ASSIGNMENT AND ASSUMPTION AGREEMENT

Exhibit 10.51

ASSIGNMENT AND ASSUMPTION AGREEMENT

by and between

BARCELÓ CRESTLINE CORPORATION

and

APPLE EIGHT HOSPITALITY OWNERSHIP, INC.

TABLE OF CONTENTS

 

ASSIGNMENT AND ASSUMPTION AGREEMENT

This ASSIGNMENT AND ASSUMPTION AGREEMENT (together with the Schedules hereto, this “ Agreement ”) is dated as of May 9, 2008 by and between Barceló Crestline Corporation, a Maryland corporation (“ BCC ”), and Apple Eight Hospitality Ownership, Inc., a Virginia corporation ( “ Apple ”). BCC and Apple are referred to hereinafter individually as a “ Party ” and collectively as the “ Parties .”

RECITALS:

A. BCC has entered into that certain Purchase and Sale Agreement, dated as of February 22, 2008, with Tidewater Hotels & Resorts, Inc., a Virginia corporation (“ Tidewater ”) and the parties identified on Schedule A thereto (collectively with Tidewater, the “ Sellers ”), and Thomas J. Lyons, Jr., as guarantor (as the same may be amended, supplemented or otherwise modified from time to time, the “ Purchase Agreement ”), pursuant to which Sellers have agreed to sell to BCC, and BCC has agreed to purchase from Sellers, in each case subject to the terms and conditions contained therein, certain hotels and resorts and related assets and businesses.

B. BCC has the right under the Purchase Agreement to assign the Purchase Agreement in whole or in part to any Person upon written notice to Sellers delivered at least two Business Days prior to the Closing Date.

C. BCC wishes to assign and delegate to Apple certain of its rights and obligations under the Purchase Agreement to purchase those hotels and resorts set forth on Schedule A hereto (the “ Marriott Hotels ”), and to purchase certain assets and assume certain liabilities related thereto, and Apple wishes to accept such assignment and assume BCC’s obligations with respect to the Marriott Hotels and the assets and liabilities related thereto, in each case on the terms and conditions set forth in this Agreement.

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

Section 1. Definitions . Capitalized terms used and not defined in this Agreement shall have the meanings ascribed to them in the Purchase Agreement. In addition, the following terms have the following meanings:

“ Apple Expenses ” means the reasonable, out-of-pocket third party expenses actually paid by Apple, or its affiliates, shareholders, officers, directors, agents, advisors or other representatives, in connection with entering into franchise agreements with respect to the Marriott Hotels, including franchise application and transfer fees, and Apple’s assumption of the Assumed Indebtedness, including loan assumption fees; provided that Apple Expenses shall not include any fees or expenses of Apple’s legal counsel or other advisors.

“ BCC Expenses ” means the fees, costs and expenses incurred by BCC, or its affiliates, shareholders, officers, directors, agents, advisors or other representatives, described on Schedule 1 hereto.

Section 2. Marriott Assets and Marriott Liabilities . Effective immediately upon the expiration of the Due Diligence Period under the Purchase Agreement, which the Parties acknowledge and agree will expire at 5:00 p.m. Eastern Time on May 9, 2008 (the “ Effective Time ”) and upon the terms and subject to the conditions set forth in this Agreement, BCC hereby assigns to Apple, and Apple hereby accepts from BCC:

(a) BCC’s right, title and interest under the Purchase Agreement (i) to purchase and acquire from Sellers the Marriott Hotels, together with the Purchased Assets listed in or contemplated by Sections 2.01(a), 2.01(e), 2.01(f), 2.01(g), 2.01(h) and 2.01(j) of the Purchase Agreement, but only to the extent such Purchased Assets are related to the Marriott Hotels and (ii) to all other rights, benefits, interests and remedies under the Purchase Agreement with respect to the Marriott Hotels (such Purchased Assets and such rights, benefits, interests and remedies, together with the Marriott Hotels, the “ Marriott Assets ”); and

(b) BCC’s liabilities and obligations under the Purchase Agreement to assume from Sellers and their Affiliates, and to pay or otherwise perform, satisfy and discharge, all of the Assumed Liabilities to the extent related to the Marriott Assets (collectively, the “ Marriott Liabilities ”).

Section 3. Reservation of Rights . Notwithstanding the provisions of Section 2 or any other provision of this Agreement or the Purchase Agreement, it is acknowledged and agreed that (i) BCC shall not assign to Apple, and Apple shall have no rights to purchase or acquire in any manner, any of the Purchased Assets contemplated in Sections 2.01(b), 2.01(c), 2.01(d) or 2.01(i) of the Purchase Agreement, or any other Purchased Assets that are not related to the Marriott Hotels (all Purchased Assets other than the Marriott Assets, the “ BCC Assets ”), (ii) Apple shall not assume any Assumed Liabilities under the Purchase Agreement other than the Marriott Liabilities (all Assumed Liabilities other than the Marriott Liabilities, the “ BCC Liabilities ”), and (iii) BCC expressly retains and reserves all right, title and interest in, to and under the Purchase Agreement, and all benefits, obligations and liabilities with respect thereto, other than all rights with respect to (including the right to acquire) the Marriott Assets and the right to assume the Marriott Liabilities expressly assigned to and assumed by Apple under Sections 2 and 4 of this Agreement (the right to acquire the BCC Assets and to assume the BCC Liabilities, together with all other rights, benefits, obligations and liabilities under the Purchase Agreement not expressly assigned to and assumed by Apple hereunder, the “ BCC Reserved Rights and Liabilities ”). For avoidance of doubt, it is acknowledged and agreed that neither Apple nor BCC shall acquire any Excluded Assets or assume any Excluded Liabilities under the Purchase Agreement.

Section 4. Assumption by Apple . Effective as of the Effective Time, and upon and subject to the terms and subject to the conditions set forth in this Agreement, Apple hereby assumes and agrees to perform, satisfy and discharge all of the liabilities and obligations of BCC with respect to the purchase and acquisition of the Marriott Assets, and the assumption of the Marriott Liabilities, from Sellers and their Affiliates under the terms and conditions of the Purchase Agreement as if Apple were the original “Buyer” of the Marriott Assets under the Purchase Agreement. Without limiting the foregoing, Apple hereby assumes and agrees to perform, comply with and be bound by all terms, conditions, provisions, restrictions, limitations, liabilities and obligations applicable to “Buyer” under the Purchase Agreement as if Apple were an

 

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original party to the Purchase Agreement as the Buyer thereunder; provided that the foregoing shall not confer upon Apple any of the BCC Reserved Rights and Liabilities, including any right or obligation to purchase the BCC Assets or to assume the BCC Liabilities. It is acknowledged and agreed that Apple shall have all rights of Buyer, and shall be responsible for liabilities and obligations of Buyer, under Section 5.18 of the Purchase Agreement (Access to Financial Information); provided that upon reasonable request of Apple, BCC shall cooperate in good faith in connection with Apple’s exercise of such rights.

Section 5. Joint Rights and Liabilities . Except as otherwise provided in this Agreement:

(a) to the extent any term, condition, provision, restriction, limitation, right, liability or obligation under the Purchase Agreement, including with respect to any election, consent or approval rights, shall be solely applicable to the Marriott Assets or the Marriott Liabilities, Apple shall have the sole rights and obligations (as between BCC and Apple) with respect thereto;

(b) to the extent any term, condition, provision, restriction, limitation, right, liability or obligation under the Purchase Agreement, including with respect to any election, consent or approval rights, shall be solely applicable to the BCC Reserved Rights and Liabilities, the BCC Assets or the BCC Liabilities, BCC shall have the sole rights and obligations (as between BCC and Apple) with respect thereto;

(c) to the extent any term, condition, provision, restriction, limitation, right, liability or obligation under the Purchase Agreement is solely applicable to the Marriott Assets or the Marriott Liabilities under Section 5(a), or is solely applicable to the BCC Reserved Rights and Liabilities, the BCC Assets or the BCC Liabilities under Section 5(b), but the exercise or enforcement of such term, condition, provision, restriction, limitation, right, liability or obligation could reasonably be expected to have a material effect (positive or negative) on the other Party, the Party with sole rights and obligations with respect thereto shall cooperate in good faith with the other Party with respect to such exercise and enforcement; and

(d) to the extent any term, condition, provision, restriction, limitation, right, liability or obligation under the Purchase Agreement is jointly applicable to any of the Marriott Assets or the Marriott Liabilities, on one hand, and the BCC Reserved Rights and Liabilities, the BCC Assets or the BCC Liabilities, on the other hand, the Parties shall have joint rights thereto and obligations thereunder; provided that in such event the Parties shall endeavor in good faith to divide the exercise and benefit of such rights, and the performance of and liability for such obligations, based upon the applicable hotel or other assets or rights so that the Party acquiring such hotel or other assets or rights shall exercise all rights and perform all obligations related thereto.

Section 6. Purchase Price .

(a) Subject to adjustment as provided in this Agreement and the Purchase Agreement (but only to the extent related to the Marriott Assets), the aggregate purchase price (the “ Apple Purchase Price ”) for the Marriott Assets shall equal $184,200,000, allocated to the Marriott Assets as set forth on Schedule 6 .

 

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(b) The Apple Purchase Price shall be payable as follows:

(i) subject to reduction in accordance with the terms and conditions of this Agreement and the Purchase Agreement (including, to the extent applicable, Sections 5.06, 5.13 and 5.16 of the Purchase Agreement), on the Initial Closing Date, Apple shall pay to Sellers an amount equal to: (A) (1) the aggregate portion of the Apple Purchase Price allocable to the Marriott Hotels and the related Marriott Assets to be acquired by Apple on the Initial Closing Date, as set forth on Schedule 6 , plus (2) if the Marriott Hotel known as “Courtyard North” is acquired on the Initial Closing, any amounts payable by Buyer to Sellers in accordance with Section 5.17 of the Purchase Agreement minus (B) any Assumed Indebtedness related to the Marriott Assets acquired by Apple on the Initial Closing Date, plus or minus , as the case may be, (C) the net amount of any apportionments between Buyer and Sellers made as of the Initial Closing Date with respect to the Marriott Assets acquired by Apple on the Initial Closing Date in accordance with Section 12.01 of the Purchase Agreement; and

(ii) subject to adjustment as provided in this Agreement and the Purchase Agreement, on each Delayed Closing Date, Apple shall pay to Sellers an amount equal to: (A) the portion of the Apple Purchase Price attributable to the Marriott Hotels and the related Marriott Assets to be acquired by Apple in the applicable Delayed Closing, as set forth on Schedule 6 , minus (B) any Assumed Indebtedness related to the Marriott Assets acquired by Apple in such Delayed Closing, plus or minus , as the case may be, (C) the net amount of any apportionments between Buyer and Sellers made as of such Delayed Closing Date with respect to the Marriott Assets acquired by Apple on such Delayed Closing Date in accordance with Section 12.01 of the Purchase Agreement.

Section 7. Additional Deposit .

(a) No later than 5:00 p.m. Eastern Time on May 12, 2008, Apple shall pay and deliver to the Escrow Agent, in accordance with an escrow agreement in the form attached hereto as Schedule 7 (the “ Apple Escrow Agreement ”), the amount of $2,500,000 (together with any interest accrued thereon, the “ Apple Deposit ”). BCC shall fund the Additional Deposit required to be delivered to the Escrow Agent by Buyer in accordance with the provisions of the Escrow Agreement and Section 2.06(e) of the Purchase Agreement. Apple’s obligation to pay the Apple Deposit into escrow is absolute and unconditional. The failure by Apple to pay such amount into escrow no later than 5:00 p.m. Eastern Time on May 12, 2008 shall constitute a material breach by Apple of this Agreement. In such case, BCC shall be entitled to terminate this Agreement, in which case (i) in the event that the Purchase Agreement shall also be terminated, and in connection with such termination, Buyer shall forfeit the Deposit to Sellers, Apple shall be liable to BCC for, and shall pay and deliver to BCC, the entire amount of the Deposit, together with all interest accrued thereon from the date of deposit of the Deposit into escrow under the Escrow Agreement, (ii) Apple shall pay to BCC, and reimburse BCC for, the BCC Expenses, and (iii) except as otherwise contemplated herein, neither Apple nor BCC shall have any further liability or obligation to the other under this Agreement or the Purchase Agreement as a result of such termination.

 

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(b) It is acknowledged and agreed that under the Purchase Agreement, on the Initial Closing Date, a portion of the Deposit in the amount of the Initial Deposit, plus any interest accrued thereon from the date of deposit of the Initial Deposit into escrow under the Escrow Agreement, shall be paid to Sellers by the Escrow Agent for credit against the Closing Payment otherwise payable by Buyer to Sellers, and the remainder of the Deposit (the Additional Deposit, plus any interest accrued thereon from the date of deposit of the Additional Deposit into escrow under the Escrow Agreement) shall continue to be held in escrow as security for payment of the remainder of the Purchase Price.

(c) In order to allocate between themselves the credit for the Deposit against the Purchase Price due under the Purchase Agreement, BCC and Apple agree that:

(i) on the Initial Closing Date: (A) BCC’s obligations with respect to payment of the Purchase Price to Sellers under the Purchase Agreement and this Agreement shall be reduced by the amount of the Initial Deposit, plus any interest accrued thereon from the date of deposit of the Initial Deposit into escrow under the Escrow Agreement, and such amount shall be released from escrow under the Escrow Agreement and delivered to Sellers; (B) Apple’s obligations with respect to payment of the Purchase Price in respect of the Marriott Assets acquired by Apple on the Initial Closing Date payable to Sellers on the Initial Closing Date under the Purchase Agreement and this Agreement shall not be reduced by any amount of the Deposit; (C) the Additional Deposit, plus any interest accrued thereon from the date of deposit of the Additional Deposit into escrow under the Escrow Agreement shall remain in escrow under the Escrow Agreement; and (D) the Apple Deposit, plus any interest accrued thereon from the date of deposit of the Apple Deposit into escrow under the Apple Escrow Agreement, shall remain in escrow under the Apple Escrow Agreement;

(ii) on the Delayed Closing Date for the sale of the Marriott Hotels known as “Courtyard – Carolina Beach,” “Courtyard – Suffolk” and “TownePlace Suites – Suffolk,” the remaining Deposit shall be released from escrow under the Escrow Agreement and paid to Sellers, and Apple’s obligation with respect to payment of the Purchase Price for the Marriott Assets acquired at such Delayed Closing shall be reduced by such released amount; provided that if “Courtyard – Carolina Beach,” “Courtyard – Suffolk” and “TownePlace Suites – Suffolk” are acquired in separate Delayed Closings, a portion of the Deposit that is proportional to the portion of the Purchase Price attributable to the Purchased Hotels acquired in each such Delayed Closing, as compared to the aggregate portion of the Purchase Price attributable to the “Courtyard – Carolina Beach,” “Courtyard – Suffolk” and “TownePlace Suites – Suffolk” Purchased Hotels, shall be released from escrow under the Escrow Agreement and paid to Sellers as credit against the applicable Delayed Closing Payment, and Apple’s obligation with respect to payment of the Purchase Price for the Marriott Assets acquired at such Delayed Closing shall be reduced by such released amount, and any remaining Deposit shall continue to be held in escrow under the Escrow Agreement;

 

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(iii) on the date of the last Delayed Closing of the Purchased Hotels known as “Courtyard – Carolina Beach,” “Courtyard – Suffolk” and “TownePlace Suites – Suffolk,” the remaining balance of the Deposit under the Escrow Agreement shall be paid and released to Sellers, and credited against the Purchase Price remaining to be paid to Sellers under the Purchase Agreement; and

(iv) simultaneously with any release of any amount of the Deposit from escrow under the Escrow Agreement and payment of such amount to Sellers under the Purchase Agreement, the same amount shall be released from escrow under the Apple Escrow Agreement and paid to BCC.

(d) In the event of any termination of the obligation of Buyer and Sellers to consummate any Delayed Closing under the Purchase Agreement after the Initial Closing, if any portion of the Deposit then held in escrow under the Escrow Agreement shall be payable to Buyer under the terms and conditions of the Purchase Agreement and the Escrow Agreement, (i) such payment of the Deposit shall be made and released to BCC under the Escrow Agreement, and (ii) simultaneously with BCC’s receipt of the Deposit from escrow, an equal amount of the Apple Deposit shall be paid and released to Apple under the Apple Escrow Agreement.

(e) It is acknowledged and agreed that the Deposit under the Escrow Agreement and the Apple Deposit under the Apple Escrow Agreement shall each be held by the Escrow Agent, and that the Escrow Agent shall be directed to invest the funds so as to accrue interest at the same rate.

Section 8. Closing .

(a) Apple agrees to execute and deliver the Transaction Agreements and the other closing deliveries required to be executed and delivered by Buyer under the Purchase Agreement, as and when required by the Purchase Agreement, to the extent related to the Purchased Assets included in the Marriott Assets, including those closing deliveries set forth in Section 2.07 and Article 8 of the Purchase Agreement. Without limiting the generality of the foregoing, Apple shall make all of the representations and warranties of Buyer (with such modifications as may be appropriate for such representations and warranties to be applicable to Apple) to Sellers and Guarantor contemplated in Article 4 as of each applicable Closing Date, and Apple shall deliver to Sellers the certificates required under Section 8.03(a)(iii) and 8.04(b)(iii), as applicable. On each Closing Date, Apple shall pay to BCC, and reimburse BCC for, the BCC Expenses payable in respect of the Marriott Hotels acquired by Apple on such Closing Date.

(b) BCC agrees to execute and deliver the Transaction Agreements and the other closing deliveries required to be executed and delivered by Buyer under the Purchase Agreement, as and when required by the Purchase Agreement, to the extent related to the Purchased Assets included in the BCC Assets, including those closing deliveries set forth in Section 2.07 and Article 8 of the Purchase Agreement. Without limiting the generality of the foregoing, BCC shall make all of the representations and warranties of Buyer to Sellers and Guarantor contemplated in Article 4 as of the Initial Closing Date, and BCC shall deliver to Sellers the certificates required under Section 8.03(a)(iii) and 8.04(b)(iii), as applicable.

 

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Section 9. Representations and Warranties .

(a) Apple hereby represents and warrants to BCC as follows:

(i) Apple is a corporation duly organized, validly existing and in good standing under the laws of the Commonwealth of Virginia. Apple is duly qualified to do business and is in good standing in the Commonwealth of Virginia and as a foreign corporation or other legal entity in each jurisdiction where the character of the properties owned or leased by it or the nature of the business transacted by it requires it to be so qualified.

(ii) The execution, delivery and performance by Apple of this Agreement and the consummation of the transactions contemplated hereby are within Apple’s corporate powers and have been (or will be prior to the applicable Closing Date) duly authorized by all requisite corporate action on the part of Apple. This Agreement has been duly executed and delivered by Apple and (assuming due authorization, execution and delivery by BCC) this Agreement constitutes a legal, valid and binding obligation of Apple enforceable in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or similar Applicable Laws relating to or affecting creditors’ rights generally or by general equitable principles (whether considered in a proceeding in equity or at law).

(iii) The execution, delivery and performance by Apple of this Agreement and the consummation of the transactions contemplated hereby require no action by or in respect of, consent or approval of, or filing with, any Governmental Authority; provided that Apple is required to make certain filings and disclosures under applicable securities laws.

(iv) The execution, delivery and performance by Apple of this Agreement and the consummation of the transactions contemplated hereby do not and will not (i) contravene or violate the charter or bylaws of Apple, or (ii) contravene or violate any Applicable Law or any judgment, order, injunction, or decree of any Governmental Authority applicable to Apple.

(b) BCC hereby represents and warrants to Apple as follows.

(i) BCC is a corporation duly organized, validly existing and in good standing under the laws of the State of Maryland. BCC is duly qualified to do business and is in good standing in the State of Maryland and as a foreign corporation or other legal entity in each jurisdiction where the character of the properties owned or leased by it or the nature of the business transacted by it requires it to be so qualified.

(ii) The execution, delivery and performance by BCC of this Agreement and the consummation of the transactions contemplated hereby are within each BCC’s corporate powers and have been (or will be prior to the Initial Closing Date) duly authorized by all requisite corporate action on the part of BCC. This Agreement has been duly executed and delivered by BCC and (assuming due authorization, execution

 

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and delivery by Apple) this Agreement constitutes a legal, valid and binding obligation of BCC enforceable in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or similar Applicable Laws relating to or affecting creditors’ rights generally or by general equitable principles (whether considered in a proceeding in equity or at law).

(iii) The execution, delivery and performance by BCC of this Agreement and the consummation of the transactions contemplated hereby require no action by or in respect of, consent or approval of, or filing with, any Governmental Authority.

(iv) The execution, delivery and performance by BCC of this Agreement and the consummation of the transactions contemplated hereby do not and will not (i) contravene or violate the charter or bylaws of BCC, or (ii) contravene or violate any Applicable Law or any judgment, order, injunction, or decree of any Governmental Authority applicable to BCC.

(v) The Purchase Agreement is in full force and effect and, as of the date of this Agreement, there exist no material defaults on the part of BCC or, to the knowledge of BCC, on the part of Sellers under the Purchase Agreement. BCC has not heretofore assigned, sold, pledged or encumbered its right, title or interest in or under the Purchase Agreement. As of the date of this Agreement, BCC has furnished to Apple a complete copy of the Purchase Agreement, together with all amendments thereto. As of the date of this Agreement, BCC has not exercised any rights of Buyer under the Purchase Agreement to terminate the Purchase Agreement or to exclude any of the Marriott Assets from the Purchased Assets to be acquired thereunder. BCC has not received any written notice from Sellers under the Purchase Agreement to exclude the Purchased Hotel known as “Courtyard North” and its related Purchased Assets from the purchase and sale under the Purchase Agreement pursuant to Section 5.13 of the Purchase Agreement.

Section 10. DISCLAIMER . NOTWITHSTANDING ANY PROVISION OF THIS AGREEMENT OR THE PURCHASE AGREEMENT, EACH OF BCC AND APPLE HEREBY EXPRESSLY DISCLAIMS, AND EACH OTHER PARTY HEREBY EXPRESSLY ACKNOWLEDGES AND AGREES THAT NEITHER BCC, APPLE NOR ANY OF THEIR RESPECTIVE AFFILIATES, EMPLOYEES, ADVISORS, AGENTS OR OTHER REPRESENTATIVES HAS MADE OR WILL MAKE AT ANY TIME, EITHER EXPRESSLY OR IMPLIEDLY, ANY REPRESENTATIONS, GUARANTIES, COVENANTS, PROMISES, STATEMENTS, ASSURANCES OR WARRANTIES OF ANY KIND WHATSOEVER CONCERNING ANY OF THE ACQUIRED BUSINESS, THE PURCHASED ASSETS, THE EXCLUDED ASSETS, THE ASSUMED LIABILITIES, THE EXCLUDED LIABILITIES OR ANY RIGHTS, PRIVILEGES, LIABILITIES OR OBLIGATIONS OF ANY PERSON UNDER THE PURCHASE AGREEMENT OR THE OTHER TRANSACTION AGREEMENTS.

Section 11. Broker’s Fee . It is acknowledged and agreed that upon the Closing, BCC is obligated to pay a fee to CB Richard Ellis of Virginia, Inc. (“ CBRE ”) under the

 

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Confidentiality and Commission Agreement dated as of November 29, 2007 between BCC and CBRE (the “ CBRE Agreement ”). Apple shall be responsible for, and shall pay in full, a portion of the fee due to CBRE under the CBRE Agreement that is attributable to the Marriott Assets, which amounts are set forth on Schedule 11 (the “ CBRE Fee ”), and BCC shall be responsible for all other fees due to CBRE under the CBRE Agreement. On each Closing Date, Apple shall pay the applicable portion of the CBRE Fee due at such Closing directly to CBRE, in accordance with payment instructions to be delivered by CBRE under the CBRE Agreement.

Section 12. Inspection; Due Diligence . Apple shall have all rights of “Buyer” under Section 5.02(a) of the Purchase Agreement to conduct due diligence in connection with its purchase of the Marriott Hotels and the Marriott Assets; provided that Apple shall be subject to and bound by the conditions and restrictions set forth in Section 5.02(a) of the Purchase Agreement.

Section 13. Due Diligence Period . It is acknowledged and agreed that the Due Diligence Period under the Purchase Agreement has expired, and therefore that neither Party has the right to terminate the Purchase Agreement without fault under Section 5.02(b) of the Purchase Agreement.

Section 14. Title Insurance and Surveys . It is acknowledged and agreed that BCC was required to obtain Title Commitments and Surveys with respect to the Purchased Assets, including the Marriott Hotels, within 10 Business Days of the date of the Purchase Agreement, and that BCC was required to deliver the Objection Notices to Sellers on or before April 11, 2008. It is further acknowledged and agreed that Buyer’s right under Section 5.03 of the Purchase Agreement to terminate the Purchase Agreement has expired in accordance with its terms, and that neither BCC nor Apple shall have any right to terminate the Purchase Agreement under Section 5.03 of the Purchase Agreement; provided that if any of Buyer’s rights were reserved prior to such expiration, or otherwise become exercisable by Buyer after the Effective Time, that Apple shall have all rights and obligations of “Buyer” under Section 5.03 of the Purchase Agreement; provided further that (i) notwithstanding the foregoing, each Party shall have the rights to terminate this Agreement and the Purchase Agreement otherwise contemplated in this Agreement or the Purchase Agreement, to the extent applicable, and (ii) the Parties’ acknowledgement under this Section 14 shall not constitute an approval of any exceptions that Sellers have agreed to eliminate in accordance with Section 5.03 of the Purchase Agreement.

Section 15. Franchise Agreements, Assumed Indebtedness, Liquor Licenses . Promptly after the Effective Time, (a) Apple shall perform Buyer’s obligations under, and shall comply with in all respects, Sections 5.04 (Franchise Agreements), 5.07 (Assumption of Assumed Indebtedness; Payment of Non-Assumed Indebtedness) and 5.08 (Liquor Licenses) of the Purchase Agreement, to the extent such provisions and obligations relate to the Marriott Assets, and (b) Apple shall be responsible for and shall pay any and all costs and expenses contemplated to be paid by Buyer under any of Sections 5.04, 5.07 or 5.08 of the Purchase Agreement, including franchise application and transfer fees, loan assumption fees and/or licensing fees, to the extent relating to the Marriott Assets.

Section 16. Construction Hotels . From and after the Effective Time, Apple shall be solely liable and responsible for all liabilities and obligations under the Purchase Agreement with

 

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respect to the Construction Hotels, including the obligation to purchase the Construction Hotels upon satisfaction or waiver of all conditions to Buyer’s obligation to consummate such purchase under the Purchase Agreement. From and after the Effective Time, BCC shall have no liabilities or obligations whatsoever under the Purchase Agreement with respect to the Construction Hotels. Notwithstanding the foregoing, BCC shall have the sole and exclusive right to manage the Construction Hotels upon Apple’s acquisition of such Construction Hotels, pursuant to the terms and conditions of the Apple Management Agreements entered into on the Initial Closing Date in accordance with Section 23 hereof (it being understood that if Apple does not acquire a Construction Hotel, the Apple Management Agreement for such Construction Hotel will terminate by its terms). Apple shall pay to BCC the BCC Expenses applicable to each Construction Hotel on the date of Closing of Apple’s acquisition of each such Construction Hotel.

Section 17. Property Improvement Plans; Franchise Agreement Costs . With respect to all Franchise Agreement Costs to be borne by Buyer under Section 5.06 of the Purchase Agreement, Apple shall be liable for and shall pay 100% of such costs to the extent applicable to the Marriott Assets. In the event Sellers shall deliver notice to Buyer to terminate the Purchase Agreement under Section 5.06(c) of the Purchase Agreement, then either Party shall be entitled to elect to assume the excess Franchise Agreement Costs under Section 5.06(c) and to cause Sellers to consummate the Closing. In the event neither BCC nor Apple shall elect to cause Sellers to consummate the Closing under Section 5.06(c) of the Purchase Agreement, and the Purchase Agreement shall therefore be terminated under Section 5.06(c), then, upon the effectiveness of the termination of the Purchase Agreement, (i) this Agreement shall terminate automatically, (ii) the entire Deposit, together with all interest accrued thereon from the date of deposit of the Deposit into escrow under the Escrow Agreement, shall be refunded to BCC, and Apple shall have no right to any portion of the Deposit, (iii) the entire Apple Deposit, together with all interest accrued thereon from the date of deposit of the Apple Deposit into escrow under the Apple Escrow Agreement, shall be refunded to Apple, and BCC shall have no right to any portion of the Apple Deposit, (iv) the Buyer’s Expenses to be paid by Sellers to Buyer under Section 5.06(c) of the Purchase Agreement as a result of such termination shall be shared equally between BCC and Apple, (v) Apple shall pay to BCC, and reimburse BCC for, the BCC Expenses, and (vi) except as otherwise contemplated in this Agreement, neither Apple nor BCC shall have any further liability or obligation to the other under this Agreement or the Purchase Agreement as a result of such termination. For avoidance of doubt, it is acknowledged and agreed that Apple shall not be liable for any costs and expenses of BCC pursuant to this Section 17 unless such costs and expenses constitute BCC Expenses and such BCC Expenses are due and payable hereunder.

Section 18. Ground Landlord Estoppels . From and after the Effective Time, but subject to the terms and conditions of this Agreement, Apple shall have all rights and obligations of “Buyer” under Section 5.09 of the Purchase Agreement with respect to the Marriott Assets. Notwithstanding the foregoing, in the event Apple shall desire to extend the Initial Closing Date in accordance with Section 5.09(ii) of the Purchase Agreement, Apple shall consult in good faith with BCC in determining whether or not to so extend the Initial Closing Date. In addition, in the event Apple (subject to Section 30(e)) shall terminate the Purchase Agreement in accordance with the provisions of Section 5.09 of the Purchase Agreement, then, upon the effectiveness of the termination of the Purchase Agreement, (i) this Agreement shall terminate automatically, (ii)

 

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the entire Deposit, together with all interest accrued thereon from the date of deposit of the Deposit into escrow under the Escrow Agreement, shall be refunded to BCC, and Apple shall have no right to any portion of the Deposit, (iii) the entire Apple Deposit, together with all interest accrued thereon from the date of deposit of the Apple Deposit into escrow under the Apple Escrow Agreement, shall be refunded to Apple, and BCC shall have no right to any portion of the Apple Deposit, (iv) Apple shall pay to BCC, and reimburse BCC for, the BCC Expenses, and (v) except as otherwise contemplated in this Agreement, neither Apple nor BCC shall have any further liability or obligation to the other under this Agreement or the Purchase Agreement as a result of such termination.

Section 19. Jefferson Pilot Land . From and after the Effective Time, but subject to the terms and conditions of this Agreement, Apple shall have all rights and obligations of “Buyer” under Section 5.13 of the Purchase Agreement, including Buyer’s right to exclude Courtyard North and its related Purchased Assets from the purchase and sale transactions contemplated under the Purchase Agreement. Notwithstanding the foregoing, in the event Apple shall exclude Courtyard North from the purchase and sale under the Purchase Agreement, all costs and expenses of Buyer to be paid by Sellers on the Initial Closing Date under Section 5.13 of the Purchase Agreement shall be shared equally between BCC and Apple.

Section 20. Suffolk Hotels . From and after the Effective Time, but subject to the terms and conditions of this Agreement, Apple shall have all rights, remedies and obligations of “Buyer” under Section 5.14 of the Purchase Agreement, including Buyer’s right to exclude Courtyard Suffolk and TownePlace Suites Suffolk from the purchase and sale transactions contemplated under the Purchase Agreement.

Section 21. Charlottesville Courtyard . From and after the Effective Time, but subject to the terms and conditions of this Agreement, Apple shall have all rights, remedies and obligations of “Buyer” under Section 5.16 of the Purchase Agreement in accordance with, and subject to the provisions of, Section 5.16 of the Purchase Agreement. In the event the Charlottesville Closing shall not take place simultaneously with the Initial Closing, and the Purchase Price shall be consequently reduced by $500,000 under Section 5.16 of the Purchase Agreement, such $500,000 amount shall reduce Apple’s purchase price payable under this Agreement and the Purchase Agreement.

Section 22. JP Expenses . From and after the Effective Time, but subject to the terms and conditions of this Agreement, Apple shall have all rights and obligations of “Buyer” under Section 5.17 of the Purchase Agreement and Apple shall be responsible for and shall pay all JP Expenses and other amounts payable by Buyer under Section 5.17 of the Purchase Agreement.

Section 23. Management of Marriott Hotels and Excluded Hotels .

(a) On the Initial Closing Date, BCC and Apple shall enter into a management agreement with respect to each Marriott Hotel in the applicable form attached hereto as Schedule 23 , subject to such modifications as may be agreed by the Parties (such agreements, the “ Apple Management Agreements ”), pursuant to which BCC, or its Affiliate, shall act as manager for each Marriott Hotel; provided that with respect to each Construction Hotel or any other Marriott Hotel not acquired by Apple on the Initial Closing Date, BCC and Apple shall enter into an

 

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Apple Management Agreement on the Initial Closing Date, but BCC shall not begin performing services under the Apple Management Agreements for the Construction Hotels (except for pre-opening services, to the extent contemplated in the applicable Apple Management Agreement for such Construction Hotels) or any other Marriott Hotel not acquired by Apple on the Initial Closing Date, and Apple shall have no payment or other obligations to BCC thereunder, unless and until consummation of the applicable Delayed Closing for each such Construction Hotel or other Marriott Hotel not acquired by Apple on the Initial Closing Date (except for payment for pre-opening services, to the extent contemplated in the applicable Apple Management Agreement for such Construction Hotels), and each such Apple Management Agreement shall provide for termination without cost to Apple (except for costs incurred and payable in connection with pre-opening services, to the extent contemplated in the applicable Apple Management Agreement for the Construction Hotels) if any Marriott Hotel is not acquired by Apple pursuant to the terms of this Agreement and the Purchase Agreement. It is acknowledged and agreed that Apple’s rights to acquire the Marriott Assets under this Agreement and the Purchase Agreement are expressly conditioned upon Apple’s execution of an Apple Management Agreement for each Marriott Hotel on or prior to the Initial Closing Date. Notwithstanding any provision of this Agreement or the Purchase Agreement to the contrary, BCC shall not be obligated to consummate any Closing of the transactions contemplated under the Purchase Agreement unless and until Apple shall have executed and delivered to BCC an Apple Management Agreement with respect to each of the Marriott Hotels on or prior to the Initial Closing Date. If at any time all conditions to the Initial Closing under the Purchase Agreement shall have been satisfied, or waived by the applicable parties, and Apple shall refuse to execute and deliver to BCC an Apple Management Agreement with respect to each of the Marriott Hotels at or prior to such time, then (i) BCC shall not be required to consummate the Initial Closing under the Purchase Agreement, (ii) BCC shall be entitled to terminate this Agreement immediately for Apple’s material breach, and the remedies contemplated in Section 30(a)(i) shall apply (but without any notice or cure period), and (iii) Apple shall indemnify and hold harmless BCC and all BCC Indemnified Parties from and against any and all Damages incurred by such BCC Indemnified Parties as a result of a breach by Buyer of the terms and conditions of the Purchase Agreement due to BCC’s refusal to consummate the Closing, including any loss of the Deposit under the Purchase Agreement.

(b) It is acknowledged and agreed that BCC or its Affiliate shall provide management services to each of the Excluded Hotels (including any Purchased Hotels the purchase and sale of which is terminated under the Purchase Agreement prior to the Closing), and that neither Apple nor any of its Affiliates, employees, agents or representatives shall have any right to provide management services to any of the Excluded Hotels. In the event any Purchased Hotel under the Purchase Agreement shall become an Excluded Hotel for any reason, including as contemplated in Sections 5.05, 5.13, 5.14 and 5.16 of the Purchase Agreement, (i) Apple shall not have any rights to manage such Excluded Hotels, and (ii) such Excluded Hotels shall be managed by BCC under the terms and conditions of the Purchase Agreement. It is further acknowledged and agreed that BCC shall have the sole right of first refusal as to each Excluded Hotel under Section 6.02 of the Purchase Agreement and that Apple shall not have any rights under Section 6.02 of the Purchase Agreement; provided that (A) promptly upon receipt of any notice from Sellers triggering BCC’s right of first refusal under the Purchase Agreement, BCC shall provide notice to Apple that such right of first refusal has been initiated and, subject to the same obligations of confidentiality that may be imposed upon BCC in connection with

 

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such notice and right of first refusal, BCC shall disclose to Apple the purchase price for the applicable Excluded Hotel subject to BCC’s right of first refusal, and (B) subject to BCC’s right of first refusal under the Purchase Agreement and all rights of BCC thereunder, Apple shall not otherwise be restricted or prohibited from acquiring any of the Excluded Hotels.

Section 24. Performance Covenant . Each of BCC and Apple hereby covenants and agrees that it will perform and fulfill its covenants and obligations as Buyer under the Purchase Agreement in accordance with the terms and subject to the conditions of the Purchase Agreement, as such covenants and obligations are allocated between the Parties under this Agreement.

Section 25. Confidentiality . All confidential or proprietary information with respect to any of BCC, Sellers, the Purchased Assets, the Acquired Business, the Assumed Liabilities or the transactions contemplated by the Purchase Agreement shall be kept and held confidential by Apple in accordance with the terms and conditions of the letter agreement between Apple and BCC dated as of February 28, 2008, without regard to whether such letter agreement shall remain in effect by its terms. Notwithstanding the foregoing or anything contained in such letter agreement, this Agreement or the Purchase Agreement to the contrary, subject to the provisions of Section 35, Apple shall be entitled to make such disclosures and public or other filings as may be required by applicable law, including filings with the Securities and Exchange Commission.

Section 26. Employees and Employment Matters . Notwithstanding any provisions of Section 6.08 of the Purchase Agreement or any other provision of the Purchase Agreement or this Agreement to the contrary, BCC shall make offers of employment to each of the Employees in accordance with Section 6.08 of the Purchase Agreement and covenants and agrees to perform, satisfy and discharge all obligations of Buyer under the Purchase Agreement with respect to employees, benefit plans and other employment matters, including with respect to the Marriott Assets, and Apple shall have no obligation or liability with respect to any of the foregoing obligations (which shall be included within the definition of BCC Reserved Rights and Liabilities), and Apple shall not make, and shall have no obligation to make, offers of employment to, hire or employ any of the Employees, regardless of whether or not such Employees may currently be employed by the Marriott Hotels. BCC agrees to indemnify and hold harmless each Apple Indemnified Party (as hereinafter defined) from and against all losses, costs, expenses, liabilities and damages paid or incurred by any Apple Indemnified Party as a result of BCC’s breach of its obligations under this Section 26 or the applicable provisions of the Purchase Agreement.

Section 27. Conditions to Closing .

(a) The obligation of BCC to consummate each Closing under the Purchase Agreement shall be subject to the satisfaction, or the waiver by BCC, of the conditions to the Buyer’s obligations to close set forth in Article 8 of the Purchase Agreement, to the extent such conditions are applicable to the BCC Reserved Rights and Liabilities, the BCC Assets or the BCC Liabilities. The obligation of Apple to consummate each Closing under the Purchase Agreement shall be subject to the satisfaction, or the waiver by Apple, of the conditions to the Buyer’s obligations to close set forth in Article 8 of the Purchase Agreement, to the extent such conditions are applicable to the Marriott Assets or the Marriott Liabilities. With respect to

 

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conditions upon the obligation of Buyer to consummate any Closing under the Purchase Agreement that are of general application, that are applicable to both the BCC Assets (or the BCC Liabilities) and the Marriott Assets (or the Marriott Liabilities) or that are not clearly applicable to any of the foregoing, each of BCC and Apple shall be entitled to satisfaction or waiver of such condition as a condition precedent to its obligation to consummate such Closing under the Purchase Agreement. Except as otherwise provided in Section 23(a), with respect to BCC, each Party hereby covenants and agrees to consummate each Closing of the transactions under the Purchase Agreement upon such time as such Party’s respective conditions to such Closing shall be satisfied or waived.

(b) Except as otherwise provided in Section 23(a), with respect to BCC, if either BCC or Apple shall refuse to consummate the Closing at any time when all conditions precedent to such Party’s obligation to close under the Purchase Agreement have been satisfied or waived, the other Party shall have the remedies contemplated in Section 30(c), as applicable.

Section 28. Casualty and Condemnation . From and after the Effective Time, but subject to the terms and conditions of this Agreement, (a) Apple shall have all rights and obligations of “Buyer” under Article 11 of the Purchase Agreement with respect to the Marriott Assets, and (b) BCC shall have all rights and obligations of “Buyer” under Article 11 of the Purchase Agreement with respect to the BCC Assets. In the event either BCC or (subject to Section 30(e)) Apple, as applicable, shall terminate the Purchase Agreement in accordance with the provisions of Article 11 of the Purchase Agreement, then, upon the effectiveness of the termination of the Purchase Agreement, (i) this Agreement shall terminate automatically, (ii) the entire Deposit, together with all interest accrued thereon from the date of deposit of the Deposit into escrow under the Escrow Agreement, shall be refunded to BCC, and Apple shall have no right to any portion of the Deposit, (iii) the entire Apple Deposit, together with all interest accrued thereon from the date of deposit of the Apple Deposit into escrow under the Apple Escrow Agreement, shall be refunded to Apple, and BCC shall have no right to any portion of the Apple Deposit, (iv) Apple shall pay to BCC, and reimburse BCC for, the BCC Expenses, and (v) except as otherwise contemplated in this Agreement, neither Apple nor BCC shall have any further liability or obligation to the other under this Agreement or the Purchase Agreement as a result of such termination. In the event of any partial termination of the Purchase Agreement by either Party under Article 11 of the Purchase Agreement, this Agreement and the Purchase Agreement shall remain in effect and the applicable provisions of the Purchase Agreement shall govern.

Section 29. Buyer Termination Rights Under Purchase Agreement .

(a) In addition to the rights of the Parties to terminate the Purchase Agreement contained elsewhere in this Agreement (including Sections 13, 14, 17, 18, 28 and 30) and/or in the Purchase Agreement, the Parties shall have the right to exercise Buyer’s rights under the Purchase Agreement to terminate the Purchase Agreement at any time prior to the Initial Closing as follows:

(i) With respect to any mutual agreement of Buyer and Sellers to terminate the Purchase Agreement under Section 10.01(a)(i) of the Purchase Agreement, each of Apple and BCC must agree in writing to such termination prior to either Party executing any such written agreement of termination with Sellers.

 

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(ii) Each of BCC and (subject to Section 30(e)) Apple shall have the right to exercise Buyer’s right to terminate the Purchase Agreement pursuant to Section 10.01(a)(ii) of the Purchase Agreement if the Initial Closing shall not have been consummated on or before the Drop Dead Date (as such date may be extended under the Purchase Agreement); provided , however , that a Party may not so terminate the Purchase Agreement if the Initial Closing shall not have been consummated by the Drop Dead Date by reason of the failure of such Party to perform, or to cause its Affiliates to perform, in all material respects any of its or their respective covenants or agreements contained the Purchase Agreement.

(iii) Each of BCC and (subject to Section 30(e)) Apple shall have the right to exercise Buyer’s right to terminate the Purchase Agreement pursuant to Section 10.01(a)(iii) of the Purchase Agreement in the event of a material breach of the Sellers under the Purchase Agreement (subject to the terms and conditions of Section 10.01(a)(iii) of the Purchase Agreement).

(iv) In the event the Parties shall agree to terminate the Purchase Agreement in accordance with Section 29(a)(i), or either BCC or (subject to Section 30(e)) Apple, as applicable, shall terminate the Purchase Agreement in accordance with Section 29(a)(ii) or 29(a)(iii) of this Agreement prior to the Initial Closing Date, then, in each case upon the effectiveness of the termination of the Purchase Agreement, (A) this Agreement shall terminate automatically, (B) the entire Deposit, together with all interest accrued thereon from the date of deposit of the Deposit into escrow under the Escrow Agreement, shall be refunded to BCC, and Apple shall have no right to any portion of the Deposit, (C) the entire Apple Deposit, together with all interest accrued thereon from the date of deposit of the Apple Deposit into escrow under the Apple Escrow Agreement, shall be refunded to Apple, and BCC shall have no right to any portion of the Apple Deposit, (D) any Buyer’s Expenses to be paid by Sellers to Buyer under 10.03(a) of the Purchase Agreement as a result of such termination shall be shared equally between BCC and Apple, (E) Apple shall pay to BCC, and reimburse BCC for, the BCC Expenses, and (F) except as otherwise contemplated herein, neither Apple nor BCC shall have any further liability or obligation to the other under this Agreement or the Purchase Agreement as a result of such termination.

(b) After the Initial Closing, Apple shall have the right to exercise Buyer’s rights under the Purchase Agreement to terminate the obligation of Buyer and Sellers to consummate a Delayed Closing under the Purchase Agreement as follows:

(i) With respect to any mutual agreement of Buyer and Sellers to terminate the obligation of Buyer and Sellers to consummate a Delayed Closing under Section 10.01(b)(i) of the Purchase Agreement, Apple may agree in writing to such termination, subject to the provisions of Section 30(e).

 

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(ii) Apple shall have the right to exercise Buyer’s right to terminate the obligation of Buyer and Sellers to consummate a Delayed Closing pursuant to Section 10.01(b)(ii) of the Purchase Agreement in the event of a material breach of the Sellers under the Purchase Agreement (subject to the terms and conditions of Section 10.01(b)(ii) of the Purchase Agreement).

(iii) In the event Apple shall terminate the obligation under the Purchase Agreement of Buyer and Sellers to consummate a Delayed Closing in accordance with this Section 29(b), then, upon the effectiveness of such termination, (i) the obligations of Apple under this Agreement to consummate such Delayed Closing shall terminate automatically, (ii) any portion of the Deposit, together with interest accrued thereon, payable to Buyer under the Purchase Agreement as a result of such termination shall be refunded to BCC, (iii) the same amount shall be refunded to Apple from the Apple Deposit under the Apple Escrow Agreement, (iv) Apple shall pay to BCC, and reimburse BCC for, any BCC Expenses not previously reimbursed to BCC that would have been payable at such Delayed Closing, and (v) except as otherwise contemplated herein, neither Apple nor BCC shall have any further liability or obligation to the other under this Agreement or the Purchase Agreement as a result of such termination.

Section 30. Termination Rights Under this Agreement .

(a) In addition to the rights of the Parties to terminate this Agreement prior to the Initial Closing Date contained elsewhere in this Agreement (including Sections 13, 14, 17, 18, 28 and 29), each of BCC and Apple shall have the right to terminate this Agreement prior to the Initial Closing Date in the event of a material breach by the other of any covenant or agreement under this Agreement or the Purchase Agreement, where such breach is not cured by the breaching party within 10 Business Days of receiving written notice from the terminating party of the breach, which written notice shall state that unless such breach is cured in accordance with this Section 30(a), the terminating Party intends to terminate this Agreement.

(i) In the event of any termination of this Agreement by BCC under this Section 30(a) as a result of Apple’s breach of this Agreement, (A) the entire Apple Deposit, together with all interest accrued on the Apple Deposit from the date of deposit of the Apple Deposit into escrow under the Apple Escrow Agreement, shall be paid and released in full to BCC and Apple shall not be entitled to any portion of the Deposit or the Apple Deposit, (B) Apple shall pay to BCC, and reimburse BCC for, the BCC Expenses, and (C) except as otherwise contemplated herein, neither Apple nor BCC shall have any further liability or obligation to the other under this Agreement or the Purchase Agreement as a result of such termination.

(ii) In the event of any termination of this Agreement by Apple under this Section 30(a) as a result of BCC’s breach of this Agreement, (A) the entire Apple Deposit, together with all interest accrued on the Apple Deposit from the date of deposit of the Apple Deposit into escrow under the Apple Escrow Agreement, shall be refunded to Apple, (B) BCC shall pay and reimburse Apple for the Apple Expenses and all BCC Expenses previously paid by Apple to BCC, and (C) except as otherwise contemplated herein, neither Apple nor BCC shall have any further liability or obligation to the other under this Agreement or the Purchase Agreement as a result of such termination.

 

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(b) This Agreement may not be terminated after the Initial Closing Date. However, after the Initial Closing but prior to any Delayed Closing, each of BCC and Apple shall have the right to terminate the rights and obligations under this Agreement to consummate such Delayed Closing in the event of a material breach by the other of any covenant or agreement under this Agreement or the Purchase Agreement, where such breach is not cured by the breaching party within 10 Business Days of receiving written notice from the terminating party of the breach, which written notice shall state that unless such breach is cured in accordance with this Section 30(b), the terminating Party intends to terminate the rights and obligations under this Agreement to consummate such Delayed Closing.

(i) In the event of any termination under this Section 30(b) after the Initial Closing Date by BCC of the rights and obligations under this Agreement to consummate any Delayed Closing, (A) a portion of any remaining Apple Deposit corresponding to such Delayed Closing, and any interest accrued thereon, shall be released from escrow under the Apple Escrow Agreement and paid to BCC, (B) Apple shall pay to BCC, and reimburse BCC for, any BCC Expenses not previously reimbursed to BCC corresponding to such Delayed Closing, and (C) except as otherwise contemplated herein, neither Apple nor BCC shall have any further liability or obligation to the other under this Agreement or the Purchase Agreement relating to such Delayed Closing as a result of such termination.

(ii) In the event of any termination under this Section 30(b) after the Initial Closing Date by Apple of the rights and obligations under this Agreement to consummate any Delayed Closing, (A) a portion of any remaining Apple Deposit corresponding to such Delayed Closing, and any interest accrued thereon, shall be released from escrow under the Apple Escrow Agreement and paid to Apple, (B) BCC shall pay and reimburse Apple for the Apple Expenses corresponding to such Delayed Closing, and all BCC Expenses previously paid by Apple to BCC, to the extent corresponding to such Delayed Closing, and (C) except as otherwise contemplated herein, neither Apple nor BCC shall have any further liability or obligation to the other under this Agreement or the Purchase Agreement relating to such Delayed Closing as a result of such termination.

(c) This Agreement shall terminate automatically in the event of any termination of the Purchase Agreement by Sellers pursuant to Section 10.01(a)(iii) of the Purchase Agreement except as expressly set forth in this Agreement.

(i) In the event that the breach by Buyer under the Purchase Agreement giving rise to Sellers’ termination under Section 10.01(a)(iii) of the Purchase Agreement is a breach of a covenant, agreement or obligation allocated solely to BCC under this Agreement, or results from BCC’s failure to consummate a Closing under the Purchase Agreement at any time after which the conditions to BCC’s obligation to consummate such Closing shall have been satisfied or waived (other than as contemplated in Section 23), (A) the entire Apple Deposit, together with all interest

 

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accrued on the Apple Deposit from the date of deposit of the Apple Deposit into escrow under the Apple Escrow Agreement, shall be refunded to Apple, (B) BCC shall pay and reimburse Apple for the Apple Expenses, and (C) except as otherwise contemplated herein, neither Apple nor BCC shall have any further liability or obligation to the other under this Agreement or the Purchase Agreement as a result of such termination.

(ii) In the event that the breach by Buyer under the Purchase Agreement giving rise to Sellers’ termination under Section 10.01(a)(iii) of the Purchase Agreement is a breach of a covenant, agreement or obligation allocated solely to Apple under this Agreement, or results from Apple’s failure to consummate a Closing under the Purchase Agreement at any time after which the conditions to Apple’s obligation to consummate such Closing shall have been satisfied or waived, (A) the entire Apple Deposit, together with all interest accrued on the Apple Deposit from the date of deposit of the Apple Deposit into escrow under the Apple Escrow Agreement, shall be paid and released in full to BCC, and Apple shall not be entitled to any portion of the Apple Deposit, (B) Apple shall pay to BCC, and reimburse BCC for, all BCC Expenses, and (C) except as otherwise contemplated herein, neither Apple nor BCC shall have any further liability or obligation to the other under this Agreement or the Purchase Agreement as a result of such termination.

(iii) In the event that the breach by Buyer under the Purchase Agreement giving rise to Sellers’ termination under Section 10.01(a)(iii) of the Purchase Agreement is a breach of a covenant, agreement or obligation allocated jointly to both BCC and Apple under this Agreement, or results from the Parties’ mutual failure to consummate a Closing under the Purchase Agreement at any time after which the conditions to the Parties’ obligation to consummate such Closing shall have been satisfied (other than, with respect to BCC, as contemplated in Section 23), the Parties shall share liability on a basis proportionate to their relative responsibility for such breach, including liability for the Deposit ( provided that in no event shall Apple’s liability for the Deposit or any portion thereof exceed the amount of the then remaining Apple Deposit, nor shall BCC’s liability for the Deposit or any portion thereof exceed the amount of the then remaining Deposit) and for any further liabilities or obligations incurred as a result of such breach; provided that in such event Apple shall pay to, and reimburse BCC for, the BCC Expenses.

(d) In the event of any termination by Sellers of the obligation of Buyer and Sellers to consummate a Delayed Closing under the Purchase Agreement pursuant to Section 10.01(b)(ii) of the Purchase Agreement, this Agreement shall not terminate, but the corresponding obligation of the Parties to consummate such Delayed Closing hereunder shall likewise terminate.

(i) In the event that the breach by Buyer under the Purchase Agreement giving rise to Sellers’ termination of a Delayed Closing under Section 10.01(b)(ii) of the Purchase Agreement is a breach of a covenant, agreement or obligation allocated solely to BCC under this Agreement, or results from BCC’s failure to consummate such Delayed Closing under the Purchase Agreement at any time after which the conditions to BCC’s obligation to consummate such Closing shall have been

 

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satisfied or waived (other than as contemplated in Section 23), (A) any portion of the Apple Deposit corresponding to such Delayed Closing, together with all interest accrued thereon, shall be refunded to Apple, (B) BCC shall pay and reimburse Apple for the Apple Expenses corresponding to such Delayed Closing, and (C) except as otherwise contemplated herein, neither Apple nor BCC shall have any further liability or obligation to the other under this Agreement or the Purchase Agreement with respect to such Delayed Closing as a result of such termination.

(ii) In the event that the breach by Buyer under the Purchase Agreement giving rise to Sellers’ termination of a Delayed Closing under Section 10.01(b)(ii) of the Purchase Agreement is a breach of a covenant, agreement or obligation allocated solely to Apple under this Agreement, or results from Apple’s failure to consummate such Delayed Closing under the Purchase Agreement at any time after which the conditions to Apple’s obligation to consummate such Closing shall have been satisfied or waived, (A) any portion of the Apple Deposit corresponding to such Delayed Closing, together with all interest accrued thereon, shall be paid and released in full to BCC, (B) Apple shall pay to BCC, and reimburse BCC for, all BCC Expenses corresponding to such Delayed Closing, and (C) except as otherwise contemplated herein, neither Apple nor BCC shall have any further liability or obligation to the other under this Agreement or the Purchase Agreement with respect to such Delayed Closing as a result of such termination.

(iii) In the event that the breach by Buyer under the Purchase Agreement giving rise to Sellers’ termination of a Delayed Closing under Section 10.01(b)(ii) of the Purchase Agreement is a breach of a covenant, agreement or obligation allocated jointly to both BCC and Apple under this Agreement, or results from the Parties’ mutual failure to consummate such Delayed Closing under the Purchase Agreement at any time after which the conditions to the Parties’ obligation to consummate such Delayed Closing shall have been satisfied (other than, with respect to BCC, as contemplated in Section 23), the Parties shall share liability on a basis proportionate to their relative responsibility for such breach, including liability for any portion of the Deposit payable to Sellers ( provided that in no event shall Apple’s liability for the Deposit or any portion thereof exceed the amount of the then remaining Apple Deposit, nor shall BCC’s liability for the Deposit or any portion thereof exceed the amount of the then remaining Deposit) and for any further liabilities or obligations incurred as a result of such breach; provided that in such event Apple shall pay to, and reimburse BCC for, the BCC Expenses corresponding to such Delayed Closing.

(e) Notwithstanding any provision of this Agreement or the Purchase Agreement to the contrary, with respect to any right of Apple under this Agreement or otherwise (x) to terminate the Purchase Agreement voluntarily prior to the Initial Closing Date, or (y) to terminate the obligation of Buyer and Sellers to consummate any Delayed Closing under the Purchase Agreement, in the event Apple shall desire to exercise any such right of termination, Apple shall first deliver written notice of such intention to BCC at least three Business Days prior to the effective date of such termination, and BCC shall have the right to elect instead to terminate this Agreement, or to terminate Apple’s obligation to consummate any Delayed Closing under this Agreement, as the case may be.

 

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(i) In the event of any termination by BCC of this Agreement under clause (x) of Section 30(e), (i) this Agreement shall be terminated upon BCC’s notice of termination to Apple, (ii) the Purchase Agreement shall remain in full force and effect in accordance with its terms, (iii) the Apple Deposit, together with all interest accrued on the Apple Deposit from the date of deposit of the Apple Deposit into escrow under the Apple Escrow Agreement, shall be refunded to Apple, (iv) Apple shall reimburse BCC for all BCC Expenses, and (v) except as otherwise contemplated in this Agreement, neither Apple nor BCC shall have any further liability or obligation to the other under this Agreement or the Purchase Agreement as a result of such termination.

(ii) In the event of any termination by BCC of Apple’s obligation to consummate any Delayed Closing under this Agreement under clause (y) of Section 30(e), (i) the Purchase Agreement shall remain in full force and effect in accordance with its terms, (ii) any remaining portion of the Apple Deposit corresponding to such Delayed Closing, together with all interest accrued thereon, shall be refunded to Apple, (iii) Apple shall reimburse BCC for all BCC Expenses corresponding to such Delayed Closing, and (iv) except as otherwise contemplated in this Agreement, neither Apple nor BCC shall have any further liability or obligation to the other under this Agreement or the Purchase Agreement as a result of such termination.

(f) With respect to any right of BCC under this Agreement or otherwise to terminate the Purchase Agreement voluntarily prior to the Initial Closing Date, BCC shall deliver written notice of its exercise of any such right to Apple at least three Business Days prior to the effective date of such termination. BCC shall not have the right to terminate this Agreement other than as to a Delayed Closing after the Initial Closing Date.

Section 31. Effect of Termination .

(a) Upon any termination of this Agreement, this Agreement shall forthwith become void and of no further force or effect, except those which expressly survive termination and except:

(i) for the following provisions, which shall remain in full force and effect: Section 25 (Confidentiality), this Section 31, Section 33 (Expenses), Section 35 (Public Announcements), Section 40 (Governing Law), Section 41 (Jurisdiction) and Section 44 (Entire Agreement); and

(ii) claims and obligations arising prior to or simultaneously with such termination, including obligations of the Parties under this Agreement for any payment, reimbursement or release, as the case may be, of the Initial Deposit, the Additional Deposit, the Apple Deposit, the BCC Expenses or the Apple Expenses, as applicable, shall survive such termination.

(b) It is acknowledged and agreed that a termination of this Agreement shall not constitute an automatic termination of the Purchase Agreement; provided that the Parties acknowledge and agree that an event or circumstance giving rise to a termination of this Agreement may also result in a termination of the Purchase Agreement pursuant to the terms

 

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thereof. Effective upon any termination of this Agreement, and in the event the Purchase Agreement has not also been terminated, (i) Apple shall forfeit and relinquish all rights and interests under the Purchase Agreement and shall no longer be a Buyer under the Purchase Agreement and (ii) upon the request of BCC, Apple shall assign to BCC all rights, benefits and obligations assigned to Apple under this Agreement and shall take all actions as reasonably necessary under the Purchase Agreement to effect such assignment, including delivery of written notice to Sellers under the Purchase Agreement; provided that Apple shall not be relieved of any liabilities or obligations arising or incurred under this Agreement or the Purchase Agreement prior to any termination of this Agreement. If, upon BCC’s request, Apple shall assign its rights, benefits and obligations under the Purchase Agreement to BCC in accordance with the foregoing clause (ii), BCC shall indemnify and hold harmless Apple for any liabilities, losses, costs, expenses and damages paid or incurred by Apple as a Buyer under the Purchase Agreement arising from acts or omissions of BCC (or its affiliates, agents or representatives) occurring after the termination of this Agreement.

(c) It is further acknowledged and agreed that a termination of the rights and obligations to consummate a Delayed Closing under this Agreement or the Purchase Agreement shall not constitute a termination of this Agreement or the Purchase Agreement, but shall be limited to the termination of the rights and obligations of the Parties, and of Buyer and Sellers under the Purchase Agreement, to consummate such Delayed Closing. Effective upon any termination of Apple’s right and obligation to consummate a Delayed Closing under this Agreement, (i) Apple shall forfeit and relinquish its rights and interests under the Purchase Agreement to consummate such Delayed Closing, and (ii) upon the request of BCC, Apple shall assign to BCC all rights, benefits and obligations assigned to Apple under this Agreement with respect to such Delayed Closing, and shall take all actions as reasonably necessary under the Purchase Agreement to effect such assignment, including delivery of written notice to Sellers under the Purchase Agreement; provided that Apple shall not be relieved of any liabilities or obligations arising or incurred under this Agreement or the Purchase Agreement with respect to such Delayed Closing prior to such termination. If, upon BCC’s request, Apple shall assign its rights, benefits and obligations under the Purchase Agreement with respect to any Delayed Closing to BCC in accordance with the foregoing clause (ii), BCC shall indemnify and hold harmless Apple for any liabilities, losses, costs, expenses and damages paid or incurred by Apple in connection with each such Delayed Closing under the Purchase Agreement arising from acts or omissions of BCC (or its affiliates, agents or representatives) occurring after such termination.

Section 32. Liability and Indemnification .

(a) From and after the Initial Closing Date, each of BCC and Apple shall have, and shall be entitled to exercise, all of the rights and remedies of Buyer against Sellers and Guarantor under the Purchase Agreement, including under Article 9 and Section 13.14 thereof, to the extent related to each of their respective Purchased Assets and Assumed Liabilities and, with respect to BCC, the BCC Reserved Rights and Liabilities. To the extent any claim for indemnification against the Sellers relates to assets or properties acquired by, or liabilities assumed by, both BCC and Apple, or is otherwise mutually applicable to BCC and Apple, BCC and Apple shall cooperate in good faith in the pursuit of such claim so as to maximize recovery of Damages by both BCC and Apple (and their respective Indemnified Parties under the Purchase Agreement) under the Purchase Agreement.

 

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(b) From and after the Initial Closing Date, each of BCC and Apple shall be liable for, and shall perform and discharge, all liabilities and obligations of Buyer under the Purchase Agreement, including Article 9 thereof, to the extent related to each of their respective Purchased Assets and Assumed Liabilities or the acts or omissions of such Party. To the extent any claim for indemnification by any Seller Indemnified Party relates to assets or properties acquired by, or liabilities assumed by, both BCC and Apple, or is otherwise mutually applicable to BCC and Apple, BCC and Apple shall cooperate in good faith in the defense of such claim so as to minimize liability for Damages for which Apple and/or BCC are liable to Sellers under the Purchase Agreement. Any Damages awarded to any Seller Indemnified Party with respect to claims mutually applicable to BCC and Apple shall be divided between BCC and Apple equitably in proportion to their relative fault as determined by BCC and Apple, by negotiation, settlement, legal proceedings or otherwise.

(c) Each of BCC and Apple (in such capacity, the “ Indemnifying Party ”) shall indemnify the other Party and its Affiliates, successors and assigns, and each of such Person’s agents, including accountants, counsel, directors, officers, employees and consultants (with respect to BCC, the “ BCC Indemnified Parties ” and with respect to Apple, the “ Apple Indemnified Parties ”) against and hold each of them harmless from any and all Damages caused by, resulting from, arising out of or relating to any liabilities and obligations allocated pursuant to this Agreement to such Indemnifying Party as a Buyer under the Purchase Agreement, including any failure to perform any covenants or agreements or any claims for indemnification asserted by any Seller Indemnified Party under the Purchase Agreement.

(d) In addition, BCC shall indemnify and hold harmless each of the Apple Indemnified Parties from and against any Damages suffered by the Apple Indemnified Parties resulting from BCC’s breach of the Purchase Agreement prior to the Effective Time; provided that BCC shall not have any liability or obligation to Apple, and Apple hereby waives and releases any claims against or liabilities or obligations of BCC, for Damages arising out of or relating to the following actions or inactions of BCC as Buyer of the Marriott Assets and the Marriott Liabilities prior to the Effective Date (except to the extent such Damages suffered by Apple arise from a claim from a Seller Indemnified Party or a third party):

(i) BCC’s actions taken in accordance with Section 5.03 of the Purchase Agreement in connection with (A) ordering and obtaining Title Commitments and Surveys, (B) the submission of Buyer’s Objection Notices to Sellers, (C) the grant of an extension to Sellers for Sellers’ delivery of responses to Buyer’s Objection Notices, (D) BCC’s failure to terminate the Purchase Agreement during the Title Termination Period, (E) BCC’s acceptance of Permitted Exceptions on behalf of Buyer or (F) BCC’s approval of the condition of title of any parcel of Owned Real Property on behalf of Buyer under the Purchase Agreement;

(ii) BCC’s failure (A) to submit an application to each franchisor or licensor under the Franchise Agreements for the transfer or assignment of such Franchise Agreements to Buyer, or for the issuance of a new franchise agreement to Buyer, promptly after the date of the Purchase Agreement, (B) to use diligence and commercially reasonable efforts to obtain all necessary approvals for such transfers, assignments or new issuances, as the case may be, or (C) to exercise reasonable

 

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commercial efforts to secure the release of the applicable Seller and any guarantor under Sellers’ Franchise Agreements, in each case as contemplated under Section 5.04 of the Purchase Agreement;

(iii) BCC’s negotiation of and agreement upon Property Improvement Plans under Section 5.06 of the Purchase Agreement

(iv) BCC’s failure (A) to submit applications to applicable lenders with respect to assumption of the Assumed Indebtedness promptly after the date of the Purchase Agreement, (B) to pay any application fees, loan assumption fees or costs of lenders associated with assumption by Buyer of the Assumed Indebtedness, or (C) to provide financial or other information to the lenders, or to use diligent and commercially reasonable efforts to obtain the consent of lenders to Buyer’s assumption of the Assumed Indebtedness, in each case as contemplated under Section 5.07 of the Purchase Agreement;

(v) BCC’s failure (A) to make an application promptly after the date of the Purchase Agreement to the appropriate Governmental Authorities to have new liquor licenses issued in the name of Buyer or an entity designated by Buyer in compliance with local law for those Marriott Hotels that sell alcoholic beverages, or (B) to use diligence and reasonable efforts to obtain approvals of applicable Governmental Authorities for the issuance of new liquor licenses prior to the applicable Closing Date, in each case as contemplated under Section 5.08 of the Purchase Agreement; or

(vi) BCC’s failure to exclude Courtyard North from the purchase and sale transactions under the Purchase Agreement in accordance with the provisions of Section 5.13.

Notwithstanding the foregoing, BCC represents and warrants to Apple that BCC knows of no claim of delay or lack of due diligence that would prevent the Drop Dead Date from being extended in accordance with Section 10.01(a)(ii) of the Purchase Agreement.

(e) In addition to and without limiting the generality of Section 32(d), BCC shall not have any liability or obligation to Apple, and Apple hereby waives and releases any claims against or liabilities or obligations of BCC, relating to BCC’s performance of due diligence with respect to the Marriott Assets, including the quantity, quality, adequacy, method, content or thoroughness of such due diligence. Apple acknowledges and agrees that any results of due diligence or other information provided by BCC to Apple with respect to the Marriott Assets were provided merely for convenience and that BCC shall not have any liability or obligation to Apple arising therefrom.

(f) Notwithstanding any provision of this Agreement, neither Party shall be liable under this Agreement for consequential, indirect, special or punitive damages or lost profits, except to the extent payable to a third party.

Section 33. Expenses; Setoff . Except as otherwise provided in this Agreement (including in Sections 14, 17, 18, 28, 29 and 30), all costs and expenses incurred in connection with negotiating, preparing and executing this Agreement shall be paid by the Party incurring

 

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such cost or expenses. Except for the reimbursement of BCC Expenses or Apple Expenses to the extent contemplated herein, each Party shall be responsible for its own, and neither Party shall be obligated to reimburse the other for, any costs or expenses incurred in connection with this Agreement or the Purchase Agreement or the transactions contemplated hereby or thereby, and neither Party shall be liable to the other for any fees or expenses of legal counsel or other advisors. Each Party (the “ Payor ”) shall be entitled to set off against any unpaid amounts owed to the other Party (the “ Payee ”), pursuant to the Purchase Agreement, the Transaction Agreements, this Agreement or otherwise, any amounts owed by the Payee to the Payor pursuant to the Purchase Agreement, the Transaction Agreements, this Agreement or otherwise, including any amounts then subject to a pending claim for indemnification or collection under this Agreement (for so long as such claim shall remain pending). Each Party shall be responsible for the portion of Transfer Taxes payable by Buyer under the Purchase Agreement that is attributable to such Party’s Purchased Assets.

Section 34. Commercially Reasonable Efforts; Further Assurances . Subject to the terms and conditions of this Agreement, the Parties (i) will use their commercially reasonable efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary or desirable under Applicable Laws or otherwise to consummate the assignment and assumption transactions contemplated by this Agreement and the consummation of the transactions contemplated under the Purchase Agreement, and (ii) agree to execute and deliver, or cause to be executed and delivered, such other documents, certificates, agreements and other writings as may be reasonably necessary to implement expeditiously the assignment and assumption transactions contemplated by this Agreement and the consummation of the transactions contemplated under the Purchase Agreement.

Section 35. Public Announcements . Neither Party will issue any press release or make any public statement with respect to this Agreement, the Purchase Agreement or the transactions contemplated hereby or thereby without the prior written consent of the other Party, unless required under Applicable Law. Notwithstanding the foregoing, in the event Apple shall desire or be required to issue any press release or make any public statement or other filings or disclosures with respect to this Agreement, the Purchase Agreement or the transactions contemplated hereby or thereby, Apple shall endeavor to provide a draft of such intended release or disclosure to BCC and to Tidewater at least two Business Days prior to such release, and shall consider in good faith any comments or objections of BCC or Tidewater to the form or substance of such release or disclosure as well as any reasonable requests of BCC or Tidewater for confidential treatment of particular provisions of this Agreement or the Purchase Agreement.

Section 36. Amendments to Purchase Agreement . Neither Party shall be entitled to agree to, or to effect, any amendments to or modifications of the Purchase Agreement without the prior consent of the other, which consent shall not be unreasonably withheld or delayed.

Section 37. Notices . All notices, requests and other communications to either Party hereunder shall be in writing (including facsimile transmission) and shall be given or delivered personally, by facsimile with confirmation of receipt, by mail (first class, postage prepaid), by overnight delivery using a nationally recognized carrier or by email, to the Parties at the following addresses:

 

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if to BCC to:

Barceló Crestline Corporation

8405 Greensboro Drive, Suite 500

McLean, Virginia 22102

Attn: General Counsel

Fax No.: (571) 382-1754

Email: pierre.donahue@crestlinehotels.com

with a copy to:

Hogan & Hartson LLP

555 Thirteenth Street, NW

Washington, DC 20004

Attn: Elizabeth M. Donley; Bruce W. Gilchrist

Fax No.: (202) 637-5910

Email: edonley@hhlaw.com; bwgilchrist@hhlaw.com

if to Apple, to:

c/o Apple REIT Eight

814 East Main Street

Richmond, VA 23219

Attn: Samuel F. Reynolds; David P. Buckley

Fax No: (804) 344-8129

Email: sreynolds@applereit.com; dbuckley@applereit.com

with a copy to:

McGuire Woods LLP

One James Center

901 East Cary Street

Richmond, Virginia 23219-4030

Attn: Nancy R. Little

Fax No: (804) 698-2101

Email: nlittle@mcguirewoods.com

or to such other representative or at such other address as a party may furnish to the other Party in writing. All such notices, requests and other communications shall be deemed received on the date of receipt by the recipient thereof if received prior to 5:00 p.m. in the place of receipt and such day is a Business Day in the place of receipt. Otherwise, any such notice, request or communication shall be deemed not to have been received until the next succeeding Business Day in the place of receipt.

 

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Section 38. Amendments and Waivers .

(a) Any provision of this Agreement may be amended or waived if, but only if, such amendment or waiver is in writing, which writing specifically references the section of this Agreement to be amended or waived, and is signed, in the case of an amendment, by each Party or in the case of a waiver, by the Party against whom the waiver is to be effective.

(b) No failure or delay by any Party in exercising any right, power or privilege hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege.

Section 39. Successors and Assigns . The provisions of this Agreement shall be binding upon and inure to the benefit of the Parties hereto and their respective successors and assigns. Neither Party may assign, delegate or otherwise transfer any of its rights or obligations under this Agreement without the prior written consent of the other Party; provided that each Party shall have the right to designate one or more Affiliates to take title to one or more of its respective Purchased Assets on any Closing Date, and to assign its corresponding rights and obligations under this Agreement and the Purchase Agreement to such Affiliates, upon written notice to the other delivered no later than two days prior to such Closing Date; provided further that no such designation or assignment shall relieve such Party of any of its liabilities or obligations under this Agreement or the Purchase Agreement.

Section 40. Governing Law . This Agreement shall be governed by and construed in accordance with the laws of the Commonwealth of Virginia without regard to the conflicts of law rules of such state.

Section 41. Jurisdiction . Except as otherwise expressly provided in this Agreement, the Parties hereto agree that any suit, action or proceeding seeking to enforce any provision of, or based on any matter arising out of or in connection with, this Agreement or the transactions contemplated hereby shall be brought in a federal or state court located in the Commonwealth of Virginia and that any cause of action arising out of this Agreement shall be deemed to have arisen from a transaction of business in the Commonwealth of Virginia, and each of the Parties hereby irrevocably consents to the jurisdiction of such courts (and of the appropriate appellate courts therefrom) in any such suit, action or proceeding and irrevocably waives, to the fullest extent permitted by law, any objection that it may now or hereafter have to the laying of the venue of any such suit, action or proceeding in any such court or that any such suit, action or proceeding which is brought in any such court has been brought in an inconvenient forum. Process in any such suit, action or proceeding may be served on any party anywhere in the world, whether within or without the jurisdiction of any such court.

Section 42. Waiver of Jury Trial . EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

Section 43. Counterparts; Third Party Beneficiaries . This Agreement may be signed in one or more counterparts, each of which shall be an original, with the same effect as if the signatures hereto and thereto were upon the same instrument. Any change made to any

 

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counterpart but not made to all counterparts shall have no effect. This Agreement shall become effective when each Party shall have received a counterpart hereof or thereof signed by the other Party. Signatures provided by facsimile transmission shall be deemed to be original signatures. No provision of this Agreement is intended to confer upon any Person other than the Parties any rights or remedies hereunder.

Section 44. Entire Agreement . This Agreement, together with the Purchase Agreement and other Transaction Agreements, constitutes the entire agreement between the Parties with respect to the subject matter hereof and supersedes all prior agreements and understandings, both oral and written, between the Parties with respect to the subject matter of this Agreement. This Agreement shall not be construed as if prepared by one Party, but rather according to its fair meaning as a whole, as if both Parties had prepared it.

Section 45. Captions . The captions herein are included for convenience of reference only and shall be ignored in the construction or interpretation hereof.

Section 46. Severability . If any term or other provision of this Agreement is held by a court of competent jurisdiction to be invalid, illegal or incapable of being enforced under any rule of law in any particular respect or under any particular circumstances, such term or provision shall nevertheless remain in full force and effect in all other respects and under all other circumstances, and all other terms, conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the Parties shall negotiate in good faith to modify this Agreement so as to effect the original intent of the Parties as closely as possible in an acceptable manner to the end that the transactions contemplated hereby are fulfilled to the fullest extent possible.

Section 47. Rules of Construction . Unless the context of this Agreement otherwise clearly requires:

(a) references to the plural include the singular, references to the singular include the plural, references to any gender include the other gender, the terms “include,” “includes,” and “including” are not limiting and have the inclusive meaning represented by the phrase “include without limitation,” “includes without limitation,” and “including without limitation,” respectively, except when used together with the word “either” or otherwise for the purpose of identifying mutually exclusive alternatives, and the term “or” has the inclusive meaning represented by the phrase “and/or”;

(b) the terms “hereof”, “herein”, “hereunder”, “hereto” and similar terms in this Agreement refer to this Agreement as a whole and not to any particular provision of this Agreement;

(c) the terms “day” and “days” mean and refer to calendar day(s);

(d) all Article, Section, Exhibit and Schedule references herein are to Articles, Sections, Exhibits and Schedules of this Agreement; and

 

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(e) any deadline or time period set forth in this Agreement that by its terms ends on a day that is not a Business Day shall be automatically extended to the next succeeding Business Day.

[Signature pages follow]

 

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IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the day and year first above written.

 

PURCHASE AND SALE AGREEMENT

dated as of

February 22, 2008

among

TIDEWATER HOTELS & RESORTS, INC.

and

THE PARTIES IDENTIFIED ON SCHEDULE A

as Sellers,

THOMAS J. LYONS, JR.

as Guarantor

and

BARCELÓ CRESTLINE CORPORATION

as Buyer

EXECUTION COPY

TABLE OF CONTENTS

 

 

EXECUTION COPY

 

ii

Exhibits and Schedules

 

 

iii

 

iv

PURCHASE AND SALE AGREEMENT

This PURCHASE AND SALE AGREEMENT (together with the Exhibits, Schedules and Attachments hereto, this “ Agreement ”) is dated as of February 22, 2008 by and among Tidewater Hotels & Resorts, Inc., a Virginia corporation (“ Tidewater ”), each of the Sellers identified in Schedule A attached hereto (collectively with Tidewater, each a “ Seller ” and collectively, the “ Sellers ”), Thomas J. Lyons, Jr. (“ Guarantor ”) and Barceló Crestline Corporation, a Maryland corporation (“ Buyer ”). Sellers and Guarantor, on one hand, and Buyer, on the other hand, are referred to hereinafter individually as a “ Party ” and collectively as the “ Parties .”

RECITALS:

A. Sellers are the owners of (i) the hotels and resorts described on Exhibit A (together with all Purchased Assets associated therewith, as described in further detail herein, each a “ Purchased Hotel ”), (ii) the Management Company Business; (iii) a laundry facility located on Lots 7 and 8, Horse Pasture Road, Virginia Beach, Virginia (the “ Laundry Facility ”), and (iv) a parking lot located at 36 ^th Street and Atlantic Avenue, Virginia Beach, Virginia (the “ Parking Lot ”).

B. Guarantor is the owner of a majority of the ownership interests in each of the Sellers and/or Controls each of the Sellers.

C. Sellers desire to sell and transfer all of the assets, and certain of the liabilities, of the Purchased Hotels, the Management Company Business, the Laundry Facility and the Parking Lot to Buyer, and Buyer desires to purchase the assets and assume certain liabilities of the Purchased Hotels, the Management Company Business, the Laundry Facility and the Parking Lot from Sellers, upon the terms and subject to the conditions hereinafter set forth.

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

ARTICLE 1

DEFINITIONS, RULES OF CONSTRUCTION AND ACCOUNTING TERMS

Section 1.01 Definitions . The following terms and phrases, as used in this Agreement, have the following meanings:

“ Acquired Business ” means, collectively, the business, operation and use of the Purchased Assets.

“ Affiliate ” of any specified Person means any other Person directly or indirectly Controlling or Controlled by or under direct or indirect common Control with such specified Person. Guarantor shall be deemed to be an Affiliate of each of the Sellers for purposes of this Agreement.

EXECUTION COPY

“ Applicable Law ” means, with respect to any Person, any federal, state or local statute, law, common law ruling, ordinance, rule, regulation, order, writ, injunction, decree or other requirement of any Governmental Authority applicable to such Person or any of its properties, assets, officers, directors, employees, consultants or agents (in connection with such officer’s, director’s, employee’s, consultant’s or agent’s activities on behalf of such Person), including building codes and zoning laws.

“ Business Day ” means a day, other than a Saturday, Sunday or other day on which commercial banks in the Commonwealth of Virginia are authorized or required by law to close.

“ Buyer’s Expenses ” means all costs and expenses (including attorneys’ fees and expenses) incurred by Buyer in connection with this Agreement and the transactions contemplated hereby, up to an aggregate amount of $250,000.

“ Claims ” means all causes of action, claims, credits, demands, indemnity rights or judgments.

“ Closing Date ” means, with respect to each Closing as the context so requires, the date of such Closing.

“ Contracts ” means, with respect to any Person, all contracts, agreements, leases, subleases, licenses, commitments and other undertakings of any kind, whether written or oral, to which such Person is a party, under which such Person is otherwise entitled to benefits or by which such Person otherwise is bound.

“ Control ” means, with respect to any Person, the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms “ Controlling ” and “ Controlled ” have meanings correlative to the foregoing.

“ Employees ” means all employees performing services for the Purchased Hotels, the Management Company Business, the Laundry Facility, the Parking Lot and any other Purchased Assets.

“ Employment Liabilities ” means, collectively, liabilities with respect to the Employees, including liabilities for payment of all compensation, wages, bonuses, incentive payments, accrued vacation pay, sick leave, pension benefits, COBRA rights, and other benefits earned and accrued, together with F.I.C.A., unemployment and other taxes and benefits due from any employer of such Employees.

“ Environmental Laws ” means all Applicable Laws relating to protection of or damage to natural resources or the environment, pollution control, product registration or Hazardous Materials.

“ Franchise Agreement ” means, with respect to each Purchased Hotel, any franchise agreement, license agreement or similar Contract with any franchisor, licensor or other Person with respect to the license and use of a hotel franchise or brand.

 

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“ GAAP ” means generally accepted accounting principles in the United States.

“ Governmental Authority ” means any foreign, domestic, federal, territorial, state or local governmental authority, quasi-governmental authority, instrumentality, court, government or self-regulatory organization, commission, tribunal or organization or any regulatory, administrative or other agency, or any political or other subdivision, department or branch of any of the foregoing.

“ Ground Landlords ” means, collectively, the Holiday Inn Beachside Ground Landlord/Smith, the Holiday Inn Beachside Ground Landlord/Joyner, the Courtyard South Ground Landlord and the Sheraton Oceanfront Landlord.

“ Ground Leases ” means, collectively, the Holiday Inn Beachside Ground Lease/Smith, the Holiday Inn Beachside Ground Lease/Joyner, the Courtyard South Ground Lease and the Sheraton Oceanfront Ground Lease.

“ Hazardous Materials ” means any wastes, substances, radiation, or materials (whether solids, liquids or gases) that (i) are listed, regulated or defined under any Environmental Laws; (ii) contain polychlorinated biphenyls (PCBs), mold, methyl-tertiary butyl ether (MTBE), lead-based paints, urea-formaldehyde foam insulation, or petroleum or petroleum products (including crude oil or any fraction thereof); or (iii) pose a hazard to human health, safety, natural resources, employees, or the environment.

“ Indebtedness ” means, as to any Person: (i) indebtedness created, issued or incurred by such Person for borrowed money or deferred purchase price (whether by loan or the issuance and sale of debt securities or otherwise); (ii) indebtedness of others secured by a Lien on the property of such Person, whether or not the respective indebtedness so secured has been assumed by such Person; and (iii) indebtedness of others guaranteed by such Person.

“ Intellectual Property Rights ” means any trademark, service mark, trade name, invention, patent, trade secret, copyright, know-how (including any registrations or applications for registration of any of the foregoing) or any other similar type of proprietary intellectual property right.

“ JP Indebtedness ” means, collectively, all Indebtedness with respect to those Purchased Hotels identified on Exhibit A hereto as “Courtyard South,” “Courtyard North,” and “Charlottesville Courtyard.”

“ Lien ” means any mortgage, deed of trust, lien, pledge, charge, security interest, option, encroachment, easement, covenant, lease, reservation, restriction, encumbrance or defect in title of any kind.

“ Management Company Business ” means the performance of management, marketing and related services for the Purchased Hotels and for the Excluded Hotels.

“ Management Company Contracts ” means all Contracts pursuant to which the Management Company Business performs management, marketing or similar services for any Person, including the Purchased Hotels and the Excluded Hotels.

 

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“ Permits ” means licenses (including liquor licenses), certificates of occupancy, franchises, permits and authorization or approvals required to be issued by any Governmental Authority and used in or necessary to the operation of (i) each Purchased Hotel as a fully functioning hotel, (ii) the Management Company Business, (iii) the Laundry Facility, (iv) the Parking Lot, or (v) any of the other Purchased Assets, as applicable.

“ Person ” means an individual, a corporation, a general partnership, a limited partnership, a limited liability company, a limited liability partnership, an association, a trust or any other entity or organization, including a Governmental Authority.

“ Pre-Closing Tax Period ” means, with respect to each Closing, (i) any taxable period ending on or before the Closing Date for such Closing, and (ii) with respect to a taxable period that commences before but ends after the Closing Date for such Closing, the portion of such period up to but excluding the Closing Date for such Closing.

“ Proceedings ” means governmental, judicial or administrative proceedings (public or private), litigation, suits, arbitration, disputes, claims or causes of action.

“ Related Party ” means Thomas J. Lyons, Jr., Timothy J. Stiffler, and (i) any of their respective relatives by blood, marriage or adoption, (ii) any entity in which Thomas J. Lyons, Jr., Timothy J. Stiffler or any of the persons described in clause (i) owns a beneficial interest and (iii) any Affiliate of any of the foregoing.

“ Release ” means any emission, spill, seepage, leak, escape, leaching, discharge, injection, pumping, pouring, emptying, dumping, disposal, migration or release of Hazardous Materials into or upon or presence of Hazardous Materials in the environment.

“ Required Consent ” means each notice, consent, approval or other action by any Person necessary or required with respect to any of the Material Assumed Contracts described in any of Sections 3.09(a)(ii), 3.09(a)(iv), 3.09(a)(vii), 3.09(a)(ix) or 3.09(a)(xv) as a result of the execution, delivery and/or performance of this Agreement or the other Transaction Agreements.

“ Seller Employee Plan ” means each “employee benefit plan”, as defined in Section 3(3) of ERISA, each material employment, change in control, retention, severance or similar contract, plan, arrangement or policy and each other material plan or arrangement providing for compensation, bonuses, profit-sharing, stock option or other equity-based rights or other forms of incentive or deferred compensation, vacation benefits, insurance (including any self-insured arrangements), health or medical benefits, employee assistance program, disability or sick leave benefits, workers’ compensation, supplemental unemployment benefits, severance benefits and post-employment or retirement benefits (including compensation, pension, health, medical or life insurance benefits) which is maintained, administered or contributed to by Sellers or any of their Affiliates and covers any Employee.

“ Tax Authority ” means a Governmental Authority having jurisdiction over the assessment, determination, collection or imposition of any Tax.

“ Tax Returns ” means all returns (including information returns), declarations, reports, estimates and statements regarding Taxes required to be filed with any Tax Authority.

 

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“ Taxes ” means all taxes, and any charges, fees, imposts or other assessments with respect thereto, including all gross receipts, net income, sales, use, ad valorem, value added, transfer, franchise, license, withholding, payroll, employment, excise, estimated, severance, stamp, occupation and property taxes, tariffs and customs duties, together with any interest and any penalties, additions to tax or additional amounts imposed by any Tax Authority.

“ Transaction Agreements ” means this Agreement, the Assignment and Assumption Agreements, the Deeds, the Escrow Agreement, the Pre-Opening Services Agreements and the Parking Lot Lease Contract, including any exhibits or attachments to any of the foregoing, as the same may be amended from time to time.

Section 1.02 Terms Defined Elsewhere in this Agreement .

 

 

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6

 

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Section 1.03 Rules of Construction . Unless the context of this Agreement otherwise clearly requires:

(a) references to the plural include the singular, references to the singular include the plural, references to any gender include the other gender, the terms “include,” “includes,” and “including” are not limiting and have the inclusive meaning represented by the phrase “include without limitation,” “includes without limitation,” and “including without limitation,” respectively, except when used together with the word “either” or otherwise for the purpose of identifying mutually exclusive alternatives, the term “or” has the inclusive meaning represented by the phrase “and/or”;

(b) the terms “hereof”, “herein”, “hereunder”, “hereto” and similar terms in this Agreement refer to this Agreement as a whole and not to any particular provision of this Agreement;

(c) the terms “day” and “days” mean and refer to calendar day(s);

(d) the phrase “to the knowledge,” “known by,” “known” or “knowingly” (and any similar phrase) means (i) with respect to Sellers, to the actual knowledge of Thomas J. Lyons, Jr. and/or Timothy J. Stiffler and, when used in a representation and warranty, shall be deemed to include a representation that a reasonable investigation or inquiry of the subject matter thereof has been made of such individuals ( provided that such individuals shall not be liable for claims under this Agreement merely in their capacity as knowledge parties for Sellers), and (ii) with respect to Buyer, to the actual knowledge of Ed Hoganson and/or Bruce Wardinski and, when used in a representation and warranty, shall be deemed to include a representation that a reasonable investigation or inquiry of the subject matter thereof has been made of such individuals ( provided that such individuals shall not be liable for claims under this Agreement merely in their capacity as knowledge parties for Buyer);

(e) all Article, Section, Exhibit and Schedule references herein are to Articles, Sections, Exhibits and Schedules of this Agreement;

(f) any deadline or time period set forth in this Agreement that by its terms ends on a day that is not a Business Day shall be automatically extended to the next succeeding Business Day; and

(g) the Schedules delivered by Sellers pursuant to Article III hereto shall not amend, limit or otherwise modify the liabilities and obligations of the Sellers with respect to the payment, performance, satisfaction, retention and discharge in full of all Excluded Liabilities.

Section 1.04 Accounting Terms . All accounting terms not specifically defined in this Agreement shall be construed in accordance with GAAP.

 

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ARTICLE 2

PURCHASE AND SALE

Section 2.01 Purchase and Sale . Upon the terms and subject to the conditions of this Agreement, Sellers agree to sell, convey, transfer, assign and deliver, or cause to be sold, conveyed, transferred, assigned and delivered, to Buyer, and Buyer agrees to purchase from Sellers, free and clear of all liabilities of Sellers and their Affiliates (other than the Assumed Liabilities) and Liens (other than as expressly permitted herein), all of Sellers’ and their Affiliates’ right, title and interest in, to and under the following assets and properties, other than the Excluded Assets (collectively, the “ Purchased Assets ”):

(a) Purchased Hotels . All assets, properties, rights, licenses, permits, Contracts, real property, causes of action and business of every kind and description, real, personal or mixed, tangible or intangible, owned by, leased by or in the possession of Sellers or their Affiliates and held or used in connection with the Purchased Hotels, whether now owned or acquired after the date of this Agreement (but prior to the applicable Closing Date), including:

(i) with respect to each Purchased Hotel, the fee interest in and to those certain parcels of land more particularly described on Exhibit A attached hereto and made a part hereof, including all right, title and interest of Sellers and their Affiliates in and to the land lying in the bed of any street or highway in front of or adjoining such land, all water and mineral rights, development rights and all easements, rights and other interests appurtenant thereto, including the Jefferson Pilot Land (collectively, the “ Land ”);

(ii) with respect to each Purchased Hotel, any and all of Sellers’ or their Affiliates’ right, title and interest in and to the buildings located on the Land, and any and all other buildings, structures (surface and sub-surface), fixtures and other improvements located on the Land, excluding trade fixtures owned by tenants under the Space Leases (as hereinafter defined) (collectively, the “ Hotel Improvements ”);

(iii) with respect to each Purchased Hotel, the following personal property:

(A) all furniture, furnishings, fixtures, vehicles, rugs, mats, carpeting, appliances, devices, engines, computers, telephone and other communications equipment, televisions and other video equipment, plumbing fixtures and other equipment located upon the Land or within the Hotel Improvements (the “ FF&E ”);

(B) all items included within the definition of “Property and Equipment” under the Uniform System of Accounts for the Lodging Industry, Tenth Revised Edition, as published by the Hotel Association of New York City, Inc. (the “ Uniform System of Accounts ”) located at or used in the operation of the Purchased Hotel, including linen, china, glassware, tableware, silver, uniforms and similar items (the “ Fixed Asset Supplies ”);

 

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(C) all “Inventories” as defined in the Uniform System of Accounts located at or used in the operation of the Purchased Hotel, such as provisions in storerooms, refrigerators, pantries and kitchens, beverages in wine cellars and bars, other merchandise intended for sale or resale, fuel, mechanical supplies, stationery, guest supplies, maintenance and housekeeping supplies and other expensed supplies and similar items (the “ Inventories ”), provided , however , that to the extent that any Applicable Law prohibits the transfer of alcoholic beverages from Sellers to Buyer, such beverages shall not be considered a part of Inventories;

(D) to the extent transferable, all surveys, architectural, consulting and engineering blueprints, plans and specifications and reports, if any, related to the Purchased Hotel, all books and records, if any, related to the Purchased Hotel; and

(E) to the extent transferable, any and all other items of tangible or intangible personal property owned by Sellers or any of their Affiliates, including Intellectual Property Rights, and located at or used by the Purchased Hotels (the property described in subclauses (A) through (E) of this Section 2.01(a)(iii) being herein referred to as the “ Personal Property ”); provided that with respect to Personal Property leased by Sellers, title to such leased Personal Property shall not be transferred to Buyer hereunder, but the applicable leases with respect to such Personal Property shall constitute Purchased Assets;

(iv) (A) with respect to hotel known as “Holiday Inn Beachside,” (i) the leasehold interest under that certain Ground Lease, dated as of September 26, 1994, by and between Clarence J. Smith and Margaret Bonner Smith, as lessors (the “ Holiday Inn Beachside Ground Landlord/Smith ”), and Beachside, L.C., as lessee (the “ Holiday Inn Beachside Ground Lease/Smith ”) with respect to the real property described on Exhibit A-1 , and (ii) the leasehold interest under that certain Lease dated October 1, 1994 between Powell W. Joyner, Jr. and Joan P. Joyner, as lessors (the “ Holiday Inn Beachside Ground Landlord/Joyner ”) and Beachside, L.C., as lessee (the “ Holiday Inn Beachside Ground Lease/Joyner ”) with respect to the real property described on Exhibit A-2 , (B) with respect to the hotel known as “Courtyard South,” the leasehold interest under that certain Deed of Lease, dated as of December 16, 1998, by and between Ivo Grgas, as lessor (the “ Courtyard South Ground Landlord ”), and Leeward-Princess Anne Investment Associates, L.L.C., as lessee (the “ Courtyard South Ground Lease ” with respect to the real property described on Exhibit A-3 , and (C) with respect to the hotel known as “Sheraton Oceanfront,” the leasehold interest under that certain Ground Lease, dated as of January 1, 1993 by and between Bank of America, N.A., as trustee under Declaration of Trust dated July 23, 1975 with B.M. Stanton, as lessor (the “Sheraton Oceanfront Ground Landlord”) and Clearwater Investment Associates, L.P., as lessee (the “Sheraton Oceanfront Ground Lease”) with respect to the real property described on Exhibit A-4 .

(v) with respect to each Purchased Hotel, subject to Section 2.05, all rights of Sellers and their Affiliates under (A) all Contracts related to the mainten