Ashford Hospitality Prime, Inc. (Form: 10-Q, Received: 05/09/2017 16:22:13)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q



þ	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2017



¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________________ to ________________

Commission file number: 001-35972

ASHFORD HOSPITALITY PRIME, INC.

(Exact name of registrant as specified in its charter)



Maryland		46-2488594
(State or other jurisdiction of incorporation or organization)		(IRS employer identification number)

14185 Dallas Parkway, Suite 1100
Dallas, Texas		75254
(Address of principal executive offices)		(Zip code)

(972) 490-9600

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. þ Yes ¨ No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). þ Yes ¨ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “small reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.



Large accelerated filer	¨		Accelerated filer	þ
Non-accelerated filer	¨	(Do not check if a smaller reporting company)	Smaller reporting company	¨
			Emerging growth company	þ

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) if the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ¨ Yes þ No

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.



Common Stock, $0.01 par value per share		31,939,558
(Class)		Outstanding at May 5, 2017

ASHFORD HOSPITALITY PRIME, INC.

FORM 10-Q

FOR THE QUARTER ENDED MARCH 31, 2017

TABLE OF CONTENTS



PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (unaudited)
Condensed Consolidated Balance Sheets as of March 31, 2017 and December 31, 2016	2
Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2017 and 2016	3
Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three Months Ended March 31, 2017 and 2016	4
Condensed Consolidated Statement of Equity for the Three Months Ended March 31, 2017	5
Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2017 and 2016	6
Notes to Condensed Consolidated Financial Statements	8
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	28
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	42
ITEM 4. CONTROLS AND PROCEDURES	43
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS	43
ITEM 1A. RISK FACTORS	45
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	45
ITEM 3. DEFAULTS UPON SENIOR SECURITIES	45
ITEM 4. MINE SAFETY DISCLOSURES	46
ITEM 5. OTHER INFORMATION	46
ITEM 6. EXHIBITS	46
SIGNATURES	48

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS (unaudited)

ASHFORD HOSPITALITY PRIME, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited, in thousands, except share and per share amounts)



	March 31, 2017			December 31, 2016
ASSETS
Investments in hotel properties, gross	$	1,411,428		$	1,258,412
Accumulated depreciation	(254,168		)	(243,880		)
Investments in hotel properties, net	1,157,260			1,014,532
Cash and cash equivalents	161,314			126,790
Restricted cash	35,779			37,855
Accounts receivable, net of allowance of $81 and $96, respectively	24,912			18,194
Inventories	1,790			1,479
Note receivable	8,098			8,098
Deferred costs, net	924			1,020
Prepaid expenses	6,471			3,669
Investment in Ashford Inc., at fair value	11,498			8,407
Derivative assets	414			1,149
Other assets	9,068			2,249
Intangible assets, net	22,760			22,846
Due from Ashford Trust OP, net	—			488
Due from AQUA U.S. Fund	—			2,289
Due from related party, net	598			377
Due from third-party hotel managers	9,936			7,555
Total assets	$	1,450,822		$	1,256,997
LIABILITIES AND EQUITY
Liabilities:
Indebtedness, net	$	856,161		$	764,616
Accounts payable and accrued expenses	52,939			44,791
Dividends and distributions payable	8,025			5,038
Due to Ashford Trust OP, net	6			—
Due to Ashford Inc.	3,525			5,085
Due to affiliate	—			2,500
Due to third-party hotel managers	962			973
Intangible liability, net	3,611			3,625
Other liabilities	1,465			1,432
Total liabilities	926,694			828,060
Commitments and contingencies (note 15)
5.50% Series B cumulative convertible preferred stock, $0.01 par value, 4,865,850 and 2,890,850 shares issued and outstanding at March 31, 2017 and December 31, 2016, respectively	104,321			65,960
Redeemable noncontrolling interests in operating partnership	48,585			59,544
Equity:
Common stock, $0.01 par value, 200,000,000 shares authorized, 31,765,912 and 26,021,552 shares issued and outstanding at March 31, 2017 and December 31, 2016, respectively	317			260
Additional paid-in capital	467,535			401,790
Accumulated deficit	(91,246		)	(93,254		)
Total stockholders’ equity of the Company	376,606			308,796
Noncontrolling interest in consolidated entity	(5,384		)	(5,363		)
Total equity	371,222			303,433
Total liabilities and equity	$	1,450,822		$	1,256,997

See Notes to Condensed Consolidated Financial Statements.

Table of Contents

ASHFORD HOSPITALITY PRIME, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited, in thousands, except per share amounts)



	Three Months Ended March 31,
	2017			2016
REVENUE
Rooms	$	67,418		$	69,251
Food and beverage	24,473			24,865
Other	5,365			5,648
Total hotel revenue	97,256			99,764
Other	40			33
Total revenue	97,296			99,797
EXPENSES
Hotel operating expenses:
Rooms	15,797			15,819
Food and beverage	16,861			17,445
Other expenses	27,731			28,339
Management fees	3,545			3,807
Total hotel expenses	63,934			65,410
Property taxes, insurance and other	5,074			5,043
Depreciation and amortization	11,971			11,904
Advisory services fee	865			2,064
Transaction costs	4,328			—
Corporate general and administrative	3,874			3,923
Total expenses	90,046			88,344
OPERATING INCOME (LOSS)	7,250			11,453
Equity in earnings (loss) of unconsolidated entity	—			(2,650		)
Interest income	112			32
Other income (expense)	(157		)	(10		)
Interest expense and amortization of loan costs	(8,202		)	(10,634		)
Write-off of loan costs and exit fees	(1,963		)	—
Unrealized gain (loss) on investment in Ashford Inc.	3,091			(1,493		)
Unrealized gain (loss) on derivatives	(898		)	3,533
INCOME (LOSS) BEFORE INCOME TAXES	(767		)	231
Income tax (expense) benefit	478			(370		)
NET INCOME (LOSS)	(289		)	(139		)
(Income) loss from consolidated entities attributable to noncontrolling interests	21			(145		)
Net (income) loss attributable to redeemable noncontrolling interests in operating partnership	255			150
NET INCOME (LOSS) ATTRIBUTABLE TO THE COMPANY	(13		)	(134		)
Preferred dividends	(1,673		)	(894		)
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS	$	(1,686	)	$	(1,028	)
INCOME (LOSS) PER SHARE - BASIC:
Net income (loss) attributable to common stockholders	$	(0.07	)	$	(0.04	)
Weighted average common shares outstanding – basic	27,267			28,343
INCOME (LOSS) PER SHARE - DILUTED:
Net income (loss) attributable to common stockholders	$	(0.07	)	$	(0.04	)
Weighted average common shares outstanding – diluted	27,267			28,343
Dividends declared per common share	$	0.16		$	0.10

See Notes to Condensed Consolidated Financial Statements.

Table of Contents

ASHFORD HOSPITALITY PRIME, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(unaudited, in thousands)



	Three Months Ended March 31,
	2017			2016
NET INCOME (LOSS)	$	(289	)	$	(139	)
OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX
Total other comprehensive income (loss)	—			—
TOTAL COMPREHENSIVE INCOME (LOSS)	(289		)	(139		)
Comprehensive (income) loss attributable to noncontrolling interests in consolidated entities	21			(145		)
Comprehensive (income) loss attributable to redeemable noncontrolling interests in operating partnership	255			150
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO THE COMPANY	$	(13	)	$	(134	)

See Notes to Condensed Consolidated Financial Statements.

Table of Contents

ASHFORD HOSPITALITY PRIME, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF EQUITY

(unaudited, in thousands)



	Common Stock				Additional Paid-in Capital			Accumulated Deficit			Noncontrolling Interest in Consolidated Entities			Total			Redeemable Noncontrolling Interests in Operating Partnership
	Shares		Amount		Additional Paid-in Capital			Accumulated Deficit			Noncontrolling Interest in Consolidated Entities			Total
Balance at January 1, 2017	26,022		$	260	$	401,790		$	(93,254	)	$	(5,363	)	$	303,433		$	59,544
Purchase of common stock	(10	)	—		(118		)	—			—			(118		)	—
Equity-based compensation			—		(664		)	—			—			(664		)	(1,004		)
Issuance of common stock	5,750		57		66,460			—			—			66,517			—
Issuance of restricted shares/units	1		—		—			—			—			—			—
Forfeiture of restricted common shares	(2	)	—		—			—			—			—			—
Dividends declared – common stock	—		—		—			(5,149		)	—			(5,149		)	—
Dividends declared – preferred stock	—		—		—			(1,673		)	—			(1,673		)	—
Distributions to noncontrolling interests	—		—		—			—			—			—			(790		)
Redemption/conversion of operating partnership units	5		—		67			—			—			67			(67		)
Net income (loss)	—		—		—			(13		)	(21		)	(34		)	(255		)
Redemption value adjustment	—		—		—			8,843			—			8,843			(8,843		)
Balance at March 31, 2017	31,766		$	317	$	467,535		$	(91,246	)	$	(5,384	)	$	371,222		$	48,585

See Notes to Condensed Consolidated Financial Statements.

Table of Contents

ASHFORD HOSPITALITY PRIME, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited, in thousands)



	Three Months Ended March 31,
	2017			2016
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)	$	(289	)	$	(139	)
Adjustments to reconcile net income (loss) to net cash flows provided by (used in) operating activities:
Depreciation and amortization	11,971			11,904
Equity-based compensation	(1,668		)	(613		)
Bad debt expense	36			61
Amortization of loan costs	1,049			881
Write-off of loan costs and exit fees	1,963			—
Amortization of intangibles	50			5
Unrealized (gain) loss on investment in Ashford Inc.	(3,091		)	1,493
Realized and unrealized (gain) loss on derivatives	1,054			(3,533		)
Equity in (earnings) loss of unconsolidated entity	—			2,650
Deferred tax expense (benefit)	(693		)	53
Payments for derivatives	—			(114		)
Changes in operating assets and liabilities, exclusive of the effect of hotel acquisitions:
Accounts receivable and inventories	(2,733		)	(1,849		)
Prepaid expenses and other assets	(2,833		)	(2,952		)
Accounts payable and accrued expenses	1,927			8,103
Due to/from related party, net	(221		)	(290		)
Due to affiliate	(2,500		)	—
Due to/from third-party hotel managers	1,677			(1,874		)
Due to/from Ashford Trust OP, net	494			(515		)
Due to/from Ashford Inc.	(1,672		)	(1,186		)
Other liabilities	33			58
Net cash provided by (used in) operating activities	4,554			12,143

CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from property insurance	—			673
Acquisition of hotel properties, net of cash and restricted cash acquired	(154,028		)	—
Proceeds from liquidation of AQUA U.S. Fund	2,289			—
Improvements and additions to hotel properties	(9,273		)	(3,357		)
Net cash provided by (used in) investing activities	(161,012		)	(2,684		)

CASH FLOWS FROM FINANCING ACTIVITIES
Borrowings on indebtedness	432,500			—
Repayments of indebtedness	(334,774		)	(2,143		)
Payments of loan costs and exit fees	(9,097		)	(15		)
Payments for derivatives	(319		)	(4		)
Purchase of common stock	(6		)	—
Payments for dividends and distributions	(4,625		)	(3,405		)
Issuance of preferred stock	38,577			(54		)
Issuance of common stock	66,650			—
Distributions to a noncontrolling interest in a consolidated entity	—			(3,766		)
Other	—			19
Net cash provided by (used in) financing activities	188,906			(9,368		)

Net change in cash, cash equivalents and restricted cash	32,448			91
Cash, cash equivalents and restricted cash at beginning of period	164,645			138,174
Cash, cash equivalents and restricted cash at end of period	$	197,093		$	138,265

Table of Contents



	Three Months Ended March 31,
	2017		2016
SUPPLEMENTAL CASH FLOW INFORMATION
Interest paid	$	7,981	$	9,682
Income taxes paid	716		144
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES
Common stock purchases accrued but not paid	112		103
Dividends and distributions declared but not paid	8,025		4,325
Capital expenditures accrued but not paid	1,697		479
Accrued common stock offering expense	133		—
Accrued preferred stock offering expenses	216		—
SUPPLEMENTAL DISCLOSURE OF CASH, CASH EQUIVALENTS AND RESTRICTED CASH
Cash and cash equivalents at beginning of period	$	126,790	$	105,039
Restricted cash at beginning of period	37,855		33,135
Cash, cash equivalents and restricted cash at beginning of period	$	164,645	$	138,174

Cash and cash equivalents at end of period	$	161,314	$	101,891
Restricted cash at end of period	35,779		36,374
Cash, cash equivalents and restricted cash at end of period	$	197,093	$	138,265

See Notes to Condensed Consolidated Financial Statements.

Table of Contents

ASHFORD HOSPITALITY PRIME, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

1. Organization and Description of Business

Ashford Hospitality Prime, Inc., together with its subsidiaries (“Ashford Prime”), is a Maryland corporation that invests primarily in high revenue per available room (“RevPAR”) luxury hotels and resorts. High RevPAR, for purposes of our investment strategy, means RevPAR of at least twice the then-current U.S. national average RevPAR for all hotels as determined by Smith Travel Research. Ashford Prime has elected to be taxed as a real estate investment trust (“REIT”) under the Internal Revenue Code. Ashford Prime conducts its business and owns substantially all of its assets through its operating partnership, Ashford Hospitality Prime Limited Partnership (“Ashford Prime OP”). In this report, the terms “the Company,” “we,” “us” or “our” refers to Ashford Hospitality Prime, Inc. and, as the context may require, all entities included in its condensed consolidated financial statements.

We are advised by Ashford Hospitality Advisors LLC (“Ashford LLC”) through an advisory agreement. Ashford LLC is a subsidiary of Ashford Inc., which was spun-off from Ashford Hospitality Trust, Inc. (“Ashford Trust”). All of the hotel properties in our portfolio are currently asset-managed by Ashford LLC. We do not have any employees. All of the services that might be provided by employees are provided to us by Ashford LLC.

As of March 31, 2017 , Remington Lodging & Hospitality, LLC, together with its affiliates (“Remington Lodging”), which is beneficially wholly-owned by Mr. Monty J. Bennett, Chairman of our board of directors, and Mr. Archie Bennett, Jr., chairman emeritus of Ashford Trust, managed two of our twelve hotel properties. Third-party management companies managed the remaining hotel properties. On September 17, 2015, Remington Lodging and Ashford Inc. entered into an agreement pursuant to which Ashford Inc. will acquire all of the general partner interest and 80% of the limited partner interests in Remington Lodging. On April 12, 2016, Ashford Inc.’s stockholders approved the acquisition. On March 24, 2017, the agreement was terminated as Ashford Inc. was unsuccessful in receiving an acceptable private letter ruling from the Internal Revenue Service. The receipt of the private letter ruling was a condition to the closing of the transaction.

The accompanying condensed consolidated financial statements include the accounts of such wholly-owned and majority owned subsidiaries of Ashford Prime OP that as of March 31, 2017 , own and operate twelve hotel properties in seven states, the District of Columbia and the U.S. Virgin Islands. The portfolio includes ten wholly-owned hotel properties and two hotel properties that are owned through a partnership in which Ashford Prime OP has a controlling interest. These hotel properties represent 3,892 total rooms, or 3,657 net rooms, excluding those attributable to our partner. As a REIT, Ashford Prime needs to comply with limitations imposed by the Internal Revenue Code related to operating hotels. As of March 31, 2017 , eleven of our twelve hotel properties were leased by wholly-owned or majority-owned subsidiaries that are treated as taxable REIT subsidiaries (“TRS”) for federal income tax purposes (collectively the TRS entities are referred to as “Prime TRS”). One hotel property located in the U.S. Virgin Islands is owned by our U.S. Virgin Islands TRS. Prime TRS then engages third-party or affiliated hotel management companies to operate the hotel properties under management contracts. Hotel operating results related to the hotel properties are included in the condensed consolidated statements of operations. As of March 31, 2017 , nine of the twelve hotel properties were leased by Ashford Prime’s wholly-owned TRS and two hotel properties majority-owned through a consolidated partnership were leased to a TRS wholly-owned by such consolidated partnership. Each leased hotel is leased under a percentage lease that provides for each lessee to pay in each calendar month the base rent plus, in each calendar quarter, percentage rent, if any, based on hotel revenues. Lease revenue from Prime TRS is eliminated in consolidation. The hotel properties are operated under management contracts with Marriott International, Inc. (“Marriott”), Hilton Worldwide (“Hilton”), Accor Business and Leisure Management, LLC (“Accor”), Hyatt Corporation (“Hyatt”) and Remington Lodging, which are eligible independent contractors under the Internal Revenue Code.

2. Significant Accounting Policies

Basis of Presentation and Principles of Consolidation —The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. These condensed consolidated financial statements include the accounts of Ashford Hospitality Prime, Inc., its majority-owned subsidiaries, and its majority-owned entities in which it has a controlling interest. All significant intercompany accounts and transactions between consolidated entities have been eliminated in these condensed consolidated financial statements. We have condensed or omitted certain information and footnote disclosures normally included in financial statements presented in accordance with GAAP in the accompanying unaudited condensed consolidated financial statements. We believe the disclosures made herein are adequate to prevent the information presented from being misleading. However, the financial statements should be read in conjunction with

Table of Contents

ASHFORD HOSPITALITY PRIME, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

the consolidated financial statements and notes thereto included in our 2016 Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on February 28, 2017.

Ashford Prime OP is considered to be a variable interest entity (“VIE”), as defined by authoritative accounting guidance. A VIE must be consolidated by a reporting entity if the reporting entity is the primary beneficiary because it has (i) the power to direct the VIE’s activities that most significantly impact the VIE’s economic performance and (ii) the obligation to absorb losses of the VIE or the right to receive benefits from the VIE. All major decisions related to Ashford Prime OP that most significantly impact its economic performance, including but not limited to operating procedures with respect to business affairs and any acquisitions, dispositions, financings, restructurings or other transactions with sellers, purchasers, lenders, brokers, agents and other applicable representatives, are subject to the approval of our wholly-owned subsidiary, Ashford Prime OP General Partner LLC, its general partner. As such, we consolidate Ashford Prime OP.

The following items affect reporting comparability of our historical condensed consolidated financial statements:


•	Historical seasonality patterns at some of our properties cause fluctuations in our overall operating results. Consequently, operating results for the three months ended March 31, 2017 , are not necessarily indicative of the results that may be expected for the year ending December 31, 2017.


•	On July 1, 2016, we sold the Courtyard Seattle Downtown.


•	On March 31, 2017 , we acquired the Park Hyatt Beaver Creek Resort & Spa. The results of operations of the hotel property have not been included in our results of operations for the period ended March 31, 2017 as a result of the acquisition occurring on March 31, 2017 .

Use of Estimates —The preparation of these condensed consolidated financial statements in accordance with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

Restricted Cash —Restricted cash includes reserves for debt service, real estate taxes, and insurance, as well as excess cash flow deposits and reserves for furniture, fixtures, and equipment replacements of approximately 4% to 6% of property revenue for certain hotels, as required by certain management or mortgage debt agreement restrictions and provisions. We early adopted Accounting Standards Updates (“ASU”) 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash effective January 1, 2017. See discussion in recently adopted accounting standards below.

Impairment of Investments in Hotel Properties —Hotel properties are reviewed for impairment whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. Recoverability of the hotel is measured by comparison of the carrying amount of the hotel to the estimated future undiscounted cash flows, which take into account current market conditions and our intent with respect to holding or disposing of the hotel. If our analysis indicates that the carrying value of the hotel is not recoverable on an undiscounted cash flow basis, we recognize an impairment charge for the amount by which the property’s net book value exceeds its estimated fair value, or fair value, less cost to sell. In evaluating the impairment of hotel properties, we make many assumptions and estimates, including projected cash flows, expected holding period and expected useful life. Fair value is determined through various valuation techniques, including internally developed discounted cash flow models, comparable market transactions and third-party appraisals, where considered necessary. For the three months ended March 31, 2017 and 2016 , we have not recorded any impairment charges.

Investment in Ashford Inc. —We hold approximately 195,000 shares of Ashford Inc. common stock, which represented an approximate 9.7% ownership interest in Ashford Inc. and had a fair value of $11.5 million at March 31, 2017 . This investment would typically be accounted for under the equity method of accounting, under Accounting Standards Codification (“ASC”) 323-10 - Investments - Equity Method and Joint Ventures since we exercise significant influence. However, we have elected to record our investment in Ashford Inc. using the fair value option under ASC 825-10 - Fair Value Option - Financial Assets and Financial Liabilities .

Revenue Recognition —Hotel revenues, including room, food, beverage, and ancillary revenues such as long-distance telephone service, laundry, parking and space rentals, are recognized when services have been rendered. Taxes collected from customers and submitted to taxing authorities are not recorded in revenue.

Equity-Based Compensation —Stock/unit-based compensation for non-employees is accounted for at fair value based on the market price of the shares at period end in accordance with applicable authoritative accounting guidance that results in recording expense, included in “advisory services fee” and “management fees,” equal to the fair value of the award in proportion to the

Table of Contents

ASHFORD HOSPITALITY PRIME, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

requisite service period satisfied during the period. Performance stock units (“PSUs”) and performance-based Long-Term Incentive Plan (“LTIP”) units granted to certain executive officers are accounted for at fair value at period end based on a Monte Carlo simulation valuation model that results in recording expense, included in “advisory services fee,” equal to the fair value of the award in proportion to the requisite service period satisfied during the period. Stock/unit grants to independent directors are recorded at fair value based on the market price of the shares at grant date, which amount is fully expensed as the grants of stock/units are fully vested on the date of grant and included in “corporate general and administrative” expense in the condensed consolidated statements of operations.

Recently Adopted Accounting Standards —In November 2016, the Financial Accounting Standards Board (“ FASB”) issued ASU 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash (“ASU 2016-18”), which clarifies the presentation of restricted cash and restricted cash equivalents in the statements of cash flows. Under ASU 2016-18 restricted cash and restricted cash equivalents are included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statements of cash flows. ASU 2016-18 is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted. We adopted this standard effective January 1, 2017 on a retrospective basis. The adoption of this standard resulted in the inclusion of restricted cash with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statements of cash flows for all periods presented. As a result net cash provided by operating activities increased $1.5 million and net cash used in investing activities decreased $1.7 million in the three months ended March 31, 2016. Our beginning-of-period cash, cash equivalents and restricted cash increased 37.9 million and $33.1 million in 2017 and 2016, respectively.

Recently Issued Accounting Standards — In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”). ASU 2014-09 is a comprehensive new revenue recognition model, which requires a company to recognize revenue to depict the transfer of promised goods or services to a customer in an amount that reflects the consideration the company expects to receive in exchange for those goods or services. The update will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. In August 2015, the FASB issued ASU 2015-14, Revenue From Contracts With Customers (Topic 606): Deferral of the Effective Date , which defers the effective date to fiscal periods beginning after December 15, 2017. The FASB has also issued additional updates that further clarify the requirements of Topic 606 and provide implementation guidance. Early adoption is permitted for fiscal periods beginning after December 15, 2016. The standard permits the use of either the retrospective or cumulative effect transition method. We are in the initial stages of evaluating the effect of the standard on our condensed consolidated financial statements, including as it pertains to accounting for real estate sales, and continue to evaluate the available transition methods. However, we have not yet selected a transition method. Based on our initial and ongoing assessment of ASU 2014-09, we do not currently believe there will be a material impact to the amount or timing of revenue recognition for rooms revenue, food and beverage revenue and other hotel revenue.

In January 2016, the FASB issued ASU 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities (“ASU 2016-01”), which requires an entity to: (i) measure equity investments at fair value through net income, with certain exceptions; (ii) present in OCI the changes in instrument-specific credit risk for financial liabilities measured using the fair value option; (iii) present financial assets and financial liabilities by measurement category and form of financial asset; (iv) calculate the fair value of financial instruments for disclosure purposes based on an exit price and; (v) assess a valuation allowance on deferred tax assets related to unrealized losses of available-for-sale (“AFS”) debt securities in combination with other deferred tax assets. ASU 2016-01 provides an election to subsequently measure certain nonmarketable equity investments at cost less any impairment and adjusted for certain observable price changes. It also requires a qualitative impairment assessment of such equity investments and amends certain fair value disclosure requirements. ASU 2016-01 is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Certain provisions of ASU 2016-01 are eligible for early adoption. We do not expect that ASU 2016-01 will have a material impact on our condensed consolidated financial statements and related disclosures.

In February 2016, the FASB issued ASU 2016-02, Leases (“ASU 2016-02”). The new standard establishes a right-of-use (“ROU”) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. The accounting for leases under which we are the lessor remains largely unchanged. While we are currently in the initial stages of assessing the impact that ASU 2016-02 will have on our condensed consolidated financial statements, we expect the primary impact to our condensed consolidated financial statements

Table of Contents

ASHFORD HOSPITALITY PRIME, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

upon adoption will be the recognition, on a discounted basis, of our future minimum rentals due under noncancelable leases on our condensed consolidated balance sheets resulting in the recording of ROU assets and lease obligations.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments ("ASU 2016-13"). The ASU sets forth an “expected credit loss” impairment model to replace the current “incurred loss” method of recognizing credit losses. The standard requires measurement and recognition of expected credit losses for most financial assets held. The ASU is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is permitted for periods beginning after December 15, 2018. We are currently evaluating the impact that ASU 2016-13 will have on the condensed consolidated financial statements and related disclosures.

In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments - a consensus of the Emerging Issues Task Force (“ASU 2016-15”). The new guidance is intended to reduce diversity in practice in how certain transactions are classified in the statement of cash flows. Certain issues addressed in this guidance include - Debt payments or debt extinguishment costs, contingent consideration payments made after a business combination, proceeds from the settlement of insurance claims, distributions received from equity method investments and beneficial interests in securitization transactions. ASU 2016-15 is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted. We are currently evaluating the impact that ASU 2016-15 will have on our condensed consolidated financial statements and related disclosures.

In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805) - Clarifying the Definition of a Business (“ASU 2017-01” ) , which clarifies the definition of a business with the objective of adding guidance to assist entities with evaluating whether a transaction should be accounted for as an acquisition (or disposal) of an asset or a business. ASU 2017-01 is effective for fiscal years beginning after December 15, 2017. Early adoption is permitted. While we are currently evaluating the potential impact of the standard, we currently expect that certain future hotel acquisitions may be considered asset acquisitions rather than business combinations, which would affect capitalization of acquisitions costs (such costs are expensed for business combinations and capitalized for asset acquisitions).

In February 2017, the FASB issued ASU 2017-05, Other Income-Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20): Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets (ASU “2017-05”), which clarifies the scope of ASC Subtopic 610-20, Other Income-Gains and Losses from the Derecognition of Nonfinancial Assets and adds guidance for partial sales of nonfinancial assets. ASU 2017-05 is effective for fiscal years beginning after December 15, 2017. Early adoption is permitted. An entity may elect to apply ASU 2017-05 under a retrospective or modified retrospective approach. We are evaluating the impact that ASU 2017-05 will have on our condensed consolidated financial statements and related disclosures.

3. Investments in Hotel Properties, net

Investments in hotel properties, net consisted of the following (in thousands):



	March 31, 2017			December 31, 2016
Land	$	303,165		$	210,696
Buildings and improvements	1,022,514			972,412
Furniture, fixtures and equipment	79,655			70,922
Construction in progress	6,094			4,382
Total cost	1,411,428			1,258,412
Accumulated depreciation	(254,168		)	(243,880		)
Investments in hotel properties, net	$	1,157,260		$	1,014,532

Park Hyatt Beaver Creek

We have allocated the purchase price to the assets acquired and liabilities assumed on a preliminary basis using estimated fair value information currently available. We are in the process of evaluating the values assigned to investment in hotel property,

Table of Contents

ASHFORD HOSPITALITY PRIME, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

property level working capital balances and intangibles. This valuation is considered a Level 3 valuation technique. Thus, the balances reflected below are subject to change, and any such changes could result in adjustments to the allocation. Any change to the amounts recorded within the investments in hotel properties or intangibles will also impact depreciation and amortization expense.

The following table summarizes the preliminary estimated fair value of the assets acquired in the acquisition (in thousands):



Land	$	92,470
Buildings and improvements	47,724
Furniture, fixtures, and equipment	5,306
	$	145,500
Net other assets (liabilities)	$	4,528

The results of operations of the hotel property have not been included in our results of operations for the period ended March 31, 2017 as a result of the acquisition occurring on March 31, 2017 .

Pro Forma Financial Results

The following table reflects the unaudited pro forma results of operations as if the acquisition had occurred and the applicable indebtedness was incurred on January 1, 2016, and the removal of $2.8 million of non-recurring transaction costs directly attributable to the acquisitions for the three months ended March 31, 2017 (in thousands):



	Three Months Ended March 31,
	2017		2016
Total revenue	$	116,106	$	117,825
Net income (loss)	7,888		5,070
Net income (loss) attributable to common stockholders	5,418		3,517
Pro Forma income per share:
Basic	$	0.19	$	0.12
Diluted	$	0.19	$	0.12
Weighted average common shares outstanding (in thousands):
Basic	27,267		28,343
Diluted	27,450		28,459

Table of Contents

ASHFORD HOSPITALITY PRIME, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

4. Hotel Disposition

On July 1, 2016, the Company sold the Courtyard Seattle Downtown for $84.5 million in cash. The sale resulted in a gain of $26.4 million for the year ended December 31, 2016 . Since the sale of the hotel property did not represent a strategic shift that has (or will have) a major effect on our operations or financial results, its results of operations were not reported as discontinued operations in the condensed consolidated financial statements.

We included the results of operations for these assets through the date of disposition in net income (loss) as shown in the condensed consolidated statements of operations for the three months ended March 31, 2016 . The following table includes the condensed financial information from this hotel property (in thousands):



	Three Months Ended
	March 31, 2016
Total hotel revenue	$	3,187
Total hotel operating expenses	(1,758		)
Operating income (loss)	1,429
Property taxes, insurance and other	(163		)
Depreciation and amortization	(539		)
Interest expense and amortization of loan costs	(847		)
Income (loss) before income taxes	(120		)
(Income) loss before income taxes attributable to redeemable noncontrolling interests in operating partnership	15
Income (loss) before income taxes attributable to the Company	$	(105	)

5. Note Receivable

As of March 31, 2017 and December 31, 2016 , we owned a note receivable of $8.1 million from the city of Philadelphia, Pennsylvania. The note bears interest at a rate of 12.85% and matures in 2018. The interest income recorded on the note receivable is offset against the interest expense recorded on the TIF loan of the same amount. See note 7.

Table of Contents

ASHFORD HOSPITALITY PRIME, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

6. Investment in Unconsolidated Entity

Ashford Inc.

As of March 31, 2017 and December 31, 2016 , we held approximately 195,000 shares of Ashford Inc. common stock. The closing price per share was $59.00 and $43.14 as of March 31, 2017 and December 31, 2016 , respectively. This represented an approximate 9.7% ownership interest in Ashford Inc. for both March 31, 2017 and December 31, 2016 . See notes 10 and 11.

As we exercise significant influence over Ashford Inc., this investment would typically be accounted for under the equity method of accounting, under ASC 323-10 - Investments - Equity Method and Joint Ventures . However, we have elected to record our investment in Ashford Inc. using the fair value option under ASC 825-10 - Fair Value Option - Financial Assets and Financial Liabilities as the fair value is readily available since Ashford Inc. common stock is traded on a national exchange. The fair value of our investment in Ashford Inc. is included in “investment in Ashford Inc., at fair value” on our condensed consolidated balance sheets, and changes in market value are included in “unrealized gain (loss) on investment in Ashford Inc.” on our condensed consolidated statements of operations.

The following tables summarize the condensed balance sheets as of March 31, 2017 and December 31, 2016 , and the condensed statements of operations for the three months ended March 31, 2017 and 2016, of Ashford Inc. (in thousands):

Ashford Inc.

Condensed Consolidated Balance Sheets

(unaudited)



	March 31, 2017		December 31, 2016
Total assets	$	91,154	$	129,797
Total liabilities	51,278		38,168
Redeemable noncontrolling interests	1,671		1,480
Total stockholders’ equity of Ashford Inc.	37,877		37,377
Noncontrolling interests in consolidated entities	328		52,772
Total equity	38,205		90,149
Total liabilities and equity	$	91,154	$	129,797
Our investment in Ashford Inc., at fair value	$	11,498	$	8,407

Ashford Inc.

Condensed Consolidated Statements of Operations

(unaudited)



	Three Months Ended March 31,
	2017			2016
Total revenue	$	13,013		$	13,409
Total operating expenses	(15,149		)	(13,921		)
Operating income (loss)	(2,136		)	(512		)
Realized and unrealized gain (loss) on investment in unconsolidated entity	—			(1,460		)
Realized and unrealized gain (loss) on investments	(75		)	(5,684		)
Other	118			(102		)
Income tax (expense) benefit	(630		)	(640		)
Net income (loss)	(2,723		)	(8,398		)
(Income) loss from consolidated entities attributable to noncontrolling interests	(25		)	6,548
Net (income) loss attributable to redeemable noncontrolling interests	363			118
Net gain (loss) attributable to Ashford Inc.	$	(2,385	)	$	(1,732	)
Our unrealized gain (loss) on investment in Ashford Inc.	$	3,091		$	(1,493	)

Table of Contents

ASHFORD HOSPITALITY PRIME, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

7. Indebtedness

Indebtedness consisted of the following (in thousands):



Indebtedness	Collateral	Maturity	Interest Rate	March 31, 2017			December 31, 2016
Secured revolving credit facility ⁽³⁾	None	November 2019	Base Rate ⁽²⁾ + 1.25% to 2.50% or LIBOR ⁽¹⁾ + 2.25% to 3.50%	$	—		$	—
Mortgage loan ⁽¹⁰⁾	3 hotels	April 2017	5.95%	—			245,307
Mortgage loan ⁽¹⁰⁾	1 hotel	April 2017	5.95%	—			55,915
Mortgage loan ^{(7) (10)}	1 hotel	April 2017	5.91%	—			32,879
Mortgage loan ⁽⁶⁾	1 hotel	December 2017	LIBOR ⁽¹⁾ + 4.95%	42,000			42,000
Mortgage loan ⁽⁶⁾	1 hotel	December 2017	LIBOR ⁽¹⁾ + 4.95%	40,000			40,000
Mortgage loan ⁽⁴⁾	1 hotel	March 2018	LIBOR ⁽¹⁾ + 2.30%	80,000			80,000
Mortgage loan ⁽⁵⁾	1 hotel	March 2018	LIBOR ⁽¹⁾ + 2.25%	70,000			70,000
TIF loan ⁽⁷⁾ ⁽⁸⁾	1 hotel	June 2018	12.85%	8,098			8,098
Mortgage loan ^{(7) (10)}	5 hotels	February 2019	LIBOR ⁽¹⁾ + 2.58%	365,000			—
Mortgage loan ⁽⁶⁾	1 hotel	April 2019	LIBOR ⁽¹⁾ + 2.75%	67,500			—
Mortgage loan ⁽⁹⁾	2 hotels	November 2019	LIBOR ⁽¹⁾ + 2.65%	192,092			192,765
				864,690			766,964
Deferred loan costs, net				(8,529		)	(2,348		)
Indebtedness, net				$	856,161		$	764,616

__________________


⁽¹⁾	LIBOR rates were 0.983% and 0.772% at March 31, 2017 and December 31, 2016 , respectively.


⁽²⁾	Base Rate, as defined in the secured revolving credit facility agreement, is the greater of (i) the prime rate set by Bank of America, (ii) federal funds rate + 0.5% , or (iii) LIBOR + 1.0% .

⁽³⁾

Our borrowing capacity under our secured revolving credit facility is $100.0 million . We have an option, subject to lender approval, to further increase the borrowing capacity to an aggregate of $250.0 million . We may use up to $15.0 million for standby letters of credit. The secured revolving credit facility has two one -year extension options subject to advance notice, satisfaction of certain conditions and a 0.25% extension fee.


⁽⁴⁾	This loan has three one -year extension options, subject to satisfaction of certain conditions, of which the second was exercised in March 2017.


⁽⁵⁾	This loan has three one -year extension options, subject to satisfaction of certain conditions, of which the first was exercised in March 2017.


⁽⁶⁾	This loan has three one -year extension options, subject to satisfaction of certain conditions.


⁽⁷⁾	These loans are collateralized by the same property.


⁽⁸⁾	The interest expense from the TIF loan is offset against interest income recorded on the note receivable of the same amount. See note 5.


⁽⁹⁾	This loan has two one -year extension options, subject to satisfaction of certain conditions.


⁽¹⁰⁾	On January 18, 2017, we refinanced three mortgage loans totaling $333.7 million set to mature in April 2017 with a new $365.0 million loan with a two -year initial term and five one -year extension options subject to the satisfaction of certain conditions. The new loan is interest only and bears interest at a rate of LIBOR + 2.58% .

On January 18, 2017, the Company refinanced three mortgage loans with existing outstanding balances totaling approximately $333.7 million . The previous mortgage loans that were refinanced had final maturity dates in April 2017. The new mortgage loan totals $365.0 million and has a stated maturity of February 2019 with five one -year extension options, subject to the satisfaction of certain conditions. The mortgage loan is interest only and provides for a floating interest rate of LIBOR + 2.58% . The mortgage loan is secured by five hotel properties: Plano Marriott Legacy Town Center, Seattle Marriott Waterfront, Tampa Renaissance, San Francisco Courtyard Downtown and Philadelphia Courtyard Downtown.

On March 31, 2017, in connection with the acquisition of Park Hyatt Beaver Creek, we completed the financing of a $67.5 million loan. This loan is interest only and provides for a floating interest rate of LIBOR + 2.75% . The stated maturity date of the mortgage loan is April 2019, with three one -year extension options, subject to the satisfaction of certain conditions. The mortgage loan is secured by the Park Hyatt Beaver Creek.

We are required to maintain certain financial ratios under our secured revolving credit facility. If we violate covenants in any debt agreement, we could be required to repay all or a portion of our indebtedness before maturity at a time when we might be unable to arrange financing for such repayment on attractive terms, if at all. Violations of certain debt covenants may result in our inability to borrow unused amounts under our line of credit, even if repayment of some or all of our borrowings is not required. The assets of certain of our subsidiaries are pledged under non-recourse indebtedness and are not available to satisfy the debts and

Table of Contents

ASHFORD HOSPITALITY PRIME, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

other obligations of the consolidated group. As of March 31, 2017 , we were in compliance in all material respects with all covenants or other requirements set forth in our debt agreements as amended.

8. Income (Loss) Per Share

The following table reconciles the amounts used in calculating basic and diluted income (loss) per share (in thousands, except per share amounts):



	Three Months Ended March 31,
	2017			2016
Net income (loss) attributable to common stockholders - Basic and diluted:
Net income (loss) attributable to the Company	$	(13	)	$	(134	)
Less: Dividends on preferred stock	(1,673		)	(894		)
Less: Dividends on common stock	(5,033		)	(2,837		)
Less: Dividends on unvested performance stock units	(67		)	(35		)
Less: Dividends on unvested restricted shares	(50		)	(9		)
Undistributed net income (loss) allocated to common stockholders	(6,836		)	(3,909		)
Add back: Dividends on common stock	5,033			2,837
Distributed and undistributed net income (loss) - basic and diluted	$	(1,803	)	$	(1,072	)

Weighted average common shares outstanding:
Weighted average common shares outstanding – basic and diluted	27,267			28,343

Income (loss) per share - basic and diluted:
Net income (loss) allocated to common stockholders per share	$	(0.07	)	$	(0.04	)

Due to their anti-dilutive effect, the computation of diluted income (loss) per share does not reflect the adjustments for the following items (in thousands):



	Three Months Ended March 31,
	2017			2016
Net income (loss) allocated to common stockholders is not adjusted for:
Income (loss) allocated to unvested restricted shares	$	50		$	9
Income (loss) allocated to unvested performance stock units	67			35
Income (loss) attributable to redeemable noncontrolling interests in operating partnership	(255		)	(150		)
Dividends on preferred stock	1,673			894
Total	$	1,535		$	788
Weighted average diluted shares are not adjusted for:
Effect of unvested restricted shares	50			46
Effect of assumed conversion of operating partnership units	4,223			4,764
Effect of assumed conversion of preferred stock	4,550			3,439
Effect of incentive fee shares	182			116
Total	9,005			8,365

Table of Contents

ASHFORD HOSPITALITY PRIME, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

9. Derivative Instruments

Interest Rate Derivatives —We are exposed to risks arising from our business operations, economic conditions and financial markets. To manage these risks, we primarily use interest rate derivatives to hedge our debt and our cash flows. The interest rate derivatives include interest rate caps and interest rate floors, which are subject to master netting settlement arrangements. All derivatives are recorded at fair value.

During the three months ended March 31, 2017 , we entered into interest rate caps with notional amounts totaling $568.5 million and strike rate ranging from 3.00% to 5.35% . These interest rate caps have effective dates from January 2017 to March 2017 , maturity dates from March 2018 to April 2019 , and a total cost of $319,000 . These instruments were not designated as cash flow hedges.

In March 2016, concurrent with the extension of our $80.0 million mortgage loan, we extended our existing interest rate cap with a notional amount of $80.0 million , maturity date of March 2017 and a strike rate of 5.78% for a total cost of $4,500 . This instrument was not designated as a cash flow hedge.

As of March 31, 2017 , we had interest rate caps with notional amounts totaling $796.5 million and strike rates ranging from 2.00% to 5.43% . These instruments cap the interest rates on our mortgage loans with principal balances of $856.6 million and maturity dates from December 2017 to November 2019. These instruments had maturity dates ranging from December 2017 to April 2019 . As of March 31, 2017 , we had interest rate floors with notional amounts totaling $3.0 billion and strike rates of -0.25% and a maturity date of July 2020 .

Options on Futures Contracts —During the three months ended March 31, 2016 , we purchased options on Eurodollar futures for a total cost of $124,000 and a maturity date of June 2017 . During the three months ended March 31, 2017 , we made no purchases.

10. Fair Value Measurements

Fair Value Hierarchy —Our financial instruments measured at fair value either on a recurring or a non-recurring basis are classified in a hierarchy for disclosure purposes consisting of three levels based on the observability of inputs in the market place as discussed below:


•	Level 1: Fair value measurements that are quoted prices (unadjusted) in active markets that we have the ability to access for identical assets or liabilities. Market price data generally is obtained from exchange or dealer markets.

•

Level 2: Fair value measurements based on inputs other than quoted prices included in Level 1, that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include quoted prices for similar assets and liabilities in active markets, and inputs other than quoted prices that are observable for the asset or liability, such as interest rates and yield curves that are observable at commonly quoted intervals.


•	Level 3: Fair value measurements based on valuation techniques that use significant inputs that are unobservable. The circumstances for using these measurements include those in which there is little, if any, market activity for the asset or liability.

The fair value of interest rate caps is determined using the market standard methodology of discounting the future expected cash receipts that would occur if variable interest rates rise above the strike rates of the caps. The variable interest rates used in the calculation of projected receipts on the caps are based on an expectation of future interest rates derived from observable market interest rate curves (LIBOR forward curves) and volatilities (the Level 2 inputs). We also incorporate credit valuation adjustments (the Level 3 inputs) to appropriately reflect both our own non-performance risk and the respective counterparty’s non-performance risk.

The fair value of interest rate floors is calculated using a third-party discounted cash flow model based on future cash flows that are expected to be received over the remaining life of the floor. These expected future cash flows are probability-weighted projections based on the contract terms, accounting for both the magnitude and likelihood of potential payments, which are both computed using the appropriate LIBOR forward curve and market implied volatilities as of the valuation date (Level 2 inputs).

The fair value of options on futures contracts is determined based on the last reported settlement price as of the measurement date (Level 1 inputs). These exchange-traded options are centrally cleared, and a clearinghouse stands in between all trades to ensure that the obligations involved in the trades are satisfied.

When a majority of the inputs used to value our derivatives fall within Level 2 of the fair value hierarchy, the derivative valuations in their entirety are classified in Level 2 of the fair value hierarchy. However, when the valuation adjustments associated

Table of Contents

ASHFORD HOSPITALITY PRIME, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

with our derivatives utilize Level 3 inputs, such as estimates of current credit spreads, to evaluate the likelihood of default by us and our counter-parties, which we consider significant ( 10% or more) to the overall valuation of our derivatives, the derivative valuations in their entirety are classified in Level 3 of the fair value hierarchy. Transfers of inputs between levels are determined at the end of each reporting period.

Assets and Liabilities Measured at Fair Value on a Recurring Basis

The following tables present our assets and liabilities measured at fair value on a recurring basis aggregated by the level within which measurements fall in the fair value hierarchy (in thousands):



	Quoted Market Prices (Level 1)		Significant Other Observable Inputs (Level 2)		Total
March 31, 2017
Assets
Derivative assets:
Interest rate derivatives - floors	$	—	$	331	$	331
Interest rate derivatives - caps	—		64		64
Options on futures contracts	19		—		19
	19		395		414		⁽¹⁾
Non-derivative assets:
Investment in Ashford Inc.	11,498		—		11,498
Total	$	11,517	$	395	$	11,912



	Quoted Market Prices (Level 1)		Significant Other Observable Inputs (Level 2)		Total
December 31, 2016
Assets
Derivative assets:
Interest rate derivatives - floors	$	—	$	1,091	$	1,091
Options on futures contracts	58		—		58
	58		1,091		1,149		⁽¹⁾
Non-derivative assets:
Investment in Ashford Inc.	8,407		—		8,407
Total	$	8,465	$	1,091	$	9,556

__________________


⁽¹⁾	Reported as “derivative assets” in the condensed consolidated balance sheets.

Table of Contents

ASHFORD HOSPITALITY PRIME, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

Effect of Fair Value Measured Assets and Liabilities on Condensed Consolidated Statements of Operations

The following table summarizes the effect of fair value measured assets and liabilities on the condensed consolidated statements of operations (in thousands):



	Gain (Loss) Recognized in Income
	Three Months Ended March 31,
	2017				2016
Assets
Derivative assets:
Interest rate derivatives - floors	$	(759	)		$	3,560
Interest rate derivatives - caps	(256		)		(47		)
Options on futures contracts	(39		)		20

Non-derivative assets:
Investment in Ashford Inc.	3,091				(1,493		)
Total	$	2,037			$	2,040
Total combined
Interest rate derivatives - floors	$	(759	)		$	3,560
Interest rate derivatives - caps	(256		)		(47		)
Options on futures contracts	117				20
Unrealized gain (loss) on derivatives	(898		)		$	3,533
Realized gain (loss) on options on futures contracts	(156		)	⁽¹⁾	—			⁽¹⁾
Unrealized gain (loss) on investment in Ashford Inc.	3,091				(1,493		)
Net	$	2,037			$	2,040

__________________


⁽¹⁾	Included in “other income (expense)” in the condensed consolidated statements of operations.

Table of Contents

ASHFORD HOSPITALITY PRIME, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

11. Summary of Fair Value of Financial Instruments

Determining the estimated fair values of certain financial instruments such as notes receivable and indebtedness requires considerable judgment to interpret market data. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts. Accordingly, the estimates presented are not necessarily indicative of the amounts at which these instruments could be purchased, sold or settled.

The carrying amounts and estimated fair values of financial instruments were as follows (in thousands):



	March 31, 2017				December 31, 2016
	Carrying Value		Estimated Fair Value		Carrying Value		Estimated Fair Value
Financial assets and liabilities measured at fair value:
Investment in Ashford Inc.	$	11,498	$	11,498	$	8,407	$	8,407
Derivative assets	414		414		1,149		1,149
Financial assets not measured at fair value:
Cash and cash equivalents	$	161,314	$	161,314	$	126,790	$	126,790
Restricted cash	35,779		35,779		37,855		37,855
Accounts receivable, net	24,912		24,912		18,194		18,194
Note receivable	8,098		8,490 to 9,384		8,098		8,511 to $ 9,407
Due from Ashford Trust OP, net	—		—		488		488
Due from AQUA U.S. Fund	—		—		2,289		2,289
Due from related party, net	598		598		377		377
Due from third-party hotel managers	9,936		9,936		7,555		7,555
Financial liabilities not measured at fair value:
Indebtedness	$	864,690	$ 812,563 to $ 898,094		$	766,964	$ 726,774 to $ 803,276
Accounts payable and accrued expenses	52,939		52,939		44,791		44,791
Dividends and distributions payable	8,025		8,025		5,038		5,038
Due to Ashford Trust OP, net	6		6		—		—
Due to Ashford Inc.	3,525		3,525		5,085		5,085
Due to affiliate	—		—		2,500		2,500
Due to third-party hotel managers	962		962		973		973

Cash, cash equivalents and restricted cash . These financial assets have maturities of less than 90 days and most bear interest at market rates. The carrying value approximates fair value due to their short-term nature. This is considered a Level 1 valuation technique.

Accounts receivable, net, due from AQUA U.S. Fund, due from related party, net, accounts payable and accrued expenses, dividends and distributions payable, due to/from Ashford Trust OP, net, due to Ashford Inc., due to affiliate and due to/from third-party hotel managers . The carrying values of these financial instruments approximate their fair values due to the short-term nature of these financial instruments. This is considered a Level 1 valuation technique.

Note receivable . Fair value of the note receivable was determined by using similar loans with similar collateral. Since there is very little to no trading activity, we relied on our internal analysis of what we believe a willing buyer would pay for this note at March 31, 2017 and December 31, 2016 . We estimated the fair value of the note receivable to be approximately 4.8% to 15.9% higher than the carrying value of $8.1 million at March 31, 2017 and approximately 5.1% to 16.2% higher than the carrying value of $8.1 million at December 31, 2016 . This is considered a Level 2 valuation technique.

Investment in Ashford Inc. Fair value of the investment in Ashford Inc. is based on the quoted closing price on the balance sheet date. This is considered a Level 1 valuation technique.

Derivative assets . Fair value of the interest rate derivatives is determined using the net present value of the expected cash flows of each derivative based on the market-based interest rate curve and adjusted for credit spreads of us and the counterparties. Fair value of interest rate floors is calculated using a third-party discounted cash flow model based on future cash flows that are expected to be received over the remaining life of the floor. The fair values of options on futures contracts are valued at their last

Table of Contents

ASHFORD HOSPITALITY PRIME, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

reported settlement price as of the measurement date. See notes 2, 9 and 10 for a complete description of the methodology and assumptions utilized in determining fair values.

Indebtedness . Fair value of indebtedness is determined using future cash flows discounted at current replacement rates for these instruments. Cash flows are determined using a forward interest rate yield curve. The current replacement rates are determined by using the U.S. Treasury yield curve or the index to which these financial instruments are tied, and adjusted for the credit spreads. Credit spreads take into consideration general market conditions, maturity and collateral. We estimated the fair value of the total indebtedness to be approximately 94.0% to 103.9% of the carrying value of $864.7 million at March 31, 2017 and approximately 94.8% to 104.7% of the carrying value of $767.0 million at December 31, 2016 . This is considered a Level 2 valuation technique.

12. Redeemable Noncontrolling Interests in Operating Partnership

Redeemable noncontrolling interests in the operating partnership represents the limited partners’ proportionate share of equity and their allocable share of equity in earnings/losses of Ashford Prime OP, which is an allocation of net income/loss attributable to the common unitholders based on the weighted average ownership percentage of these limited partners’ common units of limited partnership interest in the operating partnership (“common units”) and units issued under our Long-Term Incentive Plan (the “LTIP units”) that are vested. Beginning one year after issuance, each common unit may be redeemed, by the holder, for either cash or, at our sole discretion, up to one share of our REIT common stock, which is either (i) issued pursuant to an effective registration statement; (ii) included in an effective registration statement providing for the resale of such common stock; or (iii) issued subject to a registration rights agreement.

LTIP units, which are issued to certain executives and employees of Ashford LLC as compensation, have vesting periods of three years . Additionally, certain independent members of the board of directors have elected to receive LTIP units as part of their compensation, which are fully vested upon grant. Upon reaching economic parity with common units, each vested LTIP unit can be converted by the holder into one common unit which can then be redeemed for cash or, at our election, settled in our common stock. An LTIP unit will achieve parity with the common units upon the sale or deemed sale of all or substantially all of the assets of our operating partnership at a time when our stock is trading at a level in excess of the price it was trading on the date of the LTIP issuance. More specifically, LTIP units will achieve full economic parity with common units in connection with (i) the actual sale of all or substantially all of the assets of our operating partnership or (ii) the hypothetical sale of such assets, which results from a capital account revaluation, as defined in the partnership agreement, for our operating partnership.

The compensation committee of the board of directors of the Company approves performance-based LTIP units to certain executive officers from time to time. The award agreements provide for the grant of a target number of performance-based LTIP units that will be settled in common units of the Ashford Prime OP, if and when the applicable vesting criteria have been achieved following the end of the performance and service period. The target number of performance-based LTIP units may be adjusted from 0% to 200% of the target number based on achievement of a specified relative total stockholder return based on the formula determined by the Company’s Compensation Committee on the grant date. As of March 31, 2017 , a total of 701,000 performance-based LTIP units representing 200% of the target were issued. The performance criteria for the performance-based LTIP units are based on market conditions under the relevant literature, and the performance-based LTIP units were granted to non-employees.

The unamortized fair value of performance-based LTIP units of $1.1 million at March 31, 2017 will be expensed over a period of 1.8 years, subject to future mark to market adjustments. We recorded credits to compensation expense in the amount of $1.0 million and $324,000 for the three months ended March 31, 2017 and 2016 , respectively, due to lower fair values as compared to prior periods. The related amounts are included in “advisory services fee” on our condensed consolidated statements of operations.

As of March 31, 2017 , we have issued a total of 1.1 million LTIP units (including performance-based LTIP units), all of which, other than approximately 3,000 LTIP units issued in March 2015, 6,000 LTIP units issued in May 2015, 389,000 performance-based LTIP units issued in June 2015, and 312,000 performance-based LTIP units issued in October 2016, had reached full economic parity with, and are convertible into, common units. For the three months ended March 31, 2017 and 2016 , compensation expense of $43,000 and $86,000 was recorded related to LTIP units issued to Ashford LLC’s employees, respectively, and is included in “advisory services fee.” The fair value of the unrecognized cost of LTIP units, which was $24,000 at March 31, 2017 , will be amortized over a period of 1.3 years, subject to future mark to market adjustments.

During the three months ended March 31, 2017 , approximately 5,000 common units with an aggregate fair value of $67,000 at redemption were redeemed by the holders and, at our election, we issued shares of our common stock to satisfy the redemption. During the three months ended March 31, 2016 , no common units were redeemed by the holders.

Table of Contents

ASHFORD HOSPITALITY PRIME, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

Redeemable noncontrolling interests in Ashford Prime OP as of March 31, 2017 and December 31, 2016 , were $48.6 million and $59.5 million , respectively, which represented ownership of our operating partnerships of 13.12% and 13.90% , respectively. The carrying value of redeemable noncontrolling interests as of March 31, 2017 and December 31, 2016 , included adjustments of $0 and $8.9 million , respectively, to reflect the excess of redemption value over the accumulated historical costs. For the three months ended March 31, 2017 and 2016 , we allocated net loss of $255,000 and $150,000 to the redeemable noncontrolling interests, respectively. We declared aggregate cash distributions to holders of common units and holders of LTIP units of $790,000 and $516,000 , respectively, for the three months ended March 31, 2017 and 2016 . These distributions are recorded as a reduction of redeemable noncontrolling interests in operating partnership.

13. Equity and Stock-Based Compensation

Equity Offering — On March 1, 2017, we commenced an underwritten public offering of approximately 5.8 million shares of common stock at $12.15 per share for gross proceeds of $69.9 million . The offering closed on March 7, 2017. The net proceeds from the sale of the shares after underwriting discounts and offering expense were approximately $66.5 million .

Dividends —Common stock dividends declared for the three months ended March 31, 2017 and 2016, were $5.1 million and $2.8 million , respectively.

Performance Stock Units —The compensation committee of the board of directors of the Company approves grants of PSUs to certain executive officers from time to time. The award agreements provide for the grant of a target number of PSUs that will be settled in shares of common stock of the Company, if and when the applicable vesting criteria have been achieved following the end of the performance and service period of three years from the issuance date. The target number of PSUs may be adjusted from 0% to 200% based on achievement of a specified relative total stockholder return based on the formula determined by the Company’s Compensation Committee on the grant date. The performance criteria for the PSUs are based on market conditions under the relevant literature, and the PSUs were granted to non-employees. At March 31, 2017 , the outstanding PSUs had a fair value of $2.6 million . We recorded credits to compensation expense in the amount of $800,000 and $398,000 for the three months ended March 31, 2017 and 2016 , respectively, due to lower fair values of the PSUs. These amounts are included in “advisory services fee” on our condensed consolidated statements of operations. As of March 31, 2017 , we had unamortized compensation expense of $1.7 million related to PSUs which is expected to be recognized over a period of 1.8 years, subject to future mark to market adjustments.

Restricted Stock Units —Stock-based compensation expense of $118,000 and $23,000 was recognized for the three months ended March 31, 2017 and 2016 , respectively, in connection with restricted units awarded to employees of Ashford LLC and is included in “advisory services fee” on our condensed consolidated statements of operations. There were also restricted shares granted to certain employees of Remington Lodging, and the associated expenses are recorded as a component of “management fees” on our condensed consolidated statements of operations. For the three months ended March 31, 2017 and 2016, expense related to such grants was immaterial. In addition, $18,000 and $0 of stock-based compensation expense was recognized for the three months ended March 31, 2017 and 2016, respectively, in connection with common stock issued to our independent directors, which vested immediately, and is included in “corporate general and administrative” expense on our condensed consolidated statements of operations. At March 31, 2017 , the outstanding restricted shares had a fair value of $3.3 million . At March 31, 2017 , the unamortized cost of the unvested shares of restricted stock was $2.8 million , which will be expensed over a period of 4.6 years , subject to future mark to market adjustments, and have vesting dates between April 2017 and November 2021 .

Stock Repurchases —On October 27, 2014, our board of directors approved a share repurchase program under which the Company may purchase up to $100 million of the Company’s common stock from time to time. The repurchase program does not have an expiration date. The specific timing, manner, price, amount and other terms of the repurchases is at management’s discretion and depends on market conditions, corporate and regulatory requirements and other factors. The Company is not required to repurchase shares under the repurchase program, and may modify, suspend or terminate the repurchase program at any time for any reason. On April 8, 2016, our board of directors authorized utilizing up to $50 million to repurchase common stock. No shares were repurchased during the three months ended March 31, 2017 and 2016, pursuant to this authorization. As of March 31, 2017 , we have purchased a cumulative 4.3 million shares of our common stock, for approximately $63.2 million , since the program’s inception on November 4, 2014.

Noncontrolling Interest in Consolidated Entities —A partner had noncontrolling ownership interests of 25% in two hotel properties with a total carrying value of $(5.4) million and $(5.4) million at March 31, 2017 and December 31, 2016 , respectively. Noncontrolling interests in consolidated entities were allocated net loss of $21,000 and net income of $145,000 for the three months ended March 31, 2017 and 2016 , respectively.

Table of Contents

ASHFORD HOSPITALITY PRIME, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

14. 5.5% Series B Cumulative Convertible Preferred Stock

Each share of our 5.5% Series B Cumulative Convertible Preferred Stock (the “Series B Preferred Stock”) is convertible at any time, at the option of the holder, into a number of whole shares of common stock at an initial conversion price of $18.90 (which represents an initial conversion rate of 1.3228 shares of our common stock, subject to certain adjustments). The Series B Preferred Stock is also subject to conversion upon certain events constituting a change of control. Holders of the Series B Preferred Stock have no voting rights, subject to certain exceptions.

The Company may, at its option, cause the Series B Preferred Stock to be converted in whole or in part, on a pro-rata basis, into fully paid and nonassessable shares of the Company’s common stock at the conversion price, provided that the “Closing Bid Price” (as defined in the Articles Supplementary) of the Company’s common stock shall have equaled or exceeded 110% of the conversion price for the immediately preceding 45 consecutive trading days ending three days prior to the date of notice of conversion. In the event of such mandatory conversion, the Company shall pay holders of the Series B Preferred Stock any additional dividend payment to make the holder whole on dividends expected to be received through June 11, 2019, in an amount equal to the net present value, where the discount rate is the dividend rate on the Series B Preferred Stock, of the difference between (i) the annual dividend payments the holders of Series B Preferred Stock would have received in cash from the date of the mandatory conversion to June 11, 2019, and (ii) the common stock quarterly dividend payments the holders of Series B Preferred Stock would have received over the same time period had such holders held common stock.

On April 26, 2016, in connection with a previously announced required public offering, we issued 290,850 shares of our Series B Preferred Stock at $17.24 per share for gross proceeds of $5.0 million . The Series B Preferred Stock offering includes accrued and unpaid dividends since April 15, 2016. The offering closed on April 29, 2016. The net proceeds, after deducting underwriting discounts, advisory fees, commissions and other estimated offering expenses payable by the company, were approximately $4.2 million . Dividends on the Series B Preferred Stock accrue at a rate of 5.50% on the liquidation preference of $25.00 per share.

On March 7, 2017, we closed an offering of approximately 2.0 million shares of our Series B Preferred Stock at $20.19 per share for gross proceeds of $39.9 million . The net proceeds to us, after underwriting discounts and offering expenses were approximately $38.4 million . Dividends on the Series B Preferred Stock accrue at a rate of 5.50% on the liquidation preference of $25.00 per share. On March 31, 2017, the underwriters partially exercised their over-allotment option and purchased an additional 100,000 shares of the Series B Preferred Stock, which closed on April 5, 2017. The net proceeds from the sale of the shares after underwriting discounts and offering expenses were approximately $1.9 million .

At March 31, 2017 , we had 4.9 million outstanding shares of Series B Preferred Stock which do not meet the requirements for permanent equity classification prescribed by the authoritative guidance because these contain certain cash redemption features that are outside our control. As such, the Series B Preferred Stock is classified outside of permanent equity.

The Series B Preferred Stock dividend for all issued and outstanding shares is set at $1.375 per annum per share. For the three months ended March 31, 2017 and 2016 , we declared dividends of $1.7 million and $894,000 , respectively, with respect to shares of Series B Preferred Stock.

15. Commitments and Contingencies

Restricted Cash —Under certain management and debt agreements for our hotel properties existing at March 31, 2017 , escrow payments are required for insurance, real estate taxes, and debt service. In addition, for certain properties based on the terms of the underlying debt and management agreements, we escrow 4% to 5% of gross revenues for capital improvements.

Management Fees —Under management agreements for our hotel properties existing at March 31, 2017 , we pay a) monthly property management fees equal to the greater of $10,000 (CPI adjusted since 2003) or 3% of gross revenues, or in some cases 3% to 7% of gross revenues, as well as annual incentive management fees, if applicable, b) project management fees of up to 4% of project costs, c) market service fees including purchasing, design and construction management not to exceed 16.5% of project management budget cumulatively, including project management fees, and d) other general fees at current market rates as approved by our independent directors, if required. These management agreements expire from December 2019 through December 2065, with renewal options. If we terminate a management agreement prior to its expiration, we may be liable for estimated management fees through the remaining term, liquidated damages or, in certain circumstances, we may substitute a new management agreement.

Income Taxes —We and our subsidiaries file income tax returns in the federal jurisdiction and various states. Tax years 2013 through 2016 remain subject to potential examination by certain federal and state taxing authorities.

Table of Contents

ASHFORD HOSPITALITY PRIME, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

Litigation —On February 3, 2016, Sessa Capital (Master), L.P. (“Sessa”) filed an action (the “Maryland Action”) in the Circuit Court for Baltimore City, Maryland, captioned Sessa Capital (Master) L.P. v. Bennett, et al. , Case No. 24-C-16-000557 (Baltimore City Cir. Ct. 2016), against Ashford Prime, the members of the Ashford Prime board of directors, Ashford LLC and Ashford Inc. The Maryland Action generally alleged that the directors of Ashford Prime breached their fiduciary duties in connection with the June 2015 amendments to the Company’s advisory agreement with Ashford LLC. The Maryland Action also alleged that Ashford Inc. aided and abetted those breaches of fiduciary duties. On February 29, 2016, the Company filed a motion to dismiss the Maryland Action. On March 14, 2016, Sessa voluntarily dismissed the Maryland Action.

On February 25, 2016, Ashford Prime filed a lawsuit (the “Texas Federal Action”) in the United States District Court for the Northern District of Texas, captioned Ashford Hospitality Prime, Inc. v. Sessa Capital (Master), L.P., et al. , No. 16-cv-00527 (N.D. Texas 2016) (DCG), against Sessa, related entities, and Sessa’s proposed director nominees John E. Petry, Philip B. Livingston, Lawrence A. Cunningham, Daniel B. Silvers and Chris D. Wheeler. The Texas Federal Action generally alleges that the defendants violated federal securities laws because Sessa’s proxy materials contain numerous false claims, material misrepresentations and omissions relating to, among other things, the proposed nominees, the financial risks associated with Sessa’s efforts to gain control of the board and Sessa’s plans and strategy for the Company and its assets. Among other remedies, the Texas Federal Action seeks to enjoin Sessa from proceeding with its proxy contest.

On March 8, 2016, Ashford Prime filed a lawsuit (the “Texas State Action”) in the District Court of Dallas County, Texas, captioned Ashford Hospital Prime, Inc. v. Sessa Capital (Master) L.P., et al. , Cause No. DC-16-02738, against Sessa, related entities, and Sessa’s proposed director nominees John E. Petry, Philip B. Livingston, Lawrence A. Cunningham, Daniel B. Silvers and Chris D. Wheeler. The Texas State Action generally alleges that Sessa’s purported notice of proposed nominees for election to the Ashford Prime board of directors is invalid due to numerous failures by the defendants to comply with material provisions in the Company’s bylaws. Among other things, the Texas State Action seeks a declaratory judgment confirming the inability of Sessa’s proposed director nominees to stand for election at the 2016 annual meeting of stockholders. On March 14, 2016, Sessa removed the Texas State Action from state court to the U.S. District Court for the Northern District of Texas with Cause No. 16-cv-00713.

On March 14, 2016, Sessa filed counterclaims and a motion for a preliminary injunction in the Texas Federal Action. These counterclaims include substantially the same claims as previously asserted by Sessa in the Maryland Action, and also allege that the directors of Ashford Prime breached their fiduciary duties in connection with the approval of the Series C Preferred Stock for issuance and the February 2016 amendments to the Amended Partnership Agreement (as defined below). Among other things, Sessa seeks an injunction prohibiting the issuance of shares of Series C Preferred Stock and requiring the board to approve the Sessa candidates, or in the alternative, prohibiting the solicitation of proxies until the board approves the Sessa candidates. On April 2, 2016, Sessa amended its counterclaims alleging that the Company had violated federal proxy solicitation laws by, among other things, stating that Sessa had not complied with the Company’s bylaws and that its purported director nominations are invalid. On April 6, 2016, the Court granted expedited discovery in connection with Sessa’s motion for preliminary injunction and the Company’s anticipated motion for preliminary injunction in the Texas State Action. On April 8, 2016, the Company notified the court that Sessa’s claims relating to the Series C Preferred Stock were moot after the Company unwound the OP Unit enfranchisement preferred equity transaction for the Company’s OP unitholders. On April 13, 2016, the Company filed its motion for preliminary injunction seeking an order declaring that Sessa’s slate of nominees is invalid and enjoining Sessa from submitting the nominees to stockholders for election to the board. On May 20, 2016, the court denied Sessa’s motion for a preliminary injunction and granted the Company’s motion for a preliminary injunction. Sessa appealed the district court’s decision to the United States Court of Appeals for the Fifth Circuit on May 23, 2016. On December 16, 2016, the Fifth Circuit dismissed Sessa’s appeal of the preliminary injunction as moot. On February 17, 2017, the District Court consolidated the Texas State Action into the Texas Federal Action (the “Consolidated Texas Federal Action”). On the same day, the District Court also dismissed all of Sessa’s counterclaims, except for its claim for violation of federal proxy solicitation laws, which the Company did not move to dismiss. The District Court granted Sessa’s motion to dismiss the Company claim for prima facie tort, but denied Sessa’s motion to dismiss the Company’s remaining claims.

On February 16, 2017, the Company, Ashford Trust and Ashford Inc., and together with the Company, Ashford Trust and each affiliate of the Company, Ashford Trust and Ashford Inc. (the “Ashford Entities”), entered into a Settlement Agreement (the “Settlement Agreement”) with Sessa, Sessa Capital GP, LLC, Sessa Capital IM, L.P., Sessa Capital IM GP, LLC and John Petry (collectively, the “Sessa Entities”) regarding the composition of the Company’s board of directors (the “Board”), dismissal of pending litigation involving the parties and certain other matters.

Table of Contents

ASHFORD HOSPITALITY PRIME, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

such appointments within two weeks of the date of the Settlement Agreement. Additionally, the Settlement Agreement provides that the Company and the Sessa Entities will work together in good faith to identify one additional director who will be independent of both the Company and Sessa (“Additional Independent Director”).

So long as the Sessa Entities satisfy certain ownership thresholds with respect to the Company’s common stock, the Company agreed to nominate: (i) the Independent Designees; (ii) the Additional Independent Director; and (iii) Montgomery J. Bennett, Stefani D. Carter, Kenneth H. Fearn, Douglas A. Kessler, Curtis B. McWilliams and Matthew D. Rinaldi (or their successors) at each of the 2017 and 2018 annual meetings of Company’s stockholders. In the case of any contested election of directors of the Company, the Sessa Entities have agreed to cause one or both of the Independent Designees to resign from the Board if the preliminary results provided by the inspector of elections at any meeting of stockholders of the Company prior to the closing of the polls indicates with reasonable certainty that any of the incumbent directors or their successors (other than the Independent Designees) will not be elected at such meeting but for the resignation of one or more of the Independent Designees.

Under the Settlement Agreement, the Sessa Entities are subject to specified standstill restrictions relating to the Ashford Entities and lasting generally until the earlier of (x) the date that is fifteen business days prior to the deadline for the submission of stockholder nominations for the 2019 annual meeting of the Company’s stockholders pursuant to the Company’s bylaws or (y) the date that is one hundred fifty days prior to the first anniversary of the 2018 annual meeting of the Company’s stockholders. During the standstill period, the Sessa Entities have agreed to cause all of its shares of the Company to be present for quorum purposes at any meeting of the Company’s stockholders and voted in accordance with the board’s recommendations, subject to certain exceptions. The Settlement Agreement contains various other obligations and provisions applicable to the Ashford Entities and Sessa Entities.

Additionally, the Company agreed to pay the Sessa Entities $2.5 million , of which the Company was reimbursed $2.0 million by its insurance carrier. The net $500,000 expense was included in the Company’s consolidated statement of operations for the year ended December 31, 2016, and the $2.5 million payable and the $2.0 million receivable were included in the Company’s consolidated balance sheet as of December 31, 2016. The amounts were paid as of March 31, 2017.

On February 20, 2017, the parties submitted a Joint Stipulation of Dismissal, which dismissed each of the parties’ remaining claims in the Consolidated Texas Federal Action with prejudice.

Jesse Small v. Monty J. Bennett, et al., Case No. 24-C-16006020 (Md. Cir. Ct.) On November 16, 2016, Jesse Small, a purported shareholder of Ashford Prime, commenced a derivative action in Maryland Circuit Court for Baltimore City asserting causes of action for breach of fiduciary duty, corporate waste, and declaratory relief against the members of the Ashford Prime board of directors, David Brooks (collectively, the “Individual Defendants”), Ashford Inc. and Ashford LLC. Ashford Prime is named as a nominal defendant. The complaint alleges that the Individual Defendants breached their fiduciary duties to Ashford Prime by negotiating and approving the termination fee provision set forth in Ashford Prime’s advisory agreement with Ashford LLC, that Ashford Inc. and Ashford LLC aided and abetted the Individual Defendants’ fiduciary duty breaches, and that the Ashford Prime board of directors committed corporate waste in connection with Ashford Prime’s purchase of 175,000 shares of Ashford Inc. common stock. The complaint seeks monetary damages and declaratory and injunctive relief, including a declaration that the termination fee provision is unenforceable. The defendants filed motions to dismiss the complaint on March 24, 2017. The plaintiff’s response is due May 23, 2017. The outcome of this matter cannot be predicted with any certainty.

We are engaged in other various legal proceedings which have arisen but have not been fully adjudicated. The likelihood of loss from these legal proceedings, based on definitions within contingency accounting literature, ranges from remote to reasonably possible and to probable. Based on estimates of the range of potential losses associated with these matters, management does not believe the ultimate resolution of these proceedings, either individually or in the aggregate, will have a material adverse effect on our consolidated financial position or results of operations. However, the final results of legal proceedings cannot be predicted with certainty and if we fail to prevail in one or more of these legal matters, and the associated realized losses exceed our current estimates of the range of potential losses, our consolidated financial position or results of operations could be materially adversely affected in future periods.

16. Segment Reporting

We operate in one business segment within the hotel lodging industry: direct hotel investments. Direct hotel investments refer to owning hotel properties through either acquisition or new development. We report operating results of direct hotel investments on an aggregate basis as substantially all of our hotel investments have similar economic characteristics and exhibit similar long-term financial performance. As of March 31, 2017 and December 31, 2016 , all of our hotel properties were in the U.S. and its territories.

Table of Contents

ASHFORD HOSPITALITY PRIME, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

17. Related Party Transactions

Ashford LLC, a subsidiary of Ashford Inc., acts as our advisor, and as a result, we pay advisory fees to Ashford LLC. We are required to pay Ashford LLC a quarterly base fee that is a percentage of our total market capitalization on a declining sliding scale plus the Key Money Asset Management Fee (defined in our advisory agreement as the aggregate gross asset value of all key money assets multiplied by 0.70% ), subject to a minimum quarterly base fee, as payment for managing our day-to-day operations in accordance with our investment guidelines. Total market capitalization includes the aggregate principal amount of our consolidated indebtedness (including our proportionate share of debt of any entity that is not consolidated but excluding our joint venture partners’ proportionate share of consolidated debt). The range of base fees on the scale are between 0.70% and 0.50% per annum for total market capitalization that ranges from less than $6.0 billion to greater than $10.0 billion . At March 31, 2017 , the quarterly base fee was 0.70% based on our current market capitalization. We are also required to pay Ashford LLC an incentive fee that is earned annually by Ashford LLC in each year that our annual total stockholder return exceeds the average annual total stockholder return for our peer group, subject to the FCCR Condition, as defined in the advisory agreement. We also reimburse Ashford LLC for certain reimbursable overhead and internal audit, insurance claims advisory and asset management services, as specified in the advisory agreement. We also record equity-based compensation expense for equity grants of common stock and LTIP units awarded to our officers and employees of Ashford LLC in connection with providing advisory services equal to the fair value of the award in proportion to the requisite service period satisfied during the period.

The following table summarizes the advisory services fees incurred (in thousands):



	Three Months Ended March 31,
	2017			2016
Advisory services fee
Base advisory fee	$	2,003		$	2,025
Reimbursable expenses ⁽¹⁾	547			652
Equity-based compensation ⁽²⁾	(1,685		)	(613		)
	$	865		$	2,064

________


⁽¹⁾	Reimbursable expenses include overhead, internal audit, insurance claims advisory and asset management services.


⁽²⁾	Equity-based compensation is associated with equity grants of Ashford Prime’s common stock, PSUs, LTIP units and Performance LTIP units awarded to officers and employees of Ashford LLC.

At March 31, 2017 and December 31, 2016 , we held a due to Ashford Trust OP, net, of $6,000 and a due from Ashford Trust OP, net, of $488,000 , respectively, which are both associated with certain expenses. At March 31, 2017 and December 31, 2016 , the balance in due to Ashford Inc., which is primarily associated with advisory services fee payable, was $3.5 million and $5.1 million , respectively. In addition, at December 31, 2016 , we held a receivable from the AQUA U.S. Fund of $2.3 million , associated with the hold back from the AQUA U.S. Fund, of which the funds were received during the first quarter of 2017.

On January 24, 2017, we entered into an amended and restated advisory agreement with Ashford Inc. (the “Amended and Restated Advisory Agreement”) that amends and restates our advisory agreement discussed herein. Although our board of directors, through the action of the independent directors only, may amend the advisory agreement without stockholder approval, the independent directors have elected to seek stockholder approval of the Amended and Restated Advisory Agreement. Accordingly, the Amended and Restated Advisory Agreement will not become effective unless and until it is approved by our stockholders. The material terms of the Amended and Restated Advisory Agreement include:


•	we will make a cash payment to Ashford LLC of $5.0 million at the time the Amended and Restated Advisory Agreement becomes effective;


•	the termination fee payable to Ashford LLC has been amended by eliminating the 1.1 x multiplier and tax gross up components of the fee;


•	Ashford Inc. will disclose publicly the revenues and expenses used to calculate “Net Earnings” on a quarterly basis which is used to calculate the termination fee; Ashford LLC will retain an accounting firm to provide a quarterly report to us on the reasonableness of Ashford LLC’s determination of expenses, which will be binding on the parties;


•	the right of Ashford LLC to appoint a “Designated CEO” has been eliminated;

Table of Contents

ASHFORD HOSPITALITY PRIME, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)


•	the right of Ashford LLC to terminate the advisory agreement due to a change in a majority of the “Company Incumbent Board” (as defined in the current advisory agreement) has been eliminated;

•

we will be incentivized to grow our assets under a “growth covenant” in the Amended and Restated Advisory Agreement under which we will receive a deemed credit against a base amount of $45.0 million for: 3.75% of the total purchase price of each hotel acquired after the date of the Amended and Restated Advisory Agreement that was recommended by Ashford LLC, netted against 3.75% of the total sale price of each hotel sold after the date of the Amended and Restated Advisory Agreement. The difference between $45.0 million and such net credit, if any, is referred to as the “Uninvested Amount.” If the Amended and Restated Advisory Agreement is terminated, other than due to certain acts by Ashford LLC, we must pay Ashford LLC the Uninvested Amount, in addition to any termination fee payable under the Amended and Restated Advisory Agreement;


•	the Amended and Restated Advisory Agreement requires us to maintain a net worth of not less than $390 million plus 75% of the equity proceeds from the sale of securities by us after December 31, 2016 and a covenant prohibiting us from paying dividends except as required to maintain our REIT status if paying the dividend would reduce our net worth below the required minimum net worth;


•	the initial term of the Amended and Restated Advisory Agreement ends on the 10th anniversary of its effective date, subject to renewal by Ashford LLC for up to seven additional successive 10 -year terms;


•	the base management fee payable to Ashford LLC will be fixed at 70 bps, and the fee will be payable on a monthly basis;


•	reimbursements of expenses to Ashford LLC will be made monthly in advance, based on an annual expense budget, with a quarterly true-up for actual expenses;


•	our right to terminate the advisory agreement due to a change of control of Ashford LLC has been eliminated;

•

our rights to terminate the advisory agreement at the end of each term upon payment of the termination fee based on the parties being unable to agree on new market-based fees or advisor’s performance have been eliminated; however, the Amended and Restated Advisory Agreement provides a mechanism for the parties to renegotiate the fees payable to Ashford LLC at the end of each term based on then prevailing market conditions, subject to floors and caps on the changes;


•	if a Change of Control (as defined in the Amended and Restated Advisory Agreement) is pending, we have agreed to deposit not less than 50% , and in certain cases 100% , of the applicable termination fee in escrow, with the payment of any remaining amounts owed to Ashford LLC secured by a letter of credit and/or first priority lien on certain assets;


•	our ability to terminate the Amended and Restated Advisory Agreement due to a material default by Ashford LLC is limited to instances where a court finally determines that the default had a material adverse effect on us and Ashford LLC fails to pay monetary damages in accordance with the Amended and Restated Advisory Agreement; and


•	if we repudiate the Amended and Restated Advisory Agreement through actions or omissions that constitute a repudiation as determined by a final non-appealable order from a court of competent jurisdiction, we will be liable to Ashford LLC for a liquidated damages amount.

Certain employees of Remington Lodging, who perform work on behalf of Ashford Prime, were granted approximately 21,000 and 1,000 shares of restricted stock under the Ashford Prime Stock Plan on April 1, 2016 and July 1, 2016, respectively. These share grants were accounted for under the applicable accounting guidance related to share-based payments granted to non-employees and are recorded as a component of “management fees” in our condensed consolidated statements of operations. For the three months ended March 31, 2017 and 2016, expense related to such grants was immaterial. The unamortized fair value of these grants was $141,000 as of March 31, 2017 , which will be amortized over a period of 2.0 years.

During first quarter of 2017, we reached a legal settlement with Sessa. See note 15.

18. Subsequent Event

On March 31, 2017, the underwriters of our offering of Series B Preferred Stock that closed on March 7, 2017, partially exercised their over-allotment option and purchased an additional 100,000 shares of our Series B Preferred Stock at $20.19 per share, which closed on April 5, 2017. The net proceeds to us from the sale of the shares after underwriting discounts were approximately $1.9 million . See note 14.

Table of Contents

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

As used in this Quarterly Report on Form 10-Q, unless the context otherwise indicates, the references to “we,” “us,” “our,” the “Company” or “Ashford Prime” refer to Ashford Hospitality Prime, Inc., a Maryland corporation, and, as the context may require, its consolidated subsidiaries, including Ashford Hospitality Prime Limited Partnership, a Delaware limited partnership, which we refer to as “our operating partnership” or “Ashford Prime OP.” “Ashford Trust” or “AHT” refers to Ashford Hospitality Trust, Inc., a Maryland corporation, and, as the context may require, its consolidated subsidiaries, including Ashford Hospitality Limited Partnership, a Delaware limited partnership and Ashford Trust’s operating partnership, which we refer to as “Ashford Trust OP.” “Ashford LLC” refers to Ashford Hospitality Advisors LLC, a Delaware limited liability company and a wholly-owned subsidiary of Ashford Inc., an affiliate of Ashford Trust. “Remington Lodging” refers to Remington Lodging and Hospitality LLC, a Delaware limited liability company, a property management company owned by Mr. Monty J. Bennett, chairman of our board of directors, and his father, Mr. Archie Bennett, Jr., chairman emeritus of Ashford Trust. “Our TRSs” refers to our taxable REIT subsidiaries, including Ashford Prime TRS Corporation, a Delaware corporation, which we refer to as “Ashford Prime TRS,” and its subsidiaries, together with the two taxable REIT subsidiaries that lease our two hotels held in a consolidated joint venture and are wholly-owned by the joint venture and the U.S. Virgin Islands’ (“USVI”) taxable REIT subsidiary that owns the Ritz-Carlton St. Thomas hotel.

This Quarterly Report on Form 10-Q (this “Form 10-Q”) contains registered trademarks that are the exclusive property of their respective owners, which are companies other than us, including Marriott International®, Hilton Worldwide®, Sofitel®, Hyatt® and Accor®.

FORWARD-LOOKING STATEMENTS

Throughout this Form 10-Q, we make forward-looking statements that are subject to risks and uncertainties. Forward-looking statements are generally identifiable by use of forward-looking terminology such as “may,” “will,” “should,” “potential,” “intend,” “expect,” “anticipate,” “estimate,” “approximately,” “believe,” “could,” “project,” “predict,” or other similar words or expressions. Additionally, statements regarding the following subjects are forward-looking by their nature:


•	our business and investment strategy;


•	our projected operating results and dividend rates;


•	our ability to obtain future financing arrangements;


•	our understanding of our competition;


•	market trends;


•	projected capital expenditures;


•	anticipated acquisitions or dispositions; and


•	the impact of technology on our operations and business.

Forward-looking statements are based on certain assumptions, discuss future expectations, describe future plans and strategies, contain financial and operating projections or state other forward looking information. Our ability to predict results or the actual effect of future events, actions, plans or strategies is inherently uncertain. Although we believe that the expectations reflected in our forward-looking statements are based on reasonable assumptions, taking into account all information currently available to us, our actual results and performance could differ materially from those set forth in our forward-looking statements. Factors that could have a material adverse effect on our forward-looking statements include, but are not limited to:

•

factors discussed in our Form 10-K for the year ended December 31, 2016 , as filed with the Securities and Exchange Commission (the “SEC”) on March 15, 2017 (the “ 2016 10-K”), including those set forth under the sections titled “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Business,” and “Properties,” as updated in our subsequent Quarterly Reports on Form 10-Q;


•	general volatility of the capital markets, the general economy or the hospitality industry, whether the result of market events or otherwise;


•	our ability to deploy capital and raise additional capital at reasonable costs to repay debts, invest in our properties and fund future acquisitions;

• unanticipated increases in financing and other costs, including a rise in interest rates;


•	the degree and nature of our competition;


•	actual and potential conflicts of interest with Ashford Trust, Ashford LLC, Ashford Inc., Remington Lodging, our executive officers and our non-independent directors;


•	changes in personnel of Ashford LLC or the lack of availability of qualified personnel;

Table of Contents


•	changes in governmental regulations, accounting rules, tax rates and similar matters;


•	legislative and regulatory changes, including changes to the Internal Revenue Code and related rules, regulations and interpretations governing the taxation of real estate investment trusts (“REITs”); and


•	limitations imposed on our business and our ability to satisfy complex rules in order for us to qualify as a REIT for U.S. federal income tax purposes.

When considering forward-looking statements, you should keep in mind the matters summarized under “Item 1A. Risk Factors” of our 2016 10-K and any subsequent updates to this disclosure in our Quarterly Reports on Form 10-Q, and the discussion in this Management’s Discussion and Analysis of Financial Condition and Results of Operations, could cause our actual results and performance to differ significantly from those contained in our forward-looking statements. Accordingly, we cannot guarantee future results or performance. Readers are cautioned not to place undue reliance on any of these forward-looking statements, which reflect our views as of the date of this Form 10-Q. Furthermore, we do not intend to update any of our forward-looking statements after the date of this Form 10-Q to conform these statements to actual results and performance, except as may be required by applicable law.

Overview

We are a Maryland corporation formed in April 2013. We became a public company on November 19, 2013 when Ashford Trust, a NYSE-listed REIT, completed the spin-off of our company through the distribution of our outstanding common stock to the Ashford Trust stockholders. We invest primarily in high revenue per available room (“RevPAR”), luxury hotels and resorts. High RevPAR, for purposes of our investment strategy, means RevPAR of at least twice the then-current U.S. national average RevPAR for all hotels as determined by Smith Travel Research. Two times the U.S. national average was $162 for the year ended December 31, 2016. We have elected to be taxed as a REIT under the Internal Revenue Code beginning in the year ended December 31, 2013. We conduct our business and own substantially all of our assets through our operating partnership, Ashford Prime OP.

We operate in the direct hotel investment segment of the hotel lodging industry. As of May 5, 2017 , we own interests in twelve hotel properties in seven states, the District of Columbia and St. Thomas, U.S. Virgin Islands with 3,892 total rooms, or 3,657 net rooms, excluding those attributable to our joint venture partner. The hotel properties in our current portfolio are predominantly located in U.S. urban markets with favorable growth characteristics resulting from multiple demand generators. We own ten of our hotel properties directly, and the remaining two hotel properties through an investment in a majority-owned consolidated entity.

We are advised by Ashford LLC, a subsidiary of Ashford Inc., through an advisory agreement. All of the hotel properties in our portfolio are currently asset-managed by Ashford LLC. We do not have any employees. All of the services that might be provided by employees are provided to us by Ashford LLC.

Recent Developments

On January 18, 2017, the Company refinanced three mortgage loans with existing outstanding balances totaling approximately $333.7 million. The previous mortgage loans that were refinanced had final maturity dates in April 2017. The new mortgage loan totals $365.0 million and has stated maturity of February 2019 with five one-year extension options, subject to the satisfaction of certain conditions. The mortgage loan is interest only and provides for a floating interest rate of LIBOR + 2.58%. The mortgage loan is secured by five hotel properties: Plano Marriott Legacy Town Center, Seattle Marriott Waterfront, Tampa Renaissance, San Francisco Courtyard Downtown and Philadelphia Courtyard Downtown.

On January 24, 2017, the Company announced refinements to its strategy in an effort to enhance shareholder value. The refinements, which have been unanimously endorsed by the Board of Directors, include the following:

•

Focused Portfolio: Going forward, the Company's portfolio will be predominantly focused on investing in the luxury chain scale segment. Empirical evidence has shown the luxury segment has had greater RevPAR growth over the long term. The Company will continue to target acquisitions of hotels with a RevPAR of at least 2.0x the national average. As a result, four hotel properties have been designated as non-core to the portfolio, including the Courtyard Philadelphia Downtown Hotel, Courtyard San Francisco Downtown Hotel, Renaissance Tampa Hotel and Marriott Legacy Center Hotel in Plano, Texas. The Company intends to either reposition or opportunistically sell these hotel properties in the future if conditions warrant. The Company will also simultaneously pursue new acquisitions in order to grow the portfolio consistent with its stated strategy. Luxury hotels have proven to have superior long-term RevPAR growth versus other chain scales, and the Company believes its exclusive focus of investing in luxury hotels should generate attractive returns for its shareholders.


•	Increased Dividend: The Company's 2017 dividend policy will be amended commencing with the first quarter by increasing the expected quarterly cash dividend for the Company's common stock by 33%, from $0.12 per diluted share

Table of Contents

to $0.16 per diluted share. This equates to an annual rate of $0.64 per diluted share, representing a 4.5% yield based on the Company's closing stock price on January 23, 2017;


•	Reaffirming Conservative Leverage: The Company will continue to target conservative leverage, with a target leverage level of 45% net debt to gross assets;


•	Strong Liquidity: The Company will continue to focus on having access to liquidity for both opportunistic investments and as a hedge against economic uncertainty. The Company will target holding 10-15% of its gross debt balance in cash.

On January 24, 2017, we entered into an amended and restated advisory agreement with Ashford Inc. that amends and restates our advisory agreement discussed herein. Although our board of directors, through the action of the independent directors only, may amend the advisory agreement without stockholder approval, the independent directors have elected to seek stockholder approval of the Amended and Restated Advisory Agreement. Accordingly, the Amended and Restated Advisory Agreement will not become effective unless and until it is approved by our stockholders. The material terms of the Amended and Restated Advisory Agreement include:


•	we will make a cash payment to Ashford LLC of $5.0 million at the time the Amended and Restated Advisory Agreement becomes effective;


•	the termination fee payable to Ashford LLC has been amended by eliminating the 1.1x multiplier and tax gross up components of the fee;


•	Ashford Inc. will disclose publicly the revenues and expenses used to calculate “Net Earnings” on a quarterly basis which is used to calculate the termination fee; Ashford LLC will retain an accounting firm to provide a quarterly report to us on the reasonableness of Ashford LLC’s determination of expenses, which will be binding on the parties;


•	the right of Ashford LLC to appoint a “Designated CEO” has been eliminated;


•	the right of Ashford LLC to terminate the advisory agreement due to a change in a majority of the “Company Incumbent Board” (as defined in the current advisory agreement) has been eliminated;

•


•	the Amended and Restated Advisory Agreement requires us to maintain a net worth of not less than $390 million plus 75% of the equity proceeds from the sale of securities by us after December 31, 2016 and a covenant prohibiting us from paying dividends except as required to maintain our REIT status if paying the dividend would reduce our net worth below the required minimum net worth;


•	the initial term of the Amended and Restated Advisory Agreement ends on the 10th anniversary of its effective date, subject to renewal by Ashford LLC for up to seven additional successive 10 -year terms;


•	the base management fee payable to Ashford LLC will be fixed at 70 bps, and the fee will be payable on a monthly basis;


•	reimbursements of expenses to Ashford LLC will be made monthly in advance, based on an annual expense budget, with a quarterly true-up for actual expenses;


•	our right to terminate the advisory agreement due to a change of control of Ashford LLC has been eliminated;

•


•	if a Change of Control (as defined in the Amended and Restated Advisory Agreement) is pending, we have agreed to deposit not less than 50% , and in certain cases 100% , of the applicable termination fee in escrow, with the payment of any remaining amounts owed to Ashford LLC secured by a letter of credit and/or first priority lien on certain assets;


•	our ability to terminate the Amended and Restated Advisory Agreement due to a material default by Ashford LLC is limited to instances where a court finally determines that the default had a material adverse effect on us and Ashford LLC fails to pay monetary damages in accordance with the Amended and Restated Advisory Agreement; and


•	if we repudiate the Amended and Restated Advisory Agreement through actions or omissions that constitute a repudiation as determined by a final non-appealable order from a court of competent jurisdiction, we will be liable to Ashford LLC for a liquidated damages amount.

Table of Contents

On February 16, 2017, the Ashford Entities entered into a Settlement Agreement with the Sessa Entities regarding the composition of the Company’s board of directors, dismissal of pending litigation involving the parties and certain other matters. For more information, please see “Legal Proceedings” herein.

On March 1, 2017, we commenced an underwritten public offering of approximately 5.8 million shares of our common stock at $12.15 per share for gross proceeds of $69.9 million . The offering closed on March 7, 2017. The net proceeds from the sale of the shares after underwriting discounts and offering expense were approximately $66.5 million .

On March 1, 2017, we announced that we entered into a definitive agreement to acquire the 80-room Hotel Yountville in Yountville, California for $96.5 million. We expect the acquisition to close on or about May 11, 2017.

On March 7, 2017, we closed an offering of approximately 2.0 million shares of our our 5.5% Series B Cumulative Convertible Preferred Stock (the”Series B Preferred Stock”) at $20.19 per share for gross proceeds of $39.9 million . The net proceeds, after underwriting discounts and offering expenses were approximately $38.4 million . Dividends on the Series B Preferred Stock accrue at a rate of 5.50% on the liquidation preference of $25.00 per share. On March 31, 2017, the underwriters partially exercised their over-allotment option and purchased an additional 100,000 shares of the Series B Preferred Stock, which closed on April 5, 2017. The net proceeds to us from the sale of the shares after underwriting discounts and offering expenses were approximately $1.9 million .

On March 31, 2017, we acquired a 100% interest in the Park Hyatt Beaver Creek Resort & Spa in Beaver Creek, Colorado for total consideration of $145.5 million . Concurrent with the closing of the acquisition, we completed the financing of a $67.5 million mortgage loan. This loan is interest only and provides for a floating interest rate of LIBOR + 2.75%. The stated maturity date of the mortgage loan is April 2019, with three one-year extension options. The mortgage loan is secured by the Park Hyatt Beaver Creek.

On April 27, 2017, Mr. Douglas A. Kessler resigned from the Board of Directors of Ashford Prime and no longer is President of Ashford Prime as a result of being appointed Chief Executive Officer of Ashford Trust.

Key Indicators of Operating Performance

We use a variety of operating and other information to evaluate the operating performance of our business. These key indicators include financial information that is prepared in accordance with GAAP as well as other financial measures that are non-GAAP measures. In addition, we use other information that may not be financial in nature, including statistical information and comparative data. We use this information to measure the operating performance of our individual hotels, groups of hotels and/or business as a whole. We also use these metrics to evaluate the hotels in our portfolio and potential acquisitions to determine each hotel’s contribution to cash flow and its potential to provide attractive long-term total returns. These key indicators include:


•	Occupancy-Occupancy means the total number of hotel rooms sold in a given period divided by the total number of rooms available. Occupancy measures the utilization of our hotels’ available capacity. We use occupancy to measure demand at a specific hotel or group of hotels in a given period.

•

ADR-ADR means average daily rate and is calculated by dividing total hotel rooms revenues by total number of rooms sold in a given period. ADR measures average room price attained by a hotel and ADR trends provide useful information concerning the pricing environment and the nature of the customer base of a hotel or group of hotels. We use ADR to assess the pricing levels that we are able to generate.

•

RevPAR-RevPAR means revenue per available room and is calculated by multiplying ADR by the average daily occupancy. RevPAR is one of the commonly used measures within the hotel industry to evaluate hotel operations. RevPAR does not include revenues from food and beverage sales or parking, telephone or other non-rooms revenues generated by the property. Although RevPAR does not include these ancillary revenues, it is generally considered the leading indicator of core revenues for many hotels. We also use RevPAR to compare the results of our hotels between periods and to analyze results of our comparable hotels (comparable hotels represent hotels we have owned for the entire period). RevPAR improvements attributable to increases in occupancy are generally accompanied by increases in most categories of variable operating costs. RevPAR improvements attributable to increases in ADR are generally accompanied by increases in limited categories of operating costs, such as management fees and franchise fees.

RevPAR changes that are primarily driven by changes in occupancy have different implications for overall revenues and profitability than changes that are driven primarily by changes in ADR. For example, an increase in occupancy at a hotel would lead to additional variable operating costs (including housekeeping services, utilities and room supplies) and could also result in increased other operating department revenue and expense. Changes in ADR typically have a greater impact on operating margins and profitability as they do not have a substantial effect on variable operating costs.

Table of Contents

Occupancy, ADR and RevPAR are commonly used measures within the lodging industry to evaluate operating performance. RevPAR is an important statistic for monitoring operating performance at the individual hotel level and across our entire business. We evaluate individual hotel RevPAR performance on an absolute basis with comparisons to budget and prior periods, as well as on a regional and company-wide basis. ADR and RevPAR include only rooms revenue. Rooms revenue comprised approximately 69.3% and 69.4% of our total hotel revenue for the three months ended March 31, 2017 and 2016, respectively, and is dictated by demand (as measured by occupancy), pricing (as measured by ADR) and our available supply of hotel rooms.

We also use funds from operations (“FFO”), Adjusted FFO (“AFFO”), earnings before interest, taxes, depreciation and amortization (“EBITDA”) and Adjusted EBITDA as measures of the operating performance of our business. See “Non-GAAP Financial Measures.”

LIQUIDITY AND CAPITAL RESOURCES

Our short-term liquidity requirements consist primarily of funds necessary to pay for operating expenses and other expenditures directly associated with our hotels, including:


•	advisory fees payable to Ashford LLC;


•	recurring maintenance necessary to maintain our hotel properties in accordance with brand standards;


•	interest expense and scheduled principal payments on outstanding indebtedness, including our secured revolving credit facility (see “Contractual Obligations and Commitments”);


•	distributions, in the form of dividends on our common stock, necessary to qualify for taxation as a REIT;


•	dividends on preferred stock; and


•	capital expenditures to improve our hotels.

We expect to meet our short-term liquidity requirements generally through net cash provided by operations, existing cash balances and, if necessary, short-term borrowings under our secured revolving credit facility.

Our long-term liquidity requirements consist primarily of funds necessary to pay for the costs of acquiring additional hotel properties and redevelopments, renovations, expansions and other capital expenditures that need to be made periodically with respect to our hotel properties and scheduled debt payments. We expect to meet our long-term liquidity requirements through various sources of capital, including our secured revolving credit facility and future equity and preferred equity issuances, existing working capital, net cash provided by operations, hotel mortgage indebtedness and other secured and unsecured borrowings. However, there are a number of factors that may have a material adverse effect on our ability to access these capital sources, including the state of overall equity and credit markets, our degree of leverage, our unencumbered asset base and borrowing restrictions imposed by lenders (including as a result of any failure to comply with financial covenants in our existing and future indebtedness), general market conditions for REITs, our operating performance and liquidity and market perceptions about us. The success of our business strategy will depend, in part, on our ability to access these various capital sources.

Our hotel properties will require periodic capital expenditures and renovation to remain competitive. In addition, acquisitions, redevelopments or expansions of hotel properties may require significant capital outlays. We may not be able to fund such capital improvements solely from net cash provided by operations because we must distribute annually at least 90% of our REIT taxable income, determined without regard to the deductions for dividends paid and excluding net capital gains, to qualify and maintain our qualification as a REIT, and we are subject to tax on any retained income and gains. As a result, our ability to fund capital expenditures, acquisitions or hotel redevelopment through retained earnings is very limited. Consequently, we expect to rely heavily upon the availability of debt or equity capital for these purposes. If we are unable to obtain the necessary capital on favorable terms, or at all, our financial condition, liquidity, results of operations and prospects could be materially and adversely affected.

Certain of our loan agreements contain cash trap provisions that may be triggered if the performance of our hotel properties decline. When these provisions are triggered, substantially all of the profit generated by our hotel properties is deposited directly into lockbox accounts and then swept into cash management accounts for the benefit of our various lenders. Cash is not distributed to us at any time after the cash trap provisions have been triggered until we have cured the performance issues. Currently, none of the cash trap provisions of our loans are triggered.

On October 27, 2014, our board of directors approved a share repurchase program under which the Company may purchase up to $100 million of the Company’s common stock from time to time. The repurchase program does not have an expiration date. The specific timing, manner, price, amount and other terms of the repurchases are at management’s discretion and depend on market conditions, corporate and regulatory requirements and other factors. The Company is not required to repurchase shares under the repurchase program, and may modify, suspend or terminate the repurchase program at any time for any reason. On April 8, 2016, our board of directors authorized utilizing up to $50 million to repurchase common stock. As of May 5, 2017 , we have

Table of Contents

purchased a cumulative 4.3 million shares of our common stock, for approximately $63.2 million, since the program’s inception on November 4, 2014.

On January 18, 2017, the Company refinanced three mortgage loans with existing outstanding balances totaling approximately $333.7 million. The previous mortgage loans that were refinanced had final maturity dates in April 2017. The new mortgage loan totals $365.0 million and has stated maturity of February 2019 with five one-year extension options, subject to the satisfaction of certain conditions. The mortgage loan is interest only and provides for a floating interest rate of LIBOR + 2.58%. The mortgage loan is secured by five hotel properties: Plano Marriott Legacy Town Center, Seattle Marriott Waterfront, Tampa Renaissance, San Francisco Courtyard Downtown and Philadelphia Courtyard Downtown.

On March 7, 2017, we closed an offering of approximately 2.0 million shares of our Series B Preferred Stock at $20.19 per share for gross proceeds of $39.9 million . The net proceeds, after underwriting discounts and offering expenses were approximately $38.4 million . Dividends on the Series B Preferred Stock accrue at a rate of 5.50% on the liquidation preference of $25.00 per share. On March 31, 2017, the underwriters partially exercised their over-allotment option and purchased an additional 100,000 shares of the Series B Preferred Stock, which closed on April 5, 2017. The net proceeds to us from the sale of the shares after underwriting discounts and offering expenses were approximately $1.9 million .

On March 31, 2017, in connection with the acquisition of Park Hyatt Beaver Creek, we completed the financing of a $67.5 million loan. This loan is interest only and provides for a floating interest rate of LIBOR + 2.75%. The stated maturity date of the mortgage loan is April 2019, with three one-year extension options. The mortgage loan is secured by the Park Hyatt Beaver Creek.

Secured Revolving Credit Facility

We have a three-year, senior secured revolving credit facility in the amount of $100 million. It includes $15 million available in letters of credit and $15 million available in swingline loans. We believe the secured revolving credit facility will provide us with significant financial flexibility to fund future acquisitions and hotel redevelopments.

The secured credit facility is provided by a syndicate of financial institutions with Bank of America, N.A., serving as the administrative agent to Ashford Prime OP, as the borrower. We and certain of our subsidiaries guarantee the secured revolving credit facility, which is secured by a pledge of 100% of the equity interests we hold in Ashford Prime OP and 100% of the equity interest issued by any guarantor (other than Ashford Prime) or any other subsidiary of ours that is not restricted under its loan documents or organizational documents from having its equity pledged (subject to certain exclusions), all mortgage receivables held by the borrower or any guarantor, and certain deposit accounts and securities accounts held by the borrower and any guarantor. The proceeds of the secured revolving credit facility may be used for working capital, capital expenditures, property acquisitions, and any other lawful purposes.

The secured revolving credit facility also contains customary terms, covenants, negative covenants, events of default, limitations and other conditions for credit facilities of this type. Subject to certain exceptions, we are subject to restrictions on incurring additional indebtedness, mergers and fundamental changes, sales or other dispositions of property, changes in the nature of our business, investments, and capital expenditures.

We also are subject to certain financial covenants, as set forth below, which are tested by the borrower on a consolidated basis (net of the amounts attributable to the non-controlling interest held by our partner in a majority-owned consolidated entity) and include, but are not limited to, the following:


•	Consolidated indebtedness (less cash and cash equivalents and amounts represented by marketable securities) to EBITDA not to exceed 6.00x initially, with such ratio being reduced beginning October 1, 2017 to 5.75x and beginning October 1, 2019 to 5.50x. Our ratio was 5.51 x at March 31, 2017 .


•	Consolidated recourse indebtedness other than the secured revolving credit facility not to exceed $50,000,000.


•	Consolidated fixed charge coverage ratio not less than 1.40x initially, with such ratio being increased beginning October 1, 2017 to 1.50x. This ratio was 1.90 x at March 31, 2017 .


•	Indebtedness of the consolidated parties that accrues interest at a variable rate (other than the secured revolving credit facility) that is not subject to a “cap,” “collar,” or other similar arrangement not to exceed 25% of consolidated indebtedness.


•	Consolidated tangible net worth not less than 75% of the consolidated tangible net worth on the closing date of the secured revolving credit facility plus 75% of the net proceeds of any future equity issuances.

Table of Contents


•	Secured debt that is secured by real property (excluding the eight hotels we acquired in connection with the spin-off) not to exceed 70% of the as-is appraised value of such real property.

All financial covenants are tested and certified by the borrower on a quarterly basis. We were in compliance with all covenants at March 31, 2017 .

The secured revolving credit facility includes customary events of default, and the occurrence of an event of default will permit the lenders to terminate commitments to lend under the secured revolving credit facility and accelerate payment of all amounts outstanding thereunder. If a default occurs and is continuing, we will be precluded from making distributions on our shares of common stock (other than those required to allow us to qualify and maintain our status as a REIT, so long as such default does not arise from a payment default or event of insolvency).

Borrowings under the secured revolving credit facility bear interest, at our option, at either LIBOR for a designated interest period plus an applicable margin, or the base rate (as defined in the credit agreement) plus an applicable margin. The applicable margin for borrowings under the secured revolving credit facility for base rate loans range from 1.25% to 2.50% per annum and the applicable margin for borrowings under the secured revolving credit facility for LIBOR loans range from 2.25% to 3.50% per annum, depending on the ratio of consolidated indebtedness to EBITDA described above, with the lowest rate applying if such ratio is less than 4x, and the highest rate applying if such ratio is greater than 6.5x.

The secured revolving credit facility is a three-year interest-only facility with all outstanding principal being due at maturity on November 10, 2019, subject to two one-year extension options if certain terms and conditions are satisfied. The secured revolving credit facility has an accordion feature whereby the aggregate commitments may be increased up to $250 million, subject to certain terms and conditions and a 0.25% extension fee. No amounts were drawn under the secured revolving credit facility as of March 31, 2017 .

We intend to repay indebtedness incurred under our secured revolving credit facility from time to time out of net cash provided by operations and from the net proceeds of issuances of additional equity and debt securities, as market conditions permit.

Sources and Uses of Cash

As of March 31, 2017 , we had $161.3 million of cash and cash equivalents, compared to $126.8 million at December 31, 2016 .

We anticipate that our principal sources of funds to meet our cash requirements will include cash on hand, positive cash flow from operations and capital market activities.

Net Cash Flows Provided by (Used in) Operating Activities . Net cash flows provided by operating activities were $4.6 million and $12.1 million for the three months ended March 31, 2017 and 2016 , respectively. Cash flows from operations are impacted by changes in hotel operations of our eleven comparable hotel properties and the sale of the Seattle Courtyard Downtown on July 1, 2016. Cash flows from operations are also impacted by the timing of working capital cash flows such as collecting receivables from hotel guests, paying vendors, settling with related parties and settling with hotel managers. The decrease in net cash flows provided by operating activities is primarily attributable to changes in working capital balances.

Net Cash Flows Provided by (Used in) Investing Activities . For the three months ended March 31, 2017 , net cash flows used in investing activities were $161.0 million . These cash outflows were primarily attributable to $154.0 million for the acquisition of the Park Hyatt Beaver Creek and deposits on the acquisition of Hotel Yountville and $9.3 million of capital improvements made to various hotel properties, partially offset by $2.3 million of proceeds received from the liquidation of our investment in the AQUA U.S. Fund. For the three months ended March 31, 2016 , investing activities used net cash flows of $2.7 million . These cash outlays were primarily attributable to cash outflows of $3.4 million of capital improvements made to various hotel properties partially offset by proceeds from property insurance of $673,000 .

Net Cash Flows Provided by (Used in) Financing Activities. For the three months ended March 31, 2017 , net cash flows provided by financing activities were $188.9 million . Cash inflows primarily consisted of borrowings on indebtedness of $432.5 million , proceeds of $66.7 million from the issuance of common stock and $38.6 million from the issuance of convertible preferred stock. These cash inflows were partially offset by $334.8 million for repayments of indebtedness, $9.1 million for payments of loan costs and exit fees, $4.6 million for payments of dividends and distributions, $319,000 for purchases of derivatives and repurchase of common stock of $6,000 . For the three months ended March 31, 2016 , net cash flows used in financing activities were $9.4 million . Cash outflows primarily consisted of $3.8 million for distributions to the holder of a noncontrolling interest in consolidated entities, $3.4 million for payments of dividends and distributions, $2.1 million for repayments of indebtedness and $15,000 for payments of loan costs and exit fees. These cash outflows were slightly offset by other miscellaneous cash inflows of $19,000 .

Table of Contents

RESULTS OF OPERATIONS

Three Months Ended March 31, 2017 Compared to Three Months Ended March 31, 2016

The following table summarizes changes in key line items from our condensed consolidated statements of operations for the three months ended March 31, 2017 and 2016 (in thousands except percentages):



	Three Months Ended March 31,						Favorable (Unfavorable)
	2017			2016			$ Change			% Change
Revenue
Rooms	$	67,418		$	69,251		$	(1,833	)	(2.6	)%
Food and beverage	24,473			24,865			(392		)	(1.6	)
Other	5,365			5,648			(283		)	(5.0	)
Total hotel revenue	97,256			99,764			(2,508		)	(2.5	)
Other	40			33			7			21.2
Total revenue	97,296			99,797			(2,501		)	(2.5	)
Expenses
Hotel operating expenses:
Rooms	15,797			15,819			22			0.1
Food and beverage	16,861			17,445			584			3.3
Other expenses	27,731			28,339			608			2.1
Management fees	3,545			3,807			262			6.9
Total hotel expenses	63,934			65,410			1,476			2.3
Property taxes, insurance and other	5,074			5,043			(31		)	(0.6	)
Depreciation and amortization	11,971			11,904			(67		)	(0.6	)
Advisory services fee	865			2,064			1,199			58.1
Transaction costs	4,328			—			(4,328		)
Corporate general and administrative	3,874			3,923			49			1.2
Total expenses	90,046			88,344			(1,702		)	(1.9	)
Operating income (loss)	7,250			11,453			(4,203		)	(36.7	)
Equity in earnings (loss) of unconsolidated entity	—			(2,650		)	2,650			(100.0	)
Interest income	112			32			80			250.0
Other income (expense)	(157		)	(10		)	(147		)	1,470.0
Interest expense and amortization of loan costs	(8,202		)	(10,634		)	2,432			(22.9	)
Write-off of loan costs and exit fees	(1,963		)	—			(1,963		)
Unrealized gain (loss) on investment in Ashford Inc.	3,091			(1,493		)	4,584			(307.0	)
Unrealized gain (loss) on derivatives	(898		)	3,533			(4,431		)	(125.4	)
Income (loss) before income taxes	(767		)	231			(998		)	(432.0	)
Income tax (expense) benefit	478			(370		)	848			(229.2	)
Net income (loss)	(289		)	(139		)	(150		)	107.9
(Income) loss from consolidated entities attributable to noncontrolling interests	21			(145		)	(166		)	114.5
Net (income) loss attributable to redeemable noncontrolling interests in operating partnership	255			150			(105		)	(70.0	)
Net income (loss) attributable to the Company	$	(13	)	$	(134	)	$	121		(90.3	)%

Table of Contents

All hotel properties owned for the three months ended March 31, 2017 and 2016 have been included in our results of operations during the respective periods in which they were owned. Based on when a hotel property was acquired or disposed of, operating results for certain hotel properties are not comparable for the three months ended March 31, 2017 and 2016. The hotel properties listed below are not comparable hotel properties for the periods indicated and all other hotel properties are considered comparable hotel properties. The following acquisitions and dispositions affect reporting comparability related to our condensed consolidated financial statements:



Hotel Properties	Location	Acquisition/Disposition	Acquisition/Disposition Date
Seattle Courtyard Downtown	Seattle, WA	Disposition	July 1, 2016
Park Hyatt Beaver Creek ⁽¹⁾	Beaver Creek, CO	Acquisition	March 31, 2017

________


⁽¹⁾	The results of operations of the hotel property have not been included in our results of operations for the period ended March 31, 2017 as a result of the acquisition occurring on March 31, 2017 .

The following table illustrates the key performance indicators of our hotel properties for the periods indicated:



	Three Months Ended March 31,
	2017			2016
Occupancy	78.43		%	77.77		%
ADR (average daily rate)	$	258.00		$	247.62
RevPAR (revenue per available room)	$	202.35		$	192.56
Rooms revenue (in thousands)	$	67,418		$	69,251
Total hotel revenue (in thousands)	$	97,256		$	99,764

The following table illustrates the key performance indicators of the eleven hotel properties that were included for the full three months ended March 31, 2017 and 2016 :



	Three Months Ended March 31,
	2017			2016
Occupancy	78.43		%	77.75		%
ADR (average daily rate)	$	258.00		$	253.95
RevPAR (revenue per available room)	$	202.35		$	197.45
Rooms revenue (in thousands)	$	67,418		$	66,516
Total hotel revenue (in thousands)	$	97,256		$	96,578

Net income (loss) attributable to the Company. Net loss attributable to the Company decreased $121,000 , or 90.3% , to $13,000 for the three months ended March 31, 2017 (the “ 2017 quarter ”) compared to a net loss attributable to the Company of $134,000 for the three months ended March 31, 2016 (the “ 2016 quarter ”) as a result of the factors discussed below.

Rooms Revenue . Rooms revenue from our hotel properties de creased $1.8 million , or 2.6% , to $67.4 million during the 2017 quarter compared to the 2016 quarter . During the 2017 quarter , we experienced a 4.2% in crease in room rates and a 66 basis point in crease in occupancy. Rooms revenue from our eleven comparable hotel properties increased $902,000 due to a 68 basis point increase in occupancy and higher room rates of 1.6% . Rooms revenue decreased (i) $2.7 million at the Seattle Courtyard Downtown as a result of the sale of the hotel property on July 1, 2016; (ii) $1.1 million at the San Francisco Courtyard Downtown as a result of a 843 basis point decrease in occupancy and a 0.7% decrease in room rates at the hotel due to a renovation during the 2017 quarter; (iii) $162,000 at the Key West Pier House as a result of a 344 basis point decrease in occupancy, partially offset by 2.1% higher room rates at the hotel; (iv) $145,000 at the Chicago Sofitel Magnificent Mile as a result of 5.1% lower room rates, partially offset by a 150 basis point increase in occupancy at the hotel; (v) $112,000 at the Plano Marriott Legacy Town Center as a result of 4.9% lower room rates, partially offset by a 281 basis point increase in occupancy at the hotel; (vi) $105,000 at the Philadelphia Courtyard as a result of 0.2% lower room rates and a 58 basis point decrease in occupancy at the hotel; and (vii) $94,000 at the Ritz-Carlton, St. Thomas as a result of an 80 basis point decrease in occupancy, partially offset by 1.2% higher room rates at the hotel. These decreases were partially offset by increases of (i) $1.6 million at the Capital Hilton as a result of 12.2% higher room rates and a 504 basis point increase in occupancy at the hotel; (ii) $426,000 at the Seattle Marriott Waterfront as a result of a 767 basis point increase in occupancy, partially offset by 0.6% lower room rates at the hotel; (iii) $301,000 at the Hilton La Jolla Torrey Pines as a result of 3.8% higher room rates and a 193 basis point increase in occupancy at the hotel; (iv) $167,000 at the Bardessono

Table of Contents

Hotel as a result of 7.9% higher room rates and 39 basis point increase in occupancy at the hotel; and (v) $35,000 at the Tampa Renaissance as a result of 6.8% higher room rates, partially offset by a 411 basis point decrease in occupancy at the hotel.

Food and Beverage Revenue . Food and beverage revenue from our hotel properties de creased $392,000 , or 1.6% , to $24.5 million during the 2017 quarter compared to the 2016 quarter . This de crease is due to a decrease of $269,000 at the Seattle Courtyard Downtown as a result of the sale of the hotel property on July 1, 2016 and an aggregate decrease in food and beverage revenue of $1.1 million at the Ritz-Carlton, St. Thomas , Chicago Sofitel Magnificent Mile , Bardessono Hotel , Hilton La Jolla Torrey Pines , San Francisco Courtyard Downtown and Tampa Renaissance . These decreases were partially offset by higher aggregate food and beverage revenue of $983,000 at the Capital Hilton , Seattle Marriott Waterfront , Plano Marriott Legacy Town Center , Key West Pier House and Philadelphia Courtyard .

Other Hotel Revenue . Other hotel revenue, which consists mainly of telecommunications, parking and rentals, de creased $283,000 , or 5.0% , to $5.4 million during the 2017 quarter compared to the 2016 quarter . This de crease is attributable to an decrease of $182,000 at the Seattle Courtyard Downtown as a result of the sale of the hotel property on July 1, 2016 and an aggregate decrease of $439,000 at the Bardessono Hotel , San Francisco Courtyard Downtown , Philadelphia Courtyard , Key West Pier House , Plano Marriott Legacy Town Center , Seattle Marriott Waterfront and Chicago Sofitel Magnificent Mile . This decrease was partially offset by higher aggregate other revenue at the Ritz-Carlton, St. Thomas , Hilton La Jolla Torrey Pines , Capital Hilton and Tampa Renaissance of approximately $338,000 .

Other Non-Hotel Revenue . Other non-hotel revenue in creased $7,000 , or 21.2% , to $40,000 in the 2017 quarter compared to the 2016 quarter . The in crease is attributable to higher Texas margin tax recoveries from guests.

Rooms Expense . Rooms expense de creased $22,000 , or 0.1% , to $15.8 million in the 2017 quarter compared to the 2016 quarter . The de crease is attributable to a decrease of $524,000 at the Seattle Courtyard Downtown as a result of the sale of the hotel property on July 1, 2016, partially offset by an aggregate increase in rooms expense at our eleven comparable hotel properties of approximately $502,000 .

Food and Beverage Expense . Food and beverage expense de creased $584,000 , or 3.3% , to $16.9 million during the 2017 quarter compared to the 2016 quarter . The decrease is due to an aggregate decrease of $361,000 at our eleven comparable hotel properties and $223,000 from the sale of the Seattle Courtyard Downtown .

Other Operating Expenses . Other operating expenses de creased $608,000 , or 2.1% , to $27.7 million in the 2017 quarter compared to the 2016 quarter . Hotel operating expenses consist of direct expenses from departments associated with revenue streams and indirect expenses associated with support departments and incentive management fees. We experienced a de crease of $9,000 in direct expenses and $599,000 in indirect expenses and incentive management fees in the 2017 quarter compared to the 2016 quarter . Direct expenses were 1.9% of total hotel revenue for both the 2017 quarter and the 2016 quarter . The decrease in direct expenses is comprised of a decrease of $16,000 from the sale of the Seattle Courtyard Downtown partially offset by an aggregate increase of $7,000 at our eleven comparable hotel properties. The decrease in indirect expenses is primarily attributable to decreases in (i) repairs and maintenance of $235,000, including $150,000 from our eleven comparable hotel properties and $85,000 from the sale of the Seattle Courtyard Downtown ; (ii) marketing costs of $185,000, comprised of $218,000 from the sale of the Seattle Courtyard Downtown , partially offset by an increase of $33,000 from our eleven comparable hotel properties; (iii) incentive management fees of $157,000, including $83,000 from our eleven comparable hotel properties and $74,000 from the sale of the Seattle Courtyard Downtown , and (iv) general and administrative costs of $129,000, comprised of a $317,000 decrease related to the sale of the Seattle Courtyard Downtown , partially offset by an increase of $187,000 from our eleven comparable hotel properties. These decreases were partially offset by increases in (i) energy costs of $98,000, comprised of an increase of $171,000 from our eleven comparable hotel properties, partially offset by a decrease of $73,000 resulting from the sale of the Seattle Courtyard Downtown and (ii) lease expense of $10,000, comprised of an increase of $13,000 from our eleven comparable hotel properties, partially offset by a decrease of $3,000 resulting from the sale of the Seattle Courtyard Downtown .

Management Fees . Base management fees de creased $262,000 , or 6.9% , to $3.5 million in the 2017 quarter compared to the 2016 quarter . The decrease is comprised of a decrease of $223,000 as a result of the sale of the Seattle Courtyard Downtown on July 1, 2016 and $81,000 associated with the lower hotel revenue at the San Francisco Courtyard Downtown due to ongoing renovations. These decreases are partially offset by an aggregate increase of $42,000 from our ten remaining hotel properties which had higher hotel revenues in the 2017 quarter .

Property Taxes, Insurance and Other . Property taxes, insurance and other in creased $31,000 , or 0.6% , to $5.1 million in the 2017 quarter compared to the 2016 quarter , which is attributable to increases of $194,000 from our eleven comparable hotel properties partially offset by a decrease of $163,000 from the sale of the Seattle Courtyard Downtown .

Table of Contents

Depreciation and Amortization . Depreciation and amortization in creased $67,000 , or 0.6% , to $12.0 million for the 2017 quarter compared to the 2016 quarter , which is due to an aggregate increase of $606,000 from our eleven comparable hotel properties partially offset by a decrease of $539,000 from the sale of the Seattle Courtyard Downtown .

Advisory Services Fee. Advisory services fee de creased $1.2 million , or 58.1% , to $865,000 in the 2017 quarter compared to the 2016 quarter as a result of decreases in equity-based compensation of $1.1 million , reimbursable expenses of $105,000 and base advisory fee of $22,000 . In the 2017 quarter , we recorded an advisory services fee of $865,000 which included a base advisory fee of $2.0 million , reimbursable expenses of $547,000 and a credit to equity-based compensation expense in the amount of $1.7 million associated with equity grants of our common stock and LTIP units awarded to the officers and employees of Ashford Inc. The credit to equity-based compensation expense is a result of lower fair values at March 31, 2017 as compared to December 31, 2016. In the 2016 quarter , we incurred an advisory services fee of $2.1 million , which included a base advisory fee of $2.0 million , reimbursable expenses of $652,000 and a credit to equity-based compensation of $613,000 associated with equity grants of our common stock and LTIP units awarded to the officers and employees of Ashford Inc.

Transaction Costs. In the 2017 quarter , we recorded transaction costs of $4.3 million primarily related to the acquisition of Park Hyatt Beaver Creek and transfer taxes.

Corporate General and Administrative . Corporate general and administrative expenses de creased $49,000 , or 1.2% , to $3.9 million in the 2017 quarter compared to the 2016 quarter as a result of decreases in professional fees of $269,000, primarily related to the proxy contest and litigation in 2016 and lower public company costs of $64,000. These decreases were partially offset by higher miscellaneous expenses of $266,000 and equity-based compensation to non-employee directors of $18,000.

Equity in Earnings (Loss) of Unconsolidated Entity . We recorded equity in loss of unconsolidated entity of $2.7 million in the 2016 quarter related to our investment in the AQUA U.S. Fund. We did not have any equity in earnings (loss) in the 2017 quarter as this investment was liquidated in June 2016.

Interest Income . Interest income in creased $80,000 , or 250.0% , to $112,000 for the 2017 quarter compared to the 2016 quarter .

Other Income (Expense) . Other income (expense) increased $147,000 , from expense of $10,000 in 2016 quarter to expense of $157,000 in the 2017 quarter . In 2017 , we recognized a realized loss of $157,000 related to options on futures contracts. In 2016 , we recorded $10,000 of commissions paid upon purchasing options on futures contracts.

Interest Expense and Amortization of Loan Costs . Interest expense and amortization of loan costs de creased $2.4 million , or 22.9% , to $8.2 million for the 2017 quarter compared to the 2016 quarter . The decrease is primarily driven by lower interest expense from the sale of Seattle Courtyard Downtown on July 1, 2016 and the refinancing of three mortgage loans, partially offset by higher amortization of loan costs from the refinance and higher average LIBOR rates. The average LIBOR rates for the 2017 quarter and the 2016 quarter were 0.83% and 0.42% , respectively.

Unrealized Gain (Loss) on Investment in Ashford Inc. Unrealized gain (loss) on investment in Ashford Inc. changed $4.6 million , or 307.0% , from an unrealized loss of $1.5 million to an unrealized gain of $3.1 million for the 2017 quarter compared to the 2016 quarter . The fair value is based on the closing market price of Ashford Inc. common stock at the end of the period.

Write-off of Loan Costs and Exit Fees. Write-off of loan costs and exit fees were $2.0 million for the 2017 quarter , resulting from the write-off of unamortized loan costs of $107,000 and exit fees of $1.9 million associated with the refinancing of three mortgage loans maturing April of 2017. The mortgage loans were refinanced with a $365.0 million mortgage loan due February 2019. There were no write-off of loan costs and exit fees in the 2016 quarter .

Unrealized Gain (Loss) on Derivatives . Unrealized loss on derivatives of $898,000 for the 2017 quarter consisted of a $759,000 unrealized loss on interest rate floors, $256,000 unrealized loss on interest rate caps, partially offset by a $117,000 unrealized gain on options on futures contracts. Unrealized gain on derivatives of $3.5 million for the 2016 quarter consisted of a $3.6 million unrealized gain on interest rate floors and a $20,000 unrealized gain on options on futures contracts, partially offset by an unrealized loss on interest rate caps of $47,000. The fair value of the interest rate caps and floors are primarily based on movements in the LIBOR forward curve and the passage of time. The fair value of options on futures contracts is the last reported settlement price as of the measurement date.

Income Tax (Expense) Benefit . Income tax (expense) benefit in creased $848,000 , or 229.2% , from income tax expense of $370,000 in the 2016 quarter to an income tax benefit of $478,000 in the 2017 quarter . This change was primarily due to a decrease in the profitability of the Company’s taxable REIT subsidiaries in the 2017 period compared to the 2016 period.

(Income) Loss from Consolidated Entities Attributable to Noncontrolling Interest . The noncontrolling interest partner in consolidated entities was allocated loss of $21,000 and income of $145,000 for the 2017 quarter and the 2016 quarter , respectively.

Table of Contents

At both March 31, 2017 and 2016, noncontrolling interest in consolidated entities represented an ownership interest of 25% in two hotel properties held by one entity.

Net (Income) Loss Attributable to Redeemable Noncontrolling Interests in Operating Partnership. Noncontrolling interests in operating partnership were allocated net loss of $255,000 and $150,000 for the 2017 quarter and the 2016 quarter , respectively. Redeemable noncontrolling interests represented ownership interests in Ashford Prime OP of 13.12% and 12.75% as of March 31, 2017 and 2016 , respectively.

Seasonality

Our properties’ operations historically have been seasonal as certain properties maintain higher occupancy rates during the summer months and some during the winter months. This seasonality pattern can cause fluctuations in our quarterly lease revenue under our percentage leases. We anticipate that our cash flows from the operations of our properties and cash on hand will be sufficient to enable us to make quarterly distributions to maintain our REIT status. To the extent that cash flows from operations and cash on hand are insufficient during any quarter due to temporary or seasonal fluctuations in lease revenue, we expect to utilize borrowings to fund distributions required to maintain our REIT status. However, we cannot make any assurances that we will make distributions in the future.

Contractual Obligations and Commitments

There have been no material changes since December 31, 2016 , outside of the ordinary course of business, to contractual obligations specified in the table of contractual obligations included in the section “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our 2016 10-K.

Off-Balance Sheet Arrangements

In the normal course of business, we may form or invest in partnerships or joint ventures. We evaluate each partnership and joint venture to determine whether the entity is a variable interest entity (“VIE”). If the entity is determined to be a VIE we assess whether we are the primary beneficiary and need to consolidate the entity. For further discussion see note 2 to our condensed consolidated financial statements.

We have no other off-balance sheet arrangements.

Critical Accounting Policies

Our accounting policies that are critical or most important to understanding our financial condition and results of operations and that require management to make the most difficult judgments are described in the section “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our 2016 10-K. There have been no material changes in these critical accounting policies.

Non-GAAP Financial Measures

The following non-GAAP presentations of EBITDA, Adjusted EBITDA, FFO and AFFO are made to help our investors evaluate our operating performance.

EBITDA is defined as net income (loss) attributable to the Company before interest expense and amortization of loan costs, interest income, depreciation and amortization, income taxes and redeemable noncontrolling interests in the operating partnership. We adjust EBITDA to exclude certain additional items such as amortization of favorable (unfavorable) contract assets (liabilities), transaction costs, write-off of loan costs and exit fees, legal, advisory and settlement costs and non-cash items such as other (income) expense, unrealized (gain) loss on investments, unrealized (gain) loss on derivatives, stock/unit-based compensation and the Company’s portion of unrealized (gain) loss of investment in securities investment fund. Unless otherwise indicated, EBITDA and Adjusted EBITDA exclude amounts attributable to the portion of a partnership owned by the third party. We present EBITDA and Adjusted EBITDA because we believe they reflect more accurately the ongoing performance of our hotel assets and other investments and provide more useful information to investors as they are indicators of our ability to meet our future debt payment requirements, working capital requirements and they provide an overall evaluation of our financial condition. EBITDA and Adjusted EBITDA as calculated by us may not be comparable to EBITDA and Adjusted EBITDA reported by other companies that do not define EBITDA and Adjusted EBITDA exactly as we define the terms. EBITDA and Adjusted EBITDA do not represent cash generated from operating activities determined in accordance with GAAP, and should not be considered as an alternative to operating income or net income determined in accordance with GAAP as an indicator of performance or as an alternative to cash flows from operating activities as determined by GAAP as an indicator of liquidity.

Table of Contents

The following table reconciles net income (loss) to EBITDA and Adjusted EBITDA (in thousands) (unaudited):



	Three Months Ended March 31,
	2017			2016
Net income (loss)	$	(289	)	$	(139	)
(Income) loss from consolidated entities attributable to noncontrolling interest	21			(145		)
Net (income) loss attributable to redeemable noncontrolling interests in operating partnership	255			150
Net income (loss) attributable to the Company	(13		)	(134		)
Interest income	(112		)	(32		)
Interest expense and amortization of loan costs ⁽¹⁾	7,764			10,229
Depreciation and amortization ⁽¹⁾	11,251			11,200
Income tax expense (benefit) ⁽¹⁾	(501		)	370
Net income (loss) attributable to redeemable noncontrolling interests in operating partnership	(255		)	(150		)
EBITDA available to the Company and OP unitholders	18,134			21,483
Amortization of favorable (unfavorable) contract assets (liabilities)	49			(39		)
Transaction costs	4,328			—
Other (income) expense	157			10
Write-off of loan costs and exit fees	1,963			—
Unrealized (gain) loss on investments	(3,091		)	1,493
Unrealized (gain) loss on derivatives	898			(3,533		)
Non-cash stock/unit-based compensation	(1,668		)	(613		)
Legal, advisory and settlement costs	2,945			3,313
Company’s portion of unrealized (gain) loss of investment in securities investment fund	—			2,650
Adjusted EBITDA available to the Company and OP unitholders	$	23,715		$	24,764

__________________


⁽¹⁾	Net of adjustment for noncontrolling interest in consolidated entities. The following table presents the amounts of the adjustments for non-controlling interest for each line item:



	Three Months Ended March 31,
	2017			2016
Interest expense and amortization of loan costs	$	(438	)	$	(405	)
Depreciation and amortization	(720		)	(704		)
Income tax expense (benefit)	(23		)	—

We calculate FFO and AFFO in the following table. FFO is calculated on the basis defined by NAREIT, which is net income (loss) attributable to the Company, computed in accordance with GAAP, excluding gains or losses on sales of properties and extraordinary items as defined by GAAP, plus depreciation and amortization of real estate assets, and after redeemable noncontrolling interests in the operating partnership. NAREIT developed FFO as a relative measure of performance of an equity REIT to recognize that income-producing real estate historically has not depreciated on the basis determined by GAAP. Our calculation of AFFO excludes preferred dividends, transaction costs, write-off of loan costs and exit fees, legal, advisory and settlement costs and non-cash items such as other (income) expense, unrealized (gain) loss on investments, unrealized (gain) loss on derivatives, stock/unit-based compensation and the Company’s portion of unrealized (gain) loss of investment in securities investment fund. FFO and AFFO exclude amounts attributable to the portion of a partnership owned by the third party. We consider FFO and AFFO to be appropriate measures of our ongoing normalized operating performance as a REIT. We compute FFO in accordance with our interpretation of standards established by NAREIT, which may not be comparable to FFO reported by other REITs that either do not define the term in accordance with the current NAREIT definition or interpret the NAREIT definition differently than us. FFO and AFFO do not represent cash generated from operating activities as determined by GAAP and should not be considered as an alternative to GAAP net income or loss as an indication of our financial performance or GAAP cash flows from operating activities as a measure of our liquidity. FFO and AFFO are also not indicative of funds available to satisfy our cash needs, including our ability to make cash distributions. However, to facilitate a clear understanding of our historical operating results, we believe that FFO and AFFO should be considered along with our net income or loss and cash flows reported in the condensed consolidated financial statements.

Table of Contents

The following table reconciles net income (loss) to FFO and Adjusted FFO (in thousands) (unaudited):



	Three Months Ended March 31,
	2017			2016
Net income (loss)	$	(289	)	$	(139	)
(Income) loss from consolidated entities attributable to noncontrolling interest	21			(145		)
Net (income) loss attributable to redeemable noncontrolling interests in operating partnership	255			150
Preferred dividends	(1,673		)	(894		)
Net income (loss) attributable to the Company	(1,686		)	(1,028		)
Depreciation and amortization on real estate ⁽¹⁾	11,251			11,200
Net income (loss) attributable to redeemable noncontrolling interests in operating partnership	(255		)	(150		)
FFO available to common stockholders and OP unitholders	9,310			10,022
Preferred dividends	1,673			894
Transaction costs	4,328			—
Other (income) expense	157			10
Write-off of loan costs and exit fees	1,963			—
Unrealized (gain) loss on investments	(3,091		)	1,493
Unrealized (gain) loss on derivatives	898			(3,533		)
Non-cash, non-employee stock/unit-based compensation	(1,668		)	(613		)
Legal, advisory and settlement costs	2,945			3,313
Company’s portion of unrealized (gain) loss of investment in securities investment fund	—			2,650
Adjusted FFO available to the Company and OP unitholders	$	16,515		$	14,236

____________________


⁽¹⁾	Net of adjustment for noncontrolling interest in consolidated entities. The following table presents the amounts of the adjustments for non-controlling interest for each line item:



	Three Months Ended March 31,
	2017			2016
Depreciation and amortization on real estate	$	(720	)	$	(704	)

Table of Contents

Hotel Properties

The following table presents certain information related to our hotel properties:



Hotel Property	Location	Service Type	Total Rooms	% Owned		Owned Rooms
Fee Simple Properties
Hilton	Washington, D.C.	Full	550	75	%	413
Marriott	Seattle, WA	Full	358	100		358
Marriott	Plano, TX	Full	404	100		404
Courtyard by Marriott	Philadelphia, PA	Select	499	100		499
Courtyard by Marriott	San Francisco, CA	Select	405	100		405
Chicago Sofitel Magnificent Mile	Chicago, IL	Full	415	100		415
Pier House Resort	Key West, FL	Full	142	100		142
Ritz Carlton, St. Thomas	St. Thomas, USVI	Full	180	100		180
Park Hyatt Beaver Creek	Beaver Creek, CO	Full	190	100		190
Ground Lease Properties
Hilton ⁽¹⁾	La Jolla, CA	Full	394	75	%	296
Renaissance ⁽²⁾	Tampa, FL	Full	293	100		293
Bardessono Hotel ⁽³⁾	Yountville, CA	Full	62	100		62
Total			3,892			3,657

________


⁽¹⁾	The ground lease expires in 2043.


⁽²⁾	The ground lease expires in 2080.


⁽³⁾	The initial ground lease expires in 2055. The ground lease contains two 25-year extension options, at our election.


ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

Our primary market risk exposure consists of changes in interest rates on borrowings under our debt instruments that bear interest at variable rates that fluctuate with market interest rates. To the extent that we acquire assets or conduct operations in an international jurisdiction, we will also have currency exchange risk. We may enter into certain hedging arrangements in order to manage interest rate and currency fluctuations. The analysis below presents the sensitivity of the market value of our financial instruments to selected changes in market interest rates.

At March 31, 2017 , our total indebtedness of $864.7 million included $856.6 million of variable-rate debt. The impact on the results of operations of a 25-basis point change in interest rate on the outstanding balance of variable-rate debt at March 31, 2017 , would be approximately $2.1 million per year. Interest rate changes will have no impact on the remaining $8.1 million of fixed rate debt.

The above amounts were determined based on the impact of hypothetical interest rates on our borrowings and assume no changes in our capital structure. The information presented above includes those exposures that existed at March 31, 2017 , but it does not consider exposures or positions that could arise after that date. Accordingly, the information presented herein has limited predictive value. As a result, the ultimate realized gain or loss with respect to interest rate fluctuations will depend on exposures that arise during the period, the hedging strategies at the time, and the related interest rates.

We have entered into interest rate floors with an aggregate notional amount and strike rate of $3.0 billion and -0.25% , respectively for an initial total upfront cost of $3.5 million . Our total exposure is capped at our initial total cost of $3.5 million. These instruments have a maturity date of July 2020.

We have purchased options on Eurodollar futures, excluding those that have matured, to hedge our cash flow risk for total costs of $124,000 . Eurodollar futures prices reflect market expectations for interest rates on three month Eurodollar deposits for specific dates in the future, and the final settlement price is determined by three-month LIBOR on the last trading day. Options on Eurodollar futures provide the ability to limit losses while maintaining the possibility of profiting from favorable changes in the futures prices. As the purchaser, our maximum potential loss is limited to the initial premium paid for the Eurodollar option contracts, while our potential gain has no limit. These exchange-traded options are centrally cleared, and a clearinghouse stands in between all trades to ensure that the obligations involved in the trades are satisfied.

Table of Contents


ITEM 4.	CONTROLS AND PROCEDURES

Under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, our management has evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of March 31, 2017 (“Evaluation Date”). Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of the Evaluation Date, our disclosure controls and procedures are effective to ensure that information required to be disclosed in reports that we file or submit under the Exchange Act (i) is recorded, processed, summarized, and reported within the time periods specified in the SEC rules and forms; and (ii) is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosures.

There have been no changes in our internal controls over financial reporting during our most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

PART II. OTHER INFORMATION


ITEM 1.	LEGAL PROCEEDINGS

Sessa Litigation

On February 3, 2016, Sessa Capital (Master), L.P. (“Sessa”) filed an action (the “Maryland Action”) in the Circuit Court for Baltimore City, Maryland, captioned Sessa Capital (Master) L.P. v. Bennett, et al. , Case No. 24-C-16-000557 (Baltimore City Cir. Ct. 2016), against Ashford Prime, the members of the Ashford Prime board of directors, Ashford LLC and Ashford Inc. The Maryland Action generally alleged that the directors of Ashford Prime breached their fiduciary duties in connection with the June Amendments to the Company’s advisory agreement with Ashford LLC. The Maryland Action also alleged that Ashford Inc. aided and abetted those breaches of fiduciary duties. On February 29, 2016, the Company filed a motion to dismiss the Maryland Action. On March 14, 2016, Sessa voluntarily dismissed the Maryland Action.

On February 25, 2016, Ashford Prime filed a lawsuit (the “Texas Federal Action”) in the United States District Court for the Northern District of Texas, captioned Ashford Hospitality Prime, Inc. v. Sessa Capital (Master), L.P., et al. , No. 16-cv-00527 (N.D. Texas 2016) (DCG), against Sessa, related entities, and Sessa’s proposed director nominees John E. Petry, Philip B. Livingston, Lawrence A. Cunningham, Daniel B. Silvers and Chris D. Wheeler. The Texas Federal Action generally alleged that the defendants violated federal securities laws because Sessa’s proxy materials contain numerous false claims, material misrepresentations and omissions relating to, among other things, the proposed nominees, the financial risks associated with Sessa’s efforts to gain control of the board and Sessa’s plans and strategy for the Company and its assets. Among other remedies, the Texas Federal Action sought to enjoin Sessa from proceeding with its proxy contest.

On March 8, 2016, Ashford Prime filed a lawsuit (the “Texas State Action”) in the District Court of Dallas County, Texas, captioned Ashford Hospital Prime, Inc. v. Sessa Capital (Master) L.P., et al. , Cause No. DC-16-02738, against Sessa, related entities, and Sessa’s proposed director nominees John E. Petry, Philip B. Livingston, Lawrence A. Cunningham, Daniel B. Silvers and Chris D. Wheeler. The Texas State Action generally alleges that Sessa’s purported notice of proposed nominees for election to the Ashford Prime board of directors is invalid due to numerous failures by the defendants to comply with material provisions in the Company’s bylaws. Among other things, the Texas State Action sought a declaratory judgment confirming the inability of Sessa’s proposed director nominees to stand for election at the 2016 annual meeting of stockholders. On March 14, 2016, Sessa removed the Texas State Action from state court to the U.S. District Court for the Northern District of Texas with Cause No. 16-cv-00713.

Table of Contents

to the board. On May 20, 2016, the court denied Sessa’s motion for a preliminary injunction and granted the Company’s motion for a preliminary injunction. Sessa appealed the district court’s decision to the United States Court of Appeals for the Fifth Circuit on May 23, 2016. On December 16, 2016, the Fifth Circuit dismissed Sessa’s appeal of the preliminary injunction as moot. On February 17, 2017, the District Court consolidated the Texas State Action into the Texas Federal Action (the “Consolidated Texas Federal Action”). On the same day, the District Court also dismissed all of Sessa’s counterclaims, except for its claim for violation of federal proxy solicitation laws, which the Company did not move to dismiss. The District Court granted Sessa’s motion to dismiss the Company claim for prima facie tort, but denied Sessa’s motion to dismiss the Company’s remaining claims.

On February 16, 2017, the Company, Ashford Trust and Ashford Inc., and together with the Company, Ashford Trust and each affiliate of the Company, Ashford Trust and Ashford Inc., (the “Ashford Entities”), entered into a Settlement Agreement (the “Settlement Agreement”) with Sessa, Sessa Capital GP, LLC, Sessa Capital IM, L.P., Sessa Capital IM GP, LLC and John Petry (collectively, the “Sessa Entities”) regarding the composition of the Company’s board of directors (the “Board”), dismissal of pending litigation involving the parties and certain other matters.

Under the Settlement Agreement, the Company agreed to appoint to the Company’s board of directors two of the five individuals Sessa previously sought to nominate as directors of the Company (“Independent Designees”). The Company is required to make such appointments within two weeks of the date of the Settlement Agreement. Additionally, the Settlement Agreement provides that the Company and the Sessa Entities will work together in good faith to identify one additional director who will be independent of both the Company and Sessa (“Additional Independent Director”).

On February 20, 2017, the parties submitted a Joint Stipulation of Dismissal, which dismissed each of the parties’ remaining claims in the Consolidated Texas Federal Action with prejudice.

Table of Contents


ITEM 1A.	RISK FACTORS

The discussion of our business and operations should be read together with the risk factors contained in Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2016 , filed with the Securities and Exchange Commission,, which describe various risks and uncertainties to which we are or may become subject. These risks and uncertainties have the potential to affect our business, financial condition, results of operations, cash flows, strategies, or prospects in a material and adverse manner. At March 31, 2017 , there have been no material changes to the risk factors set forth in our Annual Report on Form 10-K for the year ended December 31, 2016 .


ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Purchases of Equity Securities by the Issuer

On October 27, 2014, our board of directors approved a share repurchase program under which the Company may purchase up to $100 million of the Company’s common stock from time to time. The repurchase program does not have an expiration date. The specific timing, manner, price, amount and other terms of the repurchases is at management’s discretion and depends on market conditions, corporate and regulatory requirements and other factors. The Company is not required to repurchase shares under the repurchase program, and may modify, suspend or terminate the repurchase program at any time for any reason. On April 8, 2016, our board of directors authorized utilizing up to $50 million to repurchase common stock. No shares were repurchased during the three months ended March 31, 2017 and 2016. As of March 31, 2017 , we have purchased a cumulative 4.3 million shares of our common stock, for approximately $63.2 million , since the program’s inception on November 4, 2014.

The following table provides the information with respect to purchases of our common stock during each of the months in the first quarter of 2017 :



Period	Total Number of Shares Purchased		Average Price Paid Per Share			Total Number of Shares Purchased as Part of a Publicly Announced Plan	Maximum Dollar Value of Shares That May Yet Be Purchased Under the Plan
Common stock:
January 1 to January 31	1,222	⁽¹⁾	$	13.44	⁽²⁾	—	$	36,787,500
February 1 to February 28	1,513	^{(1) (3)}	$	13.02	⁽²⁾	—	$	36,787,500
March 1 to March 31	9,468	^{(1) (3)}	$	10.61	⁽²⁾	—	$	36,787,500
Total	12,203		$	10.90		—

__________________


⁽¹⁾	Includes 83, 54 and 80 shares in January, February and March, respectively, that were repurchased from Ashford Trust when former Ashford Trust employees who held restricted shares of Ashford Prime common stock they received in the spin-off, forfeited the shares to Ashford Trust upon termination of employment.


⁽²⁾	There is no cost associated with the forfeiture of restricted shares of 1,139, 347 and 231 of our common stock in January, February and March, respectively.


⁽³⁾	Includes 1,112 shares and 9,157 shares in February and March, respectively, that were purchased from employees of Ashford LLC to satisfy stock vesting tax withholdings.


ITEM 3.	DEFAULT UPON SENIOR SECURITIES

None.

Table of Contents


ITEM 4.	MINE SAFETY DISCLOSURES

None.


ITEM 5.	OTHER INFORMATION

None.


ITEM 6.	EXHIBITS



Exhibit		Description
3.1		Articles of Amendment and Restatement of Ashford Hospitality Prime, Inc. (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed on April 29, 2016)
3.2		Articles of Amendment of Ashford Hospitality Prime, Inc. (incorporated by reference to Exhibit 3.2 to the Current Report on Form 8-K filed on April 29, 2016)
3.3		Articles Supplementary of Ashford Hospitality Prime, Inc. (incorporated by reference to Exhibit 3.2 to the Current Report on Form 8-K filed on May 18, 2015)
3.4		Articles Supplementary for 5.50% Series A Cumulative Convertible Preferred Stock of Ashford Hospitality Prime, Inc., as amended by a Certificate of Correction, as filed with the State Department of Assessments and Taxation Maryland on June 11, 2015 (incorporated by reference to Exhibit 3.4 to the Current Report on Form 8-K filed on April 29, 2016)
3.5		Articles Supplementary for 5.50% Series B Cumulative Convertible Preferred Stock of Ashford Hospitality Prime, Inc., accepted for record and certified by the Maryland State Department of Assessments and Taxation on December 4, 2015 (incorporated by reference to Exhibit 3.5 to the Current Report on Form 8-K filed on April 29, 2016)
3.6		Articles Supplementary for the Series C Preferred Stock of Ashford Hospitality Prime, Inc., as filed with the State Department of Assessments and Taxation of Maryland on February 1, 2016 (incorporated by reference to Exhibit 3.6 to the Current Report on Form 8-K filed on April 29, 2016)
3.7		Articles Supplementary Establishing Additional Shares of Series B Preferred Stock of Ashford Hospitality Prime, Inc., accepted for record and certified by the Maryland State Department of Assessments and Taxation on April 27, 2016 (incorporated by reference to Exhibit 3.7 to the Current Report on Form 8-K filed on April 29, 2016)
3.8		Articles Supplementary Establishing Additional Shares of Series B Preferred Stock of Ashford Hospitality Prime, Inc., accepted for record and certified by the Maryland State Department of Assessments and Taxation on March 3, 2017. (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed on March 7, 2017)
3.9		Second Amended and Restated Bylaws of Ashford Hospitality Prime, Inc. (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed on August 9, 2016)
10.1*		Agreement of Purchase and Sale, dated January 13, 2017 between Ashford Hospitality Prime Limited Partnership, a Delaware limited partnership (“Purchaser”) and Hotel Yountville, LLC a California limited liability company, Hotel Yountville Holdings, LLC, a California limited liability company, Altamura Family, LLC, a California limited liability company, and George Altamura, Jr., LLC, a California limited liability company (collectively “Seller”)
10.1.1*		First Amendment of Agreement of Purchase and Sale, dated January 30, 2017, between Hotel Yountville, LLC, a California limited liability company, Hotel Yountville Holdings, LLC, a California limited liability company, Altamura Family, LLC, a California limited liability company, and George Altamura, Jr., LLC, a California limited liability company, collectively, “Seller”) and Ashford Hospitality Prime Limited Partnership, a Delaware limited partnership (“Purchaser”)
10.1.2*		Second Amendment of Agreement of Purchase and Sale , dated February 28, 2017, by and among Hotel Yountville, LLC, a California limited liability company, Hotel Yountville Holdings, LLC, a California limited liability company, Altamura Family, LLC, a California limited liability company, and George Altamura, Jr., LLC, a California limited liability company, collectively, “Seller”) and Ashford Hospitality Prime Limited Partnership, a Delaware limited partnership (“Purchaser”)
10.2*		Sale and Purchase Agreement, dated March 9, 2017, by and between, WTCC Beaver Creek Investors V, L.L.C., a Delaware limited liability company (“Seller”), and Ashford Hospitality Prime Limited Partnership, a Delaware limited partnership (“Buyer”)
10.2.1*		First Amendment To Sale and Purchase Agreement, dated March 13, 2017, by and between WTCC Beaver Creek Investors V, L.L.C., a Delaware limited liability company (“Seller”), and Ashford Hospitality Prime Limited Partnership, a Delaware limited partnership (“Buyer”)

Table of Contents



10.3		Loan Agreement, dated as of January 18, 2017, between Morgan Stanley Bank, N.A., as lender, Ashford Philadelphia Annex LP, Ashford Plano-M LP, Ashford San Francisco II LP, Ashford Seattle Waterfront LP and Ashford Tampa International Hotel, LP, as borrowers, and Ashford TRS Philadelphia Annex LLC, Ashford TRS Sapphire VII LLC and Ashford TRS SF LLC, as operating lessees (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed on January 24, 2017)
10.4		Fourth Amended and Restated Advisory Agreement (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed on January 25, 2017)
10.5		Third Amended and Restated Agreement of Limited Partnership of Ashford Hospitality Prime Limited Partnership (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed on March 7, 2017)
10.6		Form of Indemnification Agreement between Ashford Hospitality Prime, Inc. and each of its executive officers and directors (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed on March 8, 2017)
12*		Statement Regarding Computation of Ratios of Earnings to Combined Fixed Charges and Preferred Stock Dividends
31.1*		Certifications of Chief Executive Officer Pursuant to Rule 13a-14(a) and Rule 15d-14(a) of Securities Exchange Act of 1934, as amended
31.2*		Certifications of Chief Financial Officer Pursuant to Rule 13a-14(a) and Rule 15d-14(a) of Securities Exchange Act of 1934, as amended
32.1*		Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2*		Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002



The following materials from the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2017 are formatted in XBRL (Extensible Business Reporting Language): (i) Consolidated Balance Sheets; (ii) Consolidated Statements of Operations; (iii) Consolidated Statements Comprehensive Income; (iii) Consolidated Statement of Equity; (iv) Consolidated Statements of Cash Flows; and (v) Notes to the Consolidated Financial Statements. In accordance with Rule 402 of Regulation S-T, the XBRL related information in Exhibit 101 to this Quarterly Report on Form 10-Q shall not be deemed to be “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, and shall not be part of any registration statement or other document filed under the Securities Act of 1933, as amended or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

101.INS	XBRL Instance Document	Submitted electronically with this report.
101.SCH	XBRL Taxonomy Extension Schema Document	Submitted electronically with this report.
101.CAL	XBRL Taxonomy Calculation Linkbase Document	Submitted electronically with this report.
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document	Submitted electronically with this report.
101.LAB	XBRL Taxonomy Label Linkbase Document	Submitted electronically with this report.
101.PRE	XBRL Taxonomy Presentation Linkbase Document	Submitted electronically with this report.

___________________________________

* Filed herewith.

Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

ASHFORD HOSPITALITY PRIME, INC.



Date:	May 9, 2017	By:	/s/ RICHARD J. STOCKTON
			Richard J. Stockton
			President and Chief Executive Officer

Date:	May 9, 2017	By:	/s/ DERIC S. EUBANKS
			Deric S. Eubanks
			Chief Financial Officer

EXHIBIT 10.1

AGREEMENT OF PURCHASE AND SALE

between

ASHFORD HOSPITALITY PRIME LIMITED PARTNERSHIP,
a Delaware limited partnership

(“ Purchaser ”)

and

HOTEL YOUNTVILLE, LLC a California limited liability company,

HOTEL YOUNTVILLE HOLDINGS, LLC, a California limited liability company,

ALTAMURA FAMILY, LLC, a California limited liability company, and

GEORGE ALTAMURA, JR., LLC, a California limited liability company

(collectively “ Seller ”)

Hotel Yountville
Yountville, California

9695236v.8

TABLE OF CONTENTS



Article I DEFINITIONS		1
1.1	Definitions	1
Article II PURCHASE AND SALE; DEPOSIT; PAYMENT OF PURCHASE PRICE; STUDY PERIOD		9
2.1	Purchase and Sale	9
2.2	Payment of Purchase Price	9
2.3	Deposit	9
2.4	Study Period	10
Article III SELLER’S REPRESENTATIONS AND WARRANTIES		13
3.1	Organization and Power	13
3.2	Authorization and Execution	14
3.3	Non-contravention	14
3.4	Title To Real Property	14
3.5	No Special Taxes	14
3.6	Compliance with Existing Laws	14
3.7	Personal Property	14
3.8	Operating Agreements/Off-Site Facility Agreements/Leased Property Agreements	14
3.9	Condemnation Proceedings; Roadways	15
3.10	Actions or Proceedings	15
3.11	Labor and Employment Matters	15
3.12	Financial Information and Submission Matters	15
3.13	Bankruptcy	16
3.14	Hazardous Substances	16
3.15	Sales, Use and Occupancy Taxes	16
3.16	Personal Property Taxes	16
3.17	Occupancy Agreements	16
3.18	Utilities	17
3.19	Leased Property	17
3.20	Advance Bookings	17
3.21	Americans With Disabilities Act	17
3.22	Zoning	17
3.23	Seller Is Not a “Foreign Person”	17
3.24	Patriot Act	17
3.25	No Other Property Interests	18
Article IV PURCHASER’S REPRESENTATIONS AND WARRANTIES		18
4.1	Organization and Power	19
4.2	Authorization and Execution	19
4.3	Non-contravention	19
4.4	Litigation	19
4.5	Bankruptcy	19

9695236v.8



4.6	Patriot Act and OFAC Compliance	19
4.7	Sophisticated Real Estate Investor	20
Article V CONDITIONS PRECEDENT		20
5.1	As to Purchaser’s Obligations	20
5.2	As to Seller’s Obligations	22
Article VI COVENANTS OF SELLER		22
6.1	Operating Agreements/Leased Property Agreements/Off-Site Facility Agreements	22
6.2	Warranties and Guaranties	22
6.3	Insurance	22
6.4	Independent Audit	23
6.5	Operation of Property Prior to Closing	23
6.6	Marketing Restriction	25
6.7	Employees and Continuation of Seller’s Group Health Plans	25
6.8	Rights of First Refusal and Options	25
6.9	Fitness Center	25
Article VII CLOSING		26
7.1	Closing	26
7.2	Seller’s Deliveries	26
7.3	Purchaser’s Deliveries	28
7.4	Mutual Deliveries	29
7.5	Closing Costs	29
7.6	Revenue and Expense Allocations	29
7.7	Acquisition and Transfer of Inventory and Personal Property	32
Article VIII GENERAL PROVISIONS		32
8.1	Condemnation	32
8.2	Risk of Loss	32
8.3	Broker	32
8.4	Bulk Sale	33
8.5	Confidentiality	33
8.6	Seller’s Accounts Receivable	34
Article IX LIABILITY OF PURCHASER; INDEMNIFICATION BY SELLER; DEFAULT; TERMINATION RIGHTS		34
9.1	Liability of Purchaser	34
9.2	Indemnification by Seller	34
9.3	Default by Seller/Failure of Conditions Precedent	35
9.4	Default by Purchaser/Failure of Conditions Precedent	35
9.5	Costs and Attorneys’ Fees	36
9.6	Limitation of Liability	36
Article X [INTENTIONALLY DELETED]		37
Article XI MISCELLANEOUS PROVISIONS		37
11.1	Completeness; Modification	37
11.2	Assignments	37
11.3	Successors and Assigns	37

9695236v.8



11.4	Days	37
11.5	Governing Law	37
11.6	Counterparts	37
11.7	Severability	37
11.8	Costs	38
11.9	Notices	38
11.10	Escrow Agent	39
11.11	Incorporation by Reference	39
11.12	Survival	40
11.13	Further Assurances	40
11.14	No Partnership	40
11.15	Time of Essence	40
11.16	Signatory Exculpation	40
11.17	Rules of Construction	40
11.18	Tax-Deferred Exchange	40
11.19	Liquor Operations	41
11.20	Holdback	41

EXHIBITS

Exhibit A - Land

Exhibit B - Intentionally Deleted

Exhibit C - Assignment and Assumption Agreement

Exhibit D - Bill of Sale

Exhibit E - Grant Deed

Exhibit F - Assignment of Occupancy Agreements

Exhibit G - Food and Beverage Management Agreement

Exhibit H - Parking Agreement

Exhibit I - Post-Closing Holdback Escrow Agreement

Exhibit 3.6 - Carve Outs to Representations

Exhibit 6.9A - Construction Contracts

Exhibit 6.9B - Scope of Work

SCHEDULES

Schedule 1 - Authorizations

Schedule 2 - Operating Agreements

Schedule 3 - Employment Agreements

Schedule 4 - Occupancy Agreements

Schedule 5 - Off-Site Facility Agreements

Schedule 6 - Restricted Employment Agreements

iii

9695236v.8

AGREEMENT OF PURCHASE AND SALE

THIS AGREEMENT OF PURCHASE AND SALE (this “ Agreement ”) is made as of this 13 ^th day of January, 2017, between ASHFORD HOSPITALITY PRIME LIMITED PARTNERSHIP, a Delaware limited partnership (“ Purchaser ”), and HOTEL YOUNTVILLE, LLC a California limited liability company (" HY LLC "), HOTEL YOUNTVILLE HOLDINGS, LLC, a California limited liability company, (" HYH LLC "), ALTAMURA FAMILY, LLC, a California limited liability company, (" AF LLC ") and GEORGE ALTAMURA, JR., LLC,

(" GAJ LLC "), a California limited liability company (collectively “ Seller ”).

R E C I T A T I O N S:

A. HYH LLC, AF LLC, AND GAJ LLC, (collectively " Property Owners") are the owners of the real property more particularly described on Exhibit A attached hereto and made a part hereof, on which are located the Hotel Yountville and Hopper Creek Apartments (collectively “ Hotel Yountville ”), in Yountville, California. HY LLC (" Hotel Owner ") leases the hotel facility from Property Owners and owns and operates the Hotel Yountville business. Property Owners are desirous of selling the land and improvements to Purchaser, and Hotel Owner is desirous of selling its business assets to Purchaser under this Agreement. For convenience these two parties are referenced as Seller under this Agreement to reflect their collective sale of all of the real property and other business assets located on and operated from the property described in Exhibit "A".

B. Purchaser is desirous of purchasing these assets from Seller, and Seller is desirous of selling such assets to Purchaser, for the purchase price and upon the terms and conditions hereinafter set forth.

NOW, THEREFORE, in consideration of premises and in consideration of the mutual covenants, promises and undertakings of the parties hereinafter set forth, and for other good and valuable considerations, the receipt and sufficiency of which is hereby acknowledged by the parties, it is agreed:

Article I
DEFINITIONS

1.1 Definitions . The following terms shall have the indicated meanings:

“ Act of Bankruptcy ” shall mean if a party hereto or any general partner thereof shall (a) apply for or consent to the appointment of, or the taking of possession by, a receiver, custodian, trustee or liquidator of itself or of all or a substantial part of its property, (b) admit in writing its inability to pay its debts as they become due, (c) make a general assignment for the benefit of its creditors, (d) file a voluntary petition or commence a voluntary case or proceeding under the Federal Bankruptcy Code (as now or hereafter in effect), (e) be adjudicated a bankrupt or insolvent, (f) file a petition seeking to take advantage of any other law relating to bankruptcy, insolvency, reorganization, winding-up or composition or adjustment of debts, (g) fail to controvert in a timely and appropriate manner, or acquiesce in writing to, any petition filed against it in an

9695236v.8

involuntary case or proceeding under the Federal Bankruptcy Code (as now or hereafter in effect), or (h) take any corporate or partnership action for the purpose of effecting any of the foregoing; or if a proceeding or case shall be commenced, without the application or consent of a party hereto or any general partner thereof, in any court of competent jurisdiction seeking (1) the liquidation, reorganization, dissolution or winding-up, or the composition or readjustment of debts, of such party or general partner, (2) the appointment of a receiver, custodian, trustee or liquidator for such party or general partner or all or any substantial part of its assets, or (3) other similar relief under any law relating to bankruptcy, insolvency, reorganization, winding-up or composition or adjustment of debts, and such proceeding or case shall continue undismissed; or an order (including an order for relief entered in an involuntary case under the Federal Bankruptcy Code, as now or hereafter in effect) judgment or decree approving or ordering any of the foregoing shall be entered and continue unstayed and in effect, for a period of sixty (60) consecutive days.

“ Additional Deposit ” shall have the meaning given such term in Section 2.3 hereof.

“ Advance Bookings ” shall mean reservations made by Seller or its manager prior to Closing for Hotel rooms or meeting rooms to be utilized after Closing, or for catering services or other Hotel services to be provided after Closing, in the ordinary course of business.

“ Affiliate ” of a Person shall mean (i) any other Person that is directly or indirectly (through one or more intermediaries) controlled by, under common control with, or controlling such Person, or (ii) any other Person in which such Person has a direct or indirect equity interest constituting at least a majority interest of the total equity of such other Person. For purposes of this definition, “control” shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of any Person or the power to veto major policy decisions of any Person, whether through the ownership of voting securities, by contract or otherwise.

“ Affiliated Company ” means any other entity which is, along with Seller and/or Seller’s management company, a member of a controlled group of corporations or a controlled group of trades or businesses (as defined in Section 414(b) or (c) of the Internal Revenue Code), any entity which along with Seller and/or Seller’s management company is included in an affiliated service group as defined in Section 414(m) of the Internal Revenue Code, and any other entity which is required to be aggregated with Seller and/or Seller’s management company pursuant to Treasury Regulations under Section 414(o) of the Internal Revenue Code.

“ Aggregate Liability ” means Seller’s aggregate liability for breach of all representations, warranties and indemnities of Seller set forth in this Agreement shall in no event exceed Four Million Dollars ($4,000,000) (the “ Liability Cap ”). Notwithstanding the foregoing, the Aggregate Liability shall not be applicable to insured third party claims, revenue and expense allocations under Section 7.6 of this Agreement (including sales and use tax and occupancy tax liability), any type of employee liability claims or claims under Section 8.3 of this Agreement.

“ Applicable Laws ” shall mean any applicable building, zoning, subdivision, environmental, health, safety or other governmental laws, statutes, ordinances, resolutions, rules, codes, regulations, orders or determinations of any Governmental Authority or of any insurance

9695236v.8

boards of underwriters (or other body exercising similar functions), or any restrictive covenants or deed restrictions affecting the Property or the ownership, operation, use, maintenance or condition thereof.

“ Assignment and Assumption Agreement ” shall mean one or more assignment and assumption agreements in the form attached hereto as Exhibit C whereby Seller assigns and Purchaser and/or its property manager, lessee or other designee (as Purchaser shall specify) assumes the Operating Agreements, Leased Property Agreements and Off-Site Facility Agreements that have not been terminated prior to Closing in accordance herewith.

“ Assignment of Occupancy Agreements ” shall mean one or more assignment agreements in the form attached hereto as Exhibit F whereby Seller assigns and Purchaser and/or its property manager, lessee or other designee (as Purchaser shall specify) assumes all of Seller’s right, title and interest in and to the Occupancy Agreements.

“ Authorizations ” shall mean all licenses, permits and approvals required by any governmental or quasi-governmental agency, body, department, commission, board, bureau, instrumentality or office, or otherwise appropriate with respect to the construction, ownership, operation, leasing, maintenance, or use of the Property or any part thereof.

“ Bill of Sale ” shall mean that certain bill of sale conveying title to the Inventory, Tangible Personal Property and the Intangible Personal Property to Purchaser or Purchaser’s property manager, lessee or other designee (as Purchaser shall specify) in the form attached hereto as Exhibit D .

“ Broker ” shall mean Coldwell Banker Real Estate /Hotels (“CBRE/Hotels”)

“ CCR Estoppel ” shall have the meaning given such term in Section 5.1(h) hereof.

“ Closing ” shall mean the Closing of the purchase and sale of the Property pursuant to this Agreement and shall be deemed to occur on the Closing Date.

“ Closing Date ” shall mean the date on which the Closing occurs.

“ Closing Documents ” shall mean the documents defined as such in Section 7.1 hereof.

“ COBRA ” shall have the meaning given such term in Section 6.7 hereof.

“ Covenants, Conditions and Restrictions ” shall mean those covenants, conditions and/or restrictions binding, restricting or benefiting the Property which are set forth in the Title Commitment.

“ Deed ” shall mean that certain deed conveying title to the Real Property with special warranty covenants of title from Seller to Purchaser or Purchaser’s designee, and subject only to Permitted Title Exceptions, in the form attached hereto as Exhibit E . If there is any difference between the description of the Land, as shown on Exhibit A attached hereto and the description of

9695236v.8

the Land as shown on the Survey, the description of the Land to be contained in the Deed shall be the description in Seller’s vesting deed and Seller shall deliver to Purchaser a quitclaim deed with a legal description conforming to the description shown on the Survey.

“ Deposit ” shall mean all amounts deposited from time to time with Escrow Agent by Purchaser pursuant to Section 2.3 hereof, plus all interest or other earnings that may accrue thereon. All cash Deposits shall be invested by Escrow Agent in a commercial bank or banks acceptable to Purchaser at money market rates, or in such other investments as shall be approved in writing by Seller and Purchaser. The Deposit shall be held and disbursed by Escrow Agent in strict accordance with the terms and provisions of this Agreement.

“ Effective Date ” shall have the meaning given such term in Section 11.17(e) hereof.

“ Employment Agreements ” shall mean all employment agreements, written or oral, between Seller and the persons employed with respect to the Property.

“ Environmental Damages ” shall mean all third-party claims, judgments, damages, losses, penalties, fines, liabilities (including, without limitation, punitive damages and strict liability), encumbrances, liens, costs and expenses of investigation and defense of any claim, whether or not such is ultimately defeated, and of any settlement or judgment, of whatever kind or nature, contingent or otherwise, matured or unmatured, including, without limitation, attorneys’ fees and disbursements and consultants’ fees, any of which arise as a result of the existence of Hazardous Materials upon, about or beneath the Property or migrating or threatening to migrate from the Property, or as a result of the existence of a violation of Environmental Requirements pertaining to the Property.

“ Environmental Requirements ” shall mean (i) all applicable statutes, regulations, rules, policies, ordinances, codes, licenses, permits, orders, approvals, plans, authorizations, and similar items, of all Governmental Authorities, and (ii) all judicial, administrative and regulatory decrees, judgments and orders, in each case of (i) and (ii) relating to the protection of human health or the environment from Hazardous Materials, including, without limitation: (a) all requirements thereof, including, without limitation, those pertaining to reporting, licensing, permitting, investigation and remediation of emissions, discharges, releases or threatened releases of Hazardous Materials into the air, surface water, groundwater or land, or relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of Hazardous Materials; and (b) all requirements pertaining to the protection of the health and safety of employees or the public from Hazardous Materials.

“ Escrow Agent ” shall mean Chicago Title Insurance Company, 711 Third Avenue, 5 ^th Floor, New York, New York 10017, Attn: Siu Cheung.

“ Financial Information ” shall mean the financial information defined as such in Section 3.13 hereof.

“ FIRPTA Certificate ” shall mean the affidavit of Seller under Section 1445 of the Internal Revenue Code, as amended, certifying that Seller is not a foreign corporation, foreign

9695236v.8

partnership, foreign trust, foreign estate or foreign person (as those terms are defined in the Internal Revenue Code and regulations promulgated thereunder), in form and substance satisfactory to Purchaser.

“ Governmental Authority ” shall mean any federal, state, county, municipal or other government or any governmental or quasi-governmental agency, department, commission, board, bureau, office or instrumentality, foreign or domestic, or any of them.

“ Hazardous Materials ” shall mean any chemical substance: (i) which is or becomes defined as a “hazardous substance,” “hazardous waste,” “hazardous material,” “pollutant,” “contaminant,” or “toxic,” “explosive,” “corrosive,” “flammable,” “infectious,” “radioactive,” “carcinogenic,” or “mutagenic” material under any law, regulation, rule, order, or other authority of the federal, state or local governments, or any agency, department, commission, board, or instrumentality thereof, regarding the protection of human health or the environment from such chemical substances including, but not limited to, the following federal laws and their amendments, analogous state and local laws, and any regulations promulgated thereunder: the Clean Air Act, the Clean Water Act, the Oil Pollution Control Act, the Comprehensive Environmental Response, Compensation, and Liability Act of 1986, the Emergency Planning and Community Right to Know Act, the Solid Waste Disposal Act, the Resource Conservation and Recovery Act, the Safe Drinking Water Act, the Federal Insecticide, Fungicide and Rodenticide Act, and the Toxic Substances Control Act, including, without limitation, asbestos and gasoline and other petroleum products (including crude oil or any fraction thereof); (ii) without limitation, which contains gasoline, diesel fuel or other petroleum hydrocarbons; (iii) without limitation, which contains drinking biphenyls or asbestos or asbestos-containing materials or urea formaldehyde foam insulation; or (iv) without limitation, radon gas.

“ Holdback Amount ” shall mean Four Million and No/100 Dollars ($4,000,000.00).

“ Hopper Creek Apartments ” means the workforce housing project and related amenities located on the Land.

“ Hotel ” shall mean the hotel and related amenities located on the Land.

“ Improvements ” shall mean the Hotel, Hopper Creek Apartments, and all other buildings, improvements, fixtures and other items of real estate located on the Land.

“ Initial Deposit ” shall have the meaning given such term in Section 2.3 hereof.

“ Insurance Policies ” shall mean all policies of insurance maintained by or on behalf of Seller pertaining to the Property, its operation, or any part thereof.

“ Intangible Personal Property ” shall mean all intangible personal property owned or possessed by Seller and used in connection with the ownership, operation, leasing, occupancy or maintenance of the Property, including, without limitation, (1) the transferable Authorizations, (2) telephone numbers, TWX numbers, post office boxes, Warranties and Guaranties, signage rights, utility and development rights and privileges, general intangibles, business records, site plans,

9695236v.8

surveys, environmental and other physical reports, plans and specifications pertaining to the Real Property and the Personal Property, (3) any unpaid award for taking by condemnation or any damage to the Land by reason of a change of grade or location of or access to any street or highway, (4) the share of the Rooms Ledger determined under Section 7.6 hereof, and (5) all websites and domains used for the Hotel, including access to the FTP files of the websites to obtain website information and content pertaining to the Hotel, excluding (a) any of the aforesaid rights Purchaser elects not to acquire, (b) [Intentionally Deleted] and (c) accounts receivable except for the above described share of the Rooms Ledger.

“ Inventory ” shall mean all tangible personal property described in Section 7.7 hereof.

“ Land ” shall mean those certain parcels of real estate more particularly described on Exhibit A attached hereto, together with all easements, rights, privileges, remainders, reversions and appurtenances thereunto belonging or in any way appertaining, and all of the estate, right, title, interest, claim or demand whatsoever of Seller therein, in the streets and ways adjacent thereto and in the beds thereof, either at law or in equity, in possession or expectancy, now or hereafter acquired.

“ Leased Property ” shall mean all leased items of Tangible Personal Property.

“ Leased Property Agreements ” shall mean the lease agreements pertaining to the Leased Property.

" Liquidated Damages " shall have the meaning given such term in Section 9.4 hereof.

“ Occupancy Agreements ” shall mean all rental or occupancy agreements for the residents of the Hopper Creek Apartments, and not including Hotel guests.

“ Off-Site Facility Agreements ” shall mean those easements, leases, contracts and agreements pertaining to facilities not located on the Property but which Purchaser deems necessary, beneficial or related to the operation of the Hotel including, without limitation, the use agreements for local golf courses, parking contracts or leases, garage contracts or leases, skybridge easements, tunnel easements, utility easements, and storm water management agreements.

“ Operating Agreements ” shall mean all service, supply and maintenance contracts, if any, in effect with respect to the Property and all other contracts (other than the Occupancy Agreements, Off-Site Facility Agreements and the Employment Agreements) that affect the Property or are otherwise related to the construction, ownership, operation, occupancy or maintenance of the Property.

“ Owner’s Title Policy ” shall mean an owner’s policy of title insurance issued to Purchaser by the Title Company, pursuant to which the Title Company insures Purchaser’s ownership of fee simple title to the Real Property (including the marketability thereof) subject only to Permitted Title Exceptions. The Owner’s Title Policy shall insure Purchaser in the amount of the Purchase Price and shall be acceptable in form and substance to Purchaser. Purchaser may require such

9695236v.8

deletions of standard exceptions and such title endorsements as are legally available and customarily required by institutional investors purchasing property comparable to the Property in the State where the Property is situated. The description of the Land in the Owner’s Title Policy shall be by courses and distances or by reference to a legal, subdivided lot and shall be identical to the description shown on the Survey.

“ Parking Agreement ” shall mean the unsigned agreement attached hereto as Exhibit H .

“ Permitted Title Exceptions ” shall mean those exceptions to title to the Real Property that are satisfactory to Purchaser as determined pursuant to Section 2.4(d) hereof.

“ Person ” shall mean an individual, a partnership, a limited liability company, a corporation, an association, a joint stock company, a trust, a joint venture, an unincorporated organization, or a Governmental Authority.

“ Personal Property ” shall mean collectively the Tangible Personal Property and the Intangible Personal Property, but shall not include any property located on the Property which is owned by Seller’s property manager.

“ Post-Closing Escrow Agreement ” shall mean the agreement in the form attached hereto as Exhibit I .

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

“ Purchase Price ” shall mean $96,500,000.00 payable in the manner described in Section 2.2 hereof.

“ Purchaser’s Objections ” shall mean the objections defined as such in Section 2.4(d) hereof.

“ Real Property ” shall collectively mean the Land and the Improvements.

“ REIT ” shall have the meaning given such term in Section 8.5 hereof.

“ Rooms Ledger ” shall mean the final night’s room revenue (revenue from rooms occupied as of 6:00 a.m. on the Closing Date, exclusive of food, beverage, telephone and similar charges which shall be retained by Seller), including any sales taxes, room taxes or other taxes thereon.

“ Seller’s Submittals ” shall have the meaning ascribed to such term in Section 2.4(b) .

“ Study Period ” shall mean the period commencing on the Effective Date and continuing through the date that is forty-five (45) days thereafter; provided, however, Purchaser shall have the option to shorten the Study Period. Except as expressly noted herein to the contrary,

9695236v.8

time periods herein referred to shall mean the time periods as in effect, from time to time, at Yountville, California.

“ Submission Matters ” shall mean all items Seller is required to deliver to Purchaser pursuant to Section 2.4(b) hereof.

“ Survey ” shall mean the survey defined as such in and prepared pursuant to Section 2.4(d) hereof.

“ Survival Period ” shall have the meaning ascribed to such term in Article III .

“ Tangible Personal Property ” shall mean the items of tangible personal property consisting of all furniture, fixtures, equipment, machinery, Inventory and other personal property of every kind and nature (excluding cash-on-hand and petty cash funds) located on or used or useful in the operation of the Hotel and owned by Seller, including, without limitation, Seller’s interest as lessee with respect to any such Tangible Personal Property; provided, however, excluded from the Tangible Personal Property are (a) a 2002 Ford F450 pickup; (b) a 2015 Nissan Rogue; and (c) three (3) dump trailers.

“ Tenant Estoppels ” shall have the meaning given such term in Section 5.1(j) hereof.

“ Third Party Consents ” shall have the meaning given such term in Section 5.1(i) hereof.

“ Title Commitment ” shall mean the title commitment and exception documents defined as such in Section 2.4(d) hereof.

“ Title Company ” shall mean Escrow Agent on behalf of Chicago Title Insurance Company or other title insurance underwriter selected by Purchaser.

“ UCC Reports ” shall mean the reports defined as such in Section 2.4(d) hereof.

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

“ Warranties and Guaranties ” shall mean all warranties and guaranties relating to the Improvements or the Tangible Personal Property or any part thereof.

9695236v.8

ARTICLE II
PURCHASE AND SALE; DEPOSIT; PAYMENT
OF PURCHASE PRICE; STUDY PERIOD

2.1 Purchase and Sale . Seller agrees to sell and Purchaser agrees to purchase the Property for the Purchase Price and in accordance with and subject to the other terms and conditions set forth herein.

2.2 Payment of Purchase Price . The Purchase Price shall be paid to Seller in the following manner:

(a) Purchaser shall receive a credit against the Purchase Price in an amount equal to the amount of the Deposit.

(b) Purchaser shall pay the balance of the Purchase Price, as adjusted in the manner specified in Article VII and as set forth below, to Seller or other applicable party at Closing by making a wire transfer of immediately available federal funds to the account of Seller or other applicable party as specified in writing by Seller.

(c) The portion of the Purchase Price allocated to the Real Property shall be $92,640,000 and the balance of the Purchase Price shall be allocated Personal Property, including tangible and intangible personal property. Allocations made pursuant to this Section shall be used by the Parties for title insurance and all tax and other government reporting purposes. In no event shall the Purchase Price be adjusted as a result of any allocation thereof to the liquor license.

2.3 Deposit . Within two (2) business days after the execution hereof by both Seller and Purchaser and as a condition precedent to the effectiveness of this Agreement, Purchaser shall deliver to Escrow Agent (i) a wire transfer or check in the sum of Fifty Dollars ($50.00) payable to the order of Seller representing the independent consideration for Seller’s execution of this Agreement and agreement to provide Purchaser with the Study Period (which check or the proceeds of which wire transfer shall thereafter be delivered by Escrow Agent to Seller) and (ii) a wire transfer or check in the sum of Two Million and No/100 Dollars ($2,000,000.00) (the “ Initial Deposit ”), the proceeds of which wire transfer or check Escrow Agent shall deposit and invest in an interest bearing account at a financial institution acceptable to Purchaser or as otherwise agreed to in writing by Seller and Purchaser. Within two (2) days after the expiration of the Study Period, if this Agreement has not been sooner terminated, Purchaser shall deposit with Escrow Agent, by wire transfer an additional deposit in the amount of Two Million and No/100 Dollars ($2,000,000.00) (the “ Additional Deposit ”). The Initial Deposit and the Additional Deposit (when it is deposited by Purchaser with Escrow Agent) are collectively and individually referred to herein as the “Deposit”. Escrow Agent shall hold and invest the Deposit pursuant to the terms, conditions and provisions of this Agreement. All accrued interest on the Deposit shall become part of the Deposit. The Deposit shall be returned to Purchaser if Purchaser fails, prior to the end of the Study Period, to notify Seller in writing, pursuant to Section 2.4 hereof, that Purchaser is not electing to terminate this Agreement. The Deposit shall be either (a) applied at the Closing against the Purchase Price, (b) returned to Purchaser pursuant hereto, or (c) paid to Seller pursuant hereto. If Purchaser does not terminate this Agreement prior to the expiration of the Study Period, the Deposit shall be non-refundable to

9695236v.8

Purchaser, except as otherwise provided in this Agreement. For purposes of reporting earned interest with respect to the Deposit, Purchaser’s Federal Tax Identification Number is 46-2473800, and Seller’s Federal Tax Identification Numbers are: ____________________________________________.

2.4 Study Period .

(a) Purchaser and Purchaser’s potential lessee or manager shall have the right, until 5:00 p.m., Yountville, California time on the last day of the Study Period, and thereafter if Purchaser notifies Seller in writing prior to the expiration of the Study Period that Purchaser has elected not to terminate this Agreement, to enter upon the Real Property upon one (1) business day notice to Seller and to perform, at Purchaser’s expense, such economic, surveying, engineering, topographic, environmental, marketing and other tests, studies and investigations as Purchaser and Purchaser’s potential lessee may deem appropriate. Purchaser and Purchaser’s agents shall conduct such investigations in a manner which, to the greatest reasonable extent, does not materially impair the operation of the Hotel or the Hopper Creek Apartments; provided, however, in no event shall Purchaser undertake any invasive testing of any of the Improvements or the Land without Seller’s prior written consent (a Phase I environmental study shall not be considered invasive). If such tests, studies and investigations warrant, in Purchaser’s sole, absolute and unreviewable discretion, the purchase of the Property for the purposes contemplated by Purchaser, then Purchaser may elect to proceed with this transaction and shall notify Seller and Escrow Agent, in writing prior to the expiration of the Study Period, that Purchaser has elected not to terminate this Agreement. If for any reason whatsoever Purchaser does not so notify Seller and Escrow Agent of its determination not to terminate this Agreement prior to the expiration of the Study Period, or if Purchaser notifies Seller and Escrow Agent in writing prior to the expiration of the Study Period that it has determined in its sole, absolute and unreviewable discretion, to terminate this Agreement, this Agreement automatically shall terminate, the Deposit shall be promptly returned to Purchaser and Purchaser and Seller shall be released from all further liability or obligation hereunder except those which expressly survive a termination of this Agreement.

(b) Within twenty (20) days after the Effective Date, Seller shall (i) deliver the following to Purchaser to the extent they exist and are in Seller’s possession or readily available to Seller (“ Seller’s Submittals ”) and (ii) complete Schedules 1-6 of the Agreement:

(1) Copies of all Operating Agreements, Leased Property Agreements, Off-Site Facility Agreements and Occupancy Agreements, if any, in effect as of the date of this Agreement.

(2) To the extent in Seller’s possession or reasonably available to Seller, copies of all Authorizations including, without limitation, all certificates of occupancy, permits, authorizations, approvals, licenses issued by Governmental Authorities having jurisdiction over the Property and copies of all certificates issued by the local board of fire underwriters (or other body exercising similar functions) relating to the Property.

(3) A complete list of Advance Bookings.

9695236v.8

(4) A schedule indicating all pertinent information with respect to each Employment Agreement in effect as of the date hereof (including name of employee, social security number, wage or salary, accrued vacation benefits, other fringe benefits, etc.) and copies of all such Employment Agreements.

(5) To the extent in Seller’s possession or reasonably available to Seller, a schedule setting forth the type and amounts of insurance coverage maintained by Seller with respect to the Property as of the date of this Agreement and complete copies of all loss history reports.

(6) The monthly and annual financial and operating statements for the Property for the current calendar year (including audited statements, if available), and, to the extent in Seller’s possession or reasonably available to Seller, for the previous three (3) calendar years.

(7) The operating and capital expenditure budget for the Property for the current calendar year and, to the extent in Seller’s possession or reasonably available to Seller, for the previous three (3) calendar years.

(8) To the extent in Seller’s possession or reasonably available to Seller, copies of receipts for all personal property taxes and ad valorem taxes and special assessments assessed against the Property for the current calendar year and prior three calendar years, statements for Utilities payable for the current calendar year and prior calendar year, and any information in Seller’s possession or reasonably available to Seller regarding current renditions or assessments on the Property or notices relative to change in valuation for ad valorem taxes.

(9) Complete copies of all Warranties and Guaranties in affect as of the date hereof.

(10) Copies of all soil tests, structural engineering tests, masonry tests, percolation tests, water, oil, gas, mineral, radon, formaldehyde, PCB or other environmental tests, audits or reports, market studies and site plans related to the Property in Seller’s possession or reasonably available to Seller.

(11) Parking, structural, mechanical or other engineering reports or studies related to the Property, if any, in Seller’s possession or reasonably available to Seller.

(12) If in Seller’s possession or reasonably available to Seller, copies of any title insurance policies covering the Real Property and any surveys of all or any portion of the Property.

(13) If in Seller’s possession or reasonably available to Seller, copies of any and all health inspection reports with respect to the Property

(14) Photos of the Property in Seller’s possession or reasonably available to Seller.

(15) A complete list of all prepaid expenses with respect to the Property.

9695236v.8

(16) A schedule of pending litigation affecting the Property, if any.

(17) An employee census listing the name, date of hire, date of last pay increase, department, title and rate of pay with respect to each employee at the Property, a payroll run, copies of all pension documents and a schedule of liabilities therefor and copies of all union and collective bargaining agreements affecting the Property.

(18) A schedule setting forth the occupancy and average rates for the Property on a monthly basis for the previous three (3) calendar years and the year to date.

During the Study Period and thereafter until the Closing, Seller shall make available to Purchaser, its agents, auditors, engineers, attorneys, potential lessees and other designees, for inspection and/or copying, copies of all existing architectural and engineering studies, surveys, title insurance policies, zoning and site plan materials, correspondence, environmental audits and reviews, books, records, tax returns, bank statements, financial statements, advance reservations and room bookings and function bookings, rate schedules and any and all other materials or information relating to the Property which are in, or come into, Seller’s possession or control or are otherwise reasonably available to Seller.

(c) Prior to Purchaser’s entry onto the Land or Improvements, Purchaser shall deliver to Seller an insurance policy naming Seller as an additional insured, providing for a minimum of Three Million Dollars ($3,000,000) combined single limit liability coverage and shall maintain such policy in force until termination of the Agreement or Closing. Purchaser shall indemnify and defend Seller against any loss, damage or claim for personal injury or property damage arising out of or relating to acts or omissions upon the Real Property by Purchaser or any agents, contractors or employees of Purchaser, unless arising from the negligent or willful acts of Seller or any of its agents, contractors or employees. Purchaser, at its own expense, shall restore any damage to the Property caused by any of the tests or studies made by Purchaser. This provision shall survive any termination of this Agreement and a closing of the transaction contemplated hereby. Purchaser’s indemnification obligation are not limited by the Liquidated Damages (defined below) applicable under this Agreement nor by the amount of insurance maintained by Purchaser.

(d) Within five (5) business days following the Effective Date, Seller shall deliver to Purchaser a copy of any survey of the Property in Seller’s possession. Within two (2) business days after receipt of Seller’s survey of the Property, Purchaser shall order an update to the survey, or shall obtain its own survey of the Property if no such survey exists (the “ Survey ”). Within two (2) business days following the Effective Date, Purchaser shall order from the Title Company to furnish to Purchaser, at Purchaser’s sole cost and expense, (i) a title insurance commitment bearing an effective date subsequent to the date of this Agreement issued by the Title Company covering the Real Property, binding the Title Company to issue its standard ALTA Owner’s Policy of Title Insurance (without a creditors’ rights exception), in form approved for use in California in favor of Purchaser, showing title to be held currently by Seller in a good, marketable and insurable condition, together with legible copies of all documents identified in such title insurance commitment as exceptions to title certified as true and complete by the Title Company (collectively, the “ Title Commitment ”), and (ii) reports of searches of the Uniform Commercial Code records of Napa County and California (collectively, the “ UCC Reports ”). Prior to the expiration of the Study

9695236v.8

Period, Purchaser shall notify Seller of any matters shown on the Survey or identified in the Title Commitment or the UCC Reports that Purchaser is unwilling to accept (collectively, “ Purchaser’s Objections ”). If any of Purchaser’s Objections consist of delinquent taxes, mortgages, deeds of trust, security agreements, construction or mechanics’ liens, tax liens or other liens or charges in a fixed sum or capable of computation as a fixed sum, then, to that extent, notwithstanding anything herein to the contrary, Seller shall be obligated to pay and discharge (or bond against in a manner sufficient to cause the Title Company to insure over such Purchaser’s Objections) any such Purchaser’s Objections at Closing, and Escrow Agent is authorized to pay and discharge at Closing such Purchaser’s Objections to the extent not paid and discharged or bonded against at Closing. For such purposes, Seller may use all or a portion of the cash to close. Seller shall not be obligated to incur any expenses to cure any non-monetary Purchaser’s Objections unless Seller agrees to cure such non-monetary Purchaser’s Objections as hereinafter provided; provided, however, Seller may withdraw its agreement to cure any such non-monetary Purchaser Objections up to five days prior to Closing. Seller shall notify Purchaser within five (5) days after receipt of notice of Purchaser’s Objections whether Seller agrees to cure such non-monetary Purchaser’s Objections, subject to Seller’s right to timely withdraw such agreement to cure. If Seller notifies Purchaser in writing within such five (5) day period that Seller agrees to cure such non-monetary Purchaser’s Objections, Seller shall correct such non-monetary Purchaser’s Objections on or before the Closing Date to the reasonable satisfaction of Purchaser. If Seller does not notify Purchaser within such five (5) day period of Seller’s agreement to cure such non-monetary Purchaser’s Objections, or if Seller timely withdraws its agreement to cure such matters, Seller shall be deemed to have elected not to cure such non-monetary Purchaser’s Objections, and Purchaser shall elect (1) to waive such non-monetary Purchaser’s Objections without any abatement in the Purchase Price or (2) to terminate this Agreement, in which case the Deposit shall be promptly returned to Purchaser and the parties hereto shall be released from all further obligations hereunder except those which expressly survive a termination of this Agreement. Seller shall not, after the date of this Agreement, subject the Real Property to or permit or suffer to exist any liens, encumbrances, covenants, conditions, restrictions, easements or other title matters or seek any zoning changes or take any other action which may affect or modify the status of title without Purchaser’s prior written consent. All title matters revealed by the Title Commitment, UCC Reports and Survey and not objected to by Purchaser as provided above (other than those rendering title defeasible and delinquent taxes, mortgages, deeds of trust, security agreements and other liens and charges that are to be paid at Closing as provided above) shall be deemed Permitted Title Exceptions. Notwithstanding the foregoing, Purchaser shall not be required to take title to the Real Property subject to any matters which may arise subsequent to the effective date of the Title Commitment, UCC Reports and Survey examined by Purchaser during the Study Period.

ARTICLE III
SELLER’S REPRESENTATIONS AND WARRANTIES

Purchaser shall be purchasing the Property on an “AS IS” and “WHERE IS” basis, subject solely to Seller’s representations and warranties expressly contained in this Agreement. Subject to the foregoing, Seller hereby makes the following representations and warranties with respect to the Property, on which Purchaser is entitled to rely and has relied, except for matters discovered by Purchaser prior to Closing which establish that such reliance is not reasonable:

9695236v.8

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

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

3.3 Non-contravention . The execution and delivery of, and the performance by Seller of its obligations under, this Agreement do not and will not contravene, or constitute a default under, any provision of Applicable Law or regulation, Seller’s organizational documents, or any agreement, judgment, injunction, order, decree or other instrument binding upon Seller or to which the Property is subject, or result in the creation of any lien or other encumbrance on any asset of Seller. There are no outstanding agreements (written or oral) pursuant to which Seller (or any predecessor to or representative of Seller) has agreed to sell or has granted an option or right of first refusal to purchase the Property or any part thereof.

3.4 Title To Real Property . Seller is the sole owner of fee simple absolute title to the Real Property as shown on Exhibit A attached hereto, subject only to the Permitted Exceptions.

3.5 No Special Taxes . Seller has no knowledge of, nor has it received any notice of, any special taxes or assessments relating to the Property or any part thereof or any planned public improvements that may result in a special tax or assessment against the Property.

3.6 Compliance with Existing Laws . To Seller’s knowledge, Seller possesses all Authorizations, each of which is valid and in full force and effect, and no provision, condition or limitation of any of the Authorizations has been breached or violated, subject however, to Exhibit 3.6 attached. Subject to Exhibit 3.6, Seller has no knowledge, nor has it received notice within the past three (3) years, of any existing or threatened violation of any provision of any Applicable Laws including, but not limited to, those of environmental agencies or insurance boards of underwriters with respect to the ownership, operation, use, maintenance or condition of the Property or any part thereof, or requiring any repairs or alterations to the Property other than those that have been made prior to the date hereof. Seller has not received written notice within the past three (3) years, of any existing or threatened violation of any restrictive covenants or deed restrictions affecting the Property which have not been remedied.

3.7 Personal Property . All of the Personal Property being conveyed by Seller hereunder are free and clear of all liens and encumbrances except for those which will be discharged by Seller at Closing, and Seller has good and merchantable title thereto and the right to convey same in accordance with the terms of this Agreement.

9695236v.8

3.8 Operating Agreements/Off-Site Facility Agreements/Leased Property Agreements . There are no management, service, supply or maintenance contracts in effect with respect to the Property other than the Operating Agreements, Leased Property Agreements and Off-Site Facility Agreements. Schedule 2 is a complete list of the Operating Agreements and Leased Property Agreements, and Schedule 5 is a complete list of the Off-Site Facility Agreements. To Seller’s knowledge, Seller has performed all of its obligations under each of the Operating Agreements, Leased Property Agreements and Off-Site Facility Agreements and no fact or circumstance has occurred which, by itself or with the passage of time or the giving of notice or both, would constitute a default under any of the Operating Agreements, Leased Property Agreements or Off-Site Facility Agreements. To Seller’s knowledge, all other parties to the Operating Agreements, Leased Property Agreements and Off-Site Facility Agreements have performed all of their obligations thereunder in all material respects, and are not in default thereunder in any material respect. Seller has received no notice of any intention by any of the parties to the Operating Agreements, Leased Property Agreements or Off-Site Facility Agreements to cancel the same, nor has Seller canceled any of same.

3.9 Condemnation Proceedings; Roadways . Seller has received no notice of any condemnation or eminent domain proceeding pending or threatened against the Property or any part thereof. Seller has no knowledge of any change or proposed change in the route, grade or width of, or otherwise affecting, any street, creek or road adjacent to or serving the Real Property.

3.10 Actions or Proceedings . There is no action, suit or proceeding pending or known to Seller to be threatened against or affecting Seller or the Property in any court, before any arbitrator or before or by any Governmental Authority which (a) could materially and adversely affect the business, financial position or results of operations of Seller or the Property, (b) could materially and adversely affect the ability of Seller to perform its obligations hereunder, or under any document to be delivered pursuant hereto, (c) could create a lien on the Property, any part thereof or any interest therein, (d) concerns any past or present employee of Seller or its managing agent or (e) could otherwise adversely affect the Property, any part thereof or any interest therein or the use, operation, condition or occupancy thereof.

3.11 Labor and Employment Matters . To Seller’s knowledge, Seller is not a party to any oral or written employment contracts or agreements with respect to the Property other than the Employment Agreements. Schedule 3 is a complete list of the particulars of the oral agreements with its employees, which for the purposes of this Agreement constitute the Employment Agreements. To Seller’s knowledge, Seller is not in default under any Employment Agreement. To Seller’s knowledge, there are no labor disputes or organizing activities pending or threatened as to the operation or maintenance of the Property or any part thereof. Seller is not a party to any union or other collective bargaining agreement with employees employed in connection with the ownership, operation or maintenance of the Property. To Seller’s knowledge, the Property has been operated in such a way as to comply with all applicable labor and employment laws, including, but not limited to, laws related to equal employment, plant closings, employment taxes and withholding requirements.

9695236v.8

3.12 Financial Information and Submission Matters . To Seller’s knowledge, all of Seller’s financial information, including, without limitation, all books and records and financial statements (“ Financial Information ”) is correct and complete in all material respects and presents accurately the results of the operations of the Property for the periods indicated. Since the date of the last financial statement included in Seller’s Financial Information, there has not been, to Seller’s knowledge, any material adverse change in the financial condition or in the operations of the Property. Neither Purchaser nor Purchaser’s lessee or its management company shall have any liability under any pension, profit sharing or welfare benefit plan that Seller may have established with respect to the Property or their or its employees. To Seller’s knowledge, all such pension, profit sharing and welfare benefit plans have been fully funded and administered in accordance with Applicable Laws and regulations. To Seller’s knowledge, the Submission Matters delivered to Purchaser are true, accurate and complete copies thereof in Seller’s possession or reasonably available to Seller and that those Submission Matters that have been prepared by Seller are true, accurate and complete in all material respects.

3.13 Bankruptcy . No Act of Bankruptcy has occurred with respect to Seller.

3.14 Hazardous Substances . To Seller’s knowledge, Seller has not engaged in or permitted any operations or activities upon, or any use or occupancy of the Property or any portion thereof, for the purpose of or in any way involving the handling, manufacture, treatment, storage, use, generation, release, discharge, refining, dumping or disposal of any Hazardous Materials on, under, in or about the Property in violation of any Applicable Laws during Seller’s ownership. To Seller’s knowledge, no Hazardous Materials have migrated from or to the Property upon, about, or beneath other properties in violation of any Environmental Requirements. To Seller’s knowledge, during Seller’s ownership the Property has not failed to materially comply with Environmental Requirements. To Seller’s knowledge, Seller has not received any written notice concerning any alleged violation of Environmental Requirements in connection with the Property or any liability for Environmental Damages in connection with the Property for which Seller (or Purchaser after Closing) may be liable. To Seller’s knowledge, there exists no writ, injunction, decree, order or judgment outstanding, nor any lawsuit, claim, proceeding, citation, summons or investigation, pending or threatened, relating to any alleged violation of Environmental Requirements on the Property, or from the suspected presence of Hazardous Materials thereon, or relating to any Environmental Damages. To Seller’s knowledge, no underground or above ground chemical treatment or storage tanks, or gas or oil wells are located on the Property.

3.15 Sales, Use and Occupancy Taxes . All sales, use and occupancy taxes due from Seller and owing with respect to the Property have been paid.

3.16 Personal Property Taxes . All ad valorem personal property taxes due and owing with respect to the Property have been paid.

3.17 Occupancy Agreements . There are no leases, concessions or occupancy agreements in effect with respect to the Real Property, including the Hotel, other than the Occupancy Agreements. A complete list of the Occupancy Agreements (including particulars of two that are oral agreements) is attached hereto as Schedule 4 . Except as specifically provided in the Occupancy Agreements, no tenant or concessionaire is entitled to any rebates, allowances, free rent or rent

9695236v.8

abatement for any period after the Closing of the transaction contemplated hereby except for an apartment at the Hopper Creek Apartments occupied by Janet Swan who is entitled to free rent until replacement housing will be provided to her by Seller at another location within one year after Closing. To the extent that any of the Occupancy Agreements call for security, such security remains on deposit with Seller, and has not been applied towards any payment due under said Occupancy Agreements. Seller has not received any advance rent or advance compensation under any of said Occupancy Agreements in excess of one month. No brokerage commissions or compensation of any kind shall be due in connection with the Occupancy Agreements, and the rents or revenues to be derived therefrom. To Seller’s knowledge, no party is in default under any Occupancy Agreement. To Seller’s knowledge, Seller has performed all obligations required of it under all of the Occupancy Agreements and there remain no unfulfilled obligations of Seller under the Occupancy Agreements. No tenant has given notice to Seller of its intention to institute litigation with respect to any Occupancy Agreement.

3.18 Utilities . To Seller’s knowledge, all Utilities required for the operation of the Property either enter the Property through adjoining streets, or they pass through adjoining land, do so in accordance with valid public easements or irrevocable private easements, and all of said Utilities are installed and operating and all installation and connection charges therefor have been paid in full.

3.19 Leased Property . To Seller’s knowledge, all leases of the Leased Property are in good standing and free from default.

3.20 Advance Bookings . To Seller’s knowledge, the Advance Bookings are true and correct in all material respects.

3.21 Americans With Disabilities Act . To Seller’s knowledge, the Property is in compliance with the Americans With Disabilities Act.

3.22 Zoning . To Seller’s knowledge, the present zoning of the Property permits the current use thereof without special variances. Seller has no knowledge of any fact, proceeding or threatened action or proceeding which could result in a modification or termination of the present zoning of the Property.

3.23 Seller Is Not a “Foreign Person ”. Seller is not a “foreign person” within the meaning of Section 1445 of the Internal Revenue Code, as amended (i.e., Seller is not a foreign corporation, foreign partnership, foreign trust, foreign estate or foreign person as those terms are defined in the Internal Revenue Code and regulations promulgated thereunder).

3.24 Patriot Act . Patriot Act and OFAC Compliance. Seller will not transfer the proceeds obtained as a result of this Agreement to any person or entity listed on the Office of Foreign Assets Control (“OFAC”) list as “Terrorists” and “Specially Designated Nationals and Blocked Persons”, or otherwise be in violation of the International Money Laundering Abatement and Financial Anti¬ Terrorism Act of 2001. Seller is not named, and is not acting, directly or indirectly, for or on behalf of any person, group, entity, or nation named by the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (Public Law 107-56,

9695236v.8

the “Patriot Act”), Executive Order #13224 or any other Executive Order or the United States Treasury Department as a terrorist, “Specially Designated Nation and Blocked Person,” or other banned or blocked person, entity, nation, or transaction pursuant to any law, order, rule or regulation that is enforced or administered by OFAC. Seller is not engaged in this transaction, directly or indirectly on behalf of, or instigating or facilitating this transaction, directly or indirectly on behalf of, any such person, group entity, or nation.

3.25 No Other Property Interests . There are no property interests, buildings, structures or other improvements or personal property that are owned by Seller which are necessary for the operation of the Hotel that are not being conveyed pursuant to this Agreement.

Each of the representations and warranties contained in this Article III and its various subparagraphs are intended for the benefit of Purchaser and may be waived in whole or in part, by Purchaser, but only by an instrument in writing signed by Purchaser. All rights and remedies arising in connection with the untruth or inaccuracy of any such representations and warranties shall survive the Closing of the transaction contemplated hereby for a period of twelve (12) months following the Closing (the “ Survival Period ”), except to the extent that Seller gives Purchaser written notice prior to Closing of the untruth or inaccuracy of any representation or warranty, or Purchaser otherwise obtains actual knowledge prior to Closing of the untruth or inaccuracy of any representation or warranty, and Purchaser nevertheless elects to close this transaction, in which event Purchaser shall be deemed to have waived its objections to the untruth or inaccuracy of such representation(s). Purchaser shall be deemed to have actual knowledge of the untruth or inaccuracy of any representation or warranty only if (i) Purchaser receives written notice from Seller, or (ii) David A. Brooks has actual knowledge of any such untruth or inaccuracy.

The term “to Seller’s knowledge” or similar phrase shall mean solely the actual knowledge of George Altamura, Jr. (the manager of Hotel Yountville, LLC), Altamura Family, LLC and George Altamura, Jr., LLC and is the person associated with Seller most familiar with the Property, and without any duty of inquiry.

Notwithstanding any language to the contrary, Seller’s liability for a breach of its warranties and representations under this Agreement shall not exceed the Aggregate Liability set forth in this Agreement.

ARTICLE IV
PURCHASER’S REPRESENTATIONS AND WARRANTIES

Purchaser acknowledges that it (a) has made or shall make prior to the expiration of the Study Period, as defined below, such investigations of the title, physical condition and zoning matters related to the Property and all matters of interest to Purchaser regarding the operating history of the Property as it deems appropriate, (b) has not relied, is not relying and shall not rely on any statements, representations, or projections, whether oral or written, heretofore or hereafter made by Seller or any of its managers, members, consultants, agents, brokers or employees in connection with the physical condition of the Property (other than those representations and warranties contained in this Agreement, and (c) shall be fully satisfied with the business, operations and conditions of the Property before the expiration of the Study Period. Purchaser acknowledges that Purchaser shall

9695236v.8

be consummating the purchase of the Property based solely upon Purchaser’s inspections and investigations of the Property and that Purchaser shall be purchasing the Property on an “AS IS” and “WHERE IS” basis, subject solely to Seller’s representations and warranties expressly contained in this Agreement. Other than as set forth in this Agreement, Purchaser acknowledges that neither Seller nor its managers, members, consultants, brokers or employees have made any other representations or warranties of any kind on which Purchaser is relying as to any matters concerning the physical condition of the Property, including, but not limited to, the conditions and restrictions affecting the Property, water or water rights, topography, drainage, soil, subsoil of the Property, the utilities serving the Property or any zoning, environmental or building laws, rules or regulations affecting the Property. Purchaser hereby makes the following representations and warranties, upon each of which Purchaser acknowledges and agrees that Seller is entitled to rely and has relied:

4.1 Organization and Power . Purchaser is a limited partnership duly organized, validly existing and in good standing under the laws of the State of Delaware, and has all partnership power and all governmental licenses, authorizations, consents and approvals required to carry on its business as now conducted and to enter into and perform its obligations under this Agreement and any of the other Closing Documents to be executed and delivered on behalf of Purchaser hereunder.

4.2 Authorization and Execution . This Agreement has been duly authorized by all necessary action on the part of Purchaser, has been duly executed and delivered by Purchaser, constitutes the valid and binding agreement of Purchaser and is enforceable in accordance with its terms. The person executing this Agreement on behalf of Purchaser has the authority to do so.

4.3 Non-contravention . The execution and delivery of this Agreement and the performance by Purchaser of its obligations hereunder do not and will not contravene, or constitute a default under, any provisions of Applicable Law or regulation, or any agreement, judgment, injunction, order, decree or other instrument binding upon Purchaser or result in the creation of any lien or other encumbrance on any asset of Purchaser.

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

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

4.6 Patriot Act and OFAC Compliance . Purchaser will not use proceeds to purchase the Property from any person or entity listed on the Office of Foreign Assets Control (“OFAC”) list as “Terrorists” and “Specially Designated Nationals and Blocked Persons”, or otherwise be in violation of the International Money Laundering Abatement and Financial Anti-Terrorism Act of 2001. Purchaser is not named, and is not acting, directly or indirectly, for or on behalf of any

9695236v.8

person, group, entity, or nation named by the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (Public Law 107-56, the “Patriot Act”), Executive Order #13224 or any other Executive Order or the United States Treasury Department as a terrorist, “Specially Designated Nation and Blocked Person,” or other banned or blocked person, entity, nation, or transaction pursuant to any law, order, rule or regulation that is enforced or administered by OFAC. Purchaser is not engaged in this transaction, directly or indirectly on behalf of, or instigating or facilitating this transaction, directly or indirectly on behalf of, any such person, group entity, or nation.

4.7 Sophisticated Real Estate Investor . Purchaser has extensive experience regarding the acquisition, development and operation of hotel properties, and has the capacity and expertise to undertake a comprehensive investigation of the Property within the Study Period and, except for Seller’s Submittals, and Seller’s warranties and representations set forth in this Agreement, Purchaser requires no additional information from Seller to make a competent decision whether or not to acquire the Property.

ARTICLE V
CONDITIONS PRECEDENT

5.1 As to Purchaser’s Obligations . Purchaser’s obligations hereunder are subject to the satisfaction of the following conditions precedent:

(a) Seller’s Deliveries . Seller shall have delivered to or for the benefit of Purchaser, on or before the Closing Date, all of the documents and other information required of Seller pursuant to Sections 7.2 and 7.4 hereof.

(b) Representations, Warranties and Covenants; Obligations of Seller; Certificate . All of Seller’s representations and warranties made in this Agreement shall be true and correct in all material respects as of the date hereof and as of the date of Closing as if then made (or otherwise waived by Purchaser); there shall have been no material adverse change in the business conducted at the Property or the financial results thereof from the date of acceptance of this Agreement and no matter, condition or event shall have occurred which could in Purchaser’s reasonable judgment, materially and adversely affect the operation, value or marketability of the Property or any part thereof; Seller shall have performed in all material respects all of its covenants and other obligations under this Agreement.

(c) Title Insurance . Good and marketable fee simple title to the Real Property shall be insurable as such by the Title Company, at its lowest rates allowed by law, subject only to Permitted Title Exceptions as determined in accordance with Section 2.4 hereof and including, without limitation, all applicable deletions of standard exceptions and endorsements permitted under applicable state law which are customarily required by institutional investors purchasing property comparable to the Property.

(d) Survey . The Survey shall be adequate for the Title Company to delete any exception for general survey matters in the Owner’s Title Policy except for “shortages in area”.

9695236v.8

(e) Title to Property . Seller shall be the sole owner of good and marketable fee simple title to the Real Property and good and marketable fee simple title to the Tangible Personal Property, free and clear of all liens, encumbrances, restrictions, conditions and agreements except for Permitted Title Exceptions. Seller shall not have taken any action or permitted or suffered any action to be taken by others from the date hereof and through and including the date of Closing that would adversely affect the status of title to the Real Property and Tangible Personal Property.

(f) Condition of Improvements . The Improvements and the Tangible Personal Property (including but not limited to the mechanical systems, plumbing, electrical, wiring, appliances, fixtures, heating, air conditioning and ventilating equipment, elevators, boilers, equipment, roofs, structural members and furnaces) shall be in the same condition at Closing as they are as of the date hereof, reasonable wear and tear excepted. Prior to Closing, Seller shall not have materially diminished the quality or quantity of maintenance and upkeep services heretofore provided to the Real Property and the Tangible Personal Property and, except in the ordinary course of business, Seller shall not have diminished the Inventory. Seller shall not have removed or caused or permitted to be removed any part or portion of the Real Property or the Tangible Personal Property without Purchaser’s prior written consent unless the same is replaced, prior to Closing, with a similar item of at least equal suitability, quality and value, free and clear of any lien or security interest.

(g) Taxes . Seller shall provide to Purchaser written evidence from the appropriate taxing authority of the payment of all sales, gross receipts, hotel occupancy and other similar taxes in connection with the operation of the Hotel before Closing. In the event Seller is unable or unwilling to obtain such clearance certificates prior to Closing, Purchaser shall withhold from the Purchase Price, an amount which is 110% of the amount of such taxes due for the year prior to the Closing, less sales taxes already forwarded to the California State Board of Equalization for the current tax period. Notwithstanding the foregoing, Seller shall indemnify Purchaser for the amount by which the full amount of all such sales, gross receipts, hotel occupancy and other similar taxes in connection with the operation of the Hotel before Closing exceeds the amount so withheld by Purchaser. The provisions of this Section 5.1(g) shall survive the Closing.

(h) Estoppels for Covenants, Conditions and Restrictions . On or before the Closing Date, Seller shall provide Purchaser with a fully executed estoppel certificate related to each of the Covenants, Conditions and Restrictions (the “ CCR Estoppel ”) showing no material defaults. The CCR Estoppel must be in a form reasonably satisfactory to Purchaser. To that end, Purchaser shall provide Seller with a recommended form of CCR Estoppel within fifteen (15) days after the delivery of the Survey and Title Commitment to Purchaser.

(i) Third-Party Consents . On or before the Closing Date, Seller shall furnish Purchaser, in form and content reasonably satisfactory to Purchaser, with any and all third party consents (the “ Third Party Consents ”), which are necessary to consummate the transaction contemplated in this Agreement.

(j) Rights of First Refusal . Seller shall provide Purchaser with reasonably satisfactory evidence of the waiver of any and all rights of first refusal or options related to the Property that may have been granted with respect to the Property.

9695236v.8

(k) No Code Violations . There shall be no violations of Applicable Laws with respect to the Property or the Hotel.

Each of the conditions contained in this Section are intended for the benefit of Purchaser and may be waived in whole or in part, by Purchaser, but only by an instrument in writing signed by Purchaser.

5.2 As to Seller’s Obligations . Seller’s obligations hereunder are subject to the satisfaction of the following conditions precedent:

(a) Purchaser’s Deliveries . Purchaser shall have delivered to or for the benefit of Seller, on or before the Closing Date, all of the documents and payments required of Purchaser pursuant to Sections 7.3 and 7.4 hereof.

(b) Representations, Warranties and Covenants; Obligations of Purchaser . All of Purchaser’s representations and warranties made in this Agreement shall be true and correct in all material respects as of the date hereof and as of the date of Closing as if then made and Purchaser shall have performed in all material respects all of its covenants and other obligations under this Agreement.

Each of the conditions contained in this Section are intended for the benefit of Seller and may be waived in whole or in part, by Seller, but only by an instrument in writing signed by Seller.

ARTICLE VI
COVENANTS OF SELLER

To induce Purchaser to enter into this Agreement and to purchase the Property, and to pay the Purchase Price therefor, Seller covenants and agrees to the following:

6.1 Operating Agreements/Leased Property Agreements/Off-Site Facility Agreements . Seller shall not enter into any new management agreement, maintenance or repair contract, supply contract, lease in which it is lessee or other agreements with respect to the Property, nor shall Seller enter into any agreements modifying the Operating Agreements, Leased Property Agreements or Off-Site Facility Agreements, unless (a) any such agreement or modification will not bind Purchaser or the Property after the date of Closing or is subject to termination on not more than thirty (30) days’ notice without penalty, or (b) Seller has obtained Purchaser’s prior written consent to such agreement or modification. Seller agrees to cancel and terminate effective as of the Closing Date, at Seller’s sole cost, expense and liability, any Operating Agreements, Leased Property Agreements or Off-Site Facility Agreements that Purchaser notifies Seller of in writing before the expiration of the Study Period that Purchaser will not assume. Purchaser shall have the right to assume the lease for the storage facility that Seller maintains, on a month to month basis for $1,200.00 per month.

6.2 Warranties and Guaranties . Seller shall not before or after Closing release or modify any Warranties and Guaranties, if any, except with the prior written consent of Purchaser.

9695236v.8

6.3 Insurance . Seller shall pay all premiums on, and shall not cancel or voluntarily allow to expire, any of Seller’s Insurance Policies unless such policy is replaced, without any lapse of coverage, by another policy or policies providing coverage at least as extensive as the policy or policies being replaced.

6.4 Independent Audit . Promptly following the execution of this Agreement, Seller shall provide to Purchaser’s representatives and independent accounting firm access to financial and other information relating to the Property in the possession of or otherwise available to Seller or its affiliates which would be sufficient to enable Purchaser’s representatives and independent accounting firm to prepare audited financial statements for the three (3) calendar years prior to the Closing and during the year in which the Closing occurs in conformity with generally accepted accounting principles and to enable them to prepare such statements, reports or disclosures as Purchaser may deem necessary or advisable. Seller shall also provide to Purchaser’s independent accounting firm a signed representation letter which would be sufficient to enable an independent public accountant to render an opinion on the financial statements related to the Property. Seller shall authorize any attorneys who have represented Seller or its management company in material litigation pertaining to or affecting the Property to respond, at Purchaser’s expense, to inquiries from Purchaser’s representatives and independent accounting firm. For the purposes of this provision, material litigation includes matters with liability exceeding $50,000. If and to the extent Seller’s financial statements pertaining to the Property for any periods during the three (3) calendar years prior to the Closing and during the year in which the Closing occurs have been audited, promptly after the execution of this Agreement Seller shall provide Purchaser with copies of such audited financial statements and shall cooperate with Purchaser’s representatives and independent public accountants to enable them to contact the auditors who prepared such audited financial statements and to obtain, at Purchaser’s expense, a reissuance of such audited financial statements.

6.5 Operation of Property Prior to Closing . Seller covenants and agrees with Purchaser that, between the date of this Agreement and the date of Closing:

(a) Subject to the restrictions contained herein, Seller shall operate the Property in the ordinary course of business and in the same manner in which Seller operated the Property prior to the execution of this Agreement, so as to keep the Property in good condition, reasonable wear and tear excepted, so as to maintain consistent inventory levels, so as to maintain the existing caliber of the Hotel operations conducted at the Property and so as to maintain the reasonable good will of all tenants of the Property and all employees, guests and other customers of the Hotel.

(b) Seller shall maintain its books of account and records in the usual, regular and ordinary manner, in accordance with sound accounting principles applied on a basis consistent with the basis used in keeping its books in prior years.

(c) Seller shall use and operate the Property in compliance with Applicable Laws and the requirements of any mortgage, and any lease, Occupancy Agreement, Operating Agreement and Insurance Policy affecting the Property.

(d) Seller shall cause to be paid prior to delinquency all ad valorem, occupancy and sales taxes due and payable with respect to the Property or the operation of the Hotel.

9695236v.8

(e) Except as otherwise permitted hereby, Seller shall not take any action or fail to take action the result of which would have a material adverse effect on the Property or Purchaser’s ability to continue the operation thereof after the date of Closing in substantially the same manner as presently conducted, or which would cause any of the representations and warranties contained in Article III hereof to be untrue as of Closing in any material respect.

(f) Seller shall not enter into new leases of space at the Hotel.

(g) Seller shall not fail to maintain the Improvements and the Tangible Personal Property (including, but not limited to, the mechanical systems, plumbing, electrical, wiring, appliances, fixtures, heating, air conditioning and ventilating equipment, elevators, boilers, equipment, roofs, structural members and furnaces) in the same condition as they are as of the date hereof, reasonable wear and tear excepted.

(h) Seller shall not diminish the quality or quantity of maintenance and upkeep services heretofore provided to the Real Property and the Tangible Personal Property and Seller shall not permit the Inventory to be diminished other than as a result of the ordinary and necessary operation of the Hotel by Seller.

(i) Seller shall not remove or cause or permit to be removed any part or portion of the Real Property or the Tangible Personal Property without the express written consent of Purchaser unless the same is replaced, prior to Closing, with similar items of at least equal suitability, quality and value, free and clear of any liens or security interests.

(j) Seller shall continue to use reasonable efforts to take guest room reservations and to book functions and meetings and otherwise to promote the business of the Property in generally the same manner as Seller did prior to the execution of this Agreement; and all advance room bookings and reservations and all meetings and function bookings shall be booked at rates, prices and charges heretofore customarily charged by Seller for such purposes, and in accordance with Seller’s published rate schedules. Seller acknowledges that the Purchase Price includes the transfer of Advance Bookings.

(k) Seller shall (1) not enter into any agreements which shall be binding upon Purchaser with respect to the Property or that otherwise cannot be terminated without penalty upon thirty (30) days’ notice, or (2) reduce or cause to be reduced any room rents or any other charges over which Seller has operational control.

(l) Seller shall promptly deliver to Purchaser upon Purchaser’s request such reports showing the revenue and expenses of the Hotel and all departments thereof, together with such periodic information with respect to room reservations and other bookings, as Seller customarily keeps or receives internally for its own use.

(m) Seller (1) shall not enter into any new Employment Agreements that are not terminable at will without the express written consent of Purchaser, and (2) with respect to those employees listed on Schedule 6 attached hereto, shall not change, modify, extend, renew or terminate

9695236v.8

any Employment Agreement in effect as of the date hereof which would be binding on Purchaser with respect to the Property without the express written consent of Purchaser.

(n) Seller shall promptly advise Purchaser of any litigation, arbitration or administrative hearing concerning or affecting the Property of which Seller obtains actual knowledge.

(o) Seller shall not modify or release any Warranties or Guaranties applicable to the Property.

(p) Seller shall not grant any encumbrances on the Property or contract for any construction or service for the Property which may impose any mechanics’ or materialmen’s lien on the Property.

(q) Seller shall not agree to make any changes to the Parking Agreement without Purchaser’s consent, which consent shall be in Purchaser’s sole and absolute discretion.

6.6 Marketing Restriction . At the expiration of the Study Period, and provided that Purchaser has not then terminated this Agreement, Seller shall (i) cease marketing the Property for sale, (ii) cease conducting discussions or negotiations with other potential purchasers of the Property and (iii) not accept backup offers.

6.7 Employees and Continuation of Seller’s Group Health Plans . Payment of all costs and expenses associated with accrued but unpaid salary, earned but unpaid vacation pay, accrued but unearned vacation pay, pension and welfare benefits, the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“ COBRA ”) benefits, employee fringe benefits, employee termination payments or any other employee benefits due to Seller’s employees up to the Closing Date shall be the sole responsibility and obligation of and shall be paid promptly by Seller. Seller shall indemnify and defend Purchaser and/or its lessee or management company, from and against any and all claims, causes of action, proceedings, judgments, damages, penalties and liabilities made, assessed or rendered against Purchaser and/or its lessee or management company and any costs and expenses (including attorneys’ fees and disbursements) incurred by Purchaser and/or its lessee or management company with respect to claims, causes of action, judgments, damages, penalties and liabilities asserted by such employees arising out of the failure of Seller to comply with the provisions of this Section 6.7 . This indemnification shall be separate from and in addition to the indemnification given by Seller to Purchaser in Article IX below.

6.8 Rights of First Refusal and Options . Seller shall provide Purchaser with reasonably satisfactory evidence of the waiver of any and all rights of first refusal or options related to the Property that may have been granted to any party.

6.9 Fitness Center . A Hotel Fitness Center is in the process of being constructed (the “ Construction ”). The plans for the work are attached hereto as Exhibit 6.9 . Seller shall complete the Construction on or before Closing in a good and workmanlike manner, fully paid for and lien free (the Fitness Center constitutes solely the structure designated on the plans, and not any of the equipment and apparatus that may be installed after completion of the Fitness Center). If the

9695236v.8

Construction is not complete as aforesaid by Closing, Seller shall continue construction of the Fitness Center with Seller's own employees, contractors or subcontractors (so long as such employees, contractors and subcontractors are not Hotel employees); shall indemnify Purchaser from any and all claims, losses and damages that may arise out of such construction activity, and shall provide an insurance policy with combined single limits of $3,000,000 naming Purchaser as an additional insured. Seller shall diligently proceed with such construction, but shall not be responsible for any delays in completion resulting from factors beyond its control. If such Construction is not complete as of one hundred twenty (120) days after Closing, Purchaser may elect to complete the Construction and reimburse itself for the cost thereof from the Holdback Amount.

ARTICLE VII
CLOSING

7.1 Closing . The Closing shall occur on a business day designated by Purchaser, with at least five (5) days written notice to Seller (or if such written notice is not given, no later than fifteen (15) days following the expiration of the Study Period). As more particularly described below, at the Closing the parties hereto will execute all of the documents required to be delivered in connection with the transactions contemplated hereby (the “ Closing Documents ”), (i) deliver the same to Escrow Agent, and (ii) take all other action required to be taken in respect of the transactions contemplated hereby. The Closing will occur through escrow at the offices of Escrow Agent. At the Closing, Purchaser shall deliver the balance of the Purchase Price to Escrow Agent, Escrow Agent shall update the title to the Property and, provided there has been no change in the status of title as reflected in the Title Commitment and Survey, Escrow Agent shall record the Deed, release and date, where appropriate, the Closing Documents in accordance with the instructions of Seller and Purchaser and shall send, by wire transfer, all sums owing to Seller hereunder to Seller. As provided herein, the parties hereto will agree upon adjustments and prorations to certain items which cannot be exactly determined at the Closing and will make the appropriate adjustments with respect thereto. Possession of the Property shall be delivered to Purchaser at the Closing, subject only to Permitted Title Exceptions and the rights of tenants under the Occupancy Agreements and guests in possession.

7.2 Seller’s Deliveries . At the Closing, Seller shall deliver to Escrow Agent all of the following instruments, each of which shall have been duly executed and, where applicable, acknowledged and/or sworn on behalf of Seller and shall be dated as of the Closing Date:

(a) The Deed (subject to such changes as are required by Applicable Law, local recording requirements and/or customary real estate practices in the jurisdiction(s) in which the Property is located, provided, the substantive terms and provisions of the Deed attached hereto are not modified as a result of any such changes).

(b) The Bill of Sale.

(d) The Assignment and Assumption Agreement.

9695236v.8

(e) Off-Site Facility Estoppels, CCR Estoppels, and All Third Party Consents.

(f) The Post-Closing Escrow Agreement.

(g) Certificates from the applicable State taxing authority and local taxing authorities or other appropriate verification demonstrating that all occupancy, sales and ad valorem real and personal property taxes due and payable for the Property have been paid and, if any such taxes have not been paid, the amount due and payable as of the Closing Date.

(h) Certificate(s)/Registration of Title for any vehicle owned by Seller and used in connection with the Property that are included in the purchase.

(i) Such agreements, affidavits or other documents as may be required by the Title Company to issue the Owner’s Title Policy subject only to the Permitted Title Exceptions and to eliminate such standard exceptions and to issue such endorsements thereto which may be eliminated and issued under applicable State law and which are customarily required by institutional investors purchasing property comparable to the Property.

(j) The FIRPTA Certificate.

(k) An assignment of each of the Leased Property Agreements to Purchaser and/or its property manager, lessee or other designee (as Purchaser shall specify), together with (1) the written consent of the lessors of such Leased Property Agreements, if required by such Leased Property Agreements, and (2) executed originals of all such Leased Property Agreements in Seller’s possession or reasonably available to Seller. If any Leased Property is leased pursuant to a Leased Property Agreements which is a capital lease, in accordance with generally accepted accounting principles, Seller shall cancel such capital lease at its expense and convey good and marketable title to such property (which shall constitute Tangible Personal Property hereunder) to Purchaser and/or its property manager, lessee or other designee (as Purchaser shall specify) free from any lien or encumbrance pursuant to the Bill of Sale – Personal Property.

(l) Written notice executed by Seller notifying all interested parties, including, without limitation, all tenants under any Occupancy Agreements, that the Property has been conveyed to Purchaser and directing that all payments, inquiries and the like be forwarded to Purchaser at the address to be provided by Purchaser.

(m) Any other document or instrument reasonably necessary or required to consummate the transactions contemplated by this Agreement.

At the Closing, Seller shall deliver to Purchaser or make available to Purchaser at the Property the following documents:

(a) All original Warranties and Guaranties in Seller’s possession or reasonably available to Seller.

(b) If Purchaser is assuming Seller’s obligations under any or all of the Operating Agreements, Off-Site Facility Agreements or Covenants, Conditions and Restrictions, to the extent

9695236v.8

in Seller’s possession or reasonably available to Seller, copies of such agreements, duly assigned to Purchaser and with such assignment acknowledged and approved by the other parties to such Operating Agreements, Off-Site Facility Agreements or Covenants, Conditions and Restrictions to the extent required by such Operating Agreements, Off-Site Facility Agreements or Covenants, Conditions and Restrictions.

(c) To the extent in Seller’s possession or reasonably available to Seller, originals of the following items (copies of which were delivered by Seller to Purchaser with the Submission Matters): (1) complete sets of all architectural, mechanical, structural and/or electrical plans and specifications used in connection with the construction of or alterations or repairs to the Property; and (2) as-built plans and specifications for the Property.

(d) Copies of all agreements, leases, concession agreements and other instruments affecting the Property and the Hotel and/or restaurant business conducted thereon.

(e) All current real estate and personal property tax bills in Seller’s possession or under its control.

(f) Access to guest registration cards, guest transcripts, guest histories, and all other available guest information for eighteen (18) months on-site, and up to seven years at Seller’s Off-Site Facility.

(g) An updated schedule of employees, showing salaries and duties, with a statement of the length of service of each such employee, brought current to a date not more than forty-eight (48) hours prior to the Closing.

(h) A complete list of all Advance Bookings, in reasonable detail so as to enable Purchaser to honor Seller’s commitments in that regard.

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

(j) A list of all vendors and suppliers servicing the Hotel.

(k) All books, records, operating reports, appraisal reports, files and other materials in Seller’s possession or control which are necessary in Purchaser’s discretion to maintain continuity of operation of the Property.

(l) Copies of all Occupancy Agreements and, to the extent available, Authorizations transferred or assigned to Purchaser at Closing as required hereunder.

7.3 Purchaser’s Deliveries . At the Closing, Purchaser shall deliver to Escrow Agent all of the following, each of which, if required, shall have been duly executed and, where applicable, acknowledged and/or sworn on behalf of Purchaser and shall be dated as of the Closing Date:

(a) The portion of the Purchase Price described in Section 2.2 hereof.

9695236v.8

(b) The Assignment and Assumption Agreement.

(d) Any other document or instrument reasonably necessary or required to consummate the transactions contemplated by this Agreement.

7.4 Mutual Deliveries . At the Closing, Purchaser and Seller shall mutually execute and deliver each to the other:

(a) A final closing statement reflecting the Purchase Price and the adjustments and prorations required hereunder and the allocation of income and expenses required hereby.

Such other and further documents, papers and instruments as may be reasonably required by the parties hereto or their respective counsel.

7.5 Closing Costs . Except as is explicitly provided in this Agreement, each party hereto shall pay its own legal fees and expenses. The escrow fees and filing fees shall be borne solely by Purchaser. Documentary transfer taxes and recording fees shall be paid by Seller. Seller shall pay sales taxes attributable to its operations on or before Closing; Purchaser shall pay all sales taxes for operations after Closing, as well as all sales taxes assessed by the California State Board of Equalization for the value of the tangible personal property acquired by Purchaser. Seller shall pay for the costs associated with the releases of any deeds of trust, mortgages and other financing encumbering the Property and for any costs associated with any corrective instruments. Purchaser shall pay all costs associated with the Survey. Purchaser shall pay all costs for title search and the title insurance premium for the issuance of the Title Policy. Purchaser shall pay the cost of the UCC Searches. All endorsements to the Title Policy shall be paid by Purchaser. All other costs (except any costs incurred by Seller for its own account) which are necessary to carry out the transactions contemplated hereunder shall be allocated between Purchaser and Seller in accordance with Napa County local custom.

7.6 Revenue and Expense Allocations . All revenues and expenses with respect to the Property, and applicable to the period of time before and after Closing, determined in accordance with sound accounting principles consistently applied, shall be allocated between Seller and Purchaser as provided herein. Seller shall be entitled to all revenue and shall be responsible for all expenses for the period of time up to but not including the date of Closing, and Purchaser shall be entitled to all revenue and shall be responsible for all expenses for the period of time from, after and including the date of Closing (provided that housekeeping costs and the Rooms Ledger for the date of Closing shall be shared equally between Purchaser and Seller). Such adjustments shall be shown on the closing statements (with such supporting documentation as the parties hereto may require being attached as exhibits to the closing statements) and shall increase or decrease (as the case may be) the cash amount payable by Purchaser pursuant to Section 2.2 hereof. Without limiting the generality of the foregoing, the following items of revenue and expense shall be allocated and prorated, as the case may be, at Closing:

(a) Current rents.

9695236v.8

(b) Real estate and personal property taxes.

(c) Revenue and expenses under the Operating Agreements, Off-Site Facility Agreements and Covenants, Conditions and Restrictions to be assigned to and assumed by Purchaser.

(d) Utility charges (including, but not limited to, charges for water, sewer and electricity).

(e) Municipal or other governmental improvement liens, which shall be paid by Seller at Closing where the work has physically commenced, and which shall be assumed by Purchaser at Closing where the work has been authorized, but not physically commenced.

(f) Insurance premiums, to the extent required hereby.

(g) License and permit fees, where transferable.

(h) All other revenues and expenses of the Property, including, but not limited to, such things as restaurant, bar and meeting room income and expenses and the like.

(i) The Rooms Ledger and housekeeping costs (i.e. the hourly wages paid for housekeeping staff employed during such day) for the date of Closing (to be apportioned equally between Seller and Purchaser).

(j) Such other items as are usually and customarily prorated between purchasers and sellers of hotel properties in the area where the Property is located.

Purchaser shall receive a credit against the Purchase Price for the total of (i) prepaid rents, (ii) prepaid room receipts and deposits, function receipts and deposits and other reservation receipts and deposits, (iii) unforfeited security deposits together with interest thereon held by Seller under Occupancy Agreements, and (iv) the value of any complimentary rooms (based upon the “rack” rate for each room) and any complimentary food or beverages (based upon the advertised rate for each food and beverage) provided by Seller from and after 6:00 a.m. on the Closing Date (the parties acknowledge that Seller’s charitable contributions, to be identified and provided to Purchaser during the Study Period restrict occupancy generally to mid-week stays and the rack rate applicable for such stay shall be based on such midweek rack rate). At Closing, Seller shall sell to Purchaser in connection with the Hotel, and Purchaser shall purchase from Seller, at face value: (i) all petty cash funds in the hands of the Seller in connection with the Hotel guest operations at the Property; and (ii) the so-called “guest ledger” as mutually approved by Purchaser and Seller for the Hotel of guest accounts receivable payable to the Hotel as of the check-out time for the Hotel on the Closing Date (based on guests and customers then using the Hotel) both (1) in occupancy from the preceding night through check out time the morning of the Closing Date, and (2) previously in occupancy prior to check out time on the Closing Date; provided, however, that the term “guest ledger” shall not include any accounts receivable which have been or are to be paid by any means other than a credit card except for corporate groups whose creditworthiness have been reasonably approved by Purchaser during the Study Period. Purchaser shall not be obligated to purchase such non-credit card accounts receivable. For purposes of this Agreement, transfer or sale at face value shall have

9695236v.8

the following meanings: (i) for petty cash, an amount equal to the total of all petty cash funds on hand and transferred to Purchaser; and (ii) for the guest ledger, the total of all credit card accounts receivable as shown on the records of the Hotel, less actual collection costs (i.e., fees retained by credit card companies), less accounting charges for rooms furnished on a gratuity or complimentary basis to any hotel staff or as an accommodation to other parties and less Purchaser’s one-half (½) share of Rooms Ledger. The purchase price of said petty cash fund and guest ledger, as determined above, shall be paid to Seller at Closing by a credit to Seller in the computation of the adjustments and prorations on the Closing Date.

Seller shall pay or cause to be paid the currently due, but not delinquent, portion of all real estate taxes and special assessments for the Property due and payable in, or deferred with respect to the years prior to, the year in which the Closing occurs and Seller or Purchaser, as the case may be, shall receive a credit at Closing based on the pro rata portion of the real estate taxes based on the Closing Date. All special assessments pending, levied or due and payable on or prior to the Closing Date shall be paid by Seller on or before the Closing Date. All subdivision and platting costs and expenses heretofore incurred by Seller, including, without limitation, all subdivision exactions, fees and costs and all dedication of land for parks and other public uses or payment of fees in lieu thereof, shall be paid by Seller on or prior to the Closing Date.

Seller shall be required to pay or cause to be paid on or before the Closing Date any accrued or earned wages, vacation pay, sick leave, bonuses, pension, profit-sharing and welfare benefits and other compensation and fringe benefits of all persons employed at the Property on or before the Closing Date, including any employment taxes or other fees or assessments attributable thereto.

Seller shall be required to pay all sales, occupancy and similar taxes and like impositions currently through the date of Closing and deliver copies of paid checks and applicable statements to Purchaser.

Seller shall be responsible for payments of amounts owing to third parties in respect of inventory and supplies ordered by Seller in respect of the Hotel prior to the Closing Date. Notwithstanding the foregoing, special purchases needed for future Advance Bookings which have been approved by Purchaser “in writing” and which relate to the period from and after Closing shall be the responsibility of Purchaser.

Purchaser shall not be obligated to collect any delinquent rents, accounts receivable or revenues accrued prior to the Closing Date for Seller, but if Purchaser collects same, such amounts shall be promptly remitted to Seller in the form received.

If accurate allocations cannot be made at Closing because current bills are not obtainable (as, for example, in the case of utility bills and/or real estate or personal property taxes), the parties shall allocate such revenue or expenses at Closing on the best available information, subject to adjustment upon receipt of the final bill or other evidence of the applicable revenue or expense. The obligation to make the adjustment shall survive the closing of the transaction contemplated by this Agreement. Any revenue received or expense incurred by Seller or Purchaser with respect to the Property after the date of Closing shall be promptly allocated in the manner described herein and the parties shall promptly pay or reimburse any amount due. The proration provisions of this

9695236v.8

Agreement shall survive the closing of the transaction contemplated hereby for a period of twelve (12) months.

7.7 Acquisition and Transfer of Inventory and Personal Property . As part of the Property and included in the Purchase Price, Seller agrees to transfer to Purchaser or its lessee, property manager or other designee (as Purchaser shall specify) all inventories of food and beverage and unused reserve stock (including in-use operating supplies) of linens, towels, paper goods, soaps, cleaning supplies, china, glassware, silverware and miscellaneous guest supplies, engineering cleaning supplies and the like (collectively, the “ Inventory ”) and Personal Property.

ARTICLE VIII
GENERAL PROVISIONS

8.1 Condemnation . In the event of any actual or threatened taking, pursuant to the power of eminent domain, of all or a portion of the Real Property valued at $250,000 or more, or any proposed sale in lieu thereof, Seller shall give written notice thereof to Purchaser promptly after Seller learns or receives notice thereof. If all or any part of the Real Property is, or is to be, so condemned or sold, Purchaser shall have the right to terminate this Agreement pursuant to Section 9.3 hereof. If Purchaser elects not to terminate this Agreement, all proceeds, awards and other payments arising out of such condemnation or sale (actual or threatened) shall be paid or assigned, as applicable, to Purchaser at Closing. Seller shall not settle or compromise any such proceeding without Purchaser’s written consent. If Purchaser elects to terminate this Agreement by giving Seller written notice thereof prior to the Closing, the Deposit shall be promptly returned to Purchaser and all rights and obligations of Seller and Purchaser hereunder (except those set forth herein which expressly survive a termination of this Agreement) shall terminate immediately. If the loss is less than $250,000, Purchaser shall be obligated to proceed to Closing and all condemnation awards received by Seller shall be delivered to Purchaser and if no proceeds have been delivered to Seller, all awards and proceeds shall be assigned to Purchaser.

8.2 Risk of Loss . The risk of any loss or damage to the Property prior to the recordation of the Deed shall remain upon Seller. If any such loss or damage resulting in a cost of repair or restoration exceeding $250,000 occurs prior to Closing, Purchaser shall have the right to terminate this Agreement pursuant to Section 9.3 hereof. If Purchaser elects not to terminate this Agreement, all insurance proceeds and rights to proceeds arising out of such loss or damage shall be paid or assigned, as applicable, to Purchaser at Closing and Purchaser shall receive as a credit against the Purchase Price the amount of any deductibles under the policies of insurance covering such loss or damage. If Purchaser elects to terminate this Agreement by giving Seller written notice thereof prior to the Closing, the Deposit shall be promptly returned to Purchaser and all rights and obligations of Seller and Purchaser hereunder (except those set forth herein which expressly survive a termination of this Agreement) shall terminate immediately. If the cost to repair is less than $250,000, Purchaser shall proceed to Closing, the insurance proceeds received or to be received by Seller shall be provided to or assigned to Purchaser, Purchaser shall receive a credit at Closing in the amount of Seller’s insurance deductible and a credit for the amount of any uninsured loss.

8.3 Broker . The parties acknowledge that Broker has been the procuring cause of this Agreement. It shall be the obligation of Seller to pay Broker its commission, when, as and if the

9695236v.8

transaction contemplated hereby actually closes, in accordance with a separate agreement between the Broker and Seller. There is no other real estate broker involved in this transaction. Purchaser warrants and represents to Seller that Purchaser has not dealt with any other real estate broker in connection with this transaction, nor has Purchaser been introduced to the Property or to Seller by any other real estate broker, and Purchaser shall indemnify Seller and hold Seller harmless from and against any claims, suits, demands or liabilities of any kind or nature whatsoever arising on account of the claim of any other person, firm or corporation to a real estate brokerage commission or a finder’s fee as a result of having dealt with Purchaser, or as a result of having introduced Purchaser to Seller or to the Property. In like manner, Seller warrants and represents to Purchaser that Seller has not dealt with any other real estate broker in connection with this transaction, nor has Seller been introduced to Purchaser by any other real estate broker, and Seller shall indemnify Purchaser and save and hold Purchaser harmless from and against any claims, suits, demands or liabilities of any kind or nature whatsoever arising on account of the claim of any person, firm or corporation to a real estate brokerage commission or a finder’s fee as a result of having dealt with Seller in connection with this transaction. This provision shall survive any termination of this Agreement and a closing of the transaction contemplated hereby.

8.4 Bulk Sale . It shall be the obligation of Seller to comply with any bulk sale requirements, statutes, laws, ordinances and regulations promulgated with respect thereto, if any, in the State in which the Property is located, or in or by any governmental entity having jurisdiction with respect thereto, and to provide proof of such compliance or proof that no such compliance is required, to Purchaser, at or prior to Closing. In any event, Seller shall indemnify Purchaser and save and hold Purchaser harmless from and against any claims, suits, demands, liabilities or obligations of any kind or nature whatsoever, including all costs of defending same, and reasonable attorneys’ fees paid or incurred in connection therewith, arising out of or relating to any claim made by any third party or any liability asserted by any third party that any applicable bulk sales law or like statute has not been complied with. The provisions of this Section shall survive the Closing of the transaction contemplated hereby.

8.5 Confidentiality . Except as hereinafter provided, from and after the execution of this Agreement, Purchaser and Seller shall keep the terms, conditions and provisions of this Agreement confidential and neither shall make any public announcements hereof unless the other first approves of same in writing, nor shall either disclose the terms, conditions and provisions hereof, except to persons who “need to know,” such as their respective officers, directors, employees, attorneys, accountants, engineers, surveyors, consultants, financiers, partners, investors, potential lessees and bankers and such other third parties whose assistance is required in connection with the consummation of this transaction. Notwithstanding the foregoing, it is acknowledged that Purchaser is, or is an affiliate of, a real estate investment trust (the “ REIT ”), and the REIT has and will seek to sell shares to the general public; consequently, Purchaser shall have the right to disclose any information regarding the transaction contemplated by this Agreement solely if disclosure is required by law or otherwise been determined to be necessary or appropriate by Purchaser or Purchaser’s attorneys to satisfy disclosure and reporting obligations of Purchaser or its affiliates. On or at any time following the Effective Date, Purchaser may make a press release and file with the United States Securities Exchange Commission information regarding the transaction contemplated by this Agreement. Seller and Purchaser and their representatives are cautioned that United States securities

9695236v.8

laws restrict the purchase and sale of securities by anyone who possesses non-public information about the issue of such securities. Accordingly, neither Seller nor any of its Affiliates nor its representatives may buy or sell any of the securities of the Purchaser or any of its Affiliates so long as any of them is in possession of any material non-public information about the Purchaser or any of its Affiliates, including information contained in or derived from confidential information.

8.6 Seller’s Accounts Receivable . It is expressly agreed by and between Purchaser and Seller that Seller is not hereby agreeing to sell to Purchaser, and Purchaser is not hereby agreeing to purchase from Seller, any of Seller’s accounts receivable. All of Seller’s accounts receivable shall be and remain the property of Seller, subsequent to the Closing of the transaction contemplated hereby. At the Closing, Seller shall prepare a list of its outstanding accounts receivable as of midnight on the date prior to the Closing, specifying the name of each account and the amount due to Seller. Purchaser shall hold any funds received by Purchaser explicitly designated as payment of such accounts receivable, in trust, if Purchaser actually collects any such amounts, and shall pay the monies collected in respect thereof to Seller at the end of each calendar month, accompanied by a statement showing the amount collected on each such account. Other than the foregoing, Purchaser shall have no obligation with respect to any such account, and Purchaser shall not be required to take any legal proceeding or action to effect collection on behalf of Seller. It is generally the intention of Purchaser and Seller that although all of Seller’s accounts receivable shall be and remain the property of Seller, still, if any such accounts are paid to Purchaser, then Purchaser shall collect same and remit to Seller in the manner above provided. Nothing herein contained shall be construed as requiring Purchaser to remit to Seller any funds collected by Purchaser on account of Purchaser’s accounts receivable generated from Hotel operations, even if the person or entity paying same is also indebted to Seller. Other than eviction proceedings, Seller may bring any legal action to enforce collection of payment of any accounts receivable against any current tenant of the Property or other third party in a contractual or business relationship with the Property as of the Closing Date.

ARTICLE IX
LIABILITY OF PURCHASER; INDEMNIFICATION
BY SELLER; DEFAULT; TERMINATION RIGHTS

9.1 Liability of Purchaser . Except for obligations expressly assumed or agreed to be assumed by Purchaser hereunder, Purchaser is not assuming any obligations of Seller or any liability for claims arising out of any act, omission or occurrence which occurs, accrues or arises prior to the Closing Date, and subject to the Aggregate Liability (as limited by its definition) Seller hereby indemnifies and holds Purchaser harmless from and against any and all claims, costs, penalties, damages, losses, liabilities and expenses (including reasonable attorneys’ fees) that may at any time be incurred by Purchaser as a result of (1) obligations of Seller not expressly assumed or agreed to be assumed by Purchaser hereunder, or (2) other than with respect to the physical or environmental conditions of the Property, acts, omissions or occurrences which occur, accrue or arise prior to the Closing Date. The provisions of this Section shall survive the Closing of the transaction contemplated hereby.

9.2 Indemnification by Seller . Subject to the Aggregate Liability (as limited by its definition) Seller hereby indemnifies and holds Purchaser harmless from and against any and all

9695236v.8

claims, costs, penalties, damages, losses, liabilities and expenses (including reasonable attorneys’ fees) that may at any time be incurred by Purchaser, whether before or after Closing, as a result of any inaccuracy or breach by Seller of any of its representations, warranties, covenants or obligations set forth herein or in any other document delivered by Seller pursuant hereto except for any breach or inaccuracy of any representation or warranty as to which Seller has given Purchaser written notice prior to Closing of the untruth or inaccuracy or of which Purchaser otherwise had actual knowledge prior to the Closing and nevertheless elected to consummate the Closing; provided, however, the foregoing knowledge limitation on Seller’s indemnity shall not limit Purchaser’s remedy described in Section 9.3(a)(ii) hereof. The provisions of this Section shall survive the Closing of the transaction contemplated hereby.

9.3 Default by Seller/Failure of Conditions Precedent . If any condition set forth herein for the benefit of Purchaser cannot or will not be satisfied prior to Closing, or upon the occurrence of any other event that would entitle Purchaser to terminate this Agreement and its obligations hereunder, and if Seller fails to cure any such matter or satisfy that condition within ten (10) business days after notice thereof from Purchaser (or such other time period as may be explicitly provided for herein), Purchaser, at its option, may elect (a) to terminate this Agreement, in which event (i) the Deposit shall be promptly returned to Purchaser, (ii) if the condition which has not been satisfied is a breach of a representation, warranty or covenant, then Seller shall be obligated upon demand to reimburse Purchaser for Purchaser’s actual out-of-pocket inspection, financing and other costs related to Purchaser’s entering into this Agreement, inspecting the Property and preparing for a Closing of the transaction contemplated hereby, including, without limitation, Purchaser’s attorneys’ fees incurred in connection with the preparation, negotiation and execution of this Agreement and in connection with Purchaser’s due diligence review, audits and preparation for a Closing; and (iii) all other rights and obligations of Seller and Purchaser hereunder (except those set forth herein which expressly survive a termination of this Agreement) shall terminate immediately; or (b) elect to proceed to Closing. If Purchaser elects to proceed to Closing and there is either a misrepresentation or breach of a warranty by Seller (other than a breach of a representation or warranty of which Purchaser had actual knowledge prior to the Closing and nevertheless elected to consummate the Closing) or the breach of a covenant by Seller or a failure by Seller to perform its obligations hereunder, Purchaser shall retain all remedies accruing as a result thereof, including, but not limited to the remedy of specific performance of Seller’s covenants and obligations and the remedy of the recovery of all reasonable damages resulting from Seller’s breach of warranty or covenant. Should Purchaser elect to terminate the transaction the total sum payable by Seller to Purchaser shall not exceed Five Hundred Thousand Dollars ($500,000) and shall be reasonably documented. If Purchaser elects to proceed to Closing, Purchaser shall automatically have released Seller from any further liability for any such known breach of warranty or representation.

9.4 Default by Purchaser/Failure of Conditions Precedent . If any condition set forth herein for the benefit of Seller (other than a default by Purchaser) cannot or will not be satisfied prior to Closing, and if Purchaser fails to satisfy that condition within ten (10) business days after notice thereof from Seller (or such other time period as may be explicitly provided for herein), Seller may, at its option, elect either (a) to terminate this Agreement in which event the Deposit shall be promptly returned to Purchaser and the parties hereto shall be released from all further obligations hereunder except those which expressly survive a termination of this Agreement, or

9695236v.8

(b) to waive its right to terminate, and instead, to proceed to Closing. If, prior to Closing, Purchaser defaults in performing any of its obligations under this Agreement (including its obligation to purchase the Property), and Purchaser fails to cure any such default within ten (10) business days after notice thereof from Seller, then Seller’s sole remedy for such default shall be to terminate this Agreement and retain the Deposit. Seller and Purchaser agree that, in the event of such a default, the damages that Seller would sustain as a result thereof would be difficult if not impossible to ascertain. Therefore, Seller and Purchaser agree that, Seller shall retain the Deposit as full and complete liquidated damages and as Seller’s sole remedy; provided, however, the indemnity obligations imposed on Purchaser under the provisions of Section 2.4(c) shall not be subject to such liquidated damages remedy.

LIQUIDATED DAMAGES . NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THIS AGREEMENT, IF THE SALE TO PURCHASER IS NOT CONSUMMATED AS A RESULT OF PURCHASER’S DEFAULT UNDER THIS AGREEMENT, SELLER SHALL BE ENTITLED TO RETAIN THE DEPOSIT AS LIQUIDATED DAMAGES FOR PURCHASER’S DEFAULT. THE PARTIES ALSO AGREE THAT IT WOULD BE IMPRACTICABLE AND EXTREMELY DIFFICULT TO ASCERTAIN THE ACTUAL DAMAGES SUFFERED BY SELLER AS A RESULT OF PURCHASER’S FAILURE TO COMPLETE THE PURCHASE PURSUANT TO THIS AGREEMENT AND THAT, UNDER THE CIRCUMSTANCES EXISTING AS OF THE EFFECTIVE DATE, THE RETENTION OF THE DEPOSITS AS LIQUIDATED DAMAGES PROVIDED FOR IN THIS SECTION REPRESENTS A REASONABLE ESTIMATE OF THE DAMAGES WHICH SELLER WILL INCUR AS A RESULT OF SUCH FAILURE; PROVIDED, HOWEVER, THAT THIS PROVISION SHALL NOT LIMIT SELLER’S RIGHTS TO RECEIVE REIMBURSEMENT FOR ATTORNEYS’ FEES, NOR WAIVE OR AFFECT SELLER’S RIGHTS AND PURCHASER’S INDEMNITY OBLIGATIONS UNDER OTHER SECTIONS OF THIS AGREEMENT. THE PARTIES ACKNOWLEDGE THAT THE PAYMENT OF SUCH LIQUIDATED DAMAGES IS NOT INTENDED AS A FORFEITURE OR PENALTY WITHIN THE MEANING OF CALIFORNIA CIVIL CODE SECTION 3275 OR 3369, BUT IS INTENDED TO CONSTITUTE LIQUIDATED DAMAGES TO SELLER PURSUANT TO CALIFORNIA CIVIL CODE SECTIONS 1671, 1676, AND 1677. THE PARTIES HAVE SET FORTH THEIR INITIALS BELOW TO INDICATE THEIR AGREEMENT WITH THE LIQUIDATED DAMAGES PROVISION CONTAINED IN THIS SECTION.

SELLER: _______________________ PURCHASER: __________________

9.5 Costs and Attorneys’ Fees . In the event of any litigation or dispute between the parties arising out of or in any way connected with this Agreement, resulting in any litigation, then the prevailing party in such litigation shall be entitled to recover its costs of prosecuting and/or defending same, including, without limitation, reasonable attorneys’ fees at trial and all appellate levels. The provisions of this Section 9.5 shall survive the Closing of the transaction contemplated hereby.

9695236v.8

9.6 Limitation of Liability . Notwithstanding anything herein to the contrary, except in the case of fraud by either party, the liability of each party hereto resulting from the breach or default by either party shall be limited to actual damages incurred by the injured party (subject to the Aggregate Liability as limited by its definition) and except in the case of fraud by either party, the parties hereto hereby waive their rights to recover from the other party punitive, consequential, exemplary, and speculative damages. The provisions of this Section 9.6 shall survive the Closing of the transaction contemplated hereby.

ARTICLE X
[INTENTIONALLY DELETED]

ARTICLE XI
MISCELLANEOUS PROVISIONS

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

11.2 Assignments . Purchaser may assign all or any portion of its rights hereunder to one or more Affiliates of Purchaser without the consent of Seller; however, any such assignment shall not relieve Purchaser of its obligations under this Agreement.

11.3 Successors and Assigns . This Agreement shall bind and inure to the benefit of the parties hereto and their respective successors and assigns.

11.4 Days . If any action is required to be performed, or if any notice, consent or other communication is given, on a day that is a Saturday or Sunday or a legal holiday in the jurisdiction in which the action is required to be performed or in which is located the intended recipient of such notice, consent or other communication, such performance shall be deemed to be required, and such notice, consent or other communication shall be deemed to be given, on the first business day following such Saturday, Sunday or legal holiday. Unless otherwise specified herein, all references herein to a “day” or “days” shall refer to calendar days and not business days.

11.5 Governing Law . This Agreement and all documents referred to herein shall be governed by and construed and interpreted in accordance with the laws of the state where the Property is located.

11.6 Counterparts . To facilitate execution, this Agreement may be executed in as many counterparts as may be required. It shall not be necessary that the signature on behalf of both parties hereto appear on each counterpart hereof. All counterparts hereof shall collectively constitute a single agreement. This Agreement may be executed and delivered by facsimile transmission or by personal digital file format via electronic mail which shall, for all purposes, serve as an original executed counterpart of this Agreement.

9695236v.8

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

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

11.9 Notices . All notices, requests, demands and other communications hereunder shall be in writing and shall be delivered by hand, transmitted by facsimile transmission, sent prepaid by Federal Express (or a comparable overnight delivery service), or sent by email. Any notice, request, demand or other communication delivered or sent in the manner aforesaid shall be deemed given or made (as the case may be) on the earlier of actual receipt or one day after transmittal.


If to Seller:	George Altamura, Jr. 101 S. Coombs Street, Suite A

Napa, CA 94559
George Altamura, Jr.
Telecopy: 707-255-2053

Email: galtajr@yahoo.com


With a copy to:	Charles W. Meibeyer Coblentz Patch Duffy & Bass LLP 1236 Spring Street St. Helena, CA 94574 Telecopy: 707-963-4897

Email: cwm@coblentzlaw.com


If to Purchaser:	Ashford Hospitality Prime Limited Partnership 14185 Dallas Parkway, Suite 1100 Dallas, Texas 75254 Attn: David A. Brooks and Christopher A. Peckham Telecopy: (972) 490-9605

Email: dbrooks@ashfordinc.com and cpeckham@ashfordinc.com


With a copy to:	Gardere Wynne Sewell LLP 2021 McKinney Avenue, Suite 1600 Dallas, Texas 75201 Attn: Cynthia B. Nelson Telecopy: (214) 999-3884

Email: cnelson@gardere.com

9695236v.8


If to Escrow Agent:	Chicago Title Insurance Company 711 Third Avenue, 5 ^th Floor New York, New York 10017 Attn: Siu Cheung Telecopy: (212) 880-9623

Email: cheungs@ctt.com

or to such other address as the intended recipient may have specified in a notice to the other party. Any party hereto may change its address or designate different or other persons or entities to receive copies by notifying the other party and Escrow Agent in a manner described in this Section.

11.10 Escrow Agent . Escrow Agent referred to in the definition thereof contained in Section 1.1 hereof has agreed to act as such for the convenience of the parties without fee or other charges for such services as Escrow Agent. Escrow Agent shall not be liable: (a) to any of the parties for any act or omission to act except for its own willful misconduct or gross negligence; (b) for any legal effect, insufficiency, or undesirability of any instrument deposited with or delivered by Escrow Agent or exchanged by the parties hereunder, whether or not Escrow Agent prepared such instrument; (c) for any loss or impairment of funds that have been deposited in escrow while those funds are in the course of collection, or while those funds are on deposit in a financial institution, if such loss or impairment results from the failure, insolvency or suspension of a financial institution; (d) for the expiration of any time limit or other consequence of delay, unless a properly executed written instruction, accepted by Escrow Agent, has instructed Escrow Agent to comply with said time limit; (e) for the default, error, action or omission of either party to the escrow. Escrow Agent, in its capacity as escrow agent, shall be entitled to rely on any document or paper received by it, believed by such Escrow Agent, in good faith, to be bona fide and genuine. In the event of any dispute as to the disposition of the Deposit or any other monies held in escrow, or of any documents held in escrow, Escrow Agent may continue to hold the Deposit pursuant to the terms hereof, or if Escrow Agent so elects, interplead the matter at the joint and several cost of Purchaser and Seller by filing an interpleader action in a court of general jurisdiction in the county or circuit where the Real Property is located (to the jurisdiction of which both parties do hereby consent), and pay into the registry of the court the Deposit, or deposit any such documents with respect to which there is a dispute in the Registry of such court, whereupon such Escrow Agent shall be relieved and released from any further liability as Escrow Agent hereunder. Escrow Agent shall not be liable for Escrow Agent’s compliance with any legal process, subpoena, writ, order, judgment and decree of any court, whether issued with or without jurisdiction, and whether or not subsequently vacated, modified, set aside or reversed. Purchaser and Seller agree to jointly and severally indemnify, defend and hold harmless the Escrow Agent from and against any loss, cost, damage, expense and attorney’s fee (collectively called “ Expenses ”) in connection with or in any way arising out of the escrow arrangement, other than expenses resulting from the Escrow Agent’s own gross negligence or willful misconduct.

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

9695236v.8

11.12 Survival . All of the covenants and agreements of Seller and Purchaser made in, or pursuant to, this Agreement shall survive Closing and shall not merge into the Deed or any other document or instrument executed and delivered in connection herewith.

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

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

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

11.16 Signatory Exculpation . The signatory(ies) for Purchaser and Seller is/are executing this Agreement in his/their capacity as representative of Purchaser and Seller and not individually and, therefore, shall have no personal or individual liability of any kind in connection with this Agreement and the transactions contemplated by it.

11.17 Rules of Construction . The following rules shall apply to the construction and interpretation of this Agreement:

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

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

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

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

(e) As used herein, the term or phrases “Effective Date,” “date of this Agreement” or “date hereof” shall mean the first date Escrow Agent is in receipt of this Agreement executed by Seller and Purchaser.

11.18 Tax-Deferred Exchange . Each party agrees to cooperate with the other party’s efforts to accomplish a tax-deferred exchange in this transaction provided that no party shall bear any

9695236v.8

additional cost, and there is no delay to the close of escrow and Purchaser shall not have to take title to any property other than the Property. This cooperation applies as well to the members or affiliates of any such party.

11.19 Liquor Operations .

(a) Change of Ownership Filings; Transfer of Liquor Licenses . Seller shall cause the holder of the liquor license for the Hotel (the “ Liquor Licensee ”), at Purchaser’s sole cost and expense, to use all reasonable efforts to transfer the liquor licenses and the liquor inventory to Purchaser or its designee (in either case, a “ License Designee ”), as successor licensee, on or after the Closing Date. Purchaser and Seller shall jointly use good faith efforts to have the License Designee accept the transfer of the liquor licenses. If such liquor licenses have not been transferred to a License Designee effective as of the Closing Date, or a temporary permit (a “ Temporary Permit ”) to sell alcohol at the Hotel has not been issued to a License Designee as of the Closing Date, then on the Closing Date, to the extent permitted by applicable law, Seller shall cause the Liquor Licensee to enter into an interim management or lease arrangement with a License Designee (the “ Food and Beverage Management Agreement ”) substantially in the form attached hereto as Exhibit "G" , whereby such Liquor Licensee shall operate for a mutually agreeable fee or rental rate the food and beverage facilities at the Hotel on behalf of Purchaser pending the transfer of the applicable liquor licenses to a License Designee or the issuance of a Temporary Permit.

(b) Liquor Inventory Escrow . In connection with the transfer of the liquor licenses, on or before the Closing Date, Seller shall open an escrow account for the Hotel (the “ Liquor Inventory Escrow ”) with a mutually agreed escrow holder (“ Liquor Escrowee ”), separate from the Escrow, as required by applicable law for the transfer of the liquor license to a License Designee on the Closing Date or such later date as such transfer is approved by the California Department of Alcoholic Beverage Control (“ CABC ”). The Liquor Inventory Escrow arrangements shall be substantially in the form attached hereto as Exhibit G , and include the following: (i) the deposit by Purchaser, on or before the Closing Date, of the purchase price for the liquor licenses in the amount of [$______] (the “ Liquor License Payment ”), and (ii) the deposit by Purchaser, on or before the Closing Date in the amount of [$______] (the “ Liquor Inventory Escrow Deposit ”). The Liquor License Payment and the Liquor Inventory Escrow Deposit shall be deposited by Purchaser in the Liquor Inventory Escrow on or before the Closing Date, and Purchaser shall receive a credit against the Purchase Price in the amount of the Liquor License Payment. Any and all funds remaining in the Liquor Inventory Escrow after the payment of claims by Liquor Licensee’s creditors, if any, shall be remitted to Seller by Liquor Escrowee upon the approval by the CABC of the transfer of the liquor licenses to a License Designee. The provisions of this Section 11.19 are a condition precedent for the benefit of Purchaser.

11.20 Holdback . At Closing, out of the Purchase Price paid by Purchaser, Escrow Agent shall retain in escrow the amount of the Liability Cap in immediately available U.S. federal funds (the “ Holdback Amount ”), which Holdback Amount shall be held by Escrow Agent in escrow for three hundred sixty-five (365) days after Closing pursuant to an escrow agreement in the form attached hereto as Exhibit I , and shall be available to satisfy any post-Closing liabilities of Seller under this Agreement, including, without limitation, any surviving indemnity obligations of Seller

9695236v.8

and any liabilities with respect to a breach by Seller of any warranty, representation or covenant that expressly survives Closing (the “ Post-Closing Holdback Escrow Agreement ”).

[Remainder of page intentionally left blank – signatures follow on next page]

9695236v.8

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

SELLER :

HOTEL YOUNTVILLE, LLC, a California limited liability company


By:	/s/ George Altamura Jr


Name:	George Altamura Jr


Title:	Manager


Date of Execution: January 13,	, 2017

HOTEL YOUNTVILLE HOLDINGS, LLC, a California limited liability company


By:	/s/ Michael Yacob


Name:	Michael Yacob


Title:	Senior Vice President


Date of Execution: January 13	, 2017

ALTAMURA FAMILY, LLC, a California limited liability company


By:	/s/ George Altamura Jr


Name:	George Altamura Jr


Title:	Manager


Date of Execution: January 13,	, 2017

GEORGE ALTAMURA, JR., LLC, a California limited liability company


By:	/s/ George Altamura Jr


Name:	George Altamura Jr


Title:	Manager


Date of Execution: January 13,	, 2017

9695236v.8

PURCHASER :

ASHFORD HOSPITALITY PRIME LIMITED PARTNERSHIP, a Delaware limited partnership

By: Ashford Prime OP General Partner LLC, its general partner


By:	/s/ David Brooks


Name:	David Brooks


Title:	Vice President


Date of Execution: January 12,	, 2017

ESCROW AGENT :

Chicago Title Insurance Company (Escrow Agent hereby acknowledges receipt of a fully executed Agreement from both Seller and Purchaser for purposes of Sections 11.10 and 11.17 hereof.)


By:	/s/ Lisa Zicchinella


Name:	Lisa Zicchinella


Title:	National Underwriter


Date:	January 13, , 2017

RECEIPT OF ESCROW AGENT

Chicago Title Insurance Company, as Escrow Agent, acknowledges receipt of the sum of $2,000,000.00 by check or by wire transfer from Purchaser as described in Section 2.2 of the foregoing Agreement of Purchase and Sale, said check or wire transfer to be held pursuant to the terms and provisions of said Agreement.

DATED this _____ day of __________________, 2017.

CHICAGO TITLE INSURANCE COMPANY

By:

Name:

Title:

9695236v.8

EXHIBIT A

LAND

The land referred to in this report is situated in the Town of Yountville, County of Napa, State of California, and is described as follows:

TRACT ONE :

Parcel 1 as shown on the map entitled, “Parcel Map, A Division of the Lands of James DeHaven Atwood,” filed June 14, 1990 in Book 17 of Parcel Maps at page 75 in the office of the County Recorder of Napa County.

TRACT TWO :

Parcel 2 as shown on the map entitled “Parcel Map of the Yountville Inn Expansion and Gateway Mobile Home Park,” filed March 28, 2008, in Book 25 of Parcel Maps at page(s) 98-100, in the office of the County Recorder of Napa County.

TRACT THREE :

Parcel 3 as shown on the map entitled “Parcel Map of the Yountville Inn Expansion and Gateway Mobile Home Park,” filed March 28, 2008, in Book 25 of Parcel Maps at page(s) 98-100, in the office of the County Recorder of Napa County.

Exhibit A – Page 1

9695236v.8

EXHIBIT B

INTENTIONALLY DELETED

16480.001 3614102v1 Exhibit B – Page 1

9695236v.8

EXHIBIT C

ASSIGNMENT AND ASSUMPTION AGREEMENT

(i) all Operating Agreements (as defined in that certain Agreement of Purchase and Sale dated ____________, 20___ by and between Seller and _______________________ (the “ Agreement ”) with respect to the Property (as defined in the Agreement), and listed on Exhibit A attached hereto;

(ii) all Leased Property Agreements (as defined in the Agreement) described on Exhibit A attached hereto;

(iii) all Off-Site Facility Agreements (as defined in the Agreement) described on Exhibit A attached hereto;

Assignee hereby assumes and agrees to perform all of the obligations of Seller under the Operating Agreements, Leased Property Agreements and Off-Site Facility Agreements (collectively the “ Assigned Agreements ”), to the extent any such obligations accrue and are applicable to periods from and after the date hereof or which accrue prior to the date hereof for which Assignee received a credit on the closing statement of even date herewith between the parties (or pursuant to any post-closing adjustment thereof).

Seller hereby agrees to indemnify, defend and hold harmless Assignee and its affiliates from and against any and all liabilities, claims, costs and expenses, including, without limitation, reasonable attorney’s fees, relating to acts or omissions accruing under the Assigned Agreements prior to the date hereof. Assignee hereby agrees to indemnify, defend and hold harmless Seller and its affiliates from and against any and all liabilities, claims, costs and expenses, including, without limitation, reasonable attorney’s fees, relating to acts or omissions accruing under the Assigned Agreements from and after the date hereof or with respect to obligations otherwise assumed by Assignee herein.

If any litigation between Seller and Assignee arises out of the obligations of the parties under this Assignment and Assumption Agreement or concerning the meaning or interpretation of any provision contained herein, the losing party shall pay the prevailing party’s costs and expenses of such litigation including, without limitation, reasonable attorneys’ fees.

This Assignment and Assumption Agreement may be executed and delivered in any number of counterparts, each of which so executed and delivered shall be deemed to be an original and all

Exhibit C – Page 1

9695236v.8

of which shall constitute one and the same instrument. Telecopied signatures shall have the same valid and binding effect as original signatures.

IN WITNESS WHEREOF, Seller and Assignee have executed this Assignment as of ___________________, 20___.

SELLER :

,
a

By:

Name:

Title:

ASSIGNEE :

,
a

By:

Name:

Title:

Exhibit C – Page 2

9695236v.8

Exhibit A to Assignment and Assumption Agreement

OPERATING AGREEMENTS, LEASED PROPERTY
AGREEMENTS AND OFF SITE FACILITY AGREEMENTS

Exhibit C – Page 3

9695236v.8

EXHIBIT D

BILL OF SALE

For valuable consideration, the receipt and sufficiency of which are hereby acknowledged, _________________________________, (“Seller”), in connection with the sale of certain real property located in the Town of Yountville and County of Napa, California, which is more particularly described in the Purchase Agreement (as defined below), hereby grants, assigns, transfers, conveys and delivers to, without recourse and without any representation or warranty whatsoever, express or implied, other than as set forth herein and in a certain Purchase and Sale Agreement dated __________, 2017 (the “Purchase Agreement”) pursuant to which this Bill of Sale is given, all of Seller’s right, title and interest in and to the “Personal Property”, as such term is defined in the Purchase Agreement. This Bill of Sale shall be governed by the laws of the State of California.

TO HAVE AND TO HOLD the Personal Property, together with any rights and appurtenances thereto, unto Purchaser, its successors and assigns.

IN WITNESS WHEREOF, Seller has executed this Bill of Sale effective as of ____________________, 20____.

SELLER :

By:

Name:

Title:

Exhibit D – Page 1

9695236v.8

EXHIBIT E

RECORDING REQUESTED BY :

AND

WHEN RECORDED MAIL TO:

GRANT DEED

Documentary Transfer Tax is: _____________

__ computed on full value of interest; or

__ full value less value of liens or encumbrances

remaining at time of sale

GRANT DEED

FOR A VALUABLE CONSIDERATION, receipt of which is hereby acknowledged,

____________________________________________ (“Grantor”), hereby GRANTS to ______________________________ (“Grantee”), the following described real property (the “Property”) located in the City of Yountville and County of Napa, State of California, subject only to those exceptions set forth on Exhibit 2 attached hereto:

SEE EXHIBIT “1” ATTACHED HERETO AND INCORPORATED HEREIN BY THIS REFERENCE

IN WITNESS WHEREOF, the undersigned has executed this Grant Deed dated as of ______________, 2017.

By: _________________________________

Name: _______________________________

Exhibit E – Page 1

9695236v.8

Title: ________________________________

Exhibit E – Page 2

9695236v.8

EXHIBIT 1 TO EXHIBIT E

LEGAL DESCRIPTION

Exhibit E – Page 3

9695236v.8

ACKNOWLEDGMENT

State of California

County of _____________________________)

On _________________________ before me, _________________________________________

personally appeared ______________________________________________________________, who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.

I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.

WITNESS my hand and official seal.

Signature: ___________________________ (Seal)

Exhibit E – Page 4

9695236v.8

EXHIBIT F

ASSIGNMENT OF OCCUPANCY AGREEMENTS

For Ten and No/100 Dollars ($10.00) and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, ________________________ ___________________, a ___________________________________ (“ Seller ”), hereby assigns to _______________________ (“ Assignee ”) all of its right, title and interest in and to the Occupancy Agreements, as defined in that certain Agreement of Purchase and Sale dated _________________, 2017 by and between Seller and __________________ (the “ Agreement ”), listed on Exhibit A attached hereto. Assignee hereby assumes and agrees to perform all of the obligations of Seller under the Occupancy Agreements to the extent any such obligations accrue and are applicable to periods from and after the date hereof or which accrue prior to the date hereof for which Assignee received a credit on the closing statement of even date herewith between the parties (or pursuant to any post-closing adjustment thereof).

Seller hereby agree to indemnify, defend and hold harmless Assignee and its affiliates from and against any and all liabilities, claims, costs and expenses, including, without limitation, reasonable attorney’s fees, relating to acts or omissions accruing under the Occupancy Agreements prior to the date hereof. Assignee hereby agrees to indemnify, defend and hold harmless Seller and its affiliates from and against any and all liabilities, claims, costs and expenses, including, without limitation, reasonable attorney’s fees, relating to acts or omissions accruing under the Occupancy Agreements from and after the date hereof or with respect to obligations otherwise assumed by Assignee herein.

If any litigation between Seller and Assignee arises out of the obligations of the parties under this Assignment of Occupancy Agreements or concerning the meaning or interpretation of any provision contained herein, the losing party shall pay the prevailing party’s costs and expenses of such litigation including, without limitation, reasonable attorneys’ fees.

This Assignment of Occupancy Agreements may be executed and delivered in any number of counterparts, each of which so executed and delivered shall be deemed to be an original and all of which shall constitute one and the same instrument. Telecopied signatures may be attached hereto and shall have the same valid and binding effect as original signatures.

IN WITNESS WHEREOF, Seller and Assignee have executed this Assignment of Occupancy Agreements as of ___________________, 2017.

Exhibit F – Page 1

9695236v.8

SELLER :

By:

Name:

Title:

ASSIGNEE :

By:

Name:

Title:

Exhibit F – Page 2

9695236v.8

Exhibit A to Assignment of Occupancy Agreements

Occupancy Agreements

Exhibit F – Page 3

9695236v.8

*Subject to local counsel review

EXHIBIT G

FOOD AND BEVERAGE MANAGEMENT AGREEMENT

This FOOD AND BEVERAGE MANAGEMENT AGREEMENT (“Agreement”) is made, as of the ___ day of _______ , 2017 by and between ______________________ (“Licensee”), __________________ (“Manager”) and ______________________ (Owner”).

The purpose of this Agreement is to clarify the rights and obligations of the parties with respect to responsibility for the operation of the alcoholic beverage business (the “Business”) at the Hotel currently known as the Hotel Yountville, 6462 Washington Street, Yountville, California (the “Hotel”), during the pendency of the transfer of the alcoholic beverage license and alcoholic beverage inventory from Licensee to Manager.

1. Licensee agrees to transfer the License to Manager, and Owner agrees to cause Manager to file for transfer of the License as soon as reasonably possible. Licensee agrees to cooperate in the transfer of the License, the opening of the escrow and the completion of all necessary paperwork. Owner agrees to pay or arrange for payment of all escrow, application and transfer fees.

2. During the term of this Agreement, Licensee shall be responsible for the operation of the Business at the Hotel, and Owner hereby grants Licensee the right to enter onto the Hotel premises and to use same as may be necessary for that purpose. Until such time as the California Department of Alcoholic Beverage Control (“ABC”) approves the transfer of the Liquor License to Manager, Manager shall operate the Business as the manager thereof on behalf of Licensee and shall assure compliance with all laws pertaining to the operation of the Business. Owner hereby consents to Manager’s operation of the Business on behalf of and pursuant to the direction and control of Licensee.

3. Title to the Inventory shall remain in Licensee until the ABC approves the transfer of the Liquor License to Manager. Until such time, all proceeds from the operation of the Business at the Hotel shall be applied to the operating expenses of the Business.

4. Manager and Owner agree to indemnify Licensee against any and all loss, cost, liability and expense (including attorneys’ fees) that may arise from Manager’s management of the Business; provided, however, such indemnity shall not apply to any matter that relates to an event that occurred prior to the date hereof, or that arose due to Licensee’s negligence or willful misconduct. Manager and Owner agree to provide all customary insurance coverages at the Hotel and to name Licensee, and its members, as additional insureds on such policies for the term of this Agreement.

5. Licensee and Manager shall not be construed as partners, joint venture partners or as having an employer or employee relationship, and nothing contained herein shall be construed to the contrary.

Exhibit G – Page 1

9695236v.8

6. This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which, together, shall constitute one and the same instrument, binding on the parties hereto.

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date stated above.

OWNER :

By:

Name:

Title:

LICENSEE :

By:

Name:

Title:

MANAGER :

By:

Name:

Title:

Exhibit G – Page 2

9695236v.8

EXHIBIT H

PARKING AGREEMENT

Exhibit H – Page 1

9695236v.8

EXHIBIT I

FORM OF POST-CLOSING HOLDBACK ESCROW AGREEMENT

THIS POST-CLOSING HOLDBACK ESCROW AGREEMENT (this “Escrow Agreement”), dated as of ___________, 2017, is by and among _______________, a _______________ (“Seller”), _______________, a _______________ (“Buyer”), and [-] (“Escrow Agent”).

RECITALS:

A. WHEREAS, Seller and Buyer entered into that certain Agreement of Purchase and Sale dated January ____, 2017 (as amended, the “Purchase Agreement”). All initially capitalized terms not otherwise defined in this Escrow Agreement shall have the meaning ascribed to such term in the Purchase Agreement.

B. WHEREAS, of even date herewith, Seller and Buyer have consummated the Closing and, in connection therewith, Seller and Buyer desire to establish an escrow with Escrow Agent pursuant to Section 11.20 of the Purchase Agreement.

C. WHEREAS, Buyer and Seller desire to appoint Escrow Agent as the escrow agent pursuant to this Escrow Agreement, and Escrow Agent is willing to act as escrow agent hereunder.

D. WHEREAS, Escrow Agent has agreed to hold and disburse the funds pursuant to the terms of this Escrow Agreement.

NOW THEREFORE, in consideration of the covenants and agreements contained in this Escrow Agreement, and intending to be legally bound, the parties hereto agree as follows:

AGREEMENT

Article I
APPOINTMENT OF ESCROW AGENT

1.1 The parties hereto hereby appoint the Escrow Agent to act as escrow agent hereunder, and the Escrow Agent hereby agrees to serve as escrow agent upon the terms and conditions set forth herein. Escrow Agent shall hold, invest and disburse the Escrow Funds (as hereinafter defined) in accordance with the terms of this Escrow Agreement, which terms shall include, without limitation, the provisions of Article 3 below.

Article II
ESCROW

2.1 Escrow . Seller hereby deposits Four Million and 00/100 DOLLARS ($4,000,000) (the funds together with any interest earned thereon are hereinafter referred to as the “ Escrow Funds ”) into escrow with the Escrow Agent, and the Escrow Agent hereby acknowledges receipt thereof. Seller hereby expressly confirms that it has instructed Escrow Agent to create the Escrow Fund by retaining $4,000,000.00 of the net sales proceeds payable to Seller upon the Closing under the Purchase Agreement. The Escrow Funds, together with the interest thereon, shall be deposited

Exhibit I – Page 1

9695236v.8

by Escrow Agent into a federally insured, interest bearing account at [___________] (the “Holdback Account”). Escrow Agent hereby agrees that the Escrow Funds shall not be commingled with any other funds. The parties hereto hereby agree that the Escrow Funds are the “Holdback Amount” referred to in the Purchase Agreement.

2.2 Fee . Escrow Agent was selected as escrow agent and as the title agent, in connection with the Closing under the Purchase Agreement, in part because it agreed to act as Escrow Agent hereunder without any additional consideration due to it, and Escrow Agent acknowledges that it is not due any additional fee for its services hereunder.

2.3 Disbursement of Escrow Funds . Escrow Agent shall only disburse the Escrow Funds as follows:

2.3.1. At such time as Buyer asserts, in good faith, a claim for disbursement of funds from the Holdback Account (a “Claim”), Buyer shall give written notice thereof (the “Disbursement Request”) to Seller and Escrow Agent. Any such Disbursement Request shall describe in reasonable detail Buyer’s calculations of the amount of Escrow Funds due Buyer (the “Claim Amount”) and the facts and/or circumstances giving rise to such Claim, and contain appropriate supporting documentation with respect thereto. Seller shall have ten (10) Business Days after receipt of the Disbursement Request to object to the disbursement of the Claim Amount requested by Buyer by submitting a notice of objection (the “Objection Notice”) to Buyer and Escrow Agent, which objection shall be solely on the grounds that Seller disagrees, in good faith, with Buyer’s entitlement to or calculations of the Claim Amount set forth in the applicable Disbursement Request. If Seller delivers the Objection Notice within such ten (10) Business Day period, then Section 2.3.4 hereof shall apply with respect to Escrow Agent’s disbursement of the Claim Amount. If Seller does not deliver the Objection Notice to Buyer and Escrow Agent within such ten (10) Business Day period, then Escrow Agent shall disburse the Claim Amount to Buyer in accordance with the Disbursement Request within three (3) Business Days following the expiration of such ten (10) Business Day period. Buyer shall have the right to deliver multiple Disbursement Requests and receive multiple disbursements from the Escrow Funds but shall only submit one Disbursement Request for each Claim.

2.3.2 Notwithstanding any provision of Section 0 above to the contrary, if Buyer and Seller jointly submit a Disbursement Request with regard to all or any portion of the Escrow Funds, Escrow Agent shall disburse the requested amounts from the Holdback Escrow within three (3) Business Days following its receipt of the joint Disbursement Request pursuant to the directions set forth therein.

2.3.3 If there is remaining balance of the Escrow Funds on ______________, 20__ (the “Release Date”) then, to the extent such remaining balance is not subject to an unresolved Disbursement Request, such undisputed portion shall be remitted to Seller. The Claim Amount(s) subject to an unresolved Disbursement Request shall be retained in the Holdback Escrow by Escrow Agent until, with respect to each Claim Amount, (i) the expiration of the ten (10) Business Day period provided in Section 0 above with respect to a specific Disbursement Request, if no Objection Notice is delivered by Seller to Escrow Agent within such ten (10) Business Day period with respect to such Disbursement Request; (ii) Seller and Buyer resolve any dispute with respect to any

Exhibit I – Page 2

9695236v.8

Objection Notice which has been timely provided by Seller and jointly submit a Disbursement Request to Escrow Agent; or (iii) Escrow Agent has brought an interpleader action with respect to such Claim as set forth below.

2.3.4 In the event Escrow Agent receives an Objection Notice within the ten (10) Business Day period noted in Section 2.3.1 , Escrow Agent may, at its option, (a) continue to hold the Claim Amount subject to the Disbursement Request until such time as Seller and Buyer resolve their dispute and issue joint written instructions relative to disbursement of the Claim Amount, or (b) if such dispute has not been resolved within ninety (90) days after Escrow Agent’s receipt of the subject Disbursement Request, bring a suit in interpleader in a court of competent jurisdiction naming the parties to this Escrow Agreement and any other parties as may be appropriate in the opinion of Escrow Agent. Upon filing of said suit and placing of the Claim Amount subject to the Disbursement Request in the registry of the court, Escrow Agent shall have the right to withdraw from said suit and all obligations of Escrow Agent with respect to, but only with respect to, such Claim Amount shall cease and terminate.

2.3.5 This Escrow Agreement shall terminate upon the disbursement by Escrow Agent of all of the Escrow Funds in accordance with this Escrow Agreement and Escrow Agent shall thereupon be discharged.

Article III
LIABILITY OF ESCROW AGENT

3.1 Liability of Escrow Agent . Escrow Agent shall have no liability or obligation with respect to the Escrow Funds except for Escrow Agent’s willful misconduct or gross negligence. Escrow Agent’s sole responsibility shall be for the safekeeping, and disbursement of the Escrow Funds in accordance with the terms of this Escrow Agreement. Escrow Agent shall have no implied duties or obligations and shall not be charged with knowledge or notice of any fact or circumstance not specifically set forth herein. Escrow Agent may rely upon any instrument, not only as to its due execution, validity and effectiveness, but also as to the truth and accuracy of any information contained therein, which Escrow Agent shall in good faith believe to be genuine, to have been signed or presented by the person or parties purporting to sign the same and to conform to the provisions of this Escrow Agreement. In no event shall Escrow Agent be liable for incidental, indirect, special, consequential or punitive damages. Escrow Agent shall not be obligated to take any legal action or commence any proceeding in connection with the Escrow Funds, any account in which Escrow Funds is deposited, this Escrow Agreement or the Purchase Agreement, or to appear in, prosecute or defend any such legal action or proceeding.

3.2 Authorization of Escrow Agent . The Escrow Agent is authorized and instructed to comply with orders issued or process entered by any court with respect to the Escrow Funds, without determination by the Escrow Agent of such court’s jurisdiction in the matter. If any portion of the Escrow Funds is at any time attached, garnished or levied upon under any court order, or in case the payment, assignment, transfer, conveyance or delivery of any such property shall be stayed or enjoined by any court order, or in case any order, judgment or decree shall be made or entered by any court affecting such property or any part thereof, then and in any such event, the Escrow Agent is authorized, in its sole discretion, to rely upon and comply with any such order, writ, judgment or

Exhibit I – Page 3

9695236v.8

decree which it is advised by legal counsel selected by it is binding upon it without the need for appeal or other action; and if the Escrow Agent complies with any such order, writ, judgment or decree, it shall not be liable to any of the parties hereto or to any other person or entity by reason of such compliance even though such order, writ, judgment or decree may be subsequently reversed, modified, annulled, set aside or vacated.

3.3 Indemnification of Escrow Agent . Seller and Buyer hereby agree jointly and severally to indemnify and hold harmless the Escrow Agent and its directors, officers and employees from and against any and all losses, liabilities, expenses, claims and demands (including reasonable attorneys’ fees and expenses) arising out of or in connection with the performance of the Escrow Agent’s obligations in accordance with the provisions of this Escrow Agreement, except for the Escrow Agent’s own gross negligence or willful misconduct. The obligations of Buyer and Seller under this Section shall survive any termination of this Escrow Agreement.

Article IV
MISCELLANEOUS

4.1 Assignment; Successors and Assigns; Third Parties . Except as otherwise provided herein, neither Buyer nor Seller shall convey, assign or otherwise transfer any of its rights or obligations under this Escrow Agreement without the express written consent of the other party. Any conveyance, assignment or other transfer of any of Escrow Agent’s rights and obligations under this Escrow Agreement shall require express written consent of both Buyer and Seller. This Escrow Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and permitted assigns. This Escrow Agreement is not intended to benefit, and shall not run to the benefit of or be enforceable by, any other person or entity other than the parties hereto and their successors and permitted assigns.

4.2 Tax Reporting . Seller and Buyer agree that, for tax reporting purposes, all interest or other income earned from the investment of the Escrow Funds in any tax year shall (a) to the extent such interest or other income is distributed by the Escrow Agent to any person or entity pursuant to the terms of this Escrow Agreement during such tax year, be reported as allocated to such person or entity, and (b) otherwise shall be reported as allocated to Seller.

4.3 Entire Agreement . This Escrow Agreement and the Purchase Agreement set forth all of the promises, covenants, agreements, conditions and undertakings between the parties hereto with respect to the subject matter hereof and supersede all prior or contemporaneous agreements and understandings, negotiations, inducements or conditions, express or implied, oral or written. In the event of any direct conflict of the terms of this Escrow Agreement with the terms of the Purchase Agreement, the terms of the Purchase Agreement shall control and prevail.

4.4 Severability . If a provision of this Escrow Agreement is deemed to be contrary to law, that provision will be deemed separable from the remaining provisions of this Escrow Agreement, and will not affect the validity, interpretation or effect of the other provisions of either this Escrow Agreement or any agreement executed pursuant to it or the application of that provision to other circumstances not contrary to law.

Exhibit I – Page 4

9695236v.8

4.5 Notices . All notices that are required or permitted hereunder shall be in writing and shall be sufficient if personally delivered or sent by registered or certified mail, facsimile message, email or Federal Express or other nationally recognized overnight delivery service. Any notice shall be deemed given upon the earlier of the date when received at, or the third day after the date when sent by registered or certified mail or the day after the date when sent by Federal Express or the day of when sent by facsimile to, the address or facsimile number set forth below, unless such address or facsimile number is changed by written notice to the other parties in accordance with this Escrow Agreement:

If to Seller:

Copy to:

If to Buyer:

c/o Ashford Hospitality Prime Limited Partnership

14185 Dallas Parkway, Suite 1100

Dallas, Texas 75254

Attention: David Brooks

Facsimile: (972) 490-9605

Copy to:

Gardere Wynne Sewell LLP

2021 McKinney Avenue, Suite 1600

Dallas, Texas 75201

Attention: Cynthia Nelson

Facsimile: (214) 999-3884

If to Escrow Agent:

Chicago Title Insurance Company
711 Third Avenue, 5 ^th Floor

Exhibit I – Page 5

9695236v.8

New York, New York 10017
Attention: Sie Cheung
Facsimile: (212) 880-1400

4.6 Expenses . Except as otherwise provided for herein, each party shall be responsible for its own costs and expenses with respect to matters involving this Escrow Agreement.

4.7 Governing Law . This Escrow Agreement shall be governed by and construed in accordance with the laws of the State of California.

4.8 Execution Counterparts . This Escrow Agreement may be executed in two (2) or more counterparts, each of which shall be deemed to be an original but all of which together shall be deemed to be one and the same instrument.

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

4.10 Attorneys’ Fees . If any legal action is brought for the enforcement of this Escrow Agreement, the successful or prevailing party shall be entitled to recover reasonable attorneys’ fees and other costs incurred in that action or proceeding (together with costs of enforcing any judgments or rulings), in addition to any other relief to which it may be entitled. In all other matters arising hereunder, each party shall bear its own attorneys’ fees.

4.11 Further Assurances . Each party hereto, at the reasonable request of another party hereto, shall execute and deliver such other instruments and do and perform such other acts and things as may be necessary or desirable for effecting completely the consummation of this Escrow Agreement and the transactions contemplated hereby.

4.12 Recitals Incorporated . The foregoing recitals are hereby incorporated within and made an integral part of this Escrow Agreement as if fully set forth herein.

4.13 No Waiver . No failure on the part of Buyer or Seller at any time to require the performance by the other of any provision of this Escrow Agreement shall in any way affect the party’s rights to require such performance, nor shall any waiver by any party of any provision hereof be taken or held to be a waiver of any other provision hereof.

[SIGNATURE PAGE FOLLOWS]

Exhibit I – Page 6

9695236v.8

IN WITNESS WHEREOF, each of the parties hereto has caused this Escrow Agreement to be executed on its behalf as of the day and year first above written.

ESCROW AGENT :

CHICAGO TITLE INSURANCE COMPANY :

By:____________________________
[Name]
[Title]

SELLER :

BUYER :

Exhibit I – Page 7

9695236v.8

EXHIBIT 3.6

CARVE OUTS TO REPRESENTATIONS

During 2016 the Town of Yountville determined that Seller had violated one of its conditions of approval by allowing Hotel guests to utilize, on a shared basis, the fitness room in the Hopper Creek Apartments. Subsequently, the Town approved the construction of a new Fitness Center on the Hotel property and Seller is in process of constructing such facility and shall bear the expense of such construction.

Recently, the Town of Yountville delivered to Seller a notice of an intended “Audit’ of Seller’s compliance with its Use Permit Conditions of Approval as part of a standard Town-wide compliance Audit. No such Audit has yet occurred so Seller has no knowledge of any potential compliance issues other than the need to update its Management Parking information.

Seller has received approval to open up its spa, restaurant, and bar to the public. Such approval requires the construction of a new parking lot on Town-owned land on Washington Street. An agreement with the Town regarding that construction has been negotiated, but not yet executed pending Seller’s determination of the costs of the construction of such parking lot.

Exhibit 3.6 – Page 1

9695236v.8

EXHIBIT 6.9A

CONSTRUCTION CONTRACTS

Exhibit 6.9A – Page 1

9695236v.8

EXHIBIT 6.9B

SCOPE OF WORK

Exhibit 6.9B – Page 1

9695236v.8

SCHEDULE 1

AUTHORIZATIONS

Schedule 1 – Page 1

9695236v.8

SCHEDULE 2

OPERATING AGREEMENTS

Schedule 2 – Page 1

9695236v.8

SCHEDULE 3

EMPLOYMENT AGREEMENTS

Schedule 3 – Page 1

9695236v.8

SCHEDULE 4

OCCUPANCY AGREEMENTS

Schedule 4 – Page 1

9695236v.8

SCHEDULE 5

OFF-SITE FACILITY AGREEMENTS

Schedule 5 – Page 1

9695236v.8

SCHEDULE 6

RESTRICTED EMPLOYMENT AGREEMENTS

Schedule 6 – Page 1

9695236v.8

EXHIBIT 10.1.1

FIRST AMENDMENT OF
AGREEMENT OF PURCHASE AND SALE

This First Amendment of Agreement of Purchase and Sale (“ Amendment ”) is dated effective as of January 30, 2017, between HOTEL YOUNTVILLE, LLC, a California limited liability company (" Hotel Yountville "), HOTEL YOUNTVILLE HOLDINGS, LLC, a California limited liability company (" Yountville Holdings "), ALTAMURA FAMILY, LLC, a California limited liability company (" Family "), and GEORGE ALTAMURA, JR., LLC, a California limited liability company (" Altamura ", and, together with Hotel Yountville, Yountville Holdings and Family, collectively, “ Seller ”) and ASHFORD HOSPITALITY PRIME LIMITED PARTNERSHIP, a Delaware limited partnership (“ Purchaser ”).

Whereas, Seller and Purchaser entered into that certain Purchase and Sale Agreement dated effective January 13, 2017 (the “ Agreement ”), for the sale and purchase of real property in Yountville, California, on which are located the Hotel Yountville and Hopper Creek Apartments, and more are particularly described in the Agreement;

WHEREAS, Seller and Purchaser wish to amend certain provisions thereof as set forth herein; and

Now, therefore, in consideration of the foregoing, and other good and valuable consideration in hand paid, the receipt and sufficiency of which is hereby acknowledged, Seller and Purchaser, each intending to be legally bound, do hereby agree as follows:


1.	Extension to Study Period . The Study Period shall be extended to Friday, March 10 ^th at 5:00 PM Pacific Time.


2.	Closing Date . The Closing Date as set forth in the Agreement shall be March 14, 2017.


3.	Ratification . Except as expressly modified and amended hereby, the terms and provisions of the Agreement shall remain in full force and effect as therein provided, and the Agreement as amended hereby is ratified in all respects by the parties hereto.


4.	Entire Agreement . The Agreement as amended hereby represents the entire agreement between the parties hereto, and all prior correspondence, memoranda, agreements or understandings (written or oral) with respect to the transaction contemplated by the Agreement are merged into and superseded by the Agreement as amended hereby.


5.	Defined Terms . Capitalized terms not otherwise defined herein shall have the meaning given to such terms in the Agreement.

Counterparts . This Amendment may be executed in multiple counterparts, each of which shall be deemed an original and all of which together shall constitute one document. Signatures of the parties by facsimile or other electronic transmission (such as email) of an ink signature shall be deemed sufficient to bind the parties to this Amendment, and each party waives any objection to such signature by such transmission.

[signature pages follow]

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

SELLER :

HOTEL YOUNTVILLE, LLC,

A California limited liability company

By: /s/ George Altamura Jr

Name: George Altamura Jr

Title: Manager

HOTEL YOUNTVILLE HOLDINGS, LLC,

A California limited liability company

By: /s/ Michael Yacob

Name: Michael Yacob

Title: Senior Vice President

ALTAMURA FAMILY, LLC,

A California limited liability company

By: /s/ George Altamura Jr

Name: George Altamura Jr

Title: Manager

ALTAMURA FAMILY, LLC,

A California limited liability company

By: /s/ George Altamura Jr

Name: George Altamura Jr

Title: Manager

PURCHASER :

ASHFORD HOSPITALITY PRIME

LIMITED PARTNERSHIP,

A Delaware limited partnership

By: Ashford Prime OP General

Partner LLC, its general partner

By: /s/ David Brooks

Name: David Brooks

Title: Vice President

EXHIBIT 10.1.2

SECOND AMENDMENT OF

AGREEMENT OF PURCHASE AND SALE

This Second Amendment of Agreement of Purchase and Sale (this “ Second Amendment ”) is made effective as of February 28, 2017, by and among HOTEL YOUNTVILLE, LLC, a California limited liability company (“ Hotel Yountville ”), HOTEL YOUNTVILLE HOLDINGS, LLC, a California limited liability company (“ Yountville Holdings ”), ALTAMURA FAMILY, LLC, a California limited liability company (“ Family ”), and GEORGE ALTAMURA, JR. LLC, a California limited liability company (“ Altamura ”; together with Hotel Yountville, Yountville Holdings, and Family, collectively, “ Seller ”), and ASHFORD HOSPITALITY PRIME LIMITED PARTNERSHIP, a Delaware limited partnership (“ Purchaser ”).

RECITALS:

A. Seller and Purchaser entered into that certain Agreement of Purchase and Sale dated effective as of January 13, 2017, as amended by that certain First Amendment to Agreement of Purchase and Sale dated effective as of January 30, 2017 (collectively, the “ Agreement ;” all capitalized terms used in this Second Amendment and not otherwise defined herein shall have the same meaning given to them in the Agreement).

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

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree, and the Agreement is amended, as follows:

1. Closing . Notwithstanding anything in the Agreement to the contrary, (i) the Study Period shall expire effective as of 5:00 p.m. Pacific Time on Tuesday, February 28, 2017, and (ii) the Closing shall occur on a business day designated by Purchaser no later than the fifth (5) business day after the date on which the Town of Yountville (the “ Town ”) approves the New Development Agreement (defined below) at the second reading of the applicable Town of Yountville Resolution to approve such New Development Agreement during a duly noticed public hearing for such purpose (the “ Second Reading ”); provided, however, in no event shall the Closing occur later than the sixtieth (60th) day after the expiration of the Study Period. Notwithstanding anything in the immediately preceding sentence to the contrary, if the Town has not approved the New Development Agreement at the Second Reading on or before the sixtieth (60th) day after the expiration of the Study Period, but the Town and Purchaser have determined that approval of the New Development Agreement at the Second Reading is reasonably likely to be accomplished within a sixty (60) day period thereafter, then Purchaser shall have the option, in Purchaser’s sole and absolute discretion, to extend the Closing Date for an additional sixty (60) days by delivering written notice thereof to Seller on or before the sixtieth (60th) day after the expiration of the Study Period. Notwithstanding anything in this paragraph 1 to the contrary, if the Town still have not approved the New Development Agreement at the Second Reading on or before the one hundred twentieth (120th) day after the expiration of the Study Period, but approval of the New Development Agreement at the Second

Reading will be accomplished within a thirty (30) day period thereafter, then Purchaser shall have the option, in Purchaser’s sole and absolute discretion, to extend the Closing Date for an additional thirty (30) days by delivering written notice thereof to Seller on or before the one hundred twentieth (120th) day after the expiration of the Study Period.

2. Conditions Precedent as to Purchaser’s Obligations . The following subparagraph (l) is hereby added to Section 5.1 of the Agreement beginning immediately after subparagraph (k) of the Agreement:

“(l) The Town must have approved of a new Development Agreement for the Property, at the Second Reading, pursuant to which (i) the Property, including, without limitation the portion of the Land described on Exhibit A as ‘Tract One’ (‘ Tract One ’), can be used for hotel, inn, and other transient uses, (ii) the as-built condition of all of the Improvements on the Property has been approved, and (iii) all of the Improvements on the Property may be reconstructed after any destruction, calamity, or casualty to substantially the same condition in which such Improvements were in immediately before such destruction, calamity, or casualty (the “ New Development Agreement ”). In connection with the approval of the New Development Agreement, Seller, at Seller’s sole cost and expense, must have executed, acknowledged, and delivered to the Title Company on or before the Closing Date an original counterpart, and caused the Town to have executed, acknowledged, and delivered to the Title Company on or before the Closing Date an original counterpart, to a termination of the existing Development Agreement dated March 6, 2006, and recorded on May 1, 2006 in the Official Records of Napa County, California under Instrument Number 2006-0015203 (the ‘ Original Development Agreement ’), as amended by the Amendment One to the Development Agreement by and between the Town, Gateway Mobilehome Park, LLC, and the Yountville Inn Owners Relative to 6424 Washington Street dated December 1, 2009, and recorded on October 8, 2010 in the Official Records of Napa County, California under Instrument Number 2010-0023571 (the ‘ Amendment to the Development Agreement ’; together with the Original Development Agreement, as such instrument may hereafter be amended, modified, supplemented, or assigned, collectively, the ‘ Development Agreement ’), which termination must indicate that the Property was fully developed and all of Seller’s and the Town’s obligations in connection therewith were fully satisfied.”

3. Covenants of Seller . New Sections 6.10, 6.11, 6.12, 6.13, 6.14, and 6.15 are hereby added to Article VI of the Agreement beginning immediately after Section 6.9 of the Agreement:

“6.10 New Development Agreement . Seller agrees that Purchaser, at Purchaser’s sole cost and expense, may take any and all actions reasonably necessary to, and Seller shall cooperate, in good faith, with Purchaser, without any cost or expense to Seller, in Purchaser’s efforts to, obtain the Town’s approval of the New Development Agreement, which obligation to cooperate shall include, without limitation, the obligation to sign any documents reasonably required by the Town

or Purchaser in connection with Purchaser’s efforts to obtain the Town’s approval of the New Development Agreement. In furtherance of the foregoing, Purchaser shall use commercially reasonable efforts to diligently pursue, in good faith, an application for, the reading of a Town of Yountville Resolution related to, and the Town’s approval of, the New Development Agreement.

6.11 Termination of Memorandum of Co-Tenancy . At or before Closing, Seller shall execute, acknowledge, and deliver to the Title Company on or before the Closing Date a termination of the Memorandum of Co-Tenancy Agreement dated as of December 29, 2016, and recorded on December 30, 2016 in the Official Records of Napa County, California under Instrument Number 2016-0033742.

6.12 Termination of Commercial Lease Agreement . At or before Closing, Seller shall terminate the Commercial Lease Agreement dated as of December 29, 2016, between HYH LLC, AF LLC, and GAJ LLC, as landlord, and HY LLC, as tenant, and shall provide evidence of such termination to Purchaser at Closing.

6.13 Termination of Easement Agreement . At or before Closing, Seller shall execute, acknowledge, and deliver to the Title Company on or before the Closing Date an original counterpart, and cause the Town to execute, acknowledge, and deliver to the Title Company on or before the Closing Date an original counterpart, to a termination of the Easement Agreement dated April 10, 1992, and recorded on May 8, 1992 in the Official Records of Napa County, California under Instrument Number 1992-015124.

6.14 Workforce Housing Agreement . At or before Closing, Seller shall cause the Workforce Housing Agreement dated March 31, 2006, and recorded on May 3, 2006 in the Official Records of Napa County, California under Instrument Number 2006-0015542 to be (i) properly assigned of record (1) by Gateway Mobile Home Park, LLC to Yountville Inn, LLC, a California limited liability company, then (2) by HY LLC, formerly known as Yountville Inn, LLC, to HYH LLC, AF LLC, and GAJ LLC, and (3) finally by HYH LLC, AF LLC, and GAJ LLC to Purchaser at Closing, each of which assignments must bear the Town’s written approval thereon, and (ii) amended so that it is limited to the portion of the Land described on Exhibit A as ‘Tract 3’, and so that it states the appropriate number of workforce housing units in accordance with the Amendment to the Development Agreement. In addition, Seller shall use commercially reasonable efforts to cause the Town to execute and deliver, before Closing, an estoppel certificate pertaining to such Workforce Housing Agreement.

6.15 Merger of Tract One and Tract Two . At or before Closing, Seller shall cause Tract One and the portion of the Land described on Exhibit A as ‘Tract Two’ to be properly merged in accordance with all Applicable Laws, and, in connection therewith, shall cause any and all appropriate deeds, maps, plats, and legal

descriptions to be prepared and, subject to Purchaser’s review and approval, recorded in the Official Records of Napa County, California.”

4. The Deposit . Notwithstanding anything in the Agreement to the contrary, within two (2) business days of the effective date of this Second Amendment, Purchaser shall deposit the Additional Deposit with Escrow Agent, by wire transfer, and, thereafter, the Initial Deposit and Additional Deposit shall be non-refundable to Purchaser, except as otherwise provided in the Agreement.

5. Offsite Parking Agreement . Notwithstanding anything in the Agreement to the contrary, Seller shall not have any obligations with respect to, or liabilities arising out of, (i) the construction of the offsite employee parking lot as required pursuant to Town of Yountville Resolution Number 16-3318 dated January 19, 2016, or (ii) any agreement between the Town and Purchaser related to the construction of, or payment of rent with respect to, such offsite employee parking lot.

6. No Other Amendments . The parties acknowledge and agree that, except as amended by this Second Amendment, the Agreement remains in full force and effect. To the extent that there is any inconsistency between the terms of this Second Amendment and the Agreement, the terms of this Second Amendment shall prevail.

7. Counterparts . To facilitate execution, this Second Amendment may be executed in as many counterparts as may be required. It shall not be necessary that the signature on behalf of both parties hereto appear on each counterpart hereof. All counterparts hereof shall collectively constitute a single agreement. Facsimile signatures and/or electronically scanned (.pdf) and emailed signatures shall have the same valid and binding effect as original signatures.

8. Governing Law . This Second Amendment and all documents referred to herein shall be governed by and construed and interpreted in accordance with the laws of the stated in which the Property is located without regard to its principles of conflicts of law.

[SIGNATURES APPEAR ON FOLLOWING PAGE]

IN WITNESS WHEREOF , this Second Amendment is effective as of the date above first written above.

SELLER :

HOTEL YOUNTVILLE, LLC,

a California limited liability company

By: /s/ George Altamura Jr

Name: George Altamura Jr

Title: Manager

HOTEL YOUNTVILLE HOLDINGS, LLC,

a California limited liability company

By: /s/ David Preimesberger

Name: David Preimesberger

Title: CFO

ALTAMURA FAMILY, LLC,

a California limited liability company

By: /s/ George Altamura Jr

Name: George Altamura Jr

Title: Manager

GEORGE ALTAMURA, JR. LLC,

a California limited liability company

By: /s/ George Altamura Jr

Name: George Altamura Jr

Title: Manager

PURCHASER :

ASHFORD HOSPITALITY PRIME

LIMITED PARTNERSHIP,

A Delaware limited partnership

By: Ashford Prime OP General

Partner LLC, its general partner

By: /s/ David Brooks

Name: David Brooks

Title: Vice President

EXHIBIT 10.2

SALE AND PURCHASE AGREEMENT
FOR SALE AND PURCHASE OF
PARK HYATT BEAVER CREEK RESORT & SPA

This SALE AND PURCHASE AGREEMENT (this “ Agreement ”) is made and entered into as of the 9th day of March, 2017 (the “ Effective Date ”), by and between, WTCC BEAVER CREEK INVESTORS V, L.L.C., a Delaware limited liability company (“ Seller ”), and ASHFORD HOSPITALITY PRIME LIMITED PARTNERSHIP, a Delaware limited partnership (“ Buyer ”).

R E C I T A L S

A. Seller desires to sell to Buyer, and Buyer desires to acquire from Seller, the “Property” (as hereinafter defined) on the terms and conditions set forth herein.

NOW, THEREFORE, in consideration of the mutual undertakings of the parties hereto, it is hereby agreed as follows:

1. Purchase and Sale; Certain Definitions .

1.1 Purchase and Sale of the Property . On the terms and conditions herein set forth, Seller shall sell to Buyer, and Buyer shall purchase from Seller, the Property.

1.2 Certain Definitions. As used herein, the following terms are defined as follows:

1.2.1 “Beaver Creek License Agreements” means (i) that certain Agreement Regarding License to Use Beaver Creek Trade Name and Service Mark by and between Vail Associates, Inc., a Colorado corporation, and East West Properties, Ltd., a Colorado limited partnership, dated effective as of September 14, 1988, as amended and assigned, and (ii) that certain Cross License Agreement by and between Vail Associates, Inc., a Colorado corporation, Hyatt Corporation, a Delaware Corporation, and East West Properties, Ltd., a Colorado limited partnership, dated effective as of March 1988, as amended and assigned.

1.2.2 “ Condominium Declaration ” means, as applicable and whether singular or plural, (i) that certain Condominium Declaration for Village Hall Condominiums, dated January 24, 1984 and recorded February 1, 1984 in Book 377 at Page 638, as amended by the First Amendment to Condominium Declaration for Village Hall Condominiums recorded October 27, 1989, in Book 516 at Page 628, as amended by the Second Amendment to Condominium Declaration for Village Hall Condominiums recorded September 14, 1992, in Book 589 at Page 97, as amended by the Third Amendment to Condominium Declaration for Village Hall Condominiums recorded February 16, 1993, in Book 601 at Page 457, as amended by the Fourth Amendment to Condominium Declaration for Village Hall Condominiums recorded June 27, 2001, at reception number 760705, as amended by the Fifth Amendment to Condominium Declaration for Village Hall Condominiums, dated January 23, 2002, at reception number 783617, as amended by the Sixth Amendment to Condominium Declaration for Village Hall Condominiums recorded November 17, 2006 at reception number 200631574, and as amended by Seventh Amendment to Condominium Declaration for Village Hall Condominiums recorded March 27, 2015 at reception number 201505289, all in the public records of the Eagle County, Colorado, Clerk and Recorder and (ii) Declaration For Beaver Creek Hotel A Condominium, recorded March 8, 1990 in Book 524 at Page 175; Assignment of

3721766.8

-1 -

Gardere01 - 10003657v.4

Declarant's Rights recorded January 3, 1995 in Book 658 at Page 490 and October 10, 1995 in Book 677 at Page 958 and First Amendments Declaration recorded April 12, 2005 as Reception No. 911873, Second Amendment recorded July 25, 2006 at Reception No. 200620033 and Third Amendment recorded December 7, 2006 at Reception No. 200633338, County of Eagle, State of Colorado.

1.2.3 “ Condominium Plat ” means, as applicable and whether singular or plural, (i) that certain Condominium Map recorded March 8,1990 in Book 524 at Page 176 and Amended Plat and Condominium Map First Amendment, Beaver Creek Hotel A Condominium, a Re-Configuration of Units C-6, C-7, C-12, C-13 and Hotel Unit recorded April 12, 2005 at Reception No. 911872, and Amended Plat and Condominium Map - Second Amendment Beaver Creek Hotel A Condominium, a Resubdivision of Unit C-15 and Hotel Unit recorded July 25, 2006 at Reception No. 200620032 and (ii) that certain Condominium Map for Village Hall Condominiums recorded February 1, 1984 in Book 377 at Page 639, and amended by the Fifth Amendment to the Condominium Map for Village Hall Condominiums, recorded July 17, 1996 in Book 699 at Page 963 and amended by Condominium Map for Village Hall Condominiums, Sixth Amendment recorded June 27, 2001 at Reception No. 760704.

1.2.4 “ Hotel ” means the 190-room Park Hyatt Beaver Creek Resort & Spa located at 136 E. Thomas Place, Beaver Creek, Colorado.

1.2.5 “ Hotel Management Agreement ” means that certain management agreement, dated December 11, 1987, as amended from time to time, between Seller and Manager.

1.2.6 “ Manager ” shall mean Hyatt Corporation, a Delaware corporation.

1.2.7 “ Parking Agreement ” means that certain Village Hall Parking Easement dated as of September 30, 1987, recorded October 7, 1987 in Book 471 at Page 508, Eagle County, Colorado, as amended by the First Amendment to Village Hall Parking Easement dated as of September 14, 1988, and recorded October 25, 1988 in Book 493 at Page 710, as assigned by the Assignment of Village Hall Parking Easement recorded January 3, 1995 in Book 658 at Page 489, as further assigned by the Assignment of Village Hall Parking Easement dated October 6, 1995 and recorded October 10, 1995 in Book 677 at Page 957, as further assigned by the Assignment of Village Hall Parking Easement dated January 12, 2004 and recorded on January 20, 2004 at reception numbers 865438 and 865439, as amended by the Second Amendment to Village Hall Parking Easement dated as of October 17, 2014 and recorded on October 20, 2014 at reception number 201417959, as the same may be amended from time to time.

1.2.8 “ Property ” means (a) the Units, and (b) all of Seller’s right, title and interest in and to (i) all fixtures, furnishings, artwork, systems, equipment and all other items of personal property (other than cash) used in the operation of the Units on or attached or appurtenant to the Units, including two (2) owned vehicles (a 2003 GMC Denali and a 2007 Jeep Grand Cherokee) and a leased 2014 Jeep Grand Cherokee (collectively, the “ Personal Property ”), excluding, however, any property, rights or interests attributable to other units or areas in the larger project or development or owned or controlled by a common association, manager or similar person, (ii) all food, liquor, wine and other beverages (alcoholic and non-alcoholic), including such food, liquor and other beverages held for sale in hotel rooms within the Units, and all consumable supplies and inventories of every kind and nature including “Inventories of Merchandise” and “Inventories of Supplies” as such terms are defined in the current Uniform System of Accounts for Hotels published by the Hotel

3721766.8

-2 -

Gardere01 - 10003657v.4

Association of New York City, Inc. (the “ Consumables ”), in each case owned by Seller as of the “Closing Date” (as hereinafter defined) and located at, and used in connection with the operation of, the Units, including, without limitation, cleaning supplies, guest supplies, paper supplies, stationary, bar supplies, robes, slippers, fuel, laundry supplies, engineering supplies, sundry or gift shop inventory and room, food and beverage linen, glassware and silverware, whether in use or held in stock or storage for future use in connection with Seller’s ownership, operation or maintenance of the Units, if any, and (iii) (u) all “Continuing Agreements and Equipment Leases” (as such term is defined in Section 3.1.4); (v) all of Seller’s interest as lessor in all tenant leases affecting the Property, and additionally as to the Allegria Spa Lease (as hereinafter defined), the lessee’s interest in such lease; (w) all site plans, surveys, plans, specifications and similar items; (x) all licenses, permits, deposits (other than cash, cash reserves and FF&E amounts held under the Hotel Management Agreement, which shall be acquired by Buyer in addition to the Purchase Price); (y) all telephone numbers, websites and domains (including access to FTP file content), warranties, governmental approvals, signage rights and authorizations; (z) all copyrights, trademarks, trade names, and any licenses related to the foregoing that relate to the business being conducted at the Hotel, other than any software licenses used by Seller in the corporate offices of Seller; and (aa) all other related rights and benefits pertaining directly or indirectly to the Property and its operations (the matters described in this clause “(iii),”collectively, called the “ Intangible Property ”), each such piece and parcel of Intangible Property, to the extent assignable; provided , however , in no event shall the Intangible Property include “Hyatt” brand concepts.

1.2.9 “ Retail Management Agreement ” means that certain Commercial Space Management Agreement, dated May 23, 2007, between Seller and East West Resorts, LLC, a Delaware limited liability agreement, as amended by that certain First Amendment to Commercial Space Management Agreement, dated as of June 1, 2008, as the same may have been amended from time to time.

1.2.10 “ Spa Management Agreement ” means that certain Management Agreement, dated May 23, 2007, between Seller and East West Resorts, LLC, a Delaware limited liability agreement, as amended by that certain First Amendment to Management Agreement (Spa), dated as of June 1, 2008, as the same may have been amended from time to time.

1.2.11 “ Units ” means the property constituting the condominium units more particularly described in Exhibit “A” and any rights of the owner thereof in and to the common elements and limited common elements associated therewith.

1.2.12 “ Village Hall Back Lawn Lease ” means the Lease dated as of October 1, 1990, between The Vail Corporation, a Colorado corporation d/b/a Vail Associates, Inc. (as successor in interest to Vail Associates, Inc., a Colorado corporation), as landlord, and WTCC Beaver Creek Investors V, L.L.C., a Delaware limited liability company (as successor in interest to East West Properties, Ltd., a Colorado limited partnership), as tenant, as amended by the First Amendment to Lease dated as of May 1, 1993, as amended by the Second Amendment to Lease dated as of October 1, 1994, as assigned by the Assignment of Back Lawn Lease dated as of January 3, 1995, as assigned by the Assignment of Back Lawn Lease dated as of October 6, 1995, as assigned by the Assignment of Back Lawn Lease dated as of January 12, 2004, as amended by the Third Amendment to Lease dated July 8, 2004, as amended by the Fourth Amendment to Lease dated as of August 1, 2006, and as assigned by the Assignment and Assumption Agreement dated as of May 24, 2007.

3721766.8

-3 -

Gardere01 - 10003657v.4

2. Purchase Price .

2.1 Amount of Purchase Price . The purchase price for the Property (the “ Purchase Price ”) shall be One Hundred Forty-Five Million Five Hundred Thousand and No/100 United States Dollars ($145,500,000.00).

2.2 Payment of Purchase Price . The Purchase Price shall be paid to Seller by Buyer as follows:

2.2.1 Deposit . Within two (2) business days of the Effective Date, Buyer shall deliver to Chicago Title Insurance Company (“ Title Company ”), at its offices at 711 Third Avenue, 5 ^th Floor, New York, New York 10017, Attention: Sie Cheung, in its capacity as escrow agent (“ Escrow Agent ”), a deposit by wire transfer of immediately available funds in the amount of Five Hundred Thousand and No/100 United States Dollars ($500,000.00) (which amount is referred to in this Agreement as the “ Initial Deposit ”). If Buyer does not deliver a “Buyer’s Termination Notice” (as defined in Section 3.1.7) prior to the expiration of the “Due Diligence Period” (as defined in Section 3.1.1) in accordance with Section 3.1.7 hereof, Buyer shall pay by wire transfer of immediately available funds, within two (2) business days after the expiration of the Due Diligence Period, an additional deposit to Escrow Agent in the amount of Five Million Five Hundred Thousand and No/100 United States Dollars ($5,500,000.00) (the “ Additional Deposit ”). As used in this Agreement, the term “ Deposit ” refers, together, to the Initial Deposit and the Additional Deposit (to the extent required to be delivered to Escrow Agent by Buyer). If any portion of the Deposit is not timely delivered, then Seller may terminate this Agreement in its sole and absolute discretion and retain any part of the Deposit then held by the Title Company. All interest earned on the Deposit, or any portion thereof, shall be deemed a part of the Deposit. The Deposit shall be nonrefundable to Buyer except as otherwise herein expressly provided. The Deposit, and all portions thereof, shall be invested by Escrow Agent in accordance with the terms of a separate escrow agreement in the form of Exhibit “B” attached hereto and dated as of the date hereof by and among Buyer, Seller and Escrow Agent (the “ Deposit Escrow Agreement ”). At all times that the Deposit is being held by Escrow Agent, the Deposit shall be invested by Escrow Agent in one of the following investments: (i) United States Treasury obligations, (ii) United States Treasury backed repurchase agreements issued by a major money center banking institution reasonably acceptable to Buyer, or (iii) a money market account at a major money center banking institution reasonably acceptable to Buyer. Escrow Agent shall dispose of the Deposit only as provided in this Agreement, the Deposit Escrow Agreement and the “Escrow Instructions” (as hereinafter defined); provided, however, the Deposit Escrow Agreement and the Escrow Instructions are ancillary to this Agreement and the terms and provisions of this Agreement shall control in all circumstances. At Closing (as defined in Section 6), the Deposit shall be delivered to Seller and applied as a credit towards the Purchase Price.

2.2.2 Payment of Balance of Purchase Price . The balance of the Purchase Price, as adjusted by the prorations and credits provided for in this Agreement (as so adjusted, the “ Closing Payment”) , shall be paid by Buyer delivering the Closing Payment to Escrow Agent by federal funds wire transfer of immediately available funds or otherwise wire-transferring the Closing Payment in immediately available funds directly to Seller at Closing, as the Seller may direct and the Buyer may so agree.

3721766.8

-4 -

Gardere01 - 10003657v.4

2.2.3 Closing Date . Buyer shall deliver the Closing Payment as provided above on March 28, 2017 (the “ Closing Date ”).

3. Due Diligence .

3.1 Access.

3.1.1 Right of Access . Except for title and survey matters (which shall be governed by the provisions of Section 4 below), and subject to the provisions hereinafter set forth, Buyer had, from February 9, 2016 (“ Access Date ”) pursuant to that certain Access Agreement, dated February 9, 2017, between Buyer and Seller (the “ Access Agreement ”) to the Effective Date and shall have from the Effective Date until 5:00 PM Mountain Time on March 13, 2017 (the “ Due Diligence Period ”) within which to perform and complete all of Buyer’s due diligence examinations, reviews and inspections of all matters pertaining to the purchase of the Property, including, without limitation, the Condominium Declaration, Parking Agreement, Continuing Agreements and Equipment Leases, Personal Property, Intangible Property, the Hotel Management Agreement, the Beaver Creek License Agreements, the Spa Management Agreement, the Retail Management Agreement, the Village Hall Back Lawn Lease, all permits, licenses, management agreements, leases, service contracts, books and records, and all physical, environmental and compliance matters and conditions respecting the Property. During the Due Diligence Period, and, so long as this Agreement is in effect, until Closing, Seller shall provide Buyer with reasonable access to the Property (subject to this Section 3.1) upon reasonable advance notice and shall also make available to Buyer (to the extent in Seller’s possession) and shall instruct Manager to make available to Buyer such leases, service contracts, reports, studies, permits, licenses and other information relating to the operation of the Property as Buyer shall reasonably request. In no event however, shall Buyer have access to areas outside of the Units, other than to access by way of the common elements, with respect to its due diligence investigations. Additionally, during the Due Diligence Period, Buyer shall (i) satisfy itself that Seller does not hold any alcoholic beverage licenses and any other attendant liquor permits required for the sale, consumption, use or distribution of liquor at the Hotel (collectively, the “ Liquor Licenses ”); (ii) satisfy itself that any such Liquor Licenses are held by Manager or its affiliate or designee; and (iii) to the extent Buyer’s deems it necessary to transfer the Liquor Licenses to Buyer or Buyer’s designee, file any and all paperwork reasonably necessary to transfer the Liquor Licenses to Buyer or Buyer’s designee, as licensee, provided that any such assignment shall not delay Closing.

3.1.2 Procedures for Inspections . In conducting any inspection of the Property or otherwise accessing the Property, Buyer shall at all times comply with all laws and regulations of all applicable governmental authorities, and terms of the Condominium Declaration, and Buyer shall not (i) contact or have any discussions with any of Seller’s or Manager’s employees, agents or representatives, or with any guests at, or contractors providing services to, the Property, or with governmental or quasi-governmental authority having jurisdiction over the Property, or with the Declarant, manager or association under any of the Condominium Declarations, unless in each case Buyer obtains the prior written consent of Seller, such consent not to be unreasonably withheld, conditioned or delayed (except in connection with the issuance of a zoning compliance report by the Planning & Zoning Resource Corporation or similar provider or in connection with the transfer of any licenses or permits), (ii) unreasonably interfere with the business of Seller (or any of its guests) or Manager conducted

3721766.8

-5 -

Gardere01 - 10003657v.4

at the Property or disturb the use or occupancy of any occupant of the Property, (iii) damage the Property or (iv) cause any physical inspections to be conducted outside of the Units. In conducting the foregoing inspection or otherwise accessing the Property, Buyer shall require its agents, attorneys, contractors, employees, prospective lenders and all others who assist Buyer in connection with such inspections and the analysis of the transaction contemplated herein (collectively, “ Buyer’s Representatives ”) to, at all times comply with, and shall be subject to, the matters provided above and any provisions and restrictions in the Hotel Management Agreement, the Spa Management Agreement, the Retail Management Agreement, the Leases or Condominium Declaration. Seller may from time to time establish reasonable rules of conduct for Buyer and Buyer’s Representatives in furtherance of the foregoing. Buyer shall schedule and coordinate all inspections or other access with Seller and shall give Seller at least one (1) business day prior notice thereof (which may be provided to Seller by email at PoundK@WaltonSt.com ). Seller shall be entitled to have a representative present at all times during each such inspection or other access. Buyer agrees to pay to Seller on demand the cost of repairing and restoring any physical damage or disturbance which Buyer or Buyer’s Representatives shall cause to the Property. All inspection fees, appraisal fees, engineering fees and other costs and expenses of any kind incurred by Buyer or Buyer’s Representatives relating to such inspection and its other access shall be at the sole expense of Buyer. In the event that the Closing hereunder shall not occur for any reason whatsoever (other than Seller’s default), Buyer shall: (A) promptly deliver to Seller, at no cost to Seller, and without representation or warranty, the originals of all tests, reports and inspections of the Property, made and conducted by Buyer or Buyer’s Representatives or for Buyer’s benefit which are in the possession or control of Buyer or Buyer’s Representatives, other than Buyer’s internal analysis and work product, and (B) promptly return to Seller originals of all due diligence materials delivered by Seller to Buyer and shall destroy all copies and abstracts thereof. Buyer and Buyer’s Representatives shall not, without Seller’s prior written consent, be permitted to conduct borings of the Property or drilling in or on the Property, or any other invasive testing, in connection with the preparation of an environmental audit or in connection with any other inspection of the Property. Notwithstanding the foregoing, Buyer shall be permitted to conduct a standard Phase I environmental assessment of the Property. The provisions of this Section 3.1.2 shall survive the Closing or any termination of this Agreement.

3.1.3 Insurance for Inspections . Prior to conducting any on-site inspection of the Property from and after the Access Date, other than mere visual examination, including, without limitation, boring, drilling and sampling of soil (to the extent permitted under Section 3.1.2), Buyer shall obtain, and during the period of such inspection or testing shall maintain, at its expense, (i) commercial general liability insurance, including a contractual liability endorsement, and personal injury liability coverage which insurance policies must have limits for bodily injury and death of not less than Two Million Dollars ($2,000,000) for any one occurrence and not less than One Million Dollars ($1,000,000) for property damage liability for any one occurrence (ii) Worker’s Compensation and Employer’s Liability insurance covering all personnel entering such Property, and such Employer’s Liability insurance shall be in an amount not less than $1,000,000 for each accident, disease per employee and disease policy limit and naming Seller, Manager and any parties required to be named under the Condominium Declaration as additional insureds as respects general liability. Such limits may be achieved through the usage of a combination of Umbrella Liability that extends over the Commercial General Liability and Employer’s Liability insurance. All required policies shall

3721766.8

-6 -

Gardere01 - 10003657v.4

insure Buyer and its representatives and contractors against any liability arising out of any entry or inspections of the Property pursuant to the provisions hereof. Any representative of Buyer which conducts environmental inspections beyond those normally conducted in a standard Phase 1 inspection shall also provide evidence of environmental liability insurance of not less than $1,000,000. Prior to making any entry upon the Property, Buyer shall furnish to Seller a certificate of insurance evidencing the foregoing coverages.

3.1.4 Termination of Agreements and Equipment Leases : On or prior to the expiration of the Due Diligence Period, Buyer shall give Seller written notice (the “ Contract Notice ”) designating those “Agreements and Equipment Leases” (as defined in Section 8.1.8 below) which Buyer wishes Seller to provide notice of termination as provided in each of such agreements which are terminable without cost or liability to Seller and which Seller has the right to terminate pursuant to the terms thereof (the “ Unassumed Agreements and Equipment Leases ”) and those Agreements and Equipment Leases which Buyer elects to retain on and after the date of the Closing (the “ Continuing Agreements and Equipment Leases ”). Notwithstanding anything herein contained in this Agreement to the contrary, other than Seller sending notice of termination of Unassumed Agreements and Equipment Leases as a part of the Closing, Buyer shall assume all of the Agreements and Equipment Leases at Closing pursuant to the Bill of Sale to the extent assignable (and the same shall be deemed to be Continuing Agreements and Equipment Leases). To the extent assignable, Buyer shall take an assignment of the 2014 Jeep Grand Cherokee lease. The failure of Buyer to timely give the Contract Notice shall be deemed to constitute Buyer’s election for Seller not to send notice of termination of any of the Agreements and Equipment Leases. To the extent that any Unassumed Agreements and Equipment Leases require the payment of a termination fee, the same shall be the responsibility of, and paid by, Buyer.

3.1.5 Indemnification for Inspections . Buyer shall indemnify and hold Seller, Manager and any parties required to be named under the Condominium Declaration as additional insureds and their respective disclosed or undisclosed, direct and indirect shareholders, officers, directors, trustees, partners, principals, members, employees, agents, affiliates, representatives, consultants, accountants, contractors and attorneys or other advisors, and any successors or assigns of the foregoing (collectively with Seller, “ Seller Related Parties ”) harmless from and against any and all losses, costs, damages, liens, claims, liabilities or expenses (including, but not limited to, reasonable attorneys’ fees, court costs and disbursements) incurred by any Seller Related Parties arising from or by reason of Buyer’s and/or Buyer’s Representatives’ access to, or inspection of, the Property (including damage to property and injury to persons caused by any tests, inspections or other due diligence conducted by or on behalf of Buyer) from and after the Access Date. Notwithstanding the foregoing, in no such event shall Buyer be obligated to indemnify Seller, Manager or any Seller Related Parties with respect to losses, costs, damages, claims, liabilities, expenses, demands, and/or obligations resulting from the gross negligence or willful misconduct of Seller, Manager or any Seller Related Parties, or the mere discovery by Buyer of any pre-existing conditions of the Property that is not exacerbated by Buyer. The provisions of this Section 3.1.5 shall survive the Closing or any termination of this Agreement.

3.1.6 Certain Matters . Notwithstanding anything to the contrary contained herein, Seller shall have no obligation to deliver to Buyer any confidential or proprietary materials, including, without limitation, the following: (1) information contained

3721766.8

-7 -

Gardere01 - 10003657v.4

in Seller’s (or any of Seller’s affiliates’) credit reports, credit authorizations, credit for financial analyses or projections, steering committee sheets, account summaries or other internal documents relating to the Property, including any valuation documents and the book value of the Property; (2) material which is subject to attorney client privilege or which is attorney work product or may not be disclosed pursuant to any order or agreement in any arbitration, litigation or other proceeding; (3) appraisal reports or letters; (4) financial statements or tax returns of Seller or any affiliate of Seller other than financial statements regularly provided by Manager with respect to the operation of the Hotel or as otherwise required in connection with the audit to be performed under Section 9.5 below; or (5) material which Seller is legally required not to disclose. The provisions of Section 3.1.6 shall survive the Closing or any termination of this Agreement.

3.1.7 Due Diligence Termination Right .

(a) At the expiration of the Due Diligence Period, this Agreement shall continue in full force and effect unless, prior to the expiration of the Due Diligence Period, Buyer shall have notified Seller and Escrow Agent in writing of Buyer’s election not to proceed with the acquisition of the Property (the “ Buyer’s Termination Notice ”).

(b) If Buyer shall timely deliver the Buyer’s Termination Notice as provided for in Section 3.1.7(a) above, the obligations of the parties hereunder shall terminate (and no party hereto shall have any further obligation in connection herewith except under those provisions that expressly survive a termination of this Agreement) and the Initial Deposit shall be released to Buyer by Escrow Agent, within three (3) business days after Buyer’s delivery of the Buyer’s Termination Notice, less (x) all escrow cancellation fees and (y) One Hundred Dollars ($100.00) (the “ Independent Consideration ”) which shall be delivered by Escrow Agent to Seller in consideration of Seller having entered into this Agreement.

3.1.8 Estoppel Delivery . Upon the execution and delivery of this Agreement and on or before the expiration of the Due Diligence Period, Seller shall use commercially reasonable efforts to obtain the following estoppel certificates: (i) an estoppel certificate from the Village Hall Condominium Association with respect to its Condominium Declaration (the “ Village Hall Estoppel ”), (ii) an estoppel certificate from the Beaver Creek Hotel A Condominium Association with respect to its Condominium Declaration (the “ A Condo Estoppel ”) and (iii) a lease estoppel certificate from Gorsuch, Ltd. B.C., a Colorado corporation (“ Gorsuch Lease Estoppel ”). A copy of the proposed Village Hall Estoppel and the proposed A Condo Estoppel are attached hereto as Exhibit “S-1 and “S-2 .” The Gorsuch Lease Estoppel shall comply with the estoppel requirements under the Gorsuch lease. If the Seller is unable to deliver the Village Hall Estoppel, the A Condo Estoppel or the Gorsuch Lease Estoppel to Buyer on or prior to the expiration of the Due Diligence Period, then Buyer may elect to terminate this Agreement in accordance with the terms of Section 3.1.7. If Buyer elects not to terminate the Agreement, then Buyer shall be deemed to have elected to proceed to Closing and shall have no further rights to terminate the Agreement pursuant to the terms of Section 3.1.7 or with respect to the estoppel certificates provided in this Section 3.1.8.

3721766.8

-8 -

Gardere01 - 10003657v.4

4. Title and Survey Matters .

4.1 Upon receipt, Buyer shall make available to Seller (i) a title insurance commitment covering the Units issued by the Title Company and (ii) copies of the recorded documents evidencing the exceptions to title stated in Schedule B therein (collectively, the “ Title Commitment ”). Seller has heretofore made available to Buyer (a) a copy of the Condominium Plats and (b) Seller’s existing survey of the Property. If Buyer elects to update said survey or obtain a new survey, the same shall be completed at Buyer’s cost. If a new or updated survey is not available at Closing, Buyer shall accept title to the Property subject to a survey exception acceptable to the Title Company without further act of the Seller. Either Seller’s survey (if a new or updated survey is not obtained) or any new or updated survey obtained by Buyer shall be the “ Survey ” under this Agreement). In no event will the update to Seller’s existing Survey be deemed to result in a New Matter (as defined below) or a further title exception as to the Property.

4.2 Buyer shall satisfy itself prior to expiration of the Due Diligence Period that the Title Company is willing, pursuant to the Title Commitment, to issue a standard 2006 ALTA form of owner’s title insurance policy (the “ Owner’s Policy ”) with coverage in the amount of the Purchase Price, indicating the fee interest of the Units to be vested of record in Buyer, subject solely to the “Permitted Exceptions” (as hereinafter defined). Unless Buyer gives written notice (“ Title Disapproval Notice ”) that it disapproves the exceptions to title shown on the Title Commitment or any matter disclosed on the Survey, stating the matters so disapproved, not later than five (5) days prior to the expiration of the Due Diligence Period, Buyer shall be conclusively deemed to have approved the Survey, the Condominium Plats, the Title Commitment and all of the documents and instruments referenced therein. Upon receipt by Seller of a Title Disapproval Notice given in a timely manner, Seller may elect to notify Buyer (being a “ Seller Response Notice ”) as to each properly disapproved matter either that: (i) Seller elects not to cause such disapproved matter to be removed as of the Closing Date (or otherwise take any action with respect thereto), or (ii) Seller intends to either: (a) use commercially reasonable efforts to cause such disapproved matter to be removed or released on the Closing Date; or (b) use commercially reasonable efforts to cause the Title Company to insure over such disapproved matter; provided, however, Seller shall not be in default hereunder, and shall have no liability, if for any reason, after electing either choice under (ii) above, such additional disapproved matters are not removed, released, or insured over as aforesaid as of the Closing Date; provided, however, in such case Buyer shall have the right to terminate this Agreement whereupon the Deposit (less the Independent Consideration) shall be promptly delivered by the Escrow Agent to Buyer, and the parties shall have no further obligations or liabilities hereunder (except for any obligations or liabilities that expressly survive termination of this Agreement). If Seller has provided a Seller Response Notice to Buyer by the date which is three (3) days prior to the expiration of the Due Diligence Period stating that Seller will not remove, release or otherwise correct such disapproved exceptions or if Seller has not provided a Seller Response Notice to Buyer prior to the date which is three (3) days prior to the expiration of the Due Diligence Period (which shall be deemed an election by Seller not to take any action with respect to such items), then Buyer may elect in writing not later than the expiration of the Due Diligence Period, either to waive Buyer’s objection to such disapproved exceptions or to terminate this Agreement. If Buyer shall fail to make such election, then Buyer shall be deemed to have waived its objections to such disapproved exceptions. In the event Buyer shall elect in writing to terminate this Agreement, the Deposit (less the Independent Consideration) shall be promptly delivered by the Escrow Agent to Buyer, and the parties shall have no further obligations or liabilities hereunder (except for any obligations or liabilities that expressly survive termination of this Agreement). Notwithstanding the foregoing

3721766.8

-9 -

Gardere01 - 10003657v.4

provisions of this Section 4.2, Seller shall take such actions as may be reasonably required by Title Company so that Title Company is willing to issue title insurance to Buyer without exception for the following: (i) any liens securing any mortgage, deed of trust or other financing, or (ii) any mechanics’ liens or materialmens’ liens (“ Other Liens ”) arising from any work or improvements at the Property that encumber the Property on the Closing Date (other than liens or claims arising from Buyer’s due diligence reviews or inspections hereunder) ((i) and (ii) are collectively referred to as “ Monetary Liens ”). Notwithstanding the foregoing, Buyer shall be deemed to have approved any Other Liens, provided Seller procures (at Seller’s sole cost and expense) prior to the Closing a written commitment from the Title Company to issue the Owner’s Policy, or an endorsement thereto, insuring Buyer against any such Other Liens; provided, however, Seller shall not be obligated to pay or expend more than One Hundred Thousand Dollars ($100,000.00) to cure, insure over or release Other Liens.

4.3 It is understood that Buyer may request a number of endorsements to or extended coverage for the Owner’s Policy. Buyer shall satisfy itself prior to the expiration of the Due Diligence Period that the Title Company will be willing to issue such endorsements or extended coverage in connection with the Owner’s Policy, and, accordingly, in no event shall the issuance of such endorsements or extended coverage to the Owner’s Policy constitute a condition to Buyer’s obligations under this Agreement.

4.4 As used herein: “ Permitted Exceptions ” means the following: (1) the lien of any real estate taxes and assessments for the year 2017, and subsequent periods, a lien not yet due and payable provided that the same are prorated in accordance with this Agreement; (2) such other matters set forth in the Title Commitment which are approved or deemed approved, pursuant to the terms hereof, by Buyer during the Due Diligence Period (in any event to include the exceptions listed in Exhibit “D” ) and any matter shown on the Condominium Plat; (3) any New Matter (as hereinafter defined) which has been approved, or deemed approved by Buyer, pursuant to Section 4.5 below; (4) the printed exceptions which appear in the standard 2006 ALTA form of owner’s title insurance policy; and (5) all building, signage and zoning ordinances, laws, regulations and restrictions by or of municipal and other governmental authorities. After Closing, Seller shall have no liability to Buyer, and Buyer and its successors and assigns shall make no claim against Seller, for the Permitted Exceptions, except as otherwise provided in Section 6.4. This provision shall survive the Closing.

4.5 If an additional exception to title (“ New Matter ”) affecting the Property is first disclosed to Buyer after the expiration of the Due Diligence Period, Buyer shall be deemed to have approved any such New Matter within five (5) days of Buyer’s discovery of such New Matter unless Buyer delivers to Seller within such time written notice of its objection thereto. Notwithstanding the foregoing, any New Matter that is the result of the activities of Buyer, or that does not adversely impact the marketability of title to the Property, shall be deemed approved by Buyer, and Buyer shall have no right to object to such New Matter. Seller may elect to use reasonable efforts to remove or cause the Title Company to bond, insure or endorse over such New Matter within thirty (30) days from the date of receipt of notice from Buyer with respect to the New Matter (and the Closing Date shall be extended to accommodate such cure period). In the event that within such thirty (30) day period Seller (1) does not elect to remove or cause the Title Company to bond, insure or endorse over such New Matter, or (2) elects but fails to remove or cause the Title Company to bond, insure or endorse over such New Matter, then upon the expiration of such period, Buyer, as its sole and exclusive remedy hereunder for such failure, shall elect in writing either (a) to terminate this Agreement by written notice to Seller, in which case the Deposit (less the Independent Consideration) shall be returned to Buyer, this Agreement shall be null and void and of no further

3721766.8

-10 -

Gardere01 - 10003657v.4

force or effect and the parties hereto shall have no further obligations to the other (except for any obligations or liabilities that expressly survive termination of this Agreement), or (b) to waive the foregoing right of termination and all other rights and remedies on account of such New Matter and to close the transaction contemplated by this Agreement, without any reduction or abatement of the Purchase Price. If Buyer shall fail to make such election, then Buyer shall be deemed to have waived its objections to such disapproved New Matter.

4.6 Notwithstanding the foregoing, Seller shall convey the Units to Buyer through the form of special warranty deed (or its equivalent) attached hereto as Exhibit “C” (the “ Deed ”), which will convey the portion of the Property described therein to Buyer subject to the Permitted Exceptions.

5. Conditions Precedent . The obligation of Buyer to purchase, and Seller to sell, the Property as contemplated by this Agreement is subject to satisfaction of each of the following respective conditions precedent (any of which may be waived in writing by the party in whose favor such condition exists) on or before the applicable date specified for satisfaction of the applicable condition. If any of such conditions is not fulfilled (or so waived) pursuant to the terms of this Agreement, then, except as expressly provided in this Agreement, the party in whose favor such condition exists may elect not to proceed with this Agreement and, in connection with any such election made in accordance with this Section 5, Seller and Buyer shall be released from further obligation or liability hereunder (except for those obligations and liabilities which, pursuant to the terms of this Agreement, survive such termination [and without releasing any party for a breach or default occurring prior to such termination]), and the Deposit shall be disposed of in accordance with Section 10.

5.1 Intentionally Deleted .

5.2 No Bankruptcy or Dissolution . A condition precedent to Seller’s obligation to sell the Property shall be that that at no time on or before the Closing Date shall any “Bankruptcy/Dissolution Event” (as hereinafter defined) have occurred with respect to Buyer, and if Buyer is a partnership or limited liability company, any general partners or managing members, as the case may be, of Buyer. A condition precedent to Buyer’s obligation to purchase the Property shall be that that at no time on or before the Closing Date shall any Bankruptcy/Dissolution Event have occurred with respect to Seller or its managing member.

5.3 Performance by Seller . The performance and observance, in all material respects, by Seller of all covenants and agreements of this Agreement to be performed or observed by Seller prior to or on the Closing Date under this Agreement shall be a condition precedent to Buyer’s obligation to purchase the Property. In addition, a condition precedent to Buyer’s obligation to purchase the Property shall be that the representations and warranties of Seller are true and correct in all material respects as of the Closing Date as if made on such Closing Date; with materiality being determined in connection with the overall value of the Property for all purposes under this Section 5. Notwithstanding the foregoing, in the event a material change of circumstances not otherwise contemplated by this Agreement and which was not caused by Seller’s intentional breach of any of its obligations hereunder occurs on or prior to the Closing Date which causes any of Seller’s representations or warranties set forth in Section 8.1 (or elsewhere in this Agreement) to become untrue or in the event of an unintentional breach or unintentional default by Seller which causes any of Seller’s covenants to be in breach, in any event, such that the failure or failures of all such

3721766.8

-11 -

Gardere01 - 10003657v.4

representations and warranties to be so true and correct or such covenants to be in breach would have a material adverse effect on the Property or the purchase and sale agreement contemplated by this Agreement (a “ Change of Circumstances ”), and, in either case, in the event that Buyer is not willing to waive its objection thereto, Seller shall have a period of thirty (30) days from the date of the discovery by Seller of such Change of Circumstances to cure such untrue fact, condition or covenant (and the Closing Date shall be extended to accommodate such cure period). If Seller does not cure such Change of Circumstances within such thirty (30) day period, Buyer shall have the right, as Buyer’s sole and exclusive remedy hereunder for such failure, either (a) to terminate this Agreement by written notice to Seller, in which case, this Agreement shall be null and void and of no further force or effect and the parties hereto shall have no further obligations to the other and the Deposit (less the Independent Consideration) shall be refunded to Buyer, or (b) to waive the foregoing right of termination and all other rights and remedies on account of such breach or default and to close the transaction contemplated by this Agreement. Notwithstanding anything in this Section 5.3 to the contrary, the foregoing procedure with respect to a Change of Circumstances shall not be applicable to the intentional breach by Seller of any of its obligations hereunder, it being understood that the remedy for such a breach by Seller shall be in accordance with Section 10.1 hereof and (ii) in no event shall Buyer have the right to terminate this Agreement if any of Seller’s representations and warranties become untrue or Seller cannot perform a covenant and any such matter does not have a material adverse effect on the Property or the purchase and sale contemplated by this Agreement.

5.4 Performance by Buyer . The performance and observance, in all material respects, by Buyer of all material covenants and agreements of this Agreement to be performed or observed by Buyer prior to or on the Closing Date under this Agreement, including, without limitation, the payment of the Purchase Price to Seller, shall be a condition precedent to Seller’s obligation to sell the Property. In addition, a condition precedent to Seller’s obligation to sell the Property shall be that the representations and warranties of Buyer are true and correct in all material respects as of the Closing Date as if made on such Closing Date.

5.5 Consents . As a condition to Buyer’s obligation to close and provided Buyer cooperates with Hyatt Corporation in applying for and pursuing a transfer of the Hotel Management Agreement, Seller shall furnish to Buyer, in form and content reasonably satisfactory to Buyer, with a written consent from Hyatt Corporation, as to the transfer to Buyer or its designee of Seller’s interest in the Hotel Management Agreement, with the form of the Hyatt Management Agreement Assignment (as defined and described in Section 6.2.1(l) being deemed acceptable to Buyer and Seller.

5.6 Hotel Management Agreement . As a condition to Buyer’s obligation to close and provided Buyer cooperates with Hyatt Corporation in applying for and pursuing a transfer of the Hotel Management Agreement, Seller shall provide to Buyer an estoppel certificate from the Manager with respect to the Hotel Management Agreement (the “Hyatt Estoppel”). The Hyatt Estoppel shall certify (a) a true and complete copy of the management agreement (or a listing of the documents attendant thereto), (b) that the Hotel Management Agreement is in full force and effect, (c) to the best of Manager’s knowledge, the absence of any events of default or the occurrence of any material events which with the passage of time or the giving of notice would constitute an event of default by either party under the Hotel Management Agreement, (d) the date through which management fees are paid, and (e) such other matters reasonably requested by Buyer prior to the Effective Date and for which Manager has an obligation to provide in an estoppel certificate under

3721766.8

-12 -

Gardere01 - 10003657v.4

the Hotel Management Agreement. A Buyer approved form of the Hyatt Estoppel is attached hereto as Exhibit “S-3” .

5.7 Consequence of Failure of a Closing Condition . If Seller has not satisfied the contingencies contained in Section 5.5 and 5.6 by the time of Closing, Seller shall have the right, by delivering written notice to Buyer prior to 3:00 p.m. on the Closing Date to extend the Closing Date for up to ten (10) business days in order to satisfy such conditions to Closing. In no event shall failure to satisfy the conditions contained in Section 5.5 or 5.6 constitute a default of Seller under this Agreement. If either Buyer or Seller has the right to terminate this Agreement pursuant to this Section 5, then the party exercising its termination rights hereunder shall notify in writing the other party and Escrow Agent of such election (a “ Section 5 Termination Notice ”) prior to the Closing Date (or prior to the earlier date which may be required for such termination under the terms of this Agreement), and the specific condition or conditions giving rise to such election. If either party shall deliver a Section 5 Termination Notice, and such notice is accompanied by a demand that Escrow Agent deliver the Deposit to such party, Escrow Agent shall promptly request from the non-requesting party written confirmation that release of the Deposit to the requesting party is acceptable and upon receipt of such written confirmation (or if no written confirmation or objection is received within ten (10) business days of Escrow Agent’s request therefor), Escrow Agent shall deliver the Deposit, less the Independent Consideration which shall be paid to Seller in all cases, to the requesting party as demanded. If the non-requesting party raises an objection to release of the Deposit, the procedures set forth in the Deposit Escrow Agreement shall govern Escrow Agent’s obligation to release the Deposit hereunder.

6. Closing Procedure . The sale and purchase herein provided shall be consummated (the “ Closing ”) through and pursuant to the Escrow Instructions (as defined below).

6.1 Escrow . On the Closing Date, the parties shall make the deliveries set forth in Section 6.2 below into an escrow (the “ Escrow ”) established pursuant to escrow instructions (“ Escrow Instructions ”) to be executed among Buyer, Seller and Escrow Agent in the form of Exhibit “Q” attached hereto, as the same may be amended by the agreement of the parties to conform to the facts and circumstances of closing. The conditions to the closing of such escrow shall include the Escrow Agent’s receipt of the Closing Payment (or confirmation of the receipt thereof by Seller) and a notice from each of Buyer and Seller authorizing Escrow Agent to close the transactions as contemplated herein (each of Buyer and Seller being obligated to deliver such authorization notice on the Closing Date as soon as it is reasonably satisfied that the other party is in a position to deliver the items to be delivered by such other party under Section 6.2 below).

6.2 Delivery by Parties . On the Closing Date, the following items shall be delivered by the parties, with Buyer and Seller cooperating in a commercially reasonable manner to obtain the consent to the Parking Agreement Assignment, the Management Agreement Assignments, the Hyatt Management Agreement Assignment and the Back Lawn Lease Assignment (each defined below), provided that, except as provided in Section 5.5 with respect to the Hyatt Management Agreement Assignment, each of Buyer and Seller shall close the transaction contemplated by this Agreement if the consent or approval of any such party is not provided:

6.2.1 Seller Deliveries . Seller shall deliver to Buyer the following:

3721766.8

-13 -

Gardere01 - 10003657v.4

(a) The Deed, subject only to the Permitted Exceptions, duly executed and acknowledged by Seller;

(b) Two (2) counterpart originals of the bill of sale, assignment and assumption agreement for the Property (the “ Bill of Sale ”), in the form of Exhibit “F” attached hereto, duly executed by Seller;

(c) An original assignment and assumption of the Parking Agreement Assignment (the “ Parking Agreement Assignment ”), in the form of Exhibit “E” attached hereto, duly executed by Seller;

(d) An original duly executed certificate of Seller (the “ Seller Closing Certificate ”) in the form of Exhibit “H” attached hereto, updating the representations and warranties contained in Section 8.1 hereof to the Closing Date and noting any changes thereto;

(e) An original duly executed certificate of “non-foreign” status (the “ Certificate of Non-Foreign Status ”) in the form of Exhibit “I” from Seller and any required state withholding or non-foreign status certificate;

(f) An original assignment and assumption of the Spa Management Agreement and the Retail Management Agreement (the “ Management Agreement Assignments ”), in (i) the form attached as Exhibit “V” or (ii) a form reasonably acceptable to Buyer and Seller prior to the expiration of the Due Diligence Period, duly executed by Seller. Any non-material changes to the Management Agreement Assignments required by the third party consenting thereto shall not be grounds for termination of this Agreement by Buyer or Seller;

(g) A duly executed copy of the Closing Statement (as hereinafter defined);

(h) Such additional documents as may be reasonably required by Buyer and Title Company that is within Seller’s control in order to consummate the transactions hereunder (provided the same do not increase in any material respect the costs to, or liability or obligations of, Seller in a manner not otherwise provided for herein). In no event shall Seller be obligated to provide any indemnity or other document to the Title Company with respect to the issuance of the Owner’s Policy other than (but subject to the limitation set forth in the first sentence of this subparagraph) (i) the gap indemnity in the form of Exhibit “J” (the “ Gap Indemnity ”), and (ii) the certificate in the form of Exhibit “K” (the “ Seller’s Title Certificate ”);

(i) A resignation of Tom Werner from the board of directors of the Beaver Creek Hotel A Condominium;

(j) Certificate(s)/Registration of Title for any vehicle owned by Seller and used in connection with the Property and such forms as are required to assign the lease of the 2014 Jeep Grand Cherokee;

(k) An assignment of the lessee’s interest in the Village Hall Back Lawn Lease, in a form reasonably acceptable to Buyer and Seller prior to the expiration of the Due Diligence Period (the “ Back Lawn Lease Assignment ”). Any non-material changes to the Back

3721766.8

-14 -

Gardere01 - 10003657v.4

Lawn Lease Assignment required by the third party consenting thereto shall not be grounds for termination of this Agreement by Buyer or Seller;

(l) An assignment of the Hotel Management Agreement (“ Hyatt Management Agreement Assignment ”) to Buyer (i) in the form attached hereto as Exhibit “U” , (ii) otherwise in a form reasonably acceptable to Buyer and Seller prior to the expiration of the Due Diligence Period or (iii) on Manager’s approved form acceptable to Buyer and Seller, signed by Seller; and

(m) An assignment of Lessor’s and Lessee’s interest in the Lease - Allegria Spa, dated July 1, 1998, as amended and assigned from time to time (the “ Allegria Spa Lease ”), in the form attached hereto as Exhibit “T” .

6.2.2 Buyer Deliveries . Buyer shall deliver, or cause to be delivered to Seller the following:

(a) The Closing Payment;

(b) Two (2) counterpart originals of the Bill of Sale, duly executed by Buyer;

(d) A duly executed certificate of Buyer (the “ Buyer Closing Certificate ”) in the form of Exhibit “L” attached hereto, updating the representations and warranties contained in Section 8.2 hereof to the Closing Date and noting any changes thereto;

(e) A duly executed copy of the Closing Statement;

(f) The Hyatt Management Agreement Assignment signed by Buyer;

(g) The Management Agreement Assignments signed by Buyer;

(h) The Back Lawn Lease Assignment executed by Buyer;

(i) All applicable transfer tax forms at closing, including, without limitation, a Real Property Transfer Declaration form (TD 1000), prepared, completed and signed by the Buyer; and

(j) Such additional documents as may be reasonably required by Seller and Title Company in order to consummate the transactions hereunder (provided the same do not increase in any material respect the costs to, or liability or obligations of, Buyer in a manner not otherwise provided for herein).

6.3 Closing Costs . With reference to Closing, Seller shall pay 50% of all escrow charges and recording costs and 100% of the brokerage commission referenced in Section 12.1.2 of this Agreement. Buyer shall pay (1) all transfer taxes and all documentary fees and all other transfer fees or assessments payable, if any, in connection with the transfer contemplated hereby, (2) all

3721766.8

-15 -

Gardere01 - 10003657v.4

premiums and costs of the Owner’s Policy, and the cost of obtaining extended coverage to the Owner’s Policy, (3) Buyer’s due diligence costs and property inspection fees, including the cost of any additional environmental, asbestos, structural and physical audits it deems necessary, (4) any personal property sales tax, (5) 50% of all escrow charges and recording costs, (6) all costs associated with the assignment of the Hotel Management Agreement, (7) the costs to run any UCC searches and (8) all other costs of closing the purchase and sale contemplated by this Agreement as are customary in Eagle County, Colorado.

6.4 Adjustments, Allocations and Prorations . The following provisions shall govern the adjustments and prorations that shall be made at Closing and the allocation of income and expenses from the Property between Seller and Buyer. Except as expressly provided to the contrary in this Section 6.4, all items of revenue, cost and expense of the Property, with respect to the period on or prior to 12:01 A.M. Mountain time (the “ Cut-Off Time ”) on the Closing Date, shall be for the account of Seller and all items of revenue, cost and expense of the Property, with respect to the period from and after 12:01 A.M. Mountain time on the Closing Date, shall be for the account of Buyer. Any net adjustment in favor of Buyer shall be credited against the Purchase Price at the Closing. Any net adjustment in favor of Seller shall be paid in cash or cash equivalent at the Closing by Buyer to Seller.

6.4.1 Real Property Taxes, Personal Property Taxes, Impositions and Other Assessments . All real property taxes, personal property taxes, assessments and other governmental impositions of any kind or nature, shall be prorated at Closing based on the most recent mill levy and assessment available. Such proration shall be done in accordance with the following provisions:

(a) Allocation of Real Property Taxes, Personal Property Taxes, Impositions and Other Assessments . Seller shall be responsible for all real property taxes, personal property taxes, regardless of when payable and when billed, impositions and other assessments that are attributable to the period prior to the Closing Date, and Buyer shall be responsible for all real property taxes, personal property taxes, regardless of when payable and when billed, impositions and other assessments that are attributable to the period from and after the Closing Date.

(b) Adjustment of Tax Rate or Assessment for other than Real Property Taxes . If the personal property tax rate or any assessment has not been set for the fiscal year in which the Closing occurs, then the proration of such personal property tax or assessment shall be based upon the most recent mill levy and assessment for the preceding fiscal year for such tax or assessment which has not been set for the fiscal year in which the Closing occurs, and such proration shall be promptly adjusted between Seller and Buyer upon presentation of written evidence that the actual taxes or assessment paid (determined as of the date such taxes or assessment are actually paid) for the fiscal year in which the Closing occurs differ from the amounts used at Closing. Notwithstanding anything in this Agreement to the contrary, any such adjustment shall be completed and paid within one (1) year after the Closing Date or the same shall be deemed waived.

(c) Final Reproration after Any Real Estate Tax Appeal . The parties acknowledge that a protest will likely be filed by Buyer protesting the real estate tax assessment for the year of Closing. Notwithstanding the fact that a reproration of real estate taxes

3721766.8

-16 -

Gardere01 - 10003657v.4

may occur within one (1) year after the Closing Date, the parties agree to a final reproration of real estate taxes payable for the year of Closing based on the final real estate taxes bill after the real estate tax assessment is ultimately reduced for such period. Reasonable costs and expenses of the parties in pursuing and collecting such tax reduction shall be included in such reproration, but in no event shall Seller be responsible for any additional amounts due to Buyer resulting from said reproration and the inclusion of such costs. This Section 6.4.1(c) shall survive Closing.

6.4.2 Hotel Reservations and Revenues .

(a) Reservations . Buyer shall honor (and shall cause Manager to honor) all reservations at the Property, and for any related conference, banquet, or meeting space or any recreational facilities in connection with the Property that are made by Seller or Manager on or prior to the Closing Date in the ordinary course of business and pertain to periods on or after the Closing Date. Any down payments and advance deposits that are (i) received by Seller prior to the Closing Date and (ii) made with respect to confirmed reservations for dates on or after the Closing Date, will be credited at Closing to Buyer.

(b) Guest Revenues . Revenues from guest rooms in the Property occupied as of the Cut-Off Time, including any sales taxes, room taxes and other taxes charged to guests in such rooms, all parking charges, sales from mini bars, in-room food and beverage, telephone, facsimile and data communications, in-room movie, laundry, and other service charges allocated to such rooms with respect to the night prior to the Closing Date shall be split equally between Buyer and Seller. All other revenues from restaurants, lounges, and other service operations conducted at the Property shall be allocated based on whether the same accrued before or from and after the Cut-Off Time, and Seller shall instruct Manager to separately record sales occurring before and from and after the Cut-Off Time.

(c) Banquet and Meeting Room Revenues . Revenues from conferences, receptions, meetings, and other functions occurring in any conference, banquet or meeting rooms in the Property, including usage charges and related taxes, food and beverage sales, valet parking charges, equipment rentals, and telecommunications charges, shall be allocated between Seller and Buyer, based on when the function therein commenced, with (i) one-day functions commencing prior to the Cut-Off Time being allocable to Seller; (ii) one-day functions commencing on or after the Closing Date being allocable to Buyer and (iii) multi day functions that include periods both before and after the Cut-Off Time being prorated between Seller and Buyer according to the period of time before and from and after the Cut-Off Time.

(d) Gift Certificates and Vouchers . Buyer shall receive a credit for the amount of (and shall honor to the extent of the credit) any outstanding, verifiable vouchers and gift certificates which have not been redeemed or used at the Property prior to the Closing Date.

6.4.3 House Banks and Cash on Hand (Other Than Bank Accounts [as defined below]) . The aggregate amount of cash in the house banks and cash on hand as of the Closing Date shall be referred to as the “ Aggregate Cash Amount ”. The Aggregate Cash Amount shall belong to Buyer. Seller shall receive a credit for the same at Closing.

6.4.4 Hotel Management Fees, Deposits and Reserves . Seller and Buyer shall prorate the “ Basic Fee ” and “ Chain Service Charges ” (as those terms are defined

3721766.8

-17 -

Gardere01 - 10003657v.4

in the Hotel License Agreement) and other administrative fees and charges payable to Manager for the month in which the Closing occurs, on the basis that Seller is responsible for the portion of such Basic Fee calculated on “ Gross Receipts ” (as defined in the Hotel License Agreement) for such month received prior to the Closing Date, and Buyer is responsible for the portion of the Basic Fee calculated on the Gross Receipts for such month received on and after the Closing Date, and such other charges and amounts shall be prorated on a daily basis during the month of Closing. Accordingly, (a) if Manager has been paid prior to the Closing Date Basic Fees and other fees under the Hotel Management Agreement greater than the Basic Fee allocable to Seller during its period of ownership and as aforesaid, Seller shall receive a credit on account thereof, and (b) if Manager has been paid prior to the Closing Date Basic Fees less than the Basic Fees allocable to Seller as aforesaid, Buyer shall receive a credit on account thereof. Seller and Buyer shall also prorate the “ Incentive Fee ” (as that term is defined in the Hotel License Agreement) payable to Manager for calendar year 2017, as re-forecasted by Manager on an annual basis for 2017 from time to time, on a daily basis for calendar year 2017 (i.e., divided by 365 days) such that Seller’s share is the number of days prior to the Closing Date and Buyer’s share is the balance of such amount. Based on the foregoing proration, Buyer shall be responsible for the payment of any Incentive Fees (including, without limitation, Additional Incentive Fees and Deferred Incentive Fees) that are due or payable to Manager on or after the date of this Agreement. In addition, the aggregate amount of any deposits, working capital or reserves held by Manager under the Hotel License Agreement (including, without limitation, the “ FFE & Fund ” [as defined in the Hotel License Agreement]) shall belong to Buyer, and Seller shall receive a credit for the same at Closing. In addition, Seller shall receive a credit at Closing in the amount of any FF&E, routine or other capital improvements reserves and any other reserve funds held under or pursuant to the Hotel License Agreement so long as such funds remain on deposit after Closing for the benefit of Buyer.

6.4.5 Hotel Receivables . Except for Over 60 Day Accounts Receivables (as hereinafter defined), all accounts receivables, including, without limitation, credit card sales (“ Accounts Receivables ”), with respect to the Property shall belong to Buyer and Seller shall receive a credit at Closing for same. Notwithstanding the foregoing, Seller shall retain all accounts receivables that are outstanding for more than sixty (60) days on the Closing Date (“ Over 60 Day Accounts Receivables ”) and Buyer shall not be obligated to acquire the same from Seller. Accordingly, there will be no proration for Over 60 Day Accounts Receivables. To the extent the Buyer receives payments on account of Over 60 Day Accounts Receivables, Buyer shall promptly pay any such amounts to Seller, as and when such amount is received by Buyer, net of third party collection costs. Buyer shall utilize commercially reasonable efforts, but shall have no obligation to institute litigation, to collect the Over 60 Day Accounts Receivables. All payments of accounts receivable received after the Closing shall be first deemed payment of current receivables and then to Over 60 Day Accounts Receivables, to the extent the payment is made by a party which directly or indirectly has a balance outstanding to Seller, as reasonably determined by the Buyer.

6.4.6 Purchase of Unopened Wine and Liquor Inventory . As of the date immediately prior to the Closing Date, Seller and Buyer shall jointly conduct (or ask Manager to conduct) an inventory of all unopened wine and liquor inventory and shall deliver a written report thereon to Seller and Buyer. Such report shall reflect the value of the unopened wine and liquor inventory equal to Seller’s cost as reflected on the books of Seller. On account of Buyer’s purchase of the unopened wine and liquor inventory, Seller shall receive a credit at

3721766.8

-18 -

Gardere01 - 10003657v.4

Closing in an amount equal to such cost of the unopened wine and liquor inventory as reflected on the books of Seller (such adjustment being referred to herein as an “ Inventory Adjustment ”). In addition to the Purchase Price, Buyer shall separately pay Seller, at Closing, Seller’s (or Manager’s, if applicable) cost of all unopened wine and liquor inventory. Inventory shall be considered “unopened” even if the packaging shall have been opened for purposes of assessing or affixing tax stamps.

6.4.7 Operational Taxes . The parties acknowledge that certain taxes accrue and are payable to the various local governments by any business entity operating a hotel and its related facilities. Included in those taxes may be business and occupation taxes, retail sales and use taxes, gross receipts taxes, and other special lodging or hotel taxes. For purposes of this Agreement, all of such taxes (expressly excluding taxes and assessments covered by Section 6.4.1, corporate franchise taxes, and federal, state, and local income taxes) (hereinafter referred to as “ Operational Taxes ”) shall be allocated between Seller and Buyer such that those attributable to the period prior to the Cut-Off Time shall be allocable to Seller and those attributable to the period from and after the Cut-Off Time shall be allocable to Buyer (with the attribution of such taxes hereunder to be done in a manner consistent with the attribution under this Agreement of the applicable revenues on which such taxes may be based). Buyer shall receive a credit for any Operational Taxes attributable to the period prior to the Cut-Off Time which Seller has not paid and which Buyer is obligated to pay. Except for the Operational Taxes for which Buyer has received a credit under this Section 6.4.7, Seller shall be solely responsible for payment of the Operational Taxes with respect to the period prior to the Cut-Off Time, and Buyer shall be solely responsible for payment of such Operational Taxes with respect to the period after the Cut-Off Time. Notwithstanding the foregoing, the Operational Taxes due and payable for the night prior to the Closing Date shall be split equally between Buyer and Seller.

6.4.8 Wages and Other Employee Compensation . Buyer acknowledges that employees of the Property are the employees of Manager and not of Seller, and that Buyer has no right to cause the termination of such employees. In no event shall Buyer take any action as to such employees of Manager that would create or cause any liability to Seller. Seller shall be responsible for all wages, salaries, bonuses, employment taxes and withholding taxes to the extent attributable to the period prior to Closing, and Buyer shall be responsible for all wages, salaries, any bonuses, employment taxes and withholding taxes to the extent attributable to the period from and after Closing, and Buyer shall be responsible for any and all vacation days, sick days and personal days, if applicable, existing on or accruing on or after the Closing Date. From and after the Closing, Buyer shall indemnify and save Seller harmless from and against any claim by any employee arising from Buyer’s actions and omissions as to any employees of Manager. The provisions of this Section 6.4.8 shall apply only to employees who are employed at the Property as of Closing.

6.4.9 Permits; Contracts; Rebates . Permit and license fees of assignable permits and licenses which are assigned to Buyer or for which the Buyer acquires the Property subject to, if any, shall be prorated as of the Closing Date. Payments due under the Continuing Agreements and Equipment Leases shall be prorated as of the Closing Date. Rebates received by Buyer after the Closing for purchases made prior to the Closing shall be paid by Buyer to Seller promptly as and when received.

3721766.8

-19 -

Gardere01 - 10003657v.4

6.4.10 Assessments Under the Condominium Declaration . All “ Assessments ” (as defined in the Condominium Declaration) under the Condominium Declaration, if any, shall be prorated between Buyer and Seller, Seller being charged and credited for all of the same allocable to the period up to the Closing Date and Buyer being charged and credited for all of the same allocable to the period from and after the Closing Date. Seller shall also receive a credit at Closing for its prorata share of any operating, capital or other reserves being held by the Condominium Association, to the extent such funds remain for the benefit of Buyer at Closing.

6.4.11 Other Property Operating Expenses . Operating expenses and utility charges (subject to this Section 6.4.11 and Section 6.4.13 below) and expenses under any condominium association documents affecting the Property, management agreements assigned to Buyer or its designee, off-site facility agreements assigned to Buyer or its designee, Continuing Agreements and Equipment leases, reciprocal easement agreements, shared use, or operating agreements (if any) with respect to private roadways, parking, recreational, or other facilities (to the extent any such expenses or charges are not allocated under the foregoing provisions of this Section 6) shall be prorated between Seller and Buyer by allocating to Seller those expenses attributable to the period prior to the Closing Date, and allocating to Buyer those expenses attributable for any period from and after the Closing Date. Buyer shall receive a credit at Closing for operating and other expenses incurred but not paid prior to the Closing Date. Seller shall receive a credit for Seller’s share of such expenses paid by Seller prior to the Closing, to the extent allocable to expenses that will be incurred on or after the Closing Date. To the extent that the amount of actual consumption of any utility services is not determined prior to the Closing Date, as provided in Section 6.4.13 below, a proration shall be made at Closing based on the last available reading and post-closing adjustments between Buyer and Seller shall be made within twenty (20) days of the date that actual consumption for such pre-Closing period is determined, which obligation shall survive the Closing and not be merged therein. Any tour agents’ and travel agents’ commissions shall be prorated as of the Closing Date.

6.4.12 Indemnification . In any case in which Buyer receives a credit at Closing on account of any obligation of Seller hereunder, Seller shall have no further liability for such obligation to the extent of the credit so given, and Buyer shall pay and discharge the same up to the amount of the credit. Buyer and Seller shall indemnify, protect, defend and hold the other party harmless from and against any claim arising from the non-payment of any of the items for which the indemnifying party receives a credit, but only to the extent of the amount of such credit, or otherwise assumes or retains responsibility for payment pursuant to this Section 6.4, plus penalties, fines, fees, interest and other charges thereon or related thereto imposed by third parties or by law in connection with such non-payment.

6.4.13 Items for Which There Will Not be a Proration . Seller and Buyer agree that (a) other than pursuant to Section 7, none of the insurance policies relating to the Property will be assigned to Buyer, and Buyer shall be responsible for arranging for its own insurance as of the Closing Date; and (b) utilities, including telephone, electricity, water and gas, shall be read on the Closing Date and Buyer shall be responsible for all the necessary actions needed to arrange for utilities to be transferred to the name of Buyer beginning 12:01 A.M. Mountain time on the Closing Date, including the posting of any required deposits. Accordingly, there will be no prorations for insurance or utilities (unless, with respect to a

3721766.8

-20 -

Gardere01 - 10003657v.4

particular utility, (i) a meter reading is unavailable, in which case such utility shall be prorated in the manner provided in Section 6.4.11 above; or (ii) the Title Company reasonably requires it), and Seller shall be entitled to any refund in connection with termination of Seller’s existing insurance policies. To the extent reasonably possible, Buyer and Seller shall cooperate to arrange for utility and other service providers to separately bill each party for their respective periods of ownership, in which event no credit and no proration will be necessary. Seller shall be entitled to receive and be returned any deposits Seller may have with any utility companies, or will receive a credit at Closing from Buyer to the extent such deposits remain for the benefit of Buyer from and after Closing.

6.4.14 Closing Statement; Post-Closing Adjustments . The prorations and credits hereunder at the Closing shall be made based on a closing statement (the “ Closing Statement ”) to be prepared by Seller prior to the Closing, based on actual figures to the extent available. If any of the prorations cannot be calculated based on actual figures, then they shall be calculated based on the Seller’s good faith estimates thereof. Within ninety (90) days after the Closing, Buyer shall prepare and submit to Seller a recalculation of the prorations and credits hereunder, reflecting actual figures and not estimates (other than with respect to those expenses for which a final bill has not been received). With respect to those prorations and credits which are not determinable as of such 90-day period, the parties shall recalculate such prorations and credits thirty (30) days prior to the Survival Period, except for real estate taxes, which shall be subject to proration for a period of one (1) year after the Closing Date. Such recalculation shall be binding on Buyer and Seller unless Seller delivers to Buyer, within ten (10) days after Seller has received such recalculation, a notice (“ Audit Notice ”) stating Seller does not agree with such calculations, and, if such notice is given, KPMG, LLP (the “ Accounting Firm ”) shall be engaged to make the final determination of such prorations and credits. The fees and costs of the Accounting Firm in making such determination shall be split equally between the parties. Each of Seller and Buyer shall cooperate in good faith and act reasonably after Closing to assist Manager and Accounting Firm in their determinations.

6.4.15 Survival of Section 6.4 . The obligations and rights of the parties under this Section 6.4 shall survive the Closing.

7. Condemnation or Destruction of Property . In the event that, after the date hereof but prior to the Closing Date, either any portion of the Property is taken pursuant to eminent domain proceedings, or any of the improvements on the Property are damaged or destroyed by any casualty, Seller shall not have any obligation to repair or replace any such damage or destruction, but Seller shall be required to give Buyer written notice of the same within five (5) business days after Seller learns of such casualty or condemnation. Seller shall also deliver and assign to Buyer, upon consummation of the transaction herein provided (except to the extent any condemnation proceeds or insurance proceeds are attributable to lost rents or revenues or other items applicable to any period prior to the Closing), and subject to the requirements of the Condominium Declaration, all claims of Seller respecting any condemnation or casualty insurance coverage, as applicable, and all condemnation proceeds, or proceeds from any such casualty insurance received by Seller on account of any casualty (except to the extent required for collection costs or repairs by Seller prior to the Closing Date), as applicable. There shall be no reduction of the Purchase Price on account of any casualty or condemnation (except that in connection with a casualty covered by insurance, Buyer shall be credited with the lesser of the remaining cost to repair the damage or destruction caused by such casualty or the amount of the deductible under Seller’s casualty insurance policy [except to the

3721766.8

-21 -

Gardere01 - 10003657v.4

extent such deductible was expended by Seller to repair the resulting damage]). In the event the condemnation award or the cost of repair of damage to the Property on account of a casualty, as applicable, shall exceed five percent (5%) of the Purchase Price (or if a casualty is uninsured and Seller does not elect to credit Buyer with an amount equal to the cost to repair such uninsured casualty, Seller having the right, but not the obligation, to do so), either Buyer or Seller may, at its option terminate this Agreement by notice to the other party, given on or before the sooner to occur of the Closing Date or five (5) business days after Seller learns of such casualty or condemnation, in which event the Deposit (less the Independent Consideration) shall be returned to Buyer and neither party shall have any further obligation hereunder except for those obligations which expressly survive a termination of this Agreement.

8. Representations and Warranties; Certain Covenants .

8.1 Representations and Warranties of Seller . Seller hereby represents and warrants to Buyer that, except as otherwise expressly set forth below, the following statements are true and correct as of the Effective Date:

8.1.1 Authority . Seller is duly organized, validly existing, and in good standing in the State of Delaware. Seller has all requisite power and authority to execute and deliver, and to perform all of its obligations under, this Agreement.

8.1.2 Due Execution . This Agreement and the other documents to be executed and delivered by Seller hereunder constitute or will constitute (as of the date the same are executed) a legal, valid and binding obligation of Seller in accordance with their respective terms. The execution, delivery and performance of this Agreement and the other documents to be executed and delivered by Seller hereunder have been duly authorized by all necessary action on the part of Seller and do not and will not (a) require any consent or approval that has not been obtained under Seller’s organizational documents, or (b) violate any provision of Seller’s organizational documents.

8.1.3 No Bankruptcy or Dissolution . No “Bankruptcy/Dissolution Event” (as hereinafter defined) has occurred with respect to Seller. As used herein, a “ Bankruptcy/Dissolution Event ” means any of the following: (a) the commencement of a case under Title 11 of the United States Bankruptcy Code, as now constituted or hereafter amended, or under any other applicable bankruptcy law or other similar law; (b) the appointment of a trustee or receiver of any substantial property interest; (c) a general assignment for the benefit of creditors; (d) an attachment, execution or other judicial seizure of a substantial property interest; or (e) a dissolution.

8.1.4 Tenant Leases . Except as may be set forth in Exhibit “G” , there are no tenant leases of commercial spaces at the Property. To Seller’s knowledge, no party is in default under any tenant leases of commercial spaces at the Property after the expiration of any applicable notice, grace or cure period.

8.1.5 Litigation . Except as may be set forth in Exhibit “M” , to Seller’s actual knowledge after conferring with the general manager of the Property, there is no action, litigation, condemnation or other proceeding currently pending against Seller or Manager as to the Property which is not covered by insurance.

3721766.8

-22 -

Gardere01 - 10003657v.4

8.1.6 Compliance . Except as may be set forth in Exhibit “N” , to Seller’s actual knowledge after conferring with the general manager of the Property, Seller has received no written notice from any governmental authority having jurisdiction over the Property or any party to any recorded covenant or restriction affecting the Property to the effect that the Property owned by Seller is currently not in compliance with applicable laws, ordinances, covenants and restrictions.

8.1.7 Condominium Declaration . Seller has made available to Buyer a true, correct and complete copy of the Condominium Declaration, which is in full force and effect, to Seller’s knowledge. To Seller’s knowledge, Seller is not in material default of its obligations under the Condominium Declaration, and all sums due and payable thereunder have been paid.

8.1.8 Contracts . To Seller’s actual knowledge after conferring with the general manager of the Property, the service contracts, management agreements, licenses and equipment leases described in Exhibit “O” constitute all of the service contracts, management agreements, licenses and equipment leases (“ Agreements and Equipment Leases ”) to which Seller is a party or is bound with respect to the Property, except for Agreements and Equipment Leases which are de minimis ( i.e., any such service contract, management agreement, license or equipment lease requiring aggregate annual payments less than $6,000 for any year during the term of such service contract, management agreement, license or equipment lease after the Closing). To Seller’s actual knowledge, no party is in default under any of the Agreements and Equipment Leases.

8.1.9 Environmental Matters . Except as set forth in the reports described in Exhibit "P" (the " Environmental Reports "), copies of which have been delivered to Buyer, to Seller's knowledge there has been no release of any Hazardous Substance (as hereinafter defined) at or upon the Property, in an amount which would, as of the date hereof, give rise to an "Environmental Compliance Cost" (as hereinafter defined). The term " Hazardous Substance " shall mean asbestos, petroleum products, and any other hazardous waste or substance which has, as of the date hereof, been determined to be hazardous or a pollutant by Environmental Law (as hereinafter defined), which substance causes the Property (or any part thereof) to be in material violation of any applicable Environmental Law; provided, however, that the term "Hazardous Substance" shall not include (x) motor oil and gasoline contained in or discharged from vehicles not used primarily for the transport of motor oil or gasoline, or (y) materials which are stored or used in the ordinary course of a tenant's occupancy at (or Seller's or Seller's managing agents' operation of) the Property. The term " Environmental Compliance Cost " means any material out‑of‑pocket cost, fine, penalty, fee or expense incurred directly to satisfy any requirement imposed by the U.S. Environmental Protection Agency, the U.S. Department of Transportation, or any instrumentality authorized to regulate substances in the environment which has jurisdiction over the Property to bring the Property into compliance with applicable Environmental Law directly relating to the existence on the Property of any Hazardous Substance. The term " Environmental Law " shall mean (a) the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended ("CERCLA"), and (b) any other federal, state or local law, ordinance, rule, or regulation applicable to the Property and establishing liability standards or required action as to emissions, discharges, releases or threatened releases of pollutants, contaminants or

3721766.8

-23 -

Gardere01 - 10003657v.4

chemicals, or industrial, toxic or other hazardous substances or waste into the ambient air, soil, soil vapor, groundwater, or surface water on or about the Property.

8.1.10 Employees . Seller has no employees. There are no unions or collective bargaining agreements affecting the Property.

8.1.11 Foreign Person . Seller is a “United States person” (as defined in Section 7701(a)(30)(B) or (C) of the “Code” (as hereinafter defined) for the purposes of the provisions of Section 1445(a) of the Code.

8.1.12 OFAC . Neither Seller nor any of Seller’s affiliates, nor any of their respective brokers or other agents acting in any capacity in connection with the transactions contemplated by this Agreement, is or will be, to Seller’s knowledge (a) conducting any business or engaging in any transaction or dealing with any person appearing on the U.S. Treasury Department’s OFAC list of prohibited countries, territories, “specifically designated nationals” (“ SDNs ”) or “blocked persons” (each a “ Prohibited Person ”) (which lists can be accessed at the following web address: http://www.ustreas.gov/offices/enforcement/ofac/), including the making or receiving of any contribution of funds, goods or services to or for the benefit of any such Prohibited Person; (b) engaging in certain dealings with countries and organizations designated under Section 311 of the USA PATRIOT Act as warranting special measures due to money laundering concerns; (c) dealing in, or otherwise engaging in any transaction relating to, any property or interests in property blocked pursuant to Executive Order No. 13224 dated September 24, 2001, relating to “Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism”; (d) a foreign shell bank or any person that a financial institution would be prohibited from transacting with under the USA PATRIOT Act; or (e) engaging in or conspiring to engage in any transaction that evades or avoids, or has the purpose of evading or avoiding, or attempting to violate, any of the prohibitions set forth in (i) any U.S. anti-money laundering law, (ii) the Foreign Corrupt Practices Act, (iii) the U.S. mail and wire fraud statutes, (iv) the Travel Act, (v) any similar or successor statutes or (vi) any regulations promulgated under the foregoing statutes.

8.1.13 Personal Property . Seller is the sole owner or lessee of the Personal Property, which shall be free of any liens or encumbrances as of the Closing except for the Agreements and Equipment Leases, which shall be subject only to the ownership interest of the lessor thereunder.

8.1.14 Management Agreement . To Seller’s actual knowledge, Seller has made available to Buyer a true, correct and complete copy of the Hotel Management Agreement, which is in full force and effect, to Seller’s knowledge. To Seller’s knowledge, Seller is not in material default of its obligations under the Hotel Management Agreement, and all sums due and payable thereunder have been paid.

8.1.15 Tax Returns . To Seller's actual knowledge, except for any tax returns for which the filing deadline has not yet expired (or, with respect to which, Seller has filed an extension in accordance with applicable law), Seller has filed (or caused to be filed) with the appropriate governmental agencies all material required tax returns with respect to the Property and the operation of the Hotel. Other than amounts not yet due and payable, Seller has paid all material taxes, assessments, fees, and other government charges, in all of the

3721766.8

-24 -

Gardere01 - 10003657v.4

foregoing cases, levied by any governmental authority upon its assets and income or otherwise relating or attributable to the Property, except taxes which are currently being contested in good faith by appropriate proceedings and for which Seller has set aside on its books adequate reserves for such taxes.

8.1.16 Financial Statements . To Seller’s knowledge, the financial statements for the Property delivered to Buyer fairly represent results of operations in the manner customarily received from Manager and provided to Seller’s lender.

For the purposes of this Agreement and the documents to be delivered pursuant hereto, references to “To Seller’s knowledge” or “Seller’s actual knowledge” or “Seller has no knowledge” shall mean the actual, present, conscious knowledge of Justin Leonard and Kolin Pound (collectively, the “ Seller Knowledge Individuals ”) on the Effective Date, or as remade on the Closing Date pursuant to the Seller Closing Certificate, without any investigation or inquiry, but such individual shall not have any individual liability in connection herewith. Without limiting the foregoing, Buyer acknowledges that the Seller Knowledge Individuals have not performed and are not obligated to perform any investigation or review of any files or other information in the possession of Seller, or to make any inquiry of any persons, or to take any other actions in connection with the representations and warranties of Seller set forth in this Agreement. Neither the actual, present, conscious knowledge of any other individual or entity, nor the constructive knowledge of the Seller Knowledge Individuals or of any other individual or entity, shall be imputed to the Seller Knowledge Individuals.

8.2 Representations and Warranties of Buyer . Buyer hereby represents and warrants the following to Seller:

8.2.1 Authority . Buyer is duly organized, validly existing, and in good standing under the laws of the State of Delaware. Buyer has all requisite corporate, limited liability company or partnership power and authority to execute and deliver, and to perform all its obligations under, this Agreement.

8.2.2 Due Execution . This Agreement and the other documents to be executed and delivered by Buyer hereunder constitute or will constitute (as of the date same are executed) a legal, valid and binding obligation of Buyer in accordance with their respective terms. The execution, delivery and performance of this Agreement and the other documents to be executed and delivered by Buyer hereunder have been duly authorized by all necessary action on the part of Buyer and do not and will not (a) require any consent or approval that has not been obtained under Buyer’s organizational documents, or (b) violate any provision of Buyer’s organizational documents.

8.2.3 No Bankruptcy/Dissolution Event . No Bankruptcy/Dissolution Event has occurred with respect to Buyer or any of its partners or members, as applicable.

8.2.4 Satisfaction of Hotel Management Agreement Requirements . Buyer hereby represents and warrants to Seller that, as of the Effective Date, it has reviewed the Hotel License Agreement, is familiar with it and conducted its own analysis sufficient to conclude that, to Buyer’s actual knowledge Buyer (and any entity to whom Buyer may assign this Agreement) is a permissible assignee of the Hotel License Agreement, including, without

3721766.8

-25 -

Gardere01 - 10003657v.4

limitation, meeting the criteria, as applicable, to become an assignee of Sellers’s interest under the Hotel License Agreement for purposes of integrity and business reputation and the lack of conflicts of interest to the extent that such provisions are set forth in Section 15.2 or other provisions of the Hotel License Agreement. Buyer shall promptly provide Manager with diligence and information requested by Manager, at Buyer’s sole cost and expense and without cost to Seller, and Buyer shall be responsible for all costs, reserves and deposits in connection therewith. Buyer agrees to post any review or other deposit required by Manager and Seller shall give written notice to Manager to begin the assignment application process with Manager within three (3) Business Days after the Effective Date.

8.2.5 Condition of Property . The Purchase Price reflects Buyer’s underwriting of the costs of any capital improvements or repairs that may be required with respect to the Property, Buyer hereby acknowledging that Buyer shall assume responsibility for payment with respect to capital improvements or repairs that have either been included in the Property’s budget for 2017 or for which Seller or Manager has otherwise committed to fund.

8.2.6 Plan Assets . Buyer is not (and, throughout the period transactions are occurring pursuant to this Agreement, will not be) and is not acting on behalf of (and, throughout the period transactions are occurring pursuant to this Agreement, will not be acting on behalf of) an “employee benefit plan” as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended (“ ERISA ”), that is subject to Title I of ERISA, a “plan” as defined in and subject to Section 4975 of the Internal Revenue Code of 1986, as amended (the “ Code ”), or an entity deemed to hold the plan assets of any of the foregoing pursuant to 29 C.F.R. Section 2510.3-101, as modified by Section 3(42) of ERISA. None of the transactions contemplated by this Agreement is in violation of any state statutes applicable to Buyer regulating investments of, any fiduciary obligations with respect to, governmental plans similar to the provisions of Section 406 of ERISA or Section 4975 of the Code.

8.2.7 OFAC . Neither Buyer nor any of Buyer’s Affiliates, nor, to Buyer’s knowledge, any of their respective brokers or other agents acting in any capacity in connection with the transactions contemplated by this Agreement, is or will be (a) conducting any business or engaging in any transaction or dealing with any Prohibited Person or Prohibited Persons, including the making or receiving of any contribution of funds, goods or services to or for the benefit of any such Prohibited Person; (b) engaging in certain dealings with countries and organizations designated under Section 311 of the USA PATRIOT Act as warranting special measures due to money laundering concerns; (c) dealing in, or otherwise engaging in any transaction relating to, any property or interests in property blocked pursuant to Executive Order No. 13224 dated September 24, 2001, relating to “Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism”; (d) a foreign shell bank or any person that a financial institution would be prohibited from transacting with under the USA PATRIOT Act; or (e) engaging in or conspiring to engage in any transaction that evades or avoids, or has the purpose of evading or avoiding, or attempting to violate, any of the prohibitions set forth in (i) any U.S. anti-money laundering law, (ii) the Foreign Corrupt Practices Act, (iii) the U.S. mail and wire fraud statutes, (iv) the Travel Act, (v) any similar or successor statutes or (vi) any regulations promulgated under the foregoing statutes.

3721766.8

-26 -

Gardere01 - 10003657v.4

8.2.8 No Reliance . BUYER ACKNOWLEDGES AND AGREES ITS OBLIGATIONS UNDER THIS AGREEMENT SHALL NOT BE SUBJECT TO ANY FINANCING CONTINGENCY. EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT AND THE CLOSING DOCUMENTS EXECUTED AND DELIVERED BY SELLER AT CLOSING (“ SELLER EXECUTED CLOSING DOCUMENTS ”), THE SALE AND TRANSFER OF THE PROPERTY HEREUNDER IS AND WILL BE MADE ON AN “AS IS” BASIS, WITHOUT REPRESENTATIONS AND WARRANTIES OF ANY KIND OR NATURE, EXPRESS, IMPLIED OR OTHERWISE, INCLUDING ANY REPRESENTATION OR WARRANTY CONCERNING TITLE TO THE PROPERTY, THE PHYSICAL CONDITION OF THE PROPERTY (INCLUDING THE CONDITION OF THE SOIL OR THE UNITS OR ANY PROPERTY ASSOCIATED THEREWITH), THE NATURE, STATUS OR COMPLIANCE WITH THE TERMS OF THE CONDOMINIUM DECLARATION BY ANY PARTY THERETO, THE ENVIRONMENTAL CONDITION OF THE PROPERTY (INCLUDING THE PRESENCE OR ABSENCE OF HAZARDOUS SUBSTANCES ON OR RESPECTING THE PROPERTY), THE COMPLIANCE OF THE PROPERTY WITH APPLICABLE LAWS, ENCUMBRANCES AND REGULATIONS (INCLUDING ZONING, SIGNAGE, PARKING AND BUILDING CODES OR THE STATUS OF DEVELOPMENT, SIGNAGE AND USE RIGHTS RESPECTING THE PROPERTY), THE FINANCIAL CONDITION OF THE PROPERTY, OR ANY OTHER REPRESENTATION OR WARRANTY RESPECTING ANY INCOME, EXPENSES, CHARGES, LIENS OR ENCUMBRANCES, RIGHTS OR CLAIMS ON, AFFECTING OR PERTAINING TO THE PROPERTY OR ANY PART THEREOF. BUYER ACKNOWLEDGES THAT BUYER HAS (OR WILL HAVE PRIOR TO THE EXPIRATION OF THE DUE DILIGENCE PERIOD) EXAMINED, REVIEWED AND INSPECTED ALL MATTERS WHICH IN BUYER’S JUDGMENT BEAR UPON THE PROPERTY AND ITS VALUE AND SUITABILITY FOR BUYER’S PURPOSES. EXCEPT AS TO MATTERS EXPRESSLY SET FORTH IN THIS AGREEMENT AND THE SELLER EXECUTED CLOSING DOCUMENTS, BUYER WILL ACQUIRE THE PROPERTY SOLELY ON THE BASIS OF ITS OWN PHYSICAL AND FINANCIAL EXAMINATIONS, REVIEWS AND INSPECTIONS AND THE TITLE INSURANCE PROTECTION AFFORDED BY THE OWNER’S POLICY.



______________ Seller’s Initials	______________ Buyer’s Initials

8.3 Survival .

8.3.1 Survival Period . The representations, warranties and covenants of Seller under this Agreement, and in any certificate or document delivered pursuant hereto or in connection herewith, shall survive the Closing for a period of nine (9) months from the Closing Date (such period, the “ Survival Period ”). Each such representation, warranty and covenant of Seller shall automatically be null and void and of no further force and effect on the first day following the expiration of the Survival Period, unless, prior to the expiration of such Survival Period, as to any applicable representation, warranty or covenant, Buyer shall have provided Seller with written notice alleging that Seller is in breach of such representation,

3721766.8

-27 -

Gardere01 - 10003657v.4

warranty or covenant, and specifying in reasonable detail the nature of such breach. Buyer shall allow Seller sixty (60) days after Buyer’s notice within which to cure such breach or if such breach cannot be cured within such sixty (60) day period, and Seller notifies Buyer it wishes to extend its cure period (the “ Cure Extension Notice ”), such additional reasonable period of time (not to exceed an additional sixty (60) days) as is required to cure the same so long as such cure has been commenced within such sixty (60) day period and is being diligently pursued to completion. If Seller fails to cure such breach after written notice thereof, Buyer’s sole remedy shall be to commence a legal proceeding against Seller alleging that Seller has breached such representation, warranty or covenant and that Buyer has suffered actual damages as a result thereof (a “ Proceeding ”), which Proceeding must be commenced, if at all, within sixty (60) days after the expiration of the Survival Period, provided, however, that if Buyer gives Seller written notice of such a breach within the Survival Period, and Seller subsequently sends a Cure Extension Notice, then Buyer shall have until the date which is thirty (30) days after the date Seller notifies Buyer it has ceased endeavoring to cure such breach, to commence such Proceeding. If Buyer shall have timely delivered the written notice and commenced a Proceeding in accordance with this Section 8.3, and a court of competent jurisdiction shall, pursuant to a final, non-appealable order in connection with such Proceeding, determine that (1) Seller was in breach of the applicable representation or warranty as of the Effective Date or the Closing Date, as the case may be, and (2) Buyer suffered actual damages (the “ Damages ”) by reason of such breach, (3) Buyer did not have actual knowledge of such breach on or prior to the Closing Date, and (4) Buyer would not have learned of such breach through the exercise of reasonable diligence prior to the Closing Date, then Buyer shall be entitled to receive an amount equal to the Damages, subject, in any event, to the limitations set forth in Section 8.5. Any such Damages, subject to the limitations contained herein, shall be paid within thirty (30) days following the entry of such final, non-appealable order and delivery of a copy thereof to Seller. The representations, warranties and covenants of Buyer under this Agreement, and in any certificate or document delivered pursuant hereto or in connection herewith, shall survive the Closing indefinitely. Notwithstanding the foregoing or any other provision of this Agreement to the contrary, (i) the matters under Section 6.4 of this Agreement shall not be subject to the Survival Period and shall survive the Closing for the periods provided in Section 6.4 and (ii) insured claims against Seller or Manager for matters accruing or arising prior to the Closing Date shall survive Closing without limitation.

8.3.2 Holdback Deposit . Seller and Buyer agree that at Closing, upon the consummation of the transaction provided for by this Agreement and pursuant to the applicable terms of the “ Post-Closing Escrow Agreement ” attached hereto as Exhibit “R” , a portion of the proceeds of the Purchase Price payable to Seller equal to Three Million Seven Hundred Fifty Thousand and 00/100 Dollars ($3,750,000.00) (the “ Holdback Deposit ”) shall be retained by Title Company for the Survival Period. The Holdback Deposit shall be released or retained in accordance with the Post-Closing Escrow Agreement. Upon the expiration of the Survival Period all Seller’s representations and warranties shall cease to have any effect unless written notice of a claim has been previously given (in which case, such claim shall survive until fully and finally resolved).

8.4 Knowledge as a Defense . Seller shall have no liability with respect to a breach of the representations and warranties of Seller under this Agreement to the extent that Buyer proceeds with the closing of the transaction contemplated hereby with actual knowledge of such breach prior to the Closing Date.

3721766.8

-28 -

Gardere01 - 10003657v.4

8.5 Limitation on Damages . Notwithstanding anything to the contrary set forth in this Agreement, Seller’s liability for breach of any covenant, representation or warranty of Seller contained in this Agreement and in Seller Executed Closing Documents, (other than Seller’s obligations under Section 6.4 and insured claims against Seller or Manager for matters accruing or arising prior to the Closing Date, to which the limitations under this Section 8.5 shall not apply) or any other instruments delivered at Closing, shall, subject to the limitations of survival set forth in this Section 8, be limited to claims in excess of One Hundred Fifty Thousand and No/100 United States Dollars ($150,000.00) in the aggregate, and the total aggregate liability of Seller for any and all claims arising out of any such covenants, representations and warranties shall not exceed an amount equal to Three Million Seven Hundred Fifty Thousand and No/100 United States Dollars ($3,750,000.00). In addition, in no event shall Seller be liable for any incidental, consequential, indirect, punitive, special or exemplary damages, or for lost profits, unrealized expectations or other similar claims, and in every case Buyer’s recovery for any claims referenced above shall be net of any insurance proceeds and any indemnity, contribution or other similar payment recovered or recoverable by Buyer from any insurance company or other third party.

8.6 DISCLAIMER, RELEASE AND ASSUMPTION . AS AN ESSENTIAL INDUCEMENT TO SELLER TO ENTER INTO THIS AGREEMENT, AND AS PART OF THE DETERMINATION OF THE PURCHASE PRICE, BUYER ACKNOWLEDGES, UNDERSTANDS AND AGREES AS OF THE EFFECTIVE DATE AND AS OF THE CLOSING DATE AS FOLLOWS:

8.6.1 DISCLAIMER .

(a) AS-IS, WHERE IS . EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN THIS AGREEMENT OR IN THE DOCUMENTS EXECUTED AND DELIVERED BY SELLER AT CLOSING (THE “ SELLER EXECUTED CLOSING AGREEMENTS ”), THE SALE OF THE PROPERTY HEREUNDER IS AND WILL BE MADE ON AN “AS IS, WHERE IS” BASIS. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN THIS AGREEMENT OR IN THE SELLER EXECUTED CLOSING AGREEMENTS, SELLER HAS NOT MADE, DOES NOT MAKE AND SPECIFICALLY NEGATES AND DISCLAIMS ANY REPRESENTATIONS, WARRANTIES OR GUARANTIES OF ANY KIND OR CHARACTER WHATSOEVER, WHETHER EXPRESS OR IMPLIED, ORAL OR WRITTEN, PAST, PRESENT OR FUTURE OF, AS TO, CONCERNING OR WITH RESPECT TO THE PROPERTY OR ANY OTHER MATTER WHATSOEVER, INCLUDING, WITHOUT LIMITATION: (i) THE QUALITY, NATURE, ADEQUACY AND PHYSICAL CONDITION AND ASPECTS OF THE PROPERTY, INCLUDING, BUT NOT LIMITED TO, THE STRUCTURAL ELEMENTS, SEISMIC ASPECTS OF THE PROPERTY, FOUNDATION, ROOF, APPURTENANCES, ACCESS, SIGNAGE, LANDSCAPING, PARKING FACILITIES OR THE LACK OF OWNERSHIP THEREOF AND THE ELECTRICAL, MECHANICAL, HVAC, PLUMBING, SEWAGE, AND UTILITY SYSTEMS, FACILITIES AND APPLIANCES, THE SQUARE FOOTAGE WITHIN THE UNITS, (ii) THE QUALITY, NATURE, ADEQUACY, AND PHYSICAL CONDITION OF SOILS, GEOLOGY AND ANY GROUNDWATER, (iii) THE EXISTENCE, QUALITY, NATURE, ADEQUACY AND PHYSICAL CONDITION OF UTILITIES SERVING THE PROPERTY, (iv) THE DEVELOPMENT POTENTIAL OF THE PROPERTY, AND THE PROPERTY’S USE, HABITABILITY, MERCHANTABILITY, OR FITNESS, SUITABILITY, VALUE OR ADEQUACY OF THE PROPERTY FOR ANY PARTICULAR PURPOSE, (v) THE ZONING AND OTHER LEGAL STATUS OF THE

3721766.8

-29 -

Gardere01 - 10003657v.4

PROPERTY, THE UNITS AND ANY OTHER PUBLIC OR PRIVATE RESTRICTIONS ON USE OF THE PROPERTY, (vi) THE COMPLIANCE OF THE PROPERTY OR ITS OPERATION WITH ANY APPLICABLE CODES, LAWS, REGULATIONS, STATUTES, ORDINANCES, COVENANTS, CONDITIONS AND RESTRICTIONS OF ANY GOVERNMENTAL OR QUASI-GOVERNMENTAL ENTITY OR OF ANY OTHER PERSON OR ENTITY OR THE CONDOMINIUM DECLARATION, (vii) THE PRESENCE OF HAZARDOUS MATERIALS ON, UNDER OR ABOUT THE PROPERTY OR THE ADJOINING OR NEIGHBORING PROPERTY, (viii) THE QUALITY OF ANY LABOR AND MATERIALS USED IN ANY IMPROVEMENTS ON THE PROPERTY, (ix) THE CONDITION OF TITLE TO THE PROPERTY, (x) THE CONDOMINIUM DECLARATION, CONTRACTS, OR OTHER AGREEMENTS AFFECTING THE PROPERTY, AND (xi) ECONOMICS OF THE OPERATION OF THE PROPERTY.

(b) SOPHISTICATION OF BUYER . BUYER ACKNOWLEDGES AND AGREES THAT IT IS A SOPHISTICATED BUYER WHO IS FAMILIAR WITH THE OWNERSHIP AND OPERATION OF REAL ESTATE PROJECTS SIMILAR TO THE PROPERTY, AND THAT UPON THE EXPIRATION OF THE DUE DILIGENCE PERIOD, BUYER SHALL HAVE BEEN GIVEN A FULL OPPORTUNITY TO INSPECT AND INVESTIGATE EACH AND EVERY ASPECT OF THE PROPERTY AND ANY AND ALL MATTERS RELATING THERETO, EITHER INDEPENDENTLY OR THROUGH AGENTS OF BUYER’S CHOOSING, INCLUDING, WITHOUT LIMITATION:

(i) ALL MATTERS RELATING TO TITLE, TOGETHER WITH ALL GOVERNMENTAL AND OTHER LEGAL REQUIREMENTS SUCH AS TAXES, ASSESSMENTS, ZONING, USE PERMIT REQUIREMENTS AND BUILDING CODES.

(ii) THE PHYSICAL CONDITION AND ASPECTS OF THE PROPERTY, INCLUDING, WITHOUT LIMITATION, THE INTERIOR, THE EXTERIOR, THE SQUARE FOOTAGE WITHIN THE UNITS, THE STRUCTURE, SEISMIC ASPECTS OF THE PROPERTY, THE PAVING, THE UTILITIES, AND ALL OTHER PHYSICAL AND FUNCTIONAL ASPECTS OF THE PROPERTY.

(iii) ANY EASEMENTS AND/OR SIGNAGE, PARKING OR ACCESS RIGHTS AFFECTING THE PROPERTY.

(iv) ALL MATTERS ARISING OUT OF OR RELATING IN ANY WAY TO THE BEAVER CREEK LICENSE AGREEMENTS, THE CONTINUING AGREEMENTS AND EQUIPMENT LEASES AND ANY OTHER DOCUMENTS OR AGREEMENTS OF SIGNIFICANCE AFFECTING THE PROPERTY, INCLUDING, WITHOUT LIMITATION, THE CONDOMINIUM DECLARATION, THE PARKING AGREEMENT, THE VILLAGE HALL BACK LAWN LEASE OR ANY RECIPROCAL EASEMENT AGREEMENTS OR ANY OPERATING AGREEMENTS AFFECTING THE PROPERTY.

(v) ALL FINANCIAL EXAMINATIONS AND OTHER MATTERS OF SIGNIFICANCE AFFECTING THE PROPERTY, OR OTHERWISE RELATING TO THE ACQUISITION BY BUYER OF THE PROPERTY.

3721766.8

-30 -

Gardere01 - 10003657v.4

(c) RELIANCE . BUYER WILL ACQUIRE THE PROPERTY SOLELY ON THE BASIS OF AND IN RELIANCE UPON SUCH EXAMINATIONS AND THE TITLE INSURANCE PROTECTION AFFORDED BY THE OWNER’S POLICY AND NOT ON ANY INFORMATION PROVIDED OR TO BE PROVIDED BY SELLER (OTHER THAN IN THE REPRESENTATIONS AND WARRANTIES OF SELLER EXPRESSLY PROVIDED IN THIS AGREEMENT AND THE SELLER EXECUTED CLOSING DOCUMENTS).

(d) PASSIVE OWNER . SELLER HAS DELEGATED THE DAY-TO-DAY MANAGEMENT AND OPERATION OF THE PROPERTY TO A THIRD PARTY MANAGER OF THE PROPERTY.

(e) DUE DILIGENCE MATERIALS . ANY INFORMATION PROVIDED OR TO BE PROVIDED WITH RESPECT TO THE PROPERTY IS SOLELY FOR BUYER’S CONVENIENCE AND WAS OR WILL BE OBTAINED FROM A VARIETY OF SOURCES, SELLER HAS NOT MADE ANY INDEPENDENT INVESTIGATION OR VERIFICATION OF SUCH INFORMATION AND MAKES NO REPRESENTATIONS AS TO THE ACCURACY OR COMPLETENESS OF SUCH INFORMATION. SELLER SHALL NOT BE LIABLE FOR ANY NEGLIGENT MISREPRESENTATION OR ANY FAILURE TO INVESTIGATE THE PROPERTY NOR SHALL SELLER BE BOUND IN ANY MANNER BY ANY VERBAL OR WRITTEN STATEMENTS, REPRESENTATIONS, APPRAISALS, ENVIRONMENTAL ASSESSMENT REPORTS, OR OTHER INFORMATION PERTAINING TO THE PROPERTY OR THE OPERATION THEREOF, FURNISHED BY SELLER OR BY ANY MANAGER, LEASING AGENT, REAL ESTATE BROKER, AGENT, REPRESENTATIVE, AFFILIATE, DIRECTOR, OFFICER, SHAREHOLDER, EMPLOYEE, SERVANT, CONSTITUENT PARTNER OR MEMBER OF SELLER, AFFILIATE OF SELLER, OR OTHER PERSON OR ENTITY ACTING ON SELLER’S BEHALF.

(f) PROPERTY NAME . BUYER ACKNOWLEDGES THAT SELLER DOES NOT HAVE ANY RIGHT, TITLE OR INTEREST IN THE “PARK HYATT” TRADEMARK, AND ACCORDINGLY, EXCEPT AS PROVIDED IN THIS AGREEMENT, SELLER HAS NO RIGHT, TITLE OR INTEREST TO USE THE NAME “PARK HYATT”. FURTHER, BUYER ACKNOWLEDGES THAT SELLER DOES NOT HAVE ANY RIGHT, TITLE OR INTEREST IN THE “BEAVER CREEK” TRADEMARK, AND ACCORDINGLY, EXCEPT AS PROVIDED IN THIS AGREEMENT, SELLER HAS NO RIGHT, TITLE OR INTEREST TO USE THE NAME “BEAVER CREEK”.

(g) CONSPICUOUS DISCLAIMERS . TO THE EXTENT REQUIRED TO BE OPERATIVE, THE DISCLAIMERS OF WARRANTIES CONTAINED HEREIN ARE “CONSPICUOUS” DISCLAIMERS FOR PURPOSES OF ANY APPLICABLE LAW, RULE, REGULATION OR ORDER.

8.6.2 RELEASE . EXCEPT WITH RESPECT TO MATTERS EXPRESSLY SET FORTH IN THIS AGREEMENT AND THE SELLER EXECUTED CLOSING AGREEMENTS, BUYER, ON BEHALF OF ITSELF AND ITS SUCCESSORS AND ASSIGNS, HEREBY WAIVES ITS RIGHT TO RECOVER FROM, AND FOREVER RELEASES AND DISCHARGES, SELLER AND ALL SELLER RELATED PARTIES FROM ANY AND ALL DEMANDS, CLAIMS, LEGAL OR ADMINISTRATIVE PROCEEDINGS, LOSSES, LIABILITIES, DAMAGES, PENALTIES, FINES, LIENS, JUDGMENTS, COSTS OR

3721766.8

-31 -

Gardere01 - 10003657v.4

EXPENSES WHATSOEVER (INCLUDING, WITHOUT LIMITATION, ATTORNEYS’ FEES AND COSTS), WHETHER DIRECT OR INDIRECT, KNOWN OR UNKNOWN, FORESEEN OR UNFORESEEN (“ CLAIMS ”), WHICH BUYER OR ANY PARTY RELATED TO OR AFFILIATED WITH BUYER (A “ BUYER RELATED PARTY ”) HAS OR MAY HAVE ARISING FROM OR RELATED TO ANY MATTER OR THING RELATED TO OR IN CONNECTION WITH THE PROPERTY INCLUDING THE DOCUMENTS AND INFORMATION REFERRED TO HEREIN, THE CONDOMINIUM DECLARATION, THE SIGNAGE RIGHTS, ENTITLEMENTS, ZONING, PARKING OR PARKING RIGHTS, TITLE DOCUMENTS OR DEFECTS, ANY CONSTRUCTION DEFECTS, ERRORS OR OMISSIONS IN THE DESIGN OR CONSTRUCTION, EMPLOYMENT MATTERS AND ANY ENVIRONMENTAL CONDITIONS, AND BUYER SHALL NOT LOOK TO ANY SELLER RELATED PARTIES IN CONNECTION WITH THE FOREGOING FOR ANY REDRESS OR RELIEF. THIS RELEASE SHALL BE GIVEN FULL FORCE AND EFFECT ACCORDING TO EACH OF ITS EXPRESSED TERMS AND PROVISIONS, INCLUDING THOSE RELATING TO UNKNOWN AND UNSUSPECTED CLAIMS, DAMAGES AND CAUSES OF ACTION. THE FOREGOING PROVISIONS OF THIS SECTION 8.6.2 SHALL NOT LIMIT, HOWEVER, SELLER’S EXPRESS OBLIGATIONS UNDER THIS AGREEMENT AND THE SELLER EXECUTED CLOSING AGREEMENTS.

8.6.3 SURVIVAL . THIS SECTION 8 SHALL SURVIVE THE CLOSING DATE OR THE EARLIER TERMINATION OF THIS AGREEMENT AND SHALL NOT BE DEEMED TO HAVE MERGED INTO ANY OF THE DOCUMENTS EXECUTED OR DELIVERED AT CLOSING.

8.6.4 CERTAIN PROPERTY DISCLOSURES . WITH RESPECT TO ALL OF THE FOLLOWING MATTERS IN THIS SECTION 8.6 AND WITHOUT LIMITATION ON ANY OTHER PROVISIONS OF THIS AGREEMENT, BUYER ACKNOWLEDGES THAT IT SHALL EVALUATE AND CONSIDER SUCH MATTERS PRIOR TO THE EXPIRATION OF THE DUE DILIGENCE PERIOD. BUYER SHALL ASSUME ALL RESPONSIBILITY FOR SUCH MATTERS AND SHALL NOT SEEK ANY PAYMENT OR OTHER ACTION FROM SELLER (AND SELLER SHALL HAVE NO OBLIGATION) WITH RESPECT TO SUCH MATTERS; ANY DISCLOSURE OF SUCH MATTERS BY OTHERS SHALL NOT BE A CAUSE FOR OBJECTION BY BUYER; SUCH MATTERS HAVE ALREADY BEEN TAKEN INTO ACCOUNT IN CALCULATION OF THE PURCHASE PRICE OF THE PROPERTY, AND SUCH MATTERS SHALL NOT BE DEEMED TO EXPAND IN ANY MANNER THE LIMITED REPRESENTATIONS AND WARRANTIES OF SELLER CONTAINED HEREIN. WITHOUT LIMITATION ON THE GENERALITY OF THE FOREGOING:

(a) ENVIRONMENTAL MATTERS . SELLER HAS DELIVERED TO BUYER (AND BUYER ACKNOWLEDGES RECEIPT OF) THE ENVIRONMENTAL REPORTS. SELLER SHALL HAVE NO OBLIGATION IN CONNECTION WITH THE MATTERS ADDRESSED IN SUCH DOCUMENTS.

(b) LAND USE, ZONING, ENTITLEMENT AND DEVELOPMENT ISSUES . BUYER SHALL DETERMINE DURING THE DUE DILIGENCE PERIOD THAT IT IS SATISFIED WITH THE STATUS AND COMPLIANCE OF THE PROPERTY WITH RESPECT TO ANY AND ALL LAND USE, ZONING, ENTITLEMENT AND DEVELOPMENT LAWS, RULES, ORDINANCES, REGULATIONS, RESTRICTIONS, STANDARDS, AGREEMENTS AND SIMILAR ITEMS AFFECTING THE PROPERTY.

3721766.8

-32 -

Gardere01 - 10003657v.4

(c) THE CONDOMINIUM DECLARATION, VILLAGE HALL BACK LAWN LEASE AND PARKING AGREEMENT . SELLER HAS DELIVERED, CAUSED TO BE DELIVERED OR OTHERWISE MADE AVAILABLE TO BUYER (AND BUYER ACKNOWLEDGES RECEIPT OF) COPIES OF THE CONDOMINIUM DECLARATION, THE VILLAGE HALL BACK LAWN LEASE AND THE PARKING AGREEMENT. BUYER SHALL DETERMINE DURING THE DUE DILIGENCE PERIOD WHETHER IT IS SATISFIED WITH THE STATUS AND COMPLIANCE OF THE PROPERTY WITH, AND ALL OTHER MATTERS RELATING TO, THE CONDOMINIUM DECLARATION, THE VILLAGE HALL BACK LAWN LEASE AND THE PARKING AGREEMENT.

(d) FINANCING . BUYER ACKNOWLEDGES AND AGREES THAT THE EXISTING FINANCING CURRENTLY IN PLACE WITH RESPECT TO THE PROPERTY IS NOT ASSUMABLE. THE OBTAINING OF ANY FINANCING BY BUYER SHALL NOT BE A CONDITION TO CLOSING UNDER THIS AGREEMENT.



______________ Seller’s Initials	______________ Buyer’s Initials

9. Certain Covenants of Seller and Buyer .

9.1 No Further Encumbering . Until the Closing Date or the sooner termination of this Agreement, Seller shall not further encumber the Property with any mortgages or deeds of trust.

9.2 WARN ACT . As set forth above in Section 6.4.8, Buyer acknowledges that employees of the Property are the employees of Manager and not of Seller, and that Buyer has no right to cause the termination of such employees. In no event shall Buyer take any action, or permit Manager to take any action, at Closing or within ninety (90) days after Closing as to such employees of Manager that would create or cause any WARN Act (hereinafter defined) liability to Seller or Manager. Without limitation on the generality of the foregoing, Seller and Buyer acknowledge that the employees of Manager will not be terminated at Closing, as the Hotel Management Agreement is remaining in existence and, as a result, the United States Worker Adjustment and Retraining Notification Act (the “ WARN Act ”) or any applicable state law will not be triggered. Buyer shall indemnify, save, defend and hold Seller and the Seller Related Parties harmless from and against any and all liability under the WARN Act and applicable state law resulting from any termination from and after Closing of employees of the Property at any time after Closing Date. The provisions of this Section 9.2 shall survive the Closing.

9.3 Operations . Subject to the provisions of Section 9.4 below:

9.3.1 Property Maintenance . Seller shall use commercially reasonable efforts consistent with its past practices to cause the Manager to operate and maintain the Property in the same manner as prior hereto pursuant to its normal course of business (such obligation to include the maintenance of casualty and liability insurance policies in accordance with Seller’s normal course of business, but such obligation to not include capital expenditures or expenditures not incurred in such normal course of business), subject to reasonable wear

3721766.8

-33 -

Gardere01 - 10003657v.4

and tear and further subject to destruction by casualty or eminent domain or other events beyond the control of Seller or Manager, including changes in laws, rules, ordinances and regulations.

9.3.2 Contracts and Agreements . Seller shall not enter or permit Manager to enter (where Seller has the right under the Hotel Management Agreement to prohibit Manager from doing so) into any additional service contracts, equipment leases or other similar agreements that will be binding upon Buyer without the prior consent of Buyer; provided, however, without the consent of Buyer, Seller may, or permit Manager to, enter into service contracts, equipment leases and other agreements which are cancelable on thirty (30) days’ notice. Any additional service contracts, equipment lease and other agreements entered into in accordance with this Section 9.3.2 shall constitute Continuing Agreements and Equipment Leases being assigned to Buyer on the Closing Date.

9.3.3 Safe Deposit Boxes . Any property contained in the safe deposit boxes as of Closing shall be the responsibility of Buyer, and Buyer shall save, defend, indemnify and hold harmless Seller and the Seller Related Parties from and against any claims, liabilities, losses, damages, costs and expenses arising out of or with respect to such property. The provisions of this Section 9.3.3 shall survive the Closing.

9.3.4 Baggage Inventory . The representatives of Seller and Buyer shall prepare the inventory as of day immediately preceding the Closing Date (which inventory shall be binding on all parties thereto) of (a) all luggage, valises and trunks checked or left in the care of the Property by guests then or formerly in the Property, (b) parcels, laundry, valet packages and other property of guests checked or left in the care of the Property by guests then or formerly in the Property (excluding, however, property in the safe deposit boxes), (c) all luggage or other property of guests retained by Buyer, and (d) all items contained in the lost and found. Buyer shall be responsible from and after the Closing Date for all baggage, and other items listed in such inventory. The provisions of this Section 9.3.4 shall survive the Closing.

9.3.5 Approval Standard . All approvals by Buyer under this Section 9.3 shall not be unreasonably withheld, conditioned or delayed. Without limitation on the foregoing, if Seller delivers a written request to Buyer for Buyer’s approval of any matter for which Buyer’s approval is required under this Section 9.3 (an “ Approval Request ”), and Buyer fails to deliver to Seller its written disapproval of such Approval Request within five (5) business days after its receipt of such Approval Request, then Buyer shall be deemed to have approved the matter that is the subject of such Approval Request.

9.4 Hotel Management Agreement . Notwithstanding anything contained in this Agreement to the contrary, Buyer acknowledges that Manager has certain rights under the Hotel Management Agreement, including without limitation, the right to execute certain contracts and other agreements and to take certain actions with respect to the Property, and the performance of Manager’s rights and obligations under the Hotel Management Agreement shall not result in a breach by Seller of its obligations under this Agreement, unless Seller’s consent to such actions is required by the terms of the Hotel Management Agreement and such consent is granted in a manner that is inconsistent with the terms of this Agreement. Any additional service contracts and equipment leases entered into by Manager on behalf of Seller prior to the Closing Date in the ordinary course of business and consistent with the terms of the Hotel Management Agreement, shall constitute

3721766.8

-34 -

Gardere01 - 10003657v.4

Continuing Agreements and Equipment Leases on the Closing Date. Between the Effective Date and the Closing Date, the hiring and employment policies with respect to employees of Manager at the Property shall remain within the sole control of Manager. Manager shall remain the sole judge of the fitness and qualifications of such employees and Buyer hereby acknowledges and agrees that Manager is vested with such discretion in hiring, supervising, directing, discharging and determining the compensation, other benefits and terms of employment of such employees, as is set forth in the Hotel Management Agreement.

9.5 Independent Audit . Seller will engage, at Buyer’s cost, a third party accounting firm (“ GAAP Preparer ”) to prepare financial statements (including footnotes) in accordance with generally accepted accounting principles (“ GAAP ”) for the Property for calendar years 2015, 2016 and for 2017 through any full completed Seller fiscal quarter (“ GAAP Financials ”) and to provide such GAAP Financials to Buyer and Buyer’s independent accounting firm (“ Auditor ” with the Accounting Firm being an Auditor acceptable to the parties). Seller will (a) engage the Auditor (at Buyer’s request to expedite the engagement process and at Buyer’s cost), (b) reasonably cooperate with the Auditor, and (c) provide the Auditor with such information regarding the GAAP Financials as the Auditor may reasonably request, so that the Auditor may complete an audit of the GAAP Financials for calendar years 2015 and 2016 and a review for the period in 2017 through any full completed Seller fiscal quarter. The parties intend that Buyer’s audit will be completed on or before June 1, 2017 and the parties shall use commercially reasonable efforts to assist in such process. Seller shall also provide the Auditor with a signed representation letter in a form acceptable to Seller. Seller shall authorize any attorneys who have represented Seller or its management company in material litigation pertaining to or affecting the Property to respond, at Buyers expense, to inquiries from the Auditor. For the purposes of this provision, material litigation includes matters with liability exceeding $50,000. In order to prepare GAAP Financials for the stated periods, Buyer will engage a third party valuation company, at Buyers expense (with Cushman & Wakefield being a third party acceptable to the parties), to (i) establish for Seller a purchase price allocation (“ PPA ”) to be recorded in the GAAP Financials as of the date Seller acquired the Property and (ii) create current purchase price allocations as of the Closing Date for Buyer’s purposes only, such allocations under (ii) not being binding on Seller for any reason. The Buyer will deliver to Seller the PPA no later than March 27, 2017 so that Seller and GAAP Preparer may prepare and record Seller’s acquisition transaction for GAAP purposes and produce a set of GAAP Financials for said periods for audit and review by Auditor. Buyer agrees to provide technical accounting assistance to Seller and GAAP Preparer as needed in order to prepare the GAAP Financials. Immediately after the Effective Date Seller shall provide to the preparer of the PPA on a confidential basis, a copy of the closing documents utilized when the Property was originally acquired by Seller, as well as the documents that may be reasonably be required to prepare the PPA. This Section 9.5 shall survive Closing.

10. DISPOSITION OF DEPOSIT .

10.1 IF THE TRANSACTION HEREIN PROVIDED SHALL NOT BE CLOSED BY REASON OF SELLER’S DEFAULT UNDER THIS AGREEMENT OR THE FAILURE OF SATISFACTION OF THE CONDITIONS BENEFITING BUYER UNDER THIS AGREEMENT OR THE PERMITTED TERMINATION OF THIS AGREEMENT BY BUYER IN ACCORDANCE WITH THIS AGREEMENT, THEN THE DEPOSIT SHALL BE RETURNED TO BUYER, AND NO PARTY SHALL HAVE ANY FURTHER OBLIGATION OR LIABILITY TO THE OTHER (EXCEPT UNDER THOSE PROVISIONS OF THIS AGREEMENT THAT EXPRESSLY SURVIVE A TERMINATION OF THIS AGREEMENT);

3721766.8

-35 -

Gardere01 - 10003657v.4

PROVIDED, HOWEVER, IF THE CONDITION WHICH HAS NOT BEEN SATISFIED IS A BREACH OF A REPRESENTATION, WARRANTY OR COVENANT, THEN BUYER, AT ITS OPTION, MAY ELECT TO (I) ENFORCE SPECIFIC PERFORMANCE, OR (II) TERMINATE THIS AGREEMENT WHEREUPON THE DEPOSIT (LESS THE INDEPENDENT CONSIDERATION) SHALL BE RETURNED TO BUYER AND, IF THE DEFAULT BY SELLER WAS AN INTENTIONAL ACT OF SELLER, SELLER SHALL BE OBLIGATED UPON DEMAND TO REIMBURSE BUYER UP TO TWO HUNDRED THOUSAND DOLLARS ($200,000.00) IN THE AGGREGATE FOR BUYER’S ACTUAL OUT-OF-POCKET INSPECTION, FINANCING AND OTHER COSTS RELATED TO BUYER’S ENTERING INTO THIS AGREEMENT, INSPECTING THE PROPERTY AND PREPARING FOR A CLOSING OF THE TRANSACTION CONTEMPLATED HEREBY, INCLUDING, WITHOUT LIMITATION, BUYER’S ATTORNEYS’ FEES INCURRED IN CONNECTION WITH THE PREPARATION, NEGOTIATION AND EXECUTION OF THIS AGREEMENT AND IN CONNECTION WITH BUYER’S DUE DILIGENCE REVIEW, AUDITS AND PREPARATION FOR A CLOSING, AND ALL OTHER RIGHTS AND OBLIGATIONS OF SELLER AND BUYER HEREUNDER (EXCEPT THOSE SET FORTH HEREIN WHICH EXPRESSLY SURVIVE A TERMINATION OF THIS AGREEMENT) SHALL TERMINATE IMMEDIATELY. HOWEVER, ANY ACTION IN SPECIFIC PERFORMANCE MUST BE FILED, IF AT ALL, WITHIN 45 DAYS AFTER THE CLOSING DATE.

10.2 I N THE EVENT THE TRANSACTION HEREIN PROVIDED SHALL FAIL TO CLOSE BY REASON OF DEFAULT BY BUYER (INCLUDING A BREACH BY BUYER OF A REPRESENTATION OR WARRANTY), THEN THE DEPOSIT SHALL BE DELIVERED TO SELLER AS FULL COMPENSATION AND LIQUIDATED DAMAGES UNDER AND IN CONNECTION WITH THIS AGREEMENT, AND IN SUCH EVENT, BUYER SHALL NOT BE LIABLE TO SELLER FOR MONETARY DAMAGES EXCEPT FOR FORFEITURE OF THE DEPOSIT (AND AS PROVIDED UNDER THOSE PROVISIONS OF THIS AGREEMENT THAT EXPRESSLY SURVIVE A TERMINATION OF THIS AGREEMENT). IN CONNECTION WITH THE FOREGOING, THE PARTIES RECOGNIZE THAT SELLER WILL INCUR EXPENSE IN CONNECTION WITH THE TRANSACTION CONTEMPLATED BY THIS AGREEMENT; FURTHER, THAT IT WOULD BE EXTREMELY DIFFICULT, IF NOT IMPOSSIBLE AND IMPRACTICABLE TO ASCERTAIN WITH ANY ACCURACY THE EXTENT OF DETRIMENT TO SELLER CAUSED BY THE BREACH BY BUYER UNDER THIS AGREEMENT AND THE FAILURE OF THE CONSUMMATION OF THE TRANSACTION CONTEMPLATED BY THIS AGREEMENT OR THE AMOUNT OF COMPENSATION SELLER SHOULD RECEIVE AS A RESULT OF BUYER’S BREACH OR DEFAULT, AND THAT THE LIQUIDATED DAMAGE AMOUNT SET FORTH IN THIS SECTION REPRESENTS BOTH PARTIES’ EFFORTS TO APPROXIMATE SUCH POTENTIAL DAMAGES. IN THE EVENT THE SALE CONTEMPLATED HEREBY SHALL NOT BE CONSUMMATED ON ACCOUNT OF BUYER’S DEFAULT, THEN THE RETENTION OF THE DEPOSIT SHALL BE SELLER’S SOLE AND EXCLUSIVE REMEDY UNDER THIS AGREEMENT BY REASON OF SUCH DEFAULT AND THE PARTIES SHALL TAKE SUCH ACTION AS MAY BE REQUIRED TO CAUSE THE DEPOSIT TO BE DELIVERED TO SELLER. SELLER AGREES THAT IN THE EVENT IT IS ENTITLED TO THE DEPOSIT, THE FORFEIT OF THE DEPOSIT AS LIQUIDATED DAMAGES MEANS THAT BUYER’S AGGREGATE

3721766.8

-36 -

Gardere01 - 10003657v.4

LIABILITY IN CONNECTION WITH BUYER’S BREACH IS THE AMOUNT OF THE DEPOSIT AND NOT A GREATER SUM.

______________________ _______________________
SELLER INITIALS BUYER INITIALS

10.3 IN THE EVENT THE TRANSACTION HEREIN PROVIDED SHALL CLOSE, THE DEPOSIT SHALL BE APPLIED AS A PARTIAL PAYMENT OF THE PURCHASE PRICE.

11. Tax Reduction Proceedings . Seller (or Manager) may file and/or prosecute an application for the reduction of the assessed valuation of the Property or any portion thereof for real estate taxes or a refund of real estate taxes previously paid. The amount of any tax refunds (net of attorneys’ fees and other costs of obtaining such tax refunds) with respect to any Property for the tax year in which the Closing Date occurs shall be apportioned between Seller and Buyer. Tax refunds for any year prior to the tax year in which the Closing Date occurs shall belong entirely to Seller. If, in lieu of a tax refund for the tax year in which the Closing Date occurs or a prior tax year, a tax credit is received for the tax year in which the Closing Date occurs or subsequent tax year, then (x) within thirty (30) days after receipt by Seller or Buyer, as the case may be, of evidence of the actual amount of such tax credit (net of attorneys’ fees and other costs of obtaining such tax credit), the tax credit apportionment shall be readjusted between Seller and Buyer and (y) upon realization by Buyer of a tax savings on account of such credit, Buyer shall pay to Seller an amount equal to the savings realized (as apportioned). All refunds, credits or other benefits applicable to any fiscal period prior to the fiscal year in which the Closing Date occurs shall belong solely to Seller (and Buyer shall have no interest therein). Notwithstanding anything in this Section 11 to the contrary, Buyer shall have the right to approve the party retained by Seller (or Manager) for the tax appeal for the year of Closing and the right to approve any fee arrangement with respect thereto. The provisions of this Section 11 shall survive the Closing.

12. Miscellaneous .

12.1 Brokers .

12.1.1 Buyer represents and warrants to Seller that no broker or finder has been engaged by it in connection with any of the transactions contemplated by this Agreement or to its knowledge is in any way connected with any of such transactions. Except as provided in Section 12.1.2 below, Seller represents and warrants to Buyer that no broker or finder has been engaged by it in connection with any of the transactions contemplated by this Agreement or to its knowledge is in any way connected with any of such transactions. In the event of a claim for broker’s or finder’s fee or commissions in connection herewith, then Seller shall indemnify, protect, defend and hold Buyer harmless from and against the same if it shall be based upon any statement or agreement alleged to have been made by Seller, and Buyer shall indemnify, protect, defend and hold Seller harmless from and against the same if it shall be based upon any statement or agreement alleged to have been made by Buyer. The obligations of the parties under this Section 12.1 shall survive the Closing or any termination of this Agreement.

3721766.8

-37 -

Gardere01 - 10003657v.4

12.1.2 CBRE, Inc. (“ Seller’s Broker ”) has been engaged by Seller in connection with the transaction contemplated by this Agreement, and without limitation on the foregoing provisions of this subsection, if and only if the transaction contemplated hereby shall close in accordance with the terms of this Agreement, Seller shall pay Seller’s Broker a commission pursuant to a separate agreement between Seller and Seller’s Broker.

12.2 Further Assurances . Seller and Buyer each covenant and agree to sign, execute and deliver, or cause to be signed, executed and delivered, and to do or make, or cause to be done or made, upon the written request of the other party, any and all agreements, instruments, papers, deeds, acts or things, supplemental, confirmatory or otherwise, as may be reasonably required by either party hereto for the purpose of or in connection with consummating the transactions described herein. The provisions of this Section 12.2 shall survive Closing.

12.3 Confidentiality . Except as hereinafter provided, from and after the execution of this Agreement, Buyer and Seller shall keep the terms, conditions and provisions of this Agreement confidential and neither shall make any public announcements hereof unless the other first approves of same in writing, nor shall either disclose the terms, conditions and provisions hereof, except to persons who “need to know,” such as their respective officers, directors, employees, attorneys, accountants, engineers, surveyors, consultants, financiers, partners, investors, potential lessees and bankers and such other third parties whose assistance is required in connection with the consummation of this transaction. Notwithstanding the foregoing, it is acknowledged that Buyer is, or is an affiliate of, a real estate investment trust (the “ REIT ”), and the REIT has and will seek to sell shares to the general public; consequently, Buyer shall have the right to disclose any information regarding the transaction contemplated by this Agreement (other than the identity of the Seller or any of its affiliated entities) solely if disclosure is required by law or otherwise been determined to be necessary or appropriate by Buyer or Buyer’s attorneys to satisfy disclosure and reporting obligations of Buyer or its affiliates. On or at any time following the Effective Date, Buyer may make a press release and/or file with the United States Securities Exchange Commission information regarding the transaction contemplated by this Agreement other than the identity of the Seller or any of its affiliated entities. Seller and Buyer and their representatives are cautioned that United States securities laws restrict the purchase and sale of securities by anyone who possesses non-public information about the issue of such securities. Accordingly, neither Seller nor any of its Affiliates nor its representatives may buy or sell any of the securities of the Buyer or any of its Affiliates so long as any of them is in possession of any material non-public information about the Buyer or any of its Affiliates, including information contained in or derived from confidential information.

12.4 Cumulative Remedies . No remedy conferred upon a party in this Agreement is intended to be exclusive of any other remedy herein or by law provided or permitted, but each shall be cumulative and shall be in addition to every other remedy given hereunder or now or hereafter existing at law, in equity or by statute (except as otherwise expressly herein provided).

12.5 No Waiver . No waiver by a party of any breach of this Agreement or of any warranty or representation hereunder by the other party shall be deemed to be a waiver of any other breach by such other party (whether preceding or succeeding and whether or not of the same or similar nature), and no acceptance of payment or performance by a party after any breach by the other party shall be deemed to be a waiver of any breach of this Agreement or of any representation or warranty hereunder by such other party, whether or not the first party knows of such breach at the time it accepts such payment or performance. No failure or delay by a party to exercise any right it

3721766.8

-38 -

Gardere01 - 10003657v.4

may have by reason of the default of the other party shall operate as a waiver of default or modification of this Agreement or shall prevent the exercise of any right by the first party while the other party continues to be so in default.

12.6 Consents and Approvals . Except as otherwise expressly provided herein, any approval or consent provided to be given by a party hereunder must be in writing to be effective and may be given or withheld in the absolute discretion of such party.

12.7 Intentionally Deleted .

12.8 Modification . This Agreement may not be modified or amended except by written agreement signed by all parties.

12.9 Survival . Unless otherwise expressly provided for in this Agreement, the representations, warranties, covenants and conditions of the parties set forth in this Agreement shall not survive the consummation of the transaction contemplated by this Agreement and the delivery and recordation of the Deed. Notwithstanding the foregoing, (a) all indemnification obligations in this Agreement shall survive the Closing; and (b) the indemnification obligations set forth in Sections 3.1.5, 12.1, 12.3 and 12.11 shall survive the termination of this Agreement.

12.10 Post-Closing Access . For a period of three (3) years subsequent to the Closing Date, Seller and its employees, agents and representatives shall be entitled to access during business hours to all documents, books and records given to Buyer by Seller for tax and audit purposes, regulatory compliance, and cooperation with governmental investigations upon reasonable prior notice to Buyer, and shall have the right to make copies of such documents, books and records at Seller’s expense. Seller shall indemnify Buyer for any loss, cost, damage or expense resulting from any such access. The provisions of this Section 12.10 shall survive Closing.

12.11 Indemnification Obligations . The indemnification obligations under this Agreement shall be subject to the following provisions:

12.11.1 The party seeking indemnification (“ Indemnitee ”) shall notify the other party (“ Indemnitor ”) of any claim against Indemnitee within forty-five (45) days after it has notice of such claim, but failure to notify Indemnitor shall in no case prejudice the rights of Indemnitee under this Agreement unless Indemnitor shall be prejudiced by such failure and then only to the extent of such prejudice. Should Indemnitor fail to discharge or undertake to defend Indemnitee against such liability (with counsel reasonably approved by Indemnitee), within thirty (30) days after Indemnitee gives Indemnitor written notice of the same, then Indemnitee may settle such claim, and Indemnitor’s liability to Indemnitee shall be conclusively established by such settlement, the amount of such liability to include both the settlement consideration and the reasonable costs and expenses, including attorneys’ fees, incurred by Indemnitee in effecting such settlement. Indemnitee shall have the right to employ its own counsel in any such case, but the fees and expenses of such counsel shall be at the expense of Indemnitee unless: (a) the employment of such counsel shall have been authorized in writing by Indemnitor in connection with the defense of such action, (b) Indemnitor shall not have employed counsel to direct the defense of such action, or (c) Indemnitee shall have reasonably concluded that there may be defenses available to it which are different from or additional to those available to Indemnitor (in which case Indemnitor shall not have the right

3721766.8

-39 -

Gardere01 - 10003657v.4

to direct the defense of such action or of Indemnitee), in any of which events such fees and expenses shall be borne by Indemnitor.

12.11.2 The indemnification obligations under this Agreement shall cover the costs and expenses of Indemnitee, including reasonable attorneys’ fees, related to any actions, suits or judgments incident to any of the matters covered by such indemnities.

12.11.3 The indemnification obligations under this Agreement shall also extend to cover any claim against any present or future advisor, trustee, director, officer, partner, member, manager, employee, beneficiary, shareholder, fiduciary, participant or agent of or in Indemnitee or any entity now or hereafter having a direct or indirect ownership interest in Indemnitee.

12.11.4 Except for obligations expressly assumed or agreed to be assumed by Buyer hereunder, including without limitation those under the Hotel Management Agreement in accordance with the Hyatt Management Agreement Assignment, Buyer is not assuming any obligations of Seller or any liability for claims arising out of any act, omission or occurrence which occurs, accrues or arises prior to the Closing Date, and Seller hereby indemnifies and holds Buyer harmless from and against any and all such claims, costs, penalties, damages, losses, liabilities and expenses (including reasonable attorneys’ fees) that may at be incurred by Buyer as a result of (1) obligations of Seller not expressly assumed or agreed to be assumed by Buyer hereunder, (2) other than with respect to the physical, environmental or other conditions of the Property, acts, omissions or occurrences which occur, accrue or arise prior to the Closing Date including, without limitation, employee liability and liability under any agreements assumed by Buyer at Closing, or (3) liability arising prior to the Closing Date under the Hotel Management Agreement. Seller shall not be liable for or have any liability for claims arising out of any act, omission or occurrence which occurs, accrues and arises on or after the Closing Date and Buyer accepts, assumes and agrees to perform all of the duties, obligations and liabilities of Assignor arising and accruing on or after the Closing Date and agrees to indemnify and hold harmless Seller from and against any and all such claims, costs, penalties, damages, losses, liabilities and expenses (including reasonable attorneys’ fees) that may be incurred by Seller as a result of (1) obligations expressly assumed or agreed to be assumed by Buyer hereunder, or (2) all matters which occur, accrue or arise on or after the Closing Date including, without limitation, employee liability and liability under any agreements assumed by Buyer at Closing. This Section 12.11.4 is not intended to modify, and is subject to, any of the other provisions of this Agreement. The provisions of this Section shall survive the Closing of the transaction contemplated hereby.

12.12 Matters of Construction .

12.12.1 Incorporation of Exhibits . All exhibits attached and referred to in this Agreement are hereby incorporated herein as fully set forth in (and shall be deemed to be a part of) this Agreement.

12.12.2 Entire Agreement . This Agreement contains the entire agreement between the parties respecting the matters herein set forth and supersedes all prior agreements between the parties hereto respecting such matters including, without limitation, the Access Agreement.

3721766.8

-40 -

Gardere01 - 10003657v.4

12.12.3 Non-Business Days . Whenever action must be taken (including the giving of notice or the delivery of documents) under this Agreement during a certain period of time (or by a particular date) that ends (or occurs) on a non-business day, then such period (or date) shall be extended until the immediately following business day. As used herein, “ business day ” means any day other than a Saturday, Sunday or federal holiday or state holiday for the State of Colorado.

12.12.4 Severability . If any term or provision of this Agreement or the application thereof to any person or circumstance shall, to any extent, be invalid or unenforceable, the remainder of this Agreement, or the application of such term or provision to persons or circumstances other than those as to which it is held invalid or unenforceable, shall not be affected thereby, and each such term and provision of this Agreement shall be valid and be enforced to the fullest extent permitted by law.

12.12.5 Interpretation . Words used in the singular shall include the plural, and vice-versa, and any gender shall be deemed to include the other. Whenever the words “including”, “include” or “includes” are used in this Agreement, they shall be interpreted in a non-exclusive manner. The captions and headings of the Sections of this Agreement are for convenience of reference only, and shall not be deemed to define or limit the provisions hereof. Except as otherwise indicated, all Exhibit and Section references in this Agreement shall be deemed to refer to the Exhibits and Sections in this Agreement. Each party acknowledges and agrees that this Agreement (a) has been reviewed by it and its counsel, (b) is the product of negotiations between the parties, and (c) shall not be deemed prepared or drafted by any one party. In the event of any dispute between the parties concerning this Agreement, the parties agree that any ambiguity in the language of the Agreement is to not to be resolved against Seller or Buyer, but shall be given a reasonable interpretation in accordance with the plain meaning of the terms of this Agreement and the intent of the parties as manifested hereby.

12.13 Governing Law; Venue . This Agreement shall be construed and enforced in accordance with the internal laws of the State of Colorado (without regard to conflicts of law). The parties hereto agree to submit to personal jurisdiction in the State of Colorado in any action or proceeding arising out of this Agreement and, in furtherance of such agreement, the parties hereby agree and consent that without limiting other methods of obtaining jurisdiction, personal jurisdiction over the parties in any such action or proceeding may be obtained within or without the jurisdiction of any court located in Colorado and that any process or notice of motion or other application to any such court in connection with any such action or proceeding may be served upon the parties by registered or certified mail to or by personal service at the last known address of the parties, whether such address be within or without the jurisdiction of any such court. Any legal suit, action or other proceeding by one party to this Agreement against the other arising out of or relating to this Agreement shall be instituted only in Denver, Colorado or the United States District Court in Denver, Colorado, and each party hereby waives any objections which it may now or hereafter have based on venue and/or forum non‑conveniens of any such suit, action or proceeding and submits to the jurisdiction of such courts. Seller and Buyer hereby irrevocably and unconditionally waive any and all right to trial by jury in any action, suit or counterclaim arising in connection with, out of or otherwise relating to this Agreement. The provisions of this Section 12.13 shall survive the Closing or the termination hereof.

3721766.8

-41 -

Gardere01 - 10003657v.4

12.14 Third Party Beneficiaries . Except as otherwise expressly provided in this Agreement, Seller and Buyer do not intend by any provision of this Agreement to confer any right, remedy or benefit upon any third party, and no third party shall be entitled to enforce or otherwise shall acquire any right, remedy or benefit by reason of any provision of this Agreement.

12.15 No Recordation . In no event shall this Agreement or any document or memorandum related to the subject matter of this Agreement be recorded without the prior written consent of Seller.

12.16 Effectiveness of Agreement . In no event shall any draft of this Agreement create any obligations or liabilities, it being intended that only a fully executed and delivered copy of this Agreement will bind the parties hereto.

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

12.18 Successors and Assigns . Buyer may not assign or transfer its rights or obligations under this Agreement (or make an offer or enter into negotiations to do so) without the prior written consent of Seller (in which event such transferee shall assume in writing all of the Buyer’s obligations hereunder, but Buyer shall not be released from its obligations hereunder), such consent to be within Seller’s sole and absolute discretion; provided, however, Buyer may assign its interest in this Agreement without the consent of Seller to a “single-purpose bankruptcy remote entity” which is “controlled by Buyer” (in which event such transferee shall assume in writing all of the transferor’s obligations hereunder, and Buyer shall be released from its obligations hereunder to the extent the Closing has occurred). As used herein, “controlled by Buyer” with respect to an entity means that Buyer: (1) has the sole ability to direct the management, policies and operation of such entity, directly or indirectly, through voting securities or otherwise; and (2) Buyer owns more than fifty percent (50%) of the direct or indirect ownership interests in such entity. Any change in control or majority ownership of Buyer constitutes an assignment for purposes of this subsection. No consent given by Seller to any transfer or assignment of Buyer’s rights or obligations hereunder shall be construed as a consent to any other transfer or assignment of Buyer’s rights or obligations hereunder. Additionally, and notwithstanding the foregoing, Seller acknowledges that Buyer is or is an affiliate of a real estate investment trust and, as such, may designate that a portion of the Property be conveyed to an operating lessee, which conveyance shall not require the consent of Seller and the parties will revise the Bill of Sale as needed to reflect Buyer’s structure, provided notice and the names of the entities involved is provided to Seller prior to the expiration of the Due Diligence Period. In addition, Buyer shall not re-sell the Property or assign its rights or obligations under this Agreement (or make an offer or enter into negotiations to do so) through a “double escrow” or other similar mechanism without Seller’s prior written consent (which consent may be withheld in Seller’s sole and absolute discretion). No transfer or assignment in violation of the provisions hereof shall be valid or enforceable. Subject to the foregoing, this Agreement and the terms and provisions hereof shall inure to the benefit of and shall be binding upon the successors and assigns of the parties.

12.19 Notices . Unless otherwise agreed to by the parties, all notices required or permitted to be given hereunder shall be in writing. Such notices shall be effective upon receipt or refusal of receipt following deposit into the United States mail, registered or certified, return receipt requested, postage prepaid, or if hand delivered or if sent by nationally recognized overnight courier

3721766.8

-42 -

Gardere01 - 10003657v.4

providing evidence of delivery or when sent by email, telecopy or similar facsimile transmission (with a copy by mail delivered on the next business day), addressed as follows:

TO SELLER :

c/o Walton Street Capital, L.L.C.
900 North Michigan Avenue
Suite 1900
Chicago, Illinois 60611
Attention: Mr. Douglas Welker, Mr. Justin Leonard and Angela Lang, Esq.
Fax: (312) 915-2881

Email: welker@waltonst.com, leonard@waltonst.com, lang@waltonst.com

With Copy To :

Pircher, Nichols & Meeks
900 North Michigan Avenue, Suite 1000

Chicago, Illinois 60611

Attn: Real Estate Notices (DJP/JAK File No. 4.2047)

Fax: (312) 915.3348

Email: realestatenotices@pircher.com

TO BUYER: :

Ashford Hospitality Prime Limited Partnership

14185 Dallas Parkway, Suite 1100

Dallas, Texas 75254

Attention: David Brooks

Facsimile: (972) 490-9600

Email: dbrooks@ashfordinc.com

With Copy To :

Gardere

2021 McKinney Avenue, Suite 1600

Dallas, Texas 75201

Attention: Cynthia Brotman Nelson

Facsimile: (214) 999-3884

Email: cnelson@gardere.com

or at such other place as a party may designate in a written notice given in accordance herewith. Email and/or facsimile transmissions received during business hours during a business day at the receiving location shall be deemed made on such business day if received prior to 5:00 P.M. Central Time. Email and/or facsimile transmissions received at any other time shall be deemed received on the next business day. Any such notice so given by email or facsimile shall be deemed given upon receipt by the sending party of confirmation of successful transmission (provided that if any notice to be delivered by facsimile is unable to be transmitted because of a problem affecting the receiving party’s facsimile machine, the deadline for receiving such notice shall be extended to the next business day). The attorneys for any party hereto shall be entitled to provide any notice that a party desires to give or is required to give hereunder.

12.20 Legal Costs . The parties hereto agree that they shall pay directly any and all legal costs which they have incurred on their own behalf in the preparation of this Agreement, all

3721766.8

-43 -

Gardere01 - 10003657v.4

other agreements pertaining to this transaction and that such legal costs shall not be part of the closing costs. In addition, if any party hereto brings any suit or other proceeding with respect to the subject matter or the enforcement of this Agreement, the prevailing party (as determined by the court, agency or other authority before which such suit or proceeding is commenced), in addition to such other relief as may be awarded, shall be entitled to recover reasonable attorneys’ fees, expenses and costs of investigation actually incurred from the non-prevailing party, subject to the limitations on the liability set forth in Section 12.21 below. The foregoing includes attorneys’ fees, expenses and costs of investigation (including those incurred in appellate proceedings), costs incurred in establishing the right to indemnification, or in any action or participation in, or in connection with, any case or proceeding under Chapter 7, 11 or 13 of the Bankruptcy Code (11 United States Code Sections 101 et seq .), or any successor statutes. This Section shall survive Closing and any termination of this Agreement.

12.21 Limitation of Liability . No present or future partner, member, director, officer, shareholder, employee, advisor, affiliate or agent of or in Seller or Buyer or any affiliate of Seller or Buyer shall have any personal liability, directly or indirectly, under or in connection with this Agreement or any agreement made or entered into under or in connection with the provisions of this Agreement, or any amendment or amendments to any of the foregoing made at any time or times, heretofore or hereafter, and Seller and Buyer and their respective successors and assigns and, without limitation, all other persons and entities, shall look solely to Seller’s and/or Buyer’s assets (and with respect to Buyer, that of Buyer and any permitted assignee, jointly and severally), respectively, for the payment of any claim or for any performance, and Seller and Buyer hereby waive any and all such personal liability. For purposes of this Section 12.21, no negative capital account or any contribution or payment obligation of any partner or member in Seller or Buyer shall constitute an asset of Seller or Buyer. The limitations of liability contained in this Section are in addition to, and not in limitation of, any limitation on liability applicable to Seller or Buyer provided elsewhere in this Agreement or by law or by any other contract, agreement or instrument. The provisions of this Section 12.21 shall survive Closing and any termination of this Agreement.

12.22 Bulk Sales . Buyer and Seller agree to cooperate and take any actions reasonably necessary to comply with the bulk sales statutes, if any, of the State in which the Units are located, in connection with the transactions contemplated by this Agreement. Buyer shall be solely responsible for the payment of any bulk sales, sales taxes, hotel sales taxes, or hotel use taxes and for compliance with any and all laws related to such taxes, including any withholding laws, whether due before or after Closing or in connection with the transaction contemplated in this Agreement, and Buyer shall indemnify, protect, defend and hold Seller harmless from and against any claim in any way arising from such matters whether accruing or arising before or after Closing.

12.23 Time of Essence . Time is of the essence of each and every term, provision and covenant of this Agreement.

12.24 Waiver of Trial by Jury . THE PARTIES HEREBY IRREVOCABLY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT. IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT. THE PROVISIONS OF THIS

3721766.8

-44 -

Gardere01 - 10003657v.4

SECTION 12.24 SHALL SURVIVE CLOSING AND ANY TERMINATION OF THIS AGREEMENT.

12.25 Counterparts . This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which shall constitute one and the same document. Delivery by facsimile, or e-mail of a PDF or TIF copy, of a counterpart of this Agreement executed by a party shall constitute delivery by such party of such party’s executed counterpart of this Agreement.

[ Text of the Agreement ends here, signature page follows ]

3721766.8

-45 -

Gardere01 - 10003657v.4

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written.

BUYER :

ASHFORD HOSPITALITY PRIME LIMITED PARTNERSHIP ,

a Delaware limited partnership

By: Ashford Prime OP General Partner LLC

By: /s/ DAVID BROOKS

Name: David Brooks

Title: Vice President

S- 1

SELLER:

WTCC BEAVER CREEK INVESTORS V, L.L.C. ,

a Delaware limited liability company

By: WTCC Beaver Creek Alpha Mezz V, L.L.C.,

a Delaware limited liability company,

its Sole Member

By: WTCC Beaver Creek Mezz V, L.L.C.,

a Delaware limited liability company,

its Sole Member

By: Walton TCC Hotel REOC Investors V, L.L.C.,

a Delaware limited liability company,

its Managing Member

By: Walton Acquisition REOC Holdings V, L.L.C.,

a Delaware limited liability company,

its Managing Member

By: Walton Street Real Estate Fund V, L.P.,

a Delaware limited partnership,

its Managing Member

By: Walton Street Managers V, L.P.,

a Delaware limited partnership,

its General Partner

By: WSC Managers V, Inc.,

a Delaware corporation,

its General Partner

By: /s/ Justin Leonard

Name: Justin Leonard

Title: Vice President

S- 2

EXHIBIT LIST


EXHIBIT A	- LEGAL DESCRIPTION


EXHIBIT B	- DEPOSIT ESCROW AGREEMENT


EXHIBIT C	- DEED


EXHIBIT D	- PRELIMINARY LIST OF PERMITTED EXCEPTIONS


EXHIBIT E	- FORM OF PARKING ASSIGNMENT


EXHIBIT F	- BILL OF SALE


EXHIBIT G	- LIST OF LEASES


EXHIBIT H	- SELLER CLOSING CERTIFICATE


EXHIBIT I	- CERTIFICATE OF NON-FOREIGN STATUS


EXHIBIT J	- GAP INDEMNITY


EXHIBIT K	- OWNER’S CERTIFICATE AS TO DEBTS, LIENS AND PARTIES IN POSSESSION


EXHIBIT L	- BUYER CLOSING CERTIFICATE


EXHIBIT M	- LITIGATION


EXHIBIT N	- NON-COMPLIANCE NOTICES FROM GOVERNMENTAL AGENCIES


EXHIBIT O	- AGREEMENTS AND EQUIPMENT LEASES


EXHIBIT P	- LIST OF ENVIRONMENTAL REPORTS


EXHIBIT Q	- ESCROW INSTRUCTIONS


EXHIBIT R	- POST-CLOSING ESCROW AGREEMENT


EXHIBIT S	- ESTOPPEL FORMS


EXHIBIT T	- FORM OF ASSIGNMENT OF ALLEGRIA SPA LEASE


EXHIBIT U	- FORM OF ASSIGNMENT OF HYATT MANAGEMENT AGREEMENT


EXHIBIT V	- FORM OF ASSIGNMENT OF MANAGEMENT AGREEMENTS

3721766.8

EXHIBIT A

LEGAL DESCRIPTION OF UNITS

Parcel One:

Hotel Unit and Condominium Units C-1, C-2, C-3, C-4, C-5, C-6, C-7, C-8, C-9, C-10, C-11, C-12, C-13, C-14, Beaver Creek Hotel A Condominium, according to the Condominium Map recorded March 8,1990 in Book 524 at Page 176 and Amended Plat and Condominium Map First Amendment, Beaver Creek Hotel A Condominium, a Re-Configuration of Units C-6, C-7, C-12, C-13 and Hotel Unit recorded April 12, 2005 at Reception No. 911872, and Amended Plat and Condominium Map - Second Amendment Beaver Creek Hotel A Condominium, a Resubdivision of Unit C-15 and Hotel Unit recorded July 25, 2006 at Reception No. 200620032; and as defined and described in the Condominium Declaration recorded March 8, 1990 in Book 524 at Page 175 and First Amendment to Declaration recorded April 12, 2005 at Reception No. 911873, Second Amendment recorded July 25, 2006 at Reception No 200620033, and Third Amendment to Declaration recorded December 7, 2006, at Reception No. 200633338, County of Eagle, State of Colorado.

Parcel Two:

Condominium Units M-10, M-11, M-12, M-15, M-18 and M-20, Village Hall Condominiums, according to the Condominium Map for Village Hall Condominiums recorded February 1, 1984 in Book 377 at Page 639 and as described in the Village Hall Condominium Declaration recorded February 1, 1984 in Book 377 at Page 638, as amended and supplemented from time to time, County of Eagle, State of Colorado.

and

Condominium Unit M-4 and M-21, Village Hall Condominiums, according to the Fifth Amendment to the Condominium Map for Village Hall Condominiums, recorded July 17, 1996 in Book 699 at Page 963 and as described in the Village Hall Condominium Declaration recorded February 1, 1984 in Book 377 at Page 638, as amended and supplemented from time to time, County of Eagle, State of Colorado.

and

Condominium Unit M-9, Village Hall Condominiums, according to the Condominium Map for Village Hall Condominiums recorded February 1, 1984 in Book 377 at Page 639 and amended by Condominium Map for Village Hall Condominiums, Sixth Amendment recorded June 27, 2001 at Reception No. 760704 and as described in the Village Hall Condominium Declaration recorded February 1, 1984 in Book 377 at Page 638, and First Amendment recorded October 27, 1989 in Book 516 at Page 628, County of Eagle, State of Colorado.

Parcel Three:

119 Parking Spaces on the second level of a parking garage located in Lot 14, Block 1, Tract A, Second Amendment to the First Filing, Beaver Creek Subdivision according to the plat recorded September 20, 1980 in Book 307 at Page 997, and as further described in Village Hall Parking Easement recorded October 8, 1987 in Book 471 at Page 508 as modified by First Amendment recorded October 25, 1988 in Book 493 at Page 710 and as assigned by Assignment recorded January 3, 1995 in Book 658, Page 489, Assignment recorded October 10, 1995 in Book 677, Page 957; Assignment recorded January 20, 2004 at Reception No. 865438; and Assignment recorded at Reception 865439, and as further modified by Second Amendment to Village Hall Parking Easement recorded October 20, 2014 at Reception No. 201417959, County of Eagle, State of Colorado.

3721766.8 EXHIBIT A

Parcel Four:

The benefits of various rights and easements as described in the Declaration For Beaver Creek Hotel A Condominium, and any and all supplements, amendments, and annexations thereto, set forth in the Instruments) recorded March 8, 1990 in Book 524 at Page 175; Assignment of Declarant's Rights recorded January 3, 1995 in Book 658 at Page 490 and October 10, 1995 in Book 677 at Page 958 and First Amendments Declaration recorded April 12, 2005 as Reception No. 911873, Second Amendment recorded July 25, 2006 at Reception No. 200620033 and Third Amendment recorded December 7, 2006 at Reception No. 200633338, County of Eagle, State of Colorado.

Parcel Five:

The benefits of access and various utilities as described in the Amended and Restated General Declaration for Beaver Creek, and any and all supplements, amendments, and annexations thereto, set forth in the instrument(s) recorded December 27, 1979 in Book 296 at Page 446; Supplemental Declaration of Land Use Restrictions recorded March 12, 1980 in Book 300 at Page 48; Amendment recorded September 16, 1982 in Book 346 at Page 5; and Assignment and Assumption of Declarant Status and Rights recorded November 23, 1993 in Book 625 at Page 654, County of Eagle, State of Colorado.

Parcel Six:

Encroachment rights described in the Consent to Encroachments and Agreement, which was recorded October 5, 1988 in Book 492 at Page 448 and 449, County of Eagle, State of Colorado.

3721766.8 EXHIBIT A

EXHIBIT B

DEPOSIT ESCROW AGREEMENT

CHICAGO TITLE AND TRUST COMPANY

Refer to:

Phone no.: ___________

Fax no: ____________

STRICT JOINT ORDER #1 ESCROW TRUST INSTRUCTIONS (EARNEST MONEY)

ESCROW TRUST NO.: DATE: _________, 2017

To: Chicago Title Insurance Company, Escrow Trustee:

Customer Identification:

Seller: WTCC BEAVER CREEK INVESTORS V, L.L.C., a Delaware limited liability company

Buyer: TBD

Property Legal Description: See Exhibit “A” attached hereto

Project Reference: Park Hyatt Beaver Creek

Proposed Disbursement Date: __________, 2017

Deposits :

1. The sum of $___________ by Buyer representing:

The “Initial Deposit” under Sale and Purchase Agreement, dated as of __________, 2017, with respect to the Property described on Exhibit “A” attached hereto and an “Additional Deposit” of $__________ on __________, 2017 unless Buyer sends notice of termination to Seller and escrow trustee prior to 5:00 p.m. Central time on __________, 2017.

Delivery of Deposits :

The above-referenced escrow trust deposits (“ deposits ”) are deposited with the escrow trustee to be delivered by it only upon the receipt of a joint order of the undersigned or their respective legal representatives or assigns.

In no case shall the above-mentioned deposits be surrendered except upon the receipt of an order signed by the parties hereto, their respective legal representatives or assigns, or in obedience to the court order described below.

Notwithstanding anything herein to the contrary, if the Sale and Purchase Agreement is terminated on or prior to the expiration of the Due Diligence Period, the deposit shall be immediately returned to Buyer irrespective of consent or objection by Seller.

Billing Instructions :

3721766.8 EXHIBIT B

Escrow trust fee will be billed as follows: ½ half to Buyer and ½ to Seller, no charge if the transaction contemplated by the Sale and Purchase Agreement closes through Chicago Title.

The parties acknowledge that beginning after a period of one year from the date of this agreement, Chicago Title Insurance Company will impose an administrative maintenance fee (quarterly, semi-annually, or annually) equivalent to the fee set forth on Chicago Title Insurance Company’s then current rate schedule.

This fee may be deducted from the outstanding escrow balance or billed to Buyer.

PLEASE NOTE: The escrow trust fee for these joint order escrow trust instructions is due and payable within 30 days from the projected disbursement date (which may be amended by joint written direction of the parties hereto). In the event no projected disbursement date is ascertainable, said escrow trust fee is to be billed at acceptance and is due and payable within 30 days from the billing date. Chicago Title Insurance Company, at its sole discretion, may reduce or waive the escrow trust fee for these joint order escrow instructions in the event the funds on deposit herein are transferred to or disbursed in connection with sale escrow trust instructions or an agency closing transaction established at Chicago Title Insurance Company.

Investment :

Deposits made pursuant to these instructions may be invested on behalf of any party or parties hereto; provided that any direction to escrow trustee for such investment shall be expressed in writing and contain the consent of all parties to this escrow, and also provided that escrow trustee is in receipt of the taxpayer’s identification number and investment forms as required. Escrow trustee will, upon request, furnish information concerning its procedures and fee schedules for investment.

In the event the escrow trustee is requested to invest deposits hereunder, Chicago Title Insurance Company is not to be held responsible for any loss of principal or interest which may be incurred as a result of making the investments or redeeming said investment for the purposes of these escrow trust instructions.

Direction Not to Invest/Right to Commingle:

Except as to deposits of funds for which escrow trustee has received express written direction concerning investment or other handling, the parties hereto direct the escrow trustee NOT to invest any funds deposited by the parties under the terms of this escrow and waive any rights which they may have under Section 2-8 of the Corporate Fiduciary Act (205 ILCS 620/2-8) to receive interest on funds deposited hereunder. In the absence of an authorized direction to invest funds, the parties hereto agree that the escrow trustee shall be under no duty to invest or reinvest any such funds at any time held by it hereunder; and, further, that escrow trustee may commingle such funds with other deposits or with its own funds in the manner provided for the administration of funds under said Section 2-8 and may use any part or all of such funds for its own benefit without obligation to any party for interest or earnings derived thereby, if any. Provided, however, nothing herein shall diminish escrow trustee’s obligation to apply the full amount of such funds in accordance with the terms of these escrow instructions.

Compliance With Court Order:

The undersigned authorize and direct the escrow trustee to disregard any and all notices, warnings or demands given or made by the undersigned (other than jointly) or by any other person. The said undersigned also hereby authorize and direct the escrow trustee to accept, comply with, and obey any and all writs, orders, judgments or decrees entered or issued by any court with or without jurisdiction; and in case the said escrow trustee obeys or complies with any such writ, order, judgment or decree of any court, it shall not be liable to any of the parties hereto or any other person, by reason of such compliance, notwithstanding any such writ, order, judgment or decree be entered without jurisdiction or be subsequently reversed, modified, annulled, set aside or vacated. In case the escrow trustee is made a party defendant to any suit or proceedings regarding this escrow trust, the undersigned, for themselves, their heirs, personal representatives, successors, and assigns, jointly and severally, agree to pay to said escrow trustee, upon written demand, all costs, attorney’s fees, and expenses incurred with respect thereto. The escrow trustee shall have a lien on the deposit(s) herein for any and all such costs, fees and expenses. If said costs, fees and expenses are not paid, then the escrow trustee shall have the right to reimburse itself out of the said deposit(s).

Execution:

3721766.8 EXHIBIT B

These escrow trust instructions are governed by and are to be construed under the laws of the state of Illinois. The escrow trust instructions, amendments or supplemental instructions hereto, may be executed in counterparts, each of which shall be deemed an original and all such counterparts together shall constitute one and the same instrument.



For Seller:		For Buyer:
Name: WTCC BEAVER CREEK INVESTORS V, L.L.C., a Delaware limited liability company		Name:
By: David J. Pezza		By:
Address: c/o Pircher, Nichols & Meeks 900 North Michigan Avenue, Suite 1000 Chicago, Illinois 60611		Address:
Phone: 312.915.3100		Phone:
Fax: 312.896.9263		Fax:
Signature: _________________		Signature: _____________________

Accepted: Chicago Title Insurance Company, as Escrow Trustee
By: ________________________		Date: _______, 2017

3721766.8 EXHIBIT B

EXHIBIT C

FORM OF SPECIAL WARRANTY DEED

PROPERTY IS NOT TO BE REGARDED AS RESIDENTIAL FOR PURPOSES OF CALCULATING DOCUMENTARY FEE.

Prepared by

and Return to:

David J. Pezza, Esq.

Pircher, Nichols & Meeks

900 N. Michigan Avenue, Suite 1000

Chicago, Illinois 60611

SPECIAL WARRANTY DEED

THIS SPECIAL WARRANTY DEED is made as of the ____ day of __________, 2017 by and between WTCC BEAVER CREEK INVESTORS V, L.L.C. , a Delaware limited liability company (“ Grantor ”), having an address of 900 N. Michigan Avenue, Suite 1900, Chicago, Illinois 60611, for and in consideration of the sum of Ten and No/100 Dollars ($10.00) and other good and valuable consideration in hand paid by ___________ (“ Grantee ”), having an address of _______________________, the receipt and sufficiency of which is hereby acknowledged, has GRANTED, SOLD AND CONVEYED and by these presents does GRANT, SELL AND CONVEY unto Grantee that certain tract or parcel of land situated in Eagle County, Colorado, and more particularly described on Exhibit A attached hereto and made a part hereof for all purposes (the “ Property ”). Together with all and singular the hereditaments and appurtenances thereunto belonging, or in anywise appertaining, and the reversion and reversions, remainder and remainders, rents, issues and profits thereof; and all the estate, right, title, interest, claim and demand whatsoever, of Grantor, either in law or equity, of, in and to the Property, with the hereditaments and appurtenances. This conveyance is made and accepted subject to (a) general real estate taxes on the Property for the current year which Grantee assumes and agrees to pay, and (b) the matters set forth on Exhibit B attached hereto and made a part hereof for all purposes, to the extent the same are validly existing and enforceable (all of the foregoing being hereinafter collectively referred to as the “ Permitted Exceptions ”).

TO HAVE AND TO HOLD the Property, together with all and singular the rights and appurtenances thereto in anywise belonging unto Grantee, its successors and assigns forever, and Grantor does hereby bind itself, its successors and assigns, against every person whomsoever lawfully claiming or to claim the same or any part thereof, by, through or under Grantor, but not otherwise, subject, however, to the Permitted Exceptions.

EXHIBIT C

By its acceptance of this Deed, Grantee shall be deemed to have accepted and agreed to the foregoing provisions set forth in this Deed, including without limitation all agreements of Grantee provided herein.

[Signature Page Follows]

3721766.8 EXHIBIT C

IN WITNESS WHEREOF, Grantor has executed this Deed as of the day and year first above written.

WTCC BEAVER CREEK INVESTORS V, L.L.C. ,

a Delaware limited liability company

By: WTCC Beaver Creek Alpha Mezz V, L.L.C.,

a Delaware limited liability company,

its Sole Member

By: WTCC Beaver Creek Mezz V, L.L.C.,

a Delaware limited liability company,

its Sole Member

By: Walton TCC Hotel REOC Investors V, L.L.C.,

a Delaware limited liability company,

its Managing Member

By: Walton Acquisition REOC Holdings V, L.L.C.,

a Delaware limited liability company,

its Managing Member

By: Walton Street Real Estate Fund V, L.P.,

a Delaware limited partnership,

its Managing Member

By: Walton Street Managers V, L.P.,

a Delaware limited partnership,

its General Partner

By: WSC Managers V, Inc.,

a Delaware corporation,

its General Partner

By:

Name:

Title:

3721766.8 EXHIBIT C

STATE OF ILLINOIS

COUNTY OF COOK

The foregoing instrument was acknowledged before me on _____________, 2017, by _____________________________, as _______________________ of WSC Managers V, Inc., a Delaware corporation, as the general partner of Walton Street Managers V, L.P., a Delaware limited partnership, as general partner of Walton Street Real Estate Fund V, L.P., a Delaware limited partnership, as managing member of Walton Acquisition REOC Holdings V, L.L.C., a Delaware limited liability company, as managing member of Walton TCC Hotel REOC Investors V, L.L.C., a Delaware limited liability company, as managing member of WTCC Beaver Creek Mezz V, L.L.C., a Delaware limited liability company, as the sole member of WTCC Beaver Creek Alpha Mezz V, L.L.C., a Delaware limited liability company, as the sole member of WTCC BEAVER CREEK INVESTORS V, L.L.C., a Delaware limited liability company.

Witness my hand and official seal.

My commission expires:

____________________________________

Notary Public

3721766.8 EXHIBIT C

Exhibit “A”

Legal Description

Parcel One:

Parcel Two:

and

Parcel Three:

3721766.8 EXHIBIT C

Second Amendment to Village Hall Parking Easement recorded October 20, 2014 at Reception No. 201417959, County of Eagle, State of Colorado.

Parcel Four:

Parcel Five:

Parcel Six:

Encroachment rights described in the Consent to Encroachments and Agreement, which was recorded October 5, 1988 in Book 492 at Page 448 and 449, County of Eagle, State of Colorado.

3721766.8 EXHIBIT C

Exhibit “B”

PERMITTED EXCEPTIONS

To be agreed to by Buyer and Seller and inserted prior to the expiration of the Due Diligence Period based upon the final title review and approval.

3721766.8 EXHIBIT C

EXHIBIT D

PRELIMINARY LIST OF PERMITTED EXCEPTIONS

1. Taxes for the year 2017 and subsequent years, not yet due and payable.

2. The Condominium Declaration.

3. The Parking Agreement.

4. The Village Hall Back Lawn Lease agreement.

To be agreed to by Buyer and Seller and inserted prior to the expiration of the Due Diligence Period based upon the final title review and approval.

3721766.8 EXHIBIT D

EXHIBIT E

FORM OF PARKING AGREEMENT ASSIGNMENT
[to be in recordable form]

ASSIGNMENT AND ASSUMPTION AGREEMENT
(Park Hyatt Beaver Creek, Village Hall Parking Easement)

This Assignment and Assumption Agreement (this “ Assumption Agreement ”) is executed as of __________, 2017 (the “ Closing Date ”) by WTCC BEAVER CREEK INVESTORS V, L.L.C. , a Delaware limited liability company (“ Assignor ”), and _______________________, a ____________________ (“ Assignee ”), pursuant to, and is expressly made subject to the terms and conditions of, that certain Sale and Purchase Agreement (the “ Purchase Agreement ”) dated as of March 9, 2017, by and between, Assignor, as seller, and Assignee, as buyer, with respect to the Park Hyatt Beaver Creek (the “ Project ”)

Recitals:

(1) Assignor and The Vail Corporation, a Colorado corporation, are parties to that certain Village Hall Parking Easement recorded October 8, 1987 in Book 471 at Page 508 as modified by First Amendment recorded October 25, 1988 in Book 493 at Page 710 and as assigned by Assignment recorded January 3, 1995 in Book 658, Page 489, Assignment recorded October 10, 1995 in Book 677, Page 957; Assignment recorded January 20, 2004 at Reception No. 865438; and Assignment recorded January 20, 2004 at Reception 865439, and as further modified by Second Amendment to Village Hall Parking Easement recorded October 20, 2014 at Reception No. 201417959, County of Eagle, State of Colorado (as may be further amended from time to time, the “ Parking Agreement ”), pertaining to the Project and related facilities commonly known as the Park Hyatt Beaver Creek and more particularly described in the Parking Agreement (the “ Hotel ”).

(1) Pursuant to the Purchase Agreement and in connection with the transfer of the Hotel to Assignee, Assignor desires to transfer, assign and set over unto Assignee, without recourse or warranty except as expressly provided in the Purchase Agreement, all of Assignor’s right, title and interest under the Parking Agreement, and Assignee desires to assume the rights and obligations of Assignor with respect to the Parking Agreement.

Agreement:

NOW, THEREFORE, in consideration of Ten and No/100 Dollars ($10.00) and other good and valuable consideration, the receipt and legal sufficiency of which are hereby acknowledged, Assignor and Assignee hereby agree as follows:

(1) Assignor hereby sells, transfers, assigns and sets over unto Assignee, without recourse or warranty except as expressly provided in the Purchase Agreement, all of the Assignor’s right, title and interest in, to and under the Parking Agreement as of 12:01 a.m. on the Closing Date (the “ Effective Date ”).

3721766.8 EXHIBIT E

(1) Subject to the terms of the Purchase Agreement, Assignee hereby accepts all of Assignor’s right, title and interest in, to and under the Parking Agreement and (a) assumes and agrees to perform all of the duties, obligations and liabilities of Assignor arising and accruing under or with respect to the Parking Agreement from and after the Effective Date, and (b) agrees to indemnify and hold harmless Assignor from all loss, cost, liability and expense arising and accruing on or after the Effective Date out of or in connection with the Parking Agreement.

EXECUTED as of the Closing Date.

ASSIGNOR :

WTCC BEAVER CREEK INVESTORS V, L.L.C. ,

a Delaware limited liability company

By: WTCC Beaver Creek Alpha Mezz V, L.L.C.,

a Delaware limited liability company,

its Sole Member

By: WTCC Beaver Creek Mezz V, L.L.C.,

a Delaware limited liability company,

its Sole Member

By: Walton TCC Hotel REOC Investors V, L.L.C.,

a Delaware limited liability company,

its Managing Member

By: Walton Acquisition REOC Holdings V, L.L.C.,

a Delaware limited liability company,

its Managing Member

By: Walton Street Real Estate Fund V, L.P.,

a Delaware limited partnership,

its Managing Member

By: Walton Street Managers V, L.P.,

a Delaware limited partnership,

its General Partner

By: WSC Managers V, Inc.,

a Delaware corporation,

its General Partner

By:

Name:

3721766.8 EXHIBIT E

Title:

3721766.8 EXHIBIT E

ASSIGNEE :

BUYER :

ASHFORD HOSPITALITY PRIME LIMITED PARTNERSHIP ,
a Delaware limited partnership


By:	Ashford Prime OP General Partner LLC By: ____________________________ Name: ____________________________ Title: ____________________________

The undersigned, The Vail Corporation, d/b/a/ Vail Associates, Inc. a Colorado corporation (“Vail”), executes this Agreement to (a) evidence Vail’s consent to the assignment of the Agreement to Assignee, (b) to evidence the consent of Vail to Assignee’s assumption of the Agreement, and (c) confirm the release of Assignor from its obligations under the Agreement arising or accruing from and after the Effective Date.

The Vail Corporation, d/b/a/ Vail Associates,
a Colorado corporation

By:    ____________________________
Name:    ____________________________
Title:    ____________________________

3721766.8 EXHIBIT E

STATE OF ILLINOIS

COUNTY OF COOK

The foregoing instrument was acknowledged before me on _____________, 2017, by _____________________________, as _______________________ WSC Managers V, Inc., a Delaware corporation, as the general partner of Walton Street Managers V, L.P., a Delaware limited partnership, as general partner of Walton Street Real Estate Fund V, L.P., a Delaware limited partnership, as managing member of Walton Acquisition REOC Holdings V, L.L.C., a Delaware limited liability company, as managing member of Walton TCC Hotel REOC Investors V, L.L.C., a Delaware limited liability company, as managing member of WTCC Beaver Creek Mezz V, L.L.C., a Delaware limited liability company, as the sole member of WTCC Beaver Creek Alpha Mezz V, L.L.C., a Delaware limited liability company, as the sole member of WTCC BEAVER CREEK INVESTORS V, L.L.C., a Delaware limited liability company.

Witness my hand and official seal.

My commission expires:

____________________________________

Notary Public

STATE OF ____________

COUNTY OF __________

The foregoing instrument was acknowledged before me on _____________, 2017, by _____________________________, as _______________________ of Ashford Prime OP General Partner LLC, as the __________ of ASHFORD HOSPITALITY PRIME LIMITED PARTNERSHIP, a Delaware limited partnership.

Witness my hand and official seal.

My commission expires:

____________________________________

Notary Public

3721766.8 EXHIBIT E

STATE OF ____________

COUNTY OF __________

The foregoing instrument was acknowledged before me on _____________, 2017, by _____________________________, as _______________________ of The Vail Corporation, d/b/a Vail Associates, a Colorado corporation.

Witness my hand and official seal.

My commission expires:

____________________________________

Notary Public

3721766.8 EXHIBIT E

EXHIBIT F

BILL OF SALE

BLANKET CONVEYANCE, BILL OF SALE AND ASSIGNMENT

This Blanket Conveyance, Bill of Sale and Assignment (this “ Assignment ”), dated as of _________, 2017(the “ Effective Date ”), is made and entered into by WTCC BEAVER CREEK INVESTORS V, L.L.C., a Delaware limited liability company (“ Seller ”), and ____________, a ______________________ (“ Buyer ”) and _________, a ___________ (“ Operating Lessee ”), pursuant to, and is expressly made subject to the terms and conditions of, that certain Sale and Purchase Agreement (the “ Purchase Agreement ”) dated as of March 9, 2017, by and between Seller and Buyer. Each capitalized term used in this Assignment and not otherwise defined herein shall have the meaning assigned to such term in the Purchase Agreement.

For and in consideration of TEN AND NO/100 DOLLARS ($10.00) and other good and valuable consideration, Seller hereby transfers and assigns to Buyer, without recourse or warranty except as expressly provided in the Purchase Agreement, all of Seller’s right, title and interest in and to the Personal Property, and to Operating Lessee, all of the Seller’s right, title and interest in and to the Consumables and Intangible Property (collectively, the “ Assigned Property ”).

Buyer and Operating Lessee hereby assume and agree to perform from and after the Effective Date all of the covenants and obligations of Seller arising and accruing on or after the Effective Date pursuant to or under the Assigned Property and hereby indemnify Seller and agrees to hold Seller harmless from and against all liability, cost, loss, damage or expense, including reasonable attorneys’ fees, suffered or incurred by Seller as a result of any failure or alleged failure of Buyer and/or Operating Lessee to perform such covenants or obligations to the extent same arise and accrue on or after the Effective Date.

[ Remainder of page Intentionally Blank.

Signature Pages Follow]

3721766.8 EXHIBIT F

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

SELLER:

WTCC BEAVER CREEK INVESTORS V, L.L.C. ,

a Delaware limited liability company

By: WTCC Beaver Creek Alpha Mezz V, L.L.C.,

a Delaware limited liability company,

its Sole Member

By: WTCC Beaver Creek Mezz V, L.L.C.,

a Delaware limited liability company,

its Sole Member

By: Walton TCC Hotel REOC Investors V, L.L.C.,

a Delaware limited liability company,

its Managing Member

By: Walton Acquisition REOC Holdings V, L.L.C.,

a Delaware limited liability company,

its Managing Member

By: Walton Street Real Estate Fund V, L.P.,

a Delaware limited partnership,

its Managing Member

By: Walton Street Managers V, L.P.,

a Delaware limited partnership,

its General Partner

By: WSC Managers V, Inc.,

a Delaware corporation,

its General Partner

By:

Name:

Title:

BUYER :

3721766.8 EXHIBIT F

_____________________________,
a

By:    ____________________________
Name:    ____________________________
Title:    ____________________________

OPERATING LESSEE :

_____________________________,
a

By:    ____________________________
Name:    ____________________________
Title:    ____________________________

3721766.8 EXHIBIT F

EXHIBIT G

LIST OF LEASES

Suite Tenant

C-1,2,3,4,12 & 13 Gorsuch

C-5 Beaver Creek Gear

C-6,7 Slifer Smith & Frampton/Vail Associates Real Estate

C-8 Q Boutique

C-9 Walt Horton Studios

C-10 Wilderness Wonders

C-11 Paderewski Fine Art

C-14 A & B Slifer Smith & Frampton/Vail Associates Real Estate

3721766.8 EXHIBIT G

EXHIBIT H

SELLER CLOSING CERTIFICATE

THIS CLOSING CERTIFICATE (this “ Certificate ”) is made as of the ____ day of ___________, 2017, by WTCC BEAVER CREEK INVESTORS V, L.L.C. , a Delaware limited liability company (“ Seller ”), in favor of _________________ , a ___________________ (“ Buyer ”).

R E C I T A L S :

A. Pursuant to that certain Sale and Purchase Agreement, dated as of March 9, 2017, by and between Seller and Buyer (together with all amendments and addenda thereto, the “ Purchase Agreement ”), Seller has agreed to sell to Buyer the “Property” (as defined in the Purchase Agreement), as more particularly described in the Purchase Agreement.

B. The Purchase Agreement requires the delivery of this Certificate.

NOW THEREFORE, pursuant to the Purchase Agreement, Seller does hereby represent and warrant to Buyer that all of the representations and warranties of Seller contained in Section 8.1 of the Purchase Agreement are true and correct, in all material respects, as of the date hereof as if made on and as of the date hereof, except as set forth on Exhibit “A” attached hereto.

This Certificate is subject to the terms and conditions of the Purchase Agreement (including all applicable limitations on liability and all applicable survival limitations contained therein).

[SIGNATURES ON FOLLOWING PAGE]

3721766.8 EXHIBIT H

IN WITNESS WHEREOF, the undersigned has executed this Certificate as of the day and year first above written.

WTCC BEAVER CREEK INVESTORS V, L.L.C. ,

a Delaware limited liability company

By: WTCC Beaver Creek Alpha Mezz V, L.L.C.,

a Delaware limited liability company,

its Sole Member

By: WTCC Beaver Creek Mezz V, L.L.C.,

a Delaware limited liability company,

its Sole Member

By: Walton TCC Hotel REOC Investors V, L.L.C.,

a Delaware limited liability company,

its Managing Member

By: Walton Acquisition REOC Holdings V, L.L.C.,

a Delaware limited liability company,

its Managing Member

By: Walton Street Real Estate Fund V, L.P.,

a Delaware limited partnership,

its Managing Member

By: Walton Street Managers V, L.P.,

a Delaware limited partnership,

its General Partner

By: WSC Managers V, Inc.,

a Delaware corporation,

its General Partner

By:

Name:

Title:

3721766.8 EXHIBIT H

EXHIBIT “A”

EXCEPTIONS TO SELLER’S REPRESENTATIONS AND WARRANTIES

[ADD EXCEPTIONS, INCLUDING SUBSTITUTION OF

UPDATED EXHIBITS, IF APPROPRIATE]

3721766.8 EXHIBIT H

EXHIBIT I
CERTIFICATE OF NON-FOREIGN STATUS

Section 1445 of the Internal Revenue Code provides that a transferee (buyer) of a U.S. real property interest must withhold tax if the transferor (seller) is a foreign person. For U.S. tax purposes (including Section 1445), the owner of a disregarded entity (which has legal title to a U.S. real property interest under local law) will be the transferor of the property and not the disregarded entity. To inform ____________________________ (“ Transferee ”), that withholding of tax is not required upon the disposition of a U.S. real property interest by WTCC BEAVER CREEK INVESTORS V, L.L.C., a Delaware limited liability company that for U.S. federal income tax purposes is disregarded as separate from WTCC Beaver Creek Mezz V, L.L.C., a Delaware limited liability company (“ Transferor ”) to Transferee , the undersigned hereby certifies the following on behalf of Transferor:

1. Transferor is not a foreign corporation, foreign partnership, foreign trust, or foreign estate (as those terms are defined in the Internal Revenue Code and Income Tax Regulations);

2. Transferor is not a disregarded entity as defined in Section 1.1445-2(b)(2)(iii) of the Income Tax Regulations ;

3. Transferor’s U. S. employer identification number is 20-8912250; and

4. Transferor’s office address is:

c/o Walton Street Capital, L.L.C.

900 North Michigan Avenue

Suite 1900

Chicago, Illinois 60611

Attn: Mr. Douglas Welker, Mr. Justin Leonard and Angela Lang, Esq.

Transferor understands that this certification may be disclosed to the Internal Revenue Service by Transferee and that any false statement contained herein could be punished by fine, imprisonment, or both.

Under penalties of perjury I declare that I have examined this certification and to the best of my knowledge and belief it is true, correct and complete, and I further declare that I have authority to sign this document on behalf of Transferor.

Executed as of the ____ day of __________, 2017, at Chicago, Illinois.

[SIGNATURE ON FOLLOWING PAGE]

3721766.8 EXHIBIT I

WTCC Beaver Creek Mezz V, L.L.C.,

a Delaware limited liability company,

its sole member

By: Walton TCC Hotel REOC Investors V, L.L.C.,

a Delaware limited liability company,

its managing member

By: Walton Acquisition REOC Holdings V, L.L.C.,

a Delaware limited liability company,

its managing member

By: Walton Street Real Estate Fund V, L.P.,

a Delaware limited partnership,

its managing member

By: Walton Street Managers V, L.P.,

a Delaware limited partnership,

its general partner

By: WSC Managers V, Inc.,

a Delaware corporation,

its general partner

By:_____________________

Name:___________________

Title:____________________

3721766.8 EXHIBIT I

EXHIBIT J
GAP INDEMNITY

PERSONAL UNDERTAKING (GAP)

WTCC BEAVER CREEK INVESTORS V, L.L.C.

WHEREAS, Chicago Title Insurance Company (hereinafter referred to as the “ Company ”), is about to issue its title insurance policy (hereinafter referred to as the “ Title Insurance Policy ”) pursuant to its title commitment no. 100-N0010228-010-TO2, with respect to the land described therein (the “ Subject Property ”).

WHEREAS, the Company is unwilling to issue the Title Insurance Policy unless exception is made for the following matters:

Defects, liens, encumbrances, adverse claims or other matters, if any, created, first appearing in the public records or attaching subsequent to [ last date down to title ], but prior to the date the proposed insured acquires for value of record the estate or interest or mortgage or deed of trust covered therein (hereinafter referred to as the “ Rights and Liens ”).

NOW, THEREFORE, in consideration of the agreement of the Company to issue the Title Insurance Policy as aforesaid and of the sum of One Dollar ($1.00) in hand paid to the undersigned by the Company, the receipt whereof is hereby acknowledged, the undersigned does hereby for itself, its successors and assigns, covenant and agree with the Company: 1) to protect fully, defend and save harmless the Company from and against the Rights and Liens, and each and every one of them; 2) to protect fully, defend and save harmless the Company from any and all actual losses, costs, damages, including reasonable attorney’s fees and expenses of every kind and nature which it may suffer, expend or incur under or by reason or in consequence of the Title Insurance Policy, on account of, in consequence of or growing out of the Rights and Liens, or on account of the assertion or enforcement or attempted assertion or enforcement thereof, or of any right existing or hereafter arising, or which at any time be claimed to exist under or by reason, or in consequence of or growing out of the Rights and Liens; 3) as against the assertion or attempted assertion of any such Rights and Liens to defend at its own costs and charges on behalf of and for the protection of the Company and of the parties insured, or who may be insured, against loss by it under the Title Insurance Policy (but without prejudice to the right of the Company to defend it if the undersigned fails to do so diligently) any and every suit, action or proceeding in which any such Rights and Liens may be asserted or attempted to be asserted, established or enforced in, to, upon, against or with respect to the real estate described in the Title Insurance Policy, or any part thereof, or interest therein.

This Personal Undertaking shall be of no further force and effect on the date that is six (6) months after the date hereof, unless notice of any matter with respect to which the undersigned is indemnifying the Company is given to the undersigned before such date.

No present or future partner, member, advisor, trustee, director, officer, employee, beneficiary, shareholder, participant, direct or indirect partner or agent of the undersigned, shall

3721766.8 EXHIBIT J

have any personal liability, directly or indirectly, under or in connection with this personal undertaking; and the Company hereby waives any and all such personal liability. The limitations of liability provided in this paragraph are in addition to, and not in limitation of, any limitation on liability applicable to the undersigned provided by law or by any other contract, agreement or instrument.

3721766.8 EXHIBIT J

IN WITNESS WHEREOF, the undersigned has caused these presents to be signed as of the _______ day of __________, 2017.

OWNER :

WTCC BEAVER CREEK INVESTORS V, L.L.C. ,

a Delaware limited liability company

By: WTCC Beaver Creek Alpha Mezz V, L.L.C.,

a Delaware limited liability company,

its Sole Member

By: WTCC Beaver Creek Mezz V, L.L.C.,

a Delaware limited liability company,

its Sole Member

By: Walton TCC Hotel REOC Investors V, L.L.C.,

a Delaware limited liability company,

its Managing Member

By: Walton Acquisition REOC Holdings V, L.L.C.,

a Delaware limited liability company,

its Managing Member

By: Walton Street Real Estate Fund V, L.P.,

a Delaware limited partnership,

its Managing Member

By: Walton Street Managers V, L.P.,

a Delaware limited partnership,

its General Partner

By: WSC Managers V, Inc.,

a Delaware corporation,

its General Partner

By:

Name:

Title:

3721766.8 EXHIBIT J

EXHIBIT K

OWNER’S CERTIFICATE AS TO DEBTS, LIENS
AND PARTIES IN POSSESSION

The undersigned hereby certifies to CHICAGO TITLE INSURANCE COMPANY (the “ Company ”) that, as of __________, 2017, to its actual knowledge and belief:


1.	WTCC BEAVER CREEK INVESTORS V, L.L.C., a Delaware limited liability company (“ Owner ”), is the Owner of a fee interest in that certain real property (the “ Subject Property ”) described in that certain title insurance commitment no. 100-N0010228-010-TO2 issued by the Company (the “ Commitment ”).


2.	Owner is unaware of any unrecorded labor, mechanics’ or materialmens’ liens against the Subject Property, or of any outstanding payment for any labor performed and materials provided at or to the Subject Property, except as set forth on Exhibit “A” attached hereto.


3.	There are no parties in possession of the Subject Property except for guests of the Hotel located on the Subject Property, except as set forth on Exhibit “A” attached hereto.


4.	Owner is unaware of any unrecorded security agreements, financing statements, chattel mortgages or conditional sales agreements with respect to the Subject Property, or fixtures located thereon, created by Owner or to which the Owner is a party.

There is no action or proceeding, including but not limited to bankruptcy, which is now pending against Owner in any State or Federal Court, nor is there any attachment, judgment or other encumbrance attributable to Owner which may now constitute a lien upon the Subject Property, nor are there any claims or pending claims against Owner which may be satisfied through a lien or attachment against the Subject Property.

No present or future partner or member or direct or indirect partner or agent of the undersigned, or any advisor, trustee, director, officer, employee, beneficiary, shareholder and participant of any of the foregoing, shall have any personal liability, directly or indirectly, under or in connection with this Certificate; and the Company and its successors and assigns, and, without limitation, all other persons and entities, hereby waive any and all such personal liability. The limitations of liability provided in this paragraph are in addition to, and not in limitation of, any limitation on liability applicable to the foregoing persons and entities provided by law or by any other contract, agreement or instrument.

This Certificate is made to the Company as inducement to it to provide title insurance to the purchaser of the Subject Property,_________________, pursuant to the Commitment, and the undersigned acknowledges that the Company is relying upon the representations contained herein. Any claim made by the Company on the basis of any statement herein must be made, if at all, not later than six (6) months following the date hereof.

[The remainder of this page has been intentionally left blank.]

3721766.8 EXHIBIT K

This Owner’s Certificate as to Debts, Liens and Parties in Possession was executed as of the date first written above.

OWNER:

WTCC BEAVER CREEK INVESTORS V, L.L.C. ,

a Delaware limited liability company

By: WTCC Beaver Creek Alpha Mezz V, L.L.C.,

a Delaware limited liability company,

its Sole Member

By: WTCC Beaver Creek Mezz V, L.L.C.,

a Delaware limited liability company,

its Sole Member

By: Walton TCC Hotel REOC Investors V, L.L.C.,

a Delaware limited liability company,

its Managing Member

By: Walton Acquisition REOC Holdings V, L.L.C.,

a Delaware limited liability company,

its Managing Member

By: Walton Street Real Estate Fund V, L.P.,

a Delaware limited partnership,

its Managing Member

By: Walton Street Managers V, L.P.,

a Delaware limited partnership,

its General Partner

By: WSC Managers V, Inc.,

a Delaware corporation,

its General Partner

By:

Name:

Title:

3721766.8 EXHIBIT K

EXHIBIT “A”

EXCEPTIONS TO OWNER’S CERTIFICATE AS TO DEBTS, LIENS

AND PARTIES IN POSSESSION

3721766.8 EXHIBIT K

EXHIBIT L
BUYER CLOSING CERTIFICATE

THIS CLOSING CERTIFICATE (this “ Certificate ”) is made as of the ____ day of ________, 2017, by ________________, a _____________________________ (“ Buyer ”), in favor of WTCC BEAVER CREEK INVESTORS V, L.L.C., a Delaware limited liability company (“ Seller ”).

R E C I T A L S :

B. The Purchase Agreement requires the delivery of this Certificate to Seller by Buyer.

NOW THEREFORE, pursuant to the Purchase Agreement, Buyer does hereby represent and warrant to Seller that all of the representations and warranties of Buyer contained in Section 8.2 of the Purchase Agreement are true and correct, in all material respects, as of the date hereof as if made on and as of the date hereof, except as set forth on Exhibit “A” attached hereto.

This Certificate is subject to the terms and conditions of the Purchase Agreement (including all limitations on liability and survival limitations contained therein).

[SIGNATURE ON FOLLOWING PAGE]

3721766.8 EXHIBIT L

IN WITNESS WHEREOF, the undersigned has executed this Certificate as of the day and year first above written.

BUYER :

_____________________________,
a

By:    ____________________________
Name:    ____________________________
Title:    ____________________________

3721766.8 EXHIBIT L

EXHIBIT “A”

EXCEPTIONS TO BUYER’S REPRESENTATIONS AND WARRANTIES

3721766.8 EXHIBIT L

EXHIBIT M

LITIGATION

NO MATTERS PENDING AGAINST THE HOTEL

3721766.8 EXHIBIT M

Gardere01 - 10003657v.4

EXHIBIT N

NON-COMPLIANCE NOTICES FROM GOVERNMENTAL AGENCIES

With regard to the November 13, 2016 fire department inspection as indicated in Buyer’s draft zoning report and Seller’s estimate of the Seller work associated therewith:

Violations Code

315.3.1 Storage – Ceiling Clearance - COMPLETE

Housekeeping Storage closets have been corrected and areas have been marked with red tape at 18” from the ceiling.

506.2 Knox Box Maintenance - COMPLETE

Keys are currently up to date.

509.1.1 Utility Identification signage - COMPLETE

Switches in main electric room are identified.

605.3.1 Labelling – COMPLETE

Electrical room is labeled Private and “Electrical Equipment Room” has been added to the signs.

703.1.2 Smoke Barriers and Smoke Partitions - COMPLETE

Storage of items at areas of concern have been removed.

703.2.2 Hold Open Devices and Auto Door Closers – COMPLETE

Kick down type door stops have been removed from Fire Doors with Auto Closers.

703.2.3 Door Operations – COMPLETE

All doors are closing properly.

1031.6 Exits – Furnishings and Decorations – COMPLETE

Storage of items at areas of concern have been removed.

3721766.8 EXHIBIT N

EXHIBIT O
CONTINUING AGREEMENTS AND EQUIPMENT LEASES


A.	Vendor Contracts



	Vendor	Type of Service	Comment/Notes
A1	Allegria Spa	Spa Services
A2	Alpine Painting	Painting
A3	AON	Fire Protection
A4	Bruce Holloway Golden Glow Firewood	Firewood Supplier
A5	Castleton Masonry	Masonry Repairs
A6	Colorado Mountain Express	Guest Transportation
A7	Cummins Rocky Mountain	Generator Maintenance
A8	Destination Services	Recreation Management
A9	Dustco	Laundry/Trash Chute Repairs
A10	Eagle Bend Apartments	Employee Housing
A11	Kayak Crossing Apartments	Employee Housing
A12	Elevated Legs	Ski Conditioning
A13	Encore Electric	Electrical Repairs
A14	Fire Sprinkler Services	Backflow Testing/Sprinkler Test and Maintenance
A15	Gregory M. Davis Associates	Elevator Consulting
A16	Maverick Flooring	Carpet and Tile Repair
A17	Maximum Comfort Pool and Spa	Pool Repairs
A18	Morning Star Elevator	ADA Lift
A19	Ntherm	Natural Gas Supplier
A20	National Velvet	Dry Cleaning
A21	Omni Linen Services	Linen Cleaning
A22	Pinnacle Water	Water Softener

3721766.8 EXHIBIT O



	Vendor	Type of Service	Comment/Notes
A23	PSAV	Audio Visual
A24	Radio Resource	Radio Repairs and Service
A25	Safe Step	Anti-Slip Tub treatment
A26	Sertifi	Data
A27	Sonifi	TV Programming Content
A28	Steam Master	Carpet Restoration
A29	Thank you Masked Man	Christmas Decorations
A30	Tri County	Fire Extinguisher
A31	Venture Sports	Guest Recreation


B.	Other Typical Hotel Services

Services

3721766.8 EXHIBIT O



	Type	Vendor Name(s)	Comments/Notes
B1	Armored Car	Loomis Armored, Inc.
B2	ATM Agreement	Alpine Vending
B3	Entertainment	Shannon Tanner
B4	Entertainment	Dave Kemmerly
B5	Grease trap cleaning/Grease disposal	Snowbridge
B6	Internet – Guest Room	Guest tek
B7	Kitchen/Hood Maintenance	Averus
B8	Landscaping Services	Stevens Homecare
B9	Inspection/Service	Coyle Hospitality
B10	Night Cleaning	JJ Cleaning Company
B11	Public Relations	Turner Public Relations
B12	Staffing Services (non-administrative positions, e.g., Housekeeping, Banquet, Security, Stewarding)	Alpine Staffing
B13	Staffing Services (non-administrative positions, e.g., Housekeeping, Banquet, Security, Stewarding)	Mountain Temps
B14	Telecommunications System	Mitel Service
B15	Voice Mail System Service and Support	Mitel
B16	AmeriGas propane LP and Subsidiaries	Amerigas
B17	Associated Building Specialties, Inc	ABS Contract
B19	Wood Trim	AW Interiors, Inc
B20	Chair Cleaning Services	Deep Clean Specialists/Cintas
B21	Painting and Wallpaper	John Julian Painting and Paperhanging
B22	Guest Room Vanity	Marble Tec Services
B23	Powdercoating of Items	Monument Powdercoating
B24	Restaurant Reservation system	Open Table
B25	Phone Services	Qwest Corporation/Centurylink
B26	Transport hazardous material	Safety Kleen Systems Inc
B27	Catering Services	Vail Valley Foundation
	Master Agreements		Proprietary of Hyatt
	Outsource payroll system	ADP/Time Resource Management
	Quemicals – Cleaning	Ecolab, Inc
	Opera & POS support system	Micros Systems
	Elevators maintenance	hyssenKrupp
	Trash removal	Waste Management
	Leases
C1	GM Vehicle	Alamo leasing
C2	Copier system	Xerox

C. Spa Agreements

3721766.8 EXHIBIT O



Type	Parties	Comments/Notes
Spa Access Agreement	WTCC Beaver Creek Investors V, L.L.C., The Vail Corporation dba Vail Associates, Inc.	September 1, 2013, and expires on August 31, 2020
BCGC agreement	Beaver Creek Gold Club
Linen Service Agreement	Omni Linen	6.1.15 to termination. Termination is notified at least 60 days prior to term date
Peak Performance Imaging	Allegria Spa	11.1.15 - 10.31.16 automatically renewed annually
HeBS Digital	Allegria Spa at Park Hyatt	8.10.16 12 month term - will be automatically renewed for another 12 month term unless 90 day termination notice given
Software Support	TAC Reservation Assistant	1.1.17 - 12.31.17 renewable annually
Postage Machine	Pitney Bowes	Contract expires 10.29.20
PR / Integrated Marketing	ReComm Global, LLC	2.1.17 - 1.31.18 Early termination needs 30 days’ notice

3721766.8 EXHIBIT O

EXHIBIT P

LIST OF ENVIRONMENTAL REPORTS


1.	Phase 1 Environmental Site Assessment prepared by AllWest Environmental, Inc., dated March 29, 2007 as AllWest Project No. 27058.20

3721766.8 EXHIBIT P

EXHIBIT Q

ESCROW INSTRUCTIONS

_________, 2017

VIA E-MAIL



Chicago Title Insurance Company _________________ _________________ Attention: __________

Re: Park Hyatt Beaver Creek – Title Commitment Order No. 100-N0010228-010-TO2

Dear [____________]:

This Closing Escrow Agreement (this “ Agreement ”) will constitute your instructions from WTCC BEAVER CREEK INVESTORS V, L.L.C., a Delaware limited liability company (“ Seller ”), and [_________________, a _________________] (“ Buyer ”), with respect to the closing of the sale of the property (the “ Property ”) legally described in the pro forma title policy (the “ Pro Forma ”) attached hereto as Exhibit “B” as contemplated by that certain agreement captioned “SALE AND PURCHASE AGREEMENT” (as amended from time to time, the “ Purchase Agreement ”), dated as of March 9, 2017, by and between Seller and Buyer.

A copy of the Purchase Agreement has been delivered to you. Except as otherwise indicated, each capitalized term used herein shall have the meaning ascribed to such term in the Purchase Agreement.

1. Delivery of Funds .

1.1 Earnest Money . Buyer has previously wire transferred to you the Deposit under the Purchase Agreement in the total amount of [____________________ and No/100 United States Dollars ($____________)]. You are currently holding the Deposit pursuant to and in accordance with that certain agreement (the “ Deposit Escrow Agreement ”) captioned “DEPOSIT ESCROW AGREEMENT,” dated __________ __, 2017, by and among Seller, Buyer and you.

1.2 Closing Payment . On or before the Closing Date, Buyer may be wire‑transferring, or causing to be wire-transferred, to you an amount (the “ Closing Payment ”) equal to the Purchase Price, less the Deposit, and as further adjusted by the adjustments and credits

3721766.8 EXHIBIT Q

set forth in the “Closing Statement” (as defined below) executed by the parties, pursuant to the wiring instructions attached hereto as Exhibit “A” .

1.3 Definition . As used herein, the “ Funds ” shall mean the Deposit and the Closing Payment, collectively.

2. Delivery of Documents . On or before the Closing Date (defined below), Seller, Buyer, or both, shall deliver to you duly executed originals (unless otherwise noted) of the following documents (the “ Closing Deliveries ”):

2.1 an original of the Deed;

2.2 two (2) counterpart originals of the Bill of Sale;

2.3 an original of the Seller Closing Certificate;

2.4 an original of the Certificate of Non-Foreign Status;

2.5 an original Gap Indemnity;

2.6 an original Seller Title Certificate;

2.7 an original Owner’s Certificate as to Debts, Liens and Parties in Possession;

2.8 an original of the Parking Agreement Assignment;

2.9 an original of the Management Agreements Assignment; and

2.10 counterpart copies (sent via fax or electronic transmission of a .pdf or .tif file) of a closing statement (the “ Closing Statement ”) described in §1.6045 4(e)(3)(ii) of the U.S. Treasury Regulations (the “ Regulations ”) with respect to the transactions contemplated by the Agreement, prepared by you and signed or initialed by each of Seller and Buyer.

3. Conditions to Close of Escrow . The Funds shall not be disbursed and the Documents (defined below) shall not be delivered to any person or entity until each of the following conditions is satisfied:

(1) You have received the Closing Deliveries and are unconditionally and irrevocably prepared to record or file, as applicable, the Deed in accordance with Section 4 below.

(2) You have, to the extent necessary, compiled the respective counterpart signature pages of the Closing Deliveries, inserted the Closing Date in the blanks of any undated Closing Deliveries, and have confirmed that no additional blanks are in the Closing Deliveries, all Closing Deliveries have been notarized, where applicable, and all exhibits are attached to each of the Closing Deliveries.

3721766.8 EXHIBIT Q

(3) You have received the Closing Payment and are unconditionally and irrevocably prepared to wire the Funds in accordance with Section 4 below.

(4) You are unconditionally and irrevocably prepared to issue to Buyer an owner’s policy in the form of the Pro Forma (the “ Owner’s Policy ”).

(5) You have received written authorization in the form of Exhibit “C” attached hereto to close the transaction from each of the following:

(a) a “ Buyer Closing Representative ”. “Buyer Closing Representative” means Christopher Peckham of Buyer or Cynthia Nelson of Gardere Wynne Sewell LLP; and

(b) a “ Seller Closing Representative ”. “Seller Closing Representative” means Justin Leonard of Seller or David J. Pezza, Esq., or Alexis Kessler, Esq., of Pircher, Nichols & Meeks.

(6) You have received all information necessary for filing the forms (the “ Information Returns ”) then required to be filed pursuant to Section 6045 of the Internal Revenue Code with respect to the transactions contemplated by the Agreement (including Seller’s written approval of the amount of gross proceeds to be shown on the Information Returns) and you are unconditionally and irrevocably prepared to serve as the designated “reporting person” (with such term having the meaning prescribed in §1.6045 4(a) of the Regulations) in accordance with §1.6045 4(e)(5) of the Regulations and, accordingly, (a) file all information returns required under the Regulations in respect of such transactions, and (b) furnish to the Seller any statements required under the Regulations in respect of such transactions.

4. Close of Escrow . If the conditions specified in Section 3 above are satisfied on the Closing Date, then you shall immediately deliver to Buyer and Seller a written confirmation of such satisfaction in the form of Exhibit “D” hereto (which confirmation shall (i) evidence your agreement to promptly take or cause to be taken the actions hereinafter specified, and (ii) shall be deemed to have been given upon your taking of any of such actions), and thereafter you shall promptly (and in the order set forth below):

(1) Wire the amount due to each party under the Closing Statement in accordance with written wiring instructions provided by each such party. Please provide written notification to Seller and Buyer, via electronic transmission, with the federal reference numbers for each wire that is transmitted.

(2) Record the Deed and the Assignment of Parking Agreement with the Eagle County, Colorado Clerk & Recorder (the “ Colorado Recorder ”).

(3) Issue the Owner’s Policy, with an effective date that is the date and time of the recording of the Deed, and deliver (i) the original of such Owner’s Policy to Buyer, at the address specified in Section 5.1 below, and (ii) a copy of such Owner’s Policy, via electronic transmission

3721766.8 EXHIBIT Q

of a .pdf file, to [__________________ at __________________], in each case, within three (3) business days after you receive the original recorded Deed from the Colorado Recorder.

(4) File all Information Returns and take all other actions described in Section 3(6).

5. Disbursement of Documents . As soon as available, you shall deliver the applicable originals or copies of the Closing Deliveries (each individually a “ Document ” and collectively, the “ Documents ”) as follows:

5.1 to Gardere Wynne Sewell LLP at 2021 McKinney Avenue, Suite 1600, Dallas, Texas 75201, Attention: Cynthia Nelson, the following:

(a) an original of the recorded Deed;

(b) an original of the fully executed Bill of Sale;

(d) the original Certificate of Non-Foreign Status;

(e) the original of the recorded Assignment of Parking Agreement;

(f) a copy of the fully executed Closing Statement;

(g) the original Owner’s Policy (in accordance with Section 4(3) above); and

(j) an original (or copy if an original is unavailable) of every other Document.

5.2 to Pircher, Nichols & Meeks at 900 North Michigan Avenue, Suite 1000, Chicago, Illinois 60611, Attention: Alexis Kessler, the following:

(a) a copy of the recorded Deed;

(b) an original of the fully executed Bill of Sale;

(d) the original Buyer Closing Certificate;

(e) a copy of the fully executed Closing Statement; and

(g) a copy of every other Document.

6. Closing Costs . All closing costs incurred by you in carrying out your duties under this Agreement are to be paid in accordance with the Closing Statement.

3721766.8 EXHIBIT Q

7. Investment of Funds . You shall not invest the Closing Payment unless you have received written instructions from a Seller Closing Representative regarding such investment.

8. Cancellation of Instructions . Notwithstanding anything to the contrary herein, if the conditions specified in Section 3 hereof are not satisfied on or before the Closing Date, then, if written instructions to cancel this escrow from a Seller Closing Representative or a Buyer Closing Representative are delivered, the instructions set forth in Sections 1 through 5 shall be deemed canceled, and you shall immediately (1) notify the other party of the same, (2) release the Closing Payment to Buyer; (2) return each of the Closing Deliveries to the party depositing same; and (4) continue to hold the Deposit pursuant to the provisions of the Deposit Escrow Agreement. If the conditions specified in Section 3 above are not satisfied on or before the Closing Date, and these instructions are not amended by the undersigned or canceled as aforesaid, then as of the date which is three (3) business days after the Closing Date, Buyer and Seller shall be deemed to have given you written instructions to cancel this escrow and you shall take the actions specified in clauses (2), (3) and (4) above.

9. Limitation of Liability . You are acting solely in your capacity as escrow agent and closing agent, and shall be liable solely for your failure to comply with the terms of this Agreement; provided, however, the foregoing will not limit your liability as title insurer under the terms of the Owner’s Policy (such liability being in accordance with the terms of such policy).

10. Delivery of Documents Upon Request . Upon the request of Seller, Buyer or their respective counsel, you shall send .pdf or facsimile versions of any Documents that you are holding in escrow.

11. No Modification; Conflicts with Purchase Agreement . As between Buyer and Seller, this Agreement shall not be deemed a modification of the Purchase Agreement, and in the event of a conflict between the terms and provisions of this Agreement and the terms and provisions of the Purchase Agreement, the terms and provisions of the Purchase Agreement shall govern and control.

12. Execution by Counterparts . This Agreement may be executed in two or more counterparts, each of which shall be an original, but all of which shall constitute one and the same agreement. Signatures to this Agreement may be transmitted by facsimile or e-mailing of a .pdf or .tif file and shall be valid and effective to bind the party so signing.

3721766.8 EXHIBIT Q

Please acknowledge your acceptance and agreement to act in accordance with this Agreement by signing where indicated below and returning the same to the undersigned. In any event, the delivery of amounts due Seller under the Closing Statement shall be deemed an agreement by you to act in accordance herewith.

Very truly yours,

BUYER :

_______________________,
a ____________________

By:    ____________________________
Name:    ____________________________
Title:    ____________________________

3721766.8 EXHIBIT Q

SELLER:

WTCC BEAVER CREEK INVESTORS V, L.L.C. ,

a Delaware limited liability company

By: WTCC Beaver Creek Alpha Mezz V, L.L.C.,

a Delaware limited liability company,

its Sole Member

By: WTCC Beaver Creek Mezz V, L.L.C.,

a Delaware limited liability company,

its Sole Member

By: Walton TCC Hotel REOC Investors V, L.L.C.,

a Delaware limited liability company,

its Managing Member

By: Walton Acquisition REOC Holdings V, L.L.C.,

a Delaware limited liability company,

its Managing Member

By: Walton Street Real Estate Fund V, L.P.,

a Delaware limited partnership,

its Managing Member

By: Walton Street Managers V, L.P.,

a Delaware limited partnership,

its General Partner

By: WSC Managers V, Inc.,

a Delaware corporation,

its General Partner

By:

Name:

Title:

3721766.8 EXHIBIT Q

ACCEPTED AND AGREED TO AS OF

THE DATE FIRST ABOVE WRITTEN:

Chicago Title Insurance Company

By:

Name:

Title:

3721766.8 EXHIBIT Q

EXHIBIT “A”

WIRE TRANSFER INSTRUCTIONS

3721766.8 EXHIBIT Q

EXHIBIT “B”

BUYER’S PRO FORMA OWNER’S POLICY

[See attached.]

3721766.8 EXHIBIT Q

EXHIBIT “C”

AUTHORIZATION LETTER

_________, 2017

VIA E-MAIL



Chicago Title Insurance Company ___________________ ___________________ Attention: _____________ Email: __________________


Re:	Park Hyatt Beaver Creek – Title Commitment Order No. 100-N0010228-010-TO2

Dear [__________]:

Please refer to that certain Closing Escrow Agreement (“ Agreement ”) dated _________, 2017, from the parties identified therein as “Seller” and “Buyer” or their respective attorneys, regarding the purchase of the property described above, through your Title Commitment Order No. 100-N0010228-010-TO2. Except as otherwise indicated, each capitalized term used herein shall have the meaning set forth for the same in the Agreement.

This letter will constitute the authorization required under Section 3 of the Agreement, and Section 6.1 of the Purchase Agreement, but shall not limit your obligation to satisfy the other conditions under such Section 3 prior to disbursing the Closing Payment.

Thank you for your cooperation.

Very truly yours,

Name:

Title: [Seller/Buyer] Closing Representative

3721766.8 EXHIBIT Q

EXHIBIT “D”

CONFIRMATION BY TITLE COMPANY

_________, 2017



VIA E-MAIL “Seller” c/o Pircher, Nichols & Meeks 900 North Michigan Avenue Suite 1000 Chicago, Illinois 60611 Attention: David J. Pezza, Esq. E-Mail: dpezza@pircher.com	“Buyer” Attention: E-Mail:


Re:	Park Hyatt Beaver Creek – Title Commitment Order No. 100-N0010228-010-TO2

Ladies and Gentlemen:

Please refer to that certain Closing Escrow Agreement (“ Agreement ”) dated _________, 2017, from the parties identified therein as “Seller” and “Buyer” or their respective attorneys, regarding the purchase of the property described above, through your Title Commitment Number Order No. 100-N0010228-010-TO2. Except as otherwise indicated, each capitalized term used herein shall have the meaning set forth for the same in the Agreement.

Pursuant to Section 4 of the Agreement, we hereby confirm that each of the conditions to disbursement set forth in Section 3 of the Agreement have been satisfied.

Very truly yours,

CHICAGO TITLE INSURANCE COMPANY,

By:

Name:

Title:

3721766.8 EXHIBIT Q

EXHIBIT R

POST-CLOSING ESCROW AGREEMENT

______, 2017

Chicago Title Insurance Company

__________________

Attention: ______________



Re:	Park Hyatt Beaver Creek Your Escrow No. _____________________

Ladies and Gentlemen:

Please refer to that certain agreement captioned “SALE AND PURCHASE AGREEMENT” (as amended from time to time, the “ Purchase Agreement ”), dated as of March 9, 2017, by and between WTCC BEAVER CREEK INVESTORS V, L.L.C., a Delaware limited liability company (“ Seller ”), and ____________________ (“ Buyer ”). Except as otherwise indicated, each capitalized term used herein shall have the meaning set forth for the same in the Purchase Agreement.

This agreement (this “ Agreement ”) will constitute your instructions with respect to the escrow (the “ Escrow ”) of Three Million Seven Hundred Fifty Thousand and No/100 United States Dollars ($3,750,000.00) (together with any interest accrued thereon, the “ Holdback Funds ”) being delivered to you concurrently herewith pursuant to Section 8.3.2 of the Purchase Agreement as security for any loss or damage incurred by Buyer as a result of the breach by Seller of any covenant, indemnity, representation or warranty of Seller under the Purchase Agreement (collectively, “ Buyer Damages ”) in connection with any Claim (as defined in Section 1.3.1 below) made by Buyer during the Survival Period.

I. ESCROW

1.1 Background . Section 8.3 of the Purchase Agreement requires that the Escrow be established by Buyer and Seller at Closing with a portion of Seller’s proceeds from the Purchase Price equal to the Holdback Funds. The Holdback Funds are to be held to provide for timely payment of certain post-closing claims made by Buyer against Seller in connection with a breach of Seller’s covenants, indemnities, representations and warranties of Seller under the Purchase Agreement (such obligations being herein called the “ Subject Obligations ”).

1.2 Delivery of Funds to be Escrowed . You have been instructed to deposit at Closing a portion of Seller’s proceeds from the Purchase Price equal to the Holdback Funds into a separate account in order to fund the Escrow. The balance of such Holdback Funds held by you from time to time is herein called the “ Escrow Balance .” No disbursement of the Escrow Balance shall be made to Buyer or Seller or any other person except in accordance with this Agreement.

3721766.8 EXHIBIT R

1.3 Disbursements of the Holdback Funds .

1.3.1 In the event that Buyer determines, during the Survival Period, that it has incurred Buyer Damages for an aggregate amount in excess of One Hundred Fifty Thousand Dollars ($150,000.00) (the “ Deductible ”), then Buyer shall notify Seller and Escrow Agent in writing of such allegation, including reasonable supporting documentation evidencing such Buyer Damages (a “ Claim Notice ”) and the alleged amount of Buyer Damages associated with such Claim Notice (the “ Claim ”). Notwithstanding anything herein to the contrary, the Deductible shall not be applicable to any Claims under Section 6.4 of the Agreement or insured claims against Seller or Manager for matters accruing and arising prior to the Closing Date.

1.3.2 Within five (5) business days after receipt of a Claim Notice, Seller shall either: (i) agree in writing to permit the disbursement of the amount of such alleged Buyer Damages by Escrow Agent; or (ii) inform Escrow Agent and Buyer in writing that Seller does not agree to permit such disbursement. If Seller fails to respond during the foregoing five (5) business day period, the same shall be deemed to be the response of Seller under clause (i) of the previous sentence. If Seller agrees in writing to permit the requested distribution to Buyer pursuant to clause (i) or fails to timely respond, then Escrow Agent shall promptly make the disbursement as requested by Buyer and approved or deemed to be approved by Seller. If Seller acts under clause (ii), then Escrow Agent shall thereafter:

(a) act solely in accordance with any of the following:

(i) a joint written agreement of Seller and Buyer regarding the disbursement or non-disbursement of Holdback Funds incident to the Claim Notice at issue; or

(ii) a judgment that is final beyond appeals of a court of competent jurisdiction (as provided in the Purchase Agreement); or

(b) upon not less than ten (10) business days’ written notice to Buyer and Seller, deposit the Escrow Balance with a court of competent jurisdiction and commence an action for interpleader therein for determination of the amount of the Buyer Damages and distribution of the Escrow Balance. Seller acknowledges and agrees that, should Buyer make a claim for Buyer Damages within the Survival Period, and, if Seller objects to or seeks to prevent the interpleading of the alleged amount of Buyer Damages, then notwithstanding anything to the contrary contained herein, or the Purchase Agreement, (i) Escrow Agent shall continue to hold that portion of the Holdback Funds equal to the alleged Buyer Damages until the parties agree to its disposition or until the amount is interplead, and (ii) Seller shall continue to remain in existence until such interpleader action has been concluded, including any and all available appeals in connection with the litigation between the parties or the interpleader action.

3721766.8 EXHIBIT R

The final determination of the court, including any and all available appeals, in connection with the litigation between the parties or the interpleader action shall be conclusive as to both the amount of Buyer Damages and the related Claim.

1.3.3 On the first business day after the Survival Period (the “ Release Date ”), you are hereby authorized and directed to transfer to Seller, in accordance with the wiring instructions set forth in Exhibit A attached hereto and made a part hereof, the Release Amount. As used herein, the “ Release Amount ” means the Escrow Balance minus the amount of any Claims made by Buyer pursuant to one or more Claims Notices prior to the Release Date.

1.3.4 Any amount retained by Escrow Agent pursuant to Sections 1.3.1 or 1.3.2 following the Survival Period shall be held and disbursed to Seller (in accordance with Exhibit A ) after final and conclusive resolution of all Claims or to Buyer (in accordance with wire instructions to be provided to you by Buyer), as each such Claim is finally and conclusively resolved. You shall make such disbursements to Buyer and/or to Seller, as the case may be, upon (i) presentation of a judgment that is final beyond appeals of a court of competent jurisdiction respecting such Claim, five (5) business days after you send notice to the other party of such requested disbursement, or, alternatively, (ii) the receipt of written instructions jointly signed by Seller and Buyer.

1.4 Interest . Seller and Buyer hereby instruct and authorize you to invest the Holdback Funds in any of the following: (i) United States Treasury obligations; (ii) United States Treasury-backed repurchase agreements issued by a major national money center banking institution reasonably acceptable to Seller and Buyer; or (iii) such other investments as may be reasonably acceptable to Seller and Buyer.

1.5 Legal Costs . In the event any action be instituted by a party to enforce this Agreement, or in the event of any litigation, claim or action whatsoever concerning the subject matter of this Agreement, the prevailing party in such action (as determined by the court, agency or other authority before which such suit or proceeding is commenced), shall be entitled to such reasonable attorneys’ fees, costs and expenses as may be fixed by the decision maker. The foregoing includes, but is not limited to, reasonable attorneys’ fees, any poundage fees or other fees imposed by the court, expenses and costs of investigation incurred in (1) appellate proceedings; (2) in any post-judgment proceedings to collect or enforce the judgment; (3) establishing the right to indemnification; and (4) any action or participation in, or in connection with, any case or proceeding under Chapter 7, 11 or 13 of the Bankruptcy Code (11 United States Code Sections 101 et seq.), or any successor statutes. This provision is separate and several and shall survive the consummation of the transaction contemplated by this Agreement or the earlier termination of this Agreement.

3721766.8 EXHIBIT R

1.6 Termination . This Agreement shall terminate on the date on which the Holdback Funds shall have been fully disbursed by you in accordance with the terms of this Agreement and the Purchase Agreement.

II. MISCELLANEOUS

2.1 Notices . Any notice which a party is required or may desire to give the other party shall be in writing and may be delivered (1) personally, (2) by United States registered or certified mail, postage prepaid, (3) by Federal Express or other reputable courier service regularly providing evidence of delivery (with charges paid by the party sending the notice); or (4) by telecopy or e-mail transmission of a .pdf or .tif file, provided that such telecopy or e-mail transmission shall be immediately followed by delivery of such notice pursuant to clause (1), (2) or (3) above. Any such notice shall be addressed as follows (subject to the right of a party to designate a different address for itself by notice similarly given):

3721766.8 EXHIBIT R

TO BUYER:

TO SELLER:

c/o Walton Street Capital, L.L.C.

900 North Michigan Avenue

Suite 1900

Chicago, Illinois 60611

Attention: Mr. Douglas Welker, Mr. Justin Leonard and Angela Lang, Esq.

Fax: (312) 915-2881

Telephone: (312) 915-2800

Email: Welker@waltonst.com; Leonard@waltonst.com ; Lang@waltonst.com

With Copy To:

Pircher, Nichols & Meeks

900 North Michigan Avenue, Suite 1000

Chicago, Illinois 60611

Attn: Real Estate Notices (DJP/JAK/File No. 4.2047)

Phone: 312-915-3112

Fax: 312-915-3348

Email: realestatenotices@pircher.com (Subject Line: DJP/JAK/File No. 4.2047)

TO TITLE COMPANY:

Chicago Title Insurance Company

711 Third Avenue, 5 ^th Floor

New York, New York 10017

Attention: Sie Cheung

Telephone: _________________

Telecopier: 212-880-1400

E-Mail: ____________________

Any notice so given by mail shall be deemed to have been given as of the date of delivery (whether accepted or refused) established by U.S. Post Office return receipt or the overnight carrier’s proof of delivery, as the case may be. Any such notice not so given shall be deemed given upon the date of delivery (whether accepted or refused) by the party to whom the same is to be given. Notices may be given by facsimile or e-mail transmission and shall be deemed given upon the date of delivery (whether accepted or refused) of the same to the individual(s) to which they are addressed, and shall be promptly followed by a hard copy notice by mail or by Federal Express or other reputable courier service regularly providing evidence of delivery (with charges paid by the party sending the notice) as provided above. The attorneys for any party hereto shall be entitled to provide any notice that a party desires to give or is required to give hereunder.

3721766.8 EXHIBIT R

2.2 Costs . Except as otherwise provided in Section 1.5 hereof, Seller and Buyer shall each reimburse you for one-half of the reasonable costs and expenses incurred by you in performing your duties hereunder, including, without limitation, reasonable attorneys’ fees.

2.3 Successors and Assigns . These instructions and the terms, covenants and conditions hereof shall inure to the benefit of and be binding upon the successors and assigns of each of the parties hereto.

2.4 No Third Party Beneficiaries . The terms and provisions of this Agreement shall create no right in any person or entity other than the parties hereto and their respective successors and assigns, and no third parties shall have the right to enforce or benefit from the terms hereof. As used in this Agreement, the term “parties” shall mean, collectively, you, Seller and Buyer, and the term “party” shall mean, individually, any of you, Seller and Buyer.

2.5 Time is of the Essence . Time is of the essence of this Agreement.

2.6 Execution by Counterparts . This Agreement may be executed in two or more counterparts, each of which shall be an original, but all of which shall constitute one and the same letter of instructions. This Agreement may be delivered by e-mail or facsimile transmission and shall be effective if each party hereto has executed and delivered at least one counterpart hereof.

2.7 Severability . In case any provision of this Agreement shall be invalid, illegal or unenforceable because it is contrary to law or for any other reason, such provision shall be deemed to be severable from the rest of this Agreement, and the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

2.8 No Modifications; Incorporation and Conflicts with Purchase Agreement . As between Seller and Buyer, this Agreement shall not be deemed a modification of the Purchase Agreement, and in the event of a conflict between the terms and provisions of this Agreement and the terms and provisions of the Purchase Agreement, the terms and provisions of the Purchase Agreement shall govern and control. This Agreement can only be amended by an agreement in writing executed by all of the parties. No waiver by any party hereto of any of the terms or provisions of this Agreement shall be enforceable unless expressly set forth in writing and signed by the party against whom enforcement is sought. No evidence of any waiver or modification shall be offered or received in evidence in any proceeding, arbitration, or litigation between the parties arising out of or affecting this Agreement or the rights or obligations of any party hereunder, unless such waiver or modification is in writing and duly executed as aforesaid.

2.9 Attorneys’ Fees . In the event of any proceeding brought by either Seller or Buyer to enforce the terms of this Agreement, the prevailing party in such

3721766.8 EXHIBIT R

proceeding (as determined by the court, agency or other authority before which such proceeding is commenced) shall be entitled to recover all costs and expenses incurred in connection therewith, including reasonable attorneys’ fees, as may be fixed by the decision maker. This Section 2.9 shall survive any termination of this Agreement.

2.10 Governing Law . This Agreement shall be governed by the laws of the State of Colorado (without taking into account conflicts of law) where the Holdback Funds are being held.

2.11 Existence of Seller . Seller shall remain in existence and in good standing until the later of (i) the expiration of the Survival Period, or (ii) the final and conclusive resolution of all Claims and any dispute regarding this Agreement.

2.12 Deposit of Holdback Funds . By its execution hereof, Escrow Agent acknowledges receipt of the Holdback Funds which shall be invested and held in escrow as security for Buyer’s Damages as contemplated herein and in the Purchase Agreement.

3721766.8 EXHIBIT R

Very truly yours,

SELLER :

WTCC BEAVER CREEK INVESTORS V, L.L.C. ,

a Delaware limited liability company

By: WTCC Beaver Creek Alpha Mezz V, L.L.C.,

a Delaware limited liability company,

its Sole Member

By: WTCC Beaver Creek Mezz V, L.L.C.,

a Delaware limited liability company,

its Sole Member

By: Walton TCC Hotel REOC Investors V, L.L.C.,

a Delaware limited liability company,

its Managing Member

By: Walton Acquisition REOC Holdings V, L.L.C.,

a Delaware limited liability company,

its Managing Member

By: Walton Street Real Estate Fund V, L.P.,

a Delaware limited partnership,

its Managing Member

By: Walton Street Managers V, L.P.,

a Delaware limited partnership,

its General Partner

By: WSC Managers V, Inc.,

a Delaware corporation,

its General Partner

By:

Name:

Title:

3721766.8 EXHIBIT R



BUYER : ________________________ , a ________________________ By: ____________________________ Name: ____________________________ Title: ____________________________


ACCEPTED AND AGREED TO AS OF THE DATE FIRST ABOVE WRITTEN: TITLE COMPANY : CHICAGO TITLE INSURANCE COMPANY By: ____________________________ Name: ____________________________ Title: ____________________________

3721766.8 EXHIBIT R

EXHIBIT A

SELLER’S WIRING INSTRUCTIONS

3721766.8 EXHIBIT R

EXHIBIT S

ESTOPPEL FORMS

S-1 Proposed Village Hall Estoppel

VILLAGE HALL CONDOMINIUM ASSOCIATION
P.O. BOX 5481
AVON, COLORADO 81620

_____________________, 2017

Ashford BC LP
14185 Dallas Parkway, Suite 1100

Dallas, Texas 75254

Attn: David Brooks and Chris Peckham

Re:

Re: Conveyance of the Park Hyatt Beaver Creek Resort and Spa, comprised of the Beaver Creek Hotel A Condominium, the Village Hall Condominium, and other associated improvements located on Lot 25, Block 1, Tract A and Lot 13, Block 1, Tract A, each as shown on the Second Amendment to First Filing, Beaver Creek Subdivision according to the plat recorded September 20, 1980 in Book 307 at Page 997 of the Eagle County, Colorado real property records (“ Property ”) by WTCC Beaver Creek Investors V, L.L.C., a Delaware limited liability company (“ Seller ”) to Ashford Hospitality Prime Limited Partnership, a Delaware limited partnership, (together with its successors and assigns, “ Purchaser ”)

Gentlemen:

The undersigned President of the Board of Directors of the Village Hall Condominium Association, a Colorado non-profit corporation, writes this letter in connection with the conveyance of the Property by Seller to Purchaser.

The "Declaration Documents" (as referenced in Schedule A attached hereto) are in full force and effect and (except as referenced in Schedule A) have not been supplemented, amended, modified or superseded since their original execution and no other agreements or understandings exist between Seller and any other party to the Declaration Documents except as provided in Schedule A attached hereto. Capitalized terms used and not defined herein have the meaning assigned thereto in the Declaration Documents.

As of the date of this letter (this "Estoppel") and except as provided in Schedule B, to the knowledge of the undersigned, Seller is not in default with respect to any payment obligation or duty under the Declaration Documents, and no events have occurred that, with the giving of notice or

3721766.8 EXHIBIT S

passage of time or both, would constitute a default by Seller thereunder. To the knowledge of the undersigned, Seller's current use and operation of the Property as a hotel complies with any and all use covenants and operating requirements contained in the Declaration Documents.

The undersigned hereby agrees to use commercially reasonable efforts provide any mortgagee of Purchaser (any "Lender") with copies of all notices of default with respect to any obligation or duty of the Purchaser under the Declaration Documents in the manner and to the extent required under the Declaration Documents and a reasonable time period to cure the same consistent with the terms of the Declaration and the Association's policies. All such notices to Lender shall be sent in accordance with the terms of the Declaration Documents to the following address (or such other address designated by Lender):

_______________________
_______________________
_______________________
Attention: _______________
Facsimile: _______________

To the knowledge of the undersigned, no claim, dispute or controversy presently exists between Seller and the undersigned including any litigation or arbitration concerning the Property, the Declaration Documents, or the performance of the terms thereof or any other matter except as provided in Schedule B.

The undersigned has no right or option to purchase all or any part of the Property, except as provided in the Declaration Documents and applicable law in connection with a foreclosure of the lien of the undersigned for assessments.

The person executing this Estoppel has the power and authority to execute and deliver this Estoppel on behalf of the undersigned.

The undersigned certifies that Purchaser and any Lender and their respective affiliates, successors, assigns and/or participants, may rely on the representations contained herein in connection with the acquisition of the Property and any loan secured thereby.

Very truly yours,

3721766.8 EXHIBIT S

VILLAGE HALL CONDOMINIUM ASSOCIATION, a Colorado non-profit corporation

By:
Name:
    President

3721766.8 EXHIBIT S

Schedule A to Estoppel

Declaration Documents

Schedule B to Estoppel

Default

3721766.8 EXHIBIT S

S-2 - Proposed A Condo Estoppel

BEAVER CREEK HOTEL A CONDOMINIUM ASSOCIATION

10005519v.2

P.O. BOX 5480

AVON, COLORADO 81620

____________, 2017

Ashford BC LP

14185 Dallas Parkway, Suite 1100

Dallas, Texas 75254

Attn: David Brooks and Chris Peckham

Re:

Conveyance of the Park Hyatt Beaver Creek Resort and Spa, comprised of the Beaver Creek Hotel A Condominium, the Village Hall Condominiums, and other associated improvements located on Lot 25, Block 1, Tract A and Lot 13, Block 1, Tract A, each as shown on the Second Amendment to First Filing, Beaver Creek Subdivision according to the plat recorded September 20, 1980 in Book 307 at Page 997 of the Eagle County, Colorado real property records (“ Property ”) by WTCC Beaver Creek Investors V, L.L.C., a Delaware limited liability company (“ Seller ”) to Ashford Hospitality Prime Limited Partnership, a Delaware limited partnership, (together with its successors and assigns, “ Purchaser ”)

Gentlemen:

The undersigned President of Beaver Creek Hotel A Condominium Association, a Colorado nonprofit corporation, writes this letter in connection with the conveyance of the Property by Seller to Purchaser.

To the knowledge of the undersigned, as of the date of this letter (this "Estoppel") and except as provided in Schedule B, Seller is not in default with respect to any payment obligation or duty under the Declaration Documents, and no events have occurred that, with the giving of notice or passage of time or both, would constitute a default by Seller thereunder. To the knowledge of the undersigned, Seller's current use and operation of the Property as a hotel complies with any and all use covenants and operating requirements contained in the Declaration Documents.

3721766.8 EXHIBIT S

As of the date of this Estoppel and except as provided in Schedule B, all monetary obligations of Seller under the Declaration Documents to date have been fully and currently paid and no advance assessments have been paid, and there has not been any special assessment declared under the Declaration Documents. As of the date of this Estoppel, the current quarterly assessment of $______________ is due on ___________, 2017, and Seller has a credit in the amount of $____________ for prepaid Common Expenses.

The undersigned hereby agrees to use commercially reasonable efforts to provide any mortgagee of Purchaser (any "Lender") with copies of all notices of default with respect to any obligation or duty of the Purchaser under the Declaration Documents in the manner and to the extent required under the Declaration Documents and a reasonable time period to cure the same consistent with the Declaration and Association policies. All such notices to Lender shall be sent in accordance with the terms of the Declaration Documents to the following address (or such other address designated by Lender):

______________________
______________________
______________________
Attention: _____________
Facsimile: _____________

The undersigned has no notice that any claim, dispute or controversy presently exists between Seller and the undersigned including any litigation or arbitration concerning the Property, the Declaration Documents, or the performance of the terms thereof or any other matter except as provided in Schedule B.

The undersigned has no right or option to purchase all or any part of the Property except as provided in the Declaration Documents and applicable law in connection with a foreclosure of the lien of the undersigned for assessments.

The person executing this Estoppel has the power and authority to execute and deliver this Estoppel on behalf of the undersigned.

BEAVER CREEK HOTEL A CONDOMINIUM ASSOCIATION
a Colorado non-profit corporation

3721766.8 EXHIBIT S

By:

Name:

President

Schedule A to Estoppel

Declaration Documents

Schedule B to Estoppel

Defaults

3721766.8 EXHIBIT S

S-3 Proposed Hyatt Estoppel

MANAGER’S ESTOPPEL CERTIFICATE

March _____, 2017

TO: Ashford BC LP and Ashford TRS BC LLC

Attn: David Brooks and Christopher Peckham

14185 Dallas Parkway, Suite 1100

Dallas, TX 75254

Re: Sale of Park Hyatt Beaver Creek Hotel, Beaver Creek, Colorado

Gentlemen:

The undersigned, Hyatt Corporation (referred to herein as “ Manager” ), is the manager under that certain Management Agreement identified on Schedule 1 attached hereto, including such amendments, modifications, and supplemental agreements (if any) as may be identified on said Schedule 1 (collectively, the “ Management Agreement”), pertaining to the hotel and related facilities commonly known as the Park Hyatt Beaver Creek Hotel and more particularly described in the Management Agreement (collectively, the “ Hotel ”), under which WTCC Beaver Creek Investors V, L.L.C. acquired the rights of the “Owner” thereunder. Initially capitalized terms used herein and not expressly defined shall have the respective meanings given them in the Management Agreement.

Manager understands that (a) Owner is selling and assigning all of its rights, title, and interests in the Hotel to Ashford BC LP, a Delaware limited partnership (the “ Buyer” ), (b) Buyer is obtaining first mortgage financing for Buyer’s acquisition of the Hotel from a lender (“ Mortgagee” ), (c) simultaneously with its acquisition of the Hotel, Buyer will lease the Hotel to Ashford TRS BC LLC, a Delaware limited liability company (the “ Operating Lessee ”) who will assume and agree to perform Owner’s obligations under the Management Agreement, and (d) Owner, Buyer and Operating Lessee have requested that Manager deliver this Manager’s Estoppel Certificate (“ Certificate ”) for the benefit and reliance of Owner, Buyer, Operating Lessee and Mortgagee in connection with such transactions. Accordingly, Manager hereby certifies to Owner, Buyer, Operating Lessee and Mortgagee as follows:

The Management Agreement is in full force and effect and has not been modified or amended in any respect (other than by the documents identified on Schedule 1 attached to this Certificate), and true, correct, and complete copies of the documents listed on Schedule 1 are also attached hereto. The Management Agreement embodies the entire agreement and understanding between Owner and Manager with respect to the subject matter of such agreement.

3721766.8 EXHIBIT S

In accordance with Section 4 of the Management Agreement, all fees payable to Manager, including the Basic Fee, the Incentive Fee, the Additional Incentive Fee, and charges for the Hotel’s pro-rata share of Chain Services, earned through __________, 2017, have been paid to Manager (subject to reconciliation and adjustment following the end of the current Fiscal Year in accordance with the terms of the Management Agreement). With respect to such fees and charges:


(a)	The Basic Fee paid to Manager for Fiscal Years 2015 and 2016 were $__________ and $__________, respectively, and the Basic Fee paid to Manager for Fiscal year 2017 to date (through __________, 2017) is $__________.


(b)	The Incentive Fee paid to Manager for Fiscal Years 2015 and 2016 were $__________ and $__________, respectively, and the Incentive Fee paid to Manager for Fiscal year 2017 to date (through __________, 2017) is $__________.


(c)	(i) The Additional Incentive Fee paid to Manager for Fiscal Years 2015 and 2016 were $__________ and $__________, respectively.

(ii) The Minimum Annual Management Fee paid in 2017 for 2016’s minimum total management fee was $__________.


(d)	The Hotel’s Chain Services payments paid to Manager for Fiscal Years 2015 and 2016 were $__________ and $__________, respectively, and the Hotel’s Chain Services payments paid to Manager for Fiscal Year 2017 to date (through __________, 2017) are $__________. See also the attached Schedule 2 .


(e)	The Minimum Annual Management Fee for Fiscal Year 2017 is projected to be $__________, subject to Section 7 of the Fifth Amendment to Management Agreement.


3.	In addition, with respect to the Incentive Fee:

(a) There is currently no accumulated balance of deferred Incentive Fees, and no deferred Incentive Fees are projected for the current Fiscal Year.

(b) Upon the sale of the Hotel to Buyer, the Owner will be responsible for paying any accumulated deferred Incentive Fees; Manager agrees to look solely to Owner for payment thereof; and Buyer and Operating Lessee shall not have any liability for payment of any deferred Incentive Fees due with respect to any period prior to Buyer’s acquisition of the Hotel and Operating Lessee’s lease of the Hotel.


4.	The balance in the Fund for Replacement of and Additions to Furnishings and Equipment as of __________, 2017 was $__________. The current required annual contributions to the FF&E Reserve are equal to three percent (3%) of Gross Receipts, and there are no additional contributions to such reserve that are currently required, but have not been made, by Owner.

3721766.8 EXHIBIT S


5.	The Opening Date occurred on November 30, 1989; accordingly, the original term of the Management Agreement will expire on December 31, 2019, subject to the two successive ten-year extension options in favor of Manager as set forth in Section 2(b) of the Management Agreement.


6.	The budgets for the Fiscal Year 2017 which are to be provided pursuant to Section 3.5 of the Management Agreement are attached hereto as Schedule 3 .


7.	The monthly financial reports for the Fiscal Year to date required to be delivered to Owner pursuant to Section 7.4 of the Management Agreement are attached hereto as Schedule 4 .

Manager has not given any notice of any default by Owner under the Management Agreement that has not been cured as of the date hereof, nor has Manager received from Owner any notice of any default by Manager under the Management Agreement that has not been cured as of the date hereof. To the best knowledge of Manager, no default under the Management Agreement on the part of either Owner or Manager has occurred, nor does any circumstance or condition exist with respect to the condition, operation or management of adjacent or related properties within the Beaver Creek Resort area which either party would be entitled to treat as a violation of the Management Agreement, that has not been cured as of the date hereof. To the best knowledge of Manager, no default under the Management Agreement or any related agreement on the part of either Owner or Manager has occurred, which either party would be entitled to treat as a violation of the Management Agreement, or which would entitle either party to terminate the Management Agreement or exercise any other remedies of for a breach or default by the other party thereunder. Without limiting the foregoing, the Beaver Creek Resort has not failed to be open to the public during any 365-day period, and there are agreements in place with respect to the tennis facilities, golf course, and parking areas that satisfy the requirements of the Management Agreement.


9.	To the best knowledge of Manager, Manager has no claims, counterclaims, defenses or setoffs against Owner arising from the Management Agreement.


10.	To the best knowledge of Manager, there is no formal dispute, arbitration demand or proceedings, or pending or threatened litigation between Owner and Manager under or in connection with the Management Agreement or any other agreements pertaining to any adjacent or related properties within the Beaver Creek Resort area.

11.

The sale of the Hotel to Buyer, the lease of the Hotel to Operating Lessee and the assignment of the Management Agreement to Operating Lessee is permitted under the terms of the Management Agreement or has otherwise been approved by Manager; accordingly, from and after the consummation of such sale and assignment, and the assumption by Operating Lessee of the duties of “Owner” under the Management Agreement in form and substance reasonably acceptable to Manager, Manager will recognize Operating Lessee as “Owner” for all purposes under the Management Agreement.


12.	Subject to Manager’s receipt of a non-disturbance agreement in accordance with Section 7.5 of the Management Agreement, the Buyer’s first mortgage financing, which Owner and

3721766.8 EXHIBIT S

Buyer have advised Mortgagee will be in the principal amount of approximately $__________ is permitted under the terms of the Management Agreement; accordingly, from and after the consummation of such financing, Manager will recognize Mortgagee as a permitted mortgagee for all purposes under the Management Agreement.


13.	For all purposes hereunder, the phrase “to the best knowledge of Manager” shall mean the actual knowledge of __________ or __________, the Hotel General Manager and Controller, respectively.

Manager understands that Owner, Buyer, Operating Lessee and Mortgagee and their respective successors and assigns will be relying, and shall be entitled to rely, on the statements made herein in connection with the sale and assignment transaction described above.

HYATT CORPORATION,
a Delaware corporation

By:

Name:

Title:

3721766.8 EXHIBIT S

Schedule 1

Management Agreement


1.	Management Agreement dated as of December 11, 1987;


2.	Amendment No. 1 to Management Agreement dated as of September 22, 1988;


3.	Addendum and Amendment No. 2 to Management Agreement dated as of February 15, 1990;


4.	Amendment No. 3 to Management Agreement dated as of October 1, 1994;


5.	Consent and Assumption Agreement dated as of November 21, 1994;


6.	Assignment, Assumption and Consent Regarding Hyatt Agreements dated as of January 1, 1995;


7.	Letter Agreement dated January 16, 1996;


8.	Consent and Assumption Agreement dated __________, 1996;


9.	Agreement dated February 18, 1997;


10.	Amendment No. 4 to Management Agreement dated as of January 7, 2002;


11.	Consent, Assignment and Assumption Agreement dated as of February 14, 2002 [NEED TO SEE];


12.	Letter Agreement dated March 21, 2002 [NEED TO SEE]; and


13.	Amendment No. 5 to Management Agreement dated September 20, 2006.


	Schedule 2

Hotel Chain Services Payments

Schedule 3

Budgets

Schedule 4

Monthly Financial Reports

3721766.8 EXHIBIT V

EXHIBIT T

FORM OF ASSIGNMENT OF ALLEGRIA SPA LEASE

ASSIGNMENT AND ASSUMPTION OF LEASE AGREEMENT
(Allegria Spa – Park Hyatt Beaver Creek)

This Assignment and Assumption of Lease Agreement (this “ Assumption Agreement ”) is executed as of __________, 2017 (the “ Effective Date ”) by WTCC Beaver Creek Investors V, L.L.C., a Delaware limited liability company (“ Assignor ”), and Ashford TRS BC LLC, a Delaware limited liability company (“ Assignee ”), pursuant to, and is expressly made subject to the terms and conditions of, that certain Sale and Purchase Agreement (the “ Purchase Agreement ”) dated as of March 9, 2017, by and between, Assignor, as seller, and Ashford Hospitality Prime Limited Partnership, a Delaware limited partnership, as assigned to Ashford BC LP, a Delaware limited partnership (“Buyer”), as buyer. Simultaneously with the acquisition of the Property by Buyer, Buyer is leasing the Property to Assignee.

For and in consideration of Ten and No/100 Dollars ($10.00) and other good and valuable consideration, the receipt and legal sufficiency of which are hereby acknowledged, Except as otherwise provided in the Purchase Agreement, Assignor hereby transfers, assigns and sets over unto Assignee, without recourse, representation or warranty whatsoever, all of Assignor's right, title and interest as "Owner of the Hotel" and lessee under the agreement described on Exhibit A attached hereto, but only to the extent they relate to or arise from or in connection with the Property (collectively, the " Agreement ").

Assignor and Assignee confirm that it is their intention that there shall be no merger of the right, title and interest of Assignee under the Agreement or the leasehold estate created thereby.

Assignee hereby (a) assumes and agrees to perform all of the obligations of Assignor under the Agreement arising and accruing from and after the Effective Date, and (b) agrees to indemnify and hold harmless Assignor from all loss, costs, liability and expense arising out of or in connection with the Agreement from events first arising and accruing on or after the Effective Date.

3721766.8 EXHIBIT V

EXECUTED as of the Effective Date.

ASSIGNOR :

WTCC BEAVER CREEK INVESTORS V, L.L.C.,

a Delaware limited liability company

By: WTCC Beaver Creek Mezz V, L.L.C.,

a Delaware limited liability company,

its sole member

By: Walton TCC Hotel REOC Investors V, L.L.C.,

a Delaware limited liability company,

its managing member

By: Walton Acquisition REOC Holdings V, L.L.C.,

a Delaware limited liability company,

its managing member

By: Walton Street Real Estate Fund V, L.P.,

a Delaware limited partnership,

its managing member

By: Walton Street Managers V, L.P.,

a Delaware limited partnership,

its general partner

By: WSC Managers V, Inc.,

a Delaware corporation,

its general partner

By:_____________________

Name:___________________

Title:____________________

3721766.8 EXHIBIT V

ASSIGNEE :

OWNER :

ASHFORD TRS BC LLC ,
a Delaware limited liability company


By:	____________________________


Name:	____________________________


Title:	____________________________

The undersigned, Hyatt Corporation, a Delaware corporation (“Hyatt”), executes this Assumption Agreement to evidence Hyatt's consent to the foregoing Assumption Agreement and the assignment and assumption pursuant thereto.

Hyatt Corporation,
a Delaware corporation

By:    ____________________________
Name:    ____________________________
Title:    ____________________________

EXHIBIT A

The Agreement

Lease (Allegria Spa) by and between Hyatt Corporation, a Delaware corporation, as agent for Rose Star Southwest LLC, a Delaware limited liability company, in its capacity as "Owner of the Hotel" (as defined therein) ("Owner") and Rose Star Southwest LLC, a Delaware limited liability company, in its capacity as the Lessee therein, as amended and assigned.

3721766.8 EXHIBIT V

EXHIBIT U

FORM OF ASSIGNMENT OF HYATT MANAGEMENT AGREEMENT

ASSIGNMENT AND ASSUMPTION OF MANAGEMENT AGREEMENT
[ Park Hyatt Beaver Creek – Hotel Management Agreement ]

This Assignment and Assumption Agreement (this “ Assumption Agreement ”) is executed as of __________, 2017 (the “ Effective Date ”) by WTCC BEAVER CREEK INVESTORS V, L.L.C., a Delaware limited liability company (“ Assignor ”), and ASHFORD TRS BC LLC, a Delaware limited liability company (“ Assignee ”), pursuant to, and is expressly made subject to the terms and conditions of, that certain Sale and Purchase Agreement (the “ Purchase Agreement ”) dated as of March 9, 2017, by and between, Assignor, as seller, and Ashford Hospitality Prime Limited Partnership, a Delaware limited partnership, as assigned to Ashford BC LP, a Delaware limited partnership, as buyer (“ Buyer ”), with respect to the Park Hyatt Beaver Creek (the “ Project ”).

Recitals:

A. Assignor and Hyatt Corporation, are parties to that certain Management Agreement (the " Agreement ") dated December 11, 1987, as modified by Amendment No. 1 to Management Agreement dated as of September 22, 1988 (" Amendment No. 1 "), Addendum and Amendment No. 2 to Management Agreement dated as of February 15, 1990 (" Amendment No. 2 "), Amendment No. 3 to Management Agreement dated as of October 1, 1994 (" Amendment No. 3 "), Amendment No. 4 to Management Agreement dated January 7, 2002 (" Amendment No. 4 "), and Fifth Amendment to Management Agreement dated September 20, 2006 (" Fifth Amendment, " and, together with the Agreement, Amendment No. 1, Amendment No. 2, Amendment No. 3, and Amendment No. 4, collectively, the " Management Agreement "), pertaining to the Project and related facilities commonly known as the Park Hyatt Beaver Creek and more particularly described in the Parking Agreement (the “ Hotel ”).

B. Pursuant to the Purchase Agreement and in connection with the transfer of the Hotel to Buyer and the simultaneous leasing of the Hotel from Buyer to Assignee, Assignor desires to transfer, assign and set over unto Assignee, without recourse or warranty except as expressly provided in the Purchase Agreement, all of Assignor’s right, title and interest under the Management Agreement, and Assignee desires to assume the rights and obligations of Assignor with respect to the Management Agreement.

Agreement:

3721766.8 EXHIBIT V

1. Effective as of 12:01 a.m. on the Effective Date, Assignor hereby sells, transfers, assigns and sets over unto Assignee, without recourse or warranty except as expressly provided in the Purchase Agreement, all of Assignor’s right, title and interest in, to and under the Management Agreement.

2. Assignee hereby accepts all of Assignor’s right, title and interest in, to and under the Management Agreement and (a) assumes and agrees to perform all of the duties, obligations and liabilities under the Management Agreement, whether arising on, prior to, or after the Effective Date, and (b) agrees to indemnify and hold harmless Assignor from all loss, cost, liability and expense arising and accruing from and after the Effective Date out of or in connection with the Management Agreement.

EXECUTED as of the Effective Date.

ASSIGNOR :

WTCC BEAVER CREEK INVESTORS V, L.L.C.,

a Delaware limited liability company

By: WTCC Beaver Creek Mezz V, L.L.C.,

a Delaware limited liability company,

its sole member

By: Walton TCC Hotel REOC Investors V, L.L.C.,

a Delaware limited liability company,

its managing member

By: Walton Acquisition REOC Holdings V, L.L.C.,

a Delaware limited liability company,

its managing member

By: Walton Street Real Estate Fund V, L.P.,

a Delaware limited partnership,

its managing member

By: Walton Street Managers V, L.P.,

a Delaware limited partnership,

its general partner

By: WSC Managers V, Inc.,

a Delaware corporation,

its general partner

By:_____________________

Name:___________________

3721766.8 EXHIBIT V

Title:____________________

STATE OF ILLINOIS

COUNTY OF COOK

Witness my hand and official seal.

My commission expires:

____________________________________

Notary Public

ASSIGNEE :

ASHFORD TRS BC LLC,

a Delaware limited liability company


By:	____________________________


Name:	____________________________


Title:	____________________________

3721766.8 EXHIBIT V

STATE OF ____________

COUNTY OF __________

The foregoing instrument was acknowledged before me on _____________, 2017, by _____________________________, as _______________________ of Ashford TRS BC LLC, a Delaware limited liability company.

Witness my hand and official seal.

My commission expires:

____________________________________

Notary Public

The undersigned, HYATT CORPORATION, a Delaware corporation (“Hyatt”), executes this Assumption Agreement to (a) evidence Hyatt's approval of the transfer of the Property and the form and substance of Assignee’s agreement contained herein to assume and be bound by the provisions of the Management Agreement, (b) evidence Hyatt's approval of the assignment and assumption of the Management Agreement to Assignee and (c) evidence Hyatt’s consent to the assignment by Assignor and assumption by Assignee of the documents set forth on Exhibit A attached hereto.

HYATT CORPORATION ,
a Delaware corporation

By:    ____________________________
Name:    ____________________________
Title:    ____________________________

STATE OF ILLINOIS

COUNTY OF COOK

The foregoing instrument was acknowledged before me this ___ day of __________, 2017, by _____________________________, as _______________________ of Hyatt Corporation, a Delaware limited liability company.

Witness my hand and official seal.

My commission expires:

____________________________________

Notary Public

3721766.8 EXHIBIT V

EXHIBIT A

List of Hyatt Consents to Assignment

1) Parking Easement. Village Hall Parking Easement by and between Beaver Creek Hotel Company, Inc., a Colorado corporation, and East West Properties, Ltd., a Colorado limited partnership, dated effective as of September 30, 1987, as amended and assigned.

2) Village Hall Operating Agreement. Operating Agreement (Certain Village Hall Condominium Units) by and between WTCC Beaver Creek Investors V, L.L.C., a Delaware limited liability company, and The Vail Corporation, a Colorado corporation, dated as of October 17, 2014, as amended and assigned

3) Golf Reservation Agreement. Golf Reservation Agreement by and between Vail Associates, Inc., a Colorado corporation, and Colorado East West Partners, Inc., a Colorado corporation, dated effective as of October 1, 1987, as amended and assigned.

4) Development Agreement. Agreement by and between Colorado East West Partners, Inc., a Colorado corporation, and Vail Associates, Inc., a Colorado corporation, dated effective as of August 21, 1987, as amended and assigned.

5) Allegria Spa Lease. Lease (Allegria Spa) by and between Hyatt Corporation, a Delaware corporation, as agent for RoseStar Southwest LLC, a Delaware limited liability company in its capacity as "Owner of the Hotel" (as defined therein) ("Owner") and RoseStar Southwest LLC„ a Delaware limited liability company, in its capacity as the lessee therein, as amended and assigned.

3721766.8 EXHIBIT V

EXHIBIT V

FORM OF ASSIGNMENT OF MANAGEMENT AGREEMENT

ASSIGNMENT AND ASSUMPTION AGREEMENT
(Park Hyatt Beaver Creek, Allegria Spa Management Agreement and

Commercial Space Management Agreement)

This Assignment and Assumption Agreement (this “ Assumption Agreement ”) is executed as of __________, 2017 (the “ Effective Date ”) by WTCC Beaver Creek Investors V, L.L.C., a Delaware limited liability company (“ Assignor ”), and Ashford TRS BC LLC, a Delaware limited liability company (“ Assignee ”), pursuant to, and is expressly made subject to the terms and conditions of, that certain Sale and Purchase Agreement (the “ Purchase Agreement ”) dated as of March 9, 2017, by and between, Assignor, as seller, and Ashford Hospitality Prime Limited Partnership, a Delaware limited partnership, as assigned to Ashford BC LP, a Delaware limited partnership, as buyer, with respect to the Park Hyatt Beaver Creek (the “ Project ”).

Recitals:

A. Assignor and East West Resorts, LLC, a Delaware limited liability company (“ Manager ”), are parties to that certain Management Agreement dated May 23, 2007 (the " Management Agreement ") with respect to the management of the Allegria Spa and related facilities (the " Spa ") located in the hotel known as the Park Hyatt Beaver Creek and more particularly described in the Management Agreement (the “ Hotel ”).

B. Assignor and Manager are parties to that certain Commercial Space Management Agreement dated May 23, 2007 (the " Commercial Management Agreement ") with respect to the management of certain commercial condominium units (the " Commercial Spaces ") located in the Hotel.

C. Pursuant to the Purchase Agreement and in connection with the transfer of the Hotel to Buyer and the simultaneous leasing of the Hotel from Buyer to Assignee, Assignor desires to transfer, assign and set over unto Assignee, without recourse or warranty except as expressly provided in the Purchase Agreement, all of Assignor’s right, title and interest under the Management Agreement and the Commercial Management Agreement, and Assignee desires to assume the rights and obligations of Assignor with respect to the Management Agreement and the Commercial Management Agreement.

Agreement:

3721766.8 EXHIBIT V

1. Assignor hereby sells, transfers, assigns and sets over unto Assignee, without recourse or warranty except as expressly provided in the Purchase Agreement, all of Assignor’s right, title and interest in, to and under the Management Agreement and the Commercial Management Agreement as of 12:01 a.m. on the Effective Date.

2. Subject to the terms of the Purchase Agreement, Assignee hereby accepts all of Assignor’s right, title and interest in, to and under the Management Agreement and the Commercial Management Agreement and (a) assumes and agrees to perform all of the duties, obligations and liabilities of Assignor arising and accruing under or with respect to the Management Agreement and the Commercial Management Agreement from and after the Effective Date, and (b) agrees to indemnify and hold harmless Assignor from all loss, cost, liability and expense arising and accruing from and after the Effective Date out of or in connection with the Management Agreement and the Commercial Management Agreement.

3721766.8 EXHIBIT V

EXECUTED as of the Effective Date.

ASSIGNOR :

WTCC BEAVER CREEK INVESTORS V, L.L.C.,

a Delaware limited liability company

By: WTCC Beaver Creek Mezz V, L.L.C.,

a Delaware limited liability company,

its sole member

By: Walton TCC Hotel REOC Investors V, L.L.C.,

a Delaware limited liability company,

its managing member

By: Walton Acquisition REOC Holdings V, L.L.C.,

a Delaware limited liability company,

its managing member

By: Walton Street Real Estate Fund V, L.P.,

a Delaware limited partnership,

its managing member

By: Walton Street Managers V, L.P.,

a Delaware limited partnership,

its general partner

By: WSC Managers V, Inc.,

a Delaware corporation,

its general partner

By:_____________________

Name:___________________

Title:____________________

3721766.8 EXHIBIT V

ASSIGNEE :

ASHFORD TRS BC LLC ,
a Delaware limited liability company


By:	____________________________


Name:	____________________________


Title:	____________________________

The undersigned, East West Resorts, LLC, a Delaware limited liability company (“EW Resorts”), executes this Agreement to (a) evidence EW Resort's approval of the form and substance of Assignee’s agreement contained herein to be bound by the provisions of the Management Agreement and the Commercial Management Agreement; (b) confirm the release of Assignor from its obligations under the Management Agreement and the Commercial Management Agreement to the extent arising or accruing from and after the Effective Date; and (c) evidence EW Resort's consent, whether or not required, to the assignment and assumption of the Management Agreement and the Commercial Management Agreement.

East West Resorts, LLC,
a Delaware limited liability company

By:    ____________________________
Name:    ____________________________
Title:    ____________________________

3721766.8 EXHIBIT V

EXHIBIT 10.2.1

FIRST AMENDMENT TO SALE AND PURCHASE AGREEMENT

This FIRST AMENDMENT TO SALE AND PURCHASE AGREEMENT (this “ First Amendment ”) is made effective as of March 13, 2017, by and between WTCC BEAVER CREEK INVESTORS V, L.L.C. , a Delaware limited liability company (“ Seller ”), and ASHFORD HOSPITALITY PRIME LIMITED PARTNERSHIP , a Delaware limited partnership (“ Buyer ”).

RECITALS:

A. Seller and Buyer entered into that certain Sale and Purchase Agreement dated as of March 9, 2017 (the “ Agreement ;” all capitalized terms used in this First Amendment and not otherwise defined herein shall have the same meaning given to them in the Agreement).

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

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree, and the Agreement is amended, as follows:

1. Required Estoppels .

a. The following Section 5.7 is hereby added immediately after Section 5.6 of the Agreement and the existing Section 5.7 is hereby renumbered to Section 5.8:

“5.7 Condominium Estoppels and Operating Agreement Estoppel . As a condition to Buyer’s obligation to close, Seller shall provide to Buyer estoppel certificates from the Beaver Creek Hotel A Condominium Association, a Colorado non-profit corporation, the Village Hall Condominium Association, a Colorado non-profit corporation and The Vail Corporation, d/b/a Vail Associates, Inc. (i) in substantially the form attached hereto as Exhibits W , X , and Y , respectively, with all blanks filled in and all exhibits attached, (ii) in the form required to be delivered by the estopping party under the applicable document, or (iii) in another form reasonably acceptable to Buyer. Buyer will not unreasonably withheld, condition, or delay its approval of any reasonable or immaterial revisions requested by the party executing the applicable estoppel, including, without limitation, the removal of lender specific information. This condition shall be deemed satisfied, as to each of parties named in this Section 5.7 upon Seller’s delivery of the required estoppel certificate from each of the named parties.”

b. Section 5.8, as renumbered in accordance with Section 1.a above, is hereby amended and restated in its entirety as follows:

“5.8 Consequence of Failure of a Closing Condition . If Seller has not satisfied the contingencies contained in Section 5.5, 5.6, and 5.7 by the

time of Closing, Seller shall have the right, by delivering written notice to Buyer prior to 3:00 p.m. on the Closing Date to extend the Closing Date for up to ten (10) business days in order to satisfy such conditions to Closing. In no event shall failure to satisfy the conditions contained in Section 5.5, 5.6, or 5.7 constitute a default of Seller under this Agreement. If either Buyer or Seller has the right to terminate this Agreement pursuant to this Section 5, then the party exercising its termination rights hereunder shall notify in writing the other party and Escrow Agent of such election (a “ Section 5 Termination Notice ”) on or before to the Closing Date (or prior to the earlier date which may be required for such termination under the terms of this Agreement), and the specific condition or conditions giving rise to such election. If either party shall deliver a Section 5 Termination Notice, and such notice is accompanied by a demand that Escrow Agent deliver the Deposit to such party, Escrow Agent shall promptly request from the non-requesting party written confirmation that release of the Deposit to the requesting party is acceptable and upon receipt of such written confirmation (or if no written confirmation or objection is received within ten (10) business days of Escrow Agent’s request therefor), Escrow Agent shall deliver the Deposit, less the Independent Consideration which shall be paid to Seller in all cases, to the requesting party as demanded. If the non-requesting party raises an objection to release of the Deposit, the procedures set forth in the Deposit Escrow Agreement shall govern Escrow Agent’s obligation to release the Deposit hereunder.”

c. Exhibits W , X , and Y attached hereto are hereby added to, and incorporated into, the Agreement.

2. No Due Diligence Period . The parties agree that the Due Diligence Period has expired and Buyer has not delivered a Buyer’s Termination Notice. Buyer shall deposit the Additional Deposit with the Escrow Agent within two (2) business days after the date of this First Amendment. In addition, Section 3.1.8 of the Agreement (and Exhibits “ S-1 ” and “ S-2 ” associated therewith) is hereby deleted in its entirety and is of no further force or effect.

3. Closing Date . Notwithstanding anything in the Contract to the contrary, the “ Closing Date ” shall mean Friday, March 31, 2017; provided, however, the Closing shall be effective as of 12:01 A.M. Mountain Time on April 1, 2017 for all purposes under the Contract, including, without limitation the allocation of income and expenses from the Property between Seller and Buyer in accordance with Section 6.4 of the Contract and the date set forth in all of Seller’s and Buyer’s deliveries pursuant to Section 6.2.1 and 6.2.2, respectively. For the avoidance of doubt Seller shall be entitled to all items of revenue arising from, and responsible for all items of cost and expense with respect to, the Property before 12:01 A.M. Mountain Time on April 1, 2017, and from and after 12:01 A.M. Mountain Time on April 1, 2017, Buyer shall be entitled to all items of revenue arising from, and responsible for all items of cost and expense with respect to, the Property.

4. No Other Amendments . The parties acknowledge and agree that, except as amended by this First Amendment, the Agreement remains in full force and effect. To the extent that there is any inconsistency between the terms of this First Amendment and the Agreement, the terms of this First Amendment shall prevail.

5. Counterparts . To facilitate execution, this First Amendment may be executed in as many counterparts as may be required. It shall not be necessary that the signature on behalf of both parties hereto appear on each counterpart hereof. All counterparts hereof shall collectively constitute a single agreement. Facsimile signatures and/or electronically scanned (.pdf) and emailed signatures shall have the same valid and binding effect as original signatures.

6. Governing Law . This First Amendment and all documents referred to herein shall be governed by and construed and interpreted in accordance with the laws of the stated in which the Property is located without regard to its principles of conflicts of law.

[SIGNATURES APPEAR ON FOLLOWING PAGE]

IN WITNESS WHEREOF , this First Amendment is effective as of the date first written above.

BUYER :

ASHFORD HOSPITALITY PRIME LIMITED PARTNERSHIP ,

a Delaware limited partnership

By: Ashford Prime OP General Partner LLC

By: /s/ David A. Brooks

Name: David A. Brooks

Title: Vice President

S- 1

SELLER:

WTCC BEAVER CREEK INVESTORS V, L.L.C. ,

a Delaware limited liability company

By: WTCC Beaver Creek Alpha Mezz V, L.L.C.,

a Delaware limited liability company,

its Sole Member

By: WTCC Beaver Creek Mezz V, L.L.C.,

a Delaware limited liability company,

its Sole Member

By: Walton TCC Hotel REOC Investors V, L.L.C.,

a Delaware limited liability company,

its Managing Member

By: Walton Acquisition REOC Holdings V, L.L.C.,

a Delaware limited liability company,

its Managing Member

By: Walton Street Real Estate Fund V, L.P.,

a Delaware limited partnership,

its Managing Member

By: Walton Street Managers V, L.P.,

a Delaware limited partnership,

its General Partner

By: WSC Managers V, Inc.,

a Delaware corporation,

its General Partner

By: /s/ Kolin Pound

Name: Kolin Pound

Title: Vice President

S- 2

EXHIBIT W

FORM OF BEAVER CREEK HOTEL A CONDOMINIUM ASSOCIATION ESTOPPEL

BEAVER CREEK HOTEL A CONDOMINIUM ASSOCIATION

P.O. BOX 5480

AVON, COLORADO 81620

____________, 2017

Ashford BC LP

14185 Dallas Parkway, Suite 1100

Dallas, Texas 75254

Attn: David Brooks and Chris Peckham

Re:

Conveyance of the Park Hyatt Beaver Creek Resort and Spa, comprised of certain portions of the Beaver Creek Hotel A Condominium, the Village Hall Condominiums, and other associated improvements located on Lot 25, Block 1, Tract A and Lot 13, Block 1, Tract A, each as shown on the Second Amendment to First Filing, Beaver Creek Subdivision according to the plat recorded September 20, 1980 in Book 307 at Page 997 of the Eagle County, Colorado real property records (the “ Property ”) by WTCC Beaver Creek Investors V, L.L.C., a Delaware limited liability company (“ Seller ”), to Ashford BC LP, a Delaware limited partnership (“ Purchaser ”)

Gentlemen:

The undersigned, constituting the President and all of the members of the Board of Directors of Beaver Creek Hotel A Condominium Association, a Colorado nonprofit corporation (the “ Association ”), write this letter in connection with the conveyance of the Property by Seller to Purchaser.

The “Declaration Documents” (as referenced in Schedule A attached hereto) are in full force and effect and (except as referenced in Schedule A ) have not been supplemented, amended, modified or superseded since their original execution and no other agreements or understandings exist between Seller and any other party to the Declaration Documents except as provided in Schedule A attached hereto. Capitalized terms used and not defined herein have the meaning assigned thereto in the Declaration Documents.

To the Association’s knowledge, as of the date of this letter (this “ Estoppel ”) and except as provided in Schedule B , Seller is not in default with respect to any payment obligation or duty under the Declaration Documents, and no events have occurred that, with the giving of notice or passage of time or both, would constitute a default by Seller thereunder. To the Association’s

Exhibit W – Page 1

knowledge, Seller’s current use and operation of the Property as a hotel complies with any and all use covenants and operating requirements contained in the Declaration Documents.

As of the date of this Estoppel and except as provided in Schedule B , all monetary obligations of Seller under the Declaration Documents to date have been fully and currently paid and no advance assessments have been paid, and there has not been any special assessment declared under the Declaration Documents. As of the date of this Estoppel, the current quarterly assessment of $______________ is due on ___________, 2017, and Seller has a credit in the amount of $____________ for prepaid Common Expenses.

The Association shall use commercially reasonable efforts to provide JPMorgan Chase Bank, National Association (together with its successors and assigns, “ Lender ” ) with copies of all notices of default with respect to any obligation or duty of the Purchaser under the Declaration Documents in the manner and to the extent required under the Declaration Documents and a reasonable time period to cure the same consistent with the Declaration and Association policies. All such notices to Lender shall be sent in accordance with the terms of the Declaration Documents to the following address (or such other address designated by Lender):

To: JPMorgan Chase Bank, National Association

383 Madison Avenue

New York, New York 10179

Attention: Thomas Nicholas Cassino

Facsimile No.: (212) 834-6029

With a copy to: JPMorgan Chase Bank, National Association

383 Madison Avenue

New York, New York 10179

Attention: Nancy Alto

Facsimile No.: (917) 546-2564

And a copy to: Cadwalader, Wickersham & Taft LLP

One World Financial Center

New York, New York 10281

Attention: William P. McInernery, Esq.

Facsimile No.: (212) 504-6666

The Association has no notice that any claim, dispute or controversy presently exists between Seller and the Association including any litigation or arbitration concerning the Property, the Declaration Documents, or the performance of the terms thereof or any other matter except as provided in Schedule B.

Exhibit W – Page 2

The Association has no right or option to purchase all or any part of the Property, except as provided in the Declaration Documents and applicable law in connection with a foreclosure of the lien of the undersigned for assessments.

The President and members of the Association’s Board of Directors executing this Estoppel have the power and authority to execute and deliver this Estoppel on behalf of the Association.

[ Intentionally blank ]

Exhibit W – Page 3

The Association certifies that Purchaser and Lender and their respective affiliates, successors, assigns and/or participants, may rely on the representations contained herein in connection with the acquisition of the Property and any loan secured thereby.

BEAVER CREEK HOTEL A CONDOMINIUM ASSOCIATION
a Colorado non-profit corporation

By:

Name:

Title: President

Exhibit W – Page 4

Schedule A to Estoppel

Declaration Documents

Exhibit W – Page 5

Schedule B to Estoppel

Defaults

EXHIBIT X

FORM OF VILLAGE HALL CONDOMINIUM ASSOCIATION ESTOPPEL

VILLAGE HALL CONDOMINIUM ASSOCIATION
P.O. BOX 5481
AVON, COLORADO 81620

_____________________, 2017

Ashford BC LP
14185 Dallas Parkway, Suite 1100

Dallas, Texas 75254

Attn: David Brooks and Chris Peckham

Re:

Gentlemen:

The “Declaration Documents” (as referenced in Schedule A attached hereto) are in full force and effect and (except as referenced in Schedule A) have not been supplemented, amended, modified or superseded since their original execution and no other agreements or understandings exist between Seller and any other party to the Declaration Documents except as provided in Schedule A attached hereto. Capitalized terms used and not defined herein have the meaning assigned thereto in the Declaration Documents.

As of the date of this letter (this “Estoppel”) and except as provided in Schedule B, to the knowledge of the undersigned, Seller is not in default with respect to any payment obligation or duty under the Declaration Documents, and no events have occurred that, with the giving of notice or passage of time or both, would constitute a default by Seller thereunder. To the knowledge of the undersigned, Seller’s current use and operation of the Property as a hotel complies with any and all use covenants and operating requirements contained in the Declaration Documents.

The undersigned hereby agrees to use commercially reasonable efforts provide JPMorgan Chase Bank, National Association (together with its successors and assigns, “ Lender ”) with copies of all notices of default with respect to any obligation or duty of the Purchaser under the Declaration Documents in the manner and to the extent required under the Declaration Documents and a reasonable time period to cure the same consistent with the terms of the Declaration and the Association’s policies. All such notices to Lender shall be sent in accordance with the terms of the Declaration Documents to the following address (or such other address designated by Lender):

To: JPMorgan Chase Bank, National Association

383 Madison Avenue

New York, New York 10179

Attention: Thomas Nicholas Cassino

Facsimile No.: (212) 834-6029

With a copy to: JPMorgan Chase Bank, National Association

383 Madison Avenue

New York, New York 10179

Attention: Nancy Alto

Facsimile No.: (917) 546-2564

And a copy to: Cadwalader, Wickersham & Taft LLP

One World Financial Center

New York, New York 10281

Attention: William P. McInernery, Esq.

Facsimile No.: (212) 504-6666

The person executing this Estoppel has the power and authority to execute and deliver this Estoppel on behalf of the undersigned.

[ Intentionally blank ]

The undersigned certifies that Purchaser and Lender and their respective affiliates, successors, assigns and/or participants, may rely on the representations contained herein in connection with the acquisition of the Property and any loan secured thereby.

Very truly yours,

VILLAGE HALL CONDOMINIUM ASSOCIATION, a Colorado non-profit corporation

By:
Name:
    President

Schedule A to Estoppel

Declaration Documents

Schedule B to Estoppel

Default

EXHIBIT Y

FORM OF OPERATING AGREEMENT ESTOPPEL

THE VAIL CORPORATION
d/b/a VAIL ASSOCIATES, INC.

P.O. BOX 7

VAIL, COLORADO 81658

, 2017

Ashford BC LP

c/o Ashford Hospitality Prime

14185 Dallas Parkway, Suite 1100

Dallas, Texas 75254

Attention: David Brooks and Chris Peckham

Re:

Gentlemen:

The undersigned officer of The Vail Corporation dba Vail Associates, Inc. (“ VAI ”) delivers this letter in connection with the conveyance of the Property by Seller to Purchaser.

Operating Agreement :

VAI and Seller are parties to that certain Operating Agreement (Certain Village Hall Condominium Units) dated October 17, 2014, hereinafter referred to as the “ Operating Agreement ”. The Operating Agreement is in full force and effect and has not been supplemented, amended, modified or superseded since its original execution (except as set forth on Schedule A ), and, to VAI’s knowledge, no other agreements or understandings exist between Seller and any other party to the Operating Agreement (except as set forth on Schedule A attached hereto). Capitalized terms used and not defined herein have the meaning assigned thereto in the Operating Agreement.

Except as set forth on Schedule B , to VIA’s knowledge, as of the date of this letter (this “ Estoppel ”), (i) Seller is not in default with respect to any obligation or duty under the Operating Agreement and no event has occurred that, with the giving of notice or passage of time or both, would constitute a violation by Seller; and (ii) Seller’s current use and operation of the property subject to Operating Agreement complies with any and all use restrictions contained in the Operating Agreement.

Condominium Declaration for Village Hall Condominiums

VAI, as the declarant, established the Condominium Declaration for Village Hall Condominiums dated January 24, 1984 and recorded February 1, 1984, in Book 377 at Page 638, of the Real Property Records of Eagle County, Colorado, as amended (the “ Declaration ”). VAI and Seller are members of the Village Hall Condominium Association (the “ Association ”) by virtue of their ownership of Units of the Village Hall Condominium.

Except as set forth on Schedule C , to VAI’s knowledge, as of the date of this Estoppel, VAI does not have any right to assert any claims, liens, or offsets against, or seek any reimbursements from, the Association or Seller arising out of the Association’s or Seller’s acts or failure to act in accordance with the Declaration.

VAI hereby agrees to use commercially reasonable efforts to provide JPMorgan Chase Bank, National Association (together with its successors and assigns, “ Lender ”) with copies of any and all notices relating to an event of default of the Operating Agreement by Purchaser and a reasonable time period to cure such violation in a manner consistent with the terms of the Operating Agreement. All such notices to Lender shall be sent to the following address (or such other address designated by Lender):

To: JPMorgan Chase Bank, National Association

383 Madison Avenue

New York, New York 10179

Attention: Thomas Nicholas Cassino

Facsimile No.: (212) 834-6029

With a copy to: JPMorgan Chase Bank, National Association

383 Madison Avenue

New York, New York 10179

Attention: Nancy Alto

Facsimile No.: (917) 546-2564

And a copy to: Cadwalader, Wickersham & Taft LLP

One World Financial Center

New York, New York 10281

Attention: William P. McInernery, Esq.

Facsimile No.: (212) 504-6666

To VIA’s knowledge, no claim, dispute or controversy presently exists between Seller and VIA including any litigation or mediation concerning the Property, the Operating Agreement, or the performance of the terms thereof or any other matter, except as provided in Schedule B .

The person executing this Estoppel has the power and authority to execute and deliver this Estoppel on behalf of VAI.

The undersigned hereby certifies that Purchaser and Lender and their respective affiliates, successors, assigns and/or participants, may rely on the representations contained herein in connection with the acquisition of the Property and any loan secured thereby.

Very truly yours,

THE VAIL CORPORATION dba

Vail Associates, Inc.

By:

Name:

Title:

Schedule A to Estoppel

Operating Agreement

Schedule B to Estoppel

Defaults

Schedule C to Estoppel

VAI Claims

Exhibit W – Page 6

EXHIBIT 12

ASHFORD HOSPITALITY PRIME, INC. AND SUBSIDIARIES

STATEMENT REGARDING COMPUTATION OF RATIOS OF EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS

(dollars in thousands)



	Three Months Ended			Year Ended December 31,
	March 31, 2017			2016		2015			2014		2013			2012
Earnings
Income (loss) from continuing operations before provision for income taxes and noncontrolling interests	$	(767	)	$	25,894	$	(4,428	)	$	4,635	$	(15,585	)	$	591
Amount recorded for equity in (earnings) loss of unconsolidated entity	—			2,587		2,927			—		—			—
Add:
Interest on indebtedness	7,153			37,712		35,254			37,203		32,266			29,991
Amortization of loan costs	1,049			3,169		2,575			1,828		745			1,253
Interest component of operating leases	104			431		353			264		227			220
	$	7,539		$	69,793	$	36,681		$	43,930	$	17,653		$	32,055

Fixed charges
Interest on indebtedness	$	7,153		$	37,712	$	35,254		$	37,203	$	32,266		$	29,991
Amortization of loan costs	1,049			3,169		2,575			1,828		745			1,253
Interest component of operating leases	104			431		353			264		227			220
	$	8,306		$	41,312	$	38,182		$	39,295	$	33,238		$	31,464
Preferred stock dividends
Series A Preferred Stock	$	—		$	—	$	1,867		$	—	$	—		$	—
Series B Preferred Stock	1,673			3,860		119			—		—			—
	$	1,673		$	3,860	$	1,986		$	—	$	—		$	—

Combined fixed charges and preferred stock dividends	$	9,979		$	45,172	$	40,168		$	39,295	$	33,238		$	31,464

Ratio of earnings to fixed charges				1.69					1.12					1.02

Ratio of earnings to combined fixed charges and preferred stock dividends				1.55					1.12					1.02

Deficit (Fixed charges)	$	767				$	1,501				$	15,585

Deficit (Combined fixed charges and preferred stock dividends)	$	2,440				$	3,487				$	15,585

EXHIBIT 31.1

CERTIFICATION

I, Richard J. Stockton, certify that:


1.	I have reviewed this Quarterly Report on Form 10-Q of Ashford Hospitality Prime, Inc.;


2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;


3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;


4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:


(a)	designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;


(b)	designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;


(c)	evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and


(d)	disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and


5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):


(a)	all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and


(b)	any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 9, 2017



/s/ RICHARD J. STOCKTON
Richard J. Stockton
President and Chief Executive Officer

EXHIBIT 31.2

CERTIFICATION

I, Deric S. Eubanks, certify that:


1.	I have reviewed this Quarterly Report on Form 10-Q of Ashford Hospitality Prime, Inc.;


2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;


3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;


4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:


(a)	designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;


(b)	designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;


(c)	evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and


(d)	disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and


5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):


(a)	all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and


(b)	any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 9, 2017



/s/ DERIC S. EUBANKS
Deric S. Eubanks
Chief Financial Officer

EXHIBIT 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Ashford Hospitality Prime, Inc. (the “Company”) on Form 10-Q for the quarterly period ended March 31, 2017 , as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Richard J. Stockton, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:


(1)	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and


(2)	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: May 9, 2017



/s/ RICHARD J. STOCKTON
Richard J. Stockton
President and Chief Executive Officer

EXHIBIT 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Ashford Hospitality Prime, Inc. (the “Company”) on Form 10-Q for the quarterly period ended March 31, 2017 , as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Deric S. Eubanks, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:


(1)	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and


(2)	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: May 9, 2017



/s/ DERIC S. EUBANKS
Deric S. Eubanks
Chief Financial Officer