Exhibit 10.3

PURCHASE AND SALE AGREEMENT AND ESCROW INSTRUCTIONS

between

MANTRA, LLC

as Seller

and

CHESAPEAKE LODGING, L.P.

as Purchaser

 

 

Anaheim Courtyard by Marriott

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TABLE OF CONTENTS

 

ARTICLE

   PAGE

I. DEFINITIONS

   1

II. SALE AND PURCHASE OF PROPERTY

   6

      2.1          Purchase of Property

   6

      2.2          Purchase Price and Terms of Payment

   7

                2.2.1        Earnest Money Deposit

   7

                2.2.2        Balance of Purchase Price

   7

      2.3          Assumption of the Contracts

   7

      2.4          Franchise Agreement

   8

      2.5          Liquor Licenses, Alcoholic Beverages, Food Inventory and
Restaurant Equipment

   8

III. ESCROW

   8

      3.1          Opening of Escrow

   8

      3.2          Intentionally Omitted

   8

      3.3          Deposit of Funds

   8

IV. CONDITION OF TITLE

   9

      4.1          Title Commitment

   9

      4.2          Title to the Real Property

   9

      4.3          Inspection and Due Diligence Review

   11

      4.4          Notice of Non-Satisfaction

   13

      4.5          Condition of the Property.

   14

V. CLOSING

   20

      5.1          Closing Date

   20

      5.2          Action Prior to the Close of Escrow by Seller

   21

      5.3          Action Prior to the Close of Escrow by Purchaser

   22

      5.4          Recording of Deed

   22

      5.5          Prorations.

   22

                5.5.1        Taxes

   22

                5.5.2        Advance Reservations

   23

                5.5.3        Utility Service

   23

                5.5.4        Revenue From Operations

   23

                5.5.5        Accounts Payable and Operating Expenses

   23

                5.5.6        Miscellaneous Permits and Taxes

   23

                5.5.7        The Contracts

   24

                5.5.8        Other Income

   24

                5.5.9        Other Expenses

   24

                5.5.10      Gift Shop Inventory

   24

                5.5.11      House Banks

   24

 

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                5.5.12      Delayed Adjustments

   24

                5.5.13      Proration Allocation

   25

                5.5.14      Survival

   25

      5.6          Guest Property

   25

                5.6.1        Safe Deposit Boxes

   25

                5.6.2        Baggage Inventory

   25

      5.7          Closing Costs

   25

      5.8          California Real Estate Withholding

   26

      5.9          Distribution of Funds and Documents Following Close of Escrow

   26

      5.10        Possession

   27

VI. ADDITIONAL COVENANTS AND INDEMNITIES

   27

      6.1          Purchaser’s Covenants.

   27

                6.1.1         Indemnification

   27

                6.1.2        Seller’s Accounts Receivable

   27

      6.2          Seller’s Covenants.

   28

                6.2.1         Indemnification

   28

                6.2.2        Termination of the Franchise Agreement and the
Hotel Management Agreement

   28

                6.2.3        Operation of the Hotel

   28

      6.3          Employee Matters

   29

      6.4          No Obligations of Escrow Holder

   29

VII. REPRESENTATIONS AND WARRANTIES

   29

      7.1          By Purchaser

   29

                7.1.1        Organization and Standing

   30

                7.1.2        Due Authorization

   30

                7.1.3        Lack of Conflict

   30

                7.1.4        Solvency/Bankruptcy

   30

      7.2          By Seller

   30

                7.2.1        Organization and Standing

   30

                7.2.2        Due Authorization

   30

                7.2.3        Lack of Conflict

   31

                7.2.4        Non-Foreign Seller

   31

                7.2.5        Solvency/Bankruptcy

   31

                7.2.6        Tenant Leases

   31

                7.2.7        Existing Management Agreement

   31

                7.2.8         Employees

   31

                7.2.9         Contracts

   31

                7.2.10      Condemnation Proceedings

   32

VIII. CONDITIONS PRECEDENT TO CLOSE OF ESCROW

   32

      8.1          Conditions to Seller’s Obligations

   32

      8.2          Conditions to Purchaser’s Obligations

   33

      8.3          Failure of Conditions to Close of Escrow

   33

 

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IX. LIQUIDATED DAMAGES

   34

      9.1          Default by Purchaser

   34

      9.2          Default by Seller

   35

X. BROKERS

   35

XI. NOTICES

   36

XII. MISCELLANEOUS

   37

      12.1        Governing Law

   37

      12.2        Professional Fees and Costs

   37

      12.3        Exhibits and Schedules a Part of This Agreement

   37

      12.4        Executed Counterparts

   37

      12.5        Assignment

   38

      12.6        IRS - Form 1099-S

   38

      12.7        Successors and Assigns

   38

      12.8        Time is of the Essence

   38

      12.9        Entire Agreement

   38

      12.10      Further Assurances

   39

      12.11      Waiver

   39

      12.12      Headings

   39

      12.13      Risk of Loss.

   39

                12.13.1    Risk of Loss

   39

                12.13.2    Material Loss

   40

                12.13.3    Nonmaterial Loss

   40

                12.13.4    Eminent Domain

   40

      12.14        Construction of Agreement

   41

      12.15        Tax Deferred Exchange

   41

      12.16        No Public Disclosure

   42

      12.17        Covenants, Representations and Warranties

   42

      12.18        Confidentiality

   42

      12.19        Limitation on Liability

   43

      12.20        No Third-Party Beneficiaries

   44

      12.21        Facsimile Signatures

   44

      12.22        Exclusivity

   44

 

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PURCHASE AND SALE AGREEMENT AND ESCROW INSTRUCTIONS

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

RECITALS

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

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

AGREEMENT

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

I.

DEFINITIONS

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

II.

SALE AND PURCHASE OF PROPERTY

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

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

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

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

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

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

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

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

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

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

III.

ESCROW

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

3.2        Intentionally Omitted.

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

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IV.

CONDITION OF TITLE

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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this transaction and /or the operation of the Hotel with any on-site employees
of the Hotel or otherwise contract any governmental authority with respect to
the Property or the Land, in each case without the written consent of Seller.

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

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

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

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

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

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

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

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third-party materials provided to it by Seller in connection with its inspection
and agrees that it shall rely solely on its own independently developed or
verified information.

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

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

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

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

4.5        Condition of the Property.

(a)        BY ENTERING INTO THIS AGREEMENT, PURCHASER HAS AGREED TO, AND WILL,
PERFORM (AND PURCHASER REPRESENTS AND WARRANTS TO SELLER THAT PURCHASER IS
CAPABLE OF PERFORMING) A SOPHISTICATED, EXPERT, THOROUGH AND INDEPENDENT
INVESTIGATION, ANALYSIS AND EVALUATION OF THE PROPERTY, AND PURCHASER AGREES
THAT PURCHASER SHALL BE CHARGED WITH KNOWLEDGE OF ALL INFORMATION WHICH IS OR
SHOULD HAVE BEEN ACQUIRED BY PURCHASER AS A RESULT OF SUCH AN INVESTIGATION,
ANALYSIS, EVALUATION, AND THE MATERIALS DELIVERED BY SELLER TO PURCHASER. PRIOR
TO THE EXPIRATION OF THE DUE DILIGENCE PERIOD, PURCHASER WILL HAVE DETERMINED,
SUBJECT TO THE REPRESENTATIONS AND WARRANTIES OF SELLER SET FORTH HEREIN, AND
THE TERMS AND CONDITIONS OF THIS AGREEMENT, THAT THE PROPERTY IS ACCEPTABLE TO
PURCHASER. PRIOR TO THE EXPIRATION OF THE DUE DILIGENCE PERIOD, PURCHASER WILL
HAVE HAD ACCESS TO AND WILL HAVE CONDUCTED ITS OWN THOROUGH AND INDEPENDENT
INSPECTION,

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

PURCHASER ACKNOWLEDGES THAT SELLER WAS NOT THE DEVELOPER OR THE ORIGINAL OWNER
OF THE REAL PROPERTY OR THE HOTEL. PURCHASER FURTHER ACKNOWLEDGES THAT, PRIOR TO
THE EXPIRATION OF THE DUE DILIGENCE PERIOD, PURCHASER WILL HAVE THOROUGHLY
INSPECTED AND EXAMINED, AND UNCONDITIONALLY AND IRREVOCABLY APPROVED AND ASSUMED
(SUBJECT TO SELLER’S REPRESENTATIONS AND WARRANTIES AS SET FORTH HEREIN) ALL
LIABILITY FOR, ALL ELEMENTS COMPRISING THE PROPERTY, AND ALL FACTORS RELATED TO
THEIR USE AND OPERATION (BOTH CURRENT AND INTENDED USES), INCLUDING, WITHOUT
LIMITATION, THE CONTRACTS, UTILITIES, PHYSICAL AND FUNCTIONAL ASPECTS OF THE
PROPERTY, THE CONSTRUCTION AND CONDITION OF THE REAL PROPERTY, ALL MATTERS
AFFECTING AND RELATING TO TITLE, AND MUNICIPAL AND OTHER LEGAL REQUIREMENTS SUCH
AS TAXES, ASSESSMENTS AND BONDS, ZONING, USE PERMITS, BUSINESS PERMITS,
LICENSES, AND SIMILAR ENTITLEMENTS, INVESTIGATIONS OR ANALYSES OF PRESENT AND
FUTURE LAWS, STATUTES, RULES, REGULATIONS, ORDINANCES, LIMITATIONS, RESTRICTIONS
OR REQUIREMENTS CONCERNING THE USE, DENSITY, LOCATION AND SUITABILITY OF THE
REAL PROPERTY OR ANY EXISTING OR PROPOSED DEVELOPMENT, BUILDOUT, REDEVELOPMENT,
CHANGE IN USE, AND CONDITION THEREOF (COLLECTIVELY “REGULATIONS”), INCLUDING,
BUT NOT LIMITED TO: ZONING, SUBDIVISION, ENVIRONMENTAL

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AND OTHER SUCH REGULATIONS; THE NECESSITY AND AVAILABILITY OF ANY GENERAL OR
SPECIFIC PLAN AMENDMENTS, REZONING, ZONE VARIANCES, CONDITIONAL USE PERMITS,
BUILDING PERMITS, ENVIRONMENTAL IMPACT REPORTS, PARCEL OR SUBDIVISION MAPS, OR
ANY OTHER GOVERNMENTAL PERMITS, APPROVALS, ENTITLEMENTS OR ACTS IN RESPECT OF
THE REAL PROPERTY (COLLECTIVELY “PERMITS”); THE NECESSITY OR EXISTENCE OF ANY
DEDICATIONS, FEES, CHARGES, COSTS OR ASSESSMENTS THAT MAY BE IMPOSED IN
CONNECTION WITH ANY REGULATIONS OR THE OBTAINING OF ANY PERMITS; THE ECONOMIC
VALUE OF THE REAL PROPERTY, AND THE SIZE, DIMENSIONS, LOCATION AND TOPOGRAPHY OF
THE REAL PROPERTY; THE AVAILABILITY OR ADEQUACY OF THE ACCESS TO THE REAL
PROPERTY AND OF PARKING; THE EXTENT OF INFRASTRUCTURE OR OTHER IMPROVEMENTS, IF
ANY, REQUIRED TO BE BUILT BY PURCHASER ON, NEAR OR CONCERNING THE REAL PROPERTY
IN ORDER TO DEVELOP AND BUILDOUT THE REAL PROPERTY; THE EXTENT OR CONDITION OF
ANY GRADING OR OTHER SITE WORK ALREADY PERFORMED OR HEREAFTER REQUIRED FOR
PURCHASER’S PROPOSED DEVELOPMENT AND BUILDOUT; ANY SURFACE, SOIL, SUBSOIL,
GEOLOGIC OR GROUND WATER CONDITIONS OR OTHER PHYSICAL CONDITIONS OF OR AFFECTING
THE REAL PROPERTY, SUCH AS AIRCRAFT OVERFLIGHT, TRAFFIC, CLIMATE, DRAINAGE AND
AIR; THE POSSIBILITY OF FUTURE FEES AND ASSESSMENTS OR INCREASES IN EXISTING
FEES AND ASSESSMENTS BY ONE OR MORE GOVERNMENTAL ENTITIES OR DISTRICTS; AND ALL
OTHER MATTERS CONCERNING THE CONDITION, USE, DEVELOPMENT OR SALE OF THE REAL
PROPERTY. PURCHASER HEREBY ACKNOWLEDGES THAT NONE OF THE FOREGOING, AND THE
FAILURE OF PURCHASER TO OBTAIN ANY OF THE FOREGOING, AS THE CASE MAY BE, SHALL
BE THE BASIS FOR PURCHASER’S RIGHT TO TERMINATE THIS AGREEMENT OR OBTAIN AN
ADJUSTMENT TO THE PURCHASE PRICE, AND PURCHASER HEREBY RELEASES AND FOREVER
DISCHARGES SELLER FROM ANY AND ALL CLAIMS, LOSSES, DAMAGES, LIABILITIES OR
OBLIGATIONS ARISING OUT OF OR IN ANY WAY RELATED TO ALL OF THE ITEMS LISTED IN
THIS SECTION, WHICH RELEASE AND DISCHARGE FROM LIABILITY SHALL SURVIVE THE CLOSE
OF ESCROW.

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

(b)        PURCHASER FURTHER ACKNOWLEDGES THAT PURCHASER HAS SUBSTANTIAL
EXPERIENCE WITH REAL PROPERTY, HOTELS AND HOTEL OPERATIONS, AND THAT PURCHASER
WILL ACQUIRE THE PROPERTY IN “AS IS, WHERE IS, WITH ALL FAULTS” CONDITION, AND
(SUBJECT TO SELLER’S

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REPRESENTATIONS AND WARRANTIES AS SET FORTH HEREIN) SOLELY IN RELIANCE ON
PURCHASER’S OWN INSPECTION AND EXAMINATION. PURCHASER WAIVES ANY OBLIGATION ON
THE PART OF SELLER, OR ANY OTHER PERSON, TO DISCLOSE ANY DEFECTS OR OTHER
DEFICIENCIES OR LIABILITIES IN OR WITH RESPECT TO THE PROPERTY.

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

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

 PURCHASER’S INSPECTION, INVESTIGATION AND SURVEY OF THE PROPERTY, DURING THE
DUE DILIGENCE PERIOD, SHALL BE IN LIEU OF ANY NOTICE OR DISCLOSURE REQUIRED BY
SECTION 25359.7 OF THE CALIFORNIA HEALTH AND SAFETY CODE, OR BY ANY OTHER
PROVISION OF THE CALIFORNIA CIVIL CODE, OR PURSUANT TO ANY OTHER APPLICABLE LAW,
INCLUDING, WITHOUT LIMITATION, LAWS REQUIRING DISCLOSURE BY SELLER OF FLOOD,

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FIRE, SEISMIC HAZARDS, LEAD PAINT, MELLO ROOS, LANDSLIDE AND LIQUEFACTION, OTHER
GEOLOGICAL HAZARDS, RAILROAD AND OTHER UTILITY ACCESS, SOIL CONDITIONS AND OTHER
CONDITIONS WHICH MAY AFFECT THE USE OF THE REAL PROPERTY, AND PURCHASER HEREBY
WAIVES ANY REQUIREMENT FOR A NOTICE PURSUANT TO THOSE PROVISIONS AND HEREBY
ACKNOWLEDGES AND AGREES THAT IT IS FAMILIAR WITH SUCH DISCLOSURE REQUIREMENTS
AND WILL CONDUCT ITS OWN DUE DILIGENCE WITH RESPECT TO ALL MATTERS COVERED
THEREBY, AND HEREBY RELEASES SELLER FROM LIABILITY IN CONNECTION THEREWITH.
PURCHASER SHALL BE DEEMED TO HAVE APPROVED ALL CONDITIONS PERTAINING TO THE
PROPERTY UNLESS IT CANCELS THE ESCROW IN ACCORDANCE HEREWITH ON OR BEFORE THE
END OF THE DUE DILIGENCE PERIOD.

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

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

(e)        SELLER SHALL HAVE NO OBLIGATION OR DUTY TO EXPEND FUNDS FOR, OR
OTHERWISE BE RESPONSIBLE TO CONDUCT OR PERFORM, ANY CLEAN-UP REQUIREMENT(S) AS
IMPOSED BY ANY FEDERAL, STATE OR LOCAL

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GOVERNMENT LAW, REGULATION, ORDINANCE OR AGENCY FOR THE REMOVAL OF ANY HAZARDOUS
MATERIALS CONTAMINATION FROM THE REAL PROPERTY.

(f)        AS OF THE CLOSE OF ESCROW, EXCEPT AS TO SELLER’S REPRESENTATIONS AND
WARRANTIES SET FORTH HEREIN, PURCHASER, FOR ITSELF AND ITS OWNERS, SUCCESSORS
AND ASSIGNS, HEREBY RELEASES AND FOREVER DISCHARGES SELLER AND TARSADIA HOTELS,
AND THEIR PAST, PRESENT AND FUTURE MEMBERS, AFFILIATES, EMPLOYEES, AGENTS,
ATTORNEYS, ASSIGNS, AND SUCCESSORS-IN-INTEREST FROM ALL PAST, PRESENT AND FUTURE
CLAIMS, DEMANDS, OBLIGATIONS, LOSSES AND CAUSES OF ACTION OF ANY NATURE
WHATSOEVER, WHETHER NOW KNOWN OR UNKNOWN, DIRECT OR INDIRECT, FORESEEN OR
UNFORESEEN, SUSPECTED OR UNSUSPECTED, WHICH ARE BASED UPON OR ARISE OUT OF OR IN
CONNECTION WITH THE CONDITION OF THE PROPERTY, THE MATTERS ADDRESSED IN
SUBSECTIONS (a), (b), (c), (d) AND (e) OF THIS SECTION 4.5, AND WITH RESPECT TO
ANY ENVIRONMENTAL DAMAGES OR ENVIRONMENTAL REQUIREMENTS, INCLUDING, WITHOUT
LIMITATIONS, THE PHYSICAL, STRUCTURAL, GEOLOGICAL, MECHANICAL AND ENVIRONMENTAL
(SURFACE AND SUBSURFACE) CONDITION OF THE REAL PROPERTY (INCLUDING THE
IMPROVEMENTS THEREON) OR ANY LAW OR REGULATION RELATING TO HAZARDOUS MATERIALS,
INCLUDING, BUT NOT LIMITED TO, LOSSES IN CONNECTION WITH PROPERTY DAMAGE, CLAIMS
BY GOVERNMENTAL AGENCIES, DIMINUTION IN VALUE AND PERSONAL INJURY LOSSES.
PURCHASER EXPRESSLY UNDERSTANDS AND ACKNOWLEDGES THAT IT IS POSSIBLE THAT
UNKNOWN PROBLEMS, (EXCEPT WHERE SELLER KNOWLINGLY MADE A MATERIAL
MISREPRESENTATION OR ENGAGED IN FRAUDULENT CONDUCT). CONDITIONS OR LOSSES MAY
EXIST WITH RESPECT TO THE PROPERTY AND THAT PURCHASER EXPLICITLY TOOK SUCH INTO
ACCOUNT IN DETERMINING THE PURCHASE PRICE FOR THE PROPERTY AND ITS ELECTION TO
PROCEED WITH THE PURCHASE THEREOF, AND THAT A PORTION OF SUCH CONSIDERATION,
HAVING BEEN BARGAINED FOR BETWEEN THE PARTIES WITH THE KNOWLEDGE OF THE
POSSIBILITY OF SUCH UNKNOWN PROBLEMS, CONDITIONS OR CLAIMS, WAS GIVEN IN
EXCHANGE FOR A FULL ACCORD, SATISFACTION AND DISCHARGE OF ALL SUCH PROBLEMS,
CONDITIONS AND LOSSES. WITHOUT LIMITING THE FOREGOING, THIS RELEASE SPECIFICALLY
APPLIES TO ALL LOSSES AND CLAIMS ARISING UNDER THE COMPREHENSIVE ENVIRONMENTAL
RESPONSE, COMPENSATION AND LIABILITY ACT OF 1980, AS AMENDED, THE SUPERFUND
AMENDMENTS AND REAUTHORIZATION ACT OF 1986, (42 U.S.C. SECTIONS 9601 ET SEQ.),
THE RESOURCES CONSERVATION AND RECOVERY ACT OF 1976, (42 U.S.C. SECTIONS 6901 ET
SEQ.), THE CLEAN WATER ACT, (33 U.S.C. SECTIONS 466 ET SEQ.), THE SAFE DRINKING
WATER ACT, (14 U.S.C. SECTION 1401-1450), THE HAZARDOUS MATERIALS TRANSPORTATION
ACT, (49 U.S.C. SECTIONS 1801 ET SEQ.), THE TOXIC SUBSTANCE CONTROL ACT, (15
U.S.C. SECTIONS 2601-2629), THE CALIFORNIA HAZARDOUS WASTE CONTROL LAW,
(CALIFORNIA HEALTH AND SAFETY CODE SECTIONS 25100-25600), THE PORTER-COLOGNE
WATER QUALITY CONTROL ACT (CALIFORNIA HEALTH AND SAFETY CODE SECTIONS 13000 ET

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SEQ.), AND ANY OTHER FEDERAL, STATE OR LOCAL LAW OF SIMILAR EFFECT, AS WELL AS
ANY AND ALL COMMON LAW CLAIMS. IN ACCORDANCE WITH THE FOREGOING, PURCHASER
WAIVES ALL RIGHTS UNDER CALIFORNIA CIVIL CODE SECTION 1542 (AND ALL SIMILAR
STATUTES IN ALL OTHER STATES) WHICH STATES IN FULL AS FOLLOWS:

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

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

 

 

PURCHASER’S INITIALS

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

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

(i)        “Hazardous Materials”  means any substance (i) the presence of which
requires investigation or remediation under any federal, state or local statute,
regulation, ordinance or policy; or (ii) which is defined as a “hazardous waste”
or “hazardous substance” under any federal, state or local statute, regulation
or ordinance, including without limitation the Comprehensive Environmental
Response, Compensation and Liability Act (42 U.S.C. Section 9601 et seq.) and
the Resource Conservation and Recovery Act (42 U.S.C. Section 6901 et seq.) and
amendments thereto and regulations promulgated thereunder; or (iii) which is
toxic,

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explosive, corrosive, infectious or otherwise hazardous or is regulated by any
federal, state or local governmental authority; (iv) without limitation which
contains polychlorinated biphenyls (PCBs), asbestos or urea formaldehyde; and
(v) mold and fungi.

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

V.

CLOSING

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

Notwithstanding the foregoing, upon the election of Seller, Notice of which is
delivered to Purchaser and Escrow Holder not later than five (5) business days
prior to the Closing Date, Seller may extend the Closing Date for up to an
additional sixty (60) days.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

5.4        Recording of Deed.  Escrow Holder will cause the Deed to be dated and
recorded in the Official Records of the County of Orange, State of California,
and all other conveyance documents deposited with Escrow Holder dated as of
Close of Escrow, when (but in no event

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after the Closing Date) Title Insurer is irrevocably committed to issue the
Title Policy to be issued as contemplated in this Agreement, and holds for the
account of Seller and Purchaser the items and funds (if any) to be delivered to
Seller and Purchaser through the Escrow, after payment of costs, expenses,
disbursements and prorations chargeable to Seller or Purchaser pursuant to the
provisions of this Agreement.

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

5.5        Prorations.

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

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

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

5.5.4    Revenue From Operations.  As to the Hotel, all revenues from
operations, including, without limitation, guest room rentals, revenue from the
minibars (if any), banquet rooms rentals, vending machines, coin telephones, and
other income-producing equipment arising through 12:01 a.m. California time on
the Close of Escrow (the “Cut-Off Time”) shall belong to Seller. All revenues
from operations, including, without limitation, guest room rentals, revenue from
the minibars (if any), banquet rooms rentals, vending machines, coin telephones,

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and other income producing equipment arising after the Cut-Off Time shall belong
to Purchaser. Revenue from guest room rentals for the evening before the date of
the Close of Escrow through to the day of the Close of Escrow shall be divided
equally between Seller and Purchaser. All prepaid rentals, room rental deposits,
and all other deposits for advance reservations and Bookings for the period
after the Cut-Off Time, shall be credited to Purchaser.

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

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

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

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

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

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

5.5.11  House Banks.    On the Close of Escrow, Seller shall receive a credit
through the Escrow for an amount equal to all till money, cash-on-hand, and all
sums in house banks for the Hotel, in which case all right, title and interest
to the till money, cash-on-hand and house banks shall be assigned and conveyed
by Seller to Purchaser. In the event Seller and Purchaser are unable to agree
upon the amount of the till money, cash-on-hand and house banks, the provisions
of this Section 5.5.11 shall be inapplicable, and title to the till money,
cash-on-

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hand and house banks shall remain with Seller. The failure of Purchaser and
Seller to agree on the amounts of the till money, cash-on-hand and house banks
shall not be deemed a condition precedent to the obligations of Seller and
Purchaser under this Agreement.

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

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

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

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

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

5.6.2    Baggage Inventory.  All guest baggage and other guest property checked
and left in the possession, care and control of Seller shall be listed in an
inventory to be prepared in duplicate and signed by Seller’s and Purchaser’s
representatives on the Closing Date. Purchaser shall be responsible from and
after the Closing Date for all baggage (and the contents thereof) and other
guest property listed in inventory. Purchaser agrees to indemnify and save and

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hold Seller harmless from and against any claim arising out of or with respect
to the baggage listed in the inventory, and Seller agrees to indemnify and save
and hold Purchaser harmless from and against any claim arising prior to the
Closing Date out of or with respect to any guest baggage or other guest property
not listed in the inventory.

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

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

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

  To Seller:

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

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

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

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

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

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

  To Purchaser:

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

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

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

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

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

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

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

  (h)        The original of the Title Policy.

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

VI.

ADDITIONAL COVENANTS AND INDEMNITIES

6.1        Purchaser’s Covenants.

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

6.1.2    Seller’s Accounts Receivable.    Purchaser, upon receipt, shall
promptly remit to Seller all sums received by Purchaser in payment of any of
Seller’s Accounts Receivables. All sums received by Purchaser from a customer,
guest or patron owing Seller under a Seller’s Account Receivable shall be
credited, first, to the sums owing Seller, and then,

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

6.2        Seller’s Covenants.

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

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

6.2.3    Operation of the Hotel.  Seller, during the term of this Agreement,
shall carry on the business and operations of the Hotel in the Ordinary Course.
Prior to the Closing Date, Seller shall maintain (or replace with policies of
like amounts) all existing insurance policies insuring the Property and the
operation of the Hotel. Seller may extend, amend, modify or terminate any of the
contracts and leases pertaining to the Hotel, and enter into any new contracts
and leases, as Seller deems appropriate to operate, service and maintain the
Property in the Ordinary Course; provided, however, that so long as Purchaser is
not in default of any of its obligations under this Agreement, (a) from the date
of this Agreement to the expiration of the Due Diligence Period, Seller shall
provide to Purchaser copies of any such extensions, amendments, modifications
and terminations, and any new contracts and leases, which Seller has entered
into, or intends to enter into, and (b) from and after the expiration of the Due
Diligence Period, Seller shall not enter into any such extensions, amendments,
modifications or

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terminations, or any new contracts and leases, without the prior consent of
Purchaser (which consent shall not be unreasonably withheld, delayed or
conditioned).

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

Purchaser shall indemnify, defend and hold harmless Seller, Tarsadia Hotels and
their affiliates, owners and employees against any and all labor or employment
claims, liabilities or obligations (including, without limitation, attorneys’
fees and costs) which arise or accrue from or after, or arise out of events
occurring from or after the Close of Escrow, including, without limitation, all
claims arising from the obligations of Purchaser under this Section 6.3 and from
the termination by Purchaser of any Employee, the failure of Purchaser to offer
employment to any such Employees, and Purchaser’s decision to continue or
discontinue any employment policy or practice of Seller in existence or effect
at the Hotel prior to the Close of Escrow, which indemnity shall survive the
Close of Escrow. The foregoing indemnity shall not include coverage for any
claims, liabilities or obligations predicated on matters which occurred prior to
the Close of Escrow even though such claims, liabilities or obligations were
first instituted or brought to the attention of Seller or Purchaser after the
Close of Escrow, it being expressly understood and agreed by Seller that any
such claims or liabilities or obligations shall remain the responsibility of
Seller, and Seller shall satisfy all such claims, liabilities and obligations.
The foregoing indemnity shall survive the Close of Escrow.

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

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

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VII.

REPRESENTATIONS AND WARRANTIES

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

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

7.1.2    Due Authorization.    Subject to approval by the Board of Trustees of
Purchaser’s general partner (the “Board Approval”) to occur on or before the
expiration of the Due Diligence Period, the performance of this Agreement and
the transactions contemplated hereunder by Purchaser have been duly authorized
by all necessary action on the part of Purchaser, and this Agreement is binding
on and enforceable against Purchaser in accordance with its terms, except to the
extent Seller itself is in default hereunder. Purchaser shall, on or prior to
the Closing Date, furnish Seller with certified resolutions evidencing that
Purchaser has been duly authorized to enter into and perform this Agreement and
the transactions contemplated hereunder. Except for Board Approval, no further
consent of any shareholder, creditor, board of directors, governmental authority
or other party to such execution, delivery and performance hereunder is
required. The person(s) signing this Agreement, and any document pursuant hereto
on behalf of Purchaser, has full power and authority to bind Purchaser.

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

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

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

7.2.1    Organization and Standing.    Seller is a limited liability company,
duly organized, validly existing, and in good standing under the laws of the
State of California, and

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has the full power and authority to enter into this Agreement and to carry out
the transactions contemplated hereby to be carried out by it.

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

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

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

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

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

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

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

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

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

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

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

VIII.

CONDITIONS PRECEDENT TO CLOSE OF ESCROW

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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IX.

LIQUIDATED DAMAGES

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

 

 

                                     

SELLER’S INITIALS

  

                                                 

PURCHASER’S INITIALS

  

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

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

 

 

                                     

SELLER’S INITIALS

  

                                               

PURCHASER’S INITIALS

  

X.

BROKERS

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

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XI.

NOTICES

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

 

To Seller:

  

MANTRA, LLC

Attention: Renee Molloy

620 Newport Center Drive

Fourteenth Floor

Newport Beach, CA 92660

Telecopier: (949) 610-8210

  

With a Copy to:

  

TARSADIA HOTELS

Attention: Edward G. Coss, Esq.

620 Newport Center Drive

Fourteenth Floor

Newport Beach, CA 92660

Telecopier: (949) 610-8222

To Purchaser:

  

CHESAPEAKE LODGING, L.P.

c/o Chesapeake Lodging Trust

1997 Annapolis Exchange Parkway,

Suite 410

Annapolis, Maryland 21401

Attn: Graham J. Wootten, SVP and CAO

  

Telecopier: (410) 972-4180

With a Copy to

  

c/o Chesapeake Lodging Trust

1997 Annapolis Exchange Parkway

Suite 410

Annapolis, Maryland 21401

Attention: D. Rick Adams, SVP and CIO

Telecopier: (410) 970-4180

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

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

XII.

MISCELLANEOUS

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

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

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

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

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

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Notwithstanding the foregoing, however, Purchaser may assign and transfer all of
its rights and obligations under this Agreement to one (1) or more wholly owned
subsidiary(ies) thereof, or to an affiliate(s) thereof in which Purchaser is a
sixty-seven percent (67%) or more equity owner thereof; provided, however, that
Purchaser shall not be released of its obligations under this Agreement as a
result of any such assignment. Any assignment as permitted in the preceding
sentence shall be conditioned upon Purchaser delivering to Seller and Escrow
Holder, within forty-eight (48) hours of any such assignment, Notice thereof,
together with a copy of such assignee’s organizational and formation documents
and instruments, a Certificate of Good Standing for such assignee, and copies of
the resolutions of Purchaser and such assignee authorizing such assignment. As a
further condition to any such permitted assignment, Purchaser shall cause its
assignee to execute an assignment and assumption agreement of Purchaser’s
obligations under this Agreement (in form and content reasonably and mutually
acceptable), and such other documents and instruments as Escrow Holder may
reasonably request. Purchaser may also designate a subsidiary to take title to
the Property at Closing by giving Notice to Seller no later than ten (10) days
prior to the Closing Date.

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

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

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

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

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

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of this Agreement and cancellation of the Escrow (if otherwise permitted
hereunder). The terms of this section shall survive the Close of Escrow and/or
termination of this Agreement.

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

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

12.13    Risk of Loss.

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

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

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without reduction of the Purchase Price, and Seller shall assign the insurance
proceeds to Purchaser in the event the Casualty is insured against and credit
the amount of the applicable insurance policy deductible to Purchaser or have
the Purchase Price reduced by the Casualty Renovation Cost in the event the
Casualty is not insured against.

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

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

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

The words “herein,” “hereof,” “hereunder” and words of similar reference shall
mean this Agreement. The words “this Agreement” include the exhibits, schedules
addenda and

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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for diminution-in-value, but shall only be liable for Purchaser’s actual
out-of-pocket damages and third party expenses.

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

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

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

[The remainder of this page is intentionally left blank]

[Signatures on following page]

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EXECUTION

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

 

SELLER:

MANTRA, LLC,

a California limited liability company

BY:

 

BPP ONE, LLC, a California limited

liability company, its Manager

 

By:

 

/s/ Dipak Desai

 

Name:

 

Dipak Desai

 

Title:

 

Manager

PURCHASER:

CHESAPEAKE LODGING,L.P.

a Delaware limited partnership

BY:

 

Chesapeake Lodging Trust, a Maryland real estate investment trust, its General
Partner

 

By:

 

/s/ D. Rick Adams

 

Name:

 

D. Rick Adams

 

Title:

 

SVP – CIO

 

ESCROW HOLDER HEREBY ACKNOWLEDGES

AND AGREES TO THE ESCROW INSTRUCTIONS

SET FORTH IN THIS AGREEMENT.

 

LAWYERS TITLE INSURANCE COMPANY

 

BY:

 

/s/ Michele Mesh

     

Michele Mesh, Senior Commercial Escrow Officer

   

Dated:

 

April 14, 2010