June               ,
2010 (the “Agreement”), which provides, among other things, for the sale
by Assignor to Assignee of those certain parcels of land located at 650 Aleka
Loop, Kapaa, Waipouli Beach, on the Island of Kauai, County of Kauai, State of
Hawaii, more commonly known as the ResortQuest Kauai Beach at Makaiwa, as more
particularly described in Exhibit “A” attached to the Agreement,
together with the improvements located thereon, and the execution and delivery
of this Assignment; and

 

WHEREAS,
capitalized terms not defined in this Assignment shall have the meanings given
them in the Agreement; and

 

WHEREAS,
the Agreement requires Assignor to assign to Assignee all of Assignor’s rights,
obligations and interests in, under and to the Personal Property, the Balance
Sheet Inventories, the Government Permits, the Operating Contracts, the
Equipment Leases, the Books, the Warranties and Guaranties, the Intangible
Property, and the Plans and Studies, as such terms are defined in the
Agreement, and requires Assignee to assume Assignor’s obligations thereunder;

 

NOW
THEREFORE, in consideration of the foregoing and the agreements and covenants
herein set forth, together with the sum of TEN AND NO/100 DOLLARS (US$10.00)
and other good and valuable consideration this day paid and delivered by
Assignee to Assignor, the receipt and legal sufficiency of all of which are
hereby acknowledged by Assignor, Assignor does hereby assign and convey unto
Assignee all of Assignor’s right, title and interest in and to the following to
the extent assignable (individually, an “Assigned Property” and
collectively, the “Assigned Properties”):

 

a.             the Personal Property;

 

b.             the Balance Sheet Inventories;

 

c.             the Government Permits;

 

d.             the Operating Contracts;

 

e.             the Equipment Leases;

 

Exhibit E-2

 

f.              the Books;

 

g.             the Warranties and Guaranties;

 

h.             the Intangible Property; and

 

i.              the Plans and Studies.

 

TO
HAVE AND TO HOLD all and singular the Assigned Properties unto Assignee, and
Assignee’s successors and permitted assigns for the unexpired residue of the
Assigned Properties. Except as expressly set forth in the Agreement, ASSIGNEE
TAKES THE ASSIGNED PROPERTIES “AS IS”, “WHERE IS” AND WITH “ALL FAULTS”.

 

This
Assignment is made and delivered subject to the terms and conditions of the
Agreement, including the representations and warranties, the limitations
waivers and disclaimers of representations and warranties and the
indemnification provisions expressly set forth therein.

 

Assignee
hereby assumes and agrees to perform all of the terms, covenants and conditions
of the Assigned Properties on the part of Assignor required to be performed in
connection with the Assigned Properties, arising or incurred in respect of the
period from and after the Effective Date (but not those required to be
performed prior thereto).

 

Assignee
hereby agrees to indemnify, defend and hold Assignor harmless from and against
any and all loss, liability, cost claim, damage or expense (including, without
limitation, any attorney’s fees or other cost or expense incurred to enforce
any rights and secure any remedies under this Assignment) resulting by reason
of (i) Assignee’s failure to perform its obligations in connection with
the Assigned Properties from and after the date hereof and (ii) Assignee’s
failure to perform its obligations under this Assignment.

 

This
Assignment shall take effect as of the Effective Date; provided, however, that
this Assignment shall not constitute an assignment of any Assigned Property if
any attempted assignment of any Assigned Property without the consent of the
other parties with legal rights relating to such Assigned Property, if any, or
the other parties to any agreement affecting such Assigned Property would
constitute a breach of any such party’s rights or any such agreement or in any
way affect the rights of Assignee or Assignor under any such agreement, unless
or until such consent is obtained. If such consent is not obtained or if any
attempted assignment of an Assigned Property would be ineffective or would
affect Assignee’s or Assignor’s rights under any such agreement so that
Assignee would not in fact receive all rights to be granted under this
Assignment with respect to any Assigned Property, then Assignee is authorized
to act as the agent for Assignor in order to obtain for Assignee the benefits
of this Assignment and put Assignee in the same financial position as it would
have been had the assignment been properly made.

 

All
of the covenants, terms and conditions set forth herein shall be binding upon
and shall inure to the benefit of the parties hereto and their respective
successors and permitted assigns. This Assignment may only be modified,
altered, amended, or terminated by the written agreement of Assignor and
Assignee. If any provision or provisions in this Assignment are found by a
court of law to be in violation of any applicable local, state or federal
ordinance, statute, 

 

Exhibit E-3

 

law,
administrative or judicial decision, or public policy, and if such court should
declare such portion, provision or provisions of this Assignment to be illegal,
invalid, unlawful, void or unenforceable as written, then (i) such
portion, provision or provisions shall be given force to the fullest possible
extent that they are legal, valid and enforceable, (ii) the remainder of
this Assignment shall be construed as if such illegal, invalid, unlawful, void
or unenforceable portion, provision or provisions were not contained in this
Assignment and (iii) the rights, obligations and interest of Assignor and
Assignee under the remainder of this Assignment shall continue in full force
and effect, provided that such declarations do not materially change the nature
of the parties’ intent regarding the Assignment viewed as a whole. This Assignment
shall be governed by and construed under the laws of the State of Hawaii
without regard to principles of conflicts of law.

 

This
Assignment and all or any related documents may be executed in two or more
counterparts, and each counterpart, when executed, shall be deemed an original.
All such counterparts, together, shall constitute one agreement or one document
binding on all the parties hereto, notwithstanding that all the parties are not
signatory to the original or the same counterpart.

 

[THE REMAINDER OF THIS PAGE IS INTENTIONALLY BLANK;

 

SIGNATURE PAGES TO FOLLOW.]

 

Exhibit E-4

 

IN
WITNESS WHEREOF, Assignor and Assignee have duly executed this Assignment as of
the day and year first above written.

 

	
   

  	
  ASSIGNOR

  
	
   

  	
   

  
	
   

  	
  WAIPOULI
  OWNER, LLC, a Delaware limited liability company

  
	
   

  	
   

  
	
   

  	
  By:

  	
  WAIPOULI
  SENIOR MEZZANINE, LLC, a Delaware limited liability company, its sole member

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  WAIPOULI
  JUNIOR MEZZANINE, LLC, a Delaware limited liability company, its sole member

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
  WAIPOULI
  HOLDINGS, LLC, a Delaware limited liability company, its sole member

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  By:

  	
  RREEF
  GLOBAL OPPORTUNITIES FUND II, LLC, a Delaware limited liability company, its
  managing member

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  By:

  	
  RREEF
  AMERICA L.L.C., a Delaware limited liability company, as attorney-in-fact

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Title:

  	
   

  

 

	
   

  	
  ASSIGNEE

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  JMI
  REALTY, LLC, 

  
	
   

  	
  a
                                                
  limited liability company

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  

 

Exhibit E-5

 

EXHIBIT F

 

[INTENTIONALLY OMITTED]

 

 

EXHIBIT G

 

MIDLAND TERM SHEET

 

Midland
Loan Services, Inc. (the “Special Servicer”),
as the special servicer for Wells Fargo Bank N.A. AS TRUSTEE FOR THE MORGAN
STANLEY MORTGAGE CAPITAL I INC. COMMERCIAL MORTGAGE PASS THROUGH CERTIFICATES
SERIES 2006-XLF (the “Senior Lender”),
is prepared (subject to Senior Lender’s completion of updated underwriting of
the asset and the new Borrower, and satisfactory documentation) to allow an
assumption of the Senior Mortgage Loan (the “Senior
Loan”) secured by the Property. 
Set forth below are the principal terms that would apply to such a
transaction.

 

	
  Borrower:

  	
   

  	
  a
  newly formed single-purpose, bankruptcy remote entity (“Borrower”)
  wholly-owned and controlled by (by contract or otherwise) or under common
  control with (by contract or otherwise) JMI Realty, LLC, or it’s principals
  (John Kratzer and John Moores) and Behringer Harvard Investment Opportunity
  REIT II, Inc. or others acceptable to Senior Lender in its sole
  discretion (such joint venture partners are collectively called, the “Sponsor”).

  
	
   

  	
   

  	
   

  
	
  Total
  Capitalization:

  	
   

  	
  $46,500,000.00

  
	
   

  	
   

  	
   

  
	
  Loan
  Amount:

  	
   

  	
  $38,000,000.00

  
	
   

  	
   

  	
   

  
	
  Interest
  Rate:

  	
   

  	
  0.950%
  over 30-day LIBOR calculated on an actual/360 basis. 

   

  Interest
  will be due on the ninth day of each month (or previous business day) with no
  grace period. The accrual period shall run from the 15th day of the month
  prior to the payment date through and including the 14th day of the month in
  which the monthly payment is made.

  
	
   

  	
   

  	
   

  
	
  Borrower
  Security for

  	
   

  	
   

  
	
  Debt
  Service (24 months):

  	
   

  	
  Borrower
  will arrange for and deposit with Senior Lender at closing a $1.0 million
  evergreen Letter of Credit in favor of Senior Lender and issued by a
  financial institution acceptable to Senior Lender, in its sole discretion,
  for the purpose of securing Borrower’s obligation to fully fund operating
  expenses and debt service during the first twenty-four (24) months following
  the loan assumption date.

  
	
   

  	
   

  	
   

  
	
  Existing
  Loan Reserve Accounts

  	
   

  	
   

  
	
  (if
  any):

  	
   

  	
  At
  closing of the proposed purchase of the mortgaged property by Borrower and
  its assumption of the Senior Loan, Senior Lender shall use the funds then
  remaining in the existing loan reserve accounts under the Senior Loan to

  

 

 

	
   

  	
   

  	
  cover
  (a) reimbursement of all protective advances made by Senior Lender up to
  the closing date, (b) payment to Senior Lender of all outstanding and
  unpaid amounts required to bring the Senior Loan current as of the closing
  date of the assumption of the Senior Loan, (c) payment to Senior Lender
  or the appropriate parties of all other costs or fees incurred by Senior
  Lender and associated with the loan forbearance agreement entered into with
  the Original Borrower, (d) payment to Borrower of up to $35,000 to
  reimburse it for legal fees incurred, and (e) pay current all operating
  deficits and receivership costs related to the Property as of the loan
  assumption date. No amounts will remain in such existing loan reserve
  accounts after payment of the foregoing.

  
	
   

  	
   

  	
   

  
	
  Interest
  Rate Protection:

  	
   

  	
  Prior
  to closing Borrower will be required to purchase an interest rate cap in a
  form and with counterparty acceptable to Senior Lender limiting 30-day LIBOR
  to a rate of 4.00% for the initial 3 years of the term of the Senior Loan and
  limiting 30-day LIBOR to a rate of 5.00% for the remaining years.

  
	
   

  	
   

  	
   

  
	
  Extension
  of Loan Term:

  	
   

  	
  The
  current maturity date of the Senior Loan will be extended for a period of
  sixty (60) months from the loan assumption date. Borrower shall further have
  an option to extend the maturity date for an additional eighteen (18) month
  period upon condition that the Senior Loan is not then in default in any
  monetary or material non-monetary manner and that Borrower pays a loan
  extension fee in the amount of 0.25% of the extended balance of the Senior
  Loan, plus all costs and expenses incurred by or on behalf of Senior Lender
  in connection with such extension, not to exceed $25,000.

  
	
   

  	
   

  	
   

  
	
  Amortization:

  	
   

  	
  Interest
  only.

  
	
   

  	
   

  	
   

  
	
  Security:

  	
   

  	
  (i) Except
  as set forth in “Recourse” below, a
  non-recourse first mortgage lien on fee interest in the Property,
  (ii) lien on all personal property, any cash collateral or reserve
  accounts, credit card receivables, fixtures and equipment of Borrower,
  (iii) a first priority assignment of leases and rents, (iv) a first
  priority assignment of any LIBOR cap and (v) other items as reasonably
  required in Lender’s sole discretion.

  
	
   

  	
   

  	
   

  
	
  Assumption
  and Other Fees:

  	
   

  	
  A
  loan assumption fee equal to one percent (1.0%) of the Loan Amount
  ($380,000.00) shall be paid by Borrower to

  

 

 

	
   

  	
   

  	
  Special
  Servicer at closing, and any other incurred fees and costs due and owing to
  Senior Lender and/or Special Servicer in connection with the assumption of
  the Senior Loan shall be paid by Borrower to Senior Lender and/or Special
  Servicer at closing.

  
	
   

  	
   

  	
   

  
	
  Outside
  Closing Date:

  	
   

  	
  One
  hundred five (105) days after mutual execution of the Purchase and Sale
  Agreement between Waipouli Owner, LLC, as Seller, and Borrower, as Buyer (the
  “Purchase Agreement”).

  
	
   

  	
   

  	
   

  
	
  Prepayment:

  	
   

  	
  The
  Senior Loan will be prepayable at par and without penalty at any time

  
	
   

  	
   

  	
   

  
	
  Cash
  Management Account:

  	
   

  	
  All
  revenues from the Property, including all credit card receivables, will flow
  through an account (the “Cash Management Account”)
  established by Borrower with a financial institution acceptable to Senior
  Lender. The Senior Lender will receive a first priority pledge of the Cash
  Management Account as additional security for the Senior Loan. Monthly
  interest, escrows (as provided below), and budgeted operating expenses will
  be funded from the Cash Management Account.

  
	
   

  	
   

  	
   

  
	
  Commitment
  for Capital

  	
   

  	
   

  
	
  Improvements:

  	
   

  	
  Borrower
  shall commit to expend not less than $7.5 million in capital improvements to
  the Property during the first thirty-six (36) months after the loan
  assumption date, including without limitation, those capital improvements
  identified and set forth on Exhibit “1” attached hereto. [Need attach]

  
	
   

  	
   

  	
   

  
	
  Security
  for Commitment to

  	
   

  	
   

  
	
  Make
  Capital Improvements:

  	
   

  	
  In
  order to secure the Borrower’s obligation to make the minimum amount of
  capital improvements during said 36-month period, Borrower shall arrange for
  and deposit with Senior Lender a $7.5 million evergreen Letter of Credit in
  favor of Senior Lender and issued by a financial institution acceptable to
  Senior Lender, in its reasonable discretion. Senior Lender will review and
  approve all expenditures which will be funded from draws under this Letter of
  Credit, the amount of which shall accordingly be incrementally reduced.

  
	
   

  	
   

  	
   

  
	
  Escrows:

  	
   

  	
  Monthly
  escrow requirements will remain the same as under the current Senior Loan
  Documents, including without limitation, monthly tax and insurance escrow

  

 

 

	
   

  	
   

  	
  reserves,
  and escrow deposits of 0%, 0%, 1%, 3% and 3% of EGI respectively, during the
  first 5-years after the loan assumption date as a new FF&E/replacement
  reserve (subject to adjustment as may be required by the new hotel franchise
  agreement).

  
	
   

  	
   

  	
   

  
	
  Cash
  Trap:

  	
   

  	
  To
  be determined.

  
	
   

  	
   

  	
   

  
	
  Recourse:

  	
   

  	
  To
  be determined.

  
	
   

  	
   

  	
   

  
	
  Insurance:

  	
   

  	
  Borrower
  shall provide evidence of insurance which shall be in form and substance, and
  issued by carriers, acceptable to Senior Lender in its reasonable discretion,
  and provide for types and coverages consistent with and in full compliance
  with the insurance requirements contained in the existing Senior Loan
  Documents.

  
	
   

  	
   

  	
   

  
	
  Additional
  Financing:

  	
   

  	
  None
  permitted other than standard trade payables occurred in the ordinary course
  of business.

  
	
   

  	
   

  	
   

  
	
  Expenses:

  	
   

  	
  The
  1% loan assumption fee described above shall also be used to pay all third
  party expenses of processing, underwriting and closing the assumption of the
  Senior Loan.

  
	
   

  	
   

  	
   

  
	
  Management
  Agreement:

  	
   

  	
  The
  Property shall be managed by a property manager acceptable to Senior Lender
  pursuant to a management agreement acceptable to the manager and Senior
  Lender. Final identification of the designated property manager shall be made
  during the Borrower’s due diligence period under the Purchase Agreement with
  final Senior Lender approved property management agreement to be executed
  concurrently with closing. Borrower shall assign any and all of its rights
  under the management agreement to Senior Lender pursuant to an assignment and
  subordination of management agreement and consent of manager acceptable to
  Senior Lender and the manager.

  
	
   

  	
   

  	
   

  
	
  Hotel
  Franchise Agreement:

  	
   

  	
  The
  Property shall be franchised by a nationally recognized hotel franchisor such
  as Marriott — Courtyard, Sheraton — Four Points, Hyatt — Hyatt Place, or
  Hilton — Doubletree. Final identification of the designated franchisor shall
  be made during the Borrower’s due diligence period under the Purchase Agreement
  with final Senior Lender approved franchise agreement executed concurrently
  with closing. Any future change of the hotel brand, including the entering
  into of any franchise agreement, shall be subject to

  

 

 

	
   

  	
   

  	
  Senior
  Lender’s prior written approval. Borrower shall assign any and all of its
  rights under the franchise agreement to Senior Lender pursuant to an
  assignment and subordination of franchise agreement and consent of franchisor
  acceptable to Senior Lender.

  
	
   

  	
   

  	
   

  
	
  Deposit
  for Third Party Costs:

  	
   

  	
  Borrower
  shall deposit with Midland Loan Services, Inc. (“MLS”)
  a deposit in the amount of $40,000.00 within three (3) business days
  following Borrower’s execution of the Purchase and Sale Agreement for the
  Property, which deposit shall be used by MLS to pay for third-party costs
  associated with its review and approval of the assumption of the Senior Loan,
  including, without limitation, a current property condition report and
  analysis, and update property appraisal, with the remainder applied toward the
  1% loan assumption fee.

  
	
   

  	
   

  	
   

  
	
  Approval
  and Waiver by

  	
   

  	
   

  

 

The
proposal to allow an assumption of the Senior Loan as set forth above
constitutes neither an offer nor a commitment by Senior Lender, but rather
summarizes the general terms under which Senior Lender would be willing to
approve an assumption of the Senior Loan. 
The terms outlined below will be subject to satisfactory completion of
due diligence items customary and standard for such an assumption transaction by
Senior Lender, including, but not limited to, credit reports and 2009 year-end
financial statements for sponsorship, the new property management agreement and
the new hotel franchise agreement, each of which must be satisfactory to Senior
Lender, and approvals by Senior Lender’s loan committee and rating agencies (if
deemed necessary in Senior Lender’s sole discretion).

 

 

SCHEDULE 1.1.3

 

EXCLUDED PERSONAL PROPERTY BELONGING TO OPERATOR

 

	
  Description

  	
   

  	
  Serial Number

  	
   

  	
  Model

  	
   

  
	
  Kronos
  Timeclock

  	
   

  	
  00EL054088

  	
   

  	
  8602800-001

  	
   

  
	
  Kronos
  Timeclock

  	
   

  	
  00EL053228

  	
   

  	
  8602800-001

  	
   

  
	
  BosaNova
  Thin Client Processor with mouse

  	
   

  	
  10323029M05361055M

  	
   

  	
   

  	
   

  
	
  Fellows
  Thin Client Keyboard

  	
   

  	
   

  	
   

  	
  KWD-855

  	
   

  
	
  Dell
  17” Thin Client Monitor

  	
   

  	
  0CC639-7872-5BN-81ES

  	
   

  	
   

  	
   

  

 

 

SCHEDULE 1.1.4

 

LEASES

 

1.             Agreement for
License and Use of Space dated November 11, 2004, by and between Presidio
Kauai, LLC, as “Licensor,” and Pleasant Hawaiian Holidays, as “Licensee.”

·              Use:  Guest activities & Concierge
services

·              Location:  Lobby Concierge desk & office
between entry and lobby elevators

·              Term:  February 1, 2005 to January 31,
2008.

·              $3,000 per
month + 5% of gross commissions

·              Currently
month-to-month under oral agreement.

 

2.             Lease dated
April 27, 2005, by and between PK Holdings, LLC, as “Landlord,” and
Hawaiian Rainforest, LLC, as “Tenant,” as amended.

·              Use:  Beauty Salon, massage, manicure pedicure,
facials, haircuts etc.

·              Location:  1st floor D wing adjacent to 122

·              Term:  April 27, 2005 to September 15,
2010, with a 5 year option to extend

·              Parties have
agreed verbally to a rent reduction. 
Rent is currently $500 per month or 10% gross sales per oral
agreement.  Was $2,000 per month or 19%
of gross sales up to $35,000 or 20% if over $35,000.  If occupancy falls below 55% for 30 days
consecutively, base rent will be reduced to 10% of gross sales

 

3.             Lease dated
October     , 2007, by and between Waipouli Owner,
LLC, as “Landlord,” and DTG Operations, Inc., as “Tenant”.  Use: 
Dollar and Thrifty Rental car office and reservation center.

·              Location:
Previous sundry shop location across from Coffee Kiosk.

·              Term:  November 1, 2007 to December 31,
2010

·              2007 -
10/31/08:  Base Rent First year-$2,500
per month

·              11/0108 -
10/31/09:  Second year - $2,575 per month

·              11/1/09 -
11/30/10:  Third year - $2,652.25 per
month

·              Space is
currently abandoned, but tenant continues to pay rent at the current rate

 

4.             Laundry Room Lease
dated January 11, 2005, by and between Presidio Kauai, LLC as “Lessor” and
Excalibur Laundries, LLC as “Lessee”.

·              Use:  Coin operated Laundry services

·              Location:  2nd and 4th floor B wing fronting 264 and
464. 2nd and 4th floor D wing fronting 226 and 426.

·              Term:  March 1, 2005 to February 28, 2015,
with a 5 year option to extend

·              50 % of gross
revenue less $27.60 per machine per month

·              Now dba Web
Laundry Services

 

 

SCHEDULE 1.1.6

 

GOVERNMENTAL PERMITS

 

1.             County of Kauai’s
Planning Department, Class IV Zoning Permit Z-IV-76-18 (Resort Use,
Waipouli), approved November 12, 1975.

·              Approval of
application for a 311-room hotel with some accessory uses, subject to certain
conditions.

·              The Planning
Department has expressed concern with respect to compliance with condition
number 6 because the beach access does not connect to a public right of way.

 

2.             County of Kauai’s
Planning Department, Special Management Area Minor Permit SMA(U)-78-12 Class IV
Zoning Permit Z-IV-78-41, Use Permit U-31-78 (Luau Facility), approved
June 28, 1978.

·              Approval of
permit for a luau facility, subject to certain conditions.

 

3.             County of Kaua’i
Planning Department, Extension of Special Management Area Minor Permit
SMA(M)-2007-5 Temporary 100’ x 100’ Tent and Location of Temporary Parking.

·              Approval of
extension of SMA permit for temporary tent and location of temporary parking

·              Term:  October 10, 2008 to October 10,
2011

 

4.             Liquor Control
Commission of the County of Kauai, Liquor License No. 12G-006, Hotel
Class, Expires June 30, 2010. 
Licensee: Waipouli Owner, LLC through Joseph Toy, Court-Appointed
Receiver.  Transferred to HI 5th Circuit Court
09-1-0110 Joseph Toy, Receiver dba Aston Kauai Beach at Makaiwa effective
January 26, 2010.

 

5..            Department of Health, Food Establishment Permit,
Permit No. K1158, Category 1, Voyager Grille
Steak & Seafood, Expires September 3, 2011.  Permit holder:  Waipouli Owner LLC

 

6.             Department of
Health, Food Establishment Permit, Permit No. K1159, Category 3, Cook’s
Landing, Expires September 3, 2011. 
Permit holder:  Waipouli Owner LLC

 

7.             Department of
Health, Food Establishment Permit, Permit No. K1160, Category 30, Hanalei
Lounge, Expires September 3, 2011. 
Permit holder:  Waipouli Owner LLC

 

8.             Department of
Health, Food Establishment Permit, Permit No. K1128, Coffee Kiosk, Expires
April 9, 2011.  Permit holder:  Permit Holder:  Aston Kauai Beach at Makaiwa

 

9.             Department of
Labor & Industrial Relations, Permit No. HAW NO. 78-013,
Permit to Operate Elevator- Passenger, Owner’s No. 1, Expired
February 1, 2009.  Elevators
inspected and approved; issuance of new permits pending.

 

 

10.           Department of Labor & Industrial
Relations, Permit No. HAW NO. 78-039, Permit to Operate Elevator-
Passenger, Owner’s No. 2, Expired February 1, 2009.  Elevators inspected and approved; issuance of
new permits pending.

 

11.           Department of Labor & Industrial
Relations, Permit No. HAW NO. 78-040, Permit to Operate Elevator-
Passenger, Owner’s No. 3, Expired February 1, 2009.  Elevators inspected and approved; issuance of
new permits pending.

 

12.           Department of Labor & Industrial
Relations, Permit No. HAW NO. 78-041, Permit to Operate Elevator-
Passenger, Owner’s No. 4, Expired February 1, 2009.  Elevators inspected and approved; issuance of
new permits pending.

 

13.           Department of Labor & Industrial
Relations, Permit No. HAW NO. 78-014, Permit to Operate
Elevator-Passenger, Owner’s No. 5, Expired February 1, 2009.  Elevators inspected and approved; issuance of
new permits pending.

 

14.           Department of Labor & Industrial
Relations, Permit No. HHB0417-08, Permit to Operate Coil Water Tube/Aerco,
Expires February 24, 2011.  Permit
holder:  Resortquest Kauai Beach at
Makaiwa

 

15.           Department of Labor & Industrial
Relations, Permit No. HHB0415-08, Permit to Operate Coil Water Tube/Aerco,
Expires February 24, 2011.  Permit
holder:  Resortquest Kauai Beach at
Makaiwa

 

16.           Department of Labor & Industrial
Relations, Permit No. HHB0416-08, Permit to Operate Coil Water Tube/Aerco,
Expires February 24, 2011.  Permit
holder:  Resortquest Kauai Beach at
Makaiwa

 

17.           Department of Health, Public Swimming Pool Permit,
Permit No. KSP-2006-004-SP, Expires July 24, 2011.  Permit holder:  Waipouli Owner LLC.

 

18.           Department of Health, Public Swimming Pool Permit,
Permit No. KSP-2006-005-SP, Expires July 24, 2011.  Permit holder:  Waipouli Owner LLC.

 

Department
of Labor & Industrial Relations, Permit No. HPV 215-78,
Permit to Operate Horizontal Air Tank/Wood Industrial Prod., Expired
January 1, 2009.  Permit
holder:  Resortquest Kauai Beach

 

 

SCHEDULE 1.1.7

 

OPERATING CONTRACTS

 

1.             Shared Services
Agreement for Grounds Maintenance Services dated January 26, 2006 between
Courtyard Kauai at Waipouli Beach and Kauai Marriott Resort.

·              Grounds
maintenance services, coconut tree trimming

·              Effective
date:  January 1, 2006

·              $14,797.00 per
month

·              Currently
month-to-month, with 90 day termination notice

 

2.             Shared Services
Agreement for Laundry dated January 26, 2006 between Courtyard Kauai at
Waipouli Beach and Kauai Marriott Resort.

·              Laundry service
for Rooms and Food & Beverage linens

·              Effective
date:  January 1, 2006

·              Agreement based
on consumption ($0.49 effective 1/2009)

·              Currently
month-to-month, with 90 day termination notice

 

3.             On Command
Video Corporation — Marriott International Franchisee Service Agreement dated
February 19, 2004 between On Command Video Corporation, and Presidio
Kauai, LLC, as “Franchisee.”

·              LodgeNet
In-room movies and services

·              Term:  February 19, 2004 to February 19,
2011, with automatic 12 month renewal and 60 day termination notice

·              Monthly charge
based on usage less 15% commission due to property

·              MATV system and
other equipment to be returned to vendor with 60 days of termination of
agreement.

 

4.             Otis
Maintenance Agreement dated July 14, 2004, between Otis Elevator Company
and Presidio Kauai, LLC.

·              Preventive
Maintenance service for 4 passenger and 1 service elevator, including
coordination with State agencies

·              Term:  August 1, 2004 to July 31, 2024

·              Currently
$30,169.47 annual service charge

 

5.             Oceanic Time
Warner Cable Hotel Cable Television Bulk Billing Agreement dated
January 19, 2007, between ResortQuest Hawaii, LLC as agent for Waipouli
Owner, LLC, and Time Warner Entertainment Company, L.P. dba Oceanic Time Warner
Cable

·              Cable
television service

·              Term:  January 1, 2007 to December 31,
2011, with automatic sixty month renewal and 30 day termination notice

·              $9.50 per guest
room + taxes and fees

 

 

SCHEDULE 1.1.8

 

EQUIPMENT LEASES

 

1.             Copier Lease
Agreement between Xerox Capital Services and Presidion Kauai LLC dba Kauai
Coconut Beach Resort, as assigned to Waipouli Owner LLC effective June 20,
2006.

·              Copy Machine —
Serial EYF-012105

·              Location:  front
desk

·              Lease: 
$407.16 per month

·              Usage Charges: 
4,000 copies include, 96 cents per page for overages

 

·              Copy Machine —
Serial NWL-008510

·              Location: 
administrative offices

·              Lease: 
$525.35 per month

·              Usage Charges: 
15,000 copies include, 65 cents per page for overages

·              Term:  December 29, 2003 to December 28,
2008

·              Currently
month-to-month

 

2.             Equipment Lease
Agreement dated April 20, 2004 between Pitney Bowes Global Financial
Services, LLC and Presideio Kauai LLC dba Kauai Coconut Beach Resort, as
assigned to Waipouli Owner LLC as of July 13, 2007.

·              Postage meter
machine

·              Location:  administrative offices

·              Term:
April 2004 to December 2008

·              Currently
month-to-month

·              Currently fees
based on postage usage

 

3.             Equipment Lease
Agreement dated December 14, 2004, between Ikon Financial Services and
Presidio Hotel Group LLC, as assumed by Waipouli Owner, LLC as of June 20,
2006.

·              Canon color
copier

·              Location:  F&B offices

·              Term:  December 14, 2004 to December 17,
2009

·              Lease:  $557.80 per month

·              Usage
Charge:  $0.1110 per copy

·              Currently
month-to-month

 

4.             Scottel Voice
Data. dba Black Box Network Services — Pacific

·              Printer, modem,
and meridian mail (8 ports)

·              Location:  Maintenance

·              Term:  January 1, 2010 to December 31,
2010

·              Lease:  included in service agreement charges

 

 

SCHEDULE 1.1.9

 

OPERATOR’S PROPRIETARY SOFTWARE

 

1.             23 Microsoft
Office licenses

 

2.             23 eSet
Antivirus clients

 

 

SCHEDULE 13.1.3

 

CERTAIN EXCEPTIONS TO REPRESENTATIONS

 

1.             Liquor Control
Commission of the County of Kaua’i, License Violation dated November 28,
2009.

·              Findings of
Fact, Conclusions of Law, Decision, and Order related to Statutory Proceeding
to Suspend or Revoke License or Assess and Collect a Penalty, Waipouli Owner,
LLC dba ResortQuest Kauai Beach Hotel, Waipouli, Kauai, Hawai’i

·              Assessed
penalty of $2,000, with payment of $1,000 suspended provided no further
violation through January 8, 2011.

 

2.             County of Kaua’i
Real Property Assessment Division, Board of Review, Tax Payer’s Notice of Real
Property Tax Appeal dated April 8, 2010 for Parcel 4-4-3-007-028-0000-001
related to fiscal year 2010.

·              Submitted by
Joseph M. Toy, Court Appointed Receiver on behalf of Waipouli Owner LLC.

 

 

SCHEDULE 13.1.6

 

ENVIRONMENTAL VIOLATIONS

 

NONE

 

 

SCHEDULE 13.1.16

 

CERTAIN TITLE EXCEPTIONS

RELATING TO

PERSONAL PROPERTY AND OPERATING LEASES

 

	
  Vendor

  	
   

  	
  Item Description

  	
   

  	
  Location

  	
   

  
	
  Kaua’i
  Beverage

  	
   

  	
  Soda
  dispensing machine

  	
   

  	
  Guest
  room floors

  	
   

  
	
  Web
  Laundry Services

  	
   

  	
  Coin-operated
  washer and dryer

  	
   

  	
  Guest
  room floors

  	
   

  
	
  Oceanic
  Time Warner Cable

  	
   

  	
  Internet
  cable

  	
   

  	
  Guest
  rooms

  	
   

  
	
  LodgeNet

  	
   

  	
  Television
  controller

  	
   

  	
  Guest
  rooms

  	
   

  
	
  Kaua’i
  Coffee

  	
   

  	
  Coffee
  machines

  	
   

  	
  Guest
  rooms

  	
   

  
	
  Video
  Vend

  	
   

  	
  ATM
  machine

  	
   

  	
  LobbyExhibit
10.35

 

ASSIGNMENT AND ASSUMPTION

OF PURCHASE AND SALE AGREEMENT

 

This
ASSIGNMENT AND ASSUMPTION OF PURCHASE AND SALE AGREEMENT (“Assignment”)
is made as of October 15, 2010 between JMI REALTY, LLC, a Delaware limited
liability company (“Assignor”), and KAUAI COCONUT BEACH, LLC, a Delaware
limited liability company (“Assignee”).

 

Recitals

 

A.                                   Assignor, as
buyer, and WAIPOULI OWNER, LLC, a Delaware limited liability company, as seller
(“Seller”), entered into that certain Purchase and Sale Agreement dated
as of June 17, 2010, as amended by that certain First Amendment to
Purchase and Sale Agreement dated as of July 19, 2010, that certain Second
Amendment to Purchase and Sale Agreement dated as of October 7, 2010, and
that certain Third Amendment to Purchase and Sale Agreement dated as of October 15,
2010 (collectively, the “Purchase Agreement”), for certain real property
located at Waipouli Beach, Island of Kauai, State of Hawaii, as more
particularly described in Exhibit A to the Purchase Agreement.  MIDLAND LOAN SERVICES, INC., as special
servicer for Wells Fargo Bank N.A., as trustee for the Morgan Stanley Mortgage
Capital I, Inc. Commercial Mortgage Pass Through Certificate Series 2006-XLF
(“Senior Lender”) executed a Limited Joinder to the Purchase Agreement
confirming Senior Lender’s agreement to certain provisions of the Purchase
Agreement.  This Assignment supersedes
all partially executed previous versions of an assignment and assumption of the
Purchase Agreement.

 

B.                                     Assignor
desires to assign and Assignee desires to assume all rights and liabilities of
Assignor under the Purchase Agreement.

 

NOW,
THEREFORE, in consideration of the foregoing recitals, and for other good and
valuable consideration, the receipt and sufficiency of which is hereby acknowledged,
the parties agree to the above recitals and as follows:

 

Section 1.  Assignment and Assumption

 

Effective
as of 8:01 a.m. Hawaii Standard Time on October 20, 2010, Assignor
hereby assigns, transfers, sets over and conveys unto Assignee all of Assignor’s
rights, interests and obligations under the Purchase Agreement, and Assignee
hereby accepts such assignment and assumes all of Assignor’s rights and
obligations under the Purchase Agreement.

 

Section 2.  Counterparts

 

This
Assignment may be executed in any number of counterparts, and each such
counterpart shall be deemed to be an original instrument.

 

1

 

Section 3.  Seller/Senior Lender Consent

 

Seller
and Senior Lender each hereby acknowledges and consents to the terms of this
Assignment.

 

IN
WITNESS WHEREOF, the parties have executed this Assignment as of the date first
set forth above.

 

	
  “ASSIGNOR”

  	
   

  	
  “ASSIGNEE”

  
	
   

  	
   

  	
   

  
	
  JMI
  REALTY, LLC,

  	
   

  	
  KAUAI
  COCONUT BEACH, LLC,

  
	
  a
  Delaware limited liability company

  	
   

  	
  a
  Delaware limited liability company

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/
  Bryant W. Burke

  	
   

  	
  By:

  	
  s/
  Bryant W. Burke

  
	
   

  	
  Bryant
  W. Burke

  	
   

  	
  Name:

  	
  Bryant
  W. Burke

  
	
   

  	
  Its:
  Vice President

  	
   

  	
  Title:

  	
  Vice
  President

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  “SELLER”

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  WAIPOULI OWNER, LLC, a Delaware limited liability
  company

  
	
   

  
	
  By:

  	
  WAIPOULI
  SENIOR MEZZANINE, LLC, a Delaware limited 

  
	
   

  	
  liability
  company

  
	
   

  	
   

  
	
   

  	
  By:

  	
  WAIPOULI
  JUNIOR MEZZANINE, LLC, a Delaware 

  
	
   

  	
   

  	
  limited
  liability company, its sole member

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  WAIPOULI
  HOLDINGS, LLC, a Delaware 

  
	
   

  	
   

  	
   

  	
  limited
  liability company, its sole member

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
  RREEF
  GLOBAL OPPORTUNITIES 

  
	
   

  	
   

  	
   

  	
   

  	
  FUND
  II, LLC, a Delaware limited liability 

  
	
   

  	
   

  	
   

  	
   

  	
  company,
  its managing member

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  By:

  	
  RREEF
  AMERICA L.L.C., a 

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Delaware
  limited liability company, 

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  as
  attorney-in-fact

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  By:

  	
  /s/
  Peggy DaSilva

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Name:

  	
  Peggy
  DaSilva

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Title:

  	
  Managing
  Director

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  By:

  	
  /s/
  George Lane

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Name:

  	
  George
  Lane

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Title:

  	
  Vice
  President

  	
   

  
											

 

2

 

	
  “SENIOR LENDER”

  
	
   

  
	
  MIDLAND LOAN SERVICES, INC., as special
  servicer for Wells Fargo

  Bank N.A., as trustee for the Morgan Stanley Mortgage Capital I, Inc.

  Commercial Mortgage Pass Through Certificate Series 2006-XLF

  
	
   

  
	
   

  
	
  By:

  	
  /s/
  Kevin C. Donahue

  	
   

  	
   

  
	
  Name:

  	
  Kevin
  C. Donahue

  	
   

  	
   

  
	
  Its:

  	
  Senior
  Vice President

  	
   

  	
   

  
	
   

  	
  Servicing
  Officer

  	
   

  	
   

  

 

3

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