10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

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

For the fiscal year ended December 31, 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)

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class	Name of Exchange On Which Registered
Common Shares of Beneficial Interest, $.01 par value	New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Exchange Act of 1934.    Yes  ¨    No  x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934.    Yes  ¨    No  x

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 if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.    ¨

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 June 30, 2010, the aggregate market value of the registrant’s common shares held by non-affiliates of the registrant was approximately $111,187,469 based on the closing price reported on the New York Stock Exchange. As of February 15, 2011, there were 18,608,829 shares of the registrant’s common shares issued and outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

None

CHESAPEAKE LODGING TRUST

INDEX

		Page
PART I
Item 1.	Business		2
Item 1A.	Risk Factors		9
Item 1B.	Unresolved Staff Comments		27
Item 2.	Properties		27
Item 3.	Legal Proceedings		27
Item 4.	(Removed and Reserved)		27
PART II
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities		28
Item 6.	Selected Financial Data		30
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		31
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk		36
Item 8.	Financial Statements and Supplementary Data		36
Item 9.	Changes in and Disagreements With Accountants on Accounting and Financial Disclosure		36
Item 9A.	Controls and Procedures		36
Item 9B.	Other Information		36
PART III
Item 10.	Trustees, Executive Officers and Corporate Governance		37
Item 11.	Executive Compensation		42
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters		57
Item 13.	Certain Relationships and Related Transactions, and Trustee Independence		61
Item 14.	Principal Accounting Fees and Services		62
PART IV
Item 15.	Exhibits and Financial Statement Schedules		64

CAUTIONARY STATEMENT REGARDING 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 similar expressions, whether in the negative or affirmative. 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 those discussed in “Business,” “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and elsewhere in this Form 10-K. These risks and uncertainties 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.

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PART I

Item 1. Business

Overview

Chesapeake Lodging Trust is a self-advised real estate investment trust (REIT) that was organized in the state of Maryland on June 12, 2009. We are focused on investments in primarily upper-upscale hotel properties in major business and convention markets and, on a selective basis, premium select-service and extended-stay hotel properties in urban settings or unique locations in the United States of America (“U.S.”). We believe current industry dynamics have and will continue to create attractive opportunities to acquire high-quality hotel properties, at prices well below replacement costs, with attractive yields on investment and significant upside potential. We completed our initial public offering in January 2010 and have since acquired or committed to acquire the following six hotel properties:

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
Le Meridien San Francisco	San Francisco, CA		360	December 15, 2010
Homewood Suites Seattle Convention Center	Seattle, WA		195	Under contract

Substantially all of our assets are held by, and all of our operations are conducted through, Chesapeake Lodging, L.P., our operating partnership (the “Operating Partnership”). In order for us to qualify as a REIT, neither our company nor the Operating Partnership can operate hotels directly. Therefore, the Operating Partnership leases its hotels to CHSP TRS LLC (“CHSP TRS” or “our 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 a taxable REIT subsidiary (“TRS”) for federal income tax purposes.

Our corporate office is located at 1997 Annapolis Exchange Parkway, Suite 410, Annapolis, Maryland 21401. Our telephone number is (410) 972-4140.

Industry

Historically, the lodging industry in the U.S. has been cyclical in nature. Generally, lodging industry performance correlates with macroeconomic conditions in the U.S. Fluctuations in lodging demand and, therefore, operating performance, are caused largely by general economic and local market conditions, which affect levels of business and leisure travel. Recovery in lodging demand has generally lagged improvement in the overall economy. In addition to general economic and local market conditions, new hotel room supply has the potential to further exacerbate the negative impact of an economic recession. Lodging supply growth is typically driven by overall lodging demand, as extended periods of strong demand growth tend to encourage new hotel development. However, the rate of supply growth is also influenced by a number of additional factors, including availability and cost of capital, construction costs and local market considerations.

Beginning in 2008, the U.S. lodging industry experienced a significant downturn due to a decline in consumer and business spending as a result of the weakness in the global economy, particularly the turmoil in the credit markets, erosion of consumer confidence and increasing unemployment. As a result, lodging demand from both leisure and business travelers decreased significantly in 2008 and 2009, with 2009 marking the greatest decline over the 22-year period that Smith Travel Research has tracked the lodging industry. This decreased demand for hotel rooms, together with modest increases in hotel room supply in 2008 and 2009 due to the completion of hotel properties under development before the global recession, resulted in declines in occupancy and reductions in room rates as hotels competed more aggressively for guests. These events have had a substantial negative

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impact on revenue per available room (“RevPAR”). According to Smith Travel Research, Inc., a leading source of lodging industry information, RevPAR declined 16.7% in 2009, the largest decline recorded since they began tracking the U.S. lodging industry 22 years ago, and a significantly larger decline than the two most recent lodging industry downturns in 1991 and 2001-2002, which are considered two of the worst periods in modern U.S. lodging industry history.

Throughout 2010, we saw progressive trends of improved fundamentals in the U.S. lodging industry. In the first quarter of 2010, fundamentals in the U.S. lodging industry began showing trends of improvement with demand for rooms increasing in almost all of the major markets, as general economic indicators began to experience improvement. With lodging demand increasing, pricing power began to return in the second quarter of 2010 in a 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. These positive trends continued, strengthened and expanded to other markets during the third and fourth quarters of 2010. RevPAR increased 5.5% in 2010 as compared to 2009, as reported by Smith Travel Research, which was stronger than had been anticipated in the industry. For 2011, we expect an even greater increase in RevPAR, which we believe will be led primarily by gains in ADR resulting from shifts in business mix and rate negotiations as occupancy levels have stabilized. Furthermore, with supply of available rooms expected to rise at a significantly slower pace over the next several years than during 2006-2008, we expect these meaningful growth trends to be supported for several years to come.

Market Opportunity

We believe the next several years will present opportunities to acquire hotels at prices below replacement costs, with attractive yields and significant upside potential. From 2003 to 2008, pricing of hotel properties in the U.S. appreciated well in excess of the properties’ underlying performance, primarily driven by record levels of debt financing. From 2008 through early 2010, a significant correction in the price of hotel properties occurred, primarily as a result of the impact of the economic downturn on the lodging industry. In addition during this period, due to the widely publicized credit crisis, the market for commercial mortgage backed securities (“CMBS”) was virtually closed, and many traditional real estate lenders, such as national and regional banks and insurance companies, saw their balance sheets impaired, which resulted in a severe contraction in available debt financing for hotel properties.

We believe the combined effects of the severe decline in hotel operating performance, the limited availability of debt financing from traditional real estate lenders, and the decline in hotel property valuations from 2007 levels (in some cases below current debt balances), will yield increased levels of foreclosures, restructurings and distressed hotel asset sales from a range of sellers, including national and regional banks, insurance companies, private equity funds, real estate mezzanine debt investors, hotel owners and CMBS special servicers. We believe this will continue to create opportunities for well-capitalized and qualified buyers to acquire high-quality hotel properties at discounts to replacement cost, with substantial appreciation potential if and to the extent the U.S. economy recovers.

Business Strategy

We believe the following investment criteria and strategy promote the growth of our company and our ability to deliver strong total returns to our shareholders:

External growth. We focus our investments primarily in upper-upscale hotel properties in major business and convention markets and, on a selective basis, in premium select-service and extended-stay hotel properties in urban settings or unique locations in the U.S. We believe these types of hotel properties currently offer the opportunity for stronger returns than hotel properties in other segments of the industry due to increasing lodging demand, particularly among business travelers, given the resumption in growth of the U.S. economy in 2010.

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We pursue investment opportunities primarily in upper-upscale hotel properties operating under national franchise brands, with which our executive officers have existing relationships, such as Hyatt^®, Hyatt Regency^®, Hilton^®, Marriott^®, Renaissance^®, Sheraton^® and Westin^®. In some instances, we may also invest in premium select-service and extended-stay brands, such as Hyatt Place^®, Courtyard by Marriott^®, Hilton Garden Inn^®, Homewood Suites by Hilton^®, and Residence Inn by Marriott^® or boutique hotels (unbranded) located in urban settings or unique locations. We focus on acquisitions that will strengthen the overall quality of our portfolio and further diversify the portfolio by market, customer type and brand.

We seek to acquire primarily hotel properties that meet the following investment criteria:

• Strong location: hotel properties located in high barrier to entry markets in the top 25 U.S. Metropolitan Statistical Areas, in close proximity to major market demand generators;

• Market leaders: hotel properties that are proven leaders in market share, setting the rates in the market and providing superior meeting space, services or amenities; and

• Good condition: hotel properties that are well-maintained, as determined based on our review of third party property condition reports and other data obtained during our due diligence process.

Additionally, we pursue opportunities for:

• Re-branding: we evaluate opportunities to re-brand certain hotels by determining which brands are available in the market, seeking to quantify the potential improvement in revenue generation and profitability and undertaking a cost/benefit analysis of investing capital to bring the property into compliance with the standards of the selected brand. We analyze these opportunities by reviewing the revenue data of the local competitive set of hotels that are branded most similar to the proposed new brand for the property, which data we obtain from a third party, Smith Travel Research. Based on this data, we project the expected revenue for the property with the new brand and use hotel industry standards for profit margins to calculate potential profits. These additional profits are then compared to the expected capital costs for the brand conversion to calculate a return on investment, which we use to determine whether it is in our shareholders’ interests to undertake the re-branding project.

• Renovation: we consider properties that are in prime locations and are structurally sound, but have been neglected and can be purchased at attractive prices and renovated and reintroduced into the market at a cost significantly lower than what would have been spent to acquire a stabilized property or to develop a new hotel of similar quality. To assess whether to renovate a hotel property, we compare the quality and conditions of the physical property and facilities of a target property to a local competitive set of hotels and then estimate renovation costs to upgrade the property to a competitive quality standard based on its local market. If the purchase price and projected renovation costs are lower than the projected cost to acquire a comparable property of similar quality or the costs to develop a new property, it could be an attractive acquisition and renovation opportunity.

• New hotel property management: we investigate hotel management at underperforming properties to assess whether we can realize strong returns on our investment by acquiring the properties at an attractive price and replace the property’s manager with more highly qualified hotel managers. As part of our diligence efforts, we assess this potential through a review of the operating performance of the property and comparison with its local competitive set and industry standards. It could be indicative of poor management if based on this review the property underperforms or it is our belief that it could perform better.

Internal growth. We aggressively asset manage our hotel properties by employing value-added strategies (such as re-branding, renovation or changing hotel management) designed to improve the operating performance and value of our hotels. We do not operate our hotel properties, but engage reputable independent or brand management companies to operate our hotels. We structure our hotel management agreements to allow us to closely monitor the performance of our hotels and to ensure, among other things, that our third-party managers: (1) implement an approved business and marketing plan; (2) implement a disciplined capital expenditure program; and (3) establish and prudently spend appropriate furniture, fixtures and equipment reserves.

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Relationship with Hyatt

We have entered into a sourcing relationship with Hyatt Corporation, or Hyatt. Hyatt is a global hospitality company with widely recognized, industry leading brands. Hyatt manages, franchises, owns and develops Hyatt-branded hotels, resorts and residential and vacation ownership properties around the world. Hyatt operates full-service hotels under five world-recognized brands, Park Hyatt^®, Andaz^®, Grand Hyatt^®, Hyatt Regency^® and Hyatt^®. Additionally, Hyatt operates two select-service brands, Hyatt Place^® and Hyatt Summerfield Suites^® (an extended-stay brand).

Our strong relationship with Hyatt enabled us to work efficiently in acquiring the Hyatt Regency Boston from Hyatt in March 2010, and we believe that our sourcing relationship with Hyatt enhances our ability to execute our business strategy by potentially providing us with an additional source of attractive acquisition opportunities. Pursuant to our sourcing agreement, we are required, until the third anniversary of our IPO, to provide Hyatt with an exclusive right of first offer to manage or franchise each hotel we acquire, to the extent those properties are not operated under other brands and we determine that a brand relationship is desirable. Additionally, Hyatt may, in its sole discretion, identify and refer acquisition opportunities to us. We believe that our relationship with Hyatt benefits our shareholders as a result of Hyatt’s strong brands and excellent hotel management services. We are continuing to explore with Hyatt how to further our sourcing relationship in order to maximize the value of the relationship to both parties.

Hotel Operating Agreements

The following are general descriptions of our management agreements, franchise agreements and lease agreements:

Management agreements

We have entered into management agreements with third parties to manage our hotels. Our hotel managers generally have sole responsibility and authority for the hotel’s day-to-day operations and provide all managerial and other hotel employees, oversee operations and maintenance, prepare reports, budgets and projections and provide other administrative and accounting support services.

Our current management agreements generally provide for base management fees ranging from 1.0% to 4.0% of gross hotel revenues and incentive compensation 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 we have received a priority return on our investment in the hotel. The terms of our management agreements generally range from five to 20 years initially, with certain extension and renewal periods. In addition, we may, in certain circumstances, terminate each of the management agreements before the expiration of the initial term if the particular hotel fails to meet specified performance objectives, generally targeted levels of RevPAR and gross operating profit, for specified periods. In addition, certain management agreements impose conditions with respect to (1) mortgage loan financing and (2) conveyances of the hotel or any interest therein to third parties.

Franchise agreements

Of our five current hotel properties, four operate pursuant to franchise agreements from international hotel companies. For our Hyatt Regency Boston, we do not have a franchise agreement as our management agreement with Hyatt Corporation allows the hotel to operate under the Hyatt Regency brand.

Under the franchise agreements, we generally pay royalty fees ranging from 3% to 6% of room revenues and 1% to 3% of food and beverage revenues, plus additional fees for marketing, central reservation systems, and other franchisor costs that amount to between 1% and 5% of room revenues. The franchise agreements specify certain management, operational, recordkeeping, accounting, reporting and marketing standards and procedures with

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which we must comply. The agreements also obligate us to comply with the franchisor’s standards and requirements with respect to training of operational personnel, safety, maintaining specified insurance, the types of services and products ancillary to guest room services that may be provided by us, display of signs, and the type, quality and age of furniture, fixtures and equipment included in guest rooms, lobbies and other common areas. In addition, certain franchise agreements impose conditions with respect to (1) mortgage loan financing and (2) conveyances of the hotel or any direct or indirect interest therein to third parties.

Lease agreements

Our lease agreements are inter-company agreements between our property-owning subsidiaries and our TRS lessees. These agreements generally contain customary terms for third-party lease agreements, including customary terms regarding lease payments and other expenses.

Tax Status

We intend to elect and qualify to be taxed as a REIT under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”) beginning with our taxable year ended December 31, 2010. We will make this election when we file our tax return for such taxable year. To qualify as a REIT, we must meet a number of organizational and operational requirements, including a requirement that we currently distribute at least 90% of our REIT taxable income (determined before the deduction for dividends paid and excluding any net capital gains) to our shareholders. We believe that we have operated and it is our current intention to continue to operate in satisfaction of these requirements and to meet the qualifications for taxation as a REIT. As a REIT, we generally will not be subject to federal corporate income tax on that portion of our taxable income that is currently distributed to shareholders. If we fail to qualify for taxation as a REIT in any taxable year, we will be subject to federal income taxes at regular corporate rates (including any applicable alternative minimum tax) and may not be able to qualify as a REIT for four subsequent taxable years. Even if we qualify for taxation as a REIT, we may be subject to certain state and local taxes on our income and property, and to federal income and excise taxes on our undistributed taxable income. In addition, taxable income from activities conducted by CHSP TRS is subject to federal, state and local income taxes.

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.

Competition

We believe that competition for the acquisition of hotels is highly fragmented. We face competition from institutional pension funds, private equity investors, other REITs and numerous local, regional and national owners, including franchisors. Some of these entities may have substantially greater financial resources than we do and may be able and willing to accept more risk than we can prudently manage. Competition generally may increase the bargaining power of property owners seeking to sell and reduce the number of suitable investment opportunities offered to us.

The hotel industry is highly competitive. Our hotels compete with other hotels for guests in each market in which we operate. Competitive advantage is based on a number of factors, including location, convenience, brand affiliation, room rates, range of services and guest amenities or accommodations offered, and quality of customer

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service. Competition is often specific to the individual markets in which our hotels are located and includes competition from existing and new hotels operated under brands in the relevant segments. Increased competition could harm our occupancy, ADR and RevPAR, or may require us to provide additional amenities or make capital improvements that we otherwise would not have to make, which may reduce our profitability.

Regulation

Our properties are subject to various covenants, laws, ordinances and regulations, including regulations relating to common areas and fire and safety requirements. We believe each of our hotels has the necessary permits and approvals to operate its business, and each is adequately covered by insurance.

Americans with Disabilities Act

Our properties must comply with Title III of the Americans with Disabilities Act of 1990 (“ADA”) to the extent that such properties are “public accommodations” as defined by the ADA. Under the ADA, all public accommodations must meet federal requirements related to access and use by disabled persons. The ADA may require removal of structural barriers to access by persons with disabilities in certain public areas of our properties where such removal is readily achievable. Although we believe that the properties in our portfolio substantially comply with present requirements of the ADA, we have not conducted a comprehensive audit or investigation of all of our properties to determine our compliance, and one or more properties may not be fully compliant with the ADA. Noncompliance with the ADA could result in the incurrence of additional costs to attain compliance. The obligation to make readily achievable accommodations is an ongoing one, and we will continue to assess our properties and to make alterations as appropriate in this respect.

Environmental matters

Our hotels are subject to various U.S. federal, state and local environmental laws that impose liability for contamination. Under these laws, governmental entities have the authority to require us, as the current owner of the property, to perform or pay for the clean up of contamination (including hazardous substances, waste or petroleum products) at, on, under or emanating from the property and to pay for natural resource damages arising from such contamination. Such laws often impose liability without regard to whether the owner or operator or other responsible party knew of, or caused such contamination, and the liability may be joint and several. Because these laws also impose liability on persons who owned the property at the time it became contaminated, it is possible we could incur cleanup costs or other environmental liabilities even after we sell properties. Contamination at, on, under or emanating from our properties also may expose us to liability to private parties for costs of remediation and/or personal injury or property damage. In addition, environmental laws may create liens on contaminated sites in favor of the government for damages and costs it incurs to address such contamination. If contamination is discovered on our properties, environmental laws also may impose restrictions on the manner in which the property may be used or businesses may be operated, and these restrictions may require substantial expenditures. Moreover, environmental contamination can affect the value of a property and, therefore, an owner’s ability to borrow funds using the property as collateral or to sell the property on favorable terms or at all. Furthermore, persons who sent waste to a waste disposal facility, such as a landfill or an incinerator, may be liable for costs associated with cleanup of that facility.

Some of our properties may have contained historic uses which involved the use and/or storage of hazardous chemicals and petroleum products (e.g., storage tanks, gas stations, dry cleaning operations) which, if released, could have impacted our properties. In addition, some of our properties may be near or adjacent to other properties that have contained or currently contain storage tanks containing petroleum products or conducted or currently conduct operations which utilize other hazardous or toxic substances. Releases from these adjacent or surrounding properties could impact our properties.

Independent environmental consultants have conducted Phase I environmental site assessments on all of the properties in our portfolio and we intend to conduct Phase I environmental site assessments on properties we

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acquire in the future. Phase I site assessments are intended to discover and evaluate information regarding the environmental condition of the surveyed property and surrounding properties. These assessments do not generally include soil samplings, subsurface investigations or an asbestos survey. None of the existing Phase I site assessments revealed any past or present environmental condition that we believe would have a material adverse effect on our business, assets or results of operations. However, the assessments may have failed to reveal all environmental conditions, liabilities or compliance concerns. Material environmental conditions, liabilities or compliance concerns may have arisen after the review was completed or may arise in the future; and future laws, ordinances or regulations may impose material additional environmental liability.

In addition, our hotels are subject to various federal, state, and local environmental, health and safety regulatory requirements that address a wide variety of issues, including, but not limited to, storage tanks, air emissions from emergency generators, storm water and wastewater discharges, lead-based paint, mold and mildew, and waste management. Some of our hotels routinely handle and use hazardous or regulated substances and wastes as part of their operations, which are subject to regulation (e.g., swimming pool chemicals or biological waste). Our hotels incur costs to comply with these environmental, health and safety laws and regulations and could be subject to fines and penalties for non-compliance with applicable laws. However, we are aware of no past or present environmental liability for non-compliance with environmental laws that we believe would have a material adverse effect on our business, assets or results of operations.

Certain hotels we currently own or those we acquire in the future contain, may contain, or may have contained, asbestos-containing material (“ACM”). Environmental, health and safety laws require that ACM be properly managed and maintained, and include requirements to undertake special precautions, such as removal or abatement, if ACM would be disturbed during maintenance, renovation, or demolition of a building. Such laws regarding ACM may impose fines and penalties on building owners, employers and operators for failure to comply with these requirements or expose us to third-party liability. However, we manage such ACM under asbestos operations and maintenance plans, which we have developed and implemented at each of our hotel properties where there is known ACM or for which suspected ACM is present.

When excessive moisture accumulates in buildings or on building materials, mold growth may occur, particularly if the moisture problem remains undiscovered or is not addressed over a period of time. Some molds may produce airborne toxins or irritants. Indoor air quality issues can also stem from inadequate ventilation, chemical contamination from indoor or outdoor sources, and other biological contaminants, such as pollen, viruses and bacteria. Indoor exposure to airborne toxins or irritants above certain levels can be alleged to cause a variety of adverse health effects and symptoms, including allergic or other reactions. As a result, the presence of significant mold or other airborne contaminants at any of our properties could require us to undertake a costly remediation program to contain or remove the mold or other airborne contaminants from the affected property or increase indoor ventilation. In addition, the presence of significant mold or other airborne contaminants could expose us to liability from third parties if property damage or personal injury occurs. We are not presently aware of any indoor air quality issues at our properties that could result in a material adverse effect on our business, assets or results of operations.

Employees

As of February 15, 2011, we had seven employees. All persons employed in the day-to-day operations of our hotels are employees of the management companies engaged by our TRS lessees to operate such hotels.

Available Information

We maintain an Internet site, www.chesapeakelodgingtrust.com, which contains additional information concerning Chesapeake Lodging Trust. We make available free of charge through our Internet site our filings with the Securities and Exchange Commission the (“SEC”) as soon as reasonably practicable after we electronically file such materials with, or furnish them to, the SEC. We also post on our Interest site our Code of

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Business Conduct and Ethics, Principles of Corporate Governance, and the charters of our Audit, Compensation, and Nominating and Corporate Governance Committees of our board of trustees. We intend to disclose on our website any changes to, or waivers from, our Code of Business Conduct and Ethics. Information on our Internet site is neither part of nor incorporated into this Form 10-K.

Item 1A. Risk Factors

Our business faces many risks. The risks described below may not be the only risks we face. Additional risks that we do not yet know of or that we currently believe are immaterial may also impair our business operations. If any of the events or circumstances described in the following risk factors actually occur, our business, financial condition or results of operations could suffer, our ability to make cash distributions to our shareholders could be impaired and the trading price of our common shares could decline. You should know that many of the risks described may apply to more than just the subsection in which we grouped them for the purpose of this presentation.

Risks related to our business and properties

We have a limited operating history, own only five hotel properties currently and may not be able to successfully operate our business or generate sufficient operating cash flows to sustain or increase distributions to our shareholders.

We were organized in June 2009 and commenced operations upon completion of our IPO in January 2010. Our ability to sustain or increase distributions to our shareholders depends on many factors, including the financial performance of our properties, the availability of additional attractive acquisition opportunities that satisfy our investment strategies and our success in identifying and consummating them on favorable terms, the level and volatility of interest rates, readily accessible short-term and long-term financing on favorable terms and conditions in the financial markets, the real estate market and the economy, as to which no assurance can be given. We face competition in acquiring attractive properties. We cannot assure you that we will be able to acquire properties with attractive returns or will not seek properties with greater risk to obtain the same level of returns or that the value of our properties in the future will not decline substantially. Furthermore, there can be no assurance that our five current hotel properties will continue to generate sufficient operating cash flows to pay our operating expenses and enable us to sustain or increase the amount or rate of distributions we make to our shareholders.

The geographic concentration of our properties in three metropolitan areas could leave us disproportionately vulnerable to an economic downturn, regulatory changes or acts of nature in those areas, which could adversely affect our operating performance and cash available for shareholder distributions.

As of the date of this report, our hotel investments have been concentrated in and around the metropolitan areas of Boston, Massachusetts, Los Angeles, California and San Francisco, California. As a result, the economic conditions in these states generally, and these metropolitan areas specifically, as well as changes in laws and regulations, unforeseen acts of nature, demographics and similar factors that may result in decreased travel or lodging demand in these areas could adversely affect revenues, costs and operating performance at our properties, which could have a material adverse effect on our results of operations and the amount of cash available for distributions to our shareholders.

Failure of the lodging industry to exhibit sustained improvement or to improve as expected may adversely affect our ability to execute our business plan.

A substantial part of our business plan is based on our belief that the lodging markets in which we invest will experience improving economic fundamentals in the future. In particular, our business strategy is dependent on our expectation that key industry performance indicators, especially RevPAR, will continue to improve in 2011 and industry performance will accelerate for several years thereafter. There can be no assurance as to whether or to what extent, lodging industry fundamentals will continue to improve. In the event conditions in the industry do

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not sustain improvement or improve as we expect, or deteriorate, our ability to execute our business plan may be adversely affected.

Because our officers have broad discretion to invest our available cash and the borrowing capacity available from time to time under our revolving credit facility, they may make investments where the returns are substantially below expectations or which result in net operating losses.

Our officers have broad discretion, within the general investment policies established by our board of trustees, to invest our available cash and borrowing capacity and to determine the timing of such investments. In addition, our investment policies may be amended or revised from time-to-time at the discretion of our board of trustees, without a vote of our shareholders. Such discretion could result in investments that may not yield returns consistent with investors’ expectations or with which you may not agree. These factors may increase the uncertainty, and thus the risk, of investing in our common shares. Our failure to invest our available funds effectively or find suitable properties to acquire in a timely manner or on acceptable terms could result in returns that are substantially below expectations or result in losses, which could have a material adverse effect on our business, financial condition, results of operations and our ability to make distributions to our shareholders.

In addition, a portion of our executive officers’ bonus compensation for 2011 is linked to the amount of capital we deploy during the year. This compensation system may provide them with incentives to invest our available funds during 2011, even if suitable opportunities are not available on acceptable terms. As a result, properties acquired may not yield favorable returns.

We cannot assure you that we will be able to identify assets that meet our investment objectives, that we will be successful in consummating any investment opportunities we identify or that one or more investments we may make will generate revenue, income or cash flow. Our inability to do any of the foregoing could materially and adversely affect our results of operations and cash flows and our ability to make distributions to our shareholders.

Our success depends on key personnel whose continued service is not guaranteed.

We depend on the efforts and expertise of our president and chief executive officer and our executive vice president, chief financial officer, and treasurer to manage our day-to-day operations and strategic business direction. The loss of their services, and our inability to find suitable replacements, could have an adverse effect on our operations.

We may not succeed in managing our growth, in which case our financial results could be adversely affected.

As of the date of this report, we have only seven employees. Our ability to grow our business depends upon our senior executive officers’ business contacts and their ability to successfully hire, train, supervise and manage additional personnel. We may not be able to hire and train sufficient personnel or develop management, information and operating systems suitable for our expected growth. If we are unable to manage any future growth effectively, our operations and financial results could be adversely affected.

Our returns could be negatively impacted if our third-party hotel managers do not manage our properties in our best interests.

Since U.S. federal income tax laws restrict REITs and their subsidiaries from operating or managing a hotel, we do not operate or manage our hotels. Instead, we lease all of our hotels to our TRS and our TRS retains third-party managers to operate our hotels pursuant to management agreements. Our cash flow from the hotels may be adversely affected if our managers fail to provide quality services and amenities or if they, our franchisors, or their respective affiliates fail to maintain a quality brand name. In addition, our hotel managers or their affiliates may manage, and in some cases may own, may have invested in or may have provided credit support or operating guarantees to hotels that compete with our hotels, any of which could result in conflicts of interest. As a result, our hotel managers may make decisions regarding competing lodging facilities that are not in our best interests.

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We do not have the authority to require any hotel to be operated in a particular manner or to govern any particular aspect of the daily operations of any hotel (for instance, setting room rates). Thus, even if we believe our hotels are being operated inefficiently or in a manner that does not result in satisfactory occupancy rates, RevPAR and ADR, we are not able to force the management company to change its method of operation of our hotels. If necessary, we generally will attempt to resolve issues with our hotel managers through discussions and negotiations. However, if we are unable to reach satisfactory results through discussions and negotiations, we may choose to litigate the dispute or submit the matter to third-party dispute resolution. We can only seek redress if a management company violates the terms of the applicable management agreement with our TRS, and then only to the extent of the remedies provided for under the terms of the management agreement. In the event that we need to replace any of our management companies, we may be required by the terms of the management agreement to pay substantial termination fees and may experience significant disruptions at the affected hotels.

Funds spent to maintain franchisor operating standards or the loss of a franchise license may reduce cash available for shareholder distributions.

Certain of our hotel properties operate under franchise agreements and we anticipate that some of the hotels we acquire in the future also will operate under franchise agreements. We are therefore subject to the risks inherent in concentrating our hotel properties in several franchise brands. These risks include reductions in business following negative publicity related to one of our brands.

The maintenance of the franchise licenses for our hotels is subject to our franchisors’ operating standards and other terms and conditions. Franchisors periodically inspect our hotel properties to ensure that we and our lessees and hotel managers follow their standards. Failure by us, our TRS or one of our hotel managers to maintain these standards or other terms and conditions could result in a franchise license being terminated. If a franchise license terminates due to our failure to make required improvements or to otherwise comply with its terms, we may also be liable to the franchisor for a termination payment, which will vary by franchisor and by hotel. As a condition of our continued holding of a franchise license, a franchisor could also possibly require us to make capital expenditures, even if we do not believe the capital improvements are necessary or desirable or will result in an acceptable return on our investment. Nonetheless, we may risk losing a franchise license if we do not make franchisor-required capital expenditures.

If a franchisor terminates the franchise license, we may try either to obtain a suitable replacement franchise or to operate the hotel without a franchise license. The loss of a franchise license could materially and adversely affect the operations or the underlying value of the hotel because of the loss of associated name recognition, marketing support and centralized reservation systems provided by the franchisor. A loss of a franchise license for one or more hotels could materially and adversely affect our revenues. This loss of revenues could, therefore, also adversely affect our financial condition, results of operations and cash available for distributions to our shareholders.

Our ability to maintain quarterly distributions to our shareholders is subject to fluctuations in our financial performance, operating results and capital improvement requirements.

As a REIT, we are required to distribute at least 90% of our taxable income (excluding net capital gains) each year to our shareholders. In the event of future downturns in our operating results and financial performance or unanticipated capital improvements to our hotels, including capital improvements which may be required by our franchisors, we may be unable to declare or pay distributions to our shareholders. The timing and amount of distributions are in the sole discretion of our board of trustees which considers, among other factors, our financial performance, debt service obligations and debt covenants, and capital expenditure requirements. We intend to pay regular quarterly dividends but cannot assure you that we will continue to generate sufficient cash in order to fund distributions in the same aggregate amounts as we have paid in the past or at all.

Among the factors which could adversely affect our results of operations and our distributions to shareholders is the failure of our TRS to make required rent payments because of reduced net operating profits or operating

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losses, or increased debt service requirements and capital expenditures at our hotels, including capital expenditures required by the franchisors of our hotels. Among the factors which could reduce the net operating profits of our TRS are decreases in hotel revenues and increases in hotel operating expenses. Hotel revenue can decrease for a number of reasons, including increased competition from a new supply of hotel rooms and decreased demand for hotel rooms. These factors can reduce both occupancy and room rates at our hotels.

We lease all of our hotels to our TRS, and our TRS is subject to hotel operating risks, including risks of sustaining operating losses after payment of hotel operating expenses, including management fees. These risks can adversely affect the net operating profits of our TRS, our operating expenses and the amount of cash available for distribution to our shareholders.

Compliance with covenants in our revolving credit facility and other debt instruments may limit our freedom to operate our business and impair our ability to make distributions to our shareholders.

The terms of our revolving credit facility and other debt instruments require us to comply with customary financial and other covenants, including covenants that:

• require us to maintain minimum levels of debt to adjusted earnings before interest, taxes, depreciation and amortization, or EBITDA;

• require us to maintain maximum levels of total debt to total assets;

• require us to maintain minimum levels of tangible net worth;

• limit our ability to make certain investments;

• prevent us from employing leverage in excess of a percentage of our total asset value;

• prohibit us from making annual distributions to our shareholders in excess of 90% of our funds from operations, or FFO, over time, except for such distributions as may be required to enable us to maintain our qualification as a REIT for U.S. federal income tax purposes and prohibit us from making any distributions to shareholders while there is a continuing event of default;

• impose concentration limitations on the value and other characteristics of assets comprising the collateral pool securing the revolving credit facility; and

• limit our ability to engage in a change in control transaction without causing the amounts outstanding under the revolving credit facility to become immediately due and payable.

These restrictions may interfere with our ability to obtain financing or to engage in other business activities, which may inhibit our ability to grow our business and increase revenues. If we fail to comply with any of these requirements, then the related indebtedness, and any other debt containing cross-default or cross-acceleration rights for our lenders, could become immediately due and payable. We cannot assure you that we could pay all of our debt if it became due, or that we could continue in that instance to make distributions to our shareholders and maintain our REIT qualification.

If we are unable to repay or refinance our revolving credit facility and other debt, we may be unable to sustain or increase distributions to our shareholders and our share price may be adversely affected.

Borrowings under our revolving credit facility and our other existing and future debt subject us to many risks, including the risks that:

• our cash flow from operations will be insufficient to make required payments of principal and interest;

• our debt may increase our vulnerability to adverse economic and industry conditions;

• we may be required to dedicate a substantial portion of our cash flow from operations to payments on our debt, thereby reducing cash available for distribution to our shareholders, funds available for operations and capital expenditures, future business opportunities or other purposes;

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• the terms of any refinancing may not be as favorable as the terms of the debt being refinanced; and

• the terms of our debt may limit our ability to make distributions to our shareholders and therefore adversely affect the market price of our common shares.

If we do not have sufficient funds to repay our debt at maturity, it may be necessary to refinance this debt through additional debt financing, private or public offerings of debt securities, or additional equity financings. If we are unable to refinance our debt on acceptable terms, we may be forced to dispose of hotel properties on disadvantageous terms, potentially resulting in losses adversely affecting cash flow from operating activities. We have placed, and may continue to place, mortgages on our hotel properties to secure our debt. To the extent we cannot meet our debt service obligations, we risk losing some or all of those properties to foreclosure.

Interest expense on our debt may limit our cash available to fund our growth strategies and shareholder distributions.

Higher interest rates could increase debt service requirements on floating rate debt and could reduce funds available for operations, distributions to our shareholders, future business opportunities or other purposes.

Failure to hedge effectively against interest rate changes may adversely affect our results of operations and our ability to make shareholder distributions.

We may obtain in the future one or more forms of interest rate protection—in the form of swap agreements, interest rate cap contracts or similar agreements—to hedge against the possible negative effects of interest rate fluctuations. However, we cannot assure you that any hedging will adequately relieve the adverse effects of interest rate increases or that counterparties under these agreements will honor their obligations thereunder. In addition, we may be subject to risks of default by hedging counterparties. Adverse economic conditions could also cause the terms on which we borrow to be unfavorable. We could be required to liquidate one or more of our hotel investments at times which may not permit us to receive an attractive return on our investments in order to meet our debt service obligations.

Joint venture investments could be adversely affected by our lack of sole decision-making authority, our reliance on a co-venturer’s financial condition and disputes between us and our co-venturers.

We may co-invest in the future with third parties through partnerships, joint ventures or other entities, acquiring non-controlling interests in or sharing responsibility for managing the affairs of a property, partnership, joint venture or other entity. In such event, we would not be in a position to exercise sole decision-making authority regarding the property, partnership, joint venture or other entity. Investments in partnerships, joint ventures or other entities may, under certain circumstances, involve risks not present were a third party not involved, including the possibility that partners or co-venturers might become bankrupt or fail to fund their share of required capital contributions. Partners or co-venturers may have economic or other business interests or goals which are inconsistent with our business interests or goals, and may be in a position to take actions contrary to our policies or objectives. Such investments may also have the potential risk of impasses on decisions, such as a sale, because neither we nor the partner or co-venturer would have full control over the partnership or joint venture. Disputes between us and partners or co-venturers may result in litigation or arbitration that would increase our expenses and prevent our officers and/or trustees from focusing their time and effort on our business. Consequently, actions by, or disputes with, partners or co-venturers might result in subjecting properties owned by the partnership or joint venture to additional risk. In addition, we may in certain circumstances be liable for the actions of our third-party partners or co-venturers.

Our sourcing agreement with Hyatt does not require Hyatt to provide us with any potential acquisition opportunities and, as a result, we may not be able to grow our business as rapidly as we prefer.

We consider Hyatt’s willingness to refer potential acquisition opportunities to us, in Hyatt’s sole discretion, to be an important component of our sourcing relationship with Hyatt. Under the terms of our sourcing agreement, however, Hyatt is not obligated to refer any of these opportunities to us. Moreover, although we are obligated to

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offer Hyatt the right to manage or franchise any unbranded properties we may acquire, nothing in our agreement requires Hyatt to accept any offer we make. As a result, we may not realize the benefits of this agreement in full, which could adversely affect our financial performance.

Risks related to the hotel industry

Economic conditions may adversely affect the lodging industry.

The performance of the lodging industry has historically been closely linked to the performance of the general economy and, specifically, growth in U.S. GDP. It is also sensitive to business and personal discretionary spending levels. Declines in corporate budgets and consumer demand due to adverse general economic conditions, risks affecting or reducing travel patterns, lower consumer confidence or adverse political conditions can lower the revenues and profitability of our future hotel properties and therefore the net operating profits of our TRS. The recent global economic downturn led to a significant decline in demand for products and services provided by the lodging industry, lower occupancy levels and significantly reduced room rates.

Recovery of demand for products and services provided by the lodging industry generally trails improvement in economic conditions. Though we have seen improvement in economic and industry fundamentals, we cannot assure you that these conditions will continue to improve or that the recovery is sustainable. Worsening of the U.S. economy, if experienced, would likely have an adverse impact on our revenues and negatively affect our profitability.

Our ability to sustain the amount of distributions we make to our shareholders may be affected by various operating risks common to the lodging industry.

Our hotel properties are subject to various operating risks common to the lodging industry, many of which are beyond our control, including the following:

• competition from other hotel properties in our markets;

• over-building of hotels in our markets, which will adversely affect occupancy and revenues at the hotels we currently own or may acquire;

• dependence on business and commercial travelers and tourism;

• increases in energy costs and other expenses affecting travel, which may affect travel patterns and reduce the number of business and commercial travelers and tourists;

• increases in operating costs due to inflation and other factors that may not be offset by increased room rates;

• changes in governmental laws and regulations, fiscal policies and zoning ordinances and the related costs of compliance with laws and regulations, fiscal policies and ordinances;

• adverse effects of international, national, regional and local economic and market conditions;

• unforeseen events beyond our control, such as terrorist attacks, travel related health concerns, including pandemics and epidemics, such as H1N1 influenza (swine flu), avian bird flu and SARS, political instability, regional hostilities, imposition of taxes or surcharges by regulatory authorities, travel related accidents and unusual weather patterns, including natural disasters, such as hurricanes, tsunamis or earthquakes;

• adverse effects of a downturn in the lodging industry; and

• risks generally associated with the ownership of hotel properties and real estate, as we discuss in detail below.

These factors could reduce the net operating profits of our TRS, which in turn could adversely affect the amount or frequency of distributions we make to our shareholders.

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Our investment opportunities and growth prospects may be affected by competition for acquisitions.

We compete for investment opportunities with other entities, some of which have substantially greater financial resources than we do. This competition may generally limit the number of suitable investment opportunities offered to us, which may limit our ability to grow. This competition may also increase the bargaining power of property owners seeking to sell to us, making it more difficult for us to acquire new properties on attractive terms or at all.

Our revenues and cash available for shareholder distributions may be affected by the seasonality of the hotel industry.

The hotel industry is seasonal in nature. This seasonality can be expected to cause quarterly fluctuations in our revenues. Our quarterly earnings may be adversely affected by factors outside our control, including weather conditions and poor economic factors. As a result, we may have to enter into short-term borrowings in certain quarters in order to offset these fluctuations in revenues and to sustain the amount or quarterly rate of distributions we make to our shareholders.

The cyclical nature of the lodging industry may cause fluctuations in our operating performance.

The lodging industry is highly cyclical in nature. Fluctuations in lodging demand and, therefore, operating performance, are caused largely by general economic and local market conditions, which subsequently affect levels of business and leisure travel. In addition to general economic conditions, new hotel room supply is an important factor that can affect the lodging industry’s performance and overbuilding has the potential to further exacerbate the negative impact of an economic recession. Room rates and occupancy, and thus RevPAR, tend to increase when demand growth exceeds supply growth. Although we believe that supply growth peaked in late 2008 to early 2009, and that lodging demand has begun to rebound and will grow for the next several years, no assurances can be made. An unsustainable rebound in lodging demand or a increased growth in lodging supply, could result in returns that are substantially below expectations or result in losses, which could have a material adverse effect on our business, financial condition, results of operations and the amount of cash available for distributions to our shareholders.

Our concentration in particular segments of a single industry limits our ability to offset the risks of an industry downturn, which could adversely affect our operating performance and cash available for shareholder distributions.

Our entire business is hotel-related. Therefore, a downturn in the lodging industry, in general, and the upper-upscale segment that is the primary focus of our operations, in particular, will have a material adverse effect on our lease revenues and the net operating profits of our TRS and amounts available for distribution to our shareholders.

The ongoing need for capital expenditures at our hotel properties may limit the amounts available for shareholder distributions.

Our hotel properties will require periodic renovations and other capital improvements, including replacements, from time-to-time, of furniture, fixtures and equipment. The franchisors of our hotels also require periodic capital improvements as a condition of keeping the franchise licenses. In addition, our hotel managers and lenders require that we set aside annual amounts for capital improvements to our hotel properties. These capital improvements may give rise to the following risks:

• possible environmental problems;

• construction cost overruns and delays;

• a possible shortage of available cash to fund capital improvements and the related possibility that financing for these capital improvements may not be available to us on affordable terms; and

• uncertainties as to market demand or a loss of market demand after capital improvements have begun.

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The costs of all these capital improvements could adversely affect our financial condition and amounts available for distribution to our shareholders.

Hotel development is subject to timing, budgeting and other risks. To the extent we acquire hotel properties that are under development, these risks may adversely affect our operating results and may limit the amounts available for shareholder distributions.

We may acquire hotel properties that are under development if suitable opportunities arise, taking into consideration general economic conditions. Hotel properties involve a number of development risks, including risks associated with:

• construction delays or cost overruns that may increase project costs;

• receipt of zoning, occupancy and other required governmental permits and authorizations;

• development costs incurred for projects that are not pursued to completion;

• acts of God, such as earthquakes, hurricanes, floods or fires that could adversely impact a project;

• ability to raise capital; and

• governmental restrictions on the nature or size of a project.

To the extent we invest in hotel properties under development, we cannot assure you that any development project will be completed on time, within budget, or at all. The developer’s inability to complete a project on time or within budget may adversely affect the hotel’s projected operating results and limit amounts available for distributions to our shareholders.

The hotel business is capital-intensive, and our inability to obtain financing could limit our growth.

Our hotel properties will require periodic capital expenditures and renovation to remain competitive. Acquisitions or development of additional hotel properties will require significant capital expenditures. We may not be able to fund capital improvements or acquisitions solely from cash provided from our operating activities because we must distribute at least 90% of our taxable income (net of capital gains) each year to maintain our qualification as a REIT for U.S. federal income tax purposes. As a result, our ability to fund capital expenditures, acquisitions or hotel development through any retained earnings would be limited. Consequently, we rely upon the availability of debt or equity capital to fund hotel acquisitions and improvements. Our ability to grow through acquisitions or development of hotels will be limited if we cannot obtain satisfactory debt or equity financing which will depend on market conditions. Neither our declaration of trust nor our bylaws limits the amount of debt that we can incur. However, we cannot assure you that we will be able to obtain additional equity or debt financing or that we will be able to obtain such financing on favorable terms.

The increasing use of Internet travel intermediaries by consumers may adversely affect our profitability.

Some of our hotel rooms are be booked through Internet travel intermediaries, including, but not limited to, Travelocity.com, Expedia.com and Priceline.com. As these Internet bookings increase, these intermediaries may be able to obtain higher commissions, reduced room rates or other significant contract concessions from us and our hotel managers. Moreover, some of these Internet travel intermediaries are attempting to offer hotel rooms as a commodity, by increasing the importance of price and general indicators of quality (such as “three-star downtown hotel”) at the expense of brand identification. These agencies hope that consumers will eventually develop brand loyalties to their reservations system rather than to the brands under which our properties are franchised. Although most of the business for our hotels is expected to be derived from traditional channels, if the amount of sales made through Internet intermediaries increases significantly, room revenues may flatten or decrease and our profitability could be adversely affected.

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Future terrorist attacks or changes in terror alert levels could adversely affect our growth strategies, our ability to obtain financing, our ability to insure our properties and our overall financial condition.

Previous terrorist attacks in the U.S. and subsequent terrorist alerts have adversely affected the travel and hospitality industries over the past decade. The impact that terrorist attacks in the U.S. or elsewhere could have on domestic and international markets and our business in particular is indeterminable. It is possible that such attacks or the threat of such attacks could have a material adverse effect on our business, our ability to finance our business, our ability to insure our properties and/or our results of operations and financial condition as a whole.

Uninsured and underinsured losses could adversely affect our operating results and the amount of cash available for distributions to our shareholders.

We maintain comprehensive insurance on each of the hotel properties we own, including liability, fire and extended coverage, of the type and amount we believe are customarily obtained for or by hotel owners. Various types of catastrophic losses, like earthquakes and floods, losses from foreign terrorist activities, such as those on September 11, 2001, or losses from domestic terrorist activities, such as the Oklahoma City bombing on April 19, 1995, may not be fully insurable.

In the event of a substantial loss, our insurance coverage may not be sufficient to cover the full current market value or replacement cost of our lost investment. Should an uninsured loss or a loss in excess of insured limits occur, we could lose all or a portion of the capital we have invested in a hotel, as well as the anticipated future revenue from the hotel. In that event, we might nevertheless remain obligated for any mortgage debt or other financial obligations related to the property. Inflation, changes in building codes and ordinances, environmental considerations and other factors might also keep us from using insurance proceeds to replace or renovate a hotel after it has been damaged or destroyed. Under those circumstances, the insurance proceeds we receive might be inadequate to restore our economic position on the damaged or destroyed property.

Noncompliance with governmental regulations could adversely affect our operating results.

Environmental matters

Our hotel properties are subject to various federal, state and local environmental laws. Under these laws, courts and government agencies have the authority to require us, as the owner of a contaminated property, to clean up the property, even if we did not know of or were not responsible for the contamination. These laws also apply to persons who owned a property at the time it became contaminated. In addition to the costs of cleanup, environmental contamination can affect the value of a property and, therefore, an owner’s ability to borrow funds using the property as collateral or to sell the property. Under the environmental laws, courts and government agencies also have the authority to require that a person who sent waste to a waste disposal facility, such as a landfill or an incinerator, pay for the cleanup of that facility if it becomes contaminated and threatens human health or the environment. A person that arranges for the disposal, transports for disposal, or treatment of a hazardous substance at a property owned by another may be liable for the costs of removal or remediation of hazardous substances released into the environment at that property.

Furthermore, various court decisions have established that third parties may recover damages for injury caused by property contamination. For instance, a person exposed to asbestos while staying in a hotel may seek to recover damages if he or she suffers injury from the asbestos. Lastly, some of these environmental laws restrict the use of a property or place conditions on various activities. An example would be laws that require a business using chemicals (such as swimming pool chemicals at a hotel property) to manage them carefully and to notify local officials that the chemicals are being used.

The costs to clean up a contaminated property, to defend against a claim or to comply with environmental laws could be material and could adversely affect the funds available for distribution to our shareholders. We can make no assurances that (1) future laws or regulations will not impose material environmental liabilities or

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(2) the current environmental condition of our hotel properties will not be affected by the condition of properties in the vicinity of our properties (such as the presence of leaking underground storage tanks) or by third parties unrelated to us.

Americans with Disabilities Act and other changes in governmental rules and regulations

Under the ADA, all public accommodations must meet various federal requirements related to access and use by disabled persons. Compliance with the ADA’s requirements could require removal of access barriers, and non-compliance could result in the U.S. government imposing fines or in private litigants winning damages. Although we believe that our properties substantially comply with present requirements of the ADA, we have not conducted a comprehensive audit or investigation of all of our properties to determine our compliance, and one or more properties may not be fully compliant with the ADA. Noncompliance with the ADA could result in the incurrence of additional costs to attain compliance. The obligation to make readily achievable accommodations is an ongoing one, and we will continue to assess our properties and to make alterations as appropriate in this respect. If we are required to make substantial modifications to our hotels, whether to comply with the ADA or other changes in governmental rules and regulations, our financial condition, results of operations and amount of cash available for distributions to our shareholders could be adversely affected.

We are subject to risks associated with the employment of hotel personnel, particularly with hotels that employ unionized labor, which could increase our operating costs, reduce the flexibility of our hotel managers to adjust the size of the workforce at our hotel properties and impair our ability to make distributions to our shareholders.

We have entered into management agreements with third-party hotel managers to operate our hotel properties. Our hotel managers are responsible for hiring and maintaining the labor force at each of our hotels. Although we do not directly employ or manage employees at our hotels, we are subject to many of the costs and risks generally associated with the hotel labor force, particularly those hotels with unionized labor. From time to time, hotel operations may be disrupted as a result of strikes, lockouts, public demonstrations or other negative actions and publicity. We also may incur increased legal costs and indirect labor costs as a result of contract disputes or other events. Additionally, hotels where our managers have collective bargaining agreements with employees are more highly affected by labor force activities than others. The resolution of labor disputes or re-negotiated labor contracts could lead to increased labor costs, either by increases in wages or benefits or by changes in work rules that raise hotel operating costs. Furthermore, labor agreements may limit the ability of our hotel managers to reduce the size of hotel workforces during an economic downturn because collective bargaining agreements are negotiated between the hotel managers and labor unions. We do not have the ability to control the outcome of these negotiations.

General risks related to the real estate industry

Illiquidity of real estate investments could significantly impede our ability to respond to adverse changes in the performance of our properties and harm our financial condition.

Because real estate investments are relatively illiquid, our ability to promptly sell one or more hotel properties in our portfolio in response to changing economic, financial and investment conditions may be limited. The real estate market is affected by many factors that are beyond our control, including:

• adverse changes in international, national, regional and local economic and market conditions;

• changes in interest rates and in the availability, cost and terms of debt financing;

• changes in governmental laws and regulations, fiscal policies and zoning ordinances and the related costs of compliance with laws and regulations, fiscal policies and ordinances;

• the ongoing need for capital improvements, particularly in older structures;

• changes in operating expenses; and

• civil unrest, acts of God, including earthquakes, floods and other natural disasters, which may result in uninsured losses, and acts of war or terrorism, including the consequences of the terrorist acts, such as those that occurred on September 11, 2001.

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We may decide in the future to sell one or more of our hotels. We cannot predict whether we will be able to sell any hotel property for the price or on the terms set by us, or whether any price or other terms offered by a prospective purchaser would be acceptable to us. We also cannot predict the length of time needed to find a willing purchaser and to close the sale of a hotel property.

We may be required to expend funds to correct defects or to make improvements before a hotel property can be sold. We cannot assure you that we will have funds available to correct those defects or to make those improvements. In acquiring a hotel property, we may agree to lock-out provisions that materially restrict us from selling that property for a period of time or impose other restrictions, such as a limitation on the amount of debt that can be placed or repaid on that property. These factors and any others that would impede our ability to respond to adverse changes in the performance of our properties could have a material adverse effect on our operating results and financial condition, as well as the amount of cash available for distributions to shareholders.

Increases in our property taxes would adversely affect the amount of cash available for distributions to our shareholders.

Each of our hotels is subject to real and personal property taxes. These taxes on our hotel properties may increase as tax rates change and as the properties are assessed or reassessed by taxing authorities. If property taxes increase, the amount of cash available for distributions to our shareholders may decrease.

Risks related to our organization and structure

Our rights and the rights of our shareholders to take action against our trustees and officers are limited, which could limit your recourse in the event of actions not in your best interests.

Under Maryland law generally, a trustee is required to perform his or her duties in good faith, in a manner he or she reasonably believes to be in our best interests and with the care that an ordinarily prudent person in a like position would use under similar circumstances. Under Maryland law, trustees are presumed to have acted with this standard of care. In addition, our declaration of trust limits the liability of our trustees and officers to us and our shareholders for money damages, except for liability resulting from:

• actual receipt of an improper benefit or profit in money, property or services; or

• active and deliberate dishonesty by the trustee or officer that was established by a final judgment as being material to the cause of action adjudicated.

Our declaration of trust obligates us to indemnify our trustees and officers for actions taken by them in those capacities to the maximum extent permitted by Maryland law. Our bylaws require us to indemnify each trustee or officer, to the maximum extent permitted by Maryland law, in the defense of any proceeding to which he or she is made, or threatened to be made, a party by reason of his or her service to us. In addition, we are obligated under our declaration of trust and bylaws to pay and advance the defense costs that may be incurred by our trustees and officers. As a result, we and our shareholders may have more limited rights against our trustees and officers than might otherwise exist absent the current provisions in our declaration of trust and bylaws or that might exist with other companies.

Failure to make required distributions would subject us to tax.

In order for U.S. federal corporate income tax not to apply to earnings that we distribute, each year we must pay out to our shareholders in distributions at least 90% of our REIT taxable income, subject to certain adjustments and excluding any net capital gain. To the extent that we satisfy this distribution requirement, but distribute less than 100% of our taxable income, we will be subject to U.S. federal corporate income tax on our undistributed REIT taxable income. In addition, we will be subject to a 4% nondeductible excise tax if the actual amount that we pay out to our shareholders in a calendar year is less than a minimum amount specified under U.S. federal tax laws. Our only source of funds to make these distributions comes from distributions that we receive from our operating partnership. Accordingly, we may be required to borrow money or sell assets to make distributions

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sufficient to enable us to pay out enough of our taxable income to satisfy the distribution requirement and to avoid U.S. federal corporate income tax and the 4% nondeductible excise tax in a particular year. To the extent that the terms of our revolving credit facility or other debt obligations limit our ability to distribute sufficient taxable income to comply with these distribution requirements, we could be subject to some federal corporate income tax or even fail to qualify as a REIT.

Failure to qualify as a REIT, or failure to remain qualified as a REIT, would subject us to U.S. federal income tax and potentially to state and local taxes.

We have been organized and we intend to continue to operate in a manner that will enable us to qualify as a REIT for U.S. federal income tax purposes commencing with our taxable year ended December 31, 2010.

The REIT qualification requirements are extremely complex and interpretations of the U.S. federal income tax laws governing qualification as a REIT are limited. Accordingly, we cannot be certain that we will be successful in operating so we can qualify, or remain qualified, as a REIT. At any time, new legislation, administrative guidance, or court decisions, in each case possibly with retroactive effect, may make it more difficult or impossible for us to qualify as a REIT.

Our ability to satisfy the asset tests depends upon our analysis of the characterization and fair market values of our assets, some of which are not susceptible to a precise determination, and for which we will not obtain independent appraisals. Our compliance with the REIT income and quarterly asset requirements also depends upon our ability to successfully manage the composition of our income and assets on an ongoing basis. Accordingly, there can be no assurance that the IRS will not contend that our hotel leases, interests in subsidiaries or interests in securities of other issuers will not cause a violation of the REIT requirements.

If we fail to qualify as a REIT in any taxable year, we will be subject to U.S. federal income tax, including any applicable alternative minimum tax, on our taxable income at regular corporate rates, and dividends paid to our shareholders would not be deductible by us in computing our taxable income. In addition, we could, in certain circumstances, be required to pay an excise or penalty tax (which could be significant in amount) in order to utilize one or more relief provisions under the Internal Revenue Code to maintain our qualification as a REIT. We might need to borrow money or sell hotels in order to pay any such tax. Unless we are entitled to relief under certain Internal Revenue Code provisions, we could not re-elect REIT status until the fifth calendar year after the year in which we failed to qualify as a REIT.

Dividends payable by REITs do not qualify for the reduced tax rates available for some dividends, which could adversely affect the value of our common shares if they are perceived as less attractive investments.

The maximum tax rate applicable to income from “qualified dividends” payable to U.S. shareholders that are individuals, trusts and estates has been reduced by legislation to 15% (through 2012). Dividends payable by REITs, however, generally are not eligible for the reduced rates. Although this legislation does not adversely affect the taxation of REITs or dividends payable by REITs, the more favorable rates applicable to regular corporate qualified dividends could cause investors who are individuals, trusts and estates to perceive investments in REITs to be relatively less attractive than investments in the stocks of non-REIT corporations that pay dividends, which could adversely affect the value of the shares of REITs, including our common shares.

If our leases are not respected as true leases for U.S. federal income tax purposes, we would fail to qualify as a REIT.

To qualify as a REIT, we are required to satisfy two gross income tests, pursuant to which specified percentages of our gross income must be passive income, such as rent. For the rent paid pursuant to the hotel leases with our TRS, which constitutes substantially all of our gross income, to qualify for purposes of the gross income tests, the leases must be respected as true leases for U.S. federal income tax purposes and must not be treated as service contracts, joint ventures or some other type of arrangement. We structure our leases so that the leases will be respected as true leases for U.S. federal income tax purposes, but there can be no assurance that the IRS will

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agree with this characterization. If the leases are not respected as true leases for U.S. federal income tax purposes, we will not be able to satisfy either of the two gross income tests applicable to REITs and likely would lose our REIT status.

If our TRS fails to qualify as a “taxable REIT subsidiary” under the Internal Revenue Code, we would fail to qualify as a REIT.

Rent paid by a lessee that is a “related party tenant” of ours is not qualifying income for purposes of the two gross income tests applicable to REITs. We lease all of our hotels to our TRS. So long as any TRS lessee qualifies as a TRS, it will not be treated as a “related party tenant” with respect to our properties that are managed by a qualifying independent hotel management company. We believe that our TRS will qualify to be treated as a TRS for U.S. federal income tax purposes, but there can be no assurance that the IRS will not challenge the status of our TRS for U.S. federal income tax purposes or that a court would not sustain such a challenge. If the IRS were successful in disqualifying our TRS from treatment as a TRS, it is possible that we would fail to meet the asset tests applicable to REITs and substantially all of our income would fail to qualify for the gross income tests. If we failed to meet either the asset or gross income tests, we would likely lose our REIT qualification for U.S. federal income tax purposes.

If our hotel managers do not qualify as “eligible independent contractors,” or if our hotels are not “qualified lodging facilities,” we will fail to qualify as a REIT.

Each property with respect to which our TRS lessee pays rent must be a “qualified lodging facility.” A “qualified lodging facility” is a hotel, motel, or other establishment more than one-half of the dwelling units in which are used on a transient basis, including customary amenities and facilities, provided that no wagering activities are conducted at or in connection with such facility by any person who is engaged in the business of accepting wagers and who is legally authorized to engage in such business at or in connection with such facility. As of the date hereof, we believe that all of the hotels leased to our TRS are qualified lodging facilities. Although we intend to monitor future acquisitions and improvements of hotels, the REIT provisions of the Internal Revenue Code provide only limited guidance for making determinations under the requirements for qualified lodging facilities, and there can be no assurance that these requirements will be satisfied in all cases.

If our hotel managers do not qualify as “eligible independent contractors,” we will fail to qualify as a REIT. Each of the hotel management companies that enters into a management contract with our TRS must qualify as an “eligible independent contractor” under the REIT rules in order for the rent paid to us by our TRS to be qualifying income for our REIT income test requirements. Among other requirements, in order to qualify as an eligible independent contractor a hotel manager must not own more than 35% of our outstanding shares (by value) and no person or group of persons can own more than 35% of our outstanding shares and the ownership interests of the hotel manager, taking into account only owners of more than 5% of our shares and, with respect to ownership interests in such hotel managers that are publicly traded, only holders of more than 5% of such ownership interests. Complex ownership attribution rules apply for purposes of these 35% thresholds. Although we monitor ownership of our shares by our hotel managers and their owners, and certain provisions of our declaration of trust are designed to prevent ownership of our shares in violation of these rules, there can be no assurance that these ownership levels will not be exceeded.

Provisions of our declaration of trust may limit the ability of a third party to acquire control of our company, even if our shareholders believe the change of control is in their best interest.

Common share and preferred share ownership limits

Our declaration of trust provides that, unless an exemption were to be granted by our board of trustees, no person may directly or indirectly own more than 9.8% in value or in number of shares, whichever is more restrictive, of the aggregate outstanding common shares or more than 9.8% in value or in number of shares, whichever is more restrictive, of the aggregate preferred shares of each class or series outstanding from time-to-time. These ownership limitations, as well as certain other limits intended to protect our REIT qualification, may prevent an acquisition of control of our company by a third party without our board of trustees’ approval, even if our shareholders believe the change of control is in their interest.

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Authority to issue shares of beneficial interest

Our declaration of trust authorizes our board of trustees to issue up to 400,000,000 common shares and up to 100,000,000 preferred shares without approval of our shareholders. Issuances of additional shares may have the effect of delaying or preventing a change in control of our company, including transactions at a premium over the market price of our shares, even if shareholders believe that a change of control is in their interest.

Certain provisions of Maryland law could inhibit changes in control

Certain provisions of Maryland law may have the effect of deterring a third party from making a proposal to acquire us or of impeding a change in control under circumstances that otherwise could provide the holders of our common shares with the opportunity to realize a premium over the then-prevailing market price of our common shares. The “business combination” provisions of Maryland law generally prohibit certain business combinations (including a merger, consolidation, share exchange, or, in circumstances specified in the statute, an asset transfer or issuance or reclassification of equity securities) between us and an “interested shareholder” (defined generally as any person who beneficially owns 10% or more of our then outstanding voting shares or an affiliate or associate of ours who, at any time within the two-year period prior to the date in question, was the beneficial owner of 10% or more of our then outstanding voting shares) or an affiliate thereof for five years after the most recent date on which the shareholder becomes an interested shareholder. After the five-year prohibition, any business combination between us and an interested shareholder generally must be recommended by our board of trustees and approved by the affirmative vote of at least (1) 80% of the votes entitled to be cast by holders of our outstanding voting shares; and (2) two-thirds of the votes entitled to be cast by holders of the outstanding voting shares of our company other than shares held by the interested shareholder with whom or with whose affiliate the business combination is to be effected or held by an affiliate or associate of the interested shareholder. These super-majority vote requirements do not apply if our common shareholders receive a minimum price, as defined under Maryland law, for their shares in the form of cash or other consideration in the same form as previously paid by the interested shareholder for its shares. These provisions of Maryland law do not apply, however, to business combinations that are approved or exempted by a board of trustees prior to the time that the interested shareholder becomes an interested shareholder. Pursuant to the statute, our board of trustees has by resolution exempted business combinations between us and any other person, provided that such business combination is first approved by our board of trustees (including a majority of our trustees who are not affiliates or associates of such person).

Further, under our declaration of trust, a trustee may be removed at any time, but only with cause, at a meeting of the shareholders by the affirmative vote of the holders of not less than two-thirds of the shares then outstanding and entitled to vote generally in the election of trustees.

The “control share” provisions of Maryland law provide that “control shares” of a Maryland corporation (defined as shares which, when aggregated with other shares controlled by the shareholder (except solely by virtue of a revocable proxy), entitle the shareholder to exercise one of three increasing ranges of voting power in electing trustees) acquired in a “control share acquisition” (defined as the direct or indirect acquisition of ownership or control of “control shares”) have no voting rights except to the extent approved by our shareholders by the affirmative vote of at least two-thirds of all the votes entitled to be cast on the matter, excluding votes entitled to be cast by the acquirer of control shares, our officers and our personnel who are also our trustees. Our bylaws contain a provision exempting from the control share acquisition statute any and all acquisitions by any person of our common shares. There can be no assurance that this provision will not be amended or eliminated at any time in the future.

The “unsolicited takeover” provisions of Maryland law permit our board of trustees, without shareholder approval and regardless of what is currently provided in our declaration of trust or bylaws, to implement takeover defenses, some of which (for example, a classified board) we do not yet have. These provisions may have the effect of inhibiting a third party from making an acquisition proposal for us or of delaying, deferring or preventing a change in control of us under the circumstances that otherwise could provide the holders of our common shares with the opportunity to realize a premium over the then current market price.

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Our ownership limitations may restrict or prevent you from engaging in certain transfers of our common shares.

In order to maintain our REIT qualification, no more than 50% in value of our outstanding shares may be owned, directly or indirectly, by five or fewer individuals (as defined in the U.S. federal income tax laws to include certain entities) at any time during the last half of each taxable year following our first year. To preserve our REIT qualification, our declaration of trust contains a common share ownership limit and a preferred share ownership limit and other related limitations on transfer. Generally, any common shares owned by affiliated owners will be added together for purposes of the common share ownership limit, and any shares of a given class or series of preferred shares owned by affiliated owners will be added together for purposes of the preferred share ownership limit.

If anyone transfers shares in a way that would violate the common share ownership limit or the preferred share ownership limit, or prevent us from continuing to qualify as a REIT under the U.S. federal income tax laws, those shares instead will be transferred to a trust for the benefit of a charitable beneficiary and will be either redeemed by us or sold to a person whose ownership of the shares will not violate the common share ownership limit or the preferred share ownership limit. If this transfer to a trust fails to prevent such a violation or our continued qualification as a REIT, then the initial intended transfer shall be null and void from the outset. The intended transferee of those shares will be deemed never to have owned the shares. Anyone who acquires shares in violation of the common share ownership limit or the preferred share ownership limit or the other restrictions on transfer in our declaration of trust bears the risk of suffering a financial loss when the shares are redeemed or sold if the market price of our shares falls between the date of purchase and the date of redemption or sale.

Our ownership of our TRS will be limited and our transactions with our TRS will cause us to be subject to a 100% penalty tax on certain income or deductions if those transactions are not conducted on arm’s-length terms.

A REIT may own up to 100% of the equity interest of an entity that is a corporation for U.S. federal income tax purposes if the entity is a TRS. A TRS may hold assets and earn income that would not be qualifying assets or income if held or earned directly by a REIT, including gross operating income from hotel operations pursuant to hotel management agreements. Both the subsidiary and the REIT must jointly elect to treat the subsidiary as a TRS. A corporation of which a TRS directly or indirectly owns more than 35% of the voting power or value of the stock will automatically be treated as a TRS. Overall, no more than 25% of the value of a REIT’s assets may consist of stock or securities of one or more TRSs. In addition, the TRS rules limit the deductibility of interest paid or accrued by a TRS to its parent REIT to assure that the TRS is subject to an appropriate level of corporate taxation.

Our TRS will pay U.S. federal income tax and applicable foreign, state and local income tax on its taxable income, and its after-tax net income will be available for distribution to us but is not required to be distributed by such TRS to us. We believe that the aggregate value of the stock and securities of our TRS has been and will be less than 25% of the value of our total assets (including our TRS stock and securities). Furthermore, we monitor the value of our investments in our TRS for the purpose of ensuring compliance with TRS ownership limitations. There can be no assurance, however, that we will be able to comply with the 25% limitation discussed above.

Rents paid to us by our TRS may not be based on net income or profits to qualify as “rents from real property.” We receive “percentage rents” calculated based on gross revenues of the hotels subject to leases to our TRS – not on net income or profits. We believe our rents reflect normal business practices in this regard but there can be no assurance the IRS will agree.

If the IRS determines that the rents charged under our leases with our TRS are excessive, their deductibility may be challenged at the TRS level, and we could be subject to a 100% excise tax on “re-determined rent” or “re-determined deductions” to the extent rents exceed an arm’s length amount. We believe our rents reflect normal business practices in this regard but there can be no assurance the IRS will agree.

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There have been recent reports that the IRS is conducting at least one transfer pricing audit focusing on the rental payments made by a TRS to a REIT on an intercompany lease of a hotel and that the IRS has proposed adjustments of some sort in that audit. The proposed adjustments are reportedly on appeal within the IRS administrative process.

We may in the future choose to pay dividends in our common shares instead of cash, in which case shareholders may be required to pay income taxes in excess of the cash dividends they receive.

Although we have no current intention to do so, we may, in the future, distribute taxable dividends that are payable in cash and common shares at the election of each shareholder. Under Revenue Procedure 2010-12, up to 90% of any such taxable dividend paid with respect to our 2011 taxable year could be payable in our shares. Taxable shareholders receiving such dividends will be required to include the full amount of the dividend as ordinary income to the extent of our current and accumulated earnings and profits, or E&P, for U.S. federal income tax purposes. As a result, shareholders may be required to pay income taxes with respect to such dividends in excess of the cash dividends received. If a U.S. shareholder sells the common shares that it receives as a dividend in order to pay this tax, the sales proceeds may be less than the amount included in income with respect to the dividend, depending on the market price of our shares at the time of the sale. Furthermore, with respect to certain non-U.S. shareholders, we may be required to withhold U.S. federal income tax with respect to such dividends, including in respect of all or a portion of such dividend that is payable in common shares. In addition, if a significant number of our shareholders determine to sell common shares in order to pay taxes owed on dividends, it may put downward pressure on the trading price of our common shares.

Further, while Revenue Procedure 2010-12 applies only to taxable dividends payable by us in cash or shares with respect to our 2011 taxable year, it is unclear whether and to what extent we will be able to pay taxable dividends in cash and common shares in later years. Moreover, various aspects of such a taxable cash/share dividend are uncertain and have not yet been addressed by the IRS. No assurance can be given that the IRS will not impose additional requirements in the future with respect to taxable cash/share dividends, including on a retroactive basis, or assert that the requirements for such taxable cash/share dividends have not been met.

U.S. federal income tax provisions applicable to REITs may restrict our business decisions regarding the potential sale of a hotel.

The U.S. federal income tax provisions applicable to REITs provide that any gain realized by a REIT on the sale of property held as inventory or other property held primarily for sale to customers in the ordinary course of business is treated as income from a “prohibited transaction” that is subject to a 100% excise tax. Under existing law, whether property, including hotels, is held as inventory or primarily for sale to customers in the ordinary course of business is a question of fact that depends upon all of the facts and circumstances with respect to the particular transaction. We intend to hold our hotels for investment with a view to long-term appreciation, to engage in the business of acquiring and owning hotels and to make occasional sales of hotels consistent with our investment objectives. There can be no assurance, however, that the IRS might not contend that one or more of these sales are subject to the 100% excise tax. Moreover, the potential application of this penalty tax could deter us from selling one or more hotels even though it otherwise would be in the best interests of us and shareholders for us to do so. There is a statutory safe harbor available for a limited number of sales in a single taxable year of properties that have been owned by a REIT for at least two years, but that safe harbor likely would not apply to all sales transactions that we might otherwise consider. As a result, we may not be able to vary our portfolio promptly in response to economic or other conditions or on favorable terms, which may adversely affect us.

Complying with REIT requirements may limit our ability to hedge effectively and may cause us to incur tax liabilities.

The REIT provisions of the Internal Revenue Code substantially limit our ability to hedge our liabilities. Any income from a hedging transaction we enter into to manage risk of interest rate changes with respect to borrowings made or to be made to acquire or carry real estate assets does not constitute “gross income” for purposes of the 75% or 95% gross income tests. To the extent that we enter into other types of hedging

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transactions, the income from those transactions is likely to be treated as non-qualifying income for purposes of both of the gross income tests. As a result of these rules, we may need to limit our use of advantageous hedging techniques or implement those hedges through a TRS. This could increase the cost of our hedging activities because our TRS would be subject to tax on gains or expose us to greater risks associated with changes in interest rates than we would otherwise want to bear. In addition, losses in our TRS will generally not provide any tax benefit, except for being carried forward against future taxable income in the TRS.

The ability of our board of trustees to revoke our REIT qualification without shareholder approval may cause adverse consequences to our shareholders.

Our declaration of trust provides that our board of trustees may revoke or otherwise terminate our REIT election, without the approval of our shareholders, if it determines that it is no longer in our best interest to continue to qualify as a REIT. If we cease to be a REIT, we would become subject to U.S. federal income tax on our taxable income and would no longer be required to distribute most of our taxable income to our shareholders, which may have adverse consequences on our total return to our shareholders.

The ability of our board of trustees to change our major corporate policies may not be in your interest.

Our board of trustees determines our major corporate policies, including our acquisition, financing, growth, operations and distribution policies. Our board may amend or revise these and other policies from time-to-time without the vote or consent of our shareholders.

If we fail to implement and maintain an effective system of internal controls, we may not be able to accurately determine our financial results or prevent fraud. As a result, our shareholders could lose confidence in our financial results, which could harm our business and the market value of our common shares.

Effective internal controls are necessary for us to provide reliable financial reports and effectively prevent fraud. We may in the future discover areas of our internal controls that need improvement. Section 404 of the Sarbanes-Oxley Act of 2002 requires us, after the expiration of the transition period established by rules of the SEC for newly public companies, to evaluate and report on our internal controls over financial reporting and have our independent auditors annually attest to our evaluation, as well as issue their own opinion on our internal control over financial reporting. While we intend to undertake substantial work to prepare for compliance with Section 404, we cannot be certain that we will be successful in implementing or maintaining adequate control over our financial reporting and financial processes. Furthermore, as we grow our business, our internal controls will become more complex, and we will require significantly more resources to ensure our internal controls remain effective. If we or our independent auditors discover a material weakness, the disclosure of that fact, even if quickly remedied, could reduce the market value of our common shares. Additionally, the existence of any material weakness or significant deficiency would require management to devote significant time and incur significant expense to remediate any such material weaknesses or significant deficiencies and management may not be able to remediate any such material weaknesses or significant deficiencies in a timely manner.

Risks related to share ownership

We have not established a minimum distribution payment level, and we may be unable to generate sufficient cash flows from our operations to make distributions to our shareholders at any time in the future.

We are generally required to distribute to our shareholders at least 90% of our taxable income (excluding net capital gains) each year for us to qualify as a REIT under the Internal Revenue Code, which requirement we currently intend to satisfy. To the extent we satisfy the 90% distribution requirement but distribute less than 100% of our taxable income, we will be subject to U.S. federal corporate income tax on our undistributed taxable income. In 2010, we declared two quarterly dividends each in the amount of $0.20 per common share, of which the first was paid on October 15, 2010 to each shareholder of record on September 30, 2010 and the second was paid on January 14, 2011 to each shareholder of record on December 31, 2010. No assurances can be made that we will continue to generate sufficient income to distribute similar aggregate amounts in the future.

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Subject to maintaining our REIT qualification, we intend to continue to make regular quarterly distributions to our shareholders. Our board of trustees has the sole discretion to determine the timing, form and amount of any distributions to our shareholders. Our board of trustees will make determinations regarding distributions based upon, among other factors, our historical and projected results of operations, financial condition, cash flows and liquidity, maintenance of our REIT qualification and other tax considerations, capital expenditure and other expense obligations, debt covenants, contractual prohibitions or other limitations and applicable law and such other matters as our board of trustees may deem relevant from time-to-time. The per share amount of future distributions also will be affected by the number of common and preferred shares that are outstanding from time-to-time.

Among the factors that could impair our ability to make distributions to our shareholders are:

• our inability to invest our available cash;

• our inability to realize attractive risk-adjusted returns on our investments;

• unanticipated expenses that reduce our cash flow or non-cash earnings;

• defaults in our investment portfolio or decreases in the value of the underlying assets; and

• the fact that anticipated operating expense levels may not prove accurate, as actual results may vary from estimates.

As a result, no assurance can be given that the level of any distributions we make to our shareholders in the future will achieve a market yield or increase or even be maintained over time, any of which could materially and adversely affect the market price of our common shares.

In addition, distributions that we make to our shareholders will generally be taxable to our shareholders as ordinary income. However, a portion of our distributions may be designated by us as long-term capital gains to the extent that they are attributable to capital gain income recognized by us or may constitute a return of capital to the extent that they exceed our E&P as determined for tax purposes. A return of capital is not taxable, but has the effect of reducing the basis of a shareholder’s investment in our common shares.

Our common shares have a limited trading history and are thinly traded, which may limit your ability to liquidate your investment.

Our common shares have traded on the NYSE since our IPO was completed in January 2010. During this period, the shares have traded in relatively small average daily volumes. If our common shares continue to be thinly traded, it may enhance volatility in the share price and make it difficult for investors to buy or sell shares in the public market without materially affecting the sales price. Further, investors seeking to buy or sell a large quantity of our shares in the public market may be unable to do so within one or more trading days. We cannot assure you that a more robust trading market will develop or be sustained. If limited trading in our common shares continues, it may be difficult for you to sell your shares in the public market at any given time at prevailing prices.

The market price of our equity securities may vary substantially, which may cause the value of your investment to fluctuate.

The trading prices of equity securities issued by REITs have historically been affected by changes in market interest rates. One of the factors that may influence the price of our shares in public trading markets is the annual yield from distributions on our common or preferred shares as compared to yields on other financial instruments. An increase in market interest rates, or a decrease in our distributions to shareholders, may lead prospective purchasers of our shares to demand a higher annual yield, which could reduce the market price of our equity securities.

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Other factors that could affect the market price of our equity securities include the following:

• actual or anticipated variations in our quarterly results of operations;

• changes in market valuations of companies in the hotel or real estate industries;

• changes in expectations of future financial performance or changes in estimates of securities analysts;

• fluctuations in stock market prices and volumes;

• issuances of common shares or other securities in the future;

• the addition or departure of key personnel;

• announcements by us or our competitors of acquisitions, investments or strategic alliances; and

• unforeseen events beyond our control, such as terrorist attacks, travel related health concerns including pandemics and epidemics, such as H1N1 influenza (swine flu), avian bird flu and SARS, political instability, regional hostilities, increases in fuel prices, imposition of taxes or surcharges by regulatory authorities, travel related accidents and unusual weather patterns, including natural disasters, such as hurricanes, tsunamis or earthquakes.

Future issuances of debt or equity securities ranking senior to our common shares may adversely affect the market price of our common shares.

If we decide to issue debt or equity securities in the future ranking senior to our common shares, it is possible that these securities will be governed by an indenture or other instrument containing covenants restricting our operating flexibility. Additionally, any convertible or exchangeable securities that we issue in the future may have rights, preferences and privileges more favorable than those of our common shares and may result in dilution to owners of our common shares. We and, indirectly, our shareholders, will bear the cost of issuing and servicing such securities. Because our decision to issue debt or equity securities in the future will depend on market conditions and other factors beyond our control, we cannot predict or estimate the amount, timing or nature of any future issuances. Thus holders of our common shares will bear the risk of future issuances reducing the market price of our common shares, lowering the per share amount of distributions we may pay and diluting the value of their share holdings in us.

Item 1B. Unresolved Staff Comments

None.

Item 2. Properties

As of February 15, 2011, we currently own the following five hotel properties:

Property	Number of Rooms		Location
Hyatt Regency Boston		498		Boston, MA
Hilton Checkers Los Angeles		188		Los Angeles, CA
Courtyard Anaheim at Disneyland Resort		153		Anaheim, CA
Boston Marriott Newton		430		Newton, MA
Le Meridien San Francisco		360		San Francisco, CA
Total number of rooms		1,629

Item 3. Legal Proceedings

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

Item 4. (Removed and Reserved)

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PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Market Information

Our common shares began trading on the NYSE under the symbol “CHSP” on January 22, 2010. The closing price of our common shares on the NYSE on December 31, 2010 was $18.81 per share. The following table sets forth, for the periods indicated, the high and low sales prices as reported on the NYSE and dividends declared per common share:

	Price Range				Dividends Declared
	High		Low
2010
First quarter(1)	$	20.09	$	18.70		—
Second quarter	$	19.74	$	15.64		—
Third quarter	$	18.35	$	15.06	$	.20
Fourth quarter	$	20.22	$	16.05	$	.20

(1) Information is provided only for the period from January 22, 2010 to March 31, 2010, as our common shares did not begin trading publicly until January 22, 2010.

Shareholder Information

As of February 15, 2011, there were 15 registered holders of record of our common shares. This figure does not include beneficial owners who hold shares in nominee form.

We intend to elect and qualify to be taxed as a REIT for U.S. federal income tax purposes, beginning with our taxable year ended December 31, 2010. To assist us in qualifying as a REIT, our declaration of trust includes several restrictions on ownership of our shares, including that shareholders are generally restricted from owning more than 9.8% by value or number of shares, whichever is more restrictive, of our outstanding common or preferred shares of beneficial interest.

Distribution Information

In order to qualify as a REIT, we must annually distribute to our shareholders at least 90% of our REIT taxable income (determined before the deduction for dividends paid and excluding any net capital gains). For federal income tax purposes, distributions that we make may consist of ordinary income, capital gains, nontaxable return of capital or a combination of those items. Distributions that exceed our current and accumulated earnings and profits (calculated for tax purposes) constitute a return of capital rather than a dividend, which reduces a shareholder’s basis in its shares and will not be taxable to the extent that the distribution equals or is less than the shareholder’s basis in the shares. To the extent that a distribution exceeds both current and accumulated earnings and profits and the shareholder’s basis in its shares, that distribution will be treated as a gain from the sale or exchange of that shareholder’s shares. Every year, we notify shareholders of the taxable composition of distributions paid during the preceding year. The following characterizes distributions paid per common share for the year ended December 31, 2010 (including the distribution paid on January 14, 2011, which is treated as paid on December 31, 2010 for U.S. federal income tax purposes):

	2010
	$		%
Common shares:
Ordinary income	$	0.4000		100.00	%
Return of capital		—		—
Capital gain distribution		—		—
	$	0.4000		100.00	%

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We intend to continue to declare quarterly distributions to our shareholders. The amount, timing and frequency of future distributions will be determined by our board of trustees based upon a number of factors, including:

• actual results of operations;

• the timing of the investment of proceeds from future share offerings;

• debt service requirements;

• capital expenditure requirements for our properties;

• our taxable income;

• the annual distribution requirement under the REIT provisions of the Internal Revenue Code;

• our operating expenses; and

• other factors that our board of trustees may deem relevant.

The amount of cash available for distributions to our shareholders depends upon our receipt of distributions from our operating partnership, which may depend upon receipt of lease payments from our TRS, and, in turn, upon the management of our properties by the various managers our TRS has engaged to operate our hotels. In addition to the factors outlined above, the per share amounts of future distributions will depend on the number of our common and preferred shares outstanding from time-to-time.

The terms of our revolving credit facility also limit our ability to make distributions to our shareholders. Under the terms of the revolving credit facility, provided no event of default thereunder has occurred, we may only make distributions to our shareholders so long as the payments, together with any previous such cash payments in the same fiscal year, are not in excess of the greater of (i) 90% of our funds from operations during such fiscal year and (ii) the amount required (on an annualized basis) for us to maintain our status as a REIT.

Issuer Purchases of Equity Securities

We do not currently have a repurchase plan or program in place. However, we do provide employees, who have been issued restricted common shares, the option of selling shares to us to satisfy the minimum statutory tax withholding requirements on the date their shares vest. There were no common shares purchased in the fourth quarter 2010 related to such repurchases.

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Item 6. Selected Financial Data

We were organized in the state of Maryland on June 12, 2009 and completed our initial public offering on January 27, 2010. We have since acquired five hotel properties with aggregate purchase prices of approximately $456.3 million. Our results of operations for the year ended December 31, 2010 include the operating activity of the Hyatt Regency Boston for 306 days (the effective date of the acquisition was March 1, 2010), the operating activity of the Hilton Checkers Los Angeles for 214 days (acquired on June 1, 2010), the operating activity of the Courtyard Anaheim at Disneyland Resort and Boston Marriott Newton each for 155 days (both acquired on July 30, 2010), and the operating activity of the Le Meridien San Francisco for 17 days (acquired on December 15, 2010). The following table includes selected historical financial information including results for the initial period of our operations and should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the financial statements and notes thereto, both included elsewhere in this Form 10-K.

(in thousands, except share and per share data)			Year Ended December 31, 2010
Statement of Operations Data:
Revenues			$	54,194
Hotel operating expenses, excluding depreciation and amortization				37,341
Corporate general and administrative:
Share-based compensation				1,689
Hotel property acquisition costs				3,597
Other				5,396
Net loss				(674	)
Net loss available per common share—basic and diluted				(0.07	)
Weighted-average common shares outstanding—basic and diluted				11,236,120
Other Financial Data:
Net cash provided by (used in):
Operating activities				12,199
Investing activities				(411,199	)
Financing activities				409,528
	As of December 31,
	2010		2009
Balance Sheet Data:
Cash and cash equivalents	$	10,551	$	23
Investments in hotel properties, net		400,634		—
Total assets		425,308		435
Total shareholders’ equity		305,256		1

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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

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 hotel properties in major business and convention markets and, on a selective basis, premium select-service and extended-stay hotel properties in urban settings or unique locations in the U.S. We believe current industry dynamics have and will continue to create attractive opportunities to acquire high-quality hotel properties, at prices well below replacement costs, with attractive yields on investment and significant upside potential. We completed our initial public offering in January 2010 and have since acquired or committed to acquire the following six hotel properties:

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
Le Meridien San Francisco	San Francisco, CA		360	December 15, 2010
Homewood Suites Seattle Convention Center	Seattle, WA		195	Under contract

In mid-2008, U.S. lodging demand started to decline as a result of the economic recession which led industry 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. In the first quarter of 2010, fundamentals in the U.S. lodging industry began showing trends of improvement with demand for rooms increasing in almost all of the major markets, as general economic indicators began to experience improvement. With lodging demand increasing, pricing power began to return in the second quarter of 2010 in a few of the major leading markets such as New York, NY, Boston, MA, and Washington, D.C., with gains in ADR for the first time since the economic recession started. These positive trends continued, strengthened and expanded to other markets during the third and fourth quarters of 2010. RevPAR increased 5.5% in 2010 as compared to 2009, as reported by Smith Travel Research, which was stronger than had been anticipated in the industry. For 2011, we expect an even greater increase in RevPAR, which we believe will be led primarily by gains in ADR resulting from shifts in business mix and rate negotiations as occupancy levels have stabilized. Furthermore, with supply of available rooms expected to rise at a significantly slower pace over the next several years than during 2006-2008, we expect these meaningful growth trends to be supported for several years to come.

The acquisition environment and deal activity has increased throughout the year, and has gained considerable momentum in the last half of the year. While there are numerous sources, much of the deal activity is coming from private sellers experiencing challenges 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 have seen 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 are able and willing to pay 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.

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Results of Operations

Year ended December 31, 2010

Results of operations for the year ended December 31, 2010 include the operating activity of the Hyatt Regency Boston for 306 days (the effective date of the acquisition was March 1, 2010), the operating activity of the Hilton Checkers Los Angeles for 214 days (acquired on June 1, 2010), the operating activity of the Courtyard Anaheim at Disneyland Resort and Boston Marriott Newton each for 155 days (both acquired on July 30, 2010), and the operating activity of the Le Meridien San Francisco for 17 days (acquired on December 15, 2010).

Revenues – Total revenue was $54.2 million, which includes rooms revenue of $38.5 million, food and beverage revenue of $13.8 million, and other revenue of $1.9 million.

Hotel operating expenses – Hotel operating expenses, excluding depreciation and amortization, were $37.3 million. Direct hotel operating expenses included rooms expense of $9.1 million, food and beverage expense of $9.4 million, and other direct expenses of $1.1 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 $17.8 million.

Depreciation and amortization – Depreciation and amortization expense was $4.8 million.

Intangible asset amortization – Intangible asset amortization expense relating to an air rights contract associated with the Hyatt Regency Boston was $0.4 million.

Corporate general and administrative – Total corporate general and administrative expenses were $10.7 million, which included non-cash share-based compensation expense of $1.7 million and hotel property acquisition costs of $3.6 million.

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

Interest expense – Interest expense was $2.3 million, which included interest on borrowings under our revolving credit facility and term loans, unused fees on our revolving credit facility, and amortization of deferred financing costs.

Income tax benefit – Income tax benefit was $0.6 million, which resulted from a taxable loss incurred by our TRS during the year.

Sources and Uses of Cash

For the year ended December 31, 2010, net cash flows from operating activities were $12.2 million; net cash flows used in investing activities were $411.2 million, of which $404.2 million was used to acquire five hotel properties, $2.4 million was used for improvements and additions to those properties and $2.0 million was used for a deposit on a sixth hotel property under contract that has not yet closed; and net cash flows provided by financing activities were $409.5 million, of which $310.0 million were proceeds generated from our IPO and concurrent private placements, a secondary offering and the exercises of the respective underwriters’ over-allotment options, net of underwriting fees and offering costs, and $105.0 million were net proceeds from borrowings under our revolving credit facility and a term loan secured by our Le Meridien San Francisco.

In 2010, we declared two quarterly dividends each in the amount of $0.20 per common share, of which the first was paid on October 15, 2010 to each shareholder of record on September 30, 2010 and the second was paid on January 14, 2011 to each shareholder of record on December 31, 2010. We expect to continue declaring distributions to shareholders, as required to maintain our REIT status, although no assurances can be made that we will continue to generate sufficient income to distribute similar aggregate amounts in the future. The per share

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amounts of future distributions will depend on the number of our common and preferred shares outstanding from time-to-time and will be determined by our board of trustees following its periodic review of our financial performance and capital requirements, and the terms of our revolving credit facility.

As of December 31, 2010, we had cash and cash equivalents of approximately $10.6 million. We currently expect that our operating cash flows will be sufficient to fund our continuing operations.

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 45-50% of the aggregate purchase prices of all of our portfolio properties.

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 issuances of equity 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.

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. On January 21, 2011, we amended the credit agreement to increase the maximum amount we may borrow to $150 million, and to provide for the possibility of further future increases, up to a maximum of $200 million, in accordance with the terms of the amended credit agreement. Subject to certain conditions, the revolving credit facility allows for a one-year extension. The credit agreement contains standard financial covenants, including certain leverage ratios, coverage ratios, and a minimum tangible net worth requirement. The amount 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. As of December 31, 2010, the maximum borrowing availability under the revolving credit facility was $110.4 million, of which $45.0 million had been drawn. See Note 5, “Long-Term Debt,” to our consolidated financial statements for additional information relating to our revolving credit facility and other long-term debt.

We currently have the 195-room Homewood Suites Seattle Convention Center under contract for a purchase price of $53.0 million, plus customary pro-rated amounts and closing costs. We expect to fund the purchase price by assuming approximately $27.6 million of existing mortgage debt and with available cash and borrowings under our revolving credit facility. We have already deposited $2.0 million under the purchase and sale agreement, which is non-refundable except in the event of (1) a default under the purchase and sale agreement by the seller or (2) expressly otherwise provided by the purchase and sale agreement. There can be no assurances that we will complete this acquisition.

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 and loan 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.

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

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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 December 31, 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 December 31, 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	$	1,481	$	201	$	421	$	447	$	412
Revolving credit facility, including interest(1)		49,147		2,623		46,524		—		—
Term loan, including interest(1)		63,345		63,345		—		—		—
	$	113,973	$	66,169	$	46,945	$	447	$	412

(1) Assumes no additional borrowings under the revolving credit facility and term loan and interest payments are based on the interest rate in effect as of December 31, 2010. Also assumes that no extension options are exercised. See Note 5, “Long-Term Debt,” to our consolidated financial statements for additional information relating to our revolving credit facility and term loan.

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

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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.

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.

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New Accounting Pronouncements

In December 2010, the FASB issued updated accounting guidance to clarify that pro forma disclosures should be presented as if a business combination occurred at the beginning of the prior annual period for purposes of preparing both the current reporting period and the prior reporting period pro forma financial information. These disclosures should be accompanied by a narrative description about the nature and amount of material, nonrecurring pro forma adjustments. The new accounting guidance is effective for business combinations consummated in periods beginning after December 15, 2010, and should be applied prospectively as of the date of adoption. Early adoption is permitted. We will adopt the new disclosures on January 1, 2011. We do not believe that the adoption of this guidance will have a material impact to our consolidated financial statements.

Item 7A. 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 December 31, 2010, we had $105.0 million of debt outstanding from borrowings under our revolving credit facility and term loan. Amounts borrowed under each our revolving credit facility and term loan bear interest at variable rates based on LIBOR plus 3.75%, subject to a LIBOR floor of 2.00%. Because the prevailing LIBOR is below the interest rate floor, if prevailing LIBOR on our debt under our revolving credit facility and term loan were to decrease, we would not experience any benefits in terms of reduced interest expense. Conversely, if applicable LIBOR were to increase to reach 3.00%, or a 1.00% increase over the interest rate floor in effect, the increase in interest expense on our debt would decrease future earnings and cash flows by approximately $1.1 million annually, assuming that the amount outstanding under each our revolving credit facility and term loan were to remain at $45.0 million and $60.0 million, respectively, the balances at December 31, 2010.

Item 8. Financial Statements and Supplementary Data

See Index to Financial Statements on page F-1.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

Item 9A. 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 have been no changes in the Company’s internal control over financial reporting during the last fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

This annual report does not include a report of management’s assessment regarding internal control over financial reporting or an attestation report of the company’s registered public accounting firm due to a transition period established by rules of the SEC for newly public companies.

Item 9B. Other Information

None.

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PART III

Item 10. Trustees, executive officers and corporate governance

Our board of trustees consists of seven trustees. Our board of trustees is elected annually by our shareholders in accordance with our bylaws. Our bylaws provide that a majority of the entire board of trustees may establish, increase or decrease the number of trustees, provided that the number of trustees shall never be less than one nor more than eleven. All of our executive officers serve at the discretion of our board of trustees. The following table sets forth certain information about our trustees and executive officers, as of the date of filing:

Name	Age		Position
James L. Francis		48	President, Chief Executive Officer and Trustee
Douglas W. Vicari		51	Executive Vice President, Chief Financial Officer, Treasurer and Trustee
D. Rick Adams		47	Senior Vice President and Chief Investment Officer
Graham J. Wootten		37	Senior Vice President, Chief Accounting Officer and Secretary
Thomas A. Natelli		50	Non-executive chairman of the Board of Trustees
Thomas D. Eckert		63	Trustee
John W. Hill		56	Trustee
George F. McKenzie		55	Trustee
Jeffrey D. Nuechterlein		53	Trustee

James L. Francis is our President and Chief Executive Officer and a Trustee, positions he has held since our formation. Prior to joining our Company, Mr. Francis served as the President and Chief Executive Officer and a director of Highland Hospitality Corporation (“Highland”), positions that he held from Highland’s IPO in December 2003 to its sale in July 2007. Following the sale of Highland, Mr. Francis served as a consultant to the affiliate of JER Partners that acquired Highland until September 2008. Since September 2008, until our formation, Mr. Francis was a private investor. From June 2002 until joining Highland in December 2003, Mr. Francis served as the Chief Operating Officer, Chief Financial Officer and Treasurer of Barceló Crestline Corporation, and served as Executive Vice President and Chief Financial Officer of Crestline Capital Corporation, prior to its acquisition by Barceló, from December 1998 to June 2002. Prior to the spin-off of Crestline Capital from Host Hotels & Resorts, Inc. (formerly Host Marriott Corporation), Mr. Francis held various finance and strategic planning positions with Host Marriott and Marriott International, Inc. From June 1997 to December 1998, Mr. Francis held the position of Assistant Treasurer and Vice President Corporate Finance for Host Marriott, where he was responsible for Host Marriott’s corporate finance function, business strategy and investor relations. Over a period of ten years, Mr. Francis served in various capacities with Marriott International’s lodging business, including Vice President of Finance for Marriott Lodging from 1995 to 1997; Brand Executive, Courtyard by Marriott from 1994 to 1995; Controller for Courtyard by Marriott and Fairfield Inn from 1993 to 1994; Director of Finance and Strategic Planning for Courtyard by Marriott and Fairfield Inn from 1991 to 1993; and Director of Hotel Development Finance from 1987 to 1991. Mr. Francis received his B.A. in Economics and Business from Western Maryland College and earned an M.B.A. in Finance and Accounting from Vanderbilt University. We believe Mr. Francis should serve on our board as a result of his principal role in our founding and his extensive experience in the lodging industry.

Douglas W. Vicari is our Executive Vice President, Chief Financial Officer, Treasurer and a Trustee, positions he has held since our formation. Prior to joining our Company, Mr. Vicari served as a principal with Paramount Hotel Group, a hotel owner, developer and operator, from January 2009 to June 2009. Previously, Mr. Vicari served as Executive Vice President and Chief Financial Officer of Highland from September 2003 until its sale in July 2007. Prior to joining Highland, Mr. Vicari served as Senior Vice President and Chief Financial Officer of Prime Hospitality Corp., a former NYSE-listed company acquired by an affiliate of The Blackstone Group in 2004, from August 1998 to July 2003, and also served on the board of directors of Prime Hospitality Corp. from May 1999 to July 2003. Prior to his appointment as Chief Financial Officer, he served as Vice President and Treasurer of Prime Hospitality Corp. from January 1991 to July 1998, and was an instrumental member of the management team that led the company out of bankruptcy in July 1992. From 1986 to 1991, Mr. Vicari was

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Director of Budgeting and Financial Planning for Prime Hospitality Corp, and was responsible for all budgeting, planning and forecasting. Prior to his tenure at Prime Hospitality Corp., Mr. Vicari held numerous management positions at Combustion Engineering (now ABB Brown Boveri) from 1981 to 1986. Mr. Vicari earned a B.S. in Accounting from the College of New Jersey and received his M.B.A. in Finance from Fairleigh Dickinson University. Mr. Vicari also currently serves on the board of directors and as the audit committee chairman for Thunderbird Resorts Inc. (Euronext: TBIRD), a publicly traded gaming and lodging company. We believe Mr. Vicari should serve on our board due to his principal role in our founding and his experience as a CFO for other lodging REITs.

D. Rick Adams is our Senior Vice President and Chief Investment Officer, positions he has held since November 2009. Prior to joining our Company, Mr. Adams served as Senior Vice President of Asset Management for Highland from September 2004 until its sale in July 2007. Following the sale of Highland and until October 2009, Mr. Adams continued to serve as Senior Vice President and Head of Asset Management for the affiliate of JER Partners that acquired Highland. From October 1992 to September 2004, Mr. Adams served as Vice President of Regional Operations and Development Officer for the B.F. Saul Company, a privately owned real estate company located in Washington, DC that specializes in commercial real estate and hotel management and development. Prior to his tenure at B.F. Saul, from 1986 until September 1992, Mr. Adams held numerous operational and franchise development management positions at Holiday Inns Worldwide, known today as InterContinental Hotels Group PLC. Mr. Adams received a B.S. in Management from Indiana University.

Graham J. Wootten is our Senior Vice President, Chief Accounting Officer and Secretary, positions he has held since February 2010. Previously, Mr. Wootten served in several accounting roles, including Vice President and Controller, at Highland from December 2003 until its sale in July 2007 to an affiliate of JER Partners. Following the sale of Highland and until February 2010, Mr. Wootten served in finance and accounting roles for the affiliate of JER Partners that acquired Highland, serving most recently as its Chief Financial Officer. Prior to joining Highland, Mr. Wootten held various audit positions, including Audit Senior Manager, for PricewaterhouseCoopers LLP from 1995 until 2003. Mr. Wootten holds a BSBA in accounting from John Carroll University and is a Certified Public Accountant.

Thomas A. Natelli is the non-executive chairman of the board of trustees. Since 1987, Mr. Natelli has served as President and Chief Executive Officer of Natelli Communities, a privately held real estate investment and development company. Under Mr. Natelli’s leadership, the company has earned numerous awards, including the prestigious Urban Land Institute National Award of Excellence for Large Scale Communities, Washington Metro Area Environmental Developer of the Year and Suburban Maryland Builder of the Year. Mr. Natelli currently serves on the board of the School of Engineering at Duke University. Previously, Mr. Natelli served on the board of directors and was a member of the audit and nominating and corporate governance committees of Highland from its IPO until its sale in July 2007. In 2007, Mr. Natelli formed MargRock Entertainment, a music publishing and artist development and management services company, for which he currently serves as Principal. In 1999, Mr. Natelli co-founded eStara, Inc., a privately held technology company, for which he served as Chairman and Chief Executive Officer from its inception through its sale to Art Technology Group, Inc. in October 2006. From 1993 through 2003, Mr. Natelli served on the board of trustees of Suburban Hospital Healthcare System, after which he served as Chairman of the board of trustees and headed its executive committee until 2006. He also served on the board of directors of FBR National Bank and Trust, a wholly-owned affiliate of Friedman, Billings, Ramsey Group, Inc. Mr. Natelli is a past President of the Board of the Montgomery County Chamber of Commerce, and played a central role in creating the Montgomery Housing Partnership in 1989, a non-profit organization created to preserve and expand the supply of affordable housing in Montgomery County, Maryland. Mr. Natelli received a B.S. in Mechanical Engineering from Duke University in 1982. We believe Mr. Natelli should serve on our board due to his extensive experience in the real estate industry, his entrepreneurial background and financial acumen.

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Thomas D. Eckert is a trustee. Since 1997, Mr. Eckert has served as President and Chief Executive Officer of Capital Automotive Real Estate Services, Inc., or Capital Automotive, a privately owned real estate company that owns and manages net-leased real estate for automotive retailers. Mr. Eckert was one of Capital Automotive’s Founders and led its IPO in February 1998. Mr. Eckert also served as a trustee of Capital Automotive from its founding until December 2005, when it was taken private. From 1983 to 1997, Mr. Eckert was employed by Pulte Home Corporation, a U.S. homebuilder, serving most recently as President of Pulte’s Mid-Atlantic Region. Prior to working at Pulte, Mr. Eckert spent over seven years with the public accounting firm of Arthur Andersen LLP. Mr. Eckert is currently Chairman of the Board of The Munder Funds, a $7 billion mutual fund group, and a director and member of the audit, compensation and nominating and corporate governance committees of DuPont Fabros Technology, Inc., a publicly-traded owner, developer and manager of wholesale data centers. He is also a member of the board of The Potomac School, a K-12 private school, and the Wolf Trap Foundation. In addition, Mr. Eckert is a former director of the National Association of Real Estate Investment Trusts and Fieldstone Investment Corporation. Mr. Eckert received his undergraduate degree from the University of Michigan in 1970. We believe Mr. Eckert should serve on our board due to his extensive experience in the real estate industry, including as a CEO of a publicly traded REIT.

John W. Hill is a trustee. Mr. Hill has been Chief Executive Officer of The Federal City Council, a not-for-profit, non-partisan organization dedicated to the improvement of Washington, DC, since 2004. Previously, Mr. Hill served on the board of directors and was a member of the audit and compensation committees of Highland from January 2006 until Highland’s sale in July 2007. From 2002 until 2004, Mr. Hill served as the Chief Executive Officer of In2Books, Inc. From 1999 until 2002, he was a partner with Andersen, LLP, where he was in charge of state and local consulting for North America. Previously, Mr. Hill also was a director of Marriott Corporation’s Internal Audit Division in charge of all financial and operational audits of the hotel division and has been an audit manager for Coopers & Lybrand and Price Waterhouse. Mr. Hill has served on the board and audit committee of Prestwick Pharmaceuticals Inc., a non-public company. Mr. Hill currently serves on the boards of several not-for-profit organizations, including the DC Public Library Board of Trustees, the DC Shakespeare Theatre Board, and the National Minority Aids Council. He formerly served on the boards of the DC Children and Youth Investment Trust and the Mayor’s Blue Ribbon Commission to Revitalize the DC Public Library. Mr. Hill earned a B.S. in Accounting from the University of Maryland, College Park in 1976 and passed the Maryland State CPA exam in 1977. We believe Mr. Hill should serve on our board due to his long-standing leadership role with the Federal City Council and his extensive background in accounting and financial matters.

George F. McKenzie is a trustee. Since June 2007, Mr. McKenzie has served as President and Chief Executive Officer and a trustee of Washington Real Estate Investment Trust, or WRIT, a self-administered, self-managed, equity real estate investment trust investing in income-producing properties in the greater Washington, DC metro region. Since joining WRIT in September 1996, Mr. McKenzie also served in other executive roles, including Executive Vice President, Real Estate and Chief Operating Officer. From 1985 to 1996, Mr. McKenzie served with the Prudential Realty Group, a subsidiary of Prudential Insurance Company of America, most recently as Vice President, Investment & Sales. From 1977 to 1985, Mr. McKenzie served as an officer in the U.S. Navy. He received a B.S. in Operations Analysis from the United States Naval Academy and an MBA in Finance from the University of Rhode Island. Mr. McKenzie is a member of the Economic Club of Washington, Urban Land Institute (ULI), and the National Association of Industrial & Office Properties (NAIOP). We believe Mr. McKenzie should serve on our board due to his extensive experience in the real estate industry, including as a CEO of a publicly traded REIT.

Jeffrey D. Nuechterlein is a trustee. In 2000, Mr. Nuechterlein founded Isis Capital LLC, a venture capital and hedge fund based in Alexandria, Virginia, where he has served as Managing Partner since its formation. From 1997 until 2000, Mr. Nuechterlein served as Managing Director and Chief Investment Officer for pension fund investments at National Gypsum Company. From 1995 until 1996, Mr. Nuechterlein was Senior Counsel to the U.S. Trade Representative, and prior to that he served as outside legal counsel to several U.S. semiconductor and steel companies from 1992 until 1995. Mr. Nuechterlein also served as Special Assistant for Policy to the Governor of Virginia from 1990 until 1991, and was Counsel to the U.S. Senate’s Judiciary Subcommittee on

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Technology from 1989 until 1990. Among his non-profit activities, Mr. Nuechterlein is a Past President and a Trustee of The College Foundation at the University of Virginia, a Trustee of The Potomac School, a Trustee of the Classical American Homes Preservation Trust in New York and a member of the Council on Foreign Relations. Mr. Nuechterlein received his undergraduate and law degrees from the University of Virginia in 1979 and 1986, respectively, and his master’s and D. Phil. degrees from Oxford University. We believe Mr. Nuechterlein should serve on our board due to his extensive investment experience and non-profit activities and his legal background.

Section 16(a) beneficial ownership reporting compliance

We believe that all of our trustees, executive officers and beneficial owners of more than 10% of our common shares reported on a timely basis all transactions required to be reported by Section 16(a) of the Exchange Act during fiscal 2010, except that, as a result of an administrative oversight, a Form 4 was filed late by Mr. John W. Hill to report an issuance of 474 common shares to him on June 30, 2010 in connection with a quarterly payment of his annual trustee retainer fee.

Trustee independence and corporate governance

Our board of trustees has three committees, the principal functions of which are briefly described below. Matters put to a vote by any one of our three committees must be approved by a majority of the trustees on the committee who are present at a meeting, in person or as otherwise permitted by our bylaws, at which there is a quorum or by the unanimous written consent of the trustees on that committee. Each of these committees is comprised entirely of independent trustees, as defined by the NYSE listing standards. Moreover, the compensation committee is composed exclusively of individuals intended to be, to the extent provided by Rule 16b-3 of the Exchange Act, non-employee trustees, and individuals who will, at such times as we are subject to Section 162(m) of the Internal Revenue Code, qualify as outside trustees for purposes of Section 162(m) of the Internal Revenue Code.

Audit committee. Our audit committee is composed of Messrs. Eckert, Natelli and Hill. In addition, our audit committee is required to have a designated “audit committee financial expert” within the meaning of the SEC rules. Mr. Eckert chairs the committee and has been determined by our board of trustees to be an audit committee financial expert.

The audit committee’s primary duties and assigned roles are to:

• serve as an independent and objective body to monitor and assess our compliance with legal and regulatory requirements, our financial reporting processes and related internal control systems and the performance, generally, of our internal audit function;

• oversee the audit and other services of our independent registered public accounting firm and be directly responsible for the appointment, independence, qualifications, compensation and oversight of the independent registered public accounting firm, who reports directly to the audit committee;

• provide an open avenue of communication among the independent registered public accounting firm, accountants, financial and senior management, the internal auditing department and our board;

• resolve any disagreements between management and the independent registered public accounting firm regarding financial reporting; and

• consider and approve certain transactions between us and our trustees, executive officers, trustee nominees or 5% or greater beneficial owners, any of their immediate family members or entities affiliated with them.

Compensation committee. Our compensation committee is composed of Messrs. Hill, Natelli and Eckert. Mr. Hill chairs the committee. The principal functions of the compensation committee are to:

• evaluate the performance of and compensation paid by us to our president and chief executive officer and other executive officers and trustees;

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• administer the Chesapeake Lodging Trust Equity Plan, or Equity Plan; and

• produce a report on executive compensation required to be included in our proxy statement for our annual meetings or our annual report on Form 10-K, including the Compensation Discussion and Analysis section.

Nominating and corporate governance committee. Our nominating and corporate governance committee is composed of Messrs. McKenzie, Hill and Nuechterlein. Mr. McKenzie chairs the committee. The principal functions of the nominating and corporate governance committee are to:

• identify individuals qualified to become board members and recommend to our board candidates for election or re-election to the board;

• consider and make recommendations to our board concerning the size and composition of our board, committee structure and makeup, retirement policies and procedures affecting board members; and

• take a leadership role with respect to the development, implementation and review of our corporate governance principles and practices.

The nominating and corporate governance committee charter sets forth certain criteria for the committee to consider in evaluating potential trustee nominees. The charter requires that the committee select nominees who have the highest personal and professional integrity, who shall have demonstrated exceptional ability and judgment and who shall be most effective, in conjunction with the other nominees to the board, in collectively serving our long-term interests and those of our shareholders. The committee also is required to assess whether the candidate possesses the skills, knowledge, perspective, broad business judgment and leadership, relevant specific industry or regulatory affairs knowledge, business creativity and vision, experience, age and diversity, all in the context of an assessment of the perceived needs of the board at that time. For those trustee candidates that appear upon first consideration to meet the committee’s criteria, the committee will engage in further research to evaluate their candidacy.

In making recommendations for trustee nominees for the annual meeting of shareholders, the nominating and corporate governance committee will consider any written suggestions of shareholders received by our secretary not less than 90 nor more than 120 days prior to the anniversary of the prior year’s annual meeting of shareholders. Suggestions must be mailed to our secretary at our corporate headquarters. The manner in which trustee nominee candidates suggested in accordance with this policy are evaluated will not differ from the manner in which candidates recommended by other sources are evaluated.

Communicating with the board

Consistent with the NYSE’s corporate governance listing standards, our board has adopted Principles of Corporate Governance that, among other things, call for the non-officer trustees to meet in regularly scheduled executive sessions without management. Mr. Natelli, our non-executive chairman, has been selected to serve as the presiding independent trustee at any such executive sessions.

Interested parties, including shareholders, may communicate their concerns directly to the full board, the presiding independent trustee or the non-officer trustees as a group by writing to the board of trustees, the presiding independent trustee or the non-officer trustees, at our corporate headquarters.

Code of business conduct and ethics

Our board has adopted a Code of Business Conduct and Ethics that applies to each of our trustees, officers and employees. This code sets forth our policies and expectations on a number of topics, including:

• compliance with laws, including insider trading;

• preservation of confidential information relating to our business;

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• conflicts of interest;

• reporting of illegal or unethical behavior or concerns regarding accounting or auditing practices;

• corporate payments;

• corporate opportunities; and

• the protection and proper use of our assets.

The audit committee will review this code on an annual basis, and the board will review and act upon any proposed additions or amendments to the code as appropriate. The code is posted on our website, www.chesapeakelodgingtrust.com. You may also obtain a copy of the code without charge by writing to our secretary at our corporate headquarters. Any waivers of the code for executive officers or trustees will be posted on our website and similarly provided without charge upon written request to this address.

We have established and implemented formal “whistleblower” procedures for receiving and handling complaints of employees, and have made an e-mail address and a telephone hotline available for reporting illegal or unethical behavior as well as questionable accounting or auditing matters and other accounting, internal accounting controls or auditing matters on a confidential, anonymous basis. Any concerns regarding accounting or auditing matters reported via e-mail or to this hotline will be communicated directly to the audit committee.

Principles of corporate governance

Our Principles of Corporate Governance address a number of other topics, including:

• trustee independence and qualification standards;

• trustee responsibilities, orientation and continuing education;

• trustee compensation;

• trustee attendance and retirement;

• management succession;

• annual board self-evaluations; and

• trustee communication, committees and access to management.

Our nominating and corporate governance committee is required to review the Principles of Corporate Governance on an annual basis, and the board will review and act upon any proposed additions or amendments to the Principles of Corporate Governance as appropriate. The Principles of Corporate Governance are posted on our website, www.chesapeakelodgingtrust.com. You may also obtain a copy of our Principles of Corporate Governance without charge by writing to our secretary at our corporate headquarters.

Item 11. Executive compensation

Compensation discussion and analysis

Our compensation program for our named executive officers, Messrs. Francis, Vicari, Adams and Wootten, consists of four key elements:

• Cash compensation, in the form of base salaries and annual cash bonus awards;

• Long-term incentives, in the form of restricted share awards that vest over time and, for Messrs. Francis and Vicari, additional awards that vest only upon achievement of specified performance objectives;

• Health and welfare benefits and perquisites; and

• Severance arrangements under the executives’ employment agreements.

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During 2010, we paid base salaries and made grants of awards under our Equity Plan to our named executive officers in accordance with their employment agreements. The awards under our Equity Plan were granted to provide a retention element to such individuals’ compensation and, in certain cases, to recognize such individuals’ efforts on our behalf in connection with our formation and our IPO. We also have awarded cash bonuses to our named executive officers in respect of our financial accomplishments and their performance during the year.

Elements of named executive officer compensation

The following is a summary of the elements of and amounts paid under our employment agreements and compensation plans for 2010, as well as the elements of our compensation plans for 2011.

Annual base salary. Base salary is designed to compensate our named executive officers at a fixed level of compensation that serves as a retention tool throughout the executive’s career. The initial base salaries of Messrs. Francis, Vicari and Adams were determined prior to completion of our IPO by Messrs. Francis and Vicari in negotiations with the underwriters of our IPO, who sought to create a compensation system that was competitive with other lodging REITs, although no formal benchmark was used. The base salary of Mr. Wootten was determined by our compensation committee upon the recommendation of Messrs. Francis and Vicari in connection with Mr. Wootten’s appointment in February 2010.

Under their employment agreements, Messrs. Francis, Vicari, Adams and Wootten are entitled to receive annual base salaries at minimum annual rates of $700,000, $475,000, $275,000 and $230,000, respectively, payable in approximately equal semi-monthly installments. Base salary amounts paid to Mr. Adams for 2010 were pro-rated from the date of completion of our IPO in January 2010 and, for Mr. Wootten, were pro-rated from the date of his hire in February 2010. Messrs. Francis and Vicari did not commence receiving their salaries until March 2010 pursuant to the terms of salary deferral arrangements that we entered into with them in connection with the IPO, and accordingly all base salaries paid to them in 2010 were pro-rated from March 2010.

Pursuant to the terms of the employment agreements, the compensation committee is permitted to annually review the base salary of each named executive officer to determine whether an increase in each named executive officer’s salary is necessary or appropriate. In determining whether to increase base salaries, the compensation committee may consider a variety of factors, including each executive’s role and responsibility, unique skills, future potential with our Company, salary levels for similar positions in our target market, internal pay equity and such other factors as the compensation committee may determine to be relevant. Based upon its review of these factors, the compensation committee determined in January 2011 that the base salaries of our named executive officers remained fair. Accordingly, the 2011 base salaries for our named executive officers will be paid at the annual rates set in 2010.

Annual cash bonus. Annual cash bonuses are designed to provide incentives to our named executive officers at a variable level of compensation based on such individual’s performance, as well as the overall performance of the Company. In connection with our annual cash bonus program, our compensation committee determines annual performance criteria that are flexible and that change with the needs of our business. Each year, our annual cash bonus plan will be designed to reward the achievement of specific, pre-established financial and operational objectives.

For 2010, our cash bonus plan was created and proposed by Messrs. Francis and Vicari based on their assessment of our most important business objectives. The final terms of the 2010 cash bonus plan were approved by our compensation committee on June 1, 2010. As more fully described below, annual cash bonuses were based 37.5% on our success in achieving a company-wide objective of capital deployment (as described below), 37.5% on our success in achieving targeted levels of overall Hotel EBITDA (as described below) and 25% on each executive’s success in achieving individually designed performance objectives. The following table depicts the aggregate amount of cash bonus that each named executive officer was eligible to receive in 2010 based upon the

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executive’s and the Company’s maximum performance under each component of the bonus criteria, as well as the actual amount of cash bonus that each named executive officer received in 2010.

Maximum v. Actual 2010 Cash Bonuses (in dollars)

Executive Officer	Maximum Attainable Cash Bonus		Actual Cash Bonus Paid
James L. Francis	$	1,050,000	$	999,963
Douglas W. Vicari	$	593,750	$	559,796
D. Rick Adams	$	206,250	$	196,421
Graham J. Wootten	$	172,500	$	164,280

Capital deployment (Weight: 37.5%): The capital deployment element of our 2010 cash bonus plan was designed to reward our named executive officers for their efforts in growing our portfolio of hotel properties as quickly as prudently possible. For these purposes, capital deployment was defined as the sum of (1) the aggregate purchase price for each hotel property acquired, or committed to be acquired through the entry into a definitive purchase agreement, in 2010, inclusive of all legal, audit and transfer fees and other acquisition-related costs and expenses, and (2) the projected Company-funded capital expenditures for the first year of ownership for each hotel acquired, or committed to be acquired through the entry into a definitive purchase agreement, in 2010. The compensation committee set the threshold level of capital deployment at $200 million, the target level of capital deployment at $275 million and the maximum level of capital deployment at $350 million.

In fiscal 2010, we deployed a total of $465.5 million of capital, which exceeded the maximum level established by our compensation committee by approximately $115.5 million. Consequently, each of our named executive officers was paid the maximum bonus amount payable under the capital deployment metric of the 2010 cash bonus plan. No additional bonus was paid for performance above the maximum level.

Hotel EBITDA (Weight: 37.5%) In addition to growth, the compensation committee believed that a significant indicator of our success in 2010 would be the aggregate earnings before interest, income taxes, and depreciation and amortization, or EBITDA, generated by our hotel properties. Accordingly, the compensation committee determined that 37.5% of the overall 2010 bonus for each executive officer was to be based upon actual 2010 Hotel EBITDA, compared to 2010 Hotel EBITDA determined for each hotel acquisition and included in our hotel underwriting delivered to the board of trustees in connection with its determination to acquire the hotel. For these purposes, Hotel EBITDA generally equates to total revenue less total hotel operating expenses, as such items are reported on our consolidated statement of operations. By focusing on the actual Hotel EBITDA generated for 2010 as compared to the underwritten levels of Hotel EBITDA for our properties, the compensation committee sought to align the interests of our named executive officers with those of our shareholders by providing each officer with incentives to ensure that the properties acquired were operated by their respective managers in a way that maximized their operating results.

Under this metric, the actual amount paid to each named executive officer was based upon achievement of threshold, target and maximum amounts set at 90%, 100% and 110% of our underwritten Hotel EBITDA. In fiscal 2010, our actual Hotel EBITDA was 106.2% of our underwritten amount. Consequently, amounts paid to our named executive officers under the Hotel EBITDA metric were interpolated between the target and maximum payout levels.

Individual performance goals (Weight: 25%): In addition to Company-wide performance goals, the compensation committee believed that individual performance goals relative to pre-determined objectives should play a role in the bonus payable to each executive officer. Accordingly, the compensation committee determined

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that 25% of the overall bonus for each executive officer in 2010 was to be based upon such individual performance goals. No executive officer was guaranteed an award under the individual performance criteria of the 2010 cash bonus plan, and the size of the bonus payable as a result of achievement of the individual performance criteria was to be determined in the full discretion of the compensation committee, subject only to certain maximum payment limitations.

The compensation committee considered the following accomplishments by the Company and the named executive officers in 2010 in reaching its decision on the amounts to be paid pursuant to the individual bonus criteria of the 2010 cash bonus plan:

• the executive officers’ respective roles in facilitating the Company’s successful IPO in a difficult market and challenging economic climate;

• the executive officers’ respective roles in facilitating the Company’s successful follow-on public offering in October 2010, which resulted in net proceeds of approximately $140.4 million to the Company;

• the development and implementation of all systems required for the operation of a public company, including a technology platform, finance and treasury systems, accounting and reporting systems and internal control systems;

• the development of a high-caliber management team and staff, particularly in the areas of finance and accounting, acquisitions and asset management;

• the executive officers’ respective roles in facilitating the Company’s negotiation and closing on a $115 million revolving credit facility and $60 million term loan; and

• the Company’s reputation in the acquisitions market and the development of a strong pipeline of potential hotel acquisitions.

Based on the foregoing, the compensation committee awarded each of the named executive officers the maximum payable amount under the individual performance criteria of the 2010 cash bonus plan. The compensation committee did not rely on any one particular objective or formula in determining appropriate short-term incentives, but rather on what the compensation committee considered to be value-added quantitative and qualitative goals in furtherance of our compensation principles.

The following table depicts the actual amount paid to each named executive officer under each criteria of the 2010 cash bonus plan and the percentage of the maximum payable amount under each element to which such payment relates:

	Capital Deployment (% of  maximum level attainable)		Hotel EBITDA (% of  maximum level attainable)		Individual Performance (%  of maximum level attainable)
James L. Francis	$	393,750 (100%)	$	343,713 (87.3%)	$	262,500 (100%)
Douglas W. Vicari	$	222,656 (100%)	$	188,702 (84.8%)	$	148,438 (100%)
D. Rick Adams	$	77,344 (100%)	$	67,515 (87.3%)	$	51,562 (100%)
Graham J. Wootten	$	64,688 (100%)	$	56,468 (87.3%)	$	43,124 (100%)

2011 cash bonus plan. On January 31, 2011, the compensation committee considered and approved the 2011 cash bonus plan substantially as proposed by Messrs. Francis and Vicari. The compensation committee determined that the Company’s business objectives for 2011 are substantially similar to those of 2010. As such, the structure of the 2011 cash bonus plan is identical to that of the 2010 cash bonus plan, and again weighted 37.5% on the Company’s success in achieving a company-wide objective of capital deployment, 37.5% on the

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Company’s success in achieving targeted levels of overall Hotel EBITDA and 25% on each executive’s success in achieving individually designed performance objectives. No changes were made to the definitions or method of evaluating performance under each component.

The compensation committee set the threshold level of capital deployment at $200 million, the target level of capital deployment at $350 million and the maximum level of capital deployment at $500 million. Due to their strategic significance, the Company believes that disclosing the actual numerical target ranges for underwritten 2011 Hotel EBITDA would result in competitive harm to the Company. The underwritten levels of Hotel EBITDA reflect levels of operating performance that take into account management’s expectations of the lodging industry at the time of each hotel acquisition and give effect to management’s growth projections for each acquired asset. Achieving these forecasted results will require the Company to work closely with each hotel’s management company to operate the hotels efficiently. Nevertheless, the compensation committee considers these goals to be challenging, but achievable. In addition, the compensation committee has established individual performance goals for each of our named executive officers, which include, where appropriate, operational goals for the Company and the respective functions over which each executive has operational or overall responsibility, monitoring and expanding internal programs in support of the Company’s strategic plan, monitoring the Company’s hotel portfolio to ensure that each hotel is efficiently operated and managed, exploiting renovation, repositioning and rebranding opportunities with respect to each hotel, maintaining and expanding investor and industry relationships, undertaking leadership initiatives and other significant qualitative objectives.

Equity awards. We have provided, and expect to provide in the future, awards pursuant to our Equity Plan. In connection with our IPO, we made grants of time-based restricted shares to each of Messrs. Francis, Vicari and Adams, and also made grants of performance-based restricted shares to Messrs. Francis and Vicari. The number of shares granted, and the type of award made, were determined prior to completion of our IPO by Messrs. Francis and Vicari in negotiations with the underwriters of our IPO, who sought to create a compensation system that was competitive with other lodging REITs, although no formal benchmarking was used. Mr. Wootten received a grant of time-based restricted shares that was approved by our compensation committee at the time of his appointment in February 2010. The time-based awards were designed to foster equity ownership by our named executive officers in our Company, and align their interests with those of our shareholders. The performance-based awards made to Messrs. Francis and Vicari were designed to provide these key executives, who will be primarily responsible for our growth and operations, with incentives to focus on long-term goals and enhancing shareholder value. Because the Company failed to attain the performance-based metrics in fiscal 2010, none of the performance-based awards vested in fiscal 2010. Further information about grants made to our named executive officers in 2010 is set forth below under “– Grants of plan-based awards” and “– Narrative discussion of grants of plan-based awards.”

On January 31, 2011, our compensation committee approved the issuance of additional equity awards to our named executive officers and certain other employees. The 2011 awards are intended to complete the IPO process from an equity incentive perspective and are therefore designed to provide additional motivation and retention elements to our compensation structure in recognition that our equity market capitalization has nearly doubled since our IPO. Messrs. Francis, Vicari, Adams and Wootten were issued 70,000, 47,000, 16,000 and 10,000 time-based restricted common shares, respectively, which will vest one-half per year beginning on the second anniversary of the completion of the IPO, assuming the executive remains employed by the Company on such anniversary date. In addition, Messrs. Francis and Vicari were issued an additional 15,500 and 10,000 performance-based restricted common shares, respectively, of which one-half will be eligible for vesting each year in accordance with the terms set forth below with respect to the performance-based awards issued in 2010. An additional 13,000 time-based restricted common shares were issued to certain other employees of the Company, and such shares will vest one-half per year beginning on the second anniversary of the completion of the IPO, assuming the employee remains employed by the Company on such anniversary date.

In determining future equity awards, our compensation committee will take into account, among other things, the Company’s overall financial performance, the contributions of each of our named executive officers, the long-

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term equity incentive compensation of officers in similar positions in our target market, internal pay equity and such other factors as the compensation committee may determine to be relevant.

Retirement savings opportunities. All eligible employees are able to participate in our 401(k) Retirement Savings Plan, or 401(k) Plan. We provide this plan to help our employees save some amount of their cash compensation for retirement in a tax efficient manner. Under the 401(k) Plan, employees are eligible to defer a portion of their salary, and we, at our discretion, may make a matching contribution and/or a profit sharing contribution. We currently do not provide an option for our employees to invest in our common shares through the 401(k) plan.

Health and welfare benefits. We provide a competitive benefits package to all full-time employees, which includes health and welfare benefits, such as medical, dental, disability insurance and life insurance benefits. The plans under which these benefits are offered do not discriminate in scope, terms or operation in favor of officers and trustees and are available to all full-time employees. Messrs. Francis and Vicari also receive certain perquisites, as described more fully under “– Employment agreements.”

Post-termination pay. As described more fully under “– Employment agreements,” we have entered into employment contracts with each of our named executive officers that provide the officers with compensation if they are terminated without cause, they leave the Company with good reason or their employment terminates in some circumstances following a change in control. We believe these common protections promote our ability to attract and retain management and assure us that our executive officers will continue to be dedicated and available to provide objective advice and counsel notwithstanding the possibility, threat or occurrence of a change in their circumstances or in the control of our Company.

Impact of compensation practices on risk management

The capital deployment element of our cash bonus plan is designed to reward our named executive officers for their efforts in growing our portfolio of hotel properties as quickly as prudently possible. In creating this element of the bonus plan, our senior management team, board of trustees and compensation committee recognized that there is a risk that this element may provide our named executive officers and other employees who participate in the plan with incentives to make acquisitions of hotel properties that may not be in our shareholders’ best interests over the long term, if only to ensure that these officers receive the maximum bonus amounts tied to that element of the plan. We believe, however, that this risk was, and will continue to be, mitigated, if not entirely eliminated, by a number of factors, including:

• Our investment process results in production of significant amounts of financial and other information about each targeted property, and requires our board of trustees to approve all acquisitions before they are made;

• The value of the equity owned by our named executive officers, including the time-based and performance-based restricted shares granted to them, more than offsets the maximum amount of cash bonuses that may be paid to them under this component of the cash bonus plan; and

• The equally-weighted component of the cash bonus plan focusing on the actual Hotel EBITDA generated for the fiscal year as compared to the underwritten levels of Hotel EBITDA for our properties further aligns the interests of our management team with those of our shareholders by providing management with incentives to ensure that the properties acquired are operated by their respective managers in a way that maximizes their operating results.

Tax considerations

Section 162(m) of the Internal Revenue Code may limit the deductibility on our tax return of compensation over $1 million to any of our named executive officers unless, in general, the compensation is paid pursuant to a plan which is performance-related, non-discretionary and has been approved by our shareholders, such as our Equity

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Plan. The base salaries and any amounts payable to our named executive officers under our 2010 bonus plan will not qualify under these criteria. We may award non-deductible compensation in certain circumstances as we deem appropriate. Further, because of ambiguities and uncertainties as to the application and interpretation of Section 162(m) and the regulations and rulings issued thereunder, no assurance can be given, notwithstanding our efforts, that compensation intended by us to satisfy the requirements for deductibility under Section 162(m) does or will in fact do so. For 2010, some compensation paid to the named executive officers may not be deductible under Section 162(m).

If Section 162(m) were determined to be applicable to the compensation paid to our named executive officers, our net income would be higher and amounts required to be distributed by us to comply with the REIT qualification requirements and eliminate our U.S. federal income tax liability at the REIT level also would be higher. Our compensation committee’s compensation policy and practices are not directly guided by considerations relating to Section 162(m).

Compensation tables

The following table sets forth the annual base salary and other compensation paid to our named executive officers in 2010. None of our named executive officers received any compensation from us in 2009.

Summary Compensation Table

Name and Principal Position	Salary($)(1)		Bonus($)		Share Awards($)		Non-Equity Incentive Plan Compensation($)		All Other Compensation($)(2)		Total($)
James L. Francis	$	551,849	$	262,500	$	2,190,167	$	737,463	$	22,065	$	3,764,044
President and CEO
Douglas W. Vicari	$	374,469	$	148,438	$	1,455,437	$	411,358	$	4,815	$	2,394,517
EVP, CFO and Treasurer
D. Rick Adams	$	255,850	$	51,562	$	481,865	$	144,859	$	2,815	$	936,951
Senior Vice President and Chief Investment Officer
Graham J. Wootten	$	206,291	$	43,124	$	504,608	$	121,156	$	2,365	$	877,544
Senior Vice President, Chief Accounting Officer and Secretary

(1) Base salary amounts paid to Mr. Adams for 2010 were pro-rated from the date of completion of our IPO in January 2010 and, for Mr. Wootten, were pro-rated from the date of his hire in February 2010. Messrs. Francis and Vicari did not commence receiving their salaries until March 2010 pursuant to the terms of salary deferral arrangements that we entered into with them in connection with the IPO, and accordingly all base salaries paid to them in 2010 were pro-rated from March 2010.

(2) Amounts for 2010 reported in this column include (i) $15,000 paid to Mr. Francis pursuant to his employment agreement for reimbursement of certain financial planning services; (ii) matching contributions to the 401(k) accounts of Messrs. Francis, Vicari, Adams and Wootten of $7,000, $4,750, $2,750 and $2,300, respectively; and (iii) life insurance premiums paid by the Company since March 2010.

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The following table sets forth the grants of restricted common shares made to each of our named executive officers in fiscal 2010 under our Equity Plan.

Grants of Plan-Based Awards

Name	Grant Date		Estimated Future Payouts Under Non-Equity Incentive Plan Awards(1)						Estimated Future Payouts Under Equity Incentive Plan Awards(2)(7)						All Other Stock Awards: Number of Shares of Stock or Units (#)(7)			Grant Date Fair Value of Stock and Option Awards
			Threshold (#)		Target (#)		Maximum (#)		Threshold (#)		Target (#)		Maximum (#)
James L. Francis		01/27/10	$	131,250	$	525,000	$	787,500		13,934		—		23,224		96,935	(3)	$	2,190,167	(6)
Douglas W. Vicari		01/27/10	$	62,344	$	267,188	$	445,312		9,088		—		15,146		64,623	(3)	$	1,455,437	(6)
D. Rick Adams		01/27/10 02/16/10	$	25,781	$	103,126	$	154,688		—		—		—		25,243	(4)	$	481,865	(6)
Graham J. Wootten		02/16/10	$	21,563	$	86,250	$	129,376		—		—		—		25,243	(5)	$	504,608	(6)

(1) Represents amounts payable under our 2010 cash bonus plan. For actual amounts paid to each named executive officer under our 2010 cash bonus plan, see “– Compensation discussion and analysis – Elements of named executive officer compensation – Annual cash bonus” and “– Compensation discussion and analysis – Compensation tables – Summary Compensation Table.”

(2) Represents performance share awards issued upon completion of the IPO. In accordance with the executive’s award agreement, the number of shares initially granted was increased ratably as a result of the partial exercise by the underwriters of the IPO of their overallotment option in February 2010. These awards will vest upon our achievement of specified performance metrics. The company did not achieve any of the performance goals in 2010, and therefore none of the performance-based awards vested in 2010. See “– Narrative discussion of grants of plan-based awards.”

(3) Represents common shares issued upon completion of the IPO. In accordance with the executive’s award agreement, the number of shares initially granted was increased ratably as a result of the partial exercise by the underwriters of the IPO of their overallotment option in February 2010. These awards vest ratably in annual installments over a three-year period, which commenced on the closing of the IPO. Accordingly, with respect to Mr. Francis, 32,311 of such shares vested during 2011 and 64,624 of such shares remain subject to vesting, and with respect to Mr. Vicari, 21,541 of such shares vested during 2011 and 43,082 of such shares remain subject to vesting. See “– Narrative discussion of grants of plan-based awards.”

(4) Represents (i) 22,719 common shares issued upon completion of the IPO, which vest ratably over a three-year period that commenced on the closing of the IPO and (ii) 2,524 common shares issued on February 16, 2010, which vest ratably over a three-year period, which commenced on February 16, 2010. Accordingly, 8,414 of such shares vested during 2011 and 16,829 remain subject to vesting. In accordance with Mr. Adams’ award agreements, the number of shares initially granted were increased ratably as a result of the partial exercise by the underwriters of the IPO of their overallotment option in February 2010. See “– Narrative discussion of grants of plan-based awards.”

(5) Represents common shares issued to Mr. Wootten in connection with his appointment as an executive officer of the Company. In accordance with Mr. Wootten’s award agreement, the number of shares initially granted was increased ratably as a result of the partial exercise by the underwriters of the IPO of their overallotment option in February 2010. These awards vest ratably over a three-year period, which commenced on February 16, 2010. Accordingly, 8,414 of such shares vested during 2011 and 16,829 remain subject to vesting. See “– Narrative discussion of grants of plan-based awards.”

(6) Represents the estimated grant date fair value of the common shares and performance share awards.

(7) On January 31, 2011, the compensation committee issued (i) 70,000, 47,000, 16,000 and 10,000 time-based restricted common shares to Messrs. Francis, Vicari, Adams and Wootten, respectively, which will vest one-half per year beginning on the second anniversary of the completion of our IPO, assuming the executive remains employed by the Company on such anniversary date; and (ii) 15,500 and 10,000 performance-based restricted common shares to Messrs. Francis and Vicari, respectively, of which one-half will be eligible for vesting each year in accordance with the terms set forth below in “—Narrative discussion of grants of plan-based awards” with respect to the performance-based awards issued in 2010. The amounts set forth in this column do not include the grants made on January 31, 2011.

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Narrative discussion of grants of plan-based awards

In addition to base salary, annual bonus and non-equity incentive compensation, our named executive officers are entitled to receive long term equity incentive compensation designed to provide additional motivation and retention elements to our compensation structure . Upon completion of the IPO, each of Messrs. Francis, Vicari and Adams was granted a number of restricted common shares subject to time-based or performance-based vesting requirements. On February 16, 2010, Mr. Wootten and Mr. Adams were granted 25,000 and 2,500 timed-based restricted common shares, respectively, reflecting Mr. Wootten’s initial award upon assuming his officer role and an additional award to Mr. Adams reflecting internal pay equity considerations. In accordance with each executive’s award agreement, the number of shares initially granted to each executive was increased ratably as a result of the partial exercise by the underwriters of the IPO of their overallotment option in February 2010. The time-based shares vest one-third per year beginning on the first anniversary of the grant date, assuming the executive remains employed by the Company on such anniversary. Of the performance-based shares, one-third of such shares are eligible for vesting each year, which commenced on December 31, 2010.

The actual number of performance shares that vest in a particular year is determined by our success in attaining or exceeding performance goals linked to relative total shareholder return, or RTSR, measured at year-end for each year of the performance period, by comparing our annual total shareholder return to the total return (on a comparable basis) of the SNL US REIT Hotel Index prepared by SNL Financial LC.

For this purpose, we use the following formula to calculate our total shareholder returns, or TSR, for a given year:

	(December 31 closing share price * Adjusted share count) - Closing share  price on December 31 of prior year
Annual TSR =
	Closing share price on December 31 of prior year

For fiscal 2010, the term “closing share price on December 31 of prior year” was deemed to equal $20.00. The term “adjusted share count” means one share plus the number of shares received in connection with the assumed reinvestment of all dividends paid during the period at the closing price of our common shares on the ex-dividend date for each such dividend.

If the total return for the index is positive for any year, the performance shares will vest only if our TSR for that year equals or exceeds 75% of the total return produced by the index, in which case vesting will occur as follows:

• If our TSR for the year equals 75% of the total return produced by the index, 60% of the performance shares subject to vesting for that year will vest.

• If our TSR equals or exceeds the total return produced by the index, 100% of the performance shares subject to vesting for that year will vest.

• If our TSR is between 75% and 100% of the total return produced by the index, the number of performance shares that will vest for that year will be interpolated ratably between 60% and 100%.

If the total return for the index is negative for any year, performance shares will vest for that year if our TSR exceeds the index’s total return, in which case 100% of the performance shares subject to vesting for that year will vest.

Based on TSR performance for 2010, none of the performance-based shares eligible for vesting in fiscal 2010 vested.

Although the performance goal was not met in fiscal 2010, Messrs. Francis and Vicari may still earn a payout of performance shares for such period, or any other period in which performance goals are not met, if we achieve a

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level of RTSR over the entire performance period from January 27, 2010 through December 31, 2012 that exceeds specified levels described below. Use of this measure is designed to provide Messrs. Francis and Vicari with a continued incentive and an ability to earn a payout if we perform well in TSR compared to the total return of the index over the entire performance period, yet are unable to attain the RTSR metric in a given year. Our cumulative TSR over the entire performance period for this purpose will be computed as follows:

	(December 31, 2012 closing share price * Adjusted share count) - $20.00
Cumulative TSR =
	$20.00

If the cumulative total return for the index is positive for the period, the previously unvested performance shares for 2010 or any other year in which performance goals are not met, will vest only if our cumulative TSR equals or exceeds 75% of the cumulative total returns produced by the index for the performance period, in which case vesting will occur as follows:

• If our cumulative TSR equals 75% of the cumulative total return produced by the index, 60% of the previously unvested performance shares will vest.

• If our cumulative TSR equals or exceeds the cumulative total return produced by the index, 100% of the previously unvested performance shares will vest.

• If our cumulative TSR is between 75% and 100% of the cumulative total return produced by the index, the number of previously unvested performance shares that will vest will be interpolated ratably between 60% and 100%.

If the cumulative total return produced by the index is negative for the entire performance period, the previously unvested performance shares will vest if our cumulative TSR exceeds the index’s cumulative total return, in which case 100% of the previously unvested performance shares will vest.

Notwithstanding the vesting requirements discussed above, all long-term equity incentive compensation awards will vest upon the death or disability of the executive officer or, for awards other than share options that are not intended to qualify as performance based awards under Section 162(m) of the Internal Revenue Code, if the executive officer’s employment is terminated by us without cause, or if there is a change in control and the executive officer resigns for good reason or is terminated without cause within 12 months of such change in control.

Outstanding Equity Awards at Fiscal Year-End

The following table sets forth information with respect to outstanding equity awards held by our named executive officers as of December 31, 2010.

Outstanding Equity Awards at Fiscal Year End
Name	Number of Common Shares That Have Not Vested(1)			Market Value of Shares That Have Not Vested		Number of Unearned Shares That Have Not Vested(2)		Market or Payout Value of Unearned Shares That Have Not Vested
James L. Francis		96,935	(3)	$	1,823,347		23,224	$	436,843
Douglas W. Vicari		64,623	(3)	$	1,215,559		15,146	$	284,896
D. Rick Adams		25,243	(4)	$	474,821		—	$	—
Graham J. Wootten		25,243	(5)	$	474,821		—	$	—

(1) On January 31, 2011, the compensation committee issued 70,000, 47,000, 16,000 and 10,000 time-based restricted common shares to Messrs. Francis, Vicari, Adams and Wootten, respectively, which will vest one-half per year beginning on the second anniversary of the completion of our IPO, assuming the executive remains employed by the Company on such anniversary date. The amounts set forth in this column do not include the grants made on January 31, 2011.

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(2) On January 31, 2011, the compensation committee issued 15,500 and 10,000 performance-based restricted common shares to Messrs. Francis and Vicari, respectively, of which one-half will be eligible for vesting each year in accordance with the terms set forth above in “—Narrative discussion of grants of plan-based awards” with respect to the performance-based awards issued in 2010. The amounts set forth in this column do not include the grants made on January 31, 2011.

(3) Represents common shares issued upon completion of the IPO. In accordance with the executive’s award agreement, the number of shares initially granted was increased ratably as a result of the partial exercise by the underwriters of the IPO of their overallotment option in February 2010. These awards vest ratably in annual installments over a three-year period, which commenced on the closing of the IPO. Accordingly, with respect to Mr. Francis, 32,311 of such shares vested during 2011 and 64,624 of such shares remain subject to vesting and with respect to Mr. Vicari, 21,541 of such shares vested during 2011 and 43,082 of such shares remain subject to vesting. See “—Narrative discussion of grants of plan-based awards.”

(4) Represents (i) 22,719 common shares issued upon completion of the IPO, which vest ratably over a three-year period that commenced on the closing of the IPO and (ii) 2,524 common shares issued on February 16, 2010, which vest ratably over a three-year period, which commenced on February 16, 2010. Accordingly, 8,414 of such shares vested during 2011 and 16,829 remain subject to vesting. In accordance with Mr. Adams’ award agreements, the number of shares initially granted were increased ratably as a result of the partial exercise by the underwriters of the IPO of their overallotment option in February 2010. See “—Narrative discussion of grants of plan-based awards.”

(5) Represents common shares issued to Mr. Wootten in connection with his appointment as an executive officer of the Company. In accordance with Mr. Wootten’s award agreement, the number of shares initially granted was increased ratably as a result of the partial exercise by the underwriters of the IPO of their overallotment option in February 2010. These awards vest ratably over a three-year period, which commenced on February 16, 2010. Accordingly, 8,414 of such shares vested during 2011 and 16,829 remain subject to vesting. See “—Narrative discussion of grants of plan-based awards.”

Option Exercises and Shares Vested

The company did not grant any share option awards in 2010. Share awards were issued to the named executive officers in 2010, however none of such awards vested in 2010.

Employment agreements

We have entered into employment agreements with Messrs. Francis, Vicari, Adams and Wootten that provide for an annual base salary of $700,000 for Mr. Francis, $475,000 for Mr. Vicari, $275,000 for Mr. Adams, and $230,000 for Mr. Wootten, payable in approximately equal semi-monthly installments. Pursuant to the terms of a salary deferral arrangement, Messrs. Francis and Vicari did not commence receiving their base salaries until March 2010. In addition, the employment agreements provide these individuals with severance benefits if their employment ends under certain circumstances. We believe that the agreements benefit us by helping to retain the executives and by allowing them to focus on their duties without the distraction of the concern for their personal situations in the event of a possible change in control of our Company.

The agreements have an initial term of three years for Messrs. Francis and Vicari and an initial term of two years for Messrs. Adams and Wootten, beginning on January 27, 2010, except with respect to Mr. Wootten, whose employment commenced on February 16, 2010. Thereafter, the term of the agreements will be extended for an additional year on each anniversary of the effective date of the commencement of employment, unless either party gives 90 days’ prior notice that the term will not be extended.

Each of these executives is entitled to receive benefits under the agreements if (1) we terminate the executive’s employment without cause, or (2) if there is a change in control during the term of the agreements and the executive resigns for good reason or is terminated without cause within 12 months following such change in control. Under these scenarios, each of the executives is entitled to receive (1) any accrued but unpaid salary and bonuses (including incentive compensation), (2) reimbursement for any outstanding reasonable business expense, (3) vesting as of the executive’s last day of employment of any unvested options or restricted shares previously issued to the executive, (4) continued life and health insurance as described below, and (5) a severance payment calculated as described below.

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If we terminate the executive without cause the severance payment is equal to two times in the case of Messrs. Francis and Vicari, or one times in the case of Messrs. Adams and Wootten, current salary plus two times in the case of Messrs. Francis and Vicari, or one times in the case of Messrs. Adams and Wootten, the greater of (1) the average of all bonuses paid to them during the preceding 36 months (or the period of the executive’s employment if shorter) and (2) the most recent bonus paid to the executive. In addition, the executive is eligible to receive payment of life and health insurance coverage for a period of 24 months for Messrs. Francis and Vicari, and 12 months for Messrs. Adams and Wootten, following such executive’s termination of employment.

If there is a change of control during the term of the agreements and within 12 months following a change in control, we terminate the executive without cause or he resigns for good reason, the severance payment is equal to three times in the case of Messrs. Francis and Vicari, or two times in the case of Messrs. Adams and Wootten, current salary plus three times in the case of Messrs. Francis and Vicari, or two times in the case of Messrs. Adams and Wootten, the greater of (1) the average of all bonuses paid to the executive during the preceding 36 months (or the period of the executive’s employment if shorter) and (2) the most recent bonus paid to the executive. In addition, in the event of a termination or resignation following a change in control as described above, the executive will be eligible to receive payment of life and health insurance coverage for a period of 36 months for Messrs. Francis and Vicari, and 24 months for Messrs. Adams and Wootten, following termination of employment, and payments to compensate the executive for additional taxes, if any, imposed under Section 4999 of the Internal Revenue Code for receipt of excess parachute payments.

In addition, the employment agreements for Messrs. Francis and Vicari provide up to $10,000 annually for a comprehensive physical and medical examination and up to $15,000 annually for financial planning services. These benefits will not continue beyond termination of the agreements.

The employment agreements contain customary non-competition and non-solicitation covenants that apply during the term and for one year after the term of each executive’s employment with our Company.

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The following table indicates the cash amounts, accelerated vesting and other payments and benefits that the named executive officers would be entitled to receive under various circumstances pursuant to the terms of the Equity Plan, the grant agreements made under the Equity Plan and their respective employment agreements. The table assumes that termination of the named executive officer from the Company under the scenario shown occurred on December 31, 2010.

	Cash Severance Payment		Life/Health Insurance  Benefits(4)		Acceleration of Equity Awards(5)		Excise Tax Gross-Up		Total Termination Benefits
James L. Francis(1)(2)
Involuntary termination without cause(3)	$	3,399,926	$	37,312	$	2,260,190		—	$	5,697,428
Voluntary termination or involuntary termination with cause		—		—		—		—		—
Involuntary or good reason termination in connection with change in control(3)	$	5,099,889	$	55,968	$	2,260,190	$	2,786,430	$	10,202,477
Death or disability		—		—	$	2,260,190		—	$	2,260,190
Douglas W. Vicari(1)(2)(6)
Involuntary termination without cause(3)	$	2,069,592	$	156	$	1,500,455		—	$	3,570,203
Voluntary termination or involuntary termination with cause		—		—		—		—		—
Involuntary or good reason termination in connection with change in control(3)	$	3,104,388	$	234	$	1,500,455	$	1,813,403	$	6,418,480
Death or disability		—		—	$	1,500,455		—	$	1,500,455
D. Rick Adams(1)(2)
Involuntary termination without cause(3)	$	471,421	$	18,656	$	474,821		—	$	964,898
Voluntary termination or involuntary termination with cause		—		—		—		—		—
Involuntary or good reason termination in connection with change in control(3)	$	942,842	$	37,312	$	474,821	$	408,891	$	1,863,866
Death or disability		—		—	$	474,821		—	$	474,821
Graham J. Wootten(1)(2)
Involuntary termination without cause(3)	$	394,280	$	6,643	$	474,821		—	$	875,744
Voluntary termination or involuntary termination with cause		—		—		—		—		—
Involuntary or good reason termination in connection with change in control(3)	$	788,560	$	13,286	$	474,821		—	$	1,276,667
Death or disability		—		—	$	474,821		—	$	474,421

(1) The amounts shown in this table do not include accrued salary, earned but unpaid bonuses or reimbursement of reasonable business expenses. Those amounts are payable to the executive officer upon any termination of his employment, including an involuntary termination with cause and a resignation without good reason.

(2) A termination of this executive officer’s employment due to death or disability entitles this executive officer to benefits under our life insurance and disability insurance plans. In addition, restricted common shares immediately vest upon this executive officer’s termination of employment due to death or disability.

(3) Amounts in this row are calculated in accordance with provisions of the applicable employment agreement as disclosed above.

(4) The amounts shown in this column are estimates of the cash payments to be made under the applicable employment agreement based on the annual premiums to be paid by the Company for health care and life insurance benefits expected to be provided to each executive officer.

(5) For purposes of this table, the market value per restricted common share is assumed to be $18.81, the closing market price per common share at the end of the last completed fiscal year, December 31, 2010.

(6) Mr. Vicari does not participate in the Company’s health insurance plan.

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Non-Officer Trustee compensation

We have approved and implemented a compensation program for our non-officer trustees that consists of annual retainer fees and long-term equity awards.

For fiscal 2010, we paid our non-officer trustees an annual retainer fee of $50,000, payable quarterly. In addition, our audit committee chairman was paid an additional annual retainer of $15,000, our compensation committee chairman was paid an additional annual retainer of $10,000 and our nominating and corporate governance committee chairman was paid an additional annual retainer of $7,500, in each case payable quarterly in cash. Mr. Natelli, who serves as non-executive chairman of our board, was paid an additional annual retainer of $20,000. Although we reimburse our trustees for reasonable out-of-pocket expenses incurred in connection with performance of their duties as trustees, including, without limitation, travel expenses in connection with their attendance at board and committee meetings, we do not pay any trustee a separate fee for meetings attended. Furthermore, trustees do not receive any perquisites. Effective with the board meeting following our 2011 annual shareholders’ meeting until the 2012 annual meeting, the annual retainer fee will be increased to $60,000, payable quarterly. The additional fees payable to our non-executive chairman, as well as those payable to the various chairman of our board committees, will remain the same for the period from the 2011 annual meeting until the 2012 annual meeting.

Our non-officer trustees may elect to receive their annual retainers and chair committee fees in whole or in part in the form of cash or immediately vested common shares based on the closing market price of our common shares on the grant date.

Upon completion of the IPO, we granted each of our non-officer trustees 1,000 common shares, except that Mr. Natelli received a grant of 1,500 common shares in recognition of his expanded responsibilities as our non-executive chairman. These shares were immediately vested. In connection with our 2011 annual meeting of shareholders and each subsequent annual meeting, each of our non-officer trustees will receive an additional grant of 1,000 restricted common shares, except that Mr. Natelli will receive 1,500 restricted common shares. Vesting for these grants will occur on the date of the next annual meeting, with acceleration upon termination due to death, disability or involuntary termination of service as a result of a change in control. Dividends will be paid on the unvested restricted shares when declared and paid on our common shares generally.

The table below reflects the pro rata amount of the share awards and retainer fees paid to our non-officer trustees in 2010 beginning on January 27, 2010, the date of completion of our IPO:

Summary of Non-Executive Trustee 2010 Compensation (in dollars)
Name	Fees Earned or Paid in Cash		Share Awards(1)			Total
Thomas A. Natelli	$	65,126	$	28,485		$	93,611
Thomas D. Eckert	$	60,474	$	18,990		$	79,464
John W. Hill	$	27,911	$	46,901	(2)	$	74,812
George F. McKenzie	$	53,496	$	18,990		$	72,486
Jeffrey D. Nuechterlein	$	46,518	$	18,990		$	65,508

(1) All share awards were granted pursuant to our Equity Plan. Except with respect to Mr. Hill, who elected to receive half of his annual retainer fee in the form of unrestricted common shares, all share awards were made upon completion of the IPO. The amounts in this column reflect the estimated grant date fair value of the common share awards.

(2) In addition to receiving 1,000 common shares upon completion of the IPO, Mr. Hill elected to receive half of his annual trustee retainer fees in the form of cash and half in the form of common shares valued at a per share price equal to the closing price of our common shares on the NYSE on the last day of the applicable fiscal quarter.

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Compensation committee interlocks and insider participation

As noted above, the compensation committee consists of Messrs. Hill, Natelli and Eckert. None of the members of the compensation committee is or has been one of our employees or officers. None of our executive officers currently serves, or during the past fiscal year has served, as a member of the board of directors or compensation committee of another entity that has one or more executive officers serving on our board of trustees or compensation committee.

Compensation committee report

The compensation committee has met with the Company’s management to review and discuss the preceding Compensation Discussion and Analysis. Based on such review and discussion, the compensation committee approved the Compensation Discussion and Analysis and authorized it to be included in this Annual Report on Form 10-K for the 2010 fiscal year.

Submitted by the Compensation Committee of the Board of Trustees

John W. Hill

Thomas A. Natelli

Thomas D. Eckert

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Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters

Principal Shareholders

The following table sets forth certain information, as of the filing, regarding the ownership of each class of our shares by:

• each of our trustees;

• each of our named executive officers;

• each holder of 5% or more of each class of our shares; and

• all of our trustees and executive officers as a group.

In accordance with SEC rules, each listed person’s beneficial ownership includes:

• all shares the investor actually owns beneficially or of record;

• all shares over which the investor has or shares voting or dispositive control (such as in the capacity as a general partner of an investment fund); and

• all shares the investor has the right to acquire within 60 days (such as restricted common shares that are currently vested or which are scheduled to vest within 60 days).

Unless otherwise indicated, the address of each named person is c/o Chesapeake Lodging Trust, 1997 Annapolis Exchange Parkway, Suite 410, Annapolis, MD 21401. Except as indicated in the footnotes to the table, no shares beneficially owned by any executive officer or trustee have been pledged as security.

Beneficial Owner	Shares Owned(1)		Percentage
James L. Francis		278,348		1.50	%
Douglas W. Vicari		176,769		*
D. Rick Adams		40,213		*
Graham J. Wootten		35,243		*
Thomas A. Natelli		66,500		*
Thomas D. Eckert		26,000		*
John W. Hill		2,609		*
George F. McKenzie(2)		3,000		*
Jeffrey D. Nuechterlein		3,000		*
FMR LLC(3)		2,493,632		13.40	%
BAMCO, Inc.(4)		1,682,612		9.04	%
The Vanguard Group, Inc.(5)		1,577,209		8.48	%
Porter Orlin LLC(6)		1,455,839		7.80	%
All trustees and executive officers as a group (9 persons)		631,682		3.39	%

* Represents less than 1% of the common shares outstanding as of the date of filing.

(1) Inclusive of restricted common shares granted to our named executive officers on January 31, 2011.

(2) 2,000 of the shares reported here are held by Mr. McKenzie’s wife in a margin account and may be pledged as security for margin debt.

(3) On February 14, 2011, FMR LLC filed an amended Schedule 13G to report beneficial ownership of 2,493,632 common shares, constituting approximately 13.40% of our outstanding common shares. The common shares are held in the accounts of various registered and unregistered investment companies and managed accounts over which FMR LLC exercises investment discretion. The address for FMR LLC is 82 Devonshire Street, Boston, MA 02109.

(4) On February 14, 2011, BAMCO, Inc. and certain of its affiliates filed a Schedule 13G to report beneficial ownership of 1,682,612 common shares, or approximately 9.04% of our outstanding common shares. The common shares held by BAMCO,

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Inc. are held on behalf of certain of its investment advisory clients. Ronald Baron is the indirect controlling shareholder of BAMCO, Inc. and may be deemed to share with BAMCO, Inc. voting and dispositive power over such shares. Mr. Baron disclaims beneficial ownership of such shares held by BAMCO, Inc. (or the investment advisory clients thereof) to the extent such shares are held by persons other than Mr. Baron. BAMCO, Inc. disclaims beneficial ownership of shares held by its investment advisory clients to the extent such shares are held by persons other than BAMCO, Inc. and its affiliates. The address for BAMCO, Inc., certain of its investment advisory clients and Mr. Baron is c/o Baron Capital Group, Inc., 767 Fifth Avenue, New York, NY 10153.

(5) On February 10, 2011, The Vanguard Group, Inc. filed a Schedule 13G to report beneficial ownership of 1,577,209 common shares, constituting 8.48% of our outstanding common shares. The address for The Vanguard Group, Inc. is 100 Vanguard Blvd., Malvern, PA 19355.

(6) On February 14, 2011, Porter Orlin LLC filed an amended Schedule 13G to report beneficial ownership of 1,455,839 common shares, or approximately 7.80% of our outstanding common shares. The common shares are held in the accounts of unregistered investment companies and managed accounts over which Porter Orlin LLC and its affiliates exercise investment discretion. Our board of trustees has granted Porter Orlin LLC a waiver from the common share ownership limit of our declaration of trust that permits Porter Orlin LLC to beneficially own up to 11.33% of our outstanding common shares. The address for Porter Orlin LLC is 666 Fifth Avenue, 34^th Floor, New York, NY 10103.

Equity plan information

We have adopted an Equity Plan, which provides for the issuance of equity-based awards, including share options, share appreciation rights (SARs), restricted shares, share units, unrestricted share awards and other awards based on our common shares that may be made by us to our trustees and officers and to our advisors and consultants who are providing services to us as of the date of the grant.

The following table summarizes information, as of December 31, 2010, relating to the Equity Plan pursuant to which grants of options, restricted shares, restricted units or other rights to acquire shares may be granted from time to time.

Plan Category	Number of Securities to be Issued upon Exercise of Outstanding Options, Warrants and Rights		Weighted-average Exercise Price of Outstanding Options, Warrants and Rights		Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans(2)
Equity compensation plans approved by security holders(1)		—		—		197,134
Equity compensation plans not approved by security holders		—		—		—
Total		—		—		197,134

(1) The Equity Plan was approved by Messrs. Francis and Vicari prior to the completion of the Company’s IPO, at such time when Messrs. Francis and Vicari were the sole shareholders and trustees of the Company.

(2) On January 31, 2011, the compensation committee issued (i) 70,000, 47,000, 16,000 and 10,000 time-based restricted common shares to Messrs. Francis, Vicari, Adams and Wootten, respectively, which will vest one-half per year beginning on the second anniversary of the completion of our IPO, assuming the executive remains employed by the Company on such anniversary date; (ii) 15,500 and 10,000 performance-based restricted common shares to Messrs. Francis and Vicari, respectively, of which one-half will be eligible for vesting each year in accordance with the terms set forth above with respect to the performance-based awards issued in 2010; and (iii) 13,000 time-based restricted common shares to certain other employees of the Company, with such shares to vest one-half per year beginning on the second anniversary of the completion of our IPO, assuming the employee remains employed by the Company on such anniversary date. Accordingly, as of the date of filing, 15,634 common shares are reserved for issuance under the Equity Plan.

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The material features of the Equity Plan are summarized below.

General. We have reserved 454,657 common shares for issuance under the Equity Plan. As of December 31, 2010, we have granted (1) 250,414 restricted common shares to our executive officers, which consisted of 212,044 time-based common shares and 38,370 performance-based common shares, and (2) 7,109 unrestricted common shares to our non-employee trustees, which vested immediately. As of December 31, 2010, subject to increases resulting from the forfeiture of currently outstanding awards, 197,134 common shares are reserved and available for future issuances under the Equity Plan. Any shares that may be issued under the Equity Plan to any person pursuant to an award are counted against this limit as one share for every one share granted. The maximum number of shares that may be issued to any person in one calendar year as options or SARs is 350,000, and the maximum number of shares that can be issued to any person in one calendar year, other than in the form of options, SARs, time-vested restricted shares or share units that are not performance-based, is 350,000. The maximum amount that may be earned as an annual incentive award or other cash award in any fiscal year by any one person is $5,000,000 and the maximum amount that may be earned as a performance award or other cash award in respect of a performance period by any one person is $15,000,000.

Purposes. The purposes of the Equity Plan are to enable us to attract and retain highly qualified trustees and officers and to enable us to provide incentives to our personnel and other parties who contribute to our success in a manner linked directly to increases in shareholder value.

Administration. The Equity Plan is administered by the compensation committee. Subject to the terms of the Equity Plan, the compensation committee, or its delegates pursuant to the Equity Plan, may select participants to receive awards, determine the types of awards and terms and conditions of awards and interpret provisions of the Equity Plan.

Source of shares. The common shares issued or to be issued under the Equity Plan consist of authorized but unissued shares. 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 Equity Plan with respect to the award will, to the extent of any such forfeiture or termination, again be available for making awards under the Equity Plan as one share.

Eligibility. Awards may be made under the Equity Plan to our or our affiliates’ trustees, directors and officers providing services to us, or our affiliates, and to any other individual whose participation in the Equity Plan is determined to be in our best interests by our board.

Amendment or termination of the Equity Plan. While the compensation committee may terminate or amend the Equity Plan at any time, no amendment may adversely impair the rights of grantees with respect to outstanding awards. In addition, an amendment will be contingent on approval of our shareholders to the extent required by law or if the amendment would materially increase the benefits accruing to participants under the Equity Plan, materially increase the aggregate number of shares that may be issued under the Equity Plan, or materially modify the requirements as to eligibility for participation in the Equity Plan. Unless terminated earlier, the Equity Plan will terminate in 2020, but will continue to govern unexpired awards.

Options. The Equity Plan permits the granting of options to purchase common shares intended to qualify as “incentive stock options” under the Internal Revenue Code, referred to as incentive share options, and options that do not qualify as incentive share options, referred to as non-qualified share options. Incentive share options will only be granted to our employees and employees of our subsidiaries.

The exercise price of each option may not be less than 100% of the fair market value of our common shares on the date of grant as determined pursuant to the Equity Plan. If we were to grant incentive share options to any 10% shareholder, the exercise price may not be less than 110% of the fair market value of our common shares on the date of grant. We may grant options in substitution for options held by employees of companies that we may

59

acquire. In this case, the exercise price would be adjusted to preserve the economic value of the employee’s share option from his or her former employer. Such options granted in substitution shall not count against the shares available for issuance under the Equity Plan.

The term of each option may not exceed ten years from the date of grant; the term of each option that is intended to qualify as an incentive share option and that is granted to any 10% shareholder may not exceed five years from the date of grant. The compensation committee will determine at what time or times each option may be exercised and the period of time, if any, after retirement, death, disability or termination of employment during which options may be exercised. Options may be made exercisable in installments. The exercisability of options may be accelerated by the compensation committee or our board. The exercise price of an option may not be amended or modified after the grant of the option, and an option may not be surrendered in consideration of or exchanged for a grant of a new option having an exercise price below that of the option which was surrendered or exchanged.

In general, an optionee may pay the exercise price of an option by cash, certified check or by tendering our common shares.

Options granted under the Equity Plan may not be sold, transferred, pledged or assigned other than by will or under applicable laws of descent and distribution. However, we may permit limited transfers of non-qualified options for the benefit of immediate family members of grantees to help with estate planning concerns.

Other awards. The following may also be awarded under the Equity Plan:

• common shares subject to vesting restrictions, which are common shares issued at no cost or for a purchase price;

• share units, which are the conditional right to receive a common share or cash in the future, subject to restrictions, including vesting restrictions;

• unrestricted common shares, which are common shares issued at no cost or for a purchase price which are free from any restrictions under the Equity Plan;

• dividend equivalent rights entitling the grantee to receive credits for dividends that would be paid if the grantee had held a specified number of common shares;

• a right to receive a number of shares or an amount in cash or a combination of shares and cash, based on the increase in the fair market value of the shares underlying the right during a specified period; and

• performance-based and non-performance-based incentive awards, ultimately payable in shares or cash or a combination thereof, which may be multi-year and/or annual incentive awards subject to achievement of specified performance goals tied to business criteria described below.

Business criteria. In establishing performance goals for awards intended to comply with Section 162(m) of the Internal Revenue Code to be granted to covered officers, we will use one or more of the following business criteria as selected by the compensation committee:

• total shareholder return;

• total shareholder return as compared to total return (on a comparable basis) of a publicly available index, such as, but not limited to, the Standard & Poor’s 500 Stock Index or the SNL U.S. REIT Hotel Index prepared by SNL Financial LC;

• net income;

• pretax earnings;

• earnings before interest expense and taxes;

• earnings before interest expense, taxes, depreciation and amortization;

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• pretax operating earnings after interest expense and before bonuses, service fees and extraordinary or special items;

• operating margin;

• earnings per share;

• return on equity;

• return on assets;

• return on capital;

• return on investment;

• operating earnings;

• working capital;

• ratio of debt to shareholders’ equity;

• revenue;

• book value;

• FFO or FFO per share;

• cash available for distribution, or CAD, per share;

• cash flow;

• economic value-added models or equivalent metrics; or

• reductions in costs.

Adjustments for share dividends and similar events. We will make appropriate adjustments in outstanding awards and the number of shares available for issuance under the Equity Plan, including the individual limitations on awards, to reflect share dividends, share splits, spin-offs and other similar events.

Extraordinary vesting events. If we experience a Corporate Transaction (as defined below), the compensation committee will have full authority to determine the effect, if any, on the vesting, exercisability, settlement, payment or lapse of restrictions applicable to an award. The effect of a Corporate Transaction may be specified in a participant’s award agreement or determined at a subsequent time, including, without limitation, the substitution of new awards, the termination or the adjustment of outstanding awards, the acceleration of awards or the removal of restrictions on outstanding awards. A “Corporate Transaction” under the Equity Plan means (1) our dissolution or liquidation; (2) our merger, consolidation or reorganization with one or more other entities in which we are not the surviving entity; (3) a sale of substantially all of our assets to another person or entity; or (4) any transaction (including without limitation a merger or reorganization in which we are the surviving entity) which results in any person or entity (other than already existing shareholders or affiliates) owning 50% or more of the combined voting power of all classes of our shares of beneficial interest.

Item 13. Certain Relationships and Related Transactions, and Trustee Independence

Purchases of common shares by certain executive officers and trustees

Concurrently with the IPO, in a separate private placement, we sold an aggregate of 150,000 common shares to our non-executive chairman and certain executive officers at $20.00 per share.

Loans from certain executive officers and trustees

Messrs. Francis and Vicari loaned the Company an aggregate of $249,000 to fund our formation and the costs related to the IPO. The loans were structured as demand notes and accrued interest at the Federal Short Term

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Rate as announced by the Internal Revenue Service. Immediately following the closing of the IPO and concurrent private placements, we used approximately $250,000 of the net proceeds to repay these loans to Messrs. Francis and Vicari, and to repurchase the shares acquired by them in connection with our initial capitalization for $1,000.

Conflict of interest policy

We have adopted policies to reduce potential conflicts of interest. A “conflict of interest” occurs when a trustee’s, officer’s or employee’s personal interest interferes with our interest. Generally, our policies provide that any transaction, agreement or relationship in which any of our trustees, officers or employees has an interest must be approved by our audit committee or a majority of our disinterested trustees. However, we cannot assure you that these policies will be successful in eliminating the influence of these conflicts. See “Risk factors—Risks related to our business and properties.”

Applicable Maryland law provides that a contract or other transaction between a Maryland real estate investment trust and any of that entity’s trustees or any other entity in which that trustee is also a trustee or director or has a material financial interest is not void or voidable solely on the grounds of the common board membership or interest, the fact that the trustee was present at the meeting at which the contract or transaction is approved or the fact that the trustee’s vote was counted in favor of the contract or transaction, if:

• the fact of the common board membership or interest is disclosed to the board or a committee of the board, and the board or that committee authorizes the contract or transaction by the affirmative vote of a majority of the disinterested members, even if the disinterested members constitute less than a quorum;

• the fact of the common board membership or interest is disclosed to shareholders entitled to vote on the contract or transaction, and the contract or transaction is approved by a majority of the votes cast by the shareholders entitled to vote on the matter, other than votes of shares owned of record or beneficially by the interested director, corporation, firm or other entity; or

• the contract or transaction is fair and reasonable to the trust.

Our declaration of trust specifically adopts these provisions of Maryland law.

Trustee Independence

Our board of trustees consists of seven trustees, each of which is identified above. Aside from Messrs. Francis and Vicari, each of our trustees is independent, as defined by the NYSE listing standards. Our board of trustees has three committees, the principal functions of which are briefly described above. Each of these committees is comprised entirely of independent trustees.

Item 14. Principal Accounting Fees and Services

The following table sets forth the aggregate fees paid or accrued for professional services rendered by Ernst & Young LLP for the audit of our annual financial statements and related matters in respect of acquired hotels for fiscal 2010 and 2009 and the aggregate fees paid or accrued for audit-related services and all other services rendered by Ernst & Young LLP for fiscal 2010 and 2009.

	Fiscal Year 2010		Fiscal Year 2009
Audit Fees	$	254,039	$	30,000
Audit-Related Fees		297,799		—
Tax Fees		2,750		—
All Other Fees		—		—
Total	$	554,588	$	30,000

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Audit Fees

“Audit Fees” consist of fees and expenses billed for professional services rendered for the audit of the financial statements and services that are normally provided by Ernst & Young LLP in connection with statutory and regulatory filings or engagements. Audit Fees include fees for professional services rendered in connection with quarterly and annual financial statements and fees and expenses related to the issuance of consents and comfort letters by Ernst & Young LLP related to our filings with the SEC.

Audit-Related Fees

“Audit-Related Fees” consist of fees and expenses for assurance and related services that are reasonably related to the performance of the audit or review of our financial statements that are not “Audit Fees,” including fees for the audits of the Company’s acquired hotels.

Tax Fees

“Tax Fees” consist of fees and related expenses billed for professional services for tax compliance, tax advice and tax planning. These services include assistance regarding federal and state tax compliance and tax planning and structuring.

All Other Fees

“All Other Fees” consist of fees and expenses for products and services that are not “Audit Fees,” “Audit-Related Fees” or “Tax Fees.”

Pre-Approval Policy

The audit committee has adopted a policy for the pre-approval of services provided by the independent registered public accounting firm. Under the policy, particular services or categories of services have been pre-approved, subject to a specific budget. At least annually, the audit committee is required to review and approve the list of pre-approved services and the threshold estimates of cost of performance of each. Ernst & Young LLP, the Company’s independent registered public accounting firm, is required to provide detailed information regarding any services to be performed and an estimate of the costs of performance before commencing any work. Under its pre-approval policy, the audit committee has delegated pre-approval authority for audit related or non-audit services not exceeding $100,000 to Mr. Eckert, one of its members. In determining whether a service may be provided pursuant to the pre-approval policy, consideration is given to whether the proposed service would impair the independence of Ernst & Young LLP or any other independent registered public accounting firm providing audit services to the Company from time to time.

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PART IV

Item 15. Exhibits and Financial Statement Schedules

1. Financial Statements

Included herein at pages F-1 through F-16.

2. Financial Statement Schedules

The following financial statement schedule is included herein at page F-17:

Schedule III—Real Estate and Accumulated Depreciation

All other schedules for which provision is made in Regulation S-X are either not required to be included herein under the related instructions or are inapplicable or the related information is included in the footnotes to the applicable financial statement and, therefore, have been omitted.

3. Exhibits

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

Exhibit Number	Description of Exhibit
3.1+	Articles of Amendment and Restatement of Declaration of Trust of Registrant
3.2+	Amended and Restated Bylaws of Registrant
10.1++	Employment Agreement between Registrant and James L. Francis*
10.2++	Employment Agreement between Registrant and Douglas W. Vicari*
10.3++	Employment Agreement between Registrant and D. Rick Adams*
10.4	Employment Agreement between Registrant and Graham J. Wootten (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on February 22, 2010)*
10.5+	Form of Restricted Share Award Agreement for Executive Officers*
10.6+	Form of Restricted Share Agreement for Trustees*
10.7+	Form of Indemnification Agreement between Registrant and its Trustees and Executive Officers
10.8	Limited Partnership Agreement of Chesapeake Lodging, L.P. (incorporated by reference to Exhibit 10.8 to Amendment No. 1 to the Registrant’s Registration Statement on Form S-11 filed on October 5, 2010)
10.9	Sourcing Agreement dated September 28, 2009 between Hyatt Corporation and Registrant (incorporated by reference to Exhibit 10.11 to Amendment No. 1 to the Registrant’s IPO Registration Statement on Form S-11 filed on November 6, 2009)
10.10+	Share Purchase Agreement dated September 28, 2009 between Hyatt Corporation and Registrant
10.11	Registration Rights Agreement between Hyatt Corporation and Registrant (incorporated by reference to Exhibit 10.4 to the Registrant’s Current Report on Form 8-K filed on January 28, 2010)
10.12+	Share Purchase Agreement dated November 4, 2009 between BAMCO, Inc. and Registrant
10.13	Registration Rights Agreement between BAMCO, Inc. and Registrant (incorporated by reference to Exhibit 10.5 to the Registrant’s Current Report on Form 8-K filed on January 28, 2010)

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10.14	Share Purchase Agreement dated as of December 4, 2009 among James L. Francis, Douglas W. Vicari, Thomas A. Natelli, Natelli Capital, LLC, TN Investments, LLC, Natelli Communications LP and Registrant (incorporated by reference to Exhibit 10.14 to Amendment No. 3 to the Registrant’s IPO Registration Statement on Form S-11 filed on December 7, 2009)
10.15	Chesapeake Lodging Trust Equity Plan (incorporated by reference to Exhibit 10.1 to the Registrant’s Registration Statement on Form S-8 filed on January 27, 2010)
10.16	Purchase and Sale Agreement by and between Boston Hotel Company L.L.C. and Chesapeake Lodging, L.P., dated as of March 18, 2010 (incorporated by reference to Exhibit 10.8 to the Registrant’s Quarterly Report on Form 10-Q for the period ended March 31, 2010)
10.17	Purchase and Sale Agreement by and between Kalpana LLC and Chesapeake Lodging, L.P., dated as of April 14, 2010 (incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q for the period ended June 30, 2010)
10.17.1	First Amendment to the Purchase and Sale Agreement by and between Kalpana, LLC and Chesapeake Lodging, L.P., dated as of May 4, 2010 (incorporated by reference to Exhibit 10.1.1 to the Registrant’s Quarterly Report on Form 10-Q for the period ended June 30, 2010)
10.17.2	Second Amendment to the Purchase and Sale Agreement by and between Kalpana, LLC and Chesapeake Lodging, L.P., dated as of May 17, 2010 (incorporated by reference to Exhibit 10.1.2 to the Registrant’s Quarterly Report on Form 10-Q for the period ended June 30, 2010)
10.18	Purchase and Sale Agreement by and between 535 Grand Avenue, LLC and Chesapeake Lodging, L.P., dated as of April 14, 2010 (incorporated by reference to Exhibit 10.2 to the Registrant’s Quarterly Report on Form 10-Q for the period ended June 30, 2010)
10.18.1	First Amendment to Purchase and Sale Agreement by and between 535 Grand Avenue, LLC and Chesapeake Lodging, L.P., dated as of May 4, 2010 (incorporated by reference to Exhibit 10.2.1 to the Registrant’s Quarterly Report on Form 10-Q for the period ended June 30, 2010)
10.19	Purchase and Sale Agreement by and between Mantra, LLC and Chesapeake Lodging, L.P, dated as of April 14, 2010 (incorporated by reference to Exhibit 10.3 to the Registrant’s Quarterly Report on Form 10-Q for the period ended June 30, 2010)
10.19.1	First Amendment to Purchase and Sale Agreement by and between Mantra, LLC and Chesapeake Lodging, L.P, dated as of May 4, 2010 (incorporated by reference to Exhibit 10.3.1 to the Registrant’s Quarterly Report on Form 10-Q for the period ended June 30, 2010)
10.19.2	Second Amendment to Purchase and Sale Agreement by and between Mantra, LLC and Chesapeake Lodging, L.P., dated as of July 19, 2010 (incorporated by reference to Exhibit 10.3.2 to the Registrant’s Quarterly Report on Form 10-Q for the period ended June 30, 2010)
10.20	Purchase and Sale Agreement by and between CR/TP Newton Hotel LLC and Chesapeake Lodging, L.P., dated as of June 30, 2010 (incorporated by reference to Exhibit 10.4 to the Registrant’s Quarterly Report on Form 10-Q for the period ended June 30, 2010)
10.21†	Purchase and Sale Agreement by and between AEW SBCO Seattle, LLC and CHSP Seattle LLC, dated as of November 2, 2010
10.22†	Purchase and Sale Agreement by and between HEI San Francisco LLC and CHSP San Francisco LLC, dated as of December 7, 2010
10.23†	Loan Agreement, dated December 15, 2010, by and among CHSP San Francisco LLC, as borrower, the financial institutions party thereto and their assignees under section 13.6, as lenders and Wells Fargo Bank, N.A., as administrative agent

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10.24†	Amended and Restated Credit Agreement, dated January 21, 2011, by and among Chesapeake Lodging, L.P., as borrower, the financial institutions party thereto and their assignees under section 13.6, as lenders and Wells Fargo Bank, N.A., as administrative agent
10.25†	Non-officer Trustee Compensation Policy*
21.1†	List of Subsidiaries of Registrant
23.1†	Consent of Ernst & Young LLP
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

 † Filed herewith

 + Incorporated by reference to the same-numbered exhibit to Amendment No. 2 to the Registrant’s IPO Registration Statement on Form S-11 filed on November 24, 2009

++ Incorporated by reference to the same-numbered exhibit to the Registrant’s Current Report on Form 8-K filed on January 28, 2010

 * Denotes management or trustee compensation plan or arrangement

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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: February 16, 2011	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)

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature	Title	Date
/S/    THOMAS A. NATELLI         Thomas A. Natelli	Chairman of the Board of Trustees	February 16, 2011
/S/    JAMES L. FRANCIS         James L. Francis	President, Chief Executive Officer and Trustee (Principal Executive Officer)	February 16, 2011
/S/    DOUGLAS W. VICARI         Douglas W. Vicari	Executive Vice President, Chief Financial Officer and Treasurer (Principal Financial Officer)	February 16, 2011
/S/    THOMAS D. ECKERT         Thomas D. Eckert	Trustee	February 16, 2011
/S/    GEORGE F. MCKENZIE         George F. McKenzie	Trustee	February 16, 2011
/S/    JOHN W. HILL         John W. Hill	Trustee	February 16, 2011
/S/    JEFFREY D. NUECHTERLEIN         Jeffrey D. Nuechterlein	Trustee	February 16, 2011

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CHESAPEAKE LODGING TRUST

INDEX TO FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm	F-2
Consolidated Balance Sheets as of December 31, 2010 and 2009	F-3
Consolidated Statement of Operations for the year ended December 31, 2010	F-4
Consolidated Statement of Shareholders’ Equity for the year ended December 31, 2010	F-5
Consolidated Statement of Cash Flows for the year ended December 31, 2010	F-6
Notes to Consolidated Financial Statements	F-7
Schedule III – Real Estate and Accumulated Depreciation as of December 31, 2010	F-17

F-1

Report of Independent Registered Public Accounting Firm

The Board of Trustees and Shareholders of Chesapeake Lodging Trust:

We have audited the accompanying consolidated balance sheets of Chesapeake Lodging Trust as of December 31, 2010 and 2009, and the related consolidated statements of operations, shareholders’ equity, and cash flows for the year ended December 31, 2010. Our audits also included the financial statement schedule listed in the Index at Item 15. These financial statements and schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States) Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above, present fairly, in all material respects, the consolidated financial position of Chesapeake Lodging Trust at December 31, 2010 and 2009, and the results of its operations and its cash flows for the year ended December 31, 2010, in conformity with U.S. generally accepted accounting principles. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein.

/s/ Ernst & Young LLP

February 16, 2011

McLean, Virginia

F-2

CHESAPEAKE LODGING TRUST

CONSOLIDATED BALANCE SHEETS

(in thousands, except share data)

	December 31,
	2010			2009
ASSETS
Property and equipment, net	$	364,940		$	—
Intangible asset, net of accumulated amortization of $411		35,694			—
Cash and cash equivalents		10,551			23
Restricted cash		2,588			—
Accounts receivable, net of allowance for doubtful accounts of $69		4,186			—
Prepaid expenses and other assets		4,606			412
Deferred financing costs, net of accumulated amortization of $641		2,743			—
Total assets	$	425,308		$	435
LIABILITIES AND SHAREHOLDERS’ EQUITY
Long-term debt	$	105,000		$	—
Accounts payable and accrued expenses		11,373			185
Dividends payable		3,679			—
Related-party loan		—			249
Total liabilities		120,052			434
Commitments and contingencies (Note 11)
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; 18,435,670 shares and 100,000 shares issued and outstanding, respectively		184			1
Additional paid-in capital		311,303			—
Cumulative dividends in excess of net income		(6,231	)		—
Total shareholders’ equity		305,256			1
Total liabilities and shareholders’ equity	$	425,308		$	435

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

F-3

CHESAPEAKE LODGING TRUST

CONSOLIDATED STATEMENT OF OPERATIONS

(in thousands, except per share data)

	Year Ended December 31, 2010
REVENUE
Rooms	$	38,530
Food and beverage		13,758
Other		1,906
Total revenue		54,194
EXPENSES
Hotel operating expenses:
Rooms		9,104
Food and beverage		9,414
Other direct		1,053
Indirect		17,770
Total hotel operating expenses		37,341
Depreciation and amortization		4,793
Intangible asset amortization		411
Corporate general and administrative:
Share-based compensation		1,689
Hotel property acquisition costs		3,597
Other		5,396
Total operating expenses		53,227
Operating income		967
Interest income		120
Interest expense		(2,344	)
Loss before income taxes		(1,257	)
Income tax benefit		583
Net loss	$	(674	)
Net loss available per common share—basic and diluted	$	(0.07	)

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

F-4

CHESAPEAKE LODGING TRUST

CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY

(in thousands, except share data)

	Common Shares						Additional Paid-In Capital			Cumulative Dividends in Excess of Net Income			Total
	Shares			Amount
Balances at December 31, 2009		100,000		$	1		$	—		$	—		$	1
Sale of common shares, net of underwriting fees and offering costs		18,178,147			182			309,616			—			309,798
Repurchase of common shares		(100,000	)		(1	)		—			—			(1	)
Issuance of restricted common shares		250,414			2			(2	)		—			—
Issuance of unrestricted common shares		7,109			—			133			—			133
Amortization of deferred compensation		—			—			1,556			—			1,556
Declaration of dividends on common shares		—			—			—			(5,557	)		(5,557	)
Net loss		—			—			—			(674	)		(674	)
Balances at December 31, 2010		18,435,670		$	184		$	311,303		$	(6,231	)	$	305,256

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

F-5

CHESAPEAKE LODGING TRUST

CONSOLIDATED STATEMENT OF CASH FLOWS

(in thousands)

	Year Ended December 31, 2010
Cash flows from operating activities:
Net loss	$	(674	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization		4,793
Intangible asset amortization		411
Deferred financing costs amortization		641
Share-based compensation		1,689
Changes in assets and liabilities:
Accounts receivable, net		(1,531	)
Prepaid expenses and other assets		(909	)
Accounts payable and accrued expenses		7,779
Net cash provided by operating activities		12,199
Cash flows from investing activities:
Acquisition of hotel properties, net of cash acquired		(404,197	)
Deposit on hotel property acquisition		(2,000	)
Improvements and additions to hotel properties		(2,414	)
Change in restricted cash		(2,588	)
Net cash used in investing activities		(411,199	)
Cash flows from financing activities:
Proceeds from sale of common shares, net of underwriting fees		312,158
Payment of offering costs related to sale of common shares		(2,134	)
Net borrowing from revolving credit facility		45,000
Proceeds from term loan		60,000
Payment of deferred financing costs		(3,384	)
Payment of dividends to common shareholders		(1,862	)
Repurchase of common shares		(1	)
Repayment of related-party loans		(249	)
Net cash provided by financing activities		409,528
Net increase in cash		10,528
Cash and cash equivalents, beginning of period		23
Cash and cash equivalents, end of period	$	10,551
Supplemental disclosure of cash flow information:
Cash paid for interest	$	1,269
Cash paid for income taxes		98

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

F-6

CHESAPEAKE LODGING TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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 and convention markets and, on a selective basis, premium select-service and extended-stay hotel properties in urban settings or unique locations in the United States of America. The Company completed its initial public offering (“IPO”) on January 27, 2010. As of December 31, 2010, the Company owned five hotel properties with an aggregate of 1,629 rooms in two states and in addition, had a sixth hotel property under contract.

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.

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, real estate taxes, and insurance pursuant to certain requirements in the Company’s hotel management, franchise, and loan 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.

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 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.

F-7

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 year ended December 31, 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 December 31, 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.

Prepaid Expenses and Other Assets – Prepaid expenses and other assets consist of prepaid real estate taxes, prepaid insurance, deposits on hotel acquisitions, deferred franchise costs, inventories, and other assets.

Deferred Financing Costs – Deferred financing costs are recorded at cost and consist of loan fees and other costs incurred in issuing debt. Amortization of deferred financing costs is computed using a method that approximates the effective interest method over the term of the related debt and is included in interest expense in the consolidated statement of operations.

Fair Value of Financial Instruments – The Company’s financial instruments include cash and cash equivalents, restricted cash, accounts receivable, accounts payable and accrued expenses, and long-term debt. The carrying values reported in the consolidated balance sheets for these financial instruments approximate fair value.

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.

F-8

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.

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.

Earnings Per Share – Basic earnings per share is computed by dividing net income, adjusted for dividends declared on and undistributed earnings allocated to unvested time-based awards, by the weighted-average number of common shares outstanding during the period. Diluted earnings per share is computed by dividing net income, adjusted for dividends declared on and earnings allocated to unvested time-based awards, by the weighted-average number of common shares outstanding, plus potentially dilutive securities, such as unvested performance-based awards, during the period. The Company’s unvested time-based awards are entitled to receive non-forfeitable dividends, if declared. Therefore, unvested time-based awards qualify as participating securities, requiring the allocation of dividends and undistributed earnings under the two-class method to calculate earnings per share. The percentage of undistributed earnings allocated to the unvested time-based awards is based on the proportion of the weighted-average unvested time-based awards outstanding during the period to the total of the weighted-average common shares and unvested time-based awards outstanding during the period. No adjustment is made for shares that are anti-dilutive during the period.

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.

Recent Accounting Pronouncements – In December 2010, the FASB issued updated accounting guidance to clarify that pro forma disclosures should be presented as if a business combination occurred at the beginning of the prior annual period for purposes of preparing both the current reporting period and the prior reporting period pro forma financial information. These disclosures should be accompanied by a narrative description about the nature and amount of material, nonrecurring pro forma adjustments. The new accounting guidance is effective for business combinations consummated in periods beginning after December 15, 2010, and should be applied prospectively as of the date of adoption. Early adoption is permitted. The Company will adopt the new

F-9

disclosures on January 1, 2011. The Company does not believe that the adoption of this guidance will have a material impact to the consolidated financial statements.

3. Acquisition of Hotel Properties

On March 18, 2010, the Company acquired the 498-room Hyatt Regency Boston located in Boston, Massachusetts for approximately $113.1 million. The effective date of the Hyatt Regency Boston 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 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.

On July 30, 2010, the Company acquired the 153-room Courtyard Anaheim at Disneyland Resort in Anaheim, California for approximately $25.1 million. The Company entered into an agreement with Tarsadia Hotels to operate the hotel under the Courtyard by Marriott flag.

On July 30, 2010, the Company also acquired the 430-room Boston Marriott Newton in Newton, Massachusetts for approximately $77.2 million. The Company entered into an agreement with TPG Hospitality Inc. to operate the hotel under the Marriott flag.

On December 15, 2010, the Company acquired the 360-room Le Meridien San Francisco in San Francisco, California for approximately $143.0 million. The Company entered into an agreement with Merritt Hospitality LLC to operate the hotel under the Le Meridien flag.

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

Land and land improvements	$	57,409
Buildings and leasehold improvements		277,428
Furniture, fixtures and equipment		32,482
Intangible asset		36,105
Cash		185
Accounts receivable, net		2,655
Prepaid expenses and other assets		1,512
Accounts payable and accrued expenses		(3,394	)
Net assets acquired	$	404,382

The following pro forma financial information presents the results of operations of the Company for the year ended December 31, 2010 as if the acquisitions of the Hyatt Regency Boston, Hilton Checkers Los Angeles, Courtyard Anaheim at Disneyland Resort, Boston Marriott Newton, and Le Meridien San Francisco, and the financing transactions necessary to acquire the hotel properties had all taken place on January 1, 2010. 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 year ended December 31, 2010. 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 all transactions taken place on January 1, 2010, or of future results of operations (in thousands, except per share data).

F-10

	Year Ended December 31, 2010
Total revenue	$	108,184
Total hotel operating expenses		79,261
Total operating expenses		102,414
Operating income		5,770
Net loss		(2,214	)
Net loss available per common share – basic and diluted		(0.13	)

4. Property and Equipment

Property and equipment as of December 31, 2010 consisted of the following (in thousands):

	December 31, 2010
Land and land improvements	$	57,467
Buildings and leasehold improvements		278,689
Furniture, fixtures and equipment		33,567
Construction-in-progress		10
		369,733
Less: accumulated depreciation and amortization		(4,793	)
Property and equipment, net	$	364,940

5. Long-Term Debt

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. Subject to certain conditions, the revolving credit facility allows for a one-year extension. 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. As of December 31, 2010, the maximum borrowing availability under the revolving credit facility was $110.4 million, of which $45.0 million had been drawn. 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.

On January 21, 2011, the Company amended the credit agreement to increase the maximum amounts the Company may borrow under the revolving credit facility from $115 million to $150 million, and to provide for the possibility of further future increases, up to a maximum of $200 million, in accordance with the terms of the amended credit agreement.

On December 15, 2010, in connection with the Le Meridien San Francisco acquisition, the Company entered into a loan agreement to obtain a $60 million one-year secured term loan with Wells Fargo Bank, N.A. Subject to certain conditions, the term loan may be increased to $71.5 million and allows for four one-year extension options. Borrowings under the term loan bear interest equal to LIBOR plus 3.75%, subject to a LIBOR floor of 2.00%.

F-11

As of December 31, 2010, the Company was in compliance with all financial covenants. As of December 31, 2010, the Company’s weighted-average interest rate on its long-term debt was 5.75%. Future scheduled principal payments of debt obligations as of December 31, 2010 are as follows (in thousands):

Year	Amounts
2011	$	60,000
2012		45,000
2013		—
2014		—
2015		—
Thereafter		—
	$	105,000

6. Earnings Per Share

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

	Year Ended December  31, 2010
Numerator:
Net loss	$	(674	)
Less: Dividends declared on unvested time-based awards		(85	)
Less: Undistributed earnings allocated to unvested time-based awards		—
Net loss available to common shareholders	$	(759	)
Denominator:
Weighted-average number of common shares outstanding – basic and diluted		11,236,120
Net loss available per common share – basic and diluted	$	(0.07	)

7. Dividends

For the year ended December 31, 2010, the Company’s board of trustees declared dividends per common share as follows:

	Year Ended December  31, 2010
First Quarter	$	—
Second Quarter		—
Third Quarter		0.20
Fourth Quarter		0.20
	$	0.40

8. 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.

F-12

On January 27, 2010, the Company completed its IPO and sold 7,500,000 common shares at a price of $20.00 per share, resulting in gross proceeds of $150.0 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 placements 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 placements 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 private placements 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, private placements, and the exercise of the underwriters’ over-allotment option were approximately $169.4 million.

On October 13, 2010, the Company completed an underwritten public offering of 9,085,000 common shares at a price of $16.25 per share, including 1,185,000 shares sold as a result of the exercise of the underwriters’ over-allotment option. After deducting underwriting fees and offering costs, the Company generated net proceeds of approximately $140.4 million.

For the year ended December 31, 2010, the Company issued 257,523 restricted and unrestricted common shares to its employees and trustees. As of December 31, 2010, the Company had 18,435,670 common shares outstanding.

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.

9. 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 initially 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.

F-13

For the year ended December 31, 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 December 31, 2010, there was approximately $3.1 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 2.0 years. The following is a summary of the Company’s restricted common shares for year ended December 31, 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 December 31, 2010		250,414	$	18.50

For the year ended December 31, 2010, the Company granted 7,109 unrestricted common shares to the Company’s trustees, which vested immediately. As of December 31, 2010, subject to increases resulting from the forfeiture of currently outstanding awards, 197,134 common shares were reserved and available for future issuances under the Plan.

10. 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.

11. Commitments and Contingencies

Management Agreements – The Company’s hotel properties operate pursuant to management agreements with various third-party management companies. Each management company receives a base management fee generally between 1% 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 Agreements – As of December 31, 2010, four of the Company’s five current hotel properties operated pursuant to franchise agreements with international hotel companies. Under these franchise agreements,

F-14

the Company generally pays a royalty fee ranging from 3% to 6% of room revenues and 1% to 3% of food and beverage revenues, plus additional fees for marketing, central reservation systems, and other franchisor costs that amount to between 1% and 5% of room revenues. The Hyatt Regency Boston is managed by Hyatt Corporation pursuant to a management agreement that allows the hotel property to operate under the Hyatt Regency brand.

Purchase and Sale Agreement – As of December 31, 2010, the Company had one hotel property, the 195-room Homewood Suites Seattle Convention Center, under contract for a purchase price of $53.0 million, plus customary pro-rated amounts and closing costs. The Company expects to fund the purchase price by assuming approximately $27.6 million of existing mortgage debt and with available cash and borrowings under its revolving credit facility. The Company has deposited $2.0 million under the purchase and sale agreement, which is non-refundable except in the event of (i) a default under the purchase and sale agreement by the seller or (ii) expressly otherwise provided by the purchase and sale agreement. There can be no assurances that the Company will complete this acquisition.

Property Improvement Reserves – Pursuant to its management, franchise and loan 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.

12. Income Taxes

The components of income tax benefit for the year ended December 31, 2010 are as follows (in thousands):

	Year Ended December 31, 2010
Deferred:
Federal	$	(454	)
State		(129	)
Income tax benefit	$	(583	)

A reconciliation of the statutory federal income tax benefit to the Company’s income tax benefit is as follows (in thousands):

	Year Ended December 31, 2010
Statutory federal income tax benefit	$	(427	)
Effect of non-taxable REIT income		(79	)
State income tax benefit, net of federal benefit		(85	)
Other		8
Income tax benefit	$	(583	)

The tax effect of each type of temporary difference and carryforward that gives rise to the deferred tax assets and liabilities as of December 31, 2010 are as follows (in thousands):

	December 31, 2010
Deferred tax assets:
Employee-related compensation	$	53
Net operating loss carryforwards		513
Other		17
Net deferred tax asset	$	583

F-15

As of December 31, 2010, the Company had a net deferred tax asset of $0.6 million (included in prepaid expenses and other assets on the consolidated balance sheet), primarily due to tax net operating losses. These loss carryforwards will begin to expire in 2030 if not utilized by then. The Company believes that it is more likely than not that CHSP TRS will generate sufficient taxable income to realize in full this deferred tax asset. Accordingly, no valuation allowance has been recorded as of December 31, 2010.

13. Quarterly Operating Results (unaudited)

	Quarter Ended - 2010
	March 31			June 30		September 30		December 31
	(in thousands, except per share data)
Total revenue	$	2,421		$	11,775	$	18,232	$	21,766
Total operating expenses		3,815			10,432		16,272		22,708
Operating income (loss)		(1,394	)		1,343		1,960		(942	)
Net income (loss)		(1,301	)		1,367		732		(1,472	)
Net income (loss) available to common shareholders		(1,301	)		1,367		690		(1,515	)
Net income (loss) available per common share—basic and diluted(1)		(0.14	)		0.15		0.08		(0.09	)

(1) The sum of per share amounts for the four quarters may differ from the annual per share amount due to the required method of computing weighted-average number of common shares outstanding in the respective periods.

14. Subsequent Event

On January 21, 2011, the Company amended the credit agreement to increase the maximum amounts the Company may borrow under the revolving credit facility from $115 million to $150 million, and to provide for the possibility of further future increases, up to a maximum of $200 million, in accordance with the terms of the amended credit agreement.

F-16

CHESAPEAKE LODGING TRUST

SCHEDULE III—REAL ESTATE AND ACCUMULATED DEPRECIATION

AS OF DECEMBER 31, 2010

(in thousands)

Description	Encumbrances			Initial Cost				Costs  Capitalized Subsequent to Acquisition		Gross Amount at End of Year						Accumulated Depreciation		Year of Acquisition	Depreciation Life
				Land		Buildings and Improvements				Land		Buildings  and Improvements		Total
Hyatt Regency Boston
Boston, Massachusetts	$	(1	)	$	—	$	71,462	$	893	$	58	$	72,297	$	72,355	$	1,529	2010	40 years
Hilton Checkers Los Angeles
Los Angeles, California		(1	)		9,010		32,710		91		9,010		32,801		41,811		480	2010	40 years
Courtyard Anaheim at Disneyland Resort
Anaheim, California		(1	)		7,862		16,072		—		7,862		16,072		23,934		167	2010	40 years
Boston Marriott Newton
Newton, Massachusetts		(1	)		11,800		56,450		10		11,800		56,460		68,260		588	2010	40 years
Le Meridien San Francisco
San Francisco, California		60,000			28,737		100,734		—		28,737		100,734		129,471		210	2010	40 years
Totals	$	60,000		$	57,409	$	277,428	$	994	$	57,467	$	278,364	$	335,831	$	2,974

(1) This property is pledged as collateral to borrowings made under the revolving credit facility obtained on July 30, 2010, which had outstanding borrowings of $45,000 as of December 31, 2010.

Notes:

(a) The change in total cost of real estate assets for the year ended December 31, 2010 is as follows:

Balance as of December 31, 2009	$	—
Acquisitions		334,837
Capital expenditures and transfers from construction-in-progress		994
Balance as of December 31, 2010	$	335,831

(b) The change in accumulated depreciation and amortization of real estate assets for the year ended December 31, 2010 is as follows:

Balance as of December 31, 2009	$	—
Depreciation and amortization		2,974
Balance as of December 31, 2010	$	2,974

F-17

EX-10.21

Exhibit 10.21

AGREEMENT OF PURCHASE AND SALE

OF

REAL PROPERTY COMMONLY KNOWN AS

HOMEWOOD SUITES SEATTLE

SEATTLE, WASHINGTON

and

Joint Escrow Instructions

among

AEW SBCO SEATTLE, LLC, a Delaware limited liability company

(“Seller”),

and

CHSP Seattle LLC, a Delaware limited liability company

(“Buyer”).

Effective Date: November 2, 2010

Table of Contents

1.	DEFINITIONS.	1
2.	COVENANT OF PURCHASE AND SALE	10
3.	PURCHASE PRICE AND DEPOSIT.	10
4.	TITLE AND DUE DILIGENCE CONDITIONS.	10
5.	REPRESENTATIONS.	12
6.	OPERATION OF THE HOTEL PENDING CLOSING	17
7.	OTHER AGREEMENTS.	18
8.	PRORATIONS, CREDITS AND OTHER ADJUSTMENTS	21
9.	CONDITIONS TO CLOSING.	24
10.	CLOSING.	25
11.	POST CLOSING ADJUSTMENTS.	30
12.	THIRD PARTY CLAIMS AND OBLIGATIONS.	30
13.	HOTEL RECORDS	32
14.	ASSIGNMENT	32
15.	NOTICES	32
16.	GENERAL PROVISIONS.	33
17.	EXHIBITS	35
18.	SIGNERS’ WARRANTY	36
19.	LIMITATION ON SELLER’S LIABILITY.	36
20.	LIQUIDATED DAMAGES AND LIMITATIONS OF REMEDIES FOR BUYER’S BREACH	37

-i-

EXHIBITS:

A	Legal Description of Hotel Parcel
B	Form of Deed
C	Form of Bill of Sale
D	Allocation of Purchase Price
E	Form of Assignment and Assumption of Assumed Contracts	E-1
F	Form of General Assignment and Assumption	F-1
G	Form of FIRPTA Certificate
H	Exceptions to Seller Representations
I	Intentionally Omitted.
J	Schedule of Contracts
K	Schedule of Environmental Report and Existing Survey
L	Schedule of Existing Loan Documents
M	List of Insurance Policies

-ii-

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 November 2, 2010 (the “Effective Date”) among AEW SBCO SEATTLE, LLC, a Delaware limited liability company (“Seller”),

and

CHSP Seattle LLC, a subsidiary of Chesapeake Lodging, L.P., a Delaware limited liability company (“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 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. For the purposes of this definition, the term “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of the person in question, whether by the ownership of voting securities, contract or otherwise.

1.2 Approval Date. “Approval Date” means November 5, 2010.

1.3 Assumed Contracts. “Assumed Contracts” means the Equipment Leases and Service Contracts identified on the Schedule of Contracts attached hereto as Exhibit J.

1.4 Bill of Sale. “Bill of Sale” means a bill of sale in the form attached hereto as Exhibit C, together conveying the FF&E and Inventory to Buyer or Buyer’s nominee(s).

1.5 Broker. “Broker” means Eastdil Secured.

1.6 Business Day. “Business Day” means a day other than Saturday, Sunday or other day when commercial banks in Washington are authorized or required by Law to close.

1.7 Cash Bank. “Cash Bank” means, with respect to the Hotel, cash on hand in house banks and petty cash as of Closing.

1.8 Casualty. “Casualty” means damage, destruction or loss of the Hotel Premises or any portion thereof by a casualty event or a taking under power of eminent domain.

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1.9 Claim. “Claim” means any claim, demand, liability, legal action or proceeding, investigation, fine or other penalty, and loss, cost or expense related thereto but expressly (including, without limitation, attorneys’ fees and disbursements actually and reasonably incurred) excluding any consequential and punitive damages.

1.10 Closing. “Closing” means the concurrent delivery, in accordance with this Agreement, (A) by Seller to Buyer of the Transfer Instruments and (B) by Buyer to Seller of the Purchase Price.

1.11 Closing Date. “Closing Date” means December 1, 2010, as the same may be extended as specified in Section 7.3.

1.12 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.

1.13 Continuing Employees. “Continuing Employees” means all of the Hotel Employees who are employed by Buyer or Buyer’s Hotel manager or operator upon Closing.

1.14 Contract Assignment. “Contract Assignment” means an assignment and assumption of Assumed Contracts substantively in the form attached hereto as Exhibit E.

1.15 Counsel. “Counsel” means each Party’s respective legal counsel for the transaction contemplated by this Agreement: with respect to Seller, the law firm of Seyfarth Shaw LLP; and, with respect to Buyer, Tracy M.J. Colden, Esq.

1.16 Day. The term “day” means a calendar day.

1.17 Deed. “Deed” means a special warranty deed in the form attached hereto as Exhibit B, conveying the Hotel Premises to Buyer subject only to Permitted Exceptions.

1.18 Deposit. “Deposit” has the meaning specified in Section 3.3.1.

1.19 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).

1.20 Effective Date. “Effective Date” means the date specified in the initial paragraph of this Agreement.

1.21 Eligible Employees. “Eligible Employees” means a sufficient number of Hotel Employees offered employment by Buyer or Buyer’s hotel manager effective as of the Closing Date as is necessary to prevent Seller or Hotel Manager from violating the WARN Act with respect to the Hotel Employees.

1.22 Employee Leave. “Employee Leave” means vacation, sick leave and any other paid leave accrued or accruing with respect to Hotel Employees.

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1.23 Employee Liabilities. “Employee Liabilities” means all obligations and liabilities, actual or contingent with respect to Hotel Employees, whether accruing before or after Closing, including, without limitation, any and all obligations or liabilities: for (A) wages, salaries, Employee Leave, fringe benefits, and payroll taxes; (B) employer contributions and other required employer payments to Hotel Employee Plans, (C) worker’s compensation claims based on any real or alleged occurrence prior to Closing; and (D) claims or penalties under applicable Laws governing employer/employee relations (including 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, ERISA, the Multi-Employer Pension Plan Amendments Act, and the Consolidated Omnibus Budget Reconciliation Act of 1985).

1.24 Environmental Report. “Environmental Report” means the “Phase 1” site assessment report(s) and any other reports regarding the environmental condition of the Hotel Premises that are identified on Exhibit K.

1.25 Equipment Lease. “Equipment Lease” means a personal property lease covering any item(s) of FF&E that are identified as such in the schedule attached hereto as Exhibit J.

1.26 ERISA. “ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

1.27 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 at Closing.

1.28 Escrow Agent. “Escrow Agent” means Terrance Miklas of Stewart Title Guaranty Company, acting through its office at 99 Summer Street, Boston, Massachusetts, whenever acting in the capacity of an escrow holder pursuant hereto.

1.29 Existing Guarantor. “Existing Guarantor” means AEW Partners V, L.P.

1.30 Existing Guaranty. “Existing Guaranty” means the guaranty or guaranties executed by Existing Guarantor in connection with the Existing Loan.

1.31 Existing Lender. “Existing Lender” means Wells Fargo Bank, N.A., as trustee for the registered Holders of Credit Suisse First Boston Mortgage Securities Corp., Commercial Mortgage Pass-Through Certificates, Series 2007-C1, successor to Capmark Bank.

1.32 Existing Loan. “Existing Loan” means the loan evidenced by that certain Deed of Trust Note, made as of June 12, 2006, by Seller to Existing Lender in the original principal amount of $28,400,000 secured by that certain Deed of Trust, Assignment of Leases and Profits, Security Agreement and Fixture Filing dated as of June 12, 2006, and recorded under King County Auditor No. 20060612001764 on June 12, 2006 and the other Existing Loan Documents.

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1.33 Existing Loan Assumption Consent. “Existing Loan Assumption Consent” means the Existing Lender’s consent to the assumption of the Existing Loan by Buyer or its Affiliate, the full, final, and unconditional release of Seller, Existing Guarantor, and any other guarantors from all obligations under the Existing Loan and the assumption agreement and/or other documents evidencing or effecting such assumption upon such terms and conditions as are mutually acceptable to Seller and Buyer.

1.34 Existing Loan Documents. “Existing Loan Documents” means the documents and instruments identified in the Schedule of Existing Loan Documents listed on Exhibit L attached hereto.

1.35 Existing Survey. “Existing Survey” means the ALTA/ACSM Survey of the Hotel Parcel identified on Exhibit K.

1.36 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) and any special endorsements required by Buyer.

1.37 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, including without limitation any Leased 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 and software, (7) blankets, pillows, linens, towels and other bed clothing, (8) china, crystal, dishware, glassware, silverware, flatware and other “operating inventory” as that term is used in the Uniform System of Accounts, (9) kitchen appliances, cookware and other cooking utensils, (10) automobiles, vans, trucks and other 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 and/or Hilton or its Affiliate, 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.

1.38 Final Statement. “Final Statement” has the meaning specified in Section 11.1.

1.39 FIRPTA Certificate. “FIRPTA Certificate” means a certificate with respect to 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

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amended (with such supplemental statements as may be required to exempt the transactions contemplated hereby from any withholding tax requirements under applicable state Laws).

1.40 Franchise Agreement. “Franchise Agreement” means that certain Franchise License Agreement having an effective date of June 12, 2006 by and between Promus Hotels, Inc., a subsidiary of Hilton Hotels Corporation (“Hilton”), as Licensor, and Seller, as Licensee.

1.41 General Assignment. “General Assignment” means a general assignment and assumption agreement substantively in the form attached hereto as Exhibit F.

1.42 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.

1.43 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, the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended by the Superfund Amendments and Reauthorization Act of 1986, 42 U.S.C. § 9601 et seq.; the Toxic Substance Control Act, 15 U.S.C. § 2601 et seq.; the Hazardous Materials Transportation Act, 49 U.S.C. § 1802; or the Resource Conservation and Recovery Act, 42 U.S.C. § 6901 et seq., or any friable asbestos containing materials (but excluding non-friable asbestos-containing materials), PCBs or formaldehyde foam insulation.

1.44 Hotel. “Hotel” means all of the Hotel Premises, FF&E,, the Inventory, the Assumed Contracts, Cash Banks and Intangibles comprising the “Homewood Suites Seattle”, located at 1011 Pike Street in Seattle, Washington.

1.45 Hotel Employees. “Hotel Employees” means all persons employed at the Hotel by Hotel Manager.

1.46 Hotel Employee Plan. “Hotel Employee Plan” means an employee benefit plan (as defined in ERISA) to which any of Seller, Hotel Manager or an Affiliate of Seller or Hotel Manager currently makes contributions on account of any Hotel Employees.

1.47 Hotel Improvements. “Hotel Improvements” means all of the buildings, other immovable structures and improvements and fixtures on the Hotel Parcel.

1.48 Hotel Manager. “Hotel Manager” means Stonebridge Realty Advisors, Inc.

1.49 Hotel Management Agreement. “Hotel Management Agreement” means that certain management agreement dated June 9, 2006 between Seller and Hotel Manager.

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1.50 Hotel Parcel. “Hotel Parcel” means (A) those certain parcels described in Exhibit A hereto, together with (B) all appurtenant rights , including, without limitation: (i) easements and rights-of-way, (ii) licenses and other privileges, (iii) rights in and to land underlying adjacent highways, streets and other public rights-of-way and rights of access thereto, (iv) rights in and to strips and gores of land within or adjoining any such parcel, (v) air rights, excess floor area rights and other transferable development rights belonging to or useable with respect to any such parcel, (vi) rights to utility connections and hook-ups, (vii) water rights, (viii) riparian rights, and (ix) any other rights which any of Seller may have in or with respect to land adjoining any such parcel (including land which is separated from any such parcel only by public highway, street or other right-of-way).

1.51 Hotel Party. “Hotel Party” means, with respect to a Service Contract or Equipment Lease, the owner and/or manager of the Hotel (as applicable) obligated as vendee or lessee under such contract or lease.

1.52 Hotel Payable. “Hotel Payable” means any account payable outstanding as of Closing for the Hotel, other than Disputed Payables.

1.53 Hotel Premises. “Hotel Premises” means the Hotel Parcel and the Hotel Improvements.

1.54 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 control, excluding records, manuals and other like materials owned by (and proprietary to) the Hotel Manager and/or Hilton or its Affiliate(s) and personnel files of Hotel Employees.

1.55 Indemnify. “Indemnify” means to hold harmless and indemnify an indemnified party from and against a Claim and, where applicable, to defend such party by counsel reasonably satisfactory to it, all at the sole expense and liability of the indemnifying party.

1.56 Intangibles. “Intangibles” means Seller’s rights, title and interest, if any, in (A) trade names, trademarks, service marks, logs and other forms of identification used to identify the Hotel or any of its facilities or operations, including but not limited to the “vanity website” for the Hotel, (B) the Hotel Records, (C) plans and specifications for the Hotel Improvements, (D) the Permits, (E) Repair Warranties, to the extent assignable in connection with a sale of the Hotel, and (F) studies, analyses, reports and other written materials pertaining to the condition of the Hotel Premises, all to the extent assignable in connection with a sale of the Hotel and subject to the Franchise Agreement.

1.57 Inventory. “Inventory” means (i) all goods held for sale to Hotel guests and others in the Ordinary Course and (ii) the stock of supplies and other food and beverage consumables used in the operation and maintenance of the Hotel in the Ordinary Course but excluding “operating inventory” as that term is used in the Uniform System of Accounts.

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1.58 Laws. “Laws” means any and all:

1.58.1 Statutes, ordinances, rules, regulations, orders, rulings, decrees or other legal requirements of any Governmental Authority.

1.58.2 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).

1.59 Leased Equipment. “Leased Equipment” means any item of FF&E that is leased rather than owned by Seller.

1.60 Material Contract. “Material Contract” means a Service Contract or Equipment Lease for which scheduled payments due to the vendor or lessor thereunder during any 12-month period occurring after Closing will exceed $12,000 . Material Contracts do not include any contracts (a) that do not impose any obligation on the Hotel Party to make any payments after Closing, or (b) for which payment will be due from the Hotel Party only if such party orders or otherwise requests goods or services under such contract or (c) which obligate the Hotel Party to make payments solely out of, and as a percentage of, services performed by the other party for Hotel guests that impose no out-of-pocket cost on the Hotel Party.

1.61 Objectionable Title Matters. “Objectionable Title Matters” has the meaning specified in Section 4.2.

1.62 Ordinary Course. “Ordinary Course” means 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 in effect as of the Effective Date.

1.63 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.

1.64 Outside Closing Date. “Outside Closing Date” has the meaning specified in Section 7.3.

1.65 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 in connection with the sale of the Hotel.

1.66 Permitted Exceptions. “Permitted Exceptions” means (A) liens for real property taxes and assessments not yet delinquent, (B) liens or encumbrances arising out of any

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activity of Buyer, (C) the Assumed Contracts, (D) the Existing Loan and Existing Loan Documents, and (F) any other matter deemed to be a Permitted Exception pursuant to Section 4.2 or 4.4.

1.67 Place of Closing. “Place of Closing” has the meaning specified in Section 10.1.

1.68 Preliminary Statement. “Preliminary Statement” has the meaning specified in Section 8.

1.69 Proceeds. “Proceeds” means all insurance proceeds, condemnation awards or other amounts paid or payable to Seller in connection with any Casualty, including any amounts recoverable under rent loss or business interruption insurance to the extent allocable to periods after Closing.

1.70 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.

1.71 Repair Warranties. “Repair Warranties” means contractors’, manufacturers’ and vendors’ written guaranties, warranties and other obligations (if any) for the repair or maintenance of any component of the Hotel Improvements or the FF&E.

1.72 Replacement Guarantor. “Replacement Guarantor” means a person or entity acceptable to the Existing Lender.

1.73 Replacement Guaranty. “Replacement Guaranty” means a guaranty executed and delivered to the Existing Lender by the Replacement Guarantor under which the Replacement Guarantor shall assume the obligations of the Existing Guarantor with respect to the extent such obligations arise and accrue after Closing.

1.74 Reservation. “Reservation” means any reservation, commitment or agreement for the use of guest rooms, conference rooms, or other facilities in the Hotel, to the extent pertaining to periods from and after Closing.

1.75 Reservation Deposit. “Reservation Deposit” means any deposit or advance payment received by Seller or the Hotel Manager in connection with a Reservation.

1.76 Seller’s Knowledge. “Seller’s Knowledge” means the actual present (and not the constructive) knowledge of James Luchars and Greg Dietl, and does not imply that said individual (A) 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 or (B) has any personal liability with respect to any such representation, warranty or other statement.

1.77 Service Contract. “Service Contract” means any of the contracts or other written arrangements for the continuing provision of services relating to the improvement,

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maintenance, repair, protection or operation of the Hotel, excluding the Hotel Management Agreement and the Franchise Agreement.

1.78 Survey. “Survey” means a survey of the Hotel Premises, certified by a duly licensed surveyor as of date no earlier than the Effective Date, meeting the minimum requirements of the American Land Title Association/American Congress of Surveying and Mapping.

1.79 Taxes. “Taxes” has the meaning specified in Section 8.1.

1.80 Title Company. “Title Company” means Stewart Title Guaranty Company, together with any agent through which it may act in issuing the Title Policy.

1.81 Title Documents. “Title Documents” has the meaning specified in Section 4.1.

1.82 Title Report. “Title Report” means a preliminary title commitment describing the condition of title to the Hotel Premises, issued by the Title Company as of a date no earlier than 60 days prior to the Effective Date and delivered by Seller.

1.83 Title Policy. “Title Policy” means an ALTA (Form 2006 or its local equivalent) owner’s policy of title insurance for the amount of the Purchase Price, insuring or committing to insure fee title to the Hotel Premises in Buyer.

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.

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 most current edition of the Uniform System of Accounts for the Lodging Industry, published by the Educational Institute of the American Hotel and Motel Association.

1.87 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, (i) the terms “herein,” “hereof” and “hereunder” refer to this Agreement in its entirety and are not limited to any specific sections; (ii) the term “person” means any natural person, other legal entity, or combination of natural persons and/or other legal entities acting as a unit and (iii) the term “including” shall be read as “including without limitation.” 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.

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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, the Assumed Contracts, the Permits and any Permitted Exceptions).

3. PURCHASE PRICE AND DEPOSIT.

3.1 Amount of Purchase Price. The Purchase Price shall be Fifty Three Million Dollars ($53,000,000.00), 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. Seller and Buyer shall allocate the Purchase Price among the Hotel Premises, FF&E, tangible and intangible property comprising the Hotel in accordance with Exhibit D attached hereto. Allocations made pursuant to this Section shall be used by the Parties for title insurance and all tax and other government reporting purposes.

3.3 Deposit.

3.3.1 Amount and Delivery. Within two (2) Business Days after the Effective Date, Buyer shall deliver into Escrow cash in the amount of One Million Dollars ($1,000,000.00) (the “Initial Deposit”), as a good faith deposit. Within one (1) Business Day after the Approval Date, if Buyer elects to proceed with the purchase of the Hotel, Buyer shall deliver into Escrow an additional cash deposit of One Million Dollars ($1,000,000.00) (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.” The Deposit shall be non-refundable except as expressly provided in this Agreement.

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 Closing Date, Seller upon termination of this Agreement shall be entitled to receive and retain the Deposit as liquidated damages, in accordance with Section 20. At Closing, the Deposit shall, together with interest earned thereon, shall be applied against the Purchase Price. In the event of a termination of this Agreement in accordance with the terms hereof, the Deposit shall be returned to Buyer less Buyer’s proportionate share of any Escrow cancellation charges.

4. TITLE AND DUE DILIGENCE CONDITIONS.

4.1 Title Report and Survey. Buyer hereby acknowledges that it has received a copy of the Title Report and the Existing Survey, together with copies of all documents referenced in the Title Report (the “Title Documents”). If Buyer desires Extended

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Coverage, Buyer may, at its sole expense, update or supplement the Existing Survey or replace it with a new Survey, so long as it obtains such updated, supplemental Survey, and delivers a copy of it to Seller, on or before the Approval Date.

4.2 Objectionable Title Matters and Permitted Exceptions. Except for any exceptions to or defects in Seller’s title (“Objectionable Title Matters”) with respect to which Buyer gives Seller and Escrow Agent written notice of objection (each a “Title Objection Notice”) on or before the Approval Date or as otherwise provided herein, Buyer shall be deemed to have approved the state of Seller’s title to the Hotel Premises as disclosed by the Title Report or the Title Documents or would be disclosed on the Effective Date by a Survey and inspection of the Hotel Premises. All exceptions and other defects that are disclosed by the Title Report or the Title Documents, or would be disclosed by such a Survey and inspection, to which Buyer makes no timely objection in accordance with the provisions of this Section 4, and all such exceptions and other defects to which Buyer timely objects but later waives such objection as provided in this Section 4, shall be deemed Permitted Exceptions.

4.3 Cure of Objectionable Title Matters. Seller shall have no obligation to cure Objectionable Title Matters, unless hereafter created by Seller in breach of its covenants under this Agreement. If Seller elects to cure any Objectionable Title Matter, then Seller may extend the Closing Date as necessary to provide at least 30 days for Seller to effectuate such cure. Such extension shall be effected by Seller giving written notice thereof to Buyer at least five (5) Business Days before the date otherwise specified herein as the Closing Date.

4.4 Termination for Objectionable Title Matter. If, after giving Seller timely written notice under this Section 4 of any Objectionable Title Matter, Buyer does not receive within ten (10) days after the date Seller receives the Title Objection Notice from Buyer (the “Seller’s Response Date”) Seller’s unconditional written undertaking to take, at or before Closing, such steps as the Title Company specifies in its written confirmation are required for it either to omit such Objectionable Title Matter as an exception in the Title Policy or to affirmatively insure Buyer against loss resulting from such Objectionable Title Matter by an endorsement to the Title Policy in a form reasonably satisfactory to Buyer and Existing Lender, as the case may be, then Buyer shall have the right to terminate the Escrow and this Agreement by written notice of termination given to Seller and Escrow Agent no later than the five (5) days after the Seller’s Response Date, whereupon Escrow Agent shall cancel Escrow, disburse the Deposit to Buyer in accordance with Section 3.3.3 above and return every other item in Escrow to the Party which deposited the same. If Buyer does not so elect to terminate this Agreement, Buyer shall be deemed to have waived its objection to the Objectionable Title Matter(s) in question and such title matter(s) shall then become Permitted Exceptions.

4.5 Access to Property and Records. During the period from the Effective Date to Closing, Seller shall provide to Buyer, its agents, consultants and counsel, upon reasonable advance notice but not less that two (2) Day’s prior notice, access during the hours of 9:00 a.m. and 5:00 p.m. Pacific Time on all Business Days to:

4.5.1 The Hotel Records (excluding software and electronic data, but including print-outs of such data).

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4.5.2 The Hotel Premises, for purposes of conducting (at Buyer’s sole expense and liability) any inspections, observations, examinations, surveys and tests that Buyer may reasonably require (but Buyer shall not conduct any borings, drilling or other invasive or destructive testing without Seller’s prior written consent and without first evidencing to Seller liability insurance coverage for such activity reasonably satisfactory in scope and amount to Seller).

Such right of access, however, shall be subject to the rights of guests, tenants and licensees of the Hotel, and Buyer in its activities under this Section 4.5 shall conduct its inspections so as not to interfere with such rights or the operation of the Hotel in any respect. In no event shall Buyer communicate with any employees of or at the Hotel other than (A) the Hotel’s general manager and (B) such other executive Hotel Employees, if any, as Seller designates in writing from time-to-time (“Designees”), nor shall Buyer disclose or permit to be disclosed to any Hotel Employees, other than the general manager and any Designees, the nature or reason for Buyer’s presence on or about the Hotel Premises, without Seller’s prior written approval.

4.6 Indemnification. Buyer shall Indemnify Seller and Hotel Manager from and against any and all Claims (including Claims by Seller for damage to the Hotel as well as third-party Claims) arising or asserted to arise out of any activity of Buyer or Buyer’s representatives conducted at or about the Hotel Premises, except to the extent resulting from Seller’s gross negligence or willful misconduct. Buyer shall, with reasonable promptness, repair in a good and workmanlike manner any damage to the Hotel caused by any such activity.

4.7 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.

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 any other Exhibit to this Agreement, in the Title Report, the Existing Survey or in any new Survey, third party report or other written document or notice relating to the Hotel obtained by or furnished to Buyer prior to the Approval Date:

5.1.1.1 To Seller’s Knowledge, 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 or (b) revoking, canceling or denying renewal of any Permit.

5.1.1.2 There are no lawsuits filed and served upon Seller or, to Seller’s Knowledge, otherwise pending or threatened, whose outcome could adversely

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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).

5.1.1.3 The Schedule of Contracts attached hereto as Exhibit J identifies all of the existing Material Contracts and, to Seller’s Knowledge, neither the Hotel Party nor any other party to any Material Contract is currently in material breach thereof and all such Material Contracts are in full force and effect.

5.1.1.4 To Seller’s Knowledge, there is no default under the Existing Loan or Existing Loan Documents on the part of Seller or, to Seller’s Knowledge on the part of the Existing Lender. Exhibit L attached hereto identifies the Existing Loan Documents pertaining to the Existing Loan. To Seller’s Knowledge, based upon the latest information provided by the Existing Lender, the outstanding principal amount of the Existing Loan is $27,700,533.69 as of the date hereof.

5.1.1.5 To Seller’s Knowledge, Seller has not filed any notice of protest or appeal against, or commenced proceedings to recover, real property tax assessments against the Hotel Premises.

5.1.1.6 To Seller’s Knowledge, there are no employees of the Hotel other than the Hotel Employees and none of the Hotel Employees is covered by a collective bargaining agreement or within any bargaining unit certified under the National Labor Relations Act or any similar state Law.

5.1.1.7 There are no existing management or franchise agreements relating to the Hotel other than the Hotel Management Agreement and the Franchise Agreement.

5.1.1.8 Exhibit M sets forth a correct and complete list of each insurance policy maintained by Seller with respect to the Hotel.

5.1.1.9 Exhibit K sets forth a list of environmental assessments, reports and studies relating to the Hotel in Seller’s possession.

5.1.2 Regarding Seller. Seller hereby represents to Buyer that:

5.1.2.1 Seller is duly organized, validly existing and in good standing under the laws of its State of incorporation; 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 Seller has 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. This Agreement constitutes a valid and binding obligation of Seller, enforceable against Seller in accordance with its terms.

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5.1.2.3 As of the Effective Date, (i) no government, internal or other third party approval or consent that 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.

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 against Seller, 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 Seller is not the subject debtor under any federal, state or local bankruptcy or insolvency proceeding, or any other proceeding for dissolution, liquidation or winding up of its assets, and no attachments, execution proceedings, assignments for the benefit of creditors, insolvency, bankruptcy, or similar proceedings are pending or, to Seller’s Knowledge, threatened against Seller.

5.2 By Buyer. Buyer hereby represents to Seller that:

5.2.1 Buyer is a limited liability company, duly formed, validly existing and in good standing under the laws of the state of its formation, 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 approval or consent that has 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 Broker engaged by Seller, Buyer has not engaged or dealt with any broker, finder or similar agent in connection with the transaction contemplated by this Agreement.

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5.2.5 Buyer is experienced in the acquisition, ownership and operation of hotels similar to the Hotel and is fully competent to assess and evaluate the Hotel.

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.

5.2.6 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).

5.3 WAIVER AND RELEASE. AS A MATERIAL PART OF THE CONSIDERATION TO SELLER FOR THE SALE OF THE HOTEL HEREUNDER, EXCEPT (A) 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 OR (B) FOR A BREACH OF A COVENANT OF SELLER EXPRESSLY SET FORTH IN THIS AGREEMENT BUYER HEREBY WAIVES AND RELINQUISHES, AND RELEASES SELLER AND ALL OF SELLER’S OFFICERS, DIRECTORS, SHAREHOLDERS, EMPLOYEES AND AGENTS (COLLECTIVELY, “SELLER RELEASEES”) FROM, ANY AND ALL 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 MISREPRESENTATION, OR FAILURE TO DISCLOSE TO BUYER ANY INFORMATION, REGARDING THE HOTEL (INCLUDING, WITHOUT LIMITATION, ANY DEFECTIVE, HAZARDOUS OR UNLAWFUL CONDITION 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 WILLFUL FRAUD. BUYER UNDERSTANDS THAT SUCH WAIVER

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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 FURTHER AGREES AND ACKNOWLEDGES THAT, IN GIVING THE FOREGOING WAIVER AND RELEASE, IT HAS WITH ITS LEGAL COUNSEL, CONSIDERED ANY STATUTE OR OTHER LAW THAT MIGHT APPLY TO AND LIMIT THE EFFECT OF BUYER’S WAIVER AND RELEASE HEREIN AND HEREBY KNOWINGLY WAIVES THE BENEFITS OF ANY SUCH LAW AND INTENDS THAT IT NOT BE APPLICABLE HERE.

BUYER REPRESENTS AND WARRANTS TO SELLER THAT NEITHER BUYER OR ANY OF ITS AFFILIATES IS (OR WILL BE) A PERSON WITH WHOM SELLER IS RESTRICTED FROM TRANSACTING BUSINESS UNDER REGULATIONS OF THE OFFICE OF FOREIGN ASSET CONTROL (“OFAC”) OF THE DEPARTMENT OF THE TREASURY OF THE UNITED STATES OF AMERICAN (INCLUDING, THOSE PERSONS NAMED ON OFAC’S SPECIALLY DESIGNATED AND BLOCKED PERSONS LIST) OR UNDER ANY STATUTE, EXECUTIVE ORDER (INCLUDING, THE SEPTEMBER 23, 2001 EXECUTIVE ORDER BLOCKING PROPERTY AND PROHIBITING TRANSACTIONS WITH PERSONS WHO COMMIT, THREATEN TO COMMIT, OR SUPPORT TERRORISM), OR OTHER GOVERNMENTAL ACTION.

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 after Closing Seller shall have no liability to Buyer for any breach of such representations unless:

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 120 days after the Closing Date; and

5.4.3 Buyer’s actual out-of-pocket loss from such breach exceeds $50,000; and

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5.4.4 Buyer commences a legal action on such claim, and serves Seller with notice thereof in accordance with the applicable Law, within 180 days after the Closing Date.

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 of Seller’s representations contained in Section 5 materially inaccurate. If it is reasonably likely that such event or condition can be remedied within 30 days, so as to remove such material inaccuracy, and if Seller undertakes in writing to Buyer, within ten (10) Days after receiving such notice, to use all commercially reasonable efforts to effect such remedy, then so long as it is making such efforts Seller shall have the right to extend the Closing Date by no more than thirty (30) days to complete such remedy and Buyer shall not be entitled, prior to the Closing Date (as so extended) or (if earlier) the cessation of such efforts, to terminate this Agreement by reason of such inaccuracy.

6. OPERATION OF THE HOTEL PENDING CLOSING. From the Effective Date until Closing, except for emergencies, Seller shall use commercially reasonable efforts to cause Hotel Manager to operate the Hotel in the Ordinary Course (including, without limitation, maintaining insurance policies equivalent in all material respects to those maintained as of the Effective Date) and, subject to the terms of the Hotel Management Agreement, shall not cause, approve or voluntarily permit any material change in the operations of the Hotel without Buyer’s prior written approval (which shall not be unreasonably withheld, conditioned or delayed), which would:

6.1 Cancel or surrender of any existing Permit for the Hotel.

6.2 Create any lease, mortgage, deed of trust or other encumbrance on Seller’s title to the Hotel.

6.3 Material alterations or other material changes in the Hotel Improvements except for (i) alterations or improvements required to avoid or cure a violation of applicable Law, and (ii) alterations or improvements to repair any damage caused by an emergency or a Casualty.

6.4 Significantly alter or revise the accounting principles, procedures, methods or practices in place at the Hotel.

6.5 Material reductions in current levels of service, sales and marketing efforts, maintenance or staff.

6.6 Remove or permit to be removed from the Hotel any material FF&E or similar personal property, unless such item is replaced by a substitute of equal or greater value.

If Buyer proceeds to Closing with 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.

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7. OTHER AGREEMENTS.

7.1 Property Management Agreement; Franchise Agreement.

7.1.1 Notwithstanding any other provision of this Agreement, Buyer shall not assume any obligations under the Hotel Management Agreement. Seller shall cause the Hotel Management Agreement to be terminated at Seller’s sole cost and expense as of Closing and shall deliver possession of the Hotel to Buyer free and clear of any possession by or rights of the Hotel Manager; provided, however, Buyer acknowledges that the De-Flagging Activities (defined below) may have to be performed by Seller pursuant to Section 7.1.3. Seller shall remain responsible for all amounts due under the Hotel Management Agreement as of Closing. It is the intent for Buyer to negotiate a new franchise, license or agreement with Hilton to permit the Hotel to maintain the “Hilton” brand after Closing (the “New Hilton Agreement”). Promptly following the Effective Date, Buyer shall submit application to Hilton for the New Hilton Agreement, and shall pay any and all applicable application fees or deposits in connection therewith. The New Hilton Agreement shall be effective upon Closing. Simultaneously with the New Hilton Agreement taking effect, Seller shall cause the Franchise Agreement to be terminated. In the event that Buyer is unable to obtain the New Hilton Agreement on or before the tenth (10th) Business Day prior to Closing, then (i) Seller shall make the termination of the Franchise Agreement effective as of, and conditioned upon, Closing; and (ii) Buyer acknowledges that the De-Flagging Activities (defined below) may have to be performed by Seller pursuant to Section 7.1.2. If, in connection with the termination of the Franchise Agreement hereunder, Seller is required to pay to Hilton liquidated damages in connection with Seller’s termination thereof in the event that Buyer is unable to obtain the New Hilton Agreement then at Closing Buyer shall pay to Seller a sum equal to the amount of such liquidated damages paid by or due from Seller.

7.1.2 In connection with the termination of the Franchise Agreement, except as otherwise provided in this Section 7.1.2, certain activities (“De-Flagging Activities”) must be performed, including (without limitation), disconnecting the Hotel from the Hilton reservation system, termination of the Hilton website for the Hotel and removal from the Hotel Premises of all Hilton marks and protected designs. If the Franchise Agreement is terminated at Closing, during the period beginning immediately after Closing and ending ten (10) Business Days after Closing, Seller shall have access to the Hotel to perform the De-Flagging Activities. Buyer shall not operate the Hotel in violation of Hilton’s marks. Buyer shall Indemnify Seller from and against any Claim against Seller caused by or arising out of Buyer’s breach of the immediately preceding sentence of this Section 7.1.2. If Buyer obtains the New Hilton Agreement, which includes consent of Hilton to the sale of the Hotel pursuant to this Agreement without termination of the right to use the Hilton brand and system in its operation of the Hotel after Closing, and if Buyer at Closing enters into the New Hilton Agreement, Seller shall not be responsible for the De-Flagging Activities under this Section 7.1.2, and Buyer shall be responsible for performing, at Buyer’s sole cost and expense, any de-flagging activities required of Buyer under the New Hilton Agreement (or other license to use the Hilton Brand and System) upon the expiration of the term thereof.

7.2 Property of Guests. All baggage or other items checked or left in the care of Seller, and any items in the “Lost and Found Bin” will be listed in an inventory, prepared

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in duplicate and signed by representatives of Seller and Buyer on the Closing Date. Buyer will be responsible from and after the Closing for all property so listed and shall hold harmless, indemnify and defend Seller, from and against any and all Claims arising out of the subsequent loss of or damage to such listed property. Seller shall indemnify Buyer from and against any and all Claims arising out of any loss of or damage to property of guests at the Hotel prior to the Closing or not so listed in such inventory. Seller and Buyer shall use reasonable efforts to have Hotel guests who have left items in any of the Hotel’s safe deposit boxes (not including in-room safes) confirm on the Closing Date that no such items are missing, but Seller shall not be deemed liable for any guest Claim made after the Closing Date with respect to items allegedly left in a Hotel safe deposit box before Closing merely because such items could not be listed on the above-described inventory.

7.3 Assumption of Existing Loan. Buyer agrees to purchase the Hotel subject to the Existing Loan and shall, within five (5) Business Days of the Effective Date, submit application to Existing Lender for the Existing Loan Assumption Consent and shall simultaneously provide copies of all application materials and ongoing correspondence between Buyer and Existing Lender to Seller specifically relating to the Existing Loan Assumption Consent; provided that such correspondence is not otherwise privileged or proprietary. In connection with such application, Buyer shall provide to Lender all information customarily or reasonably required in connection with such a loan assumption and deliver to Lender all documentation reasonably required of Buyer and Replacement Guarantor in connection with such loan assumption. Buyer shall use commercially reasonable efforts to satisfy Lender’s requirements for the Existing Loan Assumption Consent before the Closing Date. Seller agrees to reasonably cooperate with Buyer’s efforts to obtain the Existing Loan Assumption Consent. Buyer shall Indemnify Seller and Existing Guarantor from and against any and all Claims that Seller incurs by reason of any alleged default on the part of Buyer under the Existing Loan and the Existing Loan Documents, where the allegation of such default is based on an event or condition which occurred or arose (or is alleged to have occurred or arisen) after Closing. Seller shall Indemnify Buyer and Replacement Guarantor from and against any and all Claims that Buyer incurs by reason of any alleged default on the part of Seller under the Existing Loan and the Existing Loan Documents, where the allegation of such default is based on an event or condition which occurred or arose (or is alleged to have occurred or arisen) before Closing. The indemnification set forth in the immediately preceding sentence shall not be limited by the provisions of Section 19.2 below. If the Parties are unable to obtain the Existing Loan Assumption Consent before the Closing Date, either Party shall have the right to extend the Closing Date by delivering one or more written notices to the other at least ten (10) Business Days prior to the then scheduled Closing Date to a date not later than March 31, 2011 (the “Outside Closing Date”). If after any extended time, the Parties have been unable to obtain the Existing Loan Assumption Consent, then Buyer shall be obligated to proceed to Closing, the Existing Loan shall be paid off in full at Closing and Buyer shall be responsible for an amount not to exceed the loan assumption fee that Buyer would have paid Existing Lender in connection with the Existing Loan Assumption Consent (but in no event more than a sum equal to 1% of the outstanding balance of the Existing Loan), which amount shall be paid to Seller to be applied towards any prepayment and/or yield maintenance fee Seller must pay to Existing Lender in connection therewith (the “Prepayment Fee”). In the event that the Closing Date is extended pursuant to the provisions of this Section 7.3 and Buyer elects by written notice to Seller to complete the transaction contemplated hereunder prior to the Outside Closing Date

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notwithstanding that the Existing Loan Assumption Consent has not been obtained (an “Early Closing”), then Buyer shall pay the entire Prepayment Fee due and payable under the Existing Loan Documents.

7.4 Right to Audit. Buyer may, at its sole cost and expense, engage a third-party certified public accountant to perform audits of the books and records (the “Audit”) of the Hotel for the immediate two calendar years prior to the Closing Date, including the historical financial statements of the Hotel, which audits shall include all disclosures required by generally accepted accounting principles and the Securities and Exchange Commission regulations, specifically in accordance with Rule 3-05 of Regulation S-X and all related rules and regulations thereof. Seller shall, at no cost to Seller, request Hotel Manager’s cooperation in connection with the performance of such audits, and shall provide, or request Hotel Manager to provide, all information reasonably requested by such accountants (except any information that Seller or Hotel Manager deem confidential), at no cost or expense to Seller or Hotel Manager. In connection with such audits, Seller shall request Hotel Manager to provide the accountants performing such audits with a commercially reasonable representation letter, in form and substance acceptable to Seller and Hotel Manager, at no cost or expense to Seller or Hotel Manager. The failure of the Hotel Manager to so cooperate, or provide such representation letter, shall not constitute a failure to perform by Seller hereunder and Buyer shall have no recourse to Seller in such event. The agreements of Seller and Hotel Manager set forth in this Section 7.4 shall survive Closing for a period of one (1) year.

Notwithstanding the foregoing, in no event shall the exercise of Buyer’s rights under this Section 7.4:

(i) affect Buyer’s obligations and agreements under this Agreement, including, without limitation, Buyer’s obligation to Close in accordance with the terms of this Agreement;

(ii) provide Buyer with the right to terminate this Agreement; or

(iii) affect the Purchase Price, any pro-rations, credits or other adjustments set forth in Section 8 or otherwise under this Agreement.

Furthermore, the Buyer, its employees, agents, consultants and any other person or entity claiming by, through or under Buyer (a) shall have no Claims against Seller Releasees and/or Hotel Manager as a result of the Audit, and (b) hereby waive and release any Claims against Seller Releasees and/or Hotel Manager that may arise from, or as a result of, the Audit.

7.5 Cooperation. Seller shall, at no cost or expense to Seller, and shall request Hotel Manager to, at no cost or expense to Hotel Manager, reasonably assist and cooperate with Buyer in Buyer’s efforts to obtain a liquor license for the same category of liquor consumption as presently offered at the Premises.

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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 credits 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. 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. Taxes shall be subject to readjustment to reflect the agreed upon proration provided herein in the event any abatement for the tax year in which Closing occurs has not been settled, provided that neither party shall have the obligation to pursue any abatement of Taxes.

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). 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 to Buyer.

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 All other Hotel operating expenses of a strictly periodic nature (and not based upon specific orders for goods or services).

8.2.5 Accrued interest on the Existing Loan.

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8.3 Proration of 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 midnight on the day immediately preceding Closing (“Closing Eve”) shall be closed and settled as follows:

8.3.1.1 Room and service charges (including, without limitation, room service charges and in-house movie fees) and parking charges (collectively, the “Charges”) through Closing Eve shall be retained by Seller. Buyer shall receive a credit equal to Twenty Dollars ($20.00) for each guest room that is occupied on the morning of Closing. The Charges accruing from and after the Closing Date shall belong to Buyer.

8.3.1.2 Gift shop revenues through Closing Eve shall be retained by Seller. Commencing on the Closing Date, gift shop revenues shall belong to Buyer.

8.3.1.3 Other charges shall be allocated between Seller and Buyer as of the Closing Date, based on the time such charges were actually incurred.

8.3.1.4 From the amounts apportioned to Seller or Buyer, as the case may be, under the foregoing clauses shall be deducted all applicable taxes, travel and tour agent commissions, license, reservation and franchise fees, and similar expenses.

8.3.2 Other Operating Revenues. Other operating revenues not otherwise provided for in this Section 8, shall be prorated between Buyer and Seller as of Closing.

8.3.3 Other Receivables. This sale does not include any accounts receivable for room, food and beverage and other sales and services at or from the Hotel for the period through the Closing Date (the “Accounts Receivable”), which remains the sole property of Seller. Seller shall have the right to receive, collect, discharge and compromise all Accounts Receivable. Buyer shall cause its hotel manager to use commercially reasonable good faith efforts to collect the Accounts Receivable and agrees that any Accounts Receivable received by Buyer or its hotel manager after the Closing from any party owing any portion thereof (including credit card sales when payment thereon is received by Buyer), net of any reasonable collection costs, credit card service fees or travel agent’s commissions which may be owed in connection therewith, shall be promptly remitted to Seller . Any payment at or relating to the Hotel which is received or recovered after Closing from a person who then owes amounts both on such a Seller-retained receivable and on an account to the Hotel accruing after Closing shall be applied to the invoice(s) specified by the payor (and, if the payor makes such payment without reference to a specific invoice, then such payment shall then be applied first to the latest accruing accounts).

8.4 Hotel Payables. At Closing, Buyer shall receive a proration credit equal to the excess of (A) the aggregate estimated amount of all Hotel Payables in the Preliminary Statement over (B) Buyer’s prorated share of such Hotel Payables under this Section 8, and Buyer shall assume the obligation to satisfy Hotel Payables (1) included in such estimate (as evidenced by a schedule which Seller shall prepare and submit to Buyer as part of the Preliminary Statement) and (2) which otherwise are identified within the 90-day period

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following Closing. After Closing, before paying any amount invoiced or otherwise claimed by a third party due with respect to the Hotel operations prior to Closing which is not included on such schedule (or is claimed in an amount larger than that shown on such schedule), Buyer shall first submit such invoice or claim to Seller. Unless Seller, within 15 days after receiving such submission, objects to such invoice or claim (thereby making it a Disputed Payable), Buyer may pay the same and take a credit for such payment on the Final Statement. Seller shall remain responsible for all Disputed Payables and for all Hotel Payables that are neither included on such schedule nor identified within the 90-day period following Closing.

8.5 Other Credits to Buyer.

8.5.1 Credit for Reservation Deposits. Buyer shall receive a proration credit equal to the aggregate amount of all outstanding Reservation Deposits.

8.5.2 Principal Balance on Existing Loan. Buyer shall receive a credit equal to the outstanding principal balance on the Existing Loan to be assumed by Buyer, as certified or agreed to by Existing Lender under the Existing Loan Assumption Consent.

8.6 Other Credits to Seller.

8.6.1 Credits for Cash Banks. Seller shall receive a proration credit equal to the aggregate balance of all Cash Banks as of Closing.

8.6.2 Credit for Prepaid Expenses. Seller shall receive a proration credit equal to the amount Seller actually paid with respect to all prepaid expenses, except to the extent that the goods, services or other items for which such expenses were incurred are not usable by Buyer.

8.6.3 Credit for Certain Inventories. Seller shall receive a proration credit equal to Seller’s cost of all (i) goods then held by Seller for sale to Hotel guests and others in the Ordinary Course, (ii) unopened food and beverage Inventories, to the extent allowed by law and (iii) gift shop Inventories.

8.6.4 Credit for Impound and Reserve Accounts. Seller shall receive a proration credit equal to the amount of all impound and/or reserve accounts to the extent not returned to Seller by Existing Lender and still required by Existing Lender to be maintained by Buyer.

8.7 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 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 generally accepted accounting principles and the Uniform System of Accounts.

8.8 Utility Deposits. Notwithstanding any other provision of this Agreement, no prorations shall be made or credits allowed with respect to any utility deposits, which shall remain the sole property of Seller.

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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.

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.

9.1.3 Satisfactory Title Policy. Issuance at Closing of the Title Policy (with Extended Coverage, to the extent reasonably available from title insurers in the jurisdiction where the Hotel is located and if Buyer timely requests such coverage and furnishes the Title Company with the Survey; but, otherwise, the availability of Extended Coverage or any other endorsement to the Title Policy shall not be a condition to Buyer’s obligation to close unless Seller has undertaken in writing to obtain such endorsement to cure an Objectionable Title Matter).

If any of the conditions specified in this Section 9.1 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 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.

If any condition specified in this Section 9.2 is not satisfied (or waived by Seller in writing) by the Closing Date, Seller shall have the right to terminate this Agreement by giving written notice of such termination to Buyer and Escrow Agent by the 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.

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9.3 Pre Closing Damage or Destruction.

9.3.1 Termination Rights. Seller agrees to give Buyer prompt notice of any Casualty occurring at the Hotel between the Effective Date and the Closing Date; provided, however, that Seller shall not be deemed to be in default under this Section 9.3.1 for failure to report minor incidents causing insignificant damage. If, prior to Closing, a material Casualty occurs, Buyer shall have the right, at its election, to terminate this Agreement, by written notice given to the Seller prior to the Closing Date. If a material Casualty occurs fewer than ten (10) Business Days before the Closing Date, Buyer shall have the right to extend the Closing Date until the tenth (10th) 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 Buyer either does not have or elects not to exercise the right under Section 9.3.1 to terminate this Agreement, this Agreement shall continue in force and, upon Closing, Buyer shall receive:

(i) a credit against the Purchase Price equal to (A) the amount, if any, of Proceeds received by Seller prior to Closing in connection with such Casualty, plus (B) the lesser of the “deductible” or self retained limit under the property hazard insurance covering the Hotel Premises or the reasonably estimated cost of repairing, restoring or replacing the portion of the Hotel Premises damaged or destroyed by such Casualty, minus (C) the amount (if any) actually expended by Seller to repair, restore or replace the damaged portions of the Hotel Premises; and

(ii) an assignment of Seller’s rights to all Proceeds which may then be or thereafter become payable.

If the credit formula specified in subparagraph (i) above results in a negative number, then Seller (rather than Buyer) shall be entitled to a credit, in the amount by which (i) the amount actually expended by Seller to repair, restore or replace the damaged portions of the Hotel Premises exceeds (ii) the Proceeds received by Seller; but if such credit to Seller would exceed the amount of Proceeds assigned to Buyer at Closing (or if there are no Proceeds to assign), then Seller shall instead retain the right to receive such Proceeds (if any) and receive no credit.

9.3.3 Material Part. For purposes of this Section 9.3, a Casualty shall be deemed material if the extent of the damage, destruction or taking (measured by the cost of repairing or replacing the damaged or destroyed portion of the Hotel Premises or the fair market value of the taken portion of the Hotel Premises) exceeds fifteen percent (15%) of the Purchase Price.

10. CLOSING.

10.1 Time, Place and Manner. Closing shall occur on or before the Closing Date, through Escrow, at the offices of the Escrow Agent (the “Place of Closing”). In order to confirm concurrent delivery of the Purchase Price and delivery of title to the Hotel Premises,

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Buyer’s funds for Closing and the Transfer Instruments to be recorded shall be delivered into Escrow for Closing, in accordance with this Agreement.

10.2 Seller’s Deliveries.

10.2.1 At least one (1) Business Day prior to the Closing Date, Seller shall deliver to Escrow Agent the following documents (“Seller’s Closing Documents”):

10.2.1.1 The Deed and two counterparts of every 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, duly executed.

10.2.1.3 Such other documents as the Escrow Agent or the Title Company may reasonably require from Seller (provided the same do not require any indemnification from Seller or otherwise causes Seller to incur any cost or liability in order to effect Closing in accordance with this Agreement.

10.2.1.4 If the Existing Loan Assumption Consent is obtained in accordance with the provisions of Section 7.3, the Existing Loan Assumption Consent documents reasonably required by Existing Lender to be executed by Seller or Existing Guarantor and reasonably approved by Seller, for delivery to Existing Lender upon Closing.

10.3 Buyer’s Deliveries:

10.3.1 At least one (1) Business Day prior to the Closing Date (except as otherwise indicated), Buyer shall deliver to Escrow Agent the following funds and documents (“Buyer’s Closing Documents”):

10.3.1.1 By no later than 11:00 A.M. Pacific Time on the Business Day that is before the Closing Date (the “Funds Deadline”), 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. Time is of the essence with respect to Buyer’s delivery of such funds by the Funds Deadline.

10.3.1.2 Such documents as the Escrow Agent or the Title Company may reasonably require (provided the same do not cause Buyer to incur any cost or liability) from Buyer in order to effect Closing in accordance with this Agreement.

10.3.1.3 If the Existing Loan Assumption Consent is obtained in accordance with the provisions of Section 7.3, the Existing Loan Assumption Consent documents, including but not limited to the Replacement Guaranty, required by Existing Lender to be executed and delivered by Buyer (or Buyer’s nominee), in form and substance consistent

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with Section 9.1.4 and otherwise reasonably approved by Buyer, to be delivered to Existing Lender upon Closing.

10.3.1.4 Two counterparts duly executed of each Transfer Instrument to be executed by Buyer.

10.4 Closing Costs.

10.4.1 Paid By Seller. Seller shall pay:

10.4.1.1 One half 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 Prepayment Fee if Seller is obligated to pay the same pursuant to Section 7.3.

10.4.1.4 All other fees and other costs owing to Existing Lender under the Existing Loan, except for (i) the Existing Lender’s assumption fee, (ii) any Prepayment Fee in the event of an Early Closing, and (iii) reasonable reimbursable costs and expenses (including reasonable attorney’s fees) in connection with the Existing Loan Assumption Consent.

10.4.1.5 All charges for the Title Report and the premiums for the Title Policy, excluding the cost of any Extended Coverage.

10.4.2 Paid by Buyer. Buyer shall pay:

10.4.2.1 All transfer taxes, stamp taxes, documenting taxes, sales taxes, use taxes and similar excises imposed on the sale, conveyances and transfers under this Agreement, including the realty transfer tax imposed by King County, City of Seattle and/or Washington State.

10.4.2.2 The charge for Extended Coverage.

10.4.2.3 The cost of up-dating, supplementing or obtaining a Survey.

10.4.2.4 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 of Escrow Agent’s fees and expenses for administering Escrow.

10.4.2.6 The Existing Lender’s assumption fee or payment to Seller in lieu thereof as provided in Section 7.3, the Prepayment Fee in the event of an Early

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Closing, and reimbursable costs and expenses (including reasonable attorney’s fees) actually incurred in connection with the Existing Loan Assumption Consent.

10.4.2.7 All Transfer Taxes due and payable on the Existing Loan Assumption Consent.

10.4.3 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.

10.5 Completion of Closing. Closing shall be effected as follows:

10.5.1 At such time as the Transactors and Counsel have confirmed the delivery to Escrow Agent of each of the items specified in Sections 10.2.1 and 10.3.1, (and provided Escrow Agent has not advised the Parties of any apparent obstacle to issuing the 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 to complete Closing by disbursing funds in accordance with Sections 10.5.2.1 through 10.5.2.3 and, as appropriate, delivering Seller’s Closing Documents to Buyer and Buyer’s Closing Documents to Seller.

10.5.2 As soon as Escrow Agent confirms to the Parties that the Title Company is irrevocably committed to issue the Title Policy to Buyer, the Parties through their respective Transactors or Counsel shall instruct Escrow Agent to 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.

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 Escrow Agent regarding the recording of instruments and disbursement of funds from Escrow subject to any supplementary or general instructions delivered by either party to Escrow Agent, or as may be required under any other provision of this Agreement or reasonably

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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 Delivery of Possession. Seller shall cause possession of the Hotel to be delivered to Buyer immediately upon Closing, free and clear of all leases, tenancies and occupancies except for (A) Hotel guests, (B) the Assumed Contracts, and (C) possessory rights and interests included among the Permitted Exceptions.

10.8 Failure of Closing. If Closing fails to occur by the Closing Date, 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 cancel Escrow and disburse the Deposit and all other funds and items (if any) then held in Escrow in accordance with the provisions of this Agreement. If, following termination of this Agreement, the Parties give Escrow Agent conflicting instructions or one of the Parties fails to give Escrow Agent instructions:

10.9.1 Escrow Agent shall promptly notify each Party in writing of such conflicting instructions or of one Party’s failure to give instructions, and request that such conflict or omission be promptly resolved.

10.9.2 Where one Party has failed to give instruction, unless Escrow Agent receives written instructions from such Party within five (5) Business Days after giving notice of such failure, Escrow Agent shall be free to comply with the instructions given by the other Party and both Parties shall hold harmless, indemnify and defend Escrow Agent from any claim or liability resulting from such compliance.

10.9.3 Where the Parties have given conflicting instructions, Escrow Agent shall take no action to cancel Escrow or deliver funds or items out of Escrow except pursuant to further, joint written instructions from the Parties or a final court order or judgment. If the Parties fail, within sixty (60) days after Escrow Agent has made requested such joint instructions, 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 competent jurisdiction and to deposit with such court all of the funds and other items held in Escrow, whereupon Escrow Agent shall be discharged from any further obligations or liability with respect to Escrow. 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

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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.

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 and the month in which Closing occurred, on Buyer’s own post Closing examination of the books and records of the Hotel and on other relevant facts discovered after Closing.

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 item 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 Seattle, Washington) for a determination which shall be binding and conclusive upon all Parties and shall be deemed incorporated into the 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 (or deemed agreed) between 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 shown to be due to such Party on the Final Statement, as agreed or as modified by the resolution of such objections. 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.

12. THIRD PARTY CLAIMS AND OBLIGATIONS.

12.1 Assumed and Retained Liabilities. Buyer shall Indemnify Seller from and against any and all Claims that Seller incurs by reason of any obligation or liability assumed by Buyer pursuant to this Agreement, including, without limitation (A) Employee Liabilities assumed by Buyer expressly hereunder, (B) the Assumed Contracts, (C) the Hotel Payables, and (D) Reservations. Seller shall Indemnify Buyer from and against any and all Claims that Buyer incurs by reason of any obligation or liability retained by Seller pursuant to this Agreement, including, without limitation (i) Employee Liabilities retained by Seller and (ii) Disputed Payables.

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12.2 Employee Liabilities.

12.2.1 Buyer’s Obligations. Upon Closing Buyer shall:

12.2.1.1 Offer (or cause the manager selected by Buyer to offer) employment at the Hotel in the same position or job classification and at no less than the same wage rate or salary as such Hotel Employee held and enjoyed immediately prior to Closing, and with reasonably equivalent benefits to a sufficient number of Hotel Employees as is necessary to prevent the Seller from incurring any indemnification loss under the WARN Act with respect to the Hotel Employees. Buyer shall cause each such offer to be expressly conditioned upon the Hotel Employee’s signing a written application form, in which such employee accepts the offer of new employment and concurrently gives Hotel Manager notice that he or she is termination employment with Hotel Manger, 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 after Closing (except to the extent that such Employee Liabilities arise under or relate to any Hotel Employee Plan sponsored or maintained by Seller or Hotel Manager), (B) all Employee Liabilities accrued as of Closing for which Buyer has received a proration credit under Section 8.

12.2.2 Seller’s Obligations. Seller shall cause Hotel Manager to terminate the employment of all Hotel Employees effective as of Closing. Seller Indemnifies Buyer from and against any and all Claims arising out of any and all (A) Employee Liabilities with respect to Continuing Employees accruing prior to Closing (except those which are triggered by a termination of employment after Closing or for which Buyer has received a credit under Section 8) and (B) Employee Liabilities with respect to Hotel Employees who are not Continuing Employees.

12.2.3 WARN Act Liability. Buyer acknowledges that, in light of Buyer’s intention to continue operation of the Hotel with substantially the same staff after Closing and the Parties’ desire for a prompt Closing, it is Buyer’s interest that Seller not take the precautionary step of giving Hotel Employees notice of possible termination of employment at the Hotel under the Worker Adjustment and Retraining Notification Act of 1988 (the “WARN Act”). Accordingly, Seller shall not give such notice with respect to the sale of the Hotel to Buyer, and Buyer shall Indemnify Seller from and against any and all Claims arising out of real or alleged violation of the WARN Act for failure to give such notice to the extent based on Buyer’s failure, on and after the Closing Date, to offer employment at the Hotel to Eligible Employees in accordance with Section 12.2.1.

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, shareholders, beneficial owners, directors, officers, employees, Affiliates, agents and managers (including, without limitation, Hotel Manager), all of whom are intended by the Parties to be third party beneficiaries of this Section 12.

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12.4 Survival. The Parties’ indemnities set forth in this Section 12 and elsewhere in this Agreement shall survive Closing and shall not be deemed to merge into any of the Transfer Instruments; provided, however, Seller’s liability shall be subject to the limitations set forth in Section 19.2.

13. HOTEL RECORDS. As reasonably required for tax filings, preparation and auditing of financial statements, other reporting and similar purposes, Seller shall have the right to make and retain copies of the Hotel Records which are transferred to Buyer at Closing and to disclose information contained therein. Buyer shall also make the Hotel Records available to Seller and its authorized representatives at the Hotel, at reasonable times and upon reasonable prior notice, and allow Seller to make copies thereof; and Buyer shall not dispose of any Hotel Records prior to the fifth anniversary of Closing without giving Seller at least thirty (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 the 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 Buyer gives Seller at least five (5) days’ prior written notice of such assignment and that such 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. Buyer shall remain fully and primarily liable for all its obligations under this Agreement notwithstanding any such assignment.

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”), 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:	AEW Capital Management, L.P. Two Seaport Lane, Suite 300 Boston, Massachusetts 02210 Attention: James Luchars
	Fax: 617-261-9555
and a copy to:	Seyfarth Shaw LLP Two Seaport Lane, Suite 300 Boston, Massachusetts 02210 Attention: Andrew Pearlstein                  Catherine Burns

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	Fax: 617-946-4801
If to Buyer:	c/o Chesapeake Lodging Trust 1997 Annapolis Exchange Parkway, Suite 410 Annapolis, Maryland 21401 Attention: SVP and Chief Accounting Officer Fax: 410-972-4180
and a copy to:	c/o Chesapeake Lodging Trust 1997 Annapolis Exchange Parkway, Suite 410 Annapolis, Maryland 21401 Attention: SVP and Chief Investment Officer Fax: 410-972-4180

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 (3) Business Days by duplicate notice delivered as otherwise provided herein and any refused delivery must re-tendered within two (2) Business Days.

16. GENERAL PROVISIONS.

16.1 Confidentiality. Except for Permitted Disclosures (defined below), (A) each Party 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, neither Party shall issue press release or communication with the public prior to, or after, Closing without the prior written consent of the other Party, which prohibition shall survive the Closing or termination of this Agreement. As used herein, “Permitted Disclosures” include only (i) disclosures by a Party 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 by any Party to its parent entity or entities, trustees, directors and investors therein, (iii) disclosure to any government regulatory agency which requests the information in question in the course of its regulatory functions, and (iv) 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, the disclosing Party 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 transaction 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.

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16.2 Effect of Termination. Upon any termination of this Agreement, neither Party shall have any further obligation or liability to the other hereunder except (i) as provided below (regarding Buyer’s return or destruction of materials received from Seller), (ii) any liability which a 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 under Sections 4.6 or 16.10. Within ten (10) Business 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 ten (10) Business 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, other than Buyer’s internal documents containing proprietary or privileged information and to the extent permitted pursuant to agreements with parties preparing such reports (unless this Agreement has been terminated due to the default of Seller). Such delivery shall be made without representation or warranty by Buyer as to the contents of such items and Seller shall not be entitled to rely on such items.

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.

Page 34

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 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 Consents and Approvals. Wherever this Agreement requires a Party’s consent or approval, then unless expressly provided otherwise, such consent of approval (i) may be given or withheld in such Party’s sole and absolute discretion and (ii) to be effective, must be given in a writing signed by such Party and expressly identifying the specific matter to which such consent or approval applies.

16.10 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.)

16.11 Governing Law. This Agreement shall be deemed to be an agreement made under the Laws of the State where the Hotel Premises are located and for all purposes shall be governed by and construed in accordance with such Laws.

16.12 Counterparts, Electronic Delivery. 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. A Party may deliver this Agreement by electronically transmitting to the other Party (either by Fax or email) a facsimile copy of its executed counterpart, but such Party shall also promptly deliver to the other Party an original executed counterpart hereof.

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	Allocation of Purchase Price
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	Intentionally Omitted

Page 35

J	Schedule of Material Contracts
K	Schedule of Environmental Report and Existing Survey
L	Schedule of Existing Loan Documents
M	List of Insurance Policies

Seller shall have until (and including) ten (10) Days after the Effective Date to prepare or modify, and deliver to Buyer, Exhibits H and J. Any modification of such Exhibits that Seller timely delivers shall supplement or supersede (as the case may be) the prior version of such Exhibit for all purposes of this Agreement.

18. SIGNERS’ WARRANTY. Each individual executing and delivering this agreement on behalf of a corporate party hereby warrants and represents to the other parties that he or she is duly authorized and empowered to do so.

19. LIMITATION ON SELLER’S LIABILITY.

19.1 Seller’s Breach of Obligation to Close. In the event Seller in breach of this Agreement fails to close, and such failure is not due to Buyer’s default, Buyer, as its sole and exclusive remedy may either (a) terminate this Agreement and receive a refund of the Deposit and neither party shall have any further right or obligation hereunder other than obligations which expressly survive termination of this Agreement, or (b) pursue the remedy of specific performance of Seller’s obligations under this Agreement; provided, however, that (i) Buyer shall only be entitled to such remedy if (A) any such suit for specific performance is filed within sixty (60) days after Buyer becomes aware of the default by Seller, (B) Buyer is not in default under this Agreement, (C) Buyer has tendered an amount equal to twenty five percent (25%) of the Purchase Price to the Escrow Agent in immediately available funds and the Escrow Agent has acknowledged receipt of same, in writing, to Seller, and (D) Buyer has furnished five (5) Business Days’ prior written notice to Seller of its intent and election to seek specific enforcement of this Agreement; and (ii) notwithstanding anything to the contrary contained herein, Seller shall not be obligated to expend any sums to cure any defaults under this Agreement and if Buyer seeks specific performance under this Agreement, Buyer agrees to accept the Hotel in its “AS IS, WHERE IS” condition as set forth in this Agreement. Buyer hereby agrees that prior to its exercise of any rights or remedies as a result of any defaults by Seller as provided in this Section 19.1, Buyer will first deliver written notice of said default to Seller, and if Seller so elects, Seller shall have the opportunity, but not the obligation, to cure such default within ten (10) days after Seller’s receipt of such notice. In no event whatsoever shall Buyer file any lis pendens or other instrument of record against title to the Hotel Premises, or otherwise creates any cloud on Seller’s title to the Hotel Premises. Buyer shall Indemnify Seller from and against all costs, expenses (including attorneys’ fees) and losses which Seller incurs by reason of Buyer’s violation of the immediately preceding sentence. Notwithstanding any of the foregoing to the contrary, in no event whatsoever shall Buyer have the right to seek money damages of any kind as a result of any default by Seller under any of the terms of this Agreement except as expressly set forth in this Agreement. In no event shall Seller be liable to Buyer for any punitive, speculative or consequential damages.

19.2 Other Seller’s Breaches. Seller shall have no liability to Buyer under the indemnities contained in Section 12 or elsewhere, or for breach of any covenant, representation

Page 36

or warranty contained in Section 5.1 or elsewhere, or otherwise, unless Buyer has given Seller written notice of a specific indemnity claim or claim of breach, stating in reasonable detail the factual basis for such claim, within 120 days after the Closing Date, and unless Buyer commences legal action on such claim, and serves Seller with notice of such claim in accordance with applicable Law, within 180 days after the Closing Date. Further, and notwithstanding anything to the contrary herein, (i) Seller shall in no event be liable to Buyer for any such claim unless and until the aggregate amount of Buyer’s actual out-of-pocket losses from all such valid claims exceeds $50,000, and (ii) in no event shall the aggregate amount of Seller’s liability exceed two percent of the Purchase Price. The limitations in clauses (i) and (ii) of this Section 19.2 are in addition to, and not in derogation of, the limitations in Section 5.4.3 with respect to Seller’s liability for breaches of its representations and warranties. The limitations in this Section 19.2 shall not apply to the Seller’s liability under Sections 7.3, 11 and 12.

20. 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 16.10). The parties acknowledge and agree by initialing this Section 20 that:

20.1 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.

20.2 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 20 AND SUCH CIRCUMSTANCES PRIOR TO ENTERING INTO THIS AGREEMENT AND HAS CONSULTED WITH BUYER’S COUNSEL WITH RESPECT THERETO).

20.3 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 SECTIONS 4.6, 16.2 AND 16.10; AND PROVIDED FURTHER THAT SELLER SHALL BE ENTITLED TO RECOVER FROM BUYER ATTORNEYS’ FEES AND OTHER DIRECT

Page 37

OUT OF POCKET COSTS INCURRED BY THEM IN CONNECTION WITH THE ENFORCEMENT OR DEFENSE OF OBLIGATIONS CONTAINED IN THIS SECTION 20.

IN FURTHER EVIDENCE OF THEIR AGREEMENT TO THIS LIQUIDATED DAMAGES PROVISION, SELLER AND BUYER HAVE INITIALED BELOW:

SELLER:    MD             BUYER:    GJW                         

[Remainder of Page Intentionally Blank]

Page 38

IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed and delivered, each by its own representative thereunto duly authorized, as of the date first above written.

SELLER:	AEW SBCO SEATTLE, LLC, a Delaware limited liability company
	By:	/s/ Marc Davidson

Name: Marc Davidson

Title:    Vice President

BUYER:	CHSP SEATTLE LLC, a Delaware limited liability company
	By:	/s/ Graham J. Wootten

Graham J. Wootten

Its Vice President

{ESCROW AGENT’S SIGNATURE ON THE FOLLOWING PAGE

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.

STEWART TITLE GUARANTY COMPANY
By:	/s/ Mark Anderson

Name: Mark Anderson

Title: Underwriting Counsel

Date: November 2, 2010

DESCRIPTION OF HOTEL PARCEL

Exhibit A

LEGAL DESCRIPTION

Parcel A:

Lots 6, 7, 8 And 9, Block 46, Second Addition To The Town Of Seattle As Laid Off By The Heirs Of Sarah A. Bell, Deceased (Commonly Known As Heirs Of Sarah A. Bell’s 2^nd Addition To The City Of Seattle). According To The Plat Recorded In Volume 1 Of Plats At Page 121, In King County, Washington;

Together With Vacated Alley Adjoining Said Lots, As Vacated By City Of Seattle Ordinance No. 89797, Which Attached Thereto By Operation Of Law, And;

Lots 1, 3, 4, And 6, Block 113, A. A. Denny’s Broadway Addition To The City Of Seattle. According To The Plat Recorded In Volume 6 Of Plats At Page 40, In King County, Washington;

Except The Northwesterly 10 Feet Thereof Condemned In King County Superior Court Cause No. 41394 For Street Purposes, As Provided By Ordinance No. 10051 Of The City Of Seattle And;

Except That Portion Of Said Lot 6, A. A. Denny’s Broadway Addition To The City Of Seattle And Of Said Lot 9, Of Heirs Of Sarah A. Bell’s 2^nd Addition To The City Of Seattle, Lying Southeasterly Of A Line Which Begins At The Intersection Of The Southwesterly Extension Of The Northwesterly Face Of An 8 Inch Thick Concrete Building Wall With The Southwesterly Line Of Said Lot 6, At A Point 16.67 Feet Southeasterly Of The Most Westerly Corner Thereof. And Runs Thence Northeasterly Along Said Extension, Northwesterly Face And Its Extension To The Southwesterly Margin Of Boren Avenue;

(Also Know As Parcel A Of City Of Seattle Lot Line Adjustment No. 9001610, As Recorded Under Recording No. 9008300712, In King County, Washington).

Parcel B:

Unit 502, Avanti, A Condominium, According To The Declaration Thereof Recorded Under Recording No. 9006280979, And Amendment(S) Thereto; Said Unit Is Located On Survey Map And Plans Filed In Volume 96 Of Condominiums. At Pages 17 Through 27, Amended In Volume 101 At Pages 58 Through 68, Records Of King County, Washington.

(Said Condominium Being A Subdivision Of Parcel B Of City Of Seattle Lot Line Adjustment No. 9001610, As Recorded Under Recording No. 9008300712, In King County, Washington).

Parcel C:

Easements For Footings, Foundations, Supports, Utilities, Access And Parking As Declared Under Recording No. 9003290567, And As Amended Under Recording No. 9011210516, In King County, Washington.

EXHIBIT A TO PURCHASE AND SALE AGREEMENT

Special Warranty Deed

RECORDING REQUESTED BY AND

WHEN RECORDED RETURN TO:

DEED

GRANTOR:	AEW SBCO Seattle, LLC, a Delaware limited liability company
GRANTEE:	CHSP Seattle LLC, a Delaware limited liability company
ABBREVIATED LEGAL DESCRIPTION:	Parcel A of Lot Line Adjustment No. 9001610, AF
	No. 9008300712; and Unit No. 502, Avanti, AF
	No. 9006280979
	Full legal description on Exhibit A
ASSESSORS’ TAX	066000-1832-03
PARCEL ID NO.:	032280-0020-00
	032280-0020-00

DEED

FOR VALUABLE CONSIDERATION, the receipt and sufficiency of which is hereby acknowledged, the Grantor, AEW SBCO Seattle, LLC, a Delaware limited liability company, does hereby convey and warrant to the Grantee, CHSP Seattle LLC, a Delaware limited liability company the real property in the County of King, State of Washington, more particularly described on Exhibit A attached hereto and made a part hereof (the “Property”).

This conveyance is made subject to real estate taxes for the year              and subsequent years, not yet due and payable, covenants, conditions, restrictions, easements, rights of way and other matters of record, applicable zoning, land use, and similar laws and regulations, and any and all matters which would be disclosed by an accurate survey of the real estate.

DATED effective this      day of                     , 2010.

GRANTOR:

AEW SBCO Seattle, LLC, a Delaware limited liability company

By:

Name:

Title:

STATE OF	)
	)
COUNTY OF	)

On this      day of                     , 201    , before me personally appeared                     , to me known to me to be                      of AEW SBCO Seattle, LLC, a Delaware limited liability company, that executed the within and foregoing instrument, and acknowledged that said instrument to be the free and voluntary act and deed of said company, for uses and purposes therein mentioned, and on oath stated that he/she was authorized to execute said instrument and that the seal affixed is the seal of said company.

In witness whereof, I have hereunto set my hand and affixed my official seal the day and year first above written.

	Notary Public in and for the State of
		residing at
My Commission Expires:
	Notary’s Printed Name

Exhibit A to Deed

Exhibit A

LEGAL DESCRIPTION

Parcel A:

Lots 6, 7, 8 And 9, Block 46, Second Addition To The Town Of Seattle As Laid Off By The Heirs Of Sarah A. Bell, Deceased (Commonly Known As Heirs Of Sarah A. Bell’s 2^nd Addition To The City Of Seattle). According To The Plat Recorded In Volume 1 Of Plats At Page 121, In King County, Washington;

Together With Vacated Alley Adjoining Said Lots, As Vacated By City Of Seattle Ordinance No. 89797, Which Attached Thereto By Operation Of Law, And;

Lots 1, 3, 4, And 6, Block 113, A. A. Denny’s Broadway Addition To The City Of Seattle. According To The Plat Recorded In Volume 6 Of Plats At Page 40, In King County, Washington;

Except The Northwesterly 10 Feet Thereof Condemned In King County Superior Court Cause No. 41394 For Street Purposes, As Provided By Ordinance No. 10051 Of The City Of Seattle And;

Except That Portion Of Said Lot 6, A. A. Denny’s Broadway Addition To The City Of Seattle And Of Said Lot 9, Of Heirs Of Sarah A. Bell’s 2^nd Addition To The City Of Seattle, Lying Southeasterly Of A Line Which Begins At The Intersection Of The Southwesterly Extension Of The Northwesterly Face Of An 8 Inch Thick Concrete Building Wall With The Southwesterly Line Of Said Lot 6, At A Point 16.67 Feet Southeasterly Of The Most Westerly Corner Thereof. And Runs Thence Northeasterly Along Said Extension, Northwesterly Face And Its Extension To The Southwesterly Margin Of Boren Avenue;

(Also Know As Parcel A Of City Of Seattle Lot Line Adjustment No. 9001610, As Recorded Under Recording No. 9008300712, In King County, Washington).

Parcel B:

Unit 502, Avanti, A Condominium, According To The Declaration Thereof Recorded Under Recording No. 9006280979, And Amendment(S) Thereto; Said Unit Is Located On Survey Map And Plans Filed In Volume 96 Of Condominiums. At Pages 17 Through 27, Amended In Volume 101 At Pages 58 Through 68, Records Of King County, Washington.

(Said Condominium Being A Subdivision Of Parcel B Of City Of Seattle Lot Line Adjustment No. 9001610, As Recorded Under Recording No. 9008300712, In King County, Washington).

Parcel C:

Easements For Footings, Foundations, Supports, Utilities, Access And Parking As Declared Under Recording No. 9003290567, And As Amended Under Recording No. 9011210516, In King County, Washington.

EXHIBIT B TO PURCHASE AND SALE AGREEMENT

[Form of]

BILL OF SALE

THIS BILL OF SALE, for Ten Dollars ($10.00) cash and other good and valuable consideration, receipt of which is hereby acknowledged, AEW SBCO SEATTLE, LLC, a Delaware limited liability company (“Seller”), does hereby sell, assign, convey, transfer and set over to                     , a              (“Buyer”), all of the “FF&E” and “Inventory,” as those terms are defined in that certain Agreement of Purchase and Sale for the Homewood Suites Seattle, dated as of ***, between Seller, and Buyer, without warranty, express or implied, except that Seller shall warrant and defend unto Buyer and Buyer’s successors and assigns title to such property against all persons claiming by, through or under Seller (other than the lessor of the Leased Equipment), but no others.

Seller further hereby covenants to execute and deliver such further instrument(s) as Buyer may hereafter request to evidence or confirm any of the sales made herein, in such form as Buyer may reasonably request and promptly upon Buyer’s request therefor.

Dated:                     , 20	AEW SBCO SEATTLE, LLC, a Delaware limited liability company
	By:
	Name:
	Title:

EXHIBIT C TO PURCHASE AND SALE AGREEMENT

ALLOCATION OF

PURCHASE PRICE

PURCHASE PRICE ALLOCATION

Land, Building & Improvements	$	51,839,722
Personal Property	$	1,160,278

EXHIBIT D TO PURCHASE AND SALE AGREEMENT

[Form of]

ASSIGNMENT AND ASSUMPTION OF CONTRACTS

THIS ASSIGNMENT AND ASSUMPTION OF CONTRACTS (this “Assignment”) is made as of ***, by and between AEW SBCO SEATTLE, LLC, a Delaware limited liability company (“Assignor”), and ***, a *** (“Assignee”), on the other.

RECITALS

A. Assignor has entered into that certain Agreement of Purchase and Sale (the “Purchase Agreement”), dated as of ***, between Assignor, as “Seller,” and Assignee {or, if initial Buyer has assigned the Agreement, insert name of initial Buyer***}, as “Buyer,” for purchase of the land described in Exhibit A attached hereto, together with the improvements, fixtures, furnishings, equipment, inventories and other real and personal property comprising the hotel known as the Homewood Suites Seattle, in Seattle, Washington (the “Hotel”). {If initial Buyer has assigned Agreement: Buyer has assigned all of its rights, title and interest under the Agreement to Assignee.}

B. In conjunction with the sale and purchase of the Hotel, the Purchase Agreement obligates Assignor to assign to Assignee, and Assignee to assume, all of the contracts and equipment leases (the “Assumed Contracts”) identified in the Schedule of Contracts attached hereto as Exhibit B, subject to the terms and conditions set forth in this Assignment.

NOW, THEREFORE, in consideration of the foregoing, and of the mutual covenants and conditions herein contained, the parties hereto (together, the “Parties,” and each sometimes a “Party”) hereby act and agree as follows:

1. Assignment. Assignor hereby assigns, sets over and transfers to Assignee, and Assignee hereby takes and accepts from Assignor, all of Assignor’s rights in, under and to each of the Assumed Contracts and to all benefits and privileges hereafter accruing to Assignor thereunder.

2. Assumption of Obligations and Liabilities by Assignee. Assignee hereby assumes all of the obligations and liabilities of Assignor under each of the Assumed Contracts accruing from and after the date hereof.

3. No Impairment of Purchase Agreement Provisions. Nothing contained in this Assignment shall be deemed to limit, waive or otherwise derogate from any warranty, representation, covenant or indemnification made in the Purchase Agreement by either Party, or to waive or abrogate any limits on liability specified in the Purchase Agreement, and none of such provisions in the Purchase Agreement shall be deemed to have merged into the assignment made by this Assignment.

EXHIBIT E TO PURCHASE AND SALE AGREEMENT

Page E-1

4. Further Assurances. Assignor shall promptly execute and deliver to Assignee any additional instrument or other document which Assignee reasonably requests to evidence or better effect the assignment contained herein.

5. Counterparts. This Assignment may be executed in any number of counterparts and by each Party on a separate counterpart or counterparts, each of which when so executed and delivered shall be deemed an original and all of which taken together shall constitute but one and the same instrument.

6. Governing Law. This Assignment shall be deemed to be an agreement made under the laws of the state where the Hotel is located and for all purposes shall be governed by and construed in accordance with such laws.

7. Binding Effect. This Assignment shall be binding upon and inure to the benefit of each of the Parties and its successors and assigns.

8. Warranty of Signers. Each individual executing and delivering this Assignment on behalf of a Party hereby represents and warrants to the other Party that such individual has been duly authorized and empowered to make such execution and delivery.

IN WITNESS WHEREOF, the Parties have caused this Assignment to be executed and delivered by their respective representatives, thereunto duly authorized, as of the date first above written.

[SIGNATURES ON FOLLOWING PAGE]

EXHIBIT E TO PURCHASE AND SALE AGREEMENT

Page E-2

ASSIGNOR:	AEW SBCO SEATTLE, LLC, a Delaware limited liability company
	By:
	Name:
	Title:
ASSIGNEE:	[***Insert Assignee name/jurisdiction/entity]
	By:
	Name:
	Title:

EXHIBIT E TO PURCHASE AND SALE AGREEMENT

Page E-3

[Form of]

GENERAL ASSIGNMENT AND ASSUMPTION AGREEMENT

THIS ASSIGNMENT AND ASSUMPTION AGREEMENT (this “Assignment”) is made as of                     ,     , 200    , by and between AEW SBCO SEATTLE, LLC, a Delaware limited liability company (“Assignor”), and ***, a ***, (“Assignee”).

RECITALS

A. Assignor has entered into that certain Agreement of Purchase and Sale (the “Purchase Agreement”), dated as of                     , 20    , between Assignor, as “Seller,” and Assignee, {or, if initial Buyer has assigned the Agreement, insert name of initial Buyer***}, as “Buyer,” for purchase of the land described in Exhibit A attached hereto, together with the improvements, fixtures, furnishings, equipment, inventories and other real and personal property comprising the hotel known as the Homewood Suites Seattle, in Seattle, Washington (the “Hotel”). {If initial Buyer has assigned Agreement: Buyer has assigned all of its rights, title and interest under the Agreement to Assignee.}

B. In conjunction with the sale and purchase of the Hotel, the Purchase Agreement obligates Assignor to assign to Assignee certain intangible rights with respect to the Hotel and Assignee to assume all of Assignor’s obligations with respect thereto, subject to the terms and conditions set forth in this Assignment.

NOW, THEREFORE, in consideration of the foregoing, and of the mutual covenants and conditions herein contained, the parties hereto (together, the “Parties,” and each sometimes a “Party”) hereby act and agree as follows:

1. Assignment. Assignor hereby assigns, sets over and transfers to Assignee all of Assignor’s rights, if any, in, under and to the following:

(a) Marks. Each trademark, trade name, service mark, logo or other proprietary name, number (including telephone numbers), address, mark or design which is assignable in conjunction with a sale of the Hotel and which is used by Seller exclusively in connection with the Hotel, together with all the good will associated with the use of such name, mark or design in connection the Hotel (altogether, the “Marks”).

(b) Permits. Each 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 transferable with the Hotel (altogether, the “Permits”).

(c) Warranties. Each written guaranty, warranty or other such obligation from any contractor, manufacturer or vendor, with respect to any of the

EXHIBIT F TO PURCHASE AND SALE AGREEMENT

Page F-1

Hotel Improvements, furnishings, fixtures or equipment, to the extent assignable in connection with a sale of the Hotel (altogether, the “Warranties”).

(d) Records. On-site records, files and other written materials pertaining to the operation of the Hotel (“Records”).

(e) Plans and Studies. Seller’s rights in and to the plans and specifications for the Hotel improvements (“Plans”) and any studies, analyses, reports and other written materials pertaining to the condition of the Hotel improvements and the Hotel Parcel.

(f) Reservations. Each reservation, commitment or agreement for the use of guest rooms, conference rooms, dining rooms or other facilities in the Hotel, to the extent pertaining to periods from and after the date hereof (“Reservations”).

(g) Accounts. The account receivable for each person who is a guest at the Hotel for the room night immediately preceding the date hereof (the “Guest Accounts”).

2. Assumption of Obligations and Liabilities by Assignee. Assignee hereby assumes all of the obligations and liabilities of Assignor accruing from and after the date hereof with respect to each of the Marks, Permits, Warranties, Records, Plans, Reservations and Guest Accounts.

3. No Impairment of Purchase Agreement Provisions. Nothing contained in this Assignment shall be deemed to limit, waive or otherwise derogate from any warranty, representation, covenant or indemnification made in the Purchase Agreement by either Party, or to waive or abrogate any limits on liability specified in the Purchase Agreement, and none of such provisions in the Purchase Agreement shall be deemed to have merged into the assignment made by this Assignment.

4. Further Assurances. Assignor shall promptly execute and deliver to Assignee any additional instrument or other document which Assignee reasonably requests to evidence or better effect the assignment contained herein.

5. Counterparts. This Assignment may be executed in any number of counterparts, each of which when so executed and delivered shall be deemed an original and all of which taken together shall constitute but one and the same instrument.

6. Governing Law. This Assignment shall be deemed to be an agreement made under the laws of the state where the Hotel is located and for all purposes shall be governed by and construed in accordance with such laws.

7. Binding Effect. This Assignment shall be binding upon and inure to the benefit of, respectively, Assignor and Assignee and their respective successors and assigns.

EXHIBIT F TO PURCHASE AND SALE AGREEMENT

Page F-2

8. Warranty of Signers. Each individual executing and delivering this Assignment on behalf of Assignor hereby represents and warrants to Assignee that such individual has been duly authorized and empowered to make such execution and delivery.

IN WITNESS WHEREOF, Assignor has caused this Assignment to be executed and delivered by their respective representatives, thereunto duly authorized, as of the date first above written.

ASSIGNOR:	AEW SBCO SEATTLE, LLC, a Delaware limited liability company
	By:
	Name:
	Title:
ASSIGNEE:	[***Insert Assignee name/jurisdiction/entity]
	By:
	Name:
	Title:

EXHIBIT F TO PURCHASE AND SALE AGREEMENT

Page F-3

[Form of]

TRANSFEROR’S CERTIFICATION OF NON-FOREIGN STATUS

Section 1445 of the Internal Revenue Code provides that a transferee of a U.S. real property interest must withhold tax if the transferor is a foreign person.

[Use if Seller is a disregarded entity: For U.S. tax purposes (including section 1445), the owner of a disregarded entity (which has legal title to a U.S. real property interest under local law) will be the transferor of the property and not the disregarded entity. The disregarded entity is [                    ] (the “Disregarded Entity”). [                    , a                     ] (“Transferor”), is the sole owner of the Disregarded Entity. To inform                     , a                      (“Transferee”), that withholding of tax under Section 1445 of the Internal Revenue Code of 1954, as amended (the “Code”), will not be required upon the transfer of certain real property to Transferee by the Disregarded Entity, the undersigned hereby certifies the following on behalf of Transferor:]

[Use if Seller is not a disregarded entity: To inform                     , a                      (“Transferee”), that withholding of tax under Section 1445 of the Internal Revenue Code of 1954, as amended (the “Code”), will not be required upon the transfer of certain real property by [                    , a                     ] (“Transferor”), the undersigned hereby certifies the following on behalf of Transferor:]

1. Transferor is not a foreign corporation, foreign partnership, foreign trust, or foreign estate (as those terms are defined in the Code and the Income Tax Regulations promulgated thereunder);

2. Transferor is not a disregarded entity as defined in §1.1445-2(b)(2)(iii);

3. Transferor’s U.S. employer identification number is [                    ]; and

4. Transferor’s office address is [                                         ].

Transferor understands that this Certification may be disclosed to the Internal Revenue Service by Transferee and that any false statement contained herein could be punished by fine, imprisonment, or both.

Under penalty of perjury the undersigned declares that he or she has examined this Certification and to the best of his/her knowledge and belief it is true, correct and complete, and the undersigned further declares that he/she has authority to sign this document on behalf of Transferor.

EXHIBIT G TO PURCHASE AND SALE AGREEMENT

Page G-1

Dated: ____________ ____, 2010

[		],
a	[	]

By:

Name:

Title:

EXHIBIT G TO PURCHASE AND SALE AGREEMENT

G-2

FURTHER EXCEPTIONS

TO

SELLERS’ WARRANTIES AND REPRESENTATIONS

The following conditions, events or facts constitute exceptions to Sellers’ Warranties and Representations set forth in Section 5.1 of this Agreement:

NONE.

EXHIBIT H TO PURCHASE AND SALE AGREEMENT

[INTENTIONALLY OMITTED]

EXHIBIT I TO PURCHASE AND SALE AGREEMENT

SCHEDULE OF CONTRACTS

1.	SERVICE CONTRACTS	{See Attached Schedule J-1}
2.	EQUIPMENT LEASES	{See Attached Schedule J-2}

EXHIBIT J TO PURCHASE AND SALE AGREEMENT

SCHEDULE OF ENVIRONMENTAL REPORT AND EXISTING SURVEY

A. Environmental Report:

{Identify each report by title, consultant, job number and date}

B. Existing Survey:

{Identify survey by surveying firm, individual certifying surveyor, job number and date}

EXHIBIT K TO PURCHASE AND SALE AGREEMENT

SCHEDULE OF EXISTING LOAN DOCUMENTS

1. Deed of Trust Note

2. Deed of Trust

3. Completion Guaranty Agreement

4. Guaranty of Recourse Obligations

5. Environmental Indemnity Agreement

6. Assignment of Leases, Rents and Profits

7. Assignment of Contracts, Licenses, Permits, Agreements, Warranties and Approvals

8. Renovation Escrow Agreement

9. Replacement Reserve Agreement

10. Consent, Subordination and Recognition Agreement

11. Patriot Act Certificate of Borrower’s Authorized Person

12. Deposit Account Control Agreement

13. Restricted Account Agreement

EXHIBIT L TO PURCHASE AND SALE AGREEMENT

LIST OF INSURANCE POLICIES

The following insurance coverages are provided for Homewood Suites Seattle under the Hotel Manager’s insurance program . All policy terms are 12/31/09 - 12/31/10.

• General Liability; Phoenix Insurance Company (Travelers)

• Automobile; Charter Oak Fire Insurance Company (Travelers)

• Excess/Umbrella Liability; National Union Fire Insurance Company of Pittsburgh, PA (Chartis/AIG)

• Excess/Umbrella Liability; Fireman’s Fund Insurance Company

• Crime; Philadelphia Indemnity Insurance Company

• Excess Crime; National Union Fire Insurance Company of Pittsburgh, PA (Chartis/AIG)

• Employment Practices and Fiduciary Liability; Philadelphia Indemnity Insurance Company

EXHIBIT M TO PURCHASE AND SALE AGREEMENT

EX-10.22

Exhibit 10.22

AGREEMENT FOR SALE AND PURCHASE OF HOTEL

LE MERIDIEN SAN FRANCISCO

SAN FRANCISCO, CALIFORNIA

By and Between

HEI SAN FRANCISCO LLC

a Delaware limited liability company

(“Seller”)

and

CHSP SAN FRANCISCO LLC

a Delaware limited liability company

(“Purchaser”)

December 7, 2010

AGREEMENT FOR SALE AND PURCHASE OF HOTEL

Table of Contents

		Page
ARTICLE I DEFINITIONS AND REFERENCES			1
1.01	Definitions		1
1.02	References		9
ARTICLE II SALE AND PURCHASE; “AS IS,” “WHERE IS” SALE			9
2.01	Sale and Purchase		9
2.02	As is, Where is		9
ARTICLE III PURCHASE PRICE			13
3.01	Purchase Price		13
3.02	Application of Deposit		14
ARTICLE IV DILIGENCE MATTERS			15
4.01	Inspection Period		15
4.02	Review and Inspection		15
4.03	Testing		15
4.04	Acceptance or Rejection		15
4.05	Confidentiality		16
4.06	Indemnification; Restoration; Insurance		16
4.07	Title and Survey		17
4.08	Space Leases, Hotel Contracts and Equipment Leases		18
4.09	Franchise Agreement		18
4.10	Natural Hazard Disclosures		19
ARTICLE V REPRESENTATIONS AND WARRANTIES			20
5.01	Representations and Warranties of Seller		20
5.02	Representations and Warranties of Purchaser		23
5.03	Duration of Representations and Warranties and Covenants; Limitations on Liability		24
5.04	Indemnities		25
5.05	Procedure for Indemnification with Respect to Third Party Claims		26
ARTICLE VI CLOSING AND CLOSING DELIVERIES			26
6.01	Closing		26
6.02	Escrow		27
6.03	Seller’s Deliveries		27
6.04	Purchaser’s Deliveries		28
6.05	Expenses		28
6.06	Concurrent Transactions		29
6.07	Possession		29

(i)

ARTICLE VII ADJUSTMENTS AND PRORATIONS CLOSING STATEMENTS		29
7.01	Adjustments and Prorations	29
7.02	Payment	32
7.03	Cash and Accounts	32
ARTICLE VIII CONDITIONS TO SELLER’S OBLIGATIONS		32
8.01	Conditions	32
ARTICLE IX CONDITIONS TO PURCHASER’S OBLIGATIONS		33
9.01	Conditions	33
ARTICLE X ACTIONS AND OPERATIONS PENDING CLOSING		34
10.01	Actions and Operations Pending Closing	34
ARTICLE XI CASUALTIES AND TAKINGS		35
11.01	Casualties	35
11.02	Takings	36
ARTICLE XII EMPLOYEES		37
12.01	Employees	37
ARTICLE XIII NOTICES		38
13.01	Notices	38
ARTICLE XIV ADDITIONAL COVENANTS		40
14.01	Additional Covenants	40
ARTICLE XV DEFAULTS AND REMEDIES; EFFECT OF TERMINATION		42
15.01	Purchaser Default/Seller’s Remedies	42
15.02	Seller Default/Purchaser’s Remedies	44
15.03	Attorneys’ Fees	44
15.04	No Reservation of Property	44
ARTICLE XVI IRS FORM 1099-S DESIGNATION		44
16.01	Designee	44
ARTICLE XVII MISCELLANEOUS PROVISIONS		45
17.01	Construction	45
17.02	Severability	45
17.03	Publicity	46
17.04	Assignment	46
17.05	Business Days	47
17.06	Counterparts	47
17.07	Recitals, Exhibits and Schedules	47
17.08	Entirety	47
17.09	Amendments to Agreement	47
17.10	Governing Law	47
17.11	Jurisdiction	47

(ii)

17.12	Jury Trial Waiver	47
17.13	Successors and Assigns	47
ARTICLE XVIII GENERAL ESCROW PROVISIONS		48
18.01	General Escrow Provisions	48

(iii)

Exhibit A:	Excluded Assets	A-1
Exhibit B:	Land	B-1
Exhibit C:	Pending or Threatened Litigation	C-1
Exhibit D:	Notices of Violation	D-1
Exhibit E:	Schedule of Leases	E-1
Exhibit F:	Leased or 3rd Party Owned Fixtures and Tangible Personal Property	F-1
Exhibit G:	Hotel Contracts and related matters	G-1
Exhibit H:	Form of Deed	H-1
Exhibit I:	Form of Bill of Sale	I-1
Exhibit J:	Form of Assignment and Assumption Agreement	J-1
Exhibit K:	Form of Certification of Non-Foreign Status	K-1
Exhibit L:	Form of 1099-S	L-1
Exhibit M:	Allocation of Transaction Costs and Expenses	M-1
Exhibit N:	ADA Related Contracts	N-1

(iv)

AGREEMENT FOR SALE AND PURCHASE OF HOTEL

THIS AGREEMENT FOR SALE AND PURCHASE OF HOTEL (this “Agreement”), dated as of December 7, 2010, is entered into by and between HEI SAN FRANCISCO LLC, a Delaware limited liability company (“Seller”), and CHSP SAN FRANCISCO LLC, a Delaware limited liability company (“Purchaser”).

RECITALS:

A. Seller is the owner of the Land and the Improvements commonly referred to as the Le Meridien San Francisco and located in San Francisco, California, the Hotel, the Fixtures and Tangible Personal Property, Operating Equipment, Consumables, Inventory and Miscellaneous Hotel Assets (each as hereinafter defined).

B. Seller desires to sell, and Purchaser desires to purchase, the Property (as hereinafter defined) upon and subject to the terms and conditions hereinafter set forth.

AGREEMENTS:

NOW, THEREFORE, in consideration of the representations, warranties, agreements, covenants and conditions contained in this Agreement, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Seller and Purchaser agree as follows:

ARTICLE I

DEFINITIONS AND REFERENCES

1.01 Definitions.

Account Cash: The balances of all cash and securities and other instruments held by Seller or by Manager or for the benefit of Seller or the Property and deposited, held or contained in any account, bank or vault, except for Cash On Hand and/or any reserve for the replacement of fixtures, furnishings and equipment, as well as any other reserves held by any Lender on the Property or the Franchisor, all of which are owned and to be retained by Seller or any Affiliate of Seller.

Accounts Receivable: All accounts receivable with regard to the Hotel.

Accrued Vacation Pay: The monetary value of any vacation days, sick-leave or other paid time-off earned and accrued by the Employees as of the time in question (computed by reference to, as applicable, the rate of the salaries and wages earned by such Employees as of the time in question), under Manager’s employment policies (including all employment taxes with respect thereto).

ADA Capital Improvements: Shall have the meaning given to it in Section 14.01(h).

ADA Contracts: Shall have the meaning given to it in Section 14.01(h).

Affiliate: With respect to a specific entity, any natural person or any firm, corporation, partnership, association, trust or other entity which, directly or indirectly, controls or is under common control with the subject entity, and with respect to any specific entity or person, any firm, corporation, partnership, association, trust or other entity which is controlled by the subject entity or person. For purposes hereof, the term “control” or “controlled by” shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of any such entity or the power to veto major policy decisions of any such entity, whether through the ownership of voting securities, by contract, or otherwise.

Agreement: This Agreement for Sale and Purchase of Hotel, including the exhibits attached hereto and made a part hereof.

Allocation: Shall have the meaning given to it in Section 3.01.

Anti-Terrorism Order: Shall have the meaning given to it in Section 5.01(o).

Assignment and Assumption Agreement: Shall have the meaning given to it in Section 6.03(c).

Bill of Sale: Shall have the meaning given to it in Section 6.03(b).

Bookings: Agreements for the use or occupancy of guest rooms or meeting and banquet facilities or other facilities of the Hotel, including any agreements for any off-site catering by the Hotel, in each case, for any time after the Cut-Off Time, including all deposits held by or on behalf of Seller with respect thereto.

Books and Records: All material books, records and files relating to the Property owned by the Seller and in its or its Manager’s possession, including, but not limited to, plans, specifications, drawings, blueprints, surveys and environmental reports; excluding, however, appraisals, internal valuations and projections, attorney-client communications and other reports, records and files that customarily would be considered confidential or privileged as well as any confidential or proprietary books, records, files or materials of Manager, including, but not limited to, guest histories, profiles and other similar data developed and maintained by Manager.

Breach Notice: Shall have the meaning given to it in Section 5.03.

Broker: Shall have the meaning given to it in Section 14.01(b).

Business Day: All days of the year except Saturdays, Sundays and holidays recognized by the Federal Reserve Bank of New York.

California Natural Hazard Area: Shall have the meaning given to it in Section 4.10.

California NHDS: Shall have the meaning given to it in Section 4.10.

California Natural Hazards Laws: Shall have the meaning given to it in Section 4.10.

2

California Natural Hazard Report: Shall have the meaning given to it in Section 4.10.

Cash On Hand: Any and all till money and house banks, and all checks, travelers’ checks, and bank drafts paid by guests of the Hotel and located at the Property, specifically excluding, however, all Account Cash.

Closing: The consummation of the transaction contemplated by this Agreement.

Closing Date: December 15, 2010.

Closing Statements: Shall have the meaning given to it in Section 7.01(l).

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 the Federal Insurance Contribution Act and Federal Unemployment Taxes Act, and all other compensation accrued and payable to the Employees, including, without limitation, any (i) bonus or incentive compensation and (ii) any health, welfare and other benefits provided to the Employees under the Employee Benefit Plans, and employer contributions to, and amounts paid or accrued under, the Employee Benefit Plans for the benefit of the Employees.

Consumables: All of the following now located at the Real Property: food and beverages (alcoholic, to the extent transferable under applicable law, and non alcoholic); engineering, maintenance, guestroom and housekeeping supplies, including soap, shampoo, cleaning materials and matches; stationery and printing supplies; and other consumable supplies of all kinds, in each case whether partially used, unused, or held in reserve storage for future use in connection with the maintenance and operation of the Hotel, subject to such depletion and restocking as shall occur and be made in the normal course of business, excluding, however, (i) Operating Equipment and (ii) all items of personal property owned by Space Lessees, Manager, guests, Employees or persons furnishing food or services to the Hotel (other than Seller, unless denominated as an Excluded Asset under this Agreement).

Cut Off Time: 12:01 A.M. San Francisco, CA Time on the date of the Closing Date.

Deductible: Shall have the meaning given to it in Section 5.03.

Deed: Shall have the meaning given to it in Section 6.03(a).

Deposit: Shall have the meaning given to it in Section 3.01(b).

Designee: Shall have the meaning given to it in Section 16.01.

Due Diligence: Shall have the meaning given to it in Section 4.01.

Employee(s): Prior to the Closing Date, all persons employed by Manager and from and after the Closing Date, all persons employed by Purchaser or its designee or management company, for the purpose of operating the Hotel, pursuant to the Management Agreement or Employment Contracts or otherwise.

3

Employee Benefit Plans: All employee benefit plans, as that term is defined in ERISA, and each other employee benefit plan or program maintained or contributed to by Seller or Manager on behalf of any of the Employees.

Employment Contract(s): Those contracts and agreements, oral or written, with all or any of the Employees of Manager or any Affiliate of Manager for work in or in connection with the Hotel including, but not limited to, individual employment agreements, union agreements and employee handbooks.

Environmental Laws: Any federal, state and local laws, statutes, ordinances, rules, regulations (including, but not limited to, the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended from time to time (42 U.S.C. § 9601 et seq.) and the applicable provisions of all applicable state and local statutes, as amended from time to time, and rules and regulations promulgated thereunder), authorizations, judgments, decrees, administrative orders, concessions, grants, franchises, agreements and other governmental restrictions and requirements relating to the environment.

Equipment Leases: All leases, agreements, financings or other arrangements pursuant to which Seller leases or rents certain equipment, machinery, tools, devices or other such items for use in connection with its ownership and operation of the Hotel, to the extent such leases, agreements, financings or other arrangements are transferable and/or the parties obtain any consent necessary to effectuate such transfer.

ERISA: The Employee Retirement Income Security Act of 1974, as amended.

Escrow: The escrow, if any, created for the purpose of facilitating the transactions contemplated by this Agreement.

Escrow Company: Title Associates, a division of Stewart Title Insurance Company.

Excluded Assets: Those assets, if any, listed on Exhibit A to this Agreement, the Account Cash and any reserve for the replacement of fixtures, furnishings and equipment, as well as any other reserves held by any lender of Seller or related to the Property or the Franchisor, all of which are owned and to be retained by Seller or any Affiliate of Seller.

Final Closing Statement: Shall have the meaning given to it in Section 7.01(l).

Fixtures and Tangible Personal Property: All fixtures, furniture, furnishings, fittings, equipment, cars, trucks, machinery, apparatus, signage, appliances, draperies, carpeting, keys, and other articles of personal property now located on the Real Property and used or usable in connection with any part of the Hotel, subject to such depletions, resupplies, substitutions, and replacements as shall occur and be made in the normal course of business, excluding, however: (i) Consumables and Inventory; (ii) Operating Equipment;(iii) equipment subject to Equipment Leases; (iv) property owned by Space Lessees, Manager, guests, employees, or other persons furnishing goods or services to the Hotel (other than Seller, unless denominated as an Excluded Asset); (v) Improvements and (vi) Excluded Assets.

4

Franchise Agreement: That certain Conversion License Agreement dated April 25, 2006 between Seller and Franchisor, as amended.

Franchisor: Starwood (M) International, Inc., a Delaware corporation.

Hazardous Substances: Any substance, chemical, waste or material that is or becomes regulated by any federal, state or local governmental authority because of its toxicity, infectiousness, radioactivity, explosiveness, ignitability, corrosiveness or reactivity, including, without limitation, asbestos or any substance containing more than 0.1 percent asbestos, the group of compounds known as polychlorinated biphenyls, flammable explosives, oil, petroleum or any refined petroleum product.

Hotel: The hotel known as the Le Meridien San Francisco, including 360 guest rooms, approximately 13,107 square feet of meeting/ballroom space and all related facilities and the lodging, food and beverage, and other businesses and activities related thereto and conducted at such hotel.

Hotel Contracts: All service contracts, maintenance contracts, purchase orders, Equipment Leases, and other contracts or agreements and any amendments thereto, with respect to the ownership, maintenance, operation, provisioning or equipping of the Hotel, or any of the Property, as well as written warranties and guaranties relating thereto, if any, including, but not limited to, those relating to heating and cooling equipment and/or mechanical equipment, to the extent such contracts are transferable and/or the parties obtain any consent necessary to effectuate such transfer, but exclusive, however, of (i) insurance policies, (ii) the Bookings, (iii) the Employment Contracts, (iv) the Employee Benefit Plans, (v) the Franchise Agreement and (vi) the Management Agreement.

Improvements: The buildings, structures (surface and sub surface) and other improvements located on the Land, including such fixtures as shall constitute real property, except to the extent such fixtures constitute Excluded Assets.

Indemnified Party: Shall have the meaning given to it in Section 5.05.

Indemnitees: A party’s or its Affiliates’ partners, trustees, officers, directors, employees, beneficiaries, shareholders, members, managers, advisors, attorneys and other agents and their respective partners, trustees, beneficiaries, employees, officers, directors, members, managers, advisors and other agents and shareholders.

Indemnitor: Shall have the meaning given to it in Section 5.05.

Initial Deposit: Shall have the meaning given to it in Section 3.01(a).

Inspection Period: Shall have the meaning given to it in Section 4.01.

Inventory: All articles of personal property now located at the Real Property and held for resale to customers in the ordinary course of business including, without limitation, any inventory held for resale in any gift shop, newsstand or similar retail outlet in the Hotel that is operated by Manager, subject to such depletions, resupplies, substitutions and replacements as

5

shall occur and be made in the normal course of business, excluding, however: (i) Fixtures and Tangible Personal Property; (ii) Consumables; (iii) Operating Equipment; (iv) equipment subject to Equipment Leases; (v) any property owned by Manager, guests, employees, Space Lessees or other persons furnishing goods or services to the Hotel (other than Seller or any Affiliate of Seller, unless denominated as an Excluded Asset); and (vi) Improvements.

IRS: Shall have the meaning given to it in Section 16.01.

IT Systems: All computer hardware, telecommunications and information technology systems located at the Hotel, and all computer software used at the Hotel (subject to the terms of any applicable third party license agreement), to the extent such equipment and systems are transferable if they are the subject of a third party license agreement or the parties obtain any consent necessary to effectuate such transfer.

Land: The parcel of real estate owned by Seller, which parcel is described in Exhibit B, together with all rights, title, and interest, if any, of Seller in and to all land lying in any street, alley, road or avenue, open or proposed, in front of or adjoining said Land, to the centerline thereof, and all right, title, and interest, if any, of Seller in and to any award made or to be made in lieu thereof.

Legal Requirements: All laws, statutes, codes, acts, ordinances, orders, judgments, decrees, injunctions, rules, regulations, permits, licenses, authorizations, directions and requirements of all governments and governmental authorities having jurisdiction over the Hotel or the Property, or the operation of the Hotel or Property.

Liabilities: Any and all liabilities, demands, liens, interest, claims, actions or causes of action, assessments, losses, fines, penalties, costs (including, without limitation, response and/or remedial costs), damages and expenses including, without limitation, those asserted by any Federal, state or local governmental or quasi-governmental agency or any third party, and any and all reasonable attorneys’, consultants’ and expert witness fees and expenses.

Liquor License: Any and all licenses and permits held by Seller or any Affiliate of Seller or of Manager required by any applicable governmental authorities for the sale and consumption of alcoholic beverages at the Hotel.

Management Agreement: That certain Hotel Management Agreement, dated as of May 9, 2006, by and between Seller and Manager, as amended, pursuant to which Manager manages and operates the Hotel.

Manager: Merritt Hospitality LLC, a Delaware limited liability company.

Miscellaneous Hotel Assets: All contract rights, leases, concessions, trademarks, logos, copyrights, goodwill, assignable warranties, and other items of intangible personal property relating to the ownership or operation of Hotel to the extent transferable and/or the parties obtain any consent necessary to effectuate such transfer, but such term shall not include: (i) Bookings; (ii) Hotel Contracts; (iii) the Management Agreement, (iv) the Franchise Agreement; (v) Space Leases; (vi) Permits; (vii) Cash On Hand; (viii) Books and Records; (ix) Accounts Receivable; (x) refunds, rebates or other claims, or any interest thereon, for periods or events occurring prior

6

to the Cut Off Time; (xi) utility and similar deposits; (xii) prepaid insurance or other prepaid items; or (xiii) prepaid fees for Permits; except, in the case of clauses (x) through (xiii) (inclusive), only to the extent that Seller receives a credit on the Closing Statement for any such item or matter.

Notice and Notices: Shall have the meanings given to them in Section 13.01.

Objection Letter: Shall have the meaning given to it in Section 4.07.

Operating Equipment: All china, glassware, linens, silverware, uniforms and other similar items used in connection with the operation of the Hotel, whether in use or held in reserve storage for future use, which are located at the Real Property as of the date of this Agreement, subject to such depletion and restocking as shall be made in the normal course of business.

Party(ies): Purchaser and/or Seller, as applicable.

Permits: All licenses, permits, certificates of occupancy, authorizations and approvals used in or relating to the ownership, occupancy or operation of any part of the Hotel, including, without limitation, those necessary for the sale and on premises consumption of food, liquor and other alcoholic beverages, to the extent transferable and/or the parties obtain any consent necessary to effectuate such transfer.

Permitted Exceptions: Shall have the meaning given to it in Section 4.07.

Personal Property: Collectively, the Fixtures and Tangible Personal Property, Consumables, Inventory, Operating Equipment, IT Systems, and Cash-On-Hand, but excluding the Excluded Assets.

Preliminary Closing Statement: Shall have the meaning given to it in Section 7.01(l).

Present Standards: The standards to which Seller and Manager have generally operated and maintained the Hotel during the most recent six months prior to the execution of this Agreement.

Property: The Hotel, including without limitation, collectively the (i) Real Property: (ii) Fixtures and Tangible Personal Property; (iii) Operating Equipment; (iv) Consumables; (v) transferable right, title, and interest of Seller in, to and under the Hotel Contracts and the Space Leases; (vi) Bookings; (vii) Permits (to the extent assignable); (viii) Cash-On-Hand; (ix) IT Systems; (x) Inventory; (xi) Warranties; (xii) Books and Records; and (xiii) Miscellaneous Hotel Assets; provided, however, that the Property shall not include the Excluded Assets.

Purchase Price: Shall have the meaning given to it in Section 3.01.

Purchaser: Shall have the meaning given to it in the Introductory Paragraph.

Purchaser’s Employee Obligations: Shall have the meaning given to it in Section 12.01(b).

7

Purchaser Party/ies: Shall have the meaning given to it in Section 4.05.

Real Property: The Land together with the Improvements located on the Land.

Seller: Shall have the meaning given to it in the Introductory Paragraph.

Seller Default: Shall have the meaning given to in Section 15.02.

Seller Encumbrances: Shall have the meaning given to in Section 4.07.

Seller Release Parties: Shall have the meaning given to it in Section 2.02(f).

Seller’s Knowledge: Shall have the meaning given to it in Section 5.01.

Seller’s Representative: Shall have the meaning given to it in Section 5.01.

Seller’s Response Notice: Shall have the meaning given to it in Section 4.07.

Seller’s Response Period: Shall have the meaning given to it in Section 4.07.

Settlement: Shall have the meaning given to it in Section 14.01(h).

Space Leases: All leases, licenses, concessions, and other occupancy agreements for the use or occupancy of any portion of the Improvements and any amendments thereto, excluding, however, Bookings, to the extent such leases, licenses, concessions, and other occupancy agreements are transferable and/or the parties obtain any consent necessary to effectuate such transfer.

Space Lessee: Any person or entity entitled to occupancy of any portion of the Real Property under a Space Lease.

Survey: Shall have the meaning given to it in Section 4.07.

Termination Notice: Shall have the meaning given to it in Section 4.04.

Title Company: Stewart Title Insurance Company.

Title Policy: A 2006-ALTA Extended Coverage Owner’s Title Insurance Policy issued by the Title Company pursuant to the Title Commitment, in favor of Purchaser and in the amount of the portion of the Purchase Price allocated to the Real Property, showing good and marketable title in the Real Property to be vested in Purchaser, subject to only the Permitted Exceptions.

Title Commitment: Shall have the meaning given to it in Section 4.07.

Transfer: Shall have the meaning given to it in Section 17.04.

Unopened Consumables: Consumables which are in unopened cases, boxes, crates or containers (other than single-use containers, such as individual guestroom shampoo containers and the like).

8

WARN Act: Shall have the meaning given to it in Section 12.01(a).

Warranties: All of Seller’s right, title and interest in and to all presently effective and assignable warranties, guaranties, representations or covenants given to or made in favor of Seller in connection with the acquisition, development, construction, maintenance, repair, renovation or inspection of any of the Property, including any made under any roof warranties, any construction contracts and any service or maintenance contracts.

1.02 References. Except as otherwise specifically indicated, all references to Section and Subsection numbers refer to Sections and Subsections of this Agreement, and all references to Exhibits refer to the Exhibits attached to this Agreement. The words “hereby,” “hereof,” “herein,” “hereto,” “hereunder,” “hereinafter,” and words of similar import refer to this Agreement as a whole and not to any particular section or subsection of this Agreement. Captions are for convenience only and shall not be used to construe the meaning of any part of this Agreement.

ARTICLE II

SALE AND PURCHASE; “AS IS,” “WHERE IS” SALE

2.01 Sale and Purchase. Seller hereby agrees to sell to Purchaser, and Purchaser hereby agrees to purchase from Seller, all of Seller’s right, title and interest in and to the Property on the terms and subject to the conditions of this Agreement.

2.02 As is, Where is.

(a) Purchaser represents that by reason of its business and financial experience, and the business and financial experience of those persons retained by Purchaser to advise it with respect to its investment in the Property, Purchaser has sufficient knowledge, sophistication and experience in business and financial matters to evaluate the merits and risks of the prospective investment and is able to bear the economic risk of such investment. Purchaser has had and will have during the Inspection Period adequate opportunity and time to review and analyze the risks attendant to the transactions contemplated in this Agreement with the assistance and guidance of competent professionals. In addition, Purchaser acknowledges that it has had and will have during the Inspection Period a sufficient period of time to inspect, examine and investigate the Property (and to review survey and title matters relating to the Property) including, but not limited to, the Books and Records provided or made available by Seller. Purchaser represents, warrants and agrees that, except for the Seller’s representations and warranties expressly set forth herein, Purchaser is relying solely on its own inspections, examinations and investigations in making the decision to purchase the Property. Purchaser hereby acknowledges and agrees that it shall not have the right to terminate this Agreement and obtain a refund of the Deposit as a result of its dissatisfaction with any aspect of its investigation of the Property after the expiration of the Inspection Period.

(b) Except for the representations and warranties expressly set forth in Section 5.01 and Section 14.01(b), Purchaser has not relied, and is not relying, upon any information, documents, sales brochures, other literature, maps or sketches, projections, pro formas,

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statements, representations or warranties (whether express or implied, oral or written, material or immaterial) that may have been given or made by or on behalf of Seller.

(c) Except for the representations and warranties expressly set forth in Section 5.01 and Section 14.01(b), Purchaser is not relying and has not relied on Seller or any of its Affiliates, or any of their respective officers, members, partners, directors, shareholders, agents, attorneys, employees or representatives as to (i) the quality, nature, adequacy or physical condition of the Property including, but not limited to, the structural elements, foundations, roofs, appurtenances, access, landscaping, parking facilities, electrical, mechanical, HVAC, plumbing, sewage or utility systems, facilities or appliances at the Property or any portion of the Property, (ii) the quality, nature, adequacy or physical condition of soils or ground water at the Property, (iii) the existence, quality, nature, adequacy or physical condition of any utility serving the Property, (iv) the ad valorem taxes now or hereafter payable on the Property or the valuation of the Property for ad valorem tax purposes, (v) the development potential of the Property or the habitability, merchantability, fitness, suitability or adequacy of the Property or any portion of the Property for any particular use or purpose, (vi) the zoning or other legal status of the Real Property, (vii) the compliance by the Property or any portion of the Property, or of the operations conducted on or at the Property, with any Legal Requirements or other covenants, conditions or restrictions, (viii) the quality of any labor or materials relating in any manner to the Property or (ix) except as otherwise expressly provided in this Agreement, the condition of title to the Property or the nature, status, and extent of any right of way, lease, right of redemption, possession, lien, encumbrance, license, reservation, covenant, condition, restriction or any other matter affecting title to the Property.

(d) EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES EXPRESSLY SET FORTH IN SECTION 5.01 AND SECTION 14.01(b), THE SALE AND CONVEYANCE BY SELLER TO PURCHASER OF ALL RIGHT, TITLE AND INTEREST OF SELLER IN AND TO THE PROPERTY WILL BE MADE WITHOUT ANY WARRANTY OR RECOURSE WHATSOEVER, INCLUDING, WITHOUT LIMITATION, ANY WARRANTY OF TITLE (EXCEPT AS TO ACTS OF SELLER), ABSENCE OF DEFECTS (WHETHER APPARENT OR LATENT, KNOWN OR UNKNOWN, EASILY DISCOVERABLE OR HIDDEN), FITNESS FOR ANY ORDINARY USE, OR FITNESS FOR ANY INTENDED USE OR PARTICULAR PURPOSE, EVEN FOR THE RETURN OR REDUCTION OF THE PURCHASE PRICE OR OTHERWISE, THE SOLE PERIL AND RISK OF EVICTION TO BE ASSUMED BY PURCHASER, BUT WITH FULL SUBSTITUTION AND SUBROGATION IN AND TO ALL OF THE RIGHTS AND ACTIONS OF WARRANTY WHICH SELLER HAS OR MAY HAVE AGAINST ALL PRECEDING OWNERS OR SELLERS; IT BEING UNDERSTOOD THAT PURCHASER WILL TAKE THE PROPERTY “AS IS” AND “WHERE IS”, PURCHASER HEREBY ACKNOWLEDGING RELIANCE SOLELY ON ITS OWN TITLE EXAMINATION AND INSPECTION OF THE PROPERTY, AND NOT ON ANY WARRANTIES OR REPRESENTATIONS FROM SELLER, EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT.

(e) EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES EXPRESSLY SET FORTH IN SECTION 5.01 AND SECTION 14.01(b), WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, PURCHASER ACKNOWLEDGES

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THAT SELLER HAS MADE NO REPRESENTATIONS OR WARRANTIES OF ANY KIND OR CHARACTER, EXPRESS OR IMPLIED, WITH RESPECT TO THE PROPERTY INCLUDING, WITHOUT LIMITATION, ANY WARRANTIES OR REPRESENTATIONS AS TO TITLE (EXCEPT AS TO ACTS OF SELLER), ABSENCE OF DEFECTS (WHETHER APPARENT OR LATENT, KNOWN OR UNKNOWN, EASILY DISCOVERABLE OR HIDDEN), HABITABILITY, MERCHANTABILITY, FITNESS FOR ANY ORDINARY USE, FITNESS FOR ANY INTENDED USE OR PARTICULAR PURPOSE, ZONING, TAX CONSEQUENCES, PHYSICAL CONDITION, UTILITIES, OPERATING HISTORY OR PROJECTIONS, VALUATION, GOVERNMENTAL APPROVALS, THE COMPLIANCE OF THE PROPERTY WITH LEGAL REQUIREMENTS, INCLUDING WITHOUT LIMITATION THE AMERICANS WITH DISABILITIES ACT OF 1990, 42 U.S.C. 12101, ET SEQ., THE TRUTH, ACCURACY, OR COMPLETENESS OF ANY MATERIALS, DATA, OR THIRD-PARTY INFORMATION PROVIDED BY OR ON BEHALF OF SELLER TO PURCHASER, OR THE MANNER OR QUALITY OF THE CONSTRUCTION OR MATERIALS INCORPORATED INTO THE PROPERTY OR THE MANNER OF REPAIR, QUALITY, STATE OF REPAIR OR LACK OF REPAIR OF THE PROPERTY OR ANY PORTION THEREOF. EXCEPT AS EXPRESSLY PROVIDED IN SECTION 5.01 AND SECTION 14.01(b), ALL SUCH REPRESENTATIONS AND WARRANTIES WITH RESPECT TO THE PROPERTY ARE HEREBY DISCLAIMED BY SELLER AND EXPRESSLY WAIVED BY PURCHASER. EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES EXPRESSLY SET FORTH IN SECTION 5.01 AND SECTION 14.01(b), PURCHASER HAS NOT RELIED AND WILL NOT RELY ON, AND SELLER IS NOT LIABLE FOR OR BOUND BY, ANY EXPRESS OR IMPLIED WARRANTIES, GUARANTIES, STATEMENTS, REPRESENTATIONS, OR INFORMATION PERTAINING OR RELATING TO THE PROPERTY MADE OR FURNISHED BY SELLER, ANY PARTY ACTING OR PURPORTING TO ACT FOR SELLER, OR ANY REAL ESTATE BROKER OR AGENT REPRESENTING OR PURPORTING TO REPRESENT SELLER, TO WHOMEVER MADE OR GIVEN, DIRECTLY OR INDIRECTLY, VERBALLY OR IN WRITING. PURCHASER FURTHER HAS NOT RELIED ON SELLER’S SKILL OR JUDGMENT IN SELECTING THE PROPERTY. EXCEPT AS EXPRESSLY PROVIDED IN SECTION 5.01 AND SECTION 14.01(b), PURCHASER SHALL HAVE NO RIGHT OR CAUSE OF ACTION IN WARRANTY OR OTHERWISE AGAINST SELLER IN ANY CONTROVERSY, CLAIM, DEMAND, OR LITIGATION ARISING FROM OR IN CONNECTION WITH THE PROPERTY, AND PURCHASER HEREBY WAIVES AND RELEASES SELLER FROM ANY SUCH RIGHT OR CAUSE OF ACTION.

(f) EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES EXPRESSLY SET FORTH IN SECTION 5.01 AND SECTION 14.01(b), SELLER HAS NOT, DOES NOT AND WILL NOT MAKE ANY REPRESENTATIONS OR WARRANTIES WITH REGARD TO (A) COMPLIANCE WITH ANY ENVIRONMENTAL LAWS OR LAND USE LAWS, RULES, REGULATIONS, ORDERS, OR REQUIREMENTS INCLUDING, BUT NOT LIMITED TO, THOSE PERTAINING TO THE HANDLING, GENERATING, TREATING, STORING OR DISPOSING OF ANY HAZARDOUS SUBSTANCES OR (B) ABSENCE OF ANY CLAIMS, WHETHER ASSERTED OR UNASSERTED, WITH RESPECT TO COMPLIANCE WITH ENVIRONMENTAL LAWS OR ENVIRONMENTAL CONDITIONS AT THE PROPERTY. AS A MATERIAL PART OF THE CONSIDERATION TO SELLER FOR THE SALE OF THE HOTEL HEREUNDER, PURCHASER HEREBY WAIVES AND

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RELINQUISHES, AND RELEASES SELLER, MANAGER AND ALL OF SELLER’S AND MANAGER’S OFFICERS, DIRECTORS, SHAREHOLDERS, INVESTORS, MEMBERS, EMPLOYEES AND AGENTS (COLLECTIVELY, “SELLER RELEASE PARTIES”) FROM ANY AND ALL CLAIMS AND REMEDIES (INCLUDING, WITHOUT LIMITATION, ANY RIGHT OF RESCISSION) AGAINST SELLER RELEASE PARTIES 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 NON-INTENTIONAL MISREPRESENTATION, OR FAILURE TO DISCLOSE TO PURCHASER 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 PURCHASER THROUGH AN INSPECTION OF THE HOTEL OR THE PROPERTY RECORDS). NOTWITHSTANDING ANYTHING STATED TO THE CONTRARY IN THIS AGREEMENT, BUT SUBJECT TO ANY LIMITATIONS EXPRESSLY SET FORTH IN THIS AGREEMENT INCLUDING, WITHOUT LIMITATION, IN SECTION 5.03, THE FOREGOING RELEASE SHALL NOT EXTEND TO (AND SHALL EXPRESSLY EXCLUDE) CLAIMS ARISING FROM SELLER’S FRAUD OR SELLER’S BREACH OF ITS EXPRESS REPRESENTATIONS AND WARRANTIES, COVENANTS AND OBLIGATIONS (INCLUDING INDEMNITY OBLIGATIONS) SET FORTH IN THIS AGREEMENT. PURCHASER 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 PURCHASER MAY BE CURRENTLY UNAWARE OR UNABLE TO DISCOVER. PURCHASER ACKNOWLEDGES THAT THE FOREGOING WAIVER AND RELEASE IS OF MATERIAL CONSIDERATION TO SELLER IN ENTERING INTO THIS AGREEMENT, THAT PURCHASER’S COUNSEL HAS ADVISED PURCHASER OF THE POSSIBLE LEGAL CONSEQUENCES OF MAKING SUCH WAIVER AND RELEASE AND THAT PURCHASER 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. NOTHING HEREIN, HOWEVER, SHALL RELEASE SELLER FROM ANY LIABILITY IN CONNECTION WITH ANY FRAUD OR FOR A BREACH OF A REPRESENTATION SET FORTH IN SECTION 5.01 AND SECTION 14.01(b), SUBJECT TO THE TERMS AND CONDITIONS SET FORTH IN THIS AGREEMENT.

Purchaser further agrees and acknowledges that, in giving the foregoing waiver and release, it has with its legal counsel, considered any statute or other law that might apply to and limit the effect of Purchaser’s waiver and release herein and hereby knowingly waives the benefits of any such law and intends that it not be applicable here, including, but not limited to the provisions of California Civil Code Section 1542, which provides as follows:

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“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.”

Purchaser’s Initials

(g) NEITHER SELLER NOR MANAGER SHALL BE LIABLE TO PURCHASER OR ANY OF ITS AFFILIATES FOR ANY PROSPECTIVE OR SPECULATIVE PROFITS, OR SPECIAL, INDIRECT, INCIDENTAL, OR CONSEQUENTIAL DAMAGES, WHETHER BASED UPON CONTRACT, TORT OR NEGLIGENCE OR IN ANY OTHER MANNER ARISING FROM THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.

(h) PURCHASER FURTHER DECLARES AND ACKNOWLEDGES THAT THE FOREGOING WAIVERS HAVE BEEN BROUGHT TO THE ATTENTION OF PURCHASER AND REVIEWED WITH LEGAL COUNSEL OF ITS CHOOSING AND EXPLAINED TO IT IN DETAIL BY SUCH LEGAL COUNSEL AND THAT PURCHASER HAS VOLUNTARILY AND KNOWINGLY CONSENTED TO THE FOREGOING WAIVER.

(i) PURCHASER AND SELLER ACKNOWLEDGE THAT NOTHING HEREIN IS INTENDED TO RELIEVE SELLER OF ANY UNWAIVABLE DISCLOSURE OBLIGATIONS EXPRESSLY REQUIRED BY APPLICABLE LAW.

ARTICLE III

PURCHASE PRICE

3.01 Purchase Price. The purchase price (the “Purchase Price”) to be paid by Purchaser to Seller at the Closing shall be One Hundred Forty Three Million Dollars ($143,000,000), subject to the prorations and adjustments as provided in this Agreement. Seller and Purchaser agree that the Purchase Price shall be allocated among (i) the Land, (ii) the Improvements, and (iii) the Personal Property as may be determined by agreement of Seller and Purchaser prior to the Closing for federal, state and local tax purposes in accordance with Section 1060 of the Code. During the Inspection Period, Purchaser shall deliver to Seller for its review a proposed allocation of the Purchase Price (and any other items that are required for federal income tax purposes to be treated as part of the Purchase Price) among the assets to be purchased by Purchaser (the “Allocation”). Seller shall review such Allocation and provide any objections to Purchaser within 10 days after receipt thereof. If Seller raises any objection to the Allocation, the parties hereto will negotiate in good faith (provided that failing to agree to an Allocation due to negative economic consequences that will be incurred by a party as a result of doing so shall in no event be considered a failure to negotiate in good faith) to resolve such objection(s). The parties shall use their good faith efforts to agree to an Allocation prior to the end of the Inspection Period. Upon reaching an agreement on such Allocation, Purchaser and Seller shall

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(i) cooperate in the filing of any forms (including Form 8594 under Section 1060 of the Code) with respect to such allocation as finally resolved, including any amendments to such forms required pursuant to this Agreement with respect to any adjustment to the Purchase Price, and (ii) shall file all federal, state and local tax returns and related tax documents consistent with such allocation, as the same may be adjusted pursuant to any provisions of this Agreement. Notwithstanding the foregoing, if the parties hereto are unable to agree on a mutually satisfactory Allocation, each of Purchaser and Seller shall use its own Allocation for purposes of this Section 3.01. The provisions of this Section 3.01 shall survive the Closing without limitation. The Purchase Price shall be payable by Purchaser as follows:

(a) No later than one (1) Business Day after the execution and delivery of this Agreement by Seller and Purchaser, Purchaser shall deposit with the Escrow Company, as escrow agent, the amount of Four Million and 00/100 Dollars ($4,000,000.00) by a wire transfer of immediately available United States of America funds as an earnest money deposit (together with the interest earned thereon, the “Initial Deposit”).

(b) No later than 5:00 P.M. on the date on which the Inspection Period expires, if Purchaser shall not have terminated this Agreement in accordance with Section 4.04, Purchaser shall make an additional deposit with the Escrow Company, as escrow agent, in the amount of Four Million and 00/100 Dollars ($4,000,000.00) (together with the Initial Deposit and the interest earned thereon, herein the “Deposit”).

(c) On the date of Closing, Purchaser shall pay the balance of the Purchase Price, subject to the prorations and adjustments provided for in this Agreement, in cash by certified check or wire transfer of immediately available United States of America funds to the Escrow Company, as escrow agent, in accordance with the terms and conditions of this Agreement. Purchaser shall be responsible for any income taxes payable with respect to any interest and/or dividends earned with respect to the Deposit. For those purposes, Purchaser’s federal taxpayer identification number is 27-4010510. The terms of this Section 3.01(c) shall survive the Closing or any termination of this Agreement.

(d) Contemporaneously with the execution of this Agreement, Purchaser shall deliver to Seller a check in the amount of $1,000 (the “Independent Contract Consideration”), which amount the parties bargained for and agreed to as consideration for the Seller’s grant to Purchaser of Purchaser’s right to purchase the Property pursuant to the terms hereof and for Seller’s execution, delivery and performance of this Agreement. The Independent Contract Consideration is in addition to and independent of any other consideration or payment provided in this Agreement, is nonrefundable under any circumstances and will be retained by Seller notwithstanding any other provisions of this Agreement.

3.02 Application of Deposit. The Deposit shall be held and disbursed by the Escrow Company acting as escrow agent. The Deposit shall be invested in a federally issued or insured interest bearing instrument and any interest earned on the Deposit shall be paid to the party to which the Deposit is paid pursuant to the provisions of this Agreement; provided, however, Purchaser shall be responsible for the payment of any and all taxes payable in connection with any interest earned on the Deposit. If the sale of the Property is consummated in accordance with the terms of this Agreement, the Deposit shall be applied to the Purchase Price to be paid by

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Purchaser at the Closing. In the event of a default under this Agreement by Purchaser or Seller, the Deposit shall be applied as provided in this Agreement.

ARTICLE IV

DILIGENCE MATTERS

4.01 Inspection Period. The “Inspection Period” shall be the period from the date of this Agreement through 3:00 P.M. Eastern time on December 10, 2010. Purchaser and its representatives shall be permitted to enter upon the Property during the Inspection Period to examine, inspect and investigate the Property including, but not limited to, all Books and Records located at the Property, subject to Manager’s good faith compliance with Legal Requirements with respect to access to any and all Employee records (collectively, “Due Diligence”); provided, however, the Purchaser shall have no right to terminate this Agreement based on such Due Diligence after the expiration of the Inspection Period. Purchaser’s Due Diligence shall be subject to the terms, conditions and limitations set forth in this Article IV, and Purchaser’s conduct shall be in strict compliance with the covenants and agreements contained in this Article IV.

4.02 Review and Inspection. Purchaser shall have a right to enter upon the Property for the purpose of conducting its Due Diligence provided that in each such instance (i) Purchaser notifies Seller in writing of its intent to enter the Property to conduct its Due Diligence not less than forty-eight (48) hours prior to such entry; (ii) the date and time period are scheduled with Seller; and (iii) Purchaser is in full compliance with the insurance requirements set forth in Section 4.06. At Seller’s election, a representative of Seller shall be present during any entry by Purchaser or its representatives upon the Property for Due Diligence. Purchaser shall take all necessary actions to ensure that neither it nor any of its representatives unreasonably interfere with the guests of the Hotel or ongoing operations occurring at the Property. Purchaser shall not cause or permit any mechanic liens, materialmen’s liens or other liens to be filed against the Property as a result of its Due Diligence.

4.03 Testing. Purchaser shall have the right to conduct, at its sole cost and expense, any inspections, studies or tests that Purchaser deems appropriate in determining the condition of the Property; provided, however, Purchaser is not permitted to perform any sampling, boring, drilling or other physically intrusive testing into the structures or ground constituting the Property, including, without limitation, any so-called Phase II environmental assessment, without the prior written consent of Seller for such testing to be provided in Seller’s sole and absolute discretion. Notwithstanding the foregoing, Purchaser shall have the right to conduct a non-intrusive Phase I environmental assessment without obtaining Seller’s prior consent, provided that such Phase I shall not include any sampling, boring, drilling or other physically intrusive testing into the structures or ground constituting any portion of the Property.

4.04 Acceptance or Rejection. Purchaser shall have until the expiration of the Inspection Period to conduct its Due Diligence and to determine whether the Property is acceptable to Purchaser. If the Property is not acceptable to Purchaser in its sole and absolute discretion, Purchaser may terminate this Agreement by giving written notice of termination (the “Termination Notice”) to Seller and the Escrow Company on or before the expiration of the

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Inspection Period. Upon receipt by Seller and the Escrow Company of such Termination Notice, (i) this Agreement shall be terminated, (ii) the parties shall have no further obligations to or recourse against each other (except for any provisions of this Agreement which are expressly stated to survive the termination of this Agreement, including, without limitation, the indemnification obligation set forth in Section 4.06) and (iii) the Escrow Company shall within one (1) Business Day of its confirmation of Seller’s receipt of the Termination Notice return to Purchaser the Initial Deposit less the amount of any damages allegedly payable to Seller pursuant to the indemnification set forth in Section 4.06, if any, and specifically set forth in a notice given by Seller to the Escrow Company and Purchaser prior to the Escrow Company’s receipt of the Termination Notice which alleged damages shall be retained by the Escrow Company until the resolution of such claim. If Purchaser does not timely give a Termination Notice as aforesaid, Purchaser shall be deemed to have fully and knowingly waived any right to terminate this Agreement pursuant to this Article IV or otherwise in connection with its Due Diligence and thereafter the Deposit shall be non-refundable to Purchaser except as otherwise expressly provided in this Agreement.

4.05 Confidentiality. Purchaser agrees and covenants with Seller not to disclose to any third party (other than its agents and employees, directors, trustees, potential hotel managers, lenders, accountants, attorneys, and other professionals and consultants engaged by Purchaser (collectively, “Purchaser Parties”) in connection with the transaction contemplated in this Agreement who shall also be obligated under this Section 4.05 not to disclose) without Seller’s prior written consent any of the terms or conditions set forth in this Agreement, the Books and Records or any of the reports or any other documentation or information obtained by Purchaser or any Purchaser Parties which relates to the Property, Seller or its Affiliates in any way, all of which shall be used by Purchaser and the Purchaser Parties solely in connection with the transaction contemplated by this Agreement, unless Purchaser or any Purchaser Party is obligated by applicable law to make such a disclosure. If such disclosure is required by applicable law or regulations, then Purchaser shall notify Seller in writing of such obligation to ensure Seller has the opportunity prevent any such disclosure. If this Agreement is terminated, Purchaser agrees that all such information will continue to be held in strict confidence and Purchaser shall return all copies of such information to Seller and upon written request of Seller, copies of information that was prepared by Purchaser excluding any correspondence or materials subject to the attorney-client privilege or which Purchaser is contractually or legally not permitted to disclose or any Purchaser Party if contractually permitted to do so (provided that Purchaser shall use commercially reasonable efforts to be able to disclose any non-attorney-client privileged materials) or if consented to by Seller in its reasonable discretion, Purchaser shall destroy all copies of such information in its possession or control and certify in writing to Seller of the destruction of such information. Except as set forth in Sections 5.01 and 14.01(b), Seller makes no representation or warranty to the completeness or accuracy of such confidential information and Purchaser shall indemnify Seller for any costs incurred as a result of Purchaser’s or any Purchaser Party’s use of such information in violation of this Section 4.05. The provisions of this Section 4.05 shall survive the Closing or any termination of this Agreement.

4.06 Indemnification; Restoration; Insurance. Purchaser agrees to save, protect, defend, indemnify and hold Seller, Manager and each of their Indemnitees harmless from and against any and all Liabilities suffered or incurred by any of Seller, Manager or any of their Indemnitees as a result of or in connection with any activities of Purchaser (including activities

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of any of Purchaser’s employees, consultants, contractors or other agents) relating to its inspection of the Property, including, without limitation, mechanics’ liens, damage to the Property, injury to persons or property resulting from such activities in connection therewith, except to the extent resulting from Seller’s gross negligence or intentional misconduct or a violation of the confidentiality provisions of this Agreement. Notwithstanding the foregoing, Purchaser’s indemnification obligations hereunder shall not include any obligation or duty whatsoever with respect to any such claims (including claims that the Real Property has declined in value) to the extent arising out of or resulting from the mere discovery or presence of any pre-existing Hazardous Substances or other property condition. If the Property is damaged in any material respect as result of such activities, Purchaser, at its sole cost and expense, shall promptly repair such damage to the Property to the reasonable satisfaction of Seller. Furthermore, Purchaser agrees to maintain and cause any of its representatives or agents conducting any Due Diligence to maintain and have in effect commercial general liability insurance with limits of not less than Two Million Dollars ($2,000,000) for personal injury, including bodily injury and death, and property damage, naming Seller and Manager as an additional insured parties, and containing a waiver of subrogation. Purchaser shall deliver to Seller a copy of the certificate of insurance effectuating the insurance required under this Section 4.06, which certificate shall provide that such insurance shall not be terminated or modified without at least thirty (30) days’ prior written notice to Seller. The provisions of this Section 4.06 shall survive the Closing or any termination of this Agreement.

4.07 Title and Survey. Seller will cause the Title Company to deliver to Purchaser an updated title commitment (the “Title Commitment”) on the Property, and Seller has previously delivered to Purchaser an ALTA survey (the “Survey”) of the Land and Improvements. If Purchaser, in its sole discretion, objects to the Survey or any of the exceptions shown in the Title Commitment or any other matter affecting title to the Real Property, Purchaser shall provide Seller with a written notice of such objections (the “Objection Letter”), which notice shall contain a reasonably detailed explanation of such objections, no later than 5:00 P.M. Eastern Time on December 7, 2010. If Purchaser does not deliver an Objection Letter by 5:00 P.M. Eastern time on such date, Purchaser shall be deemed to have accepted all exceptions contained in the Title Commitment (other than the Seller Encumbrances), the form and substance of the Survey and all matters shown thereon. All such exceptions and matters and any exceptions or matters caused by or through Purchaser shall be “Permitted Exceptions”. In the event any such objections are timely made by Purchaser, Seller shall have the right, but not the obligation, exercisable by delivery of a notice to Purchaser (the “Seller’s Response Notice”) no later than 5:00 P.M. Eastern Time on that date which is two (2) Business Days after Seller’s receipt of the Objection Letter (the “Seller’s Response Period”) to cure (by removal, endorsement or otherwise) such objections in the manner specified in the Seller’s Response Notice within the time periods provided herein. The procurement by the Seller of a commitment for the issuance of a title policy or endorsement thereto by the Title Company insuring Purchaser against the exception or other matter shall be deemed a cure of such exception or matter as long as the Title Company agrees to delete such exception or affirmatively insure over such exception. If there are objections timely made by Purchaser that Seller elects or is deemed to have elected not to cure, then Purchaser shall have the right, upon the earlier of (i) receipt of Seller’s Response Notice or (ii) the expiration of the Seller’s Response Period to either (a) terminate this Agreement (whereupon the Deposit shall be returned to Purchaser less the amount of any damages allegedly payable to Seller pursuant to the indemnification set forth in Section 4.06) or

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(b) be deemed to have agreed to accept title to the Real Property subject to all exceptions to title set forth in the updated Title Commitment (other than the Seller Encumbrances), as applicable, and all matters shown on the updated Survey, as applicable, other than those which Seller has expressly agreed to remedy in the manner set forth in Seller’s Response Notice and proceed to Closing. If any such objections are not cured (or arrangements for such cure to be effective as of the Closing are not made) by Seller by the expiration of the Inspection Period in the manner provided in Seller’s Response Notice, then Purchaser may as its only option, elect to either: (y) waive such objection(s) and consummate the transaction contemplated by this Agreement without adjustment to the Purchase Price or (z) terminate this Agreement, in which event the Deposit shall be returned to Purchaser and neither party shall have any further obligations to the other party except for the obligations in this Agreement that expressly survive termination. Notwithstanding anything to the contrary herein, Seller shall remove at Closing (i) any mortgage, deed of trust or similar voluntary monetary lien affecting the Property and (ii) any mechanic’s or similar liens for work performed at the Property at Seller’s request (individually and collectively, the “Seller Encumbrances”). Seller shall be permitted to use the Purchase Price to effect such removal at Closing.

4.08 Space Leases, Hotel Contracts and Equipment Leases. Purchaser agrees to assume all obligations under the Space Leases and, to the extent assumable or any requisite consent is obtained, the Hotel Contracts (including any Equipment Leases), arising from and after the Closing Date and at its sole cost and expenses, shall pay all of the actual out-of-pocket fees, costs and expenses incurred in connection with assignment and assumption of the Space Leases and the Hotel Contracts; provided that in no event shall Purchaser pay any out-of-pocket expenses of Seller with respect to its internal costs or outside legal expenses; and provided further the parties shall use commercially reasonable efforts to obtain any required consents or satisfy any other requirements in connection with the assignment and assumption of all Space Leases and Hotel Contracts. Purchaser agrees to save, protect, defend, indemnify and hold Seller, Manager and each of their Indemnitees harmless from and against any cost, expense, claim or Liability arising from and after the Closing Date in connection with the assignment and assumption of the Space Leases and the Hotels Contracts or the termination of any assumable (whether by its terms or based on the receipt of any requisite consent) Hotel Contract that Purchaser elects to terminate or not to assume; provided, however, that Seller shall bear any termination fee, penalty or other cost or expense under any Hotel Contract that is not assumable by Purchaser and as to which a requisite consent to assumption by Purchaser is not obtained. The provisions of this Section 4.08 shall survive the Closing.

4.09 Franchise Agreement. It shall be a condition to Purchaser’s obligation to Closing that Franchisor shall have agreed that Purchaser or its designee may assume the Franchise Agreement on the same material economic terms and conditions set forth in the Franchise Agreement, which terms and conditions shall include the same franchise fees, termination rights and area of protection set forth in the Franchise Agreement (the “Material Franchise Terms”) or that Franchisor shall have entered into a new hotel franchise agreement with Purchaser or its designee on the form included in Franchisor’s current Uniform Franchise Offering Circular (“UFOC”) containing the Material Franchise Terms. Purchaser expressly acknowledges that Seller has entered into this Agreement on the basis that no termination fees or liquidated damages shall be payable by Seller as a result of the sale of the Property to Purchaser as a result of Purchaser or its designee (at Purchaser’s sole cost and expense) either (i) so

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assuming the Franchise Agreement and obtaining any required consent of Franchisor in connection therewith or (ii) so entering into a new hotel franchise agreement with Franchisor for the Hotel and, in either instance, Seller receiving a written release from Franchisor of any obligations under the Franchise Agreement arising after Closing (including pursuant to any guaranties from Seller or any of its Affiliates pursuant to the Franchise Agreement). If Closing occurs and Purchaser or its designee has not so assumed the Franchise Agreement and Seller shall not have obtained a release of Seller as set forth above or so entered into a new hotel franchise agreement with Franchisor set forth above, in each case such that no termination fees, liquidated damages or similar fees and penalties are payable by Seller or any of its Affiliates (including Seller or any entity owning a beneficial interest in Seller in its capacity as a guarantor or otherwise) as a result of the sale of the Property to Purchaser, then Purchaser shall be responsible for, and shall save, protect, defend, indemnify and hold Seller (and any Affiliate of Seller) harmless from any such termination fees, liquidated damages or similar fees and penalties (and any other Liabilities that Seller would not bear if the Franchise Agreement was not terminated pursuant to the sale of the Property to Purchaser) in connection with the termination of the Franchise Agreement as of the Closing. Purchaser and Seller shall cooperate with one another and each use its reasonable best efforts to obtain either (x) Franchisor’s written consent to the assumption of the Franchise Agreement as set forth above as of Closing or (ii) Franchisor’s written commitment to enter into a new franchise agreement with Franchisor as set forth above, in each case prior to the expiration of the Inspection Period, and to provide a copy of such consent or commitment for deposit with Escrow Company (with a conforming copy provided to Seller). The provisions of this Section 4.09 shall survive the Closing or any termination of this Agreement.

4.10 Natural Hazard Disclosures. As used herein, the term “California Natural Hazard Area” shall mean those areas identified as natural hazard areas or natural hazards in the Natural Hazard Disclosure Act, California Government Code Sections 8589.3, 8589.4 and 51183.5, and California Public Resources Code Sections 2621.9, 2694 and 4136, and any successor statutes or laws (collectively the “California Natural Hazard Laws”). Purchaser hereby acknowledges that, prior to the date of this Agreement, Seller has provided Purchaser with a Natural Hazard Disclosure Statement (the “California NHDS”) in a form required by the California Natural Hazard Laws. Purchaser acknowledges that Seller retained the services of The Planning & Zoning Resource Corporation to examine the maps and other information made available to the public by government agencies for the purpose of enabling Seller to fulfill its disclosure obligations with respect to the California Natural Hazard Laws and to prepare the written report of the result of its examination (the “California Natural Hazard Report”). Purchaser acknowledges that the California Natural Hazard Report fully and completely discharges Seller from its disclosure obligations under the California Natural Hazard Laws and under California Civil Code Sections 1102 through 1102.17. Purchaser acknowledges and agrees that nothing contained in the California NHDS releases Purchaser from its obligation to fully investigate and satisfy itself with the condition of the Property during the Inspection Period, including, without limitation, whether the Property is located in any California Natural Hazard Area. Purchaser further acknowledges and agrees that the matters set forth in the California NHDS or California Natural Hazard Report may change on or prior to the Closing and that Seller has no obligation to update, modify or supplement the California NHDS or California Natural Hazard Report. Purchaser is solely responsible for preparing and delivering its own California NHDS to subsequent prospective purchasers of the Property.

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ARTICLE V

REPRESENTATIONS AND WARRANTIES

5.01 Representations and Warranties of Seller. Seller hereby represents and warrants the following matters to Purchaser as of the date hereof (or such other time as provided herein). Whenever a representation or warranty or other reference is made in this Agreement on the basis of the knowledge, actual knowledge, best knowledge or otherwise with reference to the knowledge of Seller (any such reference, “Seller’s Knowledge”), such representation, warranty or reference is made solely on the basis of the actual, as distinguished from implied, imputed and constructive, knowledge, on the date that such representation or warranty is made, of Anthony Rutledge and/or Clark Hanrattie (together, “Seller’s Representative”), without inquiry or investigation or duty. In addition to the foregoing, the representations and warranties of Seller herein shall be deemed modified to reflect any facts disclosed to or otherwise known by Purchaser, its representatives, employees, Affiliates, or Purchaser’s counsel, advisors, consultants, contractors and agents involved in conducting Due Diligence.

(a) Due Organization. Seller is a limited liability company duly formed, validly existing and in good standing under the laws of Delaware. Seller has full power and authority, and has taken all corporate and other action necessary to authorize Seller to make, execute, deliver and perform this Agreement and the transaction contemplated by this Agreement or at the time of Closing will be. The person executing this Agreement on behalf of Seller has been duly authorized to do so. This Agreement is a binding and legal agreement of Seller, enforceable against Seller in accordance with its terms, subject to the effect of applicable bankruptcy or insolvency and general principles of equity.

(b) No Conflict. The execution and delivery of this Agreement and the closing documents to be executed in connection herewith and the consummation of the transactions contemplated hereby and thereby, except as otherwise provided herein, do not require the consent or approval of any governmental authority, nor shall such execution and delivery result in a breach or violation of any Legal Requirement, or conflict with, breach, result in a default (or an event which with notice or passage of time or both will constitute a default) under or violate any contract or agreement to which Seller is a party or by which it or the Property is bound.

(c) Pending Litigation. Except as described in Exhibit C, there are no actions, suits or other legal proceedings filed or served against Seller, Manager, Merritt Beverage LLC or affecting any of Seller’s rights, in each case, with respect to the Property, which is reasonably expected to result in any order, injunction, decree or judgment having a material adverse effect on the ownership or operation of the Property or the Hotel. To Seller’s Knowledge, except as noted in Exhibit D, Seller has not received any written notice from any governmental authority of any violation of a Legal Requirement by Seller in connection with the use, operation or condition of the Property which would have a material adverse impact on the operations of the Hotel and which has not been corrected.

(d) Condemnation. There are no pending, or to Seller’s Knowledge, threatened, condemnation proceedings, or condemnation actions against the Property. Seller has

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not received any written notice of any pending condemnation or other proceedings in eminent domain with respect to the Property.

(e) Employees. All Employees are employed by Manager. No union is presently serving as collective bargaining agent for any Employees. To Seller’s Knowledge, no labor organization currently is engaged in a campaign to organize any group of Employees of Manager and no question concerning representation currently is pending before the National Labor Relations Board, although UNITE HERE Local 2 has at various times requested that Manager agree to allow the union to organize the Employees by entering into a card-check and neutrality agreement, as it requested of the previous operator of the Property, but Manager has not agreed to any such request.

(f) Licenses and Permits. Seller has not received any written notice from any governmental or quasi governmental agency having jurisdiction over the Property of any uncured violation or default of any material Permit of which the failure to cure would reasonably be expected to materially and adversely affect the use, operation or value of the Property.

(g) Notice of Assessment. Seller has not received written notice of any special assessments or taxes against the Property from any governmental agency which relate to any planned public improvements with respect to the Property.

(h) Environmental Notice. Seller has not received any written notices from any governmental authority or third party of any uncured violation of any Environmental Laws regarding any environmental conditions at the Hotel or of any release of Hazardous Substances from the Real Property.

(i) Space Leases. Seller has delivered or made available to Purchaser prior to the date of this Agreement complete copies of all Space Leases, and there are no Space Leases except as set forth on the list attached hereto as Exhibit E. Except as disclosed in Exhibit E: (i) to Seller’s Knowledge, each Space Lease is in full force and effect; (ii) Seller has not received any written notice from any Space Lessee claiming that Seller is currently in default in its obligations as landlord under any Space Lease; (iii) no Space Lessee is in default in any material monetary obligation or, to Seller’s Knowledge, any material non-monetary obligation, under its Space Lease; and (iv) to Seller’s Knowledge, no rent has been paid by any Space Lessee more than one month in advance and no Space Lessee security deposits have been applied to perform Space Lessee obligations.

(j) Fixtures and Tangible Personal Property. All of the Fixtures and Tangible Personal Property shall be owned by the Seller on the Closing Date, free and clear of all liens, encumbrances and security interests. Except as set forth in Exhibit F attached hereto, none of the Fixtures and Tangible Personal Property required for the operation, repair or maintenance of the Property is leased from or owned by third-parties.

(k) Bankruptcy. Seller has not filed any petition in bankruptcy or other insolvency proceedings or proceedings for reorganization of Seller or for the appointment of a receiver or trustee for all or any substantial part of Seller’s property, nor has Seller made any assignment for the benefit of its creditors or filed a petition for an arrangement, or entered into an

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arrangement with creditors or filed a petition for an arrangement with creditors or otherwise admitted in writing its inability to pay its debts as they become due.

(l) Tax Abatement Proceedings. To Seller’s Knowledge, there is no currently pending appeal or abatement proceeding with respect to the real estate taxes assessed on the Real Property.

(m) Hotel Contracts. Attached as Exhibit G is a list of all of the Hotel Contracts, including any Equipment Leases. If Seller has inadvertently omitted a Hotel Contract from Exhibit G, Purchaser hereby acknowledges and agrees that it shall not have any right to terminate this Agreement pursuant to the terms hereof, but shall not be obligated to assume such Hotel Contract. Except as noted on Exhibit G, Seller has provided a true, accurate and complete copy of each such Hotel Contract to Purchaser. Seller has neither given nor received written notice of any default under any such Hotel Contract which has not been fully cured and, to Seller’s Knowledge, neither Seller nor any other party to a Hotel Contract is otherwise in default of its obligations thereunder. Each Hotel Contract is in full force and effect with respect to Seller and, to Seller’s Knowledge, as to the other party thereto.

(n) Non-Foreign Person. Seller is a “United States person” (as defined in Section 7701(a)(30)(B) or (C) of the Code) for the purposes of the provisions of Section 1445(a) of the Code.

(o) OFAC. Seller has not engaged in any dealings or transactions, directly or indirectly, (i) in contravention of any U.S., international or other money laundering regulations or conventions, including, without limitation, the United States Bank Secrecy Act, the United States Money Laundering Control Act of 1986, the United States International Money Laundering Abatement and Anti Terrorist Financing Act of 2001, Trading with the Enemy Act (50 U.S.C. §1 et seq., as amended), or any foreign asset control regulations of the United States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) or any enabling legislation or executive order relating thereto (collectively, “OFAC Regulations”), or (ii) in contravention of Executive Order No. 13224 dated September 24, 2001 issued by the President of the United States (Executive Order Blocking Property and Prohibiting Transactions with Persons Who Commit, Threaten to Commit, or Support Terrorism), as may be amended or supplemented from time to time (“Anti Terrorism Order”) or on behalf of terrorists or terrorist organizations, including those persons or entities that are included on any relevant lists maintained pursuant to any of the rules and regulations of OFAC or pursuant to any other applicable orders. To Seller’s Knowledge, Seller (i) is not and will not be conducting any business or engaging in any transaction with any person appearing on the U.S. Treasury Department’s Office of Foreign Assets Control list of restrictions and prohibited persons, or (ii) is not a person described in Section 1 of the Anti Terrorism Order, and Seller has not engaged in any dealings or transactions, or otherwise been associated, with any such person.

(p) Brokers. Except with respect to Broker, which will be compensated solely by Seller pursuant to a separate agreement between them, Seller has not dealt with any person who has acted, directly or indirectly, as a broker, finder or agent in connection with the transaction contemplated by this Agreement in a manner which would entitle such person to any fee or

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commission in connection with this Agreement or the transaction contemplated in this Agreement.

(q) Legal Requirements. Seller has not received any written notice of any violation of any Legal Requirements with respect to the Hotel or the Property which has not been cured or dismissed.

(r) Taxes. All federal, state, local and other tax returns, reports and declarations of every nature required to be filed by or on behalf of Seller (either separately or as part of a consolidated group) prior to the Closing Date with respect to the Property (other than federal, state and local income tax returns of Seller, but including in any event all rooms, sales, use, occupancy, food and beverage and similar tax returns, reports and declarations) have been timely filed (subject to any extensions that may be permitted by law) and such returns, reports and declarations as so filed are complete and accurate and disclose all taxes required to be paid for the periods covered thereby. All such taxes and all deficiency assessments, penalties and interest relating to any period ending prior to the Closing Date with respect to the Property have been or shall be paid by Seller if due as of or prior to the Closing Date.

5.02 Representations and Warranties of Purchaser. Purchaser hereby represents and warrants the following to Seller:

(a) Due Organization. Purchaser is a limited liability company duly formed, validly existing and in good standing under the laws of Delaware and on the Closing Date shall be qualified to do business in California. Purchaser has full power and authority to enter into and perform this Agreement and the transactions contemplated by this Agreement, and Purchaser has taken all corporate and other action necessary to authorize Purchaser to make, execute, deliver and perform this Agreement and the transactions contemplated by this Agreement. The person executing this Agreement on behalf of Purchaser has been duly authorized to do so. This Agreement is a binding and legal agreement of Purchaser, enforceable against Purchaser in accordance with its terms, subject to the effect of applicable bankruptcy or insolvency and general principles of equity.

(b) No Conflict. The execution and delivery of this Agreement and the closing documents to be executed in connection herewith and the consummation of the transactions contemplated hereby and thereby, except as otherwise provided herein, do not require the consent or approval of any governmental authority, nor shall such execution and delivery result in a breach or violation of any Legal Requirement or conflict with, breach, result in a default (or an event which with notice or passage of time or both will constitute a default) under or violate any contract or agreement to which Purchaser or an Affiliate of Purchaser is a party or by which it or its property is bound.

(c) OFAC. Neither Purchaser nor any of its Affiliates have engaged in any dealings or transactions, directly or indirectly, (i) in contravention of any U.S., international or other money laundering regulations or conventions, including, without limitation, the OFAC Regulations, or (ii) in contravention of the Anti Terrorism Order or on behalf of terrorists or terrorist organizations, including those persons or entities that are included on any relevant lists maintained pursuant to any of the rules and regulations of OFAC or pursuant to any other

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applicable orders. Neither Purchaser nor any of its Affiliates (i) are or will be conducting any business or engaging in any transaction with any person appearing on the U.S. Treasury Department’s Office of Foreign Assets Control list of restrictions and prohibited persons, or (ii) are a person described in Section 1 of the Anti-Terrorism Order, and to the best of Purchaser’s knowledge neither Purchaser nor any of its Affiliates have engaged in any dealings or transactions, or otherwise been associated, with any such person. If at any time this representation becomes false then it shall be considered a default under this Agreement and Seller shall have the right to exercise all of the remedies set forth in this Agreement in the event of a default or to terminate this Agreement immediately.

(d) As-is, Where-is. Purchaser understands that subject to the provisions of this Agreement it will take the Property “as-is” and “where-is” and hereby reaffirms the waivers contained in Section 2.02.

5.03 Duration of Representations and Warranties and Covenants; Limitations on Liability. All representations and warranties contained in this Agreement, liability for breach of any covenant of Seller set forth in Article X and the Seller indemnities set forth in Section 5.04(b) shall survive the Closing for a period of nine (9) months and shall not merge into any of the documents delivered at Closing; provided, however, that no person, firm, or entity shall have any Liability or obligation with respect to any breach of representation or warranty contained in this Agreement or, with respect to Seller, breach of any covenant set forth in Article X or its indemnification obligations under Section 5.04(b) unless (1) on or prior to the date that is nine (9) months following the Closing Date, the party seeking to assert liability under such representation or warranty or, with respect to Seller, covenant or indemnification obligation shall have notified the other party in writing setting forth specifically the allegedly breached together with a detailed description of thereof (the “Breach Notice”) and (2) such alleging party shall have filed a complaint commencing a legal proceeding asserting a default in a court with competent jurisdiction within thirty (30) days following the delivery of the Breach Notice. Notwithstanding the foregoing, Purchaser acknowledges and agrees that Seller shall have no liability for, and Purchaser shall not make any claim on account of, any breach of any representation or warranty set forth in Section 5.01 or any covenant of Seller set forth in Article X or any of Seller’s indemnification obligations under Section 5.04(b) except to the extent the aggregate measure of such claims exceeds Two Hundred Thousand Dollars ($200,000) (the “Deductible”), in which event, only the amount of such losses over and above the Deductible shall be actionable. In no event shall the aggregate liability of Seller to Purchaser for any (and all) breach of any representation or warranty set forth in Section 5.01, any Seller covenant set forth in Article X or any of Seller’s indemnification obligations under Section 5.04(b) exceed Two Million Dollars ($2,000,000) collectively. The limitations set forth in this Section 5.03 shall not apply to Sections 7.01(a) (with respect to trade payables to be paid by Seller only), 7.01(l), 7.02, 12.01(b) (with respect to Liabilities related to Employees or former Employees that remain with Seller pursuant to the first sentence of such Section 12.01(b) only), 14.01(b) and 14.01(h). Notwithstanding anything to the contrary contained in this Agreement, if Purchaser obtains at any time, whether before or after Closing, an estoppel from a tenant under a Space Lease or any other party, which estoppel confirms any of the representations and warranties made by Seller in Section 5.01, then Seller shall have no further obligation under this Agreement with respect to each such representation and warranty made in Section 5.01 that is so confirmed, provided that nothing herein shall obligate Seller to obtain an such estoppel from a Space Lessee

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or make the delivery of such an estoppel a condition to either party’s obligation to consummate the transactions contemplated in this Agreement.

5.04 Indemnities.

(a) Purchaser’s Indemnity. Purchaser hereby agrees to save, protect, defend, indemnify and hold harmless Seller and Seller’s Indemnitees from and against any and all loss, damage, claim, cause of action, cost or expense or any other Liabilities incurred by Seller or its Indemnitees by reason of, or with respect to (i) any material breach of any of the representations, warranties or covenants made by Purchaser in the Agreement, (ii) the non-performance of any covenant or obligation required to be performed by Purchaser hereunder which expressly survive the termination of this Agreement or Closing (iii) events, contractual obligations, acts or omissions of Purchaser that occur or accrue after Closing in connection with the ownership or operation of the Property; (iv) damage to property or injury to or death of any person or any claims for any debt or obligations occurring on or about or in connection with the Property or any portion thereof or with respect to the Property’s operations at any time or times after Closing; (v) any termination fees, liquidated damages or similar fees and penalties (and any other Liabilities that Seller would not bear if the Franchise Agreement was not terminated pursuant to the sale of the Property to Purchaser) incurred by Seller or its Affiliates in connection with the termination of the Franchise Agreement as described in Section 4.09, or (vi) the assumption of any of the Hotel Contracts, Permits and/or Space Leases or the termination of any assumable (whether by its terms or based on the receipt of any requisite consent) Hotel Contract that Purchaser elects to terminate or not to assume as of Closing.

(b) Seller’s Indemnity. Seller hereby agrees to save, protect, defend, indemnify and hold harmless Purchaser and Purchaser’s Indemnitees from and against any and all loss, damage, claim, cause of action, cost or expense or any other Liabilities, incurred by Purchaser or its Indemnitees by reason of (i) any material breach of any of the representations and warranties made by Seller in this Agreement or Seller’s covenants in Article X, subject in each instance, to the terms of this Agreement, including, but not limited to, the provisions of Section 5.03, (ii) subject to the terms and conditions of Article XII and Sections 7.01(g) and (h), any Liability imposed upon Purchaser or its Indemnitees relating to the employment of the Employees by Manager for the period prior to the Closing Date, except to the extent arising out of or relating to the Purchaser’s or any of its Indemnitees’ breach of the terms, conditions and obligations of Article XII or Sections 7.01(g) or (h), (iii) events, contractual obligations, acts or omissions of Seller that occur or accrue prior to Closing in connection with the ownership of the Property, including without limitation, debts, obligations and/or Liabilities of Seller, its Affiliates or Manager which may exist with respect to the employment or termination of any Employees that arise prior to the Closing, or which are attributable to the termination of such Employees by Seller, its Affiliates or Manager at or prior to Closing, except to the extent that such debts, obligations and/or Liabilities are covered by a credit against the Purchase Price, (iv) damage to property or injury to or death of any person or any claims for any debt or obligations occurring on or about or in connection with the Property or any portion thereof or with respect to the Property’s operations at any time or times prior to Closing, but specifically excluding (w) any Liabilities caused by breaches of covenants of Purchaser which, by the terms of this Agreement, survive Closing, (x) any Liabilities consisting of liabilities or obligations for which Purchaser received a credit at Closing, (y) any Liabilities consisting of contractual liabilities or obligations

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which Purchaser expressly assumed at Closing and (z) any Liabilities incurred in relation to the physical condition of the Property (including without limitation, the environmental condition of the Real Property) other than Liabilities resulting from injury to or death of any person prior to Closing resulting from the physical condition (but not environmental condition) of the Property, and (v) as set forth in the indemnification provisions in Article XIV.

(c) Survival. This Section 5.04 shall survive the Closing and shall not be deemed merged into the Deed or any conveyance document delivered at Closing.

5.05 Procedure for Indemnification with Respect to Third Party Claims. If a claim by a third party is made against a party hereunder or its Indemnitees (the “Indemnified Party”) and if such Indemnified Party intends to seek indemnity with respect thereto under Section 5.04 and/or this Section 5.05, against the other party hereto (the “Indemnitor”) the Indemnified Party shall promptly notify the Indemnitor of such claim. The Indemnitor shall have thirty (30) days after receipt of the above-referenced notice to undertake, conduct and control, through counsel of its own choosing (subject to the consent of the Indemnified Party, such consent not to be unreasonably withheld or delayed) and at its expense, the settlement or defense therefor, and the Indemnified Party shall reasonably cooperate with it in connection therewith, provided that: (i) the Indemnitor shall permit the Indemnified Party to participate in such settlement or defense through counsel chosen by the Indemnified Party, provided that the fees and expenses of such counsel shall be borne by the Indemnified Party; and (ii) the Indemnitor shall agree promptly to reimburse the Indemnified Party for the full amount of any loss resulting from such claim and all related expenses incurred by the Indemnified Party within the limits of Section 5.04 and/or this Section 5.05. As long as the Indemnitor is reasonably contesting any such claim in good faith, the Indemnified Party shall not pay or settle any such claim. Notwithstanding the foregoing, the Indemnified Party shall have the right to pay or settle any such claim, provided that in such event such party shall waive any right to indemnity therefor by the Indemnitor. If the Indemnitor does not notify the Indemnified Party within thirty (30) days after receipt of the Indemnified Party’s notice of a claim of indemnity hereunder that it elects to undertake the defense thereof, the Indemnified Party shall have the right to contest, settle or compromise the claim in the exercise of its exclusive discretion at the expense of the Indemnitor. This Section 5.05 shall survive the Closing and shall not be deemed merged into the Deed or any conveyance document delivered at Closing.

ARTICLE VI

CLOSING AND CLOSING DELIVERIES

6.01 Closing. The Closing shall take place at the offices of Escrow Company on the Closing Date, or through customary closing escrow arrangements reasonably acceptable to Seller and Purchaser by the delivery of documents and funds to Escrow Company on or prior to the Closing Date. Each of Purchaser and Seller acknowledges that its respective undertakings to close this transaction promptly on the Closing Date is a material inducement to the other to execute this Agreement, that time is of the essence and that neither party shall have any obligation or right to extend, postpone or reschedule the Closing, except as expressly set forth herein.

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6.02 Escrow. This Agreement shall not be merged into any separately delivered escrow instructions, but any such escrow instructions shall be deemed auxiliary to this Agreement and, as between Purchaser and Seller, the provisions of this Agreement shall govern and control.

6.03 Seller’s Deliveries. Prior to Closing, Seller shall execute (to the extent required) and deliver, or cause to be delivered, to Purchaser or the Escrow Company as appropriate:

(a) a recordable grant deed (“Deed”) of all of Seller’s right, title and interest in and to the Land and Improvements subject to only the Permitted Exceptions in the form attached to this Agreement as Exhibit H;

(b) a Bill of Sale (“Bill of Sale”) transferring to Purchaser all of Seller’s right, title and interest in and to each and every item of Personal Property to be transferred in the form attached to this Agreement as Exhibit I;

(c) an assignment and assumption agreement (“Assignment and Assumption Agreement”), to the extent assignable, of all of Seller’s right, title and interest in, to and under the Bookings, Hotel Contracts, Space Leases, Permits, Books and Records, Warranties and Miscellaneous Hotel Assets in the form of Exhibit J;

(d) the certificate referred to in Section 9.01(c);

(e) an affidavit of Seller stating that Seller is not a “foreign person” within the meaning of Section 1445 of the Internal Revenue Code of 1986, as amended, in the form of Exhibit K and any corresponding state or local form required, including, but not limited to, a California 593-C Withholding Certificate;

(f) the Closing Statement;

(g) a preliminary change of ownership report and any reasonably required real estate transfer tax declarations or similar documentation required to evidence the payment of any tax imposed by any state, county or municipality together with any change of ownership statements required of sellers of real property under applicable law;

(h) a certificate or registration of title for any owned motor vehicle or other Personal Property which requires such certification or registration, conveying such vehicle or such other Personal Property to Purchaser;

(i) to the extent not previously delivered to Purchaser, all originals (or copies if originals are not available) of the Hotel Contracts, Space Leases, and Permits and all key codes, access codes and combinations to locks to the extent known by, or in the possession of, Seller or Manager;

(j) such agreements, affidavits, evidence of Seller’s organization, authorization, power and authority, and other documents as may be reasonably required by the Title Company from the Seller to issue the Title Policy, including, without limitation, a title

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insurance affidavit in customary form and substance reasonably acceptable to Seller and Title Company to allow the Title Company to delete the standard printed title exceptions;

(k) evidence of the termination of the Management Agreement; and

(l) such other documents and instruments as may be reasonably requested by Purchaser in order to consummate or better effectuate the transaction expressly contemplated in this Agreement

6.04 Purchaser’s Deliveries. Prior to Closing, Purchaser shall execute (to the extent required) and deliver, or cause to be delivered, to Seller or the Escrow Company as appropriate:

(a) the balance of the Purchase Price, to be paid in accordance with Section 3.01;

(b) the Bill of Sale;

(c) the Assignment and Assumption Agreement;

(d) the certificate referred to in Section 8.01(c);

(e) the Closing Statement;

(f) copies of such documents relating to Purchaser as Seller or the Title Company shall reasonably require in connection with this transaction;

(g) any required real estate transfer tax declarations or similar documentation required to evidence the payment of any tax imposed by any state, county or municipality together with any change of ownership statements required of a purchaser of real property under applicable law and a sales tax license or permit for the Hotel from each of the applicable jurisdictions and exemption or resale certificate; and

(h) Such other documents and instruments as may be reasonably requested by Seller in order to consummate or better effectuate the transaction expressly contemplated in this Agreement.

6.05 Expenses.

(a) Seller and Purchaser shall each pay the transactions costs and expenses as set forth on Exhibit M attached hereto.

(b) Any other ordinary and usual closing costs and expenses, except as expressly provided in this Agreement, in connection with the sale of the Property shall be allocated between Purchaser and Seller in accordance with the customary practice in the county where the Property is located.

The provisions of this Section 6.05 shall survive Closing or any termination of this Agreement.

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6.06 Concurrent Transactions. All documents or other deliveries required to be made by Purchaser or Seller at Closing, and all transactions required to be consummated concurrently with Closing, shall be deemed to have been delivered and to have been consummated simultaneously with all other transactions and all other deliveries, and no delivery shall be deemed to have been made, and no transaction shall be deemed to have been consummated, until all deliveries required by Purchaser and Seller shall have been made, and all concurrent or other transactions shall have been consummated.

6.07 Possession. Possession of the Property shall be delivered at Closing, provided the transaction closes. Excluded Assets shall be removed from the Hotel by Seller, at its sole cost and expense, on, or within thirty (30) days after, the Closing Date; provided that such removal shall be conducted during normal business hours and not unreasonably interfere with the guests of the Hotel or ongoing operations occurring at the Property. Seller, at its sole cost and expense, shall make all repairs necessitated by such removal to the reasonable satisfaction of Purchaser but shall have no obligation to replace any Excluded Asset so removed.

ARTICLE VII

ADJUSTMENTS AND PRORATIONS CLOSING STATEMENTS

7.01 Adjustments and Prorations. THE FOLLOWING MATTERS AND ITEMS SHALL BE APPORTIONED BETWEEN THE PARTIES OR, WHERE APPROPRIATE, CREDITED IN TOTAL TO A PARTICULAR PARTY, AS OF THE CUT OFF TIME AS PROVIDED BELOW:

(a) Accounts Receivable; Trade Accounts Payable. Accounts Receivable and trade accounts payable shall be identified as of the Cut Off Time. Purchaser shall purchase the Accounts Receivable at par, subject to a reasonable bad debt reserve to be agreed upon by the Parties prior to the end of the Inspection Period and Seller shall receive a credit at the Closing for the aggregate amount of all such Accounts Receivable as of the Cut Off Time. Seller shall pay all trade accounts payable as of the Cut Off Time that relate to matters arising or accruing prior to the Closing Date (including, without limitation, for any work performed or materials delivered prior to Closing in connection with any capital expenditures at the Property, but subject to Section 14.01(h)) in the ordinary course when due and Purchaser shall be responsible for all such trade accounts payable from and after the Closing. Revenue from room rentals (including food and beverage receivables charged to guest room accounts) shall belong to Seller to the extent attributable to any period prior to the Closing Date; provided, however, room charges (less third party collection costs, including, but not limited to, credit card fees, travel agent fees or commissions and other similar charges) for the night immediately preceding the Closing Date shall be divided equally between Purchaser and Seller. Revenue from the Hotel attributable to food and beverages (including alcoholic beverages) and other sales or services through the close of business for such food and beverage outlets or such other sales or service centers on the night (whether prior to or after the Cut Off Time) immediately preceding the Closing Date shall belong to Seller (such revenue to be determined based on completion of the night auditor’s run on the Closing Date). Thereafter, revenue from the Hotel attributable to food and beverage and other sales or services shall belong to Purchaser. Each of Purchaser and Seller shall be responsible for

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the payment of any sales and/or hotel/motel occupancy taxes collected or otherwise due and payable in connection with the revenue allocated to such party under this Section 7.01(a).

(b) Taxes and Assessments. Real estate (ad valorem) and personal property taxes and assessments with respect to the Property shall be adjusted and prorated based on (a) the periods of ownership of Seller and Purchaser with respect to the applicable tax period, and (b) the most current official real property tax information available from the assessor’s office where the Property is located or other assessing authorities. If real property tax and assessment figures for the taxes or assessments to be apportioned between Purchaser and Seller pursuant to this Section 7.01(b) are not available, real property taxes shall be prorated based on the most recent assessment, subject to further and final adjustment when the tax rate and/or assessed valuation for such taxes and assessments for the Property is fixed. In the event that the Property or any part thereof shall be or shall have been affected by an assessment or assessments, whether or not the same become payable in annual installments, Seller shall, at the Closing, be responsible for any such assessment (or any installments or portions thereof) due prior to the Closing and Purchaser shall be responsible for any such assessment (or any installments or portions thereof) due on or after the Closing.

(c) Utility Contracts. All utility services (including, without limitation, electricity, gas, water, sewer and telecommunication) shall be prorated as of the Cut-Off Time between Purchaser and Seller. To the extent practicable, readings shall be obtained for all utilities as of the Cut-Off Time. If not practicable, the cost of such utilities shall be prorated between Seller and Purchaser by estimating such cost on the basis of the most recent bill for such service; provided, however, that after the Closing, Seller and Purchaser shall reprorate the amount for 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. Seller shall receive a credit for all fuel stored at the Hotel based on Seller’s actual cost for such fuel. Seller shall receive a credit for all deposits transferred to Purchaser or which remain on deposit for the benefit of Purchaser with respect to such utility contracts.

(d) Hotel Contracts. Any amounts prepaid or payable under any Hotel Contracts shall be prorated as of the Cut Off Time, with Seller receiving a credit for each deposit, if any, made by Seller as security under any such Hotel Contract if the same is transferable or the appropriate consent has been obtained and provided such deposit remains on deposit for the benefit of Purchaser. If any such deposit cannot be transferred to Purchaser, Seller shall be paid any such deposit and Purchaser shall make such deposit as may be required.

(e) License Fees. Fees paid or payable for Permits shall be prorated as of the Cut Off Time. Seller shall receive a credit for all deposits made by Seller under the Permits which are transferred to Purchaser or which remain on deposit for the benefit of Purchaser.

(f) Hotel Matters. Purchaser shall receive a credit for: (i) advance payments, if any, under Bookings for Hotel facilities that remain in effect as of Closing; (ii) a prorata share, based on the period each party owned or will own the Hotel, of any upfront fees or payments made to Seller or the Hotel pursuant to an agreement for audio-visual services at the Hotel, based on the remaining term of any such agreement and (iii) commissions due to credit and referral organizations for any Bookings related to the period prior to Closing. Seller shall receive a

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credit for (x) coin machine, telephone, washroom and checkroom income relating to the period prior to the Cut-Off Time and (y) commissions paid by Seller to any travel agent or other referral organization prior to Closing with respect to any Bookings related to the period after Closing. Purchaser shall assume all ordinary course purchase orders for Consumables and Inventory to be delivered after Closing and credit Seller for any prepayments thereunder.

(g) Accrued Vacation. Accrued Vacation. Purchaser shall receive a credit in an amount equal to one hundred percent (100%) of the Accrued Vacation Pay as of the Cut-Off Time of all Employees. Purchaser shall (1) honor and credit each Employee’s unused accrued or earned vacation, sick-time-off or other paid time off of any Employee and (2) be responsible for the payment of such Accrued Vacation Pay to the Employees when payable in accordance with applicable laws. At Closing, Seller shall cause Manager shall pay to the Employees an amount equal to the unpaid Accrued Vacation Pay for each applicable Employee, provided, however, that if any of the Employees that are hired by Purchaser or its designee or management company elect in writing certified to Seller to waive the payment of their Accrued Vacation Pay Purchaser shall (1) honor and credit any such Employee the unused accrued or earned vacation, sick-time-off or other paid time off of any such Employee, (2) be responsible for the payment of such Accrued Vacation Pay to such Employees when payable in accordance with applicable laws and (3) receive a credit in the amount of such Accrued Vacation Pay allocable to all such Employees.

(h) Compensation. All Compensation due and payable to Employees shall be prorated as of the Cut-Off Time, other than severance pay and Accrued Vacation Pay (which is addressed in Section 10.1(g) above).

(i) Unopened Consumables and Inventory. Seller shall receive a credit in an amount equal to Seller’s actual cost of any Unopened Consumables and of any Inventory as of the Cut-Off Time.

(j) Rents. All fixed and additional rentals under the Space Leases and other tenant charges, in each case as and when actually received, shall be prorated as of the Cut-Off Time. Seller shall deliver or provide a credit in an amount equal to all prepaid rents for periods after the Closing Date. Rents which are delinquent as of the Closing Date shall not be prorated on the Closing Date. To the extent Purchaser receives rents (including operating expense, tax and insurance charges payable by tenants) on or after the Closing Date, such payments shall be applied first toward the payment in full of all delinquent rents and other delinquent amounts due to Seller for periods prior to the Closing (and Purchaser shall promptly deliver such amounts to Seller), then allocated for the month of Closing (with Seller’s share thereof being promptly delivered to Seller by Purchaser) and the balance to Purchaser with respect to periods following Closing. Purchaser shall use commercially reasonable efforts to collect any such delinquent rents. Any percentage rents under Space Leases shall be prorated on the basis of the ratio of the number of days expired before Closing to the number of days after Closing. In the event that the proration of operating expenses, taxes, insurance charges and/or percentage rent cannot be fully prorated because of the unavailability of information then such proration will be tentatively prorated on the best available information and Seller and Purchaser will make the appropriate final adjustments within ninety (90) days following the end of the calendar year in which the Closing occurs. All such adjustments will be paid in cash to the party entitled thereto. All

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security deposits shall be transferred to Purchaser and all obligations with respect to such security deposits shall be assumed by Purchaser. This Section 7.01(j) shall survive the Closing and shall not be deemed merged into the Deed or any conveyance document delivered at Closing.

(k) Other Adjustments and Prorations. To the extent not inconsistent with any of the foregoing, all other items of income and expense as are customarily adjusted or prorated upon the sale and purchase of a hotel property similar to the Hotel shall be adjusted and prorated between Seller and Purchaser accordingly.

(l) Re-Adjustment. Representatives of Seller and Purchaser shall make such inventories, examinations and audits of Seller, and of the books and records of Seller, as may be necessary to make the adjustments and prorations required under this Agreement. Prior to the Closing, representatives of Purchaser and Seller and Escrow Company shall jointly prepare a statement (the “Preliminary Closing Statement”) based upon such preliminary inventories, audits and examinations which will show the net amount due to Seller or Purchaser as the result thereof and such net amount will be added to, or deducted from, the Purchase Price. If Seller and Purchaser cannot agree upon the Closing Statement, then Seller’s good faith estimate shall prevail for purposes of Closing and pending the re-adjustment contemplated by this Section 7.01(l). Within ninety (90) days following the Closing, representatives of Purchaser and Seller shall prepare a revised statement (the “Final Closing Statement”, and together with the Preliminary Closing Statement, collectively, the “Closing Statements”) setting forth the final determination of all items to be included in the Closing Statements, and any necessary payment shall be made to the other in cash within five (5) days after completion of such Final Closing Statement. Any item that cannot be finally prorated because of the unavailability of information shall be tentatively prorated on the basis of the best data then available and re-prorated when the information is available. The provisions of this Section 7.01 shall survive the Closing and shall not be deemed merged into the Deed or any other conveyance document delivered at the Closing.

7.02 Payment. Any net credit due to Seller as a result of the adjustments and prorations under Section 7.01 shall be paid to Seller in cash at the time of the Closing (except as contemplated by Subsections 7.01(b), (j) and/or (l)). Any net credit due to Purchaser as a result of the adjustments and prorations under Section 7.01 shall be credited against the Purchase Price at the time of the Closing (except as contemplated by Subsections 7.01(b), (j) and/or (l)).

7.03 Cash and Accounts. At the Closing, Seller shall transfer to Purchaser all Cash On Hand and Seller shall receive a credit at the Closing for such Cash On Hand. All Account Cash is and shall remain the property of Seller and shall be retained by Seller after the Closing.

ARTICLE VIII

CONDITIONS TO SELLER’S OBLIGATIONS

8.01 Conditions. Seller’s obligation to close the transaction contemplated by this Agreement shall be subject to the occurrence of each of the following conditions, any one or more of which may be waived by Seller in writing:

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(a) Purchaser’s Compliance with Obligations. Purchaser shall have complied with all material obligations required by this Agreement to be complied with by Purchaser.

(b) Documents. Purchaser shall have executed and delivered or caused to be delivered at the Closing all documents and executed counterparts of documents and instruments required by this Agreement to be executed and delivered by Purchaser.

(c) Truth of Purchaser’s Representations and Warranties. The representations and warranties of Purchaser contained in this Agreement were true in all material respects when made, and are true in all material respects as if remade as of the Closing Date, and Seller shall have received a certificate to that effect signed by Purchaser. In the event any of Purchaser’s representations become untrue during the term of the Agreement, Seller may terminate this Agreement without thereby waiving any right or remedy.

(d) Franchise Agreement. Except for any franchise or other fees and amounts owed by Seller or Manager to Licensor and accrued during the period prior to Closing, Seller, Manager and their respective Affiliates shall be released from all obligations and Liabilities under the Franchise Agreement and any other related agreements between Seller or Manager and Franchisor relating to the Property and accruing from and after Closing including, without limitation, any obligation to pay any termination fees, transfer fees, liquidated damages or any similar amount pursuant to the Franchise Agreement.

ARTICLE IX

CONDITIONS TO PURCHASER’S OBLIGATIONS

9.01 Conditions. Purchaser’s obligation to close the transaction contemplated by this Agreement shall be subject to the occurrence of each of the following conditions, any one or more of which may be waived by Purchaser in writing:

(a) Seller’s Compliance with Obligations. Seller shall have complied with all material obligations required by this Agreement to be complied with by Seller.

(b) Documents. Seller shall have executed and delivered or caused to be delivered at the Closing all documents and executed counterparts of documents and instruments required by this Agreement to be executed and delivered by Seller and shall have taken all other actions and fulfilled all other covenants required of Seller under this Agreement.

(c) Truth of Seller’s Representations and Warranties. The representations and warranties of Seller contained in this Agreement were true in all material respects when made, and are true in all material respects on the Closing Date as if remade on the Closing Date, and Purchaser shall have received a certificate to that effect signed by Seller, provided that Seller’s representations and warranties shall not be deemed inaccurate or breached due to transactions or actions expressly permitted by this Agreement. In the event that one of Seller’s representations and warranties shall be deemed inaccurate or breached due to changes in fact

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after the date of this Agreement beyond Seller’s control that do not constitute or result from a default by Seller of the covenants applicable to it under this Agreement, including, without limitation, a default by any party other than Seller or any of its Affiliates to any agreement relating to the Property, changes in Bookings or the Employees, Seller shall have the right to cure such breach or inaccuracy to Purchaser’s reasonable satisfaction and, if necessary to allow such cure, the Closing Date shall be extended for up to sixty (60) days to allow such cure as long as Seller agrees to use reasonable efforts to effect such cure; provided that if Seller elects in writing not to cure or fails to give Purchaser notice of its intent to cure, Purchaser may terminate this Agreement. If, prior to the Closing, Purchaser obtains knowledge that any representation or warranty of Seller is untrue or that Seller has not complied with any of its covenants under this Agreement and Purchaser nonetheless proceeds with the Closing, Seller shall have no liability for any such matter regarding which Purchaser had knowledge prior to Closing.

(d) Management Agreement. The Management Agreement shall be terminated as of the Closing Date at the sole cost and expense of Seller. In connection with termination of the Management Agreement, subject to the provisions set forth in Article XII, the Manager will terminate the employment of the Employees effective upon the Closing unless Manager and Purchaser enter into a new management agreement as of the Closing Date, in which event the employment of the Employees shall not be terminated.

(e) Franchise Agreement. On or before the Closing Date, Franchisor shall have either entered into (i) an assignment and assumption agreement with respect to Franchise Agreement allowing Purchaser or its designee to assume the Franchise Agreement on the same terms and conditions as Franchisor’s current UFOC (except with respect to Material Franchise Terms) or (ii) a new hotel franchise agreement with Franchisor for the on the same terms and conditions as Franchisor’s current UFOC (except with respect to Material Franchise Terms). Purchaser and Seller shall each cooperate with the other and each use its reasonable best efforts to effectuate the Franchisor’s consent to the assignment of the Franchise Agreement to Purchaser or its designee at Closing and in connection with the foregoing, the Parties shall endeavor to cause Franchisor to execute any consent or other agreement required in connection with the assignment of the Franchise Agreement prior to the end of the Inspection Period, with such executed consent and/or agreement to be held by the Escrow Agent, in escrow, pending the consummation of the Closing.

ARTICLE X

ACTIONS AND OPERATIONS PENDING CLOSING

10.01 Actions and Operations Pending Closing. Seller agrees that at all times prior to the Closing Date:

(a) Subject to conditions beyond Seller’s reasonable control, the Hotel will continue to be operated and maintained in the ordinary course of business substantially consistent with Present Standards.

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(b) After the end of the Inspection Period, Seller shall not enter into any new Hotel Contract or Space Lease, or cancel, modify or renew any existing Hotel Contract or Space Lease that is not cancelable upon thirty (30) days notice and without payment of any penalty or termination fee, without the prior written consent of Purchaser, which consent shall not be unreasonably withheld, conditioned or delayed. If Purchaser fails to respond to a request for consent within five (5) Business Days after receipt of such request, such consent shall be deemed given.

(c) Seller shall have the right, without notice to or consent of Purchaser, to make Bookings in the ordinary course of business, at no less than the Hotel’s standard rates, including customary discounted rates.

(d) Seller shall use commercially reasonable efforts to preserve in force all existing Permits and to cause all those expiring on or before the Closing Date to be renewed prior to the Closing Date. If any such Permit shall be suspended or revoked, Seller shall promptly notify Purchaser and shall take commercially reasonable measures to cause the reinstatement of such Permit. Seller shall use commercially reasonable efforts (at no cost or expense to Seller, other than any de minimis cost or expense or any cost or expense which Purchaser agrees in writing to reimburse) to cooperate with Purchaser to cause the Permits to be transferred at Closing or new permits to be issued to Purchaser at Closing.

(e) Seller will maintain in effect all policies of casualty and liability insurance, or similar policies of insurance, with the same limits of coverage which it now carries with respect to the Hotel.

(f) Seller shall not remove any Fixtures and Tangible Personal Property or Operating Equipment located, installed or used in the Hotel as of the date hereof (except Excluded Assets, if applicable) other than in the ordinary course of business.

(g) Seller shall provide copies of any written notices received by Seller from any governmental or quasi governmental organizations regarding any violations of Legal Requirements.

(h) Subject to Article IV and prior to the Closing, neither Purchaser nor any of Purchaser’s representatives shall communicate concerning the Property with Manager, any tenant, employee, guest or occupant of the Real Property or any party to any Hotel Contract without the prior written approval of Seller, which approval shall not be unreasonably withheld, conditioned or delayed.

ARTICLE XI

CASUALTIES AND TAKINGS

11.01 Casualties.

(a) If any damage to the Real Property shall occur prior to the Closing Date by reason of fire, windstorm, earthquake, hail, explosion, hurricane or other casualty, and if the cost of repairing such damage will equal or exceed Five Million and 00/100 Dollars

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($5,000,000.00), Seller shall promptly notify Purchaser and Purchaser may then elect to (i) terminate this Agreement by giving written notice to Seller in which event the Deposit shall be returned to Purchaser (less the amount of any damages payable to Seller pursuant to the indemnification set forth in Section 4.06) and neither party shall have any further obligations or liability whatsoever to the other hereunder except for such provisions of this Agreement that expressly survive termination, or (ii) receive an assignment of all of Seller’s rights to any insurance proceeds (excluding business interruption proceeds for the period prior to Closing) relating to such damage and acquire the Property with appropriate adjustments to the Purchase Price equal to the deductible under the applicable insurance policy (to the extent such deductible is not applied by Seller for repairs prior to Closing) and the reasonable costs and expenses incurred by Seller to negotiate or settle any casualty claim with an insurer and to stabilize the Property following such casualty.

(b) If the cost of repairing such damage is less than Five Million and 00/100 Dollars ($5,000,000.00), the transactions contemplated hereby shall close with appropriate adjustments to the Purchase Price equal to the deductible under the applicable insurance policy (to the extent such deductible is not applied by Seller for repairs prior to the Closing) and the costs and expenses incurred by Seller to negotiate or settle any casualty claim with an insurer and to stabilize the Property following such casualty and Purchaser shall receive an assignment of all of Seller’s rights to any insurance proceeds (excluding business interruption proceeds for the period prior to Closing).

11.02 Takings. If, prior to the Closing Date, all or any portion of the Real Property is taken by eminent domain or by an act of governmental authority, or if an action for such taking is initiated or threatened, Seller shall promptly give Purchaser written notice thereof, and the following shall apply:

(a) If a Material Part of the Real Property is taken, or is to be taken, Purchaser may, within five (5) days after the delivery of Seller’s notice, by written notice to Seller, elect to terminate this Agreement. In the event that Purchaser shall so elect, this Agreement shall terminate and the Deposit shall be returned to Purchaser (less the amount of any damages payable to Seller pursuant to the indemnification set forth in Section 4.06) and neither party hereto shall have any further obligations or liability whatsoever to the other hereunder, except for such provisions of this Agreement that expressly survive termination.

(b) If a Material Part of the Real Property is taken, or is to be taken, but Purchaser does not elect to terminate this Agreement pursuant to paragraph (a) above, or if an immaterial part of the Real Property is taken by an act of governmental authority, Purchaser shall have no right to terminate this Agreement, and the parties shall nonetheless proceed to the Closing in accordance with this Agreement, without any abatement of the Purchase Price or any liability or obligations on the part of Seller by reason of such taking; provided, however, that Seller shall, at the Closing, (i) assign and turn over, and Purchaser shall be entitled to receive and keep, the net proceeds of any award or other proceeds of such taking which may have been collected by Seller as a result of such taking, less any portion thereof applied to the cost of repairs made by Seller prior to the Closing and less the reasonable costs and expenses incurred by Seller in connection with obtaining payment of any award or other proceeds, or (ii) if no award or other proceeds shall have been collected, deliver to Purchaser an assignment of Seller’s

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right to any such award or other proceeds which may be payable to Seller as a result of such taking, less an amount equal to the cost of any repairs made by Seller prior to the Closing, which amount shall be paid to Seller by Purchaser at the Closing. If all or any part of the payment proceeds are paid to the holder of any mortgage or deed of trust or reversionary interest in the Real Property, then, at the Closing, Seller shall credit such amount against the Purchase Price.

(c) For the purposes hereof, a “Material Part” shall be deemed to mean any taking (i) which causes a reduction in the size of any of the buildings comprising the Real Property or materially interferes with the present use and operation of any of the buildings comprising the Real Property, or (ii) which results in the elimination of any required means of legal ingress and/or egress from the Real Property to public roads, with no comparable, convenient, legal substitute ingress and/or egress being available.

ARTICLE XII

EMPLOYEES

12.01 Employees.

(a) Unless Purchaser elects to retain Manager as the manager of the Hotel (pursuant to a separate hotel management agreement executed by Purchaser and Manager), Purchaser agrees that it shall offer to hire or cause to be offered to be hired effective at and upon the Closing, and after the Closing shall maintain or cause to be maintained the employment of, in each case upon terms and conditions of employment substantially and sufficiently similar to the terms and conditions of employment existing prior to Closing, a sufficient number of Employees so that the Seller, its Affiliates or Manager shall not be required to give any layoff, closing or other termination notices or otherwise incur any liability pursuant to the provisions of the Federal Worker Adjustment and Retraining Notification Act, 29 U.S.C. 2101 2109, or any similar applicable state or local law (collectively, the “WARN Act”). Except to the extent Purchaser elects to retain Manager as the manager of the Hotel pursuant to a separate hotel management agreement executed by Purchaser and Manager, Seller shall cause its Manager to cooperate reasonably with Purchaser or its designated Hotel manager to facilitate Purchaser’s compliance with this Section 12.01. If Purchaser, or any designee or management company engaged by Purchaser to employ Hotel personnel, elects not to hire a particular Employee at Closing, or, if following the Closing, Purchaser or such designee or management company desires to terminate the employment of any Employee hired by Purchaser or its designee or management company, Purchaser shall be solely responsible for complying or causing compliance with all applicable provisions of federal, state and municipal laws and regulations relating to such action, including without limitation any applicable provisions of the WARN Act. It is agreed that the number of Employees hired, the selection of which Employees are hired, and the initial terms and conditions of employment for each Employee hired by Purchaser, or its designee or management company engaged by Purchaser to employ Hotel personnel, shall be solely determined by Purchaser or such designee or management company, provided such terms and conditions of employment satisfy the provisions of this Section 12.01(a).

(b) The Parties hereto agree that Purchaser will not be subject to any of the debts, obligations and/or Liabilities of Seller, its Affiliates or Manager which may exist with

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respect to the employment or termination of any Employees that arise prior to the Closing, or which are attributable to the termination of such Employees by Seller, its Affiliates or Manager at or prior to Closing, except to the extent that such debts, obligations and/or Liabilities are expressly covered by a credit against the Purchase Price specifically provided in this Agreement. In the event any labor organization becomes the exclusive representative of any group of Employees for purposes of collective bargaining in accordance with federal labor law prior to the Closing, Purchaser agrees to enter into, or cause its designee or management company to enter into, good faith negotiations with such labor unions in accordance with the National Labor Relations Act. The Parties hereto agree that Seller, its Affiliates and Manager shall not be subject to any of the debts, obligations and/or Liabilities of Purchaser, or Purchaser’s designee or management company, which are attributable to any actions or omissions of Purchaser or such designee or management company, or any agents or representatives thereof, in the process of the hiring any of the Employees, including, without limitation, any claims arising out of or relating to whether, and upon which terms and conditions, any such Employees are offered employment by Purchaser or such designee or management company, or are hired (or subsequently terminated) by Purchaser or such designee or management company, or which may otherwise exist regarding the employment of employees at the Hotel by Purchaser or such designee or management company from and after the Closing (“Purchaser’s Employee Obligations”).

(c) Purchaser shall save, protect, defend, indemnify and hold Seller, Manager and each of their Affiliates harmless from and against any Liabilities (including, but not limited to, payments made to Manager as the employer of the Employees) which may be incurred or suffered by any of them (i) under the WARN Act arising out of, or relating to, any actions taken by Purchaser prior to, on or after the Closing Date; (ii) in connection with any of Purchaser’s Employee Obligations; (iii) by reason of Purchaser’s failure to comply with any of the provisions of this Article XII; (iv) in connection with any employment taxes or Accrued Vacation Pay that, pursuant to Sections 7.01(g) or (h), have become the obligation of Purchaser to pay; (v) in connection with any Liability arising out of Purchaser’s or its designee’s or management company’s employment policies, practices or procedures on or after the Closing Date; or (vi) in connection with Purchaser’s violation or noncompliance with any applicable federal or state employment law, including, without limitation, COBRA, the Health Insurance Portability and Accountability Act of 1996 (HIPAA), ERISA, the Family and Medical Leave Act of 1993 (FMLA), the Fair Labor Standards Act (FLSA) and the Occupational Safety and Health Act (OSHA) on or after the Closing Date.

(d) The terms, conditions and indemnity obligations set forth in this Section 12.01 shall survive the Closing.

ARTICLE XIII

NOTICES

13.01 Notices. Except as otherwise provided in this Agreement, all notices, demands, requests, consents, approvals, and other communications (each a “Notice”, collectively “Notices”) required or permitted to be given under this Agreement, or which are to be given with respect to this Agreement, shall be in writing and shall be personally delivered, transmitted by facsimile transmission (as long as a copy is also sent on the same business day by overnight

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express courier as set forth below), or sent by registered or certified mail, postage prepaid, return receipt requested, or by overnight express courier, postage prepaid, addressed to the party as designated below:

If intended for Seller, to:

HEI San Francisco LLC

c/o HEI Hospitality, LLC

101 Merritt 7 Corporate Park, 1st Floor

Norwalk, Connecticut 06851

Attention: Anthony R. Rutledge

Fax: (203) 849-5918

with a copy to:

Goodwin Procter LLP

Exchange Place

Boston, MA 02109

Attention: Christopher B. Barker

Facsimile No.: (617) 227-8591

If intended for Purchaser, to:

c/o Chesapeake Lodging Trust

1997 Annapolis Exchange Parkway, Suite 410

Annapolis, MD 21401_

Attention: SVP and Chief Accounting Officer

Facsimile No.: (410) 972-4180

with a copy to:

c/o Chesapeake Lodging Trust

1997 Annapolis Exchange Parkway, Suite 410

Annapolis, MD 21401

Attention: SVP and Chief Investment Officer

Facsimile No.: (410) 972-4180

Notice mailed by registered or certified mail shall be deemed received by the addressee three (3) days after mailing thereof. Notice personally delivered shall be deemed received when delivered. Notice mailed by overnight express courier shall be deemed received by the addressee on the next Business Day after mailing thereof. Notice transmitted by facsimile shall be deemed received by the addressee upon receipt (as long as a copy is also sent on the same business day by overnight express courier as set forth below), and if not, then the next Business Day. Either party may at any time change the address for notice to such party by mailing a Notice as aforesaid.

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ARTICLE XIV

ADDITIONAL COVENANTS

14.01 Additional Covenants. In addition, the parties agree as follows:

(a) Liquor License. Purchaser shall use diligent, good faith efforts to effect the transfer of any existing Liquor License held by Seller, Manager or their applicable Affiliate to Purchaser or its designee or management company as of the Closing Date or to permit Purchaser or its designee or management company to obtain a new Liquor License for the Hotel. Purchaser agrees to pay all fees, charges and related costs in connection with the transfer of the existing Liquor License or to obtain a new Liquor License. Promptly following the full execution and delivery of this Agreement, Purchaser shall, or shall cause its designee to, complete, execute and file with the applicable liquor licensing authority all necessary applications for transfer of the Liquor License or to obtain a new Liquor License. In connection with Purchaser’s actions described in the foregoing sentence, at the request of Purchaser, (i) Seller shall, or shall cause the current holder of the Liquor License to, execute and deliver a liquor escrow agreement in a form and on such terms as are reasonable and customary for the transfer of a liquor license and liquor assets in the State of California and (ii) the parties shall allocate a portion of the Purchase Price to the Liquor License in accordance with the terms of Section 3.1, (provided, however, the parties acknowledge that no portion of the cost of the liquor inventory shall be allocated to the Purchase Price and such costs shall be paid to Seller (or the current holder of the Liquor License) pursuant to the terms of Section 7.01(i)). Purchaser specifically acknowledges and agrees that the transfer of the Liquor License to Purchaser on the Closing Date (or the issuance of a new Liquor License) shall not be a condition to Purchaser’s obligation to close the transaction contemplated under this Agreement. If despite the exercise of such efforts by Purchaser, Purchaser is unable to obtain a transfer of the Liquor License or a new Liquor License on or before the Closing Date, then Seller agrees that it shall cause Merritt Beverage, LLC, an Affiliate of Manager and Seller that holds the Liquor License, to enter into a customary form interim beverage services agreement or lease with Purchaser in form reasonably satisfactory to Manager and Merritt Beverage, LLC, to the extent permitted by applicable law, including without limitation, an indemnification from Purchaser of Manager and Merritt Beverage, LLC with respect to any and all damages, claims, losses, expenses, costs or other Liabilities arising during the term of such services agreement for a period not to exceed one hundred eighty (180) days following the Closing Date.

(b) Brokerage. Purchaser and Seller warrant and represent to each other that they have not had any dealings with any broker, agent or finder relating to the sale of the Property or the transactions contemplated hereby other than Eastdil Secured, LLC (the “Broker”). Each Party agrees to indemnify and hold the other Party and its Indemnitees harmless against and from any and all Liabilities incurred arising out of or resulting from any claim for brokerage commissions, compensation or fees by any broker, agent or finder acting on such Party’s behalf other than the Broker, which Seller is compensating under a separate agreement in connection with the sale of the Property. The provisions of this Section 14.01(b) shall survive Closing or any termination of this Agreement.

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(c) Guest Baggage. All baggage of guests who are still in the Hotel on the Closing Date, which has been checked with or left in the care of Seller or Manager shall be inventoried, sealed and tagged jointly by Seller and Purchaser on the Closing Date. Purchaser hereby agrees to save, protect, defend, indemnify and hold Seller and its Indemnitees harmless against any Liabilities in connection with such baggage arising out of the acts or omissions of Purchaser or its Affiliates (or any of their employees or agents) after the Closing Date.

(d) Safe Deposits. Immediately after the Closing, Seller shall send written notice to guests or tenants or other persons who have safe deposit boxes, if any, advising of the sale of the Hotel to Purchaser and requesting immediate removal of the contents thereof or the removal thereof and concurrent re deposit of such contents pursuant to new safe deposit agreements with Purchaser. Seller shall have a representative present when the boxes are opened, in the presence of a representative of the Purchaser. Any property contained in the safe deposit boxes after such re deposit shall be the responsibility of Purchaser, and Purchaser agrees to save, protect, defend, indemnify and hold harmless Seller and its Indemnitees from and against any Liabilities arising out of or with respect to such property.

(e) Tax Appeal Proceedings. Seller shall be entitled to receive and retain the proceeds from any tax appeals or protests for tax fiscal years prior to the tax fiscal year in which the Closing Date occurs. In the event an application to reduce real estate taxes is filed for the period during which Seller was the owner of the Real Property, Seller shall be entitled to a re proration of real estate taxes upon receipt of and based upon the reduction. Seller shall continue to process any pending appeals or protests with respect to the tax fiscal year in which the Closing Date occurs (and Purchaser shall reasonably cooperate in connection therewith), and the net proceeds from any such proceedings, after payment of reasonable attorneys’ fees and other costs associated with such process, will be prorated between the parties, when received, as of the Closing Date, which obligation shall survive the Closing.

(f) Books and Records. The transaction contemplated hereby includes the Books and Records of Seller pertaining to the business of the Hotel. Purchaser covenants and agrees that such Books and Records will remain in the Hotel for examination and audit by Seller and its agents after the Closing as provided in this Section 14.01(f). Books and Records not pertaining to the business of the Hotel may be removed by Seller within a reasonable time after the Closing Date. Purchaser agrees to preserve all Books and Records for at least five (5) years after the Closing Date, and not to destroy or dispose of the same, for at least five (5) years after the Closing Date. Purchaser agrees to provide access to Seller and its representatives, to such books, records, files and correspondence at all reasonable times during normal business hours and following reasonable notice.

(g) Independent Audit. From and after the Effective Date until two (2) years after the Closing, upon reasonable prior notice from Purchaser Seller shall make the books and records from the operation of the Property for the years ended December 31, 2010, 2009 and 2008 and interim periods as required by the rules and regulations of the Securities and Exchange Commission (“SEC”) available to Purchaser and Purchaser’s independent accountants for inspection, copying and audit by Purchaser’s designated accountants at the expense of the Purchaser. Upon request, Seller will provide the Purchaser’s independent accountants with a management representation letter with respect to the audited historical financial statements of the

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Property for the years ended December 31, 2010, 2009, and 2008 and any unaudited interim period to the extent required by the rules and regulations of the SEC, which management representation letter shall be in a form customary for such letters and shall otherwise be in a form reasonably satisfactory to Seller. Upon reasonable prior notice from Purchaser, Seller shall provide Purchaser, at Purchaser’s sole expense, with copies of, or access to, such factual information, accounting records and financial information as may be reasonably requested by Purchaser or its auditors, and in the possession or control of Seller, to enable Purchaser or its Affiliates to file reports or registration statements in compliance with the rules and regulations of the SEC. This Section 14.01(g) shall survive the Closing for two (2) years.

(h) Capital Expenditures. Exhibit N attached hereto sets forth the construction and design related contracts (the “ADA Contracts”) entered into by Seller for certain capital improvements at the Property (the “ADA Capital Improvements”) as part of that certain Mutual Release and Settlement Agreement made by and between Seller and Connie Arnold, an individual, dated on or about January 14, 2010 (the “Settlement”). Purchaser hereby agrees and acknowledges that Seller previously (i) delivered to Purchaser a copy of the Settlement and (ii) disclosed to Purchaser the related ADA Capital Improvements. In connection with the ADA Capital Improvements, Purchaser shall receive at Closing a credit against the Purchase Price in an amount equal to the positive result, if any, of (x) One Hundred Fifty Thousand Dollars ($150,000) less (y) any amounts paid by Seller prior to Closing pursuant to the ADA Contracts for the ADA Capital Improvements. At Closing, Purchaser shall assume all ADA Contracts and from and after Closing shall be solely responsible for the payment of all costs and expenses of the ADA Capital Improvements in accordance with the terms of the ADA Contracts and the Settlement. Notwithstanding the foregoing, Seller shall indemnify, defend and hold Purchaser harmless from any Liabilities incurred by Purchaser for any other capital improvement projects or expenditures (whether construction-related or supply-related contracts) accruing or arising prior to the Closing. The foregoing indemnification shall not be subject to the Deductible.

(i) Survival. Subject to the terms of Section 5.03, the representations, warranties, obligations, covenants, agreements, undertakings and indemnifications of Seller and Purchaser contained in this Agreement and in any closing documents delivered in connection with this Agreement, which are intended and anticipated to survive Closing, shall survive the Closing.

ARTICLE XV

DEFAULTS AND REMEDIES; EFFECT OF TERMINATION

15.01 Purchaser Default/Seller’s Remedies. IF PURCHASER FAILS TO PERFORM ITS OBLIGATIONS UNDER THIS AGREEMENT AND SELLER DOES NOT WAIVE SUCH FAILURE OF PERFORMANCE IN WRITING AND CLOSING DOES NOT OCCUR AS A RESULT OF PURCHASER’S DEFAULT, SELLER SHALL BE ENTITLED AS ITS SOLE REMEDY TO TERMINATE THIS AGREEMENT AND RECOVER THE DEPOSIT UNDER THIS AGREEMENT AS LIQUIDATED DAMAGES AND NOT AS A PENALTY, IN FULL SATISFACTION OF ANY CLAIMS AGAINST PURCHASER; PROVIDED, HOWEVER, THAT THIS PROVISION SHALL NOT LIMIT SELLER’S RIGHTS TO

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RECEIVE REIMBURSEMENT FOR COSTS, FEES AND EXPENSES (INCLUDING, WITHOUT LIMITATION, REASONABLE ATTORNEYS’ FEES AND COSTS) PURSUANT TO SECTION 15.03 BELOW IN ADDITION TO THE DEPOSIT IN THE EVENT OF A DISPUTE REGARDING THE DISPOSITION OF THE DEPOSIT TO THE EXTENT SELLER PREVAILS IN SUCH DISPUTE, NOR SHALL THIS PROVISION BE DEEMED TO WAIVE OR AFFECT SELLER’S RIGHTS AND PURCHASER’S INDEMNITY OBLIGATIONS UNDER OTHER SECTIONS OF THIS AGREEMENT. SELLER AND PURCHASER AGREE THAT SELLER’S DAMAGES RESULTING FROM SUCH A PURCHASER’S

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DEFAULT ARE DIFFICULT TO DETERMINE AND ASCERTAIN AND THE AMOUNT OF THE DEPOSIT IS A FAIR ESTIMATE OF THOSE DAMAGES AND SUCH AMOUNT IS NOT INTENDED AS A FORFEITURE OR PENALTY BUT IS INTENDED TO CONSTITUTE LIQUIDATED DAMAGES. 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 SECTIONS 1671, 1676 AND 1677.

Seller’s Initials: Purchaser’s Initials:

15.02 Seller Default/Purchaser’s Remedies. If Seller fails in any material respect to perform its obligations under this Agreement, and Seller does not cure such failure within ten (10) days after its receipt of written notice of such failure from Purchaser (a “Seller Default”) then Purchaser may elect as its sole and exclusive remedy (at law or in equity): (a) to terminate this Agreement by giving Seller written notice of such election prior to Closing, in which case the Deposit shall be returned to Purchaser; (b) to waive the Seller Default and close; or (c) to seek specific performance of this Agreement against Seller.

15.03 Attorneys’ Fees. If any action or proceeding is commenced by either party to enforce or interpret their rights under this Agreement or to collect damages as a result of the breach of any of the provisions of this Agreement, the prevailing party in such action or proceeding, including any bankruptcy, insolvency or appellate proceedings, shall be entitled to recover all reasonable costs and expenses, including, without limitation, reasonable attorneys’ fees, court costs and fees of experts, in addition to any other relief awarded by the court.

15.04 No Reservation of Property. The preparation and/or delivery of unsigned drafts of this Agreement shall not create any legally binding rights in the Property and/or obligations of the parties, and Purchaser and Seller acknowledge that this Agreement shall be of no effect until it is duly executed by both Purchaser and Seller.

ARTICLE XVI

IRS FORM 1099-S DESIGNATION

16.01 Designee. In order to comply with information reporting requirements of Section 6045(e) of the Internal Revenue Code of 1986, as amended, and the Treasury Regulations thereunder, the parties agree (i) to execute an IRS Form 1099-S Designation Agreement in the form attached hereto as Exhibit L at or prior to the Closing to designate the Title Company (the “Designee”) as the party who shall be responsible for reporting the contemplated sale of the Property to the Internal Revenue Service (the “IRS”) on IRS Form 1099-S; (ii) to provide the Designee with the information necessary to complete Form 1099-S; (iii) that the Designee shall not be liable for the actions taken under this Agreement, or for the consequences of those actions, except as they may be the result of gross negligence or willful misconduct on the part of the Designee; and (iv) that the Designee shall be indemnified by the parties for any costs or expenses incurred as a result of the actions taken hereunder, except as they may be the result of gross negligence or willful misconduct on the part of the Designee. The Designee shall provide all

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parties to this transaction with copies of the IRS Form 1099-S filed with the IRS and with any other documents used to complete IRS Form 1099-S.

ARTICLE XVII

MISCELLANEOUS PROVISIONS

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

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

(b) All references in this Agreement to particular articles, sections, subsections or clauses (whether in upper or lower case) are references to articles, sections, subsections or clauses of this Agreement. All references in this Agreement to particular exhibits or schedules (whether in upper or lower case) are references to the exhibits and schedules attached to this Agreement, unless otherwise expressly stated or clearly apparent from the context of such reference.

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

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

(e) The terms “hereby,” “hereof,” “hereto,” “herein,” “hereunder” and any similar terms shall refer to this Agreement, and not solely to the provision in which such term is used.

(f) The terms “include,” “including” and similar terms shall be construed as if followed by the phrase “without limitation.”

(g) The term “sole discretion” with respect to any determination to be made a Party under this Agreement shall mean the sole and absolute discretion of such Party, without regard to any standard by which the determination of such Party must be made.

17.02 Severability. If any term or provision of this Agreement is held to be or rendered invalid or unenforceable at any time in any jurisdiction, such term or provision shall not affect the validity or enforceability of any other terms or provisions of this Agreement, or the validity or enforceability of such affected terms or provisions at any other time or in any other jurisdiction.

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17.03 Publicity. All press releases and all other publicity concerning the transactions contemplated by this Agreement shall be jointly planned and coordinated by and between Purchaser and Seller. Neither party shall act unilaterally in this regard without the prior written approval of the other; provided, however, this approval shall not be unreasonably withheld or delayed. Notwithstanding the foregoing, if Purchaser determines, after consultation with counsel, that it is required by federal or state securities laws or regulations to publicly disclose the existence or terms of this Agreement, before or after Closing occurs, Purchaser shall allow Seller a reasonable period of time, not to exceed three (3) Business Days, to review Purchaser’s proposed disclosure in advance of Purchaser making such disclosure but, for the avoidance of doubt, Purchaser shall be permitted to make such disclosure and shall not be required to obtain the consent of Seller prior to making such disclosure.

17.04 Assignment. Neither all nor any portion of Purchaser’s interest under this Agreement may be sold, assigned, encumbered, conveyed or otherwise transferred, whether directly or indirectly, voluntarily or involuntarily, or by operation of law or otherwise including, without limitation, by a transfer of interest in Purchaser (collectively, a “Transfer”), without the prior written consent of Seller, which consent may be granted or denied in Seller’s sole and absolute discretion. Any attempted Transfer without Seller’s consent shall be null and void. Any request by Purchaser for Seller’s consent to a Transfer shall set forth in writing the details of the proposed Transfer, including, without limitation, the name, ownership and financial condition of the prospective transferee and the financial details of the proposed Transfer. Notwithstanding the foregoing, Purchaser, upon prior written notice to Seller given not less than five (5) Business Days prior to the Closing (which time period is agreed to be material and is required to permit Seller properly to prepare, execute and deliver the items required to be delivered by it pursuant to this Agreement), which notice specifies the exact legal name, address and any other information necessary for the preparation of the closing documents to be delivered under this Agreement, may assign its rights and delegate is duties under this Agreement to an entity that is owned or controlled, directly or indirectly, by Purchaser for the purposes of closing on the transaction provided (i) only one such assignment shall be made; (ii) such assignment shall not delay the Closing; (iii) such assignment shall not require Seller to obtain any additional or revised third party consents, certificates or approvals; provided, however, Purchaser shall remain liable for Purchaser’s obligations hereunder until the Closing has occurred notwithstanding such assignment. In the event Purchaser so assigns and delegates its rights and duties under this Agreement, it shall deliver to Seller at or prior to Closing an instrument of assignment and assumption evidencing such assignment and delegation. In addition, Purchaser shall provide Seller with copies of all Transfer documentation, certified by Purchaser to be true, correct, and complete, and with all other information which Seller may reasonably request. No Transfer, whether with or without Seller’s consent: (i) shall operate to release Purchaser or alter Purchaser’s primary liability to perform the obligations of Purchaser under this Agreement; or (ii) shall cause Seller to incur any cost or other economic detriment in connection with such Transfer. Purchaser shall pay any and all additional costs and expenses (including, without limitation, reasonable attorneys’ fees, charges, and disbursements) incurred by Seller that would not otherwise have been incurred by Seller had Purchaser not caused a Transfer; provided, however that Purchaser shall not be obligated to make such payment to the extent that such Transfer was to an entity that is owned or controlled, directly or indirectly, by Purchaser for the purposes of closing on the transaction.

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17.05 Business Days. Time is of the essence in the performance of the respective obligations of Seller and Purchaser. If any deadline provided in this Agreement falls on a day other than a Business Day, such deadline shall be extended until the first Business Day thereafter.

17.06 Counterparts. This Agreement may be executed in any number of counterparts, each of which shall constitute an original but all of which, taken together, shall constitute but one and the same instrument. This Agreement may be executed by facsimile or other form of electronic communication.

17.07 Recitals, Exhibits and Schedules. The recitals to this Agreement, and all exhibits and schedules (as amended and supplemented from time to time) referred to in this Agreement are incorporated herein by such reference and made a part of this Agreement. Any matter disclosed in any schedule to this Agreement shall be deemed to be incorporated in all other schedules to this Agreement.

17.08 Entirety. This Agreement (including all exhibits) contains the entire agreement between the parties with respect to the subject matter hereof, supersedes all prior letters of intent, understandings or other agreements, whether written or oral, if any, with respect thereto and may not be amended, supplemented or terminated, nor shall any obligation hereunder or condition hereof be deemed waived, except by a written instrument to such effect signed by the party to be charged.

17.09 Amendments to Agreement. No amendment, supplement or other modification to any terms of this Agreement (other than amendments, supplements and other modifications to the representations and warranties and schedules made by Seller that are expressly permitted or contemplated by this Agreement including, without limitation, pursuant to Section 9.01(c)), or termination of this Agreement (other than as expressly provided in this Agreement), shall be valid unless in writing and executed and delivered by Seller and Purchaser.

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

17.11 Jurisdiction. Any action, suit or proceeding arising out of this Agreement or the transactions contemplated by this Agreement shall be brought exclusively in the United States District Court for the Northern District of California, and Seller and Purchaser agree that such courts are the most convenient forum for resolution of any such action and further agree to submit to the jurisdiction of such courts and waive any right to object to venue in such courts.

17.12 Jury Trial Waiver. TO THE EXTENT PERMITTED BY APPLICABLE LAW FROM TIME TO TIME, SELLER AND PURCHASER HEREBY WAIVE THEIR RIGHT TO A TRIAL BY JURY IN ANY LITIGATION OR OTHER COURT PROCEEDING BY EITHER PARTY AGAINST THE OTHER PARTY WITH RESPECT TO ANY MATTER ARISING FROM OR IN CONNECTION WITH THIS AGREEMENT.

17.13 Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective permitted successors and assigns. The warranties, representations, agreements and undertakings contained herein shall not be deemed

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to have been made for the benefit of any person or entity, other than the parties hereto and their permitted successors and assigns.

ARTICLE XVIII

GENERAL ESCROW PROVISIONS

18.01 General Escrow Provisions. The obligations and rights of the Escrow Company under this Agreement shall be subject to the following terms and conditions:

(a) The duties and obligations of Escrow Company shall be determined solely by the express provisions of this Agreement and no implied duties or obligations shall be implied against Escrow Company. Further, Escrow Company shall be under no obligation to refer to any other document between or among Purchaser and Seller referred to in or related to this Agreement, unless Escrow Company is provided with a copy of such document and consents thereto in writing.

(b) Escrow Company shall not be liable to anyone by reason of any error of judgment, or for any act done or step taken or omitted by Escrow Company in good faith, or for any mistake of fact or law, or for anything which Escrow Company may do or refrain from doing in connection herewith, unless caused by or arising out of Escrow Company’s actual and intentional misconduct or gross negligence.

(c) Escrow Company shall be entitled to rely, and shall be protected in acting in reliance, upon any writing furnished to Escrow Company by either Purchaser or Seller and shall be entitled to treat as genuine, and as the document it purports to be, any letter, paper or other document furnished to Escrow Company. Escrow Company may rely on any affidavit of either Purchaser or Seller or any other person as to the existence of any facts stated therein to be known by the affiant.

(d) If Seller shall become entitled to retain or receive the Deposit or other amount paid under this Agreement, Escrow Company shall pay the same to Seller together with all interest earned thereon and if Purchaser shall become entitled to a return of the Deposit or other amount paid under this Agreement, Escrow Company shall pay the same to Purchaser, including all interest earned thereon; provided, however, that no disbursement pursuant to this subsection shall be made by Escrow Company until the third (3rd) Business Day following the receipt or deemed receipt of notice by Seller and Purchaser from Escrow Company of its intention to so disburse, and disbursement made by Escrow Company after the passage of such three (3) Business Day period shall relieve Escrow Company from all liability in connection with such disbursement unless such disbursement is proscribed by order of a court of competent jurisdiction or objected to in writing by Seller or Purchaser. If such disbursement is objected to in writing by Seller or Purchaser within such three (3) Business Day period, then Escrow Company shall not make such disbursement until unanimously instructed in writing by Purchaser and Seller, or is directed to make such disbursement by a court of competent jurisdiction.

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(e) In the event of any disagreement between Purchaser and Seller resulting in adverse claims and demands being made in connection with or against the funds held in escrow, Escrow Company shall refuse to comply with the claims or demands of either party until such disagreement is finally resolved (i) by a court of competent jurisdiction (in proceedings which Escrow Company or any other party may initiate, it being understood and agreed by Purchaser and Seller that Escrow Company has authority (but not the obligation) to initiate such proceedings), or (ii) by an arbitrator in the event that Purchaser and Seller mutually and jointly determine to submit the dispute to arbitration pursuant to the rules and under the jurisdiction of the American Arbitration Association, and in so doing Escrow Company shall not be or become liable to a party, or (iii) by written settlement between Purchaser and Seller.

(f) Purchaser and Seller each agree to jointly and severally indemnify and hold harmless Escrow Company against any and all Liabilities incurred by Escrow Company (except to the extent the Escrow Company willfully disregards any provision of this Agreement to which it is bound) in connection with or as a result of any disagreement between Purchaser and Seller under this Agreement or otherwise incurred by Escrow Company in any way on account of its role as Escrow Company.

(g) Escrow Company in its sole discretion shall have the right to resign as Escrow Company under this Agreement, provided that it shall provide both Purchaser and Seller with at least fifteen (15) days written notice of such resignation pursuant to the notice provisions of this Agreement. Upon any such resignation, Escrow Company shall transfer the Deposit and any other amounts held by Escrow Company including any interest earned thereon to a successor Escrow Company jointly approved by Purchaser and Seller, whereupon the original Escrow Company shall have no further obligation or liability whatsoever as Escrow Company under this Agreement.

(h) Escrow Company may pay the Deposit into a court of competent jurisdiction upon commencement by the Escrow Company of an interpleader action in such court. The reasonable out-of-pocket costs and attorneys’ fees of the Escrow Company for such interpleader action shall be paid by the losing party in such interpleader action.

(i) The rights and immunities of Escrow Company hereunder shall apply equally to its partners, counsel, associates, employees, affiliates and agents.

(j) All of Escrow Company’s obligations under this Agreement shall automatically terminate upon disbursing the Deposit and any other amounts held by Escrow Company as set forth above.

[The signature page follows]

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

SELLER:
HEI SAN FRANCISCO LLC, a Delaware limited liability company
By:	/s/ Clark W. Hanrattie
	Name: Clark W. Hanrattie
	Title: Vice President
PURCHASER:
CHSP SAN FRANCISCO LLC, a Delaware limited liability company
By:	/s/ D. Rick Adams
	Name: D. Rick Adams
	Title: Vice President

Signature Page to Le Meridien San Francisco P&S

AGREEMENT OF ESCROW COMPANY

The undersigned has executed this Agreement solely to confirm its agreement to (a) hold the Deposit in escrow in accordance with the provisions hereof and (b) comply with the provisions of Article VI, Article XVIII and Section 3.02.

In witness whereof, the undersigned has executed this Agreement as of December 6, 2010.

TITLE ASSOCIATES, A DIVISION OF STEWART TITLE INSURANCE COMPANY
By:	/s/ Stefanie Lally-Ardrey
Name:	Stefanie Lally-Ardrey
Title:	Counsel

Signature Page to Le Meridien San Francisco P&S

JOINDER

By the signature below of its authorized signatories, HEI HOSPITALITY FUND II, L.P. (“HEI Fund”), hereby agrees to be jointly and severally liable with Seller for all of the obligations of Seller under Section 5.04(b) of this Agreement, subject to the terms and conditions of this Agreement. The obligations of HEI Fund pursuant to this joinder are of a continuing nature and shall survive the Closing (subject to the terms and conditions of this Agreement, including, without limitation, Section 5.03 of this Agreement) and shall not be deemed merged into the deed or any other conveyance document delivered at the Closing.

HEI HOSPITALITY FUND II, L.P, a Delaware limited partnership
By:	/s/ Clark W. Hanrattie
	Name: Clark W. Hanrattie
	Title: Vice President

Signature Page to Le Meridien San Francisco P&S

EXHIBIT A

EXCLUDED ASSETS

Hardware	Juniper Firewall – Connectivity to HEI Corporate IT
Licenses	MSP Client – Network management monitoring tool
Licenses	Symantec AntiVirus – Software License
Merritt Agreement	Avendra – Procurement services
Merritt Agreement	Life Fitness – Fitness equipment service agreement
Merritt Agreement	MessageLabs – Mail Filtering
Merritt Agreement	PSAV – Audio visual provider
Merritt Agreement	Solutionary – Data Event Logging
Merritt Agreement	Stericycle – Waste management and training
Merritt Agreement	Steritech – Pest prevention
Merritt Agreement	Tharaldson Energy Group – Energy consultants
Merritt Agreement	Universal Vending – Vending machines

A-1

EXHIBIT B

LAND

The land referred to herein is situated in the State of California, County of San Francisco, City of San Francisco, and described as follows:

Parcel A:

Commencing at a point of intersection of the southerly line of Clay Street, as it now exists and the westerly line of Battery Street; running thence southerly and along said line of Battery Street 94.50 feet to the northerly line of Commercial Street; thence at a right angle westerly along said line of Commercial Street 163.50 feet; thence at a right angle northerly 94.50 feet to the southerly line of Clay Street, as it now exists; thence at a right angle easterly along said line of Clay Street 163.50 feet to the point of commencement.

Being part of Beach and Water Block No. 36.

Parcel B:

A non-exclusive easement for construction and maintenance on the terms and conditions therein, as granted to One Embarcadero Center West, a California Limited Partnership by an instrument recorded April 2, 1986, Series No. D785482, Book E57, Official Records, Page 1546, and amended by document recorded February 25, 1988, Book E537, Official Records, Page 1155, Series No. E134700, over the land described as follows:

Beginning on the southerly line of Clay Street , as Clay Street now exists , at a point distant thereon 109.50 feet easterly from the easterly line of Sansome Street; thence easterly along said line of Clay Street 2.00 feet; thence at a right angle southerly 94.50 feet to the northerly line of Commercial Street; thence at a right angle westerly along said line of Commercial Street 2.00 feet; thence at a right angle northerly 94.50 feet to the point of beginning.

Being a portion of 50 Vara Block No. 36

Parcel C:

Beginning on the southerly line of Clay Street, as Clay Street now exists, at a point distant thereon 163.50 feet westerly from the westerly line of Battery Street; thence westerly along said line of Clay Street 0.198 feet to a point distant thereon 111.50 feet easterly from the easterly line of Sansome Street; thence southerly at a right angle to said line of Clay Street 94.50 feet to the northerly line of Commercial Street; thence at a right angle easterly along said line of Commercial Street 0.198 feet to a point distant thereon 163.50 feet westerly from the westerly line of Battery Street, thence northerly at a right angle to said line of Commercial Street 94.50 feet to the point of beginning.

Being a portion of Beach and Water Block No. 36.

Parcel D:

B-1

Non-exclusive easements as set forth in paragraphs 1,2,3,4,5 and 8 of that certain Declaration 0f Reciprocal Covenants, Conditions and Restrictions with Grant of Easements dated March 28, 1988 and recorded March 29, 1988, as Document No. E149871, in Book E560, Page 784, Official Records , as set forth in paragraph 9 thereof.

Assessor’s Lot 20, Block 229

(End of Legal Description)

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EXHIBIT C

PENDING OR THREATENED LITIGATION

PENDING OR THREATENED LITIGATION

ADA Lawsuit (January 13, 2010) Mutual Release and Settlement – Connie Arnold v Starwood Hotels & Resorts Worldwide, Inc; Le Meridien San Francisco, HEI San Francisco LLC Case No. C 08-05406 JSW

Slip and Fall (April 2007) Michael Kalish case, claim #GC2007252446 – Litigation relating to a slip and fall case is continuing, responses to requests for discovery are ongoing. Plaintiff has demanded the deposition of the front desk manager by Dec 7, 2010

General Liability – Open Claim – 4/18/10 – Premises/Operations Liability ($1,250)

General Liability – Open Claim – 7/21/10 – Claimant fell on job site ($3,505)

Workers Comp – Open Claim – 1/1/08 – Strain ($1,500)

Workers Comp – Open Claim – 8/19/08 – Strain ($30,419)

Workers Comp – Open Claim – 2/3/09 – Sprain ($144,838)

Workers Comp – Open Claim – 11/1/08 – Strain ($18,968)

Workers Comp – Open Claim – 12/19/09 – Strain ($63,673)

C-1

EXHIBIT D

NOTICES OF VIOLATION

None.

D-1

EXHIBIT E

SCHEDULE OF LEASES AND RELATED MATTERS

None.

E-1

EXHIBIT F

LEASED OR 3^RD PARTY OWNED FIXTURES & TANGIBLE PERSONAL PROPERTY

1	ATM Leasing	ATM Systems Corporation
2	Mailing System	MailFinance
3	Copiers	Xerox

F-1

EXHIBIT G

HOTEL CONTRACTS AND RELATED MATTERS

1	Parking Lease	450 Sansome, LLC
2	Window Cleaning	Alert Building Maintenance
3	Purchasing	Avendra
4	Purchasing - Beverage	Avendra LLC/Pepsico
5	Kitchen Exhaust Cleaning	Chemical Exhaust
6	Minibar Management Services	Club Minibar
7	Fire Alarm Service/Maintenance	Detection Logic
8	Music Service	DMX Music
9	Armored Car	Dunbar Armored
10	Valet Parking	Five Star Parking
11	General Janitorial Services	GMG Janitorial Inc
12	Waste Disposal	Golden Gate Disposal Company
13	Guest Limousine	Grand Limousine Inc.
14	Interior/Exterior Landscaping	Greenscapes
15	High Speed Internet Access	Guesttek
16	Dry-Cleaning/Laundry	InterCity Metro Cleaners
17	Fabric Chair Cleaning	North American Chemdry
18	In-Room TV	On Command
19	Restaurant Reservation System	Open Table
20	Elevator Agreement	Otis
21	Interior Plants	Plant Domaine
22	AV Services	PSAV
23	Linen Laundry	Royal Laundry
24	STAR Report	Smith Travel
25	Food Safety Kitchen Audits	Steritech
26	Energy Consultants	Tharaldson Energy Group, Inc.
27	Hotelligence Report	TravelClick

G-1

EXHIBIT H

FORM OF DEED

STATEMENT OF TAX DUE AND REQUEST

THAT TAX DECLARATION NOT BE MADE A PART

OF THE PERMANENT RECORD

IN THE OFFICE OF THE COUNTY RECORDER

(PURSUANT TO CAL. REV. AND TAX CODE SECTION 11932)

To: Registrar – Recorder

City and County of San Francisco

Request is hereby made in accordance with the provision of the Documentary Transfer Tax Act that the amount of tax due not be shown on the original document which names:

HEI SAN FRANCISCO LLC,

a Delaware limited liability company

as Transferor

and

                                         ,

a                                         

as Transferee

The property described in the accompanying document is located in the City and County of San Francisco, State of California.

The amount of tax due to the City and County of San Francisco on the accompanying document is                      and No/100 Dollars ($            .00) and is computed on full value of the property conveyed.

TRANSFEROR:
HEI SAN FRANCISCO LLC, a Delaware limited liability company
By:
	Name:
	Title:

H-1

NOTE: After the permanent record is made, this form will be affixed to the conveying document and returned with it.

H-2

RECORDING REQUESTED BY

AND WHEN RECORDED RETURN TO:

Attention:

MAIL TAX STATEMENTS TO:

Attention:

SPACE ABOVE THIS LINE RESERVED FOR RECORDER’S USE

GRANT DEED

The undersigned grantor declares:

Documentary Transfer Tax is shown by an unrecorded separate affidavit pursuant to Section 11932 of the Revenue and Taxation Code.

City and County of San Francisco

FOR VALUABLE CONSIDERATION, receipt of which is hereby acknowledged, HEI SAN FRANCISCO LLC, a Delaware limited liability company (“Grantor”), hereby GRANTS to                     , a                     , (“Grantee”), the following described real property (“Property”) located in the City and County of San Francisco, State of California.

See Exhibit “A” attached hereto and incorporated herein by this reference.

This conveyance is made subject to all matters of record, all matters which an inspection or survey of the Property would disclose, real property taxes which are a lien but not yet due and payable and all applicable laws and ordinances.

H-3

IN WITNESS WHEREOF, this Grant Deed has been executed and delivered this      day of                     , 2010.

GRANTOR:
HEI SAN FRANCISCO LLC, a Delaware limited liability company
By:
	Name:
	Title:

ACKNOWLEDGEMENT

STATE OF	)
	)	ss.
COUNTY OF	)

On                             , 2010, before me,                                                                                                               , Notary Public,

personally appeared                                                                                                                                                                         ,

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

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

WITNESS my hand and official seal.

Signature of Notary Public Place Notary Seal Above

H-4

EXHIBIT A

LEGAL DESCRIPTION

H-5

EXHIBIT I

FORM OF BILL OF SALE

THIS BILL OF SALE (“Bill of Sale”) is made as of                     , 20     by and between HEI SAN FRANCISCO LLC, a Delaware limited liability company (“Seller”), and                     , a                     (“Purchaser”).

W I T N E S S E T H:

WHEREAS, Seller and Purchaser are parties to a certain Agreement for Sale and Purchase of Hotel dated as of                     , 2010 (the “P&S”) with respect to, inter alia, the sale and purchase of Seller’s interest in the Fixtures and Tangible Personal Property, Consumables, Inventory, Operating Equipment, IT Systems, and Cash-On-Hand, not including Excluded Assets and subject in each case to the Permitted Exceptions (the “Personal Property”);

WHEREAS, under the P&S, Seller agreed to sell all of its right, title and interest in and to the Personal Property to Purchaser; and

WHEREAS, all capitalized terms used herein but not defined herein shall have the meanings given them in the P&S;

NOW THEREFORE, for Ten Dollars ($10.00) and other good and valuable consideration, the mutual receipt and legal sufficiency of which are hereby acknowledged, Seller and Purchaser agree as follows:

1. Sale to Assignee. Seller does hereby sell, assign, transfer, grant, convey and set over unto Purchaser all of its right, title, and interest in, to, and under the Personal Property to have and to hold the same unto Purchaser, its legal representatives, successors and assigns, forever.

2. Disclaimer. Seller makes no warranty (express or implied) as to the condition of the Personal Property or its merchantability or fitness for a particular purpose. In addition, and notwithstanding anything contained in this Bill of Sale to the contrary, this Bill of Sale is subject to all disclaimers and qualifications by Seller and all encumbrances set forth in the P&S with respect to said Personal Property, including, without limitation, those set forth in Section 2.02 and Section 5.03 and all such disclaimers, qualifications, and encumbrances are hereby incorporated in this Bill of Sale by reference and made a part of this Bill of Sale. By its acceptance of this Bill of Sale, Purchaser acknowledges that it has fully inspected the Personal Property and accepts the same in its present use and “AS IS” condition.

3. Miscellaneous. This Bill of Sale shall be binding upon and enforceable against, and shall inure to the benefit of, Seller and Purchaser and their respective successors and assigns. This Bill of Sale shall be governed by, construed under, and interpreted and enforced in accordance with the laws of the State of California. This Bill of Sale may be executed in several counterparts, each of which will be deemed an original, and all of such counterparts together shall constitute one and the same instrument.

I-1

IN WITNESS WHEREOF, Seller has executed this Bill of Sale, as a sealed instrument, as of the date first above written.

SELLER:

[SELLER SIGNATURE BLOCK]

PURCHASER:

[PURCHASER SIGNATURE BLOCK]

I-2

EXHIBIT J

Assignment and Assumption Agreement

This Assignment and Assumption Agreement (this “Agreement”) is made as of                     , 20     by and between HEI SAN FRANCISCO LLC, a Delaware limited liability company (“Assignor”), and                     , a                      (“Assignee”).

W I T N E S S E T H:

WHEREAS, Assignor and Assignee are parties to a certain Agreement for Sale and Purchase of Hotel dated as of                     , 2010 (the “P&S”) with respect to, inter alia, the sale and purchase of Assignor’s interest in, and to the extent assignable, the Hotel Contracts, Space Leases, Bookings, Permits and Miscellaneous Hotel Assets (collectively, the “Assigned Assets”);

WHEREAS, under the P&S, Assignor agreed to sell all of its right, title and interest in and to the Assigned Assets to Assignee, and Assignee agreed to assume prospectively all of Assignor’s obligations and liabilities with respect to the Assigned Assets; and

WHEREAS, all capitalized terms used herein but not defined herein shall have the meanings given them in the P&S;

NOW THEREFORE, for Ten Dollars ($10.00) and other good and valuable consideration, the mutual receipt and legal sufficiency of which are hereby acknowledged, Assignor and Assignee agree as follows:

1. Assignment to Assignee. Effective as of the date hereof (the “Effective Date”), Assignor does hereby sell, assign, transfer, grant, convey and set over unto Assignee all of its right, title, and interest in, to and under the Assigned Assets to have and to hold the same unto Assignee, its legal representatives, successors and assigns, forever.

2. Assumption by Assignee. Assignee does hereby accept the sale, assignment, transfer, grant and conveyance of the Assigned Assets and hereby assumes and agrees to observe and perform all of Assignor’s obligations, terms, covenants and conditions of the Assigned Assets accruing after the date hereof.

3. Disclaimer. Assignee acknowledges that Assignor has not made and does not make any representations or warranties of any kind whatsoever, oral or written, express or implied, with respect to any of the Assigned Assets, except as set forth in the P&S. In addition, and notwithstanding anything contained in this Assignment to the contrary, this Assignment is subject to all disclaimers and qualifications by Assignor and all encumbrances set forth in the P&S with respect to the Assigned Assets, including, without limitation, those set forth in Sections 2.02 and 5.03 of the P&S, and all such disclaimers, qualifications, and encumbrances are hereby incorporated into this Agreement by reference and made a part of this Assignment.

J-1

4. Indemnity. Assignor hereby agrees to protect, save, defend, indemnify and hold harmless Assignee against and from any and all Liabilities arising out of or relating to events occurring prior to the Effective Date and arising out of the Assignor’s obligations as seller under the P&S. Assignee hereby agrees to protect, save, defend, indemnify and hold harmless Assignor against and from any and all Liabilities arising out of or relating to events occurring on or after the Effective Date and arising out of Assignee’s obligations as buyer under the P&S.

5. Miscellaneous. This Agreement shall be binding upon and enforceable against, and shall inure to the benefit of, Assignor and Assignee and their respective successors and assigns. This Agreement shall be governed by, construed under, and interpreted and enforced in accordance with, the laws of the State of California. This Agreement may be executed in several counterparts, each of which will be deemed an original, and all of such counterparts together shall constitute one and the same instrument.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement, as a sealed instrument, as of the date first above written.

SELLER:

[SELLER SIGNATURE BLOCK]

PURCHASER:

[PURCHASER SIGNATURE BLOCK]

J-2

EXHIBIT K

CERTIFICATION OF NON FOREIGN STATUS

Section 1445 of the Internal Revenue Code provides that a transferee of a United States real property interest must withhold the tax if the transferor is a foreign person. For U.S. tax purposes (including Section 1445), the owner of a disregarded entity (which has legal title to a U.S. real property interest under local law) will be the transferor of the property and not the disregarded entity. To inform the transferee,                     , a                      (“Transferee”) that withholding of tax is not required upon the disposition of a United States real property interest by HEI SAN FRANCISCO LLC, a Delaware limited liability company (“Owner”) and with the knowledge that the Transferee will rely upon the following statements, the undersigned hereby certifies the following on behalf of HEI Hospitality Fund Holdings II, L.P., a Delaware limited partnership (“Transferor”):

1. Transferor is not a foreign corporation, foreign partnership, foreign trust, foreign estate, or foreign person (as those terms are defined in the Internal Revenue Code and Income Tax Regulations);

2. Transferor is not a disregarded entity as defined in Section 1.1.45(b)(2)(iii) of the Code;

3. Transferor’s United States employer identification number/social security number is 20-4436211; and

4. Transferor’s office address is c/o HEI Hospitality LLC, 101 Merritt 7 Corporate Park, Third Floor, Norwalk, CT 06851.

Transferor understands that this certification may be disclosed to the Internal Revenue Service by Transferee and that any false statement contained herein could be punished by fine, imprisonment, or both.

Under penalties of perjury, I declare that I have examined this Certification and to the best of my knowledge and belief it is true, correct and complete, and I further declare that I have authority to sign this document on behalf of Transferor.

Dated:                     , 2010

TRANSFEROR:

[TRANSFEROR SIGNATURE BLOCK]

K-1

EXHIBIT L

1099 Designation

This AGREEMENT is made this              day of                     , 20     by and between the TRANSFEROR, HEI SAN FRANCISCO LLC, a Delaware limited liability company, with an address of c/o HEI Hospitality LLC, 101 Merritt 7 Corporate Park, Third Floor, Norwalk, CT 06851, the TRANSFEREE,                     , a                     , with an address of                                         , and the DESIGNEE,                     , a                     , with an address of                                         .

The TRANSFEROR is the present Seller of certain property (the “Premises”) known as the Embassy Suites Hotel located at 333 Battery Street, San Francisco, CA 94111, as more particularly described in that certain Agreement for Sale and Purchase of Hotel (the “Agreement”) dated                     , by and between the TRANSFEROR and the TRANSFEREE.

In order to comply with information reporting requirements provided by Section 6045(e) of the Internal Revenue Code of 1986, as amended, and the Treasury Regulations thereunder, the parties hereby agree as follows:

(i) to designate DESIGNEE as the party who shall be responsible for reporting to the Internal Revenue Service (the “IRS”) the sale of the Premises on IRS form 1099-S;

(ii) to provide DESIGNEE with the information necessary to complete Form 1099-S;

(iii) that DESIGNEE shall provide all parties to this transaction with a copy of the IRS Form 1099-S filed with the IRS and with any documentation used to complete IRS Form 1099-S;

(iv) that DESIGNEE shall not be liable for the actions taken under this Agreement or for the consequences of those actions, except as they may be the result of gross negligence or willful misconduct on the part of the DESIGNEE; and

(v) that all parties to this Agreement will retain this Agreement for four (4) years following December 31 of the calendar year in which the date of closing occurs.

[TRANSFEROR SIGNATURE BLOCK]

[TRANSFEREE SIGNATURE BLOCK]

[DESIGNEE SIGNATURE BLOCK]

L-1

EXHIBIT M

ALLOCATION OF TRANSACTION COSTS AND EXPENSES

Purchaser

1. 100% of all state, county and city transfer taxes; provided, however, that if the Deed is recorded at any time after December 16, 2010, then each of Purchaser and Seller shall pay 50% of the incremental increase, if any, then in effect with respect to any such transfer taxes resulting from the recording of the Deed after such date.

2. 50% of all recording and filing charges, other than for the discharge of Seller Encumbrances

2. 50% of all escrow and closing charges

3. The incremental premiums charged by the Title Company for the ALTA extended coverage portion of the Title Policy and the cost of all endorsements

4. All lenders’ fees related to any financing to be obtained or assumed by Purchaser

5. The cost of the Survey and any updates thereto

6. 50% of all sales and use taxes due and payable in connection with the transfer of the Personal Property

7. The fees and expenses of its own attorneys and accountants

Seller

1. 50% of all escrow and closing charges

2. The premium charged by the Title Company for the CLTA standard coverage portion of the Title Policy

3. 50% of all recording and filing charges, and all recording and filing charges for the discharge of Seller Encumbrances

4. 50% of all sales and use taxes due and payable in connection with the transfer of the Personal Property

5. The fees and expenses of its own attorneys and accountants

M-1

EXHIBIT N

ADA RELATED CONTRACTS

• Tricorp/Hearn Construction, Inc. – Dated 9/30/2010; together with all change orders

• Louis H. Felthouse Architect, Inc. – Dated 4/8/2010, together with all change orders

N-1

EX-10.23

Exhibit 10.23

  Loan Number: 1003587

LOAN AGREEMENT

Dated as of December 15, 2010

by and among

CHSP SAN FRANCISCO LLC,

as Borrower,

THE FINANCIAL INSTITUTIONS PARTY HERETO

AND THEIR ASSIGNEES UNDER SECTION 13.6,

as Lenders,

and

WELLS FARGO BANK, NATIONAL ASSOCIATION,

as Administrative Agent

TABLE OF CONTENTS

ARTICLE I		Definitions		1
	Section 1.1		Definitions	1
	Section 1.2		GAAP; General References; Pacific Time	18
ARTICLE II		Credit Facility		18
	Section 2.1		Loan	18
	Section 2.2		Rates and Payment of Interest on Loans	19
	Section 2.3		Assumptions Regarding Funding by Lenders	20
	Section 2.4		Repayment of Loans	20
	Section 2.5		Prepayments	20
	Section 2.6		Late Charges	21
	Section 2.7		Continuation	21
	Section 2.8		Conversion	22
	Section 2.9		Notes	22
	Section 2.10		Extension of Maturity Date	22
	Section 2.11		Funds Transfer Disbursements	23
ARTICLE III		Payments, Fees and Other General Provisions		24
	Section 3.1		Payments	24
	Section 3.2		Pro Rata Treatment	25
	Section 3.3		Sharing of Payments, Etc	25
	Section 3.4		Several Obligations	26
	Section 3.5		Fees	26
	Section 3.6		Computations	26
	Section 3.7		Usury	26
	Section 3.8		Statements of Account	26
	Section 3.9		Defaulting Lenders	26
	Section 3.10		Taxes; Foreign Lenders	28
	Section 3.11		Lender Failure to Make Payment	29
ARTICLE IV		INTENTIONALLY OMITTED		29
ARTICLE V		Yield Protection, Etc		29
	Section 5.1		Additional Costs; Capital Adequacy	29
	Section 5.2		Suspension of LIBOR Loans	31
	Section 5.3		Illegality	31
	Section 5.4		Compensation	32
	Section 5.5		Treatment of Affected Loans	32
	Section 5.6		Change of Lending Office	33
	Section 5.7		Assumptions Concerning Funding of LIBOR Loans	33

- i -

ARTICLE VI		Conditions Precedent		33
	Section 6.1		Initial Conditions Precedent	33
	Section 6.2		Conditions Precedent to All Loans	35
	Section 6.3		Conditions as Covenants	35
ARTICLE VII		Representations and Warranties		36
	Section 7.1		Representations and Warranties	36
	Section 7.2		Survival of Representations and Warranties, Etc	40
ARTICLE VIII			Affirmative Covenants	41
	Section 8.1		Preservation of Existence and Similar Matters	41
	Section 8.2		Compliance with Applicable Law	41
	Section 8.3		Maintenance of Property	41
	Section 8.4		Conduct of Business	41
	Section 8.5		Insurance	41
	Section 8.6		Payment of Taxes and Claims	42
	Section 8.7		Books and Records; Inspections	42
	Section 8.8		Use of Proceeds	43
	Section 8.9		Environmental Matters	43
	Section 8.10		Further Assurances	43
	Section 8.11		Initial Budgets	43
	Section 8.12		Intentionally Omitted	43
	Section 8.13		Enforcement of Obligations under Purchase Agreement	43
	Section 8.14		Operation of the Property	43
	Section 8.15		Completion of Renovations	44
	Section 8.16		Mechanics Liens	44
	Section 8.17		Proceedings	45
	Section 8.18		Correction of Defects	45
	Section 8.19		Personal Property	45
	Section 8.20		FF&E Reserve Accounts	45
ARTICLE IX		Information		46
	Section 9.1		Monthly Reporting	46
	Section 9.2		DSCR Certificate	46
	Section 9.3		Other	46
	Section 9.4		Electronic Delivery of Certain Information	47
	Section 9.5		Public/Private Information	47
	Section 9.6		USA Patriot Act Notice; Compliance	47
ARTICLE X		Negative Covenants		48
	Section 10.1		Negative Pledge	48

- ii -

	Section 10.2		Restrictions on Intercompany Transfers	48
	Section 10.3		Merger, Consolidation, Sales of Assets and Other Arrangements	48
	Section 10.4		Plans	48
	Section 10.5		Fiscal Year	48
	Section 10.6		Modifications of Organizational Documents	48
	Section 10.7		Material Contracts	48
	Section 10.8		Indebtedness	48
	Section 10.9		Transactions with Affiliates	49
	Section 10.10		Environmental Matters	49
	Section 10.11		Derivatives Contracts	49
	Section 10.12		No Sale or Encumbrance	50
ARTICLE XI		Default		50
	Section 11.1		Events of Default	50
	Section 11.2		Remedies Upon Event of Default	53
	Section 11.3		Intentionally Omitted	54
	Section 11.4		Marshaling; Payments Set Aside	54
	Section 11.5		Allocation of Proceeds	54
	Section 11.6		Intentionally Omitted	54
	Section 11.7		Rescission of Acceleration by Requisite Lenders	55
	Section 11.8		Performance by Administrative Agent	55
	Section 11.9		Rights Cumulative	55
ARTICLE XII		The Administrative Agent		55
	Section 12.1		Appointment and Authorization	55
	Section 12.2		Wells Fargo as Lender	56
	Section 12.3		Collateral Matters; Protective Advances	56
	Section 12.4		Post Foreclosure Plans	57
	Section 12.5		Approvals of Lenders	58
	Section 12.6		Notice of Events of Default	58
	Section 12.7		Administrative Agent’s Reliance	58
	Section 12.8		Indemnification of Administrative Agent	59
	Section 12.9		Lender Credit Decision, Etc	59
	Section 12.10		Successor Administrative Agent	60
ARTICLE XIII		Miscellaneous		61
	Section 13.1		Notices	61
	Section 13.2		Expenses	62
	Section 13.3		Stamp, Intangible and Recording Taxes	62
	Section 13.4		Setoff	62

- iii -

Section 13.5	Litigation; Jurisdiction; Other Matters; Waivers	63
Section 13.6	Successors and Assigns	64
Section 13.7	Amendments and Waivers	65
Section 13.8	Nonliability of Administrative Agent and Lenders	66
Section 13.9	Confidentiality	66
Section 13.10	Indemnification	67
Section 13.11	Termination; Survival	69
Section 13.12	Severability of Provisions	69
Section 13.13	GOVERNING LAW	69
Section 13.14	Counterparts	69
Section 13.15	Obligations with Respect to Loan Parties	69
Section 13.16	Intentionally Omitted	69
Section 13.17	Limitation of Liability	69
Section 13.18	Entire Agreement	69
Section 13.19	Construction	70
Section 13.20	Headings	70

SCHEDULE I	Commitments
SCHEDULE 7.1.(b)	Ownership Structure
SCHEDULE 7.1.(f)	Properties
SCHEDULE 7.1.(g)	Indebtedness and Guaranties
SCHEDULE 7.1.(h)	Material Contracts
SCHEDULE 7.1.(i)	Litigation
SCHEDULE 7.1.(s)	Affiliate Transactions
SCHEDULE 13.1	Notices
EXHIBIT A	Form of Assignment and Assumption Agreement	A-1
EXHIBIT B	Form of DSCR Certificate	B-1
EXHIBIT C	Form of Note	C-1
EXHIBIT D	Intentionally Omitted	D-1
EXHIBIT E	Form of Notice of Continuation	E-1
EXHIBIT F	Form of Notice of Conversion	F-1
EXHIBIT G	Form of Transfer Authorizer Designation Form

- iv -

THIS LOAN AGREEMENT (this “Agreement”) is made and entered into as of December 15, 2010, by and among CHSP SAN FRANCISCO LLC, a Delaware limited liability company (the “Borrower”), each of the financial institutions initially a signatory hereto together with their successors and assignees under Section 13.6. (the “Lenders”) and WELLS FARGO BANK, NATIONAL ASSOCIATION, in its capacity as administrative agent for itself and the Lenders (the “Administrative Agent”).

WHEREAS, the Borrower has requested a loan from the Administrative Agent and the Lenders, and the Administrative Agent and the Lenders have agreed to make a loan to the Borrower, in the principal amount of up to $71,500,000, subject to the terms and conditions contained herein.

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

ARTICLE I DEFINITIONS

Section 1.1 Definitions.

In addition to terms defined elsewhere herein, the following terms shall have the following meanings for the purposes of this Agreement:

“Account” shall have the meaning ascribed to such term in the Uniform Commercial Code.

“Additional Costs” has the meaning given that term in Section 5.1(b).

“Adjusted NOI” means, as determined for the applicable twelve-month period, the Net Operating Income of the Property, subject to the following adjustments:

(a) management fees shall equal the greater of (i) three percent (3%) of Gross Operating Revenues or (ii) the actual management fees paid under the applicable Management Agreement;

(b) reserves for FF&E and capital items shall equal the greater of (i) four percent (4%) of Gross Operating Revenues or (ii) the amount of reserves required under the Management Agreement or Franchise Agreement; and

(c) franchise fees shall equal the greater of (i) four percent (4%) of Gross Operating Revenues or (ii) the actual franchise fees payable under the applicable Franchise Agreement.

For purposes of determining Adjusted NOI for the first twelve months after the Agreement Date, Net Operating Income during any portion of such period that occurred prior to the acquisition of the Property by Borrower (adjusted as provided above), shall be based on the operating statements received from the prior owner or operator (subject to the reasonable approval of Administrative Agent.

“Administrative Agent” means Wells Fargo Bank, National Association or any successor Administrative Agent appointed pursuant to Section 12.10.

“Administrative Questionnaire” means the Administrative Questionnaire completed by each Lender and delivered to the Administrative Agent in a form supplied by the Administrative Agent to the Lenders from time to time.

“Affiliate” means, with respect to any Person, (a) any Person which is directly or indirectly controlled by, controls or is under common control with such Person, (b) any other Person who is an officer, director, trustee or employee of, or partner in, such Person or any Person referred to in the preceding clause (a), (c) any other Person who is a member of the immediate family of such Person or of any Person referred to in the preceding clauses (a) and (b), and (d) any other Person that is a trust solely

- 1 -

for the benefit of one or more Persons referred to in clause (c) and of which such Person is sole trustee; provided, however, in no event shall the Administrative Agent or any Lender or any of their respective Affiliates be an Affiliate of Borrower. For purposes of this definition, “control” (including with correlative meanings, the terms “controlling”, “controlled by” and “under common control with”) means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise.

“Agreement Date” means the date as of which this Agreement is dated.

“Applicable Law” means all constitutions, statutes, rules, regulations and orders of any Governmental Authority, including all orders and decrees of all courts, tribunals and arbitrators applicable to a Loan Party, the Property, the Administrative Agent or any Lender, as the context requires.

“Applicable Margin” means three and three-quarters percent (3.75%).

“Appraisal” means an M.A.I. appraisal of the Property commissioned by and addressed to the Administrative Agent (acceptable to the Administrative Agent as to form and substance), prepared by a qualified, independent appraiser acceptable to the Administrative Agent, having at least the minimum qualifications required under Applicable Law governing the Administrative Agent and the Lenders, including without limitation, FIRREA, and determining both the “as is” market value of the Property as between a willing buyer and a willing seller and the “stabilized value” of the Property.

“Appraised Value” means the “as is” market value of the Property as reflected in the most recent Appraisal as the same may have been reasonably adjusted (but not increased) by the Administrative Agent based upon its internal review of such Appraisal which is based on criteria and factors then generally used and considered by the Administrative Agent in determining the value of similar real estate properties, which review shall be conducted prior to acceptance of such Appraisal by the Administrative Agent.

“Approved Operating Budget” has the meaning given that term in Section 9.3(b).

“Approved Capital Budget” has the meaning given that term in Section 9.3(b).

“Approved Marketing Plan” has the meaning given that term in Section 9.3(b).

“Approved Fund” means any Fund that is administered or managed by (a) a Lender, (b) an Affiliate of a Lender, or (c) an entity or an Affiliate of any entity that administers or manages a Lender.

“Assignee” has the meaning given that term in Section 13.6(c).

“Assignment and Assumption” means an Assignment and Assumption Agreement among a Lender, an Assignee and the Administrative Agent, substantially in the form of Exhibit A.

“Bankruptcy Code” means the Bankruptcy Code of 1978, as amended.

“Bankruptcy Event” means, with respect to any Person, such Person becomes the subject of a bankruptcy or insolvency proceeding (under the Bankruptcy Code or otherwise), or has had a receiver, conservator, trustee, administrator, custodian, assignee for the benefit of creditors or similar Person charged with the reorganization or liquidation of its business appointed for it, or, in the good faith determination of the Administrative Agent, has taken any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any such proceeding or appointment, provided that a Bankruptcy Event shall not result solely by virtue of any ownership interest, or the acquisition of any ownership interest, in such Person by a Governmental Authority or instrumentality thereof, provided, further, that such ownership interest does not result in or provide such Person with immunity from the jurisdiction of courts within the United States or from the enforcement of judgments or writs of attachment on its assets

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or permit such Person (or such Governmental Authority or instrumentality) to reject, repudiate, disavow or disaffirm any contracts or agreements made by such Person.

“Base Rate” means the LIBOR Market Index Rate; provided, that if for any reason the LIBOR Market Index Rate is unavailable, Base Rate shall mean the per annum rate of interest equal to the Federal Funds Rate plus one and one-half of one percent (1.50%).

“Base Rate Loan” means a Loan bearing interest at a rate based on the Base Rate.

“Benefit Arrangement” means at any time an employee benefit plan within the meaning of Section 3(3) of ERISA which is not a Plan or a Multiemployer Plan and which is maintained or otherwise contributed to by any member of the ERISA Group.

“Book Value” means, with respect to any asset, the book value of such asset as determined in accordance with GAAP.

“Borrower” has the meaning set forth in the introductory paragraph hereof and shall include the Borrower’s permitted assigns.

“Borrower’s Agents” means James Francis, Douglas Vicari, Graham Wootten and any other individuals designated by Borrower in writing to Administrative Agent.

“Business Day” means (i) a day of the week (but not a Saturday, Sunday or holiday) on which the offices of the Administrative Agent in San Francisco, California are open to the public for carrying on substantially all of the Administrative Agent’s business functions, and (ii) if such day relates to a LIBOR Loan, any such day that is also a day on which dealings in Dollars are carried on in the London interbank market. Unless specifically referenced in this Agreement as a Business Day, all references to “days” shall be to calendar days.

“Capitalized Lease Obligation” means obligations under a lease (to pay rent or other amounts under any lease or other arrangement conveying the right to use) that are required to be capitalized for financial reporting purposes in accordance with GAAP. The amount of a Capitalized Lease Obligation is the capitalized amount of such obligation determined in accordance with GAAP.

“Chattel Paper” shall have the meaning ascribed to such term in the Uniform Commercial Code.

“Collateral” means any real or personal property directly or indirectly securing any of the Obligations or any other obligation of a Person under or in respect of any Loan Document to which it is a party, and includes, without limitation, the “Subject Property” under and as defined in the Security Deed, the Management Agreement and all other property subject to a Lien created by a Security Document.

“Commitment” means, as to each Lender, such Lender’s obligation to make Loans pursuant to Section 2.1 in an amount up to, but not exceeding the amount set forth for such Lender on Schedule I as such Lender’s “Commitment Amount” (as the same may be assigned in accordance with this Agreement) in each case as the same may be reduced from time to time pursuant to the terms of this Agreement.

“Commitment Percentage” means, as to each Lender, the ratio, expressed as a percentage, of (a) the amount of such Lender’s Commitment to (b) the aggregate amount of the Commitments of all Lenders hereunder; provided, however, that if at the time of determination the Commitments have been terminated or been reduced to zero, the “Commitment Percentage” of each Lender with a Commitment shall be the “Commitment Percentage” of such Lender in effect immediately prior to such termination or reduction.

“Continue”, “Continuation” and “Continued” each refers to the continuation of a LIBOR Loan from one Interest Period to another Interest Period pursuant to Section 2.7.

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“Contracts” means all contracts, agreements and warranties relating to or governing the use, occupancy, operation, management, hotel group, name or chain affiliation and/or guest reservation, repair and service of the Property, and all leases, occupancy agreements, concession agreements, and commitments to provide rooms or facilities in the future, including all amendments, modifications and supplements to any of the foregoing.

“Convert”, “Conversion” and “Converted” each refers to the conversion of a Loan of one Type into a Loan of another Type pursuant to Section 2.8.

“Credit Event” means any of the following: (a) the making (or deemed making) of any Loan, (b) the Conversion of a Loan and (c) the Continuation of a LIBOR Loan.

“Credit Party” means the Administrative Agent or any other Lender.

“Debt Service Coverage Ratio” means the ratio of (a) Adjusted NOI for the most recent twelve-month period for which information is available (provided, the Borrower’s failure to timely deliver financial information as required herein shall not render such information unavailable) to (b) Pro Forma Debt Service calculated as of the date of determination.

“Default” means any event that, with the giving of notice, the lapse of time, or both, would constitute an Event of Default.

“Defaulting Lender” means any Lender that (a) has failed, within two (2) Business Days of the date required to be funded or paid, to (i) fund any portion of its Loans, or (ii) pay over to any Credit Party any other amount required to be paid by it hereunder, unless, in the case of clause (i) above, such Lender notifies the Administrative Agent in writing that such failure is the result of such Lender’s good faith determination that a condition precedent to funding (specifically identified and including the particular default, if any) has not been satisfied, (b) has notified the Borrower or any Credit Party in writing, or has made a public statement to the effect, that it does not intend or expect to comply with any of its funding obligations under this Agreement (unless such writing or public statement indicates that such position is based on such Lender’s good faith determination that a condition precedent (specifically identified and including the particular default, if any) to funding a loan under this Agreement cannot be satisfied) or generally under other agreements in which it commits to extend credit, (c) has failed, within three Business Days after request by a Credit Party, acting in good faith, to provide a certification in writing from an authorized officer of such Lender that it will comply with its obligations (and is financially able to meet such obligations) to fund prospective Loans, provided that such Lender shall cease to be a Defaulting Lender pursuant to this clause (c) upon such Credit Party’s receipt of such certification in form and substance satisfactory to it and the Administrative Agent, or (d) has become the subject of a Bankruptcy Event.

“Derivatives Contract” means (a) any transaction (including any master agreement, confirmation or other agreement with respect to any such transaction) now existing or hereafter entered into by the Borrower or any of its Subsidiaries (i) which is a rate swap transaction, swap option, basis swap, forward rate transaction, commodity swap, commodity option, equity or equity index swap, equity or equity index option, bond option, interest rate option, foreign exchange transaction, cap transaction, floor transaction, collar transaction, currency swap transaction, cross-currency rate swap transaction, currency option, credit protection transaction, credit swap, credit default swap, credit default option, total return swap, credit spread transaction, repurchase transaction, reverse repurchase transaction, buy/sell-back transaction, securities lending transaction, weather index transaction or forward purchase or sale of a security, commodity or other financial instrument or interest (including any option with respect to any of these transactions) or (ii) which is a type of transaction that is similar to any transaction referred to in clause (i) above that is currently, or in the future becomes, recurrently entered into in the financial markets (including terms and conditions incorporated by reference in such agreement) and which is a forward, swap, future, option or other derivative on one or more rates, currencies, commodities, equity securities or other equity instruments, debt securities or other debt instruments, economic indices or

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measures of economic risk or value, or other benchmarks against which payments or deliveries are to be made, and (b) any combination of these transactions.

“Derivatives Termination Value” means, in respect of any one or more Derivatives Contracts, after taking into account the effect of any legally enforceable netting agreement or provision relating thereto, (a) for any date on or after the date such Derivatives Contracts have been terminated or closed out, the termination amount or value determined in accordance therewith, and (b) for any date prior to the date such Derivatives Contracts have been terminated or closed out, the then-current mark-to-market value for such Derivatives Contracts, determined based upon one or more mid-market quotations or estimates provided by any recognized dealer in Derivatives Contracts (which may include the Administrative Agent, any Lender or any Affiliate of any thereof).

“Dollars” or “$” means the lawful currency of the United States of America.

“DSCR Certificate” means a report in substantially the form of Exhibit B, certified by a senior officer of the Borrower, setting forth the calculations required to establish compliance with the Minimum DSCR Hurdle as of a specified date, all in form and detail satisfactory to the Administrative Agent.

“Effective Date” means the later of (a) the Agreement Date and (b) the date on which all of the conditions precedent set forth in Section 6.1 shall have been fulfilled or waived.

“Eligible Assignee” means (a) a Lender, (b) an Affiliate of a Lender, (c) an Approved Fund and (d) any other Person (other than a natural person) approved by (i) the Administrative Agent and (ii) unless a Default or Event of Default exists, the Borrower (each such approval not to be unreasonably withheld or delayed); provided that notwithstanding the foregoing, “Eligible Assignee” shall not include the Borrower or any of the Borrower’s Affiliates or Subsidiaries.

“Environmental Laws” means any Applicable Law relating to environmental protection or the manufacture, storage, remediation, disposal or clean up of Hazardous Materials including, without limitation, the following: Clean Air Act, 42 U.S.C. § 7401 et seq.; Federal Water Pollution Control Act, 33 U.S.C. § 1251 et seq.; Solid Waste Disposal Act, as amended by the Resource Conservation and Recovery Act, 42 U.S.C. § 6901 et seq.; Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. § 9601 et seq.; National Environmental Policy Act, 42 U.S.C. § 4321 et seq.; regulations of the Environmental Protection Agency, any applicable rule of common law and any judicial interpretation thereof relating primarily to the environment or Hazardous Materials, and any analogous or comparable state or local laws, regulations or ordinances that concern Hazardous Materials or protection of the environment.

“Equipment” shall have the meaning ascribed to such term in the Uniform Commercial Code.

“Equity Interest” means, with respect to any Person, any share of capital stock of (or other ownership or profit interests in) such Person, any warrant, option or other right for the purchase or other acquisition from such Person of any share of capital stock of (or other ownership or profit interests in) such Person whether or not certificated, any security convertible into or exchangeable for any share of capital stock of (or other ownership or profit interests in) such Person or warrant, right or option for the purchase or other acquisition from such Person of such shares (or such other interests), and any other ownership or profit interest in such Person (including, without limitation, partnership, member or trust interests therein), whether voting or nonvoting, and whether or not such share, warrant, option, right or other interest is authorized or otherwise existing on any date of determination.

“Equity Issuance” means any issuance or sale by a Person of any Equity Interest in such Person.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

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“ERISA Group” means the Borrower, any Subsidiary of Guarantors and all members of a controlled group of corporations and all trades or businesses (whether or not incorporated) under common control which, together with the Borrower or any Subsidiary of Guarantors, are treated as a single employer under Section 414 of the Internal Revenue Code.

“Event of Default” means any of the events specified in Section 11.1, provided that any requirement for notice or lapse of time or any other condition has been satisfied.

“Federal Funds Rate” means, for any period, a fluctuating interest rate per annum equal for each day during such period to the weighted average of the rates on overnight Federal Funds transactions with members of the Federal Reserve System arranged by Federal Funds brokers, as published for such day (or, if such day is not a Business Day, for the immediately preceding Business Day) by the Federal Reserve Bank of New York, or, if such rate is not so published for any day which is a Business Day, the average of the quotations for such day on such transactions received by the Administrative Agent from three (3) Federal Funds brokers of recognized standing selected by the Administrative Agent.

“Fee Letter” means that certain fee letter dated as of December 15, 2010, by and between the Borrower and the Administrative Agent.

“Fees” means the fees and commissions provided for or referred to in Section 3.5. and any other fees payable by the Borrower hereunder, under any other Loan Document or under the Fee Letter.

“FF&E” means all fixtures, furnishings, equipment, furniture, and other items of tangible personal property now or hereafter located on the Property or used in connection with the use, occupancy, operation and maintenance of all or any part of the Property, other than stocks of food and other supplies held for consumption in normal operation but including, without limitation, appliances, machinery, equipment, signs, artwork, office furnishings and equipment, guest room furnishings, and specialized equipment for kitchens, laundries, bars, restaurants, public rooms, health and recreational facilities, dishware, all partitions, screens, awnings, shades, blinds, floor coverings, hall and lobby equipment, heating, lighting, plumbing, ventilating, refrigerating, incinerating, elevators, escalators, air conditioning and communication plants or systems with appurtenant fixtures, vacuum cleaning systems, call or beeper systems, security systems, sprinkler systems and other fire prevention and extinguishing apparatus and materials; reservation system computer and related equipment; all equipment, manual, mechanical or motorized, for the construction, maintenance, repair and cleaning of parking areas, walks, underground ways, truck ways, driveways, common areas, roadways, highways and streets; and the vehicles; and as, further described in the Security Deed for the Property and UCC filings.

“FF&E Reserve” has the meaning given that term in Section 8.20.

“FF&E Reserve Account” means Borrower’s account No. 4122115561 at Wells Fargo Bank, denominated “CHSP San Francisco LLC, Pledgor, Wells Fargo Bank, N.A., as Pledgee of - FF&E Reserve Account.”

“FIRREA” means the Financial Institution Recovery, Reform and Enforcement Act of 1989, as amended.

“First Extended Maturity Date” means December 15, 2012.

“First Option to Extend” has the meaning given that term in Section 2.10.

“Fourth Extended Maturity Date” means December 15, 2015.

“Fourth Option to Extend” has the meaning given that term in Section 2.10.

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“Franchise Agreement” means the Conversion License Agreement, dated April 25, 2006, executed by Franchisor, as “Licensor”, and HEI San Francisco LLC, a Delaware limited liability company (“HEI”), as “Licensee”, as amended by First Amendment to License Agreement between Franchisor and HEI dated November 1, 2007, together with the Starwood Technology and Reservations Services Agreement dated April 25, 2006 executed by Franchisor and HEI, as such documents are assigned from HEI to the Operating Lessee pursuant to that certain Assignment and Assumption Agreement and Second Amendment dated December 15, 2010.

“Franchisor” means Starwood (M) International, Inc., a Delaware corporation.

“Fund” means any Person (other than a natural person) that is (or will be) engaged in making, purchasing, holding or otherwise investing in commercial loans and similar extensions of credit in the ordinary course of its business.

“GAAP” means United States generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as may be approved by a significant segment of the accounting profession, which are applicable to the circumstances as of the date of determination.

“General Intangibles” shall have the meaning ascribed to such term in the Uniform Commercial Code.

“Governmental Approvals” means all authorizations, consents, approvals, licenses and exemptions of, registrations and filings with, and reports to, all Governmental Authorities.

“Governmental Authority” means any national, state or local government (whether domestic or foreign), any political subdivision thereof or any other governmental, quasi governmental, judicial, administrative, public or statutory instrumentality, authority, body, agency, bureau, commission, board, department or other entity (including, without limitation, the Federal Deposit Insurance Corporation, the Comptroller of the Currency or the Federal Reserve Board, any central bank or any comparable authority) or any arbitrator with authority to bind a party at law.

“Gross Operating Revenues” means, for any period of time, without duplication, all income and proceeds of sales of every kind (whether in cash or on credit and computed on an accrual basis) received by Borrower, Operating Lessee or Manager for the use, occupancy or enjoyment of the Property or the sale of any goods, services or other items sold on or provided from the Property in the ordinary course of operation of the Property, including, without limitation, all income received from tenants, transient guests, lessees (other than communications equipment lessees or service providers), licensees and concessionaires and other services to guests at the Property, and the proceeds from business interruption insurance, but excluding the following: (i) any excise, sales or use taxes or similar government charges collected directly from patrons or guests, or as a part of the sales price of any goods, services or displays, such as gross receipts, admission, cabaret or similar or equivalent taxes; (ii) receipts from condemnation awards or sales in lieu of or under threat of condemnation; (iii) proceeds of insurance (other than business interruption insurance); (iv) other allowances and deductions as provided by the Uniform System in determining the sum contemplated by this definition, by whatever name, it may be called; (v) proceeds of sales, whether dispositions of capital assets, FF&E or Equipment (other than sales of Inventory in the ordinary course of business); (vi) gross receipts received by tenants, lessees (other than the Operating Lessee), licensees or concessionaires of the Property; (vii) consideration received at the Property for hotel accommodations, goods and services to be provided at other hotels although arranged by, for or on behalf of, and paid over to, Manager; (viii) tips, service charges and gratuities collected for the benefit of employees; (ix) proceeds of any financing; (x) working capital provided by the Borrower or the Operating Lessee; (xii) amounts collected from guests or patrons of the Property on behalf of Property tenants and other third parties; (xii) the value of any goods or services in excess of actual amounts paid (in cash or services) provided by the Manager on a complimentary or discounted basis; and (xiii) other income or proceeds resulting other than from the use or occupancy of

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the Property, or any part thereof, or other than from the sale of goods, services or other items sold on or provided from the Property in the ordinary course of business. Gross Operating Revenues shall be reduced by credits or refunds to guests at the Property.

“Guarantor” or “Guarantors” means, individually or collectively, Chesapeake Lodging Trust, a Maryland real estate investment trust, and Chesapeake Lodging, L.P., a Delaware limited partnership.

“Guarantor Credit Agreement” means that certain Credit Loan Agreement dated July 30, 2010 by and among Chesapeake Lodging, L.P., as Borrower, the lenders thereto and Wells Fargo Bank, National Association, as administrative agent, as amended, restated or otherwise modified from time to time.

“Guaranty”, “Guaranteed” or to “Guarantee” as applied to any obligation means and includes: (a) a guaranty (other than by endorsement of negotiable instruments for collection in the ordinary course of business), directly or indirectly, in any manner, of any part or all of such obligation, or (b) an agreement, direct or indirect, contingent or otherwise, and whether or not constituting a guaranty, the practical effect of which is to assure the payment or performance (or payment of damages in the event of nonperformance) of any part or all of such obligation whether by: (i) the purchase of securities or obligations, (ii) the purchase, sale or lease (as lessee or lessor) of property or the purchase or sale of services primarily for the purpose of enabling the obligor with respect to such obligation to make any payment or performance (or payment of damages in the event of nonperformance) of or on account of any part or all of such obligation, or to assure the owner of such obligation against loss, (iii) the supplying of funds to or in any other manner investing in the obligor with respect to such obligation, (iv) repayment of amounts drawn down by beneficiaries of letters of credit, or (v) the supplying of funds to or investing in a Person on account of all or any part of such Person’s obligation under a Guaranty of any obligation or indemnifying or holding harmless, in any way, such Person against any part or all of such obligation. As the context requires, “Guaranty” shall also mean the Partial Payment and Limited Guaranty.

“Hazardous Materials” means all or any of the following: (a) substances that are defined or listed in, or otherwise classified pursuant to, any applicable Environmental Laws as “hazardous substances”, “hazardous materials”, “hazardous wastes”, “toxic substances” or any other formulation intended to define, list or classify substances by reason of deleterious properties such as ignitability, corrosivity, reactivity, carcinogenicity, reproductive toxicity, “TCLP” toxicity, or “EP toxicity”; (b) oil, petroleum or petroleum derived substances, natural gas, natural gas liquids or synthetic gas and drilling fluids, produced waters and other wastes associated with the exploration, development or production of crude oil, natural gas or geothermal resources; (c) any explosives or any radioactive materials; (d) asbestos in any form; and (e) toxic mold.

“Hazardous Materials Indemnity Agreement” means the Hazardous Materials Indemnity Agreement of even date herewith executed by the Borrower and the Guarantor in favor of the Administrative Agent for its benefit and the benefit of the Lenders, as the same may be supplemented, amended or modified from time to time.

“Indebtedness” means, with respect to the Borrower and the Operating Lessee, at the time of computation thereof, all of the following (without duplication): (a) all obligations of such Person in respect of money borrowed; (b) all obligations of such Person (other than (x) trade payables incurred in the ordinary course of business and not more than sixty (60) days past due and (y) equipment leases entered into in the ordinary course of business), whether or not for money borrowed (i) represented by notes payable, or drafts accepted, in each case representing extensions of credit, (ii) evidenced by bonds, debentures, notes or similar instruments, or (iii) constituting purchase money indebtedness, conditional sales contracts, title retention debt instruments or other similar instruments, upon which interest charges are customarily paid or that are issued or assumed as full or partial payment for property; (c) all reimbursement obligations of such Person under or in respect of any letters of credit or acceptances (whether or not the same have been presented for payment); (d) net obligations under any Derivative Contract (which shall be deemed to have an amount equal to the Derivatives Termination Value thereof at such time but in no event shall be less than zero); and (e) all Indebtedness of other Persons which

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(i) such Person has Guaranteed or is otherwise recourse to such Person or (ii) is secured by a Lien on any property of such Person.

“Initial Disbursement” has the meaning given that term in Section 2.1(a).

“Intellectual Property” has the meaning given that term in Section 7.1(t).

“Interest Period” means, with respect to each LIBOR Loan, each period commencing on the date such LIBOR Loan is made, or in the case of the Continuation of a LIBOR Loan the last day of the preceding Interest Period for such Loan, and ending on the numerically corresponding day in the first, third or sixth calendar month thereafter, as the Borrower may select in a Notice of Continuation or Notice of Conversion, as the case may be, except that each Interest Period that commences on the last Business Day of a calendar month (or on any day for which there is no numerically corresponding day in the appropriate subsequent calendar month) shall end on the last Business Day of the appropriate subsequent calendar month. Notwithstanding the foregoing: (i) if any Interest Period would otherwise end after the Maturity Date, such Interest Period shall end on the Maturity Date; and (ii) each Interest Period that would otherwise end on a day which is not a Business Day shall end on the immediately following Business Day (or, if such immediately following Business Day falls in the next calendar month, on the immediately preceding Business Day).

“Internal Revenue Code” means the Internal Revenue Code of 1986, as amended.

“Inventory” shall have the meaning ascribed to such term in the Uniform Commercial Code, and including within the term items which would be entered on a balance sheet under the line items for “Inventories” or “China, glassware, silver, linen and uniforms” under the Uniform Systems of Accounts.

“Investment” means, with respect to any Person, any acquisition or investment (whether or not of a controlling interest) by such Person, whether by means of any of the following: (a) the purchase or other acquisition of any Equity Interest in another Person, (b) a loan, advance or extension of credit to, capital contribution to, Guaranty of Indebtedness of, or purchase or other acquisition of any Indebtedness of, another Person, including any partnership or joint venture interest in such other Person, or (c) the purchase or other acquisition (in one transaction or a series of transactions) of assets of another Person that constitute the business or a division or operating unit of another Person. Any commitment to make an Investment in any other Person, as well as any option of another Person to require an Investment in such Person, shall constitute an Investment. Except as expressly provided otherwise, for purposes of determining compliance with any covenant contained in a Loan Document, the amount of any Investment shall be the amount actually invested, without adjustment for subsequent increases or decreases in the value of such Investment.

“Lender” means each financial institution from time to time party hereto as a “Lender,” together with its respective successors and permitted assigns. With respect to matters requiring the consent or approval of all Lenders, at any given time, all then existing Defaulting Lenders will be disregarded and excluded, and, for voting purposes only, “all Lenders” shall be deemed to mean “all Lenders other than Defaulting Lenders.”

“Lending Office” means, for each Lender and for each Type of Loan, the office of such Lender specified in such Lender’s Administrative Questionnaire or in the applicable Assignment and Assumption Agreement, or such other office of such Lender as such Lender may notify the Administrative Agent in writing from time to time.

“LIBOR” means, for the Interest Period for any LIBOR Loan, the rate of interest, rounded up to the nearest whole multiple of one-hundredth of one percent (.01%), obtained by dividing (i) the rate of interest, rounded upward to the nearest whole multiple of one-sixteenth of one percent (0.0625%), referred to as the BBA (British Bankers’ Association) LIBOR rate as set forth by any service selected by the Administrative Agent that has been nominated by the British Bankers’ Association as an authorized

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information vendor for the purpose of displaying such rate for deposits in U.S. Dollars at approximately 9:00 a.m. Pacific time, two (2) Business Days prior to the date of commencement of such Interest Period for purposes of calculating effective rates of interest for loans or obligations making reference thereto, for an amount approximately equal to the applicable LIBOR Loan and for a period of time approximately equal to such Interest Period by (ii) a percentage equal to 1 minus the stated maximum rate (stated as a decimal) of all reserves, if any, required to be maintained with respect to Eurocurrency funding (currently referred to as “Eurocurrency liabilities”) as specified in Regulation D of the Board of Governors of the Federal Reserve System (or against any other category of liabilities which includes deposits by reference to which the interest rate on LIBOR Loans is determined or any applicable category of extensions of credit or other assets which includes loans by an office of any Lender outside of the United States of America), provided, however, that in no event shall LIBOR be less than two percent (2%). Any change in such stated maximum rate shall result in a change in LIBOR on the date on which such change in such stated maximum rate becomes effective.

“LIBOR Loan” means a Loan bearing interest at a rate based on LIBOR.

“LIBOR Market Index Rate” means, for any day, LIBOR as of that day for one-month deposits in U.S. Dollars at approximately 9:00 a.m. Pacific time for such day (or if such day is not a Business Day, the immediately preceding Business Day), provided, however, that in no event shall the LIBOR Market Index Rate be less than two percent (2%). The LIBOR Market Index Rate shall be determined on a daily basis.

“Licenses” means all certifications, permits, licenses and approvals, including certificates of completion, certificates of occupancy, and food and beverage and liquor licenses, required for the legal use, occupancy and operation the Property.

“Lien” as applied to the property of any Person means: (a) any security interest, encumbrance, mortgage, deed to secure debt, deed of trust, assignment of leases or rents, pledge, lien, hypothecation, assignment, charge or lease constituting a Capitalized Lease Obligation, conditional sale or other title retention agreement, or other security title or encumbrance of any kind in respect of any property of such Person, or upon the income, rents or profits therefrom; (b) any arrangement, express or implied, under which any property of such Person is transferred, sequestered or otherwise identified for the purpose of subjecting the same to the payment of Indebtedness or performance of any other obligation in priority to the payment of the general, unsecured creditors of such Person; (c) the filing of any financing statement under the UCC or its equivalent in any jurisdiction (other than a financing statement filed by a “true” lessor pursuant to Section 9408 (or a successor section) of the UCC); and (d) any agreement by such Person to grant, give or otherwise convey any of the foregoing.

“Loan” or “Loans” means (a) the aggregate amount disbursed hereunder, (b) a disbursement of proceeds under Section 2.1, or (c) a portion of the principal outstanding hereunder, as the context requires.

“Loan Document” means this Agreement, each Note, the Partial Payment and Limited Guaranty, each Security Document and each other document or instrument now or hereafter executed and delivered by a Loan Party in connection with, pursuant to or relating to this Agreement (other than the Fee Letter).

“Loan Party” means each of the Borrower, the Operating Lessee, the Guarantors, and each other Person who guarantees all or a portion of the Obligations and/or who pledges any Collateral to secure all or a portion of the Obligations.

“Loan-to-Value Ratio” means the ratio, expressed as a percentage, of the aggregate outstanding principal amount of the Loan, as of the date of determination, to the Appraised Value of the Property.

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“Major Renovations” means Renovations (including all Renovations that are part of an overall plan or that are similar or related to other Renovations, even though not performed at the same time) that (a) have resulted in, or are reasonably expected to result in, more than twenty-five percent (25%) of the rooms at the Property not being available for occupancy for a period of more than sixty (60) days, (b) have a projected cost that exceeds twenty percent (20%) of the Book Value of the Property (as determined prior to the commencement of such Renovations) or (c) have resulted in, or are reasonably expected to result in, a reduction of Net Operating Income of the Property of twenty percent (20%) or more during any period of twelve (12) consecutive months (as compared to the period of twelve (12) consecutive months immediately prior to the commencement of such Renovations).

“Major Tenant Lease” means a Tenant Lease that demises more than 5,000 rentable square feet of the Property.

“Management Agreement” means the Management Agreement, dated December 15, 2010, executed by the Operating Lessee, as “Owner”, and Manager, as “Operator”.

“Management Agreement Assignment/Subordination” means, with respect to the Property, a document or documents, in form and substance satisfactory to Administrative Agent, pursuant to which (a) the Operating Lessee assigns the Management Agreement for the Property to Administrative Agent for its benefit and the benefit of the Lenders as Collateral and (b) the Manager acknowledges and agrees to such assignment and subordinates the Management Agreement to the applicable Security Deed on terms and conditions reasonably satisfactory to Administrative Agent.

“Manager” means Merritt Hospitality, LLC, a Delaware limited liability company.

“Material Adverse Effect” means a materially adverse effect on (a) the business, assets, liabilities, condition (financial or otherwise), results of operations or business prospects of the Loan Parties taken as a whole, (b) the ability of the Borrower or any other Loan Party to perform its material obligations under any Loan Document to which it is a party, (c) the validity or enforceability of any of the Loan Documents, (d) the rights and remedies of the Lenders and the Administrative Agent under any of the Loan Documents, or (e) the Property.

“Material Contract” means (a) the Management Agreement, (b) the Franchise Agreement, (c) the Operating Lease, (d) any Major Tenant Lease, (e) any material agreement relating to parking for the Property, and (f) any other contract or other arrangement (other than Loan Documents), whether written or oral, to which the Borrower or any other Loan Party is a party as to which the breach, nonperformance, cancellation or failure to renew by any party thereto could reasonably be expected to have a Material Adverse Effect.

“Material Plan” means at any time a Plan or Plans having aggregate Unfunded Liabilities in excess of $5,000,000.

“Maturity Date” means the Original Maturity Date, as it may be extended to the First Extended Maturity Date, the Second Extended Maturity Date, the Third Extended Maturity Date and the Fourth Extended Maturity Date pursuant to Section 2.10.

“Minimum DSCR Hurdle” means the following ratio:

Effective Date	Minimum DSCR Hurdle
At First Extension Option	1.15:1.00
From June 30, 2012 through, but not including, the Second Extended Maturity Date	1.20:1.00

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From the Second Extended Maturity Date through, but not including, June 30, 2013	1.30:1.00
From June 30, 2013 through, but not including, the Third Extended Maturity Date	1.35:1.00
From and after the Third Extended Maturity Date	1.40:1.00

If, however, any portion of the Earnout is funded by the Lenders, then (i) from and after the date on which any portion of the Earnout is funded through, but not including, the Third Extended Maturity Date, the Minimum DSCR Hurdle shall mean 1.35, and (ii) from and after the Third Extended Maturity Date, the Minimum DSCR Hurdle shall be 1.40.

“Multiemployer Plan” means at any time a multiemployer plan within the meaning of Section 4001(a)(3) of ERISA to which any member of the ERISA Group is then making or accruing an obligation to make contributions or has within the preceding five plan years made contributions, including for these purposes any Person which ceased to be a member of the ERISA Group during such five year period.

“Negative Pledge” means, with respect to a given asset, any provision of a document, instrument or agreement (other than any Loan Document) which prohibits or purports to prohibit the creation or assumption of any Lien on such asset as security for Indebtedness of the Person owning such asset or any other Person; provided, however, that an agreement that conditions a Person’s ability to encumber its assets upon the maintenance of one or more specified ratios that limit a Person’s ability to encumber its assets but that do not generally prohibit the encumbrance of its assets, or the encumbrance of specific assets, shall not constitute a Negative Pledge.

“Net Operating Income” means the amount by which the Gross Operating Revenues exceed the Operating Expenses.

“Note” means a promissory note of the Borrower substantially in the form of Exhibit C, payable to the order of a Lender in a principal amount equal to the amount of such Lender’s Commitment.

“Notice of Continuation” means a notice substantially in the form of Exhibit E (or such other form reasonably acceptable to the Administrative Agent and containing the information required in such Exhibit) to be delivered to the Administrative Agent pursuant to Section 2.7 evidencing the Borrower’s request for the Continuation of a LIBOR Loan.

“Notice of Conversion” means a notice substantially in the form of Exhibit F (or such other form reasonably acceptable to the Administrative Agent and containing the information required in such Exhibit) to be delivered to the Administrative Agent pursuant to Section 2.8 evidencing the Borrower’s request for the Conversion of a Loan from one Type to another Type.

“Notice of Responsible Officers” means a certificate of incumbency or notice from the Borrower to the Administrative Agent, in a form satisfactory to the Administrative Agent, identifying the officers of the Borrower that have authority to deliver Notices of Conversion, Notices of Continuation and other notices or requests specified in this Agreement.

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“Obligations” means, individually and collectively: (a) the aggregate principal balance of, and all accrued and unpaid interest on, all Loans; and (b) all other indebtedness, liabilities, obligations, covenants and duties of the Borrower or any of the other Loan Parties owing to the Administrative Agent or any Lender of every kind, nature and description, under or in respect of this Agreement or any of the other Loan Documents, including, without limitation, the Fees and indemnification obligations, whether direct or indirect, absolute or contingent, due or not due, contractual or tortious, liquidated or unliquidated, and whether or not evidenced by any promissory note.

“Operating Expenses” means, for any period of time, all costs and expenses of maintaining, conducting and supervising the operation of the Property which are properly attributable to the period under consideration under the Borrower’s system of accounting, including without limitation:

(i) the cost of all food and beverages sold or consumed and of all Inventory;

(ii) salaries and wages of personnel employed at the Property, including costs of payroll taxes and employee benefits and all other expenses not otherwise specifically referred to in this paragraph which are referred to as “Administrative and General Expenses” in the Uniform System;

(iii) the cost of all other goods and services obtained by Manager in connection with its operation of the Property including, without limitation, heat and utilities, office supplies and all services performed by third parties, including leasing expenses in connection with telephone and data processing equipment;

(iv) the cost of repairs to and maintenance of the Property (excluding capital expenditures);

(v) insurance premiums for all insurance maintained with respect to the Property, including without limitation, property damage insurance, public liability insurance, and such business interruption or other insurance as may be provided for protection against claims, liabilities and losses arising from the use and operation of the Property and losses incurred with respect to deductibles applicable to the foregoing types of insurance;

(vi) workers’ compensation insurance or insurance required by similar employee benefits acts;

(vii) all personal property taxes, real estate taxes, assessments, and any other ad valorem taxes imposed on or levied in connection with the Property (less refunds, offsets or credits thereof, and interest thereon, if any, received during the period in question) and all other taxes, assessments and other charges (other than federal, state or local income taxes and franchise taxes or the equivalent) payable by or assessed against Manager, the Borrower or the Operating Lessee with respect to the operation of the Property and water and sewer charges;

(viii) all sums deposited into any maintenance or capital expenditure reserve, including the amount of the applicable FF&E Reserve;

(ix) legal fees related to the operation of the Property;

(x) the costs and expenses of technical consultants and specialized operational experts for specialized services in connection with non-recurring work on operational, functional, decorating, design or construction problems and activities, including the fees (if any) of Manager in connection therewith, such as ADA studies, life safety reviews, and energy efficiency studies;

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(xi) all expenses for marketing the Property, including all expenses of advertising, sales promotion and public relations activities;

(xii) utility taxes and other taxes (as those terms are defined in the Uniform System) and municipal, county and state license and permit fees;

(xiii) all fees (including base and incentive fees), assessments, royalties and charges payable under the Management Agreement and Franchise Agreement;

(xiv) reasonable reserves for uncollectible accounts receivable;

(xv) credit card fees, travel agent commissions and other third-party reservation fees and charges;

(xvi) all parking charges and other expenses associated with revenues received by the Manager related to parking operations, including valet services;

(xvii) common expenses charges, common area maintenance charges and similar costs and expenses;

(xviii) rent payments under any ground lease; and

(xix) any other cost or charge classified as an Operating Expense or an Administrative and General Expense under the Uniform System in the Management Agreement unless specifically excluded under the provisions of this Agreement.

Operating Expenses shall not include (a) depreciation and amortization except as otherwise provided in this Agreement; (b) the cost of any item specified in the Management Agreement to be provided at Manager’s sole expense; (c) debt service; (d) capital repairs and other expenditures which are normally treated as capital expenditures under the Uniform System or GAAP; or (e) other recurring or non-recurring ownership costs such as partnership or limited liability company administration and costs of changes to business and liquor licenses.

“Operating Lease” means, the Lease Agreement, dated December 15, 2010, executed by the Borrower and the Operating Lessee.

“Operating Lessee” means CHSP TRS San Francisco LLC, a Delaware limited liability company.

“Option to Extend” means each of the Borrower’s options to extend the Maturity Date as provided in Section 2.10.

“Original Maturity Date” means December 15, 2011.

“Partial Payment and Limited Guaranty” means the Partial Payment and Limited Guaranty, of even date herewith, executed by Guarantors in favor of Administrative Agent, for the benefit of Lenders, as the same may be amended, restated or replaced from time to time.

“Participant” has the meaning given that term in Section 13.6(b).

“PBGC” means the Pension Benefit Guaranty Corporation and any successor agency.

“Permitted Liens” means, with respect to any asset or property of a Person, (a) Liens securing taxes, assessments and other charges or levies imposed by any Governmental Authority (excluding any Lien imposed pursuant to any of the provisions of ERISA or pursuant to any Environmental Laws) which are not at the time required to be paid or discharged under Section 8.6; (b) Liens consisting of deposits or

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pledges made, in the ordinary course of business, in connection with, or to secure payment of, obligations under workers’ compensation, unemployment insurance or similar Applicable Laws; (c) Liens consisting of encumbrances in the nature of zoning restrictions, easements, and rights or restrictions of record on the use of real property, which do not materially detract from the value of the Property or impair the intended use thereof in the business of such Person; (d) Liens imposed by laws, such as mechanics’ liens and other similar liens, arising in the ordinary course of business which secure payment of obligations not more than sixty (60) days past due; (e) the rights of tenants under leases or subleases not interfering with the ordinary conduct of business of such Person; (f) Liens in favor of the Administrative Agent for its benefit and the benefit of the Lenders; (g) Liens permitted under any Security Documents; (h) judgment Liens not in excess of $250,000 (exclusive of (i) any amounts that are duly bonded to the satisfaction of Administrative Agent in its reasonable discretion or (ii) any amount covered by insurance to the satisfaction of Administrative Agent in its reasonable discretion); (i) deposits or pledges to secure bids, tenders, contracts (other than contracts for payment of money), leases, regulatory or statutory obligations, surety and appeal bonds and other obligations of like nature arising in the ordinary course of business; (j) Liens on leased personal property to secure the lease obligations associated with such property; (k) the Operating Lease and (l) any other matters from time to time that are not material and that are approved in writing by Administrative Agent, but specifically excluding Liens securing monetary obligation.

“Person” means any natural person, corporation, limited partnership, general partnership, joint stock company, limited liability company, limited liability partnership, joint venture, association, company, trust, bank, trust company, land trust, business trust or other organization, whether or not a legal entity, or any other nongovernmental entity, or any Governmental Authority.

“Personal Property” shall mean the Accounts, Chattel Paper, Contracts, Equipment, General Intangibles, Inventory, vehicles and cash on hand at the Property.

“PIP” means a property improvement plan for the Property prepared by a franchisor or manager of the Property.

“Plan” means at any time an employee pension benefit plan (other than a Multiemployer Plan) which is covered by Title IV of ERISA or subject to the minimum funding standards under Section 412 of the Internal Revenue Code and either (i) is maintained, or contributed to, by any member of the ERISA Group for employees of any member of the ERISA Group or (ii) has at any time within the preceding five years been maintained, or contributed to, by any Person which was at such time a member of the ERISA Group for employees of any Person which was at such time a member of the ERISA Group.

“Post-Default Rate” means, in respect of any principal of the Loan that is not paid when due, the rate otherwise applicable plus an additional four percent (4%) per annum and with respect to any other Obligation that is not paid when due (whether at stated maturity, by acceleration, by optional or mandatory prepayment or otherwise) a rate per annum equal to Base Rate as in effect from time to time plus the Applicable Margin, plus four percent (4%).

“Principal Office” means the Administrative Agent’s office at Winston-Salem Loan Center, One West Fourth Street, 3^rd Floor, Winston-Salem, NC 27101.

“Proceedings” has the meaning given that term in Section 8.16.

“Property” means the improved real property located at 333 Battery Street, San Francisco, California, owned or to be owned by the Borrower and leased to the Operating Lessee.

“Pro Forma Debt Service” means, on any day, the Dollar amount equal to the greater of (a) annual debt service (interest only) on the outstanding principal balance of the Loans, assuming an all-in rate equal to the greater of (i) 10% or (ii) the highest actual rate at which interest is then payable on the Loans or (b) annual debt service on the outstanding principal balance of the Loans, assuming an interest

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rate equal to the then prevailing rate on United States Treasury bonds, plus 3.50%, with a maturity of ten (10) years and a 25-year amortization schedule.

“Pro Rata Share” means, as to each Lender, the ratio, expressed as a percentage of (a) the amount of such Lender’s Commitment to (b) the sum of the aggregate amount of the Commitments of all Lenders; provided, however, that if at the time of determination the Commitments have terminated or been reduced to zero, the “Pro Rata Share” of each Lender shall be the ratio, expressed as a percentage of (A) the sum of the unpaid principal amount of all outstanding Loans owing to such Lender as of such date to (B) the sum of the aggregate unpaid principal amount of all outstanding Loans of all Lenders as of such date.

“Protective Advance” means all sums expended as determined by the Administrative Agent to be necessary or appropriate after the Borrower fails to do so when required: (a) to protect the validity, enforceability, perfection or priority of the Liens in any of the Collateral and the instruments evidencing the Obligations; (b) to prevent the value of any Collateral from being materially diminished; or (c) to protect any of the Collateral from being materially damaged, impaired, mismanaged or taken, including, without limitation, any amounts expended in connection therewith in accordance with Section 13.2.

“Regulatory Change” means, with respect to any Lender, any change effective after the Agreement Date in Applicable Law (including without limitation, Regulation D of the Board of Governors of the Federal Reserve System) or the adoption or making after such date of any interpretation, directive or request applying to a class of banks, including such Lender, of or under any Applicable Law (whether or not having the force of law and whether or not failure to comply therewith would be unlawful) by any Governmental Authority or monetary authority charged with the interpretation or administration thereof or compliance by any Lender with any request or directive regarding capital adequacy.

“REIT” means a Person qualifying for treatment as a “real estate investment trust” under the Internal Revenue Code.

“Renovations” means any renovations, remodeling or other capital improvements at the Property (whether performed pursuant to a PIP or otherwise), but not routine maintenance or repairs.

“Requisite Lenders” means, as of any date, Lenders (which must include the Lender then acting as Administrative Agent) having at least 66 2/3% of the aggregate amount of the Commitments, or, if the Commitments have been terminated or reduced to zero, Lenders holding at least 66 2/3% of the aggregate principal amount of the outstanding Loans; provided that in determining such percentage at any given time, all then existing Defaulting Lenders will be disregarded and excluded, and the Pro Rata Shares shall be redetermined, for voting purposes only, to exclude the Pro Rata Shares of such Defaulting Lenders.

“Second Extended Maturity Date” means December 15, 2013.

“Second Option to Extend” has the meaning given that term in Section 2.10.

“Securities Act” means the Securities Act of 1933, as amended from time to time, together with all rules and regulations issued thereunder.

“Security Deed” means the Deed of Trust with Absolute Assignment of Leases and Rents Security Agreement and Fixture Filing, executed by the Borrower and the Operating Lessee, together as trustor, to American Securities Company, as trustee, in favor of Administrative Agent for its benefit and the benefit of the Lenders, as beneficiary, as the same may be amended, restated or replaced from time to time.

“Security Document” means the Security Deed, the Management Agreement Assignment/Subordination, and any security agreement, pledge agreement, financing statement, or other

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document, instrument or agreement creating, evidencing or perfecting the Administrative Agent’s Liens in any of the Collateral.

“Solvent” means, when used with respect to any Person, that (a) the fair value and the fair salable value of its assets (excluding any Indebtedness due from any affiliate of such Person) are each in excess of the fair valuation of its total liabilities (including all contingent liabilities); (b) such Person is able to pay its debts or other obligations in the ordinary course as they mature; and (c) such Person has capital not unreasonably small to carry on its business and all business in which it proposes to be engaged.

“Subordinated Debt” means Indebtedness for money borrowed of any of the Loan Parties that is subordinated in right of payment and otherwise to the Loans and the other Obligations in a manner satisfactory to the Administrative Agent in its sole and absolute discretion.

“Subsidiary” means, for any Person, any corporation, partnership, limited liability company or other entity of which at least a majority of the Equity Interests having by the terms thereof ordinary voting power to elect a majority of the board of directors or other individuals performing similar functions of such corporation, partnership, limited liability company or other entity (without regard to the occurrence of any contingency) is at the time directly or indirectly owned or controlled by such Person or one or more Subsidiaries of such Person or by such Person and one or more Subsidiaries of such Person, and shall include all Persons the accounts of which are consolidated with those of such Person pursuant to GAAP.

“Taxes” has the meaning given that term in Section 3.10.

“Tenant Lease” means any lease, sublease or other similar occupancy agreement for any portion of the Property.

“Third Extended Maturity Date” means December 15, 2014.

“Third Option to Extend” has the meaning given that term in Section 2.10.

“Title Policy” has the meaning given that term in Section 6.1(a)(xvii).

“Transfer Authorizer Designation Form” means a form substantially in the form of Exhibit G to be delivered to the Administrative Agent pursuant to Section 6.1(a)(x), as the same may be amended, restated or modified from time to time with the prior written approval of the Administrative Agent.

“Type” with respect to any Loan, refers to whether such Loan is a LIBOR Loan or a Base Rate Loan.

“UCC” means the Uniform Commercial Code as in effect in any applicable jurisdiction.

“Unfunded Liabilities” means, with respect to any Plan at any time, the amount (if any) by which (a) the value of all benefit liabilities under such Plan, determined on a plan termination basis using the assumptions prescribed by the PBGC for purposes of Section 4044 of ERISA, exceeds (b) the fair market value of all Plan assets allocable to such liabilities under Title IV of ERISA (excluding any accrued but unpaid contributions), all determined as of the then most recent valuation date for such Plan, but only to the extent that such excess represents a potential liability of a member of the ERISA Group to the PBGC or any other Person under Title IV of ERISA.

“Uniform System” means the Uniform System of Accounts for the Lodging Industry, Tenth Revised Edition, 2006, as published by the Educations Institute of the American Hotel & Motel Association, as revised from time to time to the extent such revision has been or is in the process of being generally implemented within such Uniform System of Accounts.

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“Wells Fargo” means Wells Fargo Bank, National Association, and its successors and assigns.

“Wholly Owned Subsidiary” means any Subsidiary of a Person in respect of which all of the Equity Interests (other than, in the case of a corporation, directors’ qualifying shares) are at the time directly or indirectly owned or controlled by such Person or one or more other Subsidiaries of such Person or by such Person and one or more other Subsidiaries of such Person.

Section 1.2 GAAP; General References; Pacific Time.

(a) Unless otherwise indicated, all accounting terms, ratios and measurements shall be interpreted or determined in accordance with GAAP as in effect on the Agreement Date; provided that, if at any time any change in GAAP would affect the computation of any financial ratio or requirement set forth in any Loan Document, and either the Borrower or the Requisite Lenders shall so request, the Administrative Agent, the Lenders and the Borrower shall negotiate in good faith to amend such ratio or requirement to preserve the original intent thereof in light of such change in GAAP (subject to the approval of the Requisite Lenders); provided further that, until so amended, (i) such ratio or requirement shall continue to be computed in accordance with GAAP prior to such change therein and (ii) the Borrower shall provide to the Administrative Agent and the Lenders financial statements and other documents required under this Agreement or as reasonably requested hereunder setting forth a reconciliation between calculations of such ratio or requirement made before and after giving effect to such change in GAAP. Notwithstanding the use of GAAP, the calculation of liabilities shall NOT include any fair value adjustments to the carrying value of liabilities to record such liabilities at fair value pursuant to electing the fair value option election under FASB ASC 825-10-25 (formerly known as FAS 159, The Fair Value Option for Financial Assets and Financial Liabilities) or other FASB standards allowing entities to elect fair value option for financial liabilities. Therefore, the amount of liabilities shall be the historical cost basis, which generally is the contractual amount owed adjusted for amortization or accretion of any premium or discount.

(b) References in this Agreement to “Sections”, “Articles”, “Exhibits” and “Schedules” are to sections, articles, exhibits and schedules herein and hereto unless otherwise indicated. References in this Agreement to any document, instrument or agreement (i) shall include all exhibits, schedules and other attachments thereto, (ii) shall include all documents, instruments or agreements issued or executed in replacement thereof, to the extent permitted hereby and (iii) shall mean such document, instrument or agreement, or replacement or predecessor thereto, as amended, supplemented, restated or otherwise modified from time to time to the extent not otherwise stated herein or prohibited hereby and in effect at any given time. Wherever from the context it appears appropriate, each term stated in either the singular or plural shall include the singular and plural, and pronouns stated in the masculine, feminine or neuter gender shall include the masculine, the feminine and the neuter. Unless explicitly set forth to the contrary, a reference to “Subsidiary” means a Subsidiary of the Borrower or a Subsidiary of such Subsidiary and a reference to an “Affiliate” means a reference to an Affiliate of the Borrower. Titles and captions of Articles, Sections, subsections and clauses in this Agreement are for convenience only, and neither limit nor amplify the provisions of this Agreement. Unless otherwise indicated, all references to time are references to Pacific time.

ARTICLE II CREDIT FACILITY

Section 2.1 Loan.

(a) Initial Disbursement. Subject to the terms and conditions set forth in this Agreement, on the Effective Date, the Lenders shall disburse to or for the account of the Borrower the principal amount of $60,000,000 (the “Initial Disbursement”). Such funds shall be used to finance a portion of the acquisition cost of the Property.

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(b) Earnout. Subject to the Borrower’s request, and the Administrative Agent’s confirmation of the Borrower’s satisfaction of the conditions below, Lenders shall disburse to or for the benefit of the Borrower, in up to two (2) disbursements, up to an additional $11,500,000 (the “Earnout”). Any undisbursed portion of the Earnout shall be cancelled on December 15, 2013. Disbursement of the Earnout shall be conditioned upon satisfaction of the following conditions:

(i) The Borrower shall have delivered to the Administrative Agent a request for disbursement of all or a portion of the Earnout, which request shall have been received by the Administrative Agent by not later than November 15, 2013. The Borrower’s request shall specify the amount of the Earnout requested, which amount, when added to any portion of the Earnout previously disbursed, shall not exceed $11,500,000;

(ii) Borrower shall not have previously received more than one (1) partial disbursement of the Earnout;

(iii) As of the date of the Borrower’s request for disbursement, and as of the date on which the Earnout is to be disbursed, (A) no Default or Event of Default shall exist, (B) no material default (beyond the expiration of any applicable notice and cure periods), as determined by the Administrative Agent, shall exist under the Management Agreement or the Franchise Agreement and (C) there shall have been no change, circumstance or occurrence which could reasonably be expected to have a Material Adverse Effect, as determined by the Administrative Agent in its sole discretion;

(iv) The Debt Service Coverage Ratio, calculated as of the last day of each of the two (2) most recent fiscal quarters preceding the date of the Borrower’s request, shall be not less than 1.35, and the Borrower shall provide evidence thereof acceptable to the Administrative Agent in its sole discretion; provided, for purposes of calculating Pro Forma Debt Service, the “outstanding principal balance of the Loans” shall be deemed to include the portion of the Earnout that the Borrower has requested be disbursed;

(v) The Borrower shall have paid to the Administrative Agent, for the ratable benefit of the Lenders, a non-refundable fee in an amount equal to one-quarter of one percent (0.25%) of the amount of the Earnout for which the Borrower has requested disbursement. Such fee shall be deemed earned when received;

(vi) The Borrower shall have provided to the Administrative Agent, for its benefit and the benefit of the Lenders, any endorsements reasonably requested by the Administrative Agent to the Title Policy; and

(vii) The Borrower shall have satisfied all of the conditions to disbursement set forth in Section 6.2.

Section 2.2 Rates and Payment of Interest on Loans.

(a) Rates. The Borrower promises to pay to the Administrative Agent for the account of each Lender, interest on the unpaid principal amount of the Loan for the period from and including the date of the making of such Loan to but excluding the date such Loan shall be paid in full, at the following per annum rates:

(i) during such periods as such Loan is a Base Rate Loan, at the Base Rate (as in effect from time to time), plus the Applicable Margin; and

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(ii) during such periods as such Loan is a LIBOR Loan, at LIBOR for such Loan for the Interest Period therefor, plus the Applicable Margin.

Notwithstanding the foregoing, while an Event of Default exists, the Borrower shall pay to the Administrative Agent for the account of each Lender interest at the Post-Default Rate on the outstanding principal amount of any Loan made by such Lender and on any other amount payable by the Borrower hereunder or under the Notes held by such Lender to or for the account of such Lender (including without limitation, accrued but unpaid interest to the extent permitted under Applicable Law).

(b) Payment of Interest. All accrued and unpaid interest on the outstanding principal amount of each Loan shall be payable (i) monthly in arrears on the first day of each month, commencing with the first full calendar month occurring after the Effective Date and (ii) on any date on which the principal balance of such Loan is due and payable in full (whether at maturity, due to acceleration or otherwise). Interest payable at the Post-Default Rate shall be payable from time to time on demand. All determinations by the Administrative Agent of an interest rate hereunder shall be conclusive and binding on the Lenders and the Borrower for all purposes, absent manifest error.

(c) Number of Interest Periods. There may be no more than five (5) different Interest Periods outstanding at the same time.

Section 2.3 Assumptions Regarding Funding by Lenders. With respect to disbursement of the Earnout, unless the Administrative Agent shall have been notified by any Lender that such Lender will not make available to the Administrative Agent its Pro Rata Share, the Administrative Agent may assume that such Lender will make the proceeds available to the Administrative Agent in accordance with this Section, and the Administrative Agent may (but shall not be obligated to), in reliance upon such assumption, make available to the Borrower the amount of such Loan to be provided by such Lender. In such event, if such Lender does not make available to the Administrative Agent the proceeds of such Loan, then such Lender and the Borrower severally agree to pay to the Administrative Agent on demand the amount of such Loan with interest thereon, for each day from and including the date such Loan is made available to the Borrower but excluding the date of payment to the Administrative Agent, at (i) in the case of a payment to be made by such Lender, the greater of the Federal Funds Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation and (ii) in the case of a payment to be made by the Borrower, the interest rate applicable to Base Rate Loans. If the Borrower and such Lender shall pay the amount of such interest to the Administrative Agent for the same or overlapping period, the Administrative Agent shall promptly remit to the Borrower the amount of such interest paid by the Borrower for such period. If such Lender pays to the Administrative Agent the amount of such Loan, the amount so paid shall constitute such Lender’s Loan included in the borrowing. Any payment by the Borrower shall be without prejudice to any claim the Borrower may have against a Lender that shall have failed to make available the proceeds of a Loan to be made by such Lender.

Section 2.4 Repayment of Loans. The Borrower shall repay the entire outstanding principal amount of, and all accrued but unpaid interest on, the Loans on the Maturity Date.

Section 2.5 Prepayments.

(a) Optional. At any time on or after June 15, 2011, the Borrower may prepay any Loan at any time without premium or penalty. The Borrower shall give the Administrative Agent at least three (3) Business Days prior written notice of the prepayment of any Loan. Each voluntary prepayment of Loans shall be in an aggregate minimum amount of $1,000,000 and integral multiples of $100,000 in excess thereof. The Borrower shall not have the right to prepay the Loan, in whole or in part, prior to June 15, 2011.

(b) Mandatory.

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(i) Minimum DSCR Hurdle. In connection with each Option to Extend and as of June 30 of each year following the Original Maturity Date, if the Debt Service Coverage Ratio (as determined based on Adjusted NOI for the twelve months ending October 31 of the then current year in connection with each Option to Extend and the twelve months ending May 31 of the then current year with respect to the June 30 test) is less than the Minimum DSCR Hurdle, then the Borrower shall pay to the Administrative Agent for the account of the Lenders, as a principal payment of the Loans, not later than fifteen (15) Business Days following the day on which the relevant DSCR Certificate is required to be delivered under Section 9.2 (or, in the case of an Option to Extend, not later than the then current Maturity Date), the amount by which the outstanding principal balance of the Loan would be required to be reduced to cause the Debt Service Coverage Ratio to equal the Minimum DSCR Hurdle.

(ii) Amortization. If the term of the Loan is extended beyond the Second Extended Maturity Date, then commencing with the first day of the fiscal quarter beginning January 1, 2014, and continuing on the first day of each fiscal quarter thereafter during the term of the Loan, the Borrower shall repay to the Administrative Agent for the account of the Lenders a portion of the outstanding principal balance of the Loan, in an amount equal to $500,000.

(c) Breakage Costs. In connection with the prepayment of the Loan under this Section 2.5, in addition to any other amounts that might be due, the Borrower shall pay to the Administrative Agent any costs that would be due under Section 5.4, below.

Section 2.6 Late Charges. If any payment required under this Agreement is not paid within ten (10) days after it becomes due and payable, then the Borrower shall pay a late charge for late payment to compensate the Lenders for the loss of use of funds and for the expenses of handling the delinquent payment, in an amount equal to four percent (4%) of such delinquent payment. Such late charge shall be paid in any event not later than the due date of the next subsequent installment of principal and/or interest. In the event the maturity of the Obligations hereunder occurs or is accelerated pursuant to Section 11.2, this Section shall apply only to payments overdue prior to the time of such acceleration. This Section shall not be deemed to be a waiver of the Lenders’ right to accelerate payment of any of the Obligations as permitted under the terms of this Agreement.

Section 2.7 Continuation. So long as no Default or Event of Default exists, the Borrower may on any Business Day, with respect to any LIBOR Loan, elect to maintain such LIBOR Loan or any portion thereof as a LIBOR Loan by selecting a new Interest Period for such LIBOR Loan. Each Continuation of a LIBOR Loan shall be in an aggregate minimum amount of $1,000,000 and integral multiples of $100,000 in excess of that amount, and each new Interest Period selected under this Section shall commence on the last day of the immediately preceding Interest Period. Each selection of a new Interest Period shall be made by the Borrower giving to the Administrative Agent a Notice of Continuation not later than 9:00 a.m. on the third Business Day prior to the date of any such Continuation. Such notice by the Borrower of a Continuation shall be by telecopy, electronic mail or other similar form of communication in the form of a Notice of Continuation, specifying (a) the proposed date of such Continuation, (b) the LIBOR Loan and portion thereof subject to such Continuation and (c) the duration of the selected Interest Period, all of which shall be specified in such manner as is necessary to comply with all limitations on Loans outstanding hereunder. Notwithstanding the foregoing, the Administrative Agent is authorized to rely upon the telephonic request of any of the Borrower’s Agents. The Borrower’s telephonic notices, requests and acceptances shall be directed to such officers of the Administrative Agent as the Administrative Agent may from time to time designate and shall be followed promptly by the original or a facsimile or electronic mail Notice of Continuation required pursuant to the third sentence of this Section 2.7. Each Notice of Continuation shall be irrevocable by and binding on the Borrower once given. Promptly after receipt of a Notice of Continuation, the Administrative Agent shall notify each Lender of the proposed Continuation. If the Borrower shall fail to select in a timely manner a new Interest Period for any LIBOR Loan in accordance with this Section, such Loan will automatically, on the last day of the current Interest Period therefore, continue as a LIBOR Loan with an Interest Period of one month.

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Section 2.8 Conversion. So long as no Default or Event of Default exists, the Borrower may on any Business Day, upon the Borrower’s giving of a Notice of Conversion to the Administrative Agent by telecopy, electronic mail or other similar form of communication, Convert all or a portion of a Loan of one Type into a Loan of another Type. Each Conversion of Base Rate Loans into LIBOR Loans shall be in an aggregate minimum amount of $1,000,000 and integral multiples of $100,000 in excess of that amount, and upon Conversion of a Base Rate Loan into a LIBOR Loan, the Borrower shall pay accrued interest to the date of Conversion on the principal amount so Converted in accordance with Section 2.2. Any Conversion of a LIBOR Loan into a Base Rate Loan shall be made on, and only on, the last day of an Interest Period for such LIBOR Loan. Each such Notice of Conversion shall be given not later than 9:00 a.m. three (3) Business Days prior to the date of any proposed Conversion into Base Rate or LIBOR Loans. Promptly after receipt of a Notice of Conversion, the Administrative Agent shall notify each Lender of the proposed Conversion. Subject to the restrictions specified above, each Notice of Conversion shall be by telecopy, electronic mail or other similar form of communication in the form of a Notice of Conversion specifying (a) the requested date of such Conversion, (b) the Type of Loan to be Converted, (c) the portion of such Type of Loan to be Converted, (d) the Type of Loan such Loan is to be Converted into and (e) if such Conversion is into a LIBOR Loan, the requested duration of the Interest Period of such Loan. Notwithstanding the foregoing, the Administrative Agent is authorized to rely upon the telephonic request of any of the Borrower’s Agents. The Borrower’s telephonic notices, requests and acceptances shall be directed to such officers of the Administrative Agent as the Administrative Agent may from time to time designate and shall be followed promptly by the original or a facsimile or electronic mail Notice of Conversion required pursuant to the first sentence of this Section 2.8. Each Notice of Conversion shall be irrevocable by and binding on the Borrower once given.

Section 2.9 Notes.

(a) Notes. The Loans made by each Lender shall, in addition to this Agreement, also be evidenced by a Note, payable to the order of such Lender in a principal amount equal to the amount of its Commitment as originally in effect and otherwise duly completed.

(b) Lost, Stolen, Destroyed or Mutilated Notes. Upon receipt by the Borrower of (i) written notice from a Lender that a Note of such Lender has been lost, stolen, destroyed or mutilated, and (ii)(A) in the case of loss, theft or destruction, an unsecured agreement of indemnity from such Lender in form reasonably satisfactory to the Borrower, or (B) in the case of mutilation, upon surrender and cancellation of such Note, the Borrower shall at its own expense execute and deliver to such Lender a new Note dated the date of such lost, stolen, destroyed or mutilated Note.

Section 2.10 Extension of Maturity Date. Borrower shall have the option to extend the Maturity Date from (a) the Original Maturity Date to the First Extended Maturity Date (“First Option to Extend”), (b) the First Extended Maturity Date to the Second Extended Maturity Date (the “Second Option to Extend”), (c) the Second Extended Maturity Date to the Third Extended Maturity Date (the “Third Option to Extend”) and (d) the Third Extended Maturity Date to the Fourth Extended Maturity Date (the “Fourth Option to Extend” and each, an “Option to Extend”), upon satisfaction of each of the following conditions precedent:

(a) As applicable, the Borrower shall have validly exercised the immediately previous Option to Extend; and

(b) The Borrower shall provide the Administrative Agent with written notice of the Borrower’s request to exercise an Option to Extend not more than ninety (90) days but not less than thirty (30) days prior to the then current Maturity Date; and

(c) As of the date of the Borrower’s delivery of notice of request to exercise an Option to Extend, and as of the then current Maturity Date, no Default of Event of Default shall have occurred and be continuing, and Borrower shall so certify in writing; and

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(d) No material default (beyond the expiration of any applicable notice and cure periods), as determined by Administrative Agent, shall exist under the Management Agreement or the Franchise Agreement; and

(e) The Borrower shall execute or cause the execution of all documents reasonably required by the Administrative Agent to exercise the Option to Extend and shall deliver to the Administrative Agent, at the Borrower’s sole cost and expense, such title insurance endorsements reasonably required by the Administrative Agent; and

(f) There shall not have occurred any change in the Property since the Effective Date or the financial condition of the Borrower or either Guarantor from that which existed as of the Effective Date that, in the determination of the Administrative Agent in its sole discretion, has had a Material Adverse Effect; and

(g) On or before the then current Maturity Date, the Borrower shall pay to the Administrative Agent all recording costs, the costs of preparing any extension documents, including reasonable attorney’s fees if any, and any other reasonable costs and expense associated with the Borrower’s exercise of its Option to Extend; and

(h) On or before the then current Maturity Date, Borrower shall pay to the Administrative Agent the fee provided for in Section 3.5(b); and

(i) With respect to the exercise of the Second Option to Extend, the Third Option to Extend and the Fourth Option to Extend, at the Administrative Agent’s option, the Administrative Agent shall have received, at the Borrower’s sole cost, an Appraisal with a valuation date not more than sixty (60) days prior to the then current Maturity Date confirming to the satisfaction of the Administrative Agent that the Loan-to-Value Ratio does not exceed fifty percent (50%). If the Loan to Value Ratio exceeds fifty percent (50%), then the Borrower may satisfy the condition in this Section 2.10(i) by concurrently repaying such portion of the outstanding principal amount of the Loan necessary to cause the Loan-to-Value Ratio to be fifty percent (50%) or less; and

(j) The Adjusted NOI of the Property, calculated in accordance with Section 2.5(b), shall be sufficient to yield a Debt Service Coverage Ratio of not less than the Minimum DSCR Hurdle. If the Adjusted NOI of the Property is insufficient to yield a Debt Service Coverage Ratio which satisfies the Minimum DSCR Hurdle, then the Borrower may satisfy the condition in this Section 2.10(j) by repaying such portion of the outstanding principal amount of the Loan as would cause such condition to be satisfied.

Section 2.11 Funds Transfer Disbursements.

(a) Generally. The Borrower hereby authorizes the Administrative Agent to disburse the proceeds of any Loan made by the Lenders or any of their Affiliates pursuant to the Loan Documents as requested by any of Borrower’s Agents to any of the accounts designated in the Transfer Authorizer Designation Form. The Borrower agrees to be bound by any transfer request authorized or transmitted by the Borrower or any of the Borrower’s Agents. The Borrower further agrees and acknowledges that the Administrative Agent may rely solely on any bank routing number or identifying bank account number or name provided by the Borrower or any of the Borrower’s Agents to effect a wire of funds transfer even if the information provided by the Borrower or the Borrower’s Agents identifies a different bank or account holder than named by the Borrower. The Administrative Agent is not obligated or required in any way to take any actions to detect errors in information provided by the Borrower. If the Administrative Agent takes any actions in an attempt to detect errors in the transmission or content of transfer or requests or takes any actions in an attempt to detect unauthorized funds transfer requests, the Borrower agrees that no matter how many times the Administrative Agent takes these actions, the Administrative Agent will not in any

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situation be liable for failing to take or correctly perform these actions in the future and such actions shall not become any part of the transfer disbursement procedures authorized under this provision, the Loan Documents, or any agreement between the Administrative Agent and the Borrower. The Borrower agrees to notify the Administrative Agent of any errors in the transfer of any funds or of any unauthorized or improperly authorized transfer requests within fourteen (14) days after the Administrative Agent’s confirmation to the Borrower of such transfer.

(b) Funds Transfer. The Administrative Agent will, in its sole discretion, determine the funds transfer system and the means by which each transfer will be made. The Administrative Agent may delay or refuse to accept a funds transfer request if the transfer would: (i) violate the terms of this authorization (ii) require use of a bank unacceptable to the Administrative Agent or any Lender or prohibited by any Governmental Authority; provided, that the Administrative Agent and the Lenders hereby acknowledge that Key Bank is acceptable to the Administrative Agent and the Lenders; (iii) cause the Administrative Agent or any Lender to violate any Federal Reserve or other regulatory risk control program or guideline, or (iv) otherwise cause the Administrative Agent or any Lender to violate any Applicable Law or regulation.

(c) Limitation of Liability. Neither the Administrative Agent nor any Lender shall be liable to the Borrower or any other parties for (i) errors, acts or failures to act of others, including other entities, banks, communications carriers or clearinghouses, through which the Borrower’s transfers may be made or information received or transmitted, and no such entity shall be deemed an agent of the Administrative Agent or any Lender, (ii) any loss, liability or delay caused by fires, earthquakes, wars, civil disturbances, power surges or failures, acts of government, labor disputes, failures in communications networks, legal constraints or other events beyond Administrative Agent’s or any Lender’s reasonable control, or (iii) any special, consequential, indirect or punitive damages, whether or not (x) any claim for these damages is based on tort or contract or (y) the Administrative Agent, any Lender or the Borrower knew or should have known the likelihood of these damages in any situation. Neither the Administrative Agent nor any Lender makes any representations or warranties other than those expressly made in this Agreement.

ARTICLE III PAYMENTS, FEES AND OTHER GENERAL PROVISIONS

Section 3.1 Payments.

(a) Payments by Borrower. Except to the extent otherwise provided herein, all payments of principal, interest, Fees and other amounts to be made by the Borrower under this Agreement, the Notes or any other Loan Document shall be made in Dollars, in immediately available funds, without setoff, deduction or counterclaim, to the Administrative Agent at the Principal Office, not later than 11:00 a.m. on the date on which such payment shall become due (each such payment made after such time on such due date to be deemed to have been made on the next succeeding Business Day). Subject to Section 11.5, the Borrower shall, at the time of making each payment under this Agreement or any other Loan Document, specify to the Administrative Agent the amounts payable by the Borrower hereunder to which such payment is to be applied. Each payment received by the Administrative Agent for the account of a Lender under this Agreement or any Note shall be paid to such Lender by wire transfer of immediately available funds in accordance with the wiring instructions provided by such Lender to the Administrative Agent from time to time, for the account of such Lender at the applicable Lending Office of such Lender. In the event the Administrative Agent fails to pay such amounts to such Lender within one (1) Business Day of receipt of such amounts, the Administrative Agent shall pay interest on such amount at a rate per annum equal to the Federal Funds Rate from time to time in effect. If the due date of any payment under this Agreement or any other Loan Document would otherwise fall on a day which is not a Business Day such date shall be extended to the next succeeding Business Day and interest

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shall continue to accrue at the rate, if any, applicable to such payment for the period of such extension.

(b) Presumptions Regarding Payments by Borrower. Unless the Administrative Agent shall have received notice from the Borrower prior to the date on which any payment is due to the Administrative Agent for the account of the Lenders hereunder that the Borrower will not make such payment, the Administrative Agent may assume that the Borrower has made such payment on such date in accordance herewith and may (but shall not be obligated to), in reliance upon such assumption, distribute to the Lenders, as the case may be, the amount due. In such event, if the Borrower has not in fact made such payment, then each of the Lenders, as the case may be, severally agrees to repay to the Administrative Agent on demand that amount so distributed to such Lender, with interest thereon, for each day from and including the date such amount is distributed to it to but excluding the date of payment to the Administrative Agent, at the greater of the Federal Funds Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation.

Section 3.2 Pro Rata Treatment. Except to the extent otherwise provided herein: (a) each borrowing from Lenders under Section 2.1 shall be made from the Lenders, each payment of the fees under Sections 3.5(a), 3.5(b) and 3.5(c) shall be made for the account of the Lenders, and each termination or reduction of the amount of the Commitments under Section 2.10 shall be applied to the respective Commitments of the Lenders, pro rata according to the amounts of their respective Commitments; (b) each payment or prepayment of principal of Loans by the Borrower shall be made for the account of the Lenders pro rata in accordance with the respective unpaid principal amounts of the Loans held by them, provided that if immediately prior to giving effect to any such payment in respect of any Loans the outstanding principal amount of the Loans shall not be held by the Lenders pro rata in accordance with their respective Commitments in effect at the time such Loans were made, then such payment shall be applied to the Loans in such manner as shall result, as nearly as is practicable, in the outstanding principal amount of the Loans being held by the Lenders pro rata in accordance with their respective Commitments; (c) each payment of interest on Loans by the Borrower shall be made for the account of the Lenders pro rata in accordance with the amounts of interest on such Loans then due and payable to the respective Lenders; and (d) the Conversion and Continuation of Loans of a particular Type shall be made pro rata among the Lenders according to the amounts of their respective Loans and the then current Interest Period for each Lender’s portion of each Loan of such Type shall be coterminous. Any payment or prepayment of principal or interest made (i)(A) during the existence of a Default or Event of Default or (B) pursuant to Section 2.5(b)(i), shall be made for the account of the Lenders in accordance with the order set forth in Section 11.5 and (ii) pursuant to Section 2.5(b)(ii), shall be made for the account of the Lenders holding Commitments (or, if the Commitments have been terminated, holding Loans, in accordance with the order set forth in Section 11.5.

Section 3.3 Sharing of Payments, Etc. If a Lender shall obtain payment of any principal of, or interest on, any Loan under this Agreement or shall obtain payment on any other Obligation owing by the Borrower or any other Loan Party through the exercise of any right of set-off, banker’s lien, counterclaim or similar right or otherwise or through voluntary prepayments directly to a Lender or other payments made by the Borrower or any other Loan Party to a Lender not in accordance with the terms of this Agreement and such payment should be distributed to the Lenders in accordance with Section 3.2 or Section 11.5, such Lender shall promptly purchase from such other Lenders participations in (or, if and to the extent specified by such Lender, direct interests in) the Loans made by the other Lenders or other Obligations owed to such other Lenders in such amounts, and make such other adjustments from time to time as shall be equitable, to the end that all the Lenders shall share the benefit of such payment (net of any reasonable expenses which may actually be incurred by such Lender in obtaining or preserving such benefit) in accordance with the requirements of Section 3.2 or Section 11.5, as applicable. To such end, all the Lenders shall make appropriate adjustments among themselves (by the resale of participations sold or otherwise) if such payment is rescinded or must otherwise be restored. The Borrower agrees that any Lender so purchasing a participation (or direct interest) in the Loans or other Obligations owed to such other Lenders may exercise all rights of set-off, banker’s lien, counterclaim or similar rights with the

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respect to such participation as fully as if such Lender were a direct holder of Loans in the amount of such participation. Nothing contained herein shall require any Lender to exercise any such right or shall affect the right of any Lender to exercise and retain the benefits of exercising, any such right with respect to any other indebtedness or obligation of the Borrower.

Section 3.4 Several Obligations. No Lender shall be responsible for the failure of any other Lender to make a Loan or to perform any other obligation to be made or performed by such other Lender hereunder, and the failure of any Lender to make a Loan or to perform any other obligation to be made or performed by it hereunder shall not relieve the obligation of any other Lender to make any Loan or to perform any other obligation to be made or performed by such other Lender.

Section 3.5 Fees.

(a) Closing Fee. On the Effective Date, the Borrower agrees to pay to the Administrative Agent and each Lender all loan fees described in the Fee Letter.

(b) Extension Fee. If the Borrower exercises its right to extend the Maturity Date in accordance with Section 2.10, the Borrower agrees to pay to the Administrative Agent for the account of each Lender a fee equal to one-quarter percent (0.25%) of the amount of such Lender’s outstanding Loans as of the applicable Maturity Date.

(c) Administrative and Other Fees. The Borrower agrees to pay other fees of the Administrative Agent as may be expressly agreed to in writing from time to time.

Section 3.6 Computations. Unless otherwise expressly set forth herein, any accrued interest on any Loan, any Fees or other Obligations due hereunder shall be computed on the basis of a year of 360 days and the actual number of days elapsed.

Section 3.7 Usury. In no event shall the amount of interest due or payable on the Loans or other Obligations exceed the maximum rate of interest allowed by Applicable Law and, if any such payment is paid by the Borrower or any other Loan Party or received by any Lender, then such excess sum shall be credited as a payment of principal, unless the Borrower shall notify the respective Lender in writing that the Borrower elects to have such excess sum returned to it forthwith. It is the express intent of the parties hereto that the Borrower not pay and the Lenders not receive, directly or indirectly, in any manner whatsoever, interest in excess of that which may be lawfully paid by the Borrower under Applicable Law. The parties hereto hereby agree and stipulate that the only charge imposed upon the Borrower for the use of money in connection with this Agreement is and shall be the interest specifically described in Section 2.2(a)(i) and (ii). Notwithstanding the foregoing, the parties hereto further agree and stipulate that all agency fees, syndication fees, facility fees, underwriting fees, default charges, late charges, funding or “breakage” charges, increased cost charges, attorneys’ fees and reimbursement for costs and expenses paid by the Administrative Agent or any Lender to third parties or for damages incurred by the Administrative Agent or any Lender, are charges made to compensate the Administrative Agent or any such Lender for underwriting or administrative services and costs or losses performed or incurred, and to be performed or incurred, by the Administrative Agent and the Lenders in connection with this Agreement and shall under no circumstances be deemed to be charges for the use of money. All charges other than charges for the use of money shall be fully earned and nonrefundable when due.

Section 3.8 Statements of Account. The Administrative Agent will account to the Borrower monthly with a statement of Loans, accrued interest and Fees, charges and payments made pursuant to this Agreement and the other Loan Documents, and such account rendered by the Administrative Agent shall be deemed conclusive upon the Borrower absent manifest error. The failure of the Administrative Agent to deliver such a statement of accounts shall not relieve or discharge the Borrower from any of its obligations hereunder.

Section 3.9 Defaulting Lenders.

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(a) Generally. Notwithstanding any provision of this Agreement to the contrary, if any Lender becomes a Defaulting Lender, then, in addition to the rights and remedies that may be available to the Administrative Agent or the Borrower under this Agreement or Applicable Law, (i) fees shall cease to accrue on the unfunded portion of the Commitment of such Defaulting Lender pursuant to Section 3.5(b) and (ii) the Commitment of such Defaulting Lender shall not be included in determining whether the Requisite Lenders, or all of Lenders have taken or may take any action hereunder (including any consent to any amendment, waiver or other modification pursuant to Section 13.7, except as otherwise provided therein). If for any reason a Lender fails to make timely payment to the Administrative Agent of any amount required to be paid to the Administrative Agent hereunder (without giving effect to any notice or cure periods), in addition to other rights and remedies which the Administrative Agent or the Borrower may have under the immediately preceding provisions or otherwise, the Administrative Agent shall be entitled (A) to collect interest from such Defaulting Lender on such delinquent payment for the period from the date on which the payment was due until the date on which the payment is made at the Federal Funds Rate, (B) to withhold or setoff and to apply in satisfaction of the defaulted payment and any related interest, any amounts otherwise payable to such Defaulting Lender under this Agreement or any other Loan Document and (C) to bring an action or suit against such Defaulting Lender in a court of competent jurisdiction to recover the defaulted amount and any related interest. Any amounts received by the Administrative Agent in respect of a Defaulting Lender’s Loans shall not be paid to such Defaulting Lender and shall be held uninvested by the Administrative Agent and either applied against the purchase price of such Loans under the following subsection (b) or paid to such Defaulting Lender upon the Defaulting Lender’s curing of its default.

(b) Purchase or Cancellation of Defaulting Lender’s Commitment. Any Lender who is not a Defaulting Lender shall have the right, but not the obligation, in its sole discretion, to acquire by assignment all of a Defaulting Lender’s Commitments. Any Lender desiring to exercise such right shall give written notice thereof to the Administrative Agent and the Borrower no sooner than two (2) Business Days and not later than five (5) Business Days after such Defaulting Lender became a Defaulting Lender. If more than one (1) Lender exercises such right, each such Lender shall have the right to acquire an amount of such Defaulting Lender’s Commitments in proportion to the Commitments of the other Lenders exercising such right. If after such fifth Business Day, the Lenders have not elected to acquire all of the Commitments of such Defaulting Lender, then the Borrower may, by giving written notice thereof to the Administrative Agent, such Defaulting Lender and the other Lenders, either (i) demand that such Defaulting Lender assign its Commitments to an Eligible Assignee subject to and in accordance with the provisions of Section 13.6(c) for the purchase price provided for below or (ii) terminate the Commitments of such Defaulting Lender, whereupon such Defaulting Lender shall no longer be a party hereto or have any right or obligation whatsoever to initiate any such replacement or to assist in finding an Eligible Assignee. Upon any such assignment, the Defaulting Lender’s interest in the Loans and its rights hereunder (but not its liability in respect thereof or under the Loan Documents to the extent the same relate to the period prior to the effective date of the purchase) shall terminate on the date of purchase, and the Defaulting Lender shall promptly execute all documents reasonably requested to surrender and transfer such interest to the purchaser or assignee thereof, including an appropriate Assignment and Assumption Agreement and, notwithstanding Section 13.6(c), shall pay to the Administrative Agent an assignment fee in the amount of $10,000. The purchase price for the Commitments of a Defaulting Lender shall be equal to the amount of the principal balance of the Loans outstanding and owed by the Borrower to the Defaulting Lender. Prior to payment of such purchase price to a Defaulting Lender, the Administrative Agent shall apply against such purchase price any amounts retained by the Administrative Agent pursuant to the last sentence of the immediately preceding subsection (a). The Defaulting Lender shall be entitled to receive any amount owed to it by the Borrower under the Loan Documents which accrued prior to the date of the default by the Defaulting Lender, to the extent the same are received by the

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Administrative Agent from or on behalf of the Borrower. There shall be no recourse against any Lender or the Administrative Agent for the payment of such sums except to the extent of the receipt of payments from any other party or in respect of the Loans.

Section 3.10 Taxes; Foreign Lenders.

(a) Taxes Generally. All payments by the Borrower of principal of, and interest on, the Loans and all other Obligations shall be made free and clear of and without deduction for any present or future excise, stamp or other taxes, fees, duties, levies, imposts, charges, deductions, withholdings or other charges of any nature whatsoever imposed by any taxing authority, but excluding (i) franchise taxes, (ii) any taxes (other than withholding taxes) that would not be imposed but for a connection between the Administrative Agent or a Lender and the jurisdiction imposing such taxes (other than a connection arising solely by virtue of the activities of the Administrative Agent or such Lender pursuant to or in respect of this Agreement or any other Loan Document), (iii) any taxes imposed on or measured by any Lender’s assets, net income, receipts or branch profits and (iv) any taxes arising after the Agreement Date solely as a result of or attributable to a Lender changing its designated Lending Office after the date such Lender becomes a party hereto (such non excluded items being collectively called “Taxes”). If any withholding or deduction from any payment to be made by the Borrower hereunder is required in respect of any Taxes pursuant to any Applicable Law, then the Borrower will:

(i) pay directly to the relevant Governmental Authority the full amount required to be so withheld or deducted;

(ii) promptly forward to the Administrative Agent an official receipt or other documentation satisfactory to the Administrative Agent evidencing such payment to such Governmental Authority; and

(iii) pay to the Administrative Agent for its account or the account of the applicable Lender such additional amount or amounts as is necessary to ensure that the net amount actually received by the Administrative Agent or such Lender will equal the full amount that the Administrative Agent or such Lender would have received had no such withholding or deduction been required.

(b) Tax Indemnification. If the Borrower fails to pay any Taxes when due to the appropriate Governmental Authority or fails to remit to the Administrative Agent, for its account or the account of the respective Lender, as the case may be, the required receipts or other required documentary evidence, the Borrower shall indemnify the Administrative Agent and the Lenders for any incremental Taxes, interest or penalties that may become payable by the Administrative Agent or any Lender as a result of any such failure. For purposes of this Section, a distribution hereunder by the Administrative Agent or any Lender to or for the account of any Lender shall be deemed a payment by the Borrower.

(c) Tax Forms. Prior to the date that any Lender or Participant organized under the laws of a jurisdiction outside the United States of America becomes a party hereto, such Person shall deliver to the Borrower and the Administrative Agent such certificates, documents or other evidence, as required by the Internal Revenue Code or Treasury Regulations issued pursuant thereto (including Internal Revenue Service Forms W-8ECI and W-8BEN, as applicable, or appropriate successor forms), properly completed, currently effective and duly executed by such Lender or Participant establishing that payments to it hereunder and under the Notes are (i) not subject to United States Federal backup withholding tax and (ii) not subject to United States Federal withholding tax under the Code. Each such Lender or Participant shall (x) deliver further copies of such forms or other appropriate certifications on or before the date that any such forms expire or become obsolete and after the occurrence of any event requiring a change in the most recent form delivered to the Borrower and (y)

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obtain such extensions of the time for filing, and renew such forms and certifications thereof, as may be reasonably requested by the Borrower or the Administrative Agent. The Borrower shall not be required to pay any amount pursuant to last sentence of subsection (a) above to any Lender or Participant that is organized under the laws of a jurisdiction outside of the United States of America or the Administrative Agent, if it is organized under the laws of a jurisdiction outside of the United States of America, if such Lender, Participant or the Administrative Agent, as applicable, fails to comply with the requirements of this subsection. If any such Lender or Participant fails to deliver the above forms or other documentation, then the Administrative Agent may withhold from such payment to such Lender such amounts as are required by the Code. If any Governmental Authority asserts that the Administrative Agent did not properly withhold or backup withhold, as the case may be, any tax or other amount from payments made to or for the account of any Lender, such Lender shall indemnify the Administrative Agent therefore, including all penalties and interest, any taxes imposed by any jurisdiction on the amounts payable to the Administrative Agent under this Section, and costs and expenses (including all fees and disbursements of any law firm or other external counsel and the allocated cost of internal legal services and all disbursements of internal counsel) of the Administrative Agent. The obligation of the Lenders under this Section shall survive the termination of the Commitments, repayment of all Obligations and the resignation or replacement of the Administrative Agent.

(d) USA Patriot Act Notice; Compliance. In order for the Administrative Agent to comply with the USA Patriot Act of 2001 (Public Law 107-56), prior to any Lender or Participant that is organized under the laws of a jurisdiction outside of the United States of America becoming a party hereto, the Administrative Agent may request, and such Lender or Participant shall provide to the Administrative Agent, its name, address, tax identification number and/or such other identification information as shall be necessary for the Administrative Agent to comply with federal law.

Section 3.11 Lender Failure to Make Payment. If any Lender shall fail to make any payment required to be made by it pursuant to Sections 2.3, 3.1(b) or 12.8, then the Administrative Agent may, in its discretion and notwithstanding any contrary provision hereof, (i) apply any amounts thereafter received by the Administrative Agent for the account of such Lender for the benefit of the Administrative Agent, to satisfy such Lender’s obligations to it under such Section until all such unsatisfied obligations are fully paid, and/or (ii) hold any such amounts in a segregated account as cash collateral for, and application to, any future funding obligations of such Lender under any such Section, in the case of each of clauses (i) and (ii) above, in any order as determined by the Administrative Agent in its discretion.

ARTICLE IV INTENTIONALLY OMITTED

ARTICLE V YIELD PROTECTION, ETC.

Section 5.1 Additional Costs; Capital Adequacy.

(a) Capital Adequacy. If any Lender or any Participant in the Loan determines that compliance with any law or regulation or with any guideline or request from any central bank or other Governmental Authority (whether or not having the force of law) affects or would affect the amount of capital required or expected to be maintained by such Lender or such Participant, or any corporation controlling such Lender or such Participant, as a consequence of, or with reference to, such Lender’s or such Participant’s or such corporation’s Commitments or its making or maintaining Loans below the rate which such Lender or such Participant or such corporation controlling such Lender or such Participant could have achieved but for such compliance (taking into account the policies of such Lender or such Participant or such corporation with regard to capital), then (without duplication of any other obligations of the Borrower under the Loan Documents) the Borrower shall, from time to time, within thirty (30) days after written demand by such Lender or (subject to subsection (f) below) such Participant, pay to such Lender or such Participant additional amounts sufficient to

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compensate such Lender or such Participant or such corporation controlling such Lender or such Participant to the extent that such Lender or such Participant determines such increase in capital is allocable to such Lender’s or such Participant’s obligations hereunder.

(b) Additional Costs. In addition to, and not in limitation of the immediately preceding clause (a), the Borrower shall promptly pay to the Administrative Agent for the account of a Lender from time to time such amounts as such Lender may determine to be necessary to compensate such Lender for any costs incurred by such Lender that it determines are attributable to its making or maintaining of any LIBOR Loans or its obligation to make any LIBOR Loans hereunder, any reduction in any amount receivable by such Lender under this Agreement or any of the other Loan Documents in respect of any of such LIBOR Loans or such obligation or the maintenance by such Lender of capital in respect of its LIBOR Loans or its Commitments (such increases in costs and reductions in amounts receivable being herein called “Additional Costs”), resulting from any Regulatory Change that: (i) changes the basis of taxation of any amounts payable to such Lender under this Agreement or any of the other Loan Documents in respect of any of such LIBOR Loans or its Commitments (other than taxes imposed on or measured by the overall net income of such Lender or of its Lending Office for any of such LIBOR Loans by the jurisdiction in which such Lender has its principal office or such Lending Office), or (ii) imposes or modifies any reserve, special deposit or similar requirements (including without limitation, Regulation D of the Board of Governors of the Federal Reserve System or other similar reserve requirement applicable to any other category of liabilities or category of extensions of credit or other assets by reference to which the interest rate on LIBOR Loans is determined) relating to any extensions of credit or other assets of, or any deposits with or other liabilities of, or other credit extended by, or any other acquisition of funds by such Lender (or its parent corporation), or any commitment of such Lender (including, without limitation, the Commitment of such Lender hereunder) or (iii) has or would have the effect of reducing the rate of return on capital of such Lender to a level below that which such Lender could have achieved but for such Regulatory Change (taking into consideration such Lender’s policies with respect to capital adequacy).

(c) Lender’s Suspension of LIBOR Loans. Without limiting the effect of the provisions of the immediately preceding subsection (a) and (b), if by reason of any Regulatory Change, any Lender either (i) incurs Additional Costs based on or measured by the excess above a specified level of the amount of a category of deposits or other liabilities of such Lender that includes deposits by reference to which the interest rate on LIBOR Loans is determined as provided in this Agreement or a category of extensions of credit or other assets of such Lender that includes LIBOR Loans or (ii) becomes subject to restrictions on the amount of such a category of liabilities or assets that it may hold, then, if such Lender so elects by notice to the Borrower (with a copy to the Administrative Agent), the obligation of such Lender to make or Continue, or to Convert Base Rate Loans into, LIBOR Loans shall be suspended until such Regulatory Change ceases to be in effect (in which case the provisions of Section 5.5 shall apply).

(d) Intentionally Omitted.

(e) Notification and Determination of Additional Costs. Each of the Administrative Agent, each Lender, and (subject to subsection (f) below) each Participant, as the case may be, agrees to notify the Borrower of any event occurring after the Agreement Date entitling the Administrative Agent, such Lender or such Participant to compensation under any of the preceding subsections of this Section as promptly as practicable; provided, however, that the failure of the Administrative Agent, any Lender or any Participant to give such notice shall not release the Borrower from any of its obligations hereunder. The Administrative Agent, each Lender and (subject to subsection (f) below) each Participant, as the case may be, agrees to furnish to the Borrower (and in the case of a Lender or a Participant to the Administrative Agent as well) a certificate setting forth the basis and amount of each request for compensation under this Section. Determinations by the Administrative Agent, such

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Lender, or such Participant, as the case may be, of the effect of any Regulatory Change shall be conclusive and binding for all purposes, absent manifest error.

(f) Participants. Any notice or certificate to be delivered by a Participant under subsection (a) or (e) above shall be delivered by such Participant to the Lender from which it purchased such participation interest, and such Lender shall promptly deliver the same to the Administrative Agent and the Borrower.

Section 5.2 Suspension of LIBOR Loans. Anything herein to the contrary notwithstanding, if, on or prior to the determination of LIBOR for any Interest Period:

(a) the Administrative Agent reasonably determines (which determination shall be conclusive) that quotations of interest rates for the relevant deposits referred to in the definition of LIBOR are not being provided in the relevant amounts or for the relevant maturities for purposes of determining rates of interest for LIBOR Loans as provided herein or is otherwise unable to determine LIBOR, or

(b) the Administrative Agent reasonably determines (which determination shall be conclusive) that the relevant rates of interest referred to in the definition of LIBOR upon the basis of which the rate of interest for LIBOR Loans for such Interest Period is to be determined are not likely to adequately cover the cost to any Lender of making or maintaining LIBOR Loans for such Interest Period;

then the Administrative Agent shall give the Borrower and each Lender prompt notice thereof and, so long as such condition remains in effect, (i) the Lenders shall be under no obligation to, and shall not, make additional LIBOR Loans, Continue LIBOR Loans or Convert Loans into LIBOR Loans and (ii) the Borrower shall, on the last day of each current Interest Period for each outstanding LIBOR Loan, either prepay such Loan or Convert such Loan into a Base Rate Loan.

Section 5.3 Illegality. Notwithstanding any other provision of this Agreement, if any Lender shall determine (which determination shall be conclusive and binding) that it is unlawful for such Lender to honor its obligation to make or maintain LIBOR Loans hereunder, then such Lender shall promptly notify the Borrower thereof (with a copy of such notice to the Administrative Agent) and such Lender’s obligation to make or Continue, or to Convert Loans of any other Type into, LIBOR Loans shall be suspended, in each case, until such time as such Lender may again make and maintain LIBOR Loans (in which case the provisions of Section 5.5 shall be applicable).

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Section 5.4 Compensation. The Borrower shall pay to the Administrative Agent for the account of each Lender, upon the request of the Administrative Agent, such amount or amounts as the Administrative Agent shall determine in its sole discretion shall be sufficient to compensate such Lender for any loss, cost or expense attributable to:

(a) any payment or prepayment (whether mandatory or optional) of a LIBOR Loan, or Conversion of a LIBOR Loan, made by such Lender for any reason (including, without limitation, acceleration) on a date other than the last day of the Interest Period for such Loan; or

(b) any failure by the Borrower for any reason (including, without limitation, the failure of any of the applicable conditions precedent specified in Section 6.2 to be satisfied) to borrow a LIBOR Loan from such Lender on the date for such borrowing, or to Convert a Base Rate Loan into a LIBOR Loan or Continue a LIBOR Loan on the requested date of such Conversion or Continuation.

Not in limitation of the foregoing, such compensation shall include, without limitation, an amount equal to the then present value of (x) the amount of interest that would have accrued on such LIBOR Loan for the remainder of the Interest Period at the rate applicable to such LIBOR Loan, less (y) the amount of interest that would accrue on the same LIBOR Loan for the same period if LIBOR were set on the date on which such LIBOR Loan was repaid, prepaid or Converted or the date on which the Borrower failed to borrow, Convert or Continue such LIBOR Loan calculating present value by using as a discount rate LIBOR quoted on such date, including without limitation any losses or expenses incurred in obtaining, liquidating or employing deposits from third parties. Upon the Borrower’s request, the Administrative Agent shall provide the Borrower with a statement setting forth the basis for requesting such compensation and the method for determining the amount thereof. Any such statement shall be conclusive absent manifest error.

By initialing this provision where indicated below, Borrower confirms that Lenders’ agreement to make the Loan at the interest rates and on the other terms set forth herein and in the other Loan Documents constitutes adequate and valuable consideration, given individual weight by Borrower, for this agreement.

Borrower Initials.                 GW            

Section 5.5 Treatment of Affected Loans. If the obligation of any Lender to make LIBOR Loans or to Continue, or to Convert Base Rate Loans into, LIBOR Loans shall be suspended pursuant to Section 5.1(c), Section 5.2, or Section 5.3 then such Lender’s LIBOR Loans shall be automatically Converted into Base Rate Loans on the last day(s) of the then current Interest Period(s) for LIBOR Loans (or, in the case of a Conversion required by Section 5.1(c), Section 5.2, or Section 5.3 on such earlier date as such Lender may specify to the Borrower with a copy to the Administrative Agent) and, unless and until such Lender gives notice as provided below that the circumstances specified in Section 5.1(e), Section 5.2, or Section 5.3 that gave rise to such Conversion no longer exist:

(i) to the extent that such Lender’s LIBOR Loans have been so Converted, all payments and prepayments of principal that would otherwise be applied to such Lender’s LIBOR Loans shall be applied instead to its Base Rate Loans; and

(ii) all Loans that would otherwise be made or Continued by such Lender as LIBOR Loans shall be made or Continued instead as Base Rate Loans, and all Base Rate Loans of such Lender that would otherwise be Converted into LIBOR Loans shall remain as Base Rate Loans.

If such Lender gives notice to the Borrower (with a copy to the Administrative Agent) that the circumstances specified in Section 5.1(c) or 5.3. that gave rise to the Conversion of such Lender’s LIBOR

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Loans pursuant to this Section no longer exist (which such Lender agrees to do promptly upon such circumstances ceasing to exist) at a time when LIBOR Loans made by other Lenders are outstanding, then such Lender’s Base Rate Loans shall be automatically Converted, on the first day(s) of the next succeeding Interest Period(s) for such outstanding LIBOR Loans, to the extent necessary so that, after giving effect thereto, all Loans held by the Lenders holding LIBOR Loans and by such Lender are held pro rata (as to principal amounts, Types and Interest Periods) in accordance with their respective Commitments.

Section 5.6 Change of Lending Office. Each Lender agrees that it will use reasonable efforts (consistent with its internal policy and legal and regulatory restrictions) to designate an alternate Lending Office with respect to any of its Loans affected by the matters or circumstances described in Sections 3.10, 5.1 or 5.3 to reduce the liability of the Borrower or avoid the results provided thereunder, so long as such designation is not disadvantageous to such Lender as determined by such Lender in its sole discretion, except that such Lender shall have no obligation to designate a Lending Office located in the United States of America.

Section 5.7 Assumptions Concerning Funding of LIBOR Loans. Calculation of all amounts payable to a Lender under this Article shall be made as though such Lender had actually funded LIBOR Loans through the purchase of deposits in the relevant market bearing interest at the rate applicable to such LIBOR Loans in an amount equal to the amount of the LIBOR Loans and having a maturity comparable to the relevant Interest Period; provided, however, that each Lender may fund each of its LIBOR Loans in any manner it sees fit and the foregoing assumption shall be used only for calculation of amounts payable under this Article.

ARTICLE VI CONDITIONS PRECEDENT

Section 6.1 Initial Conditions Precedent. The obligation of the Lenders to make the first Loan hereunder is subject to the satisfaction or waiver of the following conditions precedent:

(a) The Administrative Agent shall have received each of the following, in form and substance satisfactory to the Administrative Agent:

(i) counterparts of this Agreement executed by each of the parties hereto;

(ii) Notes executed by the Borrower, payable to the Lenders and complying with the terms of Section 2.9(a);

(iii) the Partial Payment and Limited Guaranty executed by Guarantors;

(iv) the Hazardous Material Indemnity executed by the Borrower and Guarantors;

(v) (A) an opinion of Hogan Lovells US LLP, counsel to the Borrower and the other Loan Parties, and (B) an opinion of local counsel reasonably satisfactory to Administrative Agent, as special counsel to the Loan Parties, each addressed to the Administrative Agent and the Lenders;

(vi) the certificate or articles of incorporation, articles of organization, certificate of limited partnership, declaration of trust or other comparable organizational instrument (if any) of each Loan Party certified as of a recent date by the Secretary of State of the state of formation of such Person;

(vii) a certificate of good standing (or certificate of similar meaning) with respect to each Loan Party issued as of a recent date by the Secretary of State of the state of formation of each such Person and certificates of qualification to transact business or other comparable certificates issued by each Secretary of State (and any state

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department of taxation, as applicable) of each state in which such Person is required to be so qualified and where failure to be so qualified could reasonably be expected to have a Material Adverse Effect;

(viii) a certificate of incumbency signed by the Secretary or Assistant Secretary (or other individual performing similar functions) of each Loan Party with respect to each of the officers of such Person authorized to execute and deliver the Loan Documents to which such Person is a party, and in the case of the Borrower, authorized to execute and deliver on behalf of the Borrower Notices of Borrowing, Notices of Conversion, Notices of Continuation and requests for disbursement from the FF&E Reserve Account;

(ix) copies certified by the Secretary or Assistant Secretary (or other individual performing similar functions) of each Loan Party of (A) the by-laws of such Person, if a corporation, the operating agreement, if a limited liability company, the partnership agreement, if a limited or general partnership, or other comparable document in the case of any other form of legal entity and (B) all corporate, partnership, member or other necessary action taken by such Person to authorize the execution, delivery and performance of the Loan Documents to which it is a party;

(x) a Transfer Authorizer Designation Form effective as of the Agreement Date;

(xi) UCC, tax, judgment and lien search reports with respect to each Loan Party in all necessary or appropriate jurisdictions indicating that there are no Liens of record with respect to the assets of each such Loan Party other than Permitted Liens;

(xii) evidence that the Fees, if any, then due and payable under Section 3.5, together with all other fees, expenses and reimbursement amounts due and payable to the Administrative Agent and any of the Lenders, including without limitation, the fees and expenses of counsel to the Administrative Agent, have been paid;

(xiii) insurance certificates, or other evidence, providing that the insurance coverage required under Section 8.5 (including, without limitation, both property and liability insurance) is in full force and effect and stating that the coverage shall not be cancelable or materially changed without ten (10) days prior written notice to the Administrative Agent of any cancellation for nonpayment or premiums, and not less than thirty (30) days prior written notice to the Administrative Agent of any other cancellation or any modification (including a reduction in coverage), together with appropriate evidence that the Administrative Agent, for its benefit and the benefit of the Lenders is named as a lender’s loss payee and additional insured, as appropriate, on all insurance policies that the Borrower or any Loan Party actually maintains with respect to the Property and improvements thereon; and

(xiv) a Security Deed;

(xv) a Management Agreement Assignment/Subordination with respect to the Management Agreement and a “comfort letter” from the Franchisor;

(xvi) copies of all Material Contracts (to the extent not theretofore delivered) and, if requested by the Administrative Agent, collateral assignments executed by Borrower or the Operating Lessee (as applicable) in favor of the Administrative Agent for its benefit and the benefit of the Lenders, of the Material Contracts relating to the use, occupancy, operation, maintenance, enjoyment or ownership of the Property;

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(xvii) an ALTA 2006 Form Loan Policy of Title Insurance in the amount of the Loan in favor of the Administrative Agent for its benefit and the benefit of the Lenders, with respect to the Property, including endorsements with respect to such items of coverage as the Administrative Agent may request and which endorsements are available and customary in the jurisdiction where the Property is located, issued by a title insurance company acceptable to the Administrative Agent, showing the fee simple title to the Property and improvements described in the Security Deed as vested in Borrower, and insuring that the Lien granted by such Security Deed is a valid Lien against the Property, subject only to the Permitted Liens and such other restrictions, encumbrances, easements and reservations as are acceptable to the Administrative Agent (the “Title Policy”);

(xviii) documents required to establish, or evidencing the establishment of, the FF&E Reserve Account; and

(xix) such other instruments, documents, agreements, financing statements, certificates, opinions and other Security Documents as the Administrative Agent may reasonably request.

(b) In the good faith judgment of the Administrative Agent:

(i) there shall not have occurred or become known to the Administrative Agent or any of the Lenders any event, condition, situation or status since the date of the information contained in the financial and business projections, budgets, pro forma data and forecasts concerning the Guarantors or the Borrower delivered to the Administrative Agent and the Lenders prior to the Agreement Date that has had or could reasonably be expected to result in a Material Adverse Effect; and

(ii) there shall not have occurred or exist any other material disruption of financial or capital markets that could reasonably be expected to materially and adversely affect the transactions contemplated by the Loan Documents.

Section 6.2 Conditions Precedent to All Loans. The obligations of the Lenders to make any Loans are subject to the further conditions precedent that: (a) no Default or Event of Default shall exist as of the date of the making of such Loan or would exist immediately after giving effect thereto; and (b) the representations and warranties made or deemed made by the Borrower and each other Loan Party in the Loan Documents to which any of them is a party, shall be true and correct on and as of the date of the making of such Loan with the same force and effect as if made on and as of such date except to the extent that such representations and warranties expressly relate solely to an earlier date (in which case such representations and warranties shall have been true and accurate on and as of such earlier date) and except for changes in factual circumstances specifically and expressly permitted under the Loan Documents. Each Credit Event shall constitute a certification by the Borrower to the effect set forth in the preceding sentence (both as of the date of the giving of notice relating to such Credit Event and, unless the Borrower otherwise notifies the Administrative Agent prior to the date of such Credit Event, as of the date of the occurrence of such Credit Event). In addition, the Borrower shall be deemed to have represented to the Administrative Agent and the Lenders at the time such Loan is made that all conditions to the making of such Loan contained in this Article VI have been satisfied.

Section 6.3 Conditions as Covenants. If the Lenders permit the making of any Loans prior to the satisfaction of all conditions precedent set forth in Sections 6.1 or 6.2 but require the Borrower to cause such condition or conditions to be satisfied after the date of the making of such Loans, the Borrower shall enter into a supplementary agreement establishing the conditions to be satisfied thereafter and the time by which they must be satisfied, as reasonably required by the Administrative Agent. Unless set forth in writing to the contrary, the making of its Initial Disbursement by a Lender shall constitute a confirmation by such Lender to the Administrative Agent and the other Lenders that insofar as such Lender is

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concerned the Borrower has satisfied the conditions precedent for Initial Disbursement set forth in Sections 6.1 and 6.2.

ARTICLE VII REPRESENTATIONS AND WARRANTIES

Section 7.1 Representations and Warranties. In order to induce the Administrative Agent and each Lender to enter into this Agreement and to make Loans, the Borrower represents and warrants to the Administrative Agent and each Lender as follows:

(a) Organization; Power; Qualification. Each of the Loan Parties is a corporation, partnership or other legal entity, duly organized or formed, validly existing and in good standing under the jurisdiction of its incorporation or formation, has the requisite corporate, partnership or limited liability company power and authority to own or lease its respective properties and to carry on its respective business and is duly qualified as, and is in good standing as a foreign corporation, partnership or other legal entity and authorized to do business, in each jurisdiction in which the character of its properties or the nature of its business requires such qualification or authorization and where the failure to be so qualified or authorized could reasonably be expected to have, in each instance, a Material Adverse Effect.

(b) Ownership Structure. Schedule 7.1(b) is, as of the Agreement Date, a complete and correct organizational chart of the Borrower, identifying (i) the jurisdiction of organization of Borrower and its constituent members, (ii) the nature of the Equity Interests held by each such Person in Borrower and (iii) the percentage of ownership of such Person represented by such Equity Interests. As of the Agreement Date, (w) each Guarantor owns, free and clear of all Liens, and has the unencumbered right to vote, all outstanding Equity Interests owned by such Person directly or indirectly in the Borrower, (x) all of the issued and outstanding capital stock of each such Person organized as a corporation is validly issued, fully paid and nonassessable and (y) there are no outstanding subscriptions, options, warrants, commitments, preemptive rights or agreements of any kind (including, without limitation, any stockholders’ or voting trust agreements) for the issuance, sale, registration or voting of, or outstanding securities convertible into, any additional shares of capital stock of any class, or partnership or other ownership interests of any type in, any such Person.

(c) Authorization of Agreement, Notes, Loan Documents and Borrowings. The Borrower has the requisite limited liability company power, and has taken all necessary company action, and the managers of Borrower have taken all necessary action to authorize the Borrower to borrow and obtain other extensions of credit hereunder. The Borrower and each other Loan Party has the requisite corporate, partnership or limited liability company power, and has taken all necessary corporate, partnership or limited liability company action, and is authorized to execute, deliver and perform each of the Loan Documents and the Fee Letter to which it is a party in accordance with their respective terms. The Loan Documents and the Fee Letter to which the Borrower or any other Loan Party is a party have been duly executed and delivered by the duly authorized officers of such Person and each is a legal, valid and binding obligation of such Person enforceable against such Person in accordance with its respective terms, except as the same may be limited by bankruptcy, insolvency, and other similar laws affecting the rights of creditors generally and the availability of equitable remedies for the enforcement of certain obligations contained herein or therein and as may be limited by equitable principles generally.

(d) Compliance of Agreement, Etc. with Laws. The execution, delivery and performance of this Agreement and the other Loan Documents to which any Loan Party is a party and the Fee Letter in accordance with their respective terms and the borrowings and other extensions of credit hereunder do not and will not, by the passage of time, the giving of notice, or both: (i) require any Governmental Approval that has not been obtained or violate any Applicable Law (including any Environmental Law) relating to any Loan Party; (ii) conflict with, result in a breach of or constitute a default under the organizational documents of any Loan Party, or

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any indenture, agreement or other instrument to which any Loan Party is a party or by which it or any of its respective properties may be bound; or (iii) result in or require the creation or imposition of any Lien upon or with respect to any property now owned or hereafter acquired by any Loan Party other than in favor of the Administrative Agent for its benefit and the benefit of the Lenders.

(e) Compliance with Law; Governmental Approvals. Each Loan Party is in compliance with each Governmental Approval and all other Applicable Laws relating to it except for noncompliances which, and Governmental Approvals the failure to possess which, could not, individually or in the aggregate, reasonably be expected to cause a Default or Event of Default or have a Material Adverse Effect.

(f) Title to Property; Liens. The Borrower holds good, marketable and insurable title to the Property, subject only to Permitted Liens, and has good and sufficient title to, or a valid leasehold interest in, all FF&E and other personal property (except as may be owned by the Operating Lessee as provided in the Operating Lease) necessary for the continued operating of the Property in the ordinary course. Neither the Property nor the other Collateral is subject to any Lien other than Permitted Liens.

(g) Existing Indebtedness. Schedule 7.1(g) is, as of the Agreement Date, a complete and correct listing of all Indebtedness (including all Guarantees) of the Borrower and the Operating Lessee, and if such Indebtedness is secured by any Lien, a description of all of the property subject to such Lien. As of the Agreement Date, the Borrower and the Operating Lessee are in compliance in all material respects with all of the terms of such Indebtedness and all instruments and agreements relating thereto, and no default or event of default, or event or condition which with the giving of notice, the lapse of time, or both, would constitute a default or event of default, exists with respect to any such Indebtedness.

(h) Material Contracts. Schedule 7.1(h) is, as of the Agreement Date, a true, correct and complete listing of all Material Contracts. Each of the Loan Parties that is party to any Material Contract has performed and is in compliance in all material respects with all of the terms of such Material Contract, and no default or event of default, or event or condition which with the giving of notice, the lapse of time, or both, would constitute such a default or event of default, exists with respect to any such Material Contract.

(i) Litigation. Except as set forth on Schedule 7.1(i), there are no actions, suits or proceedings pending (nor, to the knowledge of the Borrower, are there any actions, suits or proceedings threatened, nor is there any basis therefor) against or in any other way relating adversely to or affecting, any Loan Party, or any of their respective properties (except for claims for personal injury or property damage that are covered by insurance and, in the case of actions or proceedings that have been commenced, have been tendered to the insurer for defense and with respect to which the insurer has not denied coverage) in any court or before any arbitrator of any kind or before or by any other Governmental Authority which, (i) if adversely determined, could reasonably be expected to have a Material Adverse Effect or (ii) in any manner draws into question the validity or enforceability of any Loan Documents or the Fee Letter. There are no strikes, slow downs, work stoppages or walkouts or other labor disputes in progress or threatened relating to, any Loan Party.

(j) Taxes. All federal, state and other tax returns of each Loan Party required by Applicable Law to be filed have been duly filed, and all federal, state and other taxes, assessments and other governmental charges or levies upon, each Loan Party and its respective properties, income and other assets which are material in amount are due and payable have been paid, except any such nonpayment or non-filing which is at the time permitted under Section 8.6. As of the Agreement Date, none of the United States income tax returns of any Loan Party is under audit.

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(k) Financial Statements. The Borrower has furnished to each Lender copies of the unaudited consolidated balance sheet of the Chesapeake Lodging Trust and its consolidated Subsidiaries for the fiscal quarter ended September 30, 2010 and the related consolidated statements of operations, shareholders’ equity and cash flow for the fiscal quarter ended on such date. Such balance sheet and statements (including in each case related schedules and notes) are complete and correct in all material respects and present fairly, in accordance with GAAP (subject to Section 1.2(a)) consistently applied throughout the periods involved, the consolidated financial position of Chesapeake Lodging Trust and its consolidated Subsidiaries as at such date and the results of operations and the cash flow for such period (subject, to changes resulting from normal year end audit adjustments).

(l) No Material Adverse Effect. Since December 31, 2009, there has been no event, change, circumstance or occurrence that could reasonably be expected to have a Material Adverse Effect; provided, that the foregoing representation shall be limited to the best of the Borrower’s knowledge as it relates to the Property. Each of the Loan Parties is Solvent.

(m) Operating Statements. To the best of Borrower’s knowledge, the operating statements and other information for the Property delivered by the Borrower to the Administrative Agent fairly present the Operating Expenses, Gross Operating Revenues, Net Operating Income and Adjusted NOI for the Property for the period then ended.

(n) ERISA. Each member of the ERISA Group has fulfilled its obligations under the contribution requirements of ERISA and the Internal Revenue Code with respect to each Plan and is in compliance in all material respects with the presently applicable provisions of ERISA and the Internal Revenue Code with respect to each Plan. No member of the ERISA Group has (i) sought a waiver of the minimum funding standard under Section 412 of the Internal Revenue Code in respect of any Plan, (ii) failed to make any contribution or payment to any Plan or Multiemployer Plan or in respect of any Benefit Arrangement, or made any amendment to any Plan or Benefit Arrangement, which has resulted or could result in the imposition of a Lien or the posting of a bond or other security under ERISA or the Internal Revenue Code or (iii) incurred any liability under Title IV of ERISA other than a liability to the PBGC for premiums under Section 4007 of ERISA.

(o) Absence of Default. None of the Loan Parties is in default under its articles of incorporation, bylaws, partnership agreement or other similar organizational documents, and no event has occurred, which has not been remedied, cured or waived: (i) which constitutes a Default or an Event of Default; or (ii) which constitutes, or which with the passage of time, the giving of notice, or both, would constitute, a default or event of default by, such Person under any agreement (other than this Agreement) or judgment, decree or order to which any such Person is a party or by which any such Person or any of its respective properties may be bound where such default or event of default could, individually or in the aggregate, have a Material Adverse Effect.

(p) Environmental Laws. Each of the Loan Parties: (i) is in compliance with all Environmental Laws applicable to its business, operations and its properties, (ii) has obtained all Governmental Approvals which are required under Environmental Laws, and each such Governmental Approval is in full force and effect, and (iii) is in compliance with all terms and conditions of such Governmental Approvals, where with respect to each of the immediately preceding clauses (i) through (iii) the failure to obtain or to comply with could be reasonably expected to have a Material Adverse Effect. Except for any of the following matters that could not be reasonably expected to have a Material Adverse Effect, no Loan Party has any knowledge of, nor has received notice of, any past present or pending releases, events, conditions, circumstances, activities, practices, incidents, facts, occurrences, actions, or plans that, with respect to any Loan Party, its respective businesses or operations or with respect to its properties, may: (i) cause or contribute to an actual or alleged violation of or noncompliance with Environmental Laws, (ii) cause or contribute to any other potential

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common law or legal claim or other liability, or (iii) cause any of its properties to become subject to any restrictions on ownership, occupancy, use or transferability under any Environmental Law or require the filing or recording of any notice, approval or disclosure document under any Environmental Law and, with respect to the immediately preceding clauses (i) through (iii) is based on or related to the on-site or off-site manufacture, generation, processing, distribution, use, treatment, storage, disposal, transport, removal, clean up or handling, or the emission, discharge, release or threatened release of any wastes or Hazardous Material, or any other requirement under Environmental Law. There is no civil, criminal, or administrative action, suit, demand, claim, hearing, notice, or demand letter, mandate, order, lien, request, investigation, or proceeding pending or, to the Borrower’s knowledge after due inquiry, threatened, against any Loan Party or any Subsidiary of any Loan Party relating in any way to Environmental Laws which, reasonably could be expected to have a Material Adverse Effect. None of the properties of the Loan Parties or any of their Subsidiaries is listed on or proposed for listing on the National Priority List promulgated pursuant to the Comprehensive Environmental Response, Compensation and Liability Act of 1980 and its implementing regulations, or any state or local priority list promulgated pursuant to any analogous state or local law. To the Borrower’s knowledge, no Hazardous Materials generated at or transported from any property of any Loan Party is or has been transported to, or disposed of at, any location that is listed or proposed for listing on the National Priority List or any analogous state or local priority list, or any other location that is or has been the subject of a clean-up, removal or remedial action pursuant to any Environmental Law, except to the extent that such transportation or disposal could not reasonably be expected to result in a Material Adverse Effect.

(q) Investment Company. No Loan Party is (i) an “investment company” or a company “controlled” by an “investment company” within the meaning of the Investment Company Act of 1940, as amended, or (ii) subject to any other Applicable Law which purports to regulate or restrict its ability to borrow money or obtain other extensions of credit or to consummate the transactions contemplated by this Agreement or to perform its obligations under any Loan Document to which it is a party.

(r) Margin Stock. No Loan Party is engaged principally, or as one of its important activities, in the business of extending credit for the purpose, whether immediate, incidental or ultimate, of buying or carrying “margin stock” within the meaning of Regulation U of the Board of Governors of the Federal Reserve System.

(s) Affiliate Transactions. Except as permitted by Section 10.9 or as otherwise set forth on Schedule 7.1.(s), no Loan Party is a party to or bound by any agreement or arrangement (whether oral or written) with any Affiliate.

(t) Intellectual Property. Each of the Loan Parties owns or has the right to use, under valid license agreements or otherwise, all patents, licenses, franchises, trademarks, trademark rights, trade names, trade name rights, trade secrets and copyrights (collectively, “Intellectual Property”), if any, necessary to the conduct of its businesses, without known conflict with any patent, license, franchise, trademark, trade secret, trade name, copyright, or other proprietary right of any other Person.

(u) Business. As of the Agreement Date, the principal business of the Guarantors and the Borrower is the ownership and/or leasing of hotels.

(v) Broker’s Fees. No broker’s or finder’s fee, commission or similar compensation will be payable with respect to the transactions contemplated hereby. No other similar fees or commissions will be payable by any Loan Party for any other services rendered to any Loan Party ancillary to the transactions contemplated hereby.

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(w) Accuracy and Completeness of Information. All written information, reports and other papers and data furnished to the Administrative Agent or any Lender by, on behalf of, or at the direction of, any Loan Party were, at the time the same were so furnished, complete and correct in all material respects, or, in the case of financial statements, present fairly, in accordance with GAAP (subject to Section 1.2(a)) consistently applied throughout the periods involved, the financial position of the Persons involved as at the date thereof and the results of operations for such periods. To Borrower’s knowledge, there is no fact known to any Loan Party which has had, or may in the future have (so far as the Borrower can reasonably foresee), a Material Adverse Effect which has not been set forth in the financial statements referred to in Section 7.1(k) or in such information, reports or other papers or data or otherwise disclosed in writing to the Administrative Agent and the Lenders prior to the Effective Date. No document furnished or written statement made to the Administrative Agent or any Lender in connection with the negotiation, preparation or execution of, or pursuant to, this Agreement or any of the other Loan Documents contains or will contain any untrue statement of a fact material to the creditworthiness of any Loan Party or omits or will omit to state a material fact necessary in order to make the statements contained therein not misleading.

(x) Not Plan Assets; No Prohibited Transactions. For purposes of ERISA and the Internal Revenue Code, none of the assets of any Loan Party or any of their Subsidiaries constitutes “plan assets”, within the meaning of ERISA and the regulations promulgated thereunder, of any Plan. The execution, delivery and performance of the Loan Documents and the Fee Letter by the Loan Parties, and the borrowing, other credit extensions and repayment of amounts thereunder, do not and will not constitute “prohibited transactions” under ERISA or the Internal Revenue Code.

(y) OFAC. None of the Borrower or any of the other Loan Parties or any of their Affiliates: (i) is a person named on the list of Specially Designated Nationals or Blocked Persons maintained by the U.S. Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) available at http://www.treas.gov/offices/eotffc/ofac/sdn/index.html, or as otherwise published from time to time; (ii) is (A) an agency of the government of a country, (B) an organization controlled by a country, or (C) a person resident in a country that is subject to a sanctions program identified on the list maintained by OFAC and available at http://www.treas.gov/offices/eotffc/ofac/sanctions/index.html, or as otherwise published from time to time, as such program may be applicable to such agency, organization or person; or (iii) derives any of its assets or operating income from investments in or transactions with any such country, agency, organization or person; and none of the proceeds from the Loan will be used to finance any operations, investments or activities in, or make any payments to, any such country, agency, organization, or person.

(z) Security Interests. The Borrower is not aware of any fact or circumstance that would prevent the Security Documents from creating, as security for the Obligations, a valid and enforceable Lien on all of the Collateral, superior to and prior to the rights of all third Persons and subject to no other Liens (except for Permitted Liens), in favor of the Administrative Agent for its benefit and the benefit of the Lenders.

Section 7.2 Survival of Representations and Warranties, Etc. All statements contained in any certificate, financial statement or other instrument delivered by or on behalf of any Loan Party to the Administrative Agent or any Lender pursuant to or in connection with this Agreement or any of the other Loan Documents (including, but not limited to, any such statement made in or in connection with any amendment thereto or any statement contained in any certificate, financial statement or other instrument delivered by or on behalf of any Loan Party prior to the Agreement Date and delivered to the Administrative Agent or any Lender in connection with the underwriting or closing the transactions contemplated hereby) shall constitute representations and warranties made by the Borrower under this Agreement. All representations and warranties made under this Agreement and the other Loan Documents shall be deemed to be made at and as of the Agreement Date, the Effective Date and at and

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as of the date of the occurrence of each Credit Event, except to the extent that such representations and warranties expressly relate solely to an earlier date (in which case such representations and warranties shall have been true and accurate on and as of such earlier date) and except for changes in factual circumstances expressly and specifically permitted hereunder. All such representations and warranties shall survive the effectiveness of this Agreement, the execution and delivery of the Loan Documents and the making of the Loans.

ARTICLE VIII AFFIRMATIVE COVENANTS

For so long as this Agreement is in effect, unless the Requisite Lenders (or, if required pursuant to Section 13.7, all of the Lenders) shall otherwise consent in the manner provided for in Section 13.7, the Borrower shall comply with the following covenants:

Section 8.1 Preservation of Existence and Similar Matters. Except as otherwise permitted under Section 10.4, the Borrower and the Operating Lessee shall each preserve and maintain its respective existence, rights, franchises, licenses and privileges in the jurisdiction of its incorporation or formation and qualify and remain qualified and authorized to do business in each jurisdiction in which the character of its properties or the nature of its business requires such qualification and authorization and where the failure to be so authorized and qualified could reasonably be expected to have a Material Adverse Effect.

Section 8.2 Compliance with Applicable Law. The Borrower and the Operating Lessee shall each comply with all Applicable Laws, including the obtaining of all Governmental Approvals, the failure with which to comply could reasonably be expected to have a Material Adverse Effect.

Section 8.3 Maintenance of Property. The Borrower and the Operating Lessee shall each keep in all material respects all properties owned or leased by it in good repair and working order, condition and appearance (ordinary wear and tear excepted), free of any structural defects and otherwise in a manner consistent with industry standards in the area in which such property is located.

Section 8.4 Conduct of Business. The Borrower and the Operating Lessee shall each carry on its respective businesses as described in Section 7.1(u) and not enter into any line of business not otherwise engaged in by such Person as of the Agreement Date.

Section 8.5 Insurance. The Borrower and the Operating Lessee shall each maintain insurance with financially sound and reputable insurance companies against such risks and in such amounts as is customarily maintained by similar businesses or as may be required by Applicable Law. The Borrower shall from time to time deliver to the Administrative Agent upon request a certificate of insurance, stating the names of the insurance companies, the amounts and rates of the insurance, the dates of the expiration thereof and the properties and risks covered thereby and/or insurance certificates, in form acceptable to the Administrative Agent, providing that the insurance coverage required under this Section 8.5 (including without limitation, both property and liability insurance) is in full force and effect and stating that coverage shall not be cancelable or materially changed without ten (10) days prior written notice to the Administrative Agent of any cancellation for nonpayment or premiums, and not less than thirty (30) days prior written notice to the Administrative Agent of any other cancellation or any modification (including a reduction in coverage), together with appropriate evidence that the Administrative Agent, for the benefit of the Lenders, is named as lender’s loss payee and additional insured, as appropriate, on all insurance policies that the Borrower or the Operating Lessee actually maintains with respect to the Property. Such insurance shall, in any event, include terrorism coverage and all of the following:

(a) Insurance against loss to the Property on an “All Risk” policy form, covering insurance risks no less broad than those covered under a Special Multi Peril (SMP) policy form, which contains a Commercial ISO “Causes of Loss-Special Form,” in the then current form, and such other risks as Administrative Agent may reasonably require, in amounts equal to the full replacement cost of the Property, including fixtures and equipment, the applicable Loan Party’s interest in leasehold improvements, and the cost of debris removal, with, if required

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by the Administrative Agent, an agreed amount endorsement, and with deductibles approved by Administrative Agent, except that the deductible for insurance covering damage by windstorm may be in amounts up to 5% of the value of the Property;

(b) Business income insurance in amounts sufficient to pay during any period in which the Property may be damaged or destroyed, for a period of twelve (12) months; (i) at least 100% of projected Net Operating Income and (ii) all amounts (including, but not limited to, all taxes, assessments, utility charges and insurance premiums) required to be paid by any tenants of the Property;

(c) During the making of any alterations or improvements to the Property, carry or cause to be carried builder’s completed value risk insurance against “all risks of physical loss” for the full replacement cost of the Property;

(d) Insurance against loss or damage by flood or mud slide in compliance with The Flood Disaster Protection Act of 1973, as amended from time to time, if the Property is now, or at any time while the Obligations or any portion thereof remains unpaid shall be, situated in any area which an appropriate Governmental Authority designates as a special flood hazard area, in amounts equal to the full replacement value of all above grade structures on the Property, or as such lesser amounts as may be available under Federal Flood Insurance Programs;

(e) Commercial general public liability insurance, with the location of the Property designated thereon, against death, bodily injury and property damage arising on, about or in connection with the Property, with the Borrower and the Operating Lessee listed as insured, with such limits as Borrower may reasonably require (but in no event less than $5,000,000);

(f) If (i) the Property is in a seismic zone 3 or 4 and (ii) the “Probable Maximum Loss” (as determined by a seismic report acceptable to the Administrative Agent and prepared in accordance with ATSM standards) exceeds twenty percent (20%) of the Appraised Value of the Property, earthquake coverage in an amount required by the Administrative Agent;

(g) Terrorism insurance in an amount required by Administrative Agent; and

(h) Such other insurance, including, without limitation, environmental coverages, relating to the Property and the uses and operation thereof as Administrative Agent may, from time to time, reasonably require.

Section 8.6 Payment of Taxes and Claims. The Borrower and the Operating Lessee shall each pay and discharge prior to delinquency (a) all taxes, assessments and governmental charges or levies imposed upon it or upon its income or profits or upon any properties belonging to it, and (b) all lawful claims of materialmen, mechanics, carriers, warehousemen and landlords for labor, materials, supplies and rentals which, if unpaid, might by Applicable Law become a Lien on any properties of such Person that is not a Permitted Lien; provided, however, that (subject to Section 8.16) this Section shall not require the payment or discharge of any such tax, assessment, charge, levy or claim (i) that is being contested in good faith and by appropriate proceedings, (ii) with respect to which reserves in conformity with GAAP have been provided, (iii) if such charge, levy or claim does not constitute and is not secured by any choate Lien on any portion of the Property and no portion of the Property is in jeopardy of being sold, forfeited or lost during or as a result of such contest, (iv) neither Administrative Agent nor any Lender could become subject to any civil or criminal fine or penalty, in each case as a result of non-payment of such charge or claim and (v) such contest does not, and could not reasonably be expected to, result in a Material Adverse Effect.

Section 8.7 Books and Records; Inspections. The Borrower and the Operating Lessee shall each keep proper books of record and account in which full, true and correct entries shall be made of all

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dealings and transactions in relation to its business and activities. The Borrower and the Operating Lessee shall each permit representatives of the Administrative Agent or any Lender to visit and inspect any of their respective properties, to examine and make abstracts from any of their respective books and records and to discuss their respective affairs, finances and accounts with their respective officers, employees and independent public accountants, all at such reasonable times during business hours and as often as may reasonably be requested and, as long as no Event of Default exists, with reasonable prior notice. The Borrower shall be obligated to reimburse the Administrative Agent and the Lenders for their costs and expenses incurred in connection with the exercise of their rights under this Section 8.7 only if such exercise occurs while a Default or Event of Default exists.

Section 8.8 Use of Proceeds. The Borrower shall use the proceeds of the Initial Advance solely to pay a portion of the purchase price of the Property. The balance of the Loan, if and to the extent disbursed, may be used for the general corporate purposes of the Borrower and Guarantors, including repayment of Indebtedness and capital expenditures. The Borrower and the Operating Lessee shall not use any part of such proceeds to purchase or carry, or to reduce or retire or refinance any credit incurred to purchase or carry, any margin stock (within the meaning of Regulation U of the Board of Governors of the Federal Reserve System) or to extend credit to others for the purpose of purchasing or carrying any such margin stock.

Section 8.9 Environmental Matters. The Borrower and the Operating Lessee shall each comply with all Environmental Laws the failure with which to comply could reasonably be expected to have a Material Adverse Effect. The Borrower and the Operating Lessee shall each use commercially reasonable efforts to cause all other Persons occupying, using or present on the Property to comply, with all Environmental Laws in all material respects. The Borrower and the Operating Lessee shall each promptly take all actions and pay or arrange to pay all costs necessary for it and for its properties to comply in all material respects with all Environmental Laws and all Governmental Approvals, including actions to remove and dispose of all Hazardous Materials and to clean up the properties as required under Environmental Laws. The Borrower and the Operating Lessee shall each promptly take all actions necessary to prevent the imposition of any Liens on the Property arising out of or related to any Environmental Laws. Nothing in this Section shall impose any obligation or liability whatsoever on the Administrative Agent or any Lender.

Section 8.10 Further Assurances. At the Borrower’s cost and expense and upon request of the Administrative Agent, the Borrower and the Operating Lessee each shall duly execute and deliver or cause to be duly executed and delivered, to the Administrative Agent such further instruments, documents and certificates, and perform or cause to be performed such further acts reasonably necessary, as determined by Administrative Agent in its reasonable judgment, to carry out the purposes of this Agreement and the other Loan Documents.

Section 8.11 Initial Budgets. Not later than thirty (30) days after the Effective Date, the Borrower shall deliver to the Administrative Agent for its review and approval (a) an FF&E budget for the Property for 2011 and (b) an operating budget for the Property for 2011, each of which shall be subject to Administrative Agent’s review and approval.

Section 8.12 Intentionally Omitted.

Section 8.13 Enforcement of Obligations under Purchase Agreement. Following the occurrence of an Event of Default hereunder, Borrower will, at Administrative Agent’s request, use commercially reasonable efforts to enforce Borrower’s rights (if any) under the Agreement for Sale and Purchase of Hotel for the sale and purchase of Le Meridien San Francisco Hotel, dated as of December 7, 2010, by and between HEI San Francisco LLC, a Delaware limited liability company and the Borrower.

Section 8.14 Operation of the Property. The Borrower and Operating Lessee each shall:

(a) operate the Property in compliance with Applicable Law in all material respects;

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(b) promptly perform and/or observe (or cause to be performed and/or observed) in all material respects the covenants and agreements required to be performed and observed by it under the Material Contracts to which it is a party and do all things necessary to preserve and to keep unimpaired their material rights thereunder;

(c) promptly notify the Administrative Agent of any default under the Management Agreement or the Franchise Agreement of which it is aware;

(d) promptly deliver to the Administrative Agent a copy of each PIP, inspection report and any other written notice or report received by it under the Management Agreement or the Franchise Agreement;

(e) maintain Inventory at the Property in amounts required to operate the Property as operated at of the Effective Date and sufficient to meet the standards from time to time required by the Manager and Franchisor; and

(f) maintain all material Licenses for the Property in full force and effect and promptly comply with all conditions thereof.

Section 8.15 Completion of Renovations.

(a) In the event that Borrower or Operating Lessee shall undertake any Renovations to the Property pursuant to a PIP or otherwise, the Borrower shall (i) cause the same to be performed diligently and promptly and to be commenced, performed and completed within the time limits set forth in the PIP (if applicable); (b) cause to be obtained all governmental permits required for such Renovations; (c) cause such Renovations to be constructed, performed and completed in compliance, in all material respects, with Applicable Law and all applicable requirements of the Manager and Franchisor, in a good and workmanlike manner, with materials of high quality, free of defects, and in accordance with the plans and specifications therefor and the PIP (if applicable), without substantial deviation therefrom unless approved by the Manager or Franchisor that issued the PIP; (d) cause such Renovations to be constructed and completed free and clear of any mechanic’s liens, materialman’s liens and equitable liens (subject to Section 8.16); (e) pay or cause to be paid all costs of such Renovations when due; (f) fully pay and discharge, or cause to be fully paid and discharged, all claims for labor performed and material and services furnished in connection with such Renovations; and (g) promptly release and discharge, or cause to be released and discharged, all claims of stop notices, mechanic’s liens, materialman’s liens and equitable liens that may arise in connection with such Renovations (subject to Section 8.16).

(b) Borrower shall notify the Administrative Agent of any Major Renovations that are scheduled or planned for the Property and shall, if requested by the Administrative Agent, promptly furnish or cause to be furnished to the Administrative Agent (i) copies of any plans and specifications, contracts and governmental permits for such Major Renovations, and (ii) upon substantial completion of such Major Renovations (A) a written statement or certificate executed by the architect designated or shown on the plans and specifications (or, if no architect has been retained, from the general contractor for such Major Renovations certifying, without qualification or exception, that such Major Renovations are substantially completed, (B) all required occupancy permit(s) for the Property issued by the local government agency having jurisdiction and authority to issue same, and (C) such other evidence of lien free completion as the Administrative Agent deems satisfactory in its reasonable discretion.

Section 8.16 Mechanics Liens. The Borrower shall not suffer or permit any mechanics’, suppliers’ or other Lien claims (including without limitation any Liens arising from environmental or other legal proceedings (“Proceedings”) to be filed or otherwise asserted against the Property. If a claim of lien is

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recorded which affects the Property, the Borrower shall, within thirty (30) days of such recording, or within ten (10) days of the Administrative Agent’s demand, whichever occurs first: (a) pay and discharge, or cause to be paid and discharged, the claim of Lien; or (b) provide the Administrative Agent with other assurances (which may include a title insurance endorsement) which the Administrative Agent deems, in its sole and absolute discretion, to be satisfactory for the payment of such claim of Lien and for the full and continuous protection of the Administrative Agent and the Lenders from the effect of such lien.

Section 8.17 Proceedings. If any Proceedings are commenced seeking to enjoin or otherwise prevent or declare unlawful the use, occupancy, operation or maintenance of the Property or any portion thereof, or if any other Proceedings are filed with respect to the Property or any Loan Party, the Borrower shall give prompt notice thereof to the Administrative Agent and to the extent permitted by law and at the Borrower’s or such Loan Party’s sole expense, (i) cause the Proceedings to be vigorously contested in good faith and (ii) in the event of an adverse ruling or decision, prosecute all allowable appeals therefrom. Without limiting the generality of the foregoing, the Borrower shall, or shall cause the applicable Loan Party to, resist the entry or seek the stay of any temporary or permanent injunction that may be entered and use its best efforts to bring about a favorable and speedy disposition of all such Proceedings.

Section 8.18 Correction of Defects. Within a commercially reasonable period of time after the Borrower acquires knowledge of or is given notice of a material defect in the Property, the Borrower and the Operating Lessee shall each commence and continue with diligence to correct, or cause to be corrected, all such defects. Upon the Borrower acquiring knowledge of such defect or departure, the Borrower shall promptly advise the Administrative Agent in writing of such matter and the measures being taken to make such corrections, along with an estimate of the time of completion.

Section 8.19 Personal Property. The tangible Personal Property of the Borrower and the Operating Lessee used in connection with the Property shall be located at the Property and to be kept free and clear of all Liens other than Permitted Liens, and the Borrower shall, from time to time upon request by the Administrative Agent, furnish the Administrative Agent with evidence of such ownership satisfactory to the Administrative Agent, including searches of applicable public records.

Section 8.20 FF&E Reserve Accounts.

(a) The Borrower or the Operating Lessee shall deposit into the FF&E Reserve Account (which account is hereby pledged to Administrative Agent, for the benefit of Lenders, as additional collateral for the Loan), not later than the fifteenth (15th) day of each month during the term of the Loan an amount equal to the greater of (a) four percent (4%) of Gross Operating Revenues for the Property for the previous month and (b) the amount required to be deposited into the “Reserve Fund” for such month pursuant to the terms of the Franchise Agreement (the “FF&E Reserve”).

(b) Provided no Event of Default then exists, funds may be withdrawn from the FF&E Reserve Account, and the Borrower and the Operating Lessee shall each withdraw and use such funds, solely for the payment of expenditures for FF&E and other capital items in accordance with the applicable Approved Capital Budget.

(c) The Administrative Agent shall have the right (to be exercised from time to time at its election) to audit the Borrower’s and the Operating Lessee’s books and records in order to determine whether or not the funds withdrawn or disbursed from the FF&E Reserve Account have been spent only for the purpose for which they were withdrawn or disbursed. The Borrower and the Operating Lessee shall each cooperate with the Administrative Agent in connection with any such audit.

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ARTICLE IX INFORMATION

For so long as this Agreement is in effect, unless the Requisite Lenders (or, if required pursuant to Section 13.7, all of the Lenders) shall otherwise consent in the manner set forth in Section 13.7, the Borrower shall furnish to the Administrative Agent for distribution to each of the Lenders:

Section 9.1 Monthly Reporting. Within thirty (30) days after the end of each calendar month:

(a) An operating statement for the Property for the preceding calendar month detailing the Gross Operating Revenues and Operating Expenses, along with the average daily rate, occupancy levels and revenue per available room for the Property, certified as true, correct and complete by a senior officer of the Borrower, together with: (i) a comparison of the results for such month with (A) the projections for such month contained in the Approved Operating Budget and (B) the actual results for the same calendar month in the immediately preceding calendar year; and (ii) an operating statement showing year-to-date results for the period ending with such month, together with a comparison of such operating statement with (A) the projections for such year-to-date period contained in the Approved Operating Budget and (B) the actual results for the year-to-date period ending with the same month in the immediately preceding calendar year;;

(b) If available from Manager, a budget reforecast, in a form acceptable to Administrative Agent in its reasonable discretion, showing actual results to date and a reforecast for the remainder of the current calendar year;

(c) The most recent Smith Travel Research STAR Report, which shall compare the Property to its primary competitive set.

Section 9.2 DSCR Certificate. Commencing December 1, 2011, and continuing each December 1 and July 1 of each year thereafter, a DSCR Certificate certifying compliance with the Minimum DSCR Hurdle for the twelve month period ending October 31 and May 31 (as applicable) of the then current year.

Section 9.3 Other. Borrower shall deliver to, or cause to be delivered to Administrative Agent:

(a) No later than January 31 of each fiscal year of the Borrower (i) the proposed annual operating budget for the Property, which shall be subject to approval of the Administrative Agent (as so approved, the “Approved Operating Budget”), (ii) the proposed annual FF&E and capital budget for the Property, which shall be subject to the approval of the Administrative Agent (as so approved, the “Approved Capital Budget”) and (iii) if available from Manager, the proposed marketing plan for the Property, which shall be subject to approval of the Administrative Agent (as so approved, the “Approved Marketing Plan”).

(b) Promptly upon Borrower or Operating Lessee entering into any Material Contract or any Tenant Lease, a copy thereof;

(c) Within forty-five (45) days after the end of each calendar quarter, a report in form and substance reasonably satisfactory to the Administrative Agent summarizing the status of the compliance with and performance of the obligations under each PIP for the Property, including in such report a statement of the amounts expended through the end of such quarter with respect to such PIP and amounts projected to be expended thereafter to complete the obligations under such PIP; and

(d) From time to time and promptly upon each request, such data, certificates, reports, statements, opinions of counsel, documents or further information regarding the Property or the business, assets, liabilities, financial condition, results of operations or business

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prospects of any Loan Party as the Administrative Agent or any Lender may reasonably request.

Section 9.4 Electronic Delivery of Certain Information.

(a) Documents required to be delivered pursuant to the Loan Documents shall be delivered by electronic communication and delivery, including, the Internet, e-mail or intranet websites to which the Administrative Agent and each Lender have access (including a commercial, third-party website such as www.Edgar.com <http://www.Edgar.com> or a website sponsored or hosted by the Administrative Agent or the Borrower) provided that (A) the foregoing shall not apply to notices to any Lender pursuant to Article II and (B) the Lender has not notified the Administrative Agent or Borrower that it cannot or does not want to receive electronic communications. The Administrative Agent or the Borrower may, in its discretion, agree to accept notices and other communications to it hereunder by electronic delivery pursuant to procedures approved by it for all or particular notices or communications. Documents or notices delivered electronically shall be deemed to have been delivered twenty-four (24) hours after the date and time on which the Administrative Agent or the Borrower posts such documents or the documents become available on a commercial website and the Administrative Agent or Borrower notifies each Lender of said posting and provides a link thereto provided if such notice or other communication is not sent or posted during the normal business hours of the recipient, said posting date and time shall be deemed to have commenced as of 9:00 a.m. on the opening of business on the next business day for the recipient. Notwithstanding anything contained herein, in every instance the Borrower shall be required to provide paper copies of the certificate required by Section 9.2 to the Administrative Agent and shall deliver paper copies of any documents to the Administrative Agent or to any Lender that requests such paper copies until a written request to cease delivering paper copies is given by the Administrative Agent or such Lender. Except for the certificates required by Section 9.2, the Administrative Agent shall have no obligation to request the delivery of or to maintain paper copies of the documents delivered electronically, and in any event shall have no responsibility to monitor compliance by the Borrower with any such request for delivery. Each Lender shall be solely responsible for requesting delivery to it of paper copies and maintaining its paper or electronic documents.

(b) Documents required to be delivered pursuant to Article II may be delivered electronically to a website provided for such purpose by the Administrative Agent pursuant to the procedures provided to the Borrower by the Administrative Agent.

Section 9.5 Public/Private Information. The Borrower and Operating Lessee each shall cooperate, with the Administrative Agent in connection with the publication of certain materials and/or information provided by or on behalf of the Borrower or the other Loan Parties. Documents required to be delivered pursuant to the Loan Documents shall be delivered by or on behalf of the Borrower or the other Loan Parties to the Administrative Agent and the Lenders (collectively, “Information Materials”) pursuant to this Article and shall designate Information Materials (a) that are either available to the public or not material with respect to the Borrower, the other Loan Parties and their Subsidiaries or any of their respective securities for purposes of United States federal and state securities laws, as “Public Information” and (b) that are not Public Information as “Private Information”.

Section 9.6 USA Patriot Act Notice; Compliance. The USA Patriot Act of 2001 (Public Law 107-56) and federal regulations issued with respect thereto require all financial institutions to obtain, verify and record certain information that identifies individuals or business entities which open an “account” with such financial institution. Consequently, a Lender (for itself and/or as Administrative Agent for all Lenders hereunder) may from time-to-time request, and the Borrower and the Operating Lessee each shall provide to such Lender, such Loan Party’s name, address, tax identification number and/or such other identification information as shall be necessary for such Lender to comply with federal law. An “account” for this purpose may include, without limitation, a deposit account, cash management service, a

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transaction or asset account, a credit account, a loan or other extension of credit, and/or other financial services product.

ARTICLE X NEGATIVE COVENANTS

For so long as this Agreement is in effect, unless the Requisite Lenders (or, if required pursuant to Section 13.7, all of the Lenders) shall otherwise consent in the manner set forth in Section 13.7, the Borrower and Operating Lessee each shall (as applicable), comply with the following covenants:

Section 10.1 Negative Pledge. Neither the Borrower nor the Operating Lessee shall (a) create, assume, incur, permit or suffer to exist any Lien on (i) any Collateral, (ii) any direct or indirect ownership interest in the Borrower or Operating Lessee, as applicable, except for Permitted Liens or (b) permit any Collateral or any direct or indirect ownership interest of the Borrower or the Operating Lessee, as applicable, to be subject to a Negative Pledge.

Section 10.2 Restrictions on Intercompany Transfers. The Borrower shall not create or otherwise cause or suffer to exist or become effective any consensual encumbrance or restriction of any kind on the ability of the Borrower to (a) following the occurrence of an Event of Default hereunder, pay any Indebtedness owed to Guarantor; or (b) make loans or advances to Guarantor; other than with respect to clauses (a) – (b) those encumbrances or restrictions contained in any Loan Document.

Section 10.3 Merger, Consolidation, Sales of Assets and Other Arrangements. Except as otherwise permitted below, the Borrower shall not (a) enter into any transaction of merger or consolidation; (b) liquidate, windup or dissolve itself (or suffer any liquidation or dissolution); or (c) convey, sell, lease, sublease, transfer or otherwise dispose of, in one transaction or a series of transactions, all or any substantial part of the Property; or (d) make an Investment in any other Person.

Section 10.4 Plans. The Borrower shall not, and shall not permit any of its Subsidiaries to, permit any of its respective assets to become or be deemed to be “plan assets” within the meaning of ERISA and the regulations promulgated thereunder for purposes of ERISA and the Internal Revenue Code.

Section 10.5 Fiscal Year. The Borrower shall not change its fiscal year from that in effect as of the Agreement Date.

Section 10.6 Modifications of Organizational Documents. The Borrower shall not amend, supplement, restate or otherwise modify in any material respect its charter, articles of incorporation or by-laws, operating agreement, partnership agreement or other organizational document without the prior written consent of the Administrative Agent (which shall not be unreasonably withheld) unless such amendment, supplement, restatement or other modification is (a) required under or as a result of the Internal Revenue Code or other Applicable Law or (b) required to maintain the Chesapeake Lodging Trust’s status as a REIT.

Section 10.7 Material Contracts. Neither the Borrower nor the Operating Lessee shall do any of the following without the Administrative Agent’s prior written consent: (i) enter into, surrender or terminate any Material Contract, including any new or replacement Franchise Agreement or Management Agreement; (ii) be or become a party to a Management Agreement that provides for base management fees in excess of 3.5% of Gross Operating Revenues or an incentive fee which is not subordinate to full repayment of the Loan; (iii) reduce or extend the term of, increase the charges or fees payable by such Loan Party under, decrease the charges or fees payable to such Loan Party under, or otherwise modify or amend in any material respect, any Material Contract; or (iv) terminate, or modify or amend in any material respect, the Operating Lease.

Section 10.8 Indebtedness.

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(a) Neither the Borrower nor the Operating Lessee shall (i) assume, create, incur or suffer to exist any Indebtedness to the Guarantor or any of its Subsidiaries unless such Indebtedness is fully subordinated to the Obligations on terms satisfactory to the Administrative Agent or (ii) assume, incur or suffer to exist any Indebtedness other than (A) as permitted in clause (i), (B) the Obligations, (C) trade payables and equipment leases that are normal and customary both as to their terms and as to their amounts, and which, in all events, do not exceed $1,000,000 in the aggregate and (D) a Guaranty of the Franchise Agreement entered into in the ordinary course of business.

(b) Neither the Borrower nor the Operating Lessee shall prepay any principal of, or accrued interest on, any Subordinated Debt or otherwise make any voluntary or optional payment with respect to any principal of, or accrued interest on, any Subordinated Debt prior to the originally scheduled maturity date thereof or otherwise redeem or acquire for value any Subordinated Debt. Further, neither the Borrower nor the Operating Lessee shall amend or modify, or permit the amendment or modification of, any agreement or instrument evidencing any Subordinated Debt where such amendment or modification provides for the following or which has any of the following effects:

(i) increases the rate of interest accruing on such Subordinated Debt;

(ii) increases the amount of any scheduled installment of principal or interest, or shortens the date on which any such installment or principal or interest becomes due;

(iii) shortens the final maturity date of such Subordinated Debt;

(iv) increases the principal amount of such Subordinated Debt;

(v) amends any financial or other covenant contained in any document or instrument evidencing any Subordinated Debt in a manner which is more onerous to the Borrower or the Operating Lessee or which requires the Borrower or the Operating Lessee to improve its financial performance;

(vi) provides for the payment of additional fees or the increase in existing fees; and/or

(vii) otherwise could reasonably be expected to be adverse to the interests of the Administrative Agent or the Lenders.

Section 10.9 Transactions with Affiliates. Neither the Borrower nor the Operating Lessee shall enter into any transaction (including the purchase, sale, lease or exchange of any property or the rendering of any service) with any Affiliate of any Loan Party, except (a) as set forth on Schedule 7.1(s) or (b) transactions in the ordinary course of and pursuant to the reasonable requirements of the business of the Borrower or the Operating Lessee and upon fair and reasonable terms which are no less favorable to the Borrower or the Operating Lessee than would be obtained in a comparable arm’s length transaction with a Person that is not an Affiliate.

Section 10.10 Environmental Matters. Neither the Borrower nor the Operating Lessee shall, nor permit any other Person to, use, generate, discharge, emit, manufacture, handle, process, store, release, transport, remove, dispose of or clean up any Hazardous Materials on, under or from the Property in material violation of any Environmental Law or in a manner that could reasonably be expected to lead to any material environmental claim or pose a material risk to human health, safety or the environment. Nothing in this Section shall impose any obligation or liability whatsoever on the Administrative Agent or any Lender.

Section 10.11 Derivatives Contracts. The Borrower shall not enter into or become obligated in respect of, Derivatives Contracts, other than Derivatives Contracts entered into by the Borrower in the ordinary

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course of business and which establish an effective hedge in respect of liabilities, commitments or assets held or reasonably anticipated by the Borrower.

Section 10.12 No Sale or Encumbrance. Except as otherwise provided herein, the Borrower shall not permit the Property or any interest therein to be sold, transferred (including, without limitation, through sale or transfer of the limited liability company interests of the Borrower), mortgaged, assigned, further encumbered or leased, whether directly or indirectly, whether voluntarily, involuntarily or by operation of law, without the prior written consent of the Administrative Agent.

ARTICLE XI DEFAULT

Section 11.1 Events of Default.

Each of the following shall constitute an Event of Default, whatever the reason for such event and whether it shall be voluntary or involuntary or be effected by operation of Applicable Law or pursuant to any judgment or order of any Governmental Authority:

(a) Default in Payment. The Borrower shall fail to pay when due under this Agreement or any other Loan Document (whether upon demand, at maturity, by reason of acceleration or otherwise) the principal of, or any interest on, any of the Loans, or shall fail to pay any of the other payment Obligations owing by the Borrower under this Agreement, any other Loan Document or the Fee Letter, or any other Loan Party shall fail to pay when due any payment obligation owing by such Loan Party under any Loan Document to which it is a party.

(b) Default in Performance.

(i) The Borrower or the Operating Lessee shall fail to perform or observe any term, covenant, condition or agreement on its part to be performed or observed and contained in Article IX and such failure shall continue for a period of five (5) days; or

(ii) The Borrower or Operating Lessee shall fail to perform or observe any term, covenant, condition or agreement on its part to be performed or observed and contained in Article X; or

(iii) The Borrower or Operating Lessee shall fail to perform or observe any term, covenant, condition or agreement contained in this Agreement or any other Loan Document to which it is a party and not otherwise mentioned in this Section and such failure shall continue for a period of thirty (30) days after the earlier of (x) the date upon which Borrower or Operating Lessee obtains knowledge of such failure or (y) the date upon which the Borrower has received written notice of such failure from the Administrative Agent; provided, however, that: (i) if such default is not susceptible of cure within such thirty (30)-day period, such thirty (30)-day period shall be extended to a ninety (90)-day period, but only if (A) Borrower shall commence such cure within such thirty (30)-day period and shall thereafter prosecute such cure to completion, diligently and without delay, and (B) no other Default or Event of Default shall have occurred; and (ii) the grace period provided in this section shall in no event apply to any default relating to any other Default for which this Agreement or the applicable Loan Document specifically provides that no period of grace shall be applicable.

(c) Misrepresentations. Any written statement, representation or warranty made or deemed made by or on behalf of the Borrower or the Operating Lessee under this Agreement or under any other Loan Document, or any amendment hereto or thereto, or in any other writing or statement at any time furnished by, or at the direction of, the Borrower or the Operating Lessee to the Administrative Agent or any Lender, shall at any time prove to have been incorrect or misleading in any material respect when furnished or made or deemed made.

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(d) Indebtedness Cross-Default.

(i) Any Loan Party shall fail to make any payment when due and payable in respect of any Indebtedness (other than the Loans) having an aggregate outstanding principal amount (or, in the case of any Derivatives Contract, having, without regard to the effect of any close-out netting provision, a Derivatives Termination Value) equal to or exceeding $1,000,000 (as applicable, “Material Indebtedness”); or

(ii) (A) The maturity of any Material Indebtedness shall have been accelerated in accordance with the provisions of any indenture, contract or instrument evidencing, providing for the creation of or otherwise concerning such Material Indebtedness or (B) any Material Indebtedness shall have been required to be prepaid or repurchased prior to the stated maturity thereof; or

(iii) Any other event shall have occurred and be continuing which, with or without the passage of time, the giving of notice, or otherwise, would permit any holder or holders of any Material Indebtedness, any trustee or agent acting on behalf of such holder or holders or any other Person, to accelerate the maturity of any Material Indebtedness or require any Material Indebtedness to be prepaid or repurchased prior to its stated maturity; or

(iv) An Event of Default (as defined therein) shall occur under the Guarantor Credit Agreement.

(e) Voluntary Bankruptcy Proceeding. Any Loan Party shall: (i) commence a voluntary case under the Bankruptcy Code or other federal bankruptcy laws (as now or hereafter in effect); (ii) file a petition seeking to take advantage of any other Applicable Laws, domestic or foreign, relating to bankruptcy, insolvency, reorganization, winding-up, or composition or adjustment of debts; (iii) consent to, or fail to contest in a timely and appropriate manner, any petition filed against it in an involuntary case under such bankruptcy laws or other Applicable Laws or consent to any proceeding or action described in the immediately following Section 11.1(f); (iv) apply for or consent to, or fail to contest in a timely and appropriate manner, the appointment of, or the taking of possession by, a receiver, custodian, trustee, or liquidator of itself or of a substantial part of its property, domestic or foreign; (v) admit in writing its inability to pay its debts as they become due; (vi) make a general assignment for the benefit of creditors; (vii) make a conveyance fraudulent as to creditors under any Applicable Law; or (viii) take any corporate, partnership or other organizational action for the purpose of effecting any of the foregoing.

(f) Involuntary Bankruptcy Proceeding. A case or other proceeding shall be commenced against any Loan Party in any court of competent jurisdiction seeking: (i) relief under the Bankruptcy Code or other federal bankruptcy laws (as now or hereafter in effect) or under any other Applicable Laws, domestic or foreign, relating to bankruptcy, insolvency, reorganization, winding up, or composition or adjustment of debts; or (ii) the appointment of a trustee, receiver, custodian, liquidator or the like of such Person, or of all or any substantial part of the assets, domestic or foreign, of such Person, and in the case of either clause (i) or (ii) such case or proceeding shall continue undismissed or unstayed for a period of sixty (60) consecutive days, or an order granting the relief requested in such case or proceeding (including, but not limited to, an order for relief under such Bankruptcy Code or such other federal bankruptcy laws) shall be entered.

(g) Revocation of Loan Documents. Any Loan Party shall (or shall attempt to) disavow, revoke or terminate any Loan Document to which it is a party or the Fee Letter or shall otherwise challenge or contest in any action, suit or proceeding in any court or before any Governmental Authority the validity or enforceability of any Loan Document or the Fee Letter.

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(h) Judgment. A judgment or order for the payment of money shall be entered against any Loan Party by any court or other tribunal and (i) such judgment or order shall continue for a period of twenty (20) days without being paid, stayed or dismissed through appropriate appellate proceedings and (ii) either (A) the amount for which insurance has not been acknowledged in writing by the applicable insurance carrier (or the amount as to which the insurer has denied liability) exceeds, individually or together with all other such judgments or orders entered against such Persons, $1,000,000 or (B) such judgment or order could reasonably be expected to have a Material Adverse Effect.

(i) Attachment. A warrant, writ of attachment, execution or similar process shall be issued against any property of any Loan Party, which exceeds, individually or together with all other such warrants, writs, executions and processes, $1,000,000 in amount and such warrant, writ, execution or process shall not be paid, discharged, vacated, stayed or bonded for a period of twenty (20) days.

(j) Intentionally Omitted.

(k) Loan Documents. An Event of Default (as defined therein) shall occur under any of the other Loan Documents.

(l) Change of Control/Change in Management.

(i) Any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), is or becomes the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that a Person will be deemed to have “beneficial ownership” of all securities that such Person has the right to acquire, whether such right is exercisable immediately or only after the passage of time), directly or indirectly, of more than 19.9% of the total voting power of the then outstanding voting stock of Chesapeake Lodging Trust;

(ii) During any period of twelve (12) consecutive months ending after the Agreement Date, individuals who at the beginning of any such 12-month period constituted the Board of Trustees of Chesapeake Lodging Trust (together with any new trustees whose election by such Board or whose nomination for election by the shareholders of Chesapeake Lodging Trust was approved by a vote of a majority of the trustees then still in office who were either directors at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority of the Board of Trustees of Chesapeake Lodging Trust then in office; or

(iii) Chesapeake Lodging Trust shall cease to be the sole general partner of Chesapeake Lodging, L.P., or shall cease to own at least 80.1% of the partnership interests in the Chesapeake Lodging, L.P.; or

(iv) The Borrower shall cease to be a Wholly Owned Subsidiary of Chesapeake Lodging, L.P.; or

(v) The Operating Lessee shall cease to be a Wholly Owned Subsidiary of Chesapeake Lodging, L.P.

(m) Damage; Strike; Casualty. Any material damage to, or loss, theft or destruction of, any Collateral, whether or not insured, any strike, lockout, labor dispute, embargo, condemnation, act of God or public enemy, or other casualty which causes, for more than thirty (30) consecutive days beyond the coverage period of any applicable business

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interruption insurance, the cessation or substantial curtailment of revenue producing activities of the Borrower or any other Loan Party.

(n) Security Documents. Any provision of any Security Documents shall for any reason cease to be valid and binding on, enforceable against, any Loan Party, or any Lien created under any Security Document ceases to be a valid and perfected first priority Lien in any of the Collateral purported to be covered thereby.

(o) Chesapeake Lodging Trust. Chesapeake Lodging Trust shall cease to maintain its status as a REIT or cease to maintain trading privileges on the New York Stock Exchange for at least one class of its common shares.

(p) Default Under Swap. The occurrence of a default by Borrower or a termination event with respect to Borrower under any swap, derivative, foreign exchange or hedge transaction or arrangement (or similar transaction or arrangement howsoever described or defined) at any time entered into between Borrower and Lender in connection with the Loan; or

(q) Default Under Indemnity. The occurrence of a default under the Hazardous Materials indemnity Agreement, dated the date hereof, executed by Borrower, Guarantors and Administrative Agent.

(r) Default Under Guaranty. The occurrence of a default under any guaranty now or hereafter executed in connection with the Loan, including without limitation, Guarantor’s failure to perform any covenant, condition or obligation thereunder.

Section 11.2 Remedies Upon Event of Default. Upon the occurrence of an Event of Default the following provisions shall apply:

(a) Acceleration; Termination of Facilities.

(i) Automatic. Upon the occurrence of an Event of Default specified in Sections 11.1(e) or 11.1(f), (A)(1) the principal of, and all accrued interest on, the Loans and the Notes at the time outstanding, and (2) all of the other Obligations of the Borrower, including, but not limited to, the other amounts owed to the Lenders and the Administrative Agent under this Agreement, the Notes or any of the other Loan Documents shall become immediately and automatically due and payable by the Borrower without presentment, demand, protest, or other notice of any kind, all of which are expressly waived by the Borrower, and (B) the Commitments and the obligation of the Lenders to make Loans hereunder shall all immediately and automatically terminate.

(ii) Optional. If any other Event of Default shall exist, the Administrative Agent may, and at the direction of the Requisite Lenders shall: (A) declare (1) the principal of, and accrued interest on, the Loans and the Notes at the time outstanding and (2) all of the other Obligations, including, but not limited to, the other amounts owed to the Lenders and the Administrative Agent under this Agreement, the Notes or any of the other Loan Documents to be forthwith due and payable, whereupon the same shall immediately become due and payable without presentment, demand, protest or other notice of any kind, all of which are expressly waived by the Borrower, and (B) terminate the Commitments and the obligation of the Lenders to make Loans hereunder.

(b) Loan Documents. The Requisite Lenders may direct the Administrative Agent to, and the Administrative Agent if so directed shall, exercise any and all of its rights under any and all of the other Loan Documents.

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(c) Applicable Law. The Requisite Lenders may direct the Administrative Agent to, and the Administrative Agent if so directed shall, exercise all other rights and remedies it may have under any Applicable Law.

(d) Appointment of Receiver. To the extent permitted by Applicable Law, the Administrative Agent and the Lenders shall be entitled to the appointment of a receiver for the assets and properties of the Borrower and Operating Lessee, without notice of any kind whatsoever and without regard to the adequacy of any security for the Obligations or the solvency of any party bound for its payment, to take possession of all or any portion of the Collateral, the property and/or the business operations of the Borrower and Operating Lessee and to exercise such power as the court shall confer upon such receiver.

Section 11.3 Intentionally Omitted.

Section 11.4 Marshaling; Payments Set Aside. Neither Administrative Agent nor any Lender shall be under any obligation to marshal any assets in favor of any Loan Party or any other party or against or in payment of any or all of the Obligations. To the extent that any Loan Party makes a payment or payments to the Administrative Agent and/or any Lender, or the Administrative Agent and/or any Lender enforce their security interests or exercise their rights of setoff, and such payment or payments or the proceeds of such enforcement or setoff or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside and/or required to be repaid to a trustee, receiver or any other party under any bankruptcy law, state or federal law, common law or equitable cause, then to the extent of such recovery, the Obligations, or part thereof originally intended to be satisfied, and all Liens, rights and remedies therefore, shall be revived and continued in full force and effect as if such payment had not been made or such enforcement or setoff had not occurred.

Section 11.5 Allocation of Proceeds. If an Event of Default exists and maturity of any of the Obligations has been accelerated or the Maturity Date has occurred, all payments received by the Administrative Agent under any of the Loan Documents, in respect of any principal of or interest on the Obligations or any other amounts payable by the Borrower hereunder or thereunder, shall be applied in the following order and priority:

(a) amounts due to the Administrative Agent, and the Lenders in respect of expenses due under Section 13.2 until paid in full, and then Fees;

(b) amounts due to the Administrative Agent and the Lenders in respect of Protective Advances;

(c) payments of interest on the Loans, to be applied for the ratable benefit of the Lenders, in such order as the Lenders may determine in their sole discretion;

(d) payments of principal of the Loans, to be applied for the ratable benefit of the Lenders, in such order as the Lenders may determine in their sole discretion;

(e) amounts due to the Administrative Agent and the Lenders pursuant to Sections 12.8 and 13.10;

(f) payments of all other amounts due under any of the Loan Documents, if any, to be applied for the ratable benefit of the Lenders; and

(g) any amount remaining after application as provided above, shall be paid to the Borrower or whomever else may be legally entitled thereto.

Section 11.6 Intentionally Omitted.

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Section 11.7 Rescission of Acceleration by Requisite Lenders. If at any time after acceleration of the maturity of the Loans and the other Obligations, the Borrower shall pay all arrears of interest and all payments on account of principal of the Obligations which shall have become due otherwise than by acceleration (with interest on principal and, to the extent permitted by Applicable Law, on overdue interest, at the rates specified in this Agreement) and all Events of Default and Defaults (other than nonpayment of principal of and accrued interest on the Obligations due and payable solely by virtue of acceleration) shall become remedied or waived to the satisfaction of the Requisite Lenders (or, if the matter that resulted in such Event of Default may be waived only by all of Lenders, then waived to the satisfaction of all of the Lenders), then by written notice to the Borrower, the Requisite Lenders may elect, in the sole discretion of such Requisite Lenders, to rescind and annul the acceleration and its consequences. The provisions of the preceding sentence are intended merely to bind all of the Lenders to a decision which may be made at the election of the Requisite Lenders, and are not intended to benefit the Borrower and do not give the Borrower the right to require the Lenders to rescind or annul any acceleration hereunder, even if the conditions set forth herein are satisfied.

Section 11.8 Performance by Administrative Agent. If the Borrower or any other Loan Party shall fail to perform any covenant, duty or agreement contained in any of the Loan Documents, the Administrative Agent may perform or attempt to perform such covenant, duty or agreement on behalf of the Borrower or such Loan Party after the expiration of any cure or grace periods set forth herein. In such event, the Borrower shall, at the request of the Administrative Agent, promptly pay any amount reasonably expended by the Administrative Agent in such performance or attempted performance to the Administrative Agent, together with interest thereon at the applicable Post-Default Rate from the date of such expenditure until paid. Notwithstanding the foregoing, neither the Administrative Agent nor any Lender shall have any liability or responsibility whatsoever for the performance of any obligation of the Borrower or such Loan Party under this Agreement or any other Loan Document.

Section 11.9 Rights Cumulative. The rights and remedies of the Administrative Agent and the Lenders under this Agreement, each of the other Loan Documents and the Fee Letter shall be cumulative and not exclusive of any rights or remedies which any of them may otherwise have under Applicable Law. In exercising their respective rights and remedies the Administrative Agent and the Lenders may be selective and no failure or delay by the Administrative Agent or any of the Lenders in exercising any right shall operate as a waiver of it, nor shall any single or partial exercise of any power or right preclude its other or further exercise or the exercise of any other power or right.

ARTICLE XII THE ADMINISTRATIVE AGENT

Section 12.1 Appointment and Authorization. Each Lender hereby irrevocably appoints and authorizes the Administrative Agent to take such action as contractual representative on such Lender’s behalf and to exercise such powers under this Agreement and the other Loan Documents as are specifically delegated to the Administrative Agent by the terms hereof and thereof, together with such powers as are reasonably incidental thereto. Not in limitation of the foregoing, each Lender authorizes and directs the Administrative Agent to enter into the Loan Documents for the benefit of the Lenders. Each Lender hereby agrees that, except as otherwise set forth herein, any action taken by the Requisite Lenders in accordance with the provisions of this Agreement or the Loan Documents, and the exercise by the Requisite Lenders of the powers set forth herein or therein, together with such other powers as are reasonably incidental thereto, shall be authorized and binding upon all of the Lenders. Nothing herein shall be construed to deem the Administrative Agent a trustee or fiduciary for any Lender or to impose on the Administrative Agent duties or obligations other than those expressly provided for herein. Without limiting the generality of the foregoing, the use of the terms “Agent”, “Administrative Agent”, “agent” and similar terms in the Loan Documents with reference to the Administrative Agent is not intended to connote any fiduciary or other implied (or express) obligations arising under agency doctrine of any Applicable Law. Instead, use of such terms is merely a matter of market custom, and is intended to create or reflect only an administrative relationship between independent contracting parties. The Administrative Agent shall deliver to each Lender, promptly upon receipt thereof by the Administrative Agent, copies of each of the financial statements, certificates, notices and other documents delivered to the Administrative Agent pursuant to Article IX, that the Borrower is not otherwise required to deliver directly to the Lenders. The

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Administrative Agent will furnish to any Lender, upon the request of such Lender, a copy (or, where appropriate, an original) of any document, instrument, agreement, certificate or notice furnished to the Administrative Agent by the Borrower, any Loan Party or any other Affiliate of the Borrower, pursuant to this Agreement or any other Loan Document not already delivered to such Lender pursuant to the terms of this Agreement or any such other Loan Document. As to any matters not expressly provided for by the Loan Documents (including, without limitation, enforcement or collection of any of the Obligations), the Administrative Agent shall not be required to exercise any discretion or take any action, but shall be required to act or to refrain from acting (and shall be fully protected in so acting or refraining from acting) upon the instructions of the Requisite Lenders (or all of the Lenders if explicitly required under any other provision of this Agreement), and such instructions shall be binding upon all Lenders and all holders of any of the Obligations; provided, however, that, notwithstanding anything in this Agreement to the contrary, the Administrative Agent shall not be required to take any action which exposes the Administrative Agent to personal liability or which is contrary to this Agreement or any other Loan Document or Applicable Law. Not in limitation of the foregoing, the Administrative Agent may exercise any right or remedy it or the Lenders may have under any Loan Document upon the occurrence of a Default or an Event of Default unless the Requisite Lenders have directed the Administrative Agent otherwise. Without limiting the foregoing, no Lender shall have any right of action whatsoever against the Administrative Agent as a result of the Administrative Agent acting or refraining from acting under this Agreement or any of the other Loan Documents in accordance with the instructions of the Requisite Lenders (or all of the Lenders if explicitly required under any other provision of this Agreement).

Section 12.2 Wells Fargo as Lender. Wells Fargo, as a Lender, shall have the same rights and powers under this Agreement and any other Loan Document, as any other Lender and may exercise the same as though it were not the Administrative Agent; and the term “Lender” or “Lenders” shall, unless otherwise expressly indicated, include Wells Fargo in each case in its individual capacity. Wells Fargo and its Affiliates may each accept deposits from, maintain deposits or credit balances for, invest in, lend money to, act as trustee under indentures of, serve as financial advisor to, and generally engage in any kind of business with the Borrower, any other Loan Party or any other Affiliate thereof as if it were any other bank and without any duty to account therefore to the other Lenders. Further, the Administrative Agent and any Affiliate may accept fees and other consideration from the Borrower for services in connection with this Agreement or otherwise without having to account for the same to the other Lenders. The Lenders acknowledge that, pursuant to such activities, Wells Fargo or its affiliates may receive information regarding the Borrower, other Loan Parties, other Subsidiaries and other Affiliates (including information that may be subject to confidentiality obligations in favor of such Person) and acknowledge that the Administrative Agent shall be under no obligation to provide such information to them.

Section 12.3 Collateral Matters; Protective Advances.

(a) Each Lender hereby authorizes the Administrative Agent, without the necessity of any notice to or further consent from any Lender, from time to time prior to an Event of Default, to take any action with respect to any Collateral or Loan Documents which may be necessary to perfect and maintain perfected the Liens upon the Collateral granted pursuant to any of the Loan Documents.

(b) The Lenders hereby authorize the Administrative Agent, at its option and in its discretion, to release any Lien granted to or held by the Administrative Agent upon any Collateral (i) upon termination of the Commitments and indefeasible payment and satisfaction in full of all of the Obligations; (ii) as expressly permitted by, but only in accordance with, the terms of the applicable Loan Document; and (iii) if approved, authorized or ratified in writing by the Requisite Lenders (or such greater number of Lenders as this Agreement or any other Loan Document may expressly provide). Upon request by the Administrative Agent at any time, the Lenders will confirm in writing the Administrative Agent’s authority to release particular types or items of Collateral pursuant to this Section.

(c) The Administrative Agent shall have no obligation whatsoever to the Lenders or to any other Person to assure that the Collateral exists or is owned by the Borrower or any other Loan

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Party or is cared for, protected or insured or that the Liens granted to the Administrative Agent herein or pursuant hereto have been properly or sufficiently or lawfully created, perfected, protected or enforced or are entitled to any particular priority, or to exercise or to continue exercising at all or in any manner or under any duty of care, disclosure or fidelity any of the rights, authorities and powers granted or available to the Administrative Agent in this Section or in any of the Loan Documents, it being understood and agreed that in respect of the Collateral, or any act, omission or event related thereto, the Administrative Agent may act in any manner it may deem appropriate, in its sole discretion, and that the Administrative Agent shall have no duty or liability whatsoever to the Lenders, except to the extent resulting from its gross negligence or willful misconduct.

(d) The Administrative Agent may make, and shall be reimbursed by the Lenders (in accordance with their Pro Rata Shares) to the extent not reimbursed by the Borrower for, Protective Advances during any one calendar year with respect to the Property up to the sum of (i) amounts expended to pay real estate taxes, assessments and governmental charges or levies imposed upon the Property; (ii) amounts expended to pay insurance premiums for policies of insurance related to the Property; and (iii) $500,000.00. Protective Advances in excess of said sum during any calendar year for the Property shall require the consent of the Requisite Lenders. The Borrower agrees to pay on demand all Protective Advances.

Section 12.4 Post Foreclosure Plans. If all or any portion of the Collateral is acquired by the Administrative Agent as a result of a foreclosure or the acceptance of a deed or assignment in lieu of foreclosure, or is retained in satisfaction of all or any part of the Obligations, the title to any such Collateral, or any portion thereof, shall be held in the name of the Administrative Agent or a nominee or Subsidiary of the Administrative Agent, as Administrative Agent, for the ratable benefit of all Lenders. The Administrative Agent shall prepare a recommended course of action for such Collateral (a “Post-Foreclosure Plan”), which shall be subject to the approval of the Requisite Lenders. In accordance with the approved Post-Foreclosure Plan, the Administrative Agent shall manage, operate, repair, administer, complete, construct, restore or otherwise deal with the Collateral acquired, and shall administer all transactions relating thereto, including, without limitation, employing a management agent, leasing agent and other agents, contractors and employees, including agents for the sale of such Collateral, and the collecting of rents, revenues and other sums from such Collateral and paying the expenses of such Collateral. Actions taken by the Administrative Agent with respect to the Collateral, which are not specifically provided for in the approved Post-Foreclosure Plan or reasonably incidental thereto, shall require the written consent of the Requisite Lenders by way of supplement to such Post-Foreclosure Plan. Upon demand therefor from time to time, each Lender will contribute its share (based on its Pro Rata Share) of all reasonable costs and expenses incurred by the administrative agent pursuant to the approved Post-Foreclosure Plan in connection with the construction, operation, management, maintenance, leasing and sale of such Collateral. In addition, the Administrative Agent shall render or cause to be rendered to each Lender, on a monthly basis, an income and expense statement for such Collateral, and each Lender shall promptly contribute its Pro Rata Share of any operating loss for such Collateral, and such other expenses and operating reserves as the Administrative Agent shall deem reasonably necessary pursuant to and in accordance with the approved Post-Foreclosure Plan. To the extent there is Net Operating Income from such Collateral (after establishment of reserves in accordance with the Post-Foreclosure Plan), the Administrative Agent shall, in accordance with the approved Post-Foreclosure Plan, determine the amount and timing of distributions to the Lenders. All such distributions shall be made to the Lenders in accordance with their respective Pro Rata Shares. The Lenders acknowledge and agree that if title to any Collateral is obtained by the Administrative Agent or its nominee, such Collateral will not be held as a permanent investment but will be liquidated and the proceeds of such liquidation will be distributed in accordance with Section 11.5 as soon as practicable. The Administrative Agent shall undertake to sell such Collateral, at such price and upon such terms and conditions as the Requisite Lenders reasonably shall determine to be most advantageous to the Lenders. Any purchase money mortgage or deed of trust taken in connection with the disposition of such Collateral in accordance with the immediately preceding sentence shall name the Administrative Agent, as Administrative Agent for the Lenders, as the beneficiary or mortgagee. In such case, the Administrative Agent and the Lenders shall enter into an agreement with respect to such purchase money mortgage or

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deed of trust defining the rights of the Lenders in the same Pro Rata Shares as provided hereunder, which agreement shall be in all material respects similar to this Article insofar as the same is appropriate or applicable.

Section 12.5 Approvals of Lenders. All communications from the Administrative Agent to any Lender requesting such Lender’s determination, consent, approval or disapproval (a) shall be given in the form of a written notice to such Lender, (b) shall be accompanied by a description of the matter or issue as to which such determination, approval, consent or disapproval is requested, or shall advise such Lender where information, if any, regarding such matter or issue may be inspected, or shall otherwise describe the matter or issue to be resolved, (c) shall include a legend substantially as follows, printed in capital letters or boldface type: “THIS COMMUNICATION REQUIRES IMMEDIATE RESPONSE. FAILURE TO RESPOND WITHIN TEN (10) BUSINESS DAYS AFTER THE DELIVERY OF THIS COMMUNICATION SHALL CONSTITUTE A DEEMED APPROVAL BY THE ADDRESSEE OF THE MATTER DESCRIBED ABOVE.”, (d) shall include, if reasonably requested by such Lender and to the extent not previously provided to such Lender, written materials and a summary of all oral information provided to the Administrative Agent by the Borrower in respect of the matter or issue to be resolved, and (e) shall include the Administrative Agent’s recommended course of action or determination in respect thereof. Unless a Lender shall give written notice to the Administrative Agent that it specifically objects to the recommendation or determination of the Administrative Agent (together with a reasonable written explanation of the reasons behind such objection) within ten (10) Business Days (or such lesser or greater period as may be specifically required under the express terms of the Loan Documents) of receipt of such communication (“Lender Reply Period”), such Lender shall be deemed to have conclusively approved of or consented to such recommendation or determination. With respect to decisions requiring the approval of the Requisite Lenders, Administrative Agent shall timely submit any required written notices to all Lenders and upon receiving the required approval or consent shall follow the course of action or determination recommended by Administrative Agent or such other course of action recommended by the Requisite Lenders, and each non-responding Lender shall be deemed to have concurred with such recommended course of action. Notwithstanding the foregoing, any matter requiring all Lenders’ approval or consent shall not be deemed given by any Lender’s failure to respond within any such Lender’s Reply Period.

Section 12.6 Notice of Events of Default. The Administrative Agent shall not be deemed to have knowledge or notice of the occurrence of a Default or Event of Default unless the Administrative Agent has received notice from a Lender or the Borrower referring to this Agreement, describing with reasonable specificity such Default or Event of Default and stating that such notice is a “notice of default.” If any Lender (excluding the Lender which is also serving as the Administrative Agent) becomes aware of any Default or Event of Default, it shall promptly send to the Administrative Agent such a “notice of default”, but nothing herein contained shall impose upon any Lender an obligation to determine whether there has been or is a Default or Event of Default. Further, if the Administrative Agent receives such a “notice of default,” the Administrative Agent shall give prompt notice thereof to the Lenders.

Section 12.7 Administrative Agent’s Reliance. Notwithstanding any other provisions of this Agreement or any other Loan Documents, neither the Administrative Agent nor any of its directors, officers, agents, employees or counsel shall be liable for any action taken or not taken by it under or in connection with this Agreement or any other Loan Document, except for its or their own gross negligence or willful misconduct in connection with its duties expressly set forth herein or therein. Without limiting the generality of the foregoing, the Administrative Agent may consult with legal counsel (including its own counsel or counsel for the Borrower or any other Loan Party), independent public accountants and other experts selected by it and shall not be liable for any action taken or omitted to be taken in good faith by it in accordance with the advice of such counsel, accountants or experts. Neither the Administrative Agent nor any of its directors, officers, agents, employees or counsel: (a) makes any warranty or representation to any Lender or any other Person and shall be responsible to any Lender or any other Person for any statement, warranty or representation made or deemed made by the Borrower, any other Loan Party or any other Person in or in connection with this Agreement or any other Loan Document; (b) shall have any duty to ascertain or to inquire as to the performance or observance of any of the terms, covenants or conditions of this Agreement or any other Loan Document or the satisfaction of any conditions precedent

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under this Agreement or any Loan Document on the part of the Borrower or other Persons or inspect the property, books or records of the Borrower or any other Person; (c) shall be responsible to any Lender for the due execution, legality, validity, enforceability, genuineness, sufficiency or value of this Agreement or any other Loan Document, any other instrument or document furnished pursuant thereto or any Collateral covered thereby or the perfection or priority of any Lien in favor of the Administrative Agent on behalf of the Lenders in any such Collateral; (d) shall have any liability in respect of any recitals, statements, certifications, representations or warranties contained in any of the Loan Documents or any other document, instrument, agreement, certificate or statement delivered in connection therewith; and (e) shall incur any liability under or in respect of this Agreement or any other Loan Document by acting upon any notice, consent, certificate or other instrument or writing (which may be by telephone, telecopy or electronic mail) believed by it to be genuine and signed, sent or given by the proper party or parties. The Administrative Agent may execute any of its duties under the Loan Documents by or through agents, employees or attorneys-in-fact and shall not be responsible for the negligence or misconduct of any agent or attorney-in-fact that it selects in the absence of gross negligence or willful misconduct.

Section 12.8 Indemnification of Administrative Agent. Regardless of whether the transactions contemplated by this Agreement and the other Loan Documents are consummated, each Lender agrees to indemnify the Administrative Agent (to the extent not reimbursed by the Borrower and without limiting the obligation of the Borrower to do so) pro rata in accordance with such Lender’s respective Pro Rata Share, from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever which may at any time be imposed on, incurred by, or asserted against the Administrative Agent (in its capacity as Administrative Agent but not as a “Lender”) in any way relating to or arising out of the Loan Documents, any transaction contemplated hereby or thereby or any action taken or omitted by the Administrative Agent under the Loan Documents (collectively, “Indemnifiable Amounts”); provided, however, that no Lender shall be liable for any portion of such Indemnifiable Amounts to the extent resulting from the Administrative Agent’s gross negligence or willful misconduct as determined by a court of competent jurisdiction in a final, non-appealable judgment; provided, however, that no action taken in accordance with the directions of the Requisite Lenders (or all of the Lenders, if expressly required hereunder) shall be deemed to constitute gross negligence or willful misconduct for purposes of this Section. Without limiting the generality of the foregoing, each Lender agrees to reimburse the Administrative Agent (to the extent not reimbursed by the Borrower and without limiting the obligation of the Borrower to do so) promptly upon demand for its ratable share of any out-of-pocket expenses (including the reasonable fees and expenses of the counsel to the Administrative Agent) incurred by the Administrative Agent (except to the extent resulting from the Administrative Agent’s gross negligence or willful misconduct as determined by a court of competent jurisdiction in a final, non-appealable judgment) in connection with the preparation, negotiation, execution, administration, or enforcement (whether through negotiations, legal proceedings, or otherwise) of, or legal advice with respect to the rights or responsibilities of the parties under, the Loan Documents, any suit or action brought by the Administrative Agent to enforce the terms of the Loan Documents and/or collect any Obligations, any “lender liability” suit or claim brought against the Administrative Agent and/or the Lenders, and any claim or suit brought against the Administrative Agent and/or the Lenders arising under any Environmental Laws. Such out-of-pocket expenses (including counsel fees) shall be advanced by the Lenders on the request of the Administrative Agent notwithstanding any claim or assertion that the Administrative Agent is not entitled to indemnification hereunder upon receipt of an undertaking by the Administrative Agent that the Administrative Agent will reimburse the Lenders if it is actually and finally determined by a court of competent jurisdiction that the Administrative Agent is not so entitled to indemnification. The agreements in this Section shall survive the payment of the Loans and all other amounts payable hereunder or under the other Loan Documents and the termination of this Agreement. If the Borrower shall reimburse the Administrative Agent for any Indemnifiable Amount following payment by any Lender to the Administrative Agent in respect of such Indemnifiable Amount pursuant to this Section, the Administrative Agent shall share such reimbursement on a ratable basis with each Lender making any such payment.

Section 12.9 Lender Credit Decision, Etc. Each of the Lenders expressly acknowledges and agrees that neither the Administrative Agent nor any of its officers, directors, employees, agents, counsel, attorneys in fact or other affiliates has made any representations or warranties to such Lender and that no

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act by the Administrative Agent hereafter taken, including any review of the affairs of the Borrower, any other Loan Party or any other Subsidiary or Affiliate, shall be deemed to constitute any such representation or warranty by the Administrative Agent or any Lender. Each of the Lenders acknowledges that it has, independently and without reliance upon the Administrative Agent, any other Lender or counsel to the Administrative Agent, or any of their respective officers, directors, employees, agents or counsel, and based on the financial statements of the Borrower, the other Loan Parties, the other Subsidiaries and other Affiliates, and inquiries of such Persons, its independent due diligence of the business and affairs of the Borrower, the other Loan Parties, the other Subsidiaries and other Persons, its review of the Loan Documents, the legal opinions required to be delivered to it hereunder, the advice of its own counsel and such other documents and information as it has deemed appropriate, made its own credit and legal analysis and decision to enter into this Agreement and the transactions contemplated hereby. Each of the Lenders also acknowledges that it will, independently and without reliance upon the Administrative Agent, any other Lender or counsel to the Administrative Agent or any of their respective officers, directors, employees and agents, and based on such review, advice, documents and information as it shall deem appropriate at the time, continue to make its own decisions in taking or not taking action under the Loan Documents. The Administrative Agent shall not be required to keep itself informed as to the performance or observance by the Borrower or any other Loan Party of the Loan Documents or any other document referred to or provided for therein or to inspect the properties or books of, or make any other investigation of, the Borrower, any other Loan Party or any other Subsidiary. Except for notices, reports and other documents and information expressly required to be furnished to the Lenders by the Administrative Agent under this Agreement or any of the other Loan Documents, the Administrative Agent shall have no duty or responsibility to provide any Lender with any credit or other information concerning the business, operations, property, financial and other condition or creditworthiness of the Borrower, any other Loan Party or any other Affiliate thereof which may come into possession of the Administrative Agent or any of its officers, directors, employees, agents, attorneys in fact or other Affiliates. Each of the Lenders acknowledges that the Administrative Agent’s legal counsel in connection with the transactions contemplated by this Agreement is only acting as counsel to the Administrative Agent and is not acting as counsel to any Lender.

Section 12.10 Successor Administrative Agent. The Administrative Agent may resign at any time as Administrative Agent under the Loan Documents by giving written notice thereof to the Lenders and the Borrower. In addition, in the event of a material breach of its duties hereunder, the Administrative Agent may be removed as Administrative Agent under the Loan Documents at any time by all Lenders (other than the Lender then acting as Administrative Agent) and, provided no Default or Event of Default exists, the Borrower upon 30-days’ prior notice. Upon any such resignation or removal, the Requisite Lenders (which, in the case of the removal of the Administrative Agent as provided in the immediately preceding sentence, shall be determined without regard to the Commitment of the Lender then acting as Administrative Agent) shall have the right to appoint a successor Administrative Agent which appointment shall, provided no Default or Event of Default exists, be subject to the Borrower’s approval, which approval shall not be unreasonably withheld or delayed (except that the Borrower shall, in all events, be deemed to have approved each Lender and any of its affiliates as a successor Administrative Agent). If no successor Administrative Agent shall have been so appointed in accordance with the immediately preceding sentence, and shall have accepted such appointment, within thirty (30) days after the current Administrative Agent’s giving of notice of resignation, then the current Administrative Agent may, on behalf of the Lenders, appoint a successor Administrative Agent, which shall be a Lender, if any Lender shall be willing to serve, and otherwise shall be an Eligible Assignee. Upon the acceptance of any appointment as Administrative Agent hereunder by a successor Administrative Agent, such successor Administrative Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the current Administrative Agent, and the current Administrative Agent shall be discharged from its duties and obligations under the Loan Documents. After any Administrative Agent’s resignation hereunder as Administrative Agent, the provisions of this Article XII. shall continue to inure to its benefit as to any actions taken or omitted to be taken by it while it was Administrative Agent under the Loan Documents. Notwithstanding anything contained herein to the contrary, the Administrative Agent may assign its rights and duties under the Loan Documents to any of its affiliates by giving the Borrower and each Lender prior written notice.

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ARTICLE XIII MISCELLANEOUS

Section 13.1 Notices. Unless otherwise provided herein (including without limitation as provided in Section 9.5.), communications provided for hereunder shall be in writing and shall be mailed, telecopied, or delivered as follows:

If to the Borrower:

CHSP San Francisco LLC

c/o Chesapeake Lodging, L.P.

1997 Annapolis Exchange Parkway

Suite 410 Annapolis, MD 21401

Attention: Graham J. Wootten

Telecopy Number:         (410) 972-4144

Telephone Number:        (410) 972-4142

With a copy to:

Hogan Lovells US LLP

555 13th Street, N.W.

Washington, D.C. 20004

Attn: Carol Weld King, Esquire

Telecopy Number:         (202) 637-5910

Telephone Number:         (202) 637-5634

If to the Administrative Agent:

Wells Fargo Bank, N.A.

1750 H Street, NW, #400

Washington, D.C. 20006

Attn: Mark F. Monahan

Telecopy Number:        (202) 429-2985

Telephone Number:        (202) 303-3017

With a copy to:

Wells Fargo Bank, N.A.

Hospitality Finance Group

2030 Main Street, Suite 500

Irvine, CA 92614

Attn: Rhonda Friedly

Telecopy Number:        (949) 251-4983

Telephone Number:        (949) 251-4383

If to any other Lender:

To such Lender’s address or telecopy number as set forth on Schedule 13.1 attached hereto (as such Schedule may be updated from time to time)

or, as to each party at such other address as shall be designated by such party in a written notice to the other parties delivered in compliance with this Section; provided, a Lender shall only be required to give

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notice of any such other address to the Administrative Agent and the Borrower. All such notices and other communications shall be effective (i) if mailed, upon the first to occur of receipt or the expiration of three (3) days after the deposit in the United States Postal Service mail, postage prepaid and addressed to the address of the Borrower or the Administrative Agent and Lenders at the addresses specified; (ii) if telecopied, when transmitted; (iii) if hand delivered, when delivered; or (iv) if delivered in accordance with Section 9.5. to the extent applicable; provided, however, that, in the case of the immediately preceding clauses (i), (ii) and (iii), non-receipt of any communication as of the result of any change of address of which the sending party was not notified or as the result of a refusal to accept delivery shall be deemed receipt of such communication. Notwithstanding the immediately preceding sentence, all notices or communications to the Administrative Agent or any Lender under Article II. shall be effective only when actually received. None of the Administrative Agent or any Lender shall incur any liability to the Borrower (nor shall the Administrative Agent incur any liability to the Lenders) for acting upon any telephonic or electronic notice referred to in this Agreement which the Administrative Agent or such Lender, as the case may be, believes in good faith to have been given by a Person authorized to deliver such notice or for otherwise acting in good faith hereunder.

Section 13.2 Expenses. The Borrower agrees (a) to pay or reimburse the Administrative Agent for all of its reasonable out-of-pocket costs and reasonable expenses incurred in connection with the preparation, negotiation and execution of, and any amendment, supplement or modification to, any of the Loan Documents (including due diligence expense and reasonable travel expenses related to closing), and the consummation of the transactions contemplated thereby, including the reasonable fees and disbursements of counsel to the Administrative Agent, (b) to pay or reimburse the Administrative Agent and the Lenders for all their costs and expenses incurred in connection with the enforcement or preservation of any rights under the Loan Documents and the Fee Letter, including the reasonable fees and disbursements of their respective counsel (including the allocated fees and expenses of in-house counsel) and any payments in indemnification or otherwise payable by the Lenders to the Administrative Agent pursuant to the Loan Documents, (c) to pay, and indemnify and hold harmless the Administrative Agent and the Lenders from, any and all recording and filing fees and any and all liabilities with respect to, or resulting from any failure to pay or delay in paying, documentary, stamp, excise and other similar taxes, if any, which may be payable or determined to be payable in connection with the execution and delivery of any of the Loan Documents, or consummation of any amendment, supplement or modification of, or any waiver or consent under or in respect of, any Loan Document and (d) to the extent not already covered by any of the preceding subsections, to pay the fees and disbursements of counsel to the Administrative Agent and any Lender incurred in connection with the representation of the Administrative Agent or such Lender in any matter relating to or arising out of any bankruptcy or other proceeding of the type described in Sections 11.1(e) or 11.1(f), including, without limitation (i) any motion for relief from any stay or similar order, (ii) the negotiation, preparation, execution and delivery of any document relating to the Obligations and (iii) the negotiation and preparation of any debtor in possession financing or any plan of reorganization of the Borrower or any other Loan Party, whether proposed by the Borrower, such Loan Party, the Lenders or any other Person, and whether such fees and expenses are incurred prior to, during or after the commencement of such proceeding or the confirmation or conclusion of any such proceeding.

Section 13.3 Stamp, Intangible and Recording Taxes. The Borrower will pay any and all stamp, excise, intangible, registration, recordation and similar taxes, fees or charges and shall indemnify the Administrative Agent and each Lender against any and all liabilities with respect to or resulting from any delay in the payment or omission to pay any such taxes, fees or charges, which may be payable or determined to be payable in connection with the execution, delivery, recording, performance or enforcement of this Agreement, the Notes and any of the other Loan Documents, the amendment, supplement, modification or waiver of or consent under this Agreement, the Notes or any of the other Loan Documents or the perfection of any rights or Liens under this Agreement, the Notes or any of the other Loan Documents.

Section 13.4 Setoff. Subject to Section 3.3 and in addition to any rights now or hereafter granted under Applicable Law and not by way of limitation of any such rights, the Administrative Agent and each Lender and each Participant is hereby authorized by the Borrower, at any time or from time to time while an Event of Default exists, without notice to the Borrower or to any other Person, any such notice being

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hereby expressly waived, but in the case of a Lender or a Participant subject to receipt of the prior written consent of the Administrative Agent and the Requisite Lenders exercised in their sole discretion, to set off and to appropriate and to apply any and all deposits (general or special, including, but not limited to, indebtedness evidenced by certificates of deposit, whether matured or unmatured) and any other indebtedness at any time held or owing by the Administrative Agent, such Lender, such Participant or any affiliate of the Administrative Agent or such Lender, to or for the credit or the account of the Borrower against and on account of any of the Obligations, irrespective of whether or not any or all of the Loans and all other Obligations have been declared to be, or have otherwise become, due and payable as permitted by Section 11.2, and although such Obligations shall be contingent or unmatured.

Section 13.5 Litigation; Jurisdiction; Other Matters; Waivers.

(a) EACH PARTY HERETO ACKNOWLEDGES THAT ANY DISPUTE OR CONTROVERSY BETWEEN OR AMONG THE BORROWER, THE ADMINISTRATIVE AGENT OR ANY OF THE LENDERS WOULD BE BASED ON DIFFICULT AND COMPLEX ISSUES OF LAW AND FACT AND WOULD RESULT IN DELAY AND EXPENSE TO THE PARTIES. ACCORDINGLY, TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH OF THE LENDERS, THE ADMINISTRATIVE AGENT AND THE BORROWER HEREBY WAIVES ITS RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING OF ANY KIND OR NATURE IN ANY COURT OR TRIBUNAL IN WHICH AN ACTION MAY BE COMMENCED BY OR AGAINST ANY PARTY HERETO ARISING OUT OF THIS AGREEMENT, THE NOTES, OR ANY OTHER LOAN DOCUMENT OR THE FEE LETTER OR IN CONNECTION WITH ANY COLLATERAL OR ANY LIEN OR BY REASON OF ANY OTHER SUIT, CAUSE OF ACTION OR DISPUTE WHATSOEVER BETWEEN OR AMONG THE BORROWER, THE ADMINISTRATIVE AGENT OR ANY OF THE LENDERS OF ANY KIND OR NATURE.

(b) EACH OF THE BORROWER, THE ADMINISTRATIVE AGENT AND EACH LENDER HEREBY AGREES THAT THE FEDERAL DISTRICT COURT OF THE NORTHERN DISTRICT OF CALIFORNIA OR, AT THE OPTION OF THE ADMINISTRATIVE AGENT, ANY STATE COURT LOCATED IN SAN FRANCISCO, CALIFORNIA SHALL HAVE JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN OR AMONG THE BORROWER, THE ADMINISTRATIVE AGENT OR ANY OF THE LENDERS, PERTAINING DIRECTLY OR INDIRECTLY TO THIS AGREEMENT, THE LOANS, THE NOTES OR ANY OTHER LOAN DOCUMENT OR THE FEE LETTER OR TO ANY MATTER ARISING HEREFROM OR THEREFROM OR THE COLLATERAL. THE BORROWER AND EACH OF THE LENDERS EXPRESSLY SUBMIT AND CONSENT IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR PROCEEDING COMMENCED IN SUCH COURTS. THE BORROWER HEREBY WAIVES PERSONAL SERVICE OF THE SUMMONS AND COMPLAINT, OR OTHER PROCESS OR PAPERS ISSUED THEREIN, AND AGREES THAT SERVICE OF SUCH SUMMONS AND COMPLAINT, OR OTHER PROCESS OR PAPERS MAY BE MADE BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO THE BORROWER AT ITS ADDRESS FOR NOTICES PROVIDED FOR HEREIN. SHOULD THE BORROWER FAIL TO APPEAR OR ANSWER ANY SUMMONS, COMPLAINT, PROCESS OR PAPERS SO SERVED WITHIN THIRTY (30) DAYS AFTER THE MAILING THEREOF, THE BORROWER SHALL BE DEEMED IN DEFAULT AND AN ORDER AND/OR JUDGMENT MAY BE ENTERED AGAINST IT AS DEMANDED OR PRAYED FOR IN SUCH SUMMONS, COMPLAINT, PROCESS OR PAPERS. EACH PARTY FURTHER WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH ACTION OR PROCEEDING IN ANY SUCH COURT OR THAT SUCH ACTION OR PROCEEDING WAS BROUGHT IN AN INCONVENIENT FORUM AND EACH AGREES NOT TO PLEAD OR CLAIM THE SAME. THE CHOICE OF FORUM SET FORTH IN THIS SECTION SHALL NOT BE DEEMED TO PRECLUDE THE BRINGING OF ANY ACTION BY THE ADMINISTRATIVE AGENT OR ANY LENDER OR THE ENFORCEMENT BY THE ADMINISTRATIVE AGENT OR ANY LENDER OF ANY JUDGMENT OBTAINED IN SUCH FORUM IN ANY OTHER APPROPRIATE JURISDICTION.

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(c) THE PROVISIONS OF THIS SECTION HAVE BEEN CONSIDERED BY EACH PARTY WITH THE ADVICE OF COUNSEL AND WITH A FULL UNDERSTANDING OF THE LEGAL CONSEQUENCES THEREOF, AND SHALL SURVIVE THE PAYMENT OF THE LOANS AND ALL OTHER AMOUNTS PAYABLE HEREUNDER OR UNDER THE OTHER LOAN DOCUMENTS, THE TERMINATION OR EXPIRATION OF ALL LETTERS OF CREDIT AND THE TERMINATION OF THIS AGREEMENT.

Section 13.6 Successors and Assigns.

(a) Generally. The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns, except that the Borrower may not assign or otherwise transfer any of its rights under this Agreement without the prior written consent of all the Lenders (and any such assignment or transfer to which all of the Lenders have not consented shall be void).

(b) Participations. Any Lender may at any time grant to an affiliate of such Lender, or one or more banks or other financial institutions (each a “Participant”) participating interests in its Commitment or the Obligations owing to such Lender. Except as otherwise provided in Section 13.4 or as otherwise expressly stated herein, no Participant shall have any rights or benefits under this Agreement or any other Loan Document. In the event of any such grant by a Lender of a participating interest to a Participant, such Lender shall remain responsible for the performance of its obligations hereunder, and the Borrower and the Administrative Agent shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this Agreement. Any agreement pursuant to which any Lender may grant such a participating interest shall provide that such Lender shall retain the sole right and responsibility to enforce the obligations of the Borrower hereunder including, without limitation, the right to approve any amendment, modification or waiver of any provision of this Agreement; provided, however, such Lender may agree with the Participant that it will not, without the consent of the Participant, agree to (i) increase such Lender’s Commitment or the aggregate amount of the Commitments, (ii) extend the date fixed for the payment of principal on the Loans or portions thereof owing to such Lender, (iii) reduce the rate at which interest is payable thereon, (iv) release all or substantially all of the Collateral except as permitted in this Agreement, (v) change the definition of “Minimum DSCR Hurdle,” or (vi) modify the definition of the term “Requisite Lenders” or modify in any other manner the number or percentage of the Lenders required to make any determinations or waive any rights hereunder or to modify any provision hereof. An assignment or other transfer which is not permitted by subsection (c) or (d) below shall be given effect for purposes of this Agreement only to the extent of a participating interest granted in accordance with this subsection (b).

(c) Assignments. Any Lender may with the prior written consent of the Administrative Agent at any time assign to one or more Eligible Assignees (each an “Assignee”) all or a portion of its rights and obligations under this Agreement and the Notes; provided, however, (i) any partial assignment shall be in an amount at least equal to $10,000,000 and (except in the case of an assignment made at a time at which there exists an Event of Default) after giving effect to such assignment the assigning Lender retains a Commitment, or if the Commitments have been terminated, holds Notes having an aggregate outstanding principal balance, of at least $10,000,000, (ii) the Administrative Agent and (provided no Event of Default has occurred that is continuing) the Borrower shall have approved such assignment, which approvals shall not be unreasonably withheld and (iii) each such assignment shall be effected by means of an Assignment and Assumption Agreement. Upon execution and delivery of such instrument and payment by such Assignee to such transferor Lender of an amount equal to the purchase price agreed between such transferor Lender and such Assignee, such Assignee shall be deemed to be a Lender party to this Agreement and shall have all the rights and obligations of a Lender with a Commitment and/or Loans, as the case may be, as set forth in such Assignment and Assumption Agreement, and the transferor Lender shall be

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released from its obligations hereunder to a corresponding extent, and no further consent or action by any party shall be required. Upon the consummation of any assignment pursuant to this subsection (c), the transferor Lender, the Administrative Agent and the Borrower shall make appropriate arrangements so the new Notes are issued to the Assignee and such transferor Lender, as appropriate, and shall update Schedule I attached hereto. In connection with any such assignment, the transferor Lender shall pay to the Administrative Agent an administrative fee for processing such assignment in the amount of $4,500.00. Anything in this Section to the contrary notwithstanding, no Lender may assign or participate any interest in any Loan held by it hereunder to the Borrower, or any of its respective affiliates or Subsidiaries.

(d) Federal Reserve Bank Assignments. In addition to the assignments and participations permitted under the foregoing provisions of the Section, and without the need to comply with any of the formal or procedural requirements of this Section, any Lender may at any time and from time to time, pledge and assign all or any portion of its rights under all or any of the Loan Documents to a Federal Reserve Bank; provided that no such pledge of assignment shall release such Lender from its obligations thereunder. No such pledge or assignment shall release the assigning Lender from its obligations hereunder.

(e) Information to Assignee, Etc. A Lender may furnish any information concerning the Borrower, any Subsidiary or any other Loan Party in the possession of such Lender from time to time to Assignees and Participants (including prospective Assignees and Participants but shall advise them that any such information that is not publicly available is confidential).

Section 13.7 Amendments and Waivers.

(a) Generally. Except as otherwise expressly provided in this Agreement, (i) any consent or approval required or permitted by this Agreement or in any Loan Document to be given by the Lenders may be given, (ii) any term of this Agreement or of any other Loan Document may be amended, (iii) the performance or observance by the Borrower or any other Loan Party of any terms of this Agreement or such other Loan Document may be waived, and (iv) the continuance of any Default or Event of Default may be waived (either generally or in a particular instance and either retroactively or prospectively) with, but only with, the written consent of the Requisite Lenders (or the Administrative Agent at the written direction of the Requisite Lenders), and, in the case of an amendment to any Loan Document, the written consent of each Loan Party which is party thereto. Notwithstanding the previous sentence, the Administrative Agent, shall be authorized on behalf of all the Lenders, without the necessity of any notice to, or further consent from, any Lender, to waive the imposition of the late fees provided in Section 2.6, up to a maximum of three (3) times per calendar year.

(b) Unanimous Consent. Notwithstanding the foregoing, no amendment, waiver or consent shall, unless in writing, and signed by all of the Lenders directly affected thereby (or the Administrative Agent at the written direction of the Lenders), do any of the following:

(i) increase the Commitments of the Lenders (excluding any increase as a result of an assignment of Commitments permitted under Section 13.6) or subject the Lenders to any additional obligations;

(ii) reduce the principal of, or interest rates that have accrued or that will be charged on the outstanding principal amount of, any Loans or other Obligations;

(iii) reduce the amount of any Fees payable to the Lenders hereunder (except that any change in Fees payable to the Administrative Agent for its own account shall not require the consent of any Lender other than the Administrative Agent);

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(iv) except for waivers permitted under the last sentence of Section 13.7(a), postpone any date fixed for any payment of principal of, or interest on, any Loans or for the payment of Fees or any other Obligations (including without limitation any extension of the Maturity Date except in accordance with Section 2.10);

(v) change the definitions of Commitment Percentage or Pro Rata Share;

(vi) amend this Section or amend the definitions of the terms used in this Agreement or the other Loan Documents insofar as such definitions affect the substance of this Section;

(vii) modify the definition of the terms “Requisite Lenders” or modify in any other manner the number or percentage of the Lenders required to make any determinations or waive any rights hereunder or to modify any provision hereof;

(viii) release any Guarantor from its obligations under the Guaranty;

(ix) waive a Default or Event of Default under Section 11.1(a); or

(x) release or dispose of any collateral unless released or disposed of as permitted by, and in accordance with, Section 12.3.

Notwithstanding the provisions of Section 3.9(a)(ii), no action shall be taken under clauses (i), (ii), (iii) or (iv) above that would affect a Defaulting Lender without its written consent.

(c) Amendment of Administrative Agent’s Duties, Etc. No amendment, waiver or consent unless in writing and signed by the Administrative Agent, in addition to the Lenders required hereinabove to take such action, shall affect the rights or duties of the Administrative Agent under this Agreement or any of the other Loan Documents. No waiver shall extend to or affect any obligation not expressly waived or impair any right consequent thereon and any amendment, waiver or consent shall be effective only in the specific instance and for the specific purpose set forth therein. No course of dealing or delay or omission on the part of the Administrative Agent or any Lender in exercising any right shall operate as a waiver thereof or otherwise be prejudicial thereto. Any Event of Default occurring hereunder shall continue to exist until such time as such Event of Default is waived in writing in accordance with the terms of this Section, notwithstanding any attempted cure or other action by the Borrower, any other Loan Party or any other Person subsequent to the occurrence of such Event of Default. Except as otherwise explicitly provided for herein or in any other Loan Document, no notice to or demand upon the Borrower shall entitle the Borrower to other or further notice or demand in similar or other circumstances.

Section 13.8 Nonliability of Administrative Agent and Lenders. The relationship between the Borrower, on the one hand, and the Lenders and the Administrative Agent, on the other hand, shall be solely that of borrower and lender. Neither the Administrative Agent nor any Lender shall have any fiduciary responsibilities to the Borrower and no provision in this Agreement or in any of the other Loan Documents, and no course of dealing between or among any of the parties hereto, shall be deemed to create any fiduciary duty owing by the Administrative Agent or any Lender to any Lender, the Borrower, any Subsidiary or any other Loan Party. Neither the Administrative Agent nor any Lender undertakes any responsibility to the Borrower to review or inform the Borrower of any matter in connection with any phase of the Borrower’s business or operations.

Section 13.9 Confidentiality. Except as otherwise provided by Applicable Law, the Administrative Agent and each Lender shall utilize all non public information obtained pursuant to the requirements of this Agreement which has been identified as confidential or proprietary by the Borrower in accordance with its customary procedure for handling confidential information of this nature and in accordance with

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safe and sound banking practices but in any event may make disclosure: (a) to any of their respective Affiliates (provided any such Affiliate shall agree to keep such information confidential in accordance with the terms of this Section 13.9); (b) as reasonably requested by any bona fide actual or proposed pledgee, Assignee, Participant or other transferee in connection with the contemplated transfer of any Commitment or participations therein as permitted hereunder (provided they shall agree to keep such information confidential in accordance with the terms of this Section 13.9); (c) as required or requested by any Governmental Authority or representative thereof or pursuant to legal process or in connection with any legal proceedings, as and to the extent so required or requested; (d) to the Administrative Agent’s or such Lender’s independent auditors and other professional advisors (provided they shall be notified of the confidential nature of the information); (e) if an Event of Default exists, to any other Person, in connection with the exercise by the Administrative Agent or the Lenders of rights hereunder or under any of the other Loan Documents; and (f) to the extent such information (x) becomes publicly available other than as a result of a breach of this Section or (y) becomes available to the Administrative Agent or any Lender on a nonconfidential basis from a source other than the Borrower or any Affiliate, the disclosure of which is not made in violation of any confidentiality agreement pertaining to such information that is known to the Administrative Agent or such Lender, as applicable.

Section 13.10 Indemnification.

(a) The Borrower shall and hereby agrees to indemnify, defend and hold harmless the Administrative Agent, any affiliate of the Administrative Agent, each of the Lenders and their respective directors, officers, shareholders, agents, employees and counsel (each referred to herein as an “Indemnified Party”) from and against any and all losses, costs, claims, damages, liabilities, deficiencies, judgments or expenses of every kind and nature (including, without limitation, amounts paid in settlement, court costs and the fees and disbursements of counsel incurred in connection with any litigation, investigation, claim or proceeding or any advice rendered in connection therewith, but excluding losses, costs, claims, damages, liabilities, deficiencies, judgments or expenses indemnification in respect of which is specifically covered by Section 3.10 or 5.1 or expressly excluded from the coverage of such Sections) incurred by an Indemnified Party in connection with, arising out of, or by reason of, any suit, cause of action, claim, arbitration, investigation or settlement, consent decree or other proceeding (the foregoing referred to herein as an “Indemnity Proceeding”) which is in any way related directly or indirectly to: (i) this Agreement or any other Loan Document or the transactions contemplated thereby; (ii) the making of any Loans hereunder; (iii) any actual or proposed use by the Borrower of the proceeds of the Loans; (iv) the Administrative Agent’s or any Lender’s entering into this Agreement; (v) the fact that the Administrative Agent and the Lenders have established the credit facility evidenced hereby in favor of the Borrower; (vi) the fact that the Administrative Agent and the Lenders are creditors of the Borrower and have or are alleged to have information regarding the financial condition, strategic plans or business operations of the Borrower and its Subsidiaries; (vii) the fact that the Administrative Agent and the Lenders are material creditors of the Borrower and are alleged to influence directly or indirectly the business decisions or affairs of the Borrower and the Subsidiaries or their financial condition; (viii) the exercise of any right or remedy the Administrative Agent or the Lenders may have under this Agreement or the other Loan Documents including, but not limited to, the foreclosure upon, or seizure of, any Collateral or the exercise of any other rights of a secured party; or (ix) any violation or non compliance by the Borrower, any other Loan Party or any Subsidiary of any Applicable Law (including any Environmental Law) including, but not limited to, any Indemnity Proceeding commenced by (A) the Internal Revenue Service or state taxing authority or (B) any Governmental Authority or other Person under any Environmental Law, including any Indemnity Proceeding commenced by a Governmental Authority or other Person seeking remedial or other action to cause the Borrower, any other Loan Party or any Subsidiaries of any of the foregoing (or its respective properties) (or the Administrative Agent and/or the Lenders as successors to the Borrower) to be in compliance with such Environmental Laws; provided, however, that the Borrower shall not be obligated to indemnify any Indemnified Party to the extent that any losses, costs, claims, damages, liabilities, deficiencies, judgments or expenses incurred by

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such Indemnified Party (1) arise from such Indemnified Party’s gross negligence or willful misconduct or (2) arise from acts or events that occur at a Property after foreclosure or other taking of title to such Property by an Indemnified Party or any successor to or assignee of an Indemnified Party.

(b) The Borrower’s indemnification obligations under this Section shall apply to all Indemnity Proceedings arising out of, or related to, the foregoing whether or not an Indemnified Party is a named party in such Indemnity Proceeding. In this connection, this indemnification shall cover all costs and expenses of any Indemnified Party in connection with any deposition of any Indemnified Party or compliance with any subpoena (including any subpoena requesting the production of documents). This indemnification shall, among other things, apply to any Indemnity Proceeding commenced by other creditors of the Borrower, any other Loan Party or any Subsidiary of any of the foregoing, any shareholder of the Borrower, any other Loan Party or any Subsidiary of any of the foregoing (whether such shareholder(s) are prosecuting such Indemnity Proceeding in their individual capacity or derivatively on behalf of the Borrower, any other Loan Party or any Subsidiary of any of the foregoing), any account debtor of the Borrower, any other Loan Party or any Subsidiary of any of the foregoing or by any Governmental Authority.

(c) This indemnification shall apply to any Indemnity Proceeding arising during the pendency of any bankruptcy proceeding filed by or against the Borrower, any other Loan Party and/or any Subsidiary of any of the foregoing.

(d) Out-of-pocket fees and expenses of, and all amounts paid to third persons by, an Indemnified Party in an amount up to Fifty Thousand and 00/100 Dollars ($50,000.00) shall be advanced by the Borrower at the request of such Indemnified Party notwithstanding any claim or assertion by the Borrower that such Indemnified Party is not entitled to indemnification hereunder upon receipt of an undertaking by such Indemnified Party that such Indemnified Party will reimburse the Borrower if it is actually and finally determined by a court of competent jurisdiction that such Indemnified Party is not so entitled to indemnification hereunder. The foregoing limitation on amounts required to be advanced under this paragraph (d) shall not otherwise limit the Borrower’s obligations to the Indemnified Parties.

(e) An Indemnified Party may conduct its own investigation and defense of, and may formulate its own strategy with respect to, any Indemnity Proceeding covered by this Section and, as provided above, all costs and expenses incurred by such Indemnified Party shall be reimbursed by the Borrower. No action taken by legal counsel chosen by an Indemnified Party in investigating or defending against any such Indemnity Proceeding shall vitiate or in any way impair the obligations and duties of the Borrower hereunder to indemnify and hold harmless each such Indemnified Party; provided, however, that (i) if the Borrower is required to indemnify an Indemnified Party pursuant hereto and (ii) the Borrower has provided evidence reasonably satisfactory to such Indemnified Party that the Borrower has the financial wherewithal to reimburse such Indemnified Party for any amount paid by such Indemnified Party with respect to such Indemnity Proceeding, such Indemnified Party shall not settle or compromise any such Indemnity Proceeding without the prior written consent of the Borrower (which consent shall not be unreasonably withheld or delayed).

(f) If and to the extent that the obligations of the Borrower hereunder are unenforceable for any reason, the Borrower hereby agrees to make the maximum contribution to the payment and satisfaction of such obligations which is permissible under Applicable Law.

(g) The Borrower’s obligations hereunder shall survive any termination of this Agreement and the other Loan Documents and the payment in full in cash of the Obligations, and are in addition to, and not in substitution of, any of the other obligations set forth in this Agreement or any other Loan Document to which it is a party.

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Section 13.11 Termination; Survival. At such time as (a) all of the Commitments have been terminated, (b) none of the Lenders is obligated any longer under this Agreement to make any Loans and (c) all Obligations (other than obligations which survive as provided in the following sentence) have been paid and satisfied in full, this Agreement shall terminate. The indemnities to which the Administrative Agent and the Lenders are entitled under the provisions of Sections 5.1, 5.4, 12.8, 13.2 and 13.10 and any other provision of this Agreement and the other Loan Documents, and the provisions of Section 13.5, shall continue in full force and effect and shall protect the Administrative Agent and the Lenders (i) notwithstanding any termination of this Agreement, or of the other Loan Documents, against events arising after such termination as well as before and (ii) at all times after any such party ceases to be a party to this Agreement with respect to all matters and events existing on or prior to the date such party ceased to be a party to this Agreement.

Section 13.12 Severability of Provisions. If any provision under this Agreement or the other Loan Documents shall be determined by a court of competent jurisdiction to be invalid or unenforceable, that provision shall be deemed severed from the Loan Documents, and the validity, legality and enforceability of the remaining provisions shall remain in full force as thought the invalid, illegal, or unenforceable provision had never been part of the Loan Documents.

Section 13.13 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF CALIFORNIA APPLICABLE TO CONTRACTS EXECUTED, AND TO BE FULLY PERFORMED, IN SUCH STATE.

Section 13.14 Counterparts. To facilitate execution, this Agreement and any amendments, waivers, consents or supplements may be executed in any number of counterparts as may be convenient or required. It shall not be necessary that the signature of, or on behalf of, each party, or that the signature of all persons required to bind any party, appear on each counterpart. All counterparts shall collectively constitute a single document. It shall not be necessary in making proof of this document to produce or account for more than a single counterpart containing the respective signatures of, or on behalf of , each of the parties hereto.

Section 13.15 Obligations with Respect to Loan Parties. The obligations of the Borrower to direct or prohibit the taking of certain actions by the other Loan Parties as specified herein shall be absolute and not subject to any defense the Borrower may have that the Borrower does not control such Loan Parties.

Section 13.16 Intentionally Omitted.

Section 13.17 Limitation of Liability. None of the Administrative Agent or any Lender, or any affiliate, officer, director, employee, attorney, or agent of the Administrative Agent or any Lender shall have any liability with respect to, and the Borrower hereby waives, releases, and agrees not to sue any of them upon, any claim for any special, indirect, incidental, or consequential damages suffered or incurred by the Borrower in connection with, arising out of, or in any way related to, this Agreement, any of the other Loan Documents or the Fee Letter, or any of the transactions contemplated by this Agreement or any of the other Loan Documents. The Borrower hereby waives, releases, and agrees not to sue the Administrative Agent or any Lender or any of the Administrative Agent’s or any Lender’s affiliates, officers, directors, employees, attorneys, or agents for punitive damages in respect of any claim in connection with, arising out of, or in any way related to, this Agreement, any of the other Loan Documents, the Fee Letter, or any of the transactions contemplated by this Agreement or financed hereby.

Section 13.18 Entire Agreement. This Agreement, the Notes, the other Loan Documents and the Fee Letter embody the final, entire agreement among the parties hereto and supersede any and all prior commitments, agreements, representations, and understandings, whether written or oral, relating to the subject matter hereof and thereof and may not be contradicted or varied by evidence of prior, contemporaneous, or subsequent oral agreements or discussions of the parties hereto. There are no oral agreements among the parties hereto.

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Section 13.19 Construction. The Administrative Agent, the Borrower and each Lender acknowledge that each of them has had the benefit of legal counsel of its own choice and has been afforded an opportunity to review this Agreement and the other Loan Documents with its legal counsel and that this Agreement and the other Loan Documents shall be construed as if jointly drafted by the Administrative Agent, the Borrower and each Lender.

Section 13.20 Headings. The Paragraph and Section headings in this Agreement are provided for convenience of reference only and shall not affect its construction or interpretation.

[Signatures on Following Pages]

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

“BORROWER”
CHSP SAN FRANCISCO LLC, a Delaware limited liability company
By:	/s/ Graham J. Wootten
Name:	Graham J. Wootten
Title:	Vice President and Secretary

[Signatures Continued on Next Page]

Signature Page – Loan Agreement

“ADMINISTRATIVE AGENT” and “LENDER”
WELLS FARGO BANK, NATIONAL ASSOCIATION, as Administrative Agent and as a Lender
By:	/s/ Mark F. Monahan
Name:	Mark F. Monahan
Title:	Senior Vice President

Signature Page – Loan Agreement

JOINDER BY OPERATING LESSEE

The undersigned, as the Operating Lessee under the foregoing Agreement, hereby joins in and executes the Agreement solely for the purposes of acknowledging and agreeing to its obligations expressly set forth therein.

“OPERATING LESSEE”
CHSP TRS SAN FRANCISCO LLC, a Delaware limited liability company
By:	/s/ Graham J. Wootten
Name:	Graham J. Wootten
Title:	Vice President and Secretary

Signature Page – Loan Agreement

SCHEDULE I

COMMITMENTS

Lender	Commitment
Wells Fargo Bank, National Association	$	71,500,000

SCHEDULE 7.1.(b)

OWNERSHIP STRUCTURE

CHSP SAN

FRANCISCO

LLC

ENTITY

CHART

SCHEDULE 7.1(g)

INDEBTEDNESS AND GUARANTIES

NONE

SCHEDULE 7.1.(h)

MATERIAL CONTRACTS

1. Agreement for Sale and Purchase of Hotel for the sale and purchase of Le Meridien San Francisco Hotel, dated as of December 7, 2010, by and between HEI San Francisco LLC, a Delaware limited liability company and the Borrower.

2. Management Agreement.

3. Franchise Agreement.

4. Operating Lease.

SCHEDULE 7.1(i)

LITIGATION

ADA Lawsuit (January 13, 2010) Mutual Release and Settlement – Connie Arnold v Starwood

Hotels & Resorts Worldwide, Inc; Le Meridien San Francisco, HEI San Francisco LLC Case No.

C 08-05406 JSW

Slip and Fall (April 2007) Michael Kalish case, claim #GC2007252446 – Litigation relating to a

slip and fall case is continuing. responses to requests for discovery are ongoing. Plaintiff has

demanded the deposition of the front desk manager by Dec 7, 2010

General Liability – Open Claim – 4/18/10 – Premises/Operations Liability ($1,250)

General Liability – Open Claim – 7/21/10 – Claimant fell on job site ($3,505)

Workers Comp – Open Claim – 1/1/08 – Strain ($1,500)

Workers Comp – Open Claim – 8/19/08 – Strain ($30,419)

Workers Comp – Open Claim – 2/3/09 – Sprain ($144,838)

Workers Comp – Open Claim – 11/1/08 – Strain ($18,968)

Workers Comp – Open Claim – 12/19/09 – Strain ($63,673)

SCHEDULE 7.1(s)

AFFILIATE TRANSACTIONS

Operating Lease, dated as of December 15, 2010, by and between CHSP San Francisco LLC, a Delaware limited liability company, and CHSP TRS San Francisco LLC, a Delaware limited liability company.

SCHEDULE 13.1

NOTICES

None

EXHIBIT A

FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT

THIS ASSIGNMENT AND ASSUMPTION AGREEMENT dated as of                     , 20     (the “Agreement”) by and among                                          (the “Assignor”),                                          (the “Assignee”), CHSP SAN FRANCISCO LLC, a Delaware limited liability company (the “Borrower”), and WELLS FARGO BANK, NATIONAL ASSOCIATION, as Administrative Agent (the “Administrative Agent”).

WHEREAS, the Assignor is a Lender under that certain Loan Agreement dated as of December 15, 2010 (as amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”), by and among the Borrower, the financial institutions party thereto and their assignees under Section 13.6. thereof, the Administrative Agent, and the other parties thereto;

WHEREAS, the Assignor desires to assign to the Assignee all or a portion of the Assignor’s Commitment under the Credit Agreement, all on the terms and conditions set forth herein; and

WHEREAS, the [Borrower and the] Administrative Agent consent[s] to such assignment on the terms and conditions set forth herein.

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

Section 1. Assignment.

(a) Subject to the terms and conditions of this Agreement and in consideration of the payment to be made by the Assignee to the Assignor pursuant to Section 2 of this Agreement, effective as of                     , 20     (the “Assignment Date”) the Assignor hereby irrevocably sells, transfers and assigns to the Assignee, without recourse, a $        interest (such interest being the “Assigned Commitment”) in and to the Assignor’s Commitment, and all of the other rights and obligations of the Assignor under the Credit Agreement, such Assignor’s Note, and the other Loan Documents representing     % in respect of the aggregate amount of all Lenders’ Commitments, including without limitation, a principal amount of outstanding Loans equal to $        , all voting rights of the Assignor associated with The Assigned Commitment all rights to receive interest on such amount of Loans and all Fees with respect to the Assigned Commitment and other rights of the Assignor under the Credit Agreement and the other Loan Documents with respect to the Assigned Commitment, all as if the Assignee were an original Lender under and signatory to the Credit Agreement having a Commitment equal to the amount of the Assigned Commitment. The Assignee, subject to the terms and conditions hereof, hereby assumes all obligations of the Assignor with respect to the Assigned Commitment as if the Assignee were an original Lender under and signatory to the Credit Agreement having a Commitment equal to the Assigned Commitment, which obligations shall include, but shall not be limited to, the obligation of the Assignor to make Loans to the Borrower with respect to the Assigned Commitment and] the obligation to indemnify the Administrative Agent as provided in the Credit Agreement (the foregoing obligations, together with all other similar obligations more particularly set forth in the Credit Agreement and the other Loan Documents, shall be referred to hereinafter, collectively, as the “Assigned Obligations”). The Assignor shall have no further duties or obligations with respect to, and shall have no further interest in, the Assigned Obligations or the Assigned Commitment from and after the Assignment Date.

(b) The assignment by the Assignor to the Assignee hereunder is without recourse to the Assignor. The Assignee makes and confirms to the Administrative Agent, the Assignor, and the other Lenders all of the representations, warranties and covenants of a Lender under Article XII of the Credit Agreement. Not in limitation of the foregoing, the Assignee acknowledges and agrees that, except as set forth in Section 4. below, the Assignor is making no representations or warranties with respect to, and the Assignee hereby releases and discharges the Assignor for any responsibility or liability for: (i) the present

A-1

or future solvency or financial condition of the Borrower, any other Loan Party or any other Subsidiary, (ii) any representations, warranties, statements or information made or furnished by the Borrower, any other Loan Party or any other Subsidiary in connection with the Credit Agreement or otherwise, (iii) the validity, efficacy, sufficiency, or enforceability of the Credit Agreement, any Loan Document or any other document or instrument executed in connection therewith, or the collectibility of the Assigned Obligations, (iv) the perfection, priority or validity of any Lien with respect to any collateral at any time securing the Obligations or the Assigned Obligations under the Notes or the Credit Agreement and (v) the performance or failure to perform by the Borrower or any other Loan Party of any obligation under the Credit Agreement or any other Loan Document. Further, the Assignee acknowledges that it has, independently and without reliance upon the Administrative Agent, any other Lender or counsel to the Administrative Agent or any of their respective officers, directors, employees and agents and based on the financial statements supplied by the Borrower and such other documents and information as it has deemed appropriate, made its own credit analysis and decision to become a Lender under the Credit Agreement. The Assignee also acknowledges that it will, independently and without reliance upon the Administrative Agent or any other Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Credit Agreement or any Note or pursuant to any other obligation. The Administrative Agent shall have no duty or responsibility whatsoever, either initially or on a continuing basis, to provide the Assignee with any credit or other information with respect to the Borrower, any other Loan Party or any other Subsidiary or to notify the undersigned of any Default or Event of Default except as expressly provided in the Credit Agreement. The Assignee has not relied on the Administrative Agent as to any legal or factual matter in connection therewith or in connection with the transactions contemplated thereunder.

Section 2. Payment by Assignee. In consideration of the assignment made pursuant to Section 1. of this Agreement, the Assignee agrees to pay to the Assignor on the Assignment Date, an amount equal to $         representing the aggregate principal amount outstanding of the Loans owing to the Assignor under the Credit Agreement and the other Loan Documents being assigned hereby.

Section 3. Payments by Assignor. The Assignor agrees to pay to the Administrative Agent on the Assignment Date the administrative fee payable under Section 13.6.(c) of the Credit Agreement.

Section 4. Representations and Warranties of Assignor. The Assignor hereby represents and warrants to the Assignee that (a) as of the Assignment Date (i) the Assignor is a Lender under the Credit Agreement having a Commitment under the Credit Agreement immediately prior to the Assignment Date, equal to $         and that the Assignor is not in default of its obligations under the Credit Agreement; and (ii) the outstanding balance of Loans owing to the Assignor (without reduction by any assignments thereof which have not yet become effective) is $        , and (b) it is the legal and beneficial owner of the Assigned Commitment which is free and clear of any adverse claim created by the Assignor.

Section 5. Representations, Warranties and Agreements of Assignee. The Assignee (a) represents and warrants that it is (i) legally authorized to enter into this Agreement; (ii) an “accredited investor” (as such term is used in Regulation D of the Securities Act) and (iii) an Eligible Assignee; (b) confirms that it has received a copy of the Credit Agreement, together with copies of the most recent financial statements delivered pursuant thereto and such other documents and information (including without limitation the Loan Documents) as it has deemed appropriate to make its own credit analysis and decision to enter into this Agreement; (c) appoints and authorizes the Administrative Agent to take such action as contractual representative on its behalf and to exercise such powers under the Loan Documents as are delegated to the Administrative Agent by the terms thereof together with such powers as are reasonably incidental thereto; (d) agrees that it will become a party to and shall be bound by the Credit Agreement and the other Loan Documents to which the other Lenders are a party on the Assignment Date and will perform in accordance therewith all of the obligations which are required to be performed by it as a Lender; and (e) is either (i) not organized under the laws of a jurisdiction outside the United States of America or (ii) has delivered to the Administrative Agent (with an additional copy for the Borrower) such items required under Section 3.10. of the Credit Agreement.

A-2

Section 6. Recording and Acknowledgment by the Administrative Agent. Following the execution of this Agreement, the Assignor will deliver to the Administrative Agent (a) a duly executed copy of this Agreement for acknowledgment and recording by the Administrative Agent and (b) the Assignor’s Note. Upon such acknowledgment and recording, from and after the Assignment Date, the Administrative Agent shall make all payments in respect of the interest assigned hereby (including payments of principal, interest, fees and other amounts) to the Assignee. The Assignor and Assignee shall make all appropriate adjustments in payments under the Credit Agreement for periods prior to the Assignment Date directly between themselves.

Section 7. Addresses. The Assignee specifies as its address for notices and its Lending Office for all Loans, the offices set forth below:

Attention:                                                      

Telephone No.:                                 

Telecopy No.:                                                 

Section 8. Payment Instructions. All payments to be made to the Assignee under this Agreement by the Assignor, and all payments to be made to the Assignee under the Credit Agreement, shall be made as provided in the Credit Agreement in accordance with the following instructions:

Section 9. Effectiveness of Assignment. This Agreement, and the assignment and assumption contemplated herein, shall not be effective until (a) this Agreement is executed and delivered by each of the Assignor, the Assignee, the Administrative Agent and if required, the Borrower, and (b) the payment to the Assignor of the amounts owing by the Assignee pursuant to Section 2. hereof and (c) the payment to the Administrative Agent of the amounts owing by the Assignor pursuant to Section 3. hereof. Upon recording and acknowledgment of this Agreement by the Administrative Agent, from and after the Assignment Date, (i) the Assignee shall be a party to the Credit Agreement and, to the extent provided in this Agreement, have the rights and obligations of a Lender thereunder and (ii) the Assignor shall, to the extent provided in this Agreement, relinquish its rights (except as otherwise provided in Section 13.11 of the Credit Agreement) and be released from its obligations under the Credit Agreement; provided, however, that if the Assignor does not assign its entire interest under the Loan Documents, it shall remain a Lender entitled to all of the benefits and subject to all of the obligations thereunder with respect to its Commitment.

Section 10. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS EXECUTED, AND TO BE FULLY PERFORMED, IN SUCH STATE.

Section 11. Counterparts. This Agreement may be executed in any number of counterparts each of which, when taken together, shall constitute one and the same agreement.

Section 12. Headings. Section headings have been inserted herein for convenience only and shall not be construed to be a part hereof.

Section 13. Amendments; Waivers. This Agreement may not be amended, changed, waived or modified except by a writing executed by the Assignee and the Assignor.

A-3

Section 14. Entire Agreement. This Agreement embodies the entire agreement between the Assignor and the Assignee with respect to the subject matter hereof and supersedes all other prior arrangements and understandings relating to the subject matter hereof.

Section 15. Binding Effect. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns.

Section 16. Definitions. Terms not otherwise defined herein are used herein with the respective meanings given them in the Credit Agreement.

[Include this Section only if the Borrower’s consent is required under Section 13.6.(c) of the Credit Agreement] Section 17. Agreements of the Borrower. The Borrower hereby agrees that the Assignee shall be a Lender under the Credit Agreement having a Commitment equal to the Assigned Commitment. The Borrower agrees that the Assignee shall have all of the rights and remedies of a Lender under the Credit Agreement and the other Loan Documents as if the Assignee were an original Lender under and signatory to the Credit Agreement, including, but not limited to, the right of a Lender to receive payments of principal and interest with respect to the Assigned Obligations, if any, and to the Loans made by the Lenders after the date hereof and to receive the Fees payable to the Lenders as provided in the Credit Agreement. Further, the Assignee shall be entitled to the benefit of the indemnification provisions from the Borrower in favor of the Lenders as provided in the Credit Agreement and the other Loan Documents. The Borrower further agrees, upon the execution and delivery of this Agreement, to execute in favor of the Assignee a Note in an initial amount equal to the Assigned Commitment. Further, the Borrower agrees that, upon the execution and delivery of this Agreement, the Borrower shall owe the Assigned Obligations to the Assignee as if the Assignee were the Lender originally making such Loans and entering into such other obligations.

[Signatures on Following Page]

A-4

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

ASSIGNOR:

[NAME OF ASSIGNOR]

By:

Name:

Title:

Payment Instructions

[Bank]

[Address]

ABA No. :

Account No.:

Account Name:

Reference:

ASSIGNEE:

[NAME OF ASSIGNEE]

By:

Name:

Title:

Payment Instructions

[Bank]

[Address]

ABA No. :

Account No.:

Account Name:

Reference:

[Signatures continued on Following Page]

A-5

Agreed and Consented to as of the date first written above.

[Include signature of the Borrower only if required under Section 13.6.(c) of the Credit Agreement]

BORROWER:

CHSP SAN FRANCISCO LLC, a Delaware

limited liability company

By:

Name:

Title:

Accepted as of the date first written above.

ADMINISTRATIVE AGENT:

WELLS FARGO BANK, NATIONAL ASSOCIATION, as Administrative  Agent

By:

Name:

Title:

A-6

EXHIBIT B

FORM OF DSCR CERTIFICATE

Reference is made to the Loan Agreement dated as of December 15, 2010 (as amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”), by and among CHSP San Francisco LLC, a Delaware limited liability company (the “Borrower”), the financial institutions party thereto and their assignees under Section 13.6. thereof (the “Lenders”), Wells Fargo Bank, National Association, as Administrative Agent (the “Administrative Agent”), and the other parties thereto. Capitalized terms used herein, and not otherwise defined herein, have their respective meanings given to them in the Credit Agreement.

Pursuant to the Credit Agreement, the undersigned hereby certifies to the Administrative Agent and the Lenders that Schedule 1 attached hereto accurately and completely sets forth the calculations required to establish compliance with the Minimum DSCR Hurdle as of the date set forth on Schedule I.

IN WITNESS WHEREOF, the undersigned has signed this Compliance Certificate on and as of             , 20    .

BORROWER:

CHSP SAN FRANCISCO LLC,

a Delaware limited liability company

By:                                                                                                  

Name:

Title:

B-1

EXHIBIT C

FORM OF NOTE

$                                     , 20    

FOR VALUE RECEIVED, the undersigned, CHSP San Francisco LLC, a Delaware limited liability company (the “Borrower”), hereby unconditionally promises to pay to the order of                                                   (the “Lender”), in care of Wells Fargo Bank, National Association, as Administrative Agent (the “Administrative Agent”), to Wells Fargo Bank, Minneapolis Loan Center of Administrative Agent, 608 2nd Avenue S., 11th Floor, Minneapolis, MN 55402, Attention: Donise White, or at such other address as may be specified by the Administrative Agent to the Borrower, the principal sum of                                      AND         /100 DOLLARS ($                        ), or such lesser amount as may be the then outstanding and unpaid balance of all Loans made by the Lender to the Borrower pursuant to, and in accordance with the terms of, the Credit Agreement.

The Borrower further agrees to pay interest at said office, in like money, on the unpaid principal amount owing hereunder from time to time on the dates and at the rates and at the times specified in the Credit Agreement.

This Note is one of the “Notes” referred to in the Loan Agreement dated as of December 15, 2010 (as amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”), by and among the Borrower, the financial institutions party thereto and their assignees under Section 13.6. thereof, the Administrative Agent, and the other parties thereto, and is subject to, and entitled to, all provisions and benefits thereof. Capitalized terms used herein and not defined herein shall have the respective meanings given to such terms in the Credit Agreement. The Credit Agreement, among other things, (a) provides for the making of Loans by the Lender to the Borrower from time to time in an aggregate amount not to exceed at any time outstanding the Dollar amount first above mentioned, (b) permits the prepayment of the Loans by the Borrower subject to certain terms and conditions and (c) provides for the acceleration of the Loans upon the occurrence of certain specified events.

The Borrower hereby waives presentment, demand, protest and notice of any kind. No failure to exercise, and no delay in exercising any rights hereunder on the part of the holder hereof shall operate as a waiver of such rights.

Time is of the essence for this Note.

[This Note is given in replacement of the Note dated                  , 2010, in the original principal amount of $                 previously delivered to the Lender under the Credit Agreement. THIS NOTE IS NOT INTENDED TO BE, AND SHALL NOT BE CONSTRUED TO BE, A NOVATION OF ANY OF THE OBLIGATIONS OWING UNDER OR IN CONNECTION WITH THE OTHER NOTE.]¹

THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF CALIFORNIA APPLICABLE TO CONTRACTS EXECUTED, AND TO BE FULLY PERFORMED, IN SUCH STATE.

¹ Language to be included in case of an assignment and need to issue a replacement note to an existing Lender, either because such Lender’s Commitment has increased or decreased from what it was initially.

C-1

IN WITNESS WHEREOF, the undersigned has executed and delivered this Note under seal as of the date written above.

CHSP SAN FRANCISCO LLC,

a Delaware limited liability company

By:

Name:

Title:

C-2

EXHIBIT D

INTENTIONALLY OMITTED

D-1

EXHIBIT E

FORM OF NOTICE OF CONTINUATION

            , 20    

Wells Fargo Bank

Minneapolis Loan Center

608 2^nd Avenue S., 11^th Floor

Minneapolis, MN 55402

Attention: Donise White

Ladies and Gentlemen:

Reference is made to that certain Loan Agreement dated as of December 15, 2010 (as amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”), by and among CHSP San Francisco LLC, a Delaware limited liability company., (the “Borrower”), the financial institutions party thereto and their assignees under Section 13.6. thereof (the “Lenders”), Wells Fargo Bank, National Association, as Administrative Agent (the “Administrative Agent”), and the other parties thereto. Capitalized terms used herein, and not otherwise defined herein, have their respective meanings given them in the Credit Agreement.

Pursuant to Section 2.7. of the Credit Agreement, the Borrower hereby requests a Continuation of Loans under the Credit Agreement, and in that connection sets forth below the information relating to such Continuation as required by such Section of the Credit Agreement:

1. The requested date of such Continuation is             , 20    .

2. The aggregate principal amount of the Loans subject to the requested Continuation is $             and the portion of such principal amount subject to such Continuation is $            .

3. The current Interest Period of the Loans subject to such Continuation ends on             , 20    .

4. The duration of the Interest Period for the Loans or portion thereof subject to such Continuation is:

[Check one box only]

¨¨     one month

¨¨     three months

¨¨     six months

[Continued on next page]

E-1

The Borrower hereby certifies to the Administrative Agent and the Lenders that as of the date hereof, as of the proposed date of the requested Continuation, and after giving effect to such Continuation, no Default or Event of Default exists or will exist.

CHSP SAN FRANCISCO LLC,

a Delaware limited liability company

By:                                                                                                  

Name:

Title:

E-2

EXHIBIT F

FORM OF NOTICE OF CONVERSION

            , 20    

Wells Fargo Bank

Minneapolis Loan Center

608 2^nd Avenue S., 11^th Floor

Minneapolis, MN 55402

Attention: Donise White

Ladies and Gentlemen:

Reference is made to the Loan Agreement dated as of December 15, 2010 (as amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”), by and among CHSP San Francisco LLC, a Delaware limited liability company (the “Borrower”), the financial institutions party thereto and their assignees under Section 13.6. thereof (the “Lenders”), Wells Fargo Bank, National Association, as Administrative Agent (the “Administrative Agent”), and the other parties thereto. Capitalized terms used herein, and not otherwise defined herein, have their respective meanings given them in the Credit Agreement.

Pursuant to Section 2.8. of the Credit Agreement, the Borrower hereby requests a Conversion of Loans of one Type into Loans of another Type under the Credit Agreement, and in that connection sets forth below the information relating to such Conversion as required by such Section of the Credit Agreement:

1. The requested date of such Conversion is             , 20    .

2. The Type of Loans to be Converted pursuant hereto is currently:

[Check one box only]

¨¨     Base Rate Loan

¨¨     LIBOR Loan

3. The aggregate principal amount of the Loans subject to the requested Conversion is $             and the portion of such principal amount subject to such Conversion is $            .

F-1

4. The amount of such Loans to be so Converted is to be converted into Loans of the following Type:

[Check one box only]

¨¨       Base Rate Loan
¨¨       LIBOR Loan, with an initial Interest Period for a duration of:
[Check one box only]
¨¨	one month
¨¨	three months
¨¨	six months
The Borrower hereby certifies to the Administrative Agent and the Lenders that as of the date hereof, as of the proposed date of the requested Conversion, and after giving effect to such Conversion, no Default or Event of Default exists or will exist.

CHSP SAN FRANCISCO LLC,

a Delaware limited liability company

By:                                                                                                  

Name:  Graham J. Wootten

Title:    Vice President and Secretary

F-2

Loan No. 1003587

EXHIBIT G

TRANSFER AUTHORIZER DESIGNATION

(For Disbursement of Loan Proceeds by Funds Transfer)

¨ NEW ¨ REPLACE PREVIOUS DESIGNATION   ¨   ADD   ¨   CHANGE   ¨   DELETE LINE NUMBER               

The following representatives of CHSP San Francisco LLC, a Delaware limited liability company (“Borrower”) are authorized to request the disbursement of Loan Proceeds and initiate funds transfers for Loan Number 1003587 assigned to the secured credit facility evidenced by the Loan Agreement dated December 15, 2010 among the Borrower, each of the financial institutions initially a signatory thereto together with their assignees under Section 13.6. thereof (the “Lenders”), Wells Fargo Bank, National Association, as the Administrative Agent for the Lenders (the “Administrative Agent”) and the other parties thereto. The Administrative Agent is authorized to rely on this Transfer Authorizer Designation until it has received a new Transfer Authorizer Designation signed by Borrower, even in the event that any or all of the foregoing information may have changed.

	Name	Title	Maximum Wire Amount1
1.
2.
3.
4.

Beneficiary Bank and Account Holder Information

1.

Transfer Funds to (Receiving Party Account Name):
Receiving Party Account Number:
Receiving Bank Name, City and State:	Receiving Bank Routing (ABA) Number
Maximum Transfer Amount: $
Further Credit Information/Instructions:

[Continued on Next Page]

2.

Transfer Funds to (Receiving Party Account Name):
Receiving Party Account Number:
Receiving Bank Name, City and State:	Receiving Bank Routing (ABA) Number
Maximum Transfer Amount: $
Further Credit Information/Instructions:

3.

Transfer Funds to (Receiving Party Account Name):
Receiving Party Account Number:
Receiving Bank Name, City and State:	Receiving Bank Routing (ABA) Number
Maximum Transfer Amount: $
Further Credit Information/Instructions:

1 Maximum Wire Amount may not exceed the Loan Amount.

[SIGNATURE ON FOLLOWING PAGE]

Date:             , 20    

BORROWER:

CHSP SAN FRANCISCO LLC,

a Delaware limited liability company

By:                                                                                            

Name:

Title:

EX-10.24

Exhibit 10.24

	Loan Number: 1002242
	Execution Version

AMENDED AND RESTATED CREDIT AGREEMENT

Dated as of January 21, 2011

by and among

CHESAPEAKE LODGING, L.P.,

as Borrower,

THE FINANCIAL INSTITUTIONS PARTY HERETO

AND THEIR ASSIGNEES UNDER SECTION 13.6.,

as Lenders,

and

WELLS FARGO BANK, NATIONAL ASSOCIATION,

as Administrative Agent

and

JPMORGAN CHASE BANK, N.A.,

as Syndication Agent

and

DEUTSCHE BANK, TRUST COMPANY AMERICAS,

as Documentation Agent

TABLE OF CONTENTS

ARTICLE I. Definitions	1
Section 1.1. Definitions.	1
Section 1.2. GAAP; General References; Pacific Time.	30
ARTICLE II. Credit Facility	31
Section 2.1. Loans.	31
Section 2.2. Requests for Loans.	32
Section 2.3. Funding of Loans.	32
Section 2.4. Assumptions Regarding Funding by Lenders.	33
Section 2.5. Purchase of Loans on the Effective Date.	33
Section 2.6. Rates and Payment of Interest on Loans.	33
Section 2.7. Number of Interest Periods.	34
Section 2.8. Repayment of Loans.	34
Section 2.9. Prepayments.	34
Section 2.10. Late Charges.	35
Section 2.11. Continuation.	35
Section 2.12. Conversion.	36
Section 2.13. Notes.	36
Section 2.14. Voluntary Reductions of the Commitment.	37
Section 2.15. Extension of Maturity Date.	37
Section 2.16. Amount Limitations.	38
Section 2.17. Funds Transfer Disbursements.	38
Section 2.18. Limitation on Collateral with respect to Boston Hyatt.	39
Section 2.19. Increase in Commitments.	39
ARTICLE III. Payments, Fees and Other General Provisions	41
Section 3.1. Payments.	41
Section 3.2. Pro Rata Treatment.	41
Section 3.3. Sharing of Payments, Etc.	42
Section 3.4. Several Obligations.	42
Section 3.5. Fees.	43
Section 3.6. Computations.	43
Section 3.7. Usury.	44
Section 3.8. Statements of Account.	44
Section 3.9. Defaulting Lenders.	44
Section 3.10. Taxes; Foreign Lenders.	46
Section 3.11. Lender Failure to Make Payment.	47
ARTICLE IV. Collateral Properties	48
Section 4.1. Eligibility of Properties.	48
Section 4.2. Release of Collateral Properties.	51
Section 4.3. Frequency of Appraisals.	52

- 1 –

Section 4.4. Limitations on Collateral Pool Releases and Additions to Collateral Pool.	52
Section 4.5. Substitute Required Collateral Property.	53
ARTICLE V. Yield Protection, Etc.	53
Section 5.1. Additional Costs; Capital Adequacy.	53
Section 5.2. Suspension of LIBOR Loans.	55
Section 5.3. Illegality.	55
Section 5.4. Compensation.	56
Section 5.5. Treatment of Affected Loans.	56
Section 5.6. Change of Lending Office.	57
Section 5.7. Assumptions Concerning Funding of LIBOR Loans.	57
ARTICLE VI. Conditions Precedent	57
Section 6.1. Initial Conditions Precedent.	57
Section 6.2. Conditions Precedent to All Loans.	59
Section 6.3. Conditions Precedent to a Property Becoming a Collateral Property.	60
Section 6.4. Conditions as Covenants.	62
ARTICLE VII. Representations and Warranties	62
Section 7.1. Representations and Warranties.	62
Section 7.2. Survival of Representations and Warranties, Etc.	68
ARTICLE VIII. Affirmative Covenants	68
Section 8.1. Preservation of Existence and Similar Matters.	68
Section 8.2. Compliance with Applicable Law.	69
Section 8.3. Maintenance of Property.	69
Section 8.4. Conduct of Business.	69
Section 8.5. Insurance.	69
Section 8.6. Payment of Taxes and Claims.	70
Section 8.7. Books and Records; Inspections.	71
Section 8.8. Use of Proceeds.	71
Section 8.9. Environmental Matters.	71
Section 8.10. Further Assurances.	72
Section 8.11. Intentionally Omitted.	72
Section 8.12. REIT Status.	72
Section 8.13. Exchange Listing.	72
Section 8.14. Operation of Collateral Property.	72
Section 8.15. Completion of Renovations.	73
Section 8.16. Mechanics Liens.	74
Section 8.17. Proceedings	74
Section 8.18. Correction of Defects	74
Section 8.19. Personal Property	75
Section 8.20. FF&E Reserve Accounts	75

- 2 –

Section 8.21. Tax/Insurance Reserve Accounts.	76
Section 8.22. Approved Ground Leases.	77
ARTICLE IX. Information	77
Section 9.1. Quarterly Financial Statements.	77
Section 9.2. Year End Statements.	77
Section 9.3. Compliance Certificate.	78
Section 9.4. Other Information.	78
Section 9.5. Electronic Delivery of Certain Information.	82
Section 9.6. Public/Private Information.	82
Section 9.7. USA Patriot Act Notice; Compliance.	83
ARTICLE X. Negative Covenants	83
Section 10.1. Financial Covenants.	83
Section 10.2. Negative Pledge.	84
Section 10.3. Restrictions on Intercompany Transfers.	85
Section 10.4. Merger, Consolidation, Sales of Assets and Other Arrangements.	85
Section 10.5. Plans.	86
Section 10.6. Fiscal Year.	86
Section 10.7. Modifications of Organizational Documents.	87
Section 10.8. Material Contracts.	87
Section 10.9. Indebtedness.	87
Section 10.10. Transactions with Affiliates.	88
Section 10.11. Environmental Matters.	88
Section 10.12. Derivatives Contracts.	89
ARTICLE XI. Default	89
Section 11.1. Events of Default.	89
Section 11.2. Remedies Upon Event of Default.	92
Section 11.3. Reserved.	93
Section 11.4. Marshaling; Payments Set Aside.	93
Section 11.5. Allocation of Proceeds.	94
Section 11.6. Intentionally Omitted.	94
Section 11.7. Rescission of Acceleration by Requisite Lenders.	94
Section 11.8. Performance by Administrative Agent.	95
Section 11.9. Rights Cumulative.	95
ARTICLE XII. The Administrative Agent	95
Section 12.1. Appointment and Authorization.	95
Section 12.2. Wells Fargo as Lender.	96
Section 12.3. Collateral Matters; Protective Advances.	97
Section 12.4. Post Foreclosure Plans.	98
Section 12.5. Approvals of Lenders.	99

- 3 –

Section 12.6. Notice of Events of Default.	99
Section 12.7. Administrative Agent’s Reliance.	100
Section 12.8. Indemnification of Administrative Agent.	101
Section 12.9. Lender Credit Decision, Etc.	101
Section 12.10. Successor Administrative Agent.	102
Section 12.11. Syndication Agent.	103
Section 12.12. Documentation Agent.	103
ARTICLE XIII. Miscellaneous	103
Section 13.1. Notices.	103
Section 13.2. Expenses.	104
Section 13.3. Stamp, Intangible and Recording Taxes.	105
Section 13.4. Setoff.	105
Section 13.5. Litigation; Jurisdiction; Other Matters; Waivers.	106
Section 13.6. Successors and Assigns.	107
Section 13.7. Amendments and Waivers.	109
Section 13.8. Nonliability of Administrative Agent and Lenders.	110
Section 13.9. Confidentiality.	110
Section 13.10. Indemnification.	111
Section 13.11. Termination; Survival.	113
Section 13.12. Severability of Provisions.	113
Section 13.13. GOVERNING LAW.	113
Section 13.14. Counterparts.	114
Section 13.15. Obligations with Respect to Loan Parties.	114
Section 13.16. Intentionally Omitted.	114
Section 13.17. Limitation of Liability.	114
Section 13.18. Entire Agreement.	114
Section 13.19. Construction.	114
Section 13.20. Headings.	115
Section 13.21. Joinder by Parent Guarantor.	115

SCHEDULE I	Commitments
SCHEDULE 7.1.(b)	Ownership Structure
SCHEDULE 7.1.(f)	Properties
SCHEDULE 7.1.(g)	Indebtedness and Guaranties
SCHEDULE 7.1.(h)	Material Contracts
SCHEDULE 7.1.(i)	Litigation
SCHEDULE 7.1.(s)	Affiliate Transactions
SCHEDULE 7.1.(t)	Intellectual Property
SCHEDULE 13.1	Notices
EXHIBIT A	Form of Assignment and Assumption Agreement	A-1
EXHIBIT B	Form of DSCR Certificate	B-1
EXHIBIT C	Form of Note	C-1

- 4 –

EXHIBIT D	Form of Notice of Borrowing	D-1
EXHIBIT E	Form of Notice of Continuation	E-1
EXHIBIT F	Form of Notice of Conversion	F-1
EXHIBIT G	Form of Transfer Authorizer Designation Form	G-1
EXHIBIT H	Matters to be Addressed in Opinions of Counsel	H-1
EXHIBIT I	Form of Compliance Certificate	I-1

- 5 –

- 5 –

THIS AMENDED AND RESTATED CREDIT AGREEMENT (this “Agreement”) dated as of January 21, 2011 by and among CHESAPEAKE LODGING, L.P., a limited partnership formed under the laws of the State of Delaware (the “Borrower”), each of the financial institutions initially a signatory hereto together with their successors and assignees under Section 13.6. (the “Lenders”) and WELLS FARGO BANK, NATIONAL ASSOCIATION (the “Administrative Agent”) and joined in by CHESAPEAKE LODGING TRUST, a Maryland real estate investment trust, for the purposes set forth in Section 13.21.

WHEREAS, Borrower, certain of the Lenders and Administrative Agent entered into that certain Credit Agreement dated July 30, 2010 (as amended by letter agreement dated December 27, 2010, the “Original Credit Agreement”) providing for a $115,000,000 revolving credit facility; and

WHEREAS, the parties hereto desire to amend and restate the Original Credit Agreement to increase the maximum amount of the revolving credit facility to $150,000,000 (which increase is being effected by (a) the increase of the Commitment of KeyBank National Association from $15,000,000 to $25,000,000 and (b) a Commitment of Royal Bank of Canada in the amount of $25,000,000) and to provide for future increases up to a maximum amount of $200,000,000, all on and subject to the terms and conditions set forth herein.

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by the parties hereto, the parties hereto hereby amend and restate the Original Credit Agreement, and hereby agree, as follows:

ARTICLE I. DEFINITIONS

Section 1.1. Definitions.

In addition to terms defined elsewhere herein, the following terms shall have the following meanings for the purposes of this Agreement:

“Accession Agreement” means an Accession Agreement substantially in the form of Annex I to the Subsidiary Guaranty.

“Account” shall have the meaning ascribed to such term in the Uniform Commercial Code.

“Additional Costs” has the meaning given that term in Section 5.1.(b).

“Adjusted Appraised Value” means, with respect to the Boston Hyatt, the lesser of (a) the Appraised Value of the Boston Hyatt or (b) $100,000,000.

“Adjusted EBITDA” means EBITDA, less a reserve equal to four percent (4%) of the aggregate amount of the Gross Operating Revenues of all Properties of the Parent Guarantor and its Subsidiaries.

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“Adjusted NOI” means, as determined for any period of time with respect to any one or more Collateral Properties, the Net Operating Income of such Collateral Property or Collateral Properties, subject to the following adjustments:

(a) for each applicable Property management fees shall equal the greater of (i) three percent (3%) of Gross Operating Revenues or (ii) the actual management fees paid under the applicable Management Agreement;

(b) for each applicable Property reserves for FF&E and capital items shall equal the greater of (i) four percent (4%) of Gross Operating Revenues or (ii) the amount of reserves required under the applicable Management Agreement or Franchise Agreement; and

(c) for each applicable Property franchise fees shall equal the greater of (i) four percent (4%) of Gross Operating Revenues or (ii) the actual franchise fees payable under the applicable Franchise Agreement.

For purposes of determining Adjusted NOI for any period of twelve months, Net Operating Income of any Collateral Property that was acquired during such period shall be included within such Adjusted NOI for the entirety of such twelve-month period, including Net Operating Income of such Collateral Property during any portion of such period that occurred prior to such acquisition (adjusted as provided above), as determined by the Borrower (subject to the reasonable approval of the Administrative Agent). based on the operating statements received from the prior owner or operator. Notwithstanding anything to the contrary contained in this Agreement, the Adjusted NOI for the Boston Hyatt shall not exceed (i) $9,688,000 for purposes of the provisions of Sections 2.9.(b)(ii) and 10.1.(g) or (ii) $7,750,000 for all other purposes.

“Administrative Agent” means Wells Fargo Bank, National Association or any successor Administrative Agent appointed pursuant to Section 12.10.

“Administrative Questionnaire” means the Administrative Questionnaire completed by each Lender and delivered to the Administrative Agent in a form supplied by the Administrative Agent to the Lenders from time to time.

“Advance Rate” means fifty percent (50%).

“Affiliate” means, with respect to any Person, (a) any Person which is directly or indirectly controlled by, controls or is under common control with such Person, (b) any other Person who is an officer, director, trustee or employee of, or partner in, such Person or any Person referred to in the preceding clause (a), (c) any other Person who is a member of the immediate family of such Person or of any Person referred to in the preceding clauses (a) and (b), and (d) any other Person that is a trust solely for the benefit of one or more Persons referred to in clause (c) and of which such Person is sole trustee; provided, however, in no event shall the Administrative Agent or any Lender or any of their respective Affiliates be an Affiliate of Borrower. For purposes of this definition, “control” (including with correlative meanings, the terms “controlling”, “controlled by” and “under common control with”) means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise.

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“Agreement Date” means the date as of which this Agreement is dated.

“Applicable Law” means all constitutions, statutes, rules, regulations and orders of any Governmental Authority, including all orders and decrees of all courts, tribunals and arbitrators applicable to a Loan Party, any Collateral Property, the Administrative Agent or any Lender, as the context requires.

“Applicable Margin” means 3.75%.

“Appraisal” means, with respect to any Property, an M.A.I. appraisal commissioned by and addressed to the Administrative Agent (acceptable to the Administrative Agent as to form and substance), prepared by a qualified, independent appraiser acceptable to the Administrative Agent, having at least the minimum qualifications required under Applicable Law governing the Administrative Agent and the Lenders, including without limitation, FIRREA, and determining both the “as is” market value of such Property as between a willing buyer and a willing seller and the “stabilized value” of such Property. Such Appraisal shall appraise the applicable Property: (a) in the case of the Appraisal of a Property proposed to be added to the Collateral Pool, as of a date not earlier than sixty (60) days prior to the date on which such Property becomes a Collateral Property, (b) in the case of an Appraisal under Section 2.15.(g), as of a date not earlier than sixty (60) days prior to the Original Maturity Date, and (c) otherwise as of a date reasonably satisfactory to the Administrative Agent.

“Appraised Value” means, with respect to any Property, the “as is” market value of such Property as reflected in the most recent Appraisal of such Property as the same may have been reasonably adjusted (but not increased) by the Administrative Agent based upon its internal review of such Appraisal which is based on criteria and factors then generally used and considered by the Administrative Agent in determining the value of similar real estate Properties, which review shall be conducted prior to acceptance of such Appraisal by the Administrative Agent. The Appraised Value of a Collateral Property shall be its Appraised Value as determined on the basis of the most recent Appraisal thereof obtained by the Administrative Agent pursuant to this Agreement.

“Approved Annual Budget” has the meaning given that term in Section 9.4.(h).

“Approved Brand” means any of the following hotel brands: (i) Hyatt, (ii) Marriott, (iii) Hilton or (iv) Starwood.

“Approved Capital Budget” has the meaning given that term in Section 9.4.(h).

“Approved Fund” means any Fund that is administered or managed by (a) a Lender, (b) an Affiliate of a Lender, or (c) an entity or an Affiliate of any entity that administers or manages a Lender.

“Approved Ground Lease” means with respect to a Property a ground lease that (a) has a remaining term (including renewal options that are exercisable without condition) of not less than fifty (50) years at the time such Property is first included as a Collateral Property, (b) permits a leasehold mortgage that secures all of the Obligations on terms satisfactory to

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Administrative Agent, (c) provides that such lease may not be terminated by the ground lessor without prior notice to the leasehold mortgagee and an opportunity for such leasehold mortgagee to cure any default by the lessee (including adequate time for the leasehold mortgagee to obtain possession to effect such cure), (d) contains such other leasehold mortgagee protections as the Administrative Agent may require and (e) is otherwise satisfactory to the Administrative Agent.

“Arrangers” means Wells Fargo Securities, LLC and J.P. Morgan Securities, Inc. in their capacities as Joint Bookrunners and Lead Arrangers.

“Assignee” has the meaning given that term in Section 13.6.(c).

“Assignment and Assumption” means an Assignment and Assumption Agreement among a Lender, an Assignee and the Administrative Agent, substantially in the form of Exhibit A.

“Assignment of Leases and Rents” means an Assignment of Leases and Rents executed by the Subsidiary Guarantor that owns, and the Operating Lessee that leases, a Collateral Property, in favor of the Administrative Agent for its benefit and the benefit of the Lenders, in form and substance satisfactory to the Administrative Agent securing the Obligations (subject to Section 2.18.), as the same may be supplemented, amended or otherwise modified from time to time.

“Bankruptcy Code” means the Bankruptcy Code of 1978, as amended.

“Bankruptcy Event” means, with respect to any Person, such Person becomes the subject of a bankruptcy or insolvency proceeding (under the Bankruptcy Code or otherwise), or has had a receiver, conservator, trustee, administrator, custodian, assignee for the benefit of creditors or similar Person charged with the reorganization or liquidation of its business appointed for it, or, in the good faith determination of the Administrative Agent, has taken any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any such proceeding or appointment, provided that a Bankruptcy Event shall not result solely by virtue of any ownership interest, or the acquisition of any ownership interest, in such Person by a Governmental Authority or instrumentality thereof, provided, further, that such ownership interest does not result in or provide such Person with immunity from the jurisdiction of courts within the United States or from the enforcement of judgments or writs of attachment on its assets or permit such Person (or such Governmental Authority or instrumentality) to reject, repudiate, disavow or disaffirm any contracts or agreements made by such Person.

“Base Rate” means the LIBOR Market Index Rate; provided, that if for any reason the LIBOR Market Index Rate is unavailable, Base Rate shall mean the per annum rate of interest equal to the Federal Funds Rate plus one and one-half of one percent (1.50%).

“Base Rate Loan” means a Loan bearing interest at a rate based on the Base Rate.

“Benefit Arrangement” means at any time an employee benefit plan within the meaning of Section 3(3) of ERISA which is not a Plan or a Multiemployer Plan and which is maintained or otherwise contributed to by any member of the ERISA Group.

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“Book Value” means, with respect to any asset, the book value of such asset as determined in accordance with GAAP.

“Borrower” has the meaning set forth in the introductory Paragraph hereof and shall include the Borrower’s permitted assigns.

“Borrower’s Agents” has the meaning given that term in Section 2.2.

“Boston Hyatt” means the Hyatt Regency Hotel in Boston, Massachusetts.

“Business Day” means (i) a day of the week (but not a Saturday, Sunday or holiday) on which the offices of the Administrative Agent in San Francisco, California are open to the public for carrying on substantially all of the Administrative Agent’s business functions, and (ii) if such day relates to a LIBOR Loan, any such day that is also a day on which dealings in Dollars are carried on in the London interbank market. Unless specifically referenced in this Agreement as a Business Day, all references to “days” shall be to calendar days.

“Capitalized Lease Obligation” means obligations under a lease (to pay rent or other amounts under any lease or other arrangement conveying the right to use) that are required to be capitalized for financial reporting purposes in accordance with GAAP. The amount of a Capitalized Lease Obligation is the capitalized amount of such obligation determined in accordance with GAAP.

“Cash Equivalents” means: (a) securities issued, guaranteed or insured by the United States of America or any of its agencies with maturities of not more than one (1) year from the date acquired; (b) certificates of deposit with maturities of not more than one (1) year from the date acquired issued by a United States federal or state chartered commercial bank of recognized standing, or a commercial bank organized under the laws of any other country which is a member of the Organisation for Economic Cooperation and Development, or a political subdivision of any such country, acting through a branch or agency, which bank has capital and unimpaired surplus in excess of $500,000,000 and which bank or its holding company has a short term commercial paper rating of at least A 2 or the equivalent by S&P or at least P 2 or the equivalent by Moody’s; (c) reverse repurchase agreements with terms of not more than seven days from the date acquired, for securities of the type described in clause (a) above and entered into only with commercial banks having the qualifications described in clause (b) above; (d) commercial paper issued by any Person incorporated under the laws of the United States of America or any State thereof and rated at least A 2 or the equivalent thereof by S&P or at least P 2 or the equivalent thereof by Moody’s, in each case with maturities of not more than one (1) year from the date acquired; and (e) investments in money market funds registered under the Investment Company Act of 1940, as amended, which have net assets of at least $500,000,000 and at least 85% of whose assets consist of securities and other obligations of the type described in clauses (a) through (d) above.

“Chattel Paper” shall have the meaning ascribed to such term in the Uniform Commercial Code.

“Collateral” means any real or personal property directly or indirectly securing any of the Obligations (subject to Section 2.18.) or any other obligation of a Person under or in respect

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of any Loan Document to which it is a party, and includes, without limitation, all “Mortgaged Property” under and as defined in any Security Deed, all Management Agreements for the Collateral Properties and all other property subject to a Lien created by a Security Document.

“Collateral Pool” means at any time all of the Properties that constitute Collateral Properties, provided, that a Property shall cease to be included in the Collateral Pool if (a) at any time such Property shall cease to be an Eligible Property or (b) the Administrative Agent shall cease to hold a valid and perfected first priority Lien in such Property.

“Collateral Pool Availability” means at any time the least of (a) the sum of (i) the Advance Rate multiplied by the aggregate Appraised Values of the Other Collateral Properties, and (ii) as long as the Boston Hyatt is a Collateral Property, the Adjusted Appraised Value, (b) the sum of (i) the Advance Rate multiplied by the aggregate purchase prices of the Other Collateral Properties (as determined by the Administrative Agent prior to admission of a Collateral Property to the Collateral Pool) and (ii) as long as the Boston Hyatt is a Collateral Property, $50,000,000, or (c) an amount equal to (i) the Adjusted NOI divided by (ii) 0.155.

“Collateral Property” means an Eligible Property that the Administrative Agent and the Required Approval Lenders have agreed to accept into the Collateral Pool pursuant to Section 4.1. and with respect to which the conditions set forth in Section 6.3. have been satisfied.

“Collateral Property Release” has the meaning given that term in Section 4.2.

“Commitment” means, as to each Lender, such Lender’s obligation to make Loans pursuant to Section 2.1. in an amount up to, but not exceeding the amount set forth for such Lender on Schedule I as such Lender’s “Commitment Amount” or increases in any Commitment under Section 2.19., or the amount of any new Commitment allocated to a new Lender under Section 2.19.) (as the same may be assigned in accordance with this Agreement) in each case as the same may be reduced from time to time pursuant to Section 2.14. or otherwise pursuant to the terms of this Agreement.

“Commitment Percentage” means, as to each Lender the ratio, expressed as a percentage, of (a) the amount of such Lender’s Commitment to (b) the aggregate amount of the Commitments of all Lenders hereunder; provided, however, that if at the time of determination the Commitments have been terminated or been reduced to zero, the “Commitment Percentage” of each Lender with a Commitment shall be the “Commitment Percentage” of such Lender in effect immediately prior to such termination or reduction.

“Compliance Certificate” has the meaning given that term in Section 9.3.

“Continue”, “Continuation” and “Continued” each refers to the continuation of a LIBOR Loan from one Interest Period to another Interest Period pursuant to Section 2.11.

“Contracts” means all contracts, agreements and warranties relating to or governing the use, occupancy, operation, management, hotel group, name or chain affiliation and/or guest reservation, repair and service of a Property, and all leases, occupancy agreements, concession agreements, and commitments to provide rooms or facilities in the future, including all amendments, modifications and supplements to any of the foregoing.

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“Control Agreement” means a control agreement entered into by the applicable Subsidiary Guarantor or Operating Lessee, the bank (which may, and if required under Section 8.20 shall, be Wells Fargo) that holds the applicable FF&E Reserve Account and the Administrative Agent, providing the Administrative Agent with the right to exercise control over such account as provided therein, provided, however, that if a Major Hotel Operator is the Manager of the applicable Collateral Property, such Manager shall also be a party to such control agreement.

“Convert”, “Conversion” and “Converted” each refers to the conversion of a Loan of one Type into a Loan of another Type pursuant to Section 2.12.

“Credit Event” means any of the following: (a) the making (or deemed making) of any Loan, (b) the Conversion of a Loan and (c) the Continuation of a LIBOR Loan.

“Credit Party” means the Administrative Agent or any other Lender.

“Debt-to-EBITDA Ratio” means the ratio of (a) Funded Debt of the Parent Guarantor and its Subsidiaries to (b) EBITDA of the Parent Guarantor and its Subsidiaries.

“Debt Service Coverage Ratio” means, as of the end of any twelve-month period, the ratio of (a) Adjusted NOI for all Collateral Properties (or, in the case of Section 4.2.(c), the Remaining Collateral Properties) for such twelve-month period to (b) Pro Forma Debt Service determined as of the last day of such twelve-month period.

“Default” means any event that, with the giving of notice, the lapse of time, or both, would constitute an Event of Default.

“Defaulting Lender” means any Lender that (a) has failed, within two (2) Business Days of the date required to be funded or paid, to (i) fund any portion of its Loans, or (ii) pay over to any Credit Party any other amount required to be paid by it hereunder, unless, in the case of clause (i) above, such Lender notifies the Administrative Agent in writing that such failure is the result of such Lender’s good faith determination that a condition precedent to funding (specifically identified and including the particular default, if any) has not been satisfied, (b) has notified the Borrower or any Credit Party in writing, or has made a public statement to the effect, that it does not intend or expect to comply with any of its funding obligations under this Agreement (unless such writing or public statement indicates that such position is based on such Lender’s good faith determination that a condition precedent (specifically identified and including the particular default, if any) to funding a loan under this Agreement cannot be satisfied) or generally under other agreements in which it commits to extend credit, (c) has failed, within three Business Days after request by a Credit Party, acting in good faith, to provide a certification in writing from an authorized officer of such Lender that it will comply with its obligations (and is financially able to meet such obligations) to fund prospective Loans, provided that such Lender shall cease to be a Defaulting Lender pursuant to this clause (c) upon such Credit Party’s receipt of such certification in form and substance satisfactory to it and the Administrative Agent, or (d) has become the subject of a Bankruptcy Event.

“Derivatives Contract” means (a) any transaction (including any master agreement, confirmation or other agreement with respect to any such transaction) now existing or hereafter

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entered into by the Borrower or any of its Subsidiaries (i) which is a rate swap transaction, swap option, basis swap, forward rate transaction, commodity swap, commodity option, equity or equity index swap, equity or equity index option, bond option, interest rate option, foreign exchange transaction, cap transaction, floor transaction, collar transaction, currency swap transaction, cross-currency rate swap transaction, currency option, credit protection transaction, credit swap, credit default swap, credit default option, total return swap, credit spread transaction, repurchase transaction, reverse repurchase transaction, buy/sell-back transaction, securities lending transaction, weather index transaction or forward purchase or sale of a security, commodity or other financial instrument or interest (including any option with respect to any of these transactions) or (ii) which is a type of transaction that is similar to any transaction referred to in clause (i) above that is currently, or in the future becomes, recurrently entered into in the financial markets (including terms and conditions incorporated by reference in such agreement) and which is a forward, swap, future, option or other derivative on one or more rates, currencies, commodities, equity securities or other equity instruments, debt securities or other debt instruments, economic indices or measures of economic risk or value, or other benchmarks against which payments or deliveries are to be made, and (b) any combination of these transactions.

“Derivatives Termination Value” means, in respect of any one or more Derivatives Contracts, after taking into account the effect of any legally enforceable netting agreement or provision relating thereto, (a) for any date on or after the date such Derivatives Contracts have been terminated or closed out, the termination amount or value determined in accordance therewith, and (b) for any date prior to the date such Derivatives Contracts have been terminated or closed out, the then-current mark-to-market value for such Derivatives Contracts, determined based upon one or more mid-market quotations or estimates provided by any recognized dealer in Derivatives Contracts (which may include the Administrative Agent, any Lender or any Affiliate of any thereof).

“Documentation Agent” means Deutsche Bank Trust Company Americas.

“Dollars” or “$” means the lawful currency of the United States of America.

“DSCR Certificate” means a report in substantially the form of Exhibit B, certified by a senior officer of the Borrower, setting forth the calculations required to establish compliance with the Minimum DSCR Hurdle as of a specified date, all in form and detail satisfactory to the Administrative Agent.

“EBITDA” means, with respect to the Parent Guarantor and its Subsidiaries on a consolidated basis for any period of four (4) consecutive fiscal quarters, net income before minority interests and Preferred Dividends (including deductions for Property-level management fees and franchise fees but excluding extraordinary gains or losses and nonrecurring items), as determined in accordance with GAAP, plus Interest Expense, income tax (if any), depreciation and amortization and other non-cash charges for stock compensation. EBITDA shall include the sum of the applicable Ownership Shares of the Parent Guarantor and its Subsidiaries in any amounts for each Unconsolidated Affiliate. For avoidance of doubt, “nonrecurring items” include, but are not limited to, gains and losses on early retirement of debt; severance and other restructuring charges; transfer taxes paid in connection with hotel acquisitions; and all other

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transaction costs of hotel acquisitions that are not permitted to be capitalized not to exceed the following amounts (or such greater amounts as the Agent may approve): one percent (1%) of the acquisition price for any Property having an acquisition price of $50,000,000 or more or $400,000 for any Property having an acquisition price of less than $50,000,000. For purposes of determining the Debt-to-EBITDA Ratio as of the end of any period of four fiscal quarters (and not for the determination of the Fixed Charge Coverage Ratio), there shall be included in EBITDA net income with respect to any Property that was acquired during such period for the entirety of such four-quarter period, including net income for such Property during any portion of such period that occurred prior to such acquisition, as determined by the Borrower (subject to the reasonable approval of the Administrative Agent) based on the operating statements received from the prior owner or operator. For purposes of calculating the Debt-to-EBITDA Ratio, the “General and Administrative Expense” deduction from net income shall be limited to fifty percent (50%) of actual cash “General and Administrative Expenses” until July 30, 2011.

“Effective Date” means the later of (a) the Agreement Date and (b) the date on which all of the conditions precedent set forth in Section 6.1. shall have been fulfilled or waived.

“Eligible Assignee” means (a) a Lender, (b) an Affiliate of a Lender, (c) an Approved Fund and (d) any other Person (other than a natural person) approved by (i) the Administrative Agent and (ii) unless a Default or Event of Default exists, the Borrower (each such approval not to be unreasonably withheld or delayed); provided that notwithstanding the foregoing, “Eligible Assignee” shall not include the Borrower or any of the Borrower’s Affiliates or Subsidiaries.

“Eligible Property” means a Hotel Property which satisfies all of the following requirements as confirmed by the Administrative Agent: (a) such Property is owned in fee simple (or located on land leased under an Approved Ground Lease) by a Wholly Owned Subsidiary of the Borrower; (b) such Property is located in a Top 25 Market in a state (other than Alaska or, unless approved by all Lenders, Hawaii) of the United States of America or in the District of Columbia; (c) such Property is either (i) an upscale (or better) full-service Hotel Property with not less than 200 keys or (ii) a select-service Hotel Property that was constructed (as determined by its initial opening date) not earlier than ten (10) years prior to the date that such Property becomes a Collateral Property; (d) such Property is operated under an Approved Brand; (e) the Borrower has the right directly, or indirectly through a Wholly Owned Subsidiary, to take the following actions without the need to obtain the consent of any Person: (i) to create Liens on such Property as security for Indebtedness of the Borrower or such Wholly Owned Subsidiary, and (ii) to sell, transfer or otherwise dispose of such Property; (f) the Borrower’s direct or indirect ownership interest in such Subsidiary is not subject to (i) any Lien other than Permitted Liens or (ii) any Negative Pledge; and (g) any management contracts relating to the management or operation of such Hotel Property are or may be subordinate to a Security Document in favor of the Administrative Agent, as agent for the Lenders.

“Environmental Laws” means any Applicable Law relating to environmental protection or the manufacture, storage, remediation, disposal or clean up of Hazardous Materials including, without limitation, the following: Clean Air Act, 42 U.S.C. § 7401 et seq.; Federal Water Pollution Control Act, 33 U.S.C. § 1251 et seq.; Solid Waste Disposal Act, as amended by the Resource Conservation and Recovery Act, 42 U.S.C. § 6901 et seq.; Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. § 9601 et seq.; National

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Environmental Policy Act, 42 U.S.C. § 4321 et seq.; regulations of the Environmental Protection Agency, any applicable rule of common law and any judicial interpretation thereof relating primarily to the environment or Hazardous Materials, and any analogous or comparable state or local laws, regulations or ordinances that concern Hazardous Materials or protection of the environment.

“Equipment” shall have the meaning ascribed to such term in the Uniform Commercial Code.

“Equity Interest” means, with respect to any Person, any share of capital stock of (or other ownership or profit interests in) such Person, any warrant, option or other right for the purchase or other acquisition from such Person of any share of capital stock of (or other ownership or profit interests in) such Person whether or not certificated, any security convertible into or exchangeable for any share of capital stock of (or other ownership or profit interests in) such Person or warrant, right or option for the purchase or other acquisition from such Person of such shares (or such other interests), and any other ownership or profit interest in such Person (including, without limitation, partnership, member or trust interests therein), whether voting or nonvoting, and whether or not such share, warrant, option, right or other interest is authorized or otherwise existing on any date of determination.

“Equity Issuance” means any issuance or sale by a Person of any Equity Interest in such Person.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

“ERISA Group” means the Borrower, any Subsidiary and all members of a controlled group of corporations and all trades or businesses (whether or not incorporated) under common control which, together with the Borrower or any Subsidiary, are treated as a single employer under Section 414 of the Internal Revenue Code.

“Event of Default” means any of the events specified in Section 11.1., provided that any requirement for notice or lapse of time or any other condition has been satisfied.

“Extended Maturity Date” means July 30, 2013.

“Fair Market Value” means, with respect to any asset, the price which could be negotiated in an arm’s-length free market transaction, for cash, between a willing seller and a willing buyer, neither of which is under pressure or compulsion to complete the transaction. Except as otherwise provided herein, Fair Market Value shall be determined by the Board of Trustees of the Parent Guarantor (or an authorized committee thereof) acting in good faith conclusively evidenced by a board resolution thereof delivered to the Administrative Agent or, with respect to any asset valued at no more than $5,000,000, such determination may be made by the chief financial officer of the Borrower evidenced by an officer’s certificate delivered to the Administrative Agent.

“Federal Funds Rate” means, for any period, a fluctuating interest rate per annum equal for each day during such period to the weighted average of the rates on overnight Federal Funds transactions with members of the Federal Reserve System arranged by Federal Funds brokers, as

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published for such day (or, if such day is not a Business Day, for the immediately preceding Business Day) by the Federal Reserve Bank of New York, or, if such rate is not so published for any day which is a Business Day, the average of the quotations for such day on such transactions received by the Administrative Agent from three (3) Federal Funds brokers of recognized standing selected by the Administrative Agent.

“Fee Letter” means that certain fee letter dated as of January 21, 2011, by and among the Borrower, the Administrative Agent, the Syndication Agent and the Arrangers.

“Fees” means the fees and commissions provided for or referred to in Section 3.5. and any other fees payable by the Borrower hereunder, under any other Loan Document or under the Fee Letter.

“FF&E” means all fixtures, furnishings, equipment, furniture, and other items of tangible personal property now or hereafter located on a Collateral Property or used in connection with the use, occupancy, operation and maintenance of all or any part of such Collateral Property, other than stocks of food and other supplies held for consumption in normal operation but including, without limitation, appliances, machinery, equipment, signs, artwork, office furnishings and equipment, guest room furnishings, and specialized equipment for kitchens, laundries, bars, restaurants, public rooms, health and recreational facilities, dishware, all partitions, screens, awnings, shades, blinds, floor coverings, hall and lobby equipment, heating, lighting, plumbing, ventilating, refrigerating, incinerating, elevators, escalators, air conditioning and communication plants or systems with appurtenant fixtures, vacuum cleaning systems, call or beeper systems, security systems, sprinkler systems and other fire prevention and extinguishing apparatus and materials; reservation system computer and related equipment; all equipment, manual, mechanical or motorized, for the construction, maintenance, repair and cleaning of parking areas, walks, underground ways, truck ways, driveways, common areas, roadways, highways and streets; and the vehicles; and as, further described in the Security Deed for such Collateral Property and UCC filings.

“FF&E Reserve” means, for any calendar month (a) with respect to the Boston Hyatt, an amount equal to the percentage of Gross Operating Revenues to be deposited for such month in the “Capital Fund” (as defined in and provided for in the applicable Management Agreement) and (b) with respect to any other Collateral Property, an amount equal to the greater of (i) four percent (4%) of Gross Operating Revenues for such calendar month or (ii) the amount of FF&E or capital reserves required under the applicable Management Agreement or Franchise Agreement.

“FF&E Reserve Account” means, with respect to each Collateral Property, an account into which the FF&E Reserve shall be deposited from time to time as provided in Section 8.20.

“FIRREA” means the Financial Institution Recovery, Reform and Enforcement Act of 1989, as amended.

“Fixed Charge Coverage Ratio” means the ratio of (i) Adjusted EBITDA of the Parent Guarantor and its consolidated Subsidiaries for any period of four consecutive fiscal quarters

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most recently ending to (ii) Fixed Charges of the Parent Guarantor and its consolidated Subsidiaries for such period.

“Fixed Charges” means, with respect to a Person and for a given period, the sum of (a) the Interest Expense of such Person (including the Ownership Share of the Interest Expense of any Unconsolidated Affiliate of such Person) for such period, plus (b) the aggregate of all principal payments on Indebtedness scheduled to be made by such Person (including the Ownership Shares of such payments scheduled to be made by any Unconsolidated Affiliate of such Person) during such period (excluding balloon, bullet or similar payments of principal due upon the stated maturity of Indebtedness), plus (c) the aggregate of all dividends paid or accrued by such Person (including the Ownership Share of such dividends paid or accrued by any Unconsolidated Affiliate of such Person) on any Preferred Stock during such period, plus (d) the aggregate of all payments in respect of Capitalized Lease Obligations scheduled to be made by such Person (including the Ownership Shares of such payments scheduled to be made by any Unconsolidated Affiliate of such Person) during such period.

“Franchise Agreement” means a license or franchise agreement between a Subsidiary Guarantor or Operating Lessee and a Franchisor.

“Franchisor” means a Person that licenses or franchises its hotel brand to hotel owners or operators.

“Fund” means any Person (other than a natural person) that is (or will be) engaged in making, purchasing, holding or otherwise investing in commercial loans and similar extensions of credit in the ordinary course of its business.

“Funded Debt” means, with respect to the Parent Guarantor and its Subsidiaries on a consolidated basis, without duplication, (a) all obligations of the Parent Guarantor and its Subsidiaries for borrowed money, (b) all obligations of the Parent Guarantor and its Subsidiaries evidenced by bonds, debentures, notes or similar instruments, or upon which interest payments are customarily made, (c) all obligations of the Parent Guarantor and its Subsidiaries under conditional sale or other title retention agreements relating to Property purchased by the Parent Guarantor and its Subsidiaries (other than customary reservations or retentions of title under agreements with suppliers entered into in the ordinary course of business), (d) all obligations of the Parent Guarantor and its Subsidiaries issued or assumed as the deferred purchase price of property or services purchased by the Parent Guarantor and its Subsidiaries (other than accounts payable and other trade debt incurred in the ordinary course of business and not overdue by more than 60 days or subject to a bona fide dispute) which would appear as liabilities on a balance sheet of the Parent Guarantor and its Subsidiaries on a consolidated basis, (e) all Guarantee obligations of the Parent Guarantor and its Subsidiaries with respect to Indebtedness of another Person, (f) the principal portion of all Capitalized Lease Obligations of the Parent Guarantor and its Subsidiaries (excluding the portion of all obligations of the Parent Guarantor and its Subsidiaries under operating leases that are recharacterized as capital leases as a result of changes in GAAP outlined by the Financial Accounting Standards Board in a press release dated March 19, 2009 becoming effective), (g) the maximum amount of all standby letters of credit issued or bankers’ acceptances facilities created for the account of the Parent Guarantor or any of its Subsidiaries and, without duplication, all drafts drawn thereunder (to the extent

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unreimbursed), (h) all Preferred Stock issued by the Parent Guarantor or any of its Subsidiaries and which by the terms thereof could be (at the request of the holders thereof or otherwise) subject to mandatory sinking fund payments, redemption or other acceleration, (i) the principal balance outstanding under any synthetic lease, tax retention operating lease, off balance sheet loan or similar off balance sheet financing product and (j) the Parent Guarantor’s and its Subsidiaries’ Ownership Shares of the items described in clauses (a) through (i) above of any Unconsolidated Affiliate. For purposes of the calculation of Funded Debt of the Parent Guarantor and its Subsidiaries on a consolidated basis, Funded Debt shall not include Funded Debt owing among the Parent Guarantor and its Subsidiaries to the extent such Funded Debt amounts to zero on a consolidated basis as a result of the consolidation of the financial statements of such entities.

“Funds From Operations” means net income (computed in accordance with GAAP), excluding gains (or losses) from sales of property, plus depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. Adjustments for unconsolidated partnership and joint ventures will be calculated to reflect funds from operations on the same basis. For purposes of this Agreement, Funds From Operations shall be calculated consistent with the White Paper on Funds From Operations dated October 1999 issued by National Association of Real Estate Investments Trusts, Inc. (“NAREIT”), as supplemented by the National Policy Bulletin dated November 8, 1999 issued by NAREIT, but without giving effect to any supplements, amendments or other modifications promulgated after the Agreement Date.

“GAAP” means United States generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as may be approved by a significant segment of the accounting profession, which are applicable to the circumstances as of the date of determination.

“General Intangibles” shall have the meaning ascribed to such term in the Uniform Commercial Code.

“Governmental Approvals” means all authorizations, consents, approvals, licenses and exemptions of, registrations and filings with, and reports to, all Governmental Authorities.

“Governmental Authority” means any national, state or local government (whether domestic or foreign), any political subdivision thereof or any other governmental, quasi governmental, judicial, administrative, public or statutory instrumentality, authority, body, agency, bureau, commission, board, department or other entity (including, without limitation, the Federal Deposit Insurance Corporation, the Comptroller of the Currency or the Federal Reserve Board, any central bank or any comparable authority) or any arbitrator with authority to bind a party at law.

“Gross Asset Value” means, without duplication, the sum of (a) the following amounts with respect to the following assets owned by the Parent Guarantor or any of its Subsidiaries (including Borrower and its Subsidiaries): (i) the lesser of the Book Value or Appraised Value of all Collateral Properties; (ii) the Book Value of all Properties that are not Collateral Properties,

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(iii) the Book Value of other assets described in Section 10.1(e)(i)(A) through (D) or Section 10.1(e)(ii)(A) through (D); and (iv) the amount of all Unrestricted Cash; plus (b) the applicable Ownership Share of the following amounts with respect to the following assets owned by Unconsolidated Affiliates: (i) the Book Value of all Properties; and (ii) the amount of all Unrestricted Cash.

“Gross Operating Revenues” means, for any period of time for any Property, without duplication, all income and proceeds of sales of every kind (whether in cash or on credit and computed on an accrual basis) received by the applicable Subsidiary Guarantor, Operating Lessee or Manager for the use, occupancy or enjoyment of the Property or the sale of any goods, services or other items sold on or provided from the Property in the ordinary course of operation of the Property, including, without limitation, all income received from tenants, transient guests, lessees (other than communications equipment lessees or service providers), licensees and concessionaires and other services to guests at the Property, and the proceeds from business interruption insurance, but excluding the following: (i) any excise, sales or use taxes or similar government charges collected directly from patrons or guests, or as a part of the sales price of any goods, services or displays, such as gross receipts, admission, cabaret or similar or equivalent taxes; (ii) receipts from condemnation awards or sales in lieu of or under threat of condemnation; (iii) proceeds of insurance (other than business interruption insurance); (iv) other allowances and deductions as provided by the Uniform System in determining the sum contemplated by this definition, by whatever name, it may be called; (v) proceeds of sales, whether dispositions of capital assets, FF&E or Equipment (other than sales of Inventory in the ordinary course of business); (vi) gross receipts received by tenants, lessees (other than the Operating Lessee), licensees or concessionaires of the Property; (vii) consideration received at the Property for hotel accommodations, goods and services to be provided at other hotels although arranged by, for or on behalf of, and paid over to, Manager; (viii) tips, service charges and gratuities collected for the benefit of employees; (ix) proceeds of any financing; (x) working capital provided by the Borrower, Subsidiary Guarantor or Operating Lessee; (xii) amounts collected from guests or patrons of the Property on behalf of Property tenants and other third parties; (xii) the value of any goods or services in excess of actual amounts paid (in cash or services) provided by the Manager on a complimentary or discounted basis; and (xiii) other income or proceeds resulting other than from the use or occupancy of the Property, or any part thereof, or other than from the sale of goods, services or other items sold on or provided from the Property in the ordinary course of business. Gross Operating Revenues shall be reduced by credits or refunds to guests at the Property.

“Guarantors” means the Parent Guarantor and Subsidiary Guarantors.

“Guaranty”, “Guaranteed” or to “Guarantee” as applied to any obligation means and includes: (a) a guaranty (other than by endorsement of negotiable instruments for collection in the ordinary course of business), directly or indirectly, in any manner, of any part or all of such obligation, or (b) an agreement, direct or indirect, contingent or otherwise, and whether or not constituting a guaranty, the practical effect of which is to assure the payment or performance (or payment of damages in the event of nonperformance) of any part or all of such obligation whether by: (i) the purchase of securities or obligations, (ii) the purchase, sale or lease (as lessee or lessor) of property or the purchase or sale of services primarily for the purpose of enabling the obligor with respect to such obligation to make any payment or performance (or payment of

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damages in the event of nonperformance) of or on account of any part or all of such obligation, or to assure the owner of such obligation against loss, (iii) the supplying of funds to or in any other manner investing in the obligor with respect to such obligation, (iv) repayment of amounts drawn down by beneficiaries of letters of credit, or (v) the supplying of funds to or investing in a Person on account of all or any part of such Person’s obligation under a Guaranty of any obligation or indemnifying or holding harmless, in any way, such Person against any part or all of such obligation. As the context requires, “Guaranty” shall also mean the Parent Guaranty and the Subsidiary Guaranty.

“Hazardous Materials” means all or any of the following: (a) substances that are defined or listed in, or otherwise classified pursuant to, any applicable Environmental Laws as “hazardous substances”, “hazardous materials”, “hazardous wastes”, “toxic substances” or any other formulation intended to define, list or classify substances by reason of deleterious properties such as ignitability, corrosivity, reactivity, carcinogenicity, reproductive toxicity, “TCLP” toxicity, or “EP toxicity”; (b) oil, petroleum or petroleum derived substances, natural gas, natural gas liquids or synthetic gas and drilling fluids, produced waters and other wastes associated with the exploration, development or production of crude oil, natural gas or geothermal resources; (c) any explosives or any radioactive materials; (d) asbestos in any form; and (e) toxic mold.

“Hazardous Materials Indemnity Agreement” means the Hazardous Materials Indemnity Agreement of even date herewith executed by the Borrower and the Parent Guarantor in favor of the Administrative Agent for its benefit and the benefit of the Lenders, as the same may be supplemented, amended or modified from time to time.

“Hotel Property” means a Property on which there is located an operating hotel.

“Indebtedness” means, with respect to a Person, at the time of computation thereof, all of the following (without duplication): (a) all obligations of such Person in respect of money borrowed; (b) all obligations of such Person (other than (x) trade payables incurred in the ordinary course of business and not more than sixty (60) days past due, (y) equipment leases entered into in the ordinary course of business and (z) Guaranties of Franchise Agreements entered into in the ordinary course of business), whether or not for money borrowed (i) represented by notes payable, or drafts accepted, in each case representing extensions of credit, (ii) evidenced by bonds, debentures, notes or similar instruments, or (iii) constituting purchase money indebtedness, conditional sales contracts, title retention debt instruments or other similar instruments, upon which interest charges are customarily paid or that are issued or assumed as full or partial payment for property; (c) Capitalized Lease Obligations of such Person; (d) all reimbursement obligations of such Person under or in respect of any letters of credit or acceptances (whether or not the same have been presented for payment); (e) all Off-Balance Sheet Obligations of such Person; (f) all obligations of such Person to purchase, redeem, retire, defease or otherwise make any payment in respect of any Mandatorily Redeemable Stock issued by such Person or any other Person, valued at the greater of its voluntary or involuntary liquidation preference plus accrued and unpaid dividends; (g) net obligations under any Derivative Contract (which shall be deemed to have an amount equal to the Derivatives Termination Value thereof at such time but in no event shall be less than zero); and (h) all

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Indebtedness of other Persons which (i) such Person has Guaranteed or is otherwise recourse to such Person or (ii) is secured by a Lien on any property of such Person.

“Initial Collateral Properties” means (a) the Boston Hyatt, (b) the Checkers Hilton Hotel in Los Angeles, California, (c) the Anaheim Courtyard by Marriott Hotel in Anaheim, California and (d) the Newton Marriott Hotel in Newton, Massachusetts.

“Initial Operating Lessees” means (a) CHSP TRS Boston LLC, a Delaware limited liability company and operating lessee of the Boston Hyatt, (b) CHSP TRS Los Angeles LLC, a Delaware limited liability company and operating lessee of the Checkers Hilton Hotel, (c) CHSP TRS Anaheim LLC, a Delaware limited liability company and operating lessee of the Anaheim Courtyard by Marriott Hotel and (d) CHSP TRS Newton LLC, a Delaware limited liability company and operating lessee of the Newton Marriott Hotel.

“Initial Subsidiary Guarantor” means (a) CHSP Boston LLC, a Delaware limited liability company and owner of the Boston Hyatt, (b) CHSP Los Angeles LLC, a Delaware limited liability company and owner of the Checkers Hilton Hotel, (c) CHSP Anaheim LLC, a Delaware limited liability company and owner of the Anaheim Courtyard by Marriott Hotel and (d) CHSP Newton LLC, a Delaware limited liability company and owner of the Newton Marriott Hotel.

“Intellectual Property” has the meaning given that term in Section 7.1.(t).

“Interest Expense” means, with respect to a Person and for any period, without duplication, (a) all paid, accrued or capitalized interest expense (including, without limitation, capitalized interest expense (other than capitalized interest funded from a construction loan interest reserve account held by another lender and not included in the calculation of cash for balance sheet reporting purposes) and interest expense attributable to Capitalized Lease Obligations) of such Person and in any event shall include all letter of credit fees and all interest expense with respect to any Indebtedness in respect of which such Person is wholly or partially liable whether pursuant to any repayment, interest carry, performance guarantee or otherwise, plus (b) to the extent not already included in the foregoing clause (a), such Person’s applicable Ownership Share of all paid, accrued or capitalized interest expense for such period of Unconsolidated Affiliates of such Person.

“Interest Period” means, with respect to each LIBOR Loan, each period commencing on the date such LIBOR Loan is made, or in the case of the Continuation of a LIBOR Loan the last day of the preceding Interest Period for such Loan, and ending on the numerically corresponding day in the first, third or sixth calendar month thereafter, as the Borrower may select in a Notice of Borrowing, Notice of Continuation or Notice of Conversion, as the case may be, except that each Interest Period that commences on the last Business Day of a calendar month (or on any day for which there is no numerically corresponding day in the appropriate subsequent calendar month) shall end on the last Business Day of the appropriate subsequent calendar month. Notwithstanding the foregoing: (i) if any Interest Period would otherwise end after the Maturity Date, such Interest Period shall end on the Maturity Date; and (ii) each Interest Period that would otherwise end on a day which is not a Business Day shall end on the immediately following

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Business Day (or, if such immediately following Business Day falls in the next calendar month, on the immediately preceding Business Day).

“Internal Revenue Code” means the Internal Revenue Code of 1986, as amended.

“Inventory” shall have the meaning ascribed to such term in the Uniform Commercial Code, and including within the term items which would be entered on a balance sheet under the line items for “Inventories” or “China, glassware, silver, linen and uniforms” under the Uniform Systems of Accounts.

“Investment” means, with respect to any Person, any acquisition or investment (whether or not of a controlling interest) by such Person, whether by means of any of the following: (a) the purchase or other acquisition of any Equity Interest in another Person, (b) a loan, advance or extension of credit to, capital contribution to, Guaranty of Indebtedness of, or purchase or other acquisition of any Indebtedness of, another Person, including any partnership or joint venture interest in such other Person, or (c) the purchase or other acquisition (in one transaction or a series of transactions) of assets of another Person that constitute the business or a division or operating unit of another Person. Any commitment to make an Investment in any other Person, as well as any option of another Person to require an Investment in such Person, shall constitute an Investment. Except as expressly provided otherwise, for purposes of determining compliance with any covenant contained in a Loan Document, the amount of any Investment shall be the amount actually invested, without adjustment for subsequent increases or decreases in the value of such Investment.

“Lender” means each financial institution from time to time party hereto as a “Lender,” together with its respective successors and permitted assigns. With respect to matters requiring the consent or approval of all Lenders, at any given time, all then existing Defaulting Lenders will be disregarded and excluded, and, for voting purposes only, “all Lenders” shall be deemed to mean “all Lenders other than Defaulting Lenders.”

“Lending Office” means, for each Lender and for each Type of Loan, the office of such Lender specified in such Lender’s Administrative Questionnaire or in the applicable Assignment and Assumption Agreement, or such other office of such Lender as such Lender may notify the Administrative Agent in writing from time to time.

“Leverage Ratio” means the ratio (stated as a percentage) of (a) Indebtedness of the Parent Guarantor and its Subsidiaries on a consolidated basis to (b) Gross Asset Value.

“LIBOR” means, for the Interest Period for any LIBOR Loan, the rate of interest, rounded up to the nearest whole multiple of one-hundredth of one percent (.01%), obtained by dividing (i) the rate of interest, rounded upward to the nearest whole multiple of one-sixteenth of one percent (0.0625%), referred to as the BBA (British Bankers’ Association) LIBOR rate as set forth by any service selected by the Administrative Agent that has been nominated by the British Bankers’ Association as an authorized information vendor for the purpose of displaying such rate for deposits in U.S. Dollars at approximately 9:00 a.m. Pacific time, two (2) Business Days prior to the date of commencement of such Interest Period for purposes of calculating effective rates of interest for loans or obligations making reference thereto, for an amount approximately equal

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to the applicable LIBOR Loan and for a period of time approximately equal to such Interest Period by (ii) a percentage equal to 1 minus the stated maximum rate (stated as a decimal) of all reserves, if any, required to be maintained with respect to Eurocurrency funding (currently referred to as “Eurocurrency liabilities”) as specified in Regulation D of the Board of Governors of the Federal Reserve System (or against any other category of liabilities which includes deposits by reference to which the interest rate on LIBOR Loans is determined or any applicable category of extensions of credit or other assets which includes loans by an office of any Lender outside of the United States of America), provided, however, that in no event shall LIBOR be less than two percent (2%). Any change in such stated maximum rate shall result in a change in LIBOR on the date on which such change in such stated maximum rate becomes effective.

“LIBOR Loan” means a Loan bearing interest at a rate based on LIBOR.

“LIBOR Market Index Rate” means, for any day, LIBOR as of that day for one-month deposits in U.S. Dollars at approximately 9:00 a.m. Pacific time for such day (or if such day is not a Business Day, the immediately preceding Business Day), provided, however, that in no event shall the LIBOR Market Index Rate be less than two percent (2%). The LIBOR Market Index Rate shall be determined on a daily basis.

“Licenses” means all certifications, permits, licenses and approvals, including certificates of completion, certificates of occupancy, and food and beverage and liquor licenses, required for the legal use, occupancy and operation of a Collateral Property as used at the time at which it is added to the Collateral Pool and from time to time thereafter.

“Lien” as applied to the property of any Person means: (a) any security interest, encumbrance, mortgage, deed to secure debt, deed of trust, assignment of leases or rents, pledge, lien, hypothecation, assignment, charge or lease constituting a Capitalized Lease Obligation, conditional sale or other title retention agreement, or other security title or encumbrance of any kind in respect of any property of such Person, or upon the income, rents or profits therefrom; (b) any arrangement, express or implied, under which any property of such Person is transferred, sequestered or otherwise identified for the purpose of subjecting the same to the payment of Indebtedness or performance of any other obligation in priority to the payment of the general, unsecured creditors of such Person; (c) the filing of any financing statement under the UCC or its equivalent in any jurisdiction (other than a financing statement filed by a “true” lessor pursuant to Section 9408 (or a successor section) of the UCC); and (d) any agreement by such Person to grant, give or otherwise convey any of the foregoing.

“Loan” means a loan made by a Lender to the Borrower pursuant to Section 2.1.

“Loan Document” means this Agreement, each Note, the Parent Guaranty, the Subsidiary Guaranty, each Security Document and each other document or instrument now or hereafter executed and delivered by a Loan Party in connection with, pursuant to or relating to this Agreement (other than the Fee Letter).

“Loan Party” means each of the Borrower, the Parent Guarantor, the Initial Subsidiary Guarantors, the Initial Operating Lessees and each other Person who guarantees all or a portion of the Obligations and/or who pledges any Collateral to secure all or a portion of the Obligations.

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“Major Hotel Operator” means a Manager that is the owner of or an Affiliate of the owner of an Approved Brand under which a Collateral Property is operated.

“Major Renovations” means, with respect to a Hotel Property, Renovations (including all Renovations that are part of an overall plan or that are similar or related to other Renovations, even though not performed at the same time) that (a) have resulted in, or are reasonably expected to result in, more than twenty-five percent (25%) of the rooms in such Hotel Property not being available for occupancy for a period of more than sixty (60) days, (b) have a projected cost that exceeds forty percent (40%) of the Book Value of such Hotel Property (as determined prior to the commencement of such Renovations) or (c) have resulted in, or are reasonably expected to result in, a reduction of Net Operating Income of such Hotel Property of thirty percent (30%) or more during any period of twelve (12) consecutive months (as compared to the period of twelve (12) consecutive months immediately prior to the commencement of such Renovations).

“Major Tenant Lease” means a Tenant Lease that demises more than 5,000 rentable square feet of a Collateral Property.

“Management Agreement” means an agreement entered into by any Subsidiary Guarantor or Operating Lessee pursuant to which it engages a Manager to manage and operate a Collateral Property, as each said agreement may be amended, supplemented, restated, replaced or otherwise modified from time to time in accordance with the terms of this Agreement.

“Management Agreement Assignment/Subordination” means, with respect to any Collateral Property, a document or documents, in form and substance satisfactory to Administrative Agent, pursuant to which (a) the Subsidiary Guarantor that owns such Collateral Property or the Operating Lessee that leases such Collateral Property (as applicable) assigns the Management Agreement for such Collateral Property to Administrative Agent for its benefit and the benefit of the Lenders as Collateral (subject to Section 2.18.) and (b) the Manager acknowledges and agrees to such assignment and subordinates the Management Agreement to the applicable Security Deed on terms and conditions reasonably satisfactory to Administrative Agent.

“Manager” means the management company that manages and operates a Collateral Property pursuant to the Management Agreement for such Collateral Property.

“Mandatorily Redeemable Stock” means, with respect to any Person, any Equity Interest of such Person which by the terms of such Equity Interest (or by the terms of any security into which it is convertible or for which it is exchangeable or exercisable), upon the happening of any event or otherwise, (a) matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise (other than an Equity Interest to the extent redeemable in exchange for common stock or other equivalent common Equity Interests at the option of the issuer of such Equity Interest), (b) is convertible into or exchangeable or exercisable for Indebtedness or Mandatorily Redeemable Stock, or (c) is redeemable at the option of the holder thereof, in whole or part (other than an Equity Interest which is redeemable solely in exchange for common stock or other equivalent common Equity Interests), in each case on or prior to the date on which all Loans are scheduled to be due and payable in full.

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“Material Adverse Effect” means a materially adverse effect on (a) the business, assets, liabilities, condition (financial or otherwise), results of operations or business prospects of the Loan Parties taken as a whole, (b) the ability of the Borrower or any other Loan Party to perform its material obligations under any Loan Document to which it is a party, (c) the validity or enforceability of any of the Loan Documents or (d) the rights and remedies of the Lenders and the Administrative Agent under any of the Loan Documents.

“Material Contract” means (a) each Management Agreement with respect to a Collateral Property, (b) each Franchise Agreement, if any, with respect to a Collateral Property, (c) the Operating Lease for a Collateral Property, (d) any Major Tenant Lease of a Collateral Property, (e) any material agreement relating to parking for a Collateral Property, (f) any ground lease with respect to a Collateral Property and (g) any other contract or other arrangement (other than Loan Documents), whether written or oral, to which the Borrower or any other Loan Party is a party as to which the breach, nonperformance, cancellation or failure to renew by any party thereto could reasonably be expected to have a Material Adverse Effect.

“Material Plan” means at any time a Plan or Plans having aggregate Unfunded Liabilities in excess of $5,000,000.

“Maturity Date” means the Original Maturity Date, as it may be extended to the Extended Maturity Date pursuant to Section 2.15.

“Maximum Loan Availability” means, at any time, the lesser of (a) the Collateral Pool Availability and (b) the aggregate amount of the Commitments at such time.

“Minimum DSCR Hurdle” means a Debt Service Coverage Ratio of 1.55 to 1.00.

“Moody’s” means Moody’s Investors Service, Inc.

“Mortgage” means a mortgage, deed of trust, deed to secure debt or similar security instrument made or to be made by a Person owning an interest in real estate granting a Lien on such interest in real estate as security for the payment of Indebtedness.

“Multiemployer Plan” means at any time a multiemployer plan within the meaning of Section 4001(a)(3) of ERISA to which any member of the ERISA Group is then making or accruing an obligation to make contributions or has within the preceding five plan years made contributions, including for these purposes any Person which ceased to be a member of the ERISA Group during such five year period.

“Negative Pledge” means, with respect to a given asset, any provision of a document, instrument or agreement (other than any Loan Document) which prohibits or purports to prohibit the creation or assumption of any Lien on such asset as security for Indebtedness of the Person owning such asset or any other Person; provided, however, that an agreement that conditions a Person’s ability to encumber its assets upon the maintenance of one or more specified ratios that limit a Person’s ability to encumber its assets but that do not generally prohibit the encumbrance of its assets, or the encumbrance of specific assets, shall not constitute a Negative Pledge.

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“Net Operating Income” means, for any Property and for a given period, the amount by which the Gross Operating Revenues for such Property exceed the Operating Expenses for such Property.

“Net Proceeds” means with respect to an Equity Issuance by a Person, the aggregate amount of all cash or the Fair Market Value of all other property received by such Person in respect of such Equity Issuance net of investment banking fees, legal fees, accountants fees, underwriting discounts and commissions and other customary fees and expenses actually incurred by such Person in connection with such Equity Issuance.

“New Property” means, on any date, a Hotel Property that as of such date has not been open and operating for a continuous period of two (2) years, whether by reason of the construction or renovation thereof or otherwise.

“Note” means a promissory note of the Borrower substantially in the form of Exhibit C, payable to the order of a Lender in a principal amount equal to the amount of such Lender’s Commitment.

“Notice of Borrowing” means a notice substantially in the form of Exhibit D (or such other form reasonably acceptable to the Administrative Agent and containing the information required in such Exhibit) to be delivered to the Administrative Agent pursuant to Section 2.2. evidencing the Borrower’s request for a borrowing of Loans.

“Notice of Continuation” means a notice substantially in the form of Exhibit E (or such other form reasonably acceptable to the Administrative Agent and containing the information required in such Exhibit) to be delivered to the Administrative Agent pursuant to Section 2.11. evidencing the Borrower’s request for the Continuation of a LIBOR Loan.

“Notice of Conversion” means a notice substantially in the form of Exhibit F (or such other form reasonably acceptable to the Administrative Agent and containing the information required in such Exhibit) to be delivered to the Administrative Agent pursuant to Section 2.12. evidencing the Borrower’s request for the Conversion of a Loan from one Type to another Type.

“Notice of Responsible Officers” means a certificate of incumbency or notice from the Borrower to the Administrative Agent, in a form satisfactory to the Administrative Agent, identifying the officers of the Borrower that have authority to deliver Notices of Borrowing, Notices of Conversion, Notices of Continuation and other notices or requests specified in this Agreement.

“Obligations” means, individually and collectively: (a) the aggregate principal balance of, and all accrued and unpaid interest on, all Loans; and (b) all other indebtedness, liabilities, obligations, covenants and duties of the Borrower or any of the other Loan Parties owing to the Administrative Agent or any Lender of every kind, nature and description, under or in respect of this Agreement or any of the other Loan Documents, including, without limitation, the Fees and indemnification obligations, whether direct or indirect, absolute or contingent, due or not due, contractual or tortious, liquidated or unliquidated, and whether or not evidenced by any promissory note.

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“Off-Balance Sheet Obligations” means liabilities and obligations of the Parent Guarantor, Borrower, any Subsidiary or any other Person in respect of “off-balance sheet arrangements” (as defined in Item 303(a)(4)(ii) of Regulation S-K promulgated under the Securities Act) which the Parent Guarantor would be required to disclose in the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” Section of the Parent Guarantor’s report on Form 10 Q or Form 10 K (or their equivalents) which the Parent Guarantor is required to file with the Securities and Exchange Commission (or any Governmental Authority substituted therefor).

“Operating Expenses” means, for any period of time for any Property, all costs and expenses of maintaining, conducting and supervising the operation of the Property which are properly attributable to the period under consideration under the Borrower’s system of accounting, including without limitation:

(i) the cost of all food and beverages sold or consumed and of all Inventory;

(ii) salaries and wages of personnel employed at the Property, including costs of payroll taxes and employee benefits and all other expenses not otherwise specifically referred to in this paragraph which are referred to as “Administrative and General Expenses” in the Uniform System;

(iii) the cost of all other goods and services obtained by Manager in connection with its operation of the Property including, without limitation, heat and utilities, office supplies and all services performed by third parties, including leasing expenses in connection with telephone and data processing equipment;

(iv) the cost of repairs to and maintenance of the Property (excluding capital expenditures);

(v) insurance premiums for all insurance maintained with respect to the Property, including without limitation, property damage insurance, public liability insurance, and such business interruption or other insurance as may be provided for protection against claim, liabilities and losses arising from the use and operation of the Property and losses incurred with respect to deductibles applicable to the foregoing types of insurance;

(vi) workers’ compensation insurance or insurance required by similar employee benefits acts;

(vii) all personal property taxes, real estate taxes, assessments, and any other ad valorem taxes imposed on or levied in connection with the Property (less refunds, offsets or credits thereof, and interest thereon, if any, received during the period in question) and all other taxes, assessments and other charges (other than federal, state or local income taxes and franchise taxes or the equivalent) payable by or assessed against Manager, Subsidiary Guarantor or Operating Lessee with respect to the operation of the Property and water and sewer charges;

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(viii) all sums deposited into any maintenance or capital expenditure reserve, including the amount of the applicable FF&E Reserve;

(ix) legal fees related to the operation of the Property;

(x) the costs and expenses of technical consultants and specialized operational experts for specialized services in connection with non-recurring work on operational, functional, decorating, design or construction problems and activities, including the fees (if any) of Manager in connection therewith, such as ADA studies, life safety reviews, and energy efficiency studies;

(xi) all expenses for marketing the Property, including all expenses of advertising, sales promotion and public relations activities;

(xii) utility taxes and other taxes (as those terms are defined in the Uniform System) and municipal, county and state license and permit fees;

(xiii) all fees (including base and incentive fees), assessments, royalties and charges payable under the Management Agreement and Franchise Agreement (if any);

(xiv) reasonable reserves for uncollectible accounts receivable;

(xv) credit card fees, travel agent commissions and other third-party reservation fees and charges;

(xvi) all parking charges and other expenses associated with revenues received by the Manager related to parking operations, including valet services;

(xvii) common expenses charges, common area maintenance charges and similar costs and expenses;

(xviii) rent payments under any ground lease; and

(xix) any other cost or charge classified as an Operating Expense or an Administrative and General Expense under the Uniform System in the Management Agreement unless specifically excluded under the provisions of this Agreement.

Gross Operating Expenses shall not include (a) depreciation and amortization except as otherwise provided in this Agreement; (b) the cost of any item specified in the Management Agreement to be provided at Manager’s sole expense; (c) debt service; (d) capital repairs and other expenditures which are normally treated as capital expenditures under the Uniform System or GAAP; or (e) other recurring or non-recurring ownership costs such as partnership or limited liability company administration and costs of changes to business and liquor licenses.

“Operating Lease” means, with respect to any Property, the lease thereof between the Subsidiary of the Borrower that is the owner thereof and the Subsidiary of the Borrower that is the Operating Lessee.

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“Operating Lessee” means any Subsidiary of the Borrower that is the lessee under an Operating Lease.

“Option to Extend” means the Borrower’s option to extend the Maturity Date as provided in Section 2.15.

“Original Credit Agreement” has the meaning given that term in the recitals to this Agreement.

“Original Maturity Date” means July 30, 2012.

“Other Collateral Properties” means all Collateral Properties other than the Boston Hyatt.

“Ownership Share” means, with respect to any Subsidiary of a Person (other than a Wholly Owned Subsidiary) or any Unconsolidated Affiliate of a Person, the greater of (a) such Person’s relative nominal direct and indirect ownership interest (expressed as a percentage) in such Subsidiary or Unconsolidated Affiliate or (b) subject to compliance with Section 9.4.(r), such Person’s relative direct and indirect economic interest (calculated as a percentage) in such Subsidiary or Unconsolidated Affiliate determined in accordance with the applicable provisions of the declaration of trust, articles or certificate of incorporation, articles of organization, partnership agreement, joint venture agreement or other applicable organizational document of such Subsidiary or Unconsolidated Affiliate.

“Parent Guarantor” means Chesapeake Lodging Trust, a Maryland real estate investment trust.

“Parent Guaranty” means the Guaranty of even date herewith executed by the Parent Guarantor in favor of the Administrative Agent for its benefit and the benefit of the Lenders, as the same may be supplemented, amended or otherwise modified from time to time.

“Participant” has the meaning given that term in Section 13.6.(b).

“PBGC” means the Pension Benefit Guaranty Corporation and any successor agency.

“Permitted Liens” means, with respect to any asset or property of a Person, (a) Liens securing taxes, assessments and other charges or levies imposed by any Governmental Authority (excluding any Lien imposed pursuant to any of the provisions of ERISA or pursuant to any Environmental Laws) which are not at the time required to be paid or discharged under Section 8.6.; (b) Liens consisting of deposits or pledges made, in the ordinary course of business, in connection with, or to secure payment of, obligations under workers’ compensation, unemployment insurance or similar Applicable Laws; (c) Liens consisting of encumbrances in the nature of zoning restrictions, easements, and rights or restrictions of record on the use of real property, which do not materially detract from the value of such Property or impair the intended use thereof in the business of such Person; (d) Liens imposed by laws, such as mechanics’ liens and other similar liens, arising in the ordinary course of business which secure payment of obligations not more than sixty (60) days past due; (e) the rights of tenants under leases or subleases not interfering with the ordinary conduct of business of such Person; (f) Liens in favor

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of the Administrative Agent for its benefit and the benefit of the Lenders; (g) Liens permitted under any Security Documents; (h) in the case of any Property that is not a Collateral Pool Party, Liens against such Property securing Indebtedness not otherwise prohibited hereunder; (i) judgment Liens not in excess of $1,000,000 in the aggregate for all Properties or $250,000 for any one Collateral Property (exclusive of (i) any amounts that are duly bonded to the satisfaction of Administrative Agent in its reasonable discretion or (ii) any amount covered by insurance to the satisfaction of Administrative Agent in its reasonable discretion); (j) deposits or pledges to secure bids, tenders, contracts (other than contracts for payment of money), leases, regulatory or statutory obligations, surety and appeal bonds and other obligations of like nature arising in the ordinary course of business; (k) Liens on leased personal property to secure the lease obligations associated with such property; and (l) any other matters from time to time that are not material and that are approved in writing by Administrative Agent (but specifically excluding, in the case of any Collateral Property, Liens securing monetary obligations).

“Person” means any natural person, corporation, limited partnership, general partnership, joint stock company, limited liability company, limited liability partnership, joint venture, association, company, trust, bank, trust company, land trust, business trust or other organization, whether or not a legal entity, or any other nongovernmental entity, or any Governmental Authority.

“Personal Property” shall mean the Accounts, Chattel Paper, Contracts, Equipment, General Intangibles, Inventory, vehicles and cash on hand at or related to a Collateral Property.

“PIP” means a property improvement plan for a Property prepared by a franchisor or manager of such Property.

“Plan” means at any time an employee pension benefit plan (other than a Multiemployer Plan) which is covered by Title IV of ERISA or subject to the minimum funding standards under Section 412 of the Internal Revenue Code and either (i) is maintained, or contributed to, by any member of the ERISA Group for employees of any member of the ERISA Group or (ii) has at any time within the preceding five years been maintained, or contributed to, by any Person which was at such time a member of the ERISA Group for employees of any Person which was at such time a member of the ERISA Group.

“Post-Default Rate” means, in respect of any principal of any Loan that is not paid when due, the rate otherwise applicable plus an additional four percent (4%) per annum and with respect to any other Obligation that is not paid when due (whether at stated maturity, by acceleration, by optional or mandatory prepayment or otherwise) a rate per annum equal to Base Rate as in effect from time to time plus the Applicable Margin, plus four percent (4%).

“Preferred Dividends” means, for any period and without duplication, all Restricted Payments paid during such period on Preferred Stock issued by the Parent Guarantor, the Borrower or a Subsidiary. Preferred Dividends shall not include dividends or distributions (a) paid or payable solely in Equity Interests (other than Mandatorily Redeemable Stock) payable to holders of such class of Equity Interests, (b) paid or payable to the Parent Guarantor, the Borrower or a Subsidiary, or (c) constituting or resulting in the redemption of Preferred Stock, other than scheduled redemptions not constituting balloon, bullet or similar redemptions in full.

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“Preferred Stock” means, with respect to any Person, shares of capital stock of, or other Equity Interests in, such Person which are entitled to preference or priority over any other capital stock of, or other Equity Interest in, such Person in respect of the payment of dividends or distribution of assets upon liquidation or both.

“Principal Office” means the Administrative Agent’s office at Minneapolis Loan Center, 608 2nd Avenue South, 11th Floor, Minneapolis, Minnesota 55402.

“Proceedings” has the meaning given that term in Section 8.16.

“Property” means a parcel of real property and the improvements thereon owned or ground leased by the Parent Guarantor, the Borrower, any Loan Party or any of their Subsidiaries (or, if applicable, Unconsolidated Affiliates). For purposes of Section 4.1., the term “Property” may include a property to be acquired, but not yet acquired, by a Subsidiary of the Borrower.

“Pro Forma Debt Service” means, on any day, the amount obtained by multiplying (a) an amount equal to the outstanding principal balance of the Loans on such day, by (b) the greater of (i) 10% or (ii) the highest actual rate at which interest is then payable on the Loans or (c) the then prevailing rate on United States Treasury bonds, plus 3.50%, with a maturity of ten (10) years and a 25-year amortization schedule.

“Pro Rata Share” means, as to each Lender, the ratio, expressed as a percentage of (a) the amount of such Lender’s Commitment to (b) the sum of the aggregate amount of the Commitments of all Lenders; provided, however, that if at the time of determination the Commitments have terminated or been reduced to zero, the “Pro Rata Share” of each Lender shall be the ratio, expressed as a percentage of (A) the sum of the unpaid principal amount of all outstanding Loans owing to such Lender as of such date to (B) the sum of the aggregate unpaid principal amount of all outstanding Loans of all Lenders as of such date.

“Protective Advance” means all sums expended as determined by the Administrative Agent to be necessary or appropriate after the Borrower fails to do so when required: (a) to protect the validity, enforceability, perfection or priority of the Liens in any of the Collateral and the instruments evidencing the Obligations; (b) to prevent the value of any Collateral from being materially diminished; or (c) to protect any of the Collateral from being materially damaged, impaired, mismanaged or taken, including, without limitation, any amounts expended in connection therewith in accordance with Section 13.2.

“Redevelopment Property” means at any time any Hotel Property that is then undergoing Major Renovations or with respect to which the Borrower or a Subsidiary is planning, or a PIP or property condition report recommends or requires, Major Renovations within the next three (3) years.

“Regulatory Change” means, with respect to any Lender, any change effective after the Agreement Date in Applicable Law (including without limitation, Regulation D of the Board of Governors of the Federal Reserve System) or the adoption or making after such date of any interpretation, directive or request applying to a class of banks, including such Lender, of or under any Applicable Law (whether or not having the force of law and whether or not failure to comply therewith would be unlawful) by any Governmental Authority or monetary authority

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charged with the interpretation or administration thereof or compliance by any Lender with any request or directive regarding capital adequacy.

“REIT” means a Person qualifying for treatment as a “real estate investment trust” under the Internal Revenue Code.

“Remaining Collateral Properties” means, at the time of a Collateral Property Release, those Collateral Properties that will continue to be included in the Collateral Pool immediately following such Collateral Property Release.

“Renovations” means any renovations, remodeling or other capital improvements at a Hotel Property (whether performed pursuant to a PIP or otherwise), but not routine maintenance or repairs.

“Required Approval Lenders” means (a) in the case of the each of the Initial Collateral Properties, all of the Lenders, (b) at any time at which there are at least seven (7) Collateral Properties in the Collateral Pool, the Requisite Lenders, and (c) at all other times, the Super Majority Lenders.

“Required Collateral Property” means each of the Boston Hyatt, the Checkers Hilton Hotel in Los Angeles, California and the Newton Massachusetts (subject to the substitution of other Collateral Properties as provided in Section 4.5.).

“Requisite Lenders” means, as of any date, Lenders having at least 66 2/3% of the aggregate amount of the Commitments, or, if the Commitments have been terminated or reduced to zero, Lenders holding at least 66 2/3% of the aggregate principal amount of the outstanding Loans; provided that (i) in determining such percentage at any given time, all then existing Defaulting Lenders will be disregarded and excluded, and the Pro Rata Shares shall be redetermined, for voting purposes only, to exclude the Pro Rata Shares of such Defaulting Lenders, and (ii) at all times when two or more Lenders are party to this Agreement, the term “Requisite Lenders” shall in no event mean less than two Lenders.

“Restricted Payment” means: (a) any dividend or other distribution, direct or indirect, on account of any shares of any class of stock or other Equity Interest of the Borrower or any of its Subsidiaries now or hereafter outstanding, except a dividend payable solely in shares of that class of stock to the holders of that class; (b) any redemption, conversion, exchange, retirement, sinking fund or similar payment, purchase or other acquisition for value, direct or indirect, of any shares of any class of stock or other Equity Interest of the Borrower or any of its Subsidiaries now or hereafter outstanding; (c) any payment or prepayment of principal of, premium, if any, or interest on, redemption, conversion, exchange, purchase, retirement, defeasance, sinking fund or similar payment with respect to, any Subordinated Debt; and (d) any payment made to retire, or to obtain the surrender of, any outstanding warrants, options or other rights to acquire any Equity Interests of the Borrower or any of its Subsidiaries now or hereafter outstanding.

“S&P” means Standard & Poor’s Rating Services, a division of The McGraw-Hill Companies, Inc.

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“Securities Act” means the Securities Act of 1933, as amended from time to time, together with all rules and regulations issued thereunder.

“Security Deed” means a deed to secure debt, deed of trust or mortgage with respect to a Collateral Property executed by the applicable Subsidiary Guarantor and Operating Lessee in favor of the Administrative Agent for its benefit and the benefit of the Lenders, in form and substance satisfactory to the Administrative Agent, securing the Obligations (subject to Section 2.18.), as the same may be supplemented, amended or otherwise modified from time to time.

“Security Document” means any Security Deed, any Assignment of Leases and Rents, any Management Agreement Assignment/Subordination, any Control Agreement and any security agreement, pledge agreement, financing statement, or other document, instrument or agreement creating, evidencing or perfecting the Administrative Agent’s Liens in any of the Collateral.

“Solvent” means, when used with respect to any Person, that (a) the fair value and the fair salable value of its assets (excluding any Indebtedness due from any affiliate of such Person) are each in excess of the fair valuation of its total liabilities (including all contingent liabilities); (b) such Person is able to pay its debts or other obligations in the ordinary course as they mature; and (c) such Person has capital not unreasonably small to carry on its business and all business in which it proposes to be engaged.

“Specified Loan Party” means each Loan Party other than the Parent Guarantor.

“Subordinated Debt” means Indebtedness for money borrowed of any of the Loan Parties that is subordinated in right of payment and otherwise to the Loans and the other Obligations in a manner satisfactory to the Administrative Agent in its sole and absolute discretion.

“Subsidiary” means, for any Person, any corporation, partnership, limited liability company or other entity of which at least a majority of the Equity Interests having by the terms thereof ordinary voting power to elect a majority of the board of directors or other individuals performing similar functions of such corporation, partnership, limited liability company or other entity (without regard to the occurrence of any contingency) is at the time directly or indirectly owned or controlled by such Person or one or more Subsidiaries of such Person or by such Person and one or more Subsidiaries of such Person, and shall include all Persons the accounts of which are consolidated with those of such Person pursuant to GAAP.

“Subsidiary Guarantor” means each Subsidiary of Borrower that owns a Collateral Property.

“Subsidiary Guaranty” means the Subsidiary Guaranty of even date herewith executed by the Initial Subsidiary Guarantors in favor of the Administrative Agent for its benefit and the benefit of the Lenders, and joined in from time to time thereafter by other Subsidiary Guarantors by Accession Agreements executed pursuant to Section 6.3.(j), as the same may be supplemented, amended or otherwise modified from time to time.

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“Substantial Amount” means, at the time of determination thereof, an amount in excess of ten percent (10%) of total consolidated assets (exclusive of depreciation) at such time of the Parent Guarantor and its Subsidiaries determined on a consolidated basis.

“Super Majority Lenders” means, as of any date, Lenders having at least 75% of the aggregate amount of the Commitments, or, if the Commitments have been terminated or reduced to zero, Lenders holding at least 75% of the aggregate principal amount of the outstanding Loans; provided that (i) in determining such percentage at any given time, all then existing Defaulting Lenders will be disregarded and excluded, and the Pro Rata Shares shall be redetermined, for voting purposes only, to exclude the Pro Rata Shares of such Defaulting Lenders, and (ii) at all times when two or more Lenders are party to this Agreement, the term “Super-Majority Lenders” shall in no event mean less than two Lenders.

“Syndication Agent” means JPMorgan Chase Bank, N.A.

“Tangible Net Worth” means, as of a given date, stockholders’ equity of the Parent Guarantor and its Subsidiaries determined on a consolidated basis plus increases in accumulated depreciation and amortization accrued after the Agreement Date, minus (to the extent included when determining stockholders’ equity of the Parent Guarantor and its Subsidiaries): (a) the amount of any write-up in the Book Value of any assets reflected in any balance sheet resulting from revaluation thereof or any write up in excess of the cost of such assets acquired, and (b) the aggregate of all amounts appearing on the assets side of any such balance sheet for franchises, licenses, permits, patents, patent applications, copyrights, trademarks, service marks, trade names, goodwill, treasury stock, experimental or organizational expenses and other like assets which would be classified as intangible assets under GAAP (subject to Section 1.2.(a)), all determined on a consolidated basis.

“Taxes” has the meaning given that term in Section 3.10.

“Tax/Insurance Reserve Account” means, with respect to each Collateral Property, an account with the Administrative Agent into which funds shall be deposited and withdrawn for the payment of personal property and real estate taxes and assessments and insurance premiums in accordance with Section 8.21.

“Tenant Lease” means any lease, sublease or other similar occupancy agreement for any portion of a Collateral Property.

“Term Conversion Date” means the Original Maturity Date. The extension of the Maturity Date shall not extend the Term Conversion Date.

“Tie-In Jurisdiction” means a jurisdiction in which a “tie-in” endorsement may be obtained for a title insurance policy covering property located in such jurisdiction which endorsement effectively ties coverage to other title insurance policies covering properties located in other jurisdictions.

“Top 25 Market” means the twenty-five (25) largest Metropolitan Statistical Areas in the United States as published from time to time by the United States Office of Management and Budget.

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“Transfer Authorizer Designation Form” means a form substantially in the form delivered to the Administrative Agent pursuant to the Original Credit Agreement or in the form of Exhibit G as the same may be amended, restated or modified from time to time with the prior written approval of the Administrative Agent.

“Type” with respect to any Loan, refers to whether such Loan is a LIBOR Loan or a Base Rate Loan.

“UCC” means the Uniform Commercial Code as in effect in any applicable jurisdiction.

“Unconsolidated Affiliate” means, with respect to any Person, any other Person in whom such Person holds an Investment, which Investment is accounted for in the financial statements of such Person on an equity basis of accounting and whose financial results would not be consolidated under GAAP with the financial results of such Person on the consolidated financial statements of such Person.

“Unfunded Liabilities” means, with respect to any Plan at any time, the amount (if any) by which (a) the value of all benefit liabilities under such Plan, determined on a plan termination basis using the assumptions prescribed by the PBGC for purposes of Section 4044 of ERISA, exceeds (b) the fair market value of all Plan assets allocable to such liabilities under Title IV of ERISA (excluding any accrued but unpaid contributions), all determined as of the then most recent valuation date for such Plan, but only to the extent that such excess represents a potential liability of a member of the ERISA Group to the PBGC or any other Person under Title IV of ERISA.

“Uniform System” means the Uniform System of Accounts for the Lodging Industry, Tenth Revised Edition, 2006, as published by the Educations Institute of the American Hotel & Motel Association, as revised from time to time to the extent such revision has been or is in the process of being generally implemented within such Uniform System of Accounts.

“Unrestricted Cash” means, with respect to any Person, cash and Cash Equivalents of such Person that are free and clear of all Liens and not subject to any restrictions (other than with respect to costs of liquidating certain Cash Equivalents prior to maturity) on the use thereof to pay Indebtedness and other obligations of the such Person.

“Wells Fargo” means Wells Fargo Bank, National Association, and its successors and assigns.

“Wholly Owned Subsidiary” means any Subsidiary of a Person in respect of which all of the Equity Interests (other than, in the case of a corporation, directors’ qualifying shares) are at the time directly or indirectly owned or controlled by such Person or one or more other Subsidiaries of such Person or by such Person and one or more other Subsidiaries of such Person.

Section 1.2. GAAP; General References; Pacific Time.

(a) Unless otherwise indicated, all accounting terms, ratios and measurements shall be interpreted or determined in accordance with GAAP as in effect on the Agreement Date;

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provided that, if at any time any change in GAAP would affect the computation of any financial ratio or requirement set forth in any Loan Document, and either the Borrower or the Requisite Lenders shall so request, the Administrative Agent, the Lenders and the Borrower shall negotiate in good faith to amend such ratio or requirement to preserve the original intent thereof in light of such change in GAAP (subject to the approval of the Requisite Lenders); provided further that, until so amended, (i) such ratio or requirement shall continue to be computed in accordance with GAAP prior to such change therein and (ii) the Borrower shall provide to the Administrative Agent and the Lenders financial statements and other documents required under this Agreement or as reasonably requested hereunder setting forth a reconciliation between calculations of such ratio or requirement made before and after giving effect to such change in GAAP. Notwithstanding the use of GAAP, the calculation of liabilities shall NOT include any fair value adjustments to the carrying value of liabilities to record such liabilities at fair value pursuant to electing the fair value option election under FASB ASC 825-10-25 (formerly known as FAS 159, The Fair Value Option for Financial Assets and Financial Liabilities) or other FASB standards allowing entities to elect fair value option for financial liabilities. Therefore, the amount of liabilities shall be the historical cost basis, which generally is the contractual amount owed adjusted for amortization or accretion of any premium or discount.

(b) References in this Agreement to “Sections”, “Articles”, “Exhibits” and “Schedules” are to sections, articles, exhibits and schedules herein and hereto unless otherwise indicated. References in this Agreement to any document, instrument or agreement (i) shall include all exhibits, schedules and other attachments thereto, (ii) shall include all documents, instruments or agreements issued or executed in replacement thereof, to the extent permitted hereby and (iii) shall mean such document, instrument or agreement, or replacement or predecessor thereto, as amended, supplemented, restated or otherwise modified from time to time to the extent not otherwise stated herein or prohibited hereby and in effect at any given time. Wherever from the context it appears appropriate, each term stated in either the singular or plural shall include the singular and plural, and pronouns stated in the masculine, feminine or neuter gender shall include the masculine, the feminine and the neuter. Unless explicitly set forth to the contrary, a reference to “Subsidiary” means a Subsidiary of the Borrower or a Subsidiary of such Subsidiary and a reference to an “Affiliate” means a reference to an Affiliate of the Borrower. Titles and captions of Articles, Sections, subsections and clauses in this Agreement are for convenience only, and neither limit nor amplify the provisions of this Agreement. Unless otherwise indicated, all references to time are references to Pacific time.

ARTICLE II. CREDIT FACILITY

Section 2.1. Loans.

Subject to the terms and conditions set forth in this Agreement, including without limitation, Section 2.16. below, each Lender severally and not jointly agrees to make Loans to the Borrower during the period from and including the Effective Date to but excluding the Term Conversion Date, in an aggregate principal amount at any one time outstanding up to, but not exceeding, such Lender’s Commitment; provided, however Loans shall not be made in excess of amounts that would cause a violation of the limitations set forth in Section 2.16. Each borrowing of Loans hereunder shall be in an aggregate principal amount of $1,000,000 and integral multiples of $100,000 in excess of that amount (except that, subject to Section 2.16., any such

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borrowing of Loans may be in the aggregate amount of the Commitments of all Lenders minus the sum of the aggregate principal balance of all Loans, which Loans, if less than $1,000,000, must be Base Rate Loans). Within the foregoing limits and subject to the terms and conditions of this Agreement, the Borrower may borrow, repay and, prior to the Term Conversion Date, reborrow Loans.

Section 2.2. Requests for Loans.

Not later than 9:00 a.m. at least one (1) Business Day prior to a borrowing of Base Rate Loans and not later than 9:00 a.m. at least three (3) Business Days prior to a borrowing of LIBOR Loans, the Borrower shall deliver to the Administrative Agent a Notice of Borrowing. Each Notice of Borrowing shall specify the aggregate principal amount of the Loans to be borrowed, the date such Loans are to be borrowed (which must be a Business Day), the use of the proceeds of such Loans, the Type of the requested Loans, and if such Loans are to be LIBOR Loans, the initial Interest Period for such Loans. Each Notice of Borrowing shall be irrevocable once given and binding on the Borrower. Notwithstanding the foregoing, the Administrative Agent is authorized to rely upon the telephonic request of Doug Vicari or Graham Wooten as the Borrower’s duly authorized agents, or such other and/or additional authorized agents as the Borrower shall designate in writing to Administrative Agent (collectively, the “Borrower’s Agents”). The Borrower’s telephonic notices, requests and acceptances shall be directed to such officers of the Administrative Agent as the Administrative Agent may from time to time designate and shall be followed promptly by the original or a facsimile or electronic mail Notice of Borrowing required pursuant to the first sentence of this Section 2.2. Prior to delivering a Notice of Borrowing, the Borrower may (without specifying whether a Loan will be a Base Rate Loan or a LIBOR Loan) request that the Administrative Agent provide the Borrower with the most recent LIBOR available to the Administrative Agent. The Administrative Agent shall provide such quoted rate to the Borrower on the date of such request or as soon as possible thereafter.

Section 2.3. Funding of Loans.

Promptly after receipt of a Notice of Borrowing under Section 2.2., the Administrative Agent shall notify each Lender of the proposed borrowing. Each Lender shall deposit an amount equal to the Loan to be made by such Lender to the Borrower with the Administrative Agent at the Principal Office, in immediately available funds not later than 9:00 a.m. on the date such proposed Loans are to be made available to the Borrower. Subject to fulfillment of all applicable conditions set forth herein, the Administrative Agent shall make available to the Borrower at the Principal Office, not later than 12:00 noon on the date of the requested borrowing of Loans, the proceeds of such amounts received by the Administrative Agent. No Lender shall be responsible for the failure of any other Lender to make a Loan or to perform any other obligation to be made or performed by such other Lender hereunder, and the failure of any Lender to make a Loan or to perform any other obligation to be made or performed by it hereunder shall not relieve the obligation of any other Lender to make any Loan or to perform any other obligation to be made or performed by such other Lender.

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Section 2.4. Assumptions Regarding Funding by Lenders.

With respect to Loans to be made after the Effective Date, unless the Administrative Agent shall have been notified by any Lender that such Lender will not make available to the Administrative Agent a Loan to be made by such Lender in connection with any borrowing, the Administrative Agent may assume that such Lender will make the proceeds of such Loan available to the Administrative Agent in accordance with this Section, and the Administrative Agent may (but shall not be obligated to), in reliance upon such assumption, make available to the Borrower the amount of such Loan to be provided by such Lender. In such event, if such Lender does not make available to the Administrative Agent the proceeds of such Loan, then such Lender and the Borrower severally agree to pay to the Administrative Agent on demand the amount of such Loan with interest thereon, for each day from and including the date such Loan is made available to the Borrower but excluding the date of payment to the Administrative Agent, at (i) in the case of a payment to be made by such Lender, the greater of the Federal Funds Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation and (ii) in the case of a payment to be made by the Borrower, the interest rate applicable to Base Rate Loans. If the Borrower and such Lender shall pay the amount of such interest to the Administrative Agent for the same or overlapping period, the Administrative Agent shall promptly remit to the Borrower the amount of such interest paid by the Borrower for such period. If such Lender pays to the Administrative Agent the amount of such Loan, the amount so paid shall constitute such Lender’s Loan included in the borrowing. Any payment by the Borrower shall be without prejudice to any claim the Borrower may have against a Lender that shall have failed to make available the proceeds of a Loan to be made by such Lender.

Section 2.5. Purchase of Loans on the Effective Date.

Each Lender that is not a party to the Original Credit Agreement and each Lender that is increasing its Commitment hereunder above the amount of its Commitment under the Original Credit Agreement shall, on the Effective Date, purchase from the other Lenders its Commitment Percentage or, in the case of a Lender that is increasing its Commitment, a percentage equal to the increase of its Commitment Percentage (determined in each case with respect to the Lender’s relative Commitments and after giving effect to the increase of Commitments as a result of this Agreement) of any outstanding Loans, by making available to the Administrative Agent for the account of such other Lenders, in same day funds, an amount equal to the portion of the outstanding principal amount of such Loans to be purchased by such Lender. The Borrower shall pay to the Lenders amounts payable, if any, to the Lenders under Section 5.4. as a result of the prepayment of any such Loans.

Section 2.6. Rates and Payment of Interest on Loans.

(a) Rates. The Borrower promises to pay to the Administrative Agent for the account of each Lender interest on the unpaid principal amount of each Loan made by such Lender for the period from and including the date of the making of such Loan (including any Loans outstanding on the Effective Date) to but excluding the date such Loan shall be paid in full, at the following per annum rates:

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(i) during such periods as such Loan is a Base Rate Loan, at the Base Rate (as in effect from time to time), plus the Applicable Margin; and

(ii) during such periods as such Loan is a LIBOR Loan, at LIBOR for such Loan for the Interest Period therefore, plus the Applicable Margin.

Notwithstanding the foregoing, while an Event of Default exists, the Borrower shall pay to the Administrative Agent for the account of each Lender interest at the Post-Default Rate on the outstanding principal amount of any Loan made by such Lender and on any other amount payable by the Borrower hereunder or under the Notes held by such Lender to or for the account of such Lender (including without limitation, accrued but unpaid interest to the extent permitted under Applicable Law).

(b) Payment of Interest. All accrued and unpaid interest on the outstanding principal amount of each Loan shall be payable (i) monthly in arrears on the first day of each month, commencing with the first full calendar month occurring after the Effective Date and (ii) on any date on which the principal balance of such Loan is due and payable in full (whether at maturity, due to acceleration or otherwise). Interest payable at the Post-Default Rate shall be payable from time to time on demand. All determinations by the Administrative Agent of an interest rate hereunder shall be conclusive and binding on the Lenders and the Borrower for all purposes, absent manifest error. In the case of interest on Loans outstanding on the Effective Date, interest accrued as of the Effective Date shall be allocated among the Lenders based on their Commitment Percentages under the Original Credit Agreement, and interest accruing from and after the Effective Date shall be allocated among the Lenders based on their Commitment Percentages under this Agreement.

Section 2.7. Number of Interest Periods.

There may be no more than seven (7) different Interest Periods outstanding at the same time.

Section 2.8. Repayment of Loans.

The Borrower shall repay the entire outstanding principal amount of, and all accrued but unpaid interest on, the Loans on the Maturity Date.

Section 2.9. Prepayments.

(a) Optional. Subject to Section 5.4., the Borrower may prepay any Loan at any time without premium or penalty. The Borrower shall give the Administrative Agent at least three (3) Business Days prior written notice of the prepayment of any Loan. Each voluntary prepayment of Loans shall be in an aggregate minimum amount of $1,000,000 and integral multiples of $100,000 in excess thereof.

(b) Mandatory.

(i) Commitment Overadvance. If at any time the aggregate principal amount of all outstanding Loans exceeds the aggregate amount of the Commitments, the

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Borrower shall immediately upon demand pay to the Administrative Agent for the account of the Lenders the amount of such excess. All payments under this Section 2.9.(b)(i) shall be applied in accordance with the last sentence of Section 3.2.

(ii) Minimum DSCR Hurdle. If the Debt Service Coverage Ratio as determined at the end of any fiscal quarter is less than the Minimum DSCR Hurdle, the Borrower shall pay to the Administrative Agent for the account of the Lenders, as a principal payment of the Loans, not later than fifteen (15) Business Days following the day on which the DSCR Certificate for such fiscal quarter is required to be delivered under Section 9.4.(d), the amount by which the outstanding principal balance of the Loan would be required to be reduced to cause the Debt Service Coverage Ratio to equal the Minimum DSCR Hurdle as of the last day of such fiscal quarter. All payments under this Section 2.9.(b)(ii) shall be applied in accordance with the last sentence of Section 3.2.

Section 2.10. Late Charges.

If any payment required under this Agreement is not paid within ten (10) days after it becomes due and payable, the Borrower shall pay a late charge for late payment to compensate the Lenders for the loss of use of funds and for the expenses of handling the delinquent payment, in an amount equal to four percent (4%) of such delinquent payment. Such late charge shall be paid in any event not later than the due date of the next subsequent installment of principal and/or interest. In the event the maturity of the Obligations hereunder occurs or is accelerated pursuant to Section 11.2., this Section shall apply only to payments overdue prior to the time of such acceleration. This Section shall not be deemed to be a waiver of the Lenders’ right to accelerate payment of any of the Obligations as permitted under the terms of this Agreement.

Section 2.11. Continuation.

So long as no Default or Event of Default exists, the Borrower may on any Business Day, with respect to any LIBOR Loan, elect to maintain such LIBOR Loan or any portion thereof as a LIBOR Loan by selecting a new Interest Period for such LIBOR Loan. Each Continuation of a LIBOR Loan shall be in an aggregate minimum amount of $1,000,000 and integral multiples of $100,000 in excess of that amount, and each new Interest Period selected under this Section shall commence on the last day of the immediately preceding Interest Period. Each selection of a new Interest Period shall be made by the Borrower giving to the Administrative Agent a Notice of Continuation not later than 9:00 a.m. on the third Business Day prior to the date of any such Continuation. Such notice by the Borrower of a Continuation shall be by telecopy, electronic mail or other similar form of communication in the form of a Notice of Continuation, specifying (a) the proposed date of such Continuation, (b) the LIBOR Loan and portion thereof subject to such Continuation and (c) the duration of the selected Interest Period, all of which shall be specified in such manner as is necessary to comply with all limitations on Loans outstanding hereunder. Notwithstanding the foregoing, the Administrative Agent is authorized to rely upon the telephonic request of any of the Borrower’s Agents. The Borrower’s telephonic notices, requests and acceptances shall be directed to such officers of the Administrative Agent as the Administrative Agent may from time to time designate and shall be followed promptly by the original or a facsimile or electronic mail Notice of Continuation required pursuant to the third sentence of this Section 2.11. Each Notice of Continuation shall be irrevocable by and binding

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on the Borrower once given. Promptly after receipt of a Notice of Continuation, the Administrative Agent shall notify each Lender of the proposed Continuation. If the Borrower shall fail to select in a timely manner a new Interest Period for any LIBOR Loan in accordance with this Section, such Loan will automatically, on the last day of the current Interest Period therefore, continue as a LIBOR Loan with an Interest Period of one month.

Section 2.12. Conversion.

So long as no Default or Event of Default exists, the Borrower may on any Business Day, upon the Borrower’s giving of a Notice of Conversion to the Administrative Agent by telecopy, electronic mail or other similar form of communication, Convert all or a portion of a Loan of one Type into a Loan of another Type. Each Conversion of Base Rate Loans into LIBOR Loans shall be in an aggregate minimum amount of $1,000,000 and integral multiples of $100,000 in excess of that amount, and upon Conversion of a Base Rate Loan into a LIBOR Loan, the Borrower shall pay accrued interest to the date of Conversion on the principal amount so Converted in accordance with Section 2.6. Any Conversion of a LIBOR Loan into a Base Rate Loan shall be made on, and only on, the last day of an Interest Period for such LIBOR Loan. Each such Notice of Conversion shall be given not later than 9:00 a.m. three (3) Business Days prior to the date of any proposed Conversion into Base Rate or LIBOR Loans. Promptly after receipt of a Notice of Conversion, the Administrative Agent shall notify each Lender of the proposed Conversion. Subject to the restrictions specified above, each Notice of Conversion shall be by telecopy, electronic mail or other similar form of communication in the form of a Notice of Conversion specifying (a) the requested date of such Conversion, (b) the Type of Loan to be Converted, (c) the portion of such Type of Loan to be Converted, (d) the Type of Loan such Loan is to be Converted into and (e) if such Conversion is into a LIBOR Loan, the requested duration of the Interest Period of such Loan. Notwithstanding the foregoing, the Administrative Agent is authorized to rely upon the telephonic request of any of the Borrower’s Agents. The Borrower’s telephonic notices, requests and acceptances shall be directed to such officers of the Administrative Agent as the Administrative Agent may from time to time designate and shall be followed promptly by the original or a facsimile or electronic mail Notice of Conversion required pursuant to the first sentence of this Section 2.12. Each Notice of Conversion shall be irrevocable by and binding on the Borrower once given.

Section 2.13. Notes.

(a) Notes. The Loans made by each Lender shall, in addition to this Agreement, also be evidenced by a Note, payable to the order of such Lender in a principal amount equal to the amount of its Commitment as originally in effect and otherwise duly completed.

(b) Lost, Stolen, Destroyed or Mutilated Notes. Upon receipt by the Borrower of (i) written notice from a Lender that a Note of such Lender has been lost, stolen, destroyed or mutilated, and (ii)(A) in the case of loss, theft or destruction, an unsecured agreement of indemnity from such Lender in form reasonably satisfactory to the Borrower, or (B) in the case of mutilation, upon surrender and cancellation of such Note, the Borrower shall at its own expense execute and deliver to such Lender a new Note dated the date of such lost, stolen, destroyed or mutilated Note.

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Section 2.14. Voluntary Reductions of the Commitment.

The Borrower may terminate or reduce the amount of the Commitments at any time and from time to time without penalty or premium upon not less than five (5) Business Days prior notice to the Administrative Agent of each such termination or reduction, which notice shall specify the effective date thereof and the amount of any such reduction (which in the case of any partial reduction of the Commitments shall not be less that $5,000,000 and integral multiples of $1,000,000 in excess of that amount in the aggregate) and shall be irrevocable once given and effective only upon receipt by the Administrative Agent (“Commitment Reduction Notice”); provided, however, (a) the Borrower may not reduce the aggregate amount of the Commitments to an amount that is less than the aggregate outstanding principal amount of the Loans unless, on or before the effective date of such reduction, the Borrower complies with the provisions of Section 2.9.(b)(i) and (b) the Borrower may not reduce the aggregate amount of the Commitments below $50,000,000 unless the Borrower is fully terminating the Commitments. Promptly after receipt of a Commitment Reduction Notice the Administrative Agent shall notify each Lender of the proposed termination or Commitment reduction. The Commitments, once reduced pursuant to this Section, may not be increased. The Borrower shall pay all interest and fees, on the Loans accrued to the date of such reduction or termination of the Commitments to the Administrative Agent for the account of the Lenders, including but not limited to any applicable compensation due to each Lender in accordance with Section 5.4. of this Agreement.

Section 2.15. Extension of Maturity Date.

Borrower shall have the option to extend the Maturity Date from the Original Maturity Date to the Extended Maturity Date, upon satisfaction of each of the following conditions precedent:

(a) The Borrower shall provide the Administrative Agent with written notice of the Borrower’s request to exercise the Option to Extend not more than ninety (90) days but not less than thirty (30) days prior to the Original Maturity Date; and

(b) As of the date of the Borrower’s delivery of notice of request to exercise the Option to Extend, and as of the Original Maturity Date, no Default of Event of Default shall have occurred and be continuing, and Borrower shall so certify in writing; and

(c) The Borrower shall execute or cause the execution of all documents reasonably required by the Administrative Agent to exercise the Option to Extend and shall deliver to the Administrative Agent, at the Borrower’s sole cost and expense, such title insurance endorsements reasonably required by the Administrative Agent; and

(d) There shall not have occurred any change in any Collateral Property since the date on which it first became a Collateral Property or the financial condition of the Borrower or the Parent Guarantor from that which existed as of July 30, 2010 that, in the determination of the Administrative Agent in its sole discretion, has had a Material Adverse Effect; and

(e) On or before the Original Maturity Date, the Borrower shall pay to the Administrative Agent all closing and recording costs, the costs of preparing any extension

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documents, including reasonable attorney’s fees if any, and any other reasonable costs and expense associated with the Borrower’s exercise of its extension right; and

(f) On or before the Original Maturity Date, Borrower shall pay to the Administrative Agent the fee provided for in Section 3.5.(c); and

(g) The Administrative Agent shall have received, at the Borrower’s sole cost, Appraisals confirming to the satisfaction of the Administrative Agent that the ratio of the aggregate amount of the Commitments to the sum of (i) the aggregate amount of the Appraised Values of the Other Collateral Properties and (ii) if the Boston Hyatt is then a Collateral Property, the Adjusted Appraised Value does not exceed the Advance Rate. If such ratio exceeds the Advance Rate, the Borrower may satisfy the condition in this Section 2.15.(g) by reducing the aggregate amount of the Commitments in accordance with Section 2.14. to the amount required to reduce such ratio to the Advance Rate.

The extension of the Maturity Date shall not extend the Term Conversion Date, and there shall be no advances of Loans from and after the Term Conversion Date.

Section 2.16. Amount Limitations.

Notwithstanding any other term of this Agreement or any other Loan Document, no Lender shall make any Loan in an amount which, immediately after the making of such Loan, would cause the aggregate principal amount of all outstanding Loans to exceed the Maximum Loan Availability.

Section 2.17. Funds Transfer Disbursements.

(a) Generally. The Borrower hereby authorizes the Administrative Agent to disburse the proceeds of any Loan made by the Lenders or any of their Affiliates pursuant to the Loan Documents as requested by any of Borrower’s Agents to any of the accounts designated in the Transfer Authorizer Designation Form. The Borrower agrees to be bound by any transfer request authorized or transmitted by the Borrower or any of the Borrower’s Agents. The Borrower further agrees and acknowledges that the Administrative Agent may rely solely on any bank routing number or identifying bank account number or name provided by the Borrower or any of the Borrower’s Agents to effect a wire of funds transfer even if the information provided by the Borrower or the Borrower’s Agents identifies a different bank or account holder than named by the Borrower. The Administrative Agent is not obligated or required in any way to take any actions to detect errors in information provided by the Borrower. If the Administrative Agent takes any actions in an attempt to detect errors in the transmission or content of transfer or requests or takes any actions in an attempt to detect unauthorized funds transfer requests, the Borrower agrees that no matter how many times the Administrative Agent takes these actions the Administrative Agent will not in any situation be liable for failing to take or correctly perform these actions in the future and such actions shall not become any part of the transfer disbursement procedures authorized under this provision, the Loan Documents, or any agreement between the Administrative Agent and the Borrower. The Borrower agrees to notify the Administrative Agent of any errors in the transfer of any funds or of any unauthorized or

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improperly authorized transfer requests within fourteen (14) days after the Administrative Agent’s confirmation to the Borrower of such transfer.

(b) Funds Transfer. The Administrative Agent will, in its sole discretion, determine the funds transfer system and the means by which each transfer will be made. The Administrative Agent may delay or refuse to accept a funds transfer request if the transfer would: (i) violate the terms of this authorization (ii) require use of a bank unacceptable to the Administrative Agent or any Lender or prohibited by any Governmental Authority; provided, that the Administrative Agent and the Lenders hereby acknowledge that TD Bank is acceptable to the Administrative Agent and the Lenders; (iii) cause the Administrative Agent or any Lender to violate any Federal Reserve or other regulatory risk control program or guideline, or (iv) otherwise cause the Administrative Agent or any Lender to violate any Applicable Law or regulation.

(c) Limitation of Liability. Neither the Administrative Agent nor any Lender shall be liable to the Borrower or any other parties for (i) errors, acts or failures to act of others, including other entities, banks, communications carriers or clearinghouses, through which the Borrower’s transfers may be made or information received or transmitted, and no such entity shall be deemed an agent of the Administrative Agent or any Lender, (ii) any loss, liability or delay caused by fires, earthquakes, wars, civil disturbances, power surges or failures, acts of government, labor disputes, failures in communications networks, legal constraints or other events beyond Administrative Agent’s or any Lender’s reasonable control, or (iii) any special, consequential, indirect or punitive damages, whether or not (x) any claim for these damages is based on tort or contract or (y) the Administrative Agent, any Lender or the Borrower knew or should have known the likelihood of these damages in any situation. Neither the Administrative Agent nor any Lender makes any representations or warranties other than those expressly made in this Agreement.

Section 2.18. Limitation on Collateral with respect to Boston Hyatt.

Notwithstanding anything to the contrary contained in any of the Loan Documents, the maximum amount of the Obligations secured by the Boston Hyatt (including personal property related thereto) shall be $62,500,000.

Section 2.19. Increase in Commitments.

(a) Request for and Conditions of Increase. The Borrower shall have the right to request increases in the aggregate amount of the Commitments by providing written notice to the Administrative Agent, which notice shall be irrevocable once given; provided, however, that after giving effect to any such increases the aggregate amount of the Commitments shall not exceed $200,000,000. Each such increase in the Commitments must be an aggregate minimum amount of $15,000,000 and integral multiples of $5,000,000 in excess thereof. The Administrative Agent, in consultation with the Borrower, shall manage all aspects of the syndication of such increase in the Commitments, including decisions as to the selection of the existing Lenders and/or other banks, financial institutions and other institutional lenders to be approached with respect to such increase and the allocations of the increase in the Commitments among such existing Lenders and/or other banks, financial institutions and other institutional

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lenders. No Lender shall be obligated in any way whatsoever to increase its Commitment. No Person shall become a Lender hereto pursuant to this Section 2.19. without the approval of Borrower. If a new Lender becomes a party to this Agreement, or if any existing Lender is increasing its Commitment, such Lender shall on the date it becomes a Lender hereunder (or in the case of an existing Lender, increases its Commitment hereunder) (and as a condition thereto) purchase from the other Lenders its Commitment Percentage or, in the case of a Lender that is increasing its Commitment, a percentage equal to the increase of its Commitment Percentage (determined in each case with respect to the Lenders’ relative Commitments and after giving effect to the increase of Commitments) of any outstanding Loans, by making available to the Administrative Agent for the account of such other Lenders, in same day funds, an amount equal to the portion of the outstanding principal amount of such Loans to be purchased by such Lender. The Borrower shall pay to the Lenders amounts payable, if any, to such Lenders under Section 5.4. as a result of the prepayment of any such Loans. Effecting the increase of the Commitments under this Section is subject to the following conditions precedent: (x) no Default or Event of Default shall be in existence on the effective date of such increase, (y) the representations and warranties made or deemed made by the Borrower or any other Loan Party in any Loan Document to which such Loan Party is a party shall be true or correct on the effective date of such increase except to the extent that such representations and warranties expressly relate solely to an earlier date (in which case such representations and warranties shall have been true and accurate on and as of such earlier date) and except for changes in factual circumstances specifically and expressly permitted hereunder, and (z) the Administrative Agent shall have received each of the following, in form and substance reasonably satisfactory to the Administrative Agent: (i) if not previously delivered to the Administrative Agent, copies certified by the Secretary or Assistant Secretary (or other individual performing similar functions) of (A) all corporate, partnership or other necessary action taken by the Borrower to authorize such increase and (B) all corporate, partnership, limited liability company or other necessary action taken by each Guarantor authorizing the guaranty of such increase; (ii) an opinion of counsel to the Borrower and the Guarantors, and addressed to the Administrative Agent and the Lenders covering such matters as reasonably requested by the Administrative Agent; (iii) a supplement to this Agreement executed by the Borrower and by any new Lender and existing Lender that is increasing its Commitment confirming the amount of such new or increased Commitments; (iv) new Notes executed by the Borrower, payable to any new Lenders and replacement Notes executed by the Borrower, payable to any existing Lenders increasing their Commitments, in the amount of such Lender’s Commitment at the time of the effectiveness of the applicable increase in the aggregate amount of the Commitments; (v) ratification by the Parent Guarantor, Subsidiary Guarantors and Operating Lessees of their obligations to which they are parties; (vi) such amendments to the Security Documents as Administrative Agent shall reasonably require; and (vii) such other documents, instruments, title insurance endorsements and information as Administrative Agent shall reasonably request.

(b) Payment of Interest and Fees. Interest and fees accrued hereunder as of the effective date of any increase in the Commitments shall be allocated among the Lenders based on their Commitment Percentages prior to such increase in the Commitments, and interest and fees accruing from and after the effective date of such increase in the Commitments shall be allocated among the Lenders based on their Commitment Percentages following such increase in the Commitments.

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ARTICLE III. PAYMENTS, FEES AND OTHER GENERAL PROVISIONS

Section 3.1. Payments.

(a) Payments by Borrower. Except to the extent otherwise provided herein, all payments of principal, interest, Fees and other amounts to be made by the Borrower under this Agreement, the Notes or any other Loan Document shall be made in Dollars, in immediately available funds, without setoff, deduction or counterclaim, to the Administrative Agent at the Principal Office, not later than 11:00 a.m. on the date on which such payment shall become due (each such payment made after such time on such due date to be deemed to have been made on the next succeeding Business Day). Subject to Section 11.5., the Borrower shall, at the time of making each payment under this Agreement or any other Loan Document, specify to the Administrative Agent the amounts payable by the Borrower hereunder to which such payment is to be applied. Each payment received by the Administrative Agent for the account of a Lender under this Agreement or any Note shall be paid to such Lender by wire transfer of immediately available funds in accordance with the wiring instructions provided by such Lender to the Administrative Agent from time to time, for the account of such Lender at the applicable Lending Office of such Lender. In the event the Administrative Agent fails to pay such amounts to such Lender within one (1) Business Day of receipt of such amounts, the Administrative Agent shall pay interest on such amount at a rate per annum equal to the Federal Funds Rate from time to time in effect. If the due date of any payment under this Agreement or any other Loan Document would otherwise fall on a day which is not a Business Day such date shall be extended to the next succeeding Business Day and interest shall continue to accrue at the rate, if any, applicable to such payment for the period of such extension.

(b) Presumptions Regarding Payments by Borrower. Unless the Administrative Agent shall have received notice from the Borrower prior to the date on which any payment is due to the Administrative Agent for the account of the Lenders hereunder that the Borrower will not make such payment, the Administrative Agent may assume that the Borrower has made such payment on such date in accordance herewith and may (but shall not be obligated to), in reliance upon such assumption, distribute to the Lenders, as the case may be, the amount due. In such event, if the Borrower has not in fact made such payment, then each of the Lenders, as the case may be, severally agrees to repay to the Administrative Agent on demand that amount so distributed to such Lender, with interest thereon, for each day from and including the date such amount is distributed to it to but excluding the date of payment to the Administrative Agent, at the greater of the Federal Funds Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation.

Section 3.2. Pro Rata Treatment.

Except to the extent otherwise provided herein: (a) each borrowing from Lenders under Section 2.1. shall be made from the Lenders, each payment of the fees under Sections 3.5.(a), 3.5.(b) and 3.5.(c) shall be made for the account of the Lenders, and each termination or reduction of the amount of the Commitments under Section 2.14. shall be applied to the respective Commitments of the Lenders, pro rata according to the amounts of their respective Commitments; (b) each payment or prepayment of principal of Loans by the Borrower shall be made for the account of the Lenders pro rata in accordance with the respective unpaid principal

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amounts of the Loans held by them, provided that if immediately prior to giving effect to any such payment in respect of any Loans the outstanding principal amount of the Loans shall not be held by the Lenders pro rata in accordance with their respective Commitments in effect at the time such Loans were made, then such payment shall be applied to the Loans in such manner as shall result, as nearly as is practicable, in the outstanding principal amount of the Loans being held by the Lenders pro rata in accordance with their respective Commitments; (c) each payment of interest on Loans by the Borrower shall be made for the account of the Lenders pro rata in accordance with the amounts of interest on such Loans then due and payable to the respective Lenders; and (d) the Conversion and Continuation of Loans of a particular Type (other than Conversions provided for by Section 5.1.) shall be made pro rata among the Lenders according to the amounts of their respective Loans and the then current Interest Period for each Lender’s portion of each Loan of such Type shall be coterminous. Any payment or prepayment of principal or interest made (i)(A) during the existence of a Default or Event of Default or (B) pursuant to Section 2.9.(b)(ii), shall be made for the account of the Lenders in accordance with the order set forth in Section 11.5. and (ii) pursuant to Section 2.9.(b)(i), shall be made for the account of the Lenders holding Commitments (or, if the Commitments have been terminated, holding Loans, in accordance with the order set forth in Section 11.5.

Section 3.3. Sharing of Payments, Etc.

If a Lender shall obtain payment of any principal of, or interest on, any Loan under this Agreement or shall obtain payment on any other Obligation owing by the Borrower or any other Loan Party through the exercise of any right of set-off, banker’s lien, counterclaim or similar right or otherwise or through voluntary prepayments directly to a Lender or other payments made by the Borrower or any other Loan Party to a Lender not in accordance with the terms of this Agreement and such payment should be distributed to the Lenders in accordance with Section 3.2. or Section 11.5., such Lender shall promptly purchase from such other Lenders participations in (or, if and to the extent specified by such Lender, direct interests in) the Loans made by the other Lenders or other Obligations owed to such other Lenders in such amounts, and make such other adjustments from time to time as shall be equitable, to the end that all the Lenders shall share the benefit of such payment (net of any reasonable expenses which may actually be incurred by such Lender in obtaining or preserving such benefit) in accordance with the requirements of Section 3.2. or Section 11.5., as applicable. To such end, all the Lenders shall make appropriate adjustments among themselves (by the resale of participations sold or otherwise) if such payment is rescinded or must otherwise be restored. The Borrower agrees that any Lender so purchasing a participation (or direct interest) in the Loans or other Obligations owed to such other Lenders may exercise all rights of set-off, banker’s lien, counterclaim or similar rights with the respect to such participation as fully as if such Lender were a direct holder of Loans in the amount of such participation. Nothing contained herein shall require any Lender to exercise any such right or shall affect the right of any Lender to exercise and retain the benefits of exercising, any such right with respect to any other indebtedness or obligation of the Borrower.

Section 3.4. Several Obligations.

No Lender shall be responsible for the failure of any other Lender to make a Loan or to perform any other obligation to be made or performed by such other Lender hereunder, and the

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failure of any Lender to make a Loan or to perform any other obligation to be made or performed by it hereunder shall not relieve the obligation of any other Lender to make any Loan or to perform any other obligation to be made or performed by such other Lender.

Section 3.5. Fees.

(a) Closing Fee. On the Effective Date, the Borrower agrees to pay to the Administrative Agent and each Lender all loan and loan modification fees as have been agreed to in writing by the Borrower and the Administrative Agent.

(b) Unused Fees. During the period from January 1, 2011 to but excluding the Term Conversion Date, the Borrower agrees to pay to the Administrative Agent for the account of the Lenders an unused fee equal to the sum of the daily amount by which the aggregate amount of the Commitments exceeds the aggregate outstanding principal balance of Loans set forth in the table below multiplied by the corresponding per annum rate:

Amount by Which Commitments Exceed Loans	Unused Fee
$0 to and including an amount equal to 50% of the aggregate amount of the Commitments		0.625	%
Greater than an amount equal to 50% of the aggregate amount of the Commitments		0.50	%

Such fee shall be computed on a daily basis and payable quarterly in arrears on the first day of each January, April, July and October during the term of this Agreement and on the Term Conversion Date or any earlier date of termination of the Commitments or reduction of the Commitments to zero. In the case of the unused fee payable on April 1, 2011, such fee accrued to the Effective Date shall be allocated among the Lenders based on their Commitment Percentages under the Original Credit Agreement, and such fee accruing from and after the Effective Date shall be allocated among the Lenders based on their Commitment Percentages under this Agreement.

(c) Extension Fee. If the Borrower exercises its right to extend the Maturity Date in accordance with Section 2.15., the Borrower agrees to pay to the Administrative Agent for the account of each Lender a fee equal to one-half percent (0.50%) of the amount of such Lender’s outstanding Loans as of the Original Maturity Date.

(d) Administrative and Other Fees. The Borrower agrees to pay the administrative and other fees of the Administrative Agent, the Syndication Agent and the Arrangers as provided in the Fee Letter and as may be otherwise agreed to in writing from time to time.

Section 3.6. Computations.

Unless otherwise expressly set forth herein, any accrued interest on any Loan, any Fees or other Obligations due hereunder shall be computed on the basis of a year of 360 days and the actual number of days elapsed.

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Section 3.7. Usury.

In no event shall the amount of interest due or payable on the Loans or other Obligations exceed the maximum rate of interest allowed by Applicable Law and, if any such payment is paid by the Borrower or any other Loan Party or received by any Lender, then such excess sum shall be credited as a payment of principal, unless the Borrower shall notify the respective Lender in writing that the Borrower elects to have such excess sum returned to it forthwith. It is the express intent of the parties hereto that the Borrower not pay and the Lenders not receive, directly or indirectly, in any manner whatsoever, interest in excess of that which may be lawfully paid by the Borrower under Applicable Law. The parties hereto hereby agree and stipulate that the only charge imposed upon the Borrower for the use of money in connection with this Agreement is and shall be the interest specifically described in Section 2.6.(a)(i) and (ii). Notwithstanding the foregoing, the parties hereto further agree and stipulate that all agency fees, syndication fees, facility fees, underwriting fees, default charges, late charges, funding or “breakage” charges, increased cost charges, attorneys’ fees and reimbursement for costs and expenses paid by the Administrative Agent or any Lender to third parties or for damages incurred by the Administrative Agent or any Lender, are charges made to compensate the Administrative Agent or any such Lender for underwriting or administrative services and costs or losses performed or incurred, and to be performed or incurred, by the Administrative Agent and the Lenders in connection with this Agreement and shall under no circumstances be deemed to be charges for the use of money. All charges other than charges for the use of money shall be fully earned and nonrefundable when due.

Section 3.8. Statements of Account.

The Administrative Agent will account to the Borrower monthly with a statement of Loans, accrued interest and Fees, charges and payments made pursuant to this Agreement and the other Loan Documents, and such account rendered by the Administrative Agent shall be deemed conclusive upon the Borrower absent manifest error. The failure of the Administrative Agent to deliver such a statement of accounts shall not relieve or discharge the Borrower from any of its obligations hereunder.

Section 3.9. Defaulting Lenders.

(a) Generally. Notwithstanding any provision of this Agreement to the contrary, if any Lender becomes a Defaulting Lender, then, in addition to the rights and remedies that may be available to the Administrative Agent or the Borrower under this Agreement or Applicable Law, (i) fees shall cease to accrue on the unfunded portion of the Commitment of such Defaulting Lender pursuant to Section 3.5(b) and (ii) the Commitment of such Defaulting Lender shall not be included in determining whether the Requisite Lenders, Super-Majority Lenders or all of Lenders have taken or may take any action hereunder (including any consent to any amendment, waiver or other modification pursuant to Section 13.7, except as otherwise provided therein). If for any reason a Lender fails to make timely payment to the Administrative Agent of any amount required to be paid to the Administrative Agent hereunder (without giving effect to any notice or cure periods), in addition to other rights and remedies which the Administrative Agent or the Borrower may have under the immediately preceding provisions or otherwise, the Administrative Agent shall be entitled (A) to collect interest from such Defaulting Lender on

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such delinquent payment for the period from the date on which the payment was due until the date on which the payment is made at the Federal Funds Rate, (B) to withhold or setoff and to apply in satisfaction of the defaulted payment and any related interest, any amounts otherwise payable to such Defaulting Lender under this Agreement or any other Loan Document and (C) to bring an action or suit against such Defaulting Lender in a court of competent jurisdiction to recover the defaulted amount and any related interest. Any amounts received by the Administrative Agent in respect of a Defaulting Lender’s Loans shall not be paid to such Defaulting Lender and shall be held uninvested by the Administrative Agent and either applied against the purchase price of such Loans under the following subsection (b) or paid to such Defaulting Lender upon the Defaulting Lender’s curing of its default.

(b) Purchase or Cancellation of Defaulting Lender’s Commitment. Any Lender who is not a Defaulting Lender shall have the right, but not the obligation, in its sole discretion, to acquire by assignment all of a Defaulting Lender’s Commitments. Any Lender desiring to exercise such right shall give written notice thereof to the Administrative Agent and the Borrower no sooner than two (2) Business Days and not later than five (5) Business Days after such Defaulting Lender became a Defaulting Lender. If more than one (1) Lender exercises such right, each such Lender shall have the right to acquire an amount of such Defaulting Lender’s Commitments in proportion to the Commitments of the other Lenders exercising such right. If after such fifth Business Day, the Lenders have not elected to acquire all of the Commitments of such Defaulting Lender, then the Borrower may, by giving written notice thereof to the Administrative Agent, such Defaulting Lender and the other Lenders, either (i) demand that such Defaulting Lender assign its Commitments to an Eligible Assignee subject to and in accordance with the provisions of Section 13.6.(c) for the purchase price provided for below or (ii) terminate the Commitments of such Defaulting Lender, whereupon such Defaulting Lender shall no longer be a party hereto or have any right or obligation whatsoever to initiate any such replacement or to assist in finding an Eligible Assignee. Upon any such assignment, the Defaulting Lender’s interest in the Loans and its rights hereunder (but not its liability in respect thereof or under the Loan Documents to the extent the same relate to the period prior to the effective date of the purchase) shall terminate on the date of purchase, and the Defaulting Lender shall promptly execute all documents reasonably requested to surrender and transfer such interest to the purchaser or assignee thereof, including an appropriate Assignment and Assumption Agreement and, notwithstanding Section 13.6.(c), shall pay to the Administrative Agent an assignment fee in the amount of $10,000. The purchase price for the Commitments of a Defaulting Lender shall be equal to the amount of the principal balance of the Loans outstanding and owed by the Borrower to the Defaulting Lender. Prior to payment of such purchase price to a Defaulting Lender, the Administrative Agent shall apply against such purchase price any amounts retained by the Administrative Agent pursuant to the last sentence of the immediately preceding subsection (a). The Defaulting Lender shall be entitled to receive any amount owed to it by the Borrower under the Loan Documents which accrued prior to the date of the default by the Defaulting Lender, to the extent the same are received by the Administrative Agent from or on behalf of the Borrower. There shall be no recourse against any Lender or the Administrative Agent for the payment of such sums except to the extent of the receipt of payments from any other party or in respect of the Loans.

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Section 3.10. Taxes; Foreign Lenders.

(a) Taxes Generally. All payments by the Borrower of principal of, and interest on, the Loans and all other Obligations shall be made free and clear of and without deduction for any present or future excise, stamp or other taxes, fees, duties, levies, imposts, charges, deductions, withholdings or other charges of any nature whatsoever imposed by any taxing authority, but excluding (i) franchise taxes, (ii) any taxes (other than withholding taxes) that would not be imposed but for a connection between the Administrative Agent or a Lender and the jurisdiction imposing such taxes (other than a connection arising solely by virtue of the activities of the Administrative Agent or such Lender pursuant to or in respect of this Agreement or any other Loan Document), (iii) any taxes imposed on or measured by any Lender’s assets, net income, receipts or branch profits and (iv) any taxes arising after the Agreement Date solely as a result of or attributable to a Lender changing its designated Lending Office after the date such Lender becomes a party hereto (such non excluded items being collectively called “Taxes”). If any withholding or deduction from any payment to be made by the Borrower hereunder is required in respect of any Taxes pursuant to any Applicable Law, then the Borrower will:

(i) pay directly to the relevant Governmental Authority the full amount required to be so withheld or deducted;

(ii) promptly forward to the Administrative Agent an official receipt or other documentation satisfactory to the Administrative Agent evidencing such payment to such Governmental Authority; and

(iii) pay to the Administrative Agent for its account or the account of the applicable Lender such additional amount or amounts as is necessary to ensure that the net amount actually received by the Administrative Agent or such Lender will equal the full amount that the Administrative Agent or such Lender would have received had no such withholding or deduction been required.

(b) Tax Indemnification. If the Borrower fails to pay any Taxes when due to the appropriate Governmental Authority or fails to remit to the Administrative Agent, for its account or the account of the respective Lender, as the case may be, the required receipts or other required documentary evidence, the Borrower shall indemnify the Administrative Agent and the Lenders for any incremental Taxes, interest or penalties that may become payable by the Administrative Agent or any Lender as a result of any such failure. For purposes of this Section, a distribution hereunder by the Administrative Agent or any Lender to or for the account of any Lender shall be deemed a payment by the Borrower.

(c) Tax Forms. Prior to the date that any Lender or Participant organized under the laws of a jurisdiction outside the United States of America becomes a party hereto, such Person shall deliver to the Borrower and the Administrative Agent such certificates, documents or other evidence, as required by the Internal Revenue Code or Treasury Regulations issued pursuant thereto (including Internal Revenue Service Forms W-8ECI and W-8BEN, as applicable, or appropriate successor forms), properly completed, currently effective and duly executed by such Lender or Participant establishing that payments to it hereunder and under the Notes are (i) not subject to United States Federal backup withholding tax and (ii) not subject to United States

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Federal withholding tax under the Code. Each such Lender or Participant shall (x) deliver further copies of such forms or other appropriate certifications on or before the date that any such forms expire or become obsolete and after the occurrence of any event requiring a change in the most recent form delivered to the Borrower and (y) obtain such extensions of the time for filing, and renew such forms and certifications thereof, as may be reasonably requested by the Borrower or the Administrative Agent. The Borrower shall not be required to pay any amount pursuant to last sentence of subsection (a) above to any Lender or Participant that is organized under the laws of a jurisdiction outside of the United States of America or the Administrative Agent, if it is organized under the laws of a jurisdiction outside of the United States of America, if such Lender, Participant or the Administrative Agent, as applicable, fails to comply with the requirements of this subsection. If any such Lender or Participant fails to deliver the above forms or other documentation, then the Administrative Agent may withhold from such payment to such Lender such amounts as are required by the Code. If any Governmental Authority asserts that the Administrative Agent did not properly withhold or backup withhold, as the case may be, any tax or other amount from payments made to or for the account of any Lender, such Lender shall indemnify the Administrative Agent therefore, including all penalties and interest, any taxes imposed by any jurisdiction on the amounts payable to the Administrative Agent under this Section, and costs and expenses (including all fees and disbursements of any law firm or other external counsel and the allocated cost of internal legal services and all disbursements of internal counsel) of the Administrative Agent. The obligation of the Lenders under this Section shall survive the termination of the Commitments, repayment of all Obligations and the resignation or replacement of the Administrative Agent.

(d) USA Patriot Act Notice; Compliance. In order for the Administrative Agent to comply with the USA Patriot Act of 2001 (Public Law 107-56), prior to any Lender or Participant that is organized under the laws of a jurisdiction outside of the United States of America becoming a party hereto, the Administrative Agent may request, and such Lender or Participant shall provide to the Administrative Agent, its name, address, tax identification number and/or such other identification information as shall be necessary for the Administrative Agent to comply with federal law.

Section 3.11. Lender Failure to Make Payment.

If any Lender shall fail to make any payment required to be made by it pursuant to Sections 2.4., 3.1.(b) or 12.8., then the Administrative Agent may, in its discretion and notwithstanding any contrary provision hereof, (i) apply any amounts thereafter received by the Administrative Agent for the account of such Lender for the benefit of the Administrative Agent, to satisfy such Lender’s obligations to it under such Section until all such unsatisfied obligations are fully paid, and/or (ii) hold any such amounts in a segregated account as cash collateral for, and application to, any future funding obligations of such Lender under any such Section, in the case of each of clauses (i) and (ii) above, in any order as determined by the Administrative Agent in its discretion.

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ARTICLE IV. COLLATERAL PROPERTIES

Section 4.1. Eligibility of Properties.

(a) Initial Collateral Properties. On the Effective Date, the Initial Collateral Properties shall be the sole Collateral Properties.

(b) Additional Collateral Properties. If after the Effective Date the Borrower desires that the Lenders include any additional Property in the Collateral Pool, and provided the inclusion of such Property would comply with the provisions of Section 4.4., the Borrower shall so notify the Administrative Agent in writing. No Property will be evaluated by the Lenders unless and until the Borrower delivers to the Administrative Agent the following, in form and substance satisfactory to the Administrative Agent:

(i) An executive summary of the Property including, at a minimum, the following information relating to such Property: (A) a description of such Property, such description to include the age, location, site plan and physical condition of such Property; (B) the purchase price paid or to be paid for such Property; (C) the current and projected condition of the regional market and specific submarket in which such Property is located; and (D) the current projected capital plans and, if applicable, current renovation plans for such Property;

(ii) The purchase and sale agreement pursuant to which such Property was or is being acquired;

(iii) An operating statement for such Property audited or certified by a representative of the Borrower as being true and correct in all material respects and prepared in accordance with GAAP for the previous three fiscal years, as well as operating statements for the most recent month, the year-to-date and the trailing twelve months, provided that, with respect to any period such Property that was owned by the Borrower or a Subsidiary for less than three years, such information shall only be required to be delivered to the extent reasonably available to the Borrower and such certification may be based upon the Borrower’s knowledge and provided further, that if such Property has been operating for less than three years, the Borrower shall provide such projections and other information concerning the anticipated operation of such Property as the Administrative Agent may reasonably request;

(iv) To the extent available, three-year historical and pro forma capital expenditure reports and projections;

(v) A copy of a recent ALTA Owner’s Policy of Title Insurance (“Owner’s Policy”), or a current commitment therefor, covering such Property showing the identity of the fee titleholder thereto and all matters of record;

(vi) Copies of all documents of record reflected in Schedule A and Schedule B of the Owner’s Policy (including any ground lease, easements, covenants, conditions and restrictions) and a copy of the most recent real estate tax bill and notice of assessment;

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(vii) A current or currently certified (within twelve (12) months, provided it shows all improvements on or affecting the Property) survey of such Property certified by a surveyor licensed in the applicable jurisdiction to have been prepared in accordance with the then effective Minimum Standard Detail Requirements for ALTA/ACSM Land Title Surveys;

(viii) If not adequately covered by the survey certification provided for above, a certificate from a licensed engineer or other professional satisfactory to the Administrative Agent that such Property is not located in a Special Flood Hazard Area as defined by the Federal Insurance Administration;

(ix) A “Phase I” environmental assessment of such Property not more than twelve months old, which report (1) has been prepared by an environmental engineering firm acceptable to the Administrative Agent and (2) complies with the requirements contained in the Administrative Agent’s guidelines adopted from time to time by the Administrative Agent to be used in its lending practice generally and any other environmental assessments or other reports relating to such Property, including any “Phase II” environmental assessment prepared or recommended by such environmental engineering firm to be prepared for such Property;

(x) An engineering report for such Property not more than twelve months old and prepared by an engineering firm acceptable to the Administrative Agent;

(xi) Copies of all Material Contracts for such Property;

(xii) The Smith Travel STAR Report for such Property and its primary competitive set for the most current month available, along with the prior year-end report;

(xiii) To the extent readily available, maps, photographs, site plans, broker packages, market studies or third-party reports on the hotel property;

(xiv) Any PIP required to remain in compliance with the applicable Franchise Agreement and Management Agreement;

(xv) Five-year financial pro forma projections, including a discounted cash flow analysis, along with any submissions to the Parent Guarantor’s board of trustees;

(xvi) Evidence that such Property complies with applicable zoning and land use laws;

(xvii) UCC, tax, judgment and lien search reports with respect to the Subsidiary that is the owner, and the Subsidiary that is the Operating Lessee, of such Property in all necessary or appropriate jurisdictions indicating that there are no Liens of record with respect to such Person or such Property other than Permitted Liens;

(xviii) Plans and specifications for such Property, provided the same shall only be required to the extent reasonably available to the Borrower;

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(xix) Final certificates of occupancy and any other Governmental Approvals relating to such Property;

(xx) Copies of all policies of insurance required by Section 8.5.; and

(xxi) Such other information the Administrative Agent may request in order to evaluate the Property.

If, after receipt and review of the foregoing documents and information, the Administrative Agent is, in its sole discretion, prepared to recommend acceptance of such Property as a Collateral Property, the Administrative Agent will so notify the Borrower and each Lender, provided, however, that the Administrative Agent may elect to make such recommendation prior to receipt of all of the foregoing documents and information, in which event such recommendation shall be subject to its receipt and review of the documents and information thereafter received. Within five (5) Business Days of the Administrative Agent’s giving such notice to the Lenders, the Administrative Agent will send the foregoing documents and information to each of the Lenders.

(c) Appraisal; Final Approval. Promptly upon (or, at the Borrower’s request, prior to) giving notice to the Lenders under Section 4.1.(b) that the Administrative Agent is prepared to recommend acceptance of such Property as a Collateral Property, the Administrative Agent shall commission, at the Administrative Agent’s discretion and the Borrower’s expense, an Appraisal of such Property, to be in form and substance satisfactory to the Administrative Agent. Within ten (10) Business Days of receipt of such Appraisal, the Administrative Agent shall review such Appraisal and shall determine the Appraised Value of such Property. If after such review and determination the Administrative Agent is, in its sole discretion, unwilling to recommend acceptance of such Property as a Collateral Property, the Administrative Agent shall promptly notify the Borrower and the Lenders and the consideration by the Administrative Agent and the Lenders of such Property shall cease. If after such review and determination the Administrative Agent remains prepared to recommend acceptance of such Property as a Collateral Property, the Administrative Agent shall forward a copy of such Appraisal to the Lenders together with notice of such Appraised Value. Each Lender shall use reasonable efforts to notify the Administrative Agent in writing whether or not such Lender, in its sole discretion, accepts such Property as a Collateral Property within ten (10) Business Days of the date on which a Lender has received all of the items referred to in this Section 4.1.(c) and the immediately preceding Section 4.1.(b). Such Property shall become a Collateral Property only upon written approval of the Required Approval Lenders and upon execution and delivery by the Borrower to the Administrative Agent of (i) a certificate in form and substance satisfactory to Administrative Agent showing the Collateral Pool Availability after inclusion of such Property as a Collateral Property, (ii) the documents and items described in Section 6.3., and (iii) such other items or documents as the Administrative Agent may reasonably deem to be appropriate under the circumstances, including updates of the documents described in the immediately preceding subsections (b)(i), (b)(ii), (b)(vi), (b)(xi), (b)(xii) and (b)(xvii), and satisfaction of all other closing requirements reasonably imposed by the Administrative Agent.

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Section 4.2. Release of Collateral Properties.

From time to time the Borrower may request, upon not less than ten (10) days’ prior written notice to the Administrative Agent or such shorter period as may be acceptable to the Administrative Agent, that a Collateral Property be released from the Liens created by the Security Documents applicable thereto, which release (the “Collateral Property Release”) shall be effected by the Administrative Agent if the Administrative Agent determines all of the following conditions are satisfied as of the date of such Collateral Property Release:

(a) No Default or Event of Default exists or will exist immediately after giving effect to such Collateral Property Release;

(b) Immediately prior to such Collateral Property Release (i) the Debt Service Coverage Ratio is not less than the Minimum DSCR Hurdle, (ii) the ratio of the outstanding principal balance of the Loans to the sum of (A) the aggregate amount of the Appraised Values of the Other Collateral Properties and (B) if Boston Hyatt is a Collateral Property, the Adjusted Appraised Value does not exceed the Advance Rate, and (iii) the Borrower is in compliance with the provisions of Section 10.1;

(c) The Borrower shall have delivered to the Administrative Agent a certificate demonstrating on a pro forma basis, and the Administrative Agent shall have determined to its satisfaction (which determination may be based on Appraisals ordered pursuant to Section 4.3.(b)(iii), in which event the Collateral Property Release shall be delayed until the Administrative Agent has received such Appraisals and the Appraised Values have been determined), that upon such Collateral Property Release (and taking into account any prepayment of the Loans to be made prior to or at the time of such Collateral Property Release), (i) the Debt Service Coverage Ratio for the Remaining Collateral Properties shall not be less than the Minimum DSCR Hurdle, (ii) the ratio of the outstanding principal balance of the Loans to the sum of (A) the aggregate amount of the Appraised Values of the Remaining Collateral Properties (other than the Boston Hyatt) and (B) if the Boston Hyatt is a Remaining Collateral Property, the Adjusted Appraised Value shall not exceed the Advance Rate, and (iii) the Borrower shall be in compliance with the provisions of Section 10.1.;

(d) Upon such Collateral Property Release, at least three Collateral Properties (including at least two Required Collateral Properties) shall remain in the Collateral Pool;

(e) Such Collateral Property Release shall be permitted under Section 4.4.; and

(f) The Borrower shall have delivered to the Administrative Agent all documents and instruments reasonably requested by the Administrative agent in connection with such Collateral Property Release.

Simultaneously with the Collateral Property Release, the Administrative Agent shall release the Subsidiary Guarantor that owns such released Collateral Property from its obligations under the Subsidiary Guaranty, provided such Subsidiary Guarantor does not own any other Collateral Property. Except as set forth in this Section 4.2., no Collateral Property shall be released from the Liens created by the Security Documents applicable thereto and no Subsidiary Guarantor shall be released from its obligations under the Subsidiary Guaranty.

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Section 4.3. Frequency of Appraisals.

The Appraised Value of a Collateral Property shall be determined or redetermined, as applicable, under each of the following circumstances:

(a) In connection with the acceptance of a Property as a Collateral Property the Administrative Agent will determine the Appraised Value thereof as provided in Section 4.1.; or

(b) From time to time upon at least five (5) Business Days written notice to the Borrower and at the Borrower’s expense, the Administrative Agent may (and shall at the direction of the Requisite Lenders) redetermine the Appraised Value of a Collateral Property (based on a new Appraisal obtained by the Administrative Agent) in any of the following circumstances:

(i) if a change occurs with respect to such Collateral Property that has a Material Adverse Effect (as determined by the Administrative Agent or based on the direction of the Requisite Lenders), including, without limitation, a material deterioration in the Net Operating Income of such Collateral Property, a major casualty at such Collateral Property that is not fully covered by insurance, a material condemnation of any part of such Collateral Property or a material change in the market conditions affecting such Collateral Property; or

(ii) if necessary in order to comply with FIRREA or other Applicable Law relating to the Administrative Agent or the Lenders; or

(iii) if the Administrative Agent determines an Appraisal of such Property is necessary in connection with its determination under Section 4.2.(b) regarding the release of a Collateral Property; or

(c) At any time and from time to time but no more than once during any period of one (1) year, the Administrative Agent may (and shall at the written direction of the Requisite Lenders) redetermine the Appraised Value of a Collateral Property (based on a new Appraisal obtained by the Administrative Agent), all at the Borrower’s expense; or

(d) At any time at which there exists an Event of Default, the Administrative Agent may (and shall at the written direction of the Requisite Lenders) obtain an Appraisal of any one or more of the Collateral Properties, all at the Borrower’s expense; or

(e) At any time and from time to time, the Administrative Agent may (and shall at the written direction of the Requisite Lenders) redetermine the Appraised Value of any Collateral Property (based on a new Appraisal obtained by the Administrative Agent), all at the Lenders’ expense.

Section 4.4. Limitations on Collateral Pool Releases and Additions to Collateral Pool.

(a) At any time at which there are five (5) or more Collateral Properties in the Collateral Pool, no Property shall be added to the Collateral Pool and no Collateral Property shall

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be released from the Collateral Pool if the addition of such Property to the Collateral Pool or such Collateral Property Release would result in any of the following:

(i) the New Properties and the Redevelopment Properties in the Collateral Pool having an aggregate Appraised Value that exceeds 25% of the aggregate Appraised Values of all Collateral Properties;

(ii) any single Collateral Property having (A) an Appraised Value that exceeds thirty-five percent (35%) of the Appraised Values of all Collateral Properties or (B) Adjusted NOI that exceeds 35% of the Adjusted NOI of all Collateral Properties;

(iii) the aggregate Appraised Values of all of the Collateral Properties located in a single metropolitan statistical area exceeding 40% of the Appraised Values of all Collateral Properties; or

(iv) the Adjusted NOI of all Collateral Properties located in a single metropolitan statistical area exceeding 40% of the Adjusted NOI of all Collateral Properties.

(b) No Property that is subject to a ground lease shall be added to the Collateral Pool, and no Collateral Property shall be released from the Collateral Pool, if following the addition of such Property to the Collateral Pool or such Collateral Property Release, Collateral Properties that are subject to ground leases would have an aggregate Appraised Value that exceeds 20% of the aggregate Appraised Values of all Collateral Properties.

Section 4.5. Substitution of Required Collateral Properties.

Borrower may at any time request, by notice to the Administrative Agent, that a Collateral Property that is not a Required Collateral Property (the “Replacement Collateral Property”) be designated a Required Collateral Property in substitution for a then existing Required Collateral Property designated by Borrower (the “Substituted Collateral Property”). Upon unanimous written approval of such substitution by the Lenders, Administrative Agent and Borrower shall enter into a written instrument confirming that the Replacement Collateral Property is a Required Collateral Property and that the Substituted Collateral Property no longer is a Required Collateral Property.

ARTICLE V. YIELD PROTECTION, ETC.

Section 5.1. Additional Costs; Capital Adequacy.

(a) Capital Adequacy. If any Lender or any Participant in the Loan determines that compliance with any law or regulation or with any guideline or request from any central bank or other Governmental Authority (whether or not having the force of law) affects or would affect the amount of capital required or expected to be maintained by such Lender or such Participant, or any corporation controlling such Lender or such Participant, as a consequence of, or with reference to, such Lender’s or such Participant’s or such corporation’s Commitments or its making or maintaining Loans below the rate which such Lender or such Participant or such corporation controlling such Lender or such Participant could have achieved but for such

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compliance (taking into account the policies of such Lender or such Participant or such corporation with regard to capital), then (without duplication of any other obligations of the Borrower under the Loan Documents) the Borrower shall, from time to time, within thirty (30) days after written demand by such Lender or (subject to subsection (f) below) such Participant, pay to such Lender or such Participant additional amounts sufficient to compensate such Lender or such Participant or such corporation controlling such Lender or such Participant to the extent that such Lender or such Participant determines such increase in capital is allocable to such Lender’s or such Participant’s obligations hereunder.

(b) Additional Costs. In addition to, and not in limitation of the immediately preceding clause (a), the Borrower shall promptly pay to the Administrative Agent for the account of a Lender from time to time such amounts as such Lender may determine to be necessary to compensate such Lender for any costs incurred by such Lender that it determines are attributable to its making or maintaining of any LIBOR Loans or its obligation to make any LIBOR Loans hereunder, any reduction in any amount receivable by such Lender under this Agreement or any of the other Loan Documents in respect of any of such LIBOR Loans or such obligation or the maintenance by such Lender of capital in respect of its LIBOR Loans or its Commitments (such increases in costs and reductions in amounts receivable being herein called “Additional Costs”), resulting from any Regulatory Change that: (i) changes the basis of taxation of any amounts payable to such Lender under this Agreement or any of the other Loan Documents in respect of any of such LIBOR Loans or its Commitments (other than taxes imposed on or measured by the overall net income of such Lender or of its Lending Office for any of such LIBOR Loans by the jurisdiction in which such Lender has its principal office or such Lending Office), or (ii) imposes or modifies any reserve, special deposit or similar requirements (including without limitation, Regulation D of the Board of Governors of the Federal Reserve System or other similar reserve requirement applicable to any other category of liabilities or category of extensions of credit or other assets by reference to which the interest rate on LIBOR Loans is determined) relating to any extensions of credit or other assets of, or any deposits with or other liabilities of, or other credit extended by, or any other acquisition of funds by such Lender (or its parent corporation), or any commitment of such Lender (including, without limitation, the Commitment of such Lender hereunder) or (iii) has or would have the effect of reducing the rate of return on capital of such Lender to a level below that which such Lender could have achieved but for such Regulatory Change (taking into consideration such Lender’s policies with respect to capital adequacy).

(c) Lender’s Suspension of LIBOR Loans. Without limiting the effect of the provisions of the immediately preceding subsection (a) and (b), if by reason of any Regulatory Change, any Lender either (i) incurs Additional Costs based on or measured by the excess above a specified level of the amount of a category of deposits or other liabilities of such Lender that includes deposits by reference to which the interest rate on LIBOR Loans is determined as provided in this Agreement or a category of extensions of credit or other assets of such Lender that includes LIBOR Loans or (ii) becomes subject to restrictions on the amount of such a category of liabilities or assets that it may hold, then, if such Lender so elects by notice to the Borrower (with a copy to the Administrative Agent), the obligation of such Lender to make or Continue, or to Convert Base Rate Loans into, LIBOR Loans shall be suspended until such Regulatory Change ceases to be in effect (in which case the provisions of Section 5.5. shall apply).

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(d) Intentionally Omitted.

(e) Notification and Determination of Additional Costs. Each of the Administrative Agent, each Lender, and (subject to subsection (f) below) each Participant, as the case may be, agrees to notify the Borrower of any event occurring after the Agreement Date entitling the Administrative Agent, such Lender or such Participant to compensation under any of the preceding subsections of this Section as promptly as practicable; provided, however, that the failure of the Administrative Agent, any Lender or any Participant to give such notice shall not release the Borrower from any of its obligations hereunder. The Administrative Agent, each Lender and (subject to subsection (f) below) each Participant, as the case may be, agrees to furnish to the Borrower (and in the case of a Lender or a Participant to the Administrative Agent as well) a certificate setting forth the basis and amount of each request for compensation under this Section. Determinations by the Administrative Agent, such Lender, or such Participant, as the case may be, of the effect of any Regulatory Change shall be conclusive and binding for all purposes, absent manifest error.

(f) Participants. Any notice or certificate to be delivered by a Participant under subsection (a) or (e) above shall be delivered by such Participant to the Lender from which it purchased such participation interest, and such Lender shall promptly deliver the same to the Administrative Agent and the Borrower.

Section 5.2. Suspension of LIBOR Loans.

Anything herein to the contrary notwithstanding, if, on or prior to the determination of LIBOR for any Interest Period:

(a) the Administrative Agent reasonably determines (which determination shall be conclusive) that quotations of interest rates for the relevant deposits referred to in the definition of LIBOR are not being provided in the relevant amounts or for the relevant maturities for purposes of determining rates of interest for LIBOR Loans as provided herein or is otherwise unable to determine LIBOR, or

(b) the Administrative Agent reasonably determines (which determination shall be conclusive) that the relevant rates of interest referred to in the definition of LIBOR upon the basis of which the rate of interest for LIBOR Loans for such Interest Period is to be determined are not likely to adequately cover the cost to any Lender of making or maintaining LIBOR Loans for such Interest Period;

then the Administrative Agent shall give the Borrower and each Lender prompt notice thereof and, so long as such condition remains in effect, (i) the Lenders shall be under no obligation to, and shall not, make additional LIBOR Loans, Continue LIBOR Loans or Convert Loans into LIBOR Loans and the Borrower shall, on the last day of each current Interest Period for each outstanding LIBOR Loan, either prepay such Loan or Convert such Loan into a Base Rate Loan.

Section 5.3. Illegality.

Notwithstanding any other provision of this Agreement, if any Lender shall determine (which determination shall be conclusive and binding) that it is unlawful for such Lender to

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honor its obligation to make or maintain LIBOR Loans hereunder, then such Lender shall promptly notify the Borrower thereof (with a copy of such notice to the Administrative Agent) and such Lender’s obligation to make or Continue, or to Convert Loans of any other Type into, LIBOR Loans shall be suspended, in each case, until such time as such Lender may again make and maintain LIBOR Loans (in which case the provisions of Section 5.5. shall be applicable).

Section 5.4. Compensation.

The Borrower shall pay to the Administrative Agent for the account of each Lender, upon the request of the Administrative Agent, such amount or amounts as the Administrative Agent shall determine in its sole discretion shall be sufficient to compensate such Lender for any loss, cost or expense attributable to:

(a) any payment or prepayment (whether mandatory or optional) of a LIBOR Loan, or Conversion of a LIBOR Loan, made by such Lender for any reason (including, without limitation, acceleration) on a date other than the last day of the Interest Period for such Loan; or

(b) any failure by the Borrower for any reason (including, without limitation, the failure of any of the applicable conditions precedent specified in Article 6.2. to be satisfied) to borrow a LIBOR Loan from such Lender on the date for such borrowing, or to Convert a Base Rate Loan into a LIBOR Loan or Continue a LIBOR Loan on the requested date of such Conversion or Continuation.

Not in limitation of the foregoing, such compensation shall include, without limitation, an amount equal to the then present value of (A) the amount of interest that would have accrued on such LIBOR Loan for the remainder of the Interest Period at the rate applicable to such LIBOR Loan, less (B) the amount of interest that would accrue on the same LIBOR Loan for the same period if LIBOR were set on the date on which such LIBOR Loan was repaid, prepaid or Converted or the date on which the Borrower failed to borrow, Convert or Continue such LIBOR Loan calculating present value by using as a discount rate LIBOR quoted on such date, including without limitation any losses or expenses incurred in obtaining, liquidating or employing deposits from third parties. Upon the Borrower’s request, the Administrative Agent shall provide the Borrower with a statement setting forth the basis for requesting such compensation and the method for determining the amount thereof. Any such statement shall be conclusive absent manifest error.

Section 5.5. Treatment of Affected Loans.

If the obligation of any Lender to make LIBOR Loans or to Continue, or to Convert Base Rate Loans into, LIBOR Loans shall be suspended pursuant to Section 5.1.(c), Section 5.2., or Section 5.3. then such Lender’s LIBOR Loans shall be automatically Converted into Base Rate Loans on the last day(s) of the then current Interest Period(s) for LIBOR Loans (or, in the case of a Conversion required by Section 5.1.(c), Section 5.2., or Section 5.3. on such earlier date as such Lender may specify to the Borrower with a copy to the Administrative Agent) and, unless and until such Lender gives notice as provided below that the circumstances specified in Section 5.1.(e), Section 5.2., or Section 5.3. that gave rise to such Conversion no longer exist:

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(i) to the extent that such Lender’s LIBOR Loans have been so Converted, all payments and prepayments of principal that would otherwise be applied to such Lender’s LIBOR Loans shall be applied instead to its Base Rate Loans; and

(ii) all Loans that would otherwise be made or Continued by such Lender as LIBOR Loans shall be made or Continued instead as Base Rate Loans, and all Base Rate Loans of such Lender that would otherwise be Converted into LIBOR Loans shall remain as Base Rate Loans.

If such Lender gives notice to the Borrower (with a copy to the Administrative Agent) that the circumstances specified in Section 5.1.(c) or 5.3. that gave rise to the Conversion of such Lender’s LIBOR Loans pursuant to this Section no longer exist (which such Lender agrees to do promptly upon such circumstances ceasing to exist) at a time when LIBOR Loans made by other Lenders are outstanding, then such Lender’s Base Rate Loans shall be automatically Converted, on the first day(s) of the next succeeding Interest Period(s) for such outstanding LIBOR Loans, to the extent necessary so that, after giving effect thereto, all Loans held by the Lenders holding LIBOR Loans and by such Lender are held pro rata (as to principal amounts, Types and Interest Periods) in accordance with their respective Commitments.

Section 5.6. Change of Lending Office.

Each Lender agrees that it will use reasonable efforts (consistent with its internal policy and legal and regulatory restrictions) to designate an alternate Lending Office with respect to any of its Loans affected by the matters or circumstances described in Sections 3.10., 5.1. or 5.3. to reduce the liability of the Borrower or avoid the results provided thereunder, so long as such designation is not disadvantageous to such Lender as determined by such Lender in its sole discretion, except that such Lender shall have no obligation to designate a Lending Office located in the United States of America.

Section 5.7. Assumptions Concerning Funding of LIBOR Loans.

Calculation of all amounts payable to a Lender under this Article shall be made as though such Lender had actually funded LIBOR Loans through the purchase of deposits in the relevant market bearing interest at the rate applicable to such LIBOR Loans in an amount equal to the amount of the LIBOR Loans and having a maturity comparable to the relevant Interest Period; provided, however, that each Lender may fund each of its LIBOR Loans in any manner it sees fit and the foregoing assumption shall be used only for calculation of amounts payable under this Article.

ARTICLE VI. CONDITIONS PRECEDENT

Section 6.1. Initial Conditions Precedent.

The effectiveness of this Agreement is subject to the satisfaction or waiver of the following conditions precedent:

(a) The Administrative Agent shall have received each of the following, in form and substance satisfactory to the Administrative Agent:

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(i) counterparts of this Agreement executed by each of the parties hereto;

(ii) a Note payable to each Lender not party to the Original Credit Agreement and a replacement Note payable to each Lender whose Commitment is being increased pursuant to this Agreement, in each case complying with the terms of Section 2.13.(a);

(iii) ratification by the Guarantors and Operating Lessees of their obligations under the Loan Documents to which they are parties;

(iv) such amendments to the Security Documents as Administrative Agent may require;

(v)(A) an opinion of Hogan Lovells US LLP, counsel to the Borrower and the other Loan Parties, and (B) to the extent required by Administrative Agent, an opinion of local counsel reasonably satisfactory to Administrative Agent, as special counsel to the Loan Parties, each addressed to the Administrative Agent and the Lenders and collectively covering the matters set forth in Exhibit H;

(vi) to the extent required by Administrative Agent, the certificate or articles of incorporation, articles of organization, certificate of limited partnership, declaration of trust or other comparable organizational instrument (if any) of each Loan Party certified as of a recent date by the Secretary of State of the state of organization or formation of such Person;

(vii) to the extent required by Administrative Agent, a certificate of good standing (or certificate of similar meaning) with respect to each Loan Party issued as of a recent date by the Secretary of State of the state of formation of each such Person and certificates of qualification to transact business or other comparable certificates issued by each Secretary of State (and any state department of taxation, as applicable) of each state in which such Person is required to be so qualified and where failure to be so qualified could reasonably be expected to have a Material Adverse Effect;

(viii) to the extent required by Administrative Agent, a certificate of incumbency signed by the Secretary or Assistant Secretary (or other individual performing similar functions) of each Loan Party with respect to each of the officers of such Person authorized to execute and deliver the Loan Documents to which such Person is a party;

(ix) to the extent required by Administrative Agent, copies certified by the Secretary or Assistant Secretary (or other individual performing similar functions) of each Loan Party of (A) the by-laws of such Person, if a corporation, the operating agreement, if a limited liability company, the partnership agreement, if a limited or general partnership, or other comparable document in the case of any other form of legal entity (or, in lieu of the foregoing, a certificate of such Secretary or Assistant Secretary (or other individual performing similar functions) that the applicable document or documents delivered on or about the date of the Original Credit Agreement have not been modified or amended and remain in full force and effect) and (B) all corporate,

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partnership, member or other necessary action taken by such Person to authorize the execution, delivery and performance of the Loan Documents to which it is a party;

(x) a Compliance Certificate for the Parent Guarantor’s fiscal quarter ended September 30, 2010;

(xi) Intentionally Omitted;

(xii) to the extent required by Administrative Agent, title insurance endorsements to the title insurance policies previously issued to Administrative Agent.

(xiii) to the extent required by Administrative Agent, UCC, tax, judgment and lien search reports with respect to each Loan Party in all necessary or appropriate jurisdictions indicating that there are no Liens of record with respect to the assets of each such Loan Party other than Permitted Liens;

(xiv) evidence that the Fees, if any, then due and payable under Section 3.5., together with all other fees, expenses and reimbursement amounts due and payable to the Administrative Agent and any of the Lenders, including without limitation, the fees and expenses of counsel to the Administrative Agent, have been paid; and

(xv) such other documents and instruments as the Administrative Agent, or any Lender through the Administrative Agent, may reasonably request; and

(b) No Default or Event of Default shall exist; and

(c) The representations and warranties made or deemed made by the Borrower and each other Loan Party in this Agreement and in the other Loan Documents delivered pursuant to Section 6.1. shall be true and correct.

Section 6.2. Conditions Precedent to All Loans.

The obligations of the Lenders to make any Loans are subject to the further conditions precedent that: (a) no Default or Event of Default shall exist as of the date of the making of such Loan or would exist immediately after giving effect thereto, and no violation of the limits described in Section 2.16. would occur after giving effect thereto; (b) the representations and warranties made or deemed made by the Borrower and each other Loan Party in the Loan Documents to which any of them is a party, shall be true and correct on and as of the date of the making of such Loan with the same force and effect as if made on and as of such date except to the extent that such representations and warranties expressly relate solely to an earlier date (in which case such representations and warranties shall have been true and accurate on and as of such earlier date) and except for changes in factual circumstances specifically and expressly permitted under the Loan Documents and (c) in the case of the borrowing of Loans, the Administrative Agent shall have received (i) a timely Notice of Borrowing, (ii) a certificate (as of the last day of the most recent calendar quarter) establishing sufficient Collateral Pool Availability for such borrowing and (iii) a certificate of Borrower confirming that the applicable Subsidiary Guarantor or Operating Lessee is in compliance with the requirements of any Franchise Agreement relating to the Loan and the execution and delivery of the Security

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Instrument with respect to the Collateral Property which is the subject thereof, pursuant to the Loan Documents. Each Credit Event shall constitute a certification by the Borrower to the effect set forth in the preceding sentence (both as of the date of the giving of notice relating to such Credit Event and, unless the Borrower otherwise notifies the Administrative Agent prior to the date of such Credit Event, as of the date of the occurrence of such Credit Event). In addition, the Borrower shall be deemed to have represented to the Administrative Agent and the Lenders at the time such Loan is made that all conditions to the making of such Loan contained in this Article VI. have been satisfied.

Section 6.3. Conditions Precedent to a Property Becoming a Collateral Property.

No Property shall become a Collateral Property until the Borrower shall have (or shall have caused to be) executed and delivered to the Administrative Agent all documents and instruments required under Section 4.1., and the Administrative Agent and the Required Approval Lenders shall have approved such Property as provided in Section 4.1., and the Borrower shall have (or shall cause to be) executed and delivered to the Administrative Agent the following instruments, documents and agreements in respect of such Property, each to be in form and substance satisfactory to the Administrative Agent:

(a) A Security Deed with respect to such Property, the form of such Security Deed to be modified as appropriate to conform to the Applicable Laws of the jurisdiction in which such Property is located;

(b) An Assignment of Leases and Rents with respect to such Property, the form of such Assignment of Leases and Rents to be modified as appropriate to conform to the Applicable Laws of the jurisdiction in which such Property is located;

(c) A Management Agreement Assignment/Subordination with respect to the Management Agreement for such Property and (if such Property is subject to a Franchise Agreement) a “comfort letter” from the Franchisor;

(d) A Control Agreement with respect to the applicable FF&E Reserve Account;

(e) Copies of the Material Contracts for such Property (to the extent not theretofore delivered) and, if requested by the Administrative Agent, collateral assignments executed by the applicable Subsidiary Guarantor and Operating Lessee in favor of the Administrative Agent for its benefit and the benefit of the Lenders, of the other Material Contracts relating to the use, occupancy, operation, maintenance, enjoyment or ownership of such Property;

(f) A commitment for an ALTA 2006 Form Loan Policy of Title Insurance or other form acceptable to the Administrative Agent in favor of the Administrative Agent for its benefit and the benefit of the Lenders, with respect to such Property, including endorsements with respect to such items of coverage as the Administrative Agent may request and which endorsements are available and customary in the jurisdiction where the Property is located, in the amount of coverage required in the following sentence, issued by a title insurance company acceptable to the Administrative Agent and with reinsurance (with direct access agreements) with title insurance companies acceptable to the Administrative Agent, showing the fee simple title to the land (or, in the case of a Property that is subject to an Approved Ground Lease, the

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leasehold interest in the Land) and improvements described in the applicable Security Deed as vested in the applicable Subsidiary Guarantor, and insuring that the Lien granted by such Security Deed is a valid Lien against said Property, subject only to the Permitted Liens and such other restrictions, encumbrances, easements and reservations as are acceptable to the Administrative Agent. The issuance of the title insurance policy pursuant to such Commitment satisfactory to the Administrative Agent shall be a condition under this Section 6.3., and the amount of coverage under such policy must equal the Appraised Value of such Property;

(g) Copies of all documents of record reflected in Schedule A and Schedule B of such title insurance commitment;

(h) If such Property is located in a Tie-In Jurisdiction, endorsements to all other existing title insurance policies issued to the Administrative Agent with respect to all other Properties located in Tie-In Jurisdictions reflecting an increase in the aggregate insured amount under the “Tie-In” Endorsements to an amount equal to the aggregate amount of the Appraised Values of all such Collateral Properties (including the Property to be added to the Collateral Pool) but in no event in an amount in excess of the aggregate amount of the Commitments;

(i) Estoppel certificates from any party to any Material Contract and estoppels certificates and subordination, non-disturbance and attornment agreements from each tenant leasing any of such Property, all as may be reasonably requested by the Administrative Agent;

(j) An Accession Agreement executed by the Subsidiary Guarantor that is the owner of such Property (unless it is already a party to the Subsidiary Guaranty);

(k) With respect to the applicable Subsidiary Guarantor and Operating Lessee, the items that would have been delivered under subsections (v) through (ix), (xiii) and (xv) of Section 6.1.(a) if they had been Loan Parties on the Agreement Date.

(l) An opinion of counsel admitted to practice law in the jurisdiction in which such Property is located and acceptable to the Administrative Agent, addressed to the Administrative Agent and each Lender covering such legal matters relating to the transactions contemplated hereby as the Administrative Agent may reasonably request;

(m) An opinion of counsel admitted to practice law in the jurisdictions in which each of the Loan Parties (including the Subsidiary Guarantor that is the owner, and the Operating Lessee that is the lessee, of such Property) is formed acceptable to the Administrative Agent, addressed to the Administrative Agent and each Lender covering such legal matters relating to the formation and existence and power of the Person executing documents, and the due authorization, execution and delivery of the Security Documents and other documents for consummating the transactions contemplated hereby as the Administrative Agent may reasonably request;

(n) Documents required to establish, or evidencing the establishment of, the FF&E Reserve Account, Insurance Reserve Account and Tax Reserve Account (as applicable); and

(o) Such other instruments, documents, agreements, financing statements, certificates, opinions and other Security Documents as the Administrative Agent may reasonably request.

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Section 6.4. Conditions as Covenants.

If the Lenders permit the making of any Loans prior to the satisfaction of all conditions precedent set forth in Sections 6.1., 6.2. or 6.3. but require the Borrower to cause such condition or conditions to be satisfied after the date of the making of such Loans, the Borrower shall enter into a supplementary agreement establishing the conditions to be satisfied thereafter and the time by which they must be satisfied, as reasonably required by the Administrative Agent. Unless set forth in writing to the contrary, the making of its initial Loan by a Lender shall constitute a confirmation by such Lender to the Administrative Agent and the other Lenders that insofar as such Lender is concerned the Borrower has satisfied the conditions precedent for initial Loans set forth in Sections 6.1. and 6.2.

ARTICLE VII. REPRESENTATIONS AND WARRANTIES

Section 7.1. Representations and Warranties.

In order to induce the Administrative Agent and each Lender to enter into this Agreement and to make Loans, the Borrower represents and warrants to the Administrative Agent and each Lender as follows:

(a) Organization; Power; Qualification. Each of the Loan Parties is a corporation, partnership or other legal entity, duly organized or formed, validly existing and in good standing under the jurisdiction of its incorporation or formation, has the requisite corporate, partnership or limited liability company power and authority to own or lease its respective properties and to carry on its respective business and is duly qualified as, and is in good standing as a foreign corporation, partnership or other legal entity and authorized to do business, in each jurisdiction in which the character of its properties or the nature of its business requires such qualification or authorization and where the failure to be so qualified or authorized could reasonably be expected to have, in each instance, a Material Adverse Effect.

(b) Ownership Structure. Part I of Schedule 7.1.(b) is, as of the Agreement Date, a complete and correct list of the Parent Guarantor and all of its Subsidiaries setting forth for each such Subsidiary, (i) the jurisdiction of organization of such Person, (ii) each Person holding any Equity Interest in such Person, (iii) the nature of the Equity Interests held by each such Person and (iv) the percentage of ownership of such Person represented by such Equity Interests. As of the Agreement Date, except as disclosed in such Schedule (A), each of the Parent Guarantor, the Borrower and their Subsidiaries owns, free and clear of all Liens, and has the unencumbered right to vote, all outstanding Equity Interests in each Person shown to be held by it on such Schedule, (B) all of the issued and outstanding capital stock of each such Person organized as a corporation is validly issued, fully paid and nonassessable and (C) there are no outstanding subscriptions, options, warrants, commitments, preemptive rights or agreements of any kind (including, without limitation, any stockholders’ or voting trust agreements) for the issuance, sale, registration or voting of, or outstanding securities convertible into, any additional shares of capital stock of any class, or partnership or other ownership interests of any type in, any such Person. As of the Agreement Date, Part II of Schedule 7.1.(b) correctly sets forth all Unconsolidated Affiliates of the Parent Guarantor and its Subsidiaries, including the correct legal name of such Person, the type of legal entity which each such Person is, and all Equity Interests

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in such Person held directly or indirectly by the Parent Guarantor or the Borrower. Part I of Schedule 7.1(b) may be updated from time to time in accordance with the terms of this Agreement.

(c) Authorization of Agreement, Notes, Loan Documents and Borrowings. The Borrower has the requisite partnership power, and has taken all necessary limited partnership action, and the Parent Guarantor has taken all necessary action, to authorize the Borrower, to borrow and obtain other extensions of credit hereunder. The Borrower and each other Loan Party has the requisite corporate, partnership or limited liability company power, and has taken all necessary corporate, partnership or limited liability company action, and the Parent Guarantor has taken all necessary action, to authorize each Loan Party, to execute, deliver and perform each of the Loan Documents and the Fee Letter to which it is a party in accordance with their respective terms and perform its respective obligations thereunder. The Loan Documents and the Fee Letter to which the Borrower or any other Loan Party is a party have been duly executed and delivered by the duly authorized officers of such Person and each is a legal, valid and binding obligation of such Person enforceable against such Person in accordance with its respective terms, except as the same may be limited by bankruptcy, insolvency, and other similar laws affecting the rights of creditors generally and the availability of equitable remedies for the enforcement of certain obligations contained herein or therein and as may be limited by equitable principles generally.

(d) Compliance of Agreement, Etc. with Laws. The execution, delivery and performance of this Agreement and the other Loan Documents to which any Loan Party is a party and the Fee Letter in accordance with their respective terms and the borrowings and other extensions of credit hereunder do not and will not, by the passage of time, the giving of notice, or both: (i) require any Governmental Approval that has not been obtained or violate any Applicable Law (including any Environmental Law) relating to any Loan Party; (ii) conflict with, result in a breach of or constitute a default under the organizational documents of any Loan Party, or any indenture, agreement or other instrument to which any Loan Party is a party or by which it or any of its respective properties may be bound; or (iii) result in or require the creation or imposition of any Lien upon or with respect to any Property now owned or hereafter acquired by any Loan Party other than in favor of the Administrative Agent for its benefit and the benefit of the Lenders.

(e) Compliance with Law; Governmental Approvals. Each Loan Party and each Subsidiary of any Loan Party is in compliance with each Governmental Approval and all other Applicable Laws relating to it except for noncompliances which, and Governmental Approvals the failure to possess which, could not, individually or in the aggregate, reasonably be expected to cause a Default or Event of Default or have a Material Adverse Effect.

(f) Title to Properties; Liens. Schedule 7.1.(f) is, as of the Agreement Date, a complete and correct listing of all real estate assets of the Loan Parties. Each of the Loan Parties holds good, marketable and insurable title each Property purported to be owned by it (or, in the case of the leasehold estate under a ground lease, a good, valid and insurable leasehold estate), subject only to Permitted Liens, and has good and sufficient title to, or a valid leasehold interest in, all FF&E and other personal property (except such as may be owned by the Manager as provided in the applicable Management Agreement) necessary for the continued operating of

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such Property in the ordinary course. No Collateral Property or other Collateral is subject to any Lien other than Permitted Liens. Each of the Collateral Pool Properties satisfies all of the requirements under the Loan Documents for being an Eligible Property.

(g) Existing Indebtedness. Schedule 7.1.(g) is, as of the Agreement Date, a complete and correct listing of all Indebtedness (including all Guarantees) of each of the Loan Parties and the other Subsidiaries, and if such Indebtedness is secured by any Lien, a description of all of the property subject to such Lien. As of the Agreement Date, the Loan Parties and the other Subsidiaries are in compliance in all material respects with all of the terms of such Indebtedness and all instruments and agreements relating thereto, and no default or event of default, or event or condition which with the giving of notice, the lapse of time, or both, would constitute a default or event of default, exists with respect to any such Indebtedness.

(h) Material Contracts. Schedule 7.1.(h) is, as of the Agreement Date, a true, correct and complete listing of all Material Contracts. Each of the Loan Parties that is party to any Material Contract has performed and is in compliance in all material respects with all of the terms of such Material Contract, and no default or event of default, or event or condition which with the giving of notice, the lapse of time, or both, would constitute such a default or event of default, exists with respect to any such Material Contract.

(i) Litigation. Except as set forth on Schedule 7.1.(i), there are no actions, suits or proceedings pending (nor, to the knowledge of Borrower, are there any actions, suits or proceedings threatened, nor is there any basis therefor) against or in any other way relating adversely to or affecting, any Loan Party, any Subsidiary of any Loan Party or any of their respective properties (except for claims for personal injury or property damage that are covered by insurance and, in the case of actions or proceedings that have been commenced, have been tendered to the insurer for defense and with respect to which the insurer has not denied coverage) in any court or before any arbitrator of any kind or before or by any other Governmental Authority which, (i) if adversely determined, could reasonably be expected to have a Material Adverse Effect or (ii) in any manner draws into question the validity or enforceability of any Loan Documents or the Fee Letter. There are no strikes, slow downs, work stoppages or walkouts or other labor disputes in progress or threatened relating to, any Loan Party or any Subsidiary of any Loan Party.

(j) Taxes. All federal, state and other tax returns of, each Loan Party required by Applicable Law to be filed have been duly filed, and all federal, state and other taxes, assessments and other governmental charges or levies upon, each Loan Party and its respective Properties, income and other assets which are material in amount are due and payable have been paid, except any such nonpayment or non-filing which is at the time permitted under Section 8.6. As of the Agreement Date, none of the United States income tax returns of, any Loan Party is under audit.

(k) Financial Statements. The Borrower has furnished to each Lender copies of the unaudited consolidated balance sheet of the Parent Guarantor and its consolidated Subsidiaries for the fiscal quarter ended March 31, 2010 and the related consolidated statements of operations, shareholders’ equity and cash flow for the fiscal quarter ended on such date. Such balance sheet and statements (including in each case related schedules and notes) are complete

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and correct in all material respects and present fairly, in accordance with GAAP (subject to Section 1.2.(a)) consistently applied throughout the periods involved, the consolidated financial position of the Parent Guarantor and its consolidated Subsidiaries as at such date and the results of operations and the cash flow for such period (subject, to changes resulting from normal year end audit adjustments).

(l) No Material Adverse Effect. Since December 31, 2009, there has been no event, change, circumstance or occurrence that could reasonably be expected to have a Material Adverse Effect. Each of the Loan Parties is Solvent.

(m) Operating Statements. The operating statements and other information for each Collateral Property delivered by the Borrower to the Administrative Agent fairly present the Operating Expenses, Gross Operating Revenues, Net Operating Income and Adjusted NOI for each Collateral Property and all Collateral Properties, collectively, for the period then ended.

(n) ERISA. Each member of the ERISA Group has fulfilled its obligations under the contribution requirements of ERISA and the Internal Revenue Code with respect to each Plan and is in compliance in all material respects with the presently applicable provisions of ERISA and the Internal Revenue Code with respect to each Plan. No member of the ERISA Group has (i) sought a waiver of the minimum funding standard under Section 412 of the Internal Revenue Code in respect of any Plan, (ii) failed to make any contribution or payment to any Plan or Multiemployer Plan or in respect of any Benefit Arrangement, or made any amendment to any Plan or Benefit Arrangement, which has resulted or could result in the imposition of a Lien or the posting of a bond or other security under ERISA or the Internal Revenue Code or (iii) incurred any liability under Title IV of ERISA other than a liability to the PBGC for premiums under Section 4007 of ERISA.

(o) Absence of Default. None of the Loan Parties or their Subsidiaries is in default under its articles of incorporation, bylaws, partnership agreement or other similar organizational documents, and no event has occurred, which has not been remedied, cured or waived: (i) which constitutes a Default or an Event of Default; or (ii) which constitutes, or which with the passage of time, the giving of notice, or both, would constitute, a default or event of default by, such Person under any agreement (other than this Agreement) or judgment, decree or order to which any such Person is a party or by which any such Person or any of its respective properties may be bound where such default or event of default could, individually or in the aggregate, have a Material Adverse Effect.

(p) Environmental Laws. Each of the Loan Parties and their Subsidiaries: (i) is in compliance with all Environmental Laws applicable to its business, operations and the Properties, (ii) has obtained all Governmental Approvals which are required under Environmental Laws, and each such Governmental Approval is in full force and effect, and (iii) is in compliance with all terms and conditions of such Governmental Approvals, where with respect to each of the immediately preceding clauses (i) through (iii) the failure to obtain or to comply with could be reasonably expected to have a Material Adverse Effect. Except for any of the following matters that could not be reasonably expected to have a Material Adverse Effect, no Loan Party has any knowledge of, nor has received notice of, any past present or pending releases, events, conditions, circumstances, activities, practices, incidents, facts, occurrences,

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actions, or plans that, with respect to any Loan Party or any Subsidiary of any Loan Party, its respective businesses or operations or with respect to its Properties, may: (i) cause or contribute to an actual or alleged violation of or noncompliance with Environmental Laws, (ii) cause or contribute to any other potential common law or legal claim or other liability, or (iii) cause any of its Properties to become subject to any restrictions on ownership, occupancy, use or transferability under any Environmental Law or require the filing or recording of any notice, approval or disclosure document under any Environmental Law and, with respect to the immediately preceding clauses (i) through (iii) is based on or related to the on-site or off-site manufacture, generation, processing, distribution, use, treatment, storage, disposal, transport, removal, clean up or handling, or the emission, discharge, release or threatened release of any wastes or Hazardous Material, or any other requirement under Environmental Law. There is no civil, criminal, or administrative action, suit, demand, claim, hearing, notice, or demand letter, mandate, order, lien, request, investigation, or proceeding pending or, to the Borrower’s knowledge after due inquiry, threatened, against any Loan Party or any Subsidiary of any Loan Party relating in any way to Environmental Laws which, reasonably could be expected to have a Material Adverse Effect. None of the Properties of the Loan Parties or any of their Subsidiaries is listed on or proposed for listing on the National Priority List promulgated pursuant to the Comprehensive Environmental Response, Compensation and Liability Act of 1980 and its implementing regulations, or any state or local priority list promulgated pursuant to any analogous state or local law. To the Borrower’s knowledge, no Hazardous Materials generated at or transported from any Property of any Loan Party or any Subsidiary of any Loan Party is or has been transported to, or disposed of at, any location that is listed or proposed for listing on the National Priority List or any analogous state or local priority list, or any other location that is or has been the subject of a clean-up, removal or remedial action pursuant to any Environmental Law, except to the extent that such transportation or disposal could not reasonably be expected to result in a Material Adverse Effect.

(q) Investment Company. No Loan Party is (i) an “investment company” or a company “controlled” by an “investment company” within the meaning of the Investment Company Act of 1940, as amended, or (ii) subject to any other Applicable Law which purports to regulate or restrict its ability to borrow money or obtain other extensions of credit or to consummate the transactions contemplated by this Agreement or to perform its obligations under any Loan Document to which it is a party.

(r) Margin Stock. No Loan Party is engaged principally, or as one of its important activities, in the business of extending credit for the purpose, whether immediate, incidental or ultimate, of buying or carrying “margin stock” within the meaning of Regulation U of the Board of Governors of the Federal Reserve System.

(s) Affiliate Transactions. Except as permitted by Section 10.9. or as otherwise set forth on Schedule 7.1.(s), no Loan Party is a party to or bound by any agreement or arrangement (whether oral or written) with any Affiliate.

(t) Intellectual Property. Each of the Loan Parties owns or has the right to use, under valid license agreements or otherwise, all patents, licenses, franchises, trademarks, trademark rights, trade names, trade name rights, trade secrets and copyrights (collectively, “Intellectual Property”), if any, necessary to the conduct of its businesses, without known conflict with any

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patent, license, franchise, trademark, trade secret, trade name, copyright, or other proprietary right of any other Person.

(u) Business. As of the Agreement Date, the principal business of the Parent Guarantor, the Borrower and their Subsidiaries is the ownership and/or leasing of hotels.

(v) Broker’s Fees. No broker’s or finder’s fee, commission or similar compensation will be payable with respect to the transactions contemplated hereby. No other similar fees or commissions will be payable by any Loan Party for any other services rendered to any Loan Party or any Subsidiary of any Loan Party ancillary to the transactions contemplated hereby.

(w) Accuracy and Completeness of Information. All written information, reports and other papers and data furnished to the Administrative Agent or any Lender by, on behalf of, or at the direction of, any Loan Party were, at the time the same were so furnished, complete and correct in all material respects, or, in the case of financial statements, present fairly, in accordance with GAAP (subject to Section 1.2.(a)) consistently applied throughout the periods involved, the financial position of the Persons involved as at the date thereof and the results of operations for such periods. To Borrower’s knowledge, there is no fact is known to any Loan Party which has had, or may in the future have (so far as the Borrower can reasonably foresee), a Material Adverse Effect which has not been set forth in the financial statements referred to in Section 7.1.(k) or in such information, reports or other papers or data or otherwise disclosed in writing to the Administrative Agent and the Lenders prior to the Effective Date. No document furnished or written statement made to the Administrative Agent or any Lender in connection with the negotiation, preparation or execution of, or pursuant to, this Agreement or any of the other Loan Documents contains or will contain any untrue statement of a fact material to the creditworthiness of any Loan Party or omits or will omit to state a material fact necessary in order to make the statements contained therein not misleading.

(x) Not Plan Assets; No Prohibited Transactions. For purposes of ERISA and the Internal Revenue Code, none of the assets of any Loan Party or any of their Subsidiaries constitutes “plan assets”, within the meaning of ERISA and the regulations promulgated thereunder, of any Plan. The execution, delivery and performance of the Loan Documents and the Fee Letter by the Loan Parties, and the borrowing, other credit extensions and repayment of amounts thereunder, do not and will not constitute “prohibited transactions” under ERISA or the Internal Revenue Code.

(y) OFAC. None of the Borrower, any of the other Loan Parties, any of their Subsidiaries, or any of their Affiliates: (i) is a person named on the list of Specially Designated Nationals or Blocked Persons maintained by the U.S. Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) available at http://www.treas.gov/offices/eotffc/ofac/sdn/index.html, or as otherwise published from time to time; (ii) is (A) an agency of the government of a country, (B) an organization controlled by a country, or (C) a person resident in a country that is subject to a sanctions program identified on the list maintained by OFAC and available at http://www.treas.gov/offices/eotffc/ofac/sanctions/index.html, or as otherwise published from time to time, as such program may be applicable to such agency, organization or person; or (iii) derives any of its assets or operating income from investments in or transactions with any

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such country, agency, organization or person; and none of the proceeds from the Loan will be used to finance any operations, investments or activities in, or make any payments to, any such country, agency, organization, or person.

(z) Security Interests. Borrower is not aware of any fact or circumstance that would prevent the Security Documents from creating, as security for the Obligations, a valid and enforceable Lien on all of the Collateral, superior to and prior to the rights of all third Persons and subject to no other Liens (except for Permitted Liens), in favor of the Administrative Agent for its benefit and the benefit of the Lenders.

Section 7.2. Survival of Representations and Warranties, Etc.

All statements contained in any certificate, financial statement or other instrument delivered by or on behalf of any Loan Party to the Administrative Agent or any Lender pursuant to or in connection with this Agreement or any of the other Loan Documents (including, but not limited to, any such statement made in or in connection with any amendment thereto or any statement contained in any certificate, financial statement or other instrument delivered by or on behalf of any Loan Party prior to the Agreement Date and delivered to the Administrative Agent or any Lender in connection with the underwriting or closing the transactions contemplated hereby) shall constitute representations and warranties made by the Borrower under this Agreement. All representations and warranties made under this Agreement and the other Loan Documents shall be deemed to be made at and as of the Agreement Date, the Effective Date and at and as of the date of the occurrence of each Credit Event, except to the extent that such representations and warranties expressly relate solely to an earlier date (in which case such representations and warranties shall have been true and accurate on and as of such earlier date) and except for changes in factual circumstances expressly and specifically permitted hereunder. All such representations and warranties shall survive the effectiveness of this Agreement, the execution and delivery of the Loan Documents and the making of the Loans.

ARTICLE VIII. AFFIRMATIVE COVENANTS

For so long as this Agreement is in effect, unless the Requisite Lenders (or, if required pursuant to Section 13.7., all of the Lenders) shall otherwise consent in the manner provided for in Section 13.7., the Borrower shall comply with the following covenants:

Section 8.1. Preservation of Existence and Similar Matters.

Except as otherwise permitted under Section 10.4., the Borrower shall, and shall cause each other Specified Loan Party and each of its and their respective Subsidiaries to, and by its execution hereof the Parent Guarantor agrees that it shall and shall cause each of its Subsidiaries to, preserve and maintain its respective existence, rights, franchises, licenses and privileges in the jurisdiction of its incorporation or formation and qualify and remain qualified and authorized to do business in each jurisdiction in which the character of its properties or the nature of its business requires such qualification and authorization and where the failure to be so authorized and qualified could reasonably be expected to have a Material Adverse Effect.

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Section 8.2. Compliance with Applicable Law.

The Borrower shall, and shall cause each other Specified Loan Party and each of its and their respective Subsidiaries to, and by its execution hereof the Parent Guarantor agrees that it shall and shall cause each of its Subsidiaries to, comply with all Applicable Laws, including the obtaining of all Governmental Approvals, the failure with which to comply could reasonably be expected to have a Material Adverse Effect.

Section 8.3. Maintenance of Property.

The Borrower shall, and shall cause each other Specified Loan Party to, and by its execution hereof the Parent Guarantor agrees that it shall and shall cause each of its Subsidiaries to, keep in all material respects all Properties owned or leased by it in good repair and working order, condition and appearance (ordinary wear and tear excepted), free of any structural defects and otherwise in a manner consistent with industry standards in the area in which such Property is located.

Section 8.4. Conduct of Business.

The Borrower shall, and shall cause each other Specified Loan Party and each of its or their respective Subsidiaries to, and by its execution hereof the Parent Guarantor agrees that it shall and shall cause each of its Subsidiaries to, carry on its respective businesses as described in Section 7.1.(u) and not enter into any line of business not otherwise engaged in by such Person as of the Agreement Date.

Section 8.5. Insurance.

The Borrower shall, and shall cause each other Specified Loan Party and each of its and their respective Subsidiaries to, and by its execution hereof the Parent Guarantor agrees that it shall and shall cause each of its Subsidiaries to, maintain insurance with financially sound and reputable insurance companies against such risks and in such amounts as is customarily maintained by similar businesses or as may be required by Applicable Law. The Borrower shall from time to time deliver to the Administrative Agent upon request a certificate of insurance, stating the names of the insurance companies, the amounts and rates of the insurance, the dates of the expiration thereof and the properties and risks covered thereby and/or insurance certificates, in form acceptable to the Administrative Agent, providing that the insurance coverage required under this Section 8.5. (including without limitation, both property and liability insurance) is in full force and effect and stating that coverage shall not be cancelable or materially changed without ten (10) days prior written notice to the Administrative Agent of any cancelation for nonpayment or premiums, and not less than thirty (30) days prior written notice to the Administrative Agent of any other cancellation or any modification (including a reduction in coverage), together with appropriate evidence that the Administrative Agent, for the benefit of the Lenders, is named as lender’s loss payee and additional insured, as appropriate, on all insurance policies that the Borrower or any Loan Party actually maintains with respect to any Collateral Property. Such insurance shall, in any event, include terrorism coverage and all of the following:

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(A) Insurance against loss to such Collateral Properties on an “All Risk” policy form, covering insurance risks no less broad than those covered under a Special Multi Peril (SMP) policy form, which contains a Commercial ISO “Causes of Loss-Special Form,” in the then current form, and such other risks as Administrative Agent may reasonably require, in amounts equal to the full replacement cost of each of the Collateral Properties including fixtures and equipment, the applicable Loan Party’s interest in leasehold improvements, and the cost of debris removal, with, if required by the Administrative Agent, an agreed amount endorsement, and with deductibles approved by Administrative Agent, except that any deductibles for any insurance covering damage by windstorm may be in amounts up to 5% of the value of the Collateral Property insured;

(B) Business income insurance in amounts sufficient to pay during any period in which a Property may be damaged or destroyed, for a period of twelve (12) months; (i) at least 100% of projected Net Operating Income and (ii) all amounts (including, but not limited to, all taxes, assessments, utility charges and insurance premiums) required to be paid by any tenants of the Collateral Property;

(C) During the making of any alterations or improvements to a Collateral Property, carry or cause to be carried builder’s completed value risk insurance against “all risks of physical loss” for the full replacement cost of such Collateral Property;

(D) Insurance against loss or damage by flood or mud slide in compliance with The Flood Disaster Protection Act of 1973, as amended from time to time, if any Property is now, or at any time while the Obligations or any portion thereof remains unpaid shall be, situated in any area which an appropriate Governmental Authority designates as a special flood hazard area, in amounts equal to the full replacement value of all above grade structures on such Collateral Property, or as such lesser amounts as may be available under Federal Flood Insurance Programs;

(E) Commercial general public liability insurance, with the location of the Collateral Properties designated thereon, against death, bodily injury and property damage arising on, about or in connection with the Collateral Properties, with applicable Subsidiary Guarantor listed as an insured, with such limits as Borrower or the applicable Subsidiary Guarantor may reasonably require (but in no event less than $5,000,000; and

(F) Such other insurance, including, without limitation, earthquake and environmental coverages, relating to the Collateral Properties and the uses and operation thereof as Administrative Agent may, from time to time, reasonably require.

Section 8.6. Payment of Taxes and Claims.

The Borrower shall, and shall cause each other Specified Loan Party to, and by its execution hereof the Parent Guarantor agrees that it shall and shall cause each of its Subsidiaries to, pay and discharge when due (a) all taxes, assessments and governmental charges or levies imposed upon it or upon its income or profits or upon any properties belonging to it, and (b) all lawful claims of materialmen, mechanics, carriers, warehousemen and landlords for labor, materials, supplies and rentals which, if unpaid, might by Applicable Law become a Lien on any

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properties of such Person that is not a Permitted Lien; provided, however, that (subject to Section 8.16.) this Section shall not require the payment or discharge of any such tax, assessment, charge, levy or claim (i) that is being contested in good faith and by appropriate proceedings, (ii) with respect to which reserves in conformity with GAAP have been provided, (iii) if such charge, levy or claim does not constitute and is not secured by any choate Lien on any portion of any Property and no portion of any Property is in jeopardy of being sold, forfeited or lost during or as a result of such contest, (iv) neither Administrative Agent nor any Lender could become subject to any civil or criminal fine or penalty, in each case as a result of non-payment of such charge or claim and (v) such contest does not, and could not reasonably be expected to, result in a Material Adverse Effect.

Section 8.7. Books and Records; Inspections.

The Borrower shall, and shall cause each other Specified Loan Party to, and by its execution hereof the Parent Guarantor agrees that it shall and shall cause each of its Subsidiaries to, keep proper books of record and account in which full, true and correct entries shall be made of all dealings and transactions in relation to its business and activities. The Borrower shall, and shall cause each other Specified Loan Party to, and by its execution hereof the Parent Guarantor agrees that it shall and shall cause each of its Subsidiaries to, permit representatives of the Administrative Agent or any Lender to visit and inspect any of their respective properties, to examine and make abstracts from any of their respective books and records and to discuss their respective affairs, finances and accounts with their respective officers, employees and independent public accountants, all at such reasonable times during business hours and as often as may reasonably be requested and, as long as no Event of Default exists, with reasonable prior notice. The Borrower shall be obligated to reimburse the Administrative Agent and the Lenders for their costs and expenses incurred in connection with the exercise of their rights under this Section 8.7. only if such exercise occurs while a Default or Event of Default exists.

Section 8.8. Use of Proceeds.

The Borrower shall use the proceeds of Loans only for the general corporate purposes of the Borrower and its Subsidiaries, including the acquisition of Properties, repayment of Indebtedness and capital expenditures. The Borrower shall not, and shall not permit any other Specified Loan Party or any of its or their respective Subsidiaries to, and by its execution hereby the Parent Guarantor agrees that it shall not and shall not permit any of its Subsidiaries to, use any part of such proceeds to purchase or carry, or to reduce or retire or refinance any credit incurred to purchase or carry, any margin stock (within the meaning of Regulation U of the Board of Governors of the Federal Reserve System) or to extend credit to others for the purpose of purchasing or carrying any such margin stock.

Section 8.9. Environmental Matters.

The Borrower shall, and shall cause each other Specified Loan Party and each of its and their respective Subsidiaries to, and by its execution hereof the Parent Guarantor agrees that it shall and shall cause each of its Subsidiaries to, comply with all Environmental Laws the failure with which to comply could reasonably be expected to have a Material Adverse Effect. The Borrower shall comply, and shall cause each other Specified Loan Party to comply, and by its

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execution hereof the Parent Guarantor agrees that it shall and shall cause each of its Subsidiaries to comply, and the Borrower shall use, and shall cause each other Specified Loan Party to use, and by its execution hereof the Parent Guarantor agrees that it shall and shall cause each of its Subsidiaries to use, commercially reasonable efforts to cause all other Persons occupying, using or present on its Properties to comply, with all Environmental Laws in all material respects. The Borrower shall, and shall cause each other Specified Loan Party to, and by its execution hereof the Parent Guarantor agrees that it shall and shall cause each of its Subsidiaries to, promptly take all actions and pay or arrange to pay all costs necessary for it and for its Properties to comply in all material respects with all Environmental Laws and all Governmental Approvals, including actions to remove and dispose of all Hazardous Materials and to clean up the Properties as required under Environmental Laws. The Borrower shall, and shall cause each other Specified Loan Party to, and by its execution hereof the Parent Guarantor agrees that it shall and shall cause each of its Subsidiaries to, promptly take all actions necessary to prevent the imposition of any Liens on any of their respective properties arising out of or related to any Environmental Laws. Nothing in this Section shall impose any obligation or liability whatsoever on the Administrative Agent or any Lender.

Section 8.10. Further Assurances.

At the Borrower’s cost and expense and upon request of the Administrative Agent, the Borrower shall, and shall cause each other Specified Loan Party to, and by its execution hereof the Parent Guarantor agrees that it shall and shall cause each of its Subsidiaries to, duly execute and deliver or cause to be duly executed and delivered, to the Administrative Agent such further instruments, documents and certificates, and perform or cause to be performed such further acts reasonably necessary, as determined by Administrative Agent in its reasonable judgment, to carry out the purposes of this Agreement and the other Loan Documents.

Section 8.11. Intentionally Omitted.

Section 8.12. REIT Status.

By its execution hereof, the Parent Guarantor agrees to maintain its status and elect to be treated as a REIT.

Section 8.13. Exchange Listing.

By its execution hereof, the Parent Guarantor agrees to maintain at least one class of common shares of the Parent Guarantor having trading privileges on the New York Stock Exchange.

Section 8.14. Operation of Collateral Property. The Borrower shall cause each Subsidiary Guarantor and Operating Lessee to:

(a) operate each Collateral Property in compliance with Applicable Law in all material respects;

(b) promptly perform and/or observe (or cause to be performed and/or observed) in all material respects the covenants and agreements required to be performed and observed by it

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under the Material Contracts to which it is a party and do all things necessary to preserve and to keep unimpaired their material rights thereunder;

(c) promptly notify the Administrative Agent of any default under any Management Agreement or Franchise Agreement of which it is aware;

(d) promptly deliver to the Administrative Agent a copy of each PIP, inspection report and any other written notice or report received by it under any Management Agreement or Franchise Agreement;

(e) maintain Inventory at the applicable Collateral Property in amounts required to operate such Collateral Property as operated at the time it first became a Collateral Property and sufficient to meet the standards from time to time required by the applicable Manager and Franchisor;

(f) maintain all material Licenses for the applicable Collateral Property in full force and effect and promptly comply with all conditions thereof; and

(g) reasonably cooperate in obtaining from each Franchisor under a Franchise Agreement for each proposed Collateral Property (whether before or after such Property becomes a Collateral Property) a “comfort letter” from such Franchisor with respect to such Franchise Agreement, including if required by such Franchisor the execution by the applicable Operating Lessee and Subsidiary Guarantor of such comfort letter; provided, however, that Borrower or such Subsidiary Guarantor or Operating Lessee, as the case may be, shall not be required to (i) make any amendments or other modifications to any Franchise Agreement once entered into; (ii) pay any fees to any Franchisor in connection with the foregoing (except for standard, commercially reasonable issuance fees) or (iii) make any other concessions in connection with the foregoing (except for standard requirements in such Franchisor’s comfort letters).

Section 8.15. Completion of Renovations.

(a) In the event that any Subsidiary Guarantor or Operating Lessee shall undertake any Renovations to a Collateral Property pursuant to a PIP or otherwise, the Borrower shall (i) cause the same to be performed diligently and promptly and to be commenced, performed and completed within the time limits set forth in the PIP (if applicable); (b) cause to be obtained all governmental permits required for such Renovations; (c) cause such Renovations to be constructed, performed and completed in compliance, in all material respects, with Applicable Law and all applicable requirements of the Manager and Franchisor, in a good and workmanlike manner, with materials of high quality, free of defects, and in accordance with the plans and specifications therefor and the PIP (if applicable), without substantial deviation therefrom unless approved by the Manager or Franchisor that issued the PIP; (d) cause such Renovations to be constructed and completed free and clear of any mechanic’s liens, materialman’s liens and equitable liens (subject to Section 8.16.); (e) pay or cause to be paid all costs of such Renovations when due; (f) fully pay and discharge, or cause to be fully paid and discharged, all claims for labor performed and material and services furnished in connection with such Renovations; and (g) promptly release and discharge, or cause to be released and discharged, all

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claims of stop notices, mechanic’s liens, materialman’s liens and equitable liens that may arise in connection with such Renovations (subject to Section 8.16.).

(b) Borrower shall notify the Administrative Agent of any Major Renovations that are scheduled or planned for any Collateral Property and shall, if requested by the Administrative Agent, promptly furnish or cause to be furnished to the Administrative Agent (i) copies of any plans and specifications, contracts and governmental permits for such Major Renovations, and (ii) upon substantial completion of such Major Renovations (A) a written statement or certificate executed by the architect designated or shown on the plans and specifications (or, if no architect has been retained, from the general contractor for such Major Renovations certifying, without qualification or exception, that such Major Renovations are substantially completed, (B) all required occupancy permit(s) for the Collateral Property issued by the local government agency having jurisdiction and authority to issue same, and (C) such other evidence of lien free completion as the Administrative Agent deems satisfactory in its reasonable discretion.

Section 8.16. Mechanics Liens. The Borrower shall not suffer or permit any mechanics’, suppliers’ or other Lien claims (including without limitation any Liens arising from environmental or other legal proceedings (“Proceedings”)) to be filed or otherwise asserted against any Collateral Property. If a claim of lien is recorded which affects any Collateral Property, the Borrower shall, within thirty (30) days of such recording, or within ten (10) days of the Administrative Agent’s demand, whichever occurs first: (a) pay and discharge, or cause to be paid and discharged, the claim of Lien; or (b) provide the Administrative Agent with other assurances (which may include a title insurance endorsement) which the Administrative Agent deems, in its sole and absolute discretion, to be satisfactory for the payment of such claim of Lien and for the full and continuous protection of the Administrative Agent and the Lenders from the effect of such lien.

Section 8.17. Proceedings. If any Proceedings are commenced seeking to enjoin or otherwise prevent or declare unlawful the use, occupancy, operation or maintenance of any Collateral Property or any portion thereof, or if any other Proceedings are filed with respect to any Collateral Property or any Loan Party, the Borrower shall give prompt notice thereof to the Administrative Agent and to the extent permitted by law and at the Borrower’s or such Loan Party’s sole expense, (i) cause the Proceedings to be vigorously contested in good faith and (ii) in the event of an adverse ruling or decision, prosecute all allowable appeals therefrom. Without limiting the generality of the foregoing, the Borrower shall, or shall cause the applicable Loan Party to, resist the entry or seek the stay of any temporary or permanent injunction that may be entered and use its best efforts to bring about a favorable and speedy disposition of all such Proceedings.

Section 8.18. Correction of Defects. Within a commercially reasonable period of time after any Loan Party acquires knowledge of or is given notice of a material defect in any Collateral Property or any departure by any Loan Party from other requirements of this Agreement or the other Loan Documents, Borrower shall, or shall cause the applicable Specified Loan Party to, commence and continue with diligence to correct, or cause to be corrected, all such defects and departures. Upon any Loan Party acquiring knowledge of such defect or departure, the Borrower shall promptly advise the Administrative Agent in writing of such matter and the measures being taken to make such corrections, along with an estimate of the time of completion.

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Section 8.19. Personal Property. The tangible Personal Property of each Subsidiary Guarantor and Operating Lessee used in connection with any Collateral Property shall be located at such Collateral Property and to be kept free and clear of all Liens other than Permitted Liens, and Borrower shall, from time to time upon request by the Administrative Agent, furnish the Administrative Agent with evidence of such ownership satisfactory to the Administrative Agent, including searches of applicable public records.

Section 8.20. FF&E Reserve Accounts. The Borrower shall cause each Subsidiary Guarantor or Operating Lessee to maintain a FF&E Reserve Account with respect to each Collateral Property, to pledge such FF&E Reserve Account to the Administrative Agent for its benefit and the benefit of the Lenders as Collateral, and to deposit funds therein and to withdraw funds therefrom on and subject to the following terms and conditions:

(a) Except as otherwise provided in subsection (d), each FF&E Reserve Account shall be held by the Administrative Agent. There shall be executed and delivered with respect to each FF&E Reserve Account (whether or not held by the Administrative Agent) a Control Agreement. Except as otherwise provided in subsection (d), the Administrative Agent may, at any time that there exists an Event of Default, exercise its right under the Control Agreement to control the FF&E Reserve Accounts.

(b) Monthly deposits into the FF&E Reserve Account in an amount equal to the FF&E Reserve for any month shall be made not later than 15th day of the succeeding month if the FF&E Reserve Account is held by the Administrative Agent or otherwise when required by the Management Agreement.

(c) Funds may be withdrawn from the FF&E Reserve Account (whether held by the Administrative Agent or otherwise), and the Borrower agrees that it shall cause each Subsidiary Guarantor and Operating Lessee to withdraw and use such funds, solely for the payment of expenditures for FF&E and other capital items in accordance with the applicable Approved Capital Budget.

(d) If the Manager of a Collateral Property is, or is an Affiliate of, a Major Hotel Operator, (i) the FF&E Reserve Account shall not be required to be held by the Administrative Agent, and (ii) the Management Agreement Assignment/Subordination and Control Agreement with respect to such Collateral Property may provide that the Administrative Agent shall not interfere with such Manager’s ability to access funds in such FF&E Reserve Account during the term of its Management Agreement for purposes permitted under such Management Agreement.

(e) The Administrative Agent shall have the right (to be exercised from time to time at its election) to audit the Loan Parties’ books and records in order to determine whether or not the funds withdrawn or disbursed from the FF&E Reserve Account have been spent only for the purpose for which they were withdrawn or disbursed. The Borrower shall, and shall cause each other Specified Loan Party to, cooperate with the Administrative Agent in connection with any such audit.

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Section 8.21. Tax/Insurance Reserve Accounts.

(a) There shall be maintained with respect to each Collateral Property a Tax/Insurance Reserve Account held by Administrative Agent and pledged to Administrative Agent for its benefit and the benefit of the Lenders as Collateral. The Administrative Agent shall have sole dominion and control over each such Tax/Insurance Reserve Account, and no Loan Party shall have any right to withdraw funds therefrom except in accordance with the provisions of this Section 8.21.

(b) On the first day of each month, the Borrower shall deposit or cause to be deposited in the Tax/Insurance Reserve Account for such Collateral Property (i) a sum, as reasonably determined by Administrative Agent from time to time based on the most recent tax bills available for such Collateral Property, that, together with other sums on deposit in such Tax Reserve Account or required to be deposited thereafter for such purpose, will be sufficient to pay in full each installment of personal property and real estate taxes and assessments accruing with respect to such Collateral Property at least thirty (30) days prior to the date on which the same is due and payable without penalty therefore, and (ii) subject to subsection (d) below, a sum, as reasonably determined by Administrative Agent from time to time based on the most recent bills for insurance premiums available for such Collateral Property, that, together with other sums on deposit in such Insurance Reserve Account or required to be deposited thereafter for such purpose, will be sufficient to pay in full the insurance premiums accruing with respect to such Collateral Property at least thirty (30) days prior to the date on which the same is due and payable without penalty therefor. The Administrative Agent shall have the right from time to time to audit the amounts in each Tax/Insurance Reserve Account and reconcile such amounts with the anticipated amount of the personal property and real estate taxes and assessments and (subject to subsection (d) below) insurance premiums coming due for the applicable Collateral Property and may, in its reasonable discretion, upon notice to Borrower, require additional amounts to be deposited therein and adjust the monthly deposits required therein.

(c) Provided no Event of Default exists, the Borrower may present to the Administrative Agent a request for disbursement of amounts held in the applicable Tax/Insurance Reserve Account for the payment of personal property and real estate taxes and assessments anticipated to be due and payable with respect to the applicable Collateral Property within thirty (30) days of such request and (subject to subsection (d) below) amounts held in the Tax/Insurance Reserve Account for insurance premiums anticipated to be due and payable with respect to the applicable Collateral Property within thirty (30) days of such request. Unless otherwise approved by the Administrative Agent, funds in a Tax/Insurance Reserve Account for a Collateral Property may not be used to pay any costs or expenses other than personal property and real estate taxes and assessments for such Collateral Property, and than insurance premiums for such Collateral Property. Subject to the limitations and conditions contained herein, all requests for a disbursement from a Tax/Insurance Reserve Account shall be made (in writing) by one of the persons set forth in the Notice of Responsible Officers most recently delivered to the Administrative Agent. The Administrative Agent is authorized to rely on a notice signed by one of the persons set forth on a Notice of Responsible Officers until such time as the Administrative Agent is notified (in writing) by the Borrower of a change to such Notice of Responsible Officers. Within ten (10) days of the Borrower’s delivery of its request for disbursement of amounts held in the applicable Tax/Insurance Reserve Account, the Administrative Agent shall

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disburse such amounts to the Borrower for application to the amounts then due and owing therefor.

(d) Notwithstanding the foregoing, deposits for insurance premiums shall not be required to be made into a Tax/Insurance Reserve Account for any Collateral Property managed by a Major Hotel Operator to which the applicable Loan Party is making monthly payments for insurance premiums for insurance that is carried by such Major Hotel Operator and that complies with the terms of this Agreement.

Section 8.22. Approved Ground Leases.

Without limitation of any other provision of the Loan Documents, the Borrower shall (a) cause the applicable Subsidiary Guarantor to perform its obligations under each Approved Ground Lease in accordance with the terms and provisions thereof; (b) promptly give notice to Administrative Agent of any event or occurrence that, with notice or passage of time or both, would constitute an event of default under any Approved Ground Lease; and (c) promptly furnish to Administrative Agent a copy of any notice given or received by any Loan Party pursuant to any Approved Ground Lease alleging any breach or default by either party thereunder.

ARTICLE IX. INFORMATION

For so long as this Agreement is in effect, unless the Requisite Lenders (or, if required pursuant to Section 13.7., all of the Lenders) shall otherwise consent in the manner set forth in Section 13.7., the Borrower shall furnish to the Administrative Agent for distribution to each of the Lenders:

Section 9.1. Quarterly Financial Statements.

As soon as available and in any event within forty-five (45) days after the close of each of the first, second and third fiscal quarters of the Parent Guarantor, the unaudited consolidated balance sheet of the Parent Guarantor and its Subsidiaries as at the end of such period and the related unaudited consolidated statements of operations, stockholders’ equity and cash flows of the Parent Guarantor and its Subsidiaries for such period, setting forth in each case in comparative form the figures as of the end of and for the corresponding periods of the previous fiscal year, all of which shall be certified by the chief financial officer of the Parent Guarantor, in his or her opinion, to present fairly, in accordance with GAAP (subject to Section 1.2.(a)), the consolidated financial position of the Parent Guarantor and its Subsidiaries as at the date thereof and the results of operations for such period (subject to normal year end audit adjustments).

Section 9.2. Year End Statements.

As soon as available and in any event within ninety (90) days after the end of each fiscal year of the Parent Guarantor, the audited consolidated balance sheet of the Parent Guarantor and its Subsidiaries as at the end of such fiscal year and the related audited consolidated statements of operations, stockholders’ equity and cash flows of the Parent Guarantor and its Subsidiaries for such fiscal year, setting forth in comparative form the figures as at the end of and for the previous fiscal year, all of which shall be certified by (a) the chief financial officer of the Parent

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Guarantor, in his or her opinion, to present fairly, in accordance with GAAP (subject to Section 1.2.(a)), the financial position of the Parent Guarantor and its Subsidiaries as at the date thereof and the result of operations for such period and (b) Ernst & Young LLP or any other independent certified public accountants of recognized national standing acceptable to the Requisite Lenders, whose certificate shall be unqualified and in scope and substance satisfactory to the Requisite Lenders and who shall have authorized the Parent Guarantor to deliver such financial statements and certification thereof to the Administrative Agent and the Lenders pursuant to this Agreement.

Section 9.3. Compliance Certificate.

At the time the financial statements are furnished pursuant to the immediately preceding Sections 9.1. and 9.2., a certificate substantially in the form of Exhibit I (a “Compliance Certificate”) executed on behalf of the Borrower by a senior officer of the Borrower (a) setting forth as of the end of such quarterly accounting period or fiscal year, as the case may be, the calculations required to establish whether the Borrower was in compliance with the covenants contained in Section 10.1.; and (b) stating that no Default or Event of Default exists, or, if such is not the case, specifying such Default or Event of Default and its nature, when it occurred and the steps being taken by the Borrower with respect to such event, condition or failure.

Section 9.4. Other Information.

(a) Within ten (10) days of receipt thereof, copies of all reports, if any, submitted to the Parent Guarantor or its Board of Trustees by its independent public accountants including, without limitation, any management report;

(b) Within five (5) Business Days of the filing thereof, copies of all registration statements (excluding the exhibits thereto and any registration statements on Form S-8 or its equivalent), reports on Forms 10-K, 10-Q and 8-K (or their equivalents) and all other periodic reports which any Loan Party or any other Subsidiary shall file with the Securities and Exchange Commission (or any Governmental Authority substituted therefor) or any national securities exchange;

(c) Promptly upon the mailing thereof to the shareholders of the Parent Guarantor generally, copies of all financial statements, reports and proxy statements so mailed and promptly upon the issuance thereof copies of all press releases issued by the Parent Guarantor, the Borrower, any Subsidiary or any other Loan Party;

(d) Within forty-five (45) days after the end of each calendar quarter, a DSCR Certificate certifying compliance with the Minimum DSCR Hurdle, as of the last day of such fiscal quarter.

(e) Within twenty-five (25) days after the end of each calendar quarter, an operating statement for each Collateral Property, and for all Collateral Properties on a consolidated basis, for the preceding calendar quarter (and for each month in such quarter), detailing the Gross Operating Revenues and Operating Expenses, along with the average daily rate, occupancy levels and revenue per available room for each Collateral Property, certified as true, correct and complete by a senior officer of the Borrower, together with: (A) a comparison of the results for

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such quarter (and for each month in such quarter) with (1) the projections for such quarter (and for each month in such quarter) contained in the Approved Annual Budget and (2) the actual results for the same calendar quarter (and for each month in such quarter) in the immediately preceding calendar year; (B) an operating statement for the twelve-month period ending with such quarter; (C) an operating statement showing year-to-date results for the period ending with such quarter, together with a comparison of such operating statement with (1) the projections for such year-to-date period contained in the Approved Annual Budget and (2) the actual results for the year-to-date period ending with the same calendar quarter in the immediately preceding calendar year; (D) budget reforecasts (showing year-to-date actual and remainder of year budget); and (E) a calculation of Adjusted NOI.

(f) Within twenty-five (25) days after the end of each calendar quarter, for each Collateral Property, (i) a group booking pace report and market segmentation report (if available) and (ii) the most current Smith Travel Research STAR Report available, comparing such Collateral Property to its primary competitive set.

(g) No later than thirty (30) days after the beginning of each fiscal year of the Parent Guarantor, projected balance sheets, operating statements, profit and loss projections, sources and uses of cash statement and statements of EBITDA and Funds From Operations, for the Parent Guarantor and its Subsidiaries on a consolidated basis for such fiscal year and the two succeeding fiscal years, all itemized in reasonable detail. The foregoing shall be accompanied by pro forma calculations, together with detailed assumptions, required to establish whether or not the Parent Guarantor, the Borrower, and when appropriate their consolidated Subsidiaries (as applicable), will be in compliance with the covenants contained in Sections 10.1. at the end of each fiscal quarter of the first year of such three-year period.

(h) No later than thirty (30) days after the beginning of each fiscal year of the Borrower (i) the proposed annual operating budget for each Collateral Property, which shall be subject to approval of the Administrative Agent (as so approved, with respect to each Collateral Property, the “Approved Operating Budget”), and (ii) the proposed annual FF&E and capital budget for each Collateral Property, which shall be subject to the approval of the Administrative Agent (as so approved, with respect to each Collateral Property, the “Approved Capital Budget”).

(i) Within ninety (90) days following the end of each fiscal year of the Parent Guarantor, operating statements, current operating and capital budgets (on both an individual basis and a consolidated basis) for each Hotel Property of the Parent Guarantor and its Subsidiaries and a marketing plan for each Hotel Property.

(j) If and when any member of the ERISA Group (i) gives or is required to give notice to the PBGC of any “reportable event” (as defined in Section 4043 of ERISA) with respect to any Plan which might constitute grounds for a termination of such Plan under Title IV of ERISA, or knows that the plan administrator of any Plan has given or is required to give notice of any such reportable event, a copy of the notice of such reportable event given or required to be given to the PBGC; (ii) receives notice of complete or partial withdrawal liability under Title IV of ERISA or notice that any Multiemployer Plan is in reorganization, is insolvent or has been terminated, a copy of such notice; (iii) receives notice from the PBGC under Title IV

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of ERISA of an intent to terminate, impose liability (other than for premiums under Section 4007 of ERISA) in respect of, or appoint a trustee to administer any Plan, a copy of such notice; (iv) applies for a waiver of the minimum funding standard under Section 412 of the Internal Revenue Code, a copy of such application; (v) gives notice of intent to terminate any Plan under Section 4041(c) of ERISA, a copy of such notice and other information filed with the PBGC; (vi) gives notice of withdrawal from any Plan pursuant to Section 4063 of ERISA, a copy of such notice; or (vii) fails to make any payment or contribution to any Plan or Multiemployer Plan or in respect of any Benefit Arrangement or makes any amendment to any Plan or Benefit Arrangement which has resulted or could result in the imposition of a Lien or the posting of a bond or other security, a certificate of the controller of the Parent Guarantor setting forth details as to such occurrence and action, if any, which the Parent Guarantor or applicable member of the ERISA Group is required or proposes to take;

(k) To the extent any Loan Party or any Subsidiary of any Loan Party is aware of the same, prompt notice of the commencement of any proceeding or investigation by or before any Governmental Authority and any action or proceeding in any court or other tribunal or before any arbitrator against or in any other way relating adversely to, or adversely affecting, any Loan Party or any Subsidiary of any Loan Party or any of their respective properties, assets or businesses which, if determined or resolved adversely to such Person, could reasonably be expected to have a Material Adverse Effect, and prompt notice of the receipt of notice that any United States income tax returns of any Loan Party or any Subsidiary of any Loan Party are being audited;

(l) A copy of any amendment to the articles of incorporation, bylaws, partnership agreement or other similar organizational documents of any Loan Party within five (5) Business Days after the effectiveness thereof;

(m) Prompt notice of (i) any change in the senior management of the Parent Guarantor or the Borrower and (ii) any change in the business, assets, liabilities, financial condition, results of operations or business prospects of any Loan Party or any Subsidiary of any Loan Party which has had or could have a Material Adverse Effect;

(n) Prompt notice of the occurrence of any Default or Event of Default or any event which constitutes or which with the passage of time, the giving of notice, or otherwise, would constitute a default or event of default by any Loan Party under any Material Contract to which any such Person is a party or by which any such Person or any of its respective properties may be bound;

(o) Promptly upon any Loan Party entering into any Material Contract or any Tenant Lease, a copy thereof;

(p) Prompt notice of any order, judgment or decree (i) in excess of $250,000 having been entered against any Loan Party or any Subsidiary of any Loan Party or any of their respective properties or assets or (ii) in excess of $1,000,000 having been entered against any Subsidiary that is not a Loan Party or any of its properties or assets;

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(q) Any notification of a material violation of any Applicable Law or any inquiry shall have been received by any Loan Party or any Subsidiary of any Loan Party from any Governmental Authority;

(r) Prompt notice of the acquisition, incorporation or other creation of any Subsidiary of any Loan Party, the purpose for such Subsidiary, the nature of the assets and liabilities thereof and whether such Subsidiary is a Wholly Owned Subsidiary;

(s) Promptly upon the request of the Administrative Agent, evidence of the Parent Guarantor’s calculation of the Ownership Share with respect to a Subsidiary or an Unconsolidated Affiliate, such evidence to be in form and detail satisfactory to the Administrative Agent;

(t) Promptly, upon each request, such information regarding the Borrower as a Lender may require in order to comply with the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001));

(u) Promptly, and in any event within three (3) business days after the Borrower obtains knowledge thereof, the Borrower shall provide the Administrative Agent with written notice of the occurrence of any of the following: (i) any Loan Party or any Subsidiary of any Loan Party shall receive notice that any violation of or noncompliance with any Environmental Law has or may have been committed or is threatened; (ii) any Loan Party or any Subsidiary of any Loan Party shall receive notice that any administrative or judicial complaint, order or petition has been filed or other proceeding has been initiated, or is about to be filed or initiated against any such Person alleging any violation of or noncompliance with any Environmental Law or requiring any such Person to take any action in connection with the release or threatened release of Hazardous Materials; (iii) any Loan Party or any Subsidiary of any Loan Party shall receive any notice from a Governmental Authority or private party alleging that any such Person may be liable or responsible for any costs associated with a response to, or remediation or cleanup of, a release or threatened release of Hazardous Materials or any damages caused thereby; or (iv) any Loan Party or any Subsidiary of any Loan Party shall receive notice of any other fact, circumstance or condition that could reasonably be expected to form the basis of an environmental claim, and such notice(s), whether individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect;

(v) Within forty-five (45) days after the end of each calendar quarter, Borrower shall deliver to the Administrative Agent a report in form and substance reasonably satisfactory to the Administrative Agent summarizing the status of the compliance with and performance of the obligations under each PIP for any Collateral Property, including in such report a statement of the amounts expended through the end of such quarter with respect to such PIP and amounts projected to be expended thereafter to complete the obligations under such PIP; and

(w) From time to time and promptly upon each request, such data, certificates, reports, statements, opinions of counsel, documents or further information regarding any Property or the business, assets, liabilities, financial condition, results of operations or business prospects of any Loan Party or any Subsidiary of any Loan Party as the Administrative Agent or any Lender may reasonably request.

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Section 9.5. Electronic Delivery of Certain Information.

(a) Documents required to be delivered pursuant to the Loan Documents shall be delivered by electronic communication and delivery, including, the Internet, e-mail or intranet websites to which the Administrative Agent and each Lender have access (including a commercial, third-party website such as www.Edgar.com <http://www.Edgar.com> or a website sponsored or hosted by the Administrative Agent or the Borrower) provided that (A) the foregoing shall not apply to notices to any Lender pursuant to Article II. and (B) the Lender has not notified the Administrative Agent or Borrower that it cannot or does not want to receive electronic communications. The Administrative Agent or the Borrower may, in its discretion, agree to accept notices and other communications to it hereunder by electronic delivery pursuant to procedures approved by it for all or particular notices or communications. Documents or notices delivered electronically shall be deemed to have been delivered twenty-four (24) hours after the date and time on which the Administrative Agent or the Borrower posts such documents or the documents become available on a commercial website and the Administrative Agent or Borrower notifies each Lender of said posting and provides a link thereto provided if such notice or other communication is not sent or posted during the normal business hours of the recipient, said posting date and time shall be deemed to have commenced as of 9:00 a.m. on the opening of business on the next business day for the recipient. Notwithstanding anything contained herein, in every instance the Borrower shall be required to provide paper copies of the certificate required by Section 9.3. to the Administrative Agent and shall deliver paper copies of any documents to the Administrative Agent or to any Lender that requests such paper copies until a written request to cease delivering paper copies is given by the Administrative Agent or such Lender. Except for the certificates required by Section 9.3., the Administrative Agent shall have no obligation to request the delivery of or to maintain paper copies of the documents delivered electronically, and in any event shall have no responsibility to monitor compliance by the Borrower with any such request for delivery. Each Lender shall be solely responsible for requesting delivery to it of paper copies and maintaining its paper or electronic documents.

(b) Documents required to be delivered pursuant to Article II. may be delivered electronically to a website provided for such purpose by the Administrative Agent pursuant to the procedures provided to the Borrower by the Administrative Agent.

Section 9.6. Public/Private Information.

The Borrower shall, and shall cause each other Specified Loan Party to, and by its execution hereof the Parent Guarantor agrees that it shall and shall cause each of its Subsidiaries to, cooperate, with the Administrative Agent in connection with the publication of certain materials and/or information provided by or on behalf of the Borrower or the other Loan Parties. Documents required to be delivered pursuant to the Loan Documents shall be delivered by or on behalf of the Borrower or the other Loan Parties to the Administrative Agent and the Lenders (collectively, “Information Materials”) pursuant to this Article and shall designate Information Materials (a) that are either available to the public or not material with respect to the Borrower, the other Loan Parties and their Subsidiaries or any of their respective securities for purposes of United States federal and state securities laws, as “Public Information” and (b) that are not Public Information as “Private Information”.

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Section 9.7. USA Patriot Act Notice; Compliance.

The USA Patriot Act of 2001 (Public Law 107-56) and federal regulations issued with respect thereto require all financial institutions to obtain, verify and record certain information that identifies individuals or business entities which open an “account” with such financial institution. Consequently, a Lender (for itself and/or as Administrative Agent for all Lenders hereunder) may from time-to-time request, and the Borrower shall, and shall cause each other Loan Party to, and by its execution hereof the Parent Guarantor agrees that it shall, provide to such Lender, such Loan Party’s name, address, tax identification number and/or such other identification information as shall be necessary for such Lender to comply with federal law. An “account” for this purpose may include, without limitation, a deposit account, cash management service, a transaction or asset account, a credit account, a loan or other extension of credit, and/or other financial services product.

ARTICLE X. NEGATIVE COVENANTS

For so long as this Agreement is in effect, unless the Requisite Lenders (or, if required pursuant to Section 13.7., all of the Lenders) shall otherwise consent in the manner set forth in Section 13.7., the Borrower shall, and by its execution hereof the Parent Guarantor agrees that it shall (as applicable), comply with the following covenants:

Section 10.1. Financial Covenants.

(a) Minimum Tangible Net Worth. Tangible Net Worth shall not at any time be less than (i) $263,353,000 plus (ii) 85% of the Net Proceeds of all Equity Issuances effected at any time after December 31, 2010 by the Parent Guarantor or any of its Subsidiaries.

(b) Debt-to-EBITDA Ratio. The Debt-to-EBITDA Ratio shall not exceed, during the fiscal quarters ending on the dates set forth below, the respective Debt-to-EBITDA Ratios set forth below:

Fiscal Quarter Ending	Debt-to-EBITDA Ratio
June 30, 2010 through June 30, 2011	6.5 to 1.0
September 30, 2011 through March 31, 2012	6.0 to 1.0
Each fiscal quarter thereafter	5.5 to 1.0

(c) Leverage Ratio. The Leverage Ratio shall at all times be less than or equal to 50%.

(d) Fixed Charge Coverage Ratio. The Fixed Charge Coverage Ratio shall not at any time be less than 1.60 to 1.00.

(e) Permitted Investments. At no time from and after the Effective Date shall any of the Loan Parties or any of their Subsidiaries make an Investment in or otherwise own the following items which would cause the aggregate value of such holdings of such Persons to exceed the following percentages of Gross Asset Value at any such time:

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(A) New Properties and Redevelopment Properties such that the aggregate Book Value of all such Properties exceeds 25% of Gross Asset Value;

(B) Equity Interests in Persons (other than consolidated Subsidiaries) such that the aggregate Book Value of such interests exceeds 15% of Gross Asset Value;

(C) Properties that are subject to ground leases such that the aggregate Book Value of such Properties exceeds 15% of Gross Asset Value;

(D) Indebtedness secured by Mortgages in favor of the Parent Guarantor or any of its Subsidiaries such that the aggregate Book Value of such Indebtedness exceeds 10% of Gross Asset Value;

(E) Redevelopment Properties having a value (based on the total budgeted construction costs for restoration or redevelopment) that exceeds in the aggregate 5% of Gross Asset Value; or

(F) Unimproved land such that the aggregate Book Value of all such unimproved land exceeds 2.5% of Gross Asset Value.

In addition to the foregoing limitations, the aggregate Book Value (or, in the case of item (E), a value (based on the total budgeted construction cost)) of items (B), (C), (D), (E) and (F) above from after the Effective Date shall not exceed 25% of Gross Asset Value.

(f) Dividends and Other Restricted Payments. If a Default or an Event of Default under Section 11.1.(a), 11.1.(b), 11.1.(e) or 11.1.(f) shall exist or, if as a result of the occurrence of any other Event of Default any of the Obligations have been accelerated pursuant to Section 11.2.(a), neither Borrower nor any Specified Loan Party nor any of their respective Subsidiaries, and by its execution hereof the Parent Guarantor agrees that neither it nor any of its Subsidiaries (other than, in the case of any of the foregoing any Wholly Owned Subsidiaries) shall directly or indirectly declare or make, or incur any liability to make, any Restricted Payments. In all other events, the Parent Guarantor by its execution hereof agrees that it shall not declare or make, or incur any liability to make, any Restricted Payments other than cash distributions to its shareholders during any period of four consecutive fiscal quarters in an amount not to exceed the greater of (i) 90% of Funds From Operations for such four quarter period and (ii) cash distributions by the Parent Guarantor to its shareholders in the minimum amount necessary to maintain compliance with Section 8.12.

(g) Minimum Debt Service Coverage. The Borrower shall not at any time permit the Debt Service Coverage Ratio to be less than the Minimum DSCR Hurdle.

Section 10.2. Negative Pledge.

The Borrower shall not, and shall not permit any other Specified Loan Party or any of its or their respective Subsidiaries to, and by its execution hereof the Parent Guarantor agrees that it shall not and shall not permit any of its Subsidiaries to, (a) create, assume, incur, permit or suffer to exist any Lien on (i) any Collateral, (ii) any direct or indirect ownership interest in any

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Subsidiary Guarantor or Operating Lessee, except for Permitted Liens or (b) permit any Collateral or any direct or indirect ownership interest of the Borrower or any Person owning a Collateral Property to be subject to a Negative Pledge. By its execution hereof, the Parent Guarantor agrees that it shall not create, assume, incur, permit or suffer to exist any Lien on the Parent Guarantor’s ownership interests in the Borrower or cause or permit its ownership interests in the Borrower to be subject to a Negative Pledge.

Section 10.3. Restrictions on Intercompany Transfers.

The Borrower shall not, and shall not permit any other Specified Loan Party or any of its or their respective Subsidiaries to, and by its execution hereof the Parent Guarantor agrees that it shall not and shall not permit any of its Subsidiaries to, create or otherwise cause or suffer to exist or become effective any consensual encumbrance or restriction of any kind on the ability of any Loan Party or any Subsidiary of any Loan Party to: (a) pay dividends or make any other distribution on any Loan Party’s or Subsidiary’s capital stock or other equity interests owned by the Borrower or any other Subsidiary; (b) pay any Indebtedness owed to the Parent Guarantor, the Borrower or any other Subsidiary; (c) make loans or advances to the Parent Guarantor, the Borrower or any other Subsidiary; or (d) transfer any of its property or assets to the Borrower or any other Subsidiary; other than (i) with respect to clauses (a) – (d) those encumbrances or restrictions contained in any Loan Document, (ii) with respect to clauses (a) –(d), customary encumbrances or restrictions on any Subsidiary (other than a Loan Party) in instruments evidencing or securing Indebtedness of such Subsidiary otherwise permitted under this Agreement or (iii) with respect to clause (d), customary provisions restricting assignment of any agreement entered into by the Borrower, any other Loan Party or any Subsidiary of any Loan Party in the ordinary course of business.

Section 10.4. Merger, Consolidation, Sales of Assets and Other Arrangements.

Except as otherwise permitted below, the Borrower shall not, and shall not permit any other Specified Loan Party or any of its or their respective Subsidiaries to, and by its execution hereof the Parent Guarantor agrees that it shall not and shall not permit any of its Subsidiaries to, (a) enter into any transaction of merger or consolidation; (b) liquidate, windup or dissolve itself (or suffer any liquidation or dissolution); (c) convey, sell, lease, sublease, transfer or otherwise dispose of, in one transaction or a series of transactions, all or any substantial part of its business or assets, or the capital stock of or other Equity Interests in any of its Subsidiaries, whether now owned or hereafter acquired; or (d) acquire a Substantial Amount of the assets of, or make an Investment of a Substantial Amount in, any other Person; provided, however, that:

(i) any Subsidiary may merge with a Loan Party (other than an Operating Lessee) so long as such Loan Party is the survivor;

(ii) any Subsidiary may sell, transfer or dispose of its assets to a Loan Party (other than an Operating Lessee);

(iii) the Parent Guarantor, the Borrower or any Subsidiary that is not a Loan Party may, directly or indirectly, (A) acquire (whether by purchase, acquisition of Equity Interests of a Person, or as a result of a merger or consolidation) a Substantial Amount of

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the assets of, or make an Investment of a Substantial Amount in, any other Person and (B) sell, lease or otherwise transfer, whether by one or a series of transactions, a Substantial Amount of assets (including capital stock or other securities of Subsidiaries) to any other Person, so long as, in each case, (1) the Borrower shall have given the Administrative Agent and the Lenders at least thirty (30) days prior written notice of such consolidation, merger, acquisition, Investment, sale, lease or other transfer; (2) immediately prior thereto, and immediately thereafter and after giving effect thereto, no Default or Event of Default is or would be in existence, including, without limitation, a Default or Event of Default resulting from a breach of Section 10.1.; (3) in the case of a consolidation or merger to which the Parent Guarantor or the Borrower is a party, the Parent Guarantor or the Borrower shall be the survivor thereof and (4) at the time the Borrower gives notice pursuant to clause (1) of this subsection, the Borrower shall have delivered to the Administrative Agent for distribution to each of the Lenders a Compliance Certificate, calculated on a pro forma basis, evidencing the continued compliance by the Loan Parties with the terms and conditions of this Agreement and the other Loan Documents, including without limitation, the financial covenants contained in Section 10.1., after giving effect to such consolidation, merger, acquisition, Investment, sale, lease or other transfer; and

(iv) the Loan Parties and their Subsidiaries may (except as otherwise provided in the Loan Documents with respect to Collateral Properties) lease and sublease their respective assets, as lessor or sublessor (as the case may be), in the ordinary course of their business.

Further, the Borrower shall not, and shall not permit any other Specified Loan Party or any of its or their respective Subsidiaries, to, and by its execution hereof the Parent Guarantor agrees that it shall not and shall not permit any of its Subsidiaries to, enter into any sale leaseback transactions or other transaction by which such Person shall remain liable as lessee (or the economic equivalent thereof) of any real or personal property that it has sold or leased to another Person.

Section 10.5. Plans.

The Borrower shall not, and shall not permit any other Specified Loan Party or any of its or their respective Subsidiaries to, and by its execution hereof the Parent Guarantor agrees that it shall not and shall not permit any of its Subsidiaries to, permit any of its respective assets to become or be deemed to be “plan assets” within the meaning of ERISA and the regulations promulgated thereunder for purposes of ERISA and the Internal Revenue Code.

Section 10.6. Fiscal Year.

The Borrower shall not, and shall not permit any other Specified Loan Party or any of its or their respective Subsidiaries to, and by its execution hereof the Parent Guarantor agrees that it shall not and shall not permit any of its Subsidiaries to, change its fiscal year from that in effect as of the Agreement Date.

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Section 10.7. Modifications of Organizational Documents.

The Borrower shall not, and shall not permit any other Specified Loan Party to, and by its execution hereof the Parent Guarantor agrees that it shall not, amend, supplement, restate or otherwise modify in any material respect its charter, articles of incorporation or by-laws, operating agreement, partnership agreement or other organizational document without the prior written consent of the Administrative Agent (which shall not be unreasonably withheld) unless such amendment, supplement, restatement or other modification is (a) required under or as a result of the Internal Revenue Code or other Applicable Law or (b) required to maintain the Parent Guarantor’s status as a REIT.

Section 10.8. Material Contracts.

(a) The Borrower shall not permit any other Specified Loan Party to, and by its execution hereof the Parent Guarantor agrees that it shall not, do any of the following without the Administrative Agent’s prior written consent: (i) enter into, surrender or terminate any Material Contract, including any new or replacement Franchise Agreement or Management Agreement; (ii) be or become a party to a Management Agreement that provides for base management fees in excess of 3.5% (or, in the case of suburban select service Hotel Properties, 4.0%); (iii) reduce or extend the term of, increase the charges or fees payable by such Loan Party under, decrease the charges or fees payable to such Loan Party under, or otherwise modify or amend in any material respect, any Material Contract (other than an Approved Ground Lease, with respect to which the provisions of subsection (b) shall apply); or (iv) terminate, or modify or amend in any material respect, any Operating Lease of a Collateral Property.

(b) The Borrower shall not cause or permit (i) any amendment or modification of any Approved Ground Lease without the prior written consent of Administrative Agent (which shall not be unreasonably withheld, construed or delayed) or (ii) the termination of any Approved Ground Lease.

Section 10.9. Indebtedness.

(a) The Borrower (i) shall not, and shall not permit any other Specified Loan Party to, and by its execution hereof the Parent Guarantor agrees that it shall not, assume, create, incur or suffer to exist any Indebtedness to the Parent Guarantor or any of its Subsidiaries unless such Indebtedness is fully subordinated to the Obligations on terms satisfactory to the Administrative Agent and (ii) shall not permit any Subsidiary Guarantor or Operating Lessee to create, assume, incur or suffer to exist any Indebtedness other than (A) as permitted in clause (i), (B) the Obligations, (C) trade payables and equipment leases that are normal and customary both as to their terms and as to their amounts and (D) Guaranties of Franchise Agreements entered into in the ordinary course of business.

(b) The Borrower shall not, and shall not permit any other Specified Loan Party or any of its or their respective Subsidiaries to, and by its execution hereof the Parent Guarantor agrees that it shall not and shall not permit any of its Subsidiaries to, prepay any principal of, or accrued interest on, any Subordinated Debt or otherwise make any voluntary or optional payment with respect to any principal of, or accrued interest on, any Subordinated Debt prior to the

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originally scheduled maturity date thereof or otherwise redeem or acquire for value any Subordinated Debt. Further, the Borrower shall not, and shall not permit any other Specified Loan Party or any of its or their respective Subsidiaries to, and by its execution hereof the Parent Guarantor agrees that it shall not and shall not permit any of its Subsidiaries to, amend or modify, or permit the amendment or modification of, any agreement or instrument evidencing any Subordinated Debt where such amendment or modification provides for the following or which has any of the following effects:

(i) increases the rate of interest accruing on such Subordinated Debt;

(ii) increases the amount of any scheduled installment of principal or interest, or shortens the date on which any such installment or principal or interest becomes due;

(iii) shortens the final maturity date of such Subordinated Debt;

(iv) increases the principal amount of such Subordinated Debt;

(v) amends any financial or other covenant contained in any document or instrument evidencing any Subordinated Debt in a manner which is more onerous to the Borrower, such Loan Party or such Subsidiary or which requires the Borrower, such Loan Party or such Subsidiary to improve its financial performance;

(vi) provides for the payment of additional fees or the increase in existing fees; and/or

(vii) otherwise could reasonably be expected to be adverse to the interests of the Administrative Agent or the Lenders.

Section 10.10. Transactions with Affiliates.

The Borrower shall not permit to exist or enter into, and will not permit any other Specified Loan Party or any of its or their respective Subsidiaries to, and by its execution hereof the Parent Guarantor agrees that it shall not and shall not permit any of its Subsidiaries to, permit to exist or enter into, any transaction (including the purchase, sale, lease or exchange of any property or the rendering of any service) with any Affiliate of any Loan Party or any Subsidiary, except (a) as set forth on Schedule 7.1.(s) or (b) transactions in the ordinary course of and pursuant to the reasonable requirements of the business of the Borrower or such Loan Party or Subsidiary and upon fair and reasonable terms which are no less favorable to the Borrower or such Loan Party or Subsidiary than would be obtained in a comparable arm’s length transaction with a Person that is not an Affiliate. Notwithstanding the forgoing, no payments may be made with respect to any items set forth on such Schedule 7.1.(s) if a Default or Event of Default exists or would result therefrom.

Section 10.11. Environmental Matters.

The Borrower shall not, and shall not permit any other Specified Loan Party or any other Person to, use, generate, discharge, emit, manufacture, handle, process, store, release, transport, remove, dispose of or clean up any Hazardous Materials on, under or from the Collateral

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Properties in material violation of any Environmental Law or in a manner that could reasonably be expected to lead to any material environmental claim or pose a material risk to human health, safety or the environment. Nothing in this Section shall impose any obligation or liability whatsoever on the Administrative Agent or any Lender.

Section 10.12. Derivatives Contracts.

The Borrower shall not, and shall not permit any other Loan Party or any Subsidiary of any Loan Party to enter into or become obligated in respect of, Derivatives Contracts, other than Derivatives Contracts entered into by the Borrower, or such Loan Party or Subsidiary in the ordinary course of business and which establish an effective hedge in respect of liabilities, commitments or assets held or reasonably anticipated by the Borrower or such Loan Party or Subsidiary.

ARTICLE XI. DEFAULT

Section 11.1. Events of Default.

Each of the following shall constitute an Event of Default, whatever the reason for such event and whether it shall be voluntary or involuntary or be effected by operation of Applicable Law or pursuant to any judgment or order of any Governmental Authority:

(a) Default in Payment. The Borrower shall fail to pay when due under this Agreement or any other Loan Document (whether upon demand, at maturity, by reason of acceleration or otherwise) the principal of, or any interest on, any of the Loans, or shall fail to pay any of the other payment Obligations owing by the Borrower under this Agreement, any other Loan Document or the Fee Letter, or any other Loan Party shall fail to pay when due any payment obligation owing by such Loan Party under any Loan Document to which it is a party.

(b) Default in Performance.

(i) The Borrower or any Loan Party shall fail to perform or observe any term, covenant, condition or agreement on its part to be performed or observed and contained in Article IX. and such failure shall continue for a period of five (5) days; or

(ii) The Borrower or any Loan Party shall fail to perform or observe any term, covenant, condition or agreement on its part to be performed or observed and contained in Article X.; or

(iii) The Borrower or any Loan Party shall fail to perform or observe any term, covenant, condition or agreement contained in this Agreement or any other Loan Document to which it is a party and not otherwise mentioned in this Section and such failure shall continue for a period of thirty (30) days after the earlier of (x) the date upon which any Loan Party obtains knowledge of such failure or (y) the date upon which the Borrower has received written notice of such failure from the Administrative Agent; provided, however, that: (i) if such default is not susceptible of cure within such thirty (30)-day period, such thirty (30)-day period shall be extended to a ninety (90)-day period, but only if (A) such Loan Party shall commence such cure within such thirty (30)-day

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period and shall thereafter prosecute such cure to completion, diligently and without delay, and (B) no other Default or Event of Default shall have occurred; and (ii) the grace period provided in this section shall in no event apply to any default relating to any other Default for which this Agreement or the applicable Loan Document specifically provides that no period of grace shall be applicable.

(c) Misrepresentations. Any written statement, representation or warranty made or deemed made by or on behalf of the Borrower or any other Loan Party under this Agreement or under any other Loan Document, or any amendment hereto or thereto, or in any other writing or statement at any time furnished by, or at the direction of, the Borrower or any other Loan Party to the Administrative Agent or any Lender, shall at any time prove to have been incorrect or misleading in any material respect when furnished or made or deemed made.

(d) Indebtedness Cross-Default.

(i) Any Loan Party or any Subsidiary of any Loan Party shall fail to make any payment when due and payable in respect of any Indebtedness (other than the Loans) having an aggregate outstanding principal amount (or, in the case of any Derivatives Contract, having, without regard to the effect of any close-out netting provision, a Derivatives Termination Value) equal to or exceeding $1,000,000 or, after the Parent Guarantor and its Subsidiaries have acquired Properties having aggregate purchase prices of $300,000,000 or more, $5,000,000 (as applicable, “Material Indebtedness”); or

(ii)(x) The maturity of any Material Indebtedness shall have been accelerated in accordance with the provisions of any indenture, contract or instrument evidencing, providing for the creation of or otherwise concerning such Material Indebtedness or (y) any Material Indebtedness shall have been required to be prepaid or repurchased prior to the stated maturity thereof; or

(iii) Any other event shall have occurred and be continuing which, with or without the passage of time, the giving of notice, or otherwise, would permit any holder or holders of any Material Indebtedness, any trustee or agent acting on behalf of such holder or holders or any other Person, to accelerate the maturity of any Material Indebtedness or require any Material Indebtedness to be prepaid or repurchased prior to its stated maturity.

(e) Voluntary Bankruptcy Proceeding. Any Loan Party or any Subsidiary of any Loan Party shall: (i) commence a voluntary case under the Bankruptcy Code or other federal bankruptcy laws (as now or hereafter in effect); (ii) file a petition seeking to take advantage of any other Applicable Laws, domestic or foreign, relating to bankruptcy, insolvency, reorganization, winding-up, or composition or adjustment of debts; (iii) consent to, or fail to contest in a timely and appropriate manner, any petition filed against it in an involuntary case under such bankruptcy laws or other Applicable Laws or consent to any proceeding or action described in the immediately following Section 11.1.(f); (iv) apply for or consent to, or fail to contest in a timely and appropriate manner, the appointment of, or the taking of possession by, a receiver, custodian, trustee, or liquidator of itself or of a substantial part of its property, domestic or foreign; (v) admit in writing its inability to pay its debts as they become due; (vi) make a

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general assignment for the benefit of creditors; (vii) make a conveyance fraudulent as to creditors under any Applicable Law; or (viii) take any corporate, partnership or other organizational action for the purpose of effecting any of the foregoing.

(f) Involuntary Bankruptcy Proceeding. A case or other proceeding shall be commenced against any Loan Party or any Subsidiary of any Loan Party in any court of competent jurisdiction seeking: (i) relief under the Bankruptcy Code or other federal bankruptcy laws (as now or hereafter in effect) or under any other Applicable Laws, domestic or foreign, relating to bankruptcy, insolvency, reorganization, winding up, or composition or adjustment of debts; or (ii) the appointment of a trustee, receiver, custodian, liquidator or the like of such Person, or of all or any substantial part of the assets, domestic or foreign, of such Person, and in the case of either clause (i) or (ii) such case or proceeding shall continue undismissed or unstayed for a period of sixty (60) consecutive days, or an order granting the relief requested in such case or proceeding (including, but not limited to, an order for relief under such Bankruptcy Code or such other federal bankruptcy laws) shall be entered.

(g) Revocation of Loan Documents. Any Loan Party shall (or shall attempt to) disavow, revoke or terminate any Loan Document to which it is a party or the Fee Letter or shall otherwise challenge or contest in any action, suit or proceeding in any court or before any Governmental Authority the validity or enforceability of any Loan Document or the Fee Letter.

(h) Judgment. A judgment or order for the payment of money shall be entered against any Loan Party or any Subsidiary of any Loan Party by any court or other tribunal and (i) such judgment or order shall continue for a period of twenty (20) days without being paid, stayed or dismissed through appropriate appellate proceedings and (ii) either (A) the amount for which insurance has not been acknowledged in writing by the applicable insurance carrier (or the amount as to which the insurer has denied liability) exceeds, individually or together with all other such judgments or orders entered against such Persons, $1,000,000 or (B) such judgment or order could reasonably be expected to have a Material Adverse Effect.

(i) Attachment. A warrant, writ of attachment, execution or similar process shall be issued against any property of any Loan Party or any Subsidiary of any Loan Party, which exceeds, individually or together with all other such warrants, writs, executions and processes, $1,000,000 in amount and such warrant, writ, execution or process shall not be paid, discharged, vacated, stayed or bonded for a period of twenty (20) days.

(j) ERISA. Any member of the ERISA Group shall fail to pay when due an amount or amounts aggregating in excess of $5,000,000 which it shall have become liable to pay under Title IV of ERISA; or notice of intent to terminate a Material Plan shall be filed under Title IV of ERISA by any member of the ERISA Group, any plan administrator or any combination of the foregoing; or the PBGC shall institute proceedings under Title IV of ERISA to terminate, to impose liability (other than for premiums under Section 4007 of ERISA) in respect of, or to cause a trustee to be appointed to administer any Material Plan; or a condition shall exist by reason of which the PBGC would be entitled to obtain a decree adjudicating that any Material Plan must be terminated; or there shall occur a complete or partial withdrawal from, or a default, within the meaning of Section 4219(c)(5) of ERISA, with respect to, one or more Multiemployer

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Plans which could cause one or more members of the ERISA Group to incur withdrawal liability or a current payment obligation in excess of $5,000,000.

(k) Loan Documents. An Event of Default (as defined therein) shall occur under any of the other Loan Documents;

(l) Change of Control/Change in Management.

(i) Any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), is or becomes the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that a Person will be deemed to have “beneficial ownership” of all securities that such Person has the right to acquire, whether such right is exercisable immediately or only after the passage of time), directly or indirectly, of more than 19.9% of the total voting power of the then outstanding voting stock of the Parent Guarantor;

(ii) During any period of twelve (12) consecutive months ending after the Agreement Date, individuals who at the beginning of any such 12-month period constituted the Board of Trustees of the Parent Guarantor (together with any new trustees whose election by such Board or whose nomination for election by the shareholders of the Parent Guarantor was approved by a vote of a majority of the trustees then still in office who were either directors at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority of the Board of Trustees of the Parent Guarantor then in office; or

(iii) The Parent Guarantor shall cease to be the sole general partner of the Borrower or shall cease to own at least 80.1% of the partnership interests in the Borrower; or

(iv) Any Subsidiary Guarantor or Operating Lessee shall cease to be a Wholly Owned Subsidiary of the Borrower.

(m) Damage; Strike; Casualty. Any material damage to, or loss, theft or destruction of, any Collateral, whether or not insured, any strike, lockout, labor dispute, embargo, condemnation, act of God or public enemy, or other casualty which causes, for more than thirty (30) consecutive days beyond the coverage period of any applicable business interruption insurance, the cessation or substantial curtailment of revenue producing activities of the Borrower or any other Loan Party.

(n) Security Documents. Any provision of any Security Documents shall for any reason cease to be valid and binding on, enforceable against, any Loan Party, or any Lien created under any Security Document ceases to be a valid and perfected first priority Lien in any of the Collateral purported to be covered thereby.

Section 11.2. Remedies Upon Event of Default.

Upon the occurrence of an Event of Default the following provisions shall apply:

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(a) Acceleration; Termination of Facilities.

(i) Automatic. Upon the occurrence of an Event of Default specified in Sections 11.1.(e) or 11.1.(f), (1)(A) the principal of, and all accrued interest on, the Loans and the Notes at the time outstanding, and (B) all of the other Obligations of the Borrower, including, but not limited to, the other amounts owed to the Lenders and the Administrative Agent under this Agreement, the Notes or any of the other Loan Documents shall become immediately and automatically due and payable by the Borrower without presentment, demand, protest, or other notice of any kind, all of which are expressly waived by the Borrower, and (2) the Commitments and the obligation of the Lenders to make Loans hereunder shall all immediately and automatically terminate.

(ii) Optional. If any other Event of Default shall exist, the Administrative Agent may, and at the direction of the Requisite Lenders shall: (1) declare (A) the principal of, and accrued interest on, the Loans and the Notes at the time outstanding and (B) all of the other Obligations, including, but not limited to, the other amounts owed to the Lenders and the Administrative Agent under this Agreement, the Notes or any of the other Loan Documents to be forthwith due and payable, whereupon the same shall immediately become due and payable without presentment, demand, protest or other notice of any kind, all of which are expressly waived by the Borrower, and (2) terminate the Commitments and the obligation of the Lenders to make Loans hereunder.

(b) Loan Documents. The Requisite Lenders may direct the Administrative Agent to, and the Administrative Agent if so directed shall, exercise any and all of its rights under any and all of the other Loan Documents.

(c) Applicable Law. The Requisite Lenders may direct the Administrative Agent to, and the Administrative Agent if so directed shall, exercise all other rights and remedies it may have under any Applicable Law.

(d) Appointment of Receiver. To the extent permitted by Applicable Law, the Administrative Agent and the Lenders shall be entitled to the appointment of a receiver for the assets and properties of the Borrower and its Subsidiaries, without notice of any kind whatsoever and without regard to the adequacy of any security for the Obligations or the solvency of any party bound for its payment, to take possession of all or any portion of the Collateral, the property and/or the business operations of the Borrower and its Subsidiaries and to exercise such power as the court shall confer upon such receiver.

Section 11.3. Reserved.

Section 11.4. Marshaling; Payments Set Aside.

None of the Administrative Agent or any Lender shall be under any obligation to marshal any assets in favor of any Loan Party or any other party or against or in payment of any or all of the Obligations. To the extent that any Loan Party makes a payment or payments to the Administrative Agent and/or any Lender, or the Administrative Agent and/or any Lender enforce their security interests or exercise their rights of setoff, and such payment or payments or the proceeds of such enforcement or setoff or any part thereof are subsequently invalidated, declared

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to be fraudulent or preferential, set aside and/or required to be repaid to a trustee, receiver or any other party under any bankruptcy law, state or federal law, common law or equitable cause, then to the extent of such recovery, the Obligations, or part thereof originally intended to be satisfied, and all Liens, rights and remedies therefore, shall be revived and continued in full force and effect as if such payment had not been made or such enforcement or setoff had not occurred.

Section 11.5. Allocation of Proceeds.

If an Event of Default exists and maturity of any of the Obligations has been accelerated or the Maturity Date has occurred, all payments received by the Administrative Agent under any of the Loan Documents, in respect of any principal of or interest on the Obligations or any other amounts payable by the Borrower hereunder or thereunder, shall be applied in the following order and priority:

(a) amounts due to the Administrative Agent, and the Lenders in respect of expenses due under Section 13.2. until paid in full, and then Fees;

(b) amounts due to the Administrative Agent and the Lenders in respect of Protective Advances;

(c) payments of interest on the Loans, to be applied for the ratable benefit of the Lenders, in such order as the Lenders may determine in their sole discretion;

(d) payments of principal of the Loans, to be applied for the ratable benefit of the Lenders, in such order as the Lenders may determine in their sole discretion;

(e) amounts due to the Administrative Agent and the Lenders pursuant to Sections 12.8. and 13.10.;

(f) payments of all other amounts due under any of the Loan Documents, if any, to be applied for the ratable benefit of the Lenders; and

(g) any amount remaining after application as provided above, shall be paid to the Borrower or whomever else may be legally entitled thereto.

Section 11.6. Intentionally Omitted.

Section 11.7. Rescission of Acceleration by Requisite Lenders.

If at any time after acceleration of the maturity of the Loans and the other Obligations, the Borrower shall pay all arrears of interest and all payments on account of principal of the Obligations which shall have become due otherwise than by acceleration (with interest on principal and, to the extent permitted by Applicable Law, on overdue interest, at the rates specified in this Agreement) and all Events of Default and Defaults (other than nonpayment of principal of and accrued interest on the Obligations due and payable solely by virtue of acceleration) shall become remedied or waived to the satisfaction of the Requisite Lenders (or, if the matter that resulted in such Event of Default may be waived only by all of Lenders, then waived to the satisfaction of all of the Lenders), then by written notice to the Borrower, the

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Requisite Lenders may elect, in the sole discretion of such Requisite Lenders, to rescind and annul the acceleration and its consequences. The provisions of the preceding sentence are intended merely to bind all of the Lenders to a decision which may be made at the election of the Requisite Lenders, and are not intended to benefit the Borrower and do not give the Borrower the right to require the Lenders to rescind or annul any acceleration hereunder, even if the conditions set forth herein are satisfied.

Section 11.8. Performance by Administrative Agent.

If the Borrower or any other Loan Party shall fail to perform any covenant, duty or agreement contained in any of the Loan Documents, the Administrative Agent may perform or attempt to perform such covenant, duty or agreement on behalf of the Borrower or such Loan Party after the expiration of any cure or grace periods set forth herein. In such event, the Borrower shall, at the request of the Administrative Agent, promptly pay any amount reasonably expended by the Administrative Agent in such performance or attempted performance to the Administrative Agent, together with interest thereon at the applicable Post-Default Rate from the date of such expenditure until paid. Notwithstanding the foregoing, neither the Administrative Agent nor any Lender shall have any liability or responsibility whatsoever for the performance of any obligation of the Borrower or such Loan Party under this Agreement or any other Loan Document.

Section 11.9. Rights Cumulative.

The rights and remedies of the Administrative Agent and the Lenders under this Agreement, each of the other Loan Documents and the Fee Letter shall be cumulative and not exclusive of any rights or remedies which any of them may otherwise have under Applicable Law. In exercising their respective rights and remedies the Administrative Agent and the Lenders may be selective and no failure or delay by the Administrative Agent or any of the Lenders in exercising any right shall operate as a waiver of it, nor shall any single or partial exercise of any power or right preclude its other or further exercise or the exercise of any other power or right.

ARTICLE XII. THE ADMINISTRATIVE AGENT

Section 12.1. Appointment and Authorization.

Each Lender hereby irrevocably appoints and authorizes the Administrative Agent to take such action as contractual representative on such Lender’s behalf and to exercise such powers under this Agreement and the other Loan Documents as are specifically delegated to the Administrative Agent by the terms hereof and thereof, together with such powers as are reasonably incidental thereto. Not in limitation of the foregoing, each Lender authorizes and directs the Administrative Agent to enter into the Loan Documents for the benefit of the Lenders. Each Lender hereby agrees that, except as otherwise set forth herein, any action taken by the Requisite Lenders in accordance with the provisions of this Agreement or the Loan Documents, and the exercise by the Requisite Lenders of the powers set forth herein or therein, together with such other powers as are reasonably incidental thereto, shall be authorized and binding upon all of the Lenders. Nothing herein shall be construed to deem the Administrative Agent a trustee or

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fiduciary for any Lender or to impose on the Administrative Agent duties or obligations other than those expressly provided for herein. Without limiting the generality of the foregoing, the use of the terms “Agent”, “Administrative Agent”, “agent” and similar terms in the Loan Documents with reference to the Administrative Agent is not intended to connote any fiduciary or other implied (or express) obligations arising under agency doctrine of any Applicable Law. Instead, use of such terms is merely a matter of market custom, and is intended to create or reflect only an administrative relationship between independent contracting parties. The Administrative Agent shall deliver to each Lender, promptly upon receipt thereof by the Administrative Agent, copies of each of the financial statements, certificates, notices and other documents delivered to the Administrative Agent pursuant to Article IX. that the Borrower is not otherwise required to deliver directly to the Lenders. The Administrative Agent will furnish to any Lender, upon the request of such Lender, a copy (or, where appropriate, an original) of any document, instrument, agreement, certificate or notice furnished to the Administrative Agent by the Borrower, any Loan Party or any other Affiliate of the Borrower, pursuant to this Agreement or any other Loan Document not already delivered to such Lender pursuant to the terms of this Agreement or any such other Loan Document. As to any matters not expressly provided for by the Loan Documents (including, without limitation, enforcement or collection of any of the Obligations), the Administrative Agent shall not be required to exercise any discretion or take any action, but shall be required to act or to refrain from acting (and shall be fully protected in so acting or refraining from acting) upon the instructions of the Requisite Lenders (or the Super-Majority Lenders or all of the Lenders if explicitly required under any other provision of this Agreement), and such instructions shall be binding upon all Lenders and all holders of any of the Obligations; provided, however, that, notwithstanding anything in this Agreement to the contrary, the Administrative Agent shall not be required to take any action which exposes the Administrative Agent to personal liability or which is contrary to this Agreement or any other Loan Document or Applicable Law. Not in limitation of the foregoing, the Administrative Agent may exercise any right or remedy it or the Lenders may have under any Loan Document upon the occurrence of a Default or an Event of Default unless the Requisite Lenders have directed the Administrative Agent otherwise. Without limiting the foregoing, no Lender shall have any right of action whatsoever against the Administrative Agent as a result of the Administrative Agent acting or refraining from acting under this Agreement or any of the other Loan Documents in accordance with the instructions of the Requisite Lenders (or the Super-Majority Lenders or all of the Lenders if explicitly required under any other provision of this Agreement).

Section 12.2. Wells Fargo as Lender.

Wells Fargo, as a Lender, shall have the same rights and powers under this Agreement and any other Loan Document, as any other Lender and may exercise the same as though it were not the Administrative Agent; and the term “Lender” or “Lenders” shall, unless otherwise expressly indicated, include Wells Fargo in each case in its individual capacity. Wells Fargo and its Affiliates may each accept deposits from, maintain deposits or credit balances for, invest in, lend money to, act as trustee under indentures of, serve as financial advisor to, and generally engage in any kind of business with the Borrower, any other Loan Party or any other Affiliate thereof as if it were any other bank and without any duty to account therefore to the other Lenders. Further, the Administrative Agent and any Affiliate may accept fees and other consideration from the Borrower for services in connection with this Agreement or otherwise without having to account for the same to the other Lenders. The Lenders acknowledge that,

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pursuant to such activities, Wells Fargo or its affiliates may receive information regarding the Borrower, other Loan Parties, other Subsidiaries and other Affiliates (including information that may be subject to confidentiality obligations in favor of such Person) and acknowledge that the Administrative Agent shall be under no obligation to provide such information to them.

Section 12.3. Collateral Matters; Protective Advances.

(A) Each Lender hereby authorizes the Administrative Agent, without the necessity of any notice to or further consent from any Lender, from time to time prior to an Event of Default, to take any action with respect to any Collateral or Loan Documents which may be necessary to perfect and maintain perfected the Liens upon the Collateral granted pursuant to any of the Loan Documents.

(B) The Lenders hereby authorize the Administrative Agent, at its option and in its discretion, to release any Lien granted to or held by the Administrative Agent upon any Collateral (i) upon termination of the Commitments and indefeasible payment and satisfaction in full of all of the Obligations; (ii) as expressly permitted by, but only in accordance with, the terms of the applicable Loan Document; and (iii) if approved, authorized or ratified in writing by the Requisite Lenders (or such greater number of Lenders as this Agreement or any other Loan Document may expressly provide). Upon request by the Administrative Agent at any time, the Lenders will confirm in writing the Administrative Agent’s authority to release particular types or items of Collateral pursuant to this Section.

(C) The Administrative Agent shall (and is hereby irrevocably authorized by the Lenders to) execute such documents as may be necessary to evidence the release of the Liens granted to the Administrative Agent for its benefit and the benefit of the Lenders herein or pursuant hereto upon any Collateral Property for which with the Borrower satisfies the conditions for a Collateral Property Release; provided, however, that (i) the Administrative Agent shall not be required to execute any such document on terms which, in the Administrative Agent’s opinion, would expose the Administrative Agent or any Lender to liability or create any obligation or entail any consequence other than the release of such Liens without recourse or warranty and (ii) such release shall not in any manner discharge, affect or impair the Obligations or any Liens upon (or obligations of the Borrower or any other Loan Party in respect of) all interests retained by the Borrower or any other Loan Party, all of which shall continue to constitute part of the Collateral. In the event of any sale or transfer of Collateral, or any foreclosure with respect to any of the collateral, the Administrative Agent shall be authorized to deduct all of the expenses reasonably incurred by the Administrative Agent from the proceeds of any such sale, transfer or foreclosure.

(D) The Administrative Agent shall have no obligation whatsoever to the Lenders or to any other Person to assure that the Collateral exists or is owned by the Borrower, any other Loan Party or any other Subsidiary or is cared for, protected or insured or that the Liens granted to the Administrative Agent herein or pursuant hereto have been properly or sufficiently or lawfully created, perfected, protected or enforced or are entitled to any particular priority, or to exercise or to continue exercising at all or in any manner or under any duty of care, disclosure or fidelity any of the rights, authorities and powers granted or available to the Administrative Agent in this Section or in any of the Loan Documents, it being understood and agreed that in respect of

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the Collateral, or any act, omission or event related thereto, the Administrative Agent may act in any manner it may deem appropriate, in its sole discretion, and that the Administrative Agent shall have no duty or liability whatsoever to the Lenders, except to the extent resulting from its gross negligence or willful misconduct.

(E) The Administrative Agent may make, and shall be reimbursed by the Lenders (in accordance with their Pro Rata Shares) to the extent not reimbursed by the Borrower for, Protective Advances during any one calendar year with respect to each Collateral Property up to the sum of (i) amounts expended to pay real estate taxes, assessments and governmental charges or levies imposed upon such Collateral Property; (ii) amounts expended to pay insurance premiums for policies of insurance related to such Collateral Property; and (iii) $500,000.00. Protective Advances in excess of said sum during any calendar year for any Collateral Property shall require the consent of the Requisite Lenders. The Borrower agrees to pay on demand all Protective Advances.

Section 12.4. Post Foreclosure Plans.

If all or any portion of the Collateral is acquired by the Administrative Agent as a result of a foreclosure or the acceptance of a deed or assignment in lieu of foreclosure, or is retained in satisfaction of all or any part of the Obligations, the title to any such Collateral, or any portion thereof, shall be held in the name of the Administrative Agent or a nominee or Subsidiary of the Administrative Agent, as Administrative Agent, for the ratable benefit of all Lenders. The Administrative Agent shall prepare a recommended course of action for such Collateral (a “Post-Foreclosure Plan”), which shall be subject to the approval of the Requisite Lenders. In accordance with the approved Post-Foreclosure Plan, the Administrative Agent shall manage, operate, repair, administer, complete, construct, restore or otherwise deal with the Collateral acquired, and shall administer all transactions relating thereto, including, without limitation, employing a management agent, leasing agent and other agents, contractors and employees, including agents for the sale of such Collateral, and the collecting of rents, revenues and other sums from such Collateral and paying the expenses of such Collateral. Actions taken by the Administrative Agent with respect to the Collateral, which are not specifically provided for in the approved Post-Foreclosure Plan or reasonably incidental thereto, shall require the written consent of the Requisite Lenders by way of supplement to such Post-Foreclosure Plan. Upon demand therefor from time to time, each Lender will contribute its share (based on its Pro Rata Share) of all reasonable costs and expenses incurred by the administrative agent pursuant to the approved Post-Foreclosure Plan in connection with the construction, operation, management, maintenance, leasing and sale of such Collateral. In addition, the Administrative Agent shall render or cause to be rendered to each Lender, on a monthly basis, an income and expense statement for such Collateral, and each Lender shall promptly contribute its Pro Rata Share of any operating loss for such Collateral, and such other expenses and operating reserves as the Administrative Agent shall deem reasonably necessary pursuant to and in accordance with the approved Post-Foreclosure Plan. To the extent there is Net Operating Income from such Collateral (after establishment of reserves in accordance with the Post-Foreclosure Plan), the Administrative Agent shall, in accordance with the approved Post-Foreclosure Plan, determine the amount and timing of distributions to the Lenders. All such distributions shall be made to the Lenders in accordance with their respective Pro Rata Shares. The Lenders acknowledge and agree that if title to any Collateral is obtained by the Administrative Agent or its nominee, such

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Collateral will not be held as a permanent investment but will be liquidated and the proceeds of such liquidation will be distributed in accordance with Section 11.5. as soon as practicable. The Administrative Agent shall undertake to sell such Collateral, at such price and upon such terms and conditions as the Requisite Lenders reasonably shall determine to be most advantageous to the Lenders. Any purchase money mortgage or deed of trust taken in connection with the disposition of such Collateral in accordance with the immediately preceding sentence shall name the Administrative Agent, as Administrative Agent for the Lenders, as the beneficiary or mortgagee. In such case, the Administrative Agent and the Lenders shall enter into an agreement with respect to such purchase money mortgage or deed of trust defining the rights of the Lenders in the same Pro Rata Shares as provided hereunder, which agreement shall be in all material respects similar to this Article insofar as the same is appropriate or applicable.

Section 12.5. Approvals of Lenders.

All communications from the Administrative Agent to any Lender requesting such Lender’s determination, consent, approval or disapproval (a) shall be given in the form of a written notice to such Lender, (b) shall be accompanied by a description of the matter or issue as to which such determination, approval, consent or disapproval is requested, or shall advise such Lender where information, if any, regarding such matter or issue may be inspected, or shall otherwise describe the matter or issue to be resolved, (c) shall include a legend substantially as follows, printed in capital letters or boldface type: “THIS COMMUNICATION REQUIRES IMMEDIATE RESPONSE. FAILURE TO RESPOND WITHIN TEN (10) BUSINESS DAYS AFTER THE DELIVERY OF THIS COMMUNICATION SHALL CONSTITUTE A DEEMED APPROVAL BY THE ADDRESSEE OF THE MATTER DESCRIBED ABOVE.”, (d) shall include, if reasonably requested by such Lender and to the extent not previously provided to such Lender, written materials and a summary of all oral information provided to the Administrative Agent by the Borrower in respect of the matter or issue to be resolved, and (e) shall include the Administrative Agent’s recommended course of action or determination in respect thereof. Unless a Lender shall give written notice to the Administrative Agent that it specifically objects to the recommendation or determination of the Administrative Agent (together with a reasonable written explanation of the reasons behind such objection) within ten (10) Business Days (or such lesser or greater period as may be specifically required under the express terms of the Loan Documents) of receipt of such communication (“Lender Reply Period”), such Lender shall be deemed to have conclusively approved of or consented to such recommendation or determination. With respect to decisions requiring the approval of the Requisite Lenders, Administrative Agent shall timely submit any required written notices to all Lenders and upon receiving the required approval or consent shall follow the course of action or determination recommended by Administrative Agent or such other course of action recommended by the Requisite Lenders, and each non-responding Lender shall be deemed to have concurred with such recommended course of action. Notwithstanding the foregoing, any matter requiring all Lenders’ approval or consent shall not be deemed given by any Lender’s failure to respond within any such Lender’s Reply Period.

Section 12.6. Notice of Events of Default.

The Administrative Agent shall not be deemed to have knowledge or notice of the occurrence of a Default or Event of Default unless the Administrative Agent has received notice

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from a Lender or the Borrower referring to this Agreement, describing with reasonable specificity such Default or Event of Default and stating that such notice is a “notice of default.” If any Lender (excluding the Lender which is also serving as the Administrative Agent) becomes aware of any Default or Event of Default, it shall promptly send to the Administrative Agent such a “notice of default”, but nothing herein contained shall impose upon any Lender an obligation to determine whether there has been or is a Default or Event of Default. Further, if the Administrative Agent receives such a “notice of default,” the Administrative Agent shall give prompt notice thereof to the Lenders.

Section 12.7. Administrative Agent’s Reliance.

Notwithstanding any other provisions of this Agreement or any other Loan Documents, neither the Administrative Agent nor any of its directors, officers, agents, employees or counsel shall be liable for any action taken or not taken by it under or in connection with this Agreement or any other Loan Document, except for its or their own gross negligence or willful misconduct in connection with its duties expressly set forth herein or therein. Without limiting the generality of the foregoing, the Administrative Agent may consult with legal counsel (including its own counsel or counsel for the Borrower or any other Loan Party), independent public accountants and other experts selected by it and shall not be liable for any action taken or omitted to be taken in good faith by it in accordance with the advice of such counsel, accountants or experts. Neither the Administrative Agent nor any of its directors, officers, agents, employees or counsel: (a) makes any warranty or representation to any Lender or any other Person and shall be responsible to any Lender or any other Person for any statement, warranty or representation made or deemed made by the Borrower, any other Loan Party or any other Person in or in connection with this Agreement or any other Loan Document; (b) shall have any duty to ascertain or to inquire as to the performance or observance of any of the terms, covenants or conditions of this Agreement or any other Loan Document or the satisfaction of any conditions precedent under this Agreement or any Loan Document on the part of the Borrower or other Persons or inspect the property, books or records of the Borrower or any other Person; (c) shall be responsible to any Lender for the due execution, legality, validity, enforceability, genuineness, sufficiency or value of this Agreement or any other Loan Document, any other instrument or document furnished pursuant thereto or any Collateral covered thereby or the perfection or priority of any Lien in favor of the Administrative Agent on behalf of the Lenders in any such Collateral; (d) shall have any liability in respect of any recitals, statements, certifications, representations or warranties contained in any of the Loan Documents or any other document, instrument, agreement, certificate or statement delivered in connection therewith; and (e) shall incur any liability under or in respect of this Agreement or any other Loan Document by acting upon any notice, consent, certificate or other instrument or writing (which may be by telephone, telecopy or electronic mail) believed by it to be genuine and signed, sent or given by the proper party or parties. The Administrative Agent may execute any of its duties under the Loan Documents by or through agents, employees or attorneys-in-fact and shall not be responsible for the negligence or misconduct of any agent or attorney-in-fact that it selects in the absence of gross negligence or willful misconduct.

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Section 12.8. Indemnification of Administrative Agent.

Regardless of whether the transactions contemplated by this Agreement and the other Loan Documents are consummated, each Lender agrees to indemnify the Administrative Agent (to the extent not reimbursed by the Borrower and without limiting the obligation of the Borrower to do so) pro rata in accordance with such Lender’s respective Pro Rata Share, from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever which may at any time be imposed on, incurred by, or asserted against the Administrative Agent (in its capacity as Administrative Agent but not as a “Lender”) in any way relating to or arising out of the Loan Documents, any transaction contemplated hereby or thereby or any action taken or omitted by the Administrative Agent under the Loan Documents (collectively, “Indemnifiable Amounts”); provided, however, that no Lender shall be liable for any portion of such Indemnifiable Amounts to the extent resulting from the Administrative Agent’s gross negligence or willful misconduct as determined by a court of competent jurisdiction in a final, non-appealable judgment; provided, however, that no action taken in accordance with the directions of the Requisite Lenders (or the Super Majority Lenders or all of the Lenders, if expressly required hereunder) shall be deemed to constitute gross negligence or willful misconduct for purposes of this Section. Without limiting the generality of the foregoing, each Lender agrees to reimburse the Administrative Agent (to the extent not reimbursed by the Borrower and without limiting the obligation of the Borrower to do so) promptly upon demand for its ratable share of any out-of-pocket expenses (including the reasonable fees and expenses of the counsel to the Administrative Agent) incurred by the Administrative Agent (except to the extent resulting from the Administrative Agent’s gross negligence or willful misconduct as determined by a court of competent jurisdiction in a final, non-appealable judgment) in connection with the preparation, negotiation, execution, administration, or enforcement (whether through negotiations, legal proceedings, or otherwise) of, or legal advice with respect to the rights or responsibilities of the parties under, the Loan Documents, any suit or action brought by the Administrative Agent to enforce the terms of the Loan Documents and/or collect any Obligations, any “lender liability” suit or claim brought against the Administrative Agent and/or the Lenders, and any claim or suit brought against the Administrative Agent and/or the Lenders arising under any Environmental Laws. Such out-of-pocket expenses (including counsel fees) shall be advanced by the Lenders on the request of the Administrative Agent notwithstanding any claim or assertion that the Administrative Agent is not entitled to indemnification hereunder upon receipt of an undertaking by the Administrative Agent that the Administrative Agent will reimburse the Lenders if it is actually and finally determined by a court of competent jurisdiction that the Administrative Agent is not so entitled to indemnification. The agreements in this Section shall survive the payment of the Loans and all other amounts payable hereunder or under the other Loan Documents and the termination of this Agreement. If the Borrower shall reimburse the Administrative Agent for any Indemnifiable Amount following payment by any Lender to the Administrative Agent in respect of such Indemnifiable Amount pursuant to this Section, the Administrative Agent shall share such reimbursement on a ratable basis with each Lender making any such payment.

Section 12.9. Lender Credit Decision, Etc.

Each of the Lenders expressly acknowledges and agrees that neither the Administrative Agent nor any of its officers, directors, employees, agents, counsel, attorneys in fact or other

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affiliates has made any representations or warranties to such Lender and that no act by the Administrative Agent hereafter taken, including any review of the affairs of the Borrower, any other Loan Party or any other Subsidiary or Affiliate, shall be deemed to constitute any such representation or warranty by the Administrative Agent or any Lender. Each of the Lenders acknowledges that it has, independently and without reliance upon the Administrative Agent, any other Lender or counsel to the Administrative Agent, or any of their respective officers, directors, employees, agents or counsel, and based on the financial statements of the Borrower, the other Loan Parties, the other Subsidiaries and other Affiliates, and inquiries of such Persons, its independent due diligence of the business and affairs of the Borrower, the other Loan Parties, the other Subsidiaries and other Persons, its review of the Loan Documents, the legal opinions required to be delivered to it hereunder, the advice of its own counsel and such other documents and information as it has deemed appropriate, made its own credit and legal analysis and decision to enter into this Agreement and the transactions contemplated hereby. Each of the Lenders also acknowledges that it will, independently and without reliance upon the Administrative Agent, any other Lender or counsel to the Administrative Agent or any of their respective officers, directors, employees and agents, and based on such review, advice, documents and information as it shall deem appropriate at the time, continue to make its own decisions in taking or not taking action under the Loan Documents. The Administrative Agent shall not be required to keep itself informed as to the performance or observance by the Borrower or any other Loan Party of the Loan Documents or any other document referred to or provided for therein or to inspect the properties or books of, or make any other investigation of, the Borrower, any other Loan Party or any other Subsidiary. Except for notices, reports and other documents and information expressly required to be furnished to the Lenders by the Administrative Agent under this Agreement or any of the other Loan Documents, the Administrative Agent shall have no duty or responsibility to provide any Lender with any credit or other information concerning the business, operations, property, financial and other condition or creditworthiness of the Borrower, any other Loan Party or any other Affiliate thereof which may come into possession of the Administrative Agent or any of its officers, directors, employees, agents, attorneys in fact or other Affiliates. Each of the Lenders acknowledges that the Administrative Agent’s legal counsel in connection with the transactions contemplated by this Agreement is only acting as counsel to the Administrative Agent and is not acting as counsel to any Lender.

Section 12.10. Successor Administrative Agent.

The Administrative Agent may resign at any time as Administrative Agent under the Loan Documents by giving written notice thereof to the Lenders and the Borrower. In addition, in the event of a material breach of its duties hereunder, the Administrative Agent may be removed as Administrative Agent under the Loan Documents at any time by all Lenders (other than the Lender then acting as Administrative Agent) and, provided no Default or Event of Default exists, the Borrower upon 30-days’ prior notice. Upon any such resignation or removal, the Requisite Lenders (which, in the case of the removal of the Administrative Agent as provided in the immediately preceding sentence, shall be determined without regard to the Commitment of the Lender then acting as Administrative Agent) shall have the right to appoint a successor Administrative Agent which appointment shall, provided no Default or Event of Default exists, be subject to the Borrower’s approval, which approval shall not be unreasonably withheld or delayed (except that the Borrower shall, in all events, be deemed to have approved each Lender

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and any of its affiliates as a successor Administrative Agent). If no successor Administrative Agent shall have been so appointed in accordance with the immediately preceding sentence, and shall have accepted such appointment, within thirty (30) days after the current Administrative Agent’s giving of notice of resignation, then the current Administrative Agent may, on behalf of the Lenders, appoint a successor Administrative Agent, which shall be a Lender, if any Lender shall be willing to serve, and otherwise shall be an Eligible Assignee. Upon the acceptance of any appointment as Administrative Agent hereunder by a successor Administrative Agent, such successor Administrative Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the current Administrative Agent, and the current Administrative Agent shall be discharged from its duties and obligations under the Loan Documents. After any Administrative Agent’s resignation hereunder as Administrative Agent, the provisions of this Article XII. shall continue to inure to its benefit as to any actions taken or omitted to be taken by it while it was Administrative Agent under the Loan Documents. Notwithstanding anything contained herein to the contrary, the Administrative Agent may assign its rights and duties under the Loan Documents to any of its affiliates by giving the Borrower and each Lender prior written notice.

Section 12.11. Syndication Agent.

JPMorgan Chase Bank, N.A. is the Syndication Agent and in such capacity assumes no responsibility or obligation hereunder, including, without limitation, for servicing, enforcement or collection of any of the Loans, nor any duties as an agent hereunder for the Lenders. The title given to the Syndication Agent is solely honorific and implies no fiduciary responsibility on the part of the Syndication Agent to the Administrative Agent, any Lender, the Borrower or any other Loan Party and the use of such titles does not impose on the Syndication Agent any duties or obligations greater than those of any other Lender or entitle the Syndication Agent to any rights other than those to which any other Lender is entitled.

Section 12.12. Documentation Agent.

Deutsche Bank Trust Company Americas is the Documentation Agent and in such capacity assumes no responsibility or obligation hereunder, including, without limitation, for servicing, enforcement or collection of any of the Loans, nor any duties as an agent hereunder for the Lenders. The title given to the Documentation Agent is solely honorific and implies no fiduciary responsibility on the part of the Documentation Agent to the Administrative Agent, any Lender, the Borrower or any other Loan Party and the use of such titles does not impose on the Documentation Agent any duties or obligations greater than those of any other Lender or entitle the Documentation Agent to any rights other than those to which any other Lender is entitled.

ARTICLE XIII. MISCELLANEOUS

Section 13.1. Notices.

Unless otherwise provided herein (including without limitation as provided in Section 9.5.), communications provided for hereunder shall be in writing and shall be mailed, telecopied, or delivered as follows:

If to the Borrower:

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Chesapeake Lodging, L.P.

1997 Annapolis Exchange Parkway

Suite 410

Annapolis, MD 21401

Attention: Doug Vicari

Telecopy Number:      (410) 972-4180

Telephone Number:    (410) 972-4142

If to the Administrative Agent:

Wells Fargo Bank, N.A.

1750 H Street, NW, #400

Washington, D.C. 20006

Attn: Mark F. Monahan

Telecopy Number:    (202) 429-2985

Telephone:    (202) 303-3017

If to any other Lender:

To such Lender’s address or telecopy number as set forth on Schedule 13.1 attached hereto

or, as to each party at such other address as shall be designated by such party in a written notice to the other parties delivered in compliance with this Section; provided, a Lender shall only be required to give notice of any such other address to the Administrative Agent and the Borrower. All such notices and other communications shall be effective (i) if mailed, upon the first to occur of receipt or the expiration of three (3) days after the deposit in the United States Postal Service mail, postage prepaid and addressed to the address of the Borrower or the Administrative Agent and Lenders at the addresses specified; (ii) if telecopied, when transmitted; (iii) if hand delivered, when delivered; or (iv) if delivered in accordance with Section 9.5. to the extent applicable; provided, however, that, in the case of the immediately preceding clauses (i), (ii) and (iii), non-receipt of any communication as of the result of any change of address of which the sending party was not notified or as the result of a refusal to accept delivery shall be deemed receipt of such communication. Notwithstanding the immediately preceding sentence, all notices or communications to the Administrative Agent or any Lender under Article II. shall be effective only when actually received. None of the Administrative Agent or any Lender shall incur any liability to the Borrower (nor shall the Administrative Agent incur any liability to the Lenders) for acting upon any telephonic or electronic notice referred to in this Agreement which the Administrative Agent or such Lender, as the case may be, believes in good faith to have been given by a Person authorized to deliver such notice or for otherwise acting in good faith hereunder.

Section 13.2. Expenses.

The Borrower agrees (a) to pay or reimburse the Administrative Agent for all of its reasonable out-of-pocket costs and reasonable expenses incurred in connection with the preparation, negotiation and execution of, and any amendment, supplement or modification to,

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any of the Loan Documents (including due diligence expense and reasonable travel expenses related to closing), and the consummation of the transactions contemplated thereby, including the reasonable fees and disbursements of counsel to the Administrative Agent and all costs and expenses of the Administrative Agent in connection with the review of Properties for inclusion in the Collateral Pool and the Administrative Agent’s other activities under Article IV., including the cost of all Appraisals (except for Appraisals ordered under Section 4.3.(d)) and the reasonable fees and disbursements of counsel to the Administrative Agent relating to all such activities, (b) to pay or reimburse the Administrative Agent and the Lenders for all their costs and expenses incurred in connection with the enforcement or preservation of any rights under the Loan Documents and the Fee Letter, including the reasonable fees and disbursements of their respective counsel (including the allocated fees and expenses of in-house counsel) and any payments in indemnification or otherwise payable by the Lenders to the Administrative Agent pursuant to the Loan Documents, (c) to pay, and indemnify and hold harmless the Administrative Agent and the Lenders from, any and all recording and filing fees and any and all liabilities with respect to, or resulting from any failure to pay or delay in paying, documentary, stamp, excise and other similar taxes, if any, which may be payable or determined to be payable in connection with the execution and delivery of any of the Loan Documents, or consummation of any amendment, supplement or modification of, or any waiver or consent under or in respect of, any Loan Document and (d) to the extent not already covered by any of the preceding subsections, to pay the fees and disbursements of counsel to the Administrative Agent and any Lender incurred in connection with the representation of the Administrative Agent or such Lender in any matter relating to or arising out of any bankruptcy or other proceeding of the type described in Sections 11.1.(e) or 11.1.(f), including, without limitation (i) any motion for relief from any stay or similar order, (ii) the negotiation, preparation, execution and delivery of any document relating to the Obligations and (iii) the negotiation and preparation of any debtor in possession financing or any plan of reorganization of the Borrower or any other Loan Party, whether proposed by the Borrower, such Loan Party, the Lenders or any other Person, and whether such fees and expenses are incurred prior to, during or after the commencement of such proceeding or the confirmation or conclusion of any such proceeding.

Section 13.3. Stamp, Intangible and Recording Taxes.

The Borrower will pay any and all stamp, excise, intangible, registration, recordation and similar taxes, fees or charges and shall indemnify the Administrative Agent and each Lender against any and all liabilities with respect to or resulting from any delay in the payment or omission to pay any such taxes, fees or charges, which may be payable or determined to be payable in connection with the execution, delivery, recording, performance or enforcement of this Agreement, the Notes and any of the other Loan Documents, the amendment, supplement, modification or waiver of or consent under this Agreement, the Notes or any of the other Loan Documents or the perfection of any rights or Liens under this Agreement, the Notes or any of the other Loan Documents.

Section 13.4. Setoff.

Subject to Section 3.3. and in addition to any rights now or hereafter granted under Applicable Law and not by way of limitation of any such rights, the Administrative Agent and each Lender and each Participant is hereby authorized by the Borrower, at any time or from time

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to time while an Event of Default exists, without notice to the Borrower or to any other Person, any such notice being hereby expressly waived, but in the case of a Lender or a Participant subject to receipt of the prior written consent of the Administrative Agent and the Requisite Lenders exercised in their sole discretion, to set off and to appropriate and to apply any and all deposits (general or special, including, but not limited to, indebtedness evidenced by certificates of deposit, whether matured or unmatured) and any other indebtedness at any time held or owing by the Administrative Agent, such Lender, such Participant or any affiliate of the Administrative Agent or such Lender, to or for the credit or the account of the Borrower against and on account of any of the Obligations, irrespective of whether or not any or all of the Loans and all other Obligations have been declared to be, or have otherwise become, due and payable as permitted by Section 11.2., and although such Obligations shall be contingent or unmatured.

Section 13.5. Litigation; Jurisdiction; Other Matters; Waivers.

(a) EACH PARTY HERETO ACKNOWLEDGES THAT ANY DISPUTE OR CONTROVERSY BETWEEN OR AMONG THE BORROWER, THE ADMINISTRATIVE AGENT OR ANY OF THE LENDERS WOULD BE BASED ON DIFFICULT AND COMPLEX ISSUES OF LAW AND FACT AND WOULD RESULT IN DELAY AND EXPENSE TO THE PARTIES. ACCORDINGLY, TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH OF THE LENDERS, THE ADMINISTRATIVE AGENT AND THE BORROWER HEREBY WAIVES ITS RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING OF ANY KIND OR NATURE IN ANY COURT OR TRIBUNAL IN WHICH AN ACTION MAY BE COMMENCED BY OR AGAINST ANY PARTY HERETO ARISING OUT OF THIS AGREEMENT, THE NOTES, OR ANY OTHER LOAN DOCUMENT OR THE FEE LETTER OR IN CONNECTION WITH ANY COLLATERAL OR ANY LIEN OR BY REASON OF ANY OTHER SUIT, CAUSE OF ACTION OR DISPUTE WHATSOEVER BETWEEN OR AMONG THE BORROWER, THE ADMINISTRATIVE AGENT OR ANY OF THE LENDERS OF ANY KIND OR NATURE.

(b) EACH OF THE BORROWER, THE ADMINISTRATIVE AGENT AND EACH LENDER HEREBY AGREES THAT THE FEDERAL DISTRICT COURT OF THE SOUTHERN DISTRICT OF NEW YORK OR OF THE DISTRICT OF COLUMBIA OR, AT THE OPTION OF THE ADMINISTRATIVE AGENT, ANY STATE COURT LOCATED IN NEW YORK, NEW YORK SHALL HAVE JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN OR AMONG THE BORROWER, THE ADMINISTRATIVE AGENT OR ANY OF THE LENDERS, PERTAINING DIRECTLY OR INDIRECTLY TO THIS AGREEMENT, THE LOANS, THE NOTES OR ANY OTHER LOAN DOCUMENT OR THE FEE LETTER OR TO ANY MATTER ARISING HEREFROM OR THEREFROM OR THE COLLATERAL. THE BORROWER AND EACH OF THE LENDERS EXPRESSLY SUBMIT AND CONSENT IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR PROCEEDING COMMENCED IN SUCH COURTS. THE BORROWER HEREBY WAIVES PERSONAL SERVICE OF THE SUMMONS AND COMPLAINT, OR OTHER PROCESS OR PAPERS ISSUED THEREIN, AND AGREES THAT SERVICE OF SUCH SUMMONS AND COMPLAINT, OR OTHER PROCESS OR PAPERS MAY BE MADE BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO THE BORROWER AT ITS ADDRESS FOR NOTICES PROVIDED FOR HEREIN. SHOULD THE BORROWER FAIL TO APPEAR OR ANSWER ANY SUMMONS, COMPLAINT, PROCESS

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OR PAPERS SO SERVED WITHIN THIRTY (30) DAYS AFTER THE MAILING THEREOF, THE BORROWER SHALL BE DEEMED IN DEFAULT AND AN ORDER AND/OR JUDGMENT MAY BE ENTERED AGAINST IT AS DEMANDED OR PRAYED FOR IN SUCH SUMMONS, COMPLAINT, PROCESS OR PAPERS. EACH PARTY FURTHER WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH ACTION OR PROCEEDING IN ANY SUCH COURT OR THAT SUCH ACTION OR PROCEEDING WAS BROUGHT IN AN INCONVENIENT FORUM AND EACH AGREES NOT TO PLEAD OR CLAIM THE SAME. THE CHOICE OF FORUM SET FORTH IN THIS SECTION SHALL NOT BE DEEMED TO PRECLUDE THE BRINGING OF ANY ACTION BY THE ADMINISTRATIVE AGENT OR ANY LENDER OR THE ENFORCEMENT BY THE ADMINISTRATIVE AGENT OR ANY LENDER OF ANY JUDGMENT OBTAINED IN SUCH FORUM IN ANY OTHER APPROPRIATE JURISDICTION.

(c) THE PROVISIONS OF THIS SECTION HAVE BEEN CONSIDERED BY EACH PARTY WITH THE ADVICE OF COUNSEL AND WITH A FULL UNDERSTANDING OF THE LEGAL CONSEQUENCES THEREOF, AND SHALL SURVIVE THE PAYMENT OF THE LOANS AND ALL OTHER AMOUNTS PAYABLE HEREUNDER OR UNDER THE OTHER LOAN DOCUMENTS, THE TERMINATION OR EXPIRATION OF ALL LETTERS OF CREDIT AND THE TERMINATION OF THIS AGREEMENT.

Section 13.6. Successors and Assigns.

(a) Generally. The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns, except that the Borrower may not assign or otherwise transfer any of is rights under this Agreement without the prior written consent of all the Lenders (and any such assignment or transfer to which all of the Lenders have not consented shall be void).

(b) Participations. Any Lender may at any time grant to an affiliate of such Lender, or one or more banks or other financial institutions (each a “Participant”) participating interests in its Commitment or the Obligations owing to such Lender. Except as otherwise provided in Section 13.4. or as otherwise expressly stated herein, no Participant shall have any rights or benefits under this Agreement or any other Loan Document. In the event of any such grant by a Lender of a participating interest to a Participant, such Lender shall remain responsible for the performance of its obligations hereunder, and the Borrower and the Administrative Agent shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this Agreement. Any agreement pursuant to which any Lender may grant such a participating interest shall provide that such Lender shall retain the sole right and responsibility to enforce the obligations of the Borrower hereunder including, without limitation, the right to approve any amendment, modification or waiver of any provision of this Agreement; provided, however, such Lender may agree with the Participant that it will not, without the consent of the Participant, agree to (i) increase such Lender’s Commitment or the aggregate amount of the Commitments, (ii) extend the date fixed for the payment of principal on the Loans or portions thereof owing to such Lender, (iii) reduce the rate at which interest is payable thereon, (iv) release all or substantially all of the Collateral except as permitted in this

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Agreement, (v) change the definitions of “Advance Rate,” or “Minimum DSCR Hurdle,” or (vi) modify the definition of the term “Requisite Lenders” or “Super Majority Lenders” or modify in any other manner the number or percentage of the Lenders required to make any determinations or waive any rights hereunder or to modify any provision hereof. An assignment or other transfer which is not permitted by subsection (c) or (d) below shall be given effect for purposes of this Agreement only to the extent of a participating interest granted in accordance with this subsection (b).

(c) Assignments. Any Lender may with the prior written consent of the Administrative Agent at any time assign to one or more Eligible Assignees (each an “Assignee”) all or a portion of its rights and obligations under this Agreement and the Notes; provided, however, (i) any partial assignment shall be in an amount at least equal to $10,000,000 and (except in the case of an assignment made at a time at which there exists an Event of Default) after giving effect to such assignment the assigning Lender retains a Commitment, or if the Commitments have been terminated, holds Notes having an aggregate outstanding principal balance, of at least $10,000,000, (ii) the Administrative Agent and (provided no Event of Default has occurred that is continuing) the Borrower shall have approved such assignment, which approvals shall not be unreasonably withheld and (iii) each such assignment shall be effected by means of an Assignment and Assumption Agreement. Upon execution and delivery of such instrument and payment by such Assignee to such transferor Lender of an amount equal to the purchase price agreed between such transferor Lender and such Assignee, such Assignee shall be deemed to be a Lender party to this Agreement and shall have all the rights and obligations of a Lender with a Commitment and/or Loans, as the case may be, as set forth in such Assignment and Assumption Agreement, and the transferor Lender shall be released from its obligations hereunder to a corresponding extent, and no further consent or action by any party shall be required. Upon the consummation of any assignment pursuant to this subsection (c), the transferor Lender, the Administrative Agent and the Borrower shall make appropriate arrangements so the new Notes are issued to the Assignee and such transferor Lender, as appropriate, and shall update Schedule I attached hereto. In connection with any such assignment, the transferor Lender shall pay to the Administrative Agent an administrative fee for processing such assignment in the amount of $4,500.00. Anything in this Section to the contrary notwithstanding, no Lender may assign or participate any interest in any Loan held by it hereunder to the Borrower, or any of its respective affiliates or Subsidiaries.

(d) Federal Reserve Bank Assignments. In addition to the assignments and participations permitted under the foregoing provisions of the Section, and without the need to comply with any of the formal or procedural requirements of this Section, any Lender may at any time and from time to time, pledge and assign all or any portion of its rights under all or any of the Loan Documents to a Federal Reserve Bank; provided that no such pledge of assignment shall release such Lender from its obligations thereunder. No such pledge or assignment shall release the assigning Lender from its obligations hereunder.

(e) Information to Assignee, Etc. A Lender may furnish any information concerning the Borrower, any Subsidiary or any other Loan Party in the possession of such Lender from time to time to Assignees and Participants (including prospective Assignees and Participants but shall advise them that any such information that is not publicly available is confidential).

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Section 13.7. Amendments and Waivers.

(a) Generally. Except as otherwise expressly provided in this Agreement, (i) any consent or approval required or permitted by this Agreement or in any Loan Document to be given by the Lenders may be given, (ii) any term of this Agreement or of any other Loan Document may be amended, (iii) the performance or observance by the Borrower or any other Loan Party of any terms of this Agreement or such other Loan Document may be waived, and (iv) the continuance of any Default or Event of Default may be waived (either generally or in a particular instance and either retroactively or prospectively) with, but only with, the written consent of the Requisite Lenders (or the Administrative Agent at the written direction of the Requisite Lenders), and, in the case of an amendment to any Loan Document, the written consent of each Loan Party which is party thereto. Notwithstanding the previous sentence, the Administrative Agent, shall be authorized on behalf of all the Lenders, without the necessity of any notice to, or further consent from, any Lender, to waive the imposition of the late fees provided in Section 2.10., up to a maximum of three (3) times per calendar year.

(b) Unanimous Consent. Notwithstanding the foregoing, no amendment, waiver or consent shall, unless in writing, and signed by all of the Lenders directly affected thereby (or the Administrative Agent at the written direction of the Lenders), do any of the following:

(i) increase the Commitments of the Lenders (excluding any increase as a result of an assignment of Commitments permitted under Section 13.6.) or subject the Lenders to any additional obligations;

(ii) reduce the principal of, or interest rates that have accrued or that will be charged on the outstanding principal amount of, any Loans or other Obligations;

(iii) reduce the amount of any Fees payable to the Lenders hereunder (except that any change in Fees payable to the Administrative Agent for its own account shall not require the consent of any Lender other than the Administrative Agent);

(iv) except for waivers permitted under the last sentence of Section 13.7(a), postpone any date fixed for any payment of principal of, or interest on, any Loans or for the payment of Fees or any other Obligations (including without limitation any extension of the Maturity Date except in accordance with Section 2.15.);

(v) change the definitions of Commitment Percentage or Pro Rata Share;

(vi) amend this Section or amend the definitions of the terms used in this Agreement or the other Loan Documents insofar as such definitions affect the substance of this Section;

(vii) modify the definition of the terms “Required Approval Lenders,” “Requisite Lenders” or “Super-Majority Lenders” or modify in any other manner the number or percentage of the Lenders required to make any determinations or waive any rights hereunder or to modify any provision hereof;

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(viii) release any Guarantor from its obligations under the Guaranty except as contemplated by Section 4.2.;

(ix) waive a Default or Event of Default under Section 11.1.(a);

(x) amend, or waive the Borrower’s compliance with, Section 2.16; or

(xi) release or dispose of any collateral unless released or disposed of as permitted by, and in accordance with, Section 12.3 or Section 4.2.

Notwithstanding the provisions of Section 3.9.(a)(ii), no action shall be taken under clauses (i), (ii), (iii) or (iv) above that would affect a Defaulting Lender without its written consent.

(c) Amendment of Administrative Agent’s Duties, Etc. No amendment, waiver or consent unless in writing and signed by the Administrative Agent, in addition to the Lenders required hereinabove to take such action, shall affect the rights or duties of the Administrative Agent under this Agreement or any of the other Loan Documents. No waiver shall extend to or affect any obligation not expressly waived or impair any right consequent thereon and any amendment, waiver or consent shall be effective only in the specific instance and for the specific purpose set forth therein. No course of dealing or delay or omission on the part of the Administrative Agent or any Lender in exercising any right shall operate as a waiver thereof or otherwise be prejudicial thereto. Any Event of Default occurring hereunder shall continue to exist until such time as such Event of Default is waived in writing in accordance with the terms of this Section, notwithstanding any attempted cure or other action by the Borrower, any other Loan Party or any other Person subsequent to the occurrence of such Event of Default. Except as otherwise explicitly provided for herein or in any other Loan Document, no notice to or demand upon the Borrower shall entitle the Borrower to other or further notice or demand in similar or other circumstances.

Section 13.8. Nonliability of Administrative Agent and Lenders.

The relationship between the Borrower, on the one hand, and the Lenders and the Administrative Agent, on the other hand, shall be solely that of borrower and lender. Neither the Administrative Agent nor any Lender shall have any fiduciary responsibilities to the Borrower and no provision in this Agreement or in any of the other Loan Documents, and no course of dealing between or among any of the parties hereto, shall be deemed to create any fiduciary duty owing by the Administrative Agent or any Lender to any Lender, the Borrower, any Subsidiary or any other Loan Party. Neither the Administrative Agent nor any Lender undertakes any responsibility to the Borrower to review or inform the Borrower of any matter in connection with any phase of the Borrower’s business or operations.

Section 13.9. Confidentiality.

Except as otherwise provided by Applicable Law, the Administrative Agent and each Lender shall utilize all non public information obtained pursuant to the requirements of this Agreement which has been identified as confidential or proprietary by the Borrower in accordance with its customary procedure for handling confidential information of this nature and

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in accordance with safe and sound banking practices but in any event may make disclosure: (a) to any of their respective Affiliates (provided any such Affiliate shall agree to keep such information confidential in accordance with the terms of this Section 13.9.); (b) as reasonably requested by any bona fide actual or proposed pledgee, Assignee, Participant or other transferee in connection with the contemplated transfer of any Commitment or participations therein as permitted hereunder (provided they shall agree to keep such information confidential in accordance with the terms of this Section 13.9.); (c) as required or requested by any Governmental Authority or representative thereof or pursuant to legal process or in connection with any legal proceedings, as and to the extent so required or requested; (d) to the Administrative Agent’s or such Lender’s independent auditors and other professional advisors (provided they shall be notified of the confidential nature of the information); (e) if an Event of Default exists, to any other Person, in connection with the exercise by the Administrative Agent or the Lenders of rights hereunder or under any of the other Loan Documents; and (f) to the extent such information (x) becomes publicly available other than as a result of a breach of this Section or (y) becomes available to the Administrative Agent or any Lender on a nonconfidential basis from a source other than the Borrower or any Affiliate, the disclosure of which is not made in violation of any confidentiality agreement pertaining to such information that is known to the Administrative Agent or such Lender, as applicable.

Section 13.10. Indemnification.

(a) The Borrower shall and hereby agrees to indemnify, defend and hold harmless the Administrative Agent, any affiliate of the Administrative Agent, each of the Lenders and their respective directors, officers, shareholders, agents, employees and counsel (each referred to herein as an “Indemnified Party”) from and against any and all losses, costs, claims, damages, liabilities, deficiencies, judgments or expenses of every kind and nature (including, without limitation, amounts paid in settlement, court costs and the fees and disbursements of counsel incurred in connection with any litigation, investigation, claim or proceeding or any advice rendered in connection therewith, but excluding losses, costs, claims, damages, liabilities, deficiencies, judgments or expenses indemnification in respect of which is specifically covered by Section 3.10. or 5.1. or expressly excluded from the coverage of such Sections) incurred by an Indemnified Party in connection with, arising out of, or by reason of, any suit, cause of action, claim, arbitration, investigation or settlement, consent decree or other proceeding (the foregoing referred to herein as an “Indemnity Proceeding”) which is in any way related directly or indirectly to: (i) this Agreement or any other Loan Document or the transactions contemplated thereby; (ii) the making of any Loans hereunder; (iii) any actual or proposed use by the Borrower of the proceeds of the Loans; (iv) the Administrative Agent’s or any Lender’s entering into this Agreement; (v) the fact that the Administrative Agent and the Lenders have established the credit facility evidenced hereby in favor of the Borrower; (vi) the fact that the Administrative Agent and the Lenders are creditors of the Borrower and have or are alleged to have information regarding the financial condition, strategic plans or business operations of the Parent Guarantor, the Borrower and their Subsidiaries; (vii) the fact that the Administrative Agent and the Lenders are material creditors of the Borrower and are alleged to influence directly or indirectly the business decisions or affairs of the Borrower and the Subsidiaries or their financial condition; (viii) the exercise of any right or remedy the Administrative Agent or the Lenders may have under this Agreement or the other Loan Documents including, but not limited to, the foreclosure upon, or seizure of, any Collateral or the exercise of any other rights of a secured party; or

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(ix) any violation or non compliance by the Borrower, any other Loan Party or any Subsidiary of any Applicable Law (including any Environmental Law) including, but not limited to, any Indemnity Proceeding commenced by (A) the Internal Revenue Service or state taxing authority or (B) any Governmental Authority or other Person under any Environmental Law, including any Indemnity Proceeding commenced by a Governmental Authority or other Person seeking remedial or other action to cause the Borrower, any other Loan Party or any Subsidiaries of any of the foregoing (or its respective properties) (or the Administrative Agent and/or the Lenders as successors to the Borrower) to be in compliance with such Environmental Laws; provided, however, that the Borrower shall not be obligated to indemnify any Indemnified Party to the extent that any losses, costs, claims, damages, liabilities, deficiencies, judgments or expenses incurred by such Indemnified Party (1) arise from such Indemnified Party’s gross negligence or willful misconduct or (2) arise from acts or events that occur at a Property after foreclosure or other taking of title to such Property by an Indemnified Party or any successor to or assignee of an Indemnified Party.

(b) The Borrower’s indemnification obligations under this Section shall apply to all Indemnity Proceedings arising out of, or related to, the foregoing whether or not an Indemnified Party is a named party in such Indemnity Proceeding. In this connection, this indemnification shall cover all costs and expenses of any Indemnified Party in connection with any deposition of any Indemnified Party or compliance with any subpoena (including any subpoena requesting the production of documents). This indemnification shall, among other things, apply to any Indemnity Proceeding commenced by other creditors of the Borrower, any other Loan Party or any Subsidiary of any of the foregoing, any shareholder of the Borrower, any other Loan Party or any Subsidiary of any of the foregoing (whether such shareholder(s) are prosecuting such Indemnity Proceeding in their individual capacity or derivatively on behalf of the Borrower, any other Loan Party or any Subsidiary of any of the foregoing), any account debtor of the Borrower, any other Loan Party or any Subsidiary of any of the foregoing or by any Governmental Authority.

(c) This indemnification shall apply to any Indemnity Proceeding arising during the pendency of any bankruptcy proceeding filed by or against the Borrower, any other Loan Party and/or any Subsidiary of any of the foregoing.

(d) Out-of-pocket fees and expenses of, and all amounts paid to third persons by, an Indemnified Party in an amount up to Fifty Thousand and 00/100 Dollars ($50,000.00) shall be advanced by the Borrower at the request of such Indemnified Party notwithstanding any claim or assertion by the Borrower that such Indemnified Party is not entitled to indemnification hereunder upon receipt of an undertaking by such Indemnified Party that such Indemnified Party will reimburse the Borrower if it is actually and finally determined by a court of competent jurisdiction that such Indemnified Party is not so entitled to indemnification hereunder. The foregoing limitation on amounts required to be advanced under this paragraph (d) shall not otherwise limit the Borrower’s obligations to the Indemnified Parties.

(e) An Indemnified Party may conduct its own investigation and defense of, and may formulate its own strategy with respect to, any Indemnity Proceeding covered by this Section and, as provided above, all costs and expenses incurred by such Indemnified Party shall be reimbursed by the Borrower. No action taken by legal counsel chosen by an Indemnified

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Party in investigating or defending against any such Indemnity Proceeding shall vitiate or in any way impair the obligations and duties of the Borrower hereunder to indemnify and hold harmless each such Indemnified Party; provided, however, that (i) if the Borrower is required to indemnify an Indemnified Party pursuant hereto and (ii) the Borrower has provided evidence reasonably satisfactory to such Indemnified Party that the Borrower has the financial wherewithal to reimburse such Indemnified Party for any amount paid by such Indemnified Party with respect to such Indemnity Proceeding, such Indemnified Party shall not settle or compromise any such Indemnity Proceeding without the prior written consent of the Borrower (which consent shall not be unreasonably withheld or delayed).

(f) If and to the extent that the obligations of the Borrower hereunder are unenforceable for any reason, the Borrower hereby agrees to make the maximum contribution to the payment and satisfaction of such obligations which is permissible under Applicable Law.

(g) The Borrower’s obligations hereunder shall survive any termination of this Agreement and the other Loan Documents and the payment in full in cash of the Obligations, and are in addition to, and not in substitution of, any of the other obligations set forth in this Agreement or any other Loan Document to which it is a party.

Section 13.11. Termination; Survival.

At such time as (a) all of the Commitments have been terminated, (b) none of the Lenders is obligated any longer under this Agreement to make any Loans and (c) all Obligations (other than obligations which survive as provided in the following sentence) have been paid and satisfied in full, this Agreement shall terminate. The indemnities to which the Administrative Agent and the Lenders are entitled under the provisions of Sections 5.1., 5.4., 12.8., 13.2. and 13.10. and any other provision of this Agreement and the other Loan Documents, and the provisions of Section 13.5., shall continue in full force and effect and shall protect the Administrative Agent and the Lenders (i) notwithstanding any termination of this Agreement, or of the other Loan Documents, against events arising after such termination as well as before and (ii) at all times after any such party ceases to be a party to this Agreement with respect to all matters and events existing on or prior to the date such party ceased to be a party to this Agreement.

Section 13.12. Severability of Provisions.

If any provision under this Agreement or the other Loan Documents shall be determined by a court of competent jurisdiction to be invalid or unenforceable, that provision shall be deemed severed from the Loan Documents, and the validity, legality and enforceability of the remaining provisions shall remain in full force as thought the invalid, illegal, or unenforceable provision had never been part of the Loan Documents.

Section 13.13. GOVERNING LAW.

THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS EXECUTED, AND TO BE FULLY PERFORMED, IN SUCH STATE.

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Section 13.14. Counterparts.

To facilitate execution, this Agreement and any amendments, waivers, consents or supplements may be executed in any number of counterparts as may be convenient or required. It shall not be necessary that the signature of, or on behalf of, each party, or that the signature of all persons required to bind any party, appear on each counterpart. All counterparts shall collectively constitute a single document. It shall not be necessary in making proof of this document to produce or account for more than a single counterpart containing the respective signatures of, or on behalf of , each of the parties hereto.

Section 13.15. Obligations with Respect to Loan Parties.

The obligations of the Borrower to direct or prohibit the taking of certain actions by the other Loan Parties as specified herein shall be absolute and not subject to any defense the Borrower may have that the Borrower does not control such Loan Parties.

Section 13.16. Intentionally Omitted.

Section 13.17. Limitation of Liability.

None of the Administrative Agent or any Lender, or any affiliate, officer, director, employee, attorney, or agent of the Administrative Agent or any Lender shall have any liability with respect to, and the Borrower hereby waives, releases, and agrees not to sue any of them upon, any claim for any special, indirect, incidental, or consequential damages suffered or incurred by the Borrower in connection with, arising out of, or in any way related to, this Agreement, any of the other Loan Documents or the Fee Letter, or any of the transactions contemplated by this Agreement or any of the other Loan Documents. The Borrower hereby waives, releases, and agrees not to sue the Administrative Agent or any Lender or any of the Administrative Agent’s or any Lender’s affiliates, officers, directors, employees, attorneys, or agents for punitive damages in respect of any claim in connection with, arising out of, or in any way related to, this Agreement, any of the other Loan Documents, the Fee Letter, or any of the transactions contemplated by this Agreement or financed hereby.

Section 13.18. Entire Agreement.

This Agreement, the Notes, the other Loan Documents and the Fee Letter embody the final, entire agreement among the parties hereto and supersede any and all prior commitments, agreements, representations, and understandings, whether written or oral, relating to the subject matter hereof and thereof and may not be contradicted or varied by evidence of prior, contemporaneous, or subsequent oral agreements or discussions of the parties hereto. There are no oral agreements among the parties hereto.

Section 13.19. Construction.

The Administrative Agent, the Borrower and each Lender acknowledge that each of them has had the benefit of legal counsel of its own choice and has been afforded an opportunity to review this Agreement and the other Loan Documents with its legal counsel and that this

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Agreement and the other Loan Documents shall be construed as if jointly drafted by the Administrative Agent, the Borrower and each Lender.

Section 13.20. Headings.

The Paragraph and Section headings in this Agreement are provided for convenience of reference only and shall not affect its construction or interpretation.

Section 13.21. Joinder by Parent Guarantor.

By its execution of this Agreement, the Parent Guarantor agrees to comply with the covenants applicable to it as set forth in this Agreement.

[Signatures on Following Pages]

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

BORROWER:
CHESAPEAKE LODGING, L.P., a Delaware limited partnership
By:	Chesapeake Lodging Trust, its general partner
By:	/s/ Graham J. Wootten
Name:	Graham J. Wootten
Title:	Secretary

[Signatures Continued on Next Page]

Signature Page to Amended and Restated Credit Agreement dated as of

January 21, 2011 with Chesapeake Lodging, L.P.

WELLS FARGO BANK, NATIONAL ASSOCIATION, as Administrative Agent and as a Lender
By:	/s/ Mark F. Monahan
	Mark F. Monahan
	Senior Vice President

Signature Page to Amended and Restated Credit Agreement dated as of

January 21, 2011 with Chesapeake Lodging, L.P.

JPMORGAN CHASE BANK, N.A., as Syndication       Agent and as a Lender
By:	/s/ Marc Constantino
Name:	Marc Constantino
Title:	Executive Director

Signature Page to Amended and Restated Credit Agreement dated as of

January 21, 2011 with Chesapeake Lodging, L.P.

KEYBANK NATIONAL ASSOCIATION, as a Lender
By:	/s/ Kevin P. Murray
Name:	Kevin P. Murray
Title:	Senior Vice President

Signature Page to Amended and Restated Credit Agreement dated as of

January 21, 2011 with Chesapeake Lodging, L.P.

DEUTSCHE BANK TRUST COMPANY       AMERICAS, as a Lender
By:	/s/ George R. Reynolds
Name:	George R. Reynolds
Title:	Director
By:	/s/ James Rolison
Name:	James Rolison
Title:	Managing Director

Signature Page to Amended and Restated Credit Agreement dated as of

January 21, 2011 with Chesapeake Lodging, L.P.

ROYAL BANK OF CANADA, as a Lender
By:	/s/ Dan LePage
Name:	Dan LePage
Title:	Authorized Signatory

JOINDER BY PARENT GUARANTOR

The undersigned, as the Parent Guarantor under the foregoing Agreement, hereby joins in and executes this Agreement for the purposes set forth in Section 13.21.

CHESAPEAKE LODGING TRUST, a Maryland real estate investment trust
By:	/s/ Graham J. Wootten
Name:	Graham Wootten
Title:	Secretary

SCHEDULE I

COMMITMENTS

Lender	Commitment
Wells Fargo Bank, National Association	$	50,000,000
JPMorgan Chase Bank, N.A.		25,000,000
Deutsche Bank Trust Company Americas		25,000,000
KeyBank National Association		25,000,000
Royal Bank of Canada		25,000,000

SCHEDULE 7.1.(b)

OWNERSHIP STRUCTURE

SCHEDULE 7.1.(f)

PROPERTIES

Loan Party	Property
CHSP Boston LLC	Hyatt Regency Hotel, Boston, MA
CHSP Los Angeles LLC	Checkers Hilton Hotel, Los Angeles, CA
CHSP Newton LLC	Marriott Hotel, Newton, MA
CHSP Anaheim LLC	Courtyard by Marriott Hotel, Anaheim, CA

SCHEDULE 7.1(g)

INDEBTEDNESS AND GUARANTIES

Indebtedness and Guaranties

a) Guarantee of Franchise License Agreement, dated as of July 30, 2010, by and between Borrower and Hilton Franchise LLC, a Delaware limited liability company.

b) Guaranty, dated as of July 30, 2010, from Guarantor and Borrower, in favor of Marriott International, Inc., a Delaware corporation (“Marriott”), of that certain Courtyard by Marriott Hotel Relicensing Franchise Agreement, dated as of July 30, 2010, between CHSP Anaheim LLC, a Delaware limited liability company, and Marriott.

c) Guaranty, dated as of July 30, 2010, from Guarantor and Borrower, in favor of Marriott, of that certain Marriott Hotel Relicensing Franchise Agreement, dated as of July 30, 2010, between CHSP Newton LLC, a Delaware limited liability company, and Marriott.

SCHEDULE 7.1.(h)

MATERIAL CONTRACTS

1. Hyatt Regency Hotel, Boston, Massachusetts

d) Hotel Management Agreement, dated as of March 18, 2010, between CHSP TRS Boston LLC, a Delaware limited liability company (“Boston Lessee”), and Hyatt Corporation, a Delaware corporation (“Hyatt”), as supplemented by (i) that certain letter agreement regarding supplemental fees, dated as of March 23, 2010, from Hyatt, as acknowledged by Boston Lessee and (ii) that certain letter agreement regarding waiver of form subordination agreement requirement, dated as of July 1, 2010, between Hyatt and Boston Lessee and joined into by Borrower and CHSP Boston LLC, a Delaware limited liability company (“Boston Owner”).

e) Operating Lease, dated as of March 18, 2010, by and between Boston Owner and Boston Lessee.

2. Checkers Hilton Hotel, Los Angeles, California

a) Management Agreement, dated as of June 1, 2010, by and between CHSP TRS Los Angeles LLC, a Delaware limited liability company (“Los Angeles Lessee”) and Crestline Hotels & Resorts, Inc., a Delaware corporation.

b) Franchise License Agreement, dated as of June 1, 2010, by and between Los Angeles Lessee and Hilton Franchise LLC, a Delaware limited liability company.

c) Operating Lease, dated as of June 1, 2010, by and between CHSP Los Angeles LLC, a Delaware limited liability company, and Los Angeles Lessee.

3. Courtyard by Marriott Hotel, Anaheim, California

a) Hotel Management Agreement, dated as of July 30, 2010, by and between CHSP TRS Anaheim LLC, a Delaware limited liability company (“Anaheim Lessee”) and Tarasidia Hotels, a California corporation.

b) Courtyard by Marriott Hotel Relicensing Franchise Agreement, dated as of July 30, 2010, by and between Marriott International, Inc., a Delaware corporation, and Anaheim Lessee.

c) Operating Lease, dated as of July 30, 2010, by and between CHSP Anaheim LLC, a Delaware limited liability company, and Anaheim Lessee.

4. Marriott Hotel, Newton, Massachusetts

a) Hotel Management Agreement, dated as of July 30, 2010, by and between CHSP TRS Newton LLC, a Delaware limited liability company (“Newton Lessee”) and TPG Hospitality, Inc., a Rhode Island corporation.

b) Marriott Hotel Relicensing Franchise Agreement, dated as of July 30, 2010, by and between Marriott International, Inc., a Delaware corporation, and Newton Lessee.

c) Operating Lease, dated as of July 30, 2010, by and between CHSP Newton LLC, a Delaware limited liability company, and Newton Lessee.

SCHEDULE 7.1(i)

LITIGATION

None.

SCHEDULE 7.1(s)

AFFILIATE TRANSACTIONS

Affiliate Transactions

a) Operating Lease, dated as of March 18, 2010, by and between CHSP Boston LLC, a Delaware limited liability company, and CHSP TRS Boston LLC, a Delaware limited liability company.

b) Operating Lease, dated as of June 1, 2010, by and between CHSP Los Angeles LLC, a Delaware limited liability company, and CHSP TRS Los Angeles LLC, a Delaware limited liability company.

c) Operating Lease, dated as of July 30, 2010, by and between CHSP Anaheim LLC, a Delaware limited liability company, and CHSP TRS Anaheim LLC, a Delaware limited liability company.

d) Operating Lease, dated as of July 30, 2010, by and between CHSP Newton LLC, a Delaware limited liability company, and CHSP TRS Newton LLC, a Delaware limited liability company.

SCHEDULE 7.1(t)

INTELLECTUAL PROPERTY

Intellectual Property

www.chesapeakelodgingtrust.com

www.cltreit.com

SCHEDULE 13.1

NOTICES

JPMorgan Chase Bank, N.A.

383 Madison Avenue – 24^th Floor

New York, NY 10179

Attention: Marc Costantino

Telecopy Number: (646) 534-0574

Telephone Number: (212) 622-8167

KeyBank National Association

1200 Abernathy Rd.

Atlanta, GA 30328

Attention: Kevin Murray

Telecopy Number: (770) 510-2195

Telephone Number: (770) 510-2168

Deutsche Bank Trust Company Americas

60 Wall Street, M/S NYC60-1005

New York, NY 10005

Attention: George Reynolds

Telecopy Number: (212) 797-4996

Telephone Number: (212) 250-2362

Royal Bank of Canada

New York Branch

One Liberty Plaza, 3^rd Floor

New York, NY 10006-1404

Attention: Manager, Loans Administration

Telecopy Number: (212) 438-2372

With copy to:

Royal Bank of Canada

Corporate Banking

3 World Financial Center

200 Vesey Street, 12^th Floor

New York, NY 10281-8098

Attention: Connie Lee

Telecopy Number: (212) 428-6459

Telephone Number: (212) 437-9234

EXHIBIT A

FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT

THIS ASSIGNMENT AND ASSUMPTION AGREEMENT dated as of             , 20     (the “Agreement”) by and among                                  (the “Assignor”),                                  (the “Assignee”), CHESAPEAKE LODGING, L.P. (the “Borrower”), and WELLS FARGO BANK, NATIONAL ASSOCIATION, as Administrative Agent (the “Administrative Agent”).

WHEREAS, the Assignor is a Lender under that certain Amended and Restated Credit Agreement dated as of January 21, 2011 (as amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”), by and among the Borrower, the financial institutions party thereto and their assignees under Section 13.6. thereof, the Administrative Agent, and the other parties thereto;

WHEREAS, the Assignor desires to assign to the Assignee all or a portion of the Assignor’s Commitment under the Credit Agreement, all on the terms and conditions set forth herein; and

WHEREAS, the [Borrower and the] Administrative Agent consent[s] to such assignment on the terms and conditions set forth herein.

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

Section 1. Assignment.

(a) Subject to the terms and conditions of this Agreement and in consideration of the payment to be made by the Assignee to the Assignor pursuant to Section 2 of this Agreement, effective as of             , 20     (the “Assignment Date”) the Assignor hereby irrevocably sells, transfers and assigns to the Assignee, without recourse, a $             interest (such interest being the “Assigned Commitment”) in and to the Assignor’s Commitment, and all of the other rights and obligations of the Assignor under the Credit Agreement, such Assignor’s Note, and the other Loan Documents representing             % in respect of the aggregate amount of all Lenders’ Commitments, including without limitation, a principal amount of outstanding Loans equal to $            , all voting rights of the Assignor associated with The Assigned Commitment all rights to receive interest on such amount of Loans and all Fees with respect to the Assigned Commitment and other rights of the Assignor under the Credit Agreement and the other Loan Documents with respect to the Assigned Commitment, all as if the Assignee were an original Lender under and signatory to the Credit Agreement having a Commitment equal to the amount of the Assigned Commitment. The Assignee, subject to the terms and conditions hereof, hereby assumes all obligations of the Assignor with respect to the Assigned Commitment as if the Assignee were an original Lender under and signatory to the Credit Agreement having a Commitment equal to the Assigned Commitment, which obligations shall include, but shall not be limited to, the obligation of the Assignor to make Loans to the Borrower with respect to the Assigned Commitment and] the obligation to indemnify the Administrative Agent as provided in the Credit Agreement (the foregoing obligations, together with all other similar obligations more particularly set forth in the Credit Agreement and the other Loan Documents, shall be referred to hereinafter, collectively, as the “Assigned Obligations”). The Assignor shall have no further duties or obligations with respect to, and shall have no further interest in, the Assigned Obligations or the Assigned Commitment from and after the Assignment Date.

A-1

(b) The assignment by the Assignor to the Assignee hereunder is without recourse to the Assignor. The Assignee makes and confirms to the Administrative Agent, the Assignor, and the other Lenders all of the representations, warranties and covenants of a Lender under Article XII of the Credit Agreement. Not in limitation of the foregoing, the Assignee acknowledges and agrees that, except as set forth in Section 4. below, the Assignor is making no representations or warranties with respect to, and the Assignee hereby releases and discharges the Assignor for any responsibility or liability for: (i) the present or future solvency or financial condition of the Borrower, any other Loan Party or any other Subsidiary, (ii) any representations, warranties, statements or information made or furnished by the Borrower, any other Loan Party or any other Subsidiary in connection with the Credit Agreement or otherwise, (iii) the validity, efficacy, sufficiency, or enforceability of the Credit Agreement, any Loan Document or any other document or instrument executed in connection therewith, or the collectibility of the Assigned Obligations, (iv) the perfection, priority or validity of any Lien with respect to any collateral at any time securing the Obligations or the Assigned Obligations under the Notes or the Credit Agreement and (v) the performance or failure to perform by the Borrower or any other Loan Party of any obligation under the Credit Agreement or any other Loan Document. Further, the Assignee acknowledges that it has, independently and without reliance upon the Administrative Agent, any other Lender or counsel to the Administrative Agent or any of their respective officers, directors, employees and agents and based on the financial statements supplied by the Borrower and such other documents and information as it has deemed appropriate, made its own credit analysis and decision to become a Lender under the Credit Agreement. The Assignee also acknowledges that it will, independently and without reliance upon the Administrative Agent or any other Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Credit Agreement or any Note or pursuant to any other obligation. The Administrative Agent shall have no duty or responsibility whatsoever, either initially or on a continuing basis, to provide the Assignee with any credit or other information with respect to the Borrower, any other Loan Party or any other Subsidiary or to notify the undersigned of any Default or Event of Default except as expressly provided in the Credit Agreement. The Assignee has not relied on the Administrative Agent as to any legal or factual matter in connection therewith or in connection with the transactions contemplated thereunder.

Section 2. Payment by Assignee. In consideration of the assignment made pursuant to Section 1. of this Agreement, the Assignee agrees to pay to the Assignor on the Assignment Date, an amount equal to $             representing the aggregate principal amount outstanding of the Loans owing to the Assignor under the Credit Agreement and the other Loan Documents being assigned hereby.

Section 3. Payments by Assignor. The Assignor agrees to pay to the Administrative Agent on the Assignment Date the administrative fee payable under Section 13.6.(c) of the Credit Agreement.

Section 4. Representations and Warranties of Assignor. The Assignor hereby represents and warrants to the Assignee that (a) as of the Assignment Date (i) the Assignor is a Lender under the Credit Agreement having a Commitment under the Credit Agreement immediately prior to the Assignment Date, equal to $             and that the Assignor is not in default of its obligations under the Credit Agreement; and (ii) the outstanding balance of Loans owing to the Assignor (without reduction by any assignments thereof which have not yet become effective) is $            , and (b) it is the legal and beneficial owner of the Assigned Commitment which is free and clear of any adverse claim created by the Assignor.

Section 5. Representations, Warranties and Agreements of Assignee. The Assignee (a) represents and warrants that it is (i) legally authorized to enter into this Agreement; (ii) an “accredited investor” (as such term is used in Regulation D of the Securities Act) and (iii) an Eligible Assignee; (b) confirms that it has received a copy of the Credit Agreement, together with copies of the most recent financial statements delivered pursuant thereto and such other documents and information (including

A-2

without limitation the Loan Documents) as it has deemed appropriate to make its own credit analysis and decision to enter into this Agreement; (c) appoints and authorizes the Administrative Agent to take such action as contractual representative on its behalf and to exercise such powers under the Loan Documents as are delegated to the Administrative Agent by the terms thereof together with such powers as are reasonably incidental thereto; (d) agrees that it will become a party to and shall be bound by the Credit Agreement and the other Loan Documents to which the other Lenders are a party on the Assignment Date and will perform in accordance therewith all of the obligations which are required to be performed by it as a Lender; and (e) is either (i) not organized under the laws of a jurisdiction outside the United States of America or (ii) has delivered to the Administrative Agent (with an additional copy for the Borrower) such items required under Section 3.10. of the Credit Agreement.

Section 6. Recording and Acknowledgment by the Administrative Agent. Following the execution of this Agreement, the Assignor will deliver to the Administrative Agent (a) a duly executed copy of this Agreement for acknowledgment and recording by the Administrative Agent and (b) the Assignor’s Note. Upon such acknowledgment and recording, from and after the Assignment Date, the Administrative Agent shall make all payments in respect of the interest assigned hereby (including payments of principal, interest, fees and other amounts) to the Assignee. The Assignor and Assignee shall make all appropriate adjustments in payments under the Credit Agreement for periods prior to the Assignment Date directly between themselves.

Section 7. Addresses. The Assignee specifies as its address for notices and its Lending Office for all Loans, the offices set forth below:

Attention:                                                      

Telephone No.:                                 

Telecopy No.:                                                 

Section 8. Payment Instructions. All payments to be made to the Assignee under this Agreement by the Assignor, and all payments to be made to the Assignee under the Credit Agreement, shall be made as provided in the Credit Agreement in accordance with the following instructions:

Section 9. Effectiveness of Assignment. This Agreement, and the assignment and assumption contemplated herein, shall not be effective until (a) this Agreement is executed and delivered by each of the Assignor, the Assignee, the Administrative Agent and if required, the Borrower, and (b) the payment to the Assignor of the amounts owing by the Assignee pursuant to Section 2. hereof and (c) the payment to the Administrative Agent of the amounts owing by the Assignor pursuant to Section 3. hereof. Upon recording and acknowledgment of this Agreement by the Administrative Agent, from and after the Assignment Date, (i) the Assignee shall be a party to the Credit Agreement and, to the extent provided in this Agreement, have the rights and obligations of a Lender thereunder and (ii) the Assignor shall, to the extent provided in this Agreement, relinquish its rights (except as otherwise provided in Section 13.11 of the Credit Agreement) and be released from its obligations under the Credit Agreement; provided, however, that if the Assignor does not assign its entire interest under the Loan Documents, it shall remain a Lender entitled to all of the benefits and subject to all of the obligations thereunder with respect to its Commitment.

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Section 10. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS EXECUTED, AND TO BE FULLY PERFORMED, IN SUCH STATE.

Section 11. Counterparts. This Agreement may be executed in any number of counterparts each of which, when taken together, shall constitute one and the same agreement.

Section 12. Headings. Section headings have been inserted herein for convenience only and shall not be construed to be a part hereof.

Section 13. Amendments; Waivers. This Agreement may not be amended, changed, waived or modified except by a writing executed by the Assignee and the Assignor.

Section 14. Entire Agreement. This Agreement embodies the entire agreement between the Assignor and the Assignee with respect to the subject matter hereof and supersedes all other prior arrangements and understandings relating to the subject matter hereof.

Section 15. Binding Effect. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns.

Section 16. Definitions. Terms not otherwise defined herein are used herein with the respective meanings given them in the Credit Agreement.

[Include this Section only if the Borrower’s consent is required under Section 13.6.(c) of the Credit Agreement] Section 17. Agreements of the Borrower. The Borrower hereby agrees that the Assignee shall be a Lender under the Credit Agreement having a Commitment equal to the Assigned Commitment. The Borrower agrees that the Assignee shall have all of the rights and remedies of a Lender under the Credit Agreement and the other Loan Documents as if the Assignee were an original Lender under and signatory to the Credit Agreement, including, but not limited to, the right of a Lender to receive payments of principal and interest with respect to the Assigned Obligations, if any, and to the Loans made by the Lenders after the date hereof and to receive the Fees payable to the Lenders as provided in the Credit Agreement. Further, the Assignee shall be entitled to the benefit of the indemnification provisions from the Borrower in favor of the Lenders as provided in the Credit Agreement and the other Loan Documents. The Borrower further agrees, upon the execution and delivery of this Agreement, to execute in favor of the Assignee a Note in an initial amount equal to the Assigned Commitment. Further, the Borrower agrees that, upon the execution and delivery of this Agreement, the Borrower shall owe the Assigned Obligations to the Assignee as if the Assignee were the Lender originally making such Loans and entering into such other obligations.

[Signatures on Following Page]

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

ASSIGNOR:

[NAME OF ASSIGNOR]

By:

      Name:

      Title:

Payment Instructions

[Bank]

[Address]

ABA No. :

Account No.:

Account Name:

Reference:

ASSIGNEE:

[Name of Assignee]

By:

      Name:

      Title:

Payment Instructions

[Bank]

[Address]

ABA No. :

Account No.:

Account Name:

Reference:

[Signatures continued on Following Page]

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Agreed and Consented to as of the date first written above.

[Include signature of the Borrower only if required under Section 13.6.(c) of the Credit Agreement]

BORROWER:
CHESAPEAKE LODGING, L.P., a Delaware limited partnership
By:	Chesapeake Lodging Trust, its general partner
By:
Name:
Title:

Accepted as of the date first written above.

ADMINISTRATIVE AGENT:

WELLS FARGO BANK, NATIONAL ASSOCIATION, as Administrative Agent

By:

      Name:

      Title:

A-6

EXHIBIT B

FORM OF DSCR CERTIFICATE

Reference is made to the Amended and Restated Credit Agreement dated as of January 21, 2011 (as amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”), by and among Chesapeake Lodging, L.P. (the “Borrower”), the financial institutions party thereto and their assignees under Section 13.6. thereof (the “Lenders”), Wells Fargo Bank, National Association, as Administrative Agent (the “Administrative Agent”), and the other parties thereto. Capitalized terms used herein, and not otherwise defined herein, have their respective meanings given to them in the Credit Agreement.

Pursuant to the Credit Agreement, the undersigned hereby certifies to the Administrative Agent and the Lenders that Schedule 1 attached hereto accurately and completely sets forth the calculations required to establish compliance with the Minimum DSCR Hurdle as of the date set forth on Schedule I.

IN WITNESS WHEREOF, the undersigned has signed this Compliance Certificate on and as of             , 20    .

BORROWER:
CHESAPEAKE LODGING, L.P., a Delaware limited partnership
By:	Chesapeake Lodging Trust, its general partner
By:
Name:
Title:

B-1

EXHIBIT C

FORM OF NOTE

$                         , 20    

FOR VALUE RECEIVED, the undersigned, Chesapeake Lodging, L.P., a Delaware limited partnership (the “Borrower”) hereby unconditionally promises to pay to the order of                                  (the “Lender”), in care of Wells Fargo Bank, National Association, as Administrative Agent (the “Administrative Agent”), to Wells Fargo Bank, Minneapolis Loan Center of Administrative Agent, 608 2^nd Avenue S., 11^th Floor, Minneapolis, MN 55402, Attention: Donise White, or at such other address as may be specified by the Administrative Agent to the Borrower, the principal sum of                                  AND         /100 DOLLARS ($            ), or such lesser amount as may be the then outstanding and unpaid balance of all Loans made by the Lender to the Borrower pursuant to, and in accordance with the terms of, the Credit Agreement.

The Borrower further agrees to pay interest at said office, in like money, on the unpaid principal amount owing hereunder from time to time on the dates and at the rates and at the times specified in the Credit Agreement.

This Note is one of the “Notes” referred to in the Amended and Restated Credit Agreement dated as of January 21, 2011 (as amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”), by and among the Borrower, the financial institutions party thereto and their assignees under Section 13.6. thereof, the Administrative Agent, and the other parties thereto, and is subject to, and entitled to, all provisions and benefits thereof. Capitalized terms used herein and not defined herein shall have the respective meanings given to such terms in the Credit Agreement. The Credit Agreement, among other things, (a) provides for the making of Loans by the Lender to the Borrower from time to time in an aggregate amount not to exceed at any time outstanding the Dollar amount first above mentioned, (b) permits the prepayment of the Loans by the Borrower subject to certain terms and conditions and (c) provides for the acceleration of the Loans upon the occurrence of certain specified events.

The Borrower hereby waives presentment, demand, protest and notice of any kind. No failure to exercise, and no delay in exercising any rights hereunder on the part of the holder hereof shall operate as a waiver of such rights.

Time is of the essence for this Note.

[This Note is given in replacement of the Note dated             , 2010, in the original principal amount of $             previously delivered to the Lender under the Credit Agreement. THIS NOTE IS NOT INTENDED TO BE, AND SHALL NOT BE CONSTRUED TO BE, A NOVATION OF ANY OF THE OBLIGATIONS OWING UNDER OR IN CONNECTION WITH THE OTHER NOTE.]¹

THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS EXECUTED, AND TO BE FULLY PERFORMED, IN SUCH STATE.

¹ Language to be included in case of an assignment and need to issue a replacement note to an existing Lender, either because such Lender’s Commitment has increased or decreased from what it was initially.

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IN WITNESS WHEREOF, the undersigned has executed and delivered this Note under seal as of the date written above.

CHESAPEAKE LODGING, L.P.,
a Delaware limited partnership
By:	Chesapeake Lodging Trust, its general partner
By:

Name:

Title:

C-2

EXHIBIT D

FORM OF NOTICE OF BORROWING

            , 20    

Wells Fargo Bank

Minneapolis Loan Center

608 2^nd Avenue S., 11^th Floor

Minneapolis, MN 55402

Attention: Donise White

Ladies and Gentlemen:

Reference is made to that certain Amended and Restated Credit Agreement dated as of January 21, 2011 (as amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”), by and among Chesapeake Lodging, L.P., a Delaware limited partnership (the “Borrower”), the financial institutions party thereto and their assignees under Section 13.6. thereof (the “Lenders”), Wells Fargo Bank, National Association, as Administrative Agent (the “Administrative Agent”), and the other parties thereto. Capitalized terms used herein, and not otherwise defined herein, have their respective meanings given them in the Credit Agreement.

1. Pursuant to Section 2.1(b) of the Credit Agreement, the Borrower hereby requests that the Lenders make Loans to the Borrower in an aggregate amount equal to $            .

2. The Borrower requests that such Loans be made available to the Borrower on             , 20    .

3. The Borrower hereby requests that such Loans be of the following Type:

[Check one box only]

¨¨¨ Base Rate Loan

¨¨¨ LIBOR Loan, with an initial Interest Period for a duration of:

[Check one box only]

¨¨ one month

¨¨ three months

¨¨ six months

The Borrower hereby certifies to the Administrative Agent and the Lenders that as of the date hereof, as of the date of the making of the requested Loans, and after making such Loans, (a) no Default or Event of Default exists or would exist, and none of the limits specified in Section 2.17. would be violated; and (b) the representations and warranties made or deemed made by the Borrower and each other Loan Party in the Loan Documents to which any of them is a party, are and shall be true and correct with the same force and effect as if made on and as of such date except to the extent that such representations and warranties expressly relate solely to an earlier date (in which case such representations and warranties shall have been true and accurate on and as of such earlier date) and except for changes in factual circumstances specifically and expressly permitted under the Loan Documents. In

D-1

addition, the Borrower certifies to the Administrative Agent and the Lenders that all conditions to the making of the requested Loans contained in Article VI. of the Credit Agreement will have been satisfied at the time such Loans are made.

CHESAPEAKE LODGING, L.P.,
a Delaware limited partnership
By:	Chesapeake Lodging Trust,
	its general partner
By:
Name:
Title:

D-2

EXHIBIT E

FORM OF NOTICE OF CONTINUATION

            , 20__

Wells Fargo Bank

Minneapolis Loan Center

608 2^nd Avenue S., 11^th Floor

Minneapolis, MN 55402

Attention: Donise White

Ladies and Gentlemen:

Reference is made to that certain Amended and Restated Credit Agreement dated as of January 21, 2011 (as amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”), by and among Chesapeake Lodging, L.P., a Delaware limited partnership (the “Borrower”), the financial institutions party thereto and their assignees under Section 13.6. thereof (the “Lenders”), Wells Fargo Bank, National Association, as Administrative Agent (the “Administrative Agent”), and the other parties thereto. Capitalized terms used herein, and not otherwise defined herein, have their respective meanings given them in the Credit Agreement.

Pursuant to Section 2.11. of the Credit Agreement, the Borrower hereby requests a Continuation of Loans under the Credit Agreement, and in that connection sets forth below the information relating to such Continuation as required by such Section of the Credit Agreement:

1. The requested date of such Continuation is             , 20    .

2. The aggregate principal amount of the Loans subject to the requested Continuation is $             and the portion of such principal amount subject to such Continuation is $            .

3. The current Interest Period of the Loans subject to such Continuation ends on             , 20__.

4. The duration of the Interest Period for the Loans or portion thereof subject to such Continuation is:

[Check one box only]

¨¨     one month

¨¨     three months

¨¨     six months

[Continued on next page]

E-1

The Borrower hereby certifies to the Administrative Agent and the Lenders that as of the date hereof, as of the proposed date of the requested Continuation, and after giving effect to such Continuation, no Default or Event of Default exists or will exist.

CHESAPEAKE LODGING, L.P.,
a Delaware limited partnership
By:	Chesapeake Lodging Trust,
	its general partner
By:
Name:
Title:

E-2

EXHIBIT F

FORM OF NOTICE OF CONVERSION

            , 20__

Wells Fargo Bank

Minneapolis Loan Center

608 2^nd Avenue S., 11^th Floor

Minneapolis, MN 55402

Attention: Donise White

Ladies and Gentlemen:

Reference is made to the Amended and Restated Credit Agreement dated as of January 21, 2011 (as amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”), by and among Chesapeake Lodging, L.P., a Delaware limited partnership (the “Borrower”), the financial institutions party thereto and their assignees under Section 13.6. thereof (the “Lenders”), Wells Fargo Bank, National Association, as Administrative Agent (the “Administrative Agent”), and the other parties thereto. Capitalized terms used herein, and not otherwise defined herein, have their respective meanings given them in the Credit Agreement.

Pursuant to Section 2.12. of the Credit Agreement, the Borrower hereby requests a Conversion of Loans of one Type into Loans of another Type under the Credit Agreement, and in that connection sets forth below the information relating to such Conversion as required by such Section of the Credit Agreement:

1. The requested date of such Conversion is             , 20    .

2. The Type of Loans to be Converted pursuant hereto is currently:

[Check one box only]

¨¨         Base Rate Loan

¨¨          LIBOR Loan

3. The aggregate principal amount of the Loans subject to the requested Conversion is $             and the portion of such principal amount subject to such Conversion is $            .

F-1

4. The amount of such Loans to be so Converted is to be converted into Loans of the following Type:

[Check one box only]

¨¨         Base Rate Loan

¨¨         LIBOR Loan, with an initial Interest Period for a duration of:

[Check one box only]

¨¨     one month

¨¨     three months

¨¨     six months

The Borrower hereby certifies to the Administrative Agent and the Lenders that as of the date hereof, as of the proposed date of the requested Conversion, and after giving effect to such Conversion, no Default or Event of Default exists or will exist.

CHESAPEAKE LODGING, L.P.,
a Delaware limited partnership
By:	Chesapeake Lodging Trust,
	its general partner
By:
Name:
Title:

F-2

Loan No. 1002242

EXHIBIT G

TRANSFER AUTHORIZER DESIGNATION

(For Disbursement of Loan Proceeds by Funds Transfer)

¨ NEW    ¨    REPLACE PREVIOUS DESIGNATION    ¨  ADD    ¨    CHANGE    ¨    DELETE LINE NUMBER                 

The following representatives of Chesapeake Lodging, L.P., a Delaware limited partnership (“Borrower”) are authorized to request the disbursement of Loan Proceeds and initiate funds transfers for Loan Number 1002242 assigned to the secured credit facility evidenced by the Amended and Restated Credit Agreement dated January 21, 2011 among the Borrower, each of the financial institutions initially a signatory thereto together with their assignees under Section 13.6. thereof (the “Lenders”), Wells Fargo Bank, National Association, as the Administrative Agent for the Lenders (the “Administrative Agent”) and the other parties thereto. The Administrative Agent is authorized to rely on this Transfer Authorizer Designation until it has received a new Transfer Authorizer Designation signed by Borrower, even in the event that any or all of the foregoing information may have changed.

Name Title Maximum Wire   Amount2

[Continued on next page]

G-1

Beneficiary Bank and Account Holder Information

1.

Transfer Funds to (Receiving Party Account Name):
Receiving Party Account Number:
Receiving Bank Name, City and State:	Receiving                 Bank                 Routing                 (ABA)                 Number
Maximum Transfer Amount:
Further Credit Information/Instructions:

2.

Transfer Funds to (Receiving Party Account Name):
Receiving Party Account Number:
Receiving Bank Name, City and State:	Receiving                 Bank                 Routing                 (ABA)                 Number
Maximum Transfer Amount:
Further Credit Information/Instructions:

G-2

3.

Transfer Funds to (Receiving Party Account Name):
Receiving Party Account Number:
Receiving Bank Name, City and State:	Receiving                 Bank                 Routing                 (ABA)                 Number
Maximum Transfer Amount:
Further Credit Information/Instructions:

1 Maximum Wire Amount may not exceed the Loan Amount.

G-3

Date:             , 20    

BORROWER:
CHESAPEAKE LODGING, L.P., a Delaware limited partnership
By:	Chesapeake Lodging Trust,
	its general partner
By:
Name:
Title:

G-4

EXHIBIT H

MATTERS TO BE ADDRESSED IN OPINIONS OF COUNSEL

• The matters set forth in Sections 7.1(a), 7.1(c), 7.1(d), the first sentence of Section 7.1(i), and Section 7.1(q)

• The perfection of Liens in personal property

• Usury

H-1

EXHIBIT I

FORM OF COMPLIANCE CERTIFICATE

Reference is made to the Amended and Restated Credit Agreement dated as of January 21, 2011 (as amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”), by and among Chesapeake Lodging, L.P. (the “Borrower”), the financial institutions party thereto and their assignees under Section 13.6. thereof (the “Lenders”), Wells Fargo Bank, National Association, as Administrative Agent (the “Administrative Agent”), and the other parties thereto. Capitalized terms used herein, and not otherwise defined herein, have their respective meanings given to them in the Credit Agreement.

Pursuant to Section 9.3. of the Credit Agreement, the undersigned hereby certifies to the Administrative Agent and the Lenders that:

1. (a) The undersigned has reviewed the terms of the Credit Agreement and has made a review of the transactions, financial condition and other affairs of the Parent Guarantor and its Subsidiaries as of, and during the relevant accounting period ending on,             , 20    and (b) such review has not disclosed the existence during such accounting period, and the undersigned does not have knowledge of the existence, as of the date hereof, of any condition or event constituting a Default or Event of Default [except as set forth on Attachment A hereto, which accurately describes the nature of the conditions(s) or event(s) that constitute (a) Default(s) or (an) Event(s) of Default and the actions which the Borrower (is taking)(is planning to take) with respect to such condition(s) or event(s)].

2. Schedule 1 attached hereto accurately and completely sets forth the calculations required to establish compliance with Section 10.1 of the Credit Agreement on the date of the financial statements for the accounting period set forth above.

3. As of the date hereof the aggregate outstanding principal amount of all outstanding Loans is less than or equal to the Maximum Loan Availability at such time.

4. (a) No Default or Event of Default exists, and (b) the representations and warranties of the Borrower and the other Loan Parties contained in the Credit Agreement and the other Loan Documents are true and correct in all material respects, except to the extent such representations or warranties expressly relate solely to an earlier date (in which case such representations and warranties shall have been true and accurate on and as of such earlier date) and except for changes in factual circumstances specifically and expressly permitted under the Credit Agreement or the other Loan Documents.

IN WITNESS WHEREOF, the undersigned has signed this Compliance Certificate on and as of             , 20    .

I-1

BORROWER:
CHESAPEAKE LODGING, L.P., a Delaware limited partnership
By:	Chesapeake Lodging Trust, its general partner
By:
Name:
Title:

I-2

EX-10.25

Exhibit 10.25

CHESAPEAKE LODGING TRUST

Trustee Compensation Policy

Commencing with the 2011 annual meeting of shareholders, the non-officer trustees of Chesapeake Lodging Trust (the “Trust”) shall be paid an annual retainer fee of $60,000, payable quarterly. In addition, the audit committee chairman will be paid an additional annual retainer of $15,000, the compensation committee chairman will be paid an additional annual retainer of $10,000 and the nominating and corporate governance committee chairman will be paid an additional annual retainer of $7,500, in each case payable quarterly. The non-executive Chairman of the Board of Trustees of the Trust will be paid an additional annual retainer of $20,000. Although the Trust will reimburse the trustees for reasonable out-of-pocket expenses incurred in connection with performance of their duties as trustees, including, without limitation, travel expenses in connection with their attendance at board and committee meetings, the Trust will not pay any trustee a separate fee for meetings attended. Furthermore, trustees will not receive any perquisites.

The non-officer trustees may elect to receive their annual retainers and chair committee fees in whole or in part in the form of cash or immediately vested common shares of beneficial interest of the Trust (“Common Shares”) based on the closing market price of the Common Shares on the grant date.

In connection with each annual meeting of shareholders, each of the Trust’s non-officer trustees will receive a grant of 1,000 restricted Common Shares, except that the non-executive Chairman of the Board of Trustees will receive a grant of 1,500 Common Shares in recognition of his or her expanded responsibilities in such capacity. A similar grant of 1,000 restricted Common Shares will be made to each new member of the Board of Trustees upon his or her appointment or election to serve in such capacity. Vesting for all grants will occur on the date of the next annual meeting, with acceleration upon termination due to death, disability or involuntary termination of service as a result of a change in control. Dividends will be paid on the unvested restricted shares when declared and paid on the Trust’s Common Shares generally.

EX-21.1

Exhibit 21.1

List of Subsidiaries of Chesapeake Lodging Trust

CHSP LLC

Chesapeake Lodging, L.P.

CHSP TRS LLC

CHSP Boston LLC

CHSP Los Angeles LLC

CHSP Anaheim LLC

CHSP Newton LLC

CHSP San Francisco LLC

CHSP Seattle LLC

CHSP TRS Boston LLC

CHSP TRS Los Angeles LLC

CHSP TRS Anaheim LLC

CHSP TRS Newton LLC

CHSP TRS San Francisco LLC

CHSP TRS Seattle LLC

EX-23.1

Exhibit 23.1

Consent of Independent Registered Public Accounting Firm

We consent to the incorporation by reference in the Registration Statement (Form S-8 No. 333-164537) pertaining to the Chesapeake Lodging Trust Equity Plan of our report dated February 16, 2011, with respect to the consolidated financial statements and schedule of Chesapeake Lodging Trust included in this Annual Report (Form 10-K) for the year ended December 31, 2010.

/s/ Ernst & Young LLP

McLean, Virginia

February 16, 2011

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-K 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 directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: February 16, 2011

/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 and Chief Financial Officer, certify that:

(1) I have reviewed this report on Form 10-K 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 directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: February 16, 2011

/s/ Douglas W. Vicari

Executive Vice President and

Chief Financial Officer

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 Annual Report of Chesapeake Lodging Trust (the “Company”) on Form 10-K for the period ended December 31, 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: February 16, 2011

/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 Annual Report of Chesapeake Lodging Trust (the “Company”) on Form 10-K for the period ended December 31, 2010, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Douglas W. Vicari, Executive Vice President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to 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: February 16, 2011

/s/ Douglas W. Vicari

Executive Vice President and

Chief Financial Officer