Exhibit 10.1

Execution Copy

AGREEMENT FOR SALE AND PURCHASE OF HOTEL
SAN DIEGO MARRIOTT LA JOLLA
SAN DIEGO, CALIFORNIA
By and Between
HEI LA JOLLA LLC,
a Delaware limited liability company
(“Seller”)

and
CWI 2 LA JOLLA HOTEL LP,
a Delaware limited partnership
(“Purchaser”)

May 19, 2016

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AGREEMENT FOR SALE AND PURCHASE OF HOTEL
Table of Contents
Page
Article I DEFINITIONS AND REFERENCES
1

Section 1.1
Definitions
1

Section 1.2
References
12

 
 
 
Article II SALE AND PURCHASE; “AS IS,” “WHERE IS” SALE
13

Section 2.1
Sale and Purchase
13

Section 2.2
As is, Where is
13

 
 
 
Article III PURCHASE PRICE
17

Section 3.1
Purchase Price; Deposit
17

Section 3.2
Application of Deposit
17

 
 
 
Article IV DILIGENCE MATTERS
18

Section 4.1
Inspection Period
18

Section 4.2
Review and Inspection
18

Section 4.3
Testing
18

Section 4.4
Intentionally Omitted
19

Section 4.5
Confidentiality
19

Section 4.6
Indemnification; Restoration; Insurance
20

Section 4.7
Title and Survey
20

Section 4.8
Space Leases, Hotel Contracts and Equipment Leases
21

Section 4.9
Franchise Agreement
22

Section 4.10
3-05 Audit
23

Section 4.11
California Required Disclosures
23

Section 4.12
Intentionally Deleted
24

Section 4.13
Tax Clearance
24

 
 
 
Article V REPRESENTATIONS AND WARRANTIES
24

Section 5.1
Representations and Warranties of Seller
24

Section 5.2
Representations and Warranties of Purchaser
29

Section 5.3
Duration of Representations and Warranties and Covenants; Limitations on
Liability
30

Section 5.4
Indemnities
31

Section 5.5
Procedure for Indemnification with Respect to Third Party Claims
33

 
 
 

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Article VI CLOSING AND CLOSING DELIVERIES
33

Section 6.1
Closing
33

Section 6.2
Escrow
34

Section 6.3
Seller’s Deliveries
34

Section 6.4
Purchaser’s Deliveries
35

Section 6.5
Expenses
36

Section 6.6
Concurrent Transactions
36

Section 6.7
Possession
36

 
 
 
Article VII ADJUSTMENTS AND PRORATIONS CLOSING STATEMENTS
36

Section 7.1
Adjustments and Prorations
36

Section 7.2
Payment
40

Section 7.3
Survival
40

 
 
 
Article VIII CONDITIONS TO SELLER’S OBLIGATIONS
40

Section 8.1
Conditions
40

 
 
 
Article IX CONDITIONS TO PURCHASER’S OBLIGATIONS
41

Section 9.1
Conditions
41

Section 9.2
Closing Condition Failure
44

 
 
 
Article X ACTIONS AND OPERATIONS PENDING CLOSING
45

Section 10.1
Actions and Operations Pending Closing
45

 
 
 
Article XI CASUALTIES AND TAKINGS
51

Section 11.1
Casualties
51

Section 11.2
Takings
52

 
 
 
Article XII EMPLOYEES
53

Section 12.1
Employees
53

 
 
 
Article XIII NOTICES
55

Section 13.1
Notices
55

 
 
 
Article XIV ADDITIONAL COVENANTS
56

Section 14.1
Additional Covenants
56

 
 
 
Article XV DEFAULTS AND REMEDIES; EFFECT OF TERMINATION
57-A

Section 15.1
Purchaser Default/Seller’s Remedies
57-A

Section 15.2
Seller Default/Purchaser’s Remedies
58

Section 15.3
Attorneys’ Fees
59

Section 15.4
No Reservation of Property
59

 
 
 

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Article XVI IRS FORM 1099-S DESIGNATION
59

Section 16.1
Designee
59

 
 
 
Article XVII MISCELLANEOUS PROVISIONS
59

Section 17.1
Construction
59

Section 17.2
Severability
60

Section 17.3
Publicity
60

Section 17.4
Assignment
61

Section 17.5
Business Days
61

Section 17.6
Counterparts
61

Section 17.7
Recitals, Exhibits and Schedules
62

Section 17.8
Entirety
62

Section 17.9
Amendments to Agreement
62

Section 17.10
Governing Law
62

Section 17.11
Jurisdiction
62

Section 17.12
Jury Trial Waiver
62

Section 17.13
Successors and Assigns
63

Section 17.14
No Agreement Until Execution
64

Section 17.15
Recording
64

 
 
 
Article XVIII GENERAL ESCROW PROVISIONS
64

Section 18.1
General Escrow Provisions
64

Exhibit A:
Excluded Assets
Exhibit B:
Land
Exhibit C-1:
Pending or Threatened Litigation
Exhibit C-2:
Violations of Legal Requirements
Exhibit D:
Schedule of Leases and Related Matters
Exhibit E:
Ongoing Tax Appeals
Exhibit F:
Hotel Contracts and Related Matters
Exhibit G:
Form of Deed
Exhibit H:
Form of Bill of Sale
Exhibit I:
Form of Assignment and Assumption Agreement
Exhibit J:
Form of Certification of Non-Foreign Status
Exhibit K:
Form of 1099 Designation
Exhibit L:
Allocation of Transaction Costs and Expenses
Exhibit M:
Permitted Exceptions
Exhibit N:
Documents and Financial Information Required by RSM US LLP
Exhibit O:
Form of Audit Representation Letter
Exhibit P:
Diligence Material
Exhibit Q:
Form of Commercial Declaration Estoppel
Exhibit R:
Material Permits

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Exhibit S:
Ongoing Capital Improvements
Exhibit T:
Form of Commercial Declaration Regarding Common Maintenance Estoppel
Exhibit U:
Determination of Voucher Values
Exhibit V-1:
Employee Census
Exhibit V-2:
Employment Contracts
Exhibit W:
Form of Owner’s Affidavit
Exhibit X:
Title Proforma
Exhibit Y:
Form of Liquor Concession Agreement
Exhibit Z:
Form of Liquor Side Letter
Exhibit AA:
Allocation

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AGREEMENT FOR SALE AND PURCHASE OF HOTEL
THIS AGREEMENT FOR SALE AND PURCHASE OF HOTEL (this “Agreement”), dated as of
May 19, 2016 (the “Effective Date”), is entered into by and between HEI LA JOLLA
LLC, a Delaware limited liability company (“Seller”), and CWI 2 LA JOLLA HOTEL,
LP, a Delaware limited partnership (“Purchaser”).
RECITALS:
A.Seller is the owner of the Land and the Improvements commonly referred to as
the San Diego Marriott La Jolla and located in San Diego, California, the Hotel,
the Fixtures and Tangible Personal Property, Operating Equipment, Consumables,
Inventory, Intellectual Property 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

Section 1.1    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 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, all of which are owned and to be
retained by Seller or any Affiliate of Seller, but not including Cash on Hand.
Accounts Receivable: All amounts properly due and payable from the operation of
the Hotel and which are not paid as of the Closing, including, without
limitation, charges for the use or occupancy of any guest, conference or banquet
rooms or other facilities at the Hotel, any restaurant, bar or banquet services,
or any other goods or services provided at the Hotel, but expressly excluding
items of income otherwise prorated pursuant to Article VII.
Accrued Vacation Pay: The monetary value of any vacation days 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 and in accordance with Manager’s employment
policies (including all employment taxes with respect thereto).

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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 3.1.
Anti-Terrorism Order: Shall have the meaning given to it in Section 5.1(n).
Assignment and Assumption Agreement: Shall have the meaning given to it in
Section 6.3(c).
Audit Representation Letter: Shall have the meaning given to it in Section 4.10.
Bill of Sale: Shall have the meaning given to it in Section 6.3(b).
Bookings: Agreements and/or reservations for the use or occupancy of guest rooms
or meeting and banquet facilities or other facilities of the Hotel, including
any agreements and/or reservations for any special events, off-site catering by
the Hotel, or other services to be provided at or 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 books, records and files relating to the Property owned
by Seller and in its or its Manager’s possession, including, but not limited to,
plans, specifications, drawings, blueprints, surveys, Hotel Guest Data,
operating reports 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, employee files, guest
histories, profiles and other similar data which is proprietary and which is
developed and maintained by Manager.
Breach Notice: Shall have the meaning given to it in Section 5.3.
Broker: Shall have the meaning given to it in Section 14.1(b).
Business Day: All days of the year except Saturdays, Sundays and holidays
recognized by the Federal Reserve Bank of New York.
California ABC: Shall have the meaning given to it in Section 5.1.

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California Natural Hazard Area: Shall have the meaning given to it in Section
4.11.
California Natural Hazard Laws: Shall have the meaning given to it in Section
4.11.
California Natural Hazard Report: Shall have the meaning given to it in Section
4.11.
California NHDS: Shall have the meaning given to it in Section 4.11.
Cap: Shall have the meaning given to it in Section 5.3.
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: June 21, 2016, as the same may be extended in accordance with the
express terms of this Agreement.
Closing Extension Deposit: Shall have the meaning given to it in Section 6.1.
Closing Statements: Shall have the meaning given to it in Section 7.1(m).
Code: The Internal Revenue Code of 1986, together with all rules, regulations
and official guidance promulgated thereunder.
Commercial Declaration: Shall mean that certain Declaration of Common
Maintenance and Architectural Control Restrictions for Regents Park Lots 1, 2,
3, 4, 5, 6, 7 and 8 recorded September 21, 1983 as Instrument No. 83-337248 of
the Official Records of San Diego County, California, as amended by that certain
Amendment to Declaration of Common Maintenance and Architectural Control
Restrictions for Regents Park recorded on June 2, 1994 as Instrument No.
1994-0360751 of the Official Records of San Diego County, California.
Commercial Declaration Regarding Common Maintenance: Shall mean that certain
Declaration of Street and Landscaping Common Maintenance Restrictions for
Regents Park recorded September 21, 1983 as Instrument No. 83-337247 of the
Official Records of San Diego County, California, as amended by that certain
First Amendment to Declaration of Street and Landscaping Common Maintenance
Restrictions for Regents Park recorded on February 10, 1986 as Instrument No.
1986-053769 of the Official Records of San Diego County, California.
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,

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and employer contributions to, and amounts paid or accrued under, the Employee
Benefit Plans for the benefit of the Employees.
Concession Agreement: Shall have the meaning given to it in Section 6.3(e).
Consumables: All of the following used in connection with the ownership or
operation of the Property, whether now located at the Real Property, stored
offsite or ordered for the benefit of the 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 opened or
unopened, 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 Diego, California Time on the Closing Date.
Deductible: Shall have the meaning given to it in Section 5.3.
Deed: Shall have the meaning given to it in Section 6.3(a).
Deposit: Shall have the meaning given to it in Section 3.1(a).
Designee: Shall have the meaning given to it in Section 16.1.
Due Diligence: Shall have the meaning given to it in Section 4.1.
Effective Date: Shall have the meaning given to it in the Introductory
Paragraph.
Employee(s): Prior to the Closing Date, all persons employed by Manager or any
Affiliate of Manager, and from and after the Closing Date, all persons employed
by Purchaser or its designee or management company, in each case, for the
purpose of operating the Hotel, pursuant to the Management Agreement or
Employment Contracts or otherwise.
Employee Benefit Plans: All Employee Benefit Plans, as that term is defined in
Section 3(3) of ERISA and all other written severance pay, salary continuation,
bonus, incentive, stock option, retirement, pension, welfare, profit sharing or
deferred compensation plans, or other employee benefit policies, programs,
agreements or arrangements of any kind maintained by 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.

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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 equipment, machinery, tools, devices or
other such items for use in connection with its ownership and operation of the
Hotel.
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: First American Title Insurance Company.
Excluded Assets: Those assets, if any, listed on Exhibit A to this Agreement,
the Accounts Receivables, 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, all of which are owned and to
be retained by Seller or any Affiliate of Seller.
Existing CBA:That certain Agreement, dated as of March 6, 2015 between UNITE
HERE Local 30, AFL-CIO and Manager, d/b/a San Diego Marriott La Jolla [sic].
FDD: Shall have the meaning given to it in Section 4.9.
Final Closing Statement: Shall have the meaning given to it in Section 7.1(m).
Fixtures and Tangible Personal Property: All fixtures, furniture, furnishings,
fittings, equipment, cars, trucks, machinery, apparatus, signage, appliances,
draperies, art work, carpeting, keys, and other articles of personal property
now located on or about 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 or leased 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.
Franchise Agreement: That certain Franchise Agreement, dated as of July 21, 2011
by and between Seller and Franchisor, as amended.
Franchisor: Marriott International, Inc., a Delaware corporation.
GAAP: Shall have the meaning given to it in Section 4.10.

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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 San Diego Marriott La Jolla, including Three
Hundred Seventy-Two (372) guest rooms, approximately twenty-one thousand
(21,000) square feet of indoor meeting/ballroom space, fitness center,
restaurants, 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 of Seller’s right, title and interest to all service
contracts, maintenance contracts, purchase orders, licensing agreements,
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.
Hotel Guest Data: All guest or customer profiles, contact information (e.g.,
addresses, phone numbers, facsimile numbers and email addresses), histories,
preferences and any other guest or customer information in any database of
Seller or Manager, however obtained or derived, all of which shall be conveyed
to Purchaser as provided herein, provided that Seller shall be entitled to
retain a copy of all such Hotel Guest Data.
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 Losses: Shall have the meaning given to it in Section 9.1(c).
Indemnified Party: Shall have the meaning given to it in Section 5.5.
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 5.5.
Inspection Period: Shall have the meaning given to it in Section 4.1.

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Intellectual Property: Any assignable or otherwise transferable trademarks,
intangibles, trade names, service marks, symbols, logos and other intellectual
property rights owned or assignable by Seller and used in connection with the
ownership and operation of the Property, including, without limitation, all of
Seller’s right, title and interest, if any, to the name “San Diego Marriott La
Jolla”, “Marriott”, “Fresh”, and “La Jolla Social” and expressly excludes HEI
Hospitality LLC’s rights to the “Amuse” trademark, tradename and related
intellectual property.
Interim License Agreement: Shall have the meaning given to it Section 14.1(a).
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 or merchandise 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 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 16.1.
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, and excluding any such computer hardware,
telecommunications and information technology systems or computer software that
are Excluded Assets.
Land: The parcel of real estate owned by Seller, which parcel is described in
Exhibit B, together with all appurtenant easements and any rights, title, and
interest, in each case, 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, all of Seller’s right, title and interest (if
any) in and to water, minerals, oil, gas and other hydrocarbon substances on and
under said Land 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.
Letter of Intent: Means collectively, the letter of intent dated as of March 20,
2016 executed by and between Carey Watermark Investors 2 Incorporated
(“CWI”) and Seller, as supplemented and amended by that certain Supplement to
Letter of Intent dated as of March 31, 2016, executed by and between CWI and
Seller.

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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, Manager or any
of their respective Affiliates, 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
July 21, 2011, 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.
Material Franchise Terms: Shall have the meaning given to it in Section 4.9.
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 Franchise Agreement and the Management
Agreement; (iv) Space Leases; (v) Permits; (vi) Cash On Hand; (vii) Books and
Records; (viii) Accounts Receivable; (ix) refunds, rebates or other claims, or
any interest thereon, for periods or events occurring prior to the Cut Off Time;
(x) utility and similar deposits; (xi) prepaid insurance or other prepaid items;
or (xii) prepaid fees for Permits; except, in the case of clauses (ix) through
(xii) (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 13.1.
OFAC Regulations: Shall have the meaning given to it in Section 5.1(n).
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 or stored offsite as of the Effective Date, subject to such depletion
and restocking as shall be made in the normal course of business.
Parking Report: Shall have the meaning given to it in Section 10.1(o).
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.

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Permitted Exceptions: Shall have the meaning given to it in Section 4.7(a).
Person(s): An individual, a corporation, a partnership, a governmental or
quasi-governmental authority, a trustee, limited liability company, limited
partnership, or other legally recognized entity, and includes the heirs,
executors, administrators, successors in office or other legal representatives
of an individual.
Personal Property: Collectively, the Fixtures and Tangible Personal Property,
Consumables, Inventory, Accounts Receivable, IT Systems, Cash on Hand, and
Operating Equipment, but excluding the Excluded Assets.
Pool Areas: Shall have the meaning given to it in Section 10.1(l).
Pool Work: Shall have the meaning given to it in Section 10.1(l).
Pool Work Renovation Fund: Shall have the meaning given to it in
Section 10.1(l)(iii).
Post-Closing Accruals:All accounts payable, trade payable, unpaid expenses,
bookings, Employee Compensation and Employee Benefit Plans, debt service
payments, security deposits, indebtedness, obligations, guarantees and any other
similar obligations or Liabilities which accrue after the Cut Off Time.
Preliminary Closing Statement: Shall have the meaning given to it in Section
7.1(m).
Present Standards: The standards to which Seller and Manager have operated and
maintained the Hotel during the most recent twenty-four (24) months prior to the
Effective Date.
Prior Dispute: Those certain litigation claims and cross-claims made by Seller
against Shidler in the Superior Court of the State of California for the County
of San Diego, as Case No. 37-2016-00007619-CU-BC-CTL, which have been dismissed
by all applicable parties, pursuant to that certain Request for Dismissal
entered in the Superior Court of the State of California for the County of San
Diego as of May 4, 2016.
Property: The Hotel, including without limitation, collectively the (i) Real
Property; (ii) Fixtures and Tangible Personal Property; (iii) Operating
Equipment; (iv) Cash on Hand; (v) Consumables; (vi) transferable right, title,
and interest of Seller in, to and under the Hotel Contracts and the Space
Leases; (vii) Bookings and Hotel Guest Data (to the extent permitted by
applicable Legal Requirements and privacy agreements relating thereto);
(viii) Permits (to the extent assignable); (ix) IT Systems; (x) Inventory;
(xi) Warranties; (xii) Books and Records; (xiii) Intellectual Property; and
(xiv) Miscellaneous Hotel Assets; provided, however, that the Property shall not
include the Excluded Assets or Retained Liabilities.
Pump Room Areas: Shall have the meaning given to it in Section 10.1(m).
Pump Room Work: Shall have the meaning given to it in Section 10.1(m).

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Pump Room Work Renovation Fund: Shall have the meaning given to it in
Section 10.1(m)(iii).
Purchase Price: Shall have the meaning given to it in Section 3.1.
Purchaser: Shall have the meaning given to it in the Introductory Paragraph.
Purchaser Party/ies: Shall have the meaning given to it in Section 4.5.
Purchaser’s Employee Obligations: Shall have the meaning given to it in Section
12.1(b).
Real Property: The Land together with the Improvements located on the Land.
Retained Liabilities: Any Liability whatsoever, whether fixed or contingent,
recorded or unrecorded, known or unknown, with respect to the Hotel that accrues
and/or arises solely from events which occurred prior to the Closing (except as
otherwise expressly set forth herein), including, but not limited to (subject to
the foregoing limitations): (a) any Seller Encumbrance; (b) any and all accounts
payable or other trade payables not included within the definition of
Post-Closing Accruals or for which Purchaser received a credit for at Closing;
(c) to the extent not included within the definition of Post-Closing Accruals or
for which Purchaser received a credit at Closing or for which Purchaser is
responsible for pursuant to the express terms of this Agreement, tax
obligations, including without limitation, all federal, state, local or special
purpose district tax and withholding liabilities and obligations of Seller or
any of its respective Affiliates with respect to periods prior to the Closing,
and any interest, fines or penalties thereon or with respect to returns filed or
required to be filed in connection therewith (including, without limitation, any
recapture and including any amounts due or which may come due and owing under
applicable Legal Requirements; provided that Purchaser shall be solely
responsible for any fines, interest or penalties resulting from Purchaser or its
Affiliates failure to pay such taxes included in the definition of Post-Closing
Accruals or for which Purchaser received a credit for at Closing or for which
Purchaser is responsible for pursuant to the express terms of this Agreement);
(d) Liabilities arising from any claims by third parties (but excluding in all
instances any Affiliate of Purchaser or any of their respective Affiliates) for
personal injury or property damage arising out of events occurring prior to the
Closing caused by any violation of Environmental Laws that were in effect and
valid at the time in question; (e) Liabilities or obligations of Seller or its
Affiliates for brokerage or other commissions relating to the transactions
contemplated herein subject to the terms of Section 14.1(b) and Purchaser’s
obligations thereunder; (f) Liabilities relating to or arising from any
contracts between Seller and any of its Affiliates; (g) any security and other
deposits, advance or prepaid rents, and key money (including any interest
thereon) not prorated pursuant to this Agreement or for which Purchaser received
a credit at Closing and held by Seller from tenants of the Hotel with Space
Leases in effect as of the Closing; (h) any Liability or obligation for advance
Bookings if any deposits related thereto that were actually received by Seller
are not prorated pursuant to this Agreement or set forth in the Preliminary
Closing Statement or for which Purchaser received a credit for at Closing
(provided, however, Purchaser shall honor all Bookings regardless of whether or
not a reservation deposit was credited to Purchaser as part of the prorations
hereunder); (i) any liability arising from the termination, discharge, layoff or
other separation from employment of Manager’s or Seller’s employees prior to the
Closing,

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except as otherwise expressly set forth in this Agreement; (j) all annual
assessments, special assessments and other charges due and payable to Regents
Park Commercial Association with respect to the Commercial Declaration or the
Regents Park Street and Landscaping Maintenance Corporation with respect to the
Commercial Declaration Regarding Common Maintenance; (k) any Liability
(including, without limitation, penalties, obligations to remove, repeat,
repair, correct and/or replace work and permit fees) arising with respect to (x)
the repair and replacement of sewer pipes and vent lines at the Property in 2016
(the “Sewer Work”) as more fully described in Sanitary System Report prepared by
TEA Consultants, (y) the Pool Work, and (z) the Pump Room Work, in each case as
a result of any failure to obtain permits from the City of San Diego Development
Services Department or other applicable governmental authorities, and (l) to the
extent not included within the definition of Post-Closing Accruals or otherwise
prorated pursuant to this Agreement or for which Purchaser received a credit at
Closing, any Liability with respect to goods and services or the purchase of
goods and services to the extent such goods were delivered at the Hotel or the
services were rendered prior to or at the Closing and were ordered at the
request of Seller or Manager.
Seller: Shall have the meaning given to it in the Introductory Paragraph.
Seller Default: Shall have the meaning given to it in Section 15.2.
Seller Encumbrances: Shall have the meaning given to it in Section 4.7(a).
Seller Release Parties: Shall have the meaning given to it in Section 2.2(f).
Seller’s Liability Amount: Shall have the meaning given to it in Section
15.2(a).
Seller’s Knowledge: Shall have the meaning given to it in Section 5.1.
Seller Representations: The representations and warranties of Seller expressly
set forth in Section 5.1 and Section 14.1(b).
Seller’s Representative: Shall have the meaning given to it in Section 5.1.
Seller’s Response Notice: Shall have the meaning given to it in Section 4.7.
Seller’s Response Period: Shall have the meaning given to it in Section 4.7.
Sewer Work: Shall have the meaning given to it in the definition of Retained
Liabilities.
Shidler: Collectively and individually, 4240 La Jolla Village, LLC, a Delaware
limited liability company, Terra Hospitality-La Jolla, LLC, a Delaware limited
liability company, Shidler Group Investment Company, LLC, a Hawaii limited
liability company, Terra Hospitality Trust – Marriott San Diego La Jolla, LLC, a
Delaware limited liability company and Roes 1-10, or any of their Affiliates.
Shidler Claim: Shall mean collectively and individually, (A) the filing of a
suit or the commencement of a lawsuit by Shidler in a court of competent
jurisdiction against Purchaser or any of Purchaser’s Indemnitees relating to
Purchaser’s potential acquisition of the Property, this

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Agreement or the Letter of Intent or (B) a written notice from an attorney
representing Shidler threatening a lawsuit that specifies proposed claims
against Purchaser or any of Purchaser’s Indemnitees relating to Purchaser’s
potential acquisition of the Property, this Agreement or the Letter of Intent.
Shidler Contact: Shall have the meaning given to it in Section 10.1(m)Section
10.1(m).
Space Leases: All leases, licenses, concessions, and other occupancy agreements
(and any amendments thereto) for the use or occupancy of any portion of the
Improvements, excluding, however, Bookings.
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 4.7.
Survival Period: Shall have the meaning given to it in Section 5.3.
Surviving Obligations: Shall have the meaning given to it in Section 3.1(a).
Title Commitment: Shall have the meaning given to it in Section 4.7.
Title Company: First American Title Insurance Company.
Title Exceptions: Shall have the meaning given to it in Section 4.7.
Title Policy: A 2006-ALTA Extended Coverage Owner’s Title Insurance Policy
issued by the Title Company in the form of the proforma attached hereto as
Exhibit X, in favor of Purchaser and in the amount of the Purchase Price,
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 4.7(a).
Transfer: Shall have the meaning given to it in Section 17.4.
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).
Vouchers: Shall have the meaning given to it in Section 7.1(f).
WARN Act: The Federal Worker Adjustment and Retraining Notification Act, 29
U.S.C. 2101 2109, or any similar applicable state or local law, together with
any rules, regulations and official guidance promulgated thereunder.
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

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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.

Section 1.2    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

Section 2.1    Sale and Purchase. Seller hereby agrees to sell to Purchaser, and
Purchaser hereby agrees to purchase from Seller, the Property on the terms and
subject to the conditions of this Agreement.

Section 2.2    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 the Hotel’s operations (including, without
limitation, to review and evaluate the physical (including the environmental)
condition, survey and title matters relating to the Property) including, but not
limited to, the Books and Records provided or made available by Seller or anyone
acting on behalf of Seller and/or Manager. Purchaser represents, warrants and
agrees that, except for the Seller Representations, Purchaser is relying solely
on its own inspections, examinations and investigations in making the decision
to purchase the Property. Without limiting Purchaser’s termination rights
expressly set forth in this Agreement, 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 Seller Representations, Purchaser has not relied, and is
not relying, upon any information, documents, sales brochures, other literature,
maps or sketches, projections, pro formas, 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.

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(c)    Except for the Seller Representations, 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 SELLER REPRESENTATIONS, THE SALE AND CONVEYANCE BY SELLER
TO PURCHASER OF 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 OR ANYONE ACTING ON BEHALF
OF SELLER, EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT.
(e)    EXCEPT FOR THE SELLER REPRESENTATIONS, WITHOUT LIMITING THE GENERALITY OF
THE FOREGOING, PURCHASER ACKNOWLEDGES THAT NEITHER SELLER NOR ANYONE ACTING ON
BEHALF OF SELLER HAS MADE ANY 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

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INTENDED USE OR PARTICULAR PURPOSE, ZONING, TAX CONSEQUENCES, PHYSICAL
CONDITION, MOLD, ENVIRONMENTAL 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 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 FOR THE SELLER
REPRESENTATIONS, ALL SUCH REPRESENTATIONS AND WARRANTIES WITH RESPECT TO THE
PROPERTY ARE HEREBY DISCLAIMED BY SELLER AND EXPRESSLY WAIVED BY PURCHASER.
EXCEPT FOR THE SELLER REPRESENTATIONS, PURCHASER HAS NOT RELIED AND WILL NOT
RELY ON, AND NEITHER SELLER NOR ANY OF THE SELLER RELEASE PARTIES (AS DEFINED
BELOW) IS 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 SET FORTH IN THIS AGREEMENT,
PURCHASER SHALL HAVE NO RIGHT OR CAUSE OF ACTION IN WARRANTY OR OTHERWISE
AGAINST SELLER OR ANY OF THE SELLER RELEASE PARTIES IN ANY CONTROVERSY, CLAIM,
DEMAND, OR LITIGATION ARISING FROM OR IN CONNECTION WITH THE PROPERTY
(INCLUDING, BUT NOT LIMITED TO THE PHYSICAL OR ENVIRONMENTAL CONDITION THEREOF)
AND PURCHASER HEREBY WAIVES AND RELEASES SELLER AND EACH OF THE SELLER RELEASE
PARTIES FROM ANY SUCH RIGHT OR CAUSE OF ACTION.
(f)    EXCEPT FOR THE SELLER REPRESENTATIONS, SELLER AND EACH PERSON ACTING OR
PURPORTING TO ACT ON BEHALF OF SELLER HAS NOT, DOES NOT AND WILL NOT MAKE ANY
REPRESENTATIONS OR WARRANTIES WITH REGARD TO (A) COMPLIANCE WITH ANY
ENVIRONMENTAL LAWS, HEALTH OR SAFETY LAWS, RULES OR REGULATIONS 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,
FIRE LIFE SAFETY OR HEALTH AND WELFARE CONDITIONS AT THE PROPERTY. AS A MATERIAL
PART OF THE CONSIDERATION TO SELLER FOR THE SALE OF THE HOTEL HEREUNDER,
PURCHASER HEREBY WAIVES AND RELINQUISHES, AND RELEASES SELLER, MANAGER AND ALL
OF SELLER’S AND MANAGER’S OFFICERS, DIRECTORS,

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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, MOLD, COMMUNICABLE DISEASE OR OTHER HEALTH OR WELFARE
ISSUE OR (B) ANY 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 ANY PORTION THEREOF OR THE PROPERTY RECORDS).
NOTWITHSTANDING ANYTHING STATED TO THE CONTRARY IN THIS AGREEMENT, THE FOREGOING
RELEASE SHALL NOT EXTEND TO (AND SHALL EXPRESSLY EXCLUDE) CLAIMS ARISING FROM
SELLER’S FRAUD OR, SUBJECT TO THE TERMS OF THIS AGREEMENT, SELLER’S BREACH OF
THE SELLER REPRESENTATIONS OR ITS EXPRESS COVENANTS AND OBLIGATIONS (INCLUDING
INDEMNITY OBLIGATIONS) SET FORTH IN THIS AGREEMENT AND SUBJECT TO THE TERMS OF
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 BY SELLER OR SUBJECT TO THE
TERMS OF THIS AGREEMENT, FOR A BREACH OF A SELLER REPRESENTATION.
(g)    NEITHER SELLER NOR ANY OF THE SELLER RELEASE PARTIES NOR MANAGER SHALL BE
LIABLE TO PURCHASER OR ANY OF ITS AFFILIATES FOR ANY PROSPECTIVE OR SPECULATIVE
PROFITS, OR SPECIAL, INDIRECT, INCIDENTAL, PUNITIVE 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 agrees and acknowledges that, in giving the foregoing
waivers and releases, it has with its legal counsel, considered any statute or
other law that might apply to and limit the effect of Purchaser’s waivers and
releases herein and hereby knowingly waives

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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:
“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.”
/s/ MM Purchaser’s Initials

ARTICLE III
PURCHASE PRICE

Section 3.1    Purchase Price; Deposit. The purchase price (the “Purchase
Price”) to be paid by Purchaser to Seller at the Closing shall be One Hundred
Thirty-Seven Million Dollars ($137,000,000.00), 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 and the Improvements, and
(ii) the Personal Property (and the classes thereof) as set forth on Exhibit AA
attached hereto for federal, state and local tax purposes in accordance with
Section 1060 (the “Allocation”). Purchaser and Seller shall (i) cooperate in the
filing of any forms (including Form 8594 under Section 1060 of the Code) with
respect to the agreed Allocation, 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 income tax
returns and related tax documents consistent with the Allocation, as the same
may be adjusted pursuant to any provisions of this Agreement. The provisions of
this Section 3.1 shall survive the Closing without limitation.
The Purchase Price shall be payable by Purchaser as follows:
(i)    No later than 3:00 p.m. Central Standard Time on the date one
(1) Business Day after the Effective Date, Purchaser shall deposit with the
Escrow Company, as escrow agent, the amount of Four Million Two Hundred Fifty
Thousand Dollars ($4,250,000.00) by a wire transfer of immediately available
United States of America funds as an earnest money deposit (together with the
interest earned thereon, the “Deposit”). In the event Purchaser does not deposit
the Deposit on or before 3:00 p.m. Central Standard Time on the first
(1st) Business Day following the Effective Date, this Agreement shall
automatically terminate, whereupon the parties hereto shall be released from all
further obligations under this Agreement, except for obligations that expressly
survive the termination of this Agreement (the “Surviving Obligations”).
(j)    On the Closing Date, 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

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with respect to the Deposit. The terms of this Section 3.1(b) shall survive the
Closing or any termination of this Agreement.

Section 3.2    Application of Deposit. The Deposit shall be held and disbursed
by the Escrow Company acting as escrow agent in accordance with this Agreement.
The Deposit shall be invested in a federally insured interest bearing account
mutually acceptable to Seller and Purchaser, provided that Escrow Company has
been furnished with a completed and executed W-9 for the party entitled to said
interest, 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 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

Section 4.1    Inspection Period. Purchaser acknowledges that Seller provided
Purchaser the opportunity to conduct such due diligence and inspections of the
Property as Purchaser and its officers, directors, employees and advisers deemed
necessary and appropriate prior to the Effective Date. Notwithstanding anything
to the contrary herein, any and all references to the “Inspection Period” in
this Agreement mean and refer and shall be deemed to mean and refer to for all
purposes to a period commencing prior to the Effective Date and expiring
immediately upon the Effective Date and that, therefore, any and all rights of
Purchaser to terminate this Agreement in connection with its Due Diligence have
terminated and been unconditionally waived and relinquished, and Purchaser has
no such right to so terminate this Agreement in connection with its Due
Diligence (but without limiting Purchaser’s termination rights expressly set
forth in this Agreement (including, without limitation, termination rights set
forth in Section 4.7) and the Deposit shall be non-refundable to Purchaser
except as otherwise expressly provided in this Agreement). Notwithstanding the
foregoing, from and after the Effective Date, subject to the terms of this
Agreement, Purchaser and its representatives shall be permitted to enter upon
the Property during the term of this Agreement 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.

Section 4.2    Review and Inspection. Purchaser shall have a right to enter upon
the Property for the purpose of conducting its Due Diligence (which entry right
shall continue on a reasonable basis until Closing unless this Agreement is
terminated prior thereto) provided that in

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each such instance (i) Purchaser notifies Seller in writing of its intent to
enter the Property to conduct its Due Diligence not less than twenty-four
(24) 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 4.6. 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.

Section 4.3    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.

Section 4.4    Intentionally Omitted.

Section 4.5    Confidentiality. Purchaser agrees and covenants with Seller not
to disclose to any third party (other than its agents and employees, directors,
trustees, 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, and have been instructed, under this Section 4.5 not to disclose)
without Seller’s prior written consent, the existence of this Agreement or 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, or the existence of any dispute under this Agreement, unless
Purchaser or any Purchaser Party is (i) obligated by applicable Legal
Requirements to make such a disclosure, (ii) is required to as may be necessary
to obtain Permits from any governmental authority or (iii) is required to in
connection with Purchaser’s or any Purchaser Party’s filing or other disclosures
required by the Securities and Exchange Commission; provided, however, in no
event shall Purchaser or Seller make or issue any public release except as set
forth in Section 17.3. If such disclosure is required or permitted under
clauses (i) – (iii) of this Section 4.5, then Purchaser shall notify Seller in
writing of such obligation to ensure Seller has the opportunity to prevent (or
appropriately and reasonably limit) 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 Purchaser agrees to provide Seller, without liability,
representation or warranty, copies of any third-party

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tests, reports and inspections of the Property so requested by Seller which were
made or conducted for or on behalf of Purchaser (excluding any such materials
which are prohibited to be distributed by such third-party); provided, however,
in the event Seller requests to have any such third-party test, report and/or
inspection certified to Seller (to the extent permitted by such third-party),
Seller shall reimburse Purchaser for fifty percent (50%) of Purchaser’s
out-of-pocket costs if this Agreement has not been terminated as a result of a
Purchaser Default, in which circumstance Seller shall have no obligation to
reimburse Purchaser in connection with the delivery of such reports. Except as
set forth in the Seller Representations, Purchaser shall have no right to rely
on any such confidential information and 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 4.5. The provisions of this Section 4.5 shall survive the Closing
or any termination of this Agreement.

Section 4.6    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 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 or a violation of the confidentiality
provisions of this Agreement, except to the extent resulting from Seller’s,
Manager’s or their respective Affiliates’ or Indemnitees’ gross negligence or
willful misconduct. 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 as result of or in connection with the activities of
Purchaser, Purchaser, at its sole cost and expense, shall promptly restore the
Property to substantially the same condition as it existed prior to such damage.
Furthermore, Purchaser shall maintain and cause any of its representatives or
agents conducting any Due Diligence to maintain and have in effect commercial
general liability insurance with single occurrence coverage of at least One
Million Dollars ($1,000,000) and aggregate coverage of at least 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 4.6, prior to conducting any inspections or investigations at the
Property. The provisions of this Section 4.6 shall survive the Closing or any
termination of this Agreement.

Section 4.7    Title and Survey.
(a)    Prior to the Effective Date, the Title Company has delivered to Purchaser
a preliminary title report for the Property (the “Title Commitment”) along with
legible copies of each instrument listed as an exception therein (the
“Title Exceptions”) and Seller has delivered the existing ALTA survey (the
“Survey”) of the Land and Improvements. All such exceptions and

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matters set forth on Exhibit M attached hereto, those matters disclosed by the
Survey and any exceptions or matters caused by or through Purchaser shall be
“Permitted Exceptions”. 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; (ii) any mechanic’s or similar liens for
work performed at the Property and not caused by any acts or omissions of
Purchaser or any Purchaser Party; and (iii) Taxes which constitute
Title Exceptions which would be delinquent if unpaid at Closing (individually
and collectively, the “Seller Encumbrances”). Seller shall be permitted to use
the proceeds from the sale to effect such removal at Closing so long as the same
does not prevent or delay the Title Company from issuing the Title Policy as
required under Section 9.1.
(b)    If after the Effective Date, the Title Company issues an update to the
Title Commitment and such update to the Title Commitment discloses an additional
Title Exception other than a Permitted Exception or a Seller Encumbrance (which
Seller is required to discharge in accordance with this Section 4.7) or a title
encumbrance caused by or through Purchaser (or any Purchaser Parties) or
expressly approved by Purchaser in accordance with the terms of this Agreement,
or if an update to the Survey discloses a material new issue not disclosed by or
set forth on the Survey, that in either instance, in Purchaser’s commercially
reasonable good faith opinion materially adversely impacts title to the Property
or the operation of the Hotel, then within three (3) Business Days of
Purchaser’s receipt of such updated Title Commitment or the updated Survey,
Purchaser may object to such new exception (and any change in an existing
exception) shown in the updated Title Commitment or new matter disclosed by the
Updated Survey, by providing Seller with a written notice of such objections
(the “Intervening Lien Objection Letter”), which notice shall contain a
reasonably detailed explanation of such objections. If Purchaser does not
deliver an Intervening Lien Objection Letter within the time period specified
above, Purchaser shall be deemed to have accepted all exceptions contained in
the updated Title Commitment and/or the Updated Survey (other than any Seller
Encumbrances) and all such exceptions and matters and shall also constitute
Permitted Exceptions and Exhibit M shall be deemed modified by such updated
Title Commitment and/or updated Survey, as applicable. 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”) within one (1) Business Day after receipt of Purchaser’s
Intervening Lien Objection Letter (the “Seller’s Response Period”) to commit to
cure (by removal or, if acceptable to Purchaser in its sole but good faith
discretion, by endorsement or otherwise) such objections in the manner specified
in the Seller’s Response Notice within the time periods provided herein. The
procurement by Seller of a commitment for the issuance of a title policy or
endorsement thereto (if acceptable to Purchaser in its sole but good faith
discretion) 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 (if acceptable to Purchaser in
its sole but good faith discretion) affirmatively insure over such exception.
Except with respect to Seller Encumbrances, 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, notwithstanding any other provision of this
Agreement, within one (1) Business Day after 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 upon written notice to Seller whereupon
this Agreement shall terminate, Escrow Company shall immediately return the
Deposit to Purchaser, the Parties shall

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each pay one-half the costs of escrow, and neither party to this Agreement shall
thereafter have any further rights or liabilities under this Agreement, except
for the Surviving Obligations, or (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 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 (or is hereunder obligated to
remove because such item constitutes a Seller Encumbrance) 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 in the manner provided in
Seller’s Response, then Seller shall be in breach of this Agreement and
Purchaser may as its only option, elect any of the remedies set forth in Section
15.2.

Section 4.8    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, to the extent first arising and accruing from and after
the Closing Date, provided that, Seller 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. Seller shall use
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; provided, however, in the event Seller is unable to
obtain any such consents or satisfy the requirements to assign any Space Lease
or Hotel Contract, (i) such Space Leases and/or Hotel Contracts shall be
excluded from the definition of Property, (ii) Seller shall not be in default
hereunder, (iii) Seller shall remain solely liable for any and all costs in
connection with the termination of any such Space Lease or Hotel Contract
(including, without limitation, any break-up fees, termination fees or damages
resulting therefrom), and (iv) the parties shall consummate the Closing in
accordance with this Agreement without the transfer of such Space Lease and/or
Hotel Contract to Purchaser. The provisions of this Section 4.8 shall survive
the Closing.

Section 4.9    Franchise Agreement. So long as Purchaser complies with its
obligations set forth in this Section 4.9, it shall be a condition to
Purchaser’s obligation to Closing that Franchisor shall have entered into a
consent and amendment, guaranty and such other agreements with respect to the
Franchise Agreement on the form required by Franchisor (preserving the same
franchise fee, FF&E reserve fund obligations and area of protection terms that
are currently set forth in the Franchise Agreement) and modified to include the
property improvement plan (aka “PIP”) dated September 1, 2015 and such other
commercially reasonable changes requested by Purchaser (the “Material Franchise
Terms”); provided, however, only those commercially reasonable changes that are
consistent with the terms of the most recent consent and amendment, guaranty and
other agreements between Franchisor and Purchaser or Affiliates of Purchaser
shall be considered Material Franchise Terms for purposes of this Agreement. In
addition to the foregoing, Purchaser agrees and acknowledges that it shall be
required to assume Seller’s obligations under the Franchise Agreement with
respect to the repayment of unamortized Key Money (as defined in the Franchise
Agreement) as part of Purchaser’s franchise agreement and Purchaser shall have
no right to object to such obligation. Prior to the Effective Date, Purchaser
has filed its application for a new franchise agreement with Franchisor and
together therewith paid all required application fees.

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Purchaser expressly acknowledges that (a) Seller has entered into this Agreement
on the basis that no termination costs, fees or expenses or liquidated damages
shall be payable by Seller as a result of the sale of the Property to Purchaser
or as a result of Purchaser or its designee (at Purchaser’s sole cost and
expense) assuming the Franchise Agreement for the Hotel and, (b) Seller must
receive a written release from Franchisor, on Franchisor’s current standard
form, of any obligations of Seller or any of its Affiliates under the Franchise
Agreement first arising from and after Closing (including with respect to the
repayment of any unamortized Key Money (as defined in the Franchise Agreement)
or pursuant to any guaranties from Seller or any of its Affiliates pursuant to
the Franchise Agreement but expressly excluding any amounts due and owing (or
otherwise incurred or accrued) prior to the Closing Date other than any
liquidated damages). If Closing occurs and Purchaser or its designee has not so
assumed the Franchise Agreement as set forth above (and Seller has not obtained
a release of Seller and its Affiliates as set forth above), in each case, such
that no termination fees, liquidated damages or similar fees and penalties
(including the repayment of any unamortized portion of any Key Money under the
Franchise Agreement) 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 costs, fees and penalties in
connection with the termination of the Franchise Agreement as of the Closing and
any other Liabilities of Seller had the release of Seller and its Affiliates as
set forth above been obtained.
The provisions of this Section 4.9 shall survive the Closing.

Section 4.10    3-05 Audit. At Purchaser’s request, and to the extent in
Seller’s possession (and without any obligation to incur any out of pocket
expenses), Seller agrees to promptly deliver to RSM US LLP all documents and
financial information that RSM US LLP reasonably requires to complete the audit
of the financial statements of Seller in accordance with generally accepted
accounting principles of the United States of America (“GAAP”). Seller
acknowledges and agrees to use its reasonable efforts to also provide such
additional information which is deemed relevant and reasonably necessary (as
determined by RSM US LLP) to enable Purchaser and its accountants to prepare and
audit financial statements of Seller in compliance with (a) Rule 3-05 of
Regulation S-X of the Securities and Exchange Commission which audit may
commence at any time after the expiration of the Inspection Period; (b) any
other rule issued by the Securities and Exchange Commission and applicable to
Purchaser; and (c) any registration statement, report or disclosure statement
filed with the Securities and Exchange Commission by, or on behalf of,
Purchaser. Exhibit N attached hereto is a representative list of documents and
financial information that may be required by RSM US LLP to complete such
audits; provided, however, that (1) Seller has reviewed the foregoing list and
agrees that Seller is able to provide all such documentation and required
information to RSM US LLP in the event of an audit, and (2) Seller acknowledges
and agrees that the foregoing is a representative description of the information
and documentation that Purchaser and its accountants may require in order to
comply with (a), (b) and (c) above; provided, however, that except for those
items listed on Exhibit N, Seller shall have no obligation to prepare any
documentation that is not in its possession or control unless the reasonable
cost thereof is paid by Purchaser. Seller shall engage (at Purchaser’s sole cost
and expense) RSM US LLP to commence any and all such required

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audits. In connection with the foregoing audit(s), and in furtherance of
Seller’s obligations to assist Purchaser pursuant to this Section 4.10, Seller
covenants and agrees to execute and deliver to RSM US LLP certain audit
representation letters, the form of which are attached hereto as Exhibit O
(each, an “Audit Representation Letter”), provided that the form of such Audit
Representation Letters may be modified as required to account for any issues
identified during the audit. Seller’s obligations under this Section 4.10 shall
survive the Closing for a period of twenty-four (24) months.

Section 4.11    California Required 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 Zoning Info, Inc. 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.

Section 4.12    Intentionally Deleted.

Section 4.13    Tax Clearance. Following the expiration of the Inspection
Period, Seller shall cooperate (at no cost to Seller other than de minimis legal
fees) with Purchaser in its efforts to obtain a “tax clearance” letter from the
California State Board of Equalization for Seller. Failure to obtain any tax
clearance letter shall not be deemed to be a failure of any condition precedent
to Seller’s or Purchaser’s obligations to consummate the sale and purchase of
the Property pursuant to this Agreement or a breach by Seller of this Agreement.
For purposes of this Agreement, the term “Tax Clearance Letter” shall mean (a) a
“tax clearance” letter from the California State Board of Equalization showing
that no taxes are delinquent and unpaid for Seller under California Revenue Tax
Code Section 6811 through 6815, or (b) a notice of withholding from the
California State Board of Equalization setting forth the taxes that are due and
payable for Seller under California Revenue Tax Code Section 6811 through 6815.
The

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provisions of this Section 4.13 shall survive Closing until such time as
Purchaser receives a Tax Clearance Letter, for a period of time not to exceed
one hundred eighty (180) days.

ARTICLE V
REPRESENTATIONS AND WARRANTIES

Section 5.1    Representations and Warranties of Seller. Seller hereby
represents and warrants the following matters to Purchaser as of the Effective
Date (or such other time as provided herein) and Purchaser acknowledges and
agrees that the representations and warranties contained herein are made solely
by Seller and in no event shall be deemed to have been made by any of the Seller
Release Parties. 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 Clark Hanrattie and Steen Petri (collectively, “Seller’s
Representatives”), without inquiry or investigation or duty provided, however,
that Seller’s Representatives shall have no personal liability whatsoever with
respect to any such representation, warranty or otherwise under this Agreement.
In addition to the foregoing, the representations and warranties of Seller
herein shall be deemed modified to reflect: (1) the actual personal knowledge
(as distinguished from implied, imputed and constructive knowledge) of Michael
Medzigian, Gil Murillo or Rick Moceri (each a “Purchaser’s Representative”); and
(2) any facts disclosed to Purchaser (or any Purchaser Party) in (A) any written
memorandum, report, letter, study, spreadsheet, chart, table, abstract, summary
or survey (collectively, “Diligence Reports”) prepared by Purchaser, any
Purchaser Party or any advisor, consultant, attorney, accountant or other agent
of Purchaser (i.e. expressly excluding any Diligence Reports prepared by third
parties other than those noted in the preceding clause) or (B) the documents,
agreements, statements, correspondence and other files set forth on Exhibit P
which have been delivered or otherwise made available to Purchaser, which
Exhibit P shall be updated within one (1) Business Day following the expiration
of the Inspection Period to reflect any additional materials provided to
Purchaser, any Purchaser Party or any advisor, consultant, attorney, account or
other agent of Purchaser (as so updated, the “Diligence Material”), so long as,
in each instance of clauses (A) and (B), the particular actual personal
knowledge of a Purchaser Representative under clause (1) above or the particular
information contained in or disclosed by any such Diligence Reports or Diligence
Material under clause (2) above would, or likely would, lead an experienced real
estate professional to reasonably conclude that such information within such
actual personal knowledge or such Diligence Reports contains or discloses
information that is inconsistent in material respects with and could constitute
a breach of the Seller Representations (collectively items 1 and 2 above are
herein referred to as a “Representation Qualification”).
(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, or at the time of Closing will have
taken, all corporate and other action necessary to

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authorize Seller to make, execute, deliver and perform this Agreement and the
transactions contemplated by this Agreement. 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 by Seller and the consummation
of the transactions contemplated hereby and thereby by Seller, except as
otherwise provided herein, do not require the consent or approval of any
governmental authority or to Seller’s Knowledge, any third party, 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,
except with respect to the transfer and assignments of any Hotel Contracts,
Space Leases, Permits or Warranties that require the consent or approval of the
counterparty to such Hotel Contract or Space Lease or the issuer of such
Warranty or Permit.
(c)    Pending Litigation/Violations. Except as set forth on Exhibit C-1,
neither Seller nor Manager is involved in any litigation, administrative action,
arbitration or similar adjudicatory proceeding with respect to the Property
which has not been resolved, settled or dismissed. To Seller’s Knowledge, except
as described in Exhibit C-1, there are no actions, suits or other legal
proceedings pending or threatened in writing against Seller, Manager, or
affecting any of Seller’s rights, in each case, with respect to the Property.
Except as noted in Exhibit C-2, Seller has not received any written notice from
any governmental or quasi-governmental agency of any violation of a Legal
Requirement by Seller or Manager in connection with the use or operation of the
Property which has not been corrected. Seller has delivered to Purchaser a true
and correct redacted copy of the settlement agreement with respect to the Prior
Dispute.
(d)    Condemnation. Neither Seller nor Manager has received written notice from
any governmental authority of any pending condemnation proceeding or other
proceeding in eminent domain. To Seller’s Knowledge, there are no pending, or
threatened in writing, condemnation proceedings or condemnation actions against
the Property.
(e)    Employees. Except for the Employees covered by the Existing CBA, no union
is presently serving as collective bargaining agent for any Employees. Seller
has delivered to Purchaser a true and complete copy of the CBA. Seller has
neither given nor received any written notice of any breach or default under the
CBA that has not been cured. Except for the CBA, there are no labor or
collective bargaining agreements covering any Employee. Seller has no employees
and is not a party to any Employment Contract, recognition agreement, collective
bargaining agreement, compensation agreement or Employee Benefit Plan (other
than the Existing CBA). All Employees are employed by Manager or an Affiliate of
Manager. The Employee Census attached hereto as Exhibit V-1, is a true, correct
and complete in all material respects. True and correct copies of all Employment
Contracts set forth on Exhibit V-2 have been provided to Purchaser and such
Employment Contracts comprise all Employment Contracts. To Seller’s Knowledge,
there is no pending or threatened attempt to organize a labor union covering any
employees employed by

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Manager at the Hotel that are not covered by the Existing CBA and there is no
pending or threatened strike, work stoppage, work slowdown, picketing, lockout
or other material labor dispute involving the Hotel. There is no litigation
threatened in writing nor any defined benefit retirement pension plan for any
current or former Employees (i.e., employees of the Hotel that are no longer
employed by Manager or its Affiliate as of the Effective Date) that would be
binding on, or a result in a Liability of, Seller from and after Closing. As of
the Effective Date only and without reference to any other time period, neither
Seller nor Manager or Manager’s Affiliate is required to contribute to a
“multiemployer plan” as defined under Section 4001(a)(3) of ERISA in connection
with the operation of the Hotel.
(f)    Licenses and Permits. To Seller’s Knowledge, Seller has delivered or made
available to Purchaser prior to the Effective Date complete copies of all
material Permits and, to Seller’s Knowledge, Seller has no other material
Permits other than those listed on Exhibit R. Neither Seller, nor to Seller’s
Knowledge, Manager has received any written notice from any governmental or
quasi-governmental agency having jurisdiction over the Property of any uncured
violation or default of any Permit.
(g)    Environmental Notice. Neither Seller nor Manager has received any written
notices from any governmental authority of (i) any uncured violation of any
Environmental Laws regarding any environmental conditions at the Hotel; (ii) any
failure of Seller, Manager or the Hotel to have all required governmental
permits and/or licenses, if any, relating to Hazardous Substances; or (iii) any
release of Hazardous Substances from the Real Property.
(h)    Space Leases. Seller has delivered or made available to Purchaser prior
to the Effective Date, complete copies of all Space Leases, and there are no
Space Leases except as set forth on the list attached hereto as Exhibit D.
Except as disclosed in Exhibit D, (i) to Seller’s Knowledge, each Space Lease is
in full force and effect; (ii) neither Seller nor Manager has received any
written notice from any Space Lessee claiming that Seller is currently in
default under any Space Leases; and (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.
(i)    Fixtures and Tangible Personal Property. All of the Fixtures and Tangible
Personal Property shall be owned by Seller on the Closing Date, free and clear
of all liens, encumbrances and security interests. Except as set forth in
Exhibit D 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. Purchaser acknowledges that the composition of the
Tangible Personal Property may change in accordance with the provisions of this
Agreement and in the ordinary course of business.
(j)    Bankruptcy. Seller is not insolvent and 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 arrangement with creditors or filed a petition for an arrangement with
creditors or otherwise admitted in writing its inability to pay its debts as
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bankruptcy proceeding and to Seller’s Knowledge, no such actions are
contemplated or have been threatened.
(k)    Tax Abatement Proceedings. To Seller’s Knowledge, except as set forth on
Exhibit E, there is no currently pending appeal or abatement proceeding with
respect to the real estate taxes assessed on the Real Property.
(l)    Hotel Contracts. Attached as Exhibit F is a list of all of the Hotel
Contracts, including any Equipment Leases; provided, however, that if Seller has
inadvertently omitted a Hotel Contract from Exhibit F, 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 if such Hotel Contract is not terminable on thirty (30) or
less days’ notice without payment of any penalty or termination fee. To Seller’s
Knowledge, Seller has provided a true, accurate and complete copy of each such
Hotel Contract to Purchaser. All Hotel Contracts are, to Seller’s Knowledge, in
full force and effect and neither Seller nor Manager has given or received any
written notice of any default under any 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 material default of its obligations thereunder.
(m)    Non-Foreign Person. Seller is a “United States person” (as defined in
Section 7701(a)(30)(B) or (C) of the Code) or a disregarded entity of such
person for the purposes of the provisions of Section 1445(a) of the Code.
(n)    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”), (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 (iii) on behalf of terrorists or terrorist
organizations, including those persons or entities that are included on any
relevant lists maintained by the United Nations, North Atlantic Treaty
Organization, Organization of Economic Cooperation and Development, Financial
Action Task Force, U.S. Office of Foreign Assets Control, U.S. Securities &
Exchange Commission, U.S. Federal Bureau of Investigation, U.S. Central
Intelligence Agency, U.S. Internal Revenue Service or any country or
organization, all as may be amended from time to time. 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.

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(o)    Ongoing Capital Improvements. Except as set forth on Exhibit S attached
hereto, there are no capital improvement projects which exceed Ten Thousand
Dollars ($10,000.00) currently ongoing at the Property other than routine
repairs and maintenance. To Seller’s Knowledge, any and all construction
contracts or development agreements in an amount in excess of Ten Thousand
Dollars ($10,000.00) for the performance of any capital improvement projects
other than those set forth on Exhibit S, have been terminated or with applicable
lien releases and paid in full, and there are no material amounts remaining to
be paid under any such contract or agreement.
(p)    Taxes. Seller has paid all taxes, including penalties and interest, that
are due on or have accrued through the Effective Date and all required reports
and returns relating thereto have been, or will be, timely filed, subject to any
extension rights. To Seller’s Knowledge, all sales and use taxes required to be
paid or collected by Seller or Manager in the ownership and operation of the
Property have been or will be collected and paid, in the ordinary course of
business, to the appropriate governmental authority through the Effective Date.
To Seller’s knowledge, as of the Effective Date, (i) neither Seller nor Manager
has received written notice of any special tax assessment relating to the Hotel
or any portion thereof, and (ii) there are no tax agreements in place affecting
the Property.
(q)    Financial Statements. The financial and operating statements of the Hotel
provided by Seller to Purchaser for fiscal years 2013, 2014 and 2015 and year to
date through March, 2016 are true and correct copies of the documents used in
connection with the reporting by Seller to its clients and investors. To
Seller’s Knowledge, all such financial and operating statements so provided have
been prepared in accordance with GAAP, are in all material respects true and
complete and fairly represent the financial condition of Seller and the Hotel as
of the dates stated therein.
(r)    Liquor License. To Seller’s Knowledge, the Liquor License is in full
force and effect and there is no investigation pending by the California
Department of Alcoholic Beverage Control (the “California ABC”). Seller has
received no written notice from the California ABC regarding any violation of
revocation of the Liquor License and there is no investigation pending by the
California ABC
(s)    Labor Agreements. Neither Seller, Manager, HEI Hotels & Resorts nor any
Affiliate of any such party is subject to any agreement, arrangement or
understanding with UNITE HERE or any other labor organization that would, as a
result of (x) Purchaser’s acquisition of the Hotel and/or (y) Purchaser’s actual
or potential retention of Manager, HEI Hotels & Resorts, or any Affiliate of
Manager or HEI Hotels & Resorts as a manager of the Hotel, impose on Purchaser
or any of its Affiliates, or their hotel(s) or other lodging property(ies) or
third party managers, including, without limitation, Manager or its Affiliates
(but without limiting Purchaser’s obligations pursuant to the Existing CBA
solely as to the Hotel), any express obligation to recognize a labor
organization as the representative of employees by any means (other than a
representation election conducted by the National Labor Relations Board),
whether through (i) card-check neutrality, accretion or otherwise, or (ii) an
agreement to remain neutral regarding the issue of union representation, or to
grant representatives of a labor organization access to its property(ies) to
communicate with employees.

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Section 5.2    Representations and Warranties of Purchaser. Purchaser hereby
represents and warrants the following to Seller:
(a)    Due Organization. Purchaser is a limited partnership 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 limited partnership
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 laws 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 or constituents 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, (ii) in
contravention of the Anti-Terrorism Order, or (iii) on behalf of terrorists or
terrorist organizations, including those persons or entities that are included
on any relevant lists maintained by the United Nations, North Atlantic Treaty
Organization, Organization of Economic Cooperation and Development, Financial
Action Task Force, U.S. Office of Foreign Assets Control, U.S. Securities &
Exchange Commission, U.S. Federal Bureau of Investigation, U.S. Central
Intelligence Agency, U.S. Internal Revenue Service or any country or
organization, all as may be amended from time to time. 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)    Bankruptcy. Purchaser has not filed any petition in bankruptcy or other
insolvency proceedings or proceedings for reorganization of Purchaser or for the
appointment of a receiver or trustee for all or any substantial part of
Purchaser ‘s property, nor has Purchaser made any assignment for the benefit of
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an 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.
(e)    As is, Where is. Purchaser agrees, acknowledges and understands that
subject to the provisions of this Agreement it will take the Property “as-is”
and “where-is” and hereby unconditionally reaffirms the waivers contained in
Section 2.2 and the aforesaid representation, warranty and covenant shall
survive Closing.

Section 5.3    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 5.4(b) shall survive the Closing
for a period of nine (9) months (the “Survival Period”) and shall not merge into
any of the documents delivered at Closing; provided, however, that no person,
company, partnership, 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 5.4(b) unless (1) on
or prior to the expiration of the Survival Period, 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 5.1 or any covenant of Seller set forth in Article
X or any of Seller’s indemnification obligations under Section 5.4(b) except to
the extent the aggregate measure of such claims exceeds One Hundred Thousand
Dollars ($100,000.00) (the “Deductible”); provided, however, in the event such
claims do exceed the Deductible, such indemnity shall be for the aggregate
losses incurred measured by the first-dollar of losses. Except as otherwise set
forth in Section 9.1(c), 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 5.1, any Seller covenant set forth in Article X or any of Seller’s
indemnification obligations under Section 5.4(b) exceed an amount equal to Three
Million Dollars ($3,000,000.00) (the “Cap”). The limitations set forth in this
Section 5.3 shall not apply to Seller’s indemnity obligation for a breach of the
representations set forth in Sections 5.1(a), 5.1(b), or 5.1(s) or Seller’s
obligations under Section 5.4(b)(iv) (with respect to Seller’s indemnification
obligations in connection with the Prior Dispute and any Shidler Claim), Section
7.1(a) (with respect to trade payables to be paid by Seller only), Section
7.1(m), Section 10.1(l) (with respect to the Pool Work), Section 10.1(m) with
respect to the Pump Room Work, Section 12.1(b) (with respect to Liabilities
related to Employees or former Employees that remain with Seller pursuant to the
first sentence of such Section 12.1(b) only), Section 12.1(d) and Section
14.1(b). This Section 5.3 shall survive the Closing and shall not be deemed
merged into the Deed or any conveyance document delivered at Closing.

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Section 5.4    Indemnities.
(a)    Purchaser’s Indemnity. From and after the Closing, 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 Closing, (iii) subject to
the terms and conditions of Article XII and Section 7.1(g) and Section 7.1(h),
any Liability imposed upon Seller or its Indemnitees relating to the employment
of the Employees by New Manager (or its Affiliate) for the period from and after
the Closing Date, (iv) events, contractual obligations, acts or omissions of
Purchaser or any of its Affiliates or assignees of this Agreement that occur or
accrue after Closing in connection with the ownership or operation of the
Property, (v) 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, and (vi) 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 4.10, but specifically excluding, in each instance of clauses (i)
through (vi) any Liabilities for which Seller is indemnifying Purchaser for
under Section 5.4(b) below. For avoidance of doubt, in the event that the
Closing does not occur, Seller’s remedies shall be expressly limited to the
terms and conditions of Section 15.1, including, but not limited to Purchaser’s
indemnification obligations referenced therein.
(b)    Seller’s Indemnity. From and after the Closing, 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 5.3, (ii) any and all Retained
Liabilities, (iii) any failure of Seller or Manager to have reported and/or paid
any and all taxes assessed or assessable by the City of San Diego, the County of
San Diego, the State of California or any other governmental authority arising
or related in any way to the Hotel for the period prior to the Closing, as well
as any and all penalties and interest related to any such taxes (including,
without limitation, costs incurred in connection with or as a result of any
audit, tax inquiry or other proceeding), which are assessed against Purchaser,
(iv) the Prior Dispute and/or any Shidler Claim (or otherwise relating to or
arising from the same (e.g., the execution of this Agreement or the Letter of
Intent or the acquisition of the Hotel)) and (v) damage to property or injury to
or death of any person or any claims for any debt or obligations occurring on,
or in connection with, the Property or any portion thereof at any time or times
prior to Closing (expressly excluding Liabilities (x) for changes to,
remediation of, or repairs to the physical, structural, or environmental
condition of the Property or (y) to any governmental authority relating to the
physical condition, structural or environmental condition of the property, in
each case, except to the extent the same expressly constitutes a breach of a
Seller Representation in accordance with,

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and subject to the terms of, clause (i) above), but specifically excluding, in
each instance of clauses (i) through (v), (A) any Liabilities for which
Purchaser is indemnifying Seller for under Section 5.4(a) above, (B) any
Liabilities consisting of liabilities or obligations for which Purchaser
received a credit at Closing (but only to the extent of such credit theretofore
received by Purchaser), (C) any Liabilities consisting of contractual
liabilities or obligations which Purchaser expressly assumed at Closing
including, but not limited to, Liabilities that Purchaser assumes pursuant to
any document or other written agreement entered into in connection with the
Closing, and (D) except to the extent the same arises as a result of a breach of
Seller’s representations and warranties set forth in the last sentence of
Section 5.1(c) or Section 5.1(g), 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. For
avoidance of doubt, in the event that the Closing does not occur, Purchaser’s
remedies shall be expressly limited to the terms and conditions of Section 15.2,
including, but not limited to Seller’s indemnification obligations referenced
therein. Any amounts paid under this Section 5.4(b), shall not be duplicative of
any other amounts paid by Seller to Purchaser pursuant to the terms hereof.
(c)    Survival. This Section 5.4 shall survive the Closing (subject to the
terms of Section 5.3) and shall not be deemed merged into the Deed or any
conveyance document delivered at Closing.

Section 5.5    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 5.4 and/or this Section 5.5,
against the other party hereto (the “Indemnitor”) the Indemnified Party shall
promptly notify the Indemnitor in writing 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 5.4 and/or this Section 5.5. 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 5.5 shall survive the Closing and shall not be deemed
merged into the Deed or any conveyance document delivered at Closing.

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ARTICLE VI
CLOSING AND CLOSING DELIVERIES

Section 6.1    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. Subject to the terms
and conditions set forth herein, Purchaser shall have the right to accelerate
the Closing Date by providing written notice to Seller of such date, which date
must be at least five (5) Business Days from the date such notice is delivered
in accordance with the provisions of Section 13.1; provided, however, that
Purchaser shall have the one-time right to revoke such acceleration notice and
amend the proposed Closing Date by selecting another Business Day to be the
Closing Date by delivering written notice to Seller at least two (2) days prior
to the previously selected Closing Date (provided that such revised Closing Date
is not later than June 21, 2016). 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. Subject to the terms and conditions set forth herein, Purchaser shall
have the right to extend the Closing Date for a period of up to thirty (30) days
beyond the original Closing Date. To the extent Purchaser elects to extend the
Closing Date pursuant to the preceding sentence, then as a condition precedent
to the effectiveness of such extension, Purchaser shall (i) not later than three
(3) Business Days prior to the original Closing Date (time being of the essence)
deliver written notice of such extension to Seller and Escrow Company and
(ii) not later than two (2) Business Days before the original Closing Date
deposit with Escrow Company the additional sum of Two Hundred Fifty Thousand
and 00/100 Dollars ($250,000.00) by wire transfer of immediately available
U.S. Federal funds which shall become part of the Deposit for all purposes under
this Agreement and which shall be applied to the Purchase Price at Closing in
accordance with the terms of this Agreement (the “Closing Extension Deposit”).

Section 6.2    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.

Section 6.3    Seller’s Deliveries. At Closing, Seller shall execute (to the
extent required) and deliver, or cause to be delivered and/or notarized, where
applicable, to Purchaser or the Escrow Company as appropriate:
(d)    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 G;
(e)    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 H;

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(f)    an assignment and assumption agreement (“Assignment and Assumption
Agreement”), to the extent assignable and to the extent that any applicable
consent or approval of the counterparty thereto has been obtained, of all of
Seller’s right, title and interest in, to and under the Bookings, Hotel
Contracts, Space Leases, Permits, Books and Records, Warranties, Intellectual
Property and Miscellaneous Hotel Assets in the form of Exhibit I;
(g)    an assignment and assumption agreement with respect to the Existing CBA
in such form as mutually agreed upon by Seller and Purchaser in their reasonable
discretion, subject to the requirements of UNITE HERE Local 30, AFL-CIO (the
“CBA Assignment and Assumption”);
(h)    a liquor concession agreement and side letter substantially in the forms
attached hereto as Exhibit Y and Exhibit Z, respectively (collectively, the
“Concession Agreement”);
(i)    an assignment and assumption agreement and a consent to assignment and
amendment with respect to the Franchise Agreement in such form as mutually
agreed upon by Seller and Purchaser in their reasonable discretion (and
otherwise acceptable to Franchisor) (the “Franchise Assignment and Assumption”);
(j)    the certificate referred to in Section 9.1(c);
(k)    evidence of termination of the existing Management Agreement;
(l)    an affidavit of Seller stating that Seller is not a “foreign person”
within the meaning of Section 1445 of the Code, in the form of Exhibit J and a
California Form RE-593 duly executed by Seller;
(m)    the Closing Statement;
(n)    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;
(o)    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;
(p)    all keys, key codes, access codes and combinations to locks to the extent
known by, or in the possession of, Seller or Manager;
(q)    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 Seller to issue the Title Policy, including,
without limitation, a title insurance affidavit in customary form attached
hereto as Exhibit W; and

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(r)    such other documents and information reasonably needed for Purchaser to
complete and file the Certificate of Real Estate Value as more particularly
described in Section 6.4(g).

Section 6.4    Purchaser’s Deliveries. At the Closing, Purchaser shall execute
(to the extent required) and deliver, or cause to be delivered, to Seller or the
Escrow Company as appropriate, or filed with the applicable governmental
authority:
(a)    the balance of the Purchase Price, to be paid in accordance with Section
3.1;
(b)    the Bill of Sale;
(c)    the Assignment and Assumption Agreement;
(d)    the CBA Assignment and Assumption;
(e)    the Franchise Assignment and Assumption;
(f)    the Concession Agreement;
(g)    the certificate referred to in Section 8.1(c);
(h)    the Closing Statement;
(i)    a preliminary change of ownership report in the form required by San
Diego County;
(j)    copies of such documents relating to Purchaser as Seller or the
Title Company shall reasonably require in connection with this transaction; and
(k)    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.

Section 6.5    Expenses. In the event that the parties proceed to Closing
hereunder:
(c)    Seller and Purchaser shall each pay the transactions costs and expenses
as set forth on Exhibit L attached hereto.
(d)    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.

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The provisions of this Section 6.5 shall survive Closing or any termination of
this Agreement.

Section 6.6    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.

Section 6.7    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 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 expense, shall make
all repairs necessitated by such removal but shall have no obligation to replace
any Excluded Asset so removed.

ARTICLE VII
ADJUSTMENTS AND PRORATIONS CLOSING STATEMENTS

Section 7.1    Adjustments and Prorations. In addition to the costs and expenses
required to be paid in connection with the consummation of the transaction,
which shall be paid by Purchaser and Seller as set forth in Section 6.5, 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 so
that the Closing Date is a date of income and expense for Purchaser as provided
below:
(a)    Accounts Receivable; Trade Accounts Payable. Seller shall retain all
Accounts Receivable. Trade accounts payable shall be identified as of the Cut
Off Time. Seller shall pay (or cause Manager to pay) all trade accounts due and
payable as of the Cut Off Time that relate to matters arising or accruing prior
to the Closing Date in the ordinary course when due and Purchaser shall be
responsible for all such trade accounts payable that relate to matters arising
or accruing from and after the Closing Date. Revenue from room rentals
(including food and beverage receivables charged to guest room accounts) (i.e.
the guest ledger) shall belong to Seller to the extent attributable to any
period prior to the Closing Date; provided, however, revenues from 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
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shall belong to Purchaser. Each of Purchaser and Seller shall be responsible for
the payment of any sales, use, and/or hotel/motel occupancy taxes collected or
otherwise due and payable in connection with the revenue allocated to such party
under this Section 7.1(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 7.1(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 and the appropriate party shall pay any
deficiency in the original proration to the other party promptly upon receipt of
the actual bill for the relevant taxable period. 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 deposits actually
transferred to Purchaser or which remain on deposit for the benefit of Purchaser
(as acknowledged orally or in writing by such utility) with respect to such
utility contracts.
(d)    Hotel Contracts. Any amounts prepaid, accrued or due and payable under
any Hotel Contracts and the Franchise Agreement shall be prorated as of the Cut
Off Time, with Seller being credited for amounts prepaid and Purchaser being
credited for amounts accrued and unpaid (excluding any delinquent amounts, which
Seller shall pay in full at or prior to Closing). Seller will receive 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 is actually transferred to Purchaser or
otherwise 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 and Permit Fees. Fees prepaid, accrued or due and payable for
Permits transferred to Purchaser 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 actually transferred to Purchaser or which remain on deposit for the
benefit of Purchaser.

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(f)    Hotel Matters. Purchaser shall receive a credit for: (i) deposits and
other advance payments, if any, under Bookings for Hotel facilities for the
period after Closing that remain in effect as of Closing; (ii) commissions due
to travel agencies, online travel agencies, credit and referral organizations
for any Bookings related to the period prior to Closing and (iii) all
outstanding gift certificates, vouchers, trade-outs and similar items for free
or discounted use of any of the Hotel rooms or other activities or services
(collectively, “Vouchers”) issued specifically for use at the Hotel (as opposed
to any Vouchers for use at any Marriott-branded hotel, the revenue from which is
directly paid to Franchisor or its Affiliates and is not retained by the Hotel),
in an amount equal to (A) eighty percent (80%) of the face value thereof (where
a face value exists) if such Voucher was sold as a gift card or gift certificate
from January 1, 2016 through the Closing Date, (B) sixty percent (60%) of the
face value thereof (where a face value exists) if such Voucher was sold as a
gift card or gift certificate from January 1, 2015 through December 31, 2015,
(C) twenty percent (20%) of the face value thereof (where a face value exists)
if such Voucher was sold as a gift card or gift certificate from January 1, 2013
through December 31, 2014, (D) ten percent (10%) of the face value thereof
(where a face value exists) if such Voucher was sold as a gift card or gift
certificate from January 1, 2011 through December 31, 2012 or (E) five percent
(5%) of the face value thereof (where a face value exists) if such Voucher was
sold as a gift card or gift certificate prior to January 1, 2011.To the extent a
Voucher does not include a face value, such Voucher will be valued pursuant to
Exhibit U attached hereto. For the avoidance of doubt, Purchaser shall not
receive a credit for any gift card or gift certificate purchased for use at any
Marriott-branded hotel, to the extent that the revenue therefrom is directly
paid to Franchisor or its Affiliates and is not retained by the Hotel. Seller
shall receive a 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 agencies, online travel agencies, 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. 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 (i) honor and credit each Employee’s unused
accrued or earned vacation, sick-time-off or other paid time off of any Employee
and (ii) be responsible for the payment of such Accrued Vacation Pay to the
Employees (to the extent Purchaser received a credit therefor) when payable in
accordance with applicable Legal Requirements. Notwithstanding the foregoing, to
the extent required pursuant to any applicable Legal Requirements, at Closing,
Seller shall cause Manager to pay to the Employees an amount equal to the unpaid
Accrued Vacation Pay for each applicable Employee.
(h)    Compensation. All Compensation due and payable to Employees shall be
prorated as of the Cut Off Time, other than Accrued Vacation Pay (which is
addressed in Section 7.1(g) above).
(i)    Consumables and Inventory. Seller shall receive no credit for any
Consumables (whether opened or unopened) and/or Inventory as of the Cut Off
Time.

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(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 to Purchaser 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 and Seller shall retain the right to pursue the collection of such
delinquent rents; provided that in connection with such efforts Seller shall
have no right to terminate any Space Lease or to initiate any eviction
proceeding against the applicable tenant thereunder. To the extent Purchaser
receives rents (including operating expense, tax and insurance charges payable
by a Space Lessee) on or after the Closing Date that such Space Lessee
designates are payable as delinquent rents for any period prior to the Closing
Date, Purchaser shall promptly deliver such amounts to Seller. Purchaser shall
use good faith efforts (at no cost to Purchaser) 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 security deposits shall be transferred
to Purchaser or credited against the Purchase Price and all obligations with
respect to such security deposits shall be assumed by Purchaser.
(k)    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.
(l)    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.
(m)    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. At least three (3) days prior to 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 Preliminary Closing Statement will
be updated based on the inventories and prorations taken as of the Cut Off Time
(unless otherwise agreed by the Parties) 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. 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 initial and the
updated 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
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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.

Section 7.2    Payment. Any net credit due to Seller as a result of the
adjustments and prorations under Section 7.1 shall be paid to Seller in cash at
the time of the Closing. Any net credit due to Purchaser as a result of the
adjustments and prorations under Section 7.1 shall be credited against the
Purchase Price at the time of the Closing.

Section 7.3    Survival. The provisions of this Article VII shall survive the
Closing and shall not be deemed merged into the Deed or any other conveyance
document delivered at the Closing.

ARTICLE VIII
CONDITIONS TO SELLER’S OBLIGATIONS

Section 8.1    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:
(s)    Purchaser’s Compliance with Obligations. Purchaser shall have complied
with all material obligations required by this Agreement to be complied with by
Purchaser.
(t)    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.
(u)    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 and such breach cannot be cured
by Purchaser and precludes Purchaser from performing its obligations hereunder,
Seller may terminate this Agreement without thereby waiving any right or remedy.
(v)    Franchise Agreement. Except for any franchise or other fees and amounts
owed by Seller or Manager to Franchisor 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 first 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.

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ARTICLE IX
CONDITIONS TO PURCHASER’S OBLIGATIONS

Section 9.1    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:
(l)    Seller’s Compliance with Obligations. Seller shall have complied with all
material obligations required by this Agreement to be complied with by Seller.
(m)    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.
(n)    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 if such change to the
respective representation and warranty (i) (x) is due to transactions or actions
that are expressly permitted by, or approved by Purchaser in accordance with,
this Agreement and (y) did not result from a breach of any of Seller’s
obligations hereunder; (ii) is due to changes in fact after the Effective Date
beyond Seller’s reasonable control that occurred in the ordinary course of the
business of owning and operating the Hotel and (x) did not result from a breach
of any of Seller’s obligations hereunder and (y) reflect only arm’s length bona
fide transactions; or (iii) constitutes a Representation Qualification.
Notwithstanding the foregoing, if any representation and warranty of Seller is
no longer true as of the Closing Date (subject to the limitations of the
immediately preceding sentence) and Seller does not cure or otherwise remedy
such change without any obligation to do so, then if such change would,
individually or in the aggregate, (A) result in actual losses (and not
consequential damages) to Purchaser such that the actual cost to address such
inaccuracy (as opposed to the effect on the value of the Property) after the
Closing is less than Three Hundred Fifty Thousand Dollars ($350,000.00),
Purchaser shall be obligated to proceed to Closing and Seller shall have no
liability with respect thereto (provided that, any such change described in any
of clauses (i) through (iii) above shall not be a breach of this Agreement and,
for avoidance of doubt, shall not be subject to Seller’s indemnification
obligations set forth in Section 5.4(b)); or (B) result in losses to Purchaser
such that the actual cost (and not consequential damages) to address such
inaccuracy (as opposed to the effect on the value of the Property) after the
Closing is in excess of Three Hundred Fifty Thousand Dollars ($350,000.00), but
less than Seven Hundred Fifty Thousand Dollars ($750,000.00), Purchaser shall
not be obligated to proceed to Closing, unless Seller elects to credit Purchaser
at Closing an amount equal to all losses caused by such change in excess of
Three Hundred Fifty Thousand Dollars ($350,000.00) not to exceed a credit of
Four Hundred Thousand Dollars ($400,000.00), in which event Purchaser shall be
obligated to proceed with Closing hereunder and any failure of Purchaser to
close the transactions contemplated hereunder under this clause (B) shall
constitute a default by Purchaser under Section 15.1 (provided Seller is

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prepared to give such credit (without any obligation to do so); provided,
however, if the change in the representation and warranty results in actual
losses (and not consequential damages) to Purchaser such that the actual cost to
address such inaccuracy (as opposed to the effect on the value of the Property)
after the Closing is in excess of Seven Hundred Fifty Thousand Dollars
($750,000.00), Purchaser shall have the right to terminate this Agreement
(subject to Seller’s cure right set forth below). If Purchaser has the right to
terminate this Agreement pursuant to the preceding sentence and Purchaser makes
such election in writing on or prior to the Closing Date (provided that
Purchaser shall make such election to terminate, if at all, promptly after
receipt of Seller’s certificate delivered under Section 6.3(d) above, but in any
event prior to 2:00PM (Central Time) on the Closing Date), then this Agreement
shall terminate, Purchaser shall receive a return of the Deposit, and neither
Seller nor Purchaser shall have any further obligations under this Agreement
except for the Surviving Obligations. In each instance of clauses (A) or
(B) above, in no event shall any claims, actions, litigation, lawsuits or other
legal proceedings filed or alleged by any Employee or any other third party that
are subject to Seller’s express indemnification obligations under this Agreement
be included in the calculation of such losses (collectively, “Indemnified
Losses”); provided, however, that to the extent that any such Indemnified Losses
are excluded from the calculation of losses under clause (A) or (B), as
applicable, such Indemnified Losses shall not be applied against the Cap in
connection with an indemnification claim brought by Purchaser after the Closing
subject to the terms and conditions of this Agreement. Seller shall in any event
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 twenty (20) days to allow such cure as long as Seller uses
its diligent and reasonable efforts to effect such cure; provided, however, such
cure period will not extend the Closing Date past any commitment date of any
financing or cost Purchaser any amount to extend such commitment date (provided
that Purchaser shall have notified Seller of any such commitment date at least
ten (10) days prior to Closing. If Seller elects in writing not to cure or fails
to give Purchaser notice of its intent to cure, Purchaser may terminate this
Agreement, whereupon Escrow Company shall immediately return the Deposit to
Purchaser, the Parties shall each pay one-half of the costs of Escrow, and
neither Party to this Agreement shall thereafter have any further rights or
obligations under this Agreement, except for the Surviving Obligations;
provided, however, if such inaccuracy was created, knowingly consented to or
affirmatively permitted by Seller, Manager or their respective Affiliate in
material breach of this Agreement, Purchaser shall also be entitled to
reimbursement for all of Purchaser’s documented out of pocket costs of this
transaction actually incurred to third parties, including reasonable attorneys’
fees and costs incurred in connection with this Agreement and Due Diligence in
an amount not to exceed the Seller’s Liability Amount. Nothing herein shall
modify or supersede the terms of and conditions of Section 9.2(b) in the event
that Purchaser elects to proceed with acquisition of the Property
notwithstanding a breach or inaccuracy with respect to Seller’s representations
and warranties or covenants.
(o)    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, 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.

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(p)    Franchise Agreement. Provided that Purchaser has complied with all of its
obligations under Section 4.9, on or before the Closing Date, Franchisor shall
be prepared to execute and issue to Purchaser, concurrently with Closing, a
consent to the assignment of the Franchise Agreement and an amendment thereto in
Franchisor’s form, as modified to incorporate the Material Franchise Terms, the
obligations with respect to the repayment of the so-called key-money as more
particularly described in Section 4.9.
(q)    No Litigation. No litigation or other court action shall have been
commenced seeking to obtain an injunction or other relief from such court to
enjoin the consummation of the transaction described in this Agreement and no
preliminary or permanent injunction or other order, decree or ruling shall have
been issued by a court of competent jurisdiction or by any governmental
authority, that would make illegal or invalid or otherwise prevent the
consummation of the transactions described in this Agreement.
(r)    Title Policy. Subject to the payment of all premiums, the Title Company
or such other nationally recognized title company reasonable acceptable to
Purchaser shall be prepared to issue to Purchaser the Title Policy subject only
to Permitted Exceptions.
(s)    Estoppels. Seller shall have delivered to Purchaser an estoppel from each
of Regents Park Commercial Association with respect to Commercial Declaration
and the Regents Park Street and Landscaping Maintenance Corporation with respect
to the Commercial Declaration Regarding Common Maintenance, each in
substantially the same form in all material respects attached as Exhibit Q and
Exhibit T, respectively, and dated within thirty (30) days prior to the original
Closing Date.
(t)    Approvals. Seller shall have received all required approvals, consents
and authorizations of third parties (including any governmental authorities)
that are required to permit Seller to sell the Property and otherwise consummate
the Closing (except with respect to any approvals or consents required in
connection with the transfer of Hotel Contracts).
(u)    Liquor License. As of the Closing Date, (i) Purchaser or Purchaser’s
manager shall be permitted to continue the sale and service of alcoholic
beverages pursuant to the existing Liquor License, or (ii) Seller shall enter
into an Interim License Agreement with Purchaser or its manager pursuant Section
14.1(a).
(v)    Parking Report. On or before five (5) Business Days prior to the Closing
Date, Purchaser shall have received the Parking Report and such Parking Report
shall contain a parking proposal (with corresponding plans) reasonably
acceptable to Purchaser that provides for at least 518 parking spaces on the
Property in accordance with applicable Legal Requirements, which Parking Report
shall satisfy the following additional requirements: (a) without limiting the
foregoing, the parking proposals in the Parking Report shall take into
consideration the required number of ADA accessible spaces, the permitted
allocation between full-size and compact parking spaces, and the required size
of, and distance between, parking spaces as required by applicable Legal
Requirements, (b) the parking proposals in the Parking Report shall not require
any additional capital improvements to the existing parking facility or the
on-site parking areas outside of the parking facility other than re-striping
and/or conversion of certain storage areas (that were

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historically parking areas) back to parking areas, (c) the parking proposals in
the Parking Report shall not require any off-site or leased parking, and (d) the
parking proposals in the Parking Report shall not require valet parking services
or tandem spaces to be utilized to satisfy Legal Requirements. In the event that
effectuating the parking proposal approved by Purchaser is estimated to cost in
excess of $25,000, at Closing, Purchaser shall receive a credit in the amount by
which the cost estimate exceeds $25,000 as reasonably determined by Seller and
Purchaser in their commercially reasonable, but good faith, discretion. Any such
credit paid by Seller to Purchaser shall constitute payment in full of Seller’s
obligations and any Liability (regardless of when accruing or arising)
associated with the cost to address the proposals set forth in the Parking
Report and/or to address the number of available parking spaces at the Property.

Section 9.2    Closing Condition Failure.
(e)    Subject to Seller’s right to extend the Closing Date pursuant to Section
9.1(c), if any condition set forth in Section 8.1 or Section 9.1 is not
satisfied on the Closing Date (and such failure is not the result of a default
under this Agreement or any act or omission intentionally taken or not taken for
purposes of frustrating Closing by the Party in whose favor such condition
runs), then the party for whom such condition(s) precedent is not satisfied (and
only such party) may, in its sole and absolute discretion, (i) terminate this
Agreement by providing written notice to such effect to the other party
whereupon Escrow Company shall immediately return the Deposit to Purchaser, the
Parties shall each pay one-half the costs of escrow, and neither party to this
Agreement shall thereafter have any further rights or liabilities under this
Agreement, except for the Surviving Obligations, or (ii) waive such closing
condition(s) at or prior to the Closing Date without any increase in, abatement
of, or credit against the Purchase Price, or claim against the other party and
proceed to Closing; provided however, if either Party terminates this Agreement
due to a default by the other Party, then Section 15.1 and Section 15.2, as
applicable, shall control the rights, remedies and obligations of the Parties.
(f)    If either party elects to proceed to the Closing with Seller’s
Representative or Purchaser’s Representative, as applicable, having actual
knowledge (as opposed to constructive or imputed knowledge) of (A) a default in
any of the covenants, agreements or obligations to be performed by the other
party under this Agreement, and/or (B) an inaccuracy in or untruthfulness of any
representation or warranty of the other party made in this Agreement or any of
the closing documents, then, upon the consummation of the Closing, such party
shall be deemed to have waived any such default and/or inaccuracy and shall have
no claim against the other party on account thereof
Notwithstanding the foregoing terms of this Section 9.2 (but subject to Seller’s
right to extend the Closing Date under the terms of Section 9.1(c)), if the
failed closing condition(s) is reasonably susceptible to cure by Seller or
Purchaser, then either party shall have the one-time right to extend the Closing
Date for up to twenty (20) days in order to allow such cure by giving notice to
such effect to the other party on or before the date that is one (1) Business
Day prior to the scheduled Closing Date, and the applicable party(ies) shall use
all commercially reasonable and diligent efforts to effect such cure; provided,
however, such cure period will not extend the Closing Date past any commitment
date of any financing or cost Purchaser any amount to extend such commitment
date

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(provided that Purchaser shall have notified Seller of any such commitment date
at least ten (10) days prior to Closing).

ARTICLE X
ACTIONS AND OPERATIONS PENDING CLOSING

Section 10.1    Actions and Operations Pending Closing. Seller agrees that at
all times prior to the Closing Date:
(g)    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 including, without limitation
(i) maintaining the inventories of FF&E, Operating Equipment and Consumables at
the Property at levels substantially consistent with Present Standards,
(ii) maintaining all Fixtures and Tangible Personal Property in the same
condition as it existed as of the Effective Date (reasonable wear, tear and loss
excepted) and not trading, substituting or removing any Personal Property from
the Hotel, except Consumables and Inventory substantially consistent with
Present Standards, (iii) performing routine maintenance and repairs for the
Property substantially consistent with Present Standards, (iv) renewing all
material Licenses and Permits prior to their expiration, (v) maintaining all
insurance policies, (vi) not making any material alterations or improvements at
the Property, or demolishing any of the Property subject to Section 11.1,
(vii) not selling, transferring or otherwise disposing of any of the Property,
other than substantially consistent with Present Standards and (viii) not
removing any Personal Property from the Hotel, other than consistent with
Present Standards.
(h)    From and 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) or less days’ notice and without payment of any penalty or termination fee,
without the prior written consent of Purchaser, in its sole and good faith
discretion. If Purchaser fails to respond to a request for consent within three
(3) Business Days after receipt of such request, such consent shall be deemed
given.
(i)    Seller shall have the right and obligation, without notice to or consent
of Purchaser, to make Bookings in the ordinary course of business and consistent
with the Present Standard, including customary discounted rates.
(j)    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 join
in all applications for and cooperate with Purchaser in obtaining all necessary
consents, permits, approvals, and licenses, and otherwise cooperate with
Purchaser as may be reasonably necessary to facilitate the transfer of the
Property to Purchaser; provided, however, that any costs, expenses or fees paid
or incurred by Seller in connection therewith shall be reimbursed and credited
to Seller.

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(k)    From and after the expiration of the Inspection Period through the
Closing Date, Purchaser shall have the right to consult with Seller and Manager
with respect to the hiring, initially and with respect to any replacement, of
the following Hotel staff positions: (i) general manager; (ii) director of human
resources; (iii) director of food and beverage; (iv) chief engineer;
(v) director of marketing; and (vi) comptroller/chief financial officer.
(l)    Seller shall 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.
(m)    Seller shall not cause or permit any Fixtures and Tangible Personal
Property or Operating Equipment located, installed or used in the Hotel as of
the Effective Date (except Excluded Assets, if applicable) to be sold,
exchanged, assigned, conveyed, leased, disposed of or removed, other than in the
ordinary course of business conducted in accordance with the Present Standards.
(n)    Seller shall provide (and shall instruct Manager to provide) copies of
any written notices (i) received by Seller after the Effective Date from any
governmental or quasi-governmental organizations regarding any violations of
Legal Requirements, or (ii) given or received by Seller (or on behalf of Seller)
after the Effective Date alleging material defaults under any material Hotel
Contracts, Space Leases or Equipment Leases.
(o)    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 any
governmental or quasi-governmental authority, agency, commission, board or
regulatory body or any party to any Hotel Contract without the prior written
approval of Seller, which approval shall not be unreasonably withheld,
conditioned or delayed.
(p)    Between the Effective Date and the Closing Date or earlier termination of
this Agreement, neither Seller, Manager, nor any of their respective Affiliates
nor any of their respective members, partners, or agents (including, without
limitation, any broker) shall offer, solicit or negotiate the possible direct or
indirect acquisition of the Property (or any other form of transaction having a
similar effect) or make any information about the Property available (for
purpose of sale or refinance) to any Person other than Purchaser, its Affiliates
and their respective designees, agents and/or authorized third parties. Seller
agrees to direct its broker, if any, to cease the marketing of the Property.
Such restrictions shall be in effect until the earlier of (i) the Closing Date,
or (ii) the termination of this Agreement by either party pursuant to the terms
and conditions hereof; and thereafter shall be null and void and of no further
force or effect.
(q)    Not later than five (5) Business Days after the date on which Purchaser
or its counsel provide Seller with a commercially reasonable form of estoppel,
Seller shall request estoppels in a form reasonably acceptable to Purchaser from
ACE Parking III, LLC, with respect to that certain Parking Services Agreement,
dated February 1, 2012, by and between Seller and ACE Parking III, LLC, and from
The Hertz Corporation, with respect to that certain Amended and Restated Global
Master Concession and Joint Marketing Agreement, dated May 2015, by and among

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Franchisor, Marriott Rewards, LLC and The Hertz Corporation. Seller shall use
commercially reasonable efforts (without any obligation to incur any out of
pocket expenses or exercise any rights under the referenced agreement) to obtain
such estoppels and the estoppels set forth in Section 9.1(h) at or prior to the
Closing. Without limiting Purchaser’s rights pursuant to Section 9.1(h) of this
Agreement, in no event shall the receipt of estoppels pursuant to this
Section 10.1(l) constitute a condition precedent to Purchaser’s obligations
under this Agreement.
(r)    From and after the Effective Date and continuing until completion, Seller
shall use commercially reasonable and diligent efforts to complete at its sole
cost and expense the repair of the pool deck and surrounding areas and
components, including, without limitation, the pool, pool deck, pool deck
drains, pool deck perimeter (including without limitation, expansion joints and
caulking/sealants), planter boxes and drains and any water intrusion into the La
Jolla Social Room (collectively, the “Pool Areas”). The scope of such repairs
shall be reasonably determined by Purchaser following the Effective Date, taking
into account recommendations from third party inspectors and consultants
retained by Purchaser (such scope of work, the “Pool Work”). Seller acknowledges
that the Pool Work may require the complete replacement of the pool deck and the
other components listed above. In addition, (x) to the extent that any testing
of areas of the La Jolla Social Room for water intrusion require removal (or
other intrusive testing) or replacement, or (y) in the event that any of the
foregoing inspections reveal mold, moisture issues or water damage, the Pool
Work shall include the repair, replacement or restoration of such areas,
including, without limitation, the remediation of such mold, moisture issues and
water damage. With respect to the Pool Work:
(i)    The Pool Work shall be completed in a good and workmanlike manner,
lien-free, in compliance with all applicable Legal Requirements and Purchaser
shall have the right to approve the contractor performing the Pool Work and
Seller shall cause such contractor to carry customary insurance and to name
Purchaser, its applicable Affiliates and Purchaser’s lender and manager as
additional insureds. While Seller shall use commercially reasonable efforts to
complete the Pool Work prior to Closing, in the event that such work is not
completed, Seller shall complete the work after Closing; and in connection
therewith Seller shall endeavor to complete the Pool Work no later than
August 31, 2016 (provided that Seller shall have until sixty (60) days after
completion of the Pool Work to finalize and receive any lien waivers or related
close-out payments with respect to the Pool Work).Upon completion of the Pool
Work, Seller shall provide Purchaser reasonable evidence that such work has been
completed and paid for and there are no mechanics’ or materialmen’s liens or
claims of liens related thereto. Seller shall also provide any warranties
applicable to the Pool Work and ensure that the same are for the benefit of
Purchaser.
(ii)    Purchaser hereby grants a license to Seller or its agents to enter upon
the Property from and after the Closing to complete the Pool Work, provided,
that all such Pool Work shall be done in a manner to avoid any material
disruption to the operation of the Hotel and in accordance with rules reasonably
established by Purchaser from time to time; provided, further, that Seller shall
provide Purchaser

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with prior written notice of any material disruption to the operation of the
Hotel such that Purchaser can work with Seller to minimize such disruption.
(iii)    In connection with the Seller’s obligations under this Section 10.1(l),
Seller shall establish at Closing an escrow holdback reserve pursuant to an
escrow agreement by and among Seller, Purchaser and Escrow Company, in an amount
of One Hundred Twenty-Five Thousand Dollars ($125,000) (the “Pool Work Reserve
Funds”). The Pool Work Reserve Funds shall be held back from the Purchase Price
payable to Seller at Closing and shall be deposited with Escrow Company at
Closing. In the event that after the Closing Seller fails to complete the Pool
Work in the manner required under this Section 10.1(l) and such failure
continues for a period of thirty (30) days following written notice from
Purchaser with respect thereto (and is not the result of any force majeure event
of which Seller has provided Purchaser with written notice within a reasonable
period of time after the onset thereof), then, upon written notice to Seller and
Escrow Company, Purchaser shall have the right (but not the obligation) to
complete the Pool Work itself (whether directly or through a third-party) and if
Purchaser so elects, Seller shall assign any and all applicable contracts to
Purchaser (or its designee) and Purchaser shall use funds from the Pool Work
Reserve Funds to complete the Pool Work. The Pool Work Reserve Funds shall be
released in accordance with the terms of the escrow agreement, which the parties
shall negotiate in good faith prior to the Closing Date; provided, however, the
conditions of such release shall be limited to Seller’s delivery of
(i) reasonable evidence that the parties performing such Pool Work shall have no
liens or claims of liens upon payment, (ii) invoices or other satisfactory
evidence of the costs incurred, and (iii) warranties with respect to the Pool
Work. In the event the Pool Work Reserve Funds are insufficient to complete the
Pool Work, Seller shall immediately pay directly to the applicable contractor or
reimburse Purchaser for any and all costs and expenses actually incurred by
Purchaser in excess of the Pool Work Reserve Funds. In the event any Pool Work
Reserve Funds remain after (x) Purchaser’s receipt of reasonable evidence that
the Pool Work has been completed and paid for and (y) unconditional lien waivers
have been delivered to Purchaser and receipt of the warranty in Purchaser’s
benefit, Escrow Company shall disburse such funds to Seller. Notwithstanding
anything to the contrary set forth in this Agreement, Seller’s obligations under
this Section 10.1(l) shall in no way be limited or reduced by Section 5.3 (i.e.,
the Cap, Deductible and/or Survival Period shall not apply). Seller shall
cooperate with any reasonable requirements of Purchaser’s lender regarding the
Pool Work and the Pool Work Reserve Funds, including, without limitation, any
requirement for such lender to hold and disburse such funds.
(iv)    Seller agrees to pursue in good faith all remedies of any nature against
each contractor with respect to any matter arising from, in connection with or
related to the Pool Work.
(v)    The terms of this Section 10.1(l) shall survive the Closing.

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(s)    From and after the Effective Date and continuing until completion, Seller
shall use commercially reasonable and diligent efforts to complete at its sole
cost and expense the repair of certain pipes, plumbing, fittings, openings, and
related areas in the pump room located on the second (2nd) floor of the Hotel
and surrounding areas to eliminate the odors emanating therefrom (collectively,
the “Pump Room Areas”). The scope of such repairs shall be reasonably determined
by Purchaser following the Effective Date, taking into account recommendations
from third party inspectors and consultants retained by Purchaser, but Seller
acknowledges and agrees that, at a minimum, replacement of approximately 300
feet of vent line pipe and re-sealing of the related pipe opening using
fire-rated sealant shall be required (such scope of work, the “Pump Room Work”).
In addition, to the extent that any testing of the Pump Room Areas require
removal (or other intrusive testing) or replacement, the Pump Room Work shall
include the repair, replacement or restoration of such areas. With respect to
the Pump Room Work:
(i)    The Pump Room Work shall be completed in a good and workmanlike manner,
lien-free, in compliance with all applicable Legal Requirements and Purchaser
shall have the right to approve the contractor performing the Pump Room Work and
Seller shall cause such contractor to carry customary insurance and to name
Purchaser, its applicable Affiliates and Purchaser’s lender and manager as
additional insureds. While Seller shall use commercially reasonable efforts to
complete the Pump Room Work prior to Closing, in the event that such work is not
completed, Seller shall complete the work after Closing; and in connection
therewith Seller shall endeavor to complete the Pump Room Work no later than
August 31, 2016 (provided that Seller shall have until sixty (60) days after
completion of the Pump Room Work to finalize and receive any lien waivers or
related close-out payments with respect to the Pump Room Work). Upon completion
of the Pump Room Work, Seller shall provide Purchaser reasonable evidence that
such work has been completed and paid for and there are no mechanics’ or
materialmen’s liens or claims of liens related thereto. Seller shall also
provide any warranties applicable to the Pump Room Work and ensure that the same
are for the benefit of Purchaser.
(ii)    Purchaser hereby grants a license to Seller or its agents to enter upon
the Property from and after the Closing to complete the Pump Room Work,
provided, that all such Pump Room Work shall be done in a manner to avoid any
material disruption to the operation of the Hotel and in accordance with rules
reasonably established by Purchaser from time to time; provided, further, that
Seller shall provide Purchaser with prior written notice of any material
disruption to the operation of the Hotel such that Purchaser can work with
Seller to minimize such disruption.
(iii)    In connection with the Seller’s obligations under this Section 10.1(m),
Seller shall establish at Closing an escrow holdback reserve pursuant to an
escrow agreement by and among Seller, Purchaser and Escrow Company, in an amount
of Twenty Five Thousand Dollars ($25,000) (the “Pump Room Work Reserve Funds”).
The Pump Room Work Reserve Funds shall be held back from the Purchase Price
payable to Seller at Closing and shall be deposited with Escrow Company at
Closing. In the event that after the Closing Seller fails to complete the

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Pump Room Work in the manner required under this Section 10.1(m) and such
failure continues for a period of thirty (30) days following written notice from
Purchaser with respect thereto (and is not the result of any force majeure event
of which Seller has provided Purchaser with written notice within a reasonable
period of time after the onset thereof), then, upon written notice to Seller and
Escrow Company, Purchaser shall have the right (but not the obligation) to
complete the Pump Room Work itself (whether directly or through a third-party)
and if Purchaser so elects, Seller shall assign any and all applicable contracts
to Purchaser (or its designee) and Purchaser shall use funds from the Pump Room
Work Reserve Funds to complete the Pump Room Work. The Pump Room Work Reserve
Funds shall be released in accordance with the terms of the escrow agreement,
which the parties shall negotiate in good faith prior to the Closing Date;
provided, however, the conditions of such release shall be limited to Seller’s
delivery of (i) reasonable evidence that the parties performing such Pump Room
Work shall have no liens or claims of liens upon payment, (ii) invoices or other
satisfactory evidence of the costs incurred, and (iii) warranties with respect
to the Pump Room Work. In the event the Pump Room Work Reserve Funds are
insufficient to complete the Pump Room Work, Seller shall immediately pay
directly to the applicable contractor or reimburse Purchaser for any and all
costs and expenses actually incurred by Purchaser in excess of the Pump Room
Work Reserve Funds. In the event any Pump Room Work Reserve Funds remain after
(x) Purchaser’s receipt of reasonable evidence that the Pump Room Work has been
completed and paid for and (y) unconditional lien waivers have been delivered to
Purchaser and receipt of the warranty in Purchaser’s benefit, Escrow Company
shall disburse such funds to Seller. Notwithstanding anything to the contrary
set forth in this Agreement, Seller’s obligations under this Section 10.1(l)
shall in no way be limited or reduced by Section 5.3 (i.e., the Cap, Deductible
and/or Survival Period shall not apply). Seller shall cooperate with any
reasonable requirements of Purchaser’s lender regarding the Pump Room Work and
the Pump Room Work Reserve Funds, including, without limitation, any requirement
for such lender to hold and disburse such funds.
(iv)    Seller agrees to pursue in good faith all remedies of any nature against
each contractor with respect to any matter arising from, in connection with or
related to the Pump Room Work.
(v)    The terms of this Section 10.1(m) shall survive the Closing.
(t)    Purchaser shall not and shall cause all of Purchaser’s Indemnitees to not
(i) contact (in any manner) any persons, employees, officers, directors,
principals, shareholders, investors, advisers, attorneys or agents of Shidler or
any persons related to any of the foregoing with respect to the Prior Dispute or
the Property or this Agreement (collectively, the “Shidler Contacts”) and
(ii) engage in any discussions or negotiations with any Shidler Contacts with
respect to the Prior Dispute or the Property or this Agreement, except to the
extent required in connection with a Shidler Claim; provided, that in such
event, Purchaser shall coordinate with Seller its response to such claim and
shall consider in good faith the requests of Seller in connection with any
response

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or defense to a Shidler Claim. Purchaser shall not, and shall cause all
Purchaser Indemnitees to not, contact (in any manner) any governmental authority
or officials with respect to any of the Sewer Work, the Pool Work or the Pump
Room Work (unless required in connection with Purchaser undertaking the Pool
Work or Pump Room Work pursuant to the terms of Sections 10.1(l) or 10.1(m), as
applicable, after Closing or, after consultation with Seller or any affiliate
thereof acting as Purchaser’s manager, with respect to any other work to be
undertaken at the Property after Closing). The terms of this Section 10.1(m)
shall survive the Closing for a period of one (1) year.
(u)    Seller and Purchaser shall jointly retain a qualified parking consultant
mutually acceptable to the Parties to prepare one or more parking proposals for
the Property (with corresponding plans) providing for at least 518 parking
spaces on the Property in accordance with applicable Legal Requirements (the
“Parking Report”). The Parking Report shall also contain an estimated cost of
carrying out each parking proposal. Seller shall use commercially reasonable
efforts to obtain the Parking Report by June 14, 2016. Seller shall be solely
responsible for the cost and expense of the Parking Report and Seller and
Purchaser shall have equal access to the parking consultant.

ARTICLE XI
CASUALTIES AND TAKINGS

Section 11.1    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, Seller shall promptly notify Purchaser. If the cost of repairing such
damage will equal or exceed Four Million Two Hundred Fifty Thousand Dollars
($4,250,000.00), Purchaser may then elect to (i) terminate this Agreement by
giving written notice to Seller, whereupon Escrow Company shall immediately
return the Deposit to Purchaser, the Parties shall each pay one-half of the
costs of the escrow, and neither party to this Agreement shall thereafter have
any further rights or liabilities under this Agreement, except for the Surviving
Obligations, or (ii) receive an assignment of all of Seller’s claims in
connection therewith and any 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 will not exceed Four Million Two
Hundred Fifty Thousand Dollars ($4,250,000.00), 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

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all of Seller’s rights to any insurance proceeds (excluding business
interruption proceeds for the period prior to Closing).

Section 11.2    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, whereupon Escrow
Company shall immediately return the Deposit to Purchaser, the Parties shall
each pay one-half of the costs of the escrow, and neither party to this
Agreement shall thereafter have any further rights or liabilities under this
Agreement, except for the Surviving Obligations.
(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 eminent domain
or 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 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.

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ARTICLE XII
EMPLOYEES

Section 12.1    Employees.
(d)    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 12.1. 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
Employees, 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 12.1(a); provided, however, to the extent that
Purchaser has received a credit at Closing therefor, Purchaser agrees to, and
shall cause its designee or management company to, honor and recognize the
seniority and vacation vesting rights of any Employee that was an Employee of
Manager as of the day immediately prior to the Closing that is rehired by
Purchaser or its designee or management company at the Closing.
(e)    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 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.
Except as required by applicable Legal Requirements, Seller covenants and agrees
not to permit any labor organization to become the exclusive representative of
any group of Employees for purposes of collective bargaining. 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
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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”).
(f)    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 compensation,
employment taxes or Accrued Vacation Pay that, pursuant to Section 7.1(g) or
Section 7.1(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 which occur on
or after the Closing Date; or (vi) in connection with Purchaser’s violation or
noncompliance with any applicable federal or state employment law on or after
the Closing Date, 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).
(g)    Seller agrees to indemnify, defend and hold Purchaser and Purchaser’s
Indemnitees harmless from and against any and all damages which any of them may
sustain by reason of, or arising out of, or resulting from the employment or
termination of any employees working at the Hotel prior to the Closing Date,
including without limitation, Seller’s failure to discharge any of the
obligations and liabilities of Seller arising prior to Closing with respect to
Employees employed by Seller or Manager or any Employee Benefit Plans maintained
by Seller or Manager.
(h)    Without limiting the generality of any other provision of this Agreement,
nothing in this Agreement shall create any third-party beneficiary rights for
the benefit of any union or any Employees of Seller or Purchaser or Manager.
(i)    The terms, conditions and indemnity obligations set forth in this Section
12.1 shall survive the Closing.

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ARTICLE XIII
NOTICES

Section 13.1    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 electronic mail
transmission, 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 La Jolla LLC
c/o HEI Hospitality, LLC
101 Merritt 7 Corporate Park, 1st Floor
Norwalk, Connecticut 06851
Attention: Clark Hanrattie / E-mail: chanrattie@heihotels.com
with a copy to:
Goodwin Procter LLP
Three Embarcadero Center, 24th Floor
San Francisco, California 94111
Attention: Benjamin C. Tschann, Esq. / E-mail: btschann@goodwinprocter.com
If intended for Purchaser, to:
CWI 2 La Jolla Hotel LP
c/o Watermark Capital Partners, LLC
272 East Deerpath Road, Suite 320
Lake Forest, Illinois 60045
Attention: Michael G. Medzigian / E-mail: medzigian@watermarkcap.com
with a copy to:
Paul Hastings LLP
515 South Flower Street, 25th Floor
Los Angeles, California 90071
Attention: Rick S. Kirkbride, Esq. / E-mail: rickkirkbride@paulhastings.com
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 e-mail shall be deemed received by the
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normal business hours, and if not, then the next Business Day, provided that
such notice is also concurrently sent by one of the other means set forth in
this Section 13.1. Either party may at any time change the address for notice to
such party by mailing a Notice as aforesaid.

ARTICLE XIV
ADDITIONAL COVENANTS

Section 14.1
    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 to Purchaser
or Purchaser’s manager as of the Closing Date or to permit Purchaser or
Purchaser’s manager 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 Effective Date, 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. If despite the exercise of such efforts by
Purchaser, Purchaser fails to obtain a transfer of the Liquor License or a new
Liquor License on or before the Closing Date, then Seller agrees that to the
extent required it shall enter, or cause Manager, the holder of the Liquor
License, to enter into an interim beverage agreement with Hotel Purchaser in
form reasonably satisfactory to all of Hotel Purchaser, Manager and Seller
(“Interim License Agreement”), to the extent permitted by applicable law,
including without limitation, an indemnification from Hotel Purchaser of Manager
and Seller with respect to any and all Liabilities arising during the term of
such Interim License 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 Jones
Lang LaSalle (the “Broker”). Purchaser and Seller each agree 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 14.1(b) shall survive Closing or any termination of this
Agreement.
(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.

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(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 previously filed tax appeals or protests applicable to any
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 by Purchaser
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 proceedings, after payment of reasonable attorneys’
fees and other costs associated with such process. Notwithstanding the
foregoing, in no event shall Seller negotiate or agree to any tax settlement,
assessment or other adjustment that would have an adverse effect on taxes for
the 2015-2016 tax year or any subsequent year. After Closing, Purchaser, at
Purchaser’s option, be entitled to take over and continue to process any pending
appeals or protests with respect to the tax fiscal year in which the Closing
Date occurs (and Seller 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; provided, however, that any such appeal or protest
applicable to the 2016-2017 tax year may only be filed by Purchaser.
(f)    Books and Records. The transaction contemplated hereby includes the Books
and Records of Seller pertaining to the business of the Hotel prior to the
Closing Date. Purchaser covenants and agrees that such Books and Records
pertaining to the period of Seller’s ownership of the Property will remain in
the Hotel for examination and audit by Seller and its agents after the Closing
as provided in this Section 14.1(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 such Books and Records for at
least seven (7) years after the Closing Date, and not to destroy or dispose of
the same, for at least seven (7) years after the Closing Date, at Purchaser’s
sole cost and expense. 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)    Permits.  Seller shall use commercially reasonable efforts to preserve in
force all existing Permits, to cause all those expiring on or before the Closing
Date to be renewed prior to the Closing Date, and to transfer all such Permits
to Purchaser in connection with the Closing.
(h)    Survival. Subject to the terms of Section 5.3, 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.

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ARTICLE XV
DEFAULTS AND REMEDIES; EFFECT OF TERMINATION

Section 15.1    Purchaser Default/Seller’s Remedies. IF PURCHASER FAILS IN ANY
MATERIAL RESPECT TO PERFORM ITS OBLIGATIONS UNDER THIS AGREEMENT, SUCH FAILURE
REMAINS UNCURED AFTER DELIVERY OF WRITTEN NOTICE BY SELLER AND THE EXPIRATION OF
A FIVE (5) DAY CURE PERIOD (PROVIDED THAT NO CURE PERIOD SHALL APPLY TO
PURCHASER’S PAYMENT OF THE PURCHASE PRICE AND/OR DELIVERY OF THE DOCUMENTS
REFERENCED IN SECTION 6.4 ON OR BEFORE THE CLOSING DATE) AND SELLER DOES NOT
WAIVE SUCH FAILURE OF PERFORMANCE IN WRITING, SELLER SHALL BE ENTITLED AS ITS
SOLE REMEDY TO TERMINATE THIS AGREEMENT AND RECOVER THE DEPOSIT UNDER THIS
AGREEMENT AS LIQUIDATED
[Remainder of page intentionally left blank]

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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 RECEIVE REIMBURSEMENT FOR COSTS, FEES AND EXPENSES (INCLUDING, WITHOUT
LIMITATION, REASONABLE ATTORNEYS’ FEES AND COSTS) PURSUANT TO SECTION 15.3 BELOW
IN ADDITION TO THE DEPOSIT IN THE EVENT OF A DISPUTE REGARDING THE DISPOSITION
OF THE DEPOSIT, NOR SHALL THIS PROVISION BE DEEMED TO WAIVE OR AFFECT SELLER’S
RIGHTS AND PURCHASER’S INDEMNITY OBLIGATIONS UNDER OTHER SECTIONS OF THIS
AGREEMENT. THE PARTIES AGREE THAT IT WOULD BE IMPRACTICABLE AND EXTREMELY
DIFFICULT TO ASCERTAIN THE ACTUAL DAMAGES SUFFERED BY SELLER AS A RESULT OF
PURCHASER’S FAILURE TO COMPLETE THE PURCHASE OF THE PROPERTY PURSUANT TO THIS
AGREEMENT, AND THAT UNDER THE CIRCUMSTANCES EXISTING AS OF THE EFFECTIVE DATE,
THE LIQUIDATED DAMAGES PROVIDED FOR IN THIS SECTION REPRESENTS A REASONABLE
ESTIMATE OF THE DAMAGES WHICH SELLER WILL INCUR AS A RESULT OF SUCH FAILURE,
PROVIDED, HOWEVER, THAT THIS PROVISION SHALL NOT LIMIT SELLER’S RIGHTS TO
RECEIVE REIMBURSEMENT FOR ATTORNEYS’ FEES PURSUANT TO SECTION 15.3, NOR WAIVE OR
AFFECT SELLER’S RIGHTS AND PURCHASER’S INDEMNITY OBLIGATIONS UNDER OTHER
SECTIONS OF THIS AGREEMENT. THE PARTIES ACKNOWLEDGE THAT THE PAYMENT OF SUCH
LIQUIDATED DAMAGES IS NOT INTENDED AS A FORFEITURE OR PENALTY WITHIN THE MEANING
OF ANY APPLICABLE STATUTE OR LAW, INCLUDING 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. THE PARTIES HAVE SET FORTH
THEIR INITIALS BELOW TO INDICATE THEIR AGREEMENT WITH THE LIQUIDATED DAMAGES
PROVISION CONTAINED IN THIS SECTION.
Seller’s Initials: /s/ CH     Purchaser’s Initials: /s/ MM

Section 15.2    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 five (5) days after its
receipt of written notice of such failure from Purchaser (a “Seller Default”)
(provided that such five (5) day cure period shall not apply to a default by
Seller to deposit the Deed and other closing documents to be held in escrow with
the Escrow Company on the Closing Date) then Purchaser may elect as its sole and
exclusive remedy (at law or in equity):
(a)    to terminate this Agreement and recover damages in an amount equal to the
total of all of Purchaser’s out-of-pocket costs of the transaction actually
incurred in connection with this Agreement and Purchaser’s Due Diligence, such
amounts not to exceed Two Hundred Thousand Dollars ($200,000) (“Seller’s
Liability Amount”); provided, however, that this provision shall not limit
Purchaser’s rights to receive reimbursement for any additional costs, expenses
and/or fees (including, without limitation, reasonable attorney’s fees and
costs) pursuant to Section 15.3 below in addition to the Seller’s Liability
Amount in the event of a dispute regarding the disposition of the Seller’s
Liability Amount to the extent Purchaser prevails in such dispute or with
respect to the Surviving Obligations;

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(b)    to waive the Seller Default and proceed to Closing; or
(c)    to seek specific performance of Seller’s obligation to sell the Property
to Purchaser pursuant to the terms of this Agreement; provided, however, if
Purchaser elects to pursue any action for specific performance and such remedy
is not available or enforceable by Purchaser for any reason other than as a
result of Purchaser’s and/or its Affiliates’ willful acts, then Purchaser shall
still have the right to terminate this Agreement and pursue all rights and
remedies afforded Purchaser under Section 15.2(a) above, provided that in no
event shall Seller be liable for any consequential damage.

Section 15.3    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.

Section 15.4    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

Section 16.1    Designee. In order to assure compliance with the requirements of
Section 6045(e) of the Internal Revenue Code of 1986, as amended, and the
Treasury Regulations thereunder, the parties agree to execute an IRS Form 1099-S
Designation Agreement in the form attached hereto as Exhibit K at or prior to
the Closing to designate the Title Company (“Designee”) to report IRS
Form 1099-S information provided to it by Purchaser and Seller in relation to
the sale of the Property. Further, Seller and Purchaser each hereby agree:
(i) to provide to Designee all information and certifications regarding such
party, as reasonably requested by Designee or otherwise required to be provided
by a party to the transaction regarding IRS Form 1099-S reporting; and (ii) to
provide to Designee such party’s taxpayer identification number and a
statement (on Internal Revenue Service Form W-9 or an acceptable substitute
form, or on any other form the applicable current or future Code sections and
regulations might require and/or any form requested by Designee), signed under
penalties of perjury, stating that the taxpayer identification number supplied
by such party to Designee is correct.

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ARTICLE XVII
MISCELLANEOUS PROVISIONS

Section 17.1    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.

Section 17.2    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.

Section 17.3    Publicity. All press releases and all other publicity concerning
the transactions contemplated by this Agreement shall be jointly drafted and
prepared by Seller and Purchaser, and Seller and Purchaser agree not to deliver
or publish any press releases or other publicity regarding the sale of the
Property pursuant to this Agreement except as expressly set forth in this
Section 17.3. Notwithstanding the foregoing, the parties acknowledge and agree
that Purchaser will issue a press release after the Closing, the form and
content of which shall be

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subject to the prior consent of Seller (which consent will not be unreasonably
withheld, conditioned or delayed); provided, however, Seller acknowledges and
agrees that Purchaser’s press release shall be substantially similar to the form
of those certain press releases previously issued by Purchaser or its Affiliates
in connection with Purchaser’s or Purchaser’s Affiliates’ recent hotel
acquisitions and Purchaser may disclose (i) the Purchase Price, (ii) the sum of
capital expenditures, transaction costs, working capital and pre-paid operating
costs, and (iii) the sum of (i) and (ii). Notwithstanding anything to the
contrary contained herein, each party’s obligations under this Section 17.3
shall survive the Closing or any earlier termination of this Agreement.

Section 17.4    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 wholly owned or controlled, directly or
indirectly, by Purchaser, W.P. Carey, Inc., Carey Watermark Investors
Incorporated, Carey Watermark Investors 2 Incorporated, Watermark Capital
Partners, LLC, or any entity managed or advised by Purchaser, W.P. Carey, Inc.,
Carey Watermark Investors Incorporated, Carey Watermark Investors 2 Incorporated
or Watermark Capital Partners, LLC 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. 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 other
than non-material legal expenses related to the preparation of the closing
documents) incurred by Seller that would not otherwise have been incurred by
Seller had Purchaser not caused a Transfer.

Section 17.5    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

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on a day other than a Business Day, such deadline shall be extended until the
first Business Day thereafter.

Section 17.6    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, .pdf format or other form of electronic communication
and such form of execution shall be deemed to be an original signature for
execution purposes.

Section 17.7    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.

Section 17.8    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.

Section 17.9    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), 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.

Section 17.10    Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of California.

Section 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 Southern
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.

Section 17.12    Jury Trial Waiver. Each of the parties to this Agreement hereby
consents and agrees that (i) any and all disputes shall be heard by a referee in
accordance with the general reference provisions of California Code of Civil
Procedure Section 638, (ii) such referee shall hear and determine all of the
issues in any such dispute (whether of fact or of law) and shall report a
statement of decision, provided that, at the mutual agreement of the parties,
any such issues pertaining to a “provisional remedy” as defined in California
Code of Civil Procedure Section 1281.8 shall be heard and determined by the
court, and (iii) pursuant to California Code of Civil Procedure Section 644(a),
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if the dispute had been tried directly by a court; provided, however, all
findings, orders, decisions, and judgments of such referee, under and pursuant
hereto, shall be subject to the same rights of appeal, as the findings, orders,
decisions, and judgments of the California Superior Court in the County of San
Diego. The parties shall use their respective best efforts to agree upon and
select such referee, provided that such referee shall be a retired California
state or federal judge and must have experience in the trial and determination
of matters relating to real property. The retired judge appointed to act as
referee pursuant to this Section shall have all powers of a judge of the
California Superior Court and shall be bound by and shall apply California law
to the dispute. Such powers shall include (a) the power to grant equitable,
injunctive, and legal relief; subject, however, to all limitations on remedies
provided in this Agreement which must be strictly adhered to, and (b) the other
powers of a judge for all purposes (subject to the limitations on remedies
provided in this Agreement, which must be strictly adhered to), which powers
shall include (i) ruling on any and all discovery matters or motions,
(ii) ruling on any and all pre-trial or trial motions, (iii) setting a schedule
of pre-trial proceedings, (iv) making any and all other orders or rulings a
sitting judge of the Superior Court would be empowered to make in any action or
proceeding in Superior Court, (v) deciding and adjudicating any and all of the
issues arising out of such dispute (whether of fact, of law, or a combination
thereof) and reporting such findings and judgment thereon, and (vi) allocating
attorney’s fees, expert’s fees and costs, in conformance with this Agreement. If
the parties have not agreed upon a referee, then any party to this Agreement
may, upon giving five (5) Business Days prior written notice to the other party
to this Agreement, apply ex parte to the presiding judge of the Superior Court
in the County of San Diego for the appointment of a retired Superior Court judge
designated by such moving party. If the non-moving party does not submit to the
presiding judge, within three Business Days after being given notice of such ex
parte application, the name of an additional retired judge acceptable to such
non-moving party, then the non-moving party shall be deemed to have agreed to
the retired judge designated by the moving party. If the non-moving party does
submit to the presiding judge the name of an additional retired judge within
such three Business Day period, then the retired judge designated by the moving
party and the retired judge designated by the non-moving party shall together
select a single different retired judge within ten (10) days thereafter to serve
as the referee of the matter. Each party hereto acknowledges that this consent
is a material inducement to enter into this Agreement and all other agreements
and instruments provided for herein, and that each will continue to rely on this
consent in their related future dealings. The parties shall share the cost of
the referee and reference proceedings equally; provided that, the referee shall
determine a “prevailing party” pursuant to Civil Code Section 1717 and Code of
Civil Procedure Section 1032 et seq., and shall award attorneys’ fees and
reimbursement of the referee and referenced proceeding fees and costs to the
prevailing party, whereupon all referee and reference proceeding fees and
charges will be payable by the non-prevailing party (as so determined by the
referee). Each party hereto further warrants and represents that it has reviewed
this consent with legal counsel of its own choosing, or has had an opportunity
to do so, and that it knowingly and voluntarily gives this consent having had
the opportunity to consult with legal counsel. This consent is irrevocable,
meaning that it may not be modified either orally or in writing, and this
consent shall apply to any subsequent amendments, renewals, supplements, or
modifications to this Agreement or any other agreement or document entered into
between the parties in connection with this Agreement. In the event of
litigation, this Agreement may be filed as evidence of either or both parties’
consent to have any and all disputes heard and determined by a referee under
California Code of Civil Procedure Section 638.

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Section 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 to have been made for the
benefit of any person or entity, other than the parties hereto and their
permitted successors and assigns.

Section 17.14    No Agreement Until Execution. This Agreement and the terms
hereof shall not be deemed to be effective or binding until each of the parties
hereto have mutually executed and delivered the Agreement. Any submission or
other exchange of drafts or iterations of this Agreement is not, and shall not
constitute, a binding offer or other binding agreement.

Section 17.15    Recording. No notice or memorandum of this Agreement shall be
recorded in any public record. A violation of this prohibition shall constitute
a material breach of this Agreement.

ARTICLE XVIII
GENERAL ESCROW PROVISIONS

Section 18.1    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
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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.
(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.

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IN WITNESS WHEREOF, the parties hereto have executed or caused this Agreement
for Sale and Purchase of Hotel to be executed, all as of the day and year first
above written.
SELLER:
 
 
HEI LA JOLLA HOTEL LLC,
a Delaware limited liability company
 
 
 
 
By:
/s/ Clark W. Hanrattie
 
Name: Clark W. Hanrattie
 
Title: Vice President
 
 
 
 
 
 
PURCHASER:
 
 
CWI 2 LA JOLLA, LP,
a Delaware limited partnership
 
 
 
 
By:
CWI 2 La Jolla, Hotel GP, LLC,
 
a Delaware limited liability company
 
 
 
 
By:
/s/ Michael G. Medzigian
 
Name: Michael G. Medzigian
 
Title: Chief Executive Officer and President
 
 

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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 3.2.
In witness whereof, the undersigned has executed this Agreement as of May 19,
2016.
FIRST AMERICAN TITLE INSURANCE COMPANY
 
 
By:
/s/ Eric Liang
 
Name: Eric Liang
 
Title: Senior Underwriting Counsel

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JOINDER
By the signature below of its authorized signatories, HEI HOSPITALITY FUND III,
L.P. (“HEI Fund”), hereby joins in the execution of the foregoing Agreement for
Sale and Purchase of Hotel (this “Agreement”) to guaranty, as a primary
guarantor and not as a surety or guaranty of collection only, all obligations of
its affiliate, HEI LA JOLLA LLC, a Delaware limited liability company (“Seller”)
under Section 5.4(b) of this Agreement and HEI Fund agrees to be jointly and
severally liable with Seller for such obligations. 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, the limitations of Section 5.3 of this Agreement as
applicable to Seller’s obligations under Section 5.4(b)) and shall not be deemed
merged into the deed or any other conveyance document delivered at the Closing.
The obligations of the undersigned are not limited by (i) any amendment or
modification to this Agreement, whether or not the undersigned has joined in any
such amendment or modification, (ii) any bankruptcy or insolvency or similar
proceeding after insolvency of Seller or (iii) any other surety defense, other
than to the extent such defense is available to Seller in accordance with the
Agreement.
In the event that the HEI Fund, at any time during the Survival Period (or, if a
Breach Notice is provided prior to the end of the Survival Period, until the
Liabilities relating thereto are fully and finally resolved), owns fewer than
three (3) hotels, then the HEI Fund shall be required to at all times maintain
Liquidity (as defined below) of not less than the amount of the Cap (“Required
Liquidity”). “Liquidity,” as used herein, means legal tender of the United
States of America or any other cash equivalents, including, uncalled capital
commitments (that are still available and permitted to be called by the general
partner of the HEI Fund) of the HEI Fund (excluding any of the same which have
been pledged or encumbered or are otherwise restricted pursuant to a separate
obligation of the HEI Fund). HEI Fund shall provide Purchaser promptly with
evidence of its maintenance of the Required Liquidity upon receipt of a written
request by Purchaser (which may not be given more than once per calendar
quarter). For the avoidance of doubt, cash and cash equivalents held by any
franchisors, managers, lenders or any subsidiaries of HEI Fund or held at the
hotels owned thereby (including, without limitation, working capital, petty
cash, FF&E, debt service, tax, insurance and other reserves) shall not be
treated as Liquidity with respect to the HEI Fund.
HEI HOSPITALITY FUND III, L.P.,
a Delaware limited partnership

By:    HEI Hospitality Fund GP III, L.P.
Its:    General Partner
By:    HEI Hospitality Fund GP III (GP), LLC
Its:    General Partner

By:    HEI Hospitality, LLC
Its:    Manager

By: /s/ Clark W. Hanrattie             
Name: Clark W. Hanrattie
Title: Vice President

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EXHIBIT A
EXCLUDED ASSETS
Licenses
Network Management Monitoring
Licenses
Symantec Anti Virus
Systems/Tools
Citrix - Connectivity platform to HEI Corporate
Systems/Tools
M3 (Timesaver) - Time keeping system and Timeclocks
Systems/Tools
PM Works - Preventative Maintenance software (but not related reports)
Merritt Corporate Agreement
Avendra - Procurement Services Agreement
Merritt Corporate Agreement
Rubicon software/service and agreement for Future Demand Reports & Market Vision
Rate shopping software (but not historical reports)
Merritt Corporate Agreement
TravelClick - Hotelligence & Sabre Spotlight Reports
Merritt Corporate Agreement
Gallagher Consulting - Healthcare benefit consulting
Merritt Corporate Agreement
Smith Travel Agreement
Merritt Corporate Agreement
Steritech – Maintenance and Monitoring Programs
Merritt Corporate Agreement
Tharaldson – Agreement with Energy Consultants
Merritt Corporate Agreement
Universal Vending - Vending Machines Service Agreement
Merritt Corporate Agreement
Trustkeeper - PCI
Merritt Corporate Agreement
IGX Global/Solutionary - Firewall Management
Merritt Corporate Agreement
Kaseya - Patch Management/AV/Monitoring
Merritt Corporate Agreement
Symantec Message Labs
Merritt Corporate Agreement
Symantec Web Filtering
Merritt Corporate Agreement
Microsoft Dynamics SL
Merritt Corporate Agreement
Medius - Electronic scanning (A/P, A/R)
Merritt Corporate Agreement
Birchstreet - Online ordering
Merritt Corporate Agreement
ADP Vantage - Payroll, Benefits, Hiring/HCM

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EXHIBIT B
LAND
PARCEL 1:
LOT 4 OF REGENTS PARK, IN THE CITY OF SAN DIEGO, COUNTY OF SAN DIEGO, STATE OF
CALIFORNIA, ACCORDING TO MAP THEREOF NO. 10703, FILED IN THE OFFICE OF THE
COUNTY RECORDER’S OF SAN DIEGO COUNTY, AUGUST 18, 1983.
PARCEL 2:
THOSE RIGHTS OF EASEMENT AS SET FORTH IN ARTICLE II, SECTION 4, OF THE
DECLARATION OF COMMON MAINTENANCE AND ARCHITECTURAL CONTROL RESTRICTIONS FOR
REGENTS PARK; RECORDED SEPTEMBER 21, 1983 AS FILE NUMBER 83-337248 AND AS
AMENDED BY DOCUMENT RECORDED JUNE 02, 1994 AS INSTRUMENT NO. 1994-0360751, BOTH
OF OFFICIAL RECORDS IN THE OFFICE OF THE COUNTY RECORDER OF SAN DIEGO COUNTY.
PARCEL 3:
THOSE RIGHTS OF EASEMENT FOR INGRESS AND EGRESS OVER EXECUTIVE SQUARE, REGENTS
PARK ROW AND REGENTS GARDEN ROW (NOW GILDRED SQUARE), AS SHOWN ON REGENTS PARK,
MAP NO. 10703, AS FILED IN THE OFFICE OF THE COUNTY RECORDER OF SAN DIEGO COUNTY
AS SET FORTH IN ARTICLE II, SECTION 3 OF THE DECLARATION OF STREET AND
LANDSCAPING COMMON MAINTENANCE RESTRICTIONS FOR REGENTS PARK, RECORDED
SEPTEMBER 21, 1983 AS FILE NO. 83-337247 OF OFFICIAL RECORDS IN THE OFFICE OF
SAID COUNTY RECORDER, AS AMENDED BY FIRST AMENDMENT TO SAID DECLARATION,
RECORDED FEBRUARY 10, 1986 AS FILE NO. 86-053769 OF OFFICIAL RECORDS OF SAID
COUNTY.
APN: 345-161-04-00

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EXHIBIT C-1
PENDING OR THREATENED LITIGATION
Date of Loss/ Occurrence
Accident Narrative
11/16/2012
Working in guest room and fell on L side on top of sheet, she felt like she
popped her lower back.
8/18/2013
EE was working the computer at the front desk and they started to feel
discomfort in the neck and the neck is now stiff.

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EXHIBIT C-2
VIOLATIONS OF LEGAL REQUIREMENTS
None.

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EXHIBIT D
SCHEDULE OF LEASES AND RELATED MATTERS
The Hertz Corporation. Lease is in full force and effect; no written notice of
default; no default of monetary obligation or material non-monetary obligation;
expiration date is December 31, 2019, and the lease is terminable by either
party upon six months’ written notice

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EXHIBIT E
ONGOING TAX APPEALS
Ongoing 2015 Personal Property Tax Appeal filed on or about November 20, 2015

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EXHIBIT F
HOTEL CONTRACTS AND RELATED MATTERS
Equipment Leases

 
DESCRIPTION OF LEASED ASSET
LESSEE - ENTITY NAME
LESSOR
  
Postage Machine
La Jolla Marriott
Hasler
 
Copier Machine
HEI La Jolla, LLC
Ricoh

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Service Contracts

 
DESCRIPTION OF SERVICE
NAMED ENTITY ON EXECUTED AGREEMENT
VENDOR
  
Turbocor Chiller & Chiller Towers Maintenance Agreement
San Diego Marriott La Jolla
EMCOR - Mesa Energy Systems, Inc.
 
Boiler Maintenance Agreement
San Diego Marriott La Jolla
EMCOR - Mesa Energy Systems, Inc.
 
Dish machine Maintenance Agreement
Marriott La Jolla
Hobart Service
 
Generator Maintenance Agreement
Marriott La Jolla
Hawthorne
 
Fire Sprinkler Testing & Maintenance Agreement
Marriott La Jolla
SimplexGrinnell
 
Pool Maintenance Agreement
San Diego Marriott La Jolla
StainEraser Inc.
 
Elevator Maintenance Agreements
HEI Hotels & Resorts
TyssenKrupp Elevator
 
Lobby Printer Maintenance Agreement
Marriott
Uniguest
 
Laundry Equipment Maintenance Agreement
Marriott La Jolla
Western State Design
 
Parking Agreement
HEI La Jolla LLC dba La Jolla Marriott Hotel
Ace Parking III, LLC
 
ATM Agreement
Marriott San Diego La Jolla
ACFN
 
Landscaping Agreement
La Jolla Marriott
Brickman Landscaping
 
Uniform Rental Agreement
Marriott San Diego
Cintas
 
Armored Car Service Agreement
Marriott Corporation
Dunbar
 
Coffee Filter Supply Agreement
San Diego Marriott, La Jolla
Filterfresh
 
Software Support Agreement
HEI La Jolla, LLC
Micros
 
Prescriptive Music Agreement
San Diego Marriott, La Jolla
PCM Technologies
 
Laundry and Dry Cleaning Agreement
Marriott La Jolla
Relaxx
 
Scent Services Agreement
Marriott La Jolla
Scent Air
 
Software Agreement
Marriott La Jolla
Single Digits
 
On-Demand TV Service Agreement
HEI La Jolla, LLC
SONIFI
 
Medical Waste Service Agreement
La Jolla Marriott
Stericycle
 
Right of Entry Agreement
HEI La Jolla, LLC
Time Warner Cable
 
Recycle & Trash Removal Agreement
Marriott La Jolla
Waste Management
 
Telecommunications Equipment
Marriott La Jolla
Xeta Technologies

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EXHIBIT G
FORM OF DEED

Grant Deed
RECORDING REQUESTED BY AND
WHEN RECORDED MAIL TO:
[___________________]
[___________________]
[___________________]
[___________________]
MAIL TAX STATEMENTS TO:
[___________________]
[___________________]
[___________________]
[___________________]

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APN# Lot 003, Block 0317    (Space Above For Recorder’s Use Only)
GRANT DEED
THE UNDERSIGNED GRANTOR DECLARES:
The undersigned grantor(s) declare(s):
In accordance with Section 11932 of the California Revenue and Taxation Code,
the Grantor (as hereinafter defined) has declared the amount of the transfer tax
by a separate statement which is not being recorded with this Grant Deed.
FOR A VALUABLE CONSIDERATION, RECEIPT OF WHICH IS HEREBY ACKNOWLEDGED, HEI LA
JOLLA, LLC, a Delaware limited liability company, hereby grants to
____________________, a ___________________, the real property described on
Exhibit A attached hereto and incorporated herein, together with all
improvements, buildings, structures, easements, privileges and rights
appurtenant thereto.
This conveyance is made subject and subordinate 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.
The grantee herein covenants by and for itself, its successors and assigns, and
all persons claiming under or through them, that there shall be no
discrimination against or segregation of any person

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or group of persons on account of sex, marital status, race, color, religion,
creed, national origin or ancestry in the sale, lease, sublease, transfer, use,
occupancy, tenure or enjoyment of the land herein conveyed, nor shall the
grantee itself or any person claiming under or through it, establish or permit
any such practice or practices of discrimination or segregation with reference
to the selection, location, number, use or occupancy of tenants, lessees,
subtenants, sublessees, or vendees of the land herein conveyed. The foregoing
covenants shall run with the land.

[Remainder of Page Intentionally Left Blank]

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DATED: __________ __, 2016.
GRANTOR:
HEI LA JOLLA LLC,
a Delaware limited liability company

By:    ________________________
Name:    ________________________
Title:    ________________________

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EXHIBIT H
FORM OF BILL OF SALE
THIS BILL OF SALE (“Bill of Sale”) is made as of ____________________, 2016 by
and between HEI LA JOLLA 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 [____________], 2016 (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, and 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 2.2 and Section 5.3 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
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.

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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]

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EXHIBIT I
FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT
This Assignment and Assumption Agreement (this “Agreement”) is made as of
___________________, 2016 (the “Effective Date”) by and between HEI LA JOLLA
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 ____________________, 2016 (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,
Miscellaneous Hotel Assets, Books and Records, Warranties and Intellectual
Property, but not including the Excluding 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 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 the obligations, terms, covenants and
conditions of the Assigned Assets accruing after the Effective Date.
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 Section 2.2 and 5.3 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.

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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.
ASSIGNOR:
[SELLER SIGNATURE BLOCK]

ASSIGNEE:
[PURCHASER SIGNATURE BLOCK]

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EXHIBIT J
FORM OF 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 LA JOLLA 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, 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 _______________; 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: ___________________, 2016
TRANSFEROR:
[TRANSFEROR SIGNATURE BLOCK]

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EXHIBIT K
FORM OF 1099 DESIGNATION
This AGREEMENT is made this _____ day of ____________, 20__ by and between the
TRANSFEROR, HEI LA JOLLA 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 San Diego Marriott La Jolla, located at 4240 La Jolla Village Drive, San
Diego, California, 92037 as more particularly described in that certain
Agreement for Sale and Purchase of Hotel (the “Agreement”) dated
[___________________], 2016 by and between the TRANSFEROR and the TRANSFEREE.
In order to comply with information reporting requirements provided by
Section 6045I of the Internal Revenue Code of 1986, as amended, and the Treasury
Regulations thereunder (collectively, the “Code”), the parties hereby agree as
follows:
i.that DESIGNEE, by its execution hereof, hereby agrees to report information
relating to sale of the Premises provided to it by TRANSFEROR and TRANSFEREE to
the Internal Revenue Service (the “IRS”) the on IRS form 1099-S;
ii.each of TRANSFEROR and TRANSFEREE shall provide DESIGNEE all information and
certifications regarding such party, as reasonably requested by DESIGNEE or
otherwise required to be provided by a party to the transaction regarding
reporting Form 1099-S, including without limitation such party’s taxpayer
identification number and a statement (on Internal Revenue Service Form W-9 or
an acceptable substitute form, or on any other form the applicable current or
future Code sections and regulations might require and/or any form requested by
DESIGNEE), signed under penalties of perjury, stating that the taxpayer
identification number supplied by such party to DESIGNEE is correct;
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.

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[TRANSFEROR SIGNATURE BLOCK]
[TRANSFEREE SIGNATURE BLOCK]
[DESIGNEE SIGNATURE BLOCK]

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EXHIBIT L
ALLOCATION OF TRANSACTION COSTS AND EXPENSES

Purchaser
1.
All recording and filing charges, other than for the discharge of Seller
Encumbrances

2.
50% of all escrow and closing charges

3.
The premium charged by the Title Company for the incremental premium charged by
the Title Company for any 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 premium charged by the Title Company for any loan title policy

6.
The cost of the Survey and any updates thereto

7.
All fees and expenses due to Purchaser’s legal counsel

Seller
1.
All state, county and city transfer taxes payable in connection with the sale,
transfer and conveyance of the Real Property

2.
All sales taxes payable in connection with the sale, transfer, conveyance and
assignment of any of the Personal Property (including, but not limited to, any
Inventory and Consumables)

3.
50% of all escrow and closing charges

4.
The premium charged by the Title Company for the CLTA standard coverage portion
of the Title Policy

5.
All fees and expenses due to Seller’s legal counsel

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EXHIBIT M
PERMITTED EXCEPTIONS

1.
All applicable zoning, subdivision, building and other land use laws and
regulations.

2.
All matters, whether or not of record, that arise out of the actions of
Purchaser or its agents, representatives or contractors.

3.
A lien of all real estate taxes, general and special, for the applicable tax
year in which the Closing occurs that are not yet due and payable as of the
Closing Date.

4.
This item has been intentionally deleted.

5.
The lien of supplemental taxes, if any, assessed pursuant to Chapter 3.5
commencing with Section 75 of the California Revenue and Taxation Code, as a
result of the transfer of title to the Purchaser; or as a result of changes in
ownership or new construction occurring after the Date of Policy.

6.
Abutter’s rights of ingress and egress to or from a portion of La Jolla Village
Drive have been relinquished in the document recorded May 1, 1969 as Instrument
No. 1969-76233 of Official Records.

7.
An easement for slope and incidental purposes, recorded May 1, 1969 as
Instrument No. 1969-76233 of Official Records.

In Favor of:
The City of San Diego, a Municipal corporation
Affects:
as described therein

8.
Covenants, conditions, restrictions and easements in the document recorded
August 5, 1976 as Instrument No. 1976-251226 of Official Records, which provide
that a violation thereof shall not defeat or render invalid the lien of any
first mortgage or deed of trust made in good faith and for value, but deleting
any covenant, condition or restriction indicating a preference, limitation or
discrimination based on race, color, religion, sex, handicap, familial status,
national origin, sexual orientation, marital status, ancestry, source of income
or disability, to the extent such covenants, conditions or restrictions violate
Title 42, Section 3604(c), of the United States Codes or Section 12955 of the
California Government Code. Lawful restrictions under state and federal law on
the age of occupants in senior housing or housing for older persons shall not be
construed as restrictions based on familial status.

9.
The terms and provisions contained in the document entitled “Agreement” recorded
March 23, 1981 as Instrument No. 1981-086986 of Official Records.

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10.
Abutter’s rights of ingress and egress to or from a portion of La Jolla Village
Drive have been dedicated or relinquished on the map of Map No. 10703 Regents
Park of Tract Maps recorded August 18, 1983.

11.
An easement shown or dedicated on the map filed or recorded August 18, 1983 as
Map No. 10703 Regents Park of Tract Maps

For:
General utility and incidental purposes.

12.
The terms and provisions contained in the document entitled “Encroachment
Removal Agreement” recorded August 26, 1983 as Instrument No. 1983-302743 of
Official Records.

13.
Covenants, conditions, restrictions, easements, assessments, liens, charges,
terms and provisions in the document recorded September 21, 1983 as Instrument
No. 1983-337247 of Official Records, which provide that a violation thereof
shall not defeat or render invalid the lien of any first mortgage or deed of
trust made in good faith and for value, but deleting any covenant, condition or
restriction indicating a preference, limitation or discrimination based on race,
color, religion, sex, handicap, familial status, national origin, sexual
orientation, marital status, ancestry, source of income or disability, to the
extent such covenants, conditions or restrictions violate Title 42,
Section 3604(c), of the United States Codes. Lawful restrictions under state and
federal law on the age of occupants in senior housing or housing for older
persons shall not be construed as restrictions based on familial status.

An easement as contained in the above document.
For:
drainage, slopes and landscape maintenance and incidental purposes.

Document(s) declaring modifications thereof recorded February 10, 1986 as
Instrument No. 1986-053769 of Official Records.
14.
Covenants, conditions, restrictions, easements, assessments, liens, charges,
terms and provisions in the document recorded September 21, 1983 as Instrument
No. 1983-337248 of Official Records, which provide that a violation thereof
shall not defeat or render invalid the lien of any first mortgage or deed of
trust made in good faith and for value, but deleting any covenant, condition or
restriction indicating a preference, limitation or discrimination based on race,
color, religion, sex, handicap, familial status, national origin, sexual
orientation, marital status, ancestry, source of income or disability, to the
extent such covenants, conditions or restrictions violate Title 42,
Section 3604(c), of the United States Codes. Lawful restrictions under state and
federal law on the age of occupants in senior housing or housing for older
persons shall not be construed as restrictions based on familial status.

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Document(s) declaring modifications thereof recorded June 02, 1994 as Instrument
No. 1994-0360751 of Official Records.
15.
An easement for the purpose of pedestrian, and delivery, emergency, and
maintenance of vehicular ingress, and of Maintenance, repair, replacement,
reconstruction of and addition to the decorative improvements situated thereon
and incidental purposes, recorded October 7, 1983 as Instrument No. 1983-361391
of Official Records.

In Favor of:
Regents Park Commercial Association, a California non-profit mutual benefit
corporation.
Affects:
As described therein

16.
An easement for the purposes of maintaining and replacing landscaping, for the
repairing, maintaining, replacing and Reconstructing street, utility and other
improvements and incidental purposes, recorded October 7, 1983 as Instrument No.
1983-361392 of Official Records.

In Favor of:
Regents Park Street and Landscaping Maintenance Association, a California
non-profit mutual benefit corporation.
Affects:
As described therein

17.
An easement for open space and incidental purposes, recorded October 7, 1983 as
Instrument No. 1983-362235 of Official Records.

In Favor of:
Various parties
Affects:
As described therein

Said easement has been granted/reserved in various other instruments of record.
18.
The terms and provisions contained in the document entitled “Planned Commercial
Development Permit No. 82-0696” recorded December 28, 1983 as Instrument No.
1983-473073 of Official Records, as affected by Commercial Development agreement
Permit No. 84-0147 recorded May 24, 1984 as Instrument No. 1984-194558, and
recorded November 29, 1984 as Instrument No. 1984-445528, as further affected by
Planned Commercial Development Permit No. PCD-85-0492 recorded March 19, 1987 as
Instrument No. 1987-142875 all of Official Records, and as further affected by
Planned Commercial Development Permit No. 96-0722 recorded on September 12, 1997
as Instrument No. 1997-0444455 of Official Records.

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19.
An easement for public utilities and incidental purposes, recorded August 17,
1984 as Instrument No. 1984-315258 of Official Records.

In Favor of:
Pacific Telephone and Telegraph Company.
Affects:
As described therein

20.
An easement for public utilities and incidental purposes, recorded September 11,
1984 as Instrument No. 1984-344606 of Official Records.

In Favor of:
San Diego Gas and Electric Company.
Affects:
As described therein

The location of the easement cannot be determined from record information.
21.
This item has been intentionally deleted.

22.
An easement for public utilities and incidental purposes, recorded August 21,
1985 as Instrument No. 1985-302269 of Official Records.

In Favor of:
San Diego Gas and Electric Company.
Affects:
As described therein

The location of the easement cannot be determined from record information.
23.
The terms and provisions contained in the document entitled “Encroachment
Removal Agreement” recorded January 12, 1989 as Instrument No. 1989-016984 of
Official Records.

24.
The terms and provisions contained in the document entitled “Encroachment
Removal Agreement” recorded January 12, 1989 as Instrument No. 1989-016985 of
Official Records.

25.
A right of refusal in favor of Marriott International, Inc. as contained in or
disclosed by a document recorded July 25, 2011 as Instrument No. 2011-0374720 of
Official Records.

26.
This item has been intentionally deleted.

27.
This item has been intentionally deleted.

28.
This item has been intentionally deleted.

29.
This item has been intentionally deleted.

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30.
This item has been intentionally deleted.

31.
This item has been intentionally deleted.

32.
A deed of trust to secure an indebtedness in the original principal amount of
$TBD recorded __________ as Document No. ____________ of Official Records.

Dated:
Trustor:    CWI 2 La Jolla Hotel LP, a Delaware limited partnership
Trustee:
Beneficiary:
33.
Any facts, rights, interest or claims that may exist or arise by reason of the
following matters disclosed by an ALTA/NSPS survey made by Craig Davis, for
Millman Surveying, INC. on April 7, 2016 last revised ______________, designated
Job Number 38203:

(A) 2 signs in the Southwesterly corner of the subject property cross the
westerly boundary line by undisclosed distances, ownership unknown; (B) Site
sign in the southeasterly corner of the subject property crosses the boundary
line by an undisclosed distance onto adjoining property; (C) Parking deck along
the southerly boundary line lies within the landscape easement detailed
in 1983-337247, 1986-053769 and 1983-361392 by up to 9.8’; (D) Northerly portion
of the subject building lies within easement detailed in 1983-337248 by up
to 14.9’; (E) asphalt pavement and curbing crosses over the southerly boundary
line by an undisclosed distance.

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EXHIBIT N
DOCUMENTS AND FINANCIAL INFORMATION REQUIRED BY RSM US LLP

EXAMPLE AUDIT REQUEST MATERIALS
Internal Controls
•
Process narratives for the all control cycles (purchase and payables, treasury,
revenue and receivables, fixed assets, payroll, month-end close process, etc.)
in place during the periods under audit

•
If available, copies of SOC 1 Reports for the Property Manager / Hotel Franchise
for the period ended 2015 and 2014 (no earlier than period ended September 30)”

o
Narrative for the night auditor packet process

o
Availability of night audit packets for selection (selections to be made at a
later date)

•
Narrative describing the IT environment including applications used, IT
governance structure, planned IT changes and processes for systems developments
and change management, physical and logical security and data backup and
recovery

•
Copies of SOC 1 Reports for the payroll service provider for period ended 2015
and 2014 (no earlier than period ended September 30)

General
•
Closed trial balances (in excel) for the years ended 12/31/13, 12/31/14
and 12/31/15

•
Hotel Operator Statements

o
December 2015 Statements of Operations (detailed by department)

o
December 2014 Statements of Operations (detailed by department)

o
December 2013 Statements of Operations (detailed by department)

•
Complete general ledger detail (excel preferable) for the following periods:

o
Year Ended December 31, 2013

o
Year Ended December 31, 2014

o
Year Ended December 31, 2015

•
Please provide copies of the following executed agreements or documents (if
applicable):

o
Organization chart

o
LLC Agreement

o
PSA for Acquisition of Hotel by the Seller

o
Closing Statement for Acquisition of Hotel by the Seller

o
Articles of Organization

o
Management agreement

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o
Franchise agreement

o
Loan Agreement, Promissory Agreement and Guaranties

o
Closing statement for loan / mortgage

o
Other material or significant contracts or agreements relevant to the audit

Cash
•
Bank reconciliations for ALL cash accounts as of the following dates

o
December 31, 2013

o
December 31, 2014

o
December 31, 2015

•
Listing of all bank accounts used during 2013, 2014 AND 2015 (including those
that were closed during the years) containing the following information:

o
Financial institution

o
Bank account numbers

o
Authorized signer (including email address as we will be using E-confirmation
service where available)

•
Copies of ALL bank statements for the following periods

o
December 31, 2013

o
December 31, 2014

o
December 31, 2015

•
Copies of ALL bank statements for the following periods

o
January 31, 2014

o
January 31, 2015

o
January 31, 2016

•
Copies of all restricted cash/escrow statements (if applicable) as of the
following periods

o
December 31, 2013

o
December 31, 2014

o
December 31, 2015

Revenue and receivables
•
Guest ledger and accounts receivable aging detail (city ledger) as of the
following dates:

o
December 31, 2013

o
December 31, 2014

o
December 31, 2015

•
Detail of Reserves for bad debt (if any) with explanation of adequacy as of the
following periods

o
December 31, 2014

o
December 31, 2015

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•
STAR reports for the last three years

•
Listing of all sales tax and occupancy tax payments made during 2015 and 2014.
We will request copies of the corresponding tax returns as necessary.

Investment in hotels
•
Detail of investment in hotels roll-forward, including listing of all additions
and dispositions BY FIXED ASSET CATEGORY *(NOTE - Invoices will be selected for
requested items)*:

o
Acquisition in hotel thru 12/31/2013

o
1/1/2014 thru 12/31/2014

o
1/1/2015 thru 12/31/2015

•
Purchase price analysis prepared by specialist in accordance with ASC 805 at
time of acquisition

Deferred loan costs, franchise fees or any other deferred charges
•
Roll-forward of deferred loan costs, franchise fees or any other deferred
charges detailing the beginning balance, amortization, disposals and ending
balance *(NOTE - Invoices will be selected for requested items)*:

o
Inception thru 12/31/2013

o
1/1/2014 thru 12/31/2014

o
1/1/2015 thru 12/31/2015

Accounts payable and accrued expenses
•
Accounts payable aging detail as of the following periods:

o
December 31, 2013

o
December 31, 2014

o
December 31, 2015

•
Advance deposit ledger as of the following periods:

o
December 31, 2013

o
December 31, 2014

o
December 31, 2015

•
Reconciliations of accrued expense accounts (including accrued vacation, accrued
payroll, accrued other, etc.) as of the following periods:

o
December 31, 2013

o
December 31, 2014

o
December 31, 2015

•
Check register detail for the periods *(NOTE - Invoices will be selected for
requested items)*:

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o
1/1/2014 - 2/28/2014

o
1/1/2015 - 2/28/2015

o
1/1/2016 - 2/28/2016

Long-Term Debt (if applicable)
•
Roll-forward of notes payable for the following periods including any advances,
repayments and ending balance:

o
1/1/2014 thru 12/31/2014

o
1/1/2015 thru 12/31/2015

•
Listing of all financial institutions during all periods from (December 31, 2013
thru December 31, 2015) containing the following information:

o
Financial institution

o
Bank account numbers

o
Authorized signer (including email address as we will be using E-confirmation
service where available)

•
Listing of information in connection with interest rate swap for confirmation
(if applicable)

Members’ Equity
•
Roll forward schedule for equity detailing contributions, distributions,
income/loss, and other activity *(NOTE - Items for cash activity surrounding
contributions and distributions will be requested)*:

o
Inception thru 12/31/2013

o
1/1/2014 thru 12/31/2014

o
1/1/2015 thru 12/31/2015

Profit and Loss
•
Copies of all legal invoices paid during the year ended:

o
December 31, 2014

o
December 31, 2015

•
Reconciliation for the report from the payroll service provider to the trial
balance for the year ended

o
December 31, 2014

o
December 31, 2015

•
Calculation of the management fees and asset management fees paid for the years
ended:

o
December 31, 2014

o
December 31, 2015

•
Copies of all real estate tax bills paid during the years ended

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o
December 31, 2014

o
December 31, 2015

Interim Review Workpaper Request List
1.
Closed trial balance (in excel) for the three months ended 3/31/2016
and 3/31/2015 and the general ledger from 1/1/2016 through 3/31/2016

2.
March 2016 and March 2015 Balance Sheets and Statements of Operations (detailed
by department)

3.
Bank reconciliations for all cash accounts as of March 2014 and March 2013

4.
Copies of all March 2016 and March 2015 bank statements

5.
Copies of all restricted cash/escrow statements as of March 2016 and March 2015

6.
Guest ledger and accounts receivable aging detail (city ledger) as of 3/31/2016

7.
Detail of Reserves for bad debt with explanation of adequacy as of 3/31/2016

8.
Detail of investment in hotels rollforward, including listing of all additions
and dispositions, for the period from 1/1/16 through 3/31/16. We will request
check copies and invoices for selected additions, if needed.

9.
Depreciation schedules as of3/31/2016 for all fixed assets

10.
Rollforward of deferred loan costs, franchise fees or any other deferred charges
detailing the beginning balance at 1/1/16 amortization, disposals and ending
balance as 3/31/16. We will request additional support for significant additions
(if applicable).

11.
Accounts payable aging detail as of 3/31/2016 and 3/31/2015

12.
Advance deposit ledger as of 3/31/2016

13.
Reconciliations of accrued expense accounts as of 3/31/16 and 3/31/15, including
accrued vacation, accrued payroll, accrued other, etc.

14.
Rollforward schedule for equity detailing contributions, distributions,
income/loss, and other activity from 1/1/2016 to 3/31/2016

15.
Copies of all real estate tax bills paid during 2016

WHERE POSSIBLE, PLEASE PROVIDE THE REQUESTED INFORMATION IN ELECTRONIC FORMAT.
ALSO, PLEASE NOTE THAT THERE WILL BE ADDITIONAL

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REQUESTS AS WE PROGRESS THROUGH THE AUDIT AS THIS IS NOT AN ALL-INCLUSIVE LIST.
THIS LIST CONTEMPLATES THAT THE HOTEL HAS NOT BEEN AUDITED PREVIOUSLY IN
ACCORDANCE WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES. ADDITIONAL REQUESTS
WILL BE MADE AS NEEDED IN ORDER TO PERFORM SUFFICIENT PROCEDURES ON THE OPENING
BALANCE SHEET

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EXHIBIT O
FORM OF AUDIT REPRESENTATION LETTER

[REPORT DATE]

RSM US LLP
1 South Wacker Drive
Suite 800
Chicago, IL 60606
This representation letter is provided in connection with your audits of the
[consolidated] [combined] financial statements of [COMPANY NAME] which comprise
the [consolidated] [combined] balance sheets as of December 31, 2015 and 2014
and the related [consolidated] [combined] statements of operations, changes in
equity, and cash flows for the years then ended, and the related notes to the
financial statements, for the purpose of expressing an opinion on whether the
financial statements are presented fairly, in all material respects, in
accordance with accounting principles generally accepted in the United States
(U.S. GAAP).
We confirm, to the best of our knowledge and belief, that as of [REPORT DATE]:
Financial Statements
1.
We have fulfilled our responsibilities, as set out in the terms of the audit
arrangement letter dated [ARRANGEMENT LETTER DATE], for the preparation and fair
presentation of the financial statements referred to above in accordance with
U.S. GAAP.

2.
We acknowledge our responsibility for the design, implementation, and
maintenance of internal control relevant to the preparation and fair
presentation of financial statements that are free from material misstatement,
whether due to fraud or error.

3.
We acknowledge our responsibility for the design, implementation, and
maintenance of internal control to prevent and detect fraud.

4.
Significant assumptions used by us in making accounting estimates, including
those measured at fair value, are reasonable and reflect our judgment based on
our knowledge and experience about past and current events and our assumptions
about conditions we expect to exist and courses of action we expect to take.

5.
Related party relationships and transactions have been appropriately accounted
for and disclosed in accordance with the requirements of U.S. GAAP.

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6.
All events subsequent to the date of the financial statements and for which
U.S. GAAP requires adjustment or disclosure have been adjusted or disclosed.

7.
The effects of all known actual or possible litigation and claims have been
accounted for and disclosed in accordance with U.S. GAAP.

8.
We have no knowledge of any uncorrected misstatements in the financial
statements.

Information Provided
1.    We have provided you with:
(a)
Access to all information, of which we are aware that is relevant to the
preparation and fair presentation of the financial statements such as records,
documentation, and other matters.

(b)
Additional information that you have requested from us for the purpose of the
audit.

(c)
Unrestricted access to persons within the entity from whom you determined it
necessary to obtain audit evidence.

(d)
Minutes of the meetings of stockholders, directors and committees of directors,
or summaries of actions of recent meetings for which minutes have not yet been
prepared.

2.    All transactions have been recorded in the accounting records and are
reflected in the financial statements.
3.    We have disclosed to you the results of our assessment of risk that the
financial statements may be materially misstated as a result of fraud.
4.    We have no knowledge of allegations of fraud or suspected fraud, affecting
the entity’s financial statements involving:
(a)
Management.

(b)
Employees who have significant roles in the internal control.

(c)
Others where the fraud could have a material effect on the financial statements.

5.    We have no knowledge of any allegations of fraud or suspected fraud
affecting the entity’s financial statements received in communications from
employees, former employees, analysts, regulators, short sellers, or others.
6.    We have no knowledge of noncompliance or suspected noncompliance with laws
and regulations whose effects should be considered when preparing financial
statements.

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7.    We are not aware of any pending or threatened litigation and claims whose
effects should be considered when preparing the financial statements [and we
have not consulted legal counsel concerning litigation or claims.
8.    We have disclosed to you the identity of the entity’s related parties and
all the related-party relationships and transactions of which we are aware.
9.    We are aware of no significant deficiencies, including material
weaknesses, in the design or operation of internal controls that could adversely
affect the entity’s ability to record, process, summarize, and report financial
data.
10.    There have been no communications from regulatory agencies concerning
noncompliance with, or deficiencies in, financial reporting practices.
11.    We acknowledge that you performed the procedures specified by the
Statements on Standards for Accounting and Review Services issued by the
American Institute of Certified Public Accountants (AICPA) on the unaudited
consolidated balance sheet as of March 31, 2016, and unaudited consolidated
statements of operations, changes in equity (deficit), and cash flows for the
three-month periods ended March 31, 2016, included in the consolidated financial
statements. The foregoing procedures did not constitute an audit conducted in
accordance with the standards of the PCAOB or the AICPA. We represent that the
accounting principles used to prepare the unaudited interim financial
information are consistent with those used to prepare the consolidated financial
statements as of and for the period ended December 31, 2015.
12.    During the course of your audit, you may have accumulated records
containing data that should be reflected in our books and records. All such data
have been so reflected. Accordingly, copies of such records in your possession
are no longer needed by us.
[COMPANY NAME]

____________________________________
Chief Executive Officer

____________________________________
Chief Financial Officer

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EXHIBIT P
DILIGENCE MATERIAL

1
All available annual P&Ls with departmental details through December 2015
2
Monthly P&Ls with departmental details for each month 2014, 2015 & YTD 2016
3
Monthly 2016 Actual/Forecast (in excel)
4
Monthly spread of 2014 and 2015 P&Ls (in excel, in same format as monthly
forecast)
5
2015 monthly operating budget with departmental details
6
Annual operating projections for 2016-2020, including all appropriate
build-ups/drivers
7
2016 marketing plan
8
Digital copy of property strategic plan, hotel strategy review, rooms share
projection, total revenue comparative, group rooms workbook, volume account
summary (all included in 2016 Budget book received in hard copy on-site by Gil)
9
2 year group booking pace report for Rooms & Banquets
10
Historical capital expenditures spend/schedule for the period of ownership to
date
11
2016 detailed capex budget
12
5-year capital plan
13
Detail on 2013 $17M renovation (detailed scope and spend, by area, etc.)
14
Plans, budgets/scope, design, schedule, etc. for the upcoming 2016 meeting space
renovation
15
ROI analysis and plans/cost estimates related to the club lounge
relocation/meeting space addition La Jolla Social and build-out of additional
guestrooms (how many could be added?)
16
Building history and any general information regarding property
expansion/additions/major renovations over time.
17
STR Reports 12-13, 12-14, 12-15 and each month YTD 2016
18
Real and personal property tax bills for 2014, 2015 and 2016 (to the extent
available)
19
Franchise agreement and all subsequent amendments
20
Copies of all previous and current union agreements and documentation, including
those from Local 30
21
Copies of all previous and current agreements and documentation related to the
condominium association/HOA including historical and current invoices as well as
CAM and assessment charge breakdown and common area detail/responsibilities.
22
Insurance: (i) breakdown of premiums by coverage, (ii) breakdown of TIV,
including building, contents, and business interruption.
23
Organizational chart showing executive committee members, managers, supervisors,
and all personnel in A&G, sales & marketing and engineering departments. Also,
full detail on any complexed positions/shared costs at the property or on a
corporate level.
24
Estimated occupancy and ADR of each property in (each) competitive set
25
Photographs, including any high-resolution photographs available
26
Detailed list of advanced reservations and bookings, including name of party,
deposit received, rate guaranteed, dates, status, and other pertinent
information.

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27
List of top 20 accounts with room nights and ADR breakdown for 2013, 2014, 2015
and YTD 2016
28
Group-specific information detailing RFP season statistics, results from
previous RFP season, rate increases, new accounts, etc.
29
Copy of two most recent Quality Assurance reports
30
YE 2014, 2015 and YTD 2016 guest satisfaction and employee satisfaction scores
31
List of all vehicles including: year, make, model, VIN #, cost new, # of
passengers, vehicle use (used by manager, transport, laundry, transport guests,
etc.)
32
Most recent personal property schedule
33
Copies of all service contracts
34
Copies of all equipment/capital leases
35
Copies of all permits & licenses
36
Copies of space leases, if any
37
Copies of all environmental reports
38
Copies of all engineering reports (e.g., PCA)
39
Seller’s current title report
40
Survey
41
Marriott PIP, including any pricing estimates
42
Gross building SF (including split between hotel and parking garage)
43
Latest zoning report
44
Construction plans including (i) architectural plans (floor plans & elevations),
(ii) structural plans, and (iii) mechanical/MEP plans (iv) drawings
45
MEP and major building systems (roof, windows, façade) schedule (age, condition,
general commentary)
46
Copies of all warranties (including roofs, mechanicals, etc.)
47
Current levels of inventories including F&B, linen, china, glass, silver, and
OS&E
48
A summary of workers’ compensation insurance coverage as well as a detail of
claims experienced for full period of ownership including claims made, date of
claim, status of claim, total claim paid, and any other pertinent information.
49
Detailed loss runs for all insurance coverages (yearly) since 2013.
50
A summary of the health insurance program available to employees, including the
scope of benefits offered, the cost of the insurance by employee with a
breakdown of both the employer’s contribution and the employee’s contribution,
and the claims experience for 2013, 2014, 2015 and YTD 2016.
51
Mall expansion detail, including scope and timing, etc.
52
Detail on skywalks, including cost allocation
53
Latest available balance sheet (2/29/16), the balance sheet 12 months prior
(2/29/15) and detail relating to deferred revenue and expenses.
54
Latest available aged receivables report - City and Guest Ledger
55
Latest available accounts receivable aging report
56
Latest available accounts payable aging report
57
Depository bank statements for the latest twelve-month period available
reconciled to total revenue for the same period as reflected in the operating
statements.

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58
The monthly state Property and occupancy tax report for each for the latest
twelve-month period
59
Copies of monthly invoices, or other supporting documentation from Marriott,
detailing revenues for the latest twelve-month period
60
List of all non-recurring, non-operating or extraordinary expense items over
$10,000 for 2014 and 2015, and YTD 2016
61
Provide detail relating to intercompany and affiliate transactions for 2014,
2015 and YTD 2016
62
Breakdown of insurance premiums, limits and deductibles by coverage type
for 2014, 2015 and YTD 2016
63
The monthly state hotel and occupancy tax report for each of the latest
twelve-month period (3/1/2015 - 2/29/2016)
64
Copies of monthly sales reports from Marriott for the latest twelve-month period
(3/1/2015 - 2/29/2016)
65
The accounting policy for capitalization of assets and related accounting
policies including basis of accounting (i.e. GAAP or tax) and threshold for
capitalization (i.e. > $1,000).

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EXHIBIT Q
ASSOCIATION ESTOPPEL
[Estoppel Certificate - Regents Park Commercial Association]

_____________, 2016
This Estoppel Certificate is given to CWI 2 La Jolla Hotel LP, a Delaware
limited partnership (the “Purchaser”), by Regents Park Commercial Association, a
California non-profit mutual benefit corporation (the “Association”), with the
understanding that Purchaser is negotiating to acquire from HEI La Jolla, LLC, a
Delaware limited liability company (the “Seller”), all of the property known as
the San Diego Marriott La Jolla, located at 4240 La Jolla Village Drive, San
Diego, California (the “Property”). In connection therewith, Purchaser has
requested this Estoppel Certificate.
Reference is hereby made to that certain Declaration of Common Maintenance and
Architectural Control Restrictions for Regents Park Lots 1, 2, 3, 4, 5, 6, 7
and 8 recorded September 21, 1983 as Instrument No. 83-337248 of the Official
Records of San Diego County, California (the “Official Records”), as amended by
that certain Amendment to Declaration of Common Maintenance and Architectural
Control Restrictions for Regents Park recorded on June 2, 1994 as Instrument No.
1994-0360751 of the Official Records (collectively, the “Declaration”).
Certification
The Association hereby certifies as of the date hereof to Purchaser, any lender
of Purchaser and any of their respective successors and/or assigns:
1.
The Declaration is unmodified and in full force and effect.

2.
To the actual knowledge of the undersigned, there exists no default or events or
circumstances that, with notice and/or the passage of time, would result in a
default under the Declaration.

3.
Seller is current with all payments of any assessments that may have been
assessed under the Declaration.

4.
The Class B membership has ceased and was converted to Class A membership.

5.
To the actual knowledge of the undersigned, all improvements on the Property are
in compliance with the Guidelines of the “Architectural Committee” and all other
requirements under Article VIII of the Declaration.

The Association hereby agrees that this letter may be relied upon by Purchaser,
any lender of Purchaser and any of their respective successors and/or assigns.

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REGENTS PARK COMMERCIAL ASSOCIATION,
a California non-profit mutual benefit corporation
By:    _______________________________________
Name:    _______________________________________
Its:    _______________________________________

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EXHIBIT R
MATERIAL PERMITS

 
DESCRIPTION OF
LICENSE/PERMIT
NAMED ENTITY
ON EXECUTED
LICENSE OR PERMIT
ISSUER
  
Air Pollution Control
HEI La Jolla LLC
County of San Diego Air Pollution Control District
 
Air Pressure Tank Permit
San Diego Marriott La Jolla
State of California DOSH Pressure Vessel Unit
 
Alarm Permit Renewal
Marriott L Jolla
City of San Diego alarm Permit Renewal
 
BOE Liquor License
Merritt Beverage LLC
State of California Dept. of Alcoholic Beverage Control
 
Cigarette License
HEI La Jolla LLC
California State Board of Equalization Cigarette & Tobacco Products License
 
Dept. of Agriculture Weights & Measures Annual Renewal for Weighing Devices
HEI La Jolla LLC
County of San Diego Dept. of Agriculture, Weights & Measures
 
Dept. of Agriculture Weights & Measures Annual Point of Sale Registration
Renewal
HEI La Jolla LLC dba Marriott La Jolla
County of San Diego Dept. of Agriculture, Weights & Measures
 
Elevator- Conveyance Permit
L Jolla Marriott Hotel
State of California Dept. of Industrial Relations DOSH
 
Environmental Health Public Pool Permit
HEI La Jolla LLC
County of San Diego Dept. of Environment Health Permit
 
Health Permit
HEI La Jolla LLC
County of San Diego Dept. of Environment Health Permit
 
FCC Radio Station Authorization
Marriot International Inc. DBA San Diego Marriott - La Jolla
FCC Wireless Telecommunications Bureau
 
Food Establishment Wastewater Discharge
HEI La Jolla LLC
City of San Diego Public Utilities Dept.
 
Seller’s Permit
San Diego Marriott La Jolla
HEI La Jolla LLC
California State Board of Equalization - Sales and Use Tax Dept.
 
Propriety Private Security Employer
HEI La Jolla LLC dba Marriott La Jolla
State of California Department of Consumer Affairs
 
Rental Unit Business Tax Billing Statement
HEI La Jolla LLC
City of San Diego Office of the City Treasurer
 
San Diego Police Entertainment Permit
L Jolla Marriott Hotel
City of San Diego- Police Permits and Licenses
 
Transient Occupancy Registration Certificate
San Diego Marriott La Jolla
City of San Diego- City Treasurer
 
Unified Program Facility Permit
HEI La Jolla, LLC
County of San Diego Dept. of Environment Health Unified Program Facility

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EXHIBIT S
ONGOING CAPITAL IMPROVEMENTS

The capital improvements with respect to the Pool Work and the Pump Room Work
are ongoing.

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EXHIBIT T
ASSOCIATION ESTOPPEL
[Estoppel Certificate - Regents Park Commercial Association for Common
Maintenance]
_____________, 2016
This Estoppel Certificate is given to CWI 2 La Jolla Hotel LP, a Delaware
limited partnership (the “Purchaser”), by Regents Park Street and Landscaping
Maintenance Corporation, a California non-profit mutual benefit corporation (the
“Association”), with the understanding that Purchaser is negotiating to acquire
from HEI La Jolla, LLC, a Delaware limited liability company (the “Seller”), all
of the property known as the San Diego Marriott La Jolla, located at 4240 La
Jolla Village Drive, San Diego, California (the “Property”). In connection
therewith, Purchaser has requested this Estoppel Certificate.
Reference is hereby made to that certain Declaration of Street and Landscaping
Common Maintenance Restrictions for Regents Park recorded September 21, 1983 as
Instrument No. 83-337247 of the Official Records of San Diego County, California
(the “Official Records”), as amended by that certain First Amendment to
Declaration of Street and Landscaping Common Maintenance Restrictions for
Regents Park recorded on February 10, 1986 as Instrument No. 1986-053769 of the
Official Records (collectively, the “Declaration”).
Certification
The Association hereby certifies as of the date hereof to Purchaser, any lender
of Purchaser and any of their respective successors and/or assigns:
1.
The Declaration is unmodified and in full force and effect.

2.
To the actual knowledge of the undersigned, there exists no default or events or
circumstances that, with notice and/or the passage of time, would result in a
default under the Declaration.

3.
Seller is current with all payments of any assessments that may have been
assessed under the Declaration.

4.
The Class B membership has ceased and was converted to Class A membership.

5.
To the actual knowledge of the undersigned, all improvements on the Property are
in compliance with the Guidelines of the “Architectural Committee” and all other
requirements under Article IX of the Declaration.

The Association hereby agrees that this letter may be relied upon by Purchaser,
any lender of Purchaser and any of their respective successors and/or assigns.

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REGENTS PARK STREET AND LANDSCAPING MAINTENANCE CORPORATION,
a California non-profit mutual benefit corporation
By:
Name:
Its:

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EXHIBIT U
VOUCHER VALUES

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EXHIBIT V-1
EMPLOYEE CENSUS

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EXHIBIT V-2
Employment Contracts
None.

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EXHIBIT W
Form of Owner’s Affidavit
To be finalized with the Title Company within five (5) Business Days following
the Effective Date.

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EXHIBIT X
Title Proforma

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EXHIBIT Y
Form of Liquor Concession Agreement

CONCESSION AGREEMENT
PROPERTY NAME: SAN DIEGO MARRIOTT LA JOLLA
This Concession Agreement (this “Agreement”) is effective as of [______], 2016
by and between LA JOLLA 2 HOTEL OPERATOR LP, a Delaware limited partnership
(“Licensor”), and MERRITT BEVERAGE LLC, a Delaware limited liability company
(hereinafter called “Licensee”).
1.Property. Subject to the terms of this Agreement, Licensor hereby grants unto
Licensee a concession and license to use, manage and operate the food and
beverage facilities at that certain property known as the San Diego Marriott La
Jolla, located in San Diego, California (the “Property”).
2.    Business and Use of Property.
(a)    Subject to the issuance of all licenses, permits and approvals to
Licensee required by applicable governmental authorities for the sale and
business of alcoholic beverages at the Property (individually and collectively,
the “License”), including, without limitation, the License required by the
California Department of Alcoholic Beverages Control (individually and
collectively, the “Licensing Authority”), Licensee shall conduct the operation
of the food and beverage facilities (including room service), and in furtherance
thereof, shall buy, store, and sell alcoholic beverages, including liquor, beer
and wine, at the Property (collectively, the “Business”); provided, however,
that Licensee may engage its parent company, Merritt Hospitality LLC, a Delaware
limited liability company, in its capacity as the manager and operator of the
Hotel (“Hotel Manager”) to manage the Business on Licensee’s behalf
(b)    Licensee shall at all times maintain a reasonable stock of wines, beer,
liquors and other beverages and shall keep the Business staffed with employees
as reasonably determined by Licensee. Licensee agrees to operate the Business
during reasonable hours consistent with past practice at the Property, subject
to compliance with any applicable franchise agreement, the Management Agreement
(as defined below) and applicable laws and governmental rules and regulations.
(c)    In no event shall Licensee intentionally and knowingly use the Property
for any purpose which: (i) violates any laws or any rules, regulations, orders
or ordinances of any governmental authority or (ii) violates the Management
Agreement and any franchise agreement applicable to the Property.

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(d)    Licensee shall use the Property and operate the Business at all times in
compliance with the Management Agreement and any franchise agreement applicable
to the Property.
(e)    Licensee shall maintain the License in full force and effect at all times
during the Term of this Agreement, subject to the terms hereof.
3.    Term and Termination.
(a)    The term of this Agreement (“Term”) shall be for a period of one
(1) year, commencing on the date of issuance of the License by the Licensing
Authority (“Effective Date”). This Agreement shall be automatically renewed from
year to year unless Licensor notifies Licensee in writing, at least thirty
(30) days prior to the end of the Term, of its intention not to renew.
(b)    Notwithstanding anything to the contrary contained in this Agreement,
(i) Licensor shall have the right to terminate this Agreement at any time and
for any reason upon at least ten (10) business days’ notice to Licensee; and
(ii) this Agreement shall terminate automatically without notice upon the lapse,
revocation or expiration of the permit, approval or license issued by the
Licensing Authority or upon the expiration or earlier termination of the
property management agreement between Licensor and Hotel Manager with respect to
the operation of the Property (the “Management Agreement”). In addition to the
foregoing, Licensee shall have the right to terminate this Agreement upon at
least thirty (30) days’ notice to Licensor in the event the Licensing Authority
provides written notice that Licensee may not hold the liquor license for the
Property in accordance with the applicable law and in no event shall such
determination constitute a default by Licensee or create any indemnification
obligations by Licensee under this Agreement, provided, further that Licensee
shall reasonably cooperate with Licensor to ensure the continuation of alcoholic
beverage service at the Hotel subject to applicable laws with respect thereto.
(c)    Upon expiration or earlier termination of this Agreement shall
immediately and peacefully vacate the Property, including all improvements,
fixtures, furniture and equipment, in as good condition as at the time
possession thereof is delivered to Licensee, reasonable wear and tear excepted.
Licensee shall promptly surrender and deliver to Licensor all licenses, permits,
approvals, books, records, accounts, contracts, keys, and all other pertinent
and necessary documents and records pertaining to the Property and the operation
thereof. For a period of up to ninety (90) days after the expiration or earlier
termination of this Agreement (the “Transition Period”), Licensee agrees, to the
extent permitted by applicable law, to fully cooperate with Licensor, Licensor’s
nominee and any successor manager or operator during the Transition Period to
maintain and facilitate the orderly continuation of the business of the Business
and to promptly do all acts and execute and deliver all documents reasonably
requested by Licensor prior to the expiration of the Transition Period,
including, without limitation, to promptly execute and deliver to Licensor all
documents and instruments reasonably necessary to transfer (if transferrable) to
Licensor or its nominee any permit, approval or license issued by the Licensing
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governmental authorities and held by Licensee or then in Licensee’s name that
are necessary to operate or otherwise relating to the Business.
4.    Concession Fee.
As a concession fee (“Concession Fee”) under this Agreement, Licensee agrees to
pay to Licensor, commencing on the Effective Date, a sum equal to [________]
Dollars ($[]) per year, plus all applicable sales taxes, if any, such Concession
Fee payable in twelve (12) equal monthly installments, in advance upon the first
business day of each and every month during the Term; provided, however, in no
event shall the Licensee have any obligation to pay any Concession Fee for any
month in which the expenses of the Business from the prior month exceed the
Total Revenues (as defined below) for the prior month, in which instance, any
such unpaid Concession Fee shall be paid in the next calendar month in which
Total Revenues exceed the expenses of the Business. The term “Total Revenues” as
used in this Agreement shall mean the gross selling price of all merchandise,
beverages, food or other items sold from the Business by Licensee, whether for
cash, credit or otherwise (and without reserve or deduction for uncollected
amounts) and whether made by Licensee or its employees or by machines, as well
as any business interruption insurance proceeds received by Licensee with
respect to the Leased Premises, excluding the following: (a) the selling price
of all merchandise returned by customers and accepted for full credit; (b) sales
taxes, excise taxes, or gross receipts taxes imposed by governmental entities
upon the sale of merchandise or Business, but only if collected from customers
separately from the selling price and paid directly to the respective
governmental entities; and (c) proceeds from the sale of equipment or property
which are not inventory or stock in trade.
5.    Revenues and Expenses. Subject to making the Concession Payment described
in Section 4 hereof, Licensee will be entitled to all revenues from operations
of the Leased Premises and will be responsible for all expenses associated with
the Business, including (a) all insurance to be maintained by Licensee in
accordance with this Agreement, (b) sales tax on all sales of alcoholic
beverages and food at the Property and (c) the pro rata allocation of the
compensation for any of Licensor’s (or Hotel Manager’s) or its agents’ or
independent contractors’ employees (if any) to the extent used by Licensee in
conducting the Business.
6.    Condition of Property, Fixtures and Improvements. Licensee takes and
accepts the Property, including, without limitation, all fixtures, furniture and
equipment located therein, “AS IS”, in its present condition. Licensor makes no
representations or warranties with respect to the fitness of said Property for
use by Licensee. Licensee also takes the storage, cooling and display facilities
of the Licensor as is. The payment for the use of such fixtures and improvements
is included in the monthly Concession Fee. All fixtures, furniture and equipment
shall at all times be and remain the property of Licensor and Licensor shall be
solely responsible for the cost of any and all repairs and replacements of all
fixtures, furniture and equipment in accordance with the Management Agreement.
Licensor shall have the right to enter the Property at all reasonable hours for
the purpose of inspecting or making repairs to same or exhibiting the same to
prospective purchasers.
7.    Default. Upon default by one party under the terms of this Agreement, the
other party may, at its option, give the defaulting party written notice of its
intention to terminate this

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Agreement unless said default is cured within thirty (30) days from the receipt
of such notice. If the defaulting party fails or refuses to cure the default
during such thirty (30) day period then, upon five (5) days’ advance written
notice, this Agreement shall terminate. Any violation of any rules and
regulations of the Licensing Authority may be deemed a default hereunder.
8.    Assignment and Subletting. Licensee shall not assign this Agreement,
except with the prior written consent of Licensor, which consent may be
arbitrarily withheld.
9.    Signs. Except as otherwise agreed to by Licensee and Licensor, Licensee
shall not place any new signs at, on or about the Property or the Property
without the prior consent of the Licensor, except as may be necessary to fulfill
any requirement of the Licensing Authority, any applicable legal requirement or
any applicable franchise agreement.
10.    Alterations and Improvements. No alterations or improvements shall be
made by Licensee except with the prior written consent of Licensor, which may be
withheld arbitrarily. Licensor shall have the right to replace, alter or add to
the improvements, fixtures, furniture and equipment in the Property, at such
times and to the extent as Licensor shall deem necessary.
11.    Intentionally Omitted.
12.    Compliance with Law. Licensee shall use commercially reasonable efforts
to comply with all governmental laws, ordinances and regulations applicable to
the use of the Property and with any applicable franchise and/or management
agreement. Licensee shall use commercially reasonable efforts to prevent any
lien of any kind, type or description being placed or imposed upon the Property
or any part of the Property, other than ordinary course trade payables.
13.    Insurance.Licensor will obtain and keep in force the insurance as
mutually agreed by the parties. Licensee will furnish such reasonably requested
information to Licensor for the purpose of placement of insurance coverages and
will reasonably aid and cooperate (at no cost or expense to Licensee) with
respect to such insurance and any claim or loss thereunder.
14.    Indemnification.
(a)    Licensee agrees to indemnify, defend and hold Licensor, its Affiliates,
and all of their respective officers, directors, shareholders, members,
employees, agents, successors and assigns free and harmless from and against any
claims, liabilities, liens, suits, judgments, damages, costs and expenses.
including, without limitation, reasonable attorneys’ fees (collectively “Loss”)
arising from or connected with the fraud, bad faith, willful misconduct or gross
negligence related to the Business of any corporate officer of Licensee or of
the general manager, the director of finance (or comptroller), the director of
sales and marketing and the director of human resources at the Property.
Licensee’s obligations pursuant to this Section 14(a) shall survive the
expiration or termination of this Agreement.
(b)    Licensor agrees to indemnify, defend and hold Licensee, its Affiliates,
and all of their respective officers, directors, shareholders, members,
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successors and assigns free and harmless from and against any Loss arising from
or connected with the Business (including the employment of the employees of the
Business by Licensee). ALL INDEMNITIES IN THIS SECTION WILL BE ENFORCED TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW FOR THE BENEFIT OF THE LICENSEE, EVEN
IF THE APPLICABLE CLAIM IS CAUSED BY THE ACTIVE OR PASSIVE, JOINT, CONCURRENT OR
COMPARATIVE NEGLIGENCE OF THE LICENSEE, AND REGARDLESS OF WHETHER LIABILITY
WITHOUT FAULT OR STRICT LIABILITY IS IMPOSED UPON OR ALLEGED AGAINST THE
LICENSEE, PROVIDED, HOWEVER, THAT LICENSOR SHALL HAVE NO OBLIGATION TO INDEMNIFY
LICENSEE FOR THOSE MATTERS FOR WHICH LICENSEE IS OBLIGATED TO INDEMNIFY LICENSOR
PURSUANT TO SECTION 14(a) ABOVE. Licensor’s obligations pursuant to this
Section 14(b) shall survive the expiration or termination of this Agreement.
15.    Utilities. Licensor shall, at Licensor’s sole cost and expense, provide
all utilities for the Property, to the extent ordinarily provided at the
Property as of the Effective Date. Any interruption of any utility Business
shall not constitute a constructive or partial eviction, nor entitle Licensee to
any compensation of abatement of Concession Fee.
16.    Repairs. All repairs to the Property, fixtures and improvements, shall be
the responsibility of Licensor. Except to the extent required to continue the
operation of the Business in accordance with this Agreement, Licensee shall not
have the right to alter or improve the Property without the express written
approval of Licensor.
17.    Destruction of Property. In the event the Property are damaged or
destroyed, or in the event that the facility in which the Property are located
is damaged to such an extent as it shall not be open for business on a regular
basis within thirty (30) days of such event, the Concession Fee hereunder shall
be prorated and abated for the number of days that the facility is closed.
18.    Condemnation. In the event that the Property is taken or condemned by any
competent authority, this License will automatically terminate and Licensee
shall not be entitled to any proceeds received in respect thereof. Licensee
hereby agrees to pay to Licensor any such award that it may receive.
19.    Access to Property. Licensor shall have access to the Property at all
times to conduct inspections and to perform its obligations or exercise its
rights hereunder.
20.    Quiet Enjoyment. Licensor warrants that it has full right and power to
execute and perform this Agreement and to grant the estate demised herein and
that Licensee, on performing the covenants herein contained, shall peaceably and
quietly have, hold and enjoy the Property during the full term of this Agreement
and any extension or renewal thereof; provided, however, that Licensee accepts
this Agreement subject and subordinate to any mortgage, deed of trust or other
lien presently or hereafter existing upon the Property. Licensor is hereby
irrevocably vested with full power and authority to subordinate Licensee’s
interest hereunder to any such mortgage, deed of trust, or other lien placed on
the Property, and Licensee agrees upon demand to execute such further
instruments subordinating this Agreement as Licensor may request.

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21.    Waiver of Default. No waiver by the parties hereto of any default or
breach of any term, condition or covenant of this Agreement shall be deemed to
be a waiver of any subsequent default or breach of the same or any other term,
condition or covenant contained herein.
22.    Amendments/Modifications. No amendment or modification to any terms of
this Agreement, or cancellation of this Agreement, shall be valid unless in
writing and executed and delivered by Licensor and Licensee.
23.    Exhibits. All exhibits, attachments, annexed instruments and addenda
referred to herein shall be considered a part hereof for all purposes with the
same force and effect as if copied at full length herein.
24.    Captioned. The captions or heading of paragraphs in this Agreement are
inserted for convenience only, and shall not be considered in construing any
provision hereof if any question of intent should arise.
25.    Successors and Assigns. The terms, conditions and covenants contained in
this Agreement shall apply to, inure to the benefit of, and be binding upon the
parties hereto and their respective successors in interest and legal
representatives except as otherwise herein expressly provided. This Agreement
may not be assigned by Licensee without the prior written consent or Licensor,
which consent may be withheld in Licensor’s sole and absolute discretion. Any
purported assignment by Licensee in violation of this section shall be null and
void ab initio.
26.    Notices. Any notice or document required or permitted to be delivered
hereunder shall be deemed to be delivered, whether actually received or not,
when deposited in the United States mail, postage prepaid, registered or
certified mail, return receipt requested, addressed to the parties hereto at the
respective addresses set out opposite their names below, or at such other
address as they have theretofore specified by written notice delivered in
accordance herewith:
LICENSOR:
c/o Carey Watermark Investors Incorporated
272 East Deerpath Road, Suite 320
Lake Forest, Illinois 60045
Attn: Michael G. Medzigian

LICENSEE:
c/o HEI Hospitality, LLC
101 Merritt 7 Corporate Park
1st Floor
Norwalk, Connecticut 06851
Attn: Anthony R. Rutledge

27.    Counterparts; Recording. This Agreement may be executed in counterparts,
each of which shall be deemed an original. Licensor and Licensee may deliver
executed signature pages to this Agreement by facsimile transmission or .pdf
format to the other Party, which facsimile or .pdf copy shall be deemed to be an
original executed signature page. Licensee agrees that it shall not record this
License or any short form memorandum of this Agreement without the express
written consent of Licensor, which consent may be withheld in Licensor’s sole
discretion.

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28.    Waiver of Trial by Jury. To the extent permitted by applicable law,
Licensor and Licensee each hereby waives its right to a trial by jury in any
action or proceeding by any Party against any other Party with respect to any
other matter arising from or in connection with this Agreement.

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IN WITNESS WHEREOF, the parties have hereunto set their hands as of the day and
year first written above.
LICENSOR:
LA JOLLA 2 HOTEL OPERATOR LP,
a Delaware limited partnership

By:     ________________________
Name:    Michael G. Medzigian
Title:     President

LICENSEE:
MERRITT BEVERAGE LLC,
a Delaware limited liability company
By:     
Name:     
Title:     

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EXHIBIT Z
Form of Liquor Side Letter
CWI 2 LA JOLLA HOTEL LP
LA JOLLA 2 HOTEL OPERATOR LP
c/o Watermark Capital Partners, LLC
272 E. Deerpath Road, Suite 320
Lake Forest, Illinois 60045

[], 2016

MERRITT BEVERAGE LLC
MERRITT HOSPITALITY LLC
c/o HEI Hospitality, LLC
101 Merritt 7 Corporate Park
1st Floor
Norwalk, Connecticut 06851
Attn: Anthony R. Rutledge
Re:
San Diego Marriott La Jolla, 4240 La Jolla Village Drive, San Diego, California

Reference is made to that certain Hotel Management Agreement, dated [___] (the
“Management Agreement”), by and between Merritt Hospitality LLC, a Delaware
limited liability company (“Manager”), and La Jolla 2 Hotel Operator LP, a
Delaware limited partnership (“LHO”), and acknowledged and agreed by CWI 2 La
Jolla Hotel LP, a Delaware limited partnership (“Owner”), and that certain
Concession Agreement (the “Concession Agreement”) of even date herewith by and
between LHO and Merritt Beverage LLC, a Delaware limited liability company
(“BevCo”), in BevCo’s capacity as licensee thereunder (“Licensee”). Any
capitalized terms used but not otherwise defined herein shall have the meanings
set forth in the Management Agreement. With respect to the Management Agreement
and Concession Agreement, the parties hereby agree as follows:
This letter is to confirm the agreement of the parties that, notwithstanding the
provisions of the Concession Agreement, including, without limitation,
Sections 4 and 5 thereof, to the extent that the operating expenses of the
Business (as defined in the Concession Agreement) exceed the aggregate Total
Revenues (as defined in the Concession Agreement) received from the operation of
the Business at the Hotel, LHO shall reimburse Licensee for all expenses
associated with the Business and the operation thereof at the Hotel (including
the cost of goods utilized for any approved or permitted complimentary happy
hour and any approved or otherwise permitted complimentary breakfast served at
the Hotel).
As compensation for providing the management and operation of the Business under
the Concession Agreement, Licensee (or at its direction, Manager) shall be
entitled to retain a fee during the term of the Concession Agreement for so long
as Licensee is operating the Business at the Hotel equal to the “Management
Fees” that Manager would be entitled to receive had Total Revenues and

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all expenses under the Concession Agreement been treated as “Gross Revenues” and
“Gross Operating Expenses” under the Management Agreement.
LHO and Licensee further agree that, notwithstanding the provisions of the
Concession Agreement including, without limitation, Section 4 thereof, the
“Concession Fee” (as defined in the Concession Agreement) payable under the
Concession Agreement is intended to be equal to the total Net Operating Income
that would have been deposited into LHO’s account pursuant to the Management
Agreement if LHO had appointed Manager as the operator of the Business at the
Hotel pursuant to the Management Agreement rather than Licensee pursuant to the
Concession Agreement (such monthly amount, the “Monthly Beverage Amount”).
Notwithstanding anything to the contrary set forth in the Agreement, in no event
shall Manager or Licensee be entitled to receive aggregate fees or revenues
under this letter, the Concession Agreement and the Management Agreement in
excess of, nor shall Manager and Licensee in any event be deemed to only be
entitled to receive aggregate fees under this letter, the Concession Agreement
and the Management Agreement less than, what Manager would be entitled to
receive had Total Revenues and all expenses under the Concession Agreement been
treated as Gross Revenues and Gross Operating Expenses under the Management
Agreement. Furthermore, in the event any of the rights or obligations of either
Licensee or LHO, respectively, under the Concession Agreement are greater than
or otherwise contradict the rights, obligations, terms and conditions of the
Management Agreement, then, notwithstanding the terms of the Concession
Agreement, the terms of the Management Agreement shall control. In the event of
any conflict between this letter, the Concession Agreement and/or the Management
Agreement, the terms of this letter shall control.
In addition to the indemnification obligations set forth in the Management
Agreement and the Concession Agreement, LHO and Owner hereby agree to jointly
and severally indemnify, defend and hold harmless Licensee and any affiliate of
Licensee or any their respective officers, directors, employees, agents,
investors, shareholders, members, partners, lenders, attorneys, accountants and
advisers from and against any and all losses, claims, citations, penalties,
fines, cost, imprisonment, damage, liability and/or expense (including
attorneys’ fees and expenses) that may arise from or in connection with the
operation of the Business pursuant to the Concession Agreement and Licensee
holding the liquor license for the Property (including, without limitation, the
mere fact Licensee has entered into the Concession Agreement and hold the liquor
license for the Hotel, which the parties agree and acknowledge is being done as
an accommodation to LHO and Owner); PROVIDED, HOWEVER, THAT NEITHER OWNER NOR
LHO SHALL HAVE ANY OBLIGATION TO INDEMNIFY LICENSEE FOR THOSE MATTERS FOR WHICH
LICENSEE IS OBLIGATED TO INDEMNIFY OWNER OR LHO PURSUANT TO THE CONCESSION
AGREEMENT OR FOR WHICH MANAGER IS OBLIGATED TO INDEMNIFY OWNER OR LHO PURSUANT
TO THE MANAGEMENT AGREEMENT; PROVIDED, FURTHER IN NO EVENT SHALL THE FACT THAT
LICENSEE ENTERED INTO THE CONCESSION AGREEMENT OR AGREED TO HOLD THE LIQUOR
LICENSE FOR THE HOTEL ON BEHALF OF LHO OR OWNER CONSTITUTE WILLFUL MISCONDUCT OR
GROSS NEGLIGENCE ON THE PART OF LICENSEE (OR ANY OF ITS AFFILIATE’S, EMPLOYEES,
OFFICERS, INVESTORS, AGENTS, ADVISERS OR ATTORNEYS) AND LHO AND OWNER EACH
HEREBY UNCONDITIONALLY AND IRREVOCABLY WAIVE ANY AND ALL DEFENSES OR OTHER LEGAL
RIGHT TO ASSERT OR CLAIM THAT LHO’S AND OWNER’S INDEMNIFICATION OBLIGATIONS
HEREUNDER AND UNDER THE CONCESSION AGREEMENT AND THE MANAGEMENT AGREEMENT

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ARE ABROGATED OR INVALIDATED OR OTHERWISE LIMITED OR MODIFIED AS A RESULT OF OR
BECAUSE OF LICENSEE ENTERING INTO THE CONCESSION AGREEMENT OR AGREEING TO HOLD
THE LIQUOR LICENSE ON BEHALF OF LHO AND/OR OWNER. The parties agree and
acknowledge that neither Manager nor Licensee has made any representation or
warranty or any other commitment or statement with respect to whether the
Concession Agreement complies with or is permitted under applicable law and in
no event shall the fact that Licensee, and not LHO or Hotel Owner, holds the
liquor license or the failure of the Concession Agreement to comply with
applicable laws or to be permitted by applicable laws, in any way modify, amend
or derogate the indemnification, defense and hold harmless obligations of LHO
and Owner under this letter, the Concession Agreement and/or the Management
Agreement. The terms of this paragraph shall survive the termination of this
letter, the Management Agreement and the Concession Agreement.
This letter also serves to confirm the agreement of the parties that, in
furtherance of the provisions hereof and notwithstanding anything to the
contrary set forth in the Concession Agreement and/or the Management Agreement,
Licensee and LHO shall execute and deliver to the other any amendment to the
Concession Agreement reasonably requested by Licensee or LHO, as applicable,
from time to time if it becomes necessary as a result of the operation of the
Business to adjust the Concession Fee to match the Monthly Beverage Amount
consistent with the terms of this letter or otherwise to address applicable
legal requirements.
Prior to the termination of the Concession Agreement, there shall be no change
in the ownership or management of Licensee without the prior written consent of
LHO which consent may be withheld in LHO’s sole, but good faith, discretion.
No amendment or modification to any terms of this Letter Agreement, shall be
valid unless in writing and executed and delivered by LHO, Owner and Licensee.
This Agreement may be executed in counterparts, each of which shall be deemed an
original. The parties hereto may deliver executed signature pages to this Letter
Agreement by facsimile transmission or .pdf format to the other party, which
facsimile or .pdf copy shall be deemed to be an original executed signature
page.

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Should the terms of this letter be acceptable to you, please confirm your
agreement to same by acknowledging below and returning a countersigned copy.
Thank you for your cooperation in this regard.
Sincerely,
OWNER:
CWI 2 LA JOLLA HOTEL LP,
a Delaware limited partnership
By: CWI 2 La Jolla Hotel GP, LLC,
a Delaware limited liability company
By: ___________________________
Name:
Title:
LHO:
LA JOLLA 2 HOTEL OPERATOR LP,
a Delaware limited partnership

By: ______________________________
Name:
Title:
AGREED AND ACCEPTED:
LICENSEE:
MERRITT BEVERAGE LLC,
a Delaware limited liability company
By:_________________________________
Name:
Title:
MANAGER:
MERRITT HOSPITALITY LLC,
a Delaware limited liability company
By:_________________________________
Name:
Title:

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EXHIBIT AA
Allocation

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