10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

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

For the quarterly period ended June 30, 2010

OR

¨ 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 001-34572

CHESAPEAKE LODGING TRUST

(Exact name of registrant as specified in its charter)

MARYLAND	27-0372343
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)

1997 Annapolis Exchange Parkway, Suite 410, Annapolis, Maryland 21401

(Address and zip code of principal executive offices)

(410) 972-4140

(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.    Yes  x    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).    Yes  ¨    No  ¨

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

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Securities Exchange Act of 1934).    Yes  ¨    No  x

As of August 12, 2010, there were 9,349,813 shares of the registrant’s common shares issued and outstanding.

CHESAPEAKE LODGING TRUST

INDEX

		Page
PART I
Item 1.	Financial Statements	3
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	13
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	17
Item 4.	Controls and Procedures	17
PART II
Item 1.	Legal Proceedings	18
Item 1A.	Risk Factors	18
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	18
Item 3.	Defaults Upon Senior Securities	18
Item 4.	(Removed and Reserved)	18
Item 5.	Other Information	18
Item 6.	Exhibits	19

2

PART I

Item 1. Financial Statements

CHESAPEAKE LODGING TRUST

CONSOLIDATED BALANCE SHEETS

(in thousands, except share data)

	June 30, 2010		December 31, 2009
	(unaudited)
ASSETS
Property and equipment, net	$	122,657	$	-
Intangible asset, net of accumulated amortization of $152		35,953		-
Cash and cash equivalents		11,160		23
Restricted cash		438		-
Accounts receivable, net of allowance for doubtful accounts of $19		3,133		-
Prepaid expenses and other assets		1,981		412
Total assets	$	175,322	$	435
LIABILITIES AND SHAREHOLDERS’ EQUITY
Accounts payable and accrued expenses	$	5,056	$	185
Related-party loan		-		249
Total liabilities		5,056		434
Commitments and contingencies (Note 9)
Preferred shares, $.01 par value; 100,000,000 shares authorized; no shares issued and outstanding, respectively		-		-
Common shares, $.01 par value; 400,000,000 shares authorized; 9,349,813 shares and 100,000 shares issued and outstanding, respectively		93		1
Additional paid-in capital		170,107		-
Retained earnings		66		-
Total shareholders’ equity		170,266		1
Total liabilities and shareholders’ equity	$	175,322	$	435

The accompanying notes are an integral part of these financial statements.

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CHESAPEAKE LODGING TRUST

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except share and per share data)

(unaudited)

	Three Months Ended June 30, 2010			Six Months Ended June 30, 2010
REVENUE
Rooms	$	8,769		$	10,576
Food and beverage		2,710			3,238
Other		296			382
Total revenue		11,775			14,196
EXPENSES
Hotel operating expenses:
Rooms		1,833			2,300
Food and beverage		1,801			2,230
Other direct		196			242
Indirect		3,439			4,321
Total hotel operating expenses		7,269			9,093
Depreciation and amortization		744			952
Intangible asset amortization		130			152
Corporate general and administrative:
Share-based compensation		429			829
Hotel property acquisition costs		453			1,127
Other		1,407			2,094
Total operating expenses		10,432			14,247
Operating income (loss)		1,343			(51	)
Interest income		36			85
Income before income taxes		1,379			34
Income tax benefit (expense)		(12	)		32
Net income	$	1,367		$	66
Net income per share:
Basic	$	.15		$	.01
Diluted	$	.15		$	.01
Weighted-average number of common shares outstanding:
Basic		9,098,930			9,083,306
Diluted		9,111,597			9,094,891

The accompanying notes are an integral part of these financial statements.

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CHESAPEAKE LODGING TRUST

CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY

(in thousands, except share data)

(unaudited)

	Common Shares					Additional Paid-In Capital			Retained Earnings		Total
	Shares		Amount
Balances at December 31, 2009	100,000		$	1		$	-		$	-	$	1
Sale of common shares, net of underwriting fees and offering costs	9,093,147			91			169,280			-		169,371
Repurchase of common shares	(100,000	)		(1	)		-			-		(1	)
Issuance of restricted common shares	250,414			2			(2	)		-		-
Issuance of unrestricted common shares	6,252			-			118			-		118
Amortization of deferred compensation	-			-			711			-		711
Net income	-			-			-			66		66
Balances at June 30, 2010	9,349,813		$	93		$	170,107		$	66	$	170,266

The accompanying notes are an integral part of these financial statements.

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CHESAPEAKE LODGING TRUST

CONSOLIDATED STATEMENT OF CASH FLOWS

(in thousands)

(unaudited)

	Six Months Ended June 30, 2010
Cash flows from operating activities:
Net income	$	66
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		952
Intangible asset amortization		152
Share-based compensation		829
Changes in assets and liabilities:
Accounts receivable, net		(1,976	)
Prepaid expenses and other assets		(91	)
Accounts payable and accrued expenses		3,837
Net cash provided by operating activities		3,769
Cash flows from investing activities:
Acquisition of hotel properties, net of cash acquired		(159,007	)
Deposit on hotel property acquisition		(750	)
Improvements and additions to hotel properties		(1,497	)
Change in restricted cash		(438	)
Net cash used in investing activities		(161,692	)
Cash flows from financing activities:
Proceeds from sale of common shares, net of underwriting fees		171,131
Payment of offering costs related to sale of common shares		(1,644	)
Repurchase of common shares		(1	)
Repayment of related-party loan		(249	)
Deposit on loan application		(50	)
Payment of deferred financing costs		(127	)
Net cash provided by financing activities		169,060
Net increase in cash		11,137
Cash and cash equivalents, beginning of period		23
Cash and cash equivalents, end of period	$	11,160

The accompanying notes are an integral part of these financial statements.

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CHESAPEAKE LODGING TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

1. Organization and Description of Business

Chesapeake Lodging Trust (the “Company”) is a self-advised real estate investment trust (“REIT”) that was organized in the state of Maryland on June 12, 2009. The Company is focused on investments primarily in upper-upscale hotel properties in major business, airport and convention markets and, on a selective basis, premium select-service hotel properties in urban settings or unique locations in the United States of America.

On January 27, 2010, the Company completed its initial public offering (“IPO”) and sold 7,500,000 common shares, resulting in net proceeds (after deducting initial underwriting fees and offering costs) of approximately $146.7 million. Concurrent with the IPO, the Company sold in private placement transactions an aggregate of 1,507,293 common shares, resulting in net proceeds of approximately $28.5 million. On February 24, 2010, the Company sold an additional 85,854 common shares as a result of the exercise of the underwriters’ over-allotment option, resulting in net proceeds (after deducting initial underwriting fees) of approximately $1.7 million. On May 21, 2010, the Company paid an additional $7.6 million in deferred underwriting fees as a result of satisfying the capital deployment hurdle set forth in its agreement with the underwriters of the IPO. The total net proceeds (after deducting initial and deferred underwriting fees and offering costs) generated from the IPO, the private placement transactions, and the exercise of the underwriters’ over-allotment option were approximately $169.4 million.

On March 18, 2010, the Company acquired its first hotel property, the Hyatt Regency Boston hotel located in Boston, Massachusetts, for approximately $113.1 million. On June 1, 2010, the Company acquired its second hotel property, the Hilton Checkers Los Angeles hotel located in Los Angeles, California, for approximately $46.0 million. Subsequent to June 30, 2010, the Company acquired the Courtyard Anaheim at Disneyland Resort hotel located in Anaheim, California for approximately $25.1 million and the Boston Marriott Newton hotel located in Newton, Massachusetts for approximately $77.2 million.

Substantially all of the Company’s assets are held by, and all of its operations are conducted through, Chesapeake Lodging, L.P., a Delaware limited partnership, which is wholly owned by the Company (the “Operating Partnership”). For the Company to qualify as a REIT, it cannot operate hotels. Therefore, the Operating Partnership leases its hotels to CHSP TRS LLC (“CHSP TRS”), which is a wholly owned subsidiary of the Operating Partnership. CHSP TRS then engages hotel management companies to operate the hotels pursuant to management agreements. CHSP TRS is treated as a taxable REIT subsidiary for federal income tax purposes.

2. Summary of Significant Accounting Policies

Basis of Presentation—The Company had no operations prior to the completion of its IPO on January 27, 2010. The consolidated financial statements presented herein include all of the accounts of Chesapeake Lodging Trust and its subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.

The information in these consolidated financial statements is unaudited but, in the opinion of management, reflects all adjustments necessary for a fair presentation of the results for the periods covered. All such adjustments are of a normal, recurring nature unless disclosed otherwise. These consolidated financial statements, including notes, have been prepared in accordance with the applicable rules of the Securities and Exchange Commission (“SEC”) and do not include all of the information and disclosures required by U.S. generally accepted accounting principles (“GAAP”) for complete financial statements.

Cash and Cash Equivalents—The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents.

Restricted Cash—Restricted cash includes reserves held in escrow for normal replacements of furniture, fixtures and equipment, pursuant to certain requirements in the Company’s hotel management agreements.

Investments in Hotel Properties—The Company allocates the purchase prices of hotel properties acquired based on the fair value of the acquired property, furniture, fixtures and equipment, and identifiable intangible assets and the fair value of the liabilities assumed. In making estimates of fair value for purposes of allocating the purchase price, the Company utilizes a number of sources of information that are obtained in connection with the acquisition of a hotel property, including cost segregation studies and valuations performed by independent third parties. The Company also considers information obtained about each hotel property as a result of its pre-acquisition due diligence in estimating the fair value of the tangible and intangible assets acquired. Hotel property acquisition costs, such as transfer taxes, title insurance, environmental and property condition reviews, and legal and accounting fees, are expensed in the period incurred.

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Property and equipment are depreciated using the straight-line method over the estimated useful lives of the assets, generally 15 to 40 years for buildings and building improvements and three to ten years for furniture, fixtures and equipment. Replacements and improvements at the hotel properties are capitalized, while repairs and maintenance are expensed as incurred. Upon the sale or retirement of property and equipment, the cost and related accumulated depreciation are removed from the Company’s accounts and any resulting gain or loss is recognized in the consolidated statements of operations.

Intangible assets are recorded on non-market contracts, including air rights and lease, management and franchise agreements, assumed as part of the acquisition of certain hotel properties. Above-market and below-market contract values are based on the present value of the difference between contractual amounts to be paid pursuant to the contracts acquired and the Company’s estimate of the fair market contract rates for corresponding contracts measured over a period equal to the remaining non-cancelable term of the contracts acquired. Contracts acquired which are at market do not have significant value. Intangible assets are amortized using the straight-line method over the remaining non-cancelable term of the related contracts.

The Company reviews its hotel properties for impairment whenever events or changes in circumstances indicate that the carrying values of the hotel properties may not be recoverable. Events or circumstances that may cause a review include, but are not limited to, adverse changes in the demand for lodging at the properties due to declining national or local economic conditions and/or new hotel construction in markets where the hotels are located. When such conditions exist, management performs an analysis to determine if the estimated undiscounted future cash flows from operations and the proceeds from the ultimate disposition of a hotel property exceed its carrying value. If the estimated undiscounted future cash flows are less than the carrying amount of the asset, an adjustment to reduce the carrying amount to the related hotel property’s estimated fair market value is recorded and an impairment loss is recognized. No impairment losses have been recognized for the three and six months ended June 30, 2010.

The Company classifies a hotel property as held for sale in the period in which it has made the decision to dispose of the hotel property, a binding agreement to purchase the property has been signed under which the buyer has committed a significant amount of nonrefundable cash, and no significant financing contingencies exist which could cause the transaction not to be completed in a timely manner. If these criteria are met, depreciation and amortization of the hotel property will cease and an impairment loss will be recognized if the fair value of the hotel property, less the costs to sell, is lower than the carrying amount of the hotel property. The Company will classify the loss, together with the related operating results, as discontinued operations in the consolidated statements of operations and classify the assets and related liabilities as held for sale in the consolidated balance sheet. As of June 30, 2010, the Company had no assets held for sale or liabilities related to assets held for sale.

Revenue Recognition—Revenues from operations of the hotels are recognized when the services are provided. Revenues consist of room sales, food and beverage sales, and other hotel department revenues, such as parking, telephone, and gift shop sales.

Income Taxes—The Company intends to elect to be taxed as a REIT under Sections 856 through 860 of the Internal Revenue Code. As a REIT, the Company generally will not be subject to federal income tax on that portion of its net income (loss) that does not relate to CHSP TRS, the Company’s wholly owned taxable REIT subsidiary, and that is currently distributed to its shareholders. CHSP TRS, which leases the Company’s hotels from the Operating Partnership, is subject to federal and state income taxes.

The Company accounts for income taxes using the asset and liability method under which deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Valuation allowances are provided if based upon the weight of the available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized.

Earnings Per Share—Basic net income (loss) per share is calculated by dividing net income (loss), less dividends on unvested restricted common shares, by the weighted-average number of common shares outstanding during the period. Diluted net income (loss) per share is calculated by dividing net income (loss), less dividends on unvested restricted common shares, by the weighted-average number of common shares outstanding, plus other dilutive securities, such as unvested restricted common shares, during the period.

Share-Based Compensation—From time-to-time, the Company grants restricted share awards to employees. To-date, the Company has granted two types of restricted share awards: (1) awards that vest solely on continued employment (time-based awards) and (2) awards that vest based on the Company achieving specified levels of relative total shareholder return and continued employment (performance-based awards). The Company measures share-based compensation expense for the restricted share awards based on the fair value of the awards on the date of grant. The fair value of time-based awards is determined based on the closing price of the Company’s common shares on the measurement date, which is generally the date of grant. The fair value of performance-based awards is determined using a Monte Carlo simulation. For time-based awards, share-based compensation expense is recognized on a straight-line basis over the life of the entire award. For performance-based awards, share-based compensation expense is recognized over the requisite service period for each award. No share-based compensation expense is recognized for awards for which employees do not render the requisite service.

8

Comprehensive Income (Loss)—Comprehensive income (loss), as defined, includes all changes in shareholders’ equity during a period from non-owner sources. The Company does not have any items of comprehensive income (loss) other than net income (loss).

Segment Information—The Company has determined that its business is conducted in one reportable segment, hotel ownership.

Use of Estimates—The preparation of the consolidated financial statements in conformity with U.S. GAAP 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 consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

3. Acquisition of Hotel Properties

On March 18, 2010, the Company acquired the 498-room Hyatt Regency Boston hotel located in Boston, Massachusetts for approximately $113.1 million. The effective date of the Hyatt Regency Boston hotel acquisition was March 1, 2010. As part of the acquisition, the Company acquired an air rights contract which expires on September 11, 2079 and that requires no payments through maturity. The Company recorded the fair value of the air rights contract as an intangible asset in the consolidated balance sheet and is amortizing the asset using the straight-line method over the term of the contract. The Company entered into a long-term agreement with Hyatt Corporation to continue to operate the hotel under the Hyatt Regency flag.

On June 1, 2010, the Company acquired the 188-room Hilton Checkers Los Angeles hotel located in Los Angeles, California for approximately $46.0 million. The Company entered into an agreement with Crestline Hotels & Resorts, Inc. to operate the hotel under the Hilton flag.

The preliminary allocation of the purchase prices to the acquired assets and liabilities based on their fair values was as follows (in thousands):

Land	$	9,010
Buildings and improvements		104,172
Furniture, fixtures and equipment		8,930
Intangible asset		36,105
Cash		89
Accounts receivable, net		1,157
Prepaid expenses and other assets		667
Accounts payable and accrued expenses		(1,034	)
Net assets acquired	$	159,096

The following pro forma financial information presents the results of operations of the Company for the three and six months ended June 30, 2010 and 2009 as if the Hyatt Regency Boston hotel acquisition and the Hilton Checkers Los Angeles hotel acquisition had both taken place on January 1, 2009. Since the Company commenced operations on January 27, 2010 upon completion of the IPO, pro forma adjustments have been included for corporate general and administrative expenses and income taxes for the three months ended June 30, 2009 and the six months ended June 30, 2010 and 2009. The pro forma results have been prepared for comparative purposes only and do not purport to be indicative of the results of operations that would have actually occurred had both transactions taken place on January 1, 2009, or of future results of operations (in thousands, except per share data).

	Three Months Ended June 30,				Six Months Ended June 30,
	2010		2009		2010		2009
Total revenue	$	13,773	$	12,614	$	22,870	$	21,565
Total hotel operating expenses		8,779		8,484		16,382		16,288
Total operating expenses		11,727		11,421		22,131		22,999
Operating income (loss)		2,046		1,193		739		(1,434	)
Net income (loss)		2,060		1,110		828		(1,540	)
Net income (loss) per common share:
Basic		.23		.12		.09		(.17	)
Diluted		.23		.12		.09		(.17	)

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4. Property and Equipment

Property and equipment as of June 30, 2010 consisted of the following (in thousands):

	June 30, 2010
Land	$	9,010
Buildings and improvements		104,212
Furniture, fixtures and equipment		9,054
Construction-in-progress		1,333
		123,609
Less: accumulated depreciation and amortization		(952	)
Property and equipment, net	$	122,657

5. Earnings Per Share

The following is a reconciliation of the amounts used in calculating basic and diluted net income per share (in thousands, except share and per share data):

	Three Months Ended June 30, 2010		Six Months Ended June 30, 2010
Numerator:
Net income	$	1,367	$	66
Less: dividends on unvested restricted common shares		—		—
Net income after dividends on unvested restricted common shares	$	1,367	$	66
Denominator:
Weighted-average number of common shares outstanding—basic		9,098,930		9,083,306
Effect of dilutive securities:
Unvested restricted common shares		12,667		11,585
Weighted-average number of common shares outstanding—diluted		9,111,597		9,094,891
Earnings per share:
Basic	$	.15	$	.01
Diluted	$	.15	$	.01

6. Shareholders’ Equity

Common Shares—The Company is authorized to issue up to 400,000,000 common shares, $.01 par value per share. Each outstanding common share entitles the holder to one vote on all matters submitted to a vote of shareholders. Holders of the Company’s common shares are entitled to receive distributions when authorized by the Company’s board of trustees out of assets legally available for the payment of distributions.

On January 27, 2010, the Company completed its IPO and sold 7,500,000 common shares at a price of $20 per share, resulting in gross proceeds of $150 million and net proceeds (after deducting initial underwriting fees and offering costs) of approximately $146.7 million. Concurrent with the IPO, the Company sold in third-party private placement transactions an aggregate of 1,357,293 common shares at a price per share equal to the IPO price, less an amount equal to the initial and deferred underwriting fees of $1.20 per share. The Company also sold in private placement transactions to its non-executive chairman and certain executives an aggregate of 150,000 common shares at a price per share equal to the IPO price. The proceeds generated from the private placement transactions were approximately $28.5 million. On February 24, 2010, the Company sold an additional 85,854 common shares at a price of $19.80 per share, net of the initial underwriting fee, as a result of the exercise of the underwriters’ over-allotment option, resulting in additional net proceeds of approximately $1.7 million. On May 21, 2010, the Company paid an additional $7.6 million in deferred underwriting fees as a result of satisfying the capital deployment hurdle set forth in its agreement with the underwriters of the IPO. The total net proceeds (after deducting initial and deferred underwriting fees and offering costs) generated from the IPO, the private placement transactions, and the exercise of the underwriters’ over-allotment option were approximately $169.4 million.

For the three and six months ended June 30, 2010, the Company issued 474 and 256,666 restricted and unrestricted common shares, respectively, to its employees and trustees. As of June 30, 2010, the Company had 9,349,813 common shares outstanding.

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Preferred Shares—The Company is authorized to issue up to 100,000,000 preferred shares, $.01 par value per share. The Company’s board of trustees is required to set for each class or series of preferred shares the terms, preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends or other distributions, qualifications, and terms or conditions of redemption.

7. Equity Plan

In January 2010, the Company established the Chesapeake Lodging Trust Equity Plan (the “Plan”), which provides for the issuance of equity-based awards, including restricted shares, unrestricted shares, share options, share appreciation rights (SARs), and other awards based on the Company’s common shares. Employees and trustees of the Company and other persons that provide services to the Company are eligible to participate in the Plan. The compensation committee of the board of trustees administers the Plan and determines the number of awards to be granted, the vesting period, and the exercise price, if any.

The Company has reserved 454,657 common shares for issuance under the Plan. Shares that are issued under the Plan to any person pursuant to an award are counted against this limit as one share for every one share granted. If any shares covered by an award are not purchased or are forfeited, if an award is settled in cash or if an award otherwise terminates without delivery of any shares, then the number of common shares counted against the aggregate number of shares available under the Plan with respect to the award will, to the extent of any such forfeiture or termination, again be available for making awards under the Plan.

The Company will make appropriate adjustments in outstanding awards and the number of shares available for issuance under the Plan, including the individual limitations on awards, to reflect share dividends, share splits, spin-offs and other similar events. While the compensation committee can terminate or amend the Plan at any time, no amendment can adversely impair the rights of grantees with respect to outstanding awards. In addition, an amendment will be contingent on approval of the Company’s common shareholders to the extent required by law or if the amendment would materially increase the benefits accruing to participants under the Plan, materially increase the aggregate number of shares that can be issued under the Plan, or materially modify the requirements as to eligibility for participation in the Plan. Unless terminated earlier, the Plan will terminate in January 2020, but will continue to govern unexpired awards.

For the six months ended June 30, 2010, the Company granted 250,414 restricted common shares to certain employees. Two types of shares were granted: (1) 212,044 shares that vest solely on continued employment (time-based awards) and (2) 38,370 shares that vest based on the Company achieving specified levels of relative total shareholder return and continued employment (performance-based awards). The time-based awards are eligible to vest at the rate of one-third of the number of restricted shares granted commencing on the first anniversary of their issuance. The performance-based awards are eligible to vest at the rate of one-third of the number of restricted shares granted commencing on December 31, 2010 and each year thereafter. Additional vesting of performance-based awards can also occur at December 31, 2012 based on the cumulative level of relative total shareholder return during the entire performance measurement period. Dividends on the performance-based awards will accrue, but will not be paid unless the related shares vest. The fair value of the performance-based awards was determined using a Monte Carlo simulation with the following assumptions: volatility of 79.42%; an expected term equal to the requisite service period for the awards; and a risk-free interest rate of 1.45%.

As of June 30, 2010, there was approximately $3.9 million of unrecognized share-based compensation expense related to restricted common shares. The unrecognized share-based compensation expense is expected to be recognized over a weighted-average period of 2.5 years. The following is a summary of the Company’s restricted common shares for the six months ended June 30, 2010:

	Number of Shares	Weighted-Average Grant-Date Fair Value
Restricted common shares as of December 31, 2009	—		—
Granted	250,414	$	18.50
Vested	—		—
Forfeited	—		—
Restricted common shares as of June 30, 2010	250,414	$	18.50

For the six months ended June 30, 2010, the Company granted 6,252 unrestricted common shares to the Company’s trustees, which vested immediately. As of June 30, 2010, subject to increases resulting from the forfeiture of currently outstanding awards, 197,991 common shares were reserved and available for future issuances under the Plan.

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8. Related-Party Transactions

On January 27, 2010, at the time of the closing of the IPO, the Company repaid a $249 thousand loan from certain executives that had been made in 2009 to fund certain offering costs of the IPO. At the same time, the Company repurchased from those same executives 100,000 common shares issued in connection with the Company’s initial capitalization for an aggregate price of $1 thousand, the same price the executives paid for the shares.

9. Commitments and Contingencies

Management Agreements—The Company’s hotel properties operate pursuant to management agreements with two management companies, Hyatt Corporation and Crestline Hotels & Resorts, Inc. Each management company receives a base management fee generally between 2% and 4% of hotel revenues. The management companies are also eligible to receive an incentive management fee if hotel operating income, as defined in the management agreements, exceeds certain performance thresholds. The incentive management fee is generally calculated as a percentage of hotel operating income after the Company has received a priority return on its investment in the hotel.

Franchise Agreement—The Hilton Checkers Los Angeles hotel operates pursuant to a franchise agreement with Hilton Worldwide. Pursuant to the franchise agreement, the Company pays a royalty fee of 4% of room revenues and 1% of food and beverage revenues, plus additional fees for marketing, central reservation systems, and other franchisor costs that amount to between 4% and 5% of room revenues. The Hyatt Regency Boston hotel is managed by Hyatt Corporation pursuant to a management agreement that allows the hotel property to operate under the Hyatt Regency brand.

Property Improvement Reserves—Pursuant to its management agreements, the Company is required to establish a property improvement reserve for each hotel to cover the cost of replacing furniture, fixtures and equipment. Contributions to the property improvement reserve are based on a percentage of gross revenues at each hotel. The Company is generally required to contribute between 3% and 5% of gross revenues over the term of the agreements.

Litigation—The Company is not involved in any material litigation nor, to its knowledge, is any material litigation threatened against the Company.

10. Subsequent Events

On July 30, 2010, the Company entered into a credit agreement to obtain a $115 million, two-year secured revolving credit facility with a syndicate of banks. The facility is led by Wells Fargo Bank, N.A., as administrative agent, and JPMorgan Chase Bank, N.A., as syndication agent. The amount that the Company can borrow under the revolving credit facility is based on the value of the Company’s hotel properties included in the borrowing base, as defined in the credit agreement. Borrowings under the revolving credit facility bear interest equal to LIBOR plus 3.75%, subject to a LIBOR floor of 2.00%. The credit agreement contains standard financial covenants, including certain leverage ratios, coverage ratios, and a minimum tangible net worth requirement. Subject to certain conditions, the facility allows for a one-year extension.

Also on July 30, 2010, the Company acquired the 153-room Courtyard Anaheim at Disneyland Resort hotel in Anaheim, California for approximately $25.1 million and the 430-room Boston Marriott Newton hotel in Newton, Massachusetts for approximately $77.2 million. The Company entered into an agreement with Tarsadia Hotels to operate the Courtyard Anaheim at Disneyland Resort hotel under the Courtyard by Marriott flag and entered into an agreement with TPG Hospitality, Inc. to operate the Boston Marriott Newton hotel under the Marriott flag. The Courtyard Anaheim at Disneyland Resort hotel and Boston Marriott Newton hotel acquisitions were funded by a $105 million borrowing under the Company’s revolving credit facility.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking Statements

This report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, and as such may involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. Forward-looking statements, which are based on certain assumptions and describe our future plans, strategies and expectations, are generally identified by our use of words, such as “intend,” “plan,” “may,” “should,” “will,” “project,” “estimate,” “anticipate,” “believe,” “expect,” “continue,” “potential,” “opportunity,” and

12

similar expressions, whether in the negative or affirmative. We cannot guarantee that we actually will achieve these plans, intentions or expectations. All statements regarding our expected financial position, business and financing plans are forward-looking statements. Factors which could have a material adverse effect on our operations and future prospects include, but are not limited to:

• U.S. economic conditions generally and the real estate market and the lodging industry specifically;

• management and performance of our hotels;

• our plans for renovation of our hotels;

• our financing plans;

• supply and demand for hotel rooms in our current and proposed market areas;

• our ability to acquire additional properties and the risk that potential acquisitions may not perform in accordance with expectations;

• legislative/regulatory changes, including changes to laws governing taxation of real estate investment trusts; and

• our competition.

These risks and uncertainties, together with the information contained in our Form S-11 Registration Statement (SEC File No. 333-162184) under the caption “Risk Factors,” should be considered in evaluating any forward-looking statement contained in this report or incorporated by reference herein. All forward-looking statements speak only as of the date of this report or, in the case of any document incorporated by reference, the date of that document. All subsequent written and oral forward-looking statements attributable to us or any person acting on our behalf are qualified by the cautionary statements in this section. We undertake no obligation to update or publicly release any revisions to forward-looking statements to reflect events, circumstances or changes in expectations after the date of this report, except as required by law.

Overview

The Company was organized as a self-advised REIT in the state of Maryland in June 2009, with a focus on investments in primarily upper-upscale hotels in major business, airport and convention markets and, on a selective basis, premium select-service hotels in urban settings or unique locations in the United States of America. In January 2010, we completed our IPO. In conjunction with the IPO, we sold additional common shares through private placement transactions and through the exercise of the underwriters’ over-allotment option. The total net proceeds (after deducting initial and deferred underwriting fees and offering costs) generated from the IPO, the private placement transactions, and the exercise of the underwriters’ over-allotment option was approximately $169.4 million.

As of the date of this report, we have now invested all of the proceeds from our IPO and private placement transactions through the acquisitions of the following four hotel properties with an aggregate of 1,269 rooms:

Hotel Property	Location	Rooms	Acquisition Date
Hyatt Regency Boston	Boston, MA	498	March 18, 2010
Hilton Checkers Los Angeles	Los Angeles, CA	188	June 1, 2010
Courtyard Anaheim at Disneyland Resort	Anaheim, CA	153	July 30, 2010
Boston Marriott Newton	Newton, MA	430	July 30, 2010

In mid-2008, U.S. lodging demand started to decline as a result of the economic recession which led industry revenue per available room (“RevPAR”) to decline for the year, as reported by Smith Travel Research. Throughout 2009, the decrease in lodging demand accelerated with RevPAR down 16.7% for the year, the largest decline recorded by Smith Travel Research since they began tracking the U.S. lodging industry. Through the first six months of 2010, based on industry reports from Smith Travel Research, fundamentals in the U.S. lodging industry showed trends of improvement with demand for rooms increasing in almost all of the major markets, as general economic indicators began to experience improvement. In the second quarter of 2010, pricing power returned in a

13

few of the major leading markets such as New York, NY, Boston, MA, and Washington, D.C., with gains in average daily rate (“ADR”) for the first time since the economic recession started. With supply of available rooms expected to rise at a significantly slower pace over the next several years than during 2006-2008 and demand for rooms expected to increase significantly as the U.S. economy rebounds, we expect meaningful growth in RevPAR to start in 2011 and to accelerate for several years thereafter.

We believe the Boston, MA market is one of the most compelling lodging markets in the U.S. With limited new supply in the foreseeable future that will compete with our two hotels in the market, and solid demand growth in both transient and group segments, we believe we are positioned for a multi-year period of strong revenue and profit growth. RevPAR for the Boston, MA market was up 17.0% and 13.7% for the three and six months ended June 30, 2010, respectively, as reported by Smith Travel Research. The gain for the six months ended June 30, 2010 was second only to the New York, NY market.

The acquisition environment and deal activity have begun to increase in recent months. While there are numerous sources, much of the deal activity is coming from private sellers either “distressed” or at least “stressed” with their current hotel holdings and underlying capital structure. Many owners have some equity remaining in their hotels, but cannot refinance their existing debt, which in many cases is coming due. As well, these owners may not have the needed capital to reinvest in the hotel and for others, they may have fund life issues with the need to begin returning capital to their investors. In addition, there are public sellers that are selling for strategic reasons, whether it’s a brand company or another REIT. All of these forces are driving much of the current deal activity. We see the bid/ask spread closing in many situations as sellers become more realistic in their expectations given debt coming due or fund life issues and buyers able to pay a little more as industry fundamentals continue to improve. The environment remains competitive; however, we feel strongly that we can continue to acquire hotels and prudently deploy capital. We believe the opportunities today are compelling and will be viewed as significantly discounted entry points as the lodging cycle continues to grow through a multi-year recovery period.

Results of Operations

Three months ended June 30, 2010

Results of operations for the three months ended June 30, 2010 include the operating activity of the Hyatt Regency Boston hotel for the full three months and the operating activity of the Hilton Checkers Los Angeles hotel for 30 days (acquired on June 1, 2010), and are not indicative of the results we expect when our investment strategy has been fully implemented.

Revenues – Total revenue was $11.8 million, which includes rooms revenue of $8.8 million, food and beverage revenue of $2.7 million, and other revenue of $0.3 million.

Hotel operating expenses – Hotel operating expenses, excluding depreciation and amortization, were $7.3 million. Direct hotel operating expenses included rooms expense of $1.8 million, food and beverage expense of $1.8 million, and other direct expenses of $0.2 million. Indirect hotel operating expenses, which includes management and franchise fees, real estate taxes, insurance, utilities, repairs and maintenance, advertising and sales, and general and administrative expenses, were $3.4 million.

Depreciation and amortization – Depreciation and amortization expense was $0.7 million.

Intangible asset amortization – Intangible asset amortization expense relating to an air rights contract associated with the Hyatt Regency Boston hotel was $0.1 million.

Corporate general and administrative – Total corporate general and administrative expenses were $2.3 million, which included non-cash share-based compensation expense of $0.4 million and hotel property acquisition costs of $0.5 million.

Interest income – Interest income on cash and cash equivalents was $36 thousand.

Income tax expense – Income tax expense was $12 thousand, which resulted from taxable income generated by our TRS during the period.

Six months ended June 30, 2010

Results of operations for the six months ended June 30, 2010 include the operating activity of the Hyatt Regency Boston hotel for 122 days (the effective date of the acquisition was March 1, 2010) and the operating activity of the Hilton Checkers Los Angeles hotel for 30 days (acquired on June 1, 2010), and are not indicative of the results we expect when our investment strategy has been fully implemented.

Revenues – Total revenue was $14.2 million, which includes rooms revenue of $10.6 million, food and beverage revenue of $3.2 million, and other revenue of $0.4 million.

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Hotel operating expenses – Hotel operating expenses, excluding depreciation and amortization, were $9.1 million. Direct hotel operating expenses included rooms expense of $2.3 million, food and beverage expense of $2.2 million, and other direct expenses of $0.2 million. Indirect hotel operating expenses, which includes management and franchise fees, real estate taxes, insurance, utilities, repairs and maintenance, advertising and sales, and general and administrative expenses, were $4.3 million.

Depreciation and amortization – Depreciation and amortization expense was $1.0 million.

Intangible asset amortization – Intangible asset amortization expense relating to an air rights contract associated with the Hyatt Regency Boston hotel was $0.2 million.

Corporate general and administrative – Total corporate general and administrative expenses were $4.1 million, which included non-cash share-based compensation expense of $0.8 million and hotel property acquisition costs of $1.1 million.

Interest income – Interest income on cash and cash equivalents was $0.1 million.

Income tax benefit – Income tax benefit was $32 thousand, which resulted from a taxable loss incurred by our TRS during the period.

Sources and Uses of Cash

For the six months ended June 30, 2010, net cash flows from operating activities were $3.8 million, net cash flows used in investing activities were $161.7 million, of which $113.1 million was used to acquire the Hyatt Regency Boston hotel and $46.0 million was used to acquire the Hilton Checkers Los Angeles hotel, and net cash flows provided by financing activities were $169.1 million, of which $169.4 million were proceeds generated from the IPO, private placement transactions, and the exercise of the underwriters’ over-allotment option, net of underwriting fees and offering costs. As of June 30, 2010, we had cash and cash equivalents of approximately $11.2 million. We currently expect that our operating cash flows will be sufficient to fund our continuing operations and, given that we expect to generate taxable income for the year, we also expect to make a distribution to shareholders, as required to maintain our REIT status, in the second half of 2010.

Liquidity and Capital Resources

We expect our primary source of cash to meet operating requirements, including payment of dividends in accordance with the REIT requirement of the U.S. federal income tax laws, payment of interest on any borrowings and funding of any capital expenditures, will be from our hotels’ results of operations and existing cash and cash equivalent balances. We intend to incur indebtedness to supplement our investment capital and to maintain flexibility to respond to industry conditions and opportunities. We intend to target an overall debt level of 40-50% of the aggregate purchase prices of all our portfolio properties.

On July 30, 2010, we entered into a credit agreement to obtain a $115 million, two-year secured revolving credit facility with a syndicate of banks. Also on July 30, 2010, we made an initial borrowing of $105.0 million under the revolving credit facility to fund the acquisitions of the Courtyard Anaheim at Disneyland Resort hotel for approximately $25.1 million and the Boston Marriott Newton hotel for approximately $77.2 million. As of July 30, 2010, we had approximately $10 million of cash and cash equivalents in addition to $10.0 million of remaining borrowing capacity under our revolving credit facility. The amount that we can borrow under our revolving credit facility is based on the value of our hotel properties included in the borrowing base, as defined in the credit agreement. We intend to invest our remaining cash and cash equivalents and additional borrowing capacity under the revolving credit facility through a new hotel acquisition, although we have not yet identified a particular property for this purpose.

We expect to meet long-term liquidity requirements, such as new hotel property acquisitions and scheduled debt maturities, through additional secured and unsecured borrowings and the issuance of additional equity or debt securities. Our ability to raise funds through the issuance of equity securities depends on, among other things, general market conditions for hotel companies and REITs and market perceptions about us. We will continue to analyze alternate sources of capital in an effort to minimize our capital costs and maximize our financial flexibility.

Capital Expenditures

We maintain each hotel property in good repair and condition and in conformity with applicable laws and regulations and in accordance with the franchisor’s standards and the agreed-upon requirements in our management agreements. The cost of all such routine improvements and alterations will be paid out of property improvement reserves, which will be funded by a portion of each hotel’s gross revenues. Routine capital expenditures will be administered by the management companies. However, we will have approval rights over the capital expenditures as part of the annual budget process.

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From time to time, certain of our hotel properties may be undergoing renovations as a result of our decision to upgrade portions of the hotels, such as guestrooms, meeting space, and/or restaurants, in order to better compete with other hotels in our markets. In addition, often after we acquire a hotel property, we are required to complete a property improvement plan (“PIP”) in order to bring the hotel property up to the respective franchisor’s standards. If permitted by the terms of the management agreement, funding for a renovation will first come from the property improvement reserve. To the extent that the property improvement reserve is not adequate to cover the cost of the renovation, we will fund the remaining portion of the renovation with cash and cash equivalents on hand.

Contractual Obligations

The following table sets forth our contractual obligations as of June 30, 2010, and the effect such obligations are expected to have on our liquidity and cash flow in future periods (in thousands). There were no other material off-balance sheet arrangements at June 30, 2010.

	Payments Due by Period
Contractual Obligations	Total		Less Than One Year		One to Three Years		Three to Five Years		More Than Five Years
Corporate office lease	$	1,541	$	160	$	415	$	440	$	526

Inflation

Operators of hotels, in general, possess the ability to adjust room rates daily to reflect the effects of inflation. However, competitive pressures may limit the ability of our management companies to raise room rates.

Seasonality

Demand in the lodging industry is affected by recurring seasonal patterns. For non-resort properties, demand is generally lower in the winter months due to decreased travel and higher in the spring and summer months during the peak travel season. For resort properties, demand is generally higher in the winter months. We expect that our operations will generally reflect non-resort seasonality patterns. Accordingly, we expect that we will have lower revenue, operating income and cash flow in the first and fourth quarters and higher revenue, operating income and cash flow in the second and third quarters. These general trends are, however, expected to be greatly influenced by overall economic cycles.

Critical Accounting Policies

We believe that the following critical accounting policies affect the most significant judgments and estimates used in the preparation of our consolidated financial statements:

Investments in Hotel Properties—We allocate the purchase prices of hotel properties acquired based on the fair value of the acquired property, furniture, fixtures and equipment, and identifiable intangible assets and the fair value of the liabilities assumed. In making estimates of fair value for purposes of allocating the purchase price, we utilize a number of sources of information that are obtained in connection with the acquisition of a hotel property, including cost segregation studies and valuations performed by independent third parties. We also consider information obtained about each hotel property as a result of our pre-acquisition due diligence in estimating the fair value of the tangible and intangible assets acquired. Hotel property acquisition costs, such as transfer taxes, title insurance, environmental and property condition reviews, and legal and accounting fees, are expensed in the period incurred.

Property and equipment are depreciated using the straight-line method over the estimated useful lives of the assets, generally 15 to 40 years for buildings and building improvements and three to ten years for furniture, fixtures and equipment. Leasehold improvements are amortized over the shorter of the lease term or the useful lives of the related assets. Replacements and improvements at the hotel properties are capitalized, while repairs and maintenance are expensed as incurred. Upon the sale or retirement of a fixed asset, the cost and related accumulated depreciation are removed from our accounts and any resulting gain or loss is recognized in the consolidated statements of operations.

Intangible assets are recorded on non-market contracts, including air rights and lease, management and franchise agreements, assumed as part of the acquisition of certain hotel properties. Above-market and below-market contract values are based on the present value of the difference between contractual amounts to be paid pursuant to the contracts acquired and our estimate of the fair market contract rates for corresponding contracts measured over a period equal to the remaining non-cancelable term of the contracts acquired. Contracts acquired which are at market do not have significant value. Intangible assets are amortized using the straight-line method over the remaining non-cancelable term of the related contracts.

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We review our hotel properties for impairment whenever events or changes in circumstances indicate that the carrying value of the hotel properties may not be recoverable. Events or circumstances that may cause us to perform our review include, but are not limited to, adverse changes in the demand for lodging at our properties due to declining national or local economic conditions and/or new hotel construction in markets where our hotels are located. When such conditions exist, management performs an analysis to determine if the estimated undiscounted future cash flows from operations and the proceeds from the ultimate disposition of an investment in a hotel property exceed the hotel’s carrying value. If the estimated undiscounted future cash flows are less than the carrying amount of the asset, an adjustment to reduce the carrying value to the estimated fair market value is recorded and an impairment loss recognized.

Share-Based Compensation—From time-to-time, we grant restricted share awards to employees. To-date, we have granted two types of restricted share awards: (1) time-based awards and (2) performance-based awards.

We measure share-based compensation expense for the restricted share awards based on the fair value of the awards on the date of grant. The fair value of time-based awards is determined based on the closing trading price of our common shares on the measurement date, which is generally the date of grant. The fair value of performance-based awards is determined using a Monte Carlo simulation performed by a third-party valuation specialist. A Monte Carlo simulation requires the use of a number of assumptions, including historical volatility and correlation of the price of our common shares and the price of the common shares of our peer group, a risk-free rate of return, and an expected term.

For time-based awards, share-based compensation expense is recognized on a straight-line basis over the life of the entire award. For performance-based awards, share-based compensation expense is recognized over the requisite service period for each award. For both time-based awards and performance-based awards, once the total amount of share-based compensation expense is determined on the date of the grant, no adjustments are made to the amount recognized each period. No share-based compensation expense is recognized for awards for which employees do not render the requisite service.

Revenue Recognition—Hotel revenues, including room, food and beverage, and other hotel revenues, are recognized as the related services are provided.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

We earn interest income from cash and cash equivalent balances. Considering our current cash and cash equivalents, if interest rates increase or decrease by 0.1%, our interest income will increase or decrease by less than $0.1 million, respectively.

As of June 30, 2010, we had no outstanding long-term debt. Subsequent to June 30, 2010, we obtained a $115 million revolving credit facility discussed under “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations–Liquidity and Capital Resources,” and have borrowed $105 million under it. Given that borrowings under our credit facility bear interest equal to LIBOR plus 3.75%, our future income, cash flows and fair values relevant to financial instruments will be dependent upon changes in LIBOR. Market risk refers to the risk of loss from adverse changes in market prices and interest rates.

Item 4. Controls and Procedures

The Chief Executive Officer and Chief Financial Officer of the Company have evaluated the effectiveness of the 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 required by paragraph (b) of Rules 13a-15 and 15d-15 under the Exchange Act, and have concluded that as of the end of the period covered by this report, the Company’s disclosure controls and procedures were effective at a reasonable assurance level.

There was no change in the Company’s internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Rules 13a-15 and 15d-15 under the Exchange Act during the Company’s most recent fiscal quarter that materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

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PART II

Item 1. Legal Proceedings

We are not involved in any material litigation nor, to our knowledge, is any material litigation threatened against us.

Item 1A. Risk Factors

There have been no material changes from the risk factors disclosed under the caption “Risk Factors” in the final prospectus forming a part of the Company’s Form S-11 Registration Statement (SEC File No. 333-162184), which was filed January 22, 2010 pursuant to Rule 424(b)(4) and is accessible on the SEC’s website at www.sec.gov.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Use of Proceeds from Registered Securities

On January 21, 2010, a Form S-11 Registration Statement (SEC File No. 333-162184) relating to our IPO was declared effective by the SEC. The managing underwriters of the IPO were J.P. Morgan Securities Inc. and Deutsche Bank Securities Inc. The offering was closed on January 27, 2010. All 7,500,000 common shares registered under the registration statement were sold at a price to the public of $20 per share. On February 24, 2010, we sold an additional 85,854 common shares as a result of the exercise of an over-allotment option that we granted to the underwriters. The aggregate gross proceeds from the common shares sold by us were $151.7 million. The aggregate net proceeds to us from the offering were approximately $140.9 million after deducting approximately $9.1 million in initial and deferred underwriting fees and approximately $1.8 million in other expenses incurred in connection with the offering. All of the common shares were sold by us and there were no selling shareholders in the offering.

No offering expenses were paid directly or indirectly to any of our trustees or officers (or their associates) or persons owning 10% or more of any class of our equity securities or to any other affiliates.

We used $250 thousand of the net proceeds to repay a loan to certain executives and to repurchase 100,000 common shares from those same executives that were issued in connection with our initial capitalization, approximately $113.1 million of the net proceeds to acquire the Hyatt Regency Boston hotel on March 18, 2010, and the remaining net proceeds to partially fund the $46.0 million acquisition of the Hilton Checkers Los Angeles hotel on June 1, 2010. As of the date of this report, we have now invested all of the proceeds from our IPO.

Item 3. Defaults Upon Senior Securities

Not applicable.

Item 4. (Removed and Reserved)

Item 5. Other Information

None.

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Item 6. Exhibits

The following exhibits are filed as part of this Form 10-Q:

Exhibit Number	Description of Exhibit
10.1	Purchase and Sale Agreement by and between Kalpana, LLC and Chesapeake Lodging, L.P., dated as of April 14, 2010
10.1.1	First Amendment to the Purchase and Sale Agreement by and between Kalpana, LLC and Chesapeake Lodging, L.P., dated as of May 4, 2010
10.1.2	Second Amendment to the Purchase and Sale Agreement by and between Kalpana, LLC and Chesapeake Lodging, L.P., dated as of May 17, 2010
10.2	Purchase and Sale Agreement by and between 535 Grand Avenue, LLC and Chesapeake Lodging, L.P., dated as of April 14, 2010
10.2.1	First Amendment to the Purchase and Sale Agreement by and between 535 Grand Avenue, LLC and Chesapeake Lodging, L.P., dated as of May 4, 2010
10.3	Purchase and Sale Agreement by and between Mantra, LLC and Chesapeake Lodging, L.P., dated as of April 14, 2010
10.3.1	First Amendment to the Purchase and Sale Agreement by and between Mantra, LLC and Chesapeake Lodging, L.P., dated as of May 4, 2010
10.3.2	Second Amendment to the Purchase and Sale Agreement by and between Mantra, LLC and Chesapeake Lodging, L.P., dated as of July 19, 2010
10.4	Purchase and Sale Agreement by and between CR/TPG Newton Hotel LLC and Chesapeake Lodging, L.P., dated as of June 30, 2010
31.1	Rule 13a-14(a)/15d-14(a) Certification of President and Chief Executive Officer
31.2	Rule 13a-14(a)/15d-14(a) Certification of Executive Vice President, Chief Financial Officer and Treasurer
32.1	Section 1350 Certification of President and Chief Executive Officer
32.2	Section 1350 Certification of Executive Vice President, Chief Financial Officer and Treasurer

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SIGNATURE

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.

	CHESAPEAKE LODGING TRUST
Date: August 13, 2010	By:	/S/    DOUGLAS W. VICARI
		Douglas W. Vicari
		Executive Vice President, Chief Financial Officer and Treasurer (Principal Financial Officer)
		/S/    GRAHAM J. WOOTTEN
		Graham J. Wootten
		Senior Vice President and Chief Accounting Officer (Principal Accounting Officer)

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EX-10.1

Exhibit 10.1

PURCHASE AND SALE AGREEMENT AND ESCROW INSTRUCTIONS

between

KALPANA, LLC

as Seller

and

CHESAPEAKE LODGING, L.P.

as Purchaser

Hilton Checkers – Leasehold Estate

TABLE OF CONTENTS

ARTICLE	PAGE
I. DEFINITIONS	1
II. SALE AND PURCHASE OF PROPERTY	7
2.1             Purchase of Property	7
2.2             Purchase Price and Terms of Payment	7
2.2.1         Earnest Money Deposit	7
2.2.2         Balance of Purchase Price	7
2.3             Assumption of the Contracts	8
2.4             Franchise Agreement	8
2.5             Liquor Licenses, Alcoholic Beverages, Food Inventory and Restaurant Equipment	8
III. ESCROW	8
3.1             Opening of Escrow	8
3.2             Intentionally Omitted	8
3.3             Deposit of Funds	8
IV. CONDITION OF TITLE	9
4.1            Title Commitment	9
4.2            Title to the Leasehold Estate and the Improvements	9
4.3             Inspection and Due Diligence Review	11
4.4             Notice of Non-Satisfaction	13
4.5             Condition of the Property.	14
V. CLOSING	20
5.1             Closing Date	20
5.2             Action Prior to the Close of Escrow by Seller	21
5.3             Action Prior to the Close of Escrow by Purchaser	22
5.4             Recording of Deed and Assignment of Ground Lease	22
5.5             Prorations.	22
5.5.1         Taxes	22
5.5.2         Advance Reservations	23
5.5.3         Utility Service	23
5.5.4         Revenue From Operations	23
5.5.5         Accounts Payable and Operating Expenses	23
5.5.6         Miscellaneous Permits and Taxes	24
5.5.7         The Ground Lease and the Contracts	24
5.5.8         Other Income	24
5.5.9         Other Expenses	24
5.5.10       Gift Shop Inventory	24

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5.5.11       House Banks	24
5.5.12       Delayed Adjustments	24
5.5.13       Proration Allocation	25
5.5.14       Survival	25
5.6            Guest Property	25
5.6.1         Safe Deposit Boxes	25
5.6.2         Baggage Inventory	25
5.7             Closing Costs	25
5.8             California Real Estate Withholding	25
5.9             Distribution of Funds and Documents Following Close of Escrow	26
5.10          Possession	27
VI. ADDITIONAL COVENANTS AND INDEMNITIES	27
6.1             Purchaser’s Covenants.	27
6.1.1         Indemnification	27
6.1.2         Seller’s Accounts Receivable	27
6.2             Seller’s Covenants.	28
6.2.1         Indemnification	28
6.2.2         Termination of the Franchise Agreement and the Hotel Management Agreement	28
6.2.3         Operation of the Hotel	28
6.3             Employee Matters	28
6.4            No Obligations of Escrow Holder	29
VII. REPRESENTATIONS AND WARRANTIES	29
7.1            By Purchaser	29
7.1.1          Organization and Standing	29
7.1.2          Due Authorization	30
7.1.3          Lack of Conflict	30
7.1.4          Solvency/Bankruptcy	30
7.2            By Seller	30
7.2.1          Organization and Standing	30
7.2.2          Due Authorization	30
7.2.3          Lack of Conflict	31
7.2.4          Non-Foreign Seller	31
7.2.5          Solvency/Bankruptcy	31
7.2.6          Ground Lease	31
7.2.7          Tenant Leases	31
7.2.8          Existing Management Agreement	31
7.2.9          Employees	31
7.2.10        Contracts	31
7.2.11        Condemnation Proceedings	31
VIII. CONDITIONS PRECEDENT TO CLOSE OF ESCROW	32

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8.1             Conditions to Seller’s Obligations	32
8.2             Conditions to Purchaser’s Obligations	33
8.3             Failure of Conditions to Close of Escrow	33
IX. LIQUIDATED DAMAGES	33
9.1             Default by Purchaser	33
9.2             Default by Seller	34
X. BROKERS	35
XI. NOTICES	35
XII. MISCELLANEOUS	37
12.1        Governing Law	37
12.2        Professional Fees and Costs	37
12.3        Exhibits and Schedules a Part of This Agreement	37
12.4        Executed Counterparts	37
12.5         Assignment	37
12.6        IRS - Form 1099-S	38
12.7        Successors and Assigns	38
12.8        Time is of the Essence	38
12.9        Entire Agreement	38
12.10      Further Assurances	38
12.11      Waiver	38
12.12      Headings	39
12.13      Risk of Loss.	39
12.13.1    Risk of Loss	39
12.13.2    Material Loss	39
12.13.3    Nonmaterial Loss	40
12.13.4    Eminent Domain	40
12.14        Construction of Agreement	40
12.15        Tax Deferred Exchange	41
12.16        No Public Disclosure	41
12.17        Covenants, Representations and Warranties	42
12.18         Confidentiality	42
12.19        Limitation on Liability	43
12.20        No Third-Party Beneficiaries	43
12.21        Facsimile Signatures	44
12.22         Exclusivity	44

iii

PURCHASE AND SALE AGREEMENT AND ESCROW INSTRUCTIONS

This PURCHASE AND SALE AGREEMENT AND ESCROW INSTRUCTIONS (the “Agreement”) is dated this          day of April, 2010, and is made by and between KALPANA, LLC, a California limited liability company (“Seller”), and CHESAPEAKE LODGING, L.P., a Delaware limited partnership (“Purchaser”).

RECITALS

A.        Seller is the lessee of certain real property located in the City of Los Angeles, County of Los Angeles, State of California, more specifically located at and commonly known as 535 South Grand Avenue, Los Angeles, California 90071on which are constructed certain improvements in, by, and through which is operated a hotel under the name “Hilton Checkers.”

B.        Subject to the terms and conditions hereof, Seller desires to sell, assign, transfer, convey and deliver to Purchaser, and Purchaser desires to acquire from Seller, all of Seller’s right, title and interest in and to the Property (as defined hereinbelow), together with all rights, benefits, privileges and appurtenances pertaining thereto, for such consideration as is hereinafter set forth.

AGREEMENT

NOW, THEREFORE, for valuable consideration, including the promises, covenants, representations and warranties hereinafter set forth, the receipt and adequacy of which are hereby acknowledged, the parties, intending to be legally and equitably bound, agree as follows.

I.

DEFINITIONS

As used in this Agreement, the following terms have the meanings ascribed to them in this Article I:

“Additional Deposit.”  As set forth in Section 2.2.1 hereof.

“Alcoholic Beverages.”  All unopened wine, beer and other alcoholic beverages located at the Real Property and held for consumption and/or sale in the operation of the Hotel.

“Assignment of Contracts.”  As set forth in Section 5.2(d) hereof.

“Assignment of Intangibles.”  As set forth in Section 5.2(c) hereof.

“Assignment of Ground Lease.”  As set forth in Section 5.2(f) hereof.

“Bill of Sale.”  As set forth in Section 5.2(b) hereof.

“Bookings.”  All contracts and reservations for the use or occupancy of guest rooms, meeting rooms and/or banquet facilities of the Hotel for periods on and after the Closing Date which are in Seller’s Ordinary Course and any and all books, records and contracts related thereto.

“Casualty.”  As set forth in Section 12.13.1 hereof.

“Casualty Notice.”  As set forth in Section 12.13 hereof.

“Casualty Renovation Cost.”  As set forth in Section 12.13 hereof.

“Close of Escrow.”  As set forth in Section 5.1 hereof.

“Closing Date.”  As set forth in Section 5.1 hereof.

“Compensation.”  All salaries and wages which the Employees are entitled to receive at the time in question, together with all employment taxes with respect thereto, including, without limitation, any withholding or employer contributions under applicable law, any (i) bonus or incentive compensation; (ii) accrued and earned vacation days, sick days and personal days; and (iii) any health, welfare and other benefits provided to the Employees under any employee plans, and employer contributions to, and amounts paid or accrued under, the any employee plans or 401(k) plan for the benefit of the Employees.

“Contracts.”  All leases for any furniture, machinery, equipment and other personal property located at the Hotel and used in connection with the ownership and operation of the Hotel and all maintenance, service and supply contracts and all other agreements and contracts used and/or executed in connection with the ownership and/or operation of the Property, all as set forth on Schedule “A” attached hereto (which schedule may be updated as provided in Section 4.3 hereof), together with all other contracts and agreements (including script, gift certificates and similar promotional arrangements not to exceed an aggregate of Thirty Eight Thousand Dollars ($38,000.00) in face value, and the Bookings) entered into by Seller in connection with the ownership and operation of the property in the Ordinary Course after the expiration of the Due Diligence Period consistent with the provisions of Section 6.2.3 hereof, but excluding loan documents evidencing indebtedness for money borrowed by Seller, the Ground Lease, the Franchise Agreement and the Existing Management Agreement.

“Cooperating Party.”  As set forth in Section 12.15 hereof.

“Cut-Off Time.”  As set forth in Section 5.5.4 hereof.

“Deed.”  As set forth in Section 5.2(a) hereof.

“Due Diligence Period.”  As set forth in Section 4.3 hereof.

“Earnest Money Deposit.”  The Initial Deposit, the Additional Deposit, and all interest accrued thereon.

“Employees.”  All employees of Existing Manager who are employed full-time or part-time at the Hotel at the time in question.

“Environmental Damages.”  As set forth in Section 4.5(g) hereof.

“Environmental Requirements.”  As set forth in Section 4.5(h) hereof.

“Escrow.”  As set forth in Section 3.1 hereof.

“Escrow Holder.”  Lawyers Title Insurance Corporation, Attention: Michele Y. Mesh, 4100 Newport Place Dr., Suite 120, Newport Beach, CA 92660, Telephone No. (949) 724-3141, Telecopier No. (714) 459-7217, E-mail address: mmesh@ltic.com.

“Exchangor.”  As set forth in Section 12.15 hereof.

“Excluded Assets.”  The Proprietary Computer Systems, the Excluded Documents, and subject to Section 5.5.11 hereof, cash, cash equivalents, checks and other funds (including, without limitation, till money, house banks, notes, and Seller’s Accounts Receivable), securities and other evidence of indebtedness held at the Hotel as of the Cut-Off Time, and balances on deposit to the credit of Seller with banking institutions, all of which shall be retained by Seller.

“Excluded Documents.”    All (a) financial statements and information, internal memoranda, correspondence, analyses, documents or reports prepared by or for Seller or any affiliate of Seller in connection with this Agreement or otherwise, including, without limitation, tax returns and financial statements of Seller (exclusive of operating statements of the Hotel which shall be provided to Purchaser, records and information necessary to honor the Bookings in accordance with this Agreement, or otherwise relating to the Contracts assumed by Purchaser in accordance with this Agreement), (b) communications between Seller or any affiliate and its attorneys or other agents or representatives, (c) employee personnel files of Seller and the manager of the Hotel unless the Employee consents, in a writing reasonably satisfactory to Seller, to the release or disclosure thereof, (d) appraisals, assessments or other valuations of the Real Property in the possession of Seller, (e) original bills, invoices, receipts and checks relating to expenses incurred prior to the Cut-Off Time (provided that Purchaser shall be entitled to copies of such items), and (f) any confidential or proprietary information of Tarsadia Hotels in Seller’s possession, in each case however embodied.

“Existing Management Agreement.”  That certain Management Agreement dated May 26, 2000 between Seller and Existing Manager.

“Existing Manager.”  Tarsadia Hotels, a California corporation.

“Food Inventory.”  All unopened food, food stuffs, menu stock and non-alcoholic beverages located at the Real Property and held for consumption and/or sale in the operation of the Hotel.

“Franchise Agreement.”  That certain License Agreement dated October 4, 2001 (as amended) between Hilton Inns, Inc.., as franchisor, and Seller, as franchisee, for the Hotel.

“Good Funds.”  A deposit of cash, cashier’s check, certified funds, or confirmed wire transfer of funds.

“Ground Lease.”  That certain Ground Lease dated December 31, 2005, between 535 Grand Avenue, LLC, as the “Landlord”, and Seller, as the “Tenant” for and with respect to the Land.

“Hazardous Materials.”  As set forth in Section 4.5(i) hereof.

“Hotel.”  The hotel business operated and conducted by Seller on the Real Property commonly known as the Hilton Checkers, 535 South Grand Avenue, Los Angeles, California 90071.

“Improvements.”  The buildings, structures, and other permanent improvements located on the Land, including, without limitation, electrical distribution systems, HVAC systems, walkways, driveways, parking lots, recreational facilities, plumbing, swimming pool, lighting, and mechanical equipment and fixtures installed thereon, and all rights, benefits and privileges appurtenant thereto.

“Initial Deposit.”  As set forth in Section 2.2.1 hereof.

“Intangible Property.”  All of Seller’s right title and interest, if any, in and to (a) fictitious business names and logos used by Seller in the operation of the Hotel and which are identified exclusively with the Hotel, but excluding the names “Hilton,” and all derivatives thereof, (b) local (Area Code 213) telephone exchange numbers identified exclusively with the Hotel, (c) transferable licenses, permits, consents, authorizations, approvals, registrations and certificates of any governmental authority held by Seller and used in connection with the construction, ownership, occupancy or operation of the Hotel, and warranties now in effect with respect to the Property, specifically excluding, however, the Liquor Licenses and the Franchise Agreement, (d) all promotional literature, security codes, assignable telephone numbers, warranties, and guarantees, in each case pertaining to and identified exclusively with the Hotel, and (e) all other intangible property located at the Real Property and used by Seller exclusively in connection with the ownership and operation of the Hotel including, but not limited to the name “Checkers”, but excluding the Excluded Assets.

“Intermediary.”  As set forth in Section 12.15 hereof.

“Inventory.”    All unopened operating inventories, materials and supplies used in connection with the operation of the Hotel and located thereat and not held for sale to the general public, including linens, bath towels, paper goods and guest supplies, but excluding the Alcoholic Beverages, the Restaurant Equipment, and the Food Inventory.

“Land.”  The land more particularly described on Exhibit “B” attached hereto and upon which the Improvements are located.

“Land Rights.”    All easements, rights-of-way, strips, zones, licenses, transferable hereditaments, privileges, tenements and appurtenants belonging to the Land, and any right or

interest in any open or proposed highways, streets, roads, avenues, alleys, easements, strips, gores and rights-of-way in, across, in front of, contiguous to, abutting or adjoining the Land, and other rights and benefits running with the Land and/or the owner of the Land.

“Leasehold Estate.”  Seller’s interest in and to the Land as the “Tenant” under the Ground Lease.

“Liabilities.”  As set forth in Section 12.15 hereof.

“Liquor Licenses.”  The liquor licenses relating to the operation of the restaurant and lounge businesses at the Real Property.

“Liquor Transfer Agreement.”  As set forth in Section 2.5 hereof.

“Non-Foreign Affidavit.”  As set forth in Section 5.2(e) hereof.

“Notices.”  As set forth in Article XI hereof.

“Opening of Escrow.”  As set forth in Section 3.1 hereof.

“Ordinary Course.”  The course of day-to-day operation of the Hotel, in accordance with its current operating budget and in a manner which does not materially vary from the policies, practices and procedures which have characterized its operation during the 6 months preceding the date hereof, except for mandated changes to practices, policies and procedures pursuant to the Franchise Agreement.

“Permits.”  As set forth in Section 4.5(a) hereof.

“Permitted Exceptions.”  As set forth in Section 4.2 hereof.

“Personal Property.”  All (a) keys and combinations to all doors, cabinets, enclosures and other locks on or about the Real Property, (b) furniture, equipment, motor vehicles, appliances, televisions, telephone systems, artwork, machinery, tools, trade fixtures, and other items of tangible personal property owned by Seller, located on the Real Property, and which are used exclusively in connection with the operation of the Real Property, or ordered for future use at the Hotel as of the Closing Date, (c) copies of files maintained or generated by Seller in the course of Seller’s operation of the Hotel (excluding the Excluded Documents) which are located on the Real Property, (d) all china, glassware, silverware; linens; uniforms; engineering, maintenance, cleaning and housekeeping supplies; matches and ashtrays; soap and other toiletries; stationery, menus and other printed materials; and all other similar materials and supplies, which are located at the Hotel or ordered for future use at the Hotel as of the Closing Date, (e) all merchandise located at the Hotel, including, without limitation, any gift shop or newsstand maintained by Seller or Existing Manager, and held for sale to guests and customers of the Hotel, or ordered for future sale at the Hotel as of the Closing Date, and (f) all other personal property located at the Real Property with respect to which Seller is the owner thereof and which is used by Seller exclusively in connection with the ownership and operation of the Hotel and/or the Real Property; but excluding, however, (i) the Food Inventory and the Alcoholic Beverages, and

related items, (ii) the Excluded Assets, (iii) the personal property owned by any tenant or guest on the Real Property, (iv) the Restaurant Equipment, (v) the Liquor Licenses, (vi) all refunds and claims for refunds for real property and personal property taxes in connection with the Property for any period prior to the Close of Escrow, and (vii) all tax and utilities and other deposits.

“Property.”  The Improvements, the Leasehold Estate, the Hotel, the Personal Property, the Inventory, Seller’s interest in and to the Contracts and the Intangible Property.

“Proprietary Computer Systems.”    The computer software, hardware, programs, processes and procedures set forth on Schedule “C” attached hereto.

“Proprietary Information.”  As set forth in Section 12.18 hereof.

“Purchase Price.”  As set forth in Section 2.2 hereof.

“Real Property.”  The Land, the Land Rights and the Improvements.

“Regulations.”  As set forth in Section 4.5(a) hereof.

“Reports.”  As set forth in Section 4.5(d) hereof.

“Restaurant Equipment.”    All equipment, furniture, fixtures, utensils, glassware, silverware and china used in connection with the operation of all restaurants and lounges on the Real Property.

“Seller’s Accounts Receivable.”  All accounts receivable and other sums owing Seller in connection with the operation of the Hotel existing on and prior to the Close of Escrow.

“Survey.”  As set forth in Section 4.2 hereof.

“Tarsadia Hotels.”  Tarsadia Hotels, a California corporation.

“Title Commitment.”  As set forth in Section 4.1 hereof.

“Title Insurer.”    Lawyers Title Company, Attention: Doug Abernathy, 801 South Figueroa Street, Suite 870, Los Angeles, CA 90017, Telephone No. (213) 330-3055, Telecopier No. (213) 330-3104, E-mail address: DAbernathy@ltic.com.

“Title Policy.”  As set forth in Section 4.2 hereof.

“WARN Act.”  As set forth in Section 6.3 hereof.

II.

SALE AND PURCHASE OF PROPERTY

2.1        Purchase of Property.  As of the Close of Escrow, and subject to the terms and conditions of this Agreement, Seller shall sell, assign, convey, transfer and deliver to Purchaser,

and Purchaser shall purchase and acquire from Seller, all of Seller’s right, title and interest in and to the Property, free and clear of all liens and encumbrances (other than the Contracts and the Permitted Exceptions), at the Purchase Price provided in Section 2.2. hereof.

2.2        Purchase Price and Terms of Payment.    The purchase price for the Property (“Purchase Price”) shall be Thirty-Two Million Dollars ($32,000,000.00), reduced by an amount equal to the purchase price for the Liquor Licenses, the Alcoholic Beverages, the Food Inventory and the Restaurant Equipment set forth in the Liquor Transfer Agreement, and subject to credits, prorations and adjustments as set forth in Section 5.5 hereof and as otherwise expressly provided in this Agreement, and shall consist of and be payable as follows:

2.2.1        Earnest Money Deposit.    On the business day following the date of the execution hereof by Purchaser and Seller, Purchaser shall deliver to Escrow Holder, in Good Funds, the sum of Two Fifty Thousand Dollars ($250,000.00) (together with all interest accrued thereon the “Initial Deposit”). The Initial Deposit shall become non-refundable to Purchaser if Purchaser does not terminate this Agreement prior to the expiration of the Due Diligence Period pursuant to the provisions of Section 4.4 hereof.

Unless Purchaser has elected to terminate this Agreement in accordance with the provisions of Section 4.4 hereof, prior to the expiration of the Due Diligence Period Purchaser shall deposit with Escrow Holder, in Good Funds, the additional sum of Five Hundred Thousand Dollars ($500,000.00) (the “Additional Deposit”).

The Earnest Money Deposit shall be held by Escrow Holder in accordance with the terms of this Agreement. The Earnest Money Deposit shall be non-refundable to Purchaser (and shall constitute liquidated damages pursuant to Section 9.1 hereof) upon the expiration of the Due Diligence Period (unless Purchaser has, prior thereto, delivered to Seller its Notice of Purchaser’s termination of this Agreement as provided in Section 4.4 hereof); provided, however that the Earnest Money Deposit shall be refundable to Purchaser in the event of (a) a material uncured default by Seller of its obligations under this Agreement, (b) a failure of a condition precedent to Purchaser’s obligations as set forth in this Agreement or (c) as otherwise specifically provided by this Agreement. The Earnest Money Deposit shall be applied to the Purchase Price on the Close of Escrow.

2.2.2        Balance of Purchase Price.  Not later than 5:00 p.m. California time on the business day preceding the Closing Date, Purchaser shall deposit with Escrow Holder, in Good Funds, the balance of the Purchase Price, reduced or increased by such amounts required to take into account such prorations, credits, costs or other adjustments which are required by this Agreement and which can be computed and determined as of the time for the required deposit hereunder.

2.3        Assumption of the Contracts.  As additional consideration, Purchaser shall, on and as of the Close of Escrow, at its sole cost and expense, assume and agree to pay all sums and perform, fulfill and comply with all other covenants and obligations which are to be paid, performed and complied with by Seller under the Contracts which first arise on and after the Close of Escrow. Seller shall indemnify, defend, protect and hold Purchaser and its affiliates

harmless from all breaches, claims, liabilities, losses and damages (including attorneys’ fees and related costs, whether or not legal proceedings are instituted) arising under the Contracts for all periods prior to the Close of Escrow. Purchaser shall indemnify, defend, protect and hold Seller, Tarsadia Hotels, and their affiliates, harmless from all breaches, claims, liabilities, losses and damages (including attorneys’ fees and related costs, whether or not legal proceedings are instituted) arising under the Contracts (including, without limitation, those arising from or as a result of the assignment and assumption thereof) for all periods on and after the Close of Escrow.

2.4        Franchise Agreement.  Purchaser shall or shall cause its affiliate, at its sole cost and expense, prior to or concurrently with the Close of Escrow, enter into a new franchise agreement for the Hotel with Hilton Inns, Inc. on such terms and conditions as Hilton Inns, Inc. and Purchaser shall negotiate. Purchaser’s obligation under this Section 2.4 is a covenant and not a condition precedent to its obligations under the Agreement.

2.5        Liquor Licenses, Alcoholic Beverages, Food Inventory and Restaurant Equipment.    The Liquor Licenses, Alcoholic Beverages, Food Inventory and Restaurant Equipment located at the Hotel shall be conveyed to Purchaser (or its designee) pursuant to a separate purchase and sale agreement (the “Liquor Transfer Agreement”) in the form and content attached hereto as Exhibit “D,” to be executed by Purchaser, Seller and the holder of the Liquor Licenses concurrently herewith.

III.

ESCROW

3.1        Opening of Escrow.  Purchaser and Seller shall open an escrow (the “Escrow”) with Escrow Holder by depositing with Escrow Holder the Earnest Money Deposit and three (3) copies of this Agreement duly executed (in counterparts or otherwise) by Seller and Purchaser. The time when Escrow Holder so receives the Earnest Money Deposit and the copies of this Agreement, fully executed by the parties and executes and delivers copies thereof to Seller and Purchaser, shall be deemed the “Opening of Escrow.” Purchaser and Seller shall execute and deliver to Escrow Holder, in a timely fashion, such instruments and funds as are reasonably necessary to close the Escrow and consummate the sale and purchase of the Property (or the exchange thereof, if applicable) in accordance with the terms and provisions of this Agreement.

3.2        Intentionally Omitted.

3.3        Deposit of Funds.  Except as otherwise provided in this Agreement, all funds deposited into the Escrow by Purchaser shall be immediately deposited by Escrow Holder into Treasury Bills or other short-term United States Government obligations, in repurchase contracts for the same, or in a federally insured money market account, subject to the control of Escrow Holder in a bank or savings and loan association, or such other institution approved by Purchaser; provided, however, that such funds must be readily available as necessary to comply with the terms of this Agreement and Escrow Holder’s escrow instructions (including the return of the Earnest Money Deposit, or any portion thereof then on deposit with Escrow Holder, to Purchaser in accordance with this Agreement), and for the Escrow to close within the time

specified in Section 5.1 of this Agreement. Except as may be otherwise specifically provided herein, interest on amounts placed by Escrow Holder in any such investments or interest bearing accounts shall accrue to the benefit of Purchaser, and Purchaser shall promptly provide to Escrow Holder Purchaser’s completed and executed W-9 with Purchaser’s Tax Identification Number and Escrow Holder’s Investment Instructions.

IV.

CONDITION OF TITLE

4.1        Title Commitment.  On or before the date hereof Escrow Holder shall furnish to Purchaser a current commitment for a C.L.T.A. Leasehold Policy of Title Insurance (standard coverage) issued by Title Insurer (the “Title Commitment”) reflecting the status of title to the Real Property and all exceptions, including easements, licenses, restrictions, rights-of-way, leases, covenants, reservations and other conditions, if any, affecting the Real Property, which would appear in a C.L.T.A. Leasehold Policy of Title Insurance (standard coverage) if used, and committing to issue the C.L.T.A. Leasehold Policy of Title Insurance (standard coverage) to Purchaser in an amount equal to or less than the Purchase Price. Accompanying the Title Commitment, Escrow Holder shall cause to be furnished to Purchaser, to the extent available, legible copies of the documents affecting the Real Property referred to in the Title Commitment.

4.2        Title to the Leasehold Estate and the Improvements.  Effective as of the Close of Escrow, but conditioned upon the Close of Escrow, Title Insurer shall issue to Purchaser Title Insurer’s C.L.T.A. Leasehold Policy of Title Insurance (standard coverage) (the “Title Policy”), with liability in the amount of the Purchase Price for the Leasehold Estate and the Improvements insuring title therein as vested in Purchaser subject only to the following matters affecting title (“Permitted Exceptions”).

    (a)        All general and special property taxes and assessments not yet due and payable or if due and payable not yet delinquent, and all improvement and assessment bonds with respect to the Real Property;

    (b)        Supplemental taxes assessed as a result of the sale of the Leasehold Estate and the Improvements by Seller to Purchaser pursuant to the provisions of California Revenue and Taxation Code Chapter 3.5 (commencing with Section 75);

    (c)        All liens, covenants, conditions, restrictions, easements, rights of way, and all other exceptions to title as referenced in the Title Commitment, except monetary liens and encumbrances (other than caused by Purchaser) which Seller shall remove at or prior to the Close of Escrow;

    (d)        All exceptions to title disclosed by or in, or arising from or in connection with, the Survey (and any updates thereto) of the Real Property for the Title Policy (including, without limitation, easements, encroachments and zoning);

    (e)        The Ground Lease, and the reversionary interest of the “Landlord” thereunder in and to the Improvements;

    (f)        All security interests recorded in connection with the Contracts;

    (g)        Rights of parties in possession not shown by the public records, easements or claims of easements not shown by the public records, but with respect to which Purchaser has knowledge thereof;

    (h)        Governmental laws, codes, ordinances and restrictions now or hereafter in effect so far as these affect the Property or any part thereof, including, without limitation, zoning ordinances (and amendments and additions relating thereto) and the Americans with Disabilities Act of 1990, as amended, and any and all other matters, known or unknown, relating to the Property, or its condition, use, value or operation;

    (i)        Any exceptions created by Purchaser or its agents, employees and/or contractors, including without limitation, any exceptions arising by reason of the entry on the Real Property by Purchaser or by its agents, employees and/or contractors; and

    (j)        All preprinted exceptions and exclusions contained in the Title Policy, except those customarily deleted by an owner’s affidavit.

    At Purchaser’s election, the Title Policy shall be an A.L.T.A. Leasehold Policy of Title Insurance (extended coverage); provided, however, subject to Section 8.2(d) hereof, that Purchaser’s ability to obtain an A.L.T.A. Leasehold Policy of Title Insurance (extended coverage) shall not be a condition precedent to Purchaser’s obligations hereunder and shall not extend the Closing Date or delay the Close of Escrow. In addition, Purchaser shall have the right to obtain from Title Insurer such endorsements to the Title Policy and/or such additional liability protection as Purchaser may elect to obtain; provided, however, that Purchaser’s ability to obtain such title endorsements and/or such additional liability protection shall not be a condition precedent to Purchaser’s obligations hereunder and shall not extend or delay the Close of Escrow. Purchaser shall be solely responsible for negotiating with Title Insurer with respect to such A.L.T.A. Leasehold Policy of Title Insurance (extended coverage) and/or with respect to such title endorsements and/or such additional liability protection as may be requested by Purchaser, if any.

    Seller will deliver to Purchaser a copy of the latest survey of the Real Property in its possession, without warranty, and Purchaser shall be solely responsible for, and shall assume the risk of, obtaining a survey (or updating Seller’s survey) of the Real Property (the “Survey”) acceptable to Title Insurer for purposes of issuing the Title Policy. Seller will also deliver to Title Insurer an owner’s affidavit in customary form in connection with the issuance of the Title Policy

4.3        Inspection and Due Diligence Review.  Purchaser shall have the right, in its sole discretion, until 3:00 p.m. California time on April 29, 2010, or such earlier date as Purchaser shall elect in writing, to satisfy itself, in its sole discretion, as to the condition and extent of the Property (the “Due Diligence Period”). Subject to the prior termination of this Agreement, during the Due Diligence Period Seller shall cooperate and provide Purchaser with reasonable and continuing access to the Real Property upon one (1) business day prior Notice to Seller for

the purpose of Purchaser’s inspection and due diligence review. In connection with such review, during normal business hours during the Due Diligence Period, Purchaser shall be afforded the opportunity to review reasonably available books and records, including non-proprietary financial reports, the Ground Lease, the Franchise Agreement, and the Contracts pertaining to the Hotel which are in or under Seller’s control and relate to the operation of the Hotel, upon reasonable Notice, except that Seller shall have no obligation to deliver or make available to Purchaser, and Purchaser shall have no right to review, the Excluded Documents and the Proprietary Information. Except as otherwise authorized by Seller pursuant to this Section 4.3, neither Purchaser nor any of its employees, agents or representatives shall contact or otherwise discuss this transaction and /or the operation of the Hotel with any on-site employees of the Hotel or otherwise contract any governmental authority with respect to the Property or the Land, in each case without the written consent of Seller.

Not later than ten (10) business days prior to the expiration of the Due Diligence Period, Purchaser shall deliver to Seller a written list of all contracts and leases (but not Bookings) pertaining to or affecting the Property and/or the Real Property which Purchaser agrees to assume. If Purchaser fails to so provide such written list, Purchaser shall assume all such contracts and leases. Upon receipt thereof, Seller shall review such list and, not later than 5:00 p.m. California time on the date five (5) business days after the receipt thereof, deliver to Purchaser, in writing, Seller’s list of those contracts and leases which Purchaser has not agreed to assume that Seller will terminate (but Seller’s obligation to terminate shall be limited to those contracts and leases that can be terminated at no cost or expense to Seller) and a list of those contracts and leases that Seller will not agree to terminate. Purchaser shall have until 5:00 p.m. California time on the date two (2) business days after the receipt of Seller’s writing to then elect, in a writing delivered to Seller, to assume all such contracts and leases that Seller is not willing to terminate or to terminate this Agreement and cancel the Escrow. If Purchaser does not so elect to terminate this Agreement and cancel the Escrow, then Seller shall amend Exhibit “A” to this Agreement to so reflect the contracts and leases to be assumed by Purchaser. If Purchaser fails to elect to so terminate this Agreement and cancel the Escrow as provided herein, Purchaser shall assume all of such contracts and leases that Seller has not agreed to terminate.

Purchaser may, at its sole cost and expense, engage a third-party Certified Public Accountant to perform audits of the books and records of the Hotel, balance sheets as of December 31, 2009 and December 31, 2008 and the related statements of operations and cash flows for the Hotel, for the years ended December 31, 2009 and December 31, 2008, which audits shall include all disclosures required by generally accepted accounting principles and Securities and Exchange Commission regulations. Seller shall use commercially reasonable efforts to cooperate in connection with the performance of such audits and shall provide or cause to be provided any information reasonably requested by the accountants relating to such balance sheets, related statements of operations and cash flows for the Hotel. In connection with such audits, Seller shall provide or cause to be provided to the accountants performing the audits a representation letter acceptable to Seller in accordance with American Institute of Public Accountants professional standards.

During the Due Diligence Period, Purchaser shall also have the opportunity to conduct a Phase I environmental audit/study, a property condition report, zoning report and such

other studies desired by Purchaser (subject to Seller’s consent rights set forth heein) of the Real Property, provided such Phase I environmental audit/study is not invasive or intrusive. Any environmental audit/study proposed to be undertaken by Purchaser shall be subject to Seller’s written approval prior to the commencement thereof, which approval shall not be unreasonably withheld. As a condition to any such consent, Purchaser shall obtain and maintain such public liability insurance in an amount of Two Million Dollars ($2,000,000) affecting the Real Property, naming Seller as an additional insured.

Purchaser, at all times, will conduct such due diligence in compliance with all applicable laws and in a manner so as to not cause damage, loss, cost or expense to Seller, the Property or the guests of the Property, and without unreasonably interfering with or disturbing any employee, tenant or guest at the Property. Purchaser shall not reveal to any governmental agency or any other third party (other than Purchaser’s employees, agents, attorneys, trustees, lenders and advisors) not approved by Seller the results of or any other information acquired pursuant to its inspections. Purchaser will promptly restore any damage to the Property caused by Purchaser’s inspection to its condition immediately preceding such inspections and examinations and will keep the Property free and clear of any mechanic’s liens or materialmen’s liens in connection with such inspections and examinations.

The cost of the inspections and tests undertaken pursuant to this Section 4.3 shall be borne solely by Purchaser. Purchaser shall indemnify, protect, defend, and hold Seller, Seller’s lenders, Tarsadia Hotels, and their affiliates, owners, agents and employees harmless from and against any obligation, liability, claim (including any claim for damage to property or injury to or death of any persons), lien or encumbrance, loss, damage, cost or expense, including reasonable attorneys’ fees, whether or not legal proceedings are instituted, arising from the acts or omissions of Purchaser or its agents, employees or contractors occurring in connection with, or as a result of, such inspections, tests or examinations of the Property, except to the extent resulting from Seller’s gross negligence or intentional misconduct. Purchaser shall in no event be responsible under this Section 4.3 for any condition already existing on the Property prior to the time of the inspections, except and only to the extent that Purchaser or the inspections exacerbate such existing condition.

Purchaser covenants and agrees that all such information and materials disclosed and/or delivered to it by Seller, or Seller’s agents, employees and representatives, are confidential and proprietary information, and that Purchaser shall hold the same in strict confidence, and shall not disclose the same to anyone other than its agents, employees and advisors on a “need-to-know” basis subject to the confidentiality restrictions set forth herein. Purchaser also agrees that, in the event the transactions contemplated in this Agreement are not consummated as provided herein or Purchaser terminates this Agreement prior to the expiration of the Due Diligence Period, Purchaser shall return all such information and documentation, and all copies thereof to Seller promptly upon Seller’s request and certify to Seller that it has destroyed all materials prepared by or for Purchaser and/or its representatives utilizing any such information and documentation.

Except as expressly provided in this Agreement, Seller makes no representations or warranties as to the truth, accuracy or completeness of any third-party materials, data or other

information, if any, supplied to Purchaser in connection with Purchaser’s inspection of the Property (e.g., that such materials are complete, accurate or the final version thereof, or that all such materials are in Seller’s possession). It is the parties’ express understanding and agreement that any such materials are to be provided only for Purchaser’s convenience in making its own examination and determination prior to the expiration of the Due Diligence Period as to whether it wishes to purchase the Property, and, in doing so, Purchaser shall rely exclusively on its own independent investigation and evaluation of every aspect of the Property and not on any third-party materials supplied by Seller. Purchaser expressly disclaims any intent to rely on any such third-party materials provided to it by Seller in connection with its inspection and agrees that it shall rely solely on its own independently developed or verified information.

The obligations of Purchaser under this Section 4.3 (including its indemnification obligations) shall survive the Close of Escrow or the termination of this Agreement.

4.4        Notice of Non-Satisfaction.  During the Due Diligence Period, by Notice delivered to Seller and Escrow Holder prior to the expiration of the Due Diligence Period, Purchaser may in its sole and absolute discretion, for any reason or for no reason, terminate this Agreement and cancel the Escrow, in which case the Initial Deposit shall be promptly refunded to Purchaser without further instruction from Purchaser or Seller (and notwithstanding instructions received to the contrary), and Purchaser shall return to Seller all information and documentation, and all copies thereof delivered to it pursuant to the provisions of Section 4.3 hereof and certify to Seller that it has destroyed all materials prepared by or for Purchaser and/or its representatives utilizing any such information and documentation, and neither Seller nor Purchaser shall have any further obligations under this Agreement (except as otherwise provided in this Agreement).

If Purchaser provides Notice of its election to waive its right to terminate this Agreement as permitted in this Section 4.4 or fails to provide Notice of cancellation before the expiration of the Due Diligence Period, Purchaser shall be deemed to have approved the state of the Property and the condition of title, and shall be deemed to have irrevocably waived its rights to terminate this Agreement during the Due Diligence Period and cancel the Escrow as a result thereof.

The failure of Purchaser to provide a Notice of termination or waiver prior to the expiration of the Due Diligence Period shall be deemed Purchaser’s irrevocable election not to so terminate this Agreement.

4.5        Condition of the Property.

    (a)        BY ENTERING INTO THIS AGREEMENT, PURCHASER HAS AGREED TO, AND WILL, PERFORM (AND PURCHASER REPRESENTS AND WARRANTS TO SELLER THAT PURCHASER IS CAPABLE OF PERFORMING) A SOPHISTICATED, EXPERT, THOROUGH AND INDEPENDENT INVESTIGATION, ANALYSIS AND EVALUATION OF THE PROPERTY, AND PURCHASER AGREES THAT PURCHASER SHALL BE CHARGED WITH KNOWLEDGE OF ALL INFORMATION WHICH IS OR SHOULD HAVE BEEN ACQUIRED BY PURCHASER AS

A RESULT OF SUCH AN INVESTIGATION, ANALYSIS, EVALUATION, AND THE MATERIALS DELIVERED BY SELLER TO PURCHASER. PRIOR TO THE EXPIRATION OF THE DUE DILIGENCE PERIOD, PURCHASER WILL HAVE DETERMINED, SUBJECT TO THE REPRESENTATIONS AND WARRANTIES OF SELLER SET FORTH HEREIN, AND THE TERMS AND CONDITIONS OF THIS AGREEMENT, THAT THE PROPERTY IS ACCEPTABLE TO PURCHASER. PRIOR TO THE EXPIRATION OF THE DUE DILIGENCE PERIOD, PURCHASER WILL HAVE HAD ACCESS TO AND WILL HAVE CONDUCTED ITS OWN THOROUGH AND INDEPENDENT INSPECTION, INVESTIGATION, ANALYSIS AND EVALUATION OF ALL INSTRUMENTS, RECORDS AND DOCUMENTS WHICH PURCHASER MAY DETERMINE TO BE APPROPRIATE OR ADVISABLE TO REVIEW IN CONNECTION WITH PURCHASER’S ACQUISITION OF THE PROPERTY AND THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, INCLUDING THOSE RELATING TO ALL ZONING REGULATIONS AND OTHER GOVERNMENTAL REQUIREMENTS (INCLUDING, WITHOUT LIMITATION, ANY IMPACT THEREOF ON PURCHASER’S INTENDED USE AND/OR DEVELOPMENT OF THE PROPERTY, INCLUDING PURCHASER’S ABILITY TO OBTAIN ANY SUCH APPROVALS, PERMITS AND VARIANCES, AND ANY AMENDMENTS, WAIVERS, MODIFICATIONS, USES AND CHANGES THERETO), SITE AND PHYSICAL CONDITIONS, TITLE MATTERS, THE DUE DILIGENCE MATERIALS DELIVERED TO PURCHASER BY SELLER, AND ALL OTHER MATTERS AFFECTING THE USE, OCCUPANCY, VALUE, AND CONDITION OF THE PROPERTY, AND PURCHASER WILL EITHER HAVE DETERMINED, SUBJECT TO THE REPRESENTATIONS AND WARRANTIES OF SELLER SET FORTH HEREIN, AND THE TERMS AND CONDITIONS OF THIS AGREEMENT, THAT THE INFORMATION AND DATA CONTAINED THEREIN OR EVIDENCED THEREBY ARE SATISFACTORY TO PURCHASER, OR TERMINATED THIS AGREEMENT PRIOR TO THE EXPIRATION OF THE DUE DILIGENCE PERIOD. PURCHASER SPECIFICALLY ACKNOWLEDGES THAT PURCHASER IS NOT RELYING ON SELLER TO INDICATE THE RELATIVE IMPORTANCE OR MATERIALITY OF ANY OF THE INSTRUMENTS, RECORDS, DOCUMENTS AND OTHER INFORMATION MADE AVAILABLE TO PURCHASER FOR REVIEW AND PURCHASER SHALL MAKE ITS OWN DETERMINATION AS TO THE LEVEL OF SCRUTINY IT APPLIES TO SUCH INSTRUMENTS, RECORDS AND DOCUMENTS MADE AVAILABLE TO PURCHASER.

PURCHASER ACKNOWLEDGES THAT SELLER WAS NOT THE DEVELOPER OR THE ORIGINAL OWNER OF THE REAL PROPERTY OR THE HOTEL. PURCHASER FURTHER ACKNOWLEDGES THAT, PRIOR TO THE EXPIRATION OF THE DUE DILIGENCE PERIOD, PURCHASER WILL HAVE THOROUGHLY INSPECTED AND EXAMINED, AND UNCONDITIONALLY AND IRREVOCABLY APPROVED AND ASSUMED (SUBJECT TO SELLER’S REPRESENTATIONS AND WARRANTIES AS SET FORTH HEREIN) ALL LIABILITY FOR, ALL ELEMENTS COMPRISING THE PROPERTY, AND ALL FACTORS RELATED TO THEIR USE AND OPERATION (BOTH CURRENT AND INTENDED USES), INCLUDING, WITHOUT LIMITATION, THE GROUND LEASE, THE CONTRACTS, UTILITIES, PHYSICAL AND FUNCTIONAL ASPECTS OF THE PROPERTY, THE CONSTRUCTION AND CONDITION OF THE REAL PROPERTY, ALL MATTERS AFFECTING AND RELATING TO TITLE, AND MUNICIPAL AND OTHER LEGAL

REQUIREMENTS SUCH AS TAXES, ASSESSMENTS AND BONDS, ZONING, USE PERMITS, BUSINESS PERMITS, LICENSES, AND SIMILAR ENTITLEMENTS, INVESTIGATIONS OR ANALYSES OF PRESENT AND FUTURE LAWS, STATUTES, RULES, REGULATIONS, ORDINANCES, LIMITATIONS, RESTRICTIONS OR REQUIREMENTS CONCERNING THE USE, DENSITY, LOCATION AND SUITABILITY OF THE REAL PROPERTY OR ANY EXISTING OR PROPOSED DEVELOPMENT, BUILDOUT, REDEVELOPMENT, CHANGE IN USE, AND CONDITION THEREOF (COLLECTIVELY “REGULATIONS”), INCLUDING, BUT NOT LIMITED TO: ZONING, SUBDIVISION, ENVIRONMENTAL AND OTHER SUCH REGULATIONS; THE NECESSITY AND AVAILABILITY OF ANY GENERAL OR SPECIFIC PLAN AMENDMENTS, REZONING, ZONE VARIANCES, CONDITIONAL USE PERMITS, BUILDING PERMITS, ENVIRONMENTAL IMPACT REPORTS, PARCEL OR SUBDIVISION MAPS, OR ANY OTHER GOVERNMENTAL PERMITS, APPROVALS, ENTITLEMENTS OR ACTS IN RESPECT OF THE REAL PROPERTY (COLLECTIVELY “PERMITS”); THE NECESSITY OR EXISTENCE OF ANY DEDICATIONS, FEES, CHARGES, COSTS OR ASSESSMENTS THAT MAY BE IMPOSED IN CONNECTION WITH ANY REGULATIONS OR THE OBTAINING OF ANY PERMITS; THE ECONOMIC VALUE OF THE REAL PROPERTY, AND THE SIZE, DIMENSIONS, LOCATION AND TOPOGRAPHY OF THE REAL PROPERTY; THE AVAILABILITY OR ADEQUACY OF THE ACCESS TO THE REAL PROPERTY AND OF PARKING; THE EXTENT OF INFRASTRUCTURE OR OTHER IMPROVEMENTS, IF ANY, REQUIRED TO BE BUILT BY PURCHASER ON, NEAR OR CONCERNING THE REAL PROPERTY IN ORDER TO DEVELOP AND BUILDOUT THE REAL PROPERTY; THE EXTENT OR CONDITION OF ANY GRADING OR OTHER SITE WORK ALREADY PERFORMED OR HEREAFTER REQUIRED FOR PURCHASER’S PROPOSED DEVELOPMENT AND BUILDOUT; ANY SURFACE, SOIL, SUBSOIL, GEOLOGIC OR GROUND WATER CONDITIONS OR OTHER PHYSICAL CONDITIONS OF OR AFFECTING THE REAL PROPERTY, SUCH AS AIRCRAFT OVERFLIGHT, TRAFFIC, CLIMATE, DRAINAGE AND AIR; THE POSSIBILITY OF FUTURE FEES AND ASSESSMENTS OR INCREASES IN EXISTING FEES AND ASSESSMENTS BY ONE OR MORE GOVERNMENTAL ENTITIES OR DISTRICTS; AND ALL OTHER MATTERS CONCERNING THE CONDITION, USE, DEVELOPMENT OR SALE OF THE REAL PROPERTY. PURCHASER HEREBY ACKNOWLEDGES THAT NONE OF THE FOREGOING, AND THE FAILURE OF PURCHASER TO OBTAIN ANY OF THE FOREGOING, AS THE CASE MAY BE, SHALL BE THE BASIS FOR PURCHASER’S RIGHT TO TERMINATE THIS AGREEMENT OR OBTAIN AN ADJUSTMENT TO THE PURCHASE PRICE, AND PURCHASER HEREBY RELEASES AND FOREVER DISCHARGES SELLER FROM ANY AND ALL CLAIMS, LOSSES, DAMAGES, LIABILITIES OR OBLIGATIONS ARISING OUT OF OR IN ANY WAY RELATED TO ALL OF THE ITEMS LISTED IN THIS SECTION, WHICH RELEASE AND DISCHARGE FROM LIABILITY SHALL SURVIVE THE CLOSE OF ESCROW.

PURCHASER ACKNOWLEDGES AND AGREES THAT PURCHASER’S DELIVERY OF AFFIRMATIVE NOTICE OF ITS ELECTION TO WAIVE ITS RIGHT TO TERMINATE THIS AGREEMENT PRIOR TO THE EXPIRATION OF THE DUE DILIGENCE PERIOD SHALL BE CONCLUSIVELY DEEMED PURCHASER’S AFFIRMATION THAT IT HAS COMPLETED ITS INVESTIGATIONS AND DUE

DILIGENCE REVIEW OF THE PROPERTY AND HAS (SUBJECT TO SELLER’S REPRESENTATIONS AND WARRANTIES AS SET FORTH HEREIN) APPROVED THE CONDITION AND STATE THEREOF.

(b)        PURCHASER FURTHER ACKNOWLEDGES THAT PURCHASER HAS SUBSTANTIAL EXPERIENCE WITH REAL PROPERTY, HOTELS AND HOTEL OPERATIONS, AND THAT PURCHASER WILL ACQUIRE THE PROPERTY IN “AS IS, WHERE IS, WITH ALL FAULTS” CONDITION, AND (SUBJECT TO SELLER’S REPRESENTATIONS AND WARRANTIES AS SET FORTH HEREIN) SOLELY IN RELIANCE ON PURCHASER’S OWN INSPECTION AND EXAMINATION. PURCHASER WAIVES ANY OBLIGATION ON THE PART OF SELLER, OR ANY OTHER PERSON, TO DISCLOSE ANY DEFECTS OR OTHER DEFICIENCIES OR LIABILITIES IN OR WITH RESPECT TO THE PROPERTY.

(c)        EXCEPT AS TO THOSE REPRESENTATIONS AND WARRANTIES OF SELLER EXPRESSLY SET FORTH IN THIS AGREEMENT, IT IS EXPRESSLY UNDERSTOOD AND AGREED THAT SELLER MAKES NO REPRESENTATIONS, WARRANTIES OR GUARANTIES OF ANY KIND, NATURE OR SORT, EXPRESS OR IMPLIED, WITH RESPECT TO THE COMPLIANCE OF THE PROPERTY WITH APPLICABLE LAWS, THE ABSENCE OF VIOLATIONS OF LAWS, THE PHYSICAL CONDITION, PAST, PRESENT OR FUTURE OPERATION AND/OR PERFORMANCE, OR VALUE, OF THE PROPERTY. SELLER CONVEYS THE PROPERTY TO PURCHASER “AS IS AND WHERE IS, WITH ALL FAULTS,” AND PURCHASER ACKNOWLEDGES THAT, EXCEPT AS SET FORTH HEREIN, SELLER MAKES NO REPRESENTATIONS, GUARANTIES OR WARRANTIES WHATSOEVER, EXPRESS OR IMPLIED, AS TO THE QUALITY, CHARACTER, EXTENT, PERFORMANCE, CONDITION OR SUITABILITY OF THE PROPERTY FOR ANY PURPOSE, INCLUDING, WITHOUT LIMITATION, ANY WARRANTY OR GUARANTY OF MERCHANTABILITY OR FITNESS FOR ANY PURPOSE. PURCHASER ACKNOWLEDGES THAT PURCHASER SHALL BE SOLELY RESPONSIBLE AND LIABLE FOR ASCERTAINING THE TRANSFERABILITY OF ALL LICENSES, PERMITS AND OTHER GOVERNMENTAL CONSENTS FOR THE OWNERSHIP, USE AND OPERATION OF THE PROPERTY, AND SHALL BE SOLELY RESPONSIBLE FOR OBTAINING THE TRANSFERS THEREOF.

 EXCEPT WITH RESPECT TO THE REPRESENTATIONS AND WARRANTIES OF SELLER EXPRESSLY SET FORTH IN THIS AGREEMENT, PURCHASER FURTHER WAIVES ANY AND ALL WARRANTIES, GUARANTIES, CONDITIONS OR LIABILITIES, EXPRESS OR IMPLIED, ARISING BY LAW OR OTHERWISE (INCLUDING, WITHOUT LIMITATION, ANY OBLIGATION OF SELLER WITH RESPECT TO CONSEQUENTIAL DAMAGES) AND ALL TORT LIABILITY, EXCLUDING LIABILITY ARISING FROM SELLER’S GROSS NEGLIGENCE, FRAUD OR INTENTIONAL MISCONDUCT. PURCHASER ALSO ACKNOWLEDGES THAT SOME DEFECTS MAY BECOME APPARENT ONLY AFTER THE CLOSE OF ESCROW AND HEREBY RELEASES AND HOLDS SELLER HARMLESS FROM BLAME AND ALL LIABILITY FOR SUCH “LATENT DEFECTS.” PURCHASER HEREBY COVENANTS

NOT TO BRING ANY ACTION AGAINST SELLER BASED ON ANY OF THESE CLAIMS. THIS SECTION SHALL SURVIVE THE CLOSE OF ESCROW.

 PURCHASER’S INSPECTION, INVESTIGATION AND SURVEY OF THE PROPERTY, DURING THE DUE DILIGENCE PERIOD, SHALL BE IN LIEU OF ANY NOTICE OR DISCLOSURE REQUIRED BY SECTION 25359.7 OF THE CALIFORNIA HEALTH AND SAFETY CODE, OR BY ANY OTHER PROVISION OF THE CALIFORNIA CIVIL CODE, OR PURSUANT TO ANY OTHER APPLICABLE LAW, INCLUDING, WITHOUT LIMITATION, LAWS REQUIRING DISCLOSURE BY SELLER OF FLOOD, FIRE, SEISMIC HAZARDS, LEAD PAINT, MELLO ROOS, LANDSLIDE AND LIQUEFACTION, OTHER GEOLOGICAL HAZARDS, RAILROAD AND OTHER UTILITY ACCESS, SOIL CONDITIONS AND OTHER CONDITIONS WHICH MAY AFFECT THE USE OF THE REAL PROPERTY, AND PURCHASER HEREBY WAIVES ANY REQUIREMENT FOR A NOTICE PURSUANT TO THOSE PROVISIONS AND HEREBY ACKNOWLEDGES AND AGREES THAT IT IS FAMILIAR WITH SUCH DISCLOSURE REQUIREMENTS AND WILL CONDUCT ITS OWN DUE DILIGENCE WITH RESPECT TO ALL MATTERS COVERED THEREBY, AND HEREBY RELEASES SELLER FROM LIABILITY IN CONNECTION THEREWITH. PURCHASER SHALL BE DEEMED TO HAVE APPROVED ALL CONDITIONS PERTAINING TO THE PROPERTY UNLESS IT CANCELS THE ESCROW IN ACCORDANCE HEREWITH ON OR BEFORE THE END OF THE DUE DILIGENCE PERIOD.

(d)        PURCHASER ALSO ACKNOWLEDGES AND AGREES THAT, ALTHOUGH SELLER HAS PROVIDED TO PURCHASER CERTAIN REPORTS, STUDIES AND SURVEYS FOR OR REGARDING THE REAL PROPERTY (THE “REPORTS”), SELLER HAS NOT VERIFIED THE ACCURACY THEREOF AND MAKES NO REPRESENTATIONS OR WARRANTIES REGARDING THE MATTERS SET FORTH THEREIN, IT BEING THE RESPONSIBILITY OF PURCHASER TO VERIFY THE ACCURACY OF SUCH REPORTS. PURCHASER AGREES THAT SELLER HAS NO LIABILITY OR RESPONSIBILITY FOR THE ACCURACY OR CONTENTS OF ANY SUCH REPORTS. PURCHASER HEREBY RELEASES AND FOREVER DISCHARGES SELLER FROM ANY AND ALL CLAIMS, LOSSES, DAMAGES, LIABILITIES OR OBLIGATIONS ARISING OUT OF OR IN ANY WAY RELATED TO ALL OF THE ITEMS LISTED IN THIS PARAGRAPH 4.5(d), WHICH RELEASE AND DISCHARGE FROM LIABILITY SHALL SURVIVE THE CLOSE OF ESCROW, EXCEPT FOR SELLER’S FRAUD OR INTENTIONAL MATERIAL MISREPRESENTATION.

 FURTHERMORE, EXCEPT AS TO THOSE REPRESENTATIONS AND WARRANTIES OF SELLER EXPRESSLY SET FORTH IN THIS AGREEMENT, PURCHASER ACKNOWLEDGES THAT SELLER HAS NOT AND DOES NOT MAKE ANY REPRESENTATIONS OR WARRANTIES IN CONNECTION WITH THE INTEGRATION OF HAZARDOUS MATERIALS UPON OR WITHIN THE REAL PROPERTY. IN THAT REGARD, PURCHASER WILL, PRIOR TO THE EXPIRATION OF THE DUE DILIGENCE PERIOD, CONDUCT ITS OWN INVESTIGATION AND OBTAIN ITS OWN ENVIRONMENTAL ASSESSMENT REPORT TO DETERMINE IF THE REAL PROPERTY CONTAINS ANY HAZARDOUS OR TOXIC WASTE, MATERIALS,

DISCHARGE, DUMPING OR CONTAMINATION, WHETHER SOIL, GROUNDWATER OR OTHERWISE, WHICH VIOLATES ANY FEDERAL, STATE, LOCAL OR OTHER GOVERNMENTAL LAW, REGULATION OR ORDER OR REQUIRES REPORTING TO ANY GOVERNMENTAL AUTHORITY.

(e)        SELLER SHALL HAVE NO OBLIGATION OR DUTY TO EXPEND FUNDS FOR, OR OTHERWISE BE RESPONSIBLE TO CONDUCT OR PERFORM, ANY CLEAN-UP REQUIREMENT(S) AS IMPOSED BY ANY FEDERAL, STATE OR LOCAL GOVERNMENT LAW, REGULATION, ORDINANCE OR AGENCY FOR THE REMOVAL OF ANY HAZARDOUS MATERIALS CONTAMINATION FROM THE REAL PROPERTY.

(f)        AS OF THE CLOSE OF ESCROW, EXCEPT AS TO SELLER’S REPRESENTATIONS AND WARRANTIES SET FORTH HEREIN, PURCHASER, FOR ITSELF AND ITS OWNERS, SUCCESSORS AND ASSIGNS, HEREBY RELEASES AND FOREVER DISCHARGES SELLER AND TARSADIA HOTELS, AND THEIR PAST, PRESENT AND FUTURE MEMBERS, AFFILIATES, EMPLOYEES, AGENTS, ATTORNEYS, ASSIGNS, AND SUCCESSORS-IN-INTEREST FROM ALL PAST, PRESENT AND FUTURE CLAIMS, DEMANDS, OBLIGATIONS, LOSSES AND CAUSES OF ACTION OF ANY NATURE WHATSOEVER, WHETHER NOW KNOWN OR UNKNOWN, DIRECT OR INDIRECT, FORESEEN OR UNFORESEEN, SUSPECTED OR UNSUSPECTED, WHICH ARE BASED UPON OR ARISE OUT OF OR IN CONNECTION WITH THE CONDITION OF THE PROPERTY, THE MATTERS ADDRESSED IN SUBSECTIONS (a), (b), (c), (d) AND (e) OF THIS SECTION 4.5, AND WITH RESPECT TO ANY ENVIRONMENTAL DAMAGES OR ENVIRONMENTAL REQUIREMENTS, INCLUDING, WITHOUT LIMITATIONS, THE PHYSICAL, STRUCTURAL, GEOLOGICAL, MECHANICAL AND ENVIRONMENTAL (SURFACE AND SUBSURFACE) CONDITION OF THE REAL PROPERTY (INCLUDING THE IMPROVEMENTS THEREON) OR ANY LAW OR REGULATION RELATING TO HAZARDOUS MATERIALS, INCLUDING, BUT NOT LIMITED TO, LOSSES IN CONNECTION WITH PROPERTY DAMAGE, CLAIMS BY GOVERNMENTAL AGENCIES, DIMINUTION IN VALUE AND PERSONAL INJURY LOSSES. PURCHASER EXPRESSLY UNDERSTANDS AND ACKNOWLEDGES THAT IT IS POSSIBLE THAT UNKNOWN PROBLEMS, (EXCEPT WHERE SELLER KNOWLINGLY MADE A MATERIAL MISREPRESENTATION OR ENGAGED IN FRAUDULENT CONDUCT). CONDITIONS OR LOSSES MAY EXIST WITH RESPECT TO THE PROPERTY AND THAT PURCHASER EXPLICITLY TOOK SUCH INTO ACCOUNT IN DETERMINING THE PURCHASE PRICE FOR THE PROPERTY AND ITS ELECTION TO PROCEED WITH THE PURCHASE THEREOF, AND THAT A PORTION OF SUCH CONSIDERATION, HAVING BEEN BARGAINED FOR BETWEEN THE PARTIES WITH THE KNOWLEDGE OF THE POSSIBILITY OF SUCH UNKNOWN PROBLEMS, CONDITIONS OR CLAIMS, WAS GIVEN IN EXCHANGE FOR A FULL ACCORD, SATISFACTION AND DISCHARGE OF ALL SUCH PROBLEMS, CONDITIONS AND LOSSES. WITHOUT LIMITING THE FOREGOING, THIS RELEASE SPECIFICALLY APPLIES TO ALL LOSSES AND CLAIMS ARISING UNDER THE COMPREHENSIVE ENVIRONMENTAL RESPONSE, COMPENSATION AND LIABILITY ACT OF 1980, AS AMENDED, THE SUPERFUND AMENDMENTS AND REAUTHORIZATION ACT OF 1986, (42 U.S.C. SECTIONS 9601 ET

SEQ.), THE RESOURCES CONSERVATION AND RECOVERY ACT OF 1976, (42 U.S.C. SECTIONS 6901 ET SEQ.), THE CLEAN WATER ACT, (33 U.S.C. SECTIONS 466 ET SEQ.), THE SAFE DRINKING WATER ACT, (14 U.S.C. SECTION 1401-1450), THE HAZARDOUS MATERIALS TRANSPORTATION ACT, (49 U.S.C. SECTIONS 1801 ET SEQ.), THE TOXIC SUBSTANCE CONTROL ACT, (15 U.S.C. SECTIONS 2601-2629), THE CALIFORNIA HAZARDOUS WASTE CONTROL LAW, (CALIFORNIA HEALTH AND SAFETY CODE SECTIONS 25100-25600), THE PORTER-COLOGNE WATER QUALITY CONTROL ACT (CALIFORNIA HEALTH AND SAFETY CODE SECTIONS 13000 ET SEQ.), AND ANY OTHER FEDERAL, STATE OR LOCAL LAW OF SIMILAR EFFECT, AS WELL AS ANY AND ALL COMMON LAW CLAIMS. IN ACCORDANCE WITH THE FOREGOING, PURCHASER WAIVES ALL RIGHTS UNDER CALIFORNIA CIVIL CODE SECTION 1542 (AND ALL SIMILAR STATUTES IN ALL OTHER STATES) WHICH STATES IN FULL AS FOLLOWS:

“A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR.”

BY INITIALING THIS AGREEMENT CLAUSE, PURCHASER ACKNOWLEDGES THAT THIS SECTION HAS BEEN READ AND FULLY UNDERSTOOD, AND THAT PURCHASER HAS HAD THE CHANCE TO ASK QUESTIONS OF ITS COUNSEL ABOUT ITS MEANING AND SIGNIFICANCE.

PURCHASER’S INITIALS

(g)        “Environmental Damages” means all claims, judgments, damages, losses, penalties, fines, liabilities (including strict liability), encumbrances, liens, costs, and expenses of investigation and defense of any claim, whether or not such claim is ultimately defeated, and of any good faith settlement of judgment, of whatever kind or nature, contingent or otherwise matured or unmatured, foreseeable or unforeseeable, including without limitation reasonable attorneys’ fees and disbursements and consultants’ fees, any of which are incurred at any time as a result of the existence of Hazardous Materials upon, about, beneath the Real Property or migrating or threatening to migrate to or from the Real Property, or the existence of a violation of Environmental Requirements pertaining to the Real Property, regardless of whether the existence of such Hazardous Materials or the violation of Environmental Requirements arose prior to the present ownership or operation of the Real Property.

(h)        “Environmental Requirements” means all applicable present and future statutes, regulations, rules, ordinances, codes, licenses, permits, orders, approvals, plans, authorizations, concessions, franchises, and similar items, of all governmental agencies, departments, commissions, boards, bureaus, or instrumentalities of the United States, states and political subdivisions thereof and all applicable judicial, administrative, and regulatory decrees, judgments, and orders relating to the protection of human health or the environment.

(i)        “Hazardous Materials” means any substance (i) the presence of which requires investigation or remediation under any federal, state or local statute, regulation, ordinance or policy; or (ii) which is defined as a “hazardous waste” or “hazardous substance” under any federal, state or local statute, regulation or ordinance, including without limitation the Comprehensive Environmental Response, Compensation and Liability Act (42 U.S.C. Section 9601 et seq.) and the Resource Conservation and Recovery Act (42 U.S.C. Section 6901 et seq.) and amendments thereto and regulations promulgated thereunder; or (iii) which is toxic, explosive, corrosive, infectious or otherwise hazardous or is regulated by any federal, state or local governmental authority; (iv) without limitation which contains polychlorinated biphenyls (PCBs), asbestos or urea formaldehyde; and (v) mold and fungi.

The provisions of this Section 4.5 shall survive the Close of Escrow.

V.

CLOSING

5.1        Closing Date.  The “Closing Date” for purposes of this Agreement shall be the date thirty (30) days from the date of the expiration or earlier waiver/termination of the Due Diligence Period, or such earlier or later date as may be agreed upon, in writing, by Seller and Purchaser, and shall be the date on which the Close of Escrow occurs.

The “Close of Escrow” for purposes of this Agreement is defined as the time when the Deed is recorded in the Official Records of Los Angeles County, California, by Title Insurer.

In the event the Escrow and this Agreement are canceled and terminated, upon Escrow Holder’s request, the parties shall pay to Escrow Holder all title and escrow cancellation charges; provided, however, that as an agreement between the parties not to concern Escrow Holder, it is agreed that if termination of the Escrow is caused by the default of one party then such party shall be responsible for all escrow and title cancellation charges, and if the termination occurs where neither party is in default or where both parties are in default, then each party shall be responsible for one-half ( ¹/2) of all title and Escrow cancellation charges.

5.2        Action Prior to the Close of Escrow by Seller.  Seller agrees that on or before 5:00 p.m. California time on the business day preceding the Closing Date, Seller will deposit with Escrow Holder such funds and other items and instruments (executed and acknowledged, if appropriate) as may be necessary in order for Escrow Holder to comply with this Agreement, including, without limitation, the following:

(a)        A Grant Deed, in the form and content attached hereto as Exhibit “E”, prepared and executed by Seller and acknowledged before a Notary Public in the manner provided under the laws of the State of California, assigning, conveying and transferring to Purchaser or its designee the Improvements subject only to the Permitted Exceptions (the “Deed”);

(b)        Two (2) duplicate originals of a Bill of Sale, in the form and content attached hereto as Exhibit “F”, prepared and executed by Seller, assigning, conveying and transferring to Purchaser or its designee, without representation or warranty, all of Seller’s right, title and interest in and to the Personal Property and the Inventory (the “Bill of Sale”);

(c)        Two (2) duplicate originals of an Assignment of Intangible Property, in the form and content attached hereto as Exhibit “G”, prepared and executed by Seller, assigning and conveying to Purchaser or its designee, at no cost or expense to Seller, and without representation or warranty, all of Seller’s right, title and interest in the Intangible Property (the “Assignment of Intangibles”);

(d)        Two (2) duplicate originals of an Assignment and Assumption of Contracts, in the form and content attached hereto as Exhibit “H”, prepared and executed by Seller, assigning and conveying to Purchaser or its designee, at no cost or expense to Seller, and without representation or warranty, all of Seller’s right, title and interest under the Contracts (the “Assignment of Contracts”);

(e)        A Non-Foreign Affidavit signed by Seller in the form to be prepared by Escrow Holder (the “Non-Foreign Affidavit”);

(f)        Two (2) duplicate originals of an Assignment and Assumption of Ground Lease and Consent, in the form and content attached hereto as Exhibit “I”, prepared and executed by Seller and the “Landlord” under the Ground Lease, assigning and conveying to Purchaser or its designee, without representation or warranty, all of Seller’s right, title and interest under the Ground Lease (the “Assignment of Ground Lease”) together with the ground lessor consent;

(g)        A written agreement between Seller and Existing Manager terminating the Existing Management Agreement and all of Existing Manager’s rights and obligations thereunder to manage or operate the Hotel from and after the Closing Date;

(h)        Originals of the Ground Lease;

(i)        The Escrow Holder’s Closing Statement, executed by Seller; and

(j)        Such other funds, instruments or documents as may be necessary to effect or carry out the covenants and obligations to be performed by Seller pursuant to this Agreement.

5.3        Action Prior to the Close of Escrow by Purchaser.  Purchaser agrees that on or before 5:00 p.m. California time on the business day preceding the Closing Date, Purchaser will deposit with Escrow Holder all additional funds (in Good Funds) and/or documents (executed and acknowledged, if appropriate) which are necessary to comply with the terms of this Agreement, including without limitation:

(a)        The funds referred to in Section 2.2.2 hereof;

(b)        Two (2) fully executed duplicate originals of the Assignment of Contracts executed by Purchaser;

(c)        Two (2) fully executed duplicate originals of the Assignment of Intangibles executed by Purchaser;

(d)        Two (2) fully executed duplicate originals of the Assignment of Ground Lease executed by Purchaser;

(e)        Such other funds, instruments or documents as may be necessary to effect or carry out the covenants and obligations to be performed by Purchaser pursuant to this Agreement; and

(f)        The Escrow Holder’s Closing Statement, executed by Purchaser.

5.4        Recording of Deed and Assignment of Ground Lease.  Escrow Holder will cause the Deed and the Assignment of Ground Lease to be dated and recorded in the Official Records of the County of Los Angeles, State of California, and all other conveyance documents deposited with Escrow Holder dated as of Close of Escrow, when (but in no event after the Closing Date) Title Insurer is irrevocably committed to issue the Title Policy to be issued as contemplated in this Agreement, and holds for the account of Seller and Purchaser the items and funds (if any) to be delivered to Seller and Purchaser through the Escrow, after payment of costs, expenses, disbursements and prorations chargeable to Seller or Purchaser pursuant to the provisions of this Agreement.

The amount of any documentary transfer taxes will not be posted on the Deed or the Assignment of Ground Lease, but will be properly reported by a separate tax affidavit filed by Escrow Holder with the Assignment of Ground Lease.

5.5        Prorations.

5.5.1    Taxes.  All non-delinquent real estate and personal property general and special taxes and assessments for the Property for the current assessment year, and whether due and payable or not, shall be prorated as of the Closing Date. It is understood that any supplemental property tax bill issued as a result of the sale of the Property pursuant to the provisions of this Agreement, shall be borne by Purchaser. Notwithstanding anything to the contrary in this Agreement, Seller shall retain all right, title and interest in and to any and all property tax (both real property and personal property) refunds and claims for refunds with respect to the Property for any period prior to the Closing Date. Purchaser shall be responsible for, and shall pay, all sales, use and other transfer taxes imposed in connection with the sale and transfer of the Personal Property, the Inventory and the Intangible Property.

5.5.2    Advance Reservations.    At the Close of Escrow, Seller shall provide Purchaser with a schedule of post-closing confirmed Bookings for the Hotel. Purchaser shall honor all such confirmed and Bookings, provided that such Bookings were booked in the Ordinary Course. Purchaser shall receive a credit for all prepaid deposits for Bookings scheduled for accommodations or events after the Closing Date which Purchaser is obligated to honor pursuant to this Agreement, except to the extent such deposits are transferred to Purchaser.

5.5.3    Utility Service.  Seller shall request each utility company providing utility service to the Real Property to cause all utility billings to be closed and billed as of the Closing Date in order that utility charges may be separately billed for the period prior to the Closing Date and the period on and after the Closing Date. In the event any such utility charges are not separately billed, the same shall be prorated by estimating such cost on the basis of the most recent bill for such service; provided, however, that after the Close of Escrow, Seller and Purchaser shall prorate the amount of such utilities and pay any deficiency in the original proration to the other party promptly upon receipt of the actual bill for the relevant billing period. In connection with any such proration, it shall be presumed that utility charges were uniformly incurred during the billing period in which the Close of Escrow occurs.

5.5.4    Revenue From Operations.  As to the Hotel, all revenues from operations, including, without limitation, guest room rentals, revenue from the minibars (if any), banquet rooms rentals, vending machines, coin telephones, and other income-producing equipment arising through 12:01 a.m. California time on the Close of Escrow (the “Cut-Off Time”) shall belong to Seller. All revenues from operations, including, without limitation, guest room rentals, revenue from the minibars (if any), banquet rooms rentals, vending machines, coin telephones, and other income producing equipment arising after the Cut-Off Time shall belong to Purchaser. Revenue from guest room rentals for the evening before the date of the Close of Escrow through to the day of the Close of Escrow shall be divided equally between Seller and Purchaser. All prepaid rentals, room rental deposits, and all other deposits for advance reservations and Bookings for the period after the Cut-Off Time, shall be credited to Purchaser.

5.5.5    Accounts Payable and Operating Expenses.  All obligations and liabilities (for services and materials ordered, or otherwise) and accounts payable for the Hotel and the Property owing as of the Closing Date for merchandise, equipment, tour agents’ and travel agents’ commissions, advertisements, supplies and other materials and services shall be prorated between Seller and Purchaser as of the Closing Date. Seller shall receive a credit for all prepaid expenses. Notwithstanding the foregoing, all liabilities for issued and outstanding gift certificates and script for the Hotel shall be assumed by Purchaser and honored in accordance with the terms thereof, without credit to the Purchase Price.

5.5.6    Miscellaneous Permits and Taxes.  All water and sewer charges, taxes (other than ad valorem property taxes), including license taxes or fees for licenses (other than the Liquor Licenses) which are assignable or transferable without added cost and have a value which will survive Close of Escrow, including, but not limited to, and any unpaid taxes payable in arrears, shall be prorated as of the Closing Date. Seller will be credited for that portion of taxes and fees paid by Seller allocable to the period after the Closing Date.

5.5.7    The Ground Lease and the Contracts.  All obligations, payments and receipts, as applicable, under the Ground Lease and the Contracts shall be prorated between Purchaser and Seller as of the Closing Date. Seller shall receive a credit for all prepayments and deposits paid thereunder, and Purchaser shall receive a credit for all prepayments and deposits received by Seller thereunder.

5.5.8    Other Income.    All other income derived by Seller from the Property accruing or relating to the period up to and including the Cut-Off-Time shall be paid to Seller. All other income derived by Seller from the Property accruing or relating to the period on and after the Cut-Off-Time shall be paid to Purchaser.

5.5.9    Other Expenses.    All other expenses and obligations not otherwise specified in this Section 5.5 incurred in the ownership of the Property and operation of the Hotel shall be prorated between Seller and Purchaser as of the Closing Date.

5.5.10    Gift Shop Inventory.    Seller shall receive a credit for all gift shop inventory held by Seller and/or Tarsadia Hotels for sale at the Hotel, in an amount equal to Seller’s/Tarsadia Hotel’s actual cost thereof.

5.5.11    House Banks.    On the Close of Escrow, Seller shall receive a credit through the Escrow for an amount equal to all till money, cash-on-hand, and all sums in house banks for the Hotel, in which case all right, title and interest to the till money, cash-on-hand and house banks shall be assigned and conveyed by Seller to Purchaser. In the event Seller and Purchaser are unable to agree upon the amount of the till money, cash-on-hand and house banks, the provisions of this Section 5.5.11 shall be inapplicable, and title to the till money, cash-on-hand and house banks shall remain with Seller. The failure of Purchaser and Seller to agree on the amounts of the till money, cash-on-hand and house banks shall not be deemed a condition precedent to the obligations of Seller and Purchaser under this Agreement.

5.5.12    Delayed Adjustments.    If, at any time following the Closing Date, the amount of an item listed in this Section 5.5 shall prove to be incorrect, the party in whose favor the error was made shall pay to the other party within fifteen (15) days after request the sum necessary to correct such error upon receipt of proof of such error, provided that such proof is delivered to the party from whom payment is requested on or before one hundred eighty (180) days after the Close of Escrow. The acceptance of the closing statement by either party shall not prevent later readjustment pursuant to this Section 5.5.12. After the Close of Escrow, each party shall have reasonable access to the books and records of the other party with respect to all matters set forth in this Section 5.5 for the purposes of determining the accuracy of all adjustments and the performance of the obligations of the parties under this Section 5.5.

5.5.13    Proration Allocation.    For proration purposes, the date of the Close of Escrow shall be charged to Purchaser.

5.5.14 Survival.    The provisions of this Section 5.5 shall survive the Close of Escrow.

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

5.6.1    Safe Deposit Boxes.    On the day prior to the Closing Date, Seller shall send written notice to guests in the Hotel who have safe deposit boxes advising them of the sale of the Hotel to Purchaser and the procedures to be followed pursuant to this Section 5.6.1. On

the Closing Date, Seller shall deliver to Purchaser all keys to the safe deposit boxes in the Hotel, all receipts and agreements relating to such safe deposit boxes, and a complete list of the name and room number of each depositor. Each box in use by a Hotel guest shall then be sealed by representatives of Seller and Purchaser. At Purchaser’s option, guests may be requested to remove and verify the contents of the sealed boxes prior to the Close of Escrow. All such removals and verifications shall be under the supervision of a representative to be agreed upon between Purchaser and Seller. Purchaser shall be responsible for all boxes once the seal is broken, and for the contents of all boxes which are verified. Seller shall be responsible for any claims pertaining to any property allegedly deposited in a safe deposit prior to the Closing Date, the seal of which was not broken. Each of Seller and Purchaser shall indemnify and hold the other harmless from and against all claims and losses arising from such indemnifying party’s obligations under this Section 5.6.1.

5.6.2    Baggage Inventory.    All guest baggage and other guest property checked and left in the possession, care and control of Seller shall be listed in an inventory to be prepared in duplicate and signed by Seller’s and Purchaser’s representatives on the Closing Date. Purchaser shall be responsible from and after the Closing Date for all baggage (and the contents thereof) and other guest property listed in inventory. Purchaser agrees to indemnify and save and hold Seller harmless from and against any claim arising out of or with respect to the baggage listed in the inventory, and Seller agrees to indemnify and save and hold Purchaser harmless from and against any claim arising prior to the Closing Date out of or with respect to any guest baggage or other guest property not listed in the inventory.

5.7        Closing Costs.    Seller and Purchaser shall each pay one-half (1/2) of the costs of the premium for the Title Policy, the cost for acquiring any additional endorsements to the Title Policy, all costs of any Survey (or update to the Survey) required for the Title Policy, documentary transfer taxes, escrow fees, and recording fees for the Deed and the Assignment of Ground Lease. Purchaser shall pay all charges and costs with respect to any financing obtained. Seller shall pay all charges and costs related to the release of liens related to any financing it obtained.

5.8        California Real Estate Withholding.    Seller and Purchaser appoint Escrow Holder as the withholding agent for purposes of compliance with California Revenue and Taxation Code Section 18662. Prior to the Close of Escrow, Seller will provide Escrow Holder with all information and documentation reasonably required to determine the amount, if any, to be withheld from the proceeds of the sale transaction contemplated herein for payment to the California Franchise Tax Board pursuant to said Revenue and Taxation Code Section, including California Form 593-W or California Form 593-C, whichever is applicable to Seller as of Close of Escrow.

5.9        Distribution of Funds and Documents Following Close of Escrow.    Following Close of Escrow, Escrow Holder shall distribute the documents as follows:

To Seller:

(a)        The cash portion of the Purchase Price as set forth in Section 2.2, less costs, offsets and prorations in accordance with the provisions of this Agreement;

(b)        One (1) fully executed duplicate original of the Bill of Sale;

(c)        One (1) fully executed duplicate original of the Assignment of Intangibles;

(d)        One (1) fully executed duplicate original of the Assignment of Contracts;

(e)        One (1) fully executed duplicate original of the Assignment of Ground Lease;

(f)        One (1) duplicate original or conformed copy as appropriate, of any other document to be received by Seller through Escrow pursuant to the provisions of this Agreement; and

(g)        One (1) copy of any other document delivered to Escrow Holder by Purchaser or Seller pursuant to the terms of this Agreement.

To Purchaser:

(a)        Any excess funds deposited by Purchaser which remain after disbursement to Seller;

(b)        One (1) conformed copy of the Deed, the original to be mailed to Purchaser following the recordation thereof;

(c)        One (1) duplicate original of the Bill of Sale;

(d)        One (1) duplicate original of the Assignment of Intangibles;

(e)        One (1) duplicate original of the Assignment of Contracts;

(f)        One (1) duplicate original of the Assignment of Ground Lease;

(g)        One (1) duplicate original or conformed copy as appropriate, of any other document to be received by Purchaser through Escrow pursuant to the provisions of this Agreement;

(h)        One (1) copy of any other document delivered to Escrow Holder by Purchaser or Seller pursuant to the terms of this Agreement; and

(i)        The original of the Title Policy.

5.10        Possession.  Purchaser shall be entitled to sole possession of the Property on the Close of Escrow (all of which, together with the Contracts, shall be located at the Improvements), subject to the possessory rights of any guests of the Hotel.

VI.

ADDITIONAL COVENANTS AND INDEMNITIES

6.1         Purchaser’s Covenants.

6.1.1    Indemnification.    Purchaser covenants to defend, indemnify and hold harmless Seller, Tarsadia Hotels, and their respective affiliates, owners, employees, agents and representatives from and against any and all claims, penalties, liabilities, fines, losses, causes of action, fees, injuries, damages, liens, proceedings, judgments, actions, rights, demands, costs and expenses (including, without limitation, reasonable attorneys’ fees and court and litigation costs) (a) arising from the use, management, operation, and ownership of the Property, based upon acts, conduct or omissions occurring, on or after the Closing Date, including, without limitation, with respect to and under the Ground Lease and the Contracts, (b) caused by or arising out of any material misrepresentation by Purchaser in connection with this Agreement, (c) arising from the use of the name “Hilton,” any materials referencing the names and logos thereof, and all derivatives thereof on and after the Close of Escrow, and (d) and arising from any breach of this Agreement by Purchaser or any instrument or agreement required delivered or to be delivered pursuant to the provisions of this Agreement, including under the WARN Act. This indemnity shall survive the Close of Escrow.

6.1.2    Seller’s Accounts Receivable.    Purchaser, upon receipt, shall promptly remit to Seller all sums received by Purchaser in payment of any of Seller’s Accounts Receivables. All sums received by Purchaser from a customer, guest or patron owing Seller under a Seller’s Account Receivable shall be credited, first, to the sums owing Seller, and then, to the extent any sums remain, to Purchaser. For a period of one (1) year after the Close of Escrow, Seller shall have the right, from time to time, to inspect and audit the books and records of the Hotel that pertain to income and collections, at Seller’s sole cost (unless it is determined from such audit or inspection that Purchaser has withheld Seller’s Accounts Receivable, then Purchaser shall pay the costs of such audit and inspection), and Purchaser shall provide full and complete access thereto to Seller during normal business hours upon not less than three (3) business days prior Notice, to verify receipt and payment of Seller’s Accounts Receivable.

6.2         Seller’s Covenants.

6.2.1    Indemnification.  Seller covenants to defend, indemnify and hold harmless Purchaser and its affiliates, owners, employees, agents and representatives from and against any and all claims, penalties, liabilities, fines, losses, causes of action, fees, injuries, damages, liens, proceedings, judgments, actions, rights, demands, costs and expenses (including, without limitation, reasonable attorneys’ fees and court and litigation costs) (a) arising from the use, management, operation and ownership of the Property based upon acts, conduct or omissions occurring during the period of Seller’s ownership thereof (except as to, and specifically

excluding, the matters set forth in Section 6.1.1 hereof, Environmental Damages, Environmental Requirements, and the matters addressed in Section 4.5 hereof), (b) arising under the Contracts, the Franchise Agreement and the Ground Lease prior to the Closing Date (other than arising as a result of the transaction contemplated in this Agreement and the assignment thereof to Purchaser), (c) caused by or arising out of any material misrepresentation by Seller in connection with this Agreement, and (d) arising from any breach of this Agreement by Seller or any instrument or agreement required to be delivered or to be delivered pursuant to the provisions of this Agreement. This indemnity shall survive the Close of Escrow.

6.2.2    Termination of the Franchise Agreement and the Hotel Management Agreement.    Prior to the Close of Escrow, and subject to Purchaser’s compliance with its obligations under Section 2.4 hereof, Seller shall terminate, at Seller’s sole cost and expense, and at no cost or expense to Purchaser, the Franchise Agreement and the Existing Management Agreement, and Seller shall indemnify Purchaser from and against all claims and liabilities with respect thereto. This indemnity shall survive the Close of Escrow.

6.2.3    Operation of the Hotel.    Seller, during the term of this Agreement, shall carry on the business and operations of the Hotel in the Ordinary Course. Prior to the Closing Date, Seller shall maintain (or replace with policies of like amounts) all existing insurance policies insuring the Property and the operation of the Hotel. Seller may extend, amend, modify or terminate any of the contracts and leases pertaining to the Hotel, and enter into any new contracts and leases, as Seller deems appropriate to operate, service and maintain the Property in the Ordinary Course; provided, however, that so long as Purchaser is not in default of any of its obligations under this Agreement, (a) from the date of this Agreement to the expiration of the Due Diligence Period, Seller shall provide to Purchaser copies of any such extensions, amendments, modifications and terminations, and any new contracts and leases, which Seller has entered into, or intends to enter into, and (b) from and after the expiration of the Due Diligence Period, Seller shall not enter into any such extensions, amendments, modifications or terminations, or any new contracts and leases, without the prior consent of Purchaser (which consent shall not be unreasonably withheld, delayed or conditioned). Provided Purchaser is not in default of its obligations under this Agreement, then Seller shall not amend or terminate the Ground Lease.

6.3        Employee Matters.    On the Closing Date, Seller shall pay all Compensation for Employees which have accrued up to 3:00 p.m. California time on the Closing Date. Seller shall terminate all of the Employees effective at 3:00 p.m. California time on the Closing Date. Seller shall indemnify, defend and hold harmless Purchaser and its affiliates against any and all labor or employment claims, liabilities or obligations (including, without limitation, attorneys’ fees and costs) which arise or accrue before, or arise out of events occurring before, the Closing Date, which indemnity shall survive the Close of Escrow.

Purchaser shall indemnify, defend and hold harmless Seller, Tarsadia Hotels and their affiliates, owners and employees against any and all labor or employment claims, liabilities or obligations (including, without limitation, attorneys’ fees and costs) which arise or accrue from or after, or arise out of events occurring from or after the Close of Escrow, including, without limitation, all claims arising from the obligations of Purchaser under this Section 6.3 and

from the termination by Purchaser of any Employee, the failure of Purchaser to offer employment to any such Employees, and Purchaser’s decision to continue or discontinue any employment policy or practice of Seller in existence or effect at the Hotel prior to the Close of Escrow, which indemnity shall survive the Close of Escrow. The foregoing indemnity shall not include coverage for any claims, liabilities or obligations predicated on matters which occurred prior to the Close of Escrow even though such claims, liabilities or obligations were first instituted or brought to the attention of Seller or Purchaser after the Close of Escrow, it being expressly understood and agreed by Seller that any such claims or liabilities or obligations shall remain the responsibility of Seller, and Seller shall satisfy all such claims, liabilities and obligations. The foregoing indemnity shall survive the Close of Escrow.

Purchaser acknowledges that Seller is not giving any notice under, or otherwise complying with, the Worker Adjustment and Retraining Notification Act and/or any applicable state law counterpart (together with all rules and regulations promulgated thereunder, the “WARN Act”). Purchaser agrees to or shall cause its hotel manager to offer to hire a sufficient number of the Employees, and on such terms and conditions, as to avoid any violation of the WARN Act in the absence of such notice, and agrees to indemnify and defend Seller and Tarsadia Hotels, and hold them harmless, from and against any and all loss, damage, liability, claim, cost or expense (including, without limitation, reasonable attorneys fees) incurred by any of such parties as a result of the failure to give such notice or otherwise comply with the WARN Act.

6.4        No Obligations of Escrow Holder.  Escrow Holder shall not be concerned with the provisions of this Article VI.

VII.

REPRESENTATIONS AND WARRANTIES

7.1        By Purchaser.    Purchaser represents and warrants to Seller that as of the date hereof and the Close of Escrow:

7.1.1    Organization and Standing.    Purchaser is a limited liability partnership, duly organized, validly existing, and in good standing under the laws of the State of Delaware, Purchaser or its designee will be as of the Closing Date, duly qualified to do business in the State of California, and has the full power and authority to enter into this Agreement and to carry out the transactions contemplated hereby to be carried out by it.

7.1.2    Due Authorization.    Subject to approval by the Board of Trustees of Purchaser’s general partner (the “Board Approval”) to occur on or before the expiration of the Due Diligence Period, the performance of this Agreement and the transactions contemplated hereunder by Purchaser have been duly authorized by all necessary action on the part of Purchaser, and this Agreement is binding on and enforceable against Purchaser in accordance with its terms, except to the extent Seller itself is in default hereunder. Purchaser shall, on or prior to the Closing Date, furnish Seller with certified resolutions evidencing that Purchaser has been duly authorized to enter into and perform this Agreement and the transactions contemplated

hereunder. Except for Board Approval and Seller obtaining the consent of the landlord under the Ground Lease, no further consent of any shareholder, creditor, board of directors, governmental authority or other party to such execution, delivery and performance hereunder is required. The person(s) signing this Agreement, and any document pursuant hereto on behalf of Purchaser, has full power and authority to bind Purchaser.

7.1.3    Lack of Conflict.    Neither the execution of this Agreement nor the consummation of the transactions contemplated hereby will violate any restriction, court order, judgment, law, regulation, charter, bylaw, instrument or agreement to which Purchaser is subject.

7.1.4    Solvency/Bankruptcy.  Purchaser has not (i) made any general assignment for the benefit of creditors, (ii) filed any voluntary petition in bankruptcy or suffered the filing of an involuntary petition in bankruptcy by Purchaser’s creditors, (iii) suffered the appointment of a receiver to take possession of all, or substantially all, of Purchaser’s assets, (iv) suffered the attachment or other judicial seizure of all, or substantially all, of Purchaser’s assets, (v) admitted in writing its inability to pay its debts as they come due, or (vi) made any offer of settlement, extension or compromise to its creditors generally, and has not considered doing or undertaking, and has no current plans to do or undertake, any of the foregoing. Furthermore, Purchaser has not taken, and does not contemplate taking, against it any such actions.

7.2        By Seller.  Seller represents and warrants to Purchaser that as of the date hereof and Close of Escrow:

7.2.1    Organization and Standing.    Seller is a limited liability company, duly organized, validly existing, and in good standing under the laws of the State of California, and has the full power and authority to enter into this Agreement and to carry out the transactions contemplated hereby to be carried out by it.

7.2.2    Due Authorization.    The performance of this Agreement and the transactions contemplated hereunder by Seller have been duly authorized by all necessary action on the part of Seller, and this Agreement is binding on and enforceable against Seller in accordance with its terms. Seller shall, on or prior to the Closing Date, furnish Purchaser with certified resolutions evidencing that Seller has been duly authorized to enter into and perform this Agreement and the transactions contemplated hereunder. No further consent of any member, manager, creditor, governmental authority or other party to such execution, delivery and performance hereunder is required. The person(s) signing this Agreement, and any document pursuant hereto on behalf of Seller, has full power and authority to bind Seller.

7.2.3    Lack of Conflict.    Neither the execution of this Agreement nor the consummation of the transactions contemplated hereby will violate any restriction, court order, judgment, law, regulation, charter, bylaw, instrument, or agreement to which Seller or the Property (or any portion thereof) are subject.

7.2.4    Non-Foreign Seller.    Seller is not a foreign seller as defined in the “Foreign Investment in Real Property Tax Act.”

7.2.5    Solvency/Bankruptcy.  Seller has not (i) made any general assignment for the benefit of creditors, (ii) filed any voluntary petition in bankruptcy or suffered the filing of an involuntary petition in bankruptcy by Seller’s creditors, (iii) suffered the appointment of a receiver to take possession of all, or substantially all of Seller’s assets, (iv) suffered the attachment or other judicial seizure of all or substantially all, of Seller’s assets, (v) admitted in writing its inability to pay its debts as they come due, or (vi) made an offer of settlement, extension or composition to its creditors generally, and has not considered doing or undertaking, and has no current plans to do or undertake any of the foregoing. Furthermore, Seller has not and does not contemplate taking or having taken against it, any such actions.

7.2.6    Ground Lease.  A true and complete copy of the Ground Lease has been made available to Purchaser. The Ground Lease is in full force and effect, and Seller has not received written notice of any default from the landlord thereunder that remains uncured.

7.2.7    Tenant Leases.    There are no leases, licenses, concessions or any other agreements giving anyone other than Seller and transient hotel guests a right to use or occupy the Property or any part thereof.

7.2.8    Existing Management Agreement.    No management agreement affecting the Property exists other than the Existing Management Agreement which will be terminated at the Closing at Seller’s sole cost and expense.

7.2.9    Employees.    All Employees are employees of Seller or the Existing Manager. No Employee is covered by a union contract or collective bargaining agreement.

7.2.10  Contracts.    The copies of the Contracts delivered by Seller to Purchaser are true and correct copies thereof, and are, to Seller’s knowledge, all of such Contracts. Seller is not, to Seller’s knowledge, in material default under any of the terms and provisions thereof, nor has it sent or, to Seller’s knowledge, received any written notice of default except as has been provided to Purchaser.

7.2.11  Condemnation Proceedings.    Seller has not been served with, and to the knowledge of Seller there is no pending or threatened condemnation proceedings against the Real Property or the Hotel.

Wherever the phrase “to Seller’s knowledge” or any similar phrase stating or implying a limitation on the basis of knowledge appears in this Agreement, unless specifically otherwise qualified, such phrase shall mean only the present actual knowledge of Pat Patel and John Murphy of Tarsadia Hotels, without any duty of inquiry, any imputation of the knowledge of another to him, or independent investigation of the relevant matter by any of such individual(s), and without any personal liability. Wherever the phrase “in Seller’s possession”, “in the possession of Seller” or similar phrase appears in this Agreement, such phrase shall be deemed to mean only to the extent the material or other item referred to by such phrase is located at the Hotel or in Seller’s offices in Orange County, California.

Notwithstanding any provision of this Agreement to the contrary, should any of the foregoing representations and warranties of Seller become false or inaccurate prior to the

Close of Escrow, and Seller discloses the same to Purchaser, in writing, prior to the Close of Escrow, then Purchaser’s sole recourse shall be to either (i) terminate this Agreement and cancel the Escrow, in which case the Earnest Money Deposit shall be returned to Purchaser and neither Seller nor Purchaser will have any further liability or obligation under this Agreement (except for those obligations which survive in accordance with their terms), or (ii) proceed with the closing, without reservation, in which case Purchaser shall be deemed to have waived all claims against Seller and Tarsadia with respect to such false or inaccurate representation and warranty.

VIII.

CONDITIONS PRECEDENT TO CLOSE OF ESCROW

8.1        Conditions to Seller’s Obligations.  The obligation of Seller to close the Escrow shall be conditioned upon the satisfaction or Notice of its waiver (delivered to Purchaser and Escrow Holder), in whole or in part, by Seller of each of the following conditions precedent:

(a)        Except by reason of a default by Seller, Escrow Holder is in a position to and will deliver to Seller the instruments and funds accruing to Seller pursuant to the provisions of this Agreement;

(b)        Except with respect to the wrongful acts or omissions of Seller or the holder of the Liquor Licenses under the Liquor Transfer Agreement, Purchaser shall not be in default of any of its obligations under the Liquor Transfer Agreement;

(c)        Purchaser shall have entered into a new franchise agreement for the Hotel in compliance with the terms of Section 2.4 hereof;

(d)        There is no existing uncured material breach of any of the covenants, representations, warranties or obligations of Purchaser set forth in this Agreement that has not been waived by Seller; and

(e)        The Franchise Agreement shall have been terminated with the consent of the franchisee thereunder.

The foregoing conditions contained in this Section 8.1 are intended solely for the benefit of Seller. Seller shall at all times have the right to waive any condition precedent, provided that such waiver is in writing and delivered to Purchaser and Escrow Holder.

8.2        Conditions to Purchaser’s Obligations. The obligations of Purchaser to close the Escrow shall be conditioned upon the satisfaction or Notice of its waiver (delivered to Seller and Escrow Holder), in whole or in part, by Purchaser of each of the following condition precedent:

(a)        Except by reason of a default by Purchaser, Escrow Holder is in a position to and will deliver to Purchaser the instruments and funds, if any, accruing to Purchaser pursuant to the provisions of this Agreement;

(b)        There is no existing uncured material breach of any of the covenants, representations, warranties or obligations of Seller set forth in this Agreement that has not been waived by Purchaser;

(c)        Seller shall have terminated the Existing Management Agreement and, subject to the obligations of Purchaser under Section 2.4 hereof, the Franchise Agreement shall have been terminated;

(d)        Except as arising from the acts and omissions of Purchaser, Title Insurer shall have not withdrawn its commitment to issue the Title Policy in form and content substantially consistent with the Title Commitment approved by Purchaser prior to the expiration of the Due Diligence Period, subject only to the Permitted Exceptions; and

(e)        Except with respect to the acts or omissions of Purchaser, there shall be no defaults by Seller and the holder of the Liquor Licenses under the Liquor Transfer Agreement.

The foregoing conditions contained in this Section 8.2 are intended solely for the benefit of Purchaser. Purchaser shall at all times have the right to waive any condition precedent, provided that such waiver is in writing and delivered to Seller and Purchaser.

8.3        Failure of Conditions to Close of Escrow. Escrow Holder shall be responsible for confirming, on or before the Close of Escrow, that the conditions to the Close of Escrow set forth in Sections 8.1 and 8.2 hereof, and as set forth elsewhere in this Agreement, have been satisfied. Purchaser and Seller hereby agree to deliver their Notices to Escrow Holder, on or before the Close of Escrow, of the satisfaction or waiver of all other conditions to the Close of Escrow hereunder, and, in the event that both Purchaser and Seller specifically notify and instruct Escrow Holder, in writing, to proceed to the Close of Escrow hereunder, all such other conditions to the Close of Escrow hereunder that are not otherwise satisfied shall be deemed to have been waived by both Purchaser and Seller. Escrow Holder shall not proceed to the Close of Escrow hereunder unless both Purchaser and Seller or their respective counsel specifically notify and instruct Escrow Holder to do so.

IX.

LIQUIDATED DAMAGES

9.1        Default by Purchaser. IN THE EVENT THE CLOSING AND THE CONSUMMATION OF THE TRANSACTION HEREIN CONTEMPLATED DOES NOT OCCUR AS HEREIN PROVIDED BY REASON OF ANY MATERIAL DEFAULT OF PURCHASER, PURCHASER AND SELLER AGREE THAT IT WOULD BE IMPRACTICAL AND EXTREMELY DIFFICULT TO ESTIMATE THE DAMAGES WHICH SELLER MAY SUFFER. THEREFORE, PURCHASER AND SELLER DO HEREBY AGREE THAT A REASONABLE ESTIMATE OF THE TOTAL DAMAGES THAT SELLER WOULD SUFFER IN THE EVENT THAT PURCHASER DEFAULTS AND FAILS TO COMPLETE THE PURCHASE OF THE PROPERTY IS AND SHALL BE, AS SELLER’S SOLE AND EXCLUSIVE REMEDY (WHETHER AT LAW OR IN EQUITY), AN AMOUNT EQUAL TO

THE EARNEST MONEY DEPOSIT. SAID AMOUNT SHALL BE THE FULL, AGREED AND LIQUIDATED DAMAGES FOR THE FAILURE OF PURCHASER TO CLOSE AND CONSUMMATE THE TRANSACTIONS HEREIN CONTEMPLATED. ALL OTHER CLAIMS TO DAMAGES OR OTHER REMEDIES IN CONNECTION WITH PURCHASER’S FAILURE TO CLOSE AND CONSUMMATE THE TRANSACTIONS CONTEMPLATED HEREIN ARE EXPRESSLY WAIVED BY SELLER; HOWEVER, SELLER RESERVES ITS RIGHTS TO LEGAL AND EQUITABLE DAMAGES AND REMEDIES FOR ANY OTHER POST-TERMINATION DEFAULT BY PURCHASER HEREUNDER. THE PAYMENT OF SUCH AMOUNT AS LIQUIDATED DAMAGES IS NOT INTENDED AS A FORFEITURE OR PENALTY WITHIN THE MEANING OF CALIFORNIA CIVIL CODE SECTIONS 3275 OR 3369, BUT IS INTENDED TO CONSTITUTE LIQUIDATED DAMAGES TO SELLER PURSUANT TO CALIFORNIA CIVIL CODE SECTION 1671, 1676 AND 1677. SELLER HEREBY WAIVES THE PROVISIONS OF CALIFORNIA CIVIL CODE SECTION 3389. UPON DEFAULT BY PURCHASER, THIS AGREEMENT SHALL BE TERMINATED AND NEITHER PARTY SHALL HAVE ANY FURTHER RIGHTS OR OBLIGATIONS HEREUNDER, EACH TO THE OTHER, EXCEPT ANY INDEMNIFICATION OBLIGATIONS THAT SURVIVE THE CLOSE OF ESCROW, THE RIGHTS OF SELLER EXPRESSLY RESERVED HEREIN, AND FOR THE RIGHT OF SELLER TO COLLECT SUCH LIQUIDATED DAMAGES FROM PURCHASER AND ESCROW HOLDER. IN THE EVENT PURCHASER FAILS TO AUTHORIZE ESCROW HOLDER TO RELEASE THE EARNEST MONEY DEPOSIT WITHIN FIVE (5) BUSINESS DAYS OF THE DEMAND OF SELLER WHEREIN SELLER ALLEGES THE DEFAULT AND NONPERFORMANCE BY PURCHASER, THEN, WITH RESPECT TO SUCH ALLEGED DEFAULT AND NON-PERFORMANCE BY PURCHASER, THE PROVISIONS OF THIS ARTICLE IX SHALL BE VOIDABLE AT THE ELECTION OF SELLER.

SELLER’S INITIALS PURCHASER’S INITIALS

9.2        Default by Seller. IN THE EVENT THE CLOSING AND THE CONSUMMATION OF THE TRANSACTION HEREIN CONTEMPLATED DOES NOT OCCUR AS HEREIN PROVIDED BY REASON OF ANY DEFAULT OF SELLER, PURCHASER AND SELLER AGREE THAT IT WOULD BE IMPRACTICAL AND EXTREMELY DIFFICULT TO ESTIMATE THE DAMAGES WHICH PURCHASER MAY SUFFER. THEREFORE, PURCHASER AND SELLER DO HEREBY AGREE THAT, IN THE EVENT OF SUCH DEFAULT, IN ADDITION TO ATTORNEYS’ FEES AND COSTS PURSUANT TO SECTION 12.2 HEREOF, PURCHASER MAY, AS ITS SOLE RECOURSE AND REMEDY (AT LAW OR IN EQUITY), EITHER: (a) PURSUE AN ACTION AGAINST SELLER FOR SPECIFIC PERFORMANCE; OR (b) RECEIVE THE RETURN OF THE EARNEST MONEY DEPOSIT THEN PAID PLUS AN AMOUNT EQUAL TO PURCHASER’S ACTUAL OUT-OF-POCKET COSTS TO UNRELATED AND INDEPENDENT THIRD PARTY VENDORS, INCLUDING ATTORNEYS’ FEES (EXCEPT IN-HOUSE ATTORNEYS), WITH REGARD TO THIS TRANSACTION (SUCH OUT-OF-POCKET COSTS NOT TO EXCEED ONE HUNDRED THOUSAND DOLLARS ($100,000) IN THE AGGREGATE). ALL OTHER CLAIMS TO DAMAGES OR OTHER REMEDIES IN CONNECTION WITH SELLER’S FAILURE TO CLOSE AND CONSUMMATE THE

TRANSACTIONS CONTEMPLATED HEREIN (OTHER THAN AS SPECIFIED IN (a) AND (b) HEREOF) ARE EXPRESSLY WAIVED BY PURCHASER. THE REFUND OF THE EARNEST MONEY DEPOSIT AS LIQUIDATED DAMAGES IS NOT INTENDED AS A FORFEITURE OR PENALTY WITHIN THE MEANING OF CALIFORNIA CIVIL CODE SECTIONS 3275 OR 3369, BUT IS INTENDED TO CONSTITUTE LIQUIDATED DAMAGES TO PURCHASER PURSUANT TO CALIFORNIA CIVIL CODE SECTION 1671. PURCHASER HEREBY WAIVES THE PROVISIONS OF CALIFORNIA CIVIL CODE SECTION 3389. UPON DEFAULT BY SELLER, IF THIS AGREEMENT IS TERMINATED BY PURCHASER, NEITHER PARTY SHALL HAVE ANY FURTHER RIGHTS OR OBLIGATIONS HEREUNDER, EACH TO THE OTHER, EXCEPT ANY INDEMNIFICATION OBLIGATIONS, THE RIGHTS OF PURCHASER RESERVED HEREIN, AND FOR THE RIGHT OF PURCHASER TO COLLECT SUCH LIQUIDATED DAMAGES FROM SELLER.

SELLER’S INITIALS PURCHASER’S INITIALS

X.

BROKERS

Seller and Purchaser each agree to indemnify, protect, defend and hold the other harmless from and against any claims, actions, suits or demands for payment of any commission, finder’s fee or other sum initiated by any broker, commission agent or other person which such party or its representatives has engaged or retained or with which it has had discussions concerning, in connection with the transaction contemplated by this Agreement or the sale of the Property by Seller. Purchaser shall specifically be responsible for any fees or commissions owed Jordan Richman and Grubb & Ellis.

XI.

NOTICES

Except as otherwise expressly provided in this Agreement, all notices, requests, demands and other communications hereunder (“Notice”) shall be in writing and shall be deemed delivered by (i) hand delivery upon receipt, (ii) registered mail or certified mail, return receipt requested, postage prepaid, upon delivery to the address indicated in the Notice, (iii) by confirmed telecopy or facsimile transmission when sent, or (iv) overnight courier (next business day delivery) on the next business day at 12:00 noon, whichever shall occur first, as follows:

To Seller: KALPANA, LLC Attention: Renee Molloy 620 Newport Center Drive Fourteenth Floor Newport Beach, CA 92660 Telecopier: (949) 610-8210

With a Copy to:	TARSADIA HOTELS Attention: Edward G. Coss, Esq. 620 Newport Center Drive Fourteenth Floor Newport Beach, CA 92660 Telecopier: (949) 610-8222
To Purchaser:	CHESAPEAKE LODGING, L.P. c/o Chesapeake Lodging Trust 1997 Annapolis Exchange Parkway, Suite 410 Annapolis, Maryland 21401 Attn: Graham J. Wootten, SVP and CAO Telecopier: (410) 972-4180
With a Copy to	c/o Chesapeake Lodging Trust 1997 Annapolis Exchange Parkway Suite 410 Annapolis, Maryland 21401 Attention: D. Rick Adams, SVP and CIO Telecopier: (410) 970-4180

Any correctly addressed Notice that is refused, unclaimed or undelivered because of an act or omission of the party to be notified shall be considered to be effective as of the first day that the Notice was refused, unclaimed or considered undeliverable by the postal authorities, messenger or overnight delivery service. The parties hereto shall have the right from time to time, and at any time, to change their respective addresses and each shall have the right to specify as its address any other address within the United States of America, by giving to the other party at least fifteen (15) days prior Notice thereof, in the manner prescribed herein; provided, however, that to be effective, any such change of address must be actually received (as evidenced by a return receipt). Telephone numbers and email addresses, if listed, are listed for convenience purposes only and not for the purposes of giving Notice pursuant to this Agreement.

XII.

MISCELLANEOUS

12.1      Governing Law.    This Agreement shall be governed by and construed in accordance with the laws of the State of California. If any legal action is necessary to enforce the terms and conditions of this Agreement, the parties hereby agree that the Superior Court of California, County of Orange, shall be the sole jurisdiction and venue for the bringing of the action.

12.2      Professional Fees and Costs.    If a lawsuit, arbitration or other proceedings are instituted by any party to enforce any of the terms or conditions of this Agreement against any other party hereto, the prevailing party in such litigation, arbitration or proceedings shall be

entitled, as an additional item of damages, to such reasonable attorneys’ and other professional fees and costs (including, but not limited to, witness fees), court costs, arbitrators’ fees, arbitration administrative fees, travel expenses, and other out-of pocket expenses or costs of such other proceedings, as may be fixed by any court of competent jurisdiction, arbitrator or other judicial or quasi-judicial body having jurisdiction thereof, whether or not such litigation or proceedings proceed to a final judgment or award. For the purposes of this section, any party receiving an arbitration award or a judgment for damages or other amounts shall be deemed to be the prevailing party, regardless of amount of the damage awarded or whether the award or judgment was based on all or some of such party’s claims or causes of action, and any party against whom a lawsuit, arbitration or other proceeding is instituted and later voluntarily dismissed by the instituting party shall be deemed to be the prevailing party.

12.3        Exhibits and Schedules a Part of This Agreement.    The Exhibits and Schedules attached hereto are incorporated in this Agreement by reference and are hereby made a part hereof.

12.4        Executed Counterparts.    This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed an original, but all such counterparts together shall constitute but one and the same instrument; signature pages may be detached from multiple separate counterparts and attached to a single counterpart so that all signature pages are physically attached to the same document. This Agreement shall become effective upon the due execution and delivery of this Agreement to the parties hereto.

12.5        Assignment.    Purchaser may not, and shall have no right or power to, assign, convey and otherwise transfer all or any part of its interest or rights herein without the prior written consent of Seller, which consent may be withheld in Seller’s sole discretion, and any attempted assignment without Seller’s written consent shall be void, invalid and unenforceable. Notwithstanding the foregoing, however, Purchaser may assign and transfer all of its rights and obligations under this Agreement to one (1) or more wholly owned subsidiary(ies) thereof, or to an affiliate(s) thereof in which Purchaser is a sixty-seven percent (67%) or more equity owner thereof; provided, however, that Purchaser shall not be released of its obligations under this Agreement as a result of any such assignment. Any assignment as permitted in the preceding sentence shall be conditioned upon Purchaser delivering to Seller and Escrow Holder, within forty-eight (48) hours of any such assignment, Notice thereof, together with a copy of such assignee’s organizational and formation documents and instruments, a Certificate of Good Standing for such assignee, and copies of the resolutions of Purchaser and such assignee authorizing such assignment. As a further condition to any such permitted assignment, Purchaser shall cause its assignee to execute an assignment and assumption agreement of Purchaser’s obligations under this Agreement (in form and content reasonably and mutually acceptable), and such other documents and instruments as Escrow Holder may reasonably request. Purchaser may also designate a subsidiary to take title to the Property at Closing by giving Notice to Seller no later than ten (10) days prior to the Closing Date.

12.6        IRS - Form 1099-S.  For purposes of complying with Section 6045 of the Internal Revenue Code of 1986, as amended, Escrow Holder shall be deemed the “person responsible for

closing the transaction” and shall be responsible for obtaining the information necessary to file with the Internal Revenue Service Form 1099-S, “Statement for Recipients of Proceeds from Real Estate, Broker and Barter Exchange Transactions.”

12.7        Successors and Assigns.    Subject to the provisions of Section 12.5 hereof, this Agreement shall be binding upon and inure to the benefit of the parties’ respective successors and permitted assigns.

12.8        Time is of the Essence.    Time is of the essence of this Agreement.

12.9    Entire Agreement. This Agreement, and Exhibits and Schedules and other documents and instruments attached to or referenced herein, contain all representations and the entire understanding and agreement between the parties hereto with respect to the purchase and sale of the Property, and all prior and contemporaneous understandings, letters of intent, agreements and representations, whether oral or written, are entirely superseded. In executing this Agreement, each of Seller and Purchaser expressly disclaim any reliance on any oral or written representations, warranties, comments, statements or assurances made by Seller, Purchaser, and any of their respective affiliates, and their respective agents, employees, representatives, attorneys or brokers, as an inducement or otherwise, to Purchaser’s and Seller’s respective execution hereof. No amendment of this Agreement shall be binding unless in writing and executed by the parties hereto.

12.10        Further Assurances.    Whenever and so often as requested by a party, the other party will promptly execute and deliver or cause to be executed and delivered all such other and further instruments, documents or assurances, and promptly do or cause to be done all such other and further things as may be necessary and reasonably required in order to further and more fully vest in such requesting party all rights, interests, powers, benefits privileges and advantages conferred or intended to be conferred upon it by this Agreement, or to effectuate the termination of this Agreement and cancellation of the Escrow (if otherwise permitted hereunder). The terms of this section shall survive the Close of Escrow and/or termination of this Agreement.

12.11        Waiver.  The failure or delay (without regard to the length of time of such failure or delay) by either party to enforce or insist on the strict performance of any covenant, term, obligation, provision, right, option or condition hereunder, or to pursue any action, claim or right arising from any breach, default, or non-performance of any term, obligation or provision of this Agreement, shall not constitute or be construed as a waiver or forgiveness of such covenant, term, obligation, provision, right, option, condition, breach, default or non-performance. To be binding upon and against a party, any waiver must (a) be in writing, (b) be delivered to the party in whose favor the waiver is made (in accordance with the provisions of Article XI hereof), and (c) identify and specify, in reasonable detail, the covenant, term, obligation, provision, right, option, condition, breach, default or non-performance being waived; any purported waiver not complying therewith shall not be effective or binding on the parties hereto. In addition, any previous waiver for the benefit of a party may not be relied upon or be enforced by such party’s successors and assigns, and shall not be binding on the waiving party. Under no circumstances shall a waiver by either party complying with the provisions hereof constitute or be construed as

a continuing waiver of any subsequent failure, default, breach or non-performance of any covenant, term, obligation, provision, right, option or condition under this Agreement.

12.12     Headings. The headings of this Agreement are for purposes of convenience only and shall not limit or define the meaning of the provisions of this Agreement.

12.13    Risk of Loss.

12.13.1        Risk of Loss.  Until the Closing Date, Seller shall bear the risk of loss should there be damage to any of the Improvements by fire or other casualty (collectively “Casualty”). If, prior to the Closing Date, any of the Improvements shall be damaged by any Casualty, Seller shall promptly deliver to Purchaser a Notice (“Casualty Notice”) of such event. Upon Purchaser’s receipt of a Casualty Notice, Seller and Purchaser shall meet promptly to estimate the cost to repair and restore the Improvements to its condition immediately preceding such event and to replace the damaged Personal Property (the “Casualty Renovation Cost”). If the parties are unable to agree on the cost of restoration, the matter will be submitted to an engineer designated by Seller and an engineer designated by Purchaser, each licensed to practice in the state in which the Land is located, and the engineers shall resolve the dispute. Each party hereto shall bear the costs and expenses of its own engineer.

12.13.2        Material Loss.  If the Casualty Renovation Cost exceeds (i) fifteen percent (15%) of the Purchase Price in the event the Casualty is insured against, or (ii) ten percent (10%) of the Purchase Price in the event the Casualty is not insured against, either party hereto may, at its option, elect to terminate this Agreement by Notice to the other party within five (5) days after the date that the Casualty Renovation Cost is determined, in which case the Earnest Money Deposit shall be delivered to Purchaser, and neither party shall have any further rights or obligations hereunder, except for any continuing confidentially and indemnity obligations as provided in this Agreement. If both parties hereto fail to timely make its election to terminate this Agreement, then the Close of Escrow shall take place as provided herein without reduction of the Purchase Price, and Seller shall assign the insurance proceeds to Purchaser in the event the Casualty is insured against and credit the amount of the applicable insurance policy deductible to Purchaser or have the Purchase Price reduced by the Casualty Renovation Cost in the event the Casualty is not insured against.

12.13.3        Nonmaterial Loss.  If the Casualty Renovation Cost is (i) fifteen percent (15%) or less of the Purchase Price in the event the Casualty is insured against, or (ii) ten percent (10%) or less of the Purchase Price in the event the Casualty is not insured against, then, in any such event, neither party hereto shall have any right to terminate this Agreement, but the Closing shall take place as provided herein without reduction of the Purchase Price, and Seller shall assign the insurance proceeds to Purchaser in the event the Casualty is insured against and credit the amount of the applicable insurance policy deductible to Purchaser or have the Purchase Price reduced by the Casualty Renovation Cost in the event the Casualty is not insured against.

12.13.4        Eminent Domain.  If, prior to the Close of Escrow, (i) all or substantially all (or so much thereof so as to substantially and materially interfere with the operation of the Hotel) of the Real Property, (ii) any portion of the parking areas on the Real

Property which results in there being insufficient parking for the operation of the Hotel as established by applicable governmental codes and regulations, or (iii) any access-way to the Real Property or any building with guest rooms is taken by condemnation or eminent domain, at the election of Purchaser this Agreement shall, upon the giving of Notice of such event or of the condemning authorities’ intention so to take the Real Property, terminate, and Purchaser shall receive a full and prompt refund of all sums deposited by them with Escrow Holder and/or Seller. If, prior to the Close of Escrow, less than all or substantially all of the Real Property shall be taken by condemnation or eminent domain, then, if any of the foregoing, in Purchaser’s reasonable opinion, materially impairs the value of the Real Property or any significant interest therein, then Purchaser shall have the option to (A) accept title to the Real Property subject to such taking, in which event at the Close of Escrow all of the proceeds of any award or payment made or to be made by reason of such taking shall be assigned by Seller to Purchaser, and any money theretofore received by Seller in connection with such taking shall be paid over to Purchaser, whereupon Purchaser shall pay the Purchase Price without abatement by reason of such taking, or (B) receive a full and prompt refund of all sums deposited by Purchaser with Escrow Holder and/or Seller. Seller shall not settle, agree to, or accept any award or payment in connection with a taking of less than all of the Real Property without obtaining Purchaser’s prior written consent in each case, which consent shall not be unreasonably withheld or delayed.

12.14    Construction of Agreement.  The parties hereto have negotiated this Agreement at length, and have had the opportunity to consult with, and be represented by, their own competent counsel. This Agreement is, therefore, deemed to have been jointly prepared. In determining the meaning of, or resolving any ambiguity with respect to, any word, phrase or provision of this Agreement, no uncertainty or ambiguity shall be construed or resolved against any party under any rule of construction, including the party primarily responsible for the drafting and preparation of this Agreement.

The words “herein,” “hereof,” “hereunder” and words of similar reference shall mean this Agreement. The words “this Agreement” include the exhibits, schedules addenda and any future written modifications, unless otherwise indicated by the context. All words in this Agreement shall be deemed to include any number or gender as the context or sense of the Agreement requires. The words “will,” “shall” and “must” in this Agreement indicate a mandatory obligation. The use of the words “include,” “includes” and “including” followed by one or more examples is intended to be illustrative and is not a limitation on the scope of the description or term for which the examples are provided. All dollar amounts set forth in this Agreement are stated in United States Dollars, unless otherwise specified. The words “day” and “days” refer to calendar days unless otherwise stated. The words “business day” refer to a day other than a Saturday, Sunday or legal holiday on which banking institutions are closed. The words “month” and “months” refer to calendar months unless otherwise stated. The words “year” and “years” refer to calendar years unless otherwise stated.

12.15    Tax Deferred Exchange.    Seller and Purchaser (the “Cooperating Party”) each agree to fully cooperate with the other (and any owner of such other party) (the “Exchangor”) (including cooperation with any Intermediary (as defined herein) selected by Exchangor) to structure the acquisition of the Property as an exchange of property held for productive use in a trade or business or for investment within the meaning of Section 1031 of the Internal Revenue

Code of 1986 (as amended), and upon request, Cooperating Party agrees to execute additional escrow instructions, documents, agreements or instruments to effect the exchange; provided, however, that Cooperating Party shall incur no additional costs or expenses in this transaction, or be required to acquire, accept or hold title to any property (other than the Property), as a result of or in connection with any such exchange, unless because of Cooperating Party’s default hereunder or under any agreement executed by reason of this Section 12.15.

Exchangor agrees to indemnify, defend or hold Cooperating Party harmless from and against any and all additional costs, expenses, claims, demands, liabilities, losses, obligations, damages, recoveries, and deficiencies (such categories being collectively referred to herein as “Liabilities”) in excess of those Liabilities that Cooperating Party would otherwise have if the transaction contemplated in this Agreement closes as a sale transaction, and that Cooperating Party may incur or suffer, as a result of or in connection with (i) the structuring of the transaction contemplated in this Agreement as an exchange under Internal Revenue Code Section 1031 and/or (ii) the execution of any documents in connection with the exchange. Exchangor’s foregoing indemnity shall not indemnify Cooperating Party for any Liabilities arising as a result of or in connection with any default by Cooperating Party under this Agreement or any default by Cooperating Party under any of the documents or agreements entered into by Cooperating Party in connection with the exchange or for any gross negligence or willful misconduct on the part of Cooperating Party. Implementation of the exchange(s) contemplated in this Section 12.15 shall not be a condition to the Close of Escrow.

Exchangor, at its election, may substitute for any one or more of them, one or more persons or entities (“Intermediary”) as a party(ies) to the Escrow and this Agreement, in which event the Intermediary shall assume and perform the obligations of Exchangor under this Agreement (but without the release of liability of Exchangor for such performance), and Cooperating Party agrees to accept the performance by Intermediary and shall tender its performance to Intermediary.

12.16    No Public Disclosure.  Purchaser shall make no public disclosure of the terms of this transaction without the prior written consent of Seller, which consent Seller shall provide via facsimile transmission or email within one (1) business day of Seller’s receipt of Purchaser’s written request if such disclosure is reasonably necessary to comply with the publicly traded company responsibilities of Purchaser or its parent or otherwise necessary to comply with applicable law. Seller shall make no public disclosure of the terms of this transaction without the prior written consent of purchaser, which consent Purchaser shall promptly provide if such disclosure is reasonably necessary for Seller to comply with applicable law.

12.17    Covenants, Representations and Warranties.  Except as otherwise set forth in this Agreement, all of the covenants, representations and agreements of Seller and Purchaser set forth in this Agreement shall survive the Close of Escrow, except that all representatives and warranties of Seller shall survive only for a period of six (6) months after the Close of Escrow. By proceeding with the closing of the sale transaction, Seller and Purchaser shall be deemed to have waived, and so covenant to waive, any claims of defaults or breaches by the other party existing on or as of the Close of Escrow whether under this Agreement and any other document or instrument executed by the other party in connection with this transaction, of which the

waiving party was aware prior to the Close of Escrow for which the other party shall have no liability.

12.18    Confidentiality.    Other than as required or permitted by the terms of this Agreement, Purchaser shall not release or cause or permit to be released any press notices or releases or publicity (oral or written) or advertising promotion relating to, or otherwise announce or disclose or cause or permit to be announced or disclosed, in any manner whatsoever, the terms and conditions of the purchase and sale transaction for the Property, and nor shall Purchaser or its agents or representatives disclose, in any manner whatsoever, (a) the information provided to Purchaser by Seller or its representatives, or (b) any analyses, compilations, studies or other documents or records prepared by or on behalf of Purchaser, in connection with Purchaser’s due diligence investigation of the Property, without first obtaining the written consent of Seller (collectively, “Proprietary Information”). The foregoing shall not preclude Purchaser (i) from discussing the Proprietary Information with any person who is employed by Purchaser or who, on behalf of Purchaser, is actively and directly participating in the purchase and sale of the Property, including, without limitation, to Purchaser’s trustees, shareholders, partners, members, existing or prospective lenders, attorneys, accountants and other consultants and advisors, or (ii) from complying with all laws, rules, regulations and court orders, including, without limitation, governmental regulatory, disclosure, tax and reporting requirements; provided, however, that if Purchaser is required by applicable law or legal process to disclose any Proprietary Information, Purchaser agrees to furnish only that portion of the Proprietary Information which Purchaser is legally compelled to disclose and to use its best efforts to obtain assurance that, if possible, confidential treatment will be accorded to the Proprietary Information. Purchaser shall inform its respective representatives of the confidential nature of the Proprietary Information and shall direct them to be bound by the terms of this section. In addition to any other remedies available to Seller, Seller shall have the right to seek equitable relief, including, without limitation, injunctive relief or specific performance, against Purchaser in order to enforce the provisions of this section. The provisions of this section shall survive any termination of this Agreement.

Except as permitted pursuant to Section 4.3 hereof, Purchaser agrees not to contact, directly or indirectly, any employees of the Hotel (and any agents or employees thereof) prior to the Close of Escrow, and agrees to be liable for all of Seller’s damages in the event of any such contact by Purchaser or any of its agents or representatives.

12.19    Limitation on Liability.    In consideration of the benefits accruing hereunder, Seller and Purchaser agree that, in the event of any actual or alleged failure, breach or default of this Agreement by Seller or Purchaser:

(a)        The sole and exclusive remedy shall be against the defaulting party and its assets;

(b)        No owner of the defaulting party shall be sued or named as a party in any suit or action;

(c)        No service of process shall be made against any owner or employee of the defaulting party (except as may be necessary to secure jurisdiction of the defaulting party);

(d)        No owner or employee of the defaulting party shall be required to answer or otherwise plead to any service of process;

(e)        No judgment may be taken against any owner or employee of the defaulting party;

(f)        Any judgment taken against any owner or employee of the defaulting party may be vacated and set-aside at any time without hearing;

(g)        No claims shall be made against Tarsadia Hotels;

(h)        No writ of execution will ever be levied against the assets of any owner or employee of the defaulting party; and

(i)        These covenants and agreements are enforceable both by the defaulting party and also by any owner or employee of the defaulting party.

In addition to the foregoing, and notwithstanding any other term or provision of this Agreement to the contrary, except as to Seller’s fraud, and except for a default by Seller of its obligations under the first paragraph of Section 6.2.1 hereof, Seller shall have no liability for the breach of any representation, warranty, covenant, indemnity or other obligation expressly stated to survive the Close of Escrow (collectively, “Seller’s Post-Closing Obligations”), unless and until the aggregate amount of Purchaser’s out-of-pocket damages and third party expenses directly resulting from such breaches shall exceed, and then only to the extent the same exceeds, Fifty Thousand Dollars ($50,000). Furthermore, Seller’s aggregate liability under this Agreement (or otherwise) for the breach of any and all of Seller’s Post-Closing Obligations shall, in no event individually or in the aggregate, exceed three percent (3%) of the Purchase Price. In no event shall Seller have any liability for punitive damages, consequential damages, or damages for diminution-in-value, but shall only be liable for Purchaser’s actual out-of-pocket damages and third party expenses.

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

12.21    Facsimile Signatures.  The execution of this Agreement and all Notices given hereunder and all amendments hereto, may be effected by facsimile signatures, all of which shall be treated as originals; provided, however, that the party receiving a document with a facsimile signature may, by Notice to the other, require the prompt delivery of an original signature to evidence and confirm the delivery of the facsimile signature. Purchaser and Seller each intend to be bound by its respective facsimile transmitted signature, and is aware that the other party will

rely thereon, and each party waives any defenses to the enforcement of the Agreement, and documents, and any Notices delivered by facsimile transmission.

12.22     Exclusivity.  From the date of the last to occur of (a) the mutual execution of this Agreement by Seller and Purchaser and (b) the deposit by Purchaser of the Initial Deposit into the Escrow, until the earlier of (i) the termination of this Agreement, (ii) the default by Purchaser hereunder and subsequent termination of this Agreement by Seller as a result thereof, (iii) the expiration of the Due Diligence Period, or (iv) the waver by Purchaser of the Due Diligence Period, Seller shall not list for sale the Property (but Seller may consider, negotiate and accept back-up offer for the sale of the Property). Upon the expiration or earlier waiver of the Due Diligence Period (provided that Purchaser has not otherwise terminated this Agreement and cancelled the Escrow), until the earlier of the Close of Escrow or the default by Purchaser hereunder and subsequent termination of this Agreement by Seller as a result thereof, Seller shall not market the Property for sale and shall not solicit or otherwise accept offer to purchase the Property.

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EXECUTION

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed on the     14     day of April, 2010.

SELLER:
KALPANA, LLC, a California limited liability company
BY:	MKP One, LLC, a California limited liability company, its Manager
	By:	/s/ Mayur Patel
	Name:	Mayur Patel
	Title:	Member
PURCHASER:
CHESAPEAKE LODGING,L.P. a Delaware limited partnership
BY:	Chesapeake Lodging Trust, a Maryland real estate investment trust, its General Partner
	By:	/s/ D. Rick Adams
	Name:	D. Rick Adams
	Title:	SVP – CIO

ESCROW HOLDER HEREBY ACKNOWLEDGES AND AGREES TO THE ESCROW INSTRUCTIONS SET FORTH IN THIS AGREEMENT.
LAWYERS TITLE INSURANCE COMPANY
BY:	/s/ Michele Mesh
	Michele Mesh, Senior Commercial Escrow Officer
Dated:	April 14, 2010

EX-10.1.1

Exhibit 10.1.1

AMENDMENT NUMBER ONE TO PURCHASE AND SALE AGREEMENT

AND ESCROW INSTRUCTIONS

(535 Grand Avenue, Los Angeles, CA)

THIS AMENDMENT NUMBER ONE TO PURCHASE AND SALE AGREEMENT AND ESCROW INSTRUCTIONS (the “Amendment”) is dated the 4th day of May, 2010, and is made by and between KALPANA, LLC., a California limited liability company (“Seller”), and CHESAPEAKE LODGING, L.P., a Delaware limited partnership (“Purchaser”).

RECITALS

A.        Seller and Purchaser are parties to that certain Purchase and Sale Agreement and Escrow Instructions dated as of April 14, 2010 (the “ Purchase Agreement”), for the purchase and sale of a leasehold estate in, and improvements constructed on, certain real property located in the County of Los Angeles, State of California, more specifically located at and commonly known as 535 Grand Avenue, Los Angeles, on which are constructed certain improvements in, by and through which is operated a hotel and hospitality business under the name of “Hilton Checkers.”

B.        Seller and Purchaser desire to amend the Purchase Agreement to correct a scrivener’s error.

C.        Unless otherwise defined herein, capitalized terms have the meanings ascribed to them in the Purchase Agreement.

AGREEMENT

NOW, THEREFORE, with reference to the foregoing Recitals, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto hereby agree as follows:

I.

AMENDMENT

1.1        Article X is hereby amended to change the word “Purchaser” to “Seller” in the last sentence thereof.

II.

RATIFICATION/CONTROLLING PROVISIONS

Except as amended and/or modified by this Amendment, the Purchase Agreement is hereby ratified and confirmed and all other terms of the Purchase Agreement shall remain in full force and affect, unaltered and unchanged by this Amendment. In the event of any conflict between the provisions of this Amendment and the provisions of the Purchase Agreement, the provisions of this Amendment shall prevail. Whether or not specifically amended by the

1

provisions of this Amendment, all of the terms and provisions of the Purchase Agreement are hereby amended to the extent necessary to give effect to the purpose and intent of this Amendment.

III.

COUNTERPARTS

This Amendment may be executed in any number of counterparts, each of which shall be deemed an original, but all of which, when taken together, will constitute one and the same instrument. The signature page of any counterpart may be detached therefrom without impairing the legal effect of the (signature) thereon, provided such signature page is attached to any other counterpart identical thereto.

IV.

ELECTRONIC AND FACSIMILE SIGNATURES

The execution of this Amendment may be effected by facsimile and/or electronically transmitted signatures, all of which shall be treated as originals; provided, however, that the party receiving a copy hereof with a facsimile and/or electronically transmitted signature may, by written notice to the other, require the prompt delivery of an original signature to evidence and confirm the delivery of the facsimile signature. Purchaser and Seller each intend to be bound by its respective facsimile and/or electronically transmitted signature, and is aware that the other party will rely thereon, and each party waives any defenses to the enforcement of this Amendment delivered by facsimile and/or electronic transmission.

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V.

EXECUTION

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

SELLER:
KALPANA, LLC, a California limited liability company
BY:	MKP One, LLC, a California limited liability company, its Manager
	By:	/s/ Mayur Patel
	Name:	Mayur Patel
	Title:	Member
PURCHASER:
CHESAPEAKE LODGING, L.P. a Delaware limited partnership
BY:	Chesapeake Lodging Trust, a Maryland real estate investment trust, its General Partner
	By:	/s/ D. Rick Adams
	Name:	D. Rick Adams
	Title:	SVP – CIO

3

EX-10.1.2

Exhibit 10.1.2

AMENDMENT NUMBER TWO TO PURCHASE AND SALE AGREEMENT

AND ESCROW INSTRUCTIONS

(535 Grand Avenue, Los Angeles, CA)

THIS AMENDMENT NUMBER TWO TO PURCHASE AND SALE AGREEMENT AND ESCROW INSTRUCTIONS (the “Amendment”) is dated the 17th day of May, 2010, and is made by and between KALPANA, LLC., a California limited liability company (“Seller”), and CHESAPEAKE LODGING, L.P., a Delaware limited partnership (“Purchaser”).

RECITALS

A.        Seller and Purchaser are parties to that certain Purchase and Sale Agreement and Escrow Instructions dated as of April 14, 2010, as amended by that certain Amendment Number One to Purchase and Sale Agreement and Escrow Instructions dated May 4, 2010 (collectively, the “ Purchase Agreement”), for the purchase and sale of a leasehold estate in, and improvements constructed on, certain real property located in the County of Los Angeles, State of California, more specifically located at and commonly known as 535 Grand Avenue, Los Angeles, on which are constructed certain improvements in, by and through which is operated a hotel and hospitality business under the name of “Hilton Checkers.”

B.        Seller and Purchaser desire to amend the Purchase Agreement to change the Closing Date and the effective time for the proration of employee compensation.

C.        Unless otherwise defined herein, capitalized terms have the meanings ascribed to them in the Purchase Agreement.

AGREEMENT

NOW, THEREFORE, with reference to the foregoing Recitals, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto hereby agree as follows:

I.

AMENDMENT

1.1        Section 5.1 is amended to reflect that the Closing Date shall be June 1, 2010.

1.2        In addition, the second paragraph of Section 5.1 is deleted in its entirety and replaced with the following:

“The “Close of Escrow” for purposes of this Agreement is defined as the earlier of the time when (a) the Deed is recorded in the Official Records of Los Angeles County, California, by Title Insurer, or (b) Seller and Purchaser both provide telephonic notice to Escrow Holder (confirmed by email to the other party and Escrow Holder) that they authorize the closing of the purchase and sale transaction as contemplated herein.”

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1.3        The first paragraph of Section 6.3 of the Purchase Agreement is deleted in its entirety and replaced with the following:

“6.3.    Employee Matters. On the Closing Date, Seller shall pay all Compensation for Employees which has accrued up to the Cut-Off Time and Purchaser shall be liable for all Compensation for Employees from the Cut-Off time through the Close of Escrow (which amount shall be reflected as items of proration through the Escrow). Seller shall terminate all of the Employees effective as of the Close of Escrow. Seller shall indemnify, defend and hold harmless Purchaser and its affiliates against any and all labor or employment claims, liabilities or obligations (including, without limitation, attorneys’ fees and costs) which arise or accrue before, or arise out of events occurring before, the Close of Escrow (except for the acts or omissions of Purchaser or its agents), which indemnity shall survive the Close of Escrow.”

II.

RATIFICATION/CONTROLLING PROVISIONS

Except as amended and/or modified by this Amendment, the Purchase Agreement is hereby ratified and confirmed and all other terms of the Purchase Agreement shall remain in full force and affect, unaltered and unchanged by this Amendment. In the event of any conflict between the provisions of this Amendment and the provisions of the Purchase Agreement, the provisions of this Amendment shall prevail. Whether or not specifically amended by the provisions of this Amendment, all of the terms and provisions of the Purchase Agreement are hereby amended to the extent necessary to give effect to the purpose and intent of this Amendment.

III.

COUNTERPARTS

This Amendment may be executed in any number of counterparts, each of which shall be deemed an original, but all of which, when taken together, will constitute one and the same instrument. The signature page of any counterpart may be detached therefrom without impairing the legal effect of the (signature) thereon, provided such signature page is attached to any other counterpart identical thereto.

IV.

ELECTRONIC AND FACSIMILE SIGNATURES

The execution of this Amendment may be effected by facsimile and/or electronically transmitted signatures, all of which shall be treated as originals; provided, however, that the party receiving a copy hereof with a facsimile and/or electronically transmitted signature may, by written notice to the other, require the prompt delivery of an original signature to evidence and confirm the delivery of the facsimile signature. Purchaser and Seller each intend to be bound by its respective facsimile and/or electronically transmitted signature, and is aware that the other

2

party will rely thereon, and each party waives any defenses to the enforcement of this Amendment delivered by facsimile and/or electronic transmission.

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V.

EXECUTION

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

SELLER:
KALPANA, LLC, a California limited liability company
BY:	MKP One, LLC, a California limited liability company, its Manager
	By:	/s/ Mayur Patel
	Name:	Mayur Patel
	Title:	Member
PURCHASER:
CHESAPEAKE LODGING, L.P. a Delaware limited partnership
BY:	Chesapeake Lodging Trust, a Maryland real estate investment trust, its General Partner
	By:	/s/ D. Rick Adams
	Name:	D. Rick Adams
	Title:	SVP – CIO

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EX-10.2

Exhibit 10.2

PURCHASE AND SALE AGREEMENT AND ESCROW INSTRUCTIONS

between

535 GRAND AVENUE, LLC

as Seller

and

CHESAPEAKE LODGING L.P.

as Purchaser

Hilton Checkers – Land

TABLE OF CONTENTS

ARTICLE	PAGE
I. DEFINITIONS	1
II. SALE AND PURCHASE OF LAND	4
2.1          Purchase of Land	4
2.2          Purchase Price and Terms of Payment	4
2.2.1         Earnest Money Deposit	4
2.2.2         Balance of Purchase Price	4
III. ESCROW	5
3.1          Opening of Escrow	5
3.2          Intentionally Omitted	5
3.3          Deposit of Funds	5
IV. CONDITION OF TITLE	5
4.1          Title Commitment	5
4.2          Title to the Land and the Land Rights	6
4.3          Inspection and Due Diligence Review	7
4.4          Notice of Non-Satisfaction	9
4.5          Condition of the Real Property.	10
V. CLOSING	16
5.1          Closing Date	16
5.2          Action Prior to the Close of Escrow by Seller	17
5.3          Action Prior to the Close of Escrow by Purchaser	17
5.4          Recording of Deed	17
5.5           Prorations.	18
5.5.1         Taxes	18
5.5.2         Ground Lease	18
5.5.3         Delayed Adjustments	18
5.5.4         Proration Allocation	18
5.5.5         Survival	18
5.6          Closing Costs	18
5.7          California Real Estate Withholding	18
5.8          Distribution of Funds and Documents Following Close of Escrow	19
5.9           Possession	19
VI. ADDITIONAL COVENANTS AND INDEMNITIES	19
6.1          Purchaser’s Covenants.	19
6.1.1         Indemnification	19
6.2          Seller’s Covenants.	20
6.2.1         Indemnification	20
6.3          No Obligations of Escrow Holder	20

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VII. REPRESENTATIONS AND WARRANTIES	20
7.1          By Purchaser	20
7.1.1         Organization and Standing	20
7.1.2         Due Authorization	20
7.1.3         Lack of Conflict	21
7.1.4         Solvency/Bankruptcy	21
7.2          By Seller	21
7.2.1         Organization and Standing	21
7.2.2         Due Authorization	21
7.2.3         Lack of Conflict	21
7.2.4         Non-Foreign Seller	21
7.2.5         Solvency/Bankruptcy	22
7.2.6         Ground Lease	22
7.2.7         Condemnation Proceedings	22
VIII. CONDITIONS PRECEDENT TO CLOSE OF ESCROW	22
8.1          Conditions to Seller’s Obligations	22
8.2          Conditions to Purchaser’s Obligations	23
8.3          Failure of Conditions to Close of Escrow	23
IX. LIQUIDATED DAMAGES	24
9.1          Default by Purchaser	24
9.2          Default by Seller	24
X. BROKERS	25
XI. NOTICES	26
XII. MISCELLANEOUS	27
12.1        Governing Law	27
12.2        Professional Fees and Costs	27
12.3        Exhibits and Schedules a Part of This Agreement	27
12.4        Executed Counterparts	27
12.5        Assignment	27
12.6        IRS - Form 1099-S	28
12.7        Successors and Assigns	28
12.8        Time is of the Essence	28
12.9        Entire Agreement	28
12.10      Further Assurances	28
12.11      Waiver	29
12.12      Headings	29
12.13      Risk of Loss.	29
12.13.1     Risk of Loss	29
12.13.2     Material Loss	29
12.13.3     Nonmaterial Loss	30
12.13.4     Eminent Domain	30

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12.14      Construction of Agreement	30
12.15      Tax Deferred Exchange	31
12.16      No Public Disclosure	32
12.17      Covenants, Representations and Warranties	32
12.18      Confidentiality	32
12.19      Limitation on Liability	33
12.20      No Third-Party Beneficiaries	34
12.21      Facsimile Signatures	34
12.22      Exclusivity	34
XIII. EXECUTION	35

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PURCHASE AND SALE AGREEMENT AND ESCROW INSTRUCTIONS

This PURCHASE AND SALE AGREEMENT AND ESCROW INSTRUCTIONS (the “Agreement”) is dated this          day of April, 2010, and is made by and between 535 GRAND AVENUE, LLC, a Delaware limited liability company (“Seller”), and CHESAPEAKE LODGING L.P., a Delaware limited partnership (“Purchaser”).

RECITALS

A.        Seller is the owner of certain land located in the City of Los Angeles, County of Los Angeles, State of California, more specifically located at and commonly known as 535 South Grand Avenue, Los Angeles, California 90071 on which are constructed certain improvements in, by, and through which is operated a hotel and hospitality business under the name “Hilton Checkers.”

B.        Subject to the terms and conditions hereof, Seller desires to sell, assign, transfer, convey and deliver to Purchaser, and Purchaser desires to acquire from Seller, all of Seller’s right, title and interest in and to the Land and the Land Rights (as each term is defined hereinbelow), together with all rights, benefits, privileges and appurtenances pertaining thereto, for such consideration as is hereinafter set forth.

AGREEMENT

NOW, THEREFORE, for valuable consideration, including the promises, covenants, representations and warranties hereinafter set forth, the receipt and adequacy of which are hereby acknowledged, the parties, intending to be legally and equitably bound, agree as follows.

I.

DEFINITIONS

As used in this Agreement, the following terms have the meanings ascribed to them in this Article I:

“Additional Deposit.” As set forth in Section 2.2.1 hereof.

“Casualty.” As set forth in Section 12.13.1 hereof.

“Casualty Notice.” As set forth in Section 12.13 hereof.

“Casualty Renovation Cost.” As set forth in Section 12.13 hereof.

“Close of Escrow.” As set forth in Section 5.1 hereof.

“Closing Date.” As set forth in Section 5.1 hereof.

“Cooperating Party.”  As set forth in Section 12.15 hereof.

“Deed.”  As set forth in Section 5.2(a) hereof.

“Due Diligence Period.”  As set forth in Section 4.3 hereof.

“Earnest Money Deposit.”  The Initial Deposit, the Additional Deposit, and all interest accrued thereon.

“Environmental Damages.”  As set forth in Section 4.5(g) hereof.

“Environmental Requirements.”  As set forth in Section 4.5(h) hereof.

“Escrow.”  As set forth in Section 3.1 hereof.

“Escrow Holder.”  Lawyers Title Insurance Corporation, Attention: Michele Y. Mesh, 4100 Newport Place Dr., Suite 120, Newport Beach, CA 92660, Telephone No. (949) 724-3141, Telecopier No. (714) 459-7217, E-mail address: mmesh@ltic.com.

“Exchangor.”  As set forth in Section 12.15 hereof.

“Excluded Documents.”    All (a) financial statements and information, internal memoranda, correspondence, analyses, documents or reports prepared by or for Seller or any affiliate of Seller in connection with this Agreement or otherwise, including, without limitation, tax returns or financial statements of Seller for or in connection with its ownership or operation of the Land (exclusive of Seller’s rental log, which shall be provided to Purchaser), (b) communications between Seller or any affiliate and its attorneys or other agents or representatives, (c) appraisals, assessments or other valuations of the Land in the possession of Seller, and (d) any confidential or proprietary information of Tarsadia Hotels in Seller’s possession, in each case however embodied.

“Good Funds.”  A deposit of cash, cashier’s check, certified funds, or confirmed wire transfer of funds.

“Ground Lease.”  That certain Ground Lease dated December 31, 2005, between Seller, as the “Landlord”, and Kalpana, LLC, as the “Tenant” for and with respect to the Land.

“Hazardous Materials.”  As set forth in Section 4.5(i) hereof.

“Hotel.”  The hotel business operated and conducted on the Real Property commonly known as the Hilton Checkers, 535 South Grand Avenue, Los Angeles, California 90071.

“Improvements.”  The buildings, structures, and other permanent improvements located on the Land, including, without limitation, electrical distribution systems, HVAC systems, walkways, driveways, parking lots, recreational facilities, plumbing, swimming pool, lighting, and mechanical equipment and fixtures installed thereon, and all rights, benefits and privileges appurtenant thereto.

“Initial Deposit.”  As set forth in Section 2.2.1 hereof.

“Intermediary.”  As set forth in Section 12.15 hereof.

“Land.”  The land more particularly described on Exhibit “A” attached hereto and upon which the Improvements are located

“Land Rights.”    All easements, rights-of-way, strips, zones, licenses, transferable hereditaments, privileges, tenements and appurtenants belonging to the Land, and any right or interest in any open or proposed highways, streets, roads, avenues, alleys, easements, strips, gores and rights-of-way in, across, in front of, contiguous to, abutting or adjoining the Land, and other rights and benefits running with the Land and/or the owner of the Land.

“Leasehold Estate.”  The “Tenant’s” interest in and to the Land under the Ground Lease.

“Liabilities.”  As set forth in Section 12.15 hereof.

“Non-Foreign Affidavit.”  As set forth in Section 5.2(e) hereof.

“Notices.”  As set forth in Article XI hereof.

“Opening of Escrow.”  As set forth in Section 3.1 hereof.

“Permits.”  As set forth in Section 4.5(a) hereof.

“Permitted Exceptions.”  As set forth in Section 4.2 hereof.

“Proprietary Information.”  As set forth in Section 12.18 hereof.

“Purchase Price.”  As set forth in Section 2.2 hereof.

“Real Property.”  The Land, the Land Rights and the Improvements.

“Regulations.”  As set forth in Section 4.5(a) hereof.

“Reports.  As set forth in Section 4.5(c) hereof.

“Survey.”  As set forth in Section 4.2 hereof.

“Tarsadia Hotels.”  Tarsadia Hotels, a California corporation.

“Title Commitment.”  As set forth in Section 4.1 hereof.

“Title Insurer.”        Lawyers Title Company, Attention: Doug Abernathy, 801 South Figueroa Street, Suite 870, Los Angeles, CA 90017, Telephone No. (213) 330-3055, Telecopier No. (213) 330-3104, E-mail address: DAbernathy@ltic.com.

“Title Policy.”  As set forth in Section 4.2 hereof.

II.

SALE AND PURCHASE OF LAND AND LAND RIGHTS

2.1        Purchase of Land.  As of the Close of Escrow, and subject to the terms and conditions of this Agreement, Seller shall sell, assign, convey, transfer and deliver to Purchaser, and Purchaser shall purchase and acquire from Seller, all of Seller’s right, title and interest in and to the Land and the Land Rights, free and clear of all liens and encumbrances (other than the Permitted Exceptions), at the Purchase Price provided in Section 2.2. hereof.

2.2        Purchase Price and Terms of Payment.  The purchase price for the Land and the Land Rights (“Purchase Price”) shall be Fourteen Million Dollars ($14,000,000), subject to credits, prorations and adjustments as set forth in Section 5.5 hereof and as otherwise provided in this Agreement, and shall consist of and be payable as follows:

2.2.1        Earnest Money Deposit.  On the business day following the date of the execution hereof by Purchaser and Seller, Purchaser shall deliver to Escrow Holder, in Good Funds, the sum of Two Hundred Fifty Thousand Dollars ($250,000) (together with all interest accrued thereon, the “Initial Deposit”). The Initial Deposit shall be non-refundable to Purchaser if Purchaser does not terminate this Agreement prior to the expiration of the Due Diligence Period pursuant to the provisions of Section 4.4 hereof.

Unless Purchaser has elected to terminate this Agreement in accordance with the provisions of Section 4.4 hereof, prior to the expiration of the Due Diligence Period Purchaser shall deposit with Escrow Holder, in Good Funds, the additional sum of Five Hundred Thousand Dollars ($500,000) (the “Additional Deposit”).

The Earnest Money Deposit shall be held by Escrow Holder in accordance with the terms of this Agreement. The Earnest Money Deposit shall be non-refundable to Purchaser (and shall constitute liquidated damages pursuant to Section 9.1 hereof), upon the expiration of the Due Diligence Period (unless Purchaser has, prior thereto, delivered to Seller its Notice of Purchaser’s termination of this Agreement as provided in Section 4.4 hereof); provided, however that the Earnest Money Deposit shall be refundable to Purchaser in the event of (a) a material uncured default by Seller of its obligations under this Agreement, (b) a failure of a condition precedent to Purchaser’s obligations as set forth in this Agreement or (c) as otherwise specifically provided by this Agreement. The Earnest Money Deposit shall be applied to the Purchase Price on the Close of Escrow.

2.2.2        Balance of Purchase Price.  Not later than 5:00 p.m. California time on the business day preceding the Closing Date, Purchaser shall deposit with Escrow Holder, in Good Funds, the balance of the Purchase Price, reduced or increased by such amounts required to take into account such prorations, credits, costs or other adjustments which are required by this Agreement and which can be computed and determined as of the time for the required deposit hereunder.

III.

ESCROW

3.1        Opening of Escrow.  Purchaser and Seller shall open an escrow (the “Escrow”) with Escrow Holder by depositing with Escrow Holder the Earnest Money Deposit and three (3) copies of this Agreement duly executed (in counterparts or otherwise) by Seller and Purchaser. The time when Escrow Holder so receives the Earnest Money Deposit and the copies of this Agreement, fully executed by the parties and executes and delivers copies thereof to Seller and Purchaser, shall be deemed the “Opening of Escrow.” Purchaser and Seller shall execute and deliver to Escrow Holder, in a timely fashion, such instruments and funds as are reasonably necessary to close the Escrow and consummate the sale and purchase of the Land and the Land Rights (or the exchange thereof, if applicable) in accordance with the terms and provisions of this Agreement.

3.2        Intentionally Omitted.

3.3        Deposit of Funds.  Except as otherwise provided in this Agreement, all funds deposited into the Escrow by Purchaser shall be immediately deposited by Escrow Holder into Treasury Bills or other short-term United States Government obligations, in repurchase contracts for the same, or in a federally insured money market account, subject to the control of Escrow Holder in a bank or savings and loan association, or such other institution approved by Purchaser; provided, however, that such funds must be readily available as necessary to comply with the terms of this Agreement and Escrow Holder’s escrow instructions (including the return of the Earnest Money Deposit, or any portion thereof then on deposit with Escrow Holder, to Purchaser in accordance with this Agreement), and for the Escrow to close within the time specified in Section 5.1 of this Agreement. Except as may be otherwise specifically provided herein, interest on amounts placed by Escrow Holder in any such investments or interest bearing accounts shall accrue to the benefit of Purchaser, and Purchaser shall promptly provide to Escrow Holder Purchaser’s completed and executed W-9 with Purchaser’s Tax Identification Number and Escrow Holder’s Investment Instructions.

IV.

CONDITION OF TITLE

4.1        Title Commitment.  On or before the date hereof, Escrow Holder shall furnish to Purchaser a current commitment for a C.L.T.A. Owner’s Policy of Title Insurance (standard coverage) issued by Title Insurer (the “Title Commitment”) reflecting the status of title to the Real Property and all exceptions, including easements, licenses, restrictions, rights-of-way, leases, covenants, reservations and other conditions, if any, affecting the Real Property, which would appear in a C.L.T.A. Owner’s Policy of Title Insurance (standard coverage) if used, and committing to issue the C.L.T.A. Owner’s Policy of Title Insurance (standard coverage) to Purchaser in an amount equal to or less than the Purchase Price. Accompanying the Title Commitment, Escrow Holder shall cause to be furnished to Purchaser, to the extent available, legible copies of the documents affecting the Real Property referred to in the Title Commitment.

4.2         Title to the Land and the Land Rights.  Effective as of the Close of Escrow, but conditioned upon the Close of Escrow, Title Insurer shall issue to Purchaser Title Insurer’s C.L.T.A. Owner’s Policy of Title Insurance (standard coverage) (the “Title Policy”), with liability in the amount of the Purchase Price for the Land and the Land Rights insuring title therein as vested in Purchaser subject only to the following matters affecting title (“Permitted Exceptions”).

(a)        All general and special property taxes and assessments not yet due and payable or if due and payable not yet delinquent, and all improvement and assessment bonds;

(b)        Supplemental taxes assessed as a result of the sale of the Land and the Land Rights by Seller to Purchaser pursuant to the provisions of California Revenue and Taxation Code Chapter 3.5 (commencing with Section 75);

(c)        All liens, covenants, conditions, restrictions, easements, rights of way, and all other exceptions to title as referenced in the Title Commitment, except monetary liens and encumbrances against the Land and/or Land Rights (other than caused by Purchaser) which Seller shall remove at or prior to the Close of Escrow;

(d)        All exceptions to title disclosed by or in, or arising from or in connection with, the Survey (and any updates thereto) of the Land and the Land Rights for the Title Policy (including, without limitation, easements, encroachments and zoning);

(e)        The Ground Lease;

(f)        Rights of parties in possession not shown by the public records, easements or claims of easements not shown by the public records, but with respect to which Purchaser has knowledge thereof;

(g)        Governmental laws, codes, ordinances and restrictions now or hereafter in effect so far as these affect the Real Property, or any part thereof, including, without limitation, zoning ordinances (and amendments and additions relating thereto) and the Americans with Disabilities Act of 1990, as amended, and any and all other matters, known or unknown, relating to the Land, or the Land Rights, or its condition, use, value or operation;

(h)        Any exceptions created by Purchaser or its agents, employees and/or contractors, including without limitation, any exceptions arising by reason of the entry on the Land by Purchaser or by its agents, employees and/or contractors; and

(i)        All preprinted exceptions and exclusions contained in the Title Policy except those customarily deleted by an owner’s affidavit.

At Purchaser’s election, the Title Policy shall be an A.L.T.A. Owner’s Policy of Title Insurance (extended coverage); provided, however, subject to Section 8.2(c) hereof, that Purchaser’s ability to obtain an A.L.T.A. Owner’s Policy of Title Insurance (extended coverage) shall not be a condition precedent to Purchaser’s obligations hereunder and shall not extend the Closing Date or delay the Close of Escrow. In addition, Purchaser shall have

the right to obtain from Title Insurer such endorsements to the Title Policy and/or such additional liability protection as Purchaser may elect to obtain; provided, however, that Purchaser’s ability to obtain such title endorsements and/or such additional liability protection shall not be a condition precedent to Purchaser’s obligations hereunder and shall not extend or delay the Close of Escrow. Purchaser shall be solely responsible for negotiating with Title Insurer with respect to such A.L.T.A. Owner’s Policy of Title Insurance (extended coverage) and/or with respect to such title endorsements and/or such additional liability protection as may be requested by Purchaser, if any.

Seller shall also deliver to Title Insurer an owner’s affidavit in customary form in connection with the issuance of the Title Policy. Seller will deliver to Purchaser a copy of the latest survey of the Land in its possession, without warranty, and Purchaser shall be solely responsible for, and shall assume the risk of, obtaining a survey (or updating Seller’s survey) of the Land and the Land Rights (the “Survey”) acceptable to Title Insurer for purposes of issuing the Title Policy.

4.3        Inspection and Due Diligence Review.  Purchaser shall have the right, in its sole discretion, until 3:00 p.m. California time on April 29, 2010, or such earlier date as Purchaser shall elect in writing, to satisfy itself, in its sole discretion, as to the condition and extent of the Real Property (the “Due Diligence Period”). Subject to the prior termination of this Agreement, during the Due Diligence Period Seller shall cooperate and provide Purchaser with reasonable and continuing access to the Land (subject to any restrictions under the Ground Lease) upon one (1) business day prior Notice to Seller for the purpose of Purchaser’s inspection and due diligence review. In connection with such review, during normal business hours during the Due Diligence Period, Purchaser shall be afforded the opportunity to review reasonably available books and records, including the Ground Lease and non-proprietary financial reports pertaining to the Land which are in Seller’s possession or under its control, upon reasonable Notice, except that Seller shall have no obligation to deliver or make available to Purchaser, and Purchaser shall have no right to review, the Excluded Documents and the Proprietary Information. Except as otherwise authorized by Seller pursuant to this Section 4.3, neither Purchaser nor any of its employees, agents or representatives shall contact or otherwise discuss this transaction and /or the operation of the Hotel with any on-site employees of the Hotel or otherwise contract any governmental authority with respect to the Real Property, in each case without the written consent of Seller and then only in the presence of a representative of the “Tenant” under the Ground Lease.

Purchaser may, at its sole cost and expense, engage a third-party Certified Public Accountant to perform audits of the books and records of the Land, balance sheets as of December 31, 2009 and December 31, 2008 and the related statements of operations and cash flows for the Land, for the years ended December 31, 2009 and December 31, 2008, which audits shall include all disclosures required by generally accepted accounting principles and Securities and Exchange Commission regulations. Seller shall use commercially reasonable efforts to cooperate in connection with the performance of such audits and shall provide or cause to be provided any information reasonably requested by the accountants relating to such balance sheets, related statements of operations and cash flows for the Land. In connection with such audits, Seller shall provide or cause to be provided to the accountants performing the audits a

representation letter acceptable to Seller in accordance with American Institute of Public Accountants professional standards.

During the Due Diligence Period, Purchaser shall also have the opportunity to conduct a Phase I environmental audit/study, a property condition report, zoning report and such other studies desired by Purchaser (subject to Seller’s consent rights set forth herein) of the Land and the Land Rights, provided such Phase I environmental audit/study is not invasive or intrusive. Any environmental audit/study proposed to be undertaken by Purchaser shall be subject to Seller’s written approval prior to the commencement thereof, which approval shall not be unreasonably withheld. As a condition to any such consent, Purchaser shall obtain and maintain such public liability insurance in an amount of Two Million Dollars ($2,000,000) affecting the Land and the Land Rights, naming Seller as an additional insured.

Purchaser, at all times, will conduct such due diligence in compliance with all applicable laws and in a manner so as to not cause damage, loss, cost or expense to Seller, the Real Property or the tenants or guests of the Real Property, and without unreasonably interfering with or disturbing any employee, tenant or guest at the Real Property. Purchaser shall not reveal to any governmental agency or any other third party (other than Purchaser’s employees, agents, attorneys, trustees, lenders and advisors) not approved by Seller the results of or any other information acquired pursuant to its inspections. Purchaser will promptly restore any damage to the Real Property caused by Purchaser’s inspection to its condition immediately preceding such inspections and examinations and will keep the Real Property free and clear of any mechanic’s liens or materialmen’s liens in connection with such inspections and examinations.

The cost of the inspections and tests undertaken pursuant to this Section 4.3 shall be borne solely by Purchaser. Purchaser shall indemnify, protect, defend, and hold Seller, Seller’s lenders, Tarsadia Hotels, and their affiliates, owners, agents and employees harmless from and against any obligation, liability, claim (including any claim for damage to property or injury to or death of any persons), lien or encumbrance, loss, damage, cost or expense, including reasonable attorneys’ fees, whether or not legal proceedings are instituted, arising from the acts or omissions of Purchaser or its agents, employees or contractors occurring in connection with, or as a result of, such inspections, tests or examinations of the Real Property, except to the extent resulting from Seller’s gross negligence or intentional misconduct. Purchaser shall in no event be responsible under this Section 4.3 for any condition already existing on the Real Property prior to the time of the inspections, except and only to the extent that Purchaser or the inspections exacerbate such existing condition.

Purchaser covenants and agrees that all such information and materials disclosed and/or delivered to it by Seller, or Seller’s agents, employees and representatives, are confidential and proprietary information, and that Purchaser shall hold the same in strict confidence, and shall not disclose the same to anyone other than its agents, employees and advisors on a “need-to-know” basis subject to the confidentiality restrictions set forth herein. Purchaser also agrees that, in the event the transactions contemplated in this Agreement are not consummated as provided herein or Purchaser terminates this Agreement prior to the expiration of the Due Diligence Period, Purchaser shall return all such information and documentation, and all copies thereof, to Seller promptly upon Seller’s request and certify to Seller that it has

destroyed all materials prepared by or for Purchaser and/or its representatives utilizing any such information and documentation.

Except as expressly provided in this Agreement, Seller makes no representations or warranties as to the truth, accuracy or completeness of any third-party materials, data or other information, if any, supplied to Purchaser in connection with Purchaser’s inspection of the Real Property (e.g., that such materials are complete, accurate or the final version thereof, or that all such materials are in Seller’s possession). It is the parties’ express understanding and agreement that any such materials are to be provided only for Purchaser’s convenience in making its own examination and determination prior to the expiration of the Due Diligence Period as to whether it wishes to purchase the Land and the Land Rights, and, in doing so, Purchaser shall rely exclusively on its own independent investigation and evaluation of every aspect of the Real Property and not on any third-party materials supplied by Seller. Purchaser expressly disclaims any intent to rely on any such third-party materials provided to it by Seller in connection with its inspection and agrees that it shall rely solely on its own independently developed or verified information.

The obligations of Purchaser under this Section 4.3 (including its indemnification obligations) shall survive the Close of Escrow or the termination of this Agreement.

4.4        Notice of Non-Satisfaction.   During the Due Diligence Period, by Notice delivered to Seller and Escrow Holder prior to the expiration of the Due Diligence Period, Purchaser may in its sole and absolute discretion, for any reason or for no reason, terminate this Agreement and cancel the Escrow, in which case the Initial Deposit shall be promptly refunded to Purchaser without further instruction from Purchaser or Seller (and notwithstanding instructions received to the contrary), and Purchaser shall return to Seller all information and documentation, and all copies thereof delivered to it pursuant to the provisions of Section 4.3 hereof and certify to Seller that it has destroyed all materials prepared by or for Purchaser and/or its representatives utilizing any such information and documentation, and neither Seller nor Purchaser shall have any further obligations under this Agreement (except as otherwise provided in this Agreement).

If Purchaser provides Notice of its election to waive its right to terminate this Agreement as permitted in this Section 4.4 or fails to provide Notice of cancellation before the expiration of the Due Diligence Period, Purchaser shall be deemed to have approved the state of the Real Property and the condition of title, and shall be deemed to have irrevocably waived its rights to terminate this Agreement during the Due Diligence Period and cancel the Escrow as a result thereof.

The failure of Purchaser to provide a Notice of termination or waiver prior to the expiration of the Due Diligence Period shall be deemed Purchaser’s irrevocable election not to so terminate this Agreement.

4.5     Condition of the Real Property.

(a)        BY ENTERING INTO THIS AGREEMENT, PURCHASER HAS AGREED TO, AND WILL, PERFORM (AND PURCHASER REPRESENTS AND WARRANTS TO SELLER THAT PURCHASER IS CAPABLE OF PERFORMING) A SOPHISTICATED, EXPERT, THOROUGH AND INDEPENDENT INVESTIGATION, ANALYSIS AND EVALUATION OF THE REAL PROPERTY, AND PURCHASER AGREES THAT PURCHASER SHALL BE CHARGED WITH KNOWLEDGE OF ALL INFORMATION WHICH IS OR SHOULD HAVE BEEN ACQUIRED BY PURCHASER AS A RESULT OF SUCH AN INVESTIGATION, ANALYSIS, EVALUATION, AND THE MATERIALS DELIVERED BY SELLER TO PURCHASER. PRIOR TO THE EXPIRATION OF THE DUE DILIGENCE PERIOD, PURCHASER WILL HAVE DETERMINED, SUBJECT TO THE REPRESENTATIONS AND WARRANTIES OF SELLER SET FORTH HEREIN, AND THE TERMS AND CONDITIONS OF THIS AGREEMENT, THAT THE REAL PROPERTY IS ACCEPTABLE TO PURCHASER. PRIOR TO THE EXPIRATION OF THE DUE DILIGENCE PERIOD, PURCHASER WILL HAVE HAD ACCESS TO AND WILL HAVE CONDUCTED ITS OWN THOROUGH AND INDEPENDENT INSPECTION, INVESTIGATION, ANALYSIS AND EVALUATION OF ALL INSTRUMENTS, RECORDS AND DOCUMENTS WHICH PURCHASER MAY DETERMINE TO BE APPROPRIATE OR ADVISABLE TO REVIEW IN CONNECTION WITH PURCHASER’S ACQUISITION OF THE LAND, THE LAND RIGHTS AND THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, INCLUDING THOSE RELATING TO ALL ZONING REGULATIONS AND OTHER GOVERNMENTAL REQUIREMENTS (INCLUDING, WITHOUT LIMITATION, ANY IMPACT THEREOF ON PURCHASER’S INTENDED USE AND/OR DEVELOPMENT OF THE REAL PROPERTY, INCLUDING PURCHASER’S ABILITY TO OBTAIN ANY SUCH APPROVALS, PERMITS AND VARIANCES, AND ANY AMENDMENTS, WAIVERS, MODIFICATIONS, USES AND CHANGES THERETO), SITE AND PHYSICAL CONDITIONS, TITLE MATTERS, THE DUE DILIGENCE MATERIALS DELIVERED TO PURCHASER BY SELLER, AND ALL OTHER MATTERS AFFECTING THE USE, OCCUPANCY, VALUE, AND CONDITION OF THE REAL PROPERTY, AND PURCHASER WILL EITHER HAVE DETERMINED, SUBJECT TO THE REPRESENTATIONS AND WARRANTIES OF SELLER SET FORTH HEREIN, AND THE TERMS AND CONDITIONS OF THIS AGREEMENT, THAT THE INFORMATION AND DATA CONTAINED THEREIN OR EVIDENCED THEREBY ARE SATISFACTORY TO PURCHASER, OR TERMINATED THIS AGREEMENT PRIOR TO THE EXPIRATION OF THE DUE DILIGENCE PERIOD. PURCHASER SPECIFICALLY ACKNOWLEDGES THAT PURCHASER IS NOT RELYING ON SELLER TO INDICATE THE RELATIVE IMPORTANCE OR MATERIALITY OF ANY OF THE INSTRUMENTS, RECORDS, DOCUMENTS AND OTHER INFORMATION MADE AVAILABLE TO PURCHASER FOR REVIEW AND PURCHASER SHALL MAKE ITS OWN DETERMINATION AS TO THE LEVEL OF SCRUTINY IT APPLIES TO SUCH INSTRUMENTS, RECORDS AND DOCUMENTS MADE AVAILABLE TO PURCHASER.

PURCHASER ACKNOWLEDGES THAT SELLER WAS NOT THE DEVELOPER OR THE ORIGINAL OWNER OF THE REAL PROPERTY. PURCHASER FURTHER ACKNOWLEDGES THAT, PRIOR TO THE EXPIRATION OF

THE DUE DILIGENCE PERIOD, PURCHASER WILL HAVE THOROUGHLY INSPECTED AND EXAMINED, AND UNCONDITIONALLY AND IRREVOCABLY APPROVED AND ASSUMED (SUBJECT TO SELLER’S REPRESENTATIONS AND WARRANTIES AS SET FORTH HEREIN) ALL LIABILITY FOR, ALL ELEMENTS COMPRISING THE REAL PROPERTY, AND ALL FACTORS RELATED TO THEIR USE AND OPERATION (BOTH CURRENT AND INTENDED USES), INCLUDING, WITHOUT LIMITATION, THE GROUND LEASE, UTILITIES, PHYSICAL AND FUNCTIONAL ASPECTS OF THE REAL PROPERTY, THE CONSTRUCTION AND CONDITION OF THE REAL PROPERTY, ALL MATTERS AFFECTING AND RELATING TO TITLE, AND MUNICIPAL AND OTHER LEGAL REQUIREMENTS SUCH AS TAXES, ASSESSMENTS AND BONDS, ZONING, USE PERMITS, BUSINESS PERMITS, LICENSES, AND SIMILAR ENTITLEMENTS, INVESTIGATIONS OR ANALYSES OF PRESENT AND FUTURE LAWS, STATUTES, RULES, REGULATIONS, ORDINANCES, LIMITATIONS, RESTRICTIONS OR REQUIREMENTS CONCERNING THE USE, DENSITY, LOCATION AND SUITABILITY OF THE REAL PROPERTY OR ANY EXISTING OR PROPOSED DEVELOPMENT, BUILDOUT, REDEVELOPMENT, CHANGE IN USE, AND CONDITION THEREOF (COLLECTIVELY “REGULATIONS”), INCLUDING, BUT NOT LIMITED TO: ZONING, SUBDIVISION, ENVIRONMENTAL AND OTHER SUCH REGULATIONS; THE NECESSITY AND AVAILABILITY OF ANY GENERAL OR SPECIFIC PLAN AMENDMENTS, REZONING, ZONE VARIANCES, CONDITIONAL USE PERMITS, BUILDING PERMITS, ENVIRONMENTAL IMPACT REPORTS, PARCEL OR SUBDIVISION MAPS, OR ANY OTHER GOVERNMENTAL PERMITS, APPROVALS, ENTITLEMENTS OR ACTS IN RESPECT OF THE REAL PROPERTY (COLLECTIVELY “PERMITS”); THE NECESSITY OR EXISTENCE OF ANY DEDICATIONS, FEES, CHARGES, COSTS OR ASSESSMENTS THAT MAY BE IMPOSED IN CONNECTION WITH ANY REGULATIONS OR THE OBTAINING OF ANY PERMITS; THE ECONOMIC VALUE OF THE REAL PROPERTY, AND THE SIZE, DIMENSIONS, LOCATION AND TOPOGRAPHY OF THE REAL PROPERTY; THE AVAILABILITY OR ADEQUACY OF THE ACCESS TO THE REAL PROPERTY AND OF PARKING; THE EXTENT OF INFRASTRUCTURE OR OTHER IMPROVEMENTS, IF ANY, REQUIRED TO BE BUILT BY PURCHASER ON, NEAR OR CONCERNING THE REAL PROPERTY IN ORDER TO DEVELOP AND BUILDOUT THE REAL PROPERTY; THE EXTENT OR CONDITION OF ANY GRADING OR OTHER SITE WORK ALREADY PERFORMED OR HEREAFTER REQUIRED FOR PURCHASER’S PROPOSED DEVELOPMENT AND BUILDOUT; ANY SURFACE, SOIL, SUBSOIL, GEOLOGIC OR GROUND WATER CONDITIONS OR OTHER PHYSICAL CONDITIONS OF OR AFFECTING THE REAL PROPERTY, SUCH AS AIRCRAFT OVERFLIGHT, TRAFFIC, CLIMATE, DRAINAGE AND AIR; THE POSSIBILITY OF FUTURE FEES AND ASSESSMENTS OR INCREASES IN EXISTING FEES AND ASSESSMENTS BY ONE OR MORE GOVERNMENTAL ENTITIES OR DISTRICTS; AND ALL OTHER MATTERS CONCERNING THE CONDITION, USE, DEVELOPMENT OR SALE OF THE REAL PROPERTY. PURCHASER HEREBY ACKNOWLEDGES THAT NONE OF THE FOREGOING, AND THE FAILURE OF PURCHASER TO OBTAIN ANY OF THE FOREGOING, AS THE CASE MAY BE, SHALL BE THE BASIS FOR PURCHASER’S RIGHT TO TERMINATE THIS AGREEMENT OR OBTAIN AN ADJUSTMENT TO THE PURCHASE PRICE, AND PURCHASER HEREBY

RELEASES AND FOREVER DISCHARGES SELLER FROM ANY AND ALL CLAIMS, LOSSES, DAMAGES, LIABILITIES OR OBLIGATIONS ARISING OUT OF OR IN ANY WAY RELATED TO ALL OF THE ITEMS LISTED IN THIS SECTION, WHICH RELEASE AND DISCHARGE FROM LIABILITY SHALL SURVIVE THE CLOSE OF ESCROW.

PURCHASER ACKNOWLEDGES AND AGREES THAT PURCHASER’S DELIVERY OF AFFIRMATIVE NOTICE OF ITS ELECTION TO WAIVE ITS RIGHT TO TERMINATE THIS AGREEMENT PRIOR TO THE EXPIRATION OF THE DUE DILIGENCE PERIOD SHALL BE CONCLUSIVELY DEEMED PURCHASER’S AFFIRMATION THAT IT HAS COMPLETED ITS INVESTIGATIONS AND DUE DILIGENCE REVIEW OF THE REAL PROPERTY AND HAS (SUBJECT TO SELLER’S REPRESENTATIONS AND WARRANTIES AS SET FORTH HEREIN) APPROVED THE CONDITION AND STATE THEREOF.

(b)        PURCHASER FURTHER ACKNOWLEDGES THAT PURCHASER HAS SUBSTANTIAL EXPERIENCE WITH REAL PROPERTY, HOTELS AND HOTEL OPERATIONS, AND THAT PURCHASER WILL ACQUIRE THE LAND IN “AS IS, WHERE IS, WITH ALL FAULTS” CONDITION, AND (SUBJECT TO SELLER’S REPRESENTATIONS AND WARRANTIES AS SET FORTH HEREIN) SOLELY IN RELIANCE ON PURCHASER’S OWN INSPECTION AND EXAMINATION. PURCHASER WAIVES ANY OBLIGATION ON THE PART OF SELLER, OR ANY OTHER PERSON, TO DISCLOSE ANY DEFECTS OR OTHER DEFICIENCIES OR LIABILITIES IN OR WITH RESPECT TO THE REAL PROPERTY.

(c)        EXCEPT AS TO THOSE REPRESENTATIONS AND WARRANTIES OF SELLER EXPRESSLY SET FORTH IN THIS AGREEMENT, IT IS EXPRESSLY UNDERSTOOD AND AGREED THAT SELLER MAKES NO REPRESENTATIONS, WARRANTIES OR GUARANTIES OF ANY KIND, NATURE OR SORT, EXPRESS OR IMPLIED, WITH RESPECT TO THE COMPLIANCE OF THE REAL PROPERTY WITH APPLICABLE LAWS, THE ABSENCE OF VIOLATIONS OF LAWS, THE PHYSICAL CONDITION, PAST, PRESENT OR FUTURE OPERATION AND/OR PERFORMANCE, OR VALUE, OF THE REAL PROPERTY. SELLER CONVEYS THE LAND TO PURCHASER “AS IS AND WHERE IS, WITH ALL FAULTS,” AND PURCHASER ACKNOWLEDGES THAT, EXCEPT AS SET FORTH HEREIN, SELLER MAKES NO REPRESENTATIONS, GUARANTIES OR WARRANTIES WHATSOEVER, EXPRESS OR IMPLIED, AS TO THE QUALITY, CHARACTER, EXTENT, PERFORMANCE, CONDITION OR SUITABILITY OF THE REAL PROPERTY FOR ANY PURPOSE, INCLUDING, WITHOUT LIMITATION, ANY WARRANTY OR GUARANTY OF MERCHANTABILITY OR FITNESS FOR ANY PURPOSE. PURCHASER ACKNOWLEDGES THAT PURCHASER SHALL BE SOLELY RESPONSIBLE AND LIABLE FOR ASCERTAINING THE TRANSFERABILITY OF ALL LICENSES, PERMITS AND OTHER GOVERNMENTAL CONSENTS FOR THE OWNERSHIP, USE AND OPERATION OF THE LAND, AND SHALL BE SOLELY RESPONSIBLE FOR OBTAINING THE TRANSFERS THEREOF.

EXCEPT WITH RESPECT TO THE REPRESENTATIONS AND WARRANTIES OF SELLER EXPRESSLY SET FORTH IN THIS AGREEMENT,

PURCHASER FURTHER WAIVES ANY AND ALL WARRANTIES, GUARANTIES, CONDITIONS OR LIABILITIES, EXPRESS OR IMPLIED, ARISING BY LAW OR OTHERWISE (INCLUDING, WITHOUT LIMITATION, ANY OBLIGATION OF SELLER WITH RESPECT TO CONSEQUENTIAL DAMAGES) AND ALL TORT LIABILITY, EXCLUDING LIABILITY ARISING FROM SELLER’S GROSS NEGLIGENCE, FRAUD OR INTENTIONAL MISCONDUCT. PURCHASER ALSO ACKNOWLEDGES THAT SOME DEFECTS MAY BECOME APPARENT ONLY AFTER THE CLOSE OF ESCROW AND HEREBY RELEASES AND HOLDS SELLER HARMLESS FROM BLAME AND ALL LIABILITY FOR SUCH “LATENT DEFECTS.” PURCHASER HEREBY COVENANTS NOT TO BRING ANY ACTION AGAINST SELLER BASED ON ANY OF THESE CLAIMS. THIS SECTION SHALL SURVIVE THE CLOSE OF ESCROW.

PURCHASER’S INSPECTION, INVESTIGATION AND SURVEY OF THE REAL PROPERTY, DURING THE DUE DILIGENCE PERIOD, SHALL BE IN LIEU OF ANY NOTICE OR DISCLOSURE REQUIRED BY SECTION 25359.7 OF THE CALIFORNIA HEALTH AND SAFETY CODE, OR BY ANY OTHER PROVISION OF THE CALIFORNIA CIVIL CODE, OR PURSUANT TO ANY OTHER APPLICABLE LAW, INCLUDING, WITHOUT LIMITATION, LAWS REQUIRING DISCLOSURE BY SELLER OF FLOOD, FIRE, SEISMIC HAZARDS, LEAD PAINT, MELLO ROOS, LANDSLIDE AND LIQUEFACTION, OTHER GEOLOGICAL HAZARDS, RAILROAD AND OTHER UTILITY ACCESS, SOIL CONDITIONS AND OTHER CONDITIONS WHICH MAY AFFECT THE USE OF THE REAL PROPERTY, AND PURCHASER HEREBY WAIVES ANY REQUIREMENT FOR A NOTICE PURSUANT TO THOSE PROVISIONS AND HEREBY ACKNOWLEDGES AND AGREES THAT IT IS FAMILIAR WITH SUCH DISCLOSURE REQUIREMENTS AND WILL CONDUCT ITS OWN DUE DILIGENCE WITH RESPECT TO ALL MATTERS COVERED THEREBY, AND HEREBY RELEASES SELLER FROM LIABILITY IN CONNECTION THEREWITH. PURCHASER SHALL BE DEEMED TO HAVE APPROVED ALL CONDITIONS PERTAINING TO THE REAL PROPERTY UNLESS IT CANCELS THE ESCROW IN ACCORDANCE HEREWITH ON OR BEFORE THE END OF THE DUE DILIGENCE PERIOD.

(d)        PURCHASER ALSO ACKNOWLEDGES AND AGREES THAT, ALTHOUGH SELLER HAS PROVIDED TO PURCHASER CERTAIN REPORTS, STUDIES AND SURVEYS FOR OR REGARDING THE REAL PROPERTY (THE “REPORTS”), SELLER HAS NOT VERIFIED THE ACCURACY THEREOF AND MAKES NO REPRESENTATIONS OR WARRANTIES REGARDING THE MATTERS SET FORTH THEREIN, IT BEING THE RESPONSIBILITY OF PURCHASER TO VERIFY THE ACCURACY OF SUCH REPORTS. PURCHASER AGREES THAT SELLER HAS NO LIABILITY OR RESPONSIBILITY FOR THE ACCURACY OR CONTENTS OF ANY SUCH REPORTS. PURCHASER HEREBY RELEASES AND FOREVER DISCHARGES SELLER FROM ANY AND ALL CLAIMS, LOSSES, DAMAGES, LIABILITIES OR OBLIGATIONS ARISING OUT OF OR IN ANY WAY RELATED TO ALL OF THE ITEMS LISTED IN THIS PARAGRAPH 4.5(d) , WHICH RELEASE AND DISCHARGE FROM LIABILITY SHALL SURVIVE THE CLOSE OF ESCROW, EXCEPT FOR SELLER’S FRAUD OR INTENTIONAL MATERIAL MISREPRESENTATION.

    FURTHERMORE, EXCEPT AS TO THOSE REPRESENTATIONS AND WARRANTIES OF SELLER EXPRESSLY SET FORTH IN THIS AGREEMENT, PURCHASER ACKNOWLEDGES THAT SELLER HAS NOT AND DOES NOT MAKE ANY REPRESENTATIONS OR WARRANTIES IN CONNECTION WITH THE INTEGRATION OF HAZARDOUS MATERIALS UPON OR WITHIN THE REAL PROPERTY. IN THAT REGARD, PURCHASER WILL, PRIOR TO THE EXPIRATION OF THE DUE DILIGENCE PERIOD, CONDUCT ITS OWN INVESTIGATION AND OBTAIN ITS OWN ENVIRONMENTAL ASSESSMENT REPORT TO DETERMINE IF THE REAL PROPERTY CONTAINS ANY HAZARDOUS OR TOXIC WASTE, MATERIALS, DISCHARGE, DUMPING OR CONTAMINATION, WHETHER SOIL, GROUNDWATER OR OTHERWISE, WHICH VIOLATES ANY FEDERAL, STATE, LOCAL OR OTHER GOVERNMENTAL LAW, REGULATION OR ORDER OR REQUIRES REPORTING TO ANY GOVERNMENTAL AUTHORITY.

(e)         SELLER SHALL HAVE NO OBLIGATION OR DUTY TO EXPEND FUNDS FOR, OR OTHERWISE BE RESPONSIBLE TO CONDUCT OR PERFORM, ANY CLEAN-UP REQUIREMENT(S) AS IMPOSED BY ANY FEDERAL, STATE OR LOCAL GOVERNMENT LAW, REGULATION, ORDINANCE OR AGENCY FOR THE REMOVAL OF ANY HAZARDOUS MATERIALS CONTAMINATION FROM THE REAL PROPERTY.

(f)         AS OF THE CLOSE OF ESCROW, EXCEPT AS TO SELLER’S REPRESENTATIONS AND WARRANTIES SET FORTH HEREIN, PURCHASER, FOR ITSELF AND ITS OWNERS, SUCCESSORS AND ASSIGNS, HEREBY RELEASES AND FOREVER DISCHARGES SELLER AND TARSADIA HOTELS, AND THEIR PAST, PRESENT AND FUTURE MEMBERS, AFFILIATES, EMPLOYEES, AGENTS, ATTORNEYS, ASSIGNS, AND SUCCESSORS-IN-INTEREST FROM ALL PAST, PRESENT AND FUTURE CLAIMS, DEMANDS, OBLIGATIONS, LOSSES AND CAUSES OF ACTION OF ANY NATURE WHATSOEVER, WHETHER NOW KNOWN OR UNKNOWN, DIRECT OR INDIRECT, FORESEEN OR UNFORESEEN, SUSPECTED OR UNSUSPECTED, WHICH ARE BASED UPON OR ARISE OUT OF OR IN CONNECTION WITH THE CONDITION OF THE REAL PROPERTY, THE MATTERS ADDRESSED IN SUBSECTIONS (a), (b), (c), (d) AND (e) OF THIS SECTION 4.5, AND WITH RESPECT TO ANY ENVIRONMENTAL DAMAGES OR ENVIRONMENTAL REQUIREMENTS, INCLUDING, WITHOUT LIMITATIONS, THE PHYSICAL, STRUCTURAL, GEOLOGICAL, MECHANICAL AND ENVIRONMENTAL (SURFACE AND SUBSURFACE) CONDITION OF THE REAL PROPERTY (INCLUDING THE IMPROVEMENTS THEREON) OR ANY LAW OR REGULATION RELATING TO HAZARDOUS MATERIALS, INCLUDING, BUT NOT LIMITED TO, LOSSES IN CONNECTION WITH REAL PROPERTY DAMAGE, CLAIMS BY GOVERNMENTAL AGENCIES, DIMINUTION IN VALUE AND PERSONAL INJURY LOSSES. PURCHASER EXPRESSLY UNDERSTANDS AND ACKNOWLEDGES THAT IT IS POSSIBLE THAT UNKNOWN PROBLEMS (EXCEPT WHERE SELLER KNOWLINGLY MADE A MATERIAL MISREPRESENTATION OR ENGAGED IN FRAUDULENT CONDUCT), CONDITIONS OR LOSSES MAY EXIST WITH RESPECT TO THE REAL PROPERTY AND THAT PURCHASER EXPLICITLY TOOK SUCH INTO ACCOUNT IN DETERMINING THE PURCHASE PRICE FOR THE LAND AND ITS ELECTION TO

PROCEED WITH THE PURCHASE THEREOF, AND THAT A PORTION OF SUCH CONSIDERATION, HAVING BEEN BARGAINED FOR BETWEEN THE PARTIES WITH THE KNOWLEDGE OF THE POSSIBILITY OF SUCH UNKNOWN PROBLEMS, CONDITIONS OR CLAIMS, WAS GIVEN IN EXCHANGE FOR A FULL ACCORD, SATISFACTION AND DISCHARGE OF ALL SUCH PROBLEMS, CONDITIONS AND LOSSES. WITHOUT LIMITING THE FOREGOING, THIS RELEASE SPECIFICALLY APPLIES TO ALL LOSSES AND CLAIMS ARISING UNDER THE COMPREHENSIVE ENVIRONMENTAL RESPONSE, COMPENSATION AND LIABILITY ACT OF 1980, AS AMENDED, THE SUPERFUND AMENDMENTS AND REAUTHORIZATION ACT OF 1986, (42 U.S.C. SECTIONS 9601 ET SEQ.), THE RESOURCES CONSERVATION AND RECOVERY ACT OF 1976, (42 U.S.C. SECTIONS 6901 ET SEQ.), THE CLEAN WATER ACT, (33 U.S.C. SECTIONS 466 ET SEQ.), THE SAFE DRINKING WATER ACT, (14 U.S.C. SECTION 1401-1450), THE HAZARDOUS MATERIALS TRANSPORTATION ACT, (49 U.S.C. SECTIONS 1801 ET SEQ.), THE TOXIC SUBSTANCE CONTROL ACT, (15 U.S.C. SECTIONS 2601-2629), THE CALIFORNIA HAZARDOUS WASTE CONTROL LAW, (CALIFORNIA HEALTH AND SAFETY CODE SECTIONS 25100-25600), THE PORTER-COLOGNE WATER QUALITY CONTROL ACT (CALIFORNIA HEALTH AND SAFETY CODE SECTIONS 13000 ET SEQ.), AND ANY OTHER FEDERAL, STATE OR LOCAL LAW OF SIMILAR EFFECT, AS WELL AS ANY AND ALL COMMON LAW CLAIMS. IN ACCORDANCE WITH THE FOREGOING, PURCHASER WAIVES ALL RIGHTS UNDER CALIFORNIA CIVIL CODE SECTION 1542 (AND ALL SIMILAR STATUTES IN ALL OTHER STATES) WHICH STATES IN FULL AS FOLLOWS:

“A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR.”

BY INITIALING THIS AGREEMENT CLAUSE, PURCHASER ACKNOWLEDGES THAT THIS SECTION HAS BEEN READ AND FULLY UNDERSTOOD, AND THAT PURCHASER HAS HAD THE CHANCE TO ASK QUESTIONS OF ITS COUNSEL ABOUT ITS MEANING AND SIGNIFICANCE.

PURCHASER’S INITIALS

(g)        “Environmental Damages” means all claims, judgments, damages, losses, penalties, fines, liabilities (including strict liability), encumbrances, liens, costs, and expenses of investigation and defense of any claim, whether or not such claim is ultimately defeated, and of any good faith settlement of judgment, of whatever kind or nature, contingent or otherwise matured or unmatured, foreseeable or unforeseeable, including without limitation reasonable attorneys’ fees and disbursements and consultants’ fees, any of which are incurred at any time as a result of the existence of Hazardous Materials upon, about, beneath the Real Property or migrating or threatening to migrate to or from the Real Property, or the existence of a violation of Environmental Requirements pertaining to the Real Property, regardless of whether the

existence of such Hazardous Materials or the violation of Environmental Requirements arose prior to the present ownership or operation of the Real Property.

(h)        “Environmental Requirements” means all applicable present and future statutes, regulations, rules, ordinances, codes, licenses, permits, orders, approvals, plans, authorizations, concessions, franchises, and similar items, of all governmental agencies, departments, commissions, boards, bureaus, or instrumentalities of the United States, states and political subdivisions thereof and all applicable judicial, administrative, and regulatory decrees, judgments, and orders relating to the protection of human health or the environment.

(i)        “Hazardous Materials” means any substance (i) the presence of which requires investigation or remediation under any federal, state or local statute, regulation, ordinance or policy; or (ii) which is defined as a “hazardous waste” or “hazardous substance” under any federal, state or local statute, regulation or ordinance, including without limitation the Comprehensive Environmental Response, Compensation and Liability Act (42 U.S.C. Section 9601 et seq.) and the Resource Conservation and Recovery Act (42 U.S.C. Section 6901 et seq.) and amendments thereto and regulations promulgated thereunder; or (iii) which is toxic, explosive, corrosive, infectious or otherwise hazardous or is regulated by any federal, state or local governmental authority; (iv) without limitation which contains polychlorinated biphenyls (PCBs), asbestos or urea formaldehyde; and (v) mold and fungi.

The provisions of this Section 4.5 shall survive the Close of Escrow.

V.

CLOSING

5.1         Closing Date.  The “Closing Date” for purposes of this Agreement shall be the date thirty (30) days from the date of the expiration or earlier waiver/termination of the Due Diligence Period, or such earlier or later date as may be agreed upon, in writing, by Seller and Purchaser, and shall be the date on which the Close of Escrow occurs.

The “Close of Escrow” for purposes of this Agreement is defined as the time when the Deed is recorded in the Official Records of Los Angeles County, California, by Title Insurer.

In the event the Escrow and this Agreement are canceled and terminated, upon Escrow Holder’s request, the parties shall pay to Escrow Holder all title and escrow cancellation charges; provided, however, that as an agreement between the parties not to concern Escrow Holder, it is agreed that if termination of the Escrow is caused by the default of one party then such party shall be responsible for all escrow and title cancellation charges, and if the termination occurs where neither party is in default or where both parties are in default, then each party shall be responsible for one-half ( ¹/2) of all title and Escrow cancellation charges.

5.2         Action Prior to the Close of Escrow by Seller.  Seller agrees that on or before 5:00 p.m. California time on the business day preceding the Closing Date, Seller will deposit with Escrow Holder such funds and other items and instruments (executed and acknowledged, if

appropriate) as may be necessary in order for Escrow Holder to comply with this Agreement, including, without limitation, the following:

(a)        A Grant Deed, in the form and content attached hereto as Exhibit “B”, prepared and executed by Seller and acknowledged before a Notary Public in the manner provided under the laws of the State of California, assigning, conveying and transferring to Purchaser or its designee the Land and the Land Rights, subject only to the Permitted Exceptions (the “Deed”);

(b)        A Non-Foreign Affidavit signed by Seller in the form to be prepared by Escrow Holder (the “Non-Foreign Affidavit”);

(c)        Escrow Holder’s closing statement, executed by Seller;

(d)        Originals of the Ground Lease; and

(e)        Such other funds, instruments or documents as may be necessary to effect or carry out the covenants and obligations to be performed by Seller pursuant to this Agreement.

5.3         Action Prior to the Close of Escrow by Purchaser. Purchaser agrees that on or before 5:00 p.m. California time on the business day preceding the Closing Date, Purchaser will deposit with Escrow Holder all additional funds (in Good Funds) and/or documents (executed and acknowledged, if appropriate) which are necessary to comply with the terms of this Agreement, including without limitation:

(a)        The funds referred to in Section 2.2.2 hereof;

(b)        Escrow Holder’s closing statement, executed by Purchaser; and

(c)        Such other funds, instruments or documents as may be necessary to effect or carry out the covenants and obligations to be performed by Purchaser pursuant to this Agreement.

5.4         Recording of Deed.    Escrow Holder will cause the Deed to be dated and recorded in the Official Records of the County of Los Angeles, State of California, and all other conveyance documents deposited with Escrow Holder dated as of Close of Escrow, when (but in no event after the Closing Date) Title Insurer is irrevocably committed to issue the Title Policy to be issued as contemplated in this Agreement, and holds for the account of Seller and Purchaser the items and funds (if any) to be delivered to Seller and Purchaser through the Escrow, after payment of costs, expenses, disbursements and prorations chargeable to Seller or Purchaser pursuant to the provisions of this Agreement.

The amount of any documentary transfer taxes will not be posted on the Deed, but will be properly reported by a separate tax affidavit filed by Escrow Holder with the Deed.

5.5         Prorations.

5.5.1     Taxes.  All non-delinquent real estate and personal property general and special taxes and assessments for the Land for the current assessment year, and whether due and payable or not, shall be prorated as of the Closing Date. It is understood that any supplemental property tax bill issued as a result of the sale of the Land pursuant to the provisions of this Agreement, shall be borne by Purchaser. Notwithstanding anything to the contrary in this Agreement, Seller shall retain all right, title and interest in and to any and all property tax (both real property and personal property) refunds and claims for refunds with respect to the Land for any period prior to the Closing Date.

5.5.2     Ground Lease.  All payments and receipts, as applicable, under the Ground Lease shall be prorated between Purchaser and Seller as of the Closing Date.

5.5.3     Delayed Adjustments.  If, at any time following the Closing Date, the amount of an item listed in this Section 5.5 shall prove to be incorrect, the party in whose favor the error was made shall pay to the other party within fifteen (15) days after request the sum necessary to correct such error upon receipt of proof of such error, provided that such proof is delivered to the party from whom payment is requested on or before one hundred eighty (180) days after the Close of Escrow. The acceptance of the closing statement by either party shall not prevent later readjustment pursuant to this Section 5.5.3. After the Close of Escrow, each party shall have reasonable access to the books and records of the other party with respect to all matters set forth in this Section 5.5 for the purposes of determining the accuracy of all adjustments and the performance of the obligations of the parties under this Section 5.5.

5.5.4     Proration Allocation.    For proration purposes, the date of the Close of Escrow shall be charged to Purchaser.

5.5.5     Survival.    The provisions of this Section 5.5 shall survive the Close of Escrow.

5.6         Closing Costs.    Seller and Purchaser shall each pay one-half (1/2) of the costs of the premium for the Title Policy, the cost for acquiring any additional endorsements to the Title Policy, all costs of any Survey (or update to the Survey) required for the Title Policy, documentary transfer taxes, escrow fees, and recording fees for the Deed. Purchaser shall pay all charges and costs with respect to any financing obtained. Seller shall pay all charges and costs related to the release of liens related to any financing it obtained.

5.7         California Real Estate Withholding.    Seller and Purchaser appoint Escrow Holder as the withholding agent for purposes of compliance with California Revenue and Taxation Code Section 18662. Prior to the Close of Escrow, Seller will provide Escrow Holder with all information and documentation reasonably required to determine the amount, if any, to be withheld from the proceeds of the sale transaction contemplated herein for payment to the California Franchise Tax Board pursuant to said Revenue and Taxation Code Section, including California Form 593-W or California Form 593-C, whichever is applicable to Seller as of Close of Escrow.

5.8         Distribution of Funds and Documents Following Close of Escrow.    Following Close of Escrow, Escrow Holder shall distribute the documents as follows:

To Seller:

(a)         The cash portion of the Purchase Price as set forth in Section 2.2, less costs, offsets and prorations in accordance with the provisions of this Agreement;

(b)         One (1) duplicate original or conformed copy as appropriate, of any other document to be received by Seller through Escrow pursuant to the provisions of this Agreement; and

(c)         One (1) copy of any other document delivered to Escrow Holder by Purchaser or Seller pursuant to the terms of this Agreement.

To Purchaser:

(a)         Any excess funds deposited by Purchaser which remain after disbursement to Seller;

(b)         One (1) conformed copy of the Deed, the original to be mailed to Purchaser following the recordation thereof;

(c)         One (1) duplicate original or conformed copy as appropriate, of any other document to be received by Purchaser through Escrow pursuant to the provisions of this Agreement;

(d)         One (1) copy of any other document delivered to Escrow Holder by Purchaser or Seller pursuant to the terms of this Agreement; and

(e)         The original of the Title Policy.

5.9         Possession.    Purchaser shall be entitled to sole possession of the Land and the Land Rights on the Close of Escrow, subject to the possessory rights of any guests of the Hotel and the rights of the “Tenant” under the Ground Lease.

VI.

ADDITIONAL COVENANTS AND INDEMNITIES

6.1         Purchaser’s Covenants.

6.1.1         Indemnification.    Purchaser covenants to defend, indemnify and hold harmless Seller, Tarsadia Hotels, and their respective affiliates, owners, employees, agents and representatives from and against any and all claims, penalties, liabilities, fines, losses, causes of action, fees, injuries, damages, liens, proceedings, judgments, actions, rights, demands, costs and expenses (including, without limitation, reasonable attorneys’ fees and court and litigation costs)

(a) arising from the and ownership of the Land, based upon acts, conduct or omissions occurring, on or after the Closing Date, including, without limitation, with respect to and under the Ground Lease, (b) caused by or arising out of any material misrepresentation by Purchaser in connection with this Agreement, , and (c) and arising from any breach of this Agreement by Purchaser or any instrument or agreement required delivered or to be delivered pursuant to the provisions of this Agreement. This indemnity shall survive the Close of Escrow.

6.2         Seller’s Covenants.

6.2.1         Indemnification.    Seller covenants to defend, indemnify and hold harmless Purchaser and its affiliates, owners, employees, agents and representatives from and against any and all claims, penalties, liabilities, fines, losses, causes of action, fees, injuries, damages, liens, proceedings, judgments, actions, rights, demands, costs and expenses (including, without limitation, reasonable attorneys’ fees and court and litigation costs) (a) arising from Seller’s ownership of the Land based upon acts, conduct or omissions by Seller occurring during the period of Seller’s ownership thereof (except as to, and specifically excluding, the matters set forth in Section 6.1.1 hereof, Environmental Damages, Environmental Requirements, and the matters addressed in Section 4.5 hereof), (b) arising under the Ground Lease prior to the Closing Date (other than arising as a result of the transaction contemplated in this Agreement and the assignment thereof to Purchaser), (c) caused by or arising out of any material misrepresentation by Seller in connection with this Agreement, and (d) arising from any breach of this Agreement by Seller or any instrument or agreement required to be delivered or to be delivered pursuant to the provisions of this Agreement. This indemnity shall survive the Close of Escrow.

6.3         No Obligations of Escrow Holder.    Escrow Holder shall not be concerned with the provisions of this Article VI.

VII.

REPRESENTATIONS AND WARRANTIES

7.1         By Purchaser.    Purchaser represents and warrants to Seller that as of the date hereof and the Close of Escrow:

7.1.1         Organization and Standing.    Purchaser is a limited liability partnership, duly organized, validly existing, and in good standing under the laws of the State of Delaware, Purchaser or Purchaser’s designee will be as of the Closing Date, duly qualified to do business in the State of California, and has the full power and authority to enter into this Agreement and to carry out the transactions contemplated hereby to be carried out by it.

7.1.2         Due Authorization.    Subject to approval by the Board of Trustees of Purchaser’s general partner (the “Board Approval”) to occur on or before the expiration of the Due Diligence Period, the performance of this Agreement and the transactions contemplated hereunder by Purchaser have been duly authorized by all necessary action on the part of Purchaser, and this Agreement is binding on and enforceable against Purchaser in accordance with its terms, except to the extent Seller itself is in default hereunder. Purchaser shall, on or

prior to the Closing Date, furnish Seller with certified resolutions evidencing that Purchaser has been duly authorized to enter into and perform this Agreement and the transactions contemplated hereunder. Except for Board Approval, no further consent of any shareholder, creditor, board of directors, governmental authority or other party to such execution, delivery and performance hereunder is required. The person(s) signing this Agreement, and any document pursuant hereto on behalf of Purchaser, has full power and authority to bind Purchaser.

7.1.3     Lack of Conflict.    Neither the execution of this Agreement nor the consummation of the transactions contemplated hereby will violate any restriction, court order, judgment, law, regulation, charter, bylaw, instrument or agreement to which Purchaser is subject.

7.1.4     Solvency/Bankruptcy.    Purchaser has not (i) made any general assignment for the benefit of creditors, (ii) filed any voluntary petition in bankruptcy or suffered the filing of an involuntary petition in bankruptcy by Purchaser’s creditors, (iii) suffered the appointment of a receiver to take possession of all, or substantially all, of Purchaser’s assets, (iv) suffered the attachment or other judicial seizure of all, or substantially all, of Purchaser’s assets, (v) admitted in writing its inability to pay its debts as they come due, or (vi) made any offer of settlement, extension or compromise to its creditors generally, and has not considered doing or undertaking, and has no current plans to do or undertake, any of the foregoing. Furthermore, Purchaser has not taken, and does not contemplate taking, against it any such actions.

7.2     By Seller.    Seller represents and warrants to Purchaser that as of the date hereof and Close of Escrow:

7.2.1     Organization and Standing.    Seller is a limited liability company, duly organized, validly existing, and in good standing under the laws of the State of California, and has the full power and authority to enter into this Agreement and to carry out the transactions contemplated hereby to be carried out by it.

7.2.2     Due Authorization.    The performance of this Agreement and the transactions contemplated hereunder by Seller have been duly authorized by all necessary action on the part of Seller, and this Agreement is binding on and enforceable against Seller in accordance with its terms. Seller shall, on or prior to the Closing Date, furnish Purchaser with certified resolutions evidencing that Seller has been duly authorized to enter into and perform this Agreement and the transactions contemplated hereunder. No further consent of any member, manager, creditor, governmental authority or other party to such execution, delivery and performance hereunder is required. The person(s) signing this Agreement, and any document pursuant hereto on behalf of Seller, has full power and authority to bind Seller.

7.2.3     Lack of Conflict.    Neither the execution of this Agreement nor the consummation of the transactions contemplated hereby will violate any restriction, court order, judgment, law, regulation, charter, bylaw, instrument, or agreement to which Seller or the Land (or any portion thereof) are subject.

7.2.4     Non-Foreign Seller.    Seller is not a foreign seller as defined in the “Foreign Investment in Land Tax Act.”

7.2.5     Solvency/Bankruptcy.  Seller has not (i) made any general assignment for the benefit of creditors, (ii) filed any voluntary petition in bankruptcy or suffered the filing of an involuntary petition in bankruptcy by Seller’s creditors, (iii) suffered the appointment of a receiver to take possession of all, or substantially all of Seller’s assets, (iv) suffered the attachment or other judicial seizure of all or substantially all, of Seller’s assets, (v) admitted in writing its inability to pay its debts as they come due, or (vi) made an offer of settlement, extension or composition to its creditors generally, and has not considered doing or undertaking, and has no current plans to do or undertake any of the foregoing. Furthermore, Seller has not and does not contemplate taking or having taken against it, any such actions.

7.2.6     Ground Lease.  A true and complete copy of the Ground Lease has been made available to Purchaser. The Ground Lease is in full force and effect, and Seller has not received written notice of any default from the tenant thereunder that remains uncured.

7.2.7     Condemnation Proceedings.  Seller has not been served with, and to the knowledge of Seller there is no pending or threatened condemnation proceedings against the Real Property.

Wherever the phrase “to Seller’s knowledge” or any similar phrase stating or implying a limitation on the basis of knowledge appears in this Agreement, unless specifically otherwise qualified, such phrase shall mean only the present actual knowledge of Pat Patel and John Murphy of Tarsadia Hotels, without any duty of inquiry, any imputation of the knowledge of another to him, or independent investigation of the relevant matter by any of such individual(s), and without any personal liability. Wherever the phrase “in Seller’s possession”, “in the possession of Seller” or similar phrase appears in this Agreement, such phrase shall be deemed to mean only to the extent the material or other item referred to by such phrase is located in Seller’s offices in Orange County, California.

Notwithstanding any provision of this Agreement to the contrary, should any of the foregoing representations and warranties of Seller become false or inaccurate prior to the Close of Escrow, and Seller discloses the same to Purchaser, in writing, prior to the Close of Escrow, then Purchaser’s sole recourse shall be to either (i) terminate this Agreement and cancel the Escrow, in which case the Earnest Money Deposit shall be returned to Purchaser and neither Seller nor Purchaser will have any further liability or obligation under this Agreement (except for those obligations which survive in accordance with their terms), or (ii) proceed with the closing, without reservation, in which case Purchaser shall be deemed to have waived all claims against Seller and Tarsadia with respect to such false or inaccurate representation and warranty.

VIII.

CONDITIONS PRECEDENT TO CLOSE OF ESCROW

8.1     Conditions to Seller’s Obligations.  The obligation of Seller to close the Escrow shall be conditioned upon the satisfaction or Notice of its waiver (delivered to Purchaser and Escrow Holder), in whole or in part, by Seller of each of the following conditions precedent:

(a)        Except by reason of a default by Seller, Escrow Holder is in a position to and will deliver to Seller the instruments and funds accruing to Seller pursuant to the provisions of this Agreement; and

(b)        There is no existing uncured material breach of any of the covenants, representations, warranties or obligations of Purchaser set forth in this Agreement that has not been waived by Seller.

The foregoing conditions contained in this Section 8.1 are intended solely for the benefit of Seller. Seller shall at all times have the right to waive any condition precedent, provided that such waiver is in writing and delivered to Purchaser and Escrow Holder.

8.2        Conditions to Purchaser’s Obligations.  The obligations of Purchaser to close the Escrow shall be conditioned upon the satisfaction or Notice of its waiver (delivered to Seller and Escrow Holder), in whole or in part, by Purchaser of each of the following condition precedent:

(a)        Except by reason of a default by Purchaser, Escrow Holder is in a position to and will deliver to Purchaser the instruments and funds, if any, accruing to Purchaser pursuant to the provisions of this Agreement;

(b)        There is no existing uncured material breach of any of the covenants, representations, warranties or obligations of Seller set forth in this Agreement that has not been waived by Purchaser; and

(c)        Except as arising from the acts and omissions of Purchaser, Title Insurer shall have not withdrawn its commitment to issue the Title Policy in form and content substantially consistent with the Title Commitment approved by Purchaser prior to the expiration of the Due Diligence Period, subject only to the Permitted Exceptions.

The foregoing conditions contained in this Section 8.2 are intended solely for the benefit of Purchaser. Purchaser shall at all times have the right to waive any condition precedent, provided that such waiver is in writing and delivered to Seller and Purchaser.

8.3        Failure of Conditions to Close of Escrow.  Escrow Holder shall be responsible for confirming, on or before the Close of Escrow, that the conditions to the Close of Escrow set forth in Sections 8.1 and 8.2 hereof, and as set forth elsewhere in this Agreement, have been satisfied. Purchaser and Seller hereby agree to deliver their Notices to Escrow Holder, on or before the Close of Escrow, of the satisfaction or waiver of all other conditions to the Close of Escrow hereunder, and, in the event that both Purchaser and Seller specifically notify and instruct Escrow Holder, in writing, to proceed to the Close of Escrow hereunder, all such other conditions to the Close of Escrow hereunder that are not otherwise satisfied shall be deemed to have been waived by both Purchaser and Seller. Escrow Holder shall not proceed to the Close of Escrow hereunder unless both Purchaser and Seller or their respective counsel specifically notify and instruct Escrow Holder to do so.

IX.

LIQUIDATED DAMAGES

9.1        Default by Purchaser.    IN THE EVENT THE CLOSING AND THE CONSUMMATION OF THE TRANSACTION HEREIN CONTEMPLATED DOES NOT OCCUR AS HEREIN PROVIDED BY REASON OF ANY MATERIAL DEFAULT OF PURCHASER, PURCHASER AND SELLER AGREE THAT IT WOULD BE IMPRACTICAL AND EXTREMELY DIFFICULT TO ESTIMATE THE DAMAGES WHICH SELLER MAY SUFFER. THEREFORE, PURCHASER AND SELLER DO HEREBY AGREE THAT A REASONABLE ESTIMATE OF THE TOTAL DAMAGES THAT SELLER WOULD SUFFER IN THE EVENT THAT PURCHASER DEFAULTS AND FAILS TO COMPLETE THE PURCHASE OF THE LAND IS AND SHALL BE, AS SELLER’S SOLE AND EXCLUSIVE REMEDY (WHETHER AT LAW OR IN EQUITY), AN AMOUNT EQUAL TO THE EARNEST MONEY DEPOSIT. SAID AMOUNT SHALL BE THE FULL, AGREED AND LIQUIDATED DAMAGES FOR THE FAILURE OF PURCHASER TO CLOSE AND CONSUMMATE THE TRANSACTIONS HEREIN CONTEMPLATED. ALL OTHER CLAIMS TO DAMAGES OR OTHER REMEDIES IN CONNECTION WITH PURCHASER’S FAILURE TO CLOSE AND CONSUMMATE THE TRANSACTIONS CONTEMPLATED HEREIN ARE EXPRESSLY WAIVED BY SELLER; HOWEVER, SELLER RESERVES ITS RIGHTS TO LEGAL AND EQUITABLE DAMAGES AND REMEDIES FOR ANY OTHER POST-TERMINATION DEFAULT BY PURCHASER HEREUNDER. THE PAYMENT OF SUCH AMOUNT AS LIQUIDATED DAMAGES IS NOT INTENDED AS A FORFEITURE OR PENALTY WITHIN THE MEANING OF CALIFORNIA CIVIL CODE SECTIONS 3275 OR 3369, BUT IS INTENDED TO CONSTITUTE LIQUIDATED DAMAGES TO SELLER PURSUANT TO CALIFORNIA CIVIL CODE SECTION 1671, 1676 AND 1677. SELLER HEREBY WAIVES THE PROVISIONS OF CALIFORNIA CIVIL CODE SECTION 3389. UPON DEFAULT BY PURCHASER, THIS AGREEMENT SHALL BE TERMINATED AND NEITHER PARTY SHALL HAVE ANY FURTHER RIGHTS OR OBLIGATIONS HEREUNDER, EACH TO THE OTHER, EXCEPT ANY INDEMNIFICATION OBLIGATIONS THAT SURVIVE THE CLOSE OF ESCROW, THE RIGHTS OF SELLER EXPRESSLY RESERVED HEREIN, AND FOR THE RIGHT OF SELLER TO COLLECT SUCH LIQUIDATED DAMAGES FROM PURCHASER AND ESCROW HOLDER. IN THE EVENT PURCHASER FAILS TO AUTHORIZE ESCROW HOLDER TO RELEASE THE EARNEST MONEY DEPOSIT WITHIN FIVE (5) BUSINESS DAYS OF THE DEMAND OF SELLER WHEREIN SELLER ALLEGES THE DEFAULT AND NONPERFORMANCE BY PURCHASER, THEN, WITH RESPECT TO SUCH ALLEGED DEFAULT AND NON-PERFORMANCE BY PURCHASER, THE PROVISIONS OF THIS ARTICLE IX SHALL BE VOIDABLE AT THE ELECTION OF SELLER.

SELLER’S INITIALS PURCHASER’S INITIALS

9.2        Default by Seller.    IN THE EVENT THE CLOSING AND THE CONSUMMATION OF THE TRANSACTION HEREIN CONTEMPLATED DOES NOT OCCUR AS HEREIN PROVIDED BY REASON OF ANY DEFAULT OF SELLER,

PURCHASER AND SELLER AGREE THAT IT WOULD BE IMPRACTICAL AND EXTREMELY DIFFICULT TO ESTIMATE THE DAMAGES WHICH PURCHASER MAY SUFFER. THEREFORE, PURCHASER AND SELLER DO HEREBY AGREE THAT, IN THE EVENT OF SUCH DEFAULT, IN ADDITION TO ATTORNEYS’ FEES AND COSTS PURSUANT TO SECTION 12.2 HEREOF, PURCHASER MAY, AS ITS SOLE RECOURSE AND REMEDY (AT LAW OR IN EQUITY), EITHER: (a) PURSUE AN ACTION AGAINST SELLER FOR SPECIFIC PERFORMANCE; OR (b) RECEIVE THE RETURN OF THE EARNEST MONEY DEPOSIT THEN PAID PLUS AN AMOUNT EQUAL TO PURCHASER’S ACTUAL OUT-OF-POCKET COSTS TO UNRELATED AND INDEPENDENT THIRD PARTY VENDORS, INCLUDING ATTORNEYS’ FEES (EXCEPT IN-HOUSE ATTORNEYS), WITH REGARD TO THIS TRANSACTION (SUCH OUT-OF-POCKET COSTS NOT TO EXCEED ONE HUNDRED THOUSAND DOLLARS ($100,000) IN THE AGGREGATE). ALL OTHER CLAIMS TO DAMAGES OR OTHER REMEDIES IN CONNECTION WITH SELLER’S FAILURE TO CLOSE AND CONSUMMATE THE TRANSACTIONS CONTEMPLATED HEREIN (OTHER THAN AS SPECIFIED IN (a) AND (b) HEREOF) ARE EXPRESSLY WAIVED BY PURCHASER. THE REFUND OF THE EARNEST MONEY DEPOSIT AS LIQUIDATED DAMAGES IS NOT INTENDED AS A FORFEITURE OR PENALTY WITHIN THE MEANING OF CALIFORNIA CIVIL CODE SECTIONS 3275 OR 3369, BUT IS INTENDED TO CONSTITUTE LIQUIDATED DAMAGES TO PURCHASER PURSUANT TO CALIFORNIA CIVIL CODE SECTION 1671. PURCHASER HEREBY WAIVES THE PROVISIONS OF CALIFORNIA CIVIL CODE SECTION 3389. UPON DEFAULT BY SELLER, IF THIS AGREEMENT IS TERMINATED BY PURCHASER, NEITHER PARTY SHALL HAVE ANY FURTHER RIGHTS OR OBLIGATIONS HEREUNDER, EACH TO THE OTHER, EXCEPT ANY INDEMNIFICATION OBLIGATIONS, THE RIGHTS OF PURCHASER RESERVED HEREIN, AND FOR THE RIGHT OF PURCHASER TO COLLECT SUCH LIQUIDATED DAMAGES FROM SELLER.

SELLER’S INITIALS PURCHASER’S INITIALS

X.

BROKERS

Seller and Purchaser each agree to indemnify, protect, defend and hold the other harmless from and against any claims, actions, suits or demands for payment of any commission, finder’s fee or other sum initiated by any broker, commission agent or other person which such party or its representatives has engaged or retained or with which it has had discussions concerning, in connection with the transaction contemplated by this Agreement or the sale of the Land by Seller. Purchaser shall specifically be responsible for any fees or commissions owed Jordan Richman and Grubb & Ellis.

XI.

NOTICES

Except as otherwise expressly provided in this Agreement, all notices, requests, demands and other communications hereunder (“Notice”) shall be in writing and shall be deemed delivered by (i) hand delivery upon receipt, (ii) registered mail or certified mail, return receipt requested, postage prepaid, upon delivery to the address indicated in the Notice, (iii) by confirmed telecopy or facsimile transmission when sent, or (iv) overnight courier (next business day delivery) on the next business day at 12:00 noon, whichever shall occur first, as follows:

To Seller:	535 GRAND AVENUE, LLC Attention: Operating Manager 2540 E. Delia Lane Orange, CA 92869 Telecopier: (949) 240-6910
With a Copy to:	TARSADIA HOTELS Attention: Edward G. Coss, Esq. 620 Newport Center Drive Fourteenth Floor Newport Beach, CA 92660 Telecopier: (949) 610-8222
To Purchaser:	CHESAPEAKE LODGING, L.P. c/o Chesapeake Lodging Trust 1997 Annapolis Exchange Parkway, Suite 410 Annapolis, Maryland 21401 Attn: Graham J. Wootten, SVP and CAO Telecopier: (410) 972-4180
With a Copy to:	c/o Chesapeake Lodging Trust 1997 Annapolis Exchange Parkway Suite 410 Annapolis, Maryland 21401 Attention: D. Rick Adams, SVP and CIO Telecopier: (410) 970-4180

Any correctly addressed Notice that is refused, unclaimed or undelivered because of an act or omission of the party to be notified shall be considered to be effective as of the first day that the Notice was refused, unclaimed or considered undeliverable by the postal authorities, messenger or overnight delivery service. The parties hereto shall have the right from time to time, and at any time, to change their respective addresses and each shall have the right to

specify as its address any other address within the United States of America, by giving to the other party at least fifteen (15) days prior Notice thereof, in the manner prescribed herein; provided, however, that to be effective, any such change of address must be actually received (as evidenced by a return receipt). Telephone numbers and email addresses, if listed, are listed for convenience purposes only and not for the purposes of giving Notice pursuant to this Agreement.

XII.

MISCELLANEOUS

12.1     Governing Law.    This Agreement shall be governed by and construed in accordance with the laws of the State of California. If any legal action is necessary to enforce the terms and conditions of this Agreement, the parties hereby agree that the Superior Court of California, County of Orange, shall be the sole jurisdiction and venue for the bringing of the action.

12.2     Professional Fees and Costs.    If a lawsuit, arbitration or other proceedings are instituted by any party to enforce any of the terms or conditions of this Agreement against any other party hereto, the prevailing party in such litigation, arbitration or proceedings shall be entitled, as an additional item of damages, to such reasonable attorneys’ and other professional fees and costs (including, but not limited to, witness fees), court costs, arbitrators’ fees, arbitration administrative fees, travel expenses, and other out-of pocket expenses or costs of such other proceedings, as may be fixed by any court of competent jurisdiction, arbitrator or other judicial or quasi-judicial body having jurisdiction thereof, whether or not such litigation or proceedings proceed to a final judgment or award. For the purposes of this section, any party receiving an arbitration award or a judgment for damages or other amounts shall be deemed to be the prevailing party, regardless of amount of the damage awarded or whether the award or judgment was based on all or some of such party’s claims or causes of action, and any party against whom a lawsuit, arbitration or other proceeding is instituted and later voluntarily dismissed by the instituting party shall be deemed to be the prevailing party.

12.3     Exhibits and Schedules a Part of This Agreement.    The Exhibits and Schedules attached hereto are incorporated in this Agreement by reference and are hereby made a part hereof.

12.4     Executed Counterparts.    This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed an original, but all such counterparts together shall constitute but one and the same instrument; signature pages may be detached from multiple separate counterparts and attached to a single counterpart so that all signature pages are physically attached to the same document. This Agreement shall become effective upon the due execution and delivery of this Agreement to the parties hereto.

12.5     Assignment.    Purchaser may not, and shall have no right or power to, assign, convey and otherwise transfer all or any part of its interest or rights herein without the prior written consent of Seller, which consent may be withheld in Seller’s sole discretion, and any

attempted assignment without Seller’s written consent shall be void, invalid and unenforceable. Notwithstanding the foregoing, however, Purchaser may assign and transfer all of its rights and obligations under this Agreement to one (1) or more wholly owned subsidiary(ies) thereof, or to an affiliate(s) thereof in which Purchaser is a sixty-seven percent (67%) or more equity owner thereof; provided, however, that Purchaser shall not be released of its obligations under this Agreement as a result of any such assignment. Any assignment as permitted in the preceding sentence shall be conditioned upon Purchaser delivering to Seller and Escrow Holder, within forty-eight (48) hours of any such assignment, Notice thereof, together with a copy of such assignee’s organizational and formation documents and instruments, a Certificate of Good Standing for such assignee, and copies of the resolutions of Purchaser and such assignee authorizing such assignment. As a further condition to any such permitted assignment, Purchaser shall cause its assignee to execute an assignment and assumption agreement of Purchaser’s obligations under this Agreement (in form and content reasonably and mutually acceptable), and such other documents and instruments as Escrow Holder may reasonably request. Purchaser may also designate a subsidiary to take title to the Land and the Land Rights at Closing by giving Notice to Seller no later than ten (10) days prior to the Closing Date.

12.6     IRS - Form 1099-S.  For purposes of complying with Section 6045 of the Internal Revenue Code of 1986, as amended, Escrow Holder shall be deemed the “person responsible for closing the transaction” and shall be responsible for obtaining the information necessary to file with the Internal Revenue Service Form 1099-S, “Statement for Recipients of Proceeds from Real Estate, Broker and Barter Exchange Transactions.”

12.7     Successors and Assigns.  Subject to the provisions of Section 12.5 hereof, this Agreement shall be binding upon and inure to the benefit of the parties’ respective successors and permitted assigns.

12.8     Time is of the Essence.  Time is of the essence of this Agreement.

12.9     Entire Agreement.  This Agreement, and Exhibits and Schedules and other documents and instruments attached to or referenced herein, contain all representations and the entire understanding and agreement between the parties hereto with respect to the purchase and sale of the Land and the Land Rights, and all prior and contemporaneous understandings, letters of intent, agreements and representations, whether oral or written, are entirely superseded. In executing this Agreement, each of Seller and Purchaser expressly disclaim any reliance on any oral or written representations, warranties, comments, statements or assurances made by Seller, Purchaser, and any of their respective affiliates, and their respective agents, employees, representatives, attorneys or brokers, as an inducement or otherwise, to Purchaser’s and Seller’s respective execution hereof. No amendment of this Agreement shall be binding unless in writing and executed by the parties hereto.

12.10     Further Assurances.  Whenever and so often as requested by a party, the other party will promptly execute and deliver or cause to be executed and delivered all such other and further instruments, documents or assurances, and promptly do or cause to be done all such other and further things as may be necessary and reasonably required in order to further and more fully vest in such requesting party all rights, interests, powers, benefits privileges and advantages

conferred or intended to be conferred upon it by this Agreement, or to effectuate the termination of this Agreement and cancellation of the Escrow (if otherwise permitted hereunder). The terms of this section shall survive the Close of Escrow and/or termination of this Agreement.

12.11         Waiver.  The failure or delay (without regard to the length of time of such failure or delay) by either party to enforce or insist on the strict performance of any covenant, term, obligation, provision, right, option or condition hereunder, or to pursue any action, claim or right arising from any breach, default, or non-performance of any term, obligation or provision of this Agreement, shall not constitute or be construed as a waiver or forgiveness of such covenant, term, obligation, provision, right, option, condition, breach, default or non-performance. To be binding upon and against a party, any waiver must (a) be in writing, (b) be delivered to the party in whose favor the waiver is made (in accordance with the provisions of Article XI hereof), and (c) identify and specify, in reasonable detail, the covenant, term, obligation, provision, right, option, condition, breach, default or non-performance being waived; any purported waiver not complying therewith shall not be effective or binding on the parties hereto. In addition, any previous waiver for the benefit of a party may not be relied upon or be enforced by such party’s successors and assigns, and shall not be binding on the waiving party. Under no circumstances shall a waiver by either party complying with the provisions hereof constitute or be construed as a continuing waiver of any subsequent failure, default, breach or non-performance of any covenant, term, obligation, provision, right, option or condition under this Agreement.

12.12         Headings.  The headings of this Agreement are for purposes of convenience only and shall not limit or define the meaning of the provisions of this Agreement.

12.13         Risk of Loss.

12.13.1         Risk of Loss.  Until the Closing Date, Seller shall bear the risk of loss should there be damage to any of the Improvements by fire or other casualty (collectively “Casualty”). If, prior to the Closing Date, the Land shall be damaged by any Casualty, Seller shall promptly deliver to Purchaser a Notice (“Casualty Notice”) of such event. Upon Purchaser’s receipt of a Casualty Notice, Seller and Purchaser shall meet promptly to estimate the cost to repair and restore the Land to its condition immediately preceding such event (the “Casualty Renovation Cost”). If the parties are unable to agree on the cost of restoration, the matter will be submitted to an engineer designated by Seller and an engineer designated by Purchaser, each licensed to practice in the state in which the Land is located, and the engineers shall resolve the dispute. Each party hereto shall bear the costs and expenses of its own engineer.

12.13.2     Material Loss.  If the Casualty Renovation Cost exceeds (i) fifteen percent (15%) of the Purchase Price in the event the Casualty is insured against, or (ii) ten percent (10%) of the Purchase Price in the event the Casualty is not insured against, either party hereto may, at its option, elect to terminate this Agreement by Notice to the other party within five (5) days after the date that the Casualty Renovation Cost is determined, in which case the Earnest Money Deposit shall be delivered to Purchaser, and neither party shall have any further rights or obligations hereunder, except for any continuing confidentially and indemnity obligations as provided in this Agreement. If both parties hereto fail to timely make its election

to terminate this Agreement, then the Close of Escrow shall take place as provided herein without reduction of the Purchase Price, and Seller shall assign the insurance proceeds to Purchaser in the event the Casualty is insured against and credit the amount of the applicable insurance policy deductible to Purchaser or have the Purchase Price reduced by the Casualty Renovation Cost in the event the Casualty is not insured against.

12.13.3     Nonmaterial Loss.    If the Casualty Renovation Cost is (i) fifteen percent (15%) or less of the Purchase Price in the event the Casualty is insured against, or (ii) ten percent (10%) or less of the Purchase Price in the event the Casualty is not insured against, then, in any such event, neither party hereto shall have any right to terminate this Agreement, but the Closing shall take place as provided herein without reduction of the Purchase Price, and Seller shall assign the insurance proceeds to Purchaser in the event the Casualty is insured against and credit the amount of the applicable insurance policy deductible to Purchaser or have the Purchase Price reduced by the Casualty Renovation Cost in the event the Casualty is not insured against.

12.13.4     Eminent Domain.    If, prior to the Close of Escrow, (i) all or substantially all (or so much thereof so as to substantially and materially interfere with the operation of the Hotel) of the Land, (ii) any portion of the parking areas on the Land which results in there being insufficient parking for the operation of the Hotel as established by applicable governmental codes and regulations, or (iii) any access-way to the Land or any building with guest rooms is taken by condemnation or eminent domain, at the election of Purchaser this Agreement shall, upon the giving of Notice of such event or of the condemning authorities’ intention so to take the Land, terminate, and Purchaser shall receive a full and prompt refund of all sums deposited by them with Escrow Holder and/or Seller. If, prior to the Close of Escrow, less than all or substantially all of the Land shall be taken by condemnation or eminent domain, then, if any of the foregoing, in Purchaser’s reasonable opinion, materially impairs the value of the Land or any significant interest therein, then Purchaser shall have the option to (A) accept title to the Land subject to such taking, in which event at the Close of Escrow all of the proceeds of any award or payment made or to be made by reason of such taking shall be assigned by Seller to Purchaser, and any money theretofore received by Seller in connection with such taking shall be paid over to Purchaser, whereupon Purchaser shall pay the Purchase Price without abatement by reason of such taking, or (B) receive a full and prompt refund of all sums deposited by Purchaser with Escrow Holder and/or Seller. Seller shall not settle, agree to, or accept any award or payment in connection with a taking of less than all of the Land without obtaining Purchaser’s prior written consent in each case, which consent shall not be unreasonably withheld or delayed.

12.14     Construction of Agreement.    The parties hereto have negotiated this Agreement at length, and have had the opportunity to consult with, and be represented by, their own competent counsel. This Agreement is, therefore, deemed to have been jointly prepared. In determining the meaning of, or resolving any ambiguity with respect to, any word, phrase or provision of this Agreement, no uncertainty or ambiguity shall be construed or resolved against any party under any rule of construction, including the party primarily responsible for the drafting and preparation of this Agreement.

The words “herein,” “hereof,” “hereunder” and words of similar reference shall mean this Agreement. The words “this Agreement” include the exhibits, schedules addenda and any future written modifications, unless otherwise indicated by the context. All words in this Agreement shall be deemed to include any number or gender as the context or sense of the Agreement requires. The words “will,” “shall” and “must” in this Agreement indicate a mandatory obligation. The use of the words “include,” “includes” and “including” followed by one or more examples is intended to be illustrative and is not a limitation on the scope of the description or term for which the examples are provided. All dollar amounts set forth in this Agreement are stated in United States Dollars, unless otherwise specified. The words “day” and “days” refer to calendar days unless otherwise stated. The words “business day” refer to a day other than a Saturday, Sunday or legal holiday on which banking institutions are closed. The words “month” and “months” refer to calendar months unless otherwise stated. The words “year” and “years” refer to calendar years unless otherwise stated.

12.15  Tax Deferred Exchange.   Seller and Purchaser (the “Cooperating Party”) each agree to fully cooperate with the other (and any owner of such other party) (the “Exchangor”) (including cooperation with any Intermediary (as defined herein) selected by Exchangor) to structure the acquisition of the Land and the Land Rights as an exchange of property held for productive use in a trade or business or for investment within the meaning of Section 1031 of the Internal Revenue Code of 1986 (as amended), and upon request, Cooperating Party agrees to execute additional escrow instructions, documents, agreements or instruments to effect the exchange; provided, however, that Cooperating Party shall incur no additional costs or expenses in this transaction, or be required to acquire, accept or hold title to any property (other than the Land and the Land Rights), as a result of or in connection with any such exchange, unless because of Cooperating Party’s default hereunder or under any agreement executed by reason of this Section 12.15.

Exchangor agrees to indemnify, defend or hold Cooperating Party harmless from and against any and all additional costs, expenses, claims, demands, liabilities, losses, obligations, damages, recoveries, and deficiencies (such categories being collectively referred to herein as “Liabilities”) in excess of those Liabilities that Cooperating Party would otherwise have if the transaction contemplated in this Agreement closes as a sale transaction, and that Cooperating Party may incur or suffer, as a result of or in connection with (i) the structuring of the transaction contemplated in this Agreement as an exchange under Internal Revenue Code Section 1031 and/or (ii) the execution of any documents in connection with the exchange. Exchangor’s foregoing indemnity shall not indemnify Cooperating Party for any Liabilities arising as a result of or in connection with any default by Cooperating Party under this Agreement or any default by Cooperating Party under any of the documents or agreements entered into by Cooperating Party in connection with the exchange or for any gross negligence or willful misconduct on the part of Cooperating Party. Implementation of the exchange(s) contemplated in this Section 12.15 shall not be a condition to the Close of Escrow.

Exchangor, at its election, may substitute for any one or more of them, one or more persons or entities (“Intermediary”) as a party(ies) to the Escrow and this Agreement, in which event the Intermediary shall assume and perform the obligations of Exchangor under this Agreement (but without the release of liability of Exchangor for such performance), and

Cooperating Party agrees to accept the performance by Intermediary and shall tender its performance to Intermediary.

12.16     No Public Disclosure.  Purchaser shall make no public disclosure of the terms of this transaction without the prior written consent of Seller, which consent Seller shall provide via facsimile transmission or email within one (1) business day of Seller’s receipt of Purchaser’s written request if such disclosure is reasonably necessary to comply with the publicly traded company responsibilities of Purchaser or its parent or otherwise necessary to comply with applicable law. Seller shall make no public disclosure of the terms of this transaction without the prior written consent of purchaser, which consent Purchaser shall promptly provide if such disclosure is reasonably necessary for Seller to comply with applicable law.

12.17     Covenants, Representations and Warranties.  Except as otherwise set forth in this Agreement, all of the covenants, representations and agreements of Seller and Purchaser set forth in this Agreement shall survive the Close of Escrow, except that all representatives and warranties of Seller shall survive only for a period of six (6) months after the Close of Escrow. By proceeding with the closing of the sale transaction, Seller and Purchaser shall be deemed to have waived, and so covenant to waive, any claims of defaults or breaches by the other party existing on or as of the Close of Escrow whether under this Agreement and any other document or instrument executed by the other party in connection with this transaction, of which the waiving party was aware prior to the Close of Escrow for which the other party shall have no liability.

12.18     Confidentiality.    Other than as required or permitted by the terms of this Agreement, Purchaser shall not release or cause or permit to be released any press notices or releases or publicity (oral or written) or advertising promotion relating to, or otherwise announce or disclose or cause or permit to be announced or disclosed, in any manner whatsoever, the terms and conditions of the purchase and sale transaction for the Land, and nor shall Purchaser or its agents or representatives disclose, in any manner whatsoever, (a) the information provided to Purchaser by Seller or its representatives, or (b) any analyses, compilations, studies or other documents or records prepared by or on behalf of Purchaser, in connection with Purchaser’s due diligence investigation of the Land, without first obtaining the written consent of Seller (collectively, “Proprietary Information”). The foregoing shall not preclude Purchaser (i) from discussing the Proprietary Information with any person who is employed by Purchaser or who, on behalf of Purchaser, is actively and directly participating in the purchase and sale of the Land, including, without limitation, to Purchaser’s trustees, shareholders, partners, members, existing or prospective lenders, attorneys, accountants and other consultants and advisors, or (ii) from complying with all laws, rules, regulations and court orders, including, without limitation, governmental regulatory, disclosure, tax and reporting requirements; provided, however, that if Purchaser is required by applicable law or legal process to disclose any Proprietary Information, Purchaser agrees to furnish only that portion of the Proprietary Information which Purchaser is legally compelled to disclose and to use its best efforts to obtain assurance that, if possible, confidential treatment will be accorded to the Proprietary Information. Purchaser shall inform its respective representatives of the confidential nature of the Proprietary Information and shall direct them to be bound by the terms of this section. In addition to any other remedies available to Seller, Seller shall have the right to seek equitable relief, including, without limitation,

injunctive relief or specific performance, against Purchaser in order to enforce the provisions of this section. The provisions of this section shall survive any termination of this Agreement.

Except as permitted pursuant to Section 4.3 hereof, Purchaser agrees not to contact, directly or indirectly, any employees of the Hotel (and any agents or employees thereof) prior to the Close of Escrow, and agrees to be liable for all of Seller’s damages in the event of any such contact by Purchaser or any of its agents or representatives.

12.19  Limitation on Liability.   In consideration of the benefits accruing hereunder, Seller and Purchaser agree that, in the event of any actual or alleged failure, breach or default of this Agreement by Seller or Purchaser:

(a)         The sole and exclusive remedy shall be against the defaulting party and its assets;

(b)         No owner of the defaulting party shall be sued or named as a party in any suit or action;

(c)         No service of process shall be made against any owner or employee of the defaulting party (except as may be necessary to secure jurisdiction of the defaulting party);

(d)         No owner or employee of the defaulting party shall be required to answer or otherwise plead to any service of process;

(e)         No judgment may be taken against any owner or employee of the defaulting party;

(f)         Any judgment taken against any owner or employee of the defaulting party may be vacated and set-aside at any time without hearing;

(g)         No claims shall be made against Tarsadia Hotels;

(h)         No writ of execution will ever be levied against the assets of any owner or employee of the defaulting party; and

(i)         These covenants and agreements are enforceable both by the defaulting party and also by any owner or employee of the defaulting party.

In addition to the foregoing, and notwithstanding any other term or provision of this Agreement to the contrary, except as to Seller’s fraud, and except for a default by Seller of its obligations under the first paragraph of Section 6.2.1 hereof, Seller shall have no liability for the breach of any representation, warranty, covenant, indemnity or other obligation expressly stated to survive the Close of Escrow (collectively, “Seller’s Post-Closing Obligations”), unless and until the aggregate amount of Purchaser’s out-of-pocket damages and third party expenses directly resulting from such breaches shall exceed, and then only to the extent the same exceeds, Fifty Thousand Dollars ($50,000). Furthermore, Seller’s aggregate liability under this Agreement (or otherwise) for the breach of any and all of Seller’s Post-Closing Obligations shall,

in no event individually or in the aggregate, exceed three percent (3%) of the Purchase Price. In no event shall Seller have any liability for punitive damages, consequential damages, or damages for diminution-in-value, but shall only be liable for Purchaser’s actual out-of-pocket damages and third party expenses.

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

12.21   Facsimile Signatures.   The execution of this Agreement and all Notices given hereunder and all amendments hereto, may be effected by facsimile signatures, all of which shall be treated as originals; provided, however, that the party receiving a document with a facsimile signature may, by Notice to the other, require the prompt delivery of an original signature to evidence and confirm the delivery of the facsimile signature. Purchaser and Seller each intend to be bound by its respective facsimile transmitted signature, and is aware that the other party will rely thereon, and each party waives any defenses to the enforcement of the Agreement, and documents, and any Notices delivered by facsimile transmission.

12.22   Exclusivity.   From the date of the last to occur of (a) the mutual execution of this Agreement by Seller and Purchaser and (b) the deposit by Purchaser of the Initial Deposit into the Escrow, until the earlier of (i) the termination of this Agreement, (ii) the default by Purchaser hereunder and subsequent termination of this Agreement by Seller as a result thereof, (iii) the expiration of the Due Diligence Period, or (iv) the waver by Purchaser of the Due Diligence Period, Seller shall not list for sale the Land (but Seller may consider, negotiate and accept back-up offer for the sale of the Land). Upon the expiration or earlier waiver of the Due Diligence Period (provided that Purchaser has not otherwise terminated this Agreement and cancelled the Escrow), until the earlier of the Close of Escrow or the default by Purchaser hereunder and subsequent termination of this Agreement by Seller as a result thereof, Seller shall not market the Land for sale and shall not solicit or otherwise accept offer to purchase the Land.

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XIII.

EXECUTION

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed on the 14 day of April, 2010.

SELLER:
535 GRAND AVENUE, LLC, a Delaware limited liability company
By:	/s/ Rosamma Devasia
Title:	Operating Manager
PURCHASER:
CHESAPEAKE LODGING,L.P. a Delaware limited partnership
BY:	Chesapeake Lodging Trust, a Maryland real estate investment trust, its General Partner
	By:	/s/ D. Rick Adams
	Name:	D. Rick Adams
	Title:	SVP – CIO

ESCROW HOLDER HEREBY ACKNOWLEDGES AND AGREES TO THE ESCROW INSTRUCTIONS SET FORTH IN THIS AGREEMENT.
LAWYERS TITLE INSURANCE COMPANY
BY:	/s/ Michele Mesh
	Michele Mesh, Senior Commercial Escrow Officer
Dated:	April 14, 2010

EX-10.2.1

Exhibit 10.2.1

AMENDMENT NUMBER ONE TO PURCHASE AND SALE AGREEMENT

AND ESCROW INSTRUCTIONS

(535 Grand Avenue, Los Angeles, CA)

THIS AMENDMENT NUMBER ONE TO PURCHASE AND SALE AGREEMENT AND ESCROW INSTRUCTIONS (the “Amendment”) is dated the 4th day of May, 2010, and is made by and between 535 GRAND AVENUE, LLC., a Delaware limited liability company (“Seller”), and CHESAPEAKE LODGING, L.P., a Delaware limited partnership (“Purchaser”).

RECITALS

A.        Seller and Purchaser are parties to that certain Purchase and Sale Agreement and Escrow Instructions dated as of April 14, 2010 (the “ Purchase Agreement”), for the purchase and sale of certain land located in the County of Los Angeles, State of California, more specifically located at and commonly known as 535 Grand Avenue, Los Angeles, on which are constructed certain improvements in, by and through which is operated a hotel and hospitality business under the name of “Hilton Checkers.”

B.        Seller and Purchaser desire to amend the Purchase Agreement to correct a scrivener’s error.

C.        Unless otherwise defined herein, capitalized terms have the meanings ascribed to them in the Purchase Agreement.

AGREEMENT

NOW, THEREFORE, with reference to the foregoing Recitals, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto hereby agree as follows:

I.

AMENDMENT

1.1        Article X is hereby amended to change the word “Purchaser” to “Seller” in the last sentence thereof.

II.

RATIFICATION/CONTROLLING PROVISIONS

Except as amended and/or modified by this Amendment, the Purchase Agreement is hereby ratified and confirmed and all other terms of the Purchase Agreement shall remain in full force and affect, unaltered and unchanged by this Amendment. In the event of any conflict between the provisions of this Amendment and the provisions of the Purchase Agreement, the provisions of this Amendment shall prevail. Whether or not specifically amended by the provisions of this Amendment, all of the terms and provisions of the Purchase Agreement are

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hereby amended to the extent necessary to give effect to the purpose and intent of this Amendment.

III.

COUNTERPARTS

This Amendment may be executed in any number of counterparts, each of which shall be deemed an original, but all of which, when taken together, will constitute one and the same instrument. The signature page of any counterpart may be detached therefrom without impairing the legal effect of the (signature) thereon, provided such signature page is attached to any other counterpart identical thereto.

IV.

ELECTRONIC AND FACSIMILE SIGNATURES

The execution of this Amendment may be effected by facsimile and/or electronically transmitted signatures, all of which shall be treated as originals; provided, however, that the party receiving a copy hereof with a facsimile and/or electronically transmitted signature may, by written notice to the other, require the prompt delivery of an original signature to evidence and confirm the delivery of the facsimile signature. Purchaser and Seller each intend to be bound by its respective facsimile and/or electronically transmitted signature, and is aware that the other party will rely thereon, and each party waives any defenses to the enforcement of this Amendment delivered by facsimile and/or electronic transmission.

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V.

EXECUTION

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

SELLER:
535 GRAND AVENUE, LLC, a Delaware limited liability company
By:	/s/ Rosamma Devasia
Title:	Operating Manager
PURCHASER:
CHESAPEAKE LODGING, L.P.a Delaware limited partnership
BY:	Chesapeake Lodging Trust, a Maryland real estate investment trust, its General Partner
	By:	/s/ D. Rick Adams
	Name:	D. Rick Adams
	Title:	SVP – CIO

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EX-10.3

Exhibit 10.3

PURCHASE AND SALE AGREEMENT AND ESCROW INSTRUCTIONS

between

MANTRA, LLC

as Seller

and

CHESAPEAKE LODGING, L.P.

as Purchaser

Anaheim Courtyard by Marriott

TABLE OF CONTENTS

ARTICLE	PAGE
I. DEFINITIONS	1
II. SALE AND PURCHASE OF PROPERTY	6
2.1          Purchase of Property	6
2.2          Purchase Price and Terms of Payment	7
2.2.1        Earnest Money Deposit	7
2.2.2        Balance of Purchase Price	7
2.3          Assumption of the Contracts	7
2.4          Franchise Agreement	8
2.5          Liquor Licenses, Alcoholic Beverages, Food Inventory and Restaurant Equipment	8
III. ESCROW	8
3.1          Opening of Escrow	8
3.2          Intentionally Omitted	8
3.3          Deposit of Funds	8
IV. CONDITION OF TITLE	9
4.1          Title Commitment	9
4.2          Title to the Real Property	9
4.3          Inspection and Due Diligence Review	11
4.4          Notice of Non-Satisfaction	13
4.5          Condition of the Property.	14
V. CLOSING	20
5.1          Closing Date	20
5.2          Action Prior to the Close of Escrow by Seller	21
5.3          Action Prior to the Close of Escrow by Purchaser	22
5.4          Recording of Deed	22
5.5          Prorations.	22
5.5.1        Taxes	22
5.5.2        Advance Reservations	23
5.5.3        Utility Service	23
5.5.4        Revenue From Operations	23
5.5.5        Accounts Payable and Operating Expenses	23
5.5.6        Miscellaneous Permits and Taxes	23
5.5.7        The Contracts	24
5.5.8        Other Income	24
5.5.9        Other Expenses	24
5.5.10      Gift Shop Inventory	24
5.5.11      House Banks	24

i

5.5.12      Delayed Adjustments	24
5.5.13      Proration Allocation	25
5.5.14      Survival	25
5.6          Guest Property	25
5.6.1        Safe Deposit Boxes	25
5.6.2        Baggage Inventory	25
5.7          Closing Costs	25
5.8          California Real Estate Withholding	26
5.9          Distribution of Funds and Documents Following Close of Escrow	26
5.10        Possession	27
VI. ADDITIONAL COVENANTS AND INDEMNITIES	27
6.1          Purchaser’s Covenants.	27
6.1.1         Indemnification	27
6.1.2        Seller’s Accounts Receivable	27
6.2          Seller’s Covenants.	28
6.2.1         Indemnification	28
6.2.2        Termination of the Franchise Agreement and the Hotel Management Agreement	28
6.2.3        Operation of the Hotel	28
6.3          Employee Matters	29
6.4          No Obligations of Escrow Holder	29
VII. REPRESENTATIONS AND WARRANTIES	29
7.1          By Purchaser	29
7.1.1        Organization and Standing	30
7.1.2        Due Authorization	30
7.1.3        Lack of Conflict	30
7.1.4        Solvency/Bankruptcy	30
7.2          By Seller	30
7.2.1        Organization and Standing	30
7.2.2        Due Authorization	30
7.2.3        Lack of Conflict	31
7.2.4        Non-Foreign Seller	31
7.2.5        Solvency/Bankruptcy	31
7.2.6        Tenant Leases	31
7.2.7        Existing Management Agreement	31
7.2.8         Employees	31
7.2.9         Contracts	31
7.2.10      Condemnation Proceedings	32
VIII. CONDITIONS PRECEDENT TO CLOSE OF ESCROW	32
8.1          Conditions to Seller’s Obligations	32
8.2          Conditions to Purchaser’s Obligations	33
8.3          Failure of Conditions to Close of Escrow	33

ii

IX. LIQUIDATED DAMAGES	34
9.1          Default by Purchaser	34
9.2          Default by Seller	35
X. BROKERS	35
XI. NOTICES	36
XII. MISCELLANEOUS	37
12.1        Governing Law	37
12.2        Professional Fees and Costs	37
12.3        Exhibits and Schedules a Part of This Agreement	37
12.4        Executed Counterparts	37
12.5        Assignment	38
12.6        IRS - Form 1099-S	38
12.7        Successors and Assigns	38
12.8        Time is of the Essence	38
12.9        Entire Agreement	38
12.10      Further Assurances	39
12.11      Waiver	39
12.12      Headings	39
12.13      Risk of Loss.	39
12.13.1    Risk of Loss	39
12.13.2    Material Loss	40
12.13.3    Nonmaterial Loss	40
12.13.4    Eminent Domain	40
12.14        Construction of Agreement	41
12.15        Tax Deferred Exchange	41
12.16        No Public Disclosure	42
12.17        Covenants, Representations and Warranties	42
12.18        Confidentiality	42
12.19        Limitation on Liability	43
12.20        No Third-Party Beneficiaries	44
12.21        Facsimile Signatures	44
12.22        Exclusivity	44

iii

PURCHASE AND SALE AGREEMENT AND ESCROW INSTRUCTIONS

This PURCHASE AND SALE AGREEMENT AND ESCROW INSTRUCTIONS (the “Agreement”) is dated this          day of April, 2010, and is made by and between MANTRA, LLC, a California limited liability company (“Seller”), and CHESAPEAKE LODGING, L.P., a Delaware limited partnership (“Purchaser”).

RECITALS

A.        Seller is the owner of certain real property located in the City of Anaheim, County of Orange, State of California, more specifically located at and commonly known as 2045 South Harbor Blvd., Anaheim, California on which are constructed certain improvements in, by, and through which is operated a hotel under the name “Anaheim Courtyard by Marriott.”

B.        Subject to the terms and conditions hereof, Seller desires to sell, assign, transfer, convey and deliver to Purchaser, and Purchaser desires to acquire from Seller, all of Seller’s right, title and interest in and to the Property (as defined hereinbelow), together with all rights, benefits, privileges and appurtenances pertaining thereto, for such consideration as is hereinafter set forth.

AGREEMENT

NOW, THEREFORE, for valuable consideration, including the promises, covenants, representations and warranties hereinafter set forth, the receipt and adequacy of which are hereby acknowledged, the parties, intending to be legally and equitably bound, agree as follows.

I.

DEFINITIONS

As used in this Agreement, the following terms have the meanings ascribed to them in this Article I:

“Additional Deposit.”  As set forth in Section 2.2.1 hereof.

“Alcoholic Beverages.”  All unopened wine, beer and other alcoholic beverages located at the Real Property and held for consumption and/or sale in the operation of the Hotel.

“Assignment of Contracts.”  As set forth in Section 5.2(d) hereof.

“Assignment of Intangibles.”  As set forth in Section 5.2(c) hereof.

“Bill of Sale.”  As set forth in Section 5.2(b) hereof.

“Bookings.”  All contracts and reservations for the use or occupancy of guest rooms, meeting rooms and/or banquet facilities of the Hotel for periods on and after the Closing Date

which are in Seller’s Ordinary Course and any and all books, records and contracts related thereto.

“Casualty.”  As set forth in Section 12.13.1 hereof.

“Casualty Notice.”  As set forth in Section 12.13 hereof.

“Casualty Renovation Cost.”  As set forth in Section 12.13 hereof.

“Close of Escrow.”  As set forth in Section 5.1 hereof.

“Closing Date.”  As set forth in Section 5.1 hereof.

“Compensation.”  All salaries and wages which the Employees are entitled to receive at the time in question, together with all employment taxes with respect thereto, including, without limitation, any withholding or employer contributions under applicable law, any (i) bonus or incentive compensation; (ii) accrued and earned vacation days, sick days and personal days; and (iii) any health, welfare and other benefits provided to the Employees under any employee plans, and employer contributions to, and amounts paid or accrued under, the any employee plans or 401(k) plan for the benefit of the Employees.

“Contracts.”  All leases for any furniture, machinery, equipment and other personal property located at the Hotel and used in connection with the ownership and operation of the Hotel and all maintenance, service and supply contracts and all other agreements and contracts used and/or executed in connection with the ownership and/or operation of the Property, all as set forth on Schedule “A” attached hereto (which schedule may be updated as provided in Section 4.3 hereof), together with all other contracts and agreements (including script, gift certificates and similar promotional arrangements not to exceed an aggregate of One Thousand Dollars ($1,000.00) in face value, and the Bookings) entered into by Seller in connection with the ownership and operation of the property in the Ordinary Course after the expiration of the Due Diligence Period consistent with the provisions of Section 6.2.3 hereof, but excluding loan documents evidencing indebtedness for money borrowed by Seller, the Franchise Agreement and the Existing Management Agreement.

“Cooperating Party.”  As set forth in Section 12.15 hereof.

“Cut-Off Time.”  As set forth in Section 5.5.4 hereof.

“Deed.”  As set forth in Section 5.2(a) hereof.

“Due Diligence Period.”  As set forth in Section 4.3 hereof.

“Earnest Money Deposit.”  The Initial Deposit, the Additional Deposit, and all interest accrued thereon.

“Employees.”  All employees of Existing Manager who are employed full-time or part-time at the Hotel at the time in question.

“Environmental Damages.”  As set forth in Section 4.5(g) hereof.

“Environmental Requirements.”  As set forth in Section 4.5(h) hereof.

“Escrow.”  As set forth in Section 3.1 hereof.

“Escrow Holder.”  Lawyers Title Insurance Corporation, Attention: Michele Y. Mesh, 4100 Newport Place Dr., Suite 120, Newport Beach, CA 92660, Telephone No. (949) 724-3141, Telecopier No. (714) 459-7217, E-mail address: mmesh@ltic.com.

“Exchangor.”  As set forth in Section 12.15 hereof.

“Excluded Assets.”  The Proprietary Computer Systems, the Excluded Documents, and subject to Section 5.5.11 hereof, cash, cash equivalents, checks and other funds (including, without limitation, till money, house banks, notes, and Seller’s Accounts Receivable), securities and other evidence of indebtedness held at the Hotel as of the Cut-Off Time, and balances on deposit to the credit of Seller with banking institutions, all of which shall be retained by Seller.

“Excluded Documents.”        All (a) financial statements and information, internal memoranda, correspondence, analyses, documents or reports prepared by or for Seller or any affiliate of Seller in connection with this Agreement or otherwise, including, without limitation, tax returns and financial statements of Seller (exclusive of operating statements of the Hotel which shall be provided to Purchaser, records and information necessary to honor the Bookings in accordance with this Agreement, or otherwise relating to the Contracts assumed by Purchaser in accordance with this Agreement), (b) communications between Seller or any affiliate and its attorneys or other agents or representatives, (c) employee personnel files of Seller and the manager of the Hotel unless the Employee consents, in a writing reasonably satisfactory to Seller, to the release or disclosure thereof, (d) appraisals, assessments or other valuations of the Real Property in the possession of Seller, (e) original bills, invoices, receipts and checks relating to expenses incurred prior to the Cut-Off Time (provided that Purchaser shall be entitled to copies of such items), and (f) any confidential or proprietary information of Tarsadia Hotels in Seller’s possession, in each case however embodied.

“Existing Management Agreement.”    That certain Management Agreement dated September 20, 2005, between Seller and Existing Manager.

“Existing Manager.”  Tarsadia Hotels, a California corporation.

“Food Inventory.”  All unopened food, food stuffs, menu stock and non-alcoholic beverages located at the Real Property and held for consumption and/or sale in the operation of the Hotel.

“Franchise Agreement.”    That certain Franchise Agreement dated March 24, 2005 (as amended) between Marriott International, Inc., as franchisor, and Seller, as franchisee, for the Hotel.

“Good Funds.”  A deposit of cash, cashier’s check, certified funds, or confirmed wire transfer of funds.

“Hazardous Materials.”  As set forth in Section 4.5(i) hereof.

“Hotel.”  The hotel business operated and conducted by Seller on the Real Property commonly known as the Anaheim Courtyard by Marriott, 2045 South Harbor Blvd., Anaheim, California.

“Improvements.”  The buildings, structures, and other permanent improvements located on the Land, including, without limitation, electrical distribution systems, HVAC systems, walkways, driveways, parking lots, recreational facilities, plumbing, swimming pool, lighting, and mechanical equipment and fixtures installed thereon, and all rights, benefits and privileges appurtenant thereto.

“Initial Deposit.”  As set forth in Section 2.2.1 hereof.

“Intangible Property.”  All of Seller’s right title and interest, if any, in and to (a) fictitious business names and logos used by Seller in the operation of the Hotel and which are identified exclusively with the Hotel, but excluding the names “Marriott,” “Courtyard by Marriott,” and all derivatives thereof, (b) local (Area Code 714) telephone exchange numbers identified exclusively with the Hotel, (c) transferable licenses, permits, consents, authorizations, approvals, registrations and certificates of any governmental authority held by Seller and used in connection with the construction, ownership, occupancy or operation of the Hotel, and warranties now in effect with respect to the Property, specifically excluding, however, the Liquor Licenses and the Franchise Agreement, (d) all promotional literature, security codes, assignable telephone numbers, warranties, and guarantees, in each case pertaining to and identified exclusively with the Hotel, and (e) all other intangible property located at the Real Property and used by Seller exclusively in connection with the ownership and operation of the Hotel, but excluding the Excluded Assets.

“Intermediary.”  As set forth in Section 12.15 hereof.

“Inventory.”    All unopened operating inventories, materials and supplies used in connection with the operation of the Hotel and located thereat and not held for sale to the general public, including linens, bath towels, paper goods and guest supplies, but excluding the Alcoholic Beverages, the Restaurant Equipment, and the Food Inventory.

“Land.”  The land more particularly described on Exhibit “B” attached hereto and upon which the Improvements are located.

“Land Rights.”    All easements, rights-of-way, strips, zones, licenses, transferable hereditaments, privileges, tenements and appurtenants belonging to the Land, and any right or interest in any open or proposed highways, streets, roads, avenues, alleys, easements, strips, gores and rights-of-way in, across, in front of, contiguous to, abutting or adjoining the Land, and other rights and benefits running with the Land and/or the owner of the Land.

“Liabilities.”  As set forth in Section 12.15 hereof.

“Liquor Licenses.”  The liquor licenses relating to the operation of the restaurant and lounge businesses at the Real Property.

“Liquor Transfer Agreement.”  As set forth in Section 2.5 hereof.

“Non-Foreign Affidavit.”  As set forth in Section 5.2(e) hereof.

“Notices.”  As set forth in Article XI hereof.

“Opening of Escrow.”  As set forth in Section 3.1 hereof.

“Ordinary Course.”  The course of day-to-day operation of the Hotel, in accordance with its current operating budget and in a manner which does not materially vary from the policies, practices and procedures which have characterized its operation during the 6 months preceding the date hereof, except for mandated changes to practices, policies and procedures pursuant to the Franchise Agreement.

“Permits.”  As set forth in Section 4.5(a) hereof.

“Permitted Exceptions.”  As set forth in Section 4.2 hereof.

“Personal Property.”  All (a) keys and combinations to all doors, cabinets, enclosures and other locks on or about the Real Property, (b) furniture, equipment, motor vehicles, appliances, televisions, telephone systems, artwork, machinery, tools, trade fixtures, and other items of tangible personal property owned by Seller, located on the Real Property, and which are used exclusively in connection with the operation of the Real Property, or ordered for future use at the Hotel as of the Closing Date, (c) copies of files maintained or generated by Seller in the course of Seller’s operation of the Hotel (excluding the Excluded Documents) which are located on the Real Property, (d) all china, glassware, silverware; linens; uniforms; engineering, maintenance, cleaning and housekeeping supplies; matches and ashtrays; soap and other toiletries; stationery, menus and other printed materials; and all other similar materials and supplies, which are located at the Hotel or ordered for future use at the Hotel as of the Closing Date, (e) all merchandise located at the Hotel, including, without limitation, any gift shop or newsstand maintained by Seller or Existing Manager, and held for sale to guests and customers of the Hotel, or ordered for future sale at the Hotel as of the Closing Date, and (f) all other personal property located at the Real Property with respect to which Seller is the owner thereof and which is used by Seller exclusively in connection with the ownership and operation of the Hotel and/or the Real Property; but excluding, however, (i) the Food Inventory and the Alcoholic Beverages, and related items, (ii) the Excluded Assets, (iii) the personal property owned by any tenant or guest on the Real Property, (iv) the Restaurant Equipment, (v) the Liquor Licenses, (vi) all refunds and claims for refunds for real property and personal property taxes in connection with the Property for any period prior to the Close of Escrow, and (vii) all tax and utilities and other deposits.

“Property.”  The Real Property, the Hotel, the Personal Property, the Inventory, Seller’s interest in and to the Contracts and the Intangible Property.

“Proprietary Computer Systems.”  The computer software, hardware, programs, processes and procedures set forth on Schedule “C”  attached hereto.

“Proprietary Information.”  As set forth in Section 12.18 hereof.

“Purchase Price.”  As set forth in Section 2.2 hereof.

“Real Property.”  The Land, the Land Rights and the Improvements.

“Regulations.”  As set forth in Section 4.5(a) hereof.

“Reports.”  As set forth in Section 4.5(d) hereof.

“Restaurant Equipment.”  All equipment, furniture, fixtures, utensils, glassware, silverware and china used in connection with the operation of all restaurants and lounges on the Real Property.

“Seller’s Accounts Receivable.”  All accounts receivable and other sums owing Seller in connection with the operation of the Hotel existing on and prior to the Close of Escrow.

“Survey.”  As set forth in Section 4.2 hereof.

“Tarsadia Hotels.”  Tarsadia Hotels, a California corporation.

“Title Commitment.”  As set forth in Section 4.1 hereof.

“Title Insurer.”  Lawyers Title Company, Attention: Doug Abernathy, 801 South Figueroa Street, Suite 870, Los Angeles, CA 90017, Telephone No. (213) 330-3055, Telecopier No. (213) 330-3104, E-mail address: DAbernathy@ltic.com.

“Title Policy.”  As set forth in Section 4.2 hereof.

“WARN Act.”  As set forth in Section 6.3 hereof.

II.

SALE AND PURCHASE OF PROPERTY

2.1        Purchase of Property.  As of the Close of Escrow, and subject to the terms and conditions of this Agreement, Seller shall sell, assign, convey, transfer and deliver to Purchaser, and Purchaser shall purchase and acquire from Seller, all of Seller’s right, title and interest in and to the Property, free and clear of all liens and encumbrances (other than the Contracts and the Permitted Exceptions), at the Purchase Price provided in Section 2.2. hereof.

2.2        Purchase Price and Terms of Payment.  The purchase price for the Property (“Purchase Price”) shall be Twenty-Five Million Dollars ($25,000,000.00), reduced by an amount equal to the purchase price for the Liquor Licenses, the Alcoholic Beverages, the Food Inventory and the Restaurant Equipment set forth in the Liquor Transfer Agreement, and subject

to credits, prorations and adjustments as set forth in Section 5.5 hereof and as otherwise expressly provided in this Agreement, and shall consist of and be payable as follows:

2.2.1        Earnest Money Deposit.  On the business day following the date of the execution hereof by Purchaser and Seller, Purchaser shall deliver to Escrow Holder, in Good Funds, the sum of Two Fifty Thousand Dollars ($250,000.00) (together with all interest accrued thereon the “Initial Deposit”). The Initial Deposit shall become non-refundable to Purchaser if Purchaser does not terminate this Agreement prior to the expiration of the Due Diligence Period pursuant to the provisions of Section 4.4 hereof.

Unless Purchaser has elected to terminate this Agreement in accordance with the provisions of Section 4.4 hereof, prior to the expiration of the Due Diligence Period Purchaser shall deposit with Escrow Holder, in Good Funds, the additional sum of Five Hundred Thousand Dollars ($500,000.00) (the “Additional Deposit”).

The Earnest Money Deposit shall be held by Escrow Holder in accordance with the terms of this Agreement. The Earnest Money Deposit shall be non-refundable to Purchaser (and shall constitute liquidated damages pursuant to Section 9.1 hereof) upon the expiration of the Due Diligence Period (unless Purchaser has, prior thereto, delivered to Seller its Notice of Purchaser’s termination of this Agreement as provided in Section 4.4 hereof); provided, however that the Earnest Money Deposit shall be refundable to Purchaser in the event of (a) a material uncured default by Seller of its obligations under this Agreement, (b) a failure of a condition precedent to Purchaser’s obligations as set forth in this Agreement or (c) as otherwise specifically provided by this Agreement. The Earnest Money Deposit shall be applied to the Purchase Price on the Close of Escrow.

2.2.2        Balance of Purchase Price.  Not later than 5:00 p.m. California time on the business day preceding the Closing Date, Purchaser shall deposit with Escrow Holder, in Good Funds, the balance of the Purchase Price, reduced or increased by such amounts required to take into account such prorations, credits, costs or other adjustments which are required by this Agreement and which can be computed and determined as of the time for the required deposit hereunder.

2.3    Assumption of the Contracts.  As additional consideration, Purchaser shall, on and as of the Close of Escrow, at its sole cost and expense, assume and agree to pay all sums and perform, fulfill and comply with all other covenants and obligations which are to be paid, performed and complied with by Seller under the Contracts which first arise on and after the Close of Escrow. Seller shall indemnify, defend, protect and hold Purchaser and its affiliates harmless from all breaches, claims, liabilities, losses and damages (including attorneys’ fees and related costs, whether or not legal proceedings are instituted) arising under the Contracts for all periods prior to the Close of Escrow. Purchaser shall indemnify, defend, protect and hold Seller, Tarsadia Hotels, and their affiliates, harmless from all breaches, claims, liabilities, losses and damages (including attorneys’ fees and related costs, whether or not legal proceedings are instituted) arising under the Contracts (including, without limitation, those arising from or as a result of the assignment and assumption thereof) for all periods on and after the Close of Escrow.

2.4        Franchise Agreement.  Purchaser shall or shall cause its affiliate, at its sole cost and expense, prior to or concurrently with the Close of Escrow, enter into a new franchise agreement for the Hotel with Marriott International, Inc. on such terms and conditions as Marriott International, Inc. and Purchaser shall negotiate. Purchaser’s obligation under this Section 2.4 is a covenant and not a condition precedent to its obligations under the Agreement.

2.5        Liquor Licenses, Alcoholic Beverages, Food Inventory and Restaurant Equipment.  The Liquor Licenses, Alcoholic Beverages, Food Inventory and Restaurant Equipment located at the Hotel shall be conveyed to Purchaser (or its designee) pursuant to a separate purchase and sale agreement (the “Liquor Transfer Agreement”) in the form and content attached hereto as Exhibit “D,” to be executed by Purchaser, Seller and the holder of the Liquor Licenses concurrently herewith.

III.

ESCROW

3.1        Opening of Escrow.  Purchaser and Seller shall open an escrow (the “Escrow”) with Escrow Holder by depositing with Escrow Holder the Earnest Money Deposit and three (3) copies of this Agreement duly executed (in counterparts or otherwise) by Seller and Purchaser. The time when Escrow Holder so receives the Earnest Money Deposit and the copies of this Agreement, fully executed by the parties and executes and delivers copies thereof to Seller and Purchaser, shall be deemed the “Opening of Escrow.” Purchaser and Seller shall execute and deliver to Escrow Holder, in a timely fashion, such instruments and funds as are reasonably necessary to close the Escrow and consummate the sale and purchase of the Property (or the exchange thereof, if applicable) in accordance with the terms and provisions of this Agreement.

3.2        Intentionally Omitted.

3.3        Deposit of Funds.  Except as otherwise provided in this Agreement, all funds deposited into the Escrow by Purchaser shall be immediately deposited by Escrow Holder into Treasury Bills or other short-term United States Government obligations, in repurchase contracts for the same, or in a federally insured money market account, subject to the control of Escrow Holder in a bank or savings and loan association, or such other institution approved by Purchaser; provided, however, that such funds must be readily available as necessary to comply with the terms of this Agreement and Escrow Holder’s escrow instructions (including the return of the Earnest Money Deposit, or any portion thereof then on deposit with Escrow Holder, to Purchaser in accordance with this Agreement), and for the Escrow to close within the time specified in Section 5.1 of this Agreement. Except as may be otherwise specifically provided herein, interest on amounts placed by Escrow Holder in any such investments or interest bearing accounts shall accrue to the benefit of Purchaser, and Purchaser shall promptly provide to Escrow Holder Purchaser’s completed and executed W-9 with Purchaser’s Tax Identification Number and Escrow Holder’s Investment Instructions.

IV.

CONDITION OF TITLE

4.1        Title Commitment.  On or before the date hereof Escrow Holder shall furnish to Purchaser a current commitment for a C.L.T.A. Owner’s Policy of Title Insurance (standard coverage) issued by Title Insurer (the “Title Commitment”) reflecting the status of title to the Real Property and all exceptions, including easements, licenses, restrictions, rights-of-way, leases, covenants, reservations and other conditions, if any, affecting the Real Property, which would appear in a C.L.T.A. Owner’s Policy of Title Insurance (standard coverage) if used, and committing to issue the C.L.T.A. Owner’s Policy of Title Insurance (standard coverage) to Purchaser in an amount equal to or less than the Purchase Price. Accompanying the Title Commitment, Escrow Holder shall cause to be furnished to Purchaser, to the extent available, legible copies of the documents affecting the Real Property referred to in the Title Commitment.

4.2        Title to the Real Property.  Effective as of the Close of Escrow, but conditioned upon the Close of Escrow, Title Insurer shall issue to Purchaser Title Insurer’s C.L.T.A. Owner’s Policy of Title Insurance (standard coverage) (the “Title Policy”), with liability in the amount of the Purchase Price for the Real Property insuring title therein as vested in Purchaser subject only to the following matters affecting title (“Permitted Exceptions”).

(a)        All general and special property taxes and assessments not yet due and payable or if due and payable not yet delinquent, and all improvement and assessment bonds with respect to the Real Property;

(b)        Supplemental taxes assessed as a result of the sale of the Real Property by Seller to Purchaser pursuant to the provisions of California Revenue and Taxation Code Chapter 3.5 (commencing with Section 75);

(c)        All liens, covenants, conditions, restrictions, easements, rights of way, and all other exceptions to title as referenced in the Title Commitment, except monetary liens and encumbrances (other than caused by Purchaser) which Seller shall remove at or prior to the Close of Escrow;

(d)        All exceptions to title disclosed by or in, or arising from or in connection with, the Survey (and any updates thereto) of the Real Property for the Title Policy (including, without limitation, easements, encroachments and zoning);

(e)        All security interests recorded in connection with the Contracts;

(f)        Rights of parties in possession not shown by the public records, easements or claims of easements not shown by the public records, but with respect to which Purchaser has knowledge thereof;

(g)        Governmental laws, codes, ordinances and restrictions now or hereafter in effect so far as these affect the Property or any part thereof, including, without limitation, zoning ordinances (and amendments and additions relating thereto) and the Americans with Disabilities

Act of 1990, as amended, and any and all other matters, known or unknown, relating to the Property, or its condition, use, value or operation;

(h)        Any exceptions created by Purchaser or its agents, employees and/or contractors, including without limitation, any exceptions arising by reason of the entry on the Real Property by Purchaser or by its agents, employees and/or contractors; and

(i)        All preprinted exceptions and exclusions contained in the Title Policy, except those customarily deleted by an owner’s affidavit.

 At Purchaser’s election, the Title Policy shall be an A.L.T.A. Owner’s Policy of Title Insurance (extended coverage); provided, however, subject to Section 8.2(d) hereof, that Purchaser’s ability to obtain an A.L.T.A. Owner’s Policy of Title Insurance (extended coverage) shall not be a condition precedent to Purchaser’s obligations hereunder and shall not extend the Closing Date or delay the Close of Escrow. In addition, Purchaser shall have the right to obtain from Title Insurer such endorsements to the Title Policy and/or such additional liability protection as Purchaser may elect to obtain; provided, however, that Purchaser’s ability to obtain such title endorsements and/or such additional liability protection shall not be a condition precedent to Purchaser’s obligations hereunder and shall not extend or delay the Close of Escrow. Purchaser shall be solely responsible for negotiating with Title Insurer with respect to such A.L.T.A. Owner’s Policy of Title Insurance (extended coverage) and/or with respect to such title endorsements and/or such additional liability protection as may be requested by Purchaser, if any.

 Seller will deliver to Purchaser a copy of the latest survey of the Real Property in its possession, without warranty, and Purchaser shall be solely responsible for, and shall assume the risk of, obtaining a survey (or updating Seller’s survey) of the Real Property (the “Survey”) acceptable to Title Insurer for purposes of issuing the Title Policy. Seller will also deliver to Title Insurer an owner’s affidavit in customary form in connection with the issuance of the Title Policy

4.3        Inspection and Due Diligence Review.  Purchaser shall have the right, in its sole discretion, until 3:00 p.m. California time on April 29, 2010, or such earlier date as Purchaser shall elect in writing, to satisfy itself, in its sole discretion, as to the condition and extent of the Property (the “Due Diligence Period”). Subject to the prior termination of this Agreement, during the Due Diligence Period Seller shall cooperate and provide Purchaser with reasonable and continuing access to the Real Property upon one (1) business day prior Notice to Seller for the purpose of Purchaser’s inspection and due diligence review. In connection with such review, during normal business hours during the Due Diligence Period, Purchaser shall be afforded the opportunity to review reasonably available books and records, including non-proprietary financial reports, the Franchise Agreement, and the Contracts pertaining to the Hotel which are in or under Seller’s control and relate to the operation of the Hotel, upon reasonable Notice, except that Seller shall have no obligation to deliver or make available to Purchaser, and Purchaser shall have no right to review, the Excluded Documents and the Proprietary Information. Except as otherwise authorized by Seller pursuant to this Section 4.3, neither Purchaser nor any of its employees, agents or representatives shall contact or otherwise discuss

this transaction and /or the operation of the Hotel with any on-site employees of the Hotel or otherwise contract any governmental authority with respect to the Property or the Land, in each case without the written consent of Seller.

Not later than ten (10) business days prior to the expiration of the Due Diligence Period, Purchaser shall deliver to Seller a written list of all contracts and leases (but not Bookings) pertaining to or affecting the Property and/or the Real Property which Purchaser agrees to assume. If Purchaser fails to so provide such written list, Purchaser shall assume all such contracts and leases. Upon receipt thereof, Seller shall review such list and, not later than 5:00 p.m. California time on the date five (5) business days after the receipt thereof, deliver to Purchaser, in writing, Seller’s list of those contracts and leases which Purchaser has not agreed to assume that Seller will terminate (but Seller’s obligation to terminate shall be limited to those contracts and leases that can be terminated at no cost or expense to Seller) and a list of those contracts and leases that Seller will not agree to terminate. Purchaser shall have until 5:00 p.m. California time on the date two (2) business days after the receipt of Seller’s writing to then elect, in a writing delivered to Seller, to assume all such contracts and leases that Seller is not willing to terminate or to terminate this Agreement and cancel the Escrow. If Purchaser does not so elect to terminate this Agreement and cancel the Escrow, then Seller shall amend Exhibit “A” to this Agreement to so reflect the contracts and leases to be assumed by Purchaser. If Purchaser fails to elect to so terminate this Agreement and cancel the Escrow as provided herein, Purchaser shall assume all of such contracts and leases that Seller has not agreed to terminate.

Purchaser may, at its sole cost and expense, engage a third-party Certified Public Accountant to perform audits of the books and records of the Hotel, balance sheets as of December 31, 2009 and December 31, 2008 and the related statements of operations and cash flows for the Hotel, for the years ended December 31, 2009 and December 31, 2008, which audits shall include all disclosures required by generally accepted accounting principles and Securities and Exchange Commission regulations. Seller shall use commercially reasonable efforts to cooperate in connection with the performance of such audits and shall provide or cause to be provided any information reasonably requested by the accountants relating to such balance sheets, related statements of operations and cash flows for the Hotel. In connection with such audits, Seller shall provide or cause to be provided to the accountants performing the audits a representation letter acceptable to Seller in accordance with American Institute of Public Accountants professional standards.

During the Due Diligence Period, Purchaser shall also have the opportunity to conduct a Phase I environmental audit/study, a property condition report, zoning report and such other studies desired by Purchaser (subject to Seller’s consent rights set forth heein) of the Real Property, provided such Phase I environmental audit/study is not invasive or intrusive. Any environmental audit/study proposed to be undertaken by Purchaser shall be subject to Seller’s written approval prior to the commencement thereof, which approval shall not be unreasonably withheld. As a condition to any such consent, Purchaser shall obtain and maintain such public liability insurance in an amount of Two Million Dollars ($2,000,000) affecting the Real Property, naming Seller as an additional insured.

Purchaser, at all times, will conduct such due diligence in compliance with all applicable laws and in a manner so as to not cause damage, loss, cost or expense to Seller, the Property or the guests of the Property, and without unreasonably interfering with or disturbing any employee, tenant or guest at the Property. Purchaser shall not reveal to any governmental agency or any other third party (other than Purchaser’s employees, agents, attorneys, trustees, lenders and advisors) not approved by Seller the results of or any other information acquired pursuant to its inspections. Purchaser will promptly restore any damage to the Property caused by Purchaser’s inspection to its condition immediately preceding such inspections and examinations and will keep the Property free and clear of any mechanic’s liens or materialmen’s liens in connection with such inspections and examinations.

The cost of the inspections and tests undertaken pursuant to this Section 4.3 shall be borne solely by Purchaser. Purchaser shall indemnify, protect, defend, and hold Seller, Seller’s lenders, Tarsadia Hotels, and their affiliates, owners, agents and employees harmless from and against any obligation, liability, claim (including any claim for damage to property or injury to or death of any persons), lien or encumbrance, loss, damage, cost or expense, including reasonable attorneys’ fees, whether or not legal proceedings are instituted, arising from the acts or omissions of Purchaser or its agents, employees or contractors occurring in connection with, or as a result of, such inspections, tests or examinations of the Property, except to the extent resulting from Seller’s gross negligence or intentional misconduct. Purchaser shall in no event be responsible under this Section 4.3 for any condition already existing on the Property prior to the time of the inspections, except and only to the extent that Purchaser or the inspections exacerbate such existing condition.

Purchaser covenants and agrees that all such information and materials disclosed and/or delivered to it by Seller, or Seller’s agents, employees and representatives, are confidential and proprietary information, and that Purchaser shall hold the same in strict confidence, and shall not disclose the same to anyone other than its agents, employees and advisors on a “need-to-know” basis subject to the confidentiality restrictions set forth herein. Purchaser also agrees that, in the event the transactions contemplated in this Agreement are not consummated as provided herein or Purchaser terminates this Agreement prior to the expiration of the Due Diligence Period, Purchaser shall return all such information and documentation, and all copies thereof to Seller promptly upon Seller’s request and certify to Seller that it has destroyed all materials prepared by or for Purchaser and/or its representatives utilizing any such information and documentation.

Except as expressly provided in this Agreement, Seller makes no representations or warranties as to the truth, accuracy or completeness of any third-party materials, data or other information, if any, supplied to Purchaser in connection with Purchaser’s inspection of the Property (e.g., that such materials are complete, accurate or the final version thereof, or that all such materials are in Seller’s possession). It is the parties’ express understanding and agreement that any such materials are to be provided only for Purchaser’s convenience in making its own examination and determination prior to the expiration of the Due Diligence Period as to whether it wishes to purchase the Property, and, in doing so, Purchaser shall rely exclusively on its own independent investigation and evaluation of every aspect of the Property and not on any third-party materials supplied by Seller. Purchaser expressly disclaims any intent to rely on any such

third-party materials provided to it by Seller in connection with its inspection and agrees that it shall rely solely on its own independently developed or verified information.

The obligations of Purchaser under this Section 4.3 (including its indemnification obligations) shall survive the Close of Escrow or the termination of this Agreement.

4.4        Notice of Non-Satisfaction.    During the Due Diligence Period, by Notice delivered to Seller and Escrow Holder prior to the expiration of the Due Diligence Period, Purchaser may in its sole and absolute discretion, for any reason or for no reason, terminate this Agreement and cancel the Escrow, in which case the Initial Deposit shall be promptly refunded to Purchaser without further instruction from Purchaser or Seller (and notwithstanding instructions received to the contrary), and Purchaser shall return to Seller all information and documentation, and all copies thereof delivered to it pursuant to the provisions of Section 4.3 hereof and certify to Seller that it has destroyed all materials prepared by or for Purchaser and/or its representatives utilizing any such information and documentation, and neither Seller nor Purchaser shall have any further obligations under this Agreement (except as otherwise provided in this Agreement).

If Purchaser provides Notice of its election to waive its right to terminate this Agreement as permitted in this Section 4.4 or fails to provide Notice of cancellation before the expiration of the Due Diligence Period, Purchaser shall be deemed to have approved the state of the Property and the condition of title, and shall be deemed to have irrevocably waived its rights to terminate this Agreement during the Due Diligence Period and cancel the Escrow as a result thereof.

The failure of Purchaser to provide a Notice of termination or waiver prior to the expiration of the Due Diligence Period shall be deemed Purchaser’s irrevocable election not to so terminate this Agreement.

4.5        Condition of the Property.

(a)        BY ENTERING INTO THIS AGREEMENT, PURCHASER HAS AGREED TO, AND WILL, PERFORM (AND PURCHASER REPRESENTS AND WARRANTS TO SELLER THAT PURCHASER IS CAPABLE OF PERFORMING) A SOPHISTICATED, EXPERT, THOROUGH AND INDEPENDENT INVESTIGATION, ANALYSIS AND EVALUATION OF THE PROPERTY, AND PURCHASER AGREES THAT PURCHASER SHALL BE CHARGED WITH KNOWLEDGE OF ALL INFORMATION WHICH IS OR SHOULD HAVE BEEN ACQUIRED BY PURCHASER AS A RESULT OF SUCH AN INVESTIGATION, ANALYSIS, EVALUATION, AND THE MATERIALS DELIVERED BY SELLER TO PURCHASER. PRIOR TO THE EXPIRATION OF THE DUE DILIGENCE PERIOD, PURCHASER WILL HAVE DETERMINED, SUBJECT TO THE REPRESENTATIONS AND WARRANTIES OF SELLER SET FORTH HEREIN, AND THE TERMS AND CONDITIONS OF THIS AGREEMENT, THAT THE PROPERTY IS ACCEPTABLE TO PURCHASER. PRIOR TO THE EXPIRATION OF THE DUE DILIGENCE PERIOD, PURCHASER WILL HAVE HAD ACCESS TO AND WILL HAVE CONDUCTED ITS OWN THOROUGH AND INDEPENDENT INSPECTION,

INVESTIGATION, ANALYSIS AND EVALUATION OF ALL INSTRUMENTS, RECORDS AND DOCUMENTS WHICH PURCHASER MAY DETERMINE TO BE APPROPRIATE OR ADVISABLE TO REVIEW IN CONNECTION WITH PURCHASER’S ACQUISITION OF THE PROPERTY AND THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, INCLUDING THOSE RELATING TO ALL ZONING REGULATIONS AND OTHER GOVERNMENTAL REQUIREMENTS (INCLUDING, WITHOUT LIMITATION, ANY IMPACT THEREOF ON PURCHASER’S INTENDED USE AND/OR DEVELOPMENT OF THE PROPERTY, INCLUDING PURCHASER’S ABILITY TO OBTAIN ANY SUCH APPROVALS, PERMITS AND VARIANCES, AND ANY AMENDMENTS, WAIVERS, MODIFICATIONS, USES AND CHANGES THERETO), SITE AND PHYSICAL CONDITIONS, TITLE MATTERS, THE DUE DILIGENCE MATERIALS DELIVERED TO PURCHASER BY SELLER, AND ALL OTHER MATTERS AFFECTING THE USE, OCCUPANCY, VALUE, AND CONDITION OF THE PROPERTY, AND PURCHASER WILL EITHER HAVE DETERMINED, SUBJECT TO THE REPRESENTATIONS AND WARRANTIES OF SELLER SET FORTH HEREIN, AND THE TERMS AND CONDITIONS OF THIS AGREEMENT, THAT THE INFORMATION AND DATA CONTAINED THEREIN OR EVIDENCED THEREBY ARE SATISFACTORY TO PURCHASER, OR TERMINATED THIS AGREEMENT PRIOR TO THE EXPIRATION OF THE DUE DILIGENCE PERIOD. PURCHASER SPECIFICALLY ACKNOWLEDGES THAT PURCHASER IS NOT RELYING ON SELLER TO INDICATE THE RELATIVE IMPORTANCE OR MATERIALITY OF ANY OF THE INSTRUMENTS, RECORDS, DOCUMENTS AND OTHER INFORMATION MADE AVAILABLE TO PURCHASER FOR REVIEW AND PURCHASER SHALL MAKE ITS OWN DETERMINATION AS TO THE LEVEL OF SCRUTINY IT APPLIES TO SUCH INSTRUMENTS, RECORDS AND DOCUMENTS MADE AVAILABLE TO PURCHASER.

PURCHASER ACKNOWLEDGES THAT SELLER WAS NOT THE DEVELOPER OR THE ORIGINAL OWNER OF THE REAL PROPERTY OR THE HOTEL. PURCHASER FURTHER ACKNOWLEDGES THAT, PRIOR TO THE EXPIRATION OF THE DUE DILIGENCE PERIOD, PURCHASER WILL HAVE THOROUGHLY INSPECTED AND EXAMINED, AND UNCONDITIONALLY AND IRREVOCABLY APPROVED AND ASSUMED (SUBJECT TO SELLER’S REPRESENTATIONS AND WARRANTIES AS SET FORTH HEREIN) ALL LIABILITY FOR, ALL ELEMENTS COMPRISING THE PROPERTY, AND ALL FACTORS RELATED TO THEIR USE AND OPERATION (BOTH CURRENT AND INTENDED USES), INCLUDING, WITHOUT LIMITATION, THE CONTRACTS, UTILITIES, PHYSICAL AND FUNCTIONAL ASPECTS OF THE PROPERTY, THE CONSTRUCTION AND CONDITION OF THE REAL PROPERTY, ALL MATTERS AFFECTING AND RELATING TO TITLE, AND MUNICIPAL AND OTHER LEGAL REQUIREMENTS SUCH AS TAXES, ASSESSMENTS AND BONDS, ZONING, USE PERMITS, BUSINESS PERMITS, LICENSES, AND SIMILAR ENTITLEMENTS, INVESTIGATIONS OR ANALYSES OF PRESENT AND FUTURE LAWS, STATUTES, RULES, REGULATIONS, ORDINANCES, LIMITATIONS, RESTRICTIONS OR REQUIREMENTS CONCERNING THE USE, DENSITY, LOCATION AND SUITABILITY OF THE REAL PROPERTY OR ANY EXISTING OR PROPOSED DEVELOPMENT, BUILDOUT, REDEVELOPMENT, CHANGE IN USE, AND CONDITION THEREOF (COLLECTIVELY “REGULATIONS”), INCLUDING, BUT NOT LIMITED TO: ZONING, SUBDIVISION, ENVIRONMENTAL

AND OTHER SUCH REGULATIONS; THE NECESSITY AND AVAILABILITY OF ANY GENERAL OR SPECIFIC PLAN AMENDMENTS, REZONING, ZONE VARIANCES, CONDITIONAL USE PERMITS, BUILDING PERMITS, ENVIRONMENTAL IMPACT REPORTS, PARCEL OR SUBDIVISION MAPS, OR ANY OTHER GOVERNMENTAL PERMITS, APPROVALS, ENTITLEMENTS OR ACTS IN RESPECT OF THE REAL PROPERTY (COLLECTIVELY “PERMITS”); THE NECESSITY OR EXISTENCE OF ANY DEDICATIONS, FEES, CHARGES, COSTS OR ASSESSMENTS THAT MAY BE IMPOSED IN CONNECTION WITH ANY REGULATIONS OR THE OBTAINING OF ANY PERMITS; THE ECONOMIC VALUE OF THE REAL PROPERTY, AND THE SIZE, DIMENSIONS, LOCATION AND TOPOGRAPHY OF THE REAL PROPERTY; THE AVAILABILITY OR ADEQUACY OF THE ACCESS TO THE REAL PROPERTY AND OF PARKING; THE EXTENT OF INFRASTRUCTURE OR OTHER IMPROVEMENTS, IF ANY, REQUIRED TO BE BUILT BY PURCHASER ON, NEAR OR CONCERNING THE REAL PROPERTY IN ORDER TO DEVELOP AND BUILDOUT THE REAL PROPERTY; THE EXTENT OR CONDITION OF ANY GRADING OR OTHER SITE WORK ALREADY PERFORMED OR HEREAFTER REQUIRED FOR PURCHASER’S PROPOSED DEVELOPMENT AND BUILDOUT; ANY SURFACE, SOIL, SUBSOIL, GEOLOGIC OR GROUND WATER CONDITIONS OR OTHER PHYSICAL CONDITIONS OF OR AFFECTING THE REAL PROPERTY, SUCH AS AIRCRAFT OVERFLIGHT, TRAFFIC, CLIMATE, DRAINAGE AND AIR; THE POSSIBILITY OF FUTURE FEES AND ASSESSMENTS OR INCREASES IN EXISTING FEES AND ASSESSMENTS BY ONE OR MORE GOVERNMENTAL ENTITIES OR DISTRICTS; AND ALL OTHER MATTERS CONCERNING THE CONDITION, USE, DEVELOPMENT OR SALE OF THE REAL PROPERTY. PURCHASER HEREBY ACKNOWLEDGES THAT NONE OF THE FOREGOING, AND THE FAILURE OF PURCHASER TO OBTAIN ANY OF THE FOREGOING, AS THE CASE MAY BE, SHALL BE THE BASIS FOR PURCHASER’S RIGHT TO TERMINATE THIS AGREEMENT OR OBTAIN AN ADJUSTMENT TO THE PURCHASE PRICE, AND PURCHASER HEREBY RELEASES AND FOREVER DISCHARGES SELLER FROM ANY AND ALL CLAIMS, LOSSES, DAMAGES, LIABILITIES OR OBLIGATIONS ARISING OUT OF OR IN ANY WAY RELATED TO ALL OF THE ITEMS LISTED IN THIS SECTION, WHICH RELEASE AND DISCHARGE FROM LIABILITY SHALL SURVIVE THE CLOSE OF ESCROW.

 PURCHASER ACKNOWLEDGES AND AGREES THAT PURCHASER’S DELIVERY OF AFFIRMATIVE NOTICE OF ITS ELECTION TO WAIVE ITS RIGHT TO TERMINATE THIS AGREEMENT PRIOR TO THE EXPIRATION OF THE DUE DILIGENCE PERIOD SHALL BE CONCLUSIVELY DEEMED PURCHASER’S AFFIRMATION THAT IT HAS COMPLETED ITS INVESTIGATIONS AND DUE DILIGENCE REVIEW OF THE PROPERTY AND HAS (SUBJECT TO SELLER’S REPRESENTATIONS AND WARRANTIES AS SET FORTH HEREIN) APPROVED THE CONDITION AND STATE THEREOF.

(b)        PURCHASER FURTHER ACKNOWLEDGES THAT PURCHASER HAS SUBSTANTIAL EXPERIENCE WITH REAL PROPERTY, HOTELS AND HOTEL OPERATIONS, AND THAT PURCHASER WILL ACQUIRE THE PROPERTY IN “AS IS, WHERE IS, WITH ALL FAULTS” CONDITION, AND (SUBJECT TO SELLER’S

REPRESENTATIONS AND WARRANTIES AS SET FORTH HEREIN) SOLELY IN RELIANCE ON PURCHASER’S OWN INSPECTION AND EXAMINATION. PURCHASER WAIVES ANY OBLIGATION ON THE PART OF SELLER, OR ANY OTHER PERSON, TO DISCLOSE ANY DEFECTS OR OTHER DEFICIENCIES OR LIABILITIES IN OR WITH RESPECT TO THE PROPERTY.

(c)        EXCEPT AS TO THOSE REPRESENTATIONS AND WARRANTIES OF SELLER EXPRESSLY SET FORTH IN THIS AGREEMENT, IT IS EXPRESSLY UNDERSTOOD AND AGREED THAT SELLER MAKES NO REPRESENTATIONS, WARRANTIES OR GUARANTIES OF ANY KIND, NATURE OR SORT, EXPRESS OR IMPLIED, WITH RESPECT TO THE COMPLIANCE OF THE PROPERTY WITH APPLICABLE LAWS, THE ABSENCE OF VIOLATIONS OF LAWS, THE PHYSICAL CONDITION, PAST, PRESENT OR FUTURE OPERATION AND/OR PERFORMANCE, OR VALUE, OF THE PROPERTY. SELLER CONVEYS THE PROPERTY TO PURCHASER “AS IS AND WHERE IS, WITH ALL FAULTS,” AND PURCHASER ACKNOWLEDGES THAT, EXCEPT AS SET FORTH HEREIN, SELLER MAKES NO REPRESENTATIONS, GUARANTIES OR WARRANTIES WHATSOEVER, EXPRESS OR IMPLIED, AS TO THE QUALITY, CHARACTER, EXTENT, PERFORMANCE, CONDITION OR SUITABILITY OF THE PROPERTY FOR ANY PURPOSE, INCLUDING, WITHOUT LIMITATION, ANY WARRANTY OR GUARANTY OF MERCHANTABILITY OR FITNESS FOR ANY PURPOSE. PURCHASER ACKNOWLEDGES THAT PURCHASER SHALL BE SOLELY RESPONSIBLE AND LIABLE FOR ASCERTAINING THE TRANSFERABILITY OF ALL LICENSES, PERMITS AND OTHER GOVERNMENTAL CONSENTS FOR THE OWNERSHIP, USE AND OPERATION OF THE PROPERTY, AND SHALL BE SOLELY RESPONSIBLE FOR OBTAINING THE TRANSFERS THEREOF.

 EXCEPT WITH RESPECT TO THE REPRESENTATIONS AND WARRANTIES OF SELLER EXPRESSLY SET FORTH IN THIS AGREEMENT, PURCHASER FURTHER WAIVES ANY AND ALL WARRANTIES, GUARANTIES, CONDITIONS OR LIABILITIES, EXPRESS OR IMPLIED, ARISING BY LAW OR OTHERWISE (INCLUDING, WITHOUT LIMITATION, ANY OBLIGATION OF SELLER WITH RESPECT TO CONSEQUENTIAL DAMAGES) AND ALL TORT LIABILITY, EXCLUDING LIABILITY ARISING FROM SELLER’S GROSS NEGLIGENCE, FRAUD OR INTENTIONAL MISCONDUCT. PURCHASER ALSO ACKNOWLEDGES THAT SOME DEFECTS MAY BECOME APPARENT ONLY AFTER THE CLOSE OF ESCROW AND HEREBY RELEASES AND HOLDS SELLER HARMLESS FROM BLAME AND ALL LIABILITY FOR SUCH “LATENT DEFECTS.” PURCHASER HEREBY COVENANTS NOT TO BRING ANY ACTION AGAINST SELLER BASED ON ANY OF THESE CLAIMS. THIS SECTION SHALL SURVIVE THE CLOSE OF ESCROW.

 PURCHASER’S INSPECTION, INVESTIGATION AND SURVEY OF THE PROPERTY, DURING THE DUE DILIGENCE PERIOD, SHALL BE IN LIEU OF ANY NOTICE OR DISCLOSURE REQUIRED BY SECTION 25359.7 OF THE CALIFORNIA HEALTH AND SAFETY CODE, OR BY ANY OTHER PROVISION OF THE CALIFORNIA CIVIL CODE, OR PURSUANT TO ANY OTHER APPLICABLE LAW, INCLUDING, WITHOUT LIMITATION, LAWS REQUIRING DISCLOSURE BY SELLER OF FLOOD,

FIRE, SEISMIC HAZARDS, LEAD PAINT, MELLO ROOS, LANDSLIDE AND LIQUEFACTION, OTHER GEOLOGICAL HAZARDS, RAILROAD AND OTHER UTILITY ACCESS, SOIL CONDITIONS AND OTHER CONDITIONS WHICH MAY AFFECT THE USE OF THE REAL PROPERTY, AND PURCHASER HEREBY WAIVES ANY REQUIREMENT FOR A NOTICE PURSUANT TO THOSE PROVISIONS AND HEREBY ACKNOWLEDGES AND AGREES THAT IT IS FAMILIAR WITH SUCH DISCLOSURE REQUIREMENTS AND WILL CONDUCT ITS OWN DUE DILIGENCE WITH RESPECT TO ALL MATTERS COVERED THEREBY, AND HEREBY RELEASES SELLER FROM LIABILITY IN CONNECTION THEREWITH. PURCHASER SHALL BE DEEMED TO HAVE APPROVED ALL CONDITIONS PERTAINING TO THE PROPERTY UNLESS IT CANCELS THE ESCROW IN ACCORDANCE HEREWITH ON OR BEFORE THE END OF THE DUE DILIGENCE PERIOD.

(d)        PURCHASER ALSO ACKNOWLEDGES AND AGREES THAT, ALTHOUGH SELLER HAS PROVIDED TO PURCHASER CERTAIN REPORTS, STUDIES AND SURVEYS FOR OR REGARDING THE REAL PROPERTY (THE “REPORTS”), SELLER HAS NOT VERIFIED THE ACCURACY THEREOF AND MAKES NO REPRESENTATIONS OR WARRANTIES REGARDING THE MATTERS SET FORTH THEREIN, IT BEING THE RESPONSIBILITY OF PURCHASER TO VERIFY THE ACCURACY OF SUCH REPORTS. PURCHASER AGREES THAT SELLER HAS NO LIABILITY OR RESPONSIBILITY FOR THE ACCURACY OR CONTENTS OF ANY SUCH REPORTS. PURCHASER HEREBY RELEASES AND FOREVER DISCHARGES SELLER FROM ANY AND ALL CLAIMS, LOSSES, DAMAGES, LIABILITIES OR OBLIGATIONS ARISING OUT OF OR IN ANY WAY RELATED TO ALL OF THE ITEMS LISTED IN THIS PARAGRAPH 4.5(d), WHICH RELEASE AND DISCHARGE FROM LIABILITY SHALL SURVIVE THE CLOSE OF ESCROW, EXCEPT FOR SELLER’S FRAUD OR INTENTIONAL MATERIAL MISREPRESENTATION.

 FURTHERMORE, EXCEPT AS TO THOSE REPRESENTATIONS AND WARRANTIES OF SELLER EXPRESSLY SET FORTH IN THIS AGREEMENT, PURCHASER ACKNOWLEDGES THAT SELLER HAS NOT AND DOES NOT MAKE ANY REPRESENTATIONS OR WARRANTIES IN CONNECTION WITH THE INTEGRATION OF HAZARDOUS MATERIALS UPON OR WITHIN THE REAL PROPERTY. IN THAT REGARD, PURCHASER WILL, PRIOR TO THE EXPIRATION OF THE DUE DILIGENCE PERIOD, CONDUCT ITS OWN INVESTIGATION AND OBTAIN ITS OWN ENVIRONMENTAL ASSESSMENT REPORT TO DETERMINE IF THE REAL PROPERTY CONTAINS ANY HAZARDOUS OR TOXIC WASTE, MATERIALS, DISCHARGE, DUMPING OR CONTAMINATION, WHETHER SOIL, GROUNDWATER OR OTHERWISE, WHICH VIOLATES ANY FEDERAL, STATE, LOCAL OR OTHER GOVERNMENTAL LAW, REGULATION OR ORDER OR REQUIRES REPORTING TO ANY GOVERNMENTAL AUTHORITY.

(e)        SELLER SHALL HAVE NO OBLIGATION OR DUTY TO EXPEND FUNDS FOR, OR OTHERWISE BE RESPONSIBLE TO CONDUCT OR PERFORM, ANY CLEAN-UP REQUIREMENT(S) AS IMPOSED BY ANY FEDERAL, STATE OR LOCAL

GOVERNMENT LAW, REGULATION, ORDINANCE OR AGENCY FOR THE REMOVAL OF ANY HAZARDOUS MATERIALS CONTAMINATION FROM THE REAL PROPERTY.

(f)        AS OF THE CLOSE OF ESCROW, EXCEPT AS TO SELLER’S REPRESENTATIONS AND WARRANTIES SET FORTH HEREIN, PURCHASER, FOR ITSELF AND ITS OWNERS, SUCCESSORS AND ASSIGNS, HEREBY RELEASES AND FOREVER DISCHARGES SELLER AND TARSADIA HOTELS, AND THEIR PAST, PRESENT AND FUTURE MEMBERS, AFFILIATES, EMPLOYEES, AGENTS, ATTORNEYS, ASSIGNS, AND SUCCESSORS-IN-INTEREST FROM ALL PAST, PRESENT AND FUTURE CLAIMS, DEMANDS, OBLIGATIONS, LOSSES AND CAUSES OF ACTION OF ANY NATURE WHATSOEVER, WHETHER NOW KNOWN OR UNKNOWN, DIRECT OR INDIRECT, FORESEEN OR UNFORESEEN, SUSPECTED OR UNSUSPECTED, WHICH ARE BASED UPON OR ARISE OUT OF OR IN CONNECTION WITH THE CONDITION OF THE PROPERTY, THE MATTERS ADDRESSED IN SUBSECTIONS (a), (b), (c), (d) AND (e) OF THIS SECTION 4.5, AND WITH RESPECT TO ANY ENVIRONMENTAL DAMAGES OR ENVIRONMENTAL REQUIREMENTS, INCLUDING, WITHOUT LIMITATIONS, THE PHYSICAL, STRUCTURAL, GEOLOGICAL, MECHANICAL AND ENVIRONMENTAL (SURFACE AND SUBSURFACE) CONDITION OF THE REAL PROPERTY (INCLUDING THE IMPROVEMENTS THEREON) OR ANY LAW OR REGULATION RELATING TO HAZARDOUS MATERIALS, INCLUDING, BUT NOT LIMITED TO, LOSSES IN CONNECTION WITH PROPERTY DAMAGE, CLAIMS BY GOVERNMENTAL AGENCIES, DIMINUTION IN VALUE AND PERSONAL INJURY LOSSES. PURCHASER EXPRESSLY UNDERSTANDS AND ACKNOWLEDGES THAT IT IS POSSIBLE THAT UNKNOWN PROBLEMS, (EXCEPT WHERE SELLER KNOWLINGLY MADE A MATERIAL MISREPRESENTATION OR ENGAGED IN FRAUDULENT CONDUCT). CONDITIONS OR LOSSES MAY EXIST WITH RESPECT TO THE PROPERTY AND THAT PURCHASER EXPLICITLY TOOK SUCH INTO ACCOUNT IN DETERMINING THE PURCHASE PRICE FOR THE PROPERTY AND ITS ELECTION TO PROCEED WITH THE PURCHASE THEREOF, AND THAT A PORTION OF SUCH CONSIDERATION, HAVING BEEN BARGAINED FOR BETWEEN THE PARTIES WITH THE KNOWLEDGE OF THE POSSIBILITY OF SUCH UNKNOWN PROBLEMS, CONDITIONS OR CLAIMS, WAS GIVEN IN EXCHANGE FOR A FULL ACCORD, SATISFACTION AND DISCHARGE OF ALL SUCH PROBLEMS, CONDITIONS AND LOSSES. WITHOUT LIMITING THE FOREGOING, THIS RELEASE SPECIFICALLY APPLIES TO ALL LOSSES AND CLAIMS ARISING UNDER THE COMPREHENSIVE ENVIRONMENTAL RESPONSE, COMPENSATION AND LIABILITY ACT OF 1980, AS AMENDED, THE SUPERFUND AMENDMENTS AND REAUTHORIZATION ACT OF 1986, (42 U.S.C. SECTIONS 9601 ET SEQ.), THE RESOURCES CONSERVATION AND RECOVERY ACT OF 1976, (42 U.S.C. SECTIONS 6901 ET SEQ.), THE CLEAN WATER ACT, (33 U.S.C. SECTIONS 466 ET SEQ.), THE SAFE DRINKING WATER ACT, (14 U.S.C. SECTION 1401-1450), THE HAZARDOUS MATERIALS TRANSPORTATION ACT, (49 U.S.C. SECTIONS 1801 ET SEQ.), THE TOXIC SUBSTANCE CONTROL ACT, (15 U.S.C. SECTIONS 2601-2629), THE CALIFORNIA HAZARDOUS WASTE CONTROL LAW, (CALIFORNIA HEALTH AND SAFETY CODE SECTIONS 25100-25600), THE PORTER-COLOGNE WATER QUALITY CONTROL ACT (CALIFORNIA HEALTH AND SAFETY CODE SECTIONS 13000 ET

SEQ.), AND ANY OTHER FEDERAL, STATE OR LOCAL LAW OF SIMILAR EFFECT, AS WELL AS ANY AND ALL COMMON LAW CLAIMS. IN ACCORDANCE WITH THE FOREGOING, PURCHASER WAIVES ALL RIGHTS UNDER CALIFORNIA CIVIL CODE SECTION 1542 (AND ALL SIMILAR STATUTES IN ALL OTHER STATES) WHICH STATES IN FULL AS FOLLOWS:

“A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR.”

 BY INITIALING THIS AGREEMENT CLAUSE, PURCHASER ACKNOWLEDGES THAT THIS SECTION HAS BEEN READ AND FULLY UNDERSTOOD, AND THAT PURCHASER HAS HAD THE CHANCE TO ASK QUESTIONS OF ITS COUNSEL ABOUT ITS MEANING AND SIGNIFICANCE.

PURCHASER’S INITIALS

(g)        “Environmental Damages”  means all claims, judgments, damages, losses, penalties, fines, liabilities (including strict liability), encumbrances, liens, costs, and expenses of investigation and defense of any claim, whether or not such claim is ultimately defeated, and of any good faith settlement of judgment, of whatever kind or nature, contingent or otherwise matured or unmatured, foreseeable or unforeseeable, including without limitation reasonable attorneys’ fees and disbursements and consultants’ fees, any of which are incurred at any time as a result of the existence of Hazardous Materials upon, about, beneath the Real Property or migrating or threatening to migrate to or from the Real Property, or the existence of a violation of Environmental Requirements pertaining to the Real Property, regardless of whether the existence of such Hazardous Materials or the violation of Environmental Requirements arose prior to the present ownership or operation of the Real Property.

(h)        “Environmental Requirements”  means all applicable present and future statutes, regulations, rules, ordinances, codes, licenses, permits, orders, approvals, plans, authorizations, concessions, franchises, and similar items, of all governmental agencies, departments, commissions, boards, bureaus, or instrumentalities of the United States, states and political subdivisions thereof and all applicable judicial, administrative, and regulatory decrees, judgments, and orders relating to the protection of human health or the environment.

(i)        “Hazardous Materials”  means any substance (i) the presence of which requires investigation or remediation under any federal, state or local statute, regulation, ordinance or policy; or (ii) which is defined as a “hazardous waste” or “hazardous substance” under any federal, state or local statute, regulation or ordinance, including without limitation the Comprehensive Environmental Response, Compensation and Liability Act (42 U.S.C. Section 9601 et seq.) and the Resource Conservation and Recovery Act (42 U.S.C. Section 6901 et seq.) and amendments thereto and regulations promulgated thereunder; or (iii) which is toxic,

explosive, corrosive, infectious or otherwise hazardous or is regulated by any federal, state or local governmental authority; (iv) without limitation which contains polychlorinated biphenyls (PCBs), asbestos or urea formaldehyde; and (v) mold and fungi.

 The provisions of this Section 4.5 shall survive the Close of Escrow.

V.

CLOSING

5.1        Closing Date.    The “Closing Date”  for purposes of this Agreement shall be the date thirty (30) days from the date of the expiration or earlier waiver/termination of the Due Diligence Period, or such earlier or later date as may be agreed upon, in writing, by Seller and Purchaser, and shall be the date on which the Close of Escrow occurs.

Notwithstanding the foregoing, upon the election of Seller, Notice of which is delivered to Purchaser and Escrow Holder not later than five (5) business days prior to the Closing Date, Seller may extend the Closing Date for up to an additional sixty (60) days.

The “Close of Escrow”  for purposes of this Agreement is defined as the time when the Deed is recorded in the Official Records of Los Angeles County, California, by Title Insurer.

In the event the Escrow and this Agreement are canceled and terminated, upon Escrow Holder’s request, the parties shall pay to Escrow Holder all title and escrow cancellation charges; provided, however, that as an agreement between the parties not to concern Escrow Holder, it is agreed that if termination of the Escrow is caused by the default of one party then such party shall be responsible for all escrow and title cancellation charges, and if the termination occurs where neither party is in default or where both parties are in default, then each party shall be responsible for one-half ( ¹/2) of all title and Escrow cancellation charges.

5.2        Action Prior to the Close of Escrow by Seller.  Seller agrees that on or before 5:00 p.m. California time on the business day preceding the Closing Date, Seller will deposit with Escrow Holder such funds and other items and instruments (executed and acknowledged, if appropriate) as may be necessary in order for Escrow Holder to comply with this Agreement, including, without limitation, the following:

(a)        A Grant Deed, in the form and content attached hereto as Exhibit “E”, prepared and executed by Seller and acknowledged before a Notary Public in the manner provided under the laws of the State of California, assigning, conveying and transferring to Purchaser or its designee the Real Property subject only to the Permitted Exceptions (the “Deed”);

(b)        Two (2) duplicate originals of a Bill of Sale, in the form and content attached hereto as Exhibit “F”, prepared and executed by Seller, assigning, conveying and transferring to Purchaser or its designee, without representation or warranty, all of Seller’s right, title and interest in and to the Personal Property and the Inventory (the “Bill of Sale”);

(c)        Two (2) duplicate originals of an Assignment of Intangible Property, in the form and content attached hereto as Exhibit “G”, prepared and executed by Seller, assigning and conveying to Purchaser or its designee, at no cost or expense to Seller, and without representation or warranty, all of Seller’s right, title and interest in the Intangible Property (the “Assignment of Intangibles”);

(d)        Two (2) duplicate originals of an Assignment and Assumption of Contracts, in the form and content attached hereto as Exhibit “H”, prepared and executed by Seller, assigning and conveying to Purchaser or its designee, at no cost or expense to Seller, and without representation or warranty, all of Seller’s right, title and interest under the Contracts (the “Assignment of Contracts”);

(e)        A Non-Foreign Affidavit signed by Seller in the form to be prepared by Escrow Holder (the “Non-Foreign Affidavit”);

(f)        A written agreement between Seller and Existing Manager terminating the Existing Management Agreement and all of Existing Manager’s rights and obligations thereunder to manage or operate the Hotel from and after the Closing Date;

(g)        The Escrow Holder’s Closing Statement, executed by Seller; and

(h)        Such other funds, instruments or documents as may be necessary to effect or carry out the covenants and obligations to be performed by Seller pursuant to this Agreement.

5.3        Action Prior to the Close of Escrow by Purchaser.  Purchaser agrees that on or before 5:00 p.m. California time on the business day preceding the Closing Date, Purchaser will deposit with Escrow Holder all additional funds (in Good Funds) and/or documents (executed and acknowledged, if appropriate) which are necessary to comply with the terms of this Agreement, including without limitation:

(a)        The funds referred to in Section 2.2.2 hereof;

(b)        Two (2) fully executed duplicate originals of the Assignment of Contracts executed by Purchaser;

(c)        Two (2) fully executed duplicate originals of the Assignment of Intangibles executed by Purchaser;

(d)        Such other funds, instruments or documents as may be necessary to effect or carry out the covenants and obligations to be performed by Purchaser pursuant to this Agreement; and

(e)        The Escrow Holder’s Closing Statement, executed by Purchaser.

5.4        Recording of Deed.  Escrow Holder will cause the Deed to be dated and recorded in the Official Records of the County of Orange, State of California, and all other conveyance documents deposited with Escrow Holder dated as of Close of Escrow, when (but in no event

after the Closing Date) Title Insurer is irrevocably committed to issue the Title Policy to be issued as contemplated in this Agreement, and holds for the account of Seller and Purchaser the items and funds (if any) to be delivered to Seller and Purchaser through the Escrow, after payment of costs, expenses, disbursements and prorations chargeable to Seller or Purchaser pursuant to the provisions of this Agreement.

 The amount of any documentary transfer taxes will not be posted on the Deed, but will be properly reported by a separate tax affidavit filed by Escrow Holder with the Deed.

5.5        Prorations.

5.5.1    Taxes.  All non-delinquent real estate and personal property general and special taxes and assessments for the Property for the current assessment year, and whether due and payable or not, shall be prorated as of the Closing Date. It is understood that any supplemental property tax bill issued as a result of the sale of the Property pursuant to the provisions of this Agreement, shall be borne by Purchaser. Notwithstanding anything to the contrary in this Agreement, Seller shall retain all right, title and interest in and to any and all property tax (both real property and personal property) refunds and claims for refunds with respect to the Property for any period prior to the Closing Date. Purchaser shall be responsible for, and shall pay, all sales, use and other transfer taxes imposed in connection with the sale and transfer of the Personal Property, the Inventory and the Intangible Property.

5.5.2    Advance Reservations.  At the Close of Escrow, Seller shall provide Purchaser with a schedule of post-closing confirmed Bookings for the Hotel. Purchaser shall honor all such confirmed and Bookings, provided that such Bookings were booked in the Ordinary Course. Purchaser shall receive a credit for all prepaid deposits for Bookings scheduled for accommodations or events after the Closing Date which Purchaser is obligated to honor pursuant to this Agreement, except to the extent such deposits are transferred to Purchaser.

5.5.3    Utility Service.  Seller shall request each utility company providing utility service to the Real Property to cause all utility billings to be closed and billed as of the Closing Date in order that utility charges may be separately billed for the period prior to the Closing Date and the period on and after the Closing Date. In the event any such utility charges are not separately billed, the same shall be prorated by estimating such cost on the basis of the most recent bill for such service; provided, however, that after the Close of Escrow, Seller and Purchaser shall prorate the amount of such utilities and pay any deficiency in the original proration to the other party promptly upon receipt of the actual bill for the relevant billing period. In connection with any such proration, it shall be presumed that utility charges were uniformly incurred during the billing period in which the Close of Escrow occurs.

5.5.4    Revenue From Operations.  As to the Hotel, all revenues from operations, including, without limitation, guest room rentals, revenue from the minibars (if any), banquet rooms rentals, vending machines, coin telephones, and other income-producing equipment arising through 12:01 a.m. California time on the Close of Escrow (the “Cut-Off Time”) shall belong to Seller. All revenues from operations, including, without limitation, guest room rentals, revenue from the minibars (if any), banquet rooms rentals, vending machines, coin telephones,

and other income producing equipment arising after the Cut-Off Time shall belong to Purchaser. Revenue from guest room rentals for the evening before the date of the Close of Escrow through to the day of the Close of Escrow shall be divided equally between Seller and Purchaser. All prepaid rentals, room rental deposits, and all other deposits for advance reservations and Bookings for the period after the Cut-Off Time, shall be credited to Purchaser.

5.5.5    Accounts Payable and Operating Expenses.  All obligations and liabilities (for services and materials ordered, or otherwise) and accounts payable for the Hotel and the Property owing as of the Closing Date for merchandise, equipment, tour agents’ and travel agents’ commissions, advertisements, supplies and other materials and services shall be prorated between Seller and Purchaser as of the Closing Date. Seller shall receive a credit for all prepaid expenses. Notwithstanding the foregoing, all liabilities for issued and outstanding gift certificates and script for the Hotel shall be assumed by Purchaser and honored in accordance with the terms thereof, without credit to the Purchase Price.

5.5.6    Miscellaneous Permits and Taxes.  All water and sewer charges, taxes (other than ad valorem property taxes), including license taxes or fees for licenses (other than the Liquor Licenses) which are assignable or transferable without added cost and have a value which will survive Close of Escrow, including, but not limited to, and any unpaid taxes payable in arrears, shall be prorated as of the Closing Date. Seller will be credited for that portion of taxes and fees paid by Seller allocable to the period after the Closing Date.

5.5.7    The Contracts.  All obligations, payments and receipts, as applicable, under the Contracts shall be prorated between Purchaser and Seller as of the Closing Date. Seller shall receive a credit for all prepayments and deposits paid thereunder, and Purchaser shall receive a credit for all prepayments and deposits received by Seller thereunder.

5.5.8    Other Income.  All other income derived by Seller from the Property accruing or relating to the period up to and including the Cut-Off-Time shall be paid to Seller. All other income derived by Seller from the Property accruing or relating to the period on and after the Cut-Off-Time shall be paid to Purchaser.

5.5.9    Other Expenses.  All other expenses and obligations not otherwise specified in this Section 5.5 incurred in the ownership of the Property and operation of the Hotel shall be prorated between Seller and Purchaser as of the Closing Date.

5.5.10  Gift Shop Inventory.    Seller shall receive a credit for all gift shop inventory held by Seller and/or Tarsadia Hotels for sale at the Hotel, in an amount equal to Seller’s/Tarsadia Hotel’s actual cost thereof.

5.5.11  House Banks.    On the Close of Escrow, Seller shall receive a credit through the Escrow for an amount equal to all till money, cash-on-hand, and all sums in house banks for the Hotel, in which case all right, title and interest to the till money, cash-on-hand and house banks shall be assigned and conveyed by Seller to Purchaser. In the event Seller and Purchaser are unable to agree upon the amount of the till money, cash-on-hand and house banks, the provisions of this Section 5.5.11 shall be inapplicable, and title to the till money, cash-on-

hand and house banks shall remain with Seller. The failure of Purchaser and Seller to agree on the amounts of the till money, cash-on-hand and house banks shall not be deemed a condition precedent to the obligations of Seller and Purchaser under this Agreement.

5.5.12    Delayed Adjustments.  If, at any time following the Closing Date, the amount of an item listed in this Section 5.5 shall prove to be incorrect, the party in whose favor the error was made shall pay to the other party within fifteen (15) days after request the sum necessary to correct such error upon receipt of proof of such error, provided that such proof is delivered to the party from whom payment is requested on or before one hundred eighty (180) days after the Close of Escrow. The acceptance of the closing statement by either party shall not prevent later readjustment pursuant to this Section 5.5.12. After the Close of Escrow, each party shall have reasonable access to the books and records of the other party with respect to all matters set forth in this Section 5.5 for the purposes of determining the accuracy of all adjustments and the performance of the obligations of the parties under this Section 5.5.

5.5.13    Proration Allocation.  For proration purposes, the date of the Close of Escrow shall be charged to Purchaser.

5.5.14    Survival.  The provisions of this Section 5.5 shall survive the Close of Escrow.

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

5.6.1    Safe Deposit Boxes.  On the day prior to the Closing Date, Seller shall send written notice to guests in the Hotel who have safe deposit boxes advising them of the sale of the Hotel to Purchaser and the procedures to be followed pursuant to this Section 5.6.1. On the Closing Date, Seller shall deliver to Purchaser all keys to the safe deposit boxes in the Hotel, all receipts and agreements relating to such safe deposit boxes, and a complete list of the name and room number of each depositor. Each box in use by a Hotel guest shall then be sealed by representatives of Seller and Purchaser. At Purchaser’s option, guests may be requested to remove and verify the contents of the sealed boxes prior to the Close of Escrow. All such removals and verifications shall be under the supervision of a representative to be agreed upon between Purchaser and Seller. Purchaser shall be responsible for all boxes once the seal is broken, and for the contents of all boxes which are verified. Seller shall be responsible for any claims pertaining to any property allegedly deposited in a safe deposit prior to the Closing Date, the seal of which was not broken. Each of Seller and Purchaser shall indemnify and hold the other harmless from and against all claims and losses arising from such indemnifying party’s obligations under this Section 5.6.1.

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

hold Seller harmless from and against any claim arising out of or with respect to the baggage listed in the inventory, and Seller agrees to indemnify and save and hold Purchaser harmless from and against any claim arising prior to the Closing Date out of or with respect to any guest baggage or other guest property not listed in the inventory.

5.7        Closing Costs.  Seller and Purchaser shall each pay one-half (1/2) of the costs of the premium for the Title Policy, the cost for acquiring any additional endorsements to the Title Policy, all costs of any Survey (or update to the Survey) required for the Title Policy, documentary transfer taxes, escrow fees, and recording fees for the Deed. Purchaser shall pay all charges and costs with respect to any financing obtained. Seller shall pay all charges and costs related to the release of liens related to any financing it obtained.

5.8        California Real Estate Withholding.  Seller and Purchaser appoint Escrow Holder as the withholding agent for purposes of compliance with California Revenue and Taxation Code Section 18662. Prior to the Close of Escrow, Seller will provide Escrow Holder with all information and documentation reasonably required to determine the amount, if any, to be withheld from the proceeds of the sale transaction contemplated herein for payment to the California Franchise Tax Board pursuant to said Revenue and Taxation Code Section, including California Form 593-W or California Form 593-C, whichever is applicable to Seller as of Close of Escrow.

5.9        Distribution of Funds and Documents Following Close of Escrow.    Following Close of Escrow, Escrow Holder shall distribute the documents as follows:

  To Seller:

  (a)        The cash portion of the Purchase Price as set forth in Section 2.2, less costs, offsets and prorations in accordance with the provisions of this Agreement;

  (b)        One (1) fully executed duplicate original of the Bill of Sale;

  (c)        One (1) fully executed duplicate original of the Assignment of Intangibles;

  (d)        One (1) fully executed duplicate original of the Assignment of Contracts;

  (e)        One (1) duplicate original or conformed copy as appropriate, of any other document to be received by Seller through Escrow pursuant to the provisions of this Agreement; and

  (f)        One (1) copy of any other document delivered to Escrow Holder by Purchaser or Seller pursuant to the terms of this Agreement.

  To Purchaser:

  (a)        Any excess funds deposited by Purchaser which remain after disbursement to Seller;

  (b)        One (1) conformed copy of the Deed, the original to be mailed to Purchaser following the recordation thereof;

  (c)        One (1) duplicate original of the Bill of Sale;

  (d)        One (1) duplicate original of the Assignment of Intangibles;

  (e)        One (1) duplicate original of the Assignment of Contracts;

  (f)        One (1) duplicate original or conformed copy as appropriate, of any other document to be received by Purchaser through Escrow pursuant to the provisions of this Agreement;

  (g)        One (1) copy of any other document delivered to Escrow Holder by Purchaser or Seller pursuant to the terms of this Agreement; and

  (h)        The original of the Title Policy.

5.10        Possession.  Purchaser shall be entitled to sole possession of the Property on the Close of Escrow (all of which, together with the Contracts, shall be located at the Real Property), subject to the possessory rights of any guests of the Hotel.

VI.

ADDITIONAL COVENANTS AND INDEMNITIES

6.1        Purchaser’s Covenants.

6.1.1    Indemnification.    Purchaser covenants to defend, indemnify and hold harmless Seller, Tarsadia Hotels, and their respective affiliates, owners, employees, agents and representatives from and against any and all claims, penalties, liabilities, fines, losses, causes of action, fees, injuries, damages, liens, proceedings, judgments, actions, rights, demands, costs and expenses (including, without limitation, reasonable attorneys’ fees and court and litigation costs) (a) arising from the use, management, operation, and ownership of the Property, based upon acts, conduct or omissions occurring, on or after the Closing Date, including, without limitation, with respect to and under the Contracts, (b) caused by or arising out of any material misrepresentation by Purchaser in connection with this Agreement, (c) arising from the use of the names “Marriott,” “Courtyard by Marriott,” any materials referencing the names and logos thereof, and all derivatives thereof on and after the Close of Escrow, and (d) and arising from any breach of this Agreement by Purchaser or any instrument or agreement required delivered or to be delivered pursuant to the provisions of this Agreement, including under the WARN Act. This indemnity shall survive the Close of Escrow.

6.1.2    Seller’s Accounts Receivable.    Purchaser, upon receipt, shall promptly remit to Seller all sums received by Purchaser in payment of any of Seller’s Accounts Receivables. All sums received by Purchaser from a customer, guest or patron owing Seller under a Seller’s Account Receivable shall be credited, first, to the sums owing Seller, and then,

to the extent any sums remain, to Purchaser. For a period of one (1) year after the Close of Escrow, Seller shall have the right, from time to time, to inspect and audit the books and records of the Hotel that pertain to income and collections, at Seller’s sole cost (unless it is determined from such audit or inspection that Purchaser has withheld Seller’s Accounts Receivable, then Purchaser shall pay the costs of such audit and inspection), and Purchaser shall provide full and complete access thereto to Seller during normal business hours upon not less than three (3) business days prior Notice, to verify receipt and payment of Seller’s Accounts Receivable.

6.2        Seller’s Covenants.

6.2.1    Indemnification.  Seller covenants to defend, indemnify and hold harmless Purchaser and its affiliates, owners, employees, agents and representatives from and against any and all claims, penalties, liabilities, fines, losses, causes of action, fees, injuries, damages, liens, proceedings, judgments, actions, rights, demands, costs and expenses (including, without limitation, reasonable attorneys’ fees and court and litigation costs) (a) arising from the use, management, operation and ownership of the Property based upon acts, conduct or omissions occurring during the period of Seller’s ownership thereof (except as to, and specifically excluding, the matters set forth in Section 6.1.1 hereof, Environmental Damages, Environmental Requirements, and the matters addressed in Section 4.5 hereof), (b) arising under the Contracts and the Franchise Agreement prior to the Closing Date (other than arising as a result of the transaction contemplated in this Agreement and the assignment thereof to Purchaser), (c) caused by or arising out of any material misrepresentation by Seller in connection with this Agreement, and (d) arising from any breach of this Agreement by Seller or any instrument or agreement required to be delivered or to be delivered pursuant to the provisions of this Agreement. This indemnity shall survive the Close of Escrow.

6.2.2    Termination of the Franchise Agreement and the Hotel Management Agreement.  Prior to the Close of Escrow, and subject to Purchaser’s compliance with its obligations under Section 2.4 hereof, Seller shall terminate, at Seller’s sole cost and expense, and at no cost or expense to Purchaser, the Franchise Agreement and the Existing Management Agreement, and Seller shall indemnify Purchaser from and against all claims and liabilities with respect thereto. This indemnity shall survive the Close of Escrow.

6.2.3    Operation of the Hotel.  Seller, during the term of this Agreement, shall carry on the business and operations of the Hotel in the Ordinary Course. Prior to the Closing Date, Seller shall maintain (or replace with policies of like amounts) all existing insurance policies insuring the Property and the operation of the Hotel. Seller may extend, amend, modify or terminate any of the contracts and leases pertaining to the Hotel, and enter into any new contracts and leases, as Seller deems appropriate to operate, service and maintain the Property in the Ordinary Course; provided, however, that so long as Purchaser is not in default of any of its obligations under this Agreement, (a) from the date of this Agreement to the expiration of the Due Diligence Period, Seller shall provide to Purchaser copies of any such extensions, amendments, modifications and terminations, and any new contracts and leases, which Seller has entered into, or intends to enter into, and (b) from and after the expiration of the Due Diligence Period, Seller shall not enter into any such extensions, amendments, modifications or

terminations, or any new contracts and leases, without the prior consent of Purchaser (which consent shall not be unreasonably withheld, delayed or conditioned).

6.3        Employee Matters.  On the Closing Date, Seller shall pay all Compensation for Employees which have accrued up to 3:00 p.m. California time on the Closing Date. Seller shall terminate all of the Employees effective at 3:00 p.m. California time on the Closing Date. Seller shall indemnify, defend and hold harmless Purchaser and its affiliates against any and all labor or employment claims, liabilities or obligations (including, without limitation, attorneys’ fees and costs) which arise or accrue before, or arise out of events occurring before, the Closing Date, which indemnity shall survive the Close of Escrow.

Purchaser shall indemnify, defend and hold harmless Seller, Tarsadia Hotels and their affiliates, owners and employees against any and all labor or employment claims, liabilities or obligations (including, without limitation, attorneys’ fees and costs) which arise or accrue from or after, or arise out of events occurring from or after the Close of Escrow, including, without limitation, all claims arising from the obligations of Purchaser under this Section 6.3 and from the termination by Purchaser of any Employee, the failure of Purchaser to offer employment to any such Employees, and Purchaser’s decision to continue or discontinue any employment policy or practice of Seller in existence or effect at the Hotel prior to the Close of Escrow, which indemnity shall survive the Close of Escrow. The foregoing indemnity shall not include coverage for any claims, liabilities or obligations predicated on matters which occurred prior to the Close of Escrow even though such claims, liabilities or obligations were first instituted or brought to the attention of Seller or Purchaser after the Close of Escrow, it being expressly understood and agreed by Seller that any such claims or liabilities or obligations shall remain the responsibility of Seller, and Seller shall satisfy all such claims, liabilities and obligations. The foregoing indemnity shall survive the Close of Escrow.

Purchaser acknowledges that Seller is not giving any notice under, or otherwise complying with, the Worker Adjustment and Retraining Notification Act and/or any applicable state law counterpart (together with all rules and regulations promulgated thereunder, the “WARN Act”). Purchaser agrees to or shall cause its hotel manager to offer to hire a sufficient number of the Employees, and on such terms and conditions, as to avoid any violation of the WARN Act in the absence of such notice, and agrees to indemnify and defend Seller and Tarsadia Hotels, and hold them harmless, from and against any and all loss, damage, liability, claim, cost or expense (including, without limitation, reasonable attorneys fees) incurred by any of such parties as a result of the failure to give such notice or otherwise comply with the WARN Act.

6.4        No Obligations of Escrow Holder.  Escrow Holder shall not be concerned with the provisions of this Article VI.

VII.

REPRESENTATIONS AND WARRANTIES

7.1        By Purchaser.    Purchaser represents and warrants to Seller that as of the date hereof and the Close of Escrow:

7.1.1    Organization and Standing.    Purchaser is a limited liability partnership, duly organized, validly existing, and in good standing under the laws of the State of Delaware, Purchaser or its designee will be as of the Closing Date, duly qualified to do business in the State of California, and has the full power and authority to enter into this Agreement and to carry out the transactions contemplated hereby to be carried out by it.

7.1.2    Due Authorization.    Subject to approval by the Board of Trustees of Purchaser’s general partner (the “Board Approval”) to occur on or before the expiration of the Due Diligence Period, the performance of this Agreement and the transactions contemplated hereunder by Purchaser have been duly authorized by all necessary action on the part of Purchaser, and this Agreement is binding on and enforceable against Purchaser in accordance with its terms, except to the extent Seller itself is in default hereunder. Purchaser shall, on or prior to the Closing Date, furnish Seller with certified resolutions evidencing that Purchaser has been duly authorized to enter into and perform this Agreement and the transactions contemplated hereunder. Except for Board Approval, no further consent of any shareholder, creditor, board of directors, governmental authority or other party to such execution, delivery and performance hereunder is required. The person(s) signing this Agreement, and any document pursuant hereto on behalf of Purchaser, has full power and authority to bind Purchaser.

7.1.3    Lack of Conflict.    Neither the execution of this Agreement nor the consummation of the transactions contemplated hereby will violate any restriction, court order, judgment, law, regulation, charter, bylaw, instrument or agreement to which Purchaser is subject.

7.1.4    Solvency/Bankruptcy.  Purchaser has not (i) made any general assignment for the benefit of creditors, (ii) filed any voluntary petition in bankruptcy or suffered the filing of an involuntary petition in bankruptcy by Purchaser’s creditors, (iii) suffered the appointment of a receiver to take possession of all, or substantially all, of Purchaser’s assets, (iv) suffered the attachment or other judicial seizure of all, or substantially all, of Purchaser’s assets, (v) admitted in writing its inability to pay its debts as they come due, or (vi) made any offer of settlement, extension or compromise to its creditors generally, and has not considered doing or undertaking, and has no current plans to do or undertake, any of the foregoing. Furthermore, Purchaser has not taken, and does not contemplate taking, against it any such actions.

7.2        By Seller.  Seller represents and warrants to Purchaser that as of the date hereof and Close of Escrow:

7.2.1    Organization and Standing.    Seller is a limited liability company, duly organized, validly existing, and in good standing under the laws of the State of California, and

has the full power and authority to enter into this Agreement and to carry out the transactions contemplated hereby to be carried out by it.

7.2.2    Due Authorization.      The performance of this Agreement and the transactions contemplated hereunder by Seller have been duly authorized by all necessary action on the part of Seller, and this Agreement is binding on and enforceable against Seller in accordance with its terms. Seller shall, on or prior to the Closing Date, furnish Purchaser with certified resolutions evidencing that Seller has been duly authorized to enter into and perform this Agreement and the transactions contemplated hereunder. No further consent of any member, manager, creditor, governmental authority or other party to such execution, delivery and performance hereunder is required. The person(s) signing this Agreement, and any document pursuant hereto on behalf of Seller, has full power and authority to bind Seller.

7.2.3    Lack of Conflict.    Neither the execution of this Agreement nor the consummation of the transactions contemplated hereby will violate any restriction, court order, judgment, law, regulation, charter, bylaw, instrument, or agreement to which Seller or the Property (or any portion thereof) are subject.

7.2.4    Non-Foreign Seller.    Seller is not a foreign seller as defined in the “Foreign Investment in Real Property Tax Act.”

7.2.5    Solvency/Bankruptcy.  Seller has not (i) made any general assignment for the benefit of creditors, (ii) filed any voluntary petition in bankruptcy or suffered the filing of an involuntary petition in bankruptcy by Seller’s creditors, (iii) suffered the appointment of a receiver to take possession of all, or substantially all of Seller’s assets, (iv) suffered the attachment or other judicial seizure of all or substantially all, of Seller’s assets, (v) admitted in writing its inability to pay its debts as they come due, or (vi) made an offer of settlement, extension or composition to its creditors generally, and has not considered doing or undertaking, and has no current plans to do or undertake any of the foregoing. Furthermore, Seller has not and does not contemplate taking or having taken against it, any such actions.

7.2.6    Tenant Leases.  There are no leases, licenses, concessions or any other agreements giving anyone other than Seller and transient hotel guests a right to use or occupy the Property or any part thereof.

7.2.7    Existing Management Agreement.    No management agreement affecting the Property exists other than the Existing Management Agreement which will be terminated at the Closing at Seller’s sole cost and expense.

7.2.8    Employees.    All Employees are employees of Seller or the Existing Manager. No Employee is covered by a union contract or collective bargaining agreement.

7.2.9    Contracts.    The copies of the Contracts delivered by Seller to Purchaser are true and correct copies thereof, and are, to Seller’s knowledge, all of such Contracts. Seller is not, to Seller’s knowledge, in material default under any of the terms and provisions thereof, nor has it sent or, to Seller’s knowledge, received any written notice of default except as has been provided to Purchaser.

7.2.10    Condemnation Proceedings.  Seller has not been served with, and to the knowledge of Seller there is no pending or threatened condemnation proceedings against the Real Property or the Hotel.

Wherever the phrase “to Seller’s knowledge” or any similar phrase stating or implying a limitation on the basis of knowledge appears in this Agreement, unless specifically otherwise qualified, such phrase shall mean only the present actual knowledge of Pat Patel and John Murphy of Tarsadia Hotels, without any duty of inquiry, any imputation of the knowledge of another to him, or independent investigation of the relevant matter by any of such individual(s), and without any personal liability. Wherever the phrase “in Seller’s possession”, “in the possession of Seller” or similar phrase appears in this Agreement, such phrase shall be deemed to mean only to the extent the material or other item referred to by such phrase is located at the Hotel or in Seller’s offices in Orange County, California.

Notwithstanding any provision of this Agreement to the contrary, should any of the foregoing representations and warranties of Seller become false or inaccurate prior to the Close of Escrow, and Seller discloses the same to Purchaser, in writing, prior to the Close of Escrow, then Purchaser’s sole recourse shall be to either (i) terminate this Agreement and cancel the Escrow, in which case the Earnest Money Deposit shall be returned to Purchaser and neither Seller nor Purchaser will have any further liability or obligation under this Agreement (except for those obligations which survive in accordance with their terms), or (ii) proceed with the closing, without reservation, in which case Purchaser shall be deemed to have waived all claims against Seller and Tarsadia with respect to such false or inaccurate representation and warranty.

VIII.

CONDITIONS PRECEDENT TO CLOSE OF ESCROW

8.1        Conditions to Seller’s Obligations.  The obligation of Seller to close the Escrow shall be conditioned upon the satisfaction or Notice of its waiver (delivered to Purchaser and Escrow Holder), in whole or in part, by Seller of each of the following conditions precedent:

(a)        Except by reason of a default by Seller, Escrow Holder is in a position to and will deliver to Seller the instruments and funds accruing to Seller pursuant to the provisions of this Agreement;

(b)        Except with respect to the wrongful acts or omissions of Seller or the holder of the Liquor Licenses under the Liquor Transfer Agreement, Purchaser shall not be in default of any of its obligations under the Liquor Transfer Agreement;

(c)        Purchaser shall have entered into a new franchise agreement for the Hotel in compliance with the terms of Section 2.4 hereof;

(d)        There is no existing uncured material breach of any of the covenants, representations, warranties or obligations of Purchaser set forth in this Agreement that has not been waived by Seller; and

(e)        The Franchise Agreement shall have been terminated with the consent of the franchisee thereunder.

The foregoing conditions contained in this Section 8.1 are intended solely for the benefit of Seller. Seller shall at all times have the right to waive any condition precedent, provided that such waiver is in writing and delivered to Purchaser and Escrow Holder.

8.2        Conditions to Purchaser’s Obligations.  The obligations of Purchaser to close the Escrow shall be conditioned upon the satisfaction or Notice of its waiver (delivered to Seller and Escrow Holder), in whole or in part, by Purchaser of each of the following condition precedent:

(a)        Except by reason of a default by Purchaser, Escrow Holder is in a position to and will deliver to Purchaser the instruments and funds, if any, accruing to Purchaser pursuant to the provisions of this Agreement;

(b)        There is no existing uncured material breach of any of the covenants, representations, warranties or obligations of Seller set forth in this Agreement that has not been waived by Purchaser;

(c)        Seller shall have terminated the Existing Management Agreement and, subject to the obligations of Purchaser under Section 2.4 hereof, the Franchise Agreement shall have been terminated;

(d)        Except as arising from the acts and omissions of Purchaser, Title Insurer shall have not withdrawn its commitment to issue the Title Policy in form and content substantially consistent with the Title Commitment approved by Purchaser prior to the expiration of the Due Diligence Period, subject only to the Permitted Exceptions; and

(e)        Except with respect to the acts or omissions of Purchaser, there shall be no defaults by Seller and the holder of the Liquor Licenses under the Liquor Transfer Agreement.

The foregoing conditions contained in this Section 8.2 are intended solely for the benefit of Purchaser. Purchaser shall at all times have the right to waive any condition precedent, provided that such waiver is in writing and delivered to Seller and Purchaser.

8.3        Failure of Conditions to Close of Escrow.  Escrow Holder shall be responsible for confirming, on or before the Close of Escrow, that the conditions to the Close of Escrow set forth in Sections 8.1 and 8.2 hereof, and as set forth elsewhere in this Agreement, have been satisfied. Purchaser and Seller hereby agree to deliver their Notices to Escrow Holder, on or before the Close of Escrow, of the satisfaction or waiver of all other conditions to the Close of Escrow hereunder, and, in the event that both Purchaser and Seller specifically notify and instruct Escrow Holder, in writing, to proceed to the Close of Escrow hereunder, all such other conditions to the Close of Escrow hereunder that are not otherwise satisfied shall be deemed to have been waived by both Purchaser and Seller. Escrow Holder shall not proceed to the Close of Escrow hereunder unless both Purchaser and Seller or their respective counsel specifically notify and instruct Escrow Holder to do so.

IX.

LIQUIDATED DAMAGES

9.1        Default by Purchaser.    IN THE EVENT THE CLOSING AND THE CONSUMMATION OF THE TRANSACTION HEREIN CONTEMPLATED DOES NOT OCCUR AS HEREIN PROVIDED BY REASON OF ANY MATERIAL DEFAULT OF PURCHASER, PURCHASER AND SELLER AGREE THAT IT WOULD BE IMPRACTICAL AND EXTREMELY DIFFICULT TO ESTIMATE THE DAMAGES WHICH SELLER MAY SUFFER. THEREFORE, PURCHASER AND SELLER DO HEREBY AGREE THAT A REASONABLE ESTIMATE OF THE TOTAL DAMAGES THAT SELLER WOULD SUFFER IN THE EVENT THAT PURCHASER DEFAULTS AND FAILS TO COMPLETE THE PURCHASE OF THE PROPERTY IS AND SHALL BE, AS SELLER’S SOLE AND EXCLUSIVE REMEDY (WHETHER AT LAW OR IN EQUITY), AN AMOUNT EQUAL TO THE EARNEST MONEY DEPOSIT. SAID AMOUNT SHALL BE THE FULL, AGREED AND LIQUIDATED DAMAGES FOR THE FAILURE OF PURCHASER TO CLOSE AND CONSUMMATE THE TRANSACTIONS HEREIN CONTEMPLATED. ALL OTHER CLAIMS TO DAMAGES OR OTHER REMEDIES IN CONNECTION WITH PURCHASER’S FAILURE TO CLOSE AND CONSUMMATE THE TRANSACTIONS CONTEMPLATED HEREIN ARE EXPRESSLY WAIVED BY SELLER; HOWEVER, SELLER RESERVES ITS RIGHTS TO LEGAL AND EQUITABLE DAMAGES AND REMEDIES FOR ANY OTHER POST-TERMINATION DEFAULT BY PURCHASER HEREUNDER. THE PAYMENT OF SUCH AMOUNT AS LIQUIDATED DAMAGES IS NOT INTENDED AS A FORFEITURE OR PENALTY WITHIN THE MEANING OF CALIFORNIA CIVIL CODE SECTIONS 3275 OR 3369, BUT IS INTENDED TO CONSTITUTE LIQUIDATED DAMAGES TO SELLER PURSUANT TO CALIFORNIA CIVIL CODE SECTION 1671, 1676 AND 1677. SELLER HEREBY WAIVES THE PROVISIONS OF CALIFORNIA CIVIL CODE SECTION 3389. UPON DEFAULT BY PURCHASER, THIS AGREEMENT SHALL BE TERMINATED AND NEITHER PARTY SHALL HAVE ANY FURTHER RIGHTS OR OBLIGATIONS HEREUNDER, EACH TO THE OTHER, EXCEPT ANY INDEMNIFICATION OBLIGATIONS THAT SURVIVE THE CLOSE OF ESCROW, THE RIGHTS OF SELLER EXPRESSLY RESERVED HEREIN, AND FOR THE RIGHT OF SELLER TO COLLECT SUCH LIQUIDATED DAMAGES FROM PURCHASER AND ESCROW HOLDER. IN THE EVENT PURCHASER FAILS TO AUTHORIZE ESCROW HOLDER TO RELEASE THE EARNEST MONEY DEPOSIT WITHIN FIVE (5) BUSINESS DAYS OF THE DEMAND OF SELLER WHEREIN SELLER ALLEGES THE DEFAULT AND NONPERFORMANCE BY PURCHASER, THEN, WITH RESPECT TO SUCH ALLEGED DEFAULT AND NON-PERFORMANCE BY PURCHASER, THE PROVISIONS OF THIS ARTICLE IX SHALL BE VOIDABLE AT THE ELECTION OF SELLER.

SELLER’S INITIALS PURCHASER’S INITIALS

9.2        Default by Seller.    IN THE EVENT THE CLOSING AND THE CONSUMMATION OF THE TRANSACTION HEREIN CONTEMPLATED DOES NOT OCCUR AS HEREIN PROVIDED BY REASON OF ANY DEFAULT OF SELLER,

PURCHASER AND SELLER AGREE THAT IT WOULD BE IMPRACTICAL AND EXTREMELY DIFFICULT TO ESTIMATE THE DAMAGES WHICH PURCHASER MAY SUFFER. THEREFORE, PURCHASER AND SELLER DO HEREBY AGREE THAT, IN THE EVENT OF SUCH DEFAULT, IN ADDITION TO ATTORNEYS’ FEES AND COSTS PURSUANT TO SECTION 12.2 HEREOF, PURCHASER MAY, AS ITS SOLE RECOURSE AND REMEDY (AT LAW OR IN EQUITY), EITHER: (a) PURSUE AN ACTION AGAINST SELLER FOR SPECIFIC PERFORMANCE; OR (b) RECEIVE THE RETURN OF THE EARNEST MONEY DEPOSIT THEN PAID PLUS AN AMOUNT EQUAL TO PURCHASER’S ACTUAL OUT-OF-POCKET COSTS TO UNRELATED AND INDEPENDENT THIRD PARTY VENDORS, INCLUDING ATTORNEYS’ FEES (EXCEPT IN-HOUSE ATTORNEYS), WITH REGARD TO THIS TRANSACTION (SUCH OUT-OF-POCKET COSTS NOT TO EXCEED ONE HUNDRED THOUSAND DOLLARS ($100,000) IN THE AGGREGATE). ALL OTHER CLAIMS TO DAMAGES OR OTHER REMEDIES IN CONNECTION WITH SELLER’S FAILURE TO CLOSE AND CONSUMMATE THE TRANSACTIONS CONTEMPLATED HEREIN (OTHER THAN AS SPECIFIED IN (a) AND (b) HEREOF) ARE EXPRESSLY WAIVED BY PURCHASER. THE REFUND OF THE EARNEST MONEY DEPOSIT AS LIQUIDATED DAMAGES IS NOT INTENDED AS A FORFEITURE OR PENALTY WITHIN THE MEANING OF CALIFORNIA CIVIL CODE SECTIONS 3275 OR 3369, BUT IS INTENDED TO CONSTITUTE LIQUIDATED DAMAGES TO PURCHASER PURSUANT TO CALIFORNIA CIVIL CODE SECTION 1671. PURCHASER HEREBY WAIVES THE PROVISIONS OF CALIFORNIA CIVIL CODE SECTION 3389. UPON DEFAULT BY SELLER, IF THIS AGREEMENT IS TERMINATED BY PURCHASER, NEITHER PARTY SHALL HAVE ANY FURTHER RIGHTS OR OBLIGATIONS HEREUNDER, EACH TO THE OTHER, EXCEPT ANY INDEMNIFICATION OBLIGATIONS, THE RIGHTS OF PURCHASER RESERVED HEREIN, AND FOR THE RIGHT OF PURCHASER TO COLLECT SUCH LIQUIDATED DAMAGES FROM SELLER.

SELLER’S INITIALS PURCHASER’S INITIALS

X.

BROKERS

Seller and Purchaser each agree to indemnify, protect, defend and hold the other harmless from and against any claims, actions, suits or demands for payment of any commission, finder’s fee or other sum initiated by any broker, commission agent or other person which such party or its representatives has engaged or retained or with which it has had discussions concerning, in connection with the transaction contemplated by this Agreement or the sale of the Property by Seller. Purchaser shall specifically be responsible for any fees or commissions owed Jordan Richman and Grubb & Ellis.

XI.

NOTICES

Except as otherwise expressly provided in this Agreement, all notices, requests, demands and other communications hereunder (“Notice”) shall be in writing and shall be deemed delivered by (i) hand delivery upon receipt, (ii) registered mail or certified mail, return receipt requested, postage prepaid, upon delivery to the address indicated in the Notice, (iii) by confirmed telecopy or facsimile transmission when sent, or (iv) overnight courier (next business day delivery) on the next business day at 12:00 noon, whichever shall occur first, as follows:

To Seller:	MANTRA, LLC Attention: Renee Molloy 620 Newport Center Drive Fourteenth Floor Newport Beach, CA 92660 Telecopier: (949) 610-8210
With a Copy to:	TARSADIA HOTELS Attention: Edward G. Coss, Esq. 620 Newport Center Drive Fourteenth Floor Newport Beach, CA 92660 Telecopier: (949) 610-8222
To Purchaser:	CHESAPEAKE LODGING, L.P. c/o Chesapeake Lodging Trust 1997 Annapolis Exchange Parkway, Suite 410 Annapolis, Maryland 21401 Attn: Graham J. Wootten, SVP and CAO
	Telecopier: (410) 972-4180
With a Copy to	c/o Chesapeake Lodging Trust 1997 Annapolis Exchange Parkway Suite 410 Annapolis, Maryland 21401 Attention: D. Rick Adams, SVP and CIO Telecopier: (410) 970-4180

Any correctly addressed Notice that is refused, unclaimed or undelivered because of an act or omission of the party to be notified shall be considered to be effective as of the first day that the Notice was refused, unclaimed or considered undeliverable by the postal authorities, messenger or overnight delivery service. The parties hereto shall have the right from time to time, and at any time, to change their respective addresses and each shall have the right to specify as its address any other address within the United States of America, by giving to the

other party at least fifteen (15) days prior Notice thereof, in the manner prescribed herein; provided, however, that to be effective, any such change of address must be actually received (as evidenced by a return receipt). Telephone numbers and email addresses, if listed, are listed for convenience purposes only and not for the purposes of giving Notice pursuant to this Agreement.

XII.

MISCELLANEOUS

12.1        Governing Law.    This Agreement shall be governed by and construed in accordance with the laws of the State of California. If any legal action is necessary to enforce the terms and conditions of this Agreement, the parties hereby agree that the Superior Court of California, County of Orange, shall be the sole jurisdiction and venue for the bringing of the action.

12.2        Professional Fees and Costs.    If a lawsuit, arbitration or other proceedings are instituted by any party to enforce any of the terms or conditions of this Agreement against any other party hereto, the prevailing party in such litigation, arbitration or proceedings shall be entitled, as an additional item of damages, to such reasonable attorneys’ and other professional fees and costs (including, but not limited to, witness fees), court costs, arbitrators’ fees, arbitration administrative fees, travel expenses, and other out-of pocket expenses or costs of such other proceedings, as may be fixed by any court of competent jurisdiction, arbitrator or other judicial or quasi-judicial body having jurisdiction thereof, whether or not such litigation or proceedings proceed to a final judgment or award. For the purposes of this section, any party receiving an arbitration award or a judgment for damages or other amounts shall be deemed to be the prevailing party, regardless of amount of the damage awarded or whether the award or judgment was based on all or some of such party’s claims or causes of action, and any party against whom a lawsuit, arbitration or other proceeding is instituted and later voluntarily dismissed by the instituting party shall be deemed to be the prevailing party.

12.3        Exhibits and Schedules a Part of This Agreement.    The Exhibits and Schedules attached hereto are incorporated in this Agreement by reference and are hereby made a part hereof.

12.4        Executed Counterparts.    This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed an original, but all such counterparts together shall constitute but one and the same instrument; signature pages may be detached from multiple separate counterparts and attached to a single counterpart so that all signature pages are physically attached to the same document. This Agreement shall become effective upon the due execution and delivery of this Agreement to the parties hereto.

12.5        Assignment.    Purchaser may not, and shall have no right or power to, assign, convey and otherwise transfer all or any part of its interest or rights herein without the prior written consent of Seller, which consent may be withheld in Seller’s sole discretion, and any attempted assignment without Seller’s written consent shall be void, invalid and unenforceable.

Notwithstanding the foregoing, however, Purchaser may assign and transfer all of its rights and obligations under this Agreement to one (1) or more wholly owned subsidiary(ies) thereof, or to an affiliate(s) thereof in which Purchaser is a sixty-seven percent (67%) or more equity owner thereof; provided, however, that Purchaser shall not be released of its obligations under this Agreement as a result of any such assignment. Any assignment as permitted in the preceding sentence shall be conditioned upon Purchaser delivering to Seller and Escrow Holder, within forty-eight (48) hours of any such assignment, Notice thereof, together with a copy of such assignee’s organizational and formation documents and instruments, a Certificate of Good Standing for such assignee, and copies of the resolutions of Purchaser and such assignee authorizing such assignment. As a further condition to any such permitted assignment, Purchaser shall cause its assignee to execute an assignment and assumption agreement of Purchaser’s obligations under this Agreement (in form and content reasonably and mutually acceptable), and such other documents and instruments as Escrow Holder may reasonably request. Purchaser may also designate a subsidiary to take title to the Property at Closing by giving Notice to Seller no later than ten (10) days prior to the Closing Date.

12.6        IRS - Form 1099-S.    For purposes of complying with Section 6045 of the Internal Revenue Code of 1986, as amended, Escrow Holder shall be deemed the “person responsible for closing the transaction” and shall be responsible for obtaining the information necessary to file with the Internal Revenue Service Form 1099-S, “Statement for Recipients of Proceeds from Real Estate, Broker and Barter Exchange Transactions.”

12.7        Successors and Assigns.  Subject to the provisions of Section 12.5 hereof, this Agreement shall be binding upon and inure to the benefit of the parties’ respective successors and permitted assigns.

12.8        Time is of the Essence.  Time is of the essence of this Agreement.

12.9        Entire Agreement.    This Agreement, and Exhibits and Schedules and other documents and instruments attached to or referenced herein, contain all representations and the entire understanding and agreement between the parties hereto with respect to the purchase and sale of the Property, and all prior and contemporaneous understandings, letters of intent, agreements and representations, whether oral or written, are entirely superseded. In executing this Agreement, each of Seller and Purchaser expressly disclaim any reliance on any oral or written representations, warranties, comments, statements or assurances made by Seller, Purchaser, and any of their respective affiliates, and their respective agents, employees, representatives, attorneys or brokers, as an inducement or otherwise, to Purchaser’s and Seller’s respective execution hereof. No amendment of this Agreement shall be binding unless in writing and executed by the parties hereto.

12.10      Further Assurances.    Whenever and so often as requested by a party, the other party will promptly execute and deliver or cause to be executed and delivered all such other and further instruments, documents or assurances, and promptly do or cause to be done all such other and further things as may be necessary and reasonably required in order to further and more fully vest in such requesting party all rights, interests, powers, benefits privileges and advantages conferred or intended to be conferred upon it by this Agreement, or to effectuate the termination

of this Agreement and cancellation of the Escrow (if otherwise permitted hereunder). The terms of this section shall survive the Close of Escrow and/or termination of this Agreement.

12.11    Waiver.  The failure or delay (without regard to the length of time of such failure or delay) by either party to enforce or insist on the strict performance of any covenant, term, obligation, provision, right, option or condition hereunder, or to pursue any action, claim or right arising from any breach, default, or non-performance of any term, obligation or provision of this Agreement, shall not constitute or be construed as a waiver or forgiveness of such covenant, term, obligation, provision, right, option, condition, breach, default or non-performance. To be binding upon and against a party, any waiver must (a) be in writing, (b) be delivered to the party in whose favor the waiver is made (in accordance with the provisions of Article XI hereof), and (c) identify and specify, in reasonable detail, the covenant, term, obligation, provision, right, option, condition, breach, default or non-performance being waived; any purported waiver not complying therewith shall not be effective or binding on the parties hereto. In addition, any previous waiver for the benefit of a party may not be relied upon or be enforced by such party’s successors and assigns, and shall not be binding on the waiving party. Under no circumstances shall a waiver by either party complying with the provisions hereof constitute or be construed as a continuing waiver of any subsequent failure, default, breach or non-performance of any covenant, term, obligation, provision, right, option or condition under this Agreement.

12.12    Headings.  The headings of this Agreement are for purposes of convenience only and shall not limit or define the meaning of the provisions of this Agreement.

12.13    Risk of Loss.

12.13.1        Risk of Loss.  Until the Closing Date, Seller shall bear the risk of loss should there be damage to any of the Improvements by fire or other casualty (collectively “Casualty”). If, prior to the Closing Date, any of the Improvements shall be damaged by any Casualty, Seller shall promptly deliver to Purchaser a Notice (“Casualty Notice”) of such event. Upon Purchaser’s receipt of a Casualty Notice, Seller and Purchaser shall meet promptly to estimate the cost to repair and restore the Improvements to its condition immediately preceding such event and to replace the damaged Personal Property (the “Casualty Renovation Cost”). If the parties are unable to agree on the cost of restoration, the matter will be submitted to an engineer designated by Seller and an engineer designated by Purchaser, each licensed to practice in the state in which the Land is located, and the engineers shall resolve the dispute. Each party hereto shall bear the costs and expenses of its own engineer.

12.13.2        Material Loss.    If the Casualty Renovation Cost exceeds (i) fifteen percent (15%) of the Purchase Price in the event the Casualty is insured against, or (ii) ten percent (10%) of the Purchase Price in the event the Casualty is not insured against, either party hereto may, at its option, elect to terminate this Agreement by Notice to the other party within five (5) days after the date that the Casualty Renovation Cost is determined, in which case the Earnest Money Deposit shall be delivered to Purchaser, and neither party shall have any further rights or obligations hereunder, except for any continuing confidentially and indemnity obligations as provided in this Agreement. If both parties hereto fail to timely make its election to terminate this Agreement, then the Close of Escrow shall take place as provided herein

without reduction of the Purchase Price, and Seller shall assign the insurance proceeds to Purchaser in the event the Casualty is insured against and credit the amount of the applicable insurance policy deductible to Purchaser or have the Purchase Price reduced by the Casualty Renovation Cost in the event the Casualty is not insured against.

12.13.3        Nonmaterial Loss.    If the Casualty Renovation Cost is (i) fifteen percent (15%) or less of the Purchase Price in the event the Casualty is insured against, or (ii) ten percent (10%) or less of the Purchase Price in the event the Casualty is not insured against, then, in any such event, neither party hereto shall have any right to terminate this Agreement, but the Closing shall take place as provided herein without reduction of the Purchase Price, and Seller shall assign the insurance proceeds to Purchaser in the event the Casualty is insured against and credit the amount of the applicable insurance policy deductible to Purchaser or have the Purchase Price reduced by the Casualty Renovation Cost in the event the Casualty is not insured against.

12.13.4        Eminent Domain.    If, prior to the Close of Escrow, (i) all or substantially all (or so much thereof so as to substantially and materially interfere with the operation of the Hotel) of the Real Property, (ii) any portion of the parking areas on the Real Property which results in there being insufficient parking for the operation of the Hotel as established by applicable governmental codes and regulations, or (iii) any access-way to the Real Property or any building with guest rooms is taken by condemnation or eminent domain, at the election of Purchaser this Agreement shall, upon the giving of Notice of such event or of the condemning authorities’ intention so to take the Real Property, terminate, and Purchaser shall receive a full and prompt refund of all sums deposited by them with Escrow Holder and/or Seller. If, prior to the Close of Escrow, less than all or substantially all of the Real Property shall be taken by condemnation or eminent domain, then, if any of the foregoing, in Purchaser’s reasonable opinion, materially impairs the value of the Real Property or any significant interest therein, then Purchaser shall have the option to (A) accept title to the Real Property subject to such taking, in which event at the Close of Escrow all of the proceeds of any award or payment made or to be made by reason of such taking shall be assigned by Seller to Purchaser, and any money theretofore received by Seller in connection with such taking shall be paid over to Purchaser, whereupon Purchaser shall pay the Purchase Price without abatement by reason of such taking, or (B) receive a full and prompt refund of all sums deposited by Purchaser with Escrow Holder and/or Seller. Seller shall not settle, agree to, or accept any award or payment in connection with a taking of less than all of the Real Property without obtaining Purchaser’s prior written consent in each case, which consent shall not be unreasonably withheld or delayed.

12.14    Construction of Agreement.    The parties hereto have negotiated this Agreement at length, and have had the opportunity to consult with, and be represented by, their own competent counsel. This Agreement is, therefore, deemed to have been jointly prepared. In determining the meaning of, or resolving any ambiguity with respect to, any word, phrase or provision of this Agreement, no uncertainty or ambiguity shall be construed or resolved against any party under any rule of construction, including the party primarily responsible for the drafting and preparation of this Agreement.

The words “herein,” “hereof,” “hereunder” and words of similar reference shall mean this Agreement. The words “this Agreement” include the exhibits, schedules addenda and

any future written modifications, unless otherwise indicated by the context. All words in this Agreement shall be deemed to include any number or gender as the context or sense of the Agreement requires. The words “will,” “shall” and “must” in this Agreement indicate a mandatory obligation. The use of the words “include,” “includes” and “including” followed by one or more examples is intended to be illustrative and is not a limitation on the scope of the description or term for which the examples are provided. All dollar amounts set forth in this Agreement are stated in United States Dollars, unless otherwise specified. The words “day” and “days” refer to calendar days unless otherwise stated. The words “business day” refer to a day other than a Saturday, Sunday or legal holiday on which banking institutions are closed. The words “month” and “months” refer to calendar months unless otherwise stated. The words “year” and “years” refer to calendar years unless otherwise stated.

12.15    Tax Deferred Exchange.    Seller and Purchaser (the “Cooperating Party”) each agree to fully cooperate with the other (and any owner of such other party) (the “Exchangor”) (including cooperation with any Intermediary (as defined herein) selected by Exchangor) to structure the acquisition of the Property as an exchange of property held for productive use in a trade or business or for investment within the meaning of Section 1031 of the Internal Revenue Code of 1986 (as amended), and upon request, Cooperating Party agrees to execute additional escrow instructions, documents, agreements or instruments to effect the exchange; provided, however, that Cooperating Party shall incur no additional costs or expenses in this transaction, or be required to acquire, accept or hold title to any property (other than the Property), as a result of or in connection with any such exchange, unless because of Cooperating Party’s default hereunder or under any agreement executed by reason of this Section 12.15.

Exchangor agrees to indemnify, defend or hold Cooperating Party harmless from and against any and all additional costs, expenses, claims, demands, liabilities, losses, obligations, damages, recoveries, and deficiencies (such categories being collectively referred to herein as “Liabilities”) in excess of those Liabilities that Cooperating Party would otherwise have if the transaction contemplated in this Agreement closes as a sale transaction, and that Cooperating Party may incur or suffer, as a result of or in connection with (i) the structuring of the transaction contemplated in this Agreement as an exchange under Internal Revenue Code Section 1031 and/or (ii) the execution of any documents in connection with the exchange. Exchangor’s foregoing indemnity shall not indemnify Cooperating Party for any Liabilities arising as a result of or in connection with any default by Cooperating Party under this Agreement or any default by Cooperating Party under any of the documents or agreements entered into by Cooperating Party in connection with the exchange or for any gross negligence or willful misconduct on the part of Cooperating Party. Implementation of the exchange(s) contemplated in this Section 12.15 shall not be a condition to the Close of Escrow.

Exchangor, at its election, may substitute for any one or more of them, one or more persons or entities (“Intermediary”) as a party(ies) to the Escrow and this Agreement, in which event the Intermediary shall assume and perform the obligations of Exchangor under this Agreement (but without the release of liability of Exchangor for such performance), and Cooperating Party agrees to accept the performance by Intermediary and shall tender its performance to Intermediary.

12.16    No Public Disclosure.  Purchaser shall make no public disclosure of the terms of this transaction without the prior written consent of Seller, which consent Seller shall provide via facsimile transmission or email within one (1) business day of Seller’s receipt of Purchaser’s written request if such disclosure is reasonably necessary to comply with the publicly traded company responsibilities of Purchaser or its parent or otherwise necessary to comply with applicable law. Seller shall make no public disclosure of the terms of this transaction without the prior written consent of purchaser, which consent Purchaser shall promptly provide if such disclosure is reasonably necessary for Seller to comply with applicable law.

12.17    Covenants, Representations and Warranties.  Except as otherwise set forth in this Agreement, all of the covenants, representations and agreements of Seller and Purchaser set forth in this Agreement shall survive the Close of Escrow, except that all representatives and warranties of Seller shall survive only for a period of six (6) months after the Close of Escrow. By proceeding with the closing of the sale transaction, Seller and Purchaser shall be deemed to have waived, and so covenant to waive, any claims of defaults or breaches by the other party existing on or as of the Close of Escrow whether under this Agreement and any other document or instrument executed by the other party in connection with this transaction, of which the waiving party was aware prior to the Close of Escrow for which the other party shall have no liability.

12.18    Confidentiality.    Other than as required or permitted by the terms of this Agreement, Purchaser shall not release or cause or permit to be released any press notices or releases or publicity (oral or written) or advertising promotion relating to, or otherwise announce or disclose or cause or permit to be announced or disclosed, in any manner whatsoever, the terms and conditions of the purchase and sale transaction for the Property, and nor shall Purchaser or its agents or representatives disclose, in any manner whatsoever, (a) the information provided to Purchaser by Seller or its representatives, or (b) any analyses, compilations, studies or other documents or records prepared by or on behalf of Purchaser, in connection with Purchaser’s due diligence investigation of the Property, without first obtaining the written consent of Seller (collectively, “Proprietary Information”). The foregoing shall not preclude Purchaser (i) from discussing the Proprietary Information with any person who is employed by Purchaser or who, on behalf of Purchaser, is actively and directly participating in the purchase and sale of the Property, including, without limitation, to Purchaser’s trustees, shareholders, partners, members, existing or prospective lenders, attorneys, accountants and other consultants and advisors, or (ii) from complying with all laws, rules, regulations and court orders, including, without limitation, governmental regulatory, disclosure, tax and reporting requirements; provided, however, that if Purchaser is required by applicable law or legal process to disclose any Proprietary Information, Purchaser agrees to furnish only that portion of the Proprietary Information which Purchaser is legally compelled to disclose and to use its best efforts to obtain assurance that, if possible, confidential treatment will be accorded to the Proprietary Information. Purchaser shall inform its respective representatives of the confidential nature of the Proprietary Information and shall direct them to be bound by the terms of this section. In addition to any other remedies available to Seller, Seller shall have the right to seek equitable relief, including, without limitation, injunctive relief or specific performance, against Purchaser in order to enforce the provisions of this section. The provisions of this section shall survive any termination of this Agreement.

Except as permitted pursuant to Section 4.3 hereof, Purchaser agrees not to contact, directly or indirectly, any employees of the Hotel (and any agents or employees thereof) prior to the Close of Escrow, and agrees to be liable for all of Seller’s damages in the event of any such contact by Purchaser or any of its agents or representatives.

12.19    Limitation on Liability.    In consideration of the benefits accruing hereunder, Seller and Purchaser agree that, in the event of any actual or alleged failure, breach or default of this Agreement by Seller or Purchaser:

(a)        The sole and exclusive remedy shall be against the defaulting party and its assets;

(b)        No owner of the defaulting party shall be sued or named as a party in any suit or action;

(c)        No service of process shall be made against any owner or employee of the defaulting party (except as may be necessary to secure jurisdiction of the defaulting party);

(d)        No owner or employee of the defaulting party shall be required to answer or otherwise plead to any service of process;

(e)        No judgment may be taken against any owner or employee of the defaulting party;

(f)        Any judgment taken against any owner or employee of the defaulting party may be vacated and set-aside at any time without hearing;

(g)        No claims shall be made against Tarsadia Hotels;

(h)        No writ of execution will ever be levied against the assets of any owner or employee of the defaulting party; and

(i)        These covenants and agreements are enforceable both by the defaulting party and also by any owner or employee of the defaulting party.

In addition to the foregoing, and notwithstanding any other term or provision of this Agreement to the contrary, except as to Seller’s fraud, and except for a default by Seller of its obligations under the first paragraph of Section 6.2.1 hereof, Seller shall have no liability for the breach of any representation, warranty, covenant, indemnity or other obligation expressly stated to survive the Close of Escrow (collectively, “Seller’s Post-Closing Obligations”), unless and until the aggregate amount of Purchaser’s out-of-pocket damages and third party expenses directly resulting from such breaches shall exceed, and then only to the extent the same exceeds, Fifty Thousand Dollars ($50,000). Furthermore, Seller’s aggregate liability under this Agreement (or otherwise) for the breach of any and all of Seller’s Post-Closing Obligations shall, in no event individually or in the aggregate, exceed three percent (3%) of the Purchase Price. In no event shall Seller have any liability for punitive damages, consequential damages, or damages

for diminution-in-value, but shall only be liable for Purchaser’s actual out-of-pocket damages and third party expenses.

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

12.21    Facsimile Signatures.    The execution of this Agreement and all Notices given hereunder and all amendments hereto, may be effected by facsimile signatures, all of which shall be treated as originals; provided, however, that the party receiving a document with a facsimile signature may, by Notice to the other, require the prompt delivery of an original signature to evidence and confirm the delivery of the facsimile signature. Purchaser and Seller each intend to be bound by its respective facsimile transmitted signature, and is aware that the other party will rely thereon, and each party waives any defenses to the enforcement of the Agreement, and documents, and any Notices delivered by facsimile transmission.

12.22    Exclusivity.    From the date of the last to occur of (a) the mutual execution of this Agreement by Seller and Purchaser and (b) the deposit by Purchaser of the Initial Deposit into the Escrow, until the earlier of (i) the termination of this Agreement, (ii) the default by Purchaser hereunder and subsequent termination of this Agreement by Seller as a result thereof, (iii) the expiration of the Due Diligence Period, or (iv) the waver by Purchaser of the Due Diligence Period, Seller shall not list for sale the Property (but Seller may consider, negotiate and accept back-up offer for the sale of the Property). Upon the expiration or earlier waiver of the Due Diligence Period (provided that Purchaser has not otherwise terminated this Agreement and cancelled the Escrow), until the earlier of the Close of Escrow or the default by Purchaser hereunder and subsequent termination of this Agreement by Seller as a result thereof, Seller shall not market the Property for sale and shall not solicit or otherwise accept offer to purchase the Property.

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EXECUTION

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed on the 14 day of April, 2010.

SELLER:
MANTRA, LLC, a California limited liability company
BY:	BPP ONE, LLC, a California limited liability company, its Manager
	By:	/s/ Dipak Desai
	Name:	Dipak Desai
	Title:	Manager
PURCHASER:
CHESAPEAKE LODGING,L.P. a Delaware limited partnership
BY:	Chesapeake Lodging Trust, a Maryland real estate investment trust, its General Partner
	By:	/s/ D. Rick Adams
	Name:	D. Rick Adams
	Title:	SVP – CIO

ESCROW HOLDER HEREBY ACKNOWLEDGES AND AGREES TO THE ESCROW INSTRUCTIONS SET FORTH IN THIS AGREEMENT.
LAWYERS TITLE INSURANCE COMPANY
BY:	/s/ Michele Mesh
	Michele Mesh, Senior Commercial Escrow Officer
Dated:	April 14, 2010

EX-10.3.1

Exhibit 10.3.1

AMENDMENT NUMBER ONE TO PURCHASE AND SALE AGREEMENT

AND ESCROW INSTRUCTIONS

(2045 South Harbor Blvd., Anaheim, CA)

THIS AMENDMENT NUMBER ONE TO PURCHASE AND SALE AGREEMENT AND ESCROW INSTRUCTIONS (the “Amendment”) is dated the 4th day of May, 2010, and is made by and between MANTRA, LLC., a California limited liability company (“Seller”), and CHESAPEAKE LODGING, L.P., a Delaware limited partnership (“Purchaser”).

RECITALS

A.        Seller and Purchaser are parties to that certain Purchase and Sale Agreement and Escrow Instructions dated as of April 14, 2010 (the “ Purchase Agreement”), for the purchase and sale of certain real property located in the County of Orange, State of California, more specifically located at and commonly known as 2045 South Harbor Blvd., Anaheim, on which are constructed certain improvements in, by and through which is operated a hotel and hospitality business under the name of “Courtyard by Marriott Anaheim.”

B.        Seller and Purchaser desire to amend the Purchase Agreement to correct a scrivener’s error.

C.        Unless otherwise defined herein, capitalized terms have the meanings ascribed to them in the Purchase Agreement.

AGREEMENT

NOW, THEREFORE, with reference to the foregoing Recitals, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto hereby agree as follows:

I.

AMENDMENT

1.1        Article X is hereby amended to change the word “Purchaser” to “Seller” in the last sentence thereof.

II.

RATIFICATION/CONTROLLING PROVISIONS

Except as amended and/or modified by this Amendment, the Purchase Agreement is hereby ratified and confirmed and all other terms of the Purchase Agreement shall remain in full force and affect, unaltered and unchanged by this Amendment. In the event of any conflict between the provisions of this Amendment and the provisions of the Purchase Agreement, the provisions of this Amendment shall prevail. Whether or not specifically amended by the provisions of this Amendment, all of the terms and provisions of the Purchase Agreement are

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hereby amended to the extent necessary to give effect to the purpose and intent of this Amendment.

III.

COUNTERPARTS

This Amendment may be executed in any number of counterparts, each of which shall be deemed an original, but all of which, when taken together, will constitute one and the same instrument. The signature page of any counterpart may be detached therefrom without impairing the legal effect of the (signature) thereon, provided such signature page is attached to any other counterpart identical thereto.

IV.

ELECTRONIC AND FACSIMILE SIGNATURES

The execution of this Amendment may be effected by facsimile and/or electronically transmitted signatures, all of which shall be treated as originals; provided, however, that the party receiving a copy hereof with a facsimile and/or electronically transmitted signature may, by written notice to the other, require the prompt delivery of an original signature to evidence and confirm the delivery of the facsimile signature. Purchaser and Seller each intend to be bound by its respective facsimile and/or electronically transmitted signature, and is aware that the other party will rely thereon, and each party waives any defenses to the enforcement of this Amendment delivered by facsimile and/or electronic transmission.

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V.

EXECUTION

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

SELLER:
MANTRA, LLC, a California limited liability company
BY:	BPP ONE, LLC, a California limited liability company, its Manager
	By:	/s/ Dipak Desai
	Name:	Dipak Desai
	Title:	Manager
PURCHASER:
CHESAPEAKE LODGING,L.P. a Delaware limited partnership
BY:	Chesapeake Lodging Trust, a Maryland real estate investment trust, its General Partner
	By:	/s/ D. Rick Adams
	Name:	D. Rick Adams
	Title:	SVP - CIO

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EX-10.3.2

Exhibit 10.3.2

SECOND AMENDMENT TO PURCHASE AND SALE AGREEMENT

AND ESCROW INSTRUCTIONS

(2045 South Harbor Blvd., Anaheim, California)

THIS SECOND AMENDMENT TO PURCHASE AND SALE AGREEMENT AND ESCROW INSTRUCTIONS (the “Amendment”) is dated the 19th day of July, 2010, and is made by and among MANTRA, LLC, a California limited liability company (“Seller”), CHESAPEAKE LODGING, L.P., a Delaware limited partnership (“Assignor”), and CHSP Anaheim LLC a Delaware limited liability company (“Assignee”).

RECITALS

A.        Seller and Assignor have previously executed and entered into that certain Purchase and Sale Agreement and Escrow Instructions dated as of April 14, 2010, as amended in that certain First Amendment to Purchase and Sale Agreement and Escrow Instructions dated May 4, 2010 (collectively, the “Agreement”), for the sale by Seller, and the purchase by Assignor, of the Property (as defined therein) located in the City of Anaheim, County of Orange, State of California, more specifically located at and commonly known as 2045 South Harbor Blvd., Anaheim, California, on and through which is operated a hotel and hospitality business under the name of “Anaheim Courtyard by Marriott.”

B.        Assignor has assigned its interest under the Agreement to Assignee, and Seller, Assignor and Assignee desire to amend and supplement the Agreement as set forth herein to reflect such assignment.

C.        Seller and Assignee also desire to amend the Agreement to change the Closing Date and the Close of Escrow.

D.        Unless otherwise defined herein, capitalized terms have the meanings ascribed to them in the Agreement.

AGREEMENT

NOW, THEREFORE, with reference to the foregoing Recitals, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto hereby agree as follows:

I.

AMENDMENT

1.1        Assignee hereby assumes and agrees to perform all of Assignor’s right, title, interest, covenants and obligations in, to and under the Agreement, to be effective on the date set forth above. Assignee shall be the “Purchaser” under the Agreement, and all references to the “Purchaser” shall be to Assignee. Assignee shall perform all covenants and obligations of the “Purchaser” pursuant to the terms of the Agreement. The parties hereto agree that, from and after the day hereof, Assignee shall be the “Purchaser” under the Agreement and shall perform all duties of “Purchaser” thereunder pursuant to the terms thereof. Notwithstanding the assignment of the Agreement to Assignee, Assignor agrees to be liable for the obligations of the

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“Purchaser” under the Agreement and is not released therefrom as a result of the assignment referenced herein.

1.2    Section 5.1 is amended to reflect that the Closing Date shall be July 30, 2010.

1.3    In addition, the third paragraph of Section 5.1 is deleted in its entirety and replaced with the following:

“The “Close of Escrow” for purposes of this Agreement is defined as the earlier of the time when (a) the Deed is recorded in the Official Records of Orange County, California, by Title Insurer, or (b) Seller and Purchaser both provide telephonic notice to Escrow Holder (confirmed by email to the other party and Escrow Holder that they authorized the closing of the purchase and sale transaction as contemplated herein.”

II.

RATIFICATION

Except as amended and/or modified by this Amendment, the Agreement is hereby ratified and confirmed and all other terms of the Agreement shall remain in full force and affect, unaltered and unchanged by this Amendment. In the event of any conflict between the provisions of this Amendment and the provisions of the Agreement, the provisions of this Amendment shall prevail. Whether or not specifically amended by the provisions of this Amendment, all of the terms and provisions of the Agreement are hereby amended to the extent necessary to give effect to the purpose and intent of this Amendment.

III.

COUNTERPARTS

This Amendment may be executed in any number of counterparts, each of which shall be deemed an original, but all of which, when taken together, will constitute one and the same instrument. The signature page of any counterpart may be detached therefrom without impairing the legal effect of the (signature) thereon, provided such signature page is attached to any other counterpart identical thereto except as having additional signature pages executed by other parties to this Amendment attached hereto.

IV.

ELECTRONIC AND FACSIMILE SIGNATURES

The execution of this Amendment may be effected by facsimile and/or electronically transmitted signatures, all of which shall be treated as originals; provided, however, that the party receiving a copy hereof with a facsimile and/or electronically transmitted signature may, by written notice to the other, require the prompt delivery of an original signature to evidence and confirm the delivery of the facsimile and/or electronically transmitted signature. Seller, Assignor and Assignee each intend to be bound by its respective facsimile and/or electronically transmitted signature, and is aware that the other party will rely thereon, and each party waives

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any defenses to the enforcement of the Agreement delivered by facsimile and/or electronic transmission.

V.

EXECUTION

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

SELLER:
MANTRA, LLC, a California limited liability company
BY:	BPP ONE, LLC, a California limited liability company, its Manager
	By:	/s/ Dipak Desai
	Name:	Dipak Desai
	Title:	Manager
ASSIGNOR:
CHESAPEAKE LODGING, L.P., a Delaware limited partnership
BY:	Chesapeake Lodging Trust, a Maryland real estate investment trust, its General Partner
	By:	/s/ D. Rick Adams
	Name:	D. Rick Adams
	Title:	Senior Vice President and CIO
ASSIGNEE:
CHSP Anaheim, LLC a Delaware limited liability company
By:	/s/ D. Rick Adams
Name	: D. Rick Adams
Title:	Vice President

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EX-10.4

Exhibit 10.4

AGREEMENT OF PURCHASE AND SALE

OF

REAL PROPERTY COMMONLY KNOWN AS THE

NEWTON MARRIOTT HOTEL

IN

NEWTON, MASSACHUSETTS

and

Joint Escrow Instructions

between

CR/TPG NEWTON HOTEL LLC,

a Delaware limited liability company (“Seller”),

and

CHESAPEAKE LODGING, L.P.,

a Delaware limited partnership (“Buyer”).

Effective Date: June 30, 2010

AGREEMENT FOR PURCHASE AND SALE

OF REAL PROPERTY

AND

JOINT ESCROW INSTRUCTIONS

THIS AGREEMENT OF PURCHASE AND SALE OF REAL PROPERTY AND JOINT ESCROW INSTRUCTIONS (this “Agreement”) is made as of June 30, 2010 (the “Effective Date”), among

CR/TPG Newton Hotel LLC a Delaware limited liability company (“Seller”),

and

Chesapeake Lodging, L.P., a Delaware limited partnership (“Buyer”).

IN CONSIDERATION OF the mutual covenants and conditions contained herein, parties hereto (together, the “Parties” and each, sometimes, a “Party”) do hereby agree and covenant with each other as follows:

1.        DEFINITIONS.

1.1        ADA Settlement Agreement. “ADA Settlement Agreement” means that certain settlement agreement affecting the Hotel dated June 29, 2009.

1.2        Affiliate. “Affiliate” means, with respect to an indicated person, any other person which controls, is controlled by or is under common control with such indicated person.

1.3        Approval Date. “Approval Date” means July 2, 2010.

1.4        Assumed Contracts.  “Assumed Contracts” means the Service Contracts identified on the Schedule of Contracts attached hereto as Exhibit J (except for any such Service Contracts excluded pursuant to Section 2).

1.5        Bill of Sale.  “Bill of Sale” means one or more instruments, as Buyer may reasonably determine, each substantively in the form attached hereto as Exhibit C, together conveying the FF&E to Buyer or Buyer’s nominee(s).

1.6        Broker.  “Broker” means Molinaro Koger.

1.7        Business Day.  The term “Business Day” means a day other than Saturday, Sunday or other day when commercial banks in Massachusetts are authorized or required by Law to close.

1.8        Buyer’s Knowledge.  “Buyer’s Knowledge” means the actual present (and not the constructive) knowledge of Rick Adams and does not imply that said individual has or should have conducted any inspection, examination or other inquiry to determine the accuracy of

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any representation, warranty or other statement made “to Buyer’s Knowledge” in this Agreement or in any other document delivered by Buyer prior to or at Closing.

1.9        Cash Bank. “Cash Bank” means, with respect to the Hotel, cash on hand in house banks and petty cash as of Closing, as specified in the Preliminary Statement.

1.10    Claims.  “Claims” has the meaning specified in Section 12.1.

1.11    Closing.  “Closing” means the recordation of the Deed in the official land records of the county in which the Hotel is located.

1.12    Closing Date.  “Closing Date” means the date upon which Closing occurs.

1.13    Closing Documents.  “Closing Documents” means the Transfer Instruments, the FIRPTA Certificate, and all the other documents to be delivered hereunder at, or for purposes of effecting, Closing.

1.14    Code.  “Code” means the Internal Revenue Code of 1986, as amended.

1.15    Consumables Inventory.  “Consumables Inventory” means the stock of supplies and other consumables used in the operation and maintenance of the Hotel in the Ordinary Course.

1.16    Continuing Employees.  “Continuing Employees” means Hotel Employees who are employed by Buyer or its Hotel manager or operator following Closing.

1.17    Contract Assignment.      “Contract Assignment” means an assignment and assumption of Assumed Contracts substantively in the form attached hereto as Exhibit E.

1.18    Counsel.  “Counsel” means each Party’s respective legal counsel for the transaction contemplated by this Agreement: with respect to Seller, the law firm of Greenberg Traurig, LLP; with respect to Buyer, the law firm of Hogan Lovells US LLP.

1.19    Day.  The term “day” means a calendar day.

1.20    Deed.      “Deed” means the deed substantially in the form attached hereto as Exhibit B, conveying the Hotel Premises to Buyer subject only to Permitted Exceptions

1.21    Deposit.  “Deposit” has the meaning specified in Section 3.3.

1.22    Disputed Payable.  “Disputed Payable” means any amount that a third party claims to be due or accrued as of Closing with respect to the operation of the Hotel, but that Seller or Hotel Manager disputes (including the disputed portion of any bill, invoice or claim that Seller or Hotel Manager otherwise acknowledges to be due and payable).

1.23    Eligible Employees.  “Eligible Employees” means all Hotel Employees, other than Excluded Employees, whom Hotel Manager employs at the Hotel immediately prior to Closing.

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1.24    Employee Leave. “Employee Leave” means vacation, sick leave and any other paid leave accrued or accruing and payable with respect to Continuing Employees.

1.25    Employee Liabilities.     “Employee Liabilities” means all obligations and liabilities, actual or contingent with respect to Hotel Employees, whether accruing or arising before or after Closing, including, without limitation, any and all obligations or liabilities: (A) for wages, salaries, Employee Leave, fringe benefits, and payroll taxes; (B) for worker’s compensation claims based on any real or alleged occurrence prior to Closing; and (C) for claims or penalties under applicable Laws governing employer/employee relations (including, without limitation, the National Labor Relations Act and other labor relations laws, fair employment standards Laws, fair employment practices and anti-discrimination Laws, the Worker Adjustment and Retraining Notification Act of 1988, the Employee Retirement Income Security Act, the Multi-Employer Pension Plan Amendments Act, and the Consolidated Omnibus Budget Reconciliation Act of 1985).

1.26    Environmental Laws. “Environmental Laws” shall mean all federal, state and local laws, statues, rules, codes, ordinances, regulations, orders, judgments, decrees, binding and enforceable guidelines, policies or common law now or hereafter in effect and in each case as amended, or any judicial or administrative interpretation thereof, including any judicial or administrative order, consent decree or judgment in each case, to the extent binding, relating to the environment or Hazardous Substances.

1.27    Equipment Lease. “Equipment Lease” means the personal property leases covering certain items of FF&E all of which are identified in the schedule attached hereto as Exhibit K.

1.28    ERISA. “ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

1.29    Escrow. “Escrow” means the escrow established pursuant to this Agreement for purposes of holding the Deposit and, pending Closing, the balance of the Purchase Price and the Transfer Instruments to be recorded upon Closing.

1.30    Escrow Agent. “Escrow Agent” means the Title Company, acting through its local office near the Hotel, whenever acting in the capacity of an escrow holder pursuant hereto.

1.31    Excluded Employees. “Excluded Employees” means Hotel Employees designated by Buyer to Seller and Hotel Manager not later than ten (10) Business Days before the Closing Date, not to exceed the lesser of (i) ten percent (10%) of the Hotel Employees employed at the Hotel immediately prior to Closing and (ii) the number (including the General Manager, if not hired by Buyer or Buyer’s manager or retained by Hotel Manager and all Hotel Employees terminated in the ninety (90) days preceding Closing) in excess of which Seller would be required to give notice under the WARN Act.

1.32    Existing Environmental Report. “Existing Environmental Report” means the environmental assessment report(s) and further environmental studies (if any) regarding the Hotel Premises identified on Exhibit O.

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1.33    Existing Survey.   “Existing Survey” means the ALTA/ACSM Survey of the Hotel Premises identified on Exhibit O.

1.34    Existing Title Report.   “Existing Title Report” means the existing owner’s policy of title insurance on the Hotel Premises identified on Exhibit O.

1.35    Extended Coverage.   “Extended Coverage” means the deletion from the Title Policy of general exceptions for survey matters, unrecorded easements, mechanics’ liens, unrecorded liens for taxes and assessments and rights of parties in possession (to the extent such deletions are customarily offered by the Title Company in the jurisdiction where the Hotel is located).

1.36    FF&E.   “FF&E” means machinery, equipment, appliances, furniture, fittings, removable fixtures, tools and other articles of durable personal property of every kind and nature, including spare parts and reserve stock, which are owned or leased by or for the account of Seller and are used or useable in the operation of the Hotel, including, without limitation and subject to depletion and replacement in the Ordinary Course: (1) office furniture and equipment, (2) room furnishings, (3) art work and other decorative items, (4) televisions, radios, VCRs and other consumer electronic equipment, (5) telecommunications equipment, (6) computer equipment, (7) blankets, pillows, linens, towels and other bed clothing, (8) china, crystal, dishware, glassware, silverware, flatware and other dinnerware, and other “operating inventory” as that term is defined in the Uniform System of Accounts, (9) kitchen appliances, cookware and other cooking utensils, (10) vehicles, and (11) manuals, schematics, plans and other written materials pertaining to the use, operation, maintenance or repair of any item of FF&E; but excluding (a) personal property owned by any Hotel guest, tenant, concessionaire, licensee or other third party (unless such person owns such property for the account or benefit of Seller), and (b) manuals, records and other like materials owned by (and proprietary to) the Hotel Manager, unless prepared or maintained solely for the Hotel, and (c) computer software licensed to Seller or Hotel Manager, unless (A) such license is by its terms transferable in connection with the sale of the Hotel to Buyer and (B) Buyer pays any fee or other charge imposed by the licensor in connection with such a transfer.

1.37    Final Statement. “Final Statement” has the meaning specified in Section 11.1.

1.38    FIRPTA Certificate.   “FIRPTA Certificate” means a certificate of Seller, substantively in the form attached as Exhibit G, confirming to Buyer that Seller is not a foreign person or entity for purposes of § 1445 of the Internal Revenue Code of 1986, as amended (with such supplemental statements as may be required to exempt the transactions contemplated hereby from any withholding tax requirements under applicable state Laws).

1.39    Food and Beverage Inventory.   “Food and Beverage Inventory” means the stock of raw and processed foods, spices, condiments and beverages used to provide food and beverage service within the Hotel, other than the Liquor Inventory.

1.40    General Assignment.   “General Assignment” means a general assignment and assumption agreement substantively in the form attached hereto as Exhibit F.

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1.41    Governmental Authority.   “Governmental Authority” means any of the United States Government, the government of any of the United States or any county or municipality therein, and any executive department, legislative body, administrative or regulatory agency, court, officer (whether elected, appointed or otherwise designated) or other authority thereof, whenever purporting to act in an official capacity.

1.42    Hazardous Substance.   “Hazardous Substance” means any substance defined as “waste”, “hazardous waste”, “hazardous substance”, “hazardous material”, “toxic substance”, “pollutant”, “contaminant” in, or which are otherwise specifically subject to regulation under any Environmental Law.

1.43    Hotel.   “Hotel” means all of the Hotel Premises, FF&E, the Inventory and Intangibles comprising the “Newton Marriott,” Newton, Massachusetts.

1.44    Hotel Employees.   “Hotel Employees” means all persons employed at the Hotel by Hotel Manager or its Affiliates.

1.45    Hotel Improvements.   “Hotel Improvements” means all of the buildings, other immovable structures and improvements and fixtures on the Hotel Parcel.

1.46    Hotel License Agreement.     “Hotel License Agreement” means that certain Franchise Agreement between Marriott and Seller dated as of July 16, 2009.

1.47    Hotel Manager.   “Hotel Manager” means TPG Hospitality, Inc., a Rhode Island corporation.

1.48    Hotel Management Agreement.   “Hotel Management Agreement” means that certain Hospitality Management Agreement between Seller and Hotel Manager dated July 16, 2009.

1.49    Hotel Parcel.   “Hotel Parcel” means (1) that certain parcel of land located at 2345 Commonwealth Avenue Newton, Massachusetts 02466 and more particularly described in Exhibit A hereto, together with (2) all appurtenant rights (including, without limitation, rights in and to adjoining streets, rights-of-way and strips and gores, water and riparian rights, rights to light and air and easements).

1.50    Hotel Payable.   “Hotel Payable” means any account payable outstanding as of Closing for the Hotel, other than Disputed Payables.

1.51    Hotel Premises.   “Hotel Premises” means the Hotel Parcel and the Hotel Improvements.

1.52    Hotel Records.   “Hotel Records” means all of the books, records, correspondence and other files, both paper and electronic (and including any accounting, database or other record-keeping software used in connection with such books and records which Seller owns or otherwise has the right freely to transfer) which have been received or generated and maintained in the course of operation of the Hotel and which are in Seller’s possession or which are maintained, controlled or possessed by a third-party for the account of Seller.

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1.53    Intangibles.  “Intangibles” means Seller’s rights, title and interest, if any, in (i) trade names, trademarks, service marks, logs and other forms of identification used to identify the Hotel or any of its facilities or operations, including the names used to designate the restaurant and bar facilities within the Hotel (but not including the name “Marriott”), (ii) plans and specifications for the Hotel Improvements, (iii) the Permits, (iv) written guaranties and warranties from contractors, manufacturers and vendors with respect to any of the Hotel Improvements and FF&E, furnishings, fixtures or equipment, to the extent assignable in connection with a sale of the Hotel, (v) studies, analyses, reports and other written materials pertaining to the condition of the Hotel Improvements and the Hotel Parcel (vi) websites and URLs related to the operation of the Hotel and (vii) information regarding the identity of, and contact information for, guests of the Hotel.

1.54    Inventory.  “Inventory” means (i) the Retail Inventory, (ii) the Food and Beverage Inventory, and (iii) the Liquor Inventory.

1.55    Laws.  “Laws” means any and all:

1.55.1    Constitutions, statutes, ordinances, rules, regulations, orders, rulings or decrees of any Governmental Authority.

1.55.2    Agreements with or covenants or commitments to any Government Authority which are binding upon Seller or any of the elements of the Hotel (including, without limitation, any requirements or conditions for the use or enjoyment of any license, permit, approval, authorization or consent legally required for the operation of the Hotel).

1.56    Last Closing Date.  “Last Closing Date” means August 3, 2010.

1.57    Lease.  “Lease” means any lease, sublease or other agreement for the occupancy or use of space within the Hotel encumbering the Hotel Premises, other than agreements in the Ordinary Course for the transient use of guest rooms, meeting rooms and other Hotel facilities.

1.58    Lien.  “Lien” means any mortgage, deed of trust or other consensual lien, mechanic’s or any materialman’s lien, judgment lien, lien for delinquent real property taxes or assessments, other tax and statutory lien (other than the lien for non-delinquent real estate taxes, general and special assessments or any lien arising out of any activity of Buyer) which affects any of the Hotel Premises and is prior to any of Seller’s interests therein.

1.59    Liquor Inventory.  “Liquor Inventory” means all liquor, wine, beer and other alcoholic beverages held for sale to Hotel guests and others in the Ordinary Course or otherwise used in the operation of the Hotel.

1.60    Liquor License.  “Liquor License” means any government license, permit or other authorization for the Liquor Operations.

1.61    Liquor Operations.  “Liquor Operations” means the sale and service of liquor, wine, beer and other alcoholic beverages at the Hotel.

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1.62    Marriot.  “Marriott” means Marriott International, Inc.

1.63    Marriott PIP. “Marriott PIP” means Property Improvement Plan for the Hotel issued by Marriott on May 4, 2009, as amended, a copy of which is attached here as Exhibit M, as modified by the waivers set forth in Exhibit N attached hereto.

1.64    New License. “New License” has the meaning specified in Section 7.3.

1.65    Objectionable Title Matters.  “Objectionable Title Matters” has the meaning specified in Section 4.2.

1.66    Intentionally Omitted.

1.67    Ordinary Course.  “Ordinary Course” means the course of day-to-day operation of the Hotel in a manner which does not materially vary from the policies, practices and procedures which have characterized its operation during the ten (10) months preceding the Effective Date.

1.68    Original.  “Original” means any of (A) an original counterpart of any Assumed Contract, (B) the Hotel Records or (C) other documents which comprise or evidence the Intangibles, to the extent within Seller’s possession or control; and “the Originals” means all such items.

1.69    Permit.  “Permit” means any permit, certificate, license or other form of authorization or approval issued by a government agency or authority and legally required for the proper operation and use of the Hotel (including, without limitation, any certificates of occupancy with respect to the Hotel Improvements, elevator permits, conditional use permits, zoning variances and business licenses, but excluding Liquor Licenses) to the extent held and assignable by Seller or otherwise transferable with the Hotel.

1.70    Permitted Exceptions.  “Permitted Exceptions” means (A) liens for real property taxes and assessments not yet delinquent, (B) liens or encumbrances arising out of any activity of Buyer, (C) the Assumed Contracts, (D) the Hotel License Agreement, (E) those matters set forth on Exhibit D attached hereto, and (F) any other matter deemed to be a Permitted Exception pursuant to Section 4.2.

1.71    Place of Closing.  “Place of Closing” has the meaning specified in Section 10.1.

1.72    Preliminary Statement.  “Preliminary Statement” has the meaning specified in Section 8.

1.73    Purchase Price.  “Purchase Price” means the gross purchase price being paid by Buyer to Seller for the Hotel, as set forth in Section 3.1.

1.74    Repair Warranties.  “Repair Warranties” means the written guaranties, warranties and other obligations for repair or maintenance, from any contractors, manufacturers or vendors, with respect to any of the Hotel Improvements or FF&E, to the extent assignable by or at the direction of Seller.

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1.75    Reservation Deposit.  “Reservation Deposit” means any deposit or advance payment received by Seller or the Hotel Manager in connection with the reservation or booking of any guest room, banquet room or other Hotel facility or service for a time or period after Closing.

1.76    Retail Inventory.  “Retail Inventory” means all goods held for sale to Hotel guests and others in the Ordinary Course, excluding the Food and Beverage Inventory and the Liquor Inventory.

1.77    Seller’s Knowledge.  “Seller’s Knowledge” means the actual present (and not the constructive) knowledge of Robert Leven, Gregory Vickowski and William Walker and does not imply that said individual has or should have conducted any inspection, examination or other inquiry to determine the accuracy of any representation, warranty or other statement made “to Seller’s Knowledge” in this Agreement or in any other document delivered by Seller prior to or at Closing.

1.78    Service Contract.  “Service Contract” means each of the contracts or other arrangements, written or oral, for the continuing provision of services relating to the improvement, maintenance, repair, protection or operation of the Hotel, all of which are identified in the schedule attached hereto as Exhibit J. “Service Contracts” does not include the Hotel Management Agreement, the Hotel License Agreement or the Equipment Leases.

1.79    Survey.  “Survey” means a current survey of the Hotel Premises meeting the minimum standard requirements of the American Land Title Association and the American Congress of Surveying and Mapping standards for “Class-A” surveys and certified, pursuant to a certification reasonably acceptable to Buyer, to Buyer, any lender designated by Buyer and the Title Company by a duly licensed land surveyor or professional engineer.

1.80    Taxes.  “Taxes” has the meaning specified in Section 8.1

1.81    Title Company.  “Title Company” means National Land Tenure Co. LLC, 900 Merchants Concourse Suite 201, Westbury, NY 11590, Attention Sean Miller, Tel: 516-227-0800, Fax: 516 227-1160, Email: seanmiller@nationallandtenure.com as agent for First American Title Insurance Company.

1.82    Title Policy.  “Title Policy” means an owner’s policy of title insurance for the portion of the Purchase Price allocated to the Hotel Premises, insuring or committing to insure fee title to the Hotel Premises in Buyer subject only to Permitted Exceptions, with Extended Coverage if Buyer so elects and obtains a Survey in a timely fashion.

1.83    Title Report.  “Title Report” means an Owner’s Commitment for Title Insurance with respect to the Hotel Premises, issued by the Title Company as of a date no earlier than June 20, 2010.

1.84    Transactor.  “Transactor” means, with respect to each Party, the person(s) authorized by such Party to execute and deliver Transfer Instruments and other Closing Documents on behalf of such Party.

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1.85    Transfer Instruments.  “Transfer Instruments” means all the instruments by which Seller will convey the Hotel to Buyer and/or Buyer’s nominees hereunder, including (without limitation) the Deed, the Bill of Sale, the Contract Assignment and the General Assignment.

1.86    Uniform System of Accounts.    “Uniform Systems of Accounts” means the Uniform System of Accounts for Hotels, 10^th Edition, published by the Hotel Association of New York.

1.87    WARN Act.  “WARN Act” means the federal Worker Adjustment and Retraining Notification Act of 1988.

1.88    Other Definitions.  Terms defined in any other part of this Agreement (including, without limitation, “Seller,” “Buyer,” “Party” and “Parties,” and “this Agreement,” defined in the initial paragraph hereof) shall have the defined meanings wherever capitalized herein. As used in this Agreement, the terms “herein,” “hereof” and “hereunder” refer to this Agreement in its entirety and are not limited to any specific sections; and the term “person” means any natural person, other legal entity, or combination of natural persons and/or other legal entities acting as a unit. Wherever appropriate in this Agreement, the singular shall be deemed to refer to the plural and the plural to the singular, and pronouns of certain genders shall be deemed to comprehend either or both of the other genders.

2.        Covenant of Purchase and Sale. On and subject to the terms and conditions set forth in this Agreement, Seller shall sell, convey, assign and transfer to Buyer, and Buyer shall purchase and accept from Seller, all of the real and personal property comprising the Hotel and, except as otherwise expressly provided herein, assume from and after Closing all obligations and liabilities appertaining to such property (including, without limitation, Seller’s obligations and liabilities under and with respect to the Assumed Contracts, the Permits and any Permitted Exceptions).

2.1        Exclusion of Certain Service Contracts.   Buyer shall have the right to exclude from the Assumed Contracts any Service Contract identified by Buyer by written notice, provided that Seller shall only be obligated to terminate any such agreements so long as such termination is at no cost to Seller.

2.2        Equipment Leases.  At Closing, (A) Buyer shall assume all of the Equipment Leases and (B) hold harmless, indemnify and defend Seller against any claim by or liability to the lessor under the applicable Equipment Leases arising from and after the Closing Date.

3.        Purchase Price and Deposit.

3.1        Amount of Purchase Price. The Purchase Price shall be SEVENTY SEVEN MILLION TWO HUNDRED FIFTY THOUSAND AND 00/100 DOLLARS ($77,250,000.00) but the net amount thereof payable to Seller shall be subject to credits, prorations and other adjustments as provided in Sections 8 and 11.

3.2        Allocation of Price.  The Purchase Price shall be allocated among the Hotel and various items of personal property as set forth on Exhibit L attached hereto. The parties agree

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that this allocation has been arrived at by a process of arm’s-length negotiations, including, without limitation, the parties’ best judgment as to the fair market value of each respective asset, and the parties specifically agree to the allocation as final and binding, and will consistently, reflect those allocations on their respective federal, state and local tax returns, including any state, county and other local transfer or sales tax declarations or forms to be filed in connection with this transaction, which obligations shall survive the Closing.

3.3        Deposit.

3.3.1    Amount and Delivery.    Within three (3) Business Days after the Effective Date, Buyer shall deliver into Escrow cash in the amount of $500,000.00 (the “Initial Deposit”), as a good faith deposit. On or before the Approval Date, if Buyer elects to proceed with the purchase of the Hotel, Buyer shall deliver into Escrow an additional cash deposit of $2,500,000.00 (the “Additional Deposit”). The Initial Deposit, together with the Additional Deposit when and if made, and all interest earned on the deposited funds while in Escrow, shall comprise the “Deposit.”

3.3.2    Investment.    The Deposit, while held in Escrow, shall be held by the Escrow Agent in a federally-insured, interest-bearing account with a national banking association.

3.3.3    Disposition.    If Buyer, in breach of its obligations under this Agreement, fails to purchase the Hotel on or before the Last Closing Date, Seller upon termination of this Agreement shall be entitled to receive and retain the Deposit as liquidated damages, in accordance with Section 19. In all other circumstances, the Deposit shall remain the property of Buyer and, together with interest earned thereon, shall either (A) at Closing, be applied against the Purchase Price or (B) upon termination of this Agreement, be returned to Buyer, less only Buyer’s one-half share of any Escrow cancellation charges.

3.4        EINs. For Escrow Agent’s information, Buyer’s Employer Identification Number is 27-1876146 and Seller’s Employer Identification Number is 27-0354270.

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4.        Title and Due Diligence Conditions.

4.1        Title Report and Survey.    Within five (5) days following the Effective Date, Seller shall provide to Buyer a copy of the Existing Title Report and the Existing Survey. Promptly after the Effective Date, Buyer shall (A) request that the Title Company provide a Title Report, together with copies of all recorded documents referenced in the Title Report, and (B) order a Survey, certified to each of Buyer (and/or its assigns), Seller and the Title Company. Upon receipt Buyer shall deliver copies of the Title Report (and such recorded documents) and the Survey to Seller and deliver a copy of the Survey to the Title Company.

4.2        Objectionable Title Matters and Permitted Exceptions.    Within five (5) Business Days of Buyer’s receipt of the Title Report and Survey, Buyer shall deliver to Seller written notice of Buyer’s objection to any matter appearing on the Title Report, other than any Permitted Exception (collectively, the “Objectionable Title Matters”). Buyer acknowledges and agrees that is shall not have the right to object to any Permitted Exceptions. Buyer’s notice of Objectionable Title Matters also shall specify whether any estoppel certificates will be required to be delivered at Closing with respect to any Lease disclosed by the Title Report. Except for (A) the Objectionable Title Matters and (B) any new item reflected in any update to the Title Report or update to the Survey received after Buyer’s delivery of its initial notice of Objectionable Title Matters with respect to which Buyer gives Seller written notice of Buyer’s objection thereto within five (5) Business Days after Buyer obtains actual knowledge of such new item (the “Additional Objectionable Title Matters”), Buyer shall be deemed to have approved the state of Seller’s title to the Hotel Premises as disclosed by the Title Report and the Survey. All exceptions and other defects disclosed by the Title Report or any update thereto or the Survey or any update thereto, to which Buyer makes no objection in accordance with the provisions of this Section 4.2, and all such exceptions and other defects to which Buyer objects but later waives such objection as provided in this Section 4.2, shall be deemed Permitted Exceptions.

4.3        Cure of Objectionable Title Matters. Cure of Objectionable Title Matters. At or prior to Closing, Seller shall cause any Lien voluntarily made or assumed by it to be removed and shall cure any Objectionable Title Matter which Seller has agreed to eliminate.

4.3.1    Termination for Objectionable Title Matter. Within five (5) Business Days following Buyer’s notice of any Objectionable Title Matters or any Additional Objectionable Title Matters, Seller shall notify Buyer either that it will eliminate all Objectionable Title Matters and/or Additional Objectionable Title Matters to which Buyer has objected prior to the Closing Date or specifying exceptions which it will not eliminate. In the event that Seller fails to respond to a notice of any Objectionable Title Matters received from Buyer, Seller shall be deemed to have elected not to remove such Objectionable Title Matters. If Seller elects, or is deemed to have elected not to remove all of the Objectionable Title Matters or Additional Objectionable Title Matters, Buyer shall have the right, within five (5) Business Days of Seller’s notification of its election not to remove such Objectionable Title Matter(s) or Additional Objectionable Title Matter(s), to terminate the Escrow and this Agreement

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by written notice of termination given to Seller and Escrow Agent no later than the Last Closing Date, whereupon Escrow Agent shall cancel Escrow, disburse the Deposit to Buyer and return every other item in Escrow to the Party which deposited the same. If Buyer does not exercise its right to terminate this Agreement within five (5) Business Days of Seller’s notification of its election not to remove any given Objectionable Title Matter or Additional Objectionable Title Matter, Buyer shall be deemed to have waived its objection to such Objectionable Title Matters and such Objectionable Title Matters shall be included as “Permitted Exceptions.”

4.3.2    Buyer shall share with Seller a copy of the pro forma Title Policy (the “Pro Forma Title Policy”) with respect to the Hotel Premises delivered to Buyer by the Title Company. Except as set forth in this Section 4.3 and subject to the requirement that Seller deliver the owner’s title affidavit in accordance with the provisions of Section 10.2.1.8, Seller shall not be required to undertake any actions, or to deliver any additional documents, in connection with the issuance of the Title Policy.

4.4        Extension of Closing Date for Notice and Cure.  If Buyer gives timely written notice under Section 4.2 of any Additional Objectionable Title Matter later than the thirtieth (30^th) day preceding the Last Closing Date, the Last Closing Date may be extended by Seller, to a date no more than thirty (30) days after the date otherwise specified herein as the Last Closing Date, to allow Seller to cure such Additional Objectionable Title Matter. Such extension shall be effected by a Seller’s giving written notice of such extension to Buyer within five (5) Business Days of Buyer’s notification of such Additional Objectionable Title Matter.

4.5        Access to Property.  During the period from the Effective Date to Closing, Seller shall provide to Buyer, its agents, consultants and counsel, access at all reasonable times to the Hotel Premises in accordance with the provisions of that certain Access Agreement between Buyer and Seller dated as of June 14, 2010 the provisions of which are incorporated herein in their entirety.

4.6        Indemnification.  Buyer shall hold harmless, indemnify and defend Seller from and against any and all claims, liability and losses, and expenses related thereto (including reasonable attorneys’ fees), which Seller incurs by reason of any damage to property (including, without limitation, the Hotel Premises or FF&E), or any third-party claim arising or asserted to arise out of, any activity of Buyer or Buyer’s representatives, conducted at or about the Hotel Premises except that Buyer’s obligation under this Section 4.6 shall not extend to previously existing conditions that are discovered by Buyer to be present on, under or about the Hotel Premises except and solely to the extent that Buyer’s activities shall have exacerbated such existing conditions. Buyer shall, with reasonable promptness, repair in a good and workmanlike manner any damage to the Hotel Improvements or FF&E caused by any such activity.

4.7        Marriott PIP Within five (5) Business Days of receipt of the anticipated update to the Marriott PIP (the “Updated Marriott PIP”), Buyer and Seller shall agree upon the scope and estimated cost of the work set forth in the Updated Marriott PIP which is required to be completed on or before December 31, 2011 (the “Required PIP Work”). Buyer and Seller’s

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agreement regarding the estimated cost of the Required PIP Work shall be evidenced by a schedule initialed by Buyer and Seller and attached hereto as Exhibit R. In the event that Seller and Buyer are unable to agree on the Required PIP Work or the estimated cost thereof, either Buyer or Seller shall have the right, in its sole discretion, to terminate this Agreement by written notice to the other party and the Escrow Agent by 5:00 p.m., Eastern Time on the fifth (5^th) Business Day following Buyer and Seller’s receipt of the Updated Marriott PIP.

4.8        Buyer’s Right of Termination. In addition to the right of termination provided in Section 4.4, Buyer shall have the right, in its sole discretion, to terminate this Agreement unless Buyer is satisfied as to all matters related to the Hotel and bearing upon the suitability of the Hotel for Buyer’s purposes; but Buyer shall be conclusively deemed to have waived such right unless by 5:00 p.m., Eastern Time, on the Approval Date Buyer has given Seller and Escrow Agent written notice of termination of this Agreement.

4.9        PRIOR TO THE APPROVAL DATE, BUYER WILL CONDUCT ITS OWN INVESTIGATION OF THE HOTEL AND MAKE ALL INQUIRIES, INSPECTIONS, TESTS, AUDITS, STUDIES AND ANALYSES (“INQUIRIES”) IN CONNECTION WITH PURCHASING THE HOTEL THAT BUYER DEEMS NECESSARY OR ADVISABLE AND BUYER WILL RELY ON SUCH INSPECTIONS AND TESTS IN DETERMINING IF THE HOTEL IS SUITABLE FOR BUYER’S PURPOSES. IF FOR ANY REASON BUYER IS UNABLE ON OR BEFORE THE APPROVAL DATE TO MAKE ANY INQUIRY THAT IT DESIRED TO MAKE, OR THAT IS CUSTOMARILY MADE IN TRANSACTIONS OF THIS SORT, OR OTHERWISE FAILS TO OBTAIN INFORMATION SUFFICIENT TO ANSWER ANY QUESTION REGARDING THE CONDITION AND SUITABILITY OF THE HOTEL, AND YET NONETHELESS PROCEEDS WITH THE PURCHASE OF THE HOTEL, BUYER SHALL ASSUME ALL RISKS THAT, HAD IT PERFORMED SUCH INQUIRY OR OBTAINED SUCH INFORMATION, IT WOULD HAVE ELECTED NOT TO PROCEED WITH THE PURCHASE OF THE HOTEL ON THE TERMS CONTAINED HEREIN.

4.10        EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT OR ANY TRANSFER INSTRUMENT, BUYER IS BUYING THE HOTEL “AS IS, WHERE-IS AND WITH ALL FAULTS” AND WITHOUT ANY REPRESENTATIONS OR WARRANTIES, EXPRESS, IMPLIED OR STATUTORY, OF ANY KIND WHATSOEVER, WHETHER BY SELLER OR BY ANY ONE ACTING ON SELLER’S BEHALF (INCLUDING, WITHOUT LIMITATION, AGENTS, BROKERS, CONSULTANTS, COUNSEL, EMPLOYEES, OFFICERS, DIRECTORS, SHAREHOLDERS, PARTNERS, TRUSTEES OR BENEFICIARIES).

5.        Representations

5.1        By Seller.

5.1.1            Regarding the Hotel. Seller hereby represents to Buyer that, as of the Effective Date, except as disclosed in Exhibit H or in any other Exhibit to this Agreement, in the Existing Environmental Report, the Existing Title Report or the Existing Survey:

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5.1.1.1    Except as set forth on Exhibit H, Seller has not received written notice from any Governmental Authority (A) that the current condition, occupancy or use of the Hotel violates or will require correction under any applicable Law (including, without limitation, building and safety codes, Title III of the Americans with Disabilities Act, OSHA regulations or Laws regulating Hazardous Substances) or (B) revoking, canceling or denying renewal of any Permit.

5.1.1.2    All sales, use, room, occupancy and similar tax returns required of Seller for the Hotel have been filed or, if not now due, will be duly filed by Seller in a timely manner. All taxes shown on the returns being due as of the Closing Date have been paid or if not now due will be timely paid.

5.1.1.3    Seller has not filed any notice of protest or appeal against, or commenced proceedings to recover, real property tax assessments against the Hotel Parcel or the Hotel Improvements. The list of tax certiorari proceedings set forth on Exhibit H constitutes a true, correct and complete list of all such proceedings (collectively, the “Tax Proceedings”), and there are no other tax certiorari proceedings pending or, to Seller’s Knowledge, threatened, against any Seller or any portion of the Property. With respect to Tax Proceedings pending at the Closing Date, Buyer shall assume the prosecution of such proceeding; provided, however, that to the extent the settlement of such proceeding materially and adversely affects real estate taxes and assessments payable with respect to any period prior to the Closing Date and any Seller is responsible therefor, Buyer will not settle or compromise such proceeding without the applicable Seller’s written consent, which consent shall not be unreasonably withheld, delayed or conditioned; further provided that any tax refund resulting from such proceeding, net of the aggregate cost of prosecuting such proceeding, and after deducting any refunds required to be made to tenants under leases, shall be apportioned between Seller and Buyer.

5.1.1.4    There are no lawsuits filed and served upon Seller or to Seller’s Knowledge otherwise pending or threatened, whose outcome could adversely affect title to or the use, occupancy or operation of the Hotel or Seller’s ability to convey the Hotel under this Agreement (including, without limitation, actions for condemnation).

5.1.1.5    Except as set forth on Exhibit H, there are no Leases encumbering the Hotel.

5.1.1.6    Exhibit S identifies all of the corporate, airline, bus, tour operator, barter or similar agreements pursuant to which third parties have been granted rights to rooms or services at the Hotel from and/or after the Closing Date (“Bookings”).

5.1.1.7    Exhibit J identifies all of the Service Contracts. True and complete copies of each Service Contract have been made available to Buyer. Seller has neither given to nor received from a party to any Service Contract written notice that any material default currently exists under such contract or asserting any defense, or right of set-off, under such contract.

5.1.1.8    Exhibit K identifies all of the Equipment Leases. True and complete copies of each of the Equipment Leases have been made available to Buyer. Seller has

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neither given to nor received from a party to any Equipment Lease written notice that any material default currently exists under such contract or asserting any defense, or right of set-off, under such contract.

5.1.1.9    Other than pursuant to the Hotel Management Agreement which is to be terminated as of the Closing, no portion of the Hotel Premises is managed by a third party.

5.1.1.10    Other than pursuant to the Hotel License Agreement which is to be terminated at the Closing, no portion of the Hotel Premises is operated pursuant to a license agreement.

5.1.1.11    None of the Hotel Employees are covered by a collective bargaining agreement or included within a bargaining unit certified pursuant to the National Labor Relations Act or similar state Law. Except as disclosed in the schedule attached hereto as Exhibit I, there are no employment agreements covering any Hotel Employees.

5.1.1.12    No unresolved material labor dispute, strike or other material work stoppage or slowdown currently exists with respect to any of the Hotel Employees.

5.1.1.13    Exhibit O sets forth a complete list of all environmental reports relating to the Hotel in the possession of Seller (“Seller’s Environmental Reports”). Except as set forth in Seller’s Environmental Reports, to Seller’s Knowledge, Seller has not received any written notice from any governmental agency concerning any violation of any Environmental Law with respect to the Hotel.

5.1.2    Regarding Seller. Seller hereby represents to Buyer that, as of the Effective Date, except as disclosed in Exhibit H or in any other Exhibit to this Agreement, in the Existing Environmental Report, the Existing Title Report or the Existing Survey:

5.1.2.1    Seller is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Delaware; is qualified to do business and in good standing in the State of Massachusetts; has full power to enter into this Agreement and to fulfill its obligations hereunder; has authorized its execution, delivery and performance of this Agreement by all necessary corporate action; and has caused this Agreement to be duly executed and delivered on its behalf to Buyer.

5.1.2.2    Except as set forth on Exhibit H, at Closing, Seller will have the full right and power to convey and deliver possession of the Hotel Premises and to transfer all of the other property comprising the Hotel in accordance with this Agreement.

5.1.2.3    As of the Effective Date, except as set forth on Exhibit P: (i) no government or third-party approval or consent which has not already been obtained is required for Seller’s execution and delivery of, or performance of obligations under, this Agreement and (ii) Seller’s execution, delivery and performance of this Agreement do not and will not violate, and are not restricted by, any other contractual obligation or any Law to which Seller is a party or by which Seller or any of the property comprising the Hotel is bound.

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5.1.2.4    As of the Effective Date, there are no lawsuits filed and served against Seller or to Seller’s Knowledge otherwise pending or threatened whose outcome could adversely affect Seller’s ability to perform its obligations under this Agreement.

5.1.2.5    Except for the Broker, Seller has not engaged or dealt with any broker, finder or similar agent in connection with the transactions contemplated by this Agreement.

5.1.2.6    Money Laundering. Neither the Seller nor, to Seller’s Knowledge, any of its members, is in violation of any laws relating to terrorism, money laundering or the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Action of 2001, Public Law 107-56 and Executive Order No. 13224 (Blocking Property and Prohibiting Transactions with Persons Who Commit, Threaten to Commit, or Support Terrorism) (the “Executive Order”) (collectively, the “Anti-Money Laundering and Anti-Terrorism Laws”).

5.1.2.7    Neither the Seller nor, to Seller’s Knowledge, any of its members, is acting, directly or indirectly, on behalf of terrorists, terrorist organizations or narcotics traffickers, including, without limitation, those persons or entities that appear on the Annex to the Executive Order, or are included on any relevant lists maintained by the Office of Foreign Assets Control of U.S. Department of Treasury, U.S. Department of State, or other U.S. government agencies, all as may be amended from time to time.

5.1.2.8    Neither the Seller nor, to Seller’s Knowledge, any of its members, in any capacity in connection with the sale of the Hotel (i) conducts any business or engages in making or receiving any contribution of funds, goods or services to or for the benefit of any person included in the lists set forth in the preceding paragraph; (ii) deals in, or otherwise engages in any transaction relating to, the Hotel or interests in property blocked pursuant to the Executive Order; or (iii) engages in or conspires to engage in any transaction that evades or avoids, or has the purpose of evading or avoiding, or attempts to violate, any of the prohibitions set forth in any Anti-Money Laundering and Anti-Terrorism Laws.

5.1.2.9    Seller understands and acknowledges that Buyer may become subject to further anti-money laundering regulations, and agrees to execute instruments, provide information, or perform any other acts as may reasonably be requested by Buyer, for the purpose of: (i) carrying out due diligence as may be required by applicable law to establish Seller’s identity and source of funds; (ii) maintaining records of such identities and sources of funds, or verifications or certifications as to the same; and (iii) taking any other actions as may be required to comply with and remain in compliance with anti-money laundering regulations applicable to Seller.

5.1.2.10    Neither Seller, nor, to Seller’s Knowledge, any person controlling or controlled by Seller, is a country, territory, individual or entity named on a Government List, and, to Seller’s Knowledge, the monies used in connection with this Agreement and amounts committed with respect thereto were not and are not derived from any activities that contravene any applicable anti-money laundering or anti bribery laws and regulations (including, without limitation, funds being derived from any person, entity, country

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or territory on a Government List or engaged in any unlawful activity defined under 18 USC §1956(c)(7)). For purposes of this Agreement, “Government List” means any of (a) the two lists maintained by the United States Department of Commerce (Denied Persons and Entities), (b) the list maintained by the United States Department of Treasury (Specially Designated Nationals and Blocked Persons) and (c) the two lists maintained by the United States Department of State (Terrorist Organizations and Debarred Parties).

5.2        By Buyer. Buyer hereby represents to Seller that:

5.2.1    Buyer is a Delaware limited partnership, duly formed, validly existing and in good standing under the laws of the State of Delaware, is in good standing and qualified to do business in every other jurisdiction in which such qualification is legally required; has full power and authority to enter into this Agreement and to fulfill its obligations hereunder; has authorized the execution, delivery and performance of this Agreement by all necessary company action; and has caused this Agreement to be duly executed and delivered to Seller.

5.2.2    No government, internal or other third-party approvals or consents which have not already been obtained are required for Buyer’s execution and delivery of, or performance of obligations under, this Agreement, and Buyer’s execution and performance of this Agreement do not and will not violate, and are not restricted by, any other contractual obligation or applicable Law to which Buyer is a party or by which Buyer is otherwise bound.

5.2.3    As of the Effective Date, there are no lawsuits filed and served against Buyer or, to Buyer’s Knowledge, otherwise pending or threatened whose outcome could adversely affect Buyer’s ability to purchase the Hotel and otherwise perform its obligations under this Agreement.

5.2.4    Except for Seller’s Broker, Buyer has not engaged or dealt with any broker, finder or similar agent in connection with the transaction contemplated by this Agreement.

5.2.5    Money Laundering. Neither the Buyer nor, to Buyer’s Knowledge, any of its members, is in violation of any laws relating to terrorism, money laundering or the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Action of 2001, Public Law 107-56 and Executive Order No. 13224 (Blocking Property and Prohibiting Transactions with Persons Who Commit, Threaten to Commit, or Support Terrorism) (the “Executive Order”) (collectively, the “Anti-Money Laundering and Anti-Terrorism Laws”).

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5.2.6    Neither the Buyer nor, to Buyer’s Knowledge, any of its members, is acting, directly or indirectly, on behalf of terrorists, terrorist organizations or narcotics traffickers, including, without limitation, those persons or entities that appear on the Annex to the Executive Order, or are included on any relevant lists maintained by the Office of Foreign Assets Control of U.S. Department of Treasury, U.S. Department of State, or other U.S. government agencies, all as may be amended from time to time.

5.2.7    Neither the Buyer nor, to Buyer’s Knowledge, any of its members, in any capacity in connection with the sale of the Hotel (i) conducts any business or engages in making or receiving any contribution of funds, goods or services to or for the benefit of any person included in the lists set forth in the preceding paragraph; (ii) deals in, or otherwise engages in any transaction relating to, the Hotel or interests in property blocked pursuant to the Executive Order; or (iii) engages in or conspires to engage in any transaction that evades or avoids, or has the purpose of evading or avoiding, or attempts to violate, any of the prohibitions set forth in any Anti-Money Laundering and Anti-Terrorism Laws.

5.2.8    Buyer understands and acknowledges that Seller may become subject to further anti-money laundering regulations, and agrees to execute instruments, provide information, or perform any other acts as may reasonably be requested by Seller, for the purpose of: (i) carrying out due diligence as may be required by applicable law to establish Buyer’s identity and source of funds; (ii) maintaining records of such identities and sources of funds, or verifications or certifications as to the same; and (iii) taking any other actions as may be required to comply with and remain in compliance with anti-money laundering regulations applicable to Buyer.

5.2.9    Neither Buyer nor, to Buyer’s Knowledge, any person controlling or controlled by Seller, is a country, territory, individual or entity named on a Government List, and, to Buyer’s Knowledge, the monies used in connection with this Agreement and amounts committed with respect thereto were not and are not derived from any activities that contravene any applicable anti-money laundering or anti bribery laws and regulations (including, without limitation, funds being derived from any person, entity, country or territory on a Government List or engaged in any unlawful activity defined under 18 USC §1956(c)(7)).

5.3        WAIVER AND RELEASE.        AS A MATERIAL PART OF THE CONSIDERATION TO SELLER FOR THE SALE OF THE HOTEL HEREUNDER, EXCEPT FOR A CLAIM MADE UNDER THIS SECTION 5 FOR MONETARY DAMAGES DUE TO A BREACH OF A REPRESENTATION OF SELLER EXPRESSLY SET FORTH IN THIS AGREEMENT, BUYER HEREBY WAIVES AND RELINQUISHES, AND RELEASES SELLER AND ALL OF SELLER’S OFFICERS, DIRECTORS, SHAREHOLDERS, BENEFICIAL OWNERS, EMPLOYEES, BROKER AND OTHER AGENTS AND AFFILIATES (COLLECTIVELY, “SELLER RELEASEES”) FROM, ANY AND ALL

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CLAIMS AND REMEDIES (INCLUDING, WITHOUT LIMITATION, ANY RIGHT OF RESCISSION) AGAINST SELLER RELEASEES OR ANY OF THEM BASED DIRECTLY OR INDIRECTLY ON (A) ANY PAST, PRESENT OR FUTURE CONDITION OF THE HOTEL, INCLUDING, WITHOUT LIMITATION, THE RELEASE OR PRESENCE OF ANY HAZARDOUS SUBSTANCES OR (B) ANY AND ALL STATEMENTS, REPRESENTATIONS WARRANTIES, REPORTS, OPINIONS OR OTHER INFORMATION, OR ANY MISREPRESENTATION OR FAILURE TO DISCLOSE TO BUYER ANY INFORMATION, REGARDING THE HOTEL (INCLUDING, WITHOUT LIMITATION, ANY DEFECTIVE, HAZARDOUS OR UNLAWFUL CONDITION OF WHICH SELLER SHOULD BE AWARE, WHETHER OR NOT SUCH CONDITION REASONABLY COULD HAVE BEEN DISCOVERED BY BUYER THROUGH AN INSPECTION OF THE HOTEL OR THE PROPERTY RECORDS), OTHER THAN SUCH A MISREPRESENTATION CONSTITUTING GROSS NEGLIGENCE OR WILLFUL FRAUD. BUYER UNDERSTANDS THAT SUCH WAIVER AND RELEASE INCLUDES STATUTORY AS WELL AS “COMMON LAW” AND EQUITABLE RIGHTS AND REMEDIES AND THAT IT COVERS POTENTIAL CLAIMS OF WHICH BUYER MAY BE CURRENTLY UNAWARE OR UNABLE TO DISCOVER. BUYER ACKNOWLEDGES THAT THE FOREGOING WAIVER AND RELEASE IS OF MATERIAL CONSIDERATION TO SELLER IN ENTERING INTO THIS AGREEMENT, THAT BUYER’S COUNSEL HAS ADVISED BUYER OF THE POSSIBLE LEGAL CONSEQUENCES OF MAKING SUCH WAIVER AND RELEASE AND THAT BUYER HAS TAKEN INTO ACCOUNT, IN AGREEING TO PURCHASE THE HOTEL AT THE PURCHASE PRICE SPECIFIED HEREIN, SELLER’S DISCLAIMER OF ANY WARRANTIES AND REPRESENTATIONS REGARDING THE HOTEL OTHER THAN THOSE EXPRESSLY SET FORTH HEREIN.

BUYER HEREBY ACKNOWLEDGES AND AGREES THAT (i) BUYER MAY HEREAFTER DISCOVER FACTS DIFFERENT FROM OR IN ADDITION TO THOSE NOW (OR AS OF THE CLOSING) KNOWN OR BELIEVED TO BE TRUE REGARDING THE PROPERTY AND/OR PROPERTY INFORMATION, (ii) BUYER’S AGREEMENT TO RELEASE, ACQUIT AND DISCHARGE SELLER AND SELLER PARTIES AS SET FORTH HEREIN SHALL REMAIN IN FULL FORCE AND EFFECT, NOTWITHSTANDING THE EXISTENCE OR DISCOVERY OF ANY SUCH DIFFERENT OR ADDITIONAL FACTS, AND (iii) BUYER KNOWINGLY AND VOLUNTARILY WAIVES ANY AND ALL RIGHTS, BENEFITS AND PRIVILEGES TO THE FULLEST EXTENT PERMISSIBLE UNDER ANY FEDERAL, STATE, LOCAL, OR OTHER LAWS WHICH DO OR WOULD NEGATIVELY AFFECT VALIDITY OR ENFORCEABILITY OF ALL OR PART OF THE RELEASES SET FORTH IN THIS AGREEMENT.

5.4        Survival and Limitations.  The Parties’ representations set forth in this Section 5 (and their respective liability for any breach thereof) shall survive Closing and shall not be deemed to merge into any of the Transfer Instruments; provided, however, that Seller shall have no liability to Buyer for any breach of such representations unless:

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5.4.1    The facts constituting such breach have not been disclosed to, discovered by or otherwise become known to Buyer prior to Closing;

5.4.2    Buyer has given Seller written notice claiming such breach, and stating in reasonable detail the factual basis for such claim, within nine (9) months after the Closing Date; and

5.4.3    Buyer’s actual out-of-pocket loss from all breaches of Seller’s representations herein exceeds $125,000;

and provided further, that in no event shall Seller’s aggregate liability to Buyer for all such breaches exceed $2,500,000.

5.5        Notice of Subsequent Event or Discovery.  Prior to Closing, each Party shall give the other prompt notice of its discovery of any event or condition which has the effect of making any representations contained in Section 5 materially inaccurate.

6.        Operation of the Hotel Pending Closing.  From the Approval Date until Closing, except for emergencies, Seller shall use commercially reasonable efforts to operate the Hotel in the Ordinary Course and shall not cause, approve or voluntarily permit any material change in the operations of the Hotel without Buyer’s prior written approval, including:

6.1        Material alterations or other material changes in the Hotel Improvements except as may be currently required by Law, the ADA Settlement Agreement, the Marriott PIP or the Updated Marriott PIP.

6.2        Cancellation or surrender of any existing Permit.

6.3        Creation of any Lease or voluntary Lien.

6.4        Other than renewals of existing Service Contracts or Equipment Leases in the Ordinary Course, entering into or materially modifying any Service Contract or Equipment Lease unless the same is terminable upon Closing.

6.5        Material reductions in levels of service, sales and marketing efforts, maintenance or staff.

6.6        Seller shall not give and shall request that Manager not give, any termination notices under the Worker Adjustment and Retraining Notification Act of 1988 (the “WARN Act”) to any Eligible Employees without the prior written consent of Buyer, which consent shall not be unreasonably withheld.

If Buyer proceeds to Closing with actual knowledge of any breach by Seller of this Section 6, Buyer shall be deemed to have waived such breach and shall have no claim against Seller after Closing on account of such breach.

7.        Other Agreements.

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7.1        Hotel Management Agreement.  Buyer shall not assume any obligations under the Hotel Management Agreement. At its sole cost and expense, Seller shall cause the Hotel Management Agreement to be terminated as of the Closing and shall deliver possession of the Hotel to Buyer free and clear of any possessory rights of Hotel Manager or Seller. Seller shall remain responsible for all amounts due under the Hotel Management Agreement and shall hold harmless, indemnify and defend Buyer from and against any claims or liability therefore

7.2        Liquor License(s) and Inventory.

7.2.1    Application for New Liquor License.  Buyer shall be responsible, at its expense, for promptly preparing, filing and diligently prosecuting all applications before Governmental Authorities for the transfer or re-issuance of the Liquor License at the Hotel to Buyer or its nominee following Closing. Seller shall cooperate with Buyer in such applications as Buyer may reasonably request (but without any obligation on the part of Seller to incur out-of-pocket expense or liability in doing so). If, despite diligent efforts, Buyer has not been able to obtain the new Liquor License at the Hotel by the Last Closing Date (but, in any event, before Closing actually occurs), Seller shall enter (or, if Seller does not hold the existing Liquor License, shall cause the holder of such license to enter) into an interim arrangement with Buyer (the “Interim Liquor Agreement”) that will permit the Liquor Operations to continue at the Hotel under the existing Liquor License pending issuance of a Liquor License to Buyer or its nominee; provided, however, that such interim arrangement is, in the reasonable judgment of Seller, permitted by applicable alcoholic beverage control Laws. The Interim Liquor Agreement shall (A) provide that Buyer shall hold harmless and indemnify Seller (and, if other than Seller, the holder of the Liquor License) from and against all Claims arising out of or related to the conduct of the Liquor Operations after Closing, unless caused by Seller’s (or such holder’s) own gross negligence or willful misconduct, (B) to the extent permitted by applicable alcoholic beverage control Laws, provide for Seller (or such holder) to receive only reimbursement of actual out-of-pocket costs in connection with Liquor Operations after Closing, (C) expire on the earlier to occur of the 180th day after Closing or the issuance of a new Liquor License to Buyer or its nominee, and (D) otherwise be in form and substance reasonably acceptable to Seller and Buyer. Buyer’s obligation to proceed to Closing shall not be conditioned upon the issuance of the Liquor License.

7.2.2    Transfer of Liquor Inventory.  Notwithstanding any other provision of this Agreement, the Liquor Inventory shall be sold and transferred to Buyer (or Buyer’s nominee) only in such manner as complies with applicable alcoholic beverage control Laws and the terms of the Liquor License. In no event shall there be a reduction in the Purchase Price or a proration credit in Buyer’s favor if, as of the Closing, the Liquor Inventory is not able to be sold and transferred in a manner complying with the

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applicable alcoholic beverage control Laws and the terms of the Liquor Licenses; provided, however, that if Seller is required by such Laws to dispose of the Liquor Inventory other than by sale or transfer to Buyer or Buyer’s nominee, any net proceeds to Seller from such disposition shall be credited against the Purchase Price at, or paid over to Buyer after, Closing, unless prohibited by Law.

7.3        Hotel License Agreement.  Promptly after the Effective Date, Seller shall give the notices (accompanied by a copy of this Agreement) required under Paragraph 11 of the Hotel License Agreement, notifying the licensor of a potential sale of the Hotel to Buyer. Buyer shall have the responsibility, prior to the Approval Date, of satisfying itself with respect to the terms and conditions (including, without limitation, any upgrading requirements) under which the licensor under the Hotel License Agreement would grant to Buyer (or its assign) a license to operate the Hotel, from and after Closing and for a period not less than the the balance of the term of the Hotel License Agreement, as a Marriott Hotel pursuant to a form of franchise agreement as set forth in the Franchisor’s UFOC in effect at the time of Buyer’s application (the “New License”). No later than immediately following the Approval Date (unless Buyer elects to terminate this Agreement under Section 4.6), Buyer shall submit an application in the licensor’s required form for such New License, and thereafter (A) diligently prosecute such application (B) provide the licensor with any reasonably or customarily requested information regarding Buyer (and its assign, if any), (C) pay (when required) the licensor’s standard application fee (except to the extent waived by the licensor), (D) if approved by the licensor, enter into the licensor’s then standard form of license agreement (except to the extent the licensor agrees to any changes requested by Buyer), to be effective upon Closing and (E) comply with all other conditions imposed by the licensor, in accordance with its current licensing policies, for the issuance of such New License effective upon Closing. Upon Closing, Seller shall surrender its existing licenses under the Hotel Licensing Agreement, and agree to terminate those agreements, in such form as the licensor under each may reasonably require.

8.        Prorations, Credits and Other Adjustments.  At Closing, the Parties shall make the prorations and other adjustments provided below, and the net amount consequently owing to Seller or Buyer shall be added to or subtracted from the proceeds of the Purchase Price payable to Seller at Closing. Beginning as close to the anticipated Closing Date as practicable, Seller shall, in consultation with Buyer and with Buyer’s reasonable cooperation, cause to be prepared a prorations and credit statement (the “Preliminary Statement”) which shall reflect all of the prorations, credits and other adjustments in payment at Closing required under this Section 8 or under any other provision of this Agreement. As soon as the Parties have agreed upon the Preliminary Statement, they shall jointly deliver a mutually signed copy thereof to Escrow Agent. To the extent the Parties are unable to agree by Closing on any item on the Preliminary Statement, Seller’s estimation of such item shall be used and such item shall be finally resolved on the Final Statement pursuant to Section 11.

8.1        Proration of Taxes.  All real estate ad valorem taxes, general assessments and special assessments and all personal property ad valorem taxes assessed against the Hotel (generically, “Taxes”) and payable during the tax year in which Closing occurs shall be prorated between Buyer and Seller as of the Closing Date, provided that Seller shall be entitled to any

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refunds thereof which relate to the period prior to the Closing Date (and if any prorations made hereunder are made based upon assessments which are subsequently changed, appropriate adjustments of such prorated amounts shall be made by Seller and Buyer and reconciled following Closing). Taxes, which become due and payable during any following tax year, even if assessed with respect to the current tax year, shall be the responsibility of Buyer.

8.2        Proration of Expenses.  The following items of expense with respect to any portion or aspect of the Hotel shall be prorated between Seller and Buyer as of the Closing Date:

8.2.1    Periodic charges under Assumed Contracts (such as monthly rents or fixed periodic charges), but not charges made on a per-order or per-call basis.

8.2.2    Utility charges (but excluding any utility deposits).

8.2.3    Employee Liabilities for wages, salary, benefit payments and payroll taxes for the pay period(s) in which Closing occurs and for accrued Employee Leave, except to the extent that Seller is required by applicable Law or otherwise elects to determine and itself pay such liabilities accrued through the day preceding Closing.

8.2.4    Fees paid or payable for Permits to the extent such Permits are transferable.

8.2.5    Prepaid expenses, including advertising expenses, trade association and trade subscriptions, prepayments under Service Contracts and Equipment Leases.

8.2.6    All other Hotel operating expenses of a strictly periodic nature (and not based upon specific orders for goods or services) and other items incurred in the Ordinary Course and customarily prorated and adjusted in similar transactions.

To the extent reasonably practicable, though, in lieu of prorating the charges for any metered utility service, the Parties shall endeavor to have the utility read the meter as early as possible on the Closing Date, render a final bill to Seller based on such reading and bill all subsequent service following the Closing Date to Buyer.

8.3        Hotel Revenues.

8.3.1    Guest Ledger.  The open account (“Guest Ledger Account”) for each person who is a guest at the Hotel as of 12:00:01 a.m. on the date of the Closing (the “Cut Off Time”) shall be prorated between Seller and Buyer as follows:

8.3.1.1    Room and service charges (including, without limitation, room service charges, in-house movie fees, health or fitness club charges and honor bar charges) for all times preceding Cut Off Time shall be credited to Seller.

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8.3.1.2    Room and service charges for all times after Cut Off Time shall belong to Buyer.

8.3.1.3    Room and service charges for the evening of the Cut Off Time shall be divided equally between Seller and Buyer.

8.3.1.4    Other amounts shall be allocated between Seller and Buyer as of the Closing Date, based on the time such charges were actually incurred.

8.3.1.5    Any other charges incurred during the 24-hour period preceding the Cut Off Time, which cannot be fixed as to the actual time of incurrence, shall be apportioned equally between Seller and Buyer.

8.3.1.6    From the amounts apportioned to Seller under the foregoing clauses shall be deducted all applicable taxes, travel and tour agent commissions, license, reservation and franchise fees, and similar expenses accrued prior to the Cut Off Time. Any proration of revenues from Liquor Operations shall be subject to such limitations and conditions as may be imposed by applicable alcoholic beverage control Laws.

All Guest Ledger Accounts shall be assigned to Buyer at Closing, and Seller shall receive a proration credit equal to its net aggregate prorated amount under this Section 8.3.1, Buyer shall be responsible for paying any taxes and other amounts deducted from Seller’s apportioned share under Section 8.3.1.6.

8.3.2    Other Operating Revenues.        Any operating revenues not otherwise provided for in this Section 8, shall be prorated between Buyer and Seller as of Closing; but no proration shall be made of any rents or other payments which are more than thirty (30) days delinquent as of the Closing Date until such payments are actually received.

8.3.3    Other Receivables.        Except for Guest Ledger Accounts and for amounts which are assigned to Buyer pursuant to Section 9.3.2, Seller shall retain all of the Hotel receivables accrued as of the Closing Date.

8.4        Hotel Payables.  At Closing, Buyer shall receive a proration credit equal to the the aggregate estimated amount of all Hotel Payables relating to Hotel expenses included in the Preliminary Statement and Buyer shall assume the obligation to satisfy all of the Hotel Payables included in such estimate (as evidenced by a schedule which Seller shall prepare and submit to Buyer as part of the Preliminary Statement). Seller shall remain responsible for all Disputed Payables and for all Hotel Payables that are not included on such schedule.

8.5        Credit for Certain Inventories.  Seller shall receive a credit (based upon the original net invoice price paid by it) from Buyer for all full, unopened Inventory (subject, however, to Section 7.2.1, in the case of the Liquor Inventory) transferred to Buyer at Closing. For purposes of the foregoing sentence, an individual container shall not be considered opened if the container itself is not opened but the crate, box or pallet including such container and other

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similar containers shall have been opened. The amount of such credit shall be based on an actual inventory of such Inventory by Seller’s and Buyer’s representatives.

8.6        Credits for Reservation Deposits. Buyer shall receive a proration credit equal to the aggregate amount of all outstanding Reservation Deposits.

8.7        Credits for Cash Banks. Seller shall receive a proration credit equal to the aggregate balance of all Cash Banks as of Closing.

8.8        Regarding Hotel Prorations Generally. Unless this Section 8 expressly provides otherwise: (A) all prorations hereunder with respect to the Hotel shall be made as of 12:00:01 a.m., local time (for the Hotel), on the Closing Date, (B) all prorations shall be made on an actual daily basis, and (C), for purposes of such prorations, all items of revenue and expense with respect to the Hotel’s operations shall be classified and determined in accordance with the Uniform System of Accounts.

8.9        Utility Deposits; Loan Impounds and Debt Service. Notwithstanding any other provision of this Agreement, no prorations shall be made or credits allowed with respect to any utility deposits, impound accounts with respect to any Lien, or any interest, prepayment premium or other payments on any Lien, all of which shall remain the sole property or obligation of Seller.

8.10        Landscaping Letter of Credit. . At Closing, Buyer shall provide a substituted letter of credit to replace the current letter of credit held by the Town of Newton in connection with the required landscaping of the Hotel.

8.11        Marriott PIP. At Closing Seller shall be obligated to deliver to Escrow Agent, for the benefit of Buyer, an amount equal to one hundred fifty percent (150%) of the difference between (i) the estimated cost of the Required PIP Work as set forth on Exhibit R and (ii) the cost (as set forth on Exhibit R) of any of the Required PIP Work that has been completed through the Closing Date (the “PIP Escrow”). The PIP Escrow shall be held by Escrow Agent and shall be released to Buyer upon submission of paid invoices to Escrow Agent relating to the completion of such outstanding items, provided that such amount shall not exceed the amount of the value of such item or items set forth on Exhibit R. At such time as Seller delivers evidence reasonably satisfactory to Buyer that the all of Required PIP Work has been completed to the satisfaction of Marriott the remaining balance of the PIP Escrow shall be delivered to Seller. In the event that Seller fails to complete the Required PIP Work, the Buyer shall be entitled to the PIP Escrow as its sole and exclusive remedy for any such breach or failure.

9.        Conditions to Closing.

9.1        In Buyer’s Favor. In addition to the conditions specified in Section 4, Buyer’s obligation to close shall be subject to timely satisfaction of each of the following conditions:

9.1.1    Performance of Seller’s Obligations. Performance by Seller in all material respects of its obligations under this Agreement to be performed at or before Closing.

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9.1.2    Accuracy of Representations. The accuracy in all material respects, as of Closing, of each of the representations set forth in Section 5.1 as if made on the Closing Date, subject to changes in represented facts that (A) are expressly permitted or required by this Agreement, or (B) result from the activity of Buyer or anyone acting at the direction or on behalf of Buyer.

9.1.3    Termination of Hotel Management Agreement. Seller shall have caused the Hotel Management Agreement to be terminated, at Seller’s sole cost and expense.

9.1.4    Hotel License Agreement. Marriott shall have provided Buyer with written notice (the “Franchise Agreement Approval Notice”) that, it has approved the Buyer’s franchise application and is prepared to grant Buyer the New License pursuant to a form of franchise agreement as set forth in the Franchisor’s UFOC in effect at the time of Buyer’s application as of the Closing Date, and the New License shall have been executed effective as of the Closing Date.

9.1.5    Termination of Service Contracts. Seller shall have terminated those Service Contracts specified by Buyer pursuant to Section 2.1 hereof to be terminated.

9.1.6    Title. Seller has taken the actions required of it and delivered to the Title Company the items required to be provided by it in accordance with the provisions of Section 4.3 including, without limitation, the owner’s title affidavit to be delivered pursuant to Section 10.2.1.8, together with such other items as Seller has agreed in writing to provide.

If any of the conditions specified in this Section is not timely satisfied (or waived by Buyer in writing), Buyer shall have the right to terminate this Agreement by giving written notice of such termination to Seller and Escrow Agent by the Last Closing Date (but, in any event, before Closing actually occurs). After Closing, Buyer shall not have any right to terminate this Agreement or rescind its purchase of the Hotel by reason of the failure of any such condition, whether or not such failure was known to or discoverable by Buyer prior to Closing.

9.2    In Seller’s Favor. The obligation of Seller to close Escrow shall be subject to timely satisfaction of each of the following conditions:

9.2.1    Performance of Buyer’s Obligations. Performance by Buyer in all material respects of Buyer’s obligations under this Agreement to be performed at or before Closing.

9.2.2    Accuracy of Representations. The accuracy in all material respects, as of Closing, of each of the representations of Buyer set forth in Section 5.2.

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9.2.3    Hotel License Agreement. Marriott shall have provided Buyer with written notice (the “Franchise Agreement Approval Notice”) that, it has approved the Buyer’s franchise application and is prepared to grant Buyer the New License pursuant to a form of franchise agreement as set forth in the Franchisor’s UFOC in effect at the time of Buyer’s application as of the Closing Date , and the New License shall have been executed effective as of the Closing Date and the Hotel License Agreement is terminated without payment by or penalty to Seller by the licensor effective at Closing.

If any condition specified in this Section 9.2 is not timely satisfied (or waived by Seller in writing), Seller shall have the right to terminate this Agreement by giving written notice of such termination to Buyer and Escrow Agent by the Last Closing Date (but, in any event, before Closing actually occurs). After Closing, Seller shall not have any right to terminate this Agreement or rescind its purchase of the Hotel by reason of the failure of any such condition, whether or not such failure was known to or discoverable by Seller prior to Closing.

9.3        Pre-Closing Damage or Destruction.

9.3.1    Termination Rights. If, prior to Closing, all or a material part of any of the Hotel Premises is damaged, destroyed or taken by eminent domain (a “Casualty”), either Party shall have the right, at its election, to terminate this Agreement, by written notice given to the other Party by the Last Closing Date (but, in any event, before Closing actually occurs). If a Casualty occurs fewer than ten (10) Business Days before the Last Closing Date (but, in any event, before Closing actually occurs), either Party shall have the right to extend the Last Closing Date until the tenth (10^th) Business Day after the occurrence of such Casualty in order to make the election permitted by this Section.

9.3.2    If No Termination. If a Casualty occurs and neither Party has or elects to exercise the right under Section 9.3.1 to terminate this Agreement, this Agreement shall continue in force and, upon Closing, Buyer shall be entitled to all insurance proceeds, condemnation awards or other amounts which have been paid or may thereafter be payable to or for the account of Seller by any person in connection with such Casualty (“Proceeds”), except that Seller shall retain the right to Proceeds payable under business interruption or rent loss insurance to the extent applicable to periods before the Closing, and the Proceeds of property hazard insurance to the extent Seller has incurred costs to repair or replace property damaged as a result of such Casualty). At Closing, Seller shall, except to the extent entitled to retain Proceeds under the preceding sentence, pay over to Buyer the amount of any Proceeds already received by Seller, shall assign Buyer all of Seller’s rights to Proceeds which may then be or thereafter become payable and shall credit Buyer with the lesser of (A) the amount of any applicable insurance deductible or (B) the reasonably estimated cost of

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repairing, restoring or replacing the portion of the Hotel damaged by such Casualty to its condition as existed immediately prior to such Casualty.

9.3.3    Material Part. For purposes of this Section, a Casualty shall be deemed to affect a material part of the Hotel Improvements or the Hotel Parcel if: (A) such Casualty results in either (A) a permanent loss of market value of the Hotel equal to more than five percent (5%) of the Purchase Price or (B) damage or loss reasonably estimated to cost more than five percent (5%) of the Purchase Price to repair or replace.

10.        Closing.

10.1        Time, Place and Manner.  Closing shall occur on or before the Last Closing Date, through escrow, at the offices of the Escrow Agent; but if either Party so requests at least ten days before the scheduled Closing Date, Closing shall be a “New York style” or “lawyers’” closing at the offices of Seller’s Counsel in Boston, Massachusetts (the “Place of Closing”). In the event of a non-escrow Closing, the Transactors shall meet at the Place of Closing as early as practicable on the scheduled Closing Date to effect Closing (and shall also meet at the Place of Closing in advance of the scheduled Closing Date, as reasonably required to effect a timely Closing). Even with a non-escrow Closing, in order to confirm concurrent delivery of the Purchase Price and delivery of title to the Hotel Premises, Buyer’s funds for Closing and the Transfer Instruments to be recorded shall be delivered into Escrow for Closing, in accordance with this Agreement. The Closing shall be completed such that the Purchase Price (as debited and credited pursuant to Article 8) shall be wire to the bank account or accounts designated by Seller no later than 1 p.m. Eastern Time on the Closing Date.

10.2        Seller’s Deliveries.

10.2.1    Pre-Closing.  On or before the Last Closing Date, Seller shall deliver to Escrow Agent the following funds and documents (“Seller’s Closing Deliveries”):

10.2.1.1    The Deed and any other Transfer Instruments (if any) to be recorded at Closing, each duly executed and acknowledged by Seller, for recording at Closing in the official land records of the county where the Hotel is located.

10.2.1.2    A counterpart of the FIRPTA Certificate of Seller, duly executed.

10.2.1.3    If an escrow Closing, each of the items specified in Section 10.2.2.

10.2.1.4    Evidence of termination of the Hotel Management Agreement.

10.2.1.5    Evidence of the termination of the Service Contracts specified by Buyer pursuant to Section 2.1.

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10.2.1.6    Evidence of termination of the Hotel License Agreement.

10.2.1.7    A counterpart of the Interim Liquor Agreement, if applicable.

10.2.1.8    An owner’s title affidavit in the form attached as Exhibit Q, duly executed by Seller, provided that such affidavit shall not subject Seller to any liabilities other than as required by Section 4.3.

10.2.2    At Closing. At Closing, Seller shall deliver to Buyer, at the Place of Closing (except as otherwise indicated):

10.2.2.1    Two (2) counterparts of each of the Transfer Instruments (except those delivered to Escrow Agent pursuant to Section 10.2.1.1, which shall be constructively delivered to Buyer at Closing by recording pursuant to Section 10.2.1.1), all duly executed by Seller.

10.2.2.2    A counterpart of the FIRPTA Certificate of Seller, duly executed.

10.2.2.3    A settlement statement relating to the purchase of the Hotel (the settlement statement shall reflect that the PIP Escrow shall be deducted from Seller’s proceeds and retained by the Escrow Agent and subsequently disbursed in accordance with the provisions of Section 8.11 of this Agreement).

10.3    Buyer’s Deliveries:

10.3.1    Pre-Closing. On or before the Last Closing Date, Buyer shall deliver to Escrow Agent the following funds and documents (“Buyer’s Closing Deliveries”):

10.3.1.1    Good and immediately available funds in an amount (when added to the Deposit) equal at least to the sum of (A) the Purchase Price, plus (B) Buyer’s share of Closing costs to be paid through Escrow, plus or minus (C) the net amount owing Seller or Buyer (as the case may be) under Section 8, as shown by the Preliminary Statement.

10.3.1.2    If an escrow Closing, each of the items specified in Section 10.3.2.

10.3.1.3    A copy of the New License Agreement.

10.3.1.4    A counterpart of the Interim Liquor Agreement, if applicable.

10.3.1.5    Such documents as the Title Company may reasonably require from Buyer in order to effect Closing in accordance with this Agreement.

10.3.2    At Closing. At Closing, Buyer shall deliver to Seller, at the Place of Closing (except as otherwise indicated):

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10.3.2.1    At Closing, Buyer shall deliver to Seller, as appropriate, at the Place of Closing, two counterparts duly executed of each Transfer Instrument to be executed by Buyer.

10.3.2.2    A settlement statement relating to the purchase of the Hotel.

10.4    Closing Costs.

10.4.1    Paid By Seller. Seller shall pay:

10.4.1.1    One-half ( ¹/2) of Escrow Agent’s fees and expenses for administering Escrow.

10.4.1.2    The commission owed to Broker pursuant to a separate agreement between Seller and Broker.

10.4.1.3    The charges for deed stamps.

10.4.2    Paid by Buyer. Buyer shall pay:

10.4.2.1    All state and county real estate transfer taxes on the sale of the Hotel Premises hereunder.

10.4.2.2    All charges for the Title Report and the Title Policy, including the charge for Extended Coverage.

10.4.2.3    The cost of the Survey.

10.4.2.4    Subject to Seller’s payment of the deed stamps, all recording and filing fees and charges incurred in connection with the recording or other filing of the Transfer Instruments.

10.4.2.5    One-half ( ¹/2) of Escrow Agent’s fees and expenses for administering Escrow.

10.4.3    Other Closing Costs. Any other charges and expenses incurred in effecting Closing shall be allocated between the Parties in accordance with the custom for commercial real estate transactions in the county where the Hotel is located. Each Party shall be responsible for the fees and expenses of its Counsel and other consultants.

10.5    Completion of Closing. Closing shall be effected as follows:

10.5.1    At such time as the Transactors and Counsel have confirmed (A) the delivery to Escrow Agent of each of the items specified in Sections 10.2.1 and 10.3.1, (B) tender of delivery of each of the items specified in Sections 10.2.2 and 10.3.2, if applicable (and provided Escrow Agent has not advised the Parties of any apparent obstacle to issuing the

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Title Policy as of Closing), the Parties through their respective Transactors or Counsel shall instruct Escrow Agent to record the Deed (and any other Transfer Instruments to be recorded) in the appropriate place and (unless a lawyers’ Closing) to complete Closing by disbursing funds in accordance with Section 10.5.2 and, as appropriate, delivering Seller’s Closing Deliveries to Buyer and Buyer’s Closing Deliveries to Seller; provided, however, that Escrow Agent shall retain and disburse the PIP Escrow in accordance with the provisions of Section 8.11.

10.5.2    As soon as the events described in Section 10.5.1 have occurred, Escrow Agent shall disburse funds from Escrow as follows:

10.5.2.1    Disburse to Seller, in such respective amounts as Seller shall designate to Escrow Agent in writing before Closing, the sum of (A) the Purchase Price, minus (B) Seller’s share of Closing costs to be paid through Escrow, plus or minus (C) the net amount owing to Seller or Buyer (as the case may be) under Section 8, as shown by the Preliminary Statement.

10.5.2.2    Pay the closing costs specified in Section 10.4.

10.5.2.3    Disburse any excess funds as directed by Buyer.

Disbursements to a Party shall be made by wire transfer of current funds to an account at a commercial bank within the United States, as designated to Escrow Agent by such Party or its Counsel; but if no such account has been so designated to Escrow Agent by the Business Day immediately following the Closing Date, Escrow Agent may instead disburse by its own check, for any amount of $10,000 or less, sent on the Closing Date by messenger or overnight delivery service to the applicable Party at the address for notices to such Party hereunder.

10.5.3    So long as the Title Company is irrevocably committed to issue the Title Policy as of Closing, it shall not be a condition to disbursement of funds at Closing that the Deed or any other Transfer Instrument have first been recorded.

10.6    Escrow and Recording Instructions.    This Agreement shall also serve as instructions to the Escrow Agent/Title Company regarding the recording of instruments and disbursement of funds from Escrow; but the Parties shall jointly execute and deliver to Escrow Agent such supplementary or general instructions as may be required under any other provision of this Agreement or reasonably requested by Escrow Agent. If there is any conflict between such supplementary general instructions and the provisions of this Agreement, the latter shall control as between the Parties.

10.7    Guests’ Property.    All baggage or other property of patrons of the Hotel checked or left in care of Seller shall be listed in an inventory to be prepared in duplicate and signed by Seller’s and Buyer’s representatives on the day prior to the Closing Date. Buyer shall be responsible from and after the Closing Date and will indemnify and hold Seller, and Hotel Manager harmless from and against all claims for all baggage and property listed in such

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inventory. Seller shall indemnify and hold harmless Buyer from and against claims for baggage and property not listed in such inventory but alleged to have been left in custody at the Hotel prior to the Closing Date. All baggage or other property of guests retained by Seller as security for unpaid accounts receivable may be left at the Hotel without any responsibility or liability therefor on the part of Buyer, for a period not to exceed one month from Closing Date, within which time such baggage or other property shall be removed or otherwise disposed of by Seller.

10.7.1.1 On the Closing Date, Seller shall cause notice to be sent to all guests of the Hotel who have safe deposit boxes advising them of the pending sale of the Hotel and requesting the removal and verification of the contents of such safe deposit boxes within three (3) days after the Closing Date. Seller may have a representative present at the Hotel during such three (3) day period for the purpose of viewing such removal and verification. Boxes of guests not responding to the written notice shall be listed at the end of such three (3) day period. Such boxes shall be opened on the following day in the presence of representatives of Seller and Buyer to be agreed upon between Seller and Buyer and the contents thereof shall be recorded. Any property contained in the safe deposit boxes and so recorded and thereafter remaining in the hands of Buyer shall be the responsibility of Buyer, and Buyer hereby agrees to indemnify and save and hold Seller and Hotel Manager harmless from and against any claim or obligation arising out of or with respect to such property. Any claim with respect to property that is not listed on the inventory and that was allegedly in the safe deposit boxes prior to the inventory shall be the sole responsibility of Seller, and Seller hereby agrees to indemnify and save and hold Buyer harmless from and against any such claim.

10.8    Failure of Closing.    If Closing fails to occur by the Last Closing Date (as may be extended in accordance with the terms hereof), any Party, if not then in default of its obligations under this Agreement, shall have the right to terminate this Agreement at any time until Closing actually occurs, by giving written notice of such termination to the other Parties and to Escrow Agent.

10.9    Procedure for Termination of Escrow.    Upon any termination of this Agreement, Seller and Buyer shall each promptly give Escrow Agent written instructions to terminate Escrow and disburse the Deposit and all other funds and items (if any) then held by Escrow Agent in accordance with the provisions of this Agreement. If Parties give Escrow Agent conflicting instructions or if, upon termination of this Agreement, either Party fails to give Escrow Agent written instructions within a reasonable time to terminate Escrow:

10.9.1 Escrow Agent shall promptly notify each Party in writing of such conflicting instructions or failure to give instructions and request that the Parties deliver joint written instructions regarding such disputed matter, but Escrow Agent shall take no action to terminate Escrow or deliver funds or items out of Escrow except pursuant to such joint instructions or a final court order or judgment.

10.9.2 If the Parties fail, within sixty (60) days after Escrow Agent has made such request, to deliver to Escrow Agent joint written instructions resolving such disputed matter, Escrow Agent shall have the right to file an action in interpleader against all the Parties in any court of

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competent jurisdiction and to deposit with such court all of the funds and other items held by Escrow Agent, whereupon Escrow Agent shall be discharged from any further obligations or liability with respect to such funds and other items. The Parties, jointly and severally, shall hold harmless and indemnify Escrow Agent from and against any claim, liability and expenses resulting from such interpleader action (but, as between Seller and Buyer, the costs of such interpleader action shall be assessed in accordance with Section 16.9).

10.10    Maintenance of Confidentiality by Escrow Agent.  Except as may be otherwise required by applicable Law, Escrow Agent shall maintain the existence, terms and nature of this transaction and the identities of the Parties in strictest confidence and shall not disclose any thereof to any third party (including, without limitation, any broker) without the prior written consent of all the Parties.

11.        Post-Closing Adjustments and Agreements.

11.1    Final Closing Statement.  No later than ninety (90) days after Closing, Buyer shall prepare and deliver to Seller a final Closing statement (the “Final Statement”), which shall correct the estimates and (if necessary) other amounts used in the Preliminary Statement, based on the Hotel’s operating reports for the month immediately preceding Closing the month in which Closing occurred, on Buyer’s own post-Closing examination of the books and records of the Hotel and on facts discovered after Closing. Seller shall be deemed have agreed to the Final Statement as prepared by Buyer, except for such items as to which Seller specifically objects in a written notice given to Buyer within sixty (60) days after Buyer delivers the Final Statement to Seller.

11.2    Disputes.  If Seller gives timely and proper notice of objection to any item(s) on the Final Statement, and Seller and Buyer are unable between themselves to resolve each such action and agree upon the Final Statement within thirty (30) days after Buyer delivers the Final Statement to Seller, then any Party may submit the unresolved items to a mutually agreeable national accounting firm (or, if the Parties are unable to agree on such firm within forty (40) days after Buyer delivers the Final Statement to Seller or such firm is unwilling to handle the dispute, to a qualified neutral party designated by the American Arbitration Association office located in Boston, Massachusetts) for a determination which shall be binding and conclusive upon all Parties and shall become part of agreed Final Statement. Seller and Buyer shall pay in equal shares the fees and other expenses of such accounting firm or other designated neutral party for making such determination.

11.3    Settlement.  Within ten (10) Business Days after the Final Statement has been agreed Seller and Buyer or after the last timely objection by Seller has been resolved under Section 11.2, Buyer or Seller (as the case may be) shall pay to the other the net amount owing on the settlement for the Closing prorations, credits and other adjustments, as shown by the agreed Final Statement. Except for mathematical error manifest on the face of the Final Statement, no further adjustments or payments shall be required with respect to such prorations, credits and other adjustments.

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11.4    Completion of Required PIP Work. Following the Closing, Seller shall complete any Required PIP Work which remains uncompleted as of the Closing Date and Buyer shall allow Seller and its representatives access to the Hotel as necessary for the purpose of completing the Required PIP Work.

12.        Third-Party Claims and Obligations.

12.1    Assumed and Retained Liabilities.    Buyer shall assume all liability and obligations under, and Buyer shall hold harmless, indemnify and defend Seller from and against any and all claims, liability and losses, and expenses related thereto (including reasonable attorneys’ fees) (collectively, “Claims”), which Seller incurs by reason of any obligation or liability which is assumed by Buyer pursuant to this Agreement, including, without limitation (A) Employee Liabilities arising or accruing from and after Closing, (B) Employee Liabilities arising or accruing before Closing, to the extent that Buyer has received a proration credit therefor, (C) obligations under the Assumed Contracts arising or accruing from and after Closing or, to the extent Buyer has received a proration credit therefore, before Closing, and (D) the Hotel Payables to the extent Buyer has received a proration credit therefore. Seller shall hold harmless, indemnify and defend Buyer from and against any and all Claims which Buyer incurs by reason of any obligation or liability relating to the period prior to the Closing Date (except to the extent assumed by Buyer hereunder), including, without limitation (i) the Employee Liabilities arising or accruing prior to Closing, except to the extent that Buyer has received a proration credit therefor, (ii) any Service Contracts which are excluded from the Assumed Contracts and (iii) any Disputed Payables (or any other Hotel Payable to the extent Buyer has not received a proration credit).

12.2    Employee Liabilities.

12.2.1    Buyer’s Obligations. Upon Closing Buyer shall:

12.2.1.1    Offer to employ (or cause Buyer’s Hotel manager or operator to offer to employ) employment to a sufficient number of Eligible Employees, in the same position or job classification and at no less than the same wage or salary level as such Hotel Employee held and enjoyed immediately prior to Closing, and with reasonably equivalent benefits to prevent Seller from incurring liability under the WARN Act effective as of Closing.

12.2.1.2    Assume (A) all Employee Liabilities with respect to the Continuing Employees accruing or first arising on and after the Closing Date, or triggered by a termination of employment at the Hotel after Closing, and (B) all Employee Liabilities which have been prorated under Section 8.

Buyer shall hold harmless, indemnify and defend Seller and Hotel Manager from and against any and all Claims arising out of (A) any breach by Buyer of its obligations under this Section 12.2.1 or (B) Employee Liabilities with respect to Continuing Employees accruing or first arising on and after the Closing Date, or triggered by a termination of employment after Closing.

12.3    Indemnification of Related Persons.  Any indemnification of a Party against third-person claims contained herein shall also run in favor of such Party’s partners,

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shareholders, beneficial owners, directors, officers, employees, Affiliates, agents and managers (including, without limitation, the Hotel Manager), all of whom are intended by the Parties to be third-party beneficiaries of this Section 12.

13.        Hotel Records.

13.1.1    From and after the date hereof, until two (2) years after the Closing, Seller shall make the books and records for the period Seller owned the Hotel available to Buyer and Buyer’s independent accountants for inspection, copying and audit by Buyer’s designated accountants at Buyer’s sole cost and expense. Seller shall at Buyer’s expense provide Buyer with copies of, or access to, such factual information, accounting records and financial information for Seller’s period of ownership as may be reasonably requested by Buyer or its auditors to enable Buyer or its Affiliates to file reports or registration statements in compliance with the rules and regulations of the Securities and Exchange Commission. This Section 12.4.1 shall survive the Closing for a period of two (2) years.

13.1.2    Seller shall retain the originals of all Hotel Records other than Service Contracts and Equipment Leases assigned to Buyer. As reasonably required for tax filings, preparation and auditing of financial statements, other reporting and purposes, Buyer shall have the right to make and retain copies of the Hotel Records and to disclose information contained therein. Seller shall also make the Hotel Records available to Buyer and its authorized representatives, at reasonable times and upon reasonable prior notice, and allow Buyer to make copies thereof; and Seller shall not dispose of any Hotel Records prior to the fifth anniversary of Closing without giving Buyer at least 30 days’ prior written notice and opportunity to recover the same.

14.        Assignment.  Neither this Agreement nor any of Buyer’s rights hereunder may be assigned, encumbered or transferred without Seller’s prior written consent. Notwithstanding the foregoing, prior to Closing, Buyer shall have a one-time right to assign or transfer its rights under this Agreement to a corporation, partnership, limited liability company or other entity which is wholly owned and controlled, directly or indirectly, by Buyer, provided that (i) Buyer gives Seller at least ten days’ prior written notice of such assignment, (ii) the assignee concurrently with such assignment assumes, in a written instrument delivered and satisfactory in form to Seller, all of the obligations and liabilities of Buyer hereunder and (iii) such assignment shall not invalidate, or require the revision or resubmission of request for, any third party consent necessary for Closing (including, without limitation, the New Licenses) or otherwise delay Closing. Provided that such assignee maintains an unencumbered net worth of at least equal to 20% of the Purchase Price for nine (9) months after the Closing Date, then any assignment of this Agreement undertaken in accordance with the provisions of this Section 14 shall operate to release the Buyer named herein from the obligations and liabilities of Buyer hereunder.

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15.        Notices.  Except in the case (if any) where this Agreement expressly provides for an alternate form of communication, any notice, consent, demand or other communication to be delivered to a Party hereunder shall be deemed delivered and received when made in writing and transmitted to the applicable Party either by receipted courier service, or by the United States Postal Service, first class registered or certified mail, postage prepaid, return receipt requested, by electronic facsimile transmission (“Fax”), or email at the address or addresses indicated for such Party below (and/or to such other address as such Party may from time to time by written notice designate to the other):

If to Seller:	c/o The Procaccianti Group
	1140 Reservoir Avenue
	Cranston, RI 02920
	Attention: Gregory D. Vickowski
	Fax: (401) 943-6320
	Email: gvick@tpgcompanies.com
with a copies to:	Greenberg Traurig, LLP
	One International Place
	Boston, MA 02110
	Attention: James P. Redding, Esq.
	Fax: (617) 897-0961
	Email: reddingj@gtlaw.com
and to	Patrick K. Fox
	Managing Member and General Counsel
	Rockpoint Group, L.L.C.
	Woodlawn Hall at Old Parkland
	3953 Maple Avenue, Suite 300
	Dallas, TX 75219
	Fax:     972-934-0100
	Email: pfox@rockpointgroup.com
and to	Adam Burinescu
	Rockpoint Group, LLC
	500 Boylston Street
	Suite 1880
	Boston, MA 02116
	Fax: 617-437-7011
	Email: aburinescu@rockpointgroup.com
and to	Bryan Clancy
	Charles River Realty Investors, LLC
	2310 Washington Street
	Newton, MA 02462
	Fax      (617) 527-0775
	Email: BClancy@CRReal.com

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If to Buyer:	Chesapeake Lodging Trust
	1997 Annapolis Exchange Parkway, Suite 410
	Annapolis, MD 21401
	Attention: Graham Wootten
	Fax: 410-972-4180
with a copy to:	Hogan Lovells US LLP
	555 Thirteenth Street NW
	Washington, D.C. 20004
	Attention: Carol Weld King
	Fax: (202) 637-5910

and shall be deemed delivered and received (A), if delivered or transmitted before 5:00 p.m. recipient’s local time on a Business Day, or if tendered for delivery between the hours 9:00 a.m. and 5:00 p.m. recipient’s local time on a Business Day and refused, then on the date of actual (or refused) delivery or actual transmission as evidenced by postal or courier receipt (or by a completed transmission log sheet generated by the sending telecopier) and (B), otherwise, on the Business Day next following the date of actual delivery or transmission; provided, however, that any communication delivered by Fax must be confirmed within three Business Days by duplicate notice delivered as otherwise provided herein and any refused delivery must re-tendered within two Business Days.

16.         General Provisions.

16.1    Confidentiality.  Except for Permitted Disclosures (defined below), (A) Buyer shall keep confidential the terms of this Agreement, and (B) until and unless the Closing occurs, Buyer shall keep confidential all information regarding the Hotel. In addition, except as required by Law, no party shall issue any press release or communication with the public prior to Closing without the prior written consent of the other. As used herein, “Permitted Disclosures” include only (i) disclosures by Buyer to its attorneys, accountants and other consultants as reasonably necessary in negotiation of this Agreement, the conduct of due diligence, the consummation of the transactions contemplated hereby and the exercise of Buyer’s rights and the performance its duties hereunder, (ii) disclosure to any government regulatory agency which requests the information in question in the course of its regulatory functions, and (iii) any other disclosure required by Law (including, without limitation, in response to any subpoena). In the case of any Permitted Disclosure described in clause (i) above, Buyer shall advise the person to whom such disclosure is made of the confidential nature of any information disclosed and obtain from such person an undertaking to respect such confidentiality. Any confidentiality agreement regarding the Hotel or the transactions contemplated by this Agreement previously made between the Parties or their agents shall continue in full force and effect and shall not be deemed to have merged into, or been superseded by, this Agreement.

16.2      Effect of Termination. Upon any termination of this Agreement, no Party shall have any further obligation or liability to the other hereunder except (i) as provided below

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(regarding Buyer’s return or destruction of materials received from Seller), (ii) any liability which any Party may have hereunder by reason of the fact that termination either (A) was wrongfully made by it or (B) resulted from a breach of its covenants or other obligations hereunder and (iii) any obligation of Seller under Sections 4.6 or 16.9. Within thirty (30) days after termination of this Agreement without Closing, Buyer shall either return to Seller all materials of a confidential nature which Buyer has received from Seller pursuant to this Agreement or confirm to Seller in writing that Buyer has destroyed all such materials. Within thirty (30) days after Seller’s request following the termination of this Agreement without Closing, Buyer shall deliver to Seller all reports, studies and analyses prepared by third parties at Buyer’s request or direction relating to the Hotel Premises (unless this Agreement has been terminated due to the default of Seller).

16.3    Construction; Participation in Drafting. Each Party acknowledges that it and its Counsel have participated substantially in the drafting of this Agreement and agree that, accordingly, in the interpretation and construction of this Agreement, no ambiguity, real or apparent, in any provision hereof shall be construed against a Party by reason of the role of such Party or its Counsel in the drafting of such provision.

16.4    No Third-Party Beneficiaries. Except as expressly provided in Section 12.3, nothing in this Agreement is intended or shall construed to confer any rights or remedies on any person other than the Parties and their active successors and assigns, or to relieve, discharge or alter the obligations of any third person to either Party or to give any third person any right of subrogation or action over against Party. Without limiting the generality of the foregoing, no Hotel Employee shall be deemed a third party beneficiary of any provision of this Agreement.

16.5    Integration and Binding Effect. This Agreement constitutes the entire agreement among the Parties pertaining to the subject matter hereof and supersedes all prior agreements, understandings and representations of the Parties with respect to the subject matter hereof (including, without limitation, any letter of intent, offer sheet, broker’s set-up, disclosure materials, offering circular or other such written materials of any kind). This Agreement may not be modified, amended, supplemented or otherwise changed, except by a writing executed by all Parties. Except as otherwise expressly provided herein, this Agreement shall bind and inure to the benefit of the Parties and their respective successors and assigns.

16.6    Computation of Time. Any time period specified in this Agreement which would otherwise end on a non-Business Day shall automatically be extended to the immediately following Business Day.

16.7     Captions. Article and section headings used herein are for convenience of reference only and shall not affect the construction of any provision of this Agreement.

16.8    Further Assurances. The Parties shall cooperate with each other as reasonably necessary to effect the provisions of this Agreement, shall use reasonable and good faith efforts to satisfy conditions to Closing and, at and after Closing, shall each execute and deliver such additional instruments or other documents as the other Party may reasonably request to accomplish the purposes and intent of this Agreement; provided, however, that nothing in this

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Section shall be deemed to enlarge the obligations of the Parties hereunder or to require any to incur any material expense or liability not otherwise required of it hereunder.

16.9        Enforcement Costs.  Should either Buyer or Seller institute any action or proceeding to enforce any provision of this Agreement or for damages by reason of any alleged breach of any provision hereof, the prevailing Party shall be entitled to recover from the other Party all costs and expenses (including reasonable attorneys’ fees) incurred by such prevailing Party in connection with such action or proceeding. A Party also shall be entitled to recover all costs and expenses (including reasonable attorneys’ fees) incurred in the enforcement of any judgment or settlement in its favor obtained in such action or proceeding (and in any such judgment, provision shall be made for the recovery of such post-judgment costs and expenses.)

16.10        GOVERNING LAW.  THIS AGREEMENT SHALL BE DEEMED TO BE AN AGREEMENT MADE UNDER THE LAW OF THE STATE WHERE THE HOTEL PREMISES ARE LOCATED AND FOR ALL PURPOSES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH SUCH LAWS.

16.11        Counterparts.  This Agreement, and any amendment hereto, may be executed in any number of counterparts and by each Party on Separate counterparts, each of which when executed and delivered shall be deemed an original and all of which taken together shall constitute but one and the same instrument.

17.        Exhibits.  Each of the following exhibits is hereby incorporated into and made an integral of this Agreement:

A	Legal Description of Hotel Parcel
B	Form of Deed
C	Form of Bill of Sale
D	Permitted Exceptions
E	Form of Assignment and Assumption of Assumed Contracts
F	Form of General Assignment and Assumption
G	Form of FIRPTA Certificate
H	Exceptions to Seller Representations
I	Schedule of Employee Agreements and Employee Plans
J	Schedule of Contracts
K	Schedule of Equipment Leases
L	Allocation of Purchase Price
M	Marriott PIP
N	Marriott PIP Waivers
O	Schedule of Existing Environmental Reports, Survey and Title Report
P	Third Party Approvals and Consents
Q	Form of Owner’s Title Affidavit
R	Required PIP Work
S	Bookings

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Seller shall have the right, at any time no later than ten Business Days after the Effective Date, to deliver to Buyer either the initial or an amended version of any or all of Exhibits H, I, J, K, M N, O, and P.

18.        Limitation on Remedies for Seller’s Breach. In the event Seller in breach of this Agreement fails to close, then, provided that Purchaser is not in material default under this Agreement on the Closing Date, Purchaser shall be entitled, as its sole remedy, to either (i) the return of the Deposit together with all interest thereon or (ii) to seek specific performance of this Agreement, provided that any action for specific performance must be initiated no later than thirty (30) days after the default by Seller. Upon Seller providing such remedies to Purchaser, neither Seller nor Purchaser shall have any rights against or obligations to the other arising out of this Agreement, except for obligations that expressly survive termination of this Agreement.

19.        LIQUIDATED DAMAGES AND LIMITATIONS OF REMEDIES FOR BUYER’S BREACH. IF BUYER IN BREACH OF THIS AGREEMENT FAILS TO CLOSE, THEN UPON WRITTEN NOTICE OF TERMINATION (A “TERMINATION NOTICE”) FROM SELLER TO BUYER AND ESCROW AGENT, THIS AGREEMENT SHALL TERMINATE (EXCEPT FOR THIS SECTION AND BUYER’S OBLIGATIONS PURSUANT TO SECTIONS 4.6, 16.2 AND 16.9). THE PARTIES ACKNOWLEDGE AND AGREE BY INITIALING THIS SECTION 19 THAT:

19.1    IF BUYER FAILS TO CLOSE IN BREACH OF THIS AGREEMENT, SELLER WILL INCUR CERTAIN COSTS AND OTHER DAMAGES IN AN AMOUNT THAT WOULD BE EXTREMELY DIFFICULT OR IMPRACTICAL TO ASCERTAIN.

19.2    THE DEPOSIT, TOGETHER WITH ALL INTEREST EARNED THEREON, BEARS A REASONABLE RELATIONSHIP TO THE DAMAGES WHICH THE PARTIES ESTIMATE MAY BE SUFFERED BY SELLER BY REASON OF SUCH A FAILURE OF CLOSING TO OCCUR, AND THE DEPOSIT AND INTEREST IS NOT AN AMOUNT WHICH IS UNREASONABLE UNDER THE CIRCUMSTANCES EXISTING AT THE TIME THIS AGREEMENT IS MADE (BUYER ACKNOWLEDGING AND AGREEING THAT BUYER HAS FULLY CONSIDERED THE PROVISIONS OF THIS SECTION 19 AND SUCH CIRCUMSTANCES PRIOR TO ENTERING INTO THIS AGREEMENT AND HAS CONSULTED WITH BUYER’S COUNSEL WITH RESPECT THERETO); AND

19.3    UPON DELIVERY TO ESCROW AGENT BY SELLER OF A PROPERLY GIVEN TERMINATION NOTICE, SELLER SHALL BE ENTITLED TO RECEIVE AND RETAIN THE DEPOSIT, TOGETHER WITH ALL INTEREST EARNED THEREON, AS LIQUIDATED DAMAGES, WHICH DAMAGES SHALL BE SELLER’S SOLE REMEDY HEREUNDER IF BUYER IN BREACH OF THIS AGREEMENT FAILS TO CLOSE, AND BUYER SHALL FORTHWITH INSTRUCT ESCROW AGENT TO RELEASE THE DEPOSIT AND ALL INTEREST EARNED THEREON TO SELLER AND TO RETURN TO SELLER ALL DOCUMENTS AND INSTRUMENTS THERETOFORE DEPOSITED INTO THE ESCROW BY OR ON BEHALF OF THEM; PROVIDED, HOWEVER, THAT THE DEPOSIT SHALL BE IN ADDITION TO AND NOT IN LIEU OF ANY AMOUNTS OWED TO SELLER BY BUYER AS A RESULT OF BUYER’S OBLIGATIONS PURSUANT TO

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SECTIONS 4.6, 16.2 AND 16.9; AND PROVIDED FURTHER THAT SELLER SHALL BE ENTITLED TO RECOVER FROM BUYER ATTORNEYS’ FEES AND OTHER DIRECT OUT-OF-POCKET COSTS INCURRED BY THEM IN CONNECTION WITH THE ENFORCEMENT OR DEFENSE OF OBLIGATIONS CONTAINED IN THIS SECTION 19.

IN FURTHER EVIDENCE OF THEIR AGREEMENT TO THIS LIQUIDATED DAMAGES PROVISION, SELLER AND BUYER HAVE INITIALED BELOW:

SELLER:                       BUYER:                     

[SIGNATURE PAGES FOLLOW]

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IN WITNESS WHEREOF, the undersigned has caused this Agreement to be executed and delivered, each its own representative thereunto duly authorized, as of the date first above written.

SELLER:	CR/TPG NEWTON HOTEL LLC, a Delaware limited liability company
		By:	Proc Capital Fund V, LLC, its Manager
Date:                                     , 2010		By:	/s/ James Procaccianti
		Name:	James Procaccianti
		Title:	Manager

[SELLER’S SIGNATURE PAGE]

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IN WITNESS WHEREOF, the undersigned has caused this Agreement to be executed and delivered, each its own representative thereunto duly authorized, as of the date first above written.

BUYER:	CHESAPEAKE LODGING, L.P., a Delaware limited partnership
		By:	CHESAPEAKE LODGING TRUST, a Maryland real estate investment trust, its general partner
Date:    6 - 30                                , 2010		By:	/s/ Rick Adams
		Name:	Rick Adams
		Title:	Senior Vice President, Chief Investment Officer

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[BUYER’S SIGNATURE PAGE]

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The undersigned hereby accepts this Agreement as its escrow instructions and agrees to act as Escrow Agent hereunder, in accordance with the terms and conditions hereof.

National Land Tenure Co. LLC
By:	/s/ Brian J. Fitzgerald
Name:	Brian J. Fitzgerald
Title:	Counsel
Date:	, 2010

[ESCROW AGENT’S SIGNATURE PAGE]

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EX-31.1

Exhibit 31.1

CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, James L. Francis, President and Chief Executive Officer, certify that:

(1) I have reviewed this report on Form 10-Q of Chesapeake Lodging Trust;

(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 trustees (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: August 13, 2010

/s/ James L. Francis

President and Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Douglas W. Vicari, Executive Vice President, Chief Financial Officer and Treasurer, certify that:

(1) I have reviewed this report on Form 10-Q of Chesapeake Lodging Trust;

(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 trustees (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: August 13, 2010

/s/ Douglas W. Vicari

Executive Vice President,

Chief Financial Officer and Treasurer

EX-32.1

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 Chesapeake Lodging Trust (the “Company”) on Form 10-Q for the period ended June 30, 2010, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, James L. Francis, 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 the best of my knowledge:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; 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: August 13, 2010

/s/ James L. Francis

President and Chief Executive Officer

EX-32.2

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 Chesapeake Lodging Trust (the “Company”) on Form 10-Q for the period ended June 30, 2010, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Douglas W. Vicari, Executive Vice President, Chief Financial Officer and Treasurer 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 the best of my knowledge:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; 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: August 13, 2010

/s/ Douglas W. Vicari

Executive Vice President,

Chief Financial Officer and Treasurer