Acquisition Focus: Lodging – Upper midscale brands from Marriott, Hilton and InterContinental Group.

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Defined Criteria: Property level characteristics, as defined in Exhibit A.

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Accepted Property: A property that has met the Defined Criteria.

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Equity Amount: Generally, $3 million to $6 million per Project.  Equity Amount investors will be known as Priority Members.

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Preferred Return: The return amount (percentage rate) paid to the Investment Members and to the co–investment from the Managing Member.

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Co – Investment: The Managing Member will co-invest up to 10% of the Equity Amount raised for each Accepted Property.  This investment will be pari passu in both economic returns and capital return preferences.

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Economics: Cash distributions, which shall be made quarterly, will be prioritized as follows: a) the Preferred Return will be paid first, then b) the Investor Members will receive 80% of the remaining cash distribution, and then c) the remaining 20% of the cash distributions will be paid to the Managing Member.  Once the initial investment of the Investor Members has been paid, future cash distributions (operating profits, refinance proceeds or sale proceeds) will be adjusted as follows: a) Investor Members will receive 75% of cash distributions, and b) the Managing Member will receive the remaining 25% of cash distributions.

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Initial Capital Contribution: A Minimum $25,000.

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Funding Mechanism: To allow the Managing Member to react quickly to potential acquisitions, funds will be deposited into an Escrow Account controlled by the laws firm of Faegre Drinker prior to the selection of an Accepted Property.

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Target Size: Estimated acquisition cost of $12M-$20M.

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Managing Member: An affiliated entity of National Lodging & Leisure, LLC.

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Geographic Focus: The State of Florida with focus on the second tier and tertiary markets of Southwest Florida, and select Florida college towns.

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Debt: Each Project will either assume existing debt or secure new financing.  Each Project will have stand-alone debt. All guarantees required will be provided by the Managing Member.

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Project: A hotel property that falls within our predetermined criteria.

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Term: The life of deal will be generally 5 to 7 years.

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Ownership Structure: A single-purpose entity with acceptable constituent members.  The Managing Member will be an affiliated entity of National Lodging & Leisure.

 

Control Rights: Review/Approval of all decisions will remain with the Managing Member.

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Escrow Agreement: A standard format Escrow Agreement and Account will be maintained at the Law Firm of Faegre Drinker.

Investor Member.

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Privileges: Investor Members, and their immediate family, shall have the opportunity to books rooms at all NLL hotel properties at the cost of $25 per night, based on the following schedule: