**EXHIBIT 10.5****AGREEMENT OF SALE AND PURCHASE**     **THISAGREEMENT OF SALE AND PURCHASE**(this**“Agreement”**), dated as of November 12, 2004 (the**“Effective Date”**), is made by and between **HANFORD HOTELS, LLC,**a California limited liabilitycompany, having an address at ________ (**“Seller”**), and **INTERSTATE CONCORD, LLC**, aDelaware limited liability company having an address c/o Interstate Hotels & Resorts, Inc., 4501 N.Fairfax Drive, Arlington, VA 22203 (**“Purchaser”**).**I.****Definitions; Sale and Purchase**     **1.01****Definitions**. In addition to terms defined elsewhere in this Agreement, thefollowing terms shall have the meanings indicated:     (a) Bookings shall mean contracts or reservations for the use or occupancyof guest rooms, meeting rooms and/or the banquet facilities of the Hotel.     (b) Books and Records shall mean all books, records, room rates, customerlists and banquet and function room records with respect to the Hotel (whether inelectronic format or reduced to paper.     (c) Closing Date shall mean the date specified in Section 7.01.     (d) Consumables shall mean all opened and unopened food and beverages(alcoholic and non-alcoholic) owned by Seller or its property manager and located at, orpurchased to be used or sold at but not yet delivered to, the Hotel.     (e) Cut-off Time shall mean 11:59 p.m. on the date preceding the ClosingDate.     (f) Effective Date shall mean the date of this Agreement.     (g) Expendables shall mean all china, glassware, linens, silverware,kitchen and bar small goods, paper goods, guest supplies, cleaning supplies, operatingsupplies, printing, stationary and uniforms, and other operating supplies andinventories whether in use or held in reserve storage for future use in connection withthe operation of the Hotel.     (h) Existing Franchise Agreement shall mean the existing franchiseagreement between Hilton Inns, Inc. (**“Hilton”**), as franchisor, and Seller, asfranchisee, with respect to the Hotel.     (i) Furnishings shall mean all fixtures, furniture, furnishings, fittings,equipment, machinery, apparatus, appliances, vehicles and other articles of personalproperty located on or used or usable in connection with any part of the Hotel.     (j) Hotel shall mean the hotel located at 1970 Diamond Boulevard, Concord,California 94520, and known as the Hilton Concord Hotel.     (k) Hotel Contracts shall mean all service and maintenance contracts,employment agreements, union contracts, purchase orders, equipment leases, volumetransient agreements and other
 

 
contracts or agreements relating to the maintenance,operation, provisioning or equipping of the Hotel, together with all related writtenwarranties and guaranties.     (l) Hotel Employees shall mean the persons employed to operate the Hotel.     (m) Improvements shall mean the buildings, structures (surface andsub-surface), installations and other improvements, including such fixtures andappurtenances as shall constitute real property located on the Land.     (n) Land shall mean the land and all appurtenances thereto, having a streetaddress at 1970 Diamond Boulevard, Concord, California 94520, Concord, California, moreparticularly described in Exhibit A to this Agreement upon which the Hotel is situatedtogether with all appurtenances to the Land.     (o) Miscellaneous Personal Property shall mean (i) any and alltrademarks, service marks, trade names and copyrights owned by Seller or any affiliateof Seller relating to the Hotel, (ii) any and all goodwill associated with theHotel, (iii) the Hotel’s website and web address, if any, (iv) theHotel’s telephone numbers, and (v) printed marketing materials, if any,relating to the Hotel, and any slides, proofs or drawings used to produce suchmaterials, to the extent such slides, proofs or drawings are in Seller’s possession.     (p) Permits shall mean all licenses, franchises, permits, certificates ofoccupancy, authorizations and approvals used in or relating to the ownership, occupancyor operation of any part of the Hotel.     (q) Property shall mean the Land and Improvements.     (r) Space Leases shall mean all leases and other agreements (written ororal) for the use of space at the Property, including but not limited to, agreements forthe use of rooftop space on the Hotel for the installation of cellular telephoneantennas.     (s) Warranties shall mean any assignable warranties benefiting Seller withrespect to the Furnishings, Miscellaneous Personal Property and Improvements.     **1.02****Sale and Purchase****.**Seller agrees to sell and convey the Hotel to Purchaser, andPurchaser agrees to purchase and accept the Hotel from Seller, for the price and subject to theterms, covenants, conditions and provisions set forth in this Agreement. The sale and purchaseshall include the Property and all right, title and interest of Seller in and to the Bookings, theBooks and Records, the Furnishings, the Expendables, the Consumables, the Permits, the SpaceLeases, the Hotel Contracts, the Miscellaneous Personal Property and the Warranties (the Property,the Bookings, the Books and Records, the Furnishings, the Expendables, the Consumables, thePermits, the Space Leases, the Hotel Contracts, the Miscellaneous Personal Property and theWarranties being hereinafter collectively referred to as the **“Purchased Assets”**). Notwithstandinganything to the contrary in Section 1.02, the following items are expressly excluded from thePurchase Assets:     (a) All cash on hand or on deposit other than deposits for advance Bookings,operating account or other account or reserve, except for (i) security deposits held bySeller as landlord with respect to any Lease, (ii) the house banks which are to betransferred at Closing subject to the terms of this Agreement and (iii) other depositsand amounts which are to be transferred or credited to Purchaser pursuant to thisAgreement;     (b) Any tangible or intangible property owned by Seller’s property manager whichis described on Exhibit F attached hereto and made a part hereof; and     (c) Any fixtures, personal property or intellectual property which is set forth onExhibit G, to the extent the same is owned by (A) the supplier, vendor, licensor, lessoror other party under any
 

 
operating agreements, provided that any rights to purchasecontained in any operating agreements shall be considered part of the Purchased Assets,(B) the tenant under any Leases, (C) any employees, or (D) any guests or customers ofthe Hotel.     **1.03****Condition of Property****.**(a) Purchaser acknowledges for Purchaser andPurchaser’s successors, heirs and assignees, (i) that Purchaser will be given areasonable opportunity to inspect and investigate the Property, all improvements thereon and allaspects relating thereto, including, without limitation, all of the physical, environmental andoperational aspects of the Property, either independently or through agents and experts ofPurchasers choosing and (ii) that Purchaser will acquire the Property based uponPurchasers own investigation and inspection thereof. SELLER AND PURCHASER AGREE THAT, EXCEPT ASPROVIDED FOR IN THIS AGREEMENT OR ANY CLOSING DOCUMENT, THE PROPERTY SHALL BE SOLD AND THATPURCHASER SHALL ACCEPT POSSESSION OF THE PROPERTY ON THE CLOSING DATE AS IS, WHERE IS, WITH ALLFAULTS WITH NO RIGHT OF SET-OFF OR REDUCTION IN THE PURCHASE PRICE, AND THAT, EXCEPT AS EXPRESSLYPROVIDED IN THIS AGREEMENT OR ANY CLOSING DOCUMENT SUCH SALE SHALL BE WITHOUT REPRESENTATION ORWARRANTY OF ANY KIND, WHETHER EXPRESS, IMPLIED, STATUTORY OR OTHERWISE, EXCEPT FOR THOSE SET FORTHIN THIS AGREEMENT, INCLUDING, WITHOUT LIMITATION, WARRANTY OF INCOME POTENTIAL, OPERATING EXPENSES,USES, MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. PURCHASER SPECIFICALLY ACKNOWLEDGESTHAT, EXCEPT AS PROVIDED FOR IN THIS AGREEMENT OR ANY CLOSING DOCUMENT, PURCHASER IS NOT RELYINGAND SHALL NOT RELY ON ANY REPRESENTATIONS OR WARRANTIES OF ANY KIND WHATSOEVER, WHETHER EXPRESS,IMPLIED, STATUTORY OR OTHERWISE, FROM SELLER AS TO ANY MATTERS CONCERNING THE PROPERTY INCLUDINGWITHOUT LIMITATION: (A) THE CONDITION OR SAFETY OF THE PROPERTY OR ANY IMPROVEMENTS THEREON,INCLUDING, BUT NOT LIMITED TO, PLUMBING, SEWER, HEATING AND ELECTRICAL SYSTEMS, ROOFING, AIRCONDITIONING, IF ANY FOUNDATIONS, SOILS AND GEOLOGY INCLUDING HAZARDOUS MATERIALS, LOT SIZE, ORSUITABILITY OF THE PROPERTY OR IMPROVEMENTS FOR A PARTICULAR PURPOSE; (B) WHETHER THE APPLIANCES,IF ANY, PLUMBING OR UTILITIES AND ANY ASSOCIATED MATTERS ARE IN WORKING ORDER; (C) THE LIABILITY ORSUITABILITY FOR OCCUPANCY OF ANY STRUCTURE AND THE QUALITY OF ITS CONSTRUCTION; (D) THE FITNESS OFANY PERSONAL PROPERTY; OR (E) WHETHER THE IMPROVEMENTS ARE STRUCTURALLY SOUND, IN GOOD CONDITION,OR IN COMPLIANCE WITH APPLICABLE CITY, COUNTY, STATE OR FEDERAL STATUTES, CODES OR ORDINANCES.     UNLESS SPECIFICALLY SET FORTH IN THIS AGREEMENT, PURCHASER REPRESENTS TO SELLER THAT PURCHASERHAS OR WILL HAVE PRIOR TO CLOSING EXTENSIVE KNOWLEDGE OF AND FAMILIARITY WITH THE PROPERTY AND HASCONDUCTED, OR WILL CONDUCT PRIOR TO CLOSING, SUCH INVESTIGATIONS OF THE PROPERTY, INCLUDING BUT NOTLIMITED TO, THE PHYSICAL AND ENVIRONMENTAL CONDITIONS THEREOF, AS PURCHASER DEEMS NECESSARY TOSATISFY ITSELF AS TO THE CONDITION OF THE PROPERTY AND THE EXISTENCE OR NONEXISTENCE OR CURATIVEACTION TO BE TAKEN WITH RESPECT TO ANY HAZARDOUS OR TOXIC SUBSTANCES ON OR DISCHARGED FROM THEPROPERTY, AND, EXCEPT AS EXPRESSLY PROVIDED FOR HEREIN OR IN ANY DOCUMENT DELIVERED TO PURCHASER BYSELLER AT CLOSING, WILL RELY SOLELY UPON SAME AND NOT UPON ANY INFORMATION PROVIDED BY OR ON BEHALFOF SELLER OR ITS AGENTS OR EMPLOYEES WITH RESPECT THERETO, OTHER THAN SUCH REPRESENTATIONS,WARRANTIES AND COVENANTS OF SELLER AS ARE EXPRESSLY SET FORTH IN THIS AGREEMENT OR IN ANY DOCUMENTDELIVERED TO PURCHASER BY SELLER AT CLOSING. UPON CLOSING, EXCEPT AS EXPRESSLY PROVIDED FOR HEREINOR IN ANY DOCUMENT DELIVERED TO PURCHASER BY SELLER AT CLOSING, PURCHASER SHALL ASSUME THE RISKTHAT ADVERSE MATTERS INCLUDING BUT NOT LIMITED TO, CONSTRUCTION DEFECTS AND ADVERSE PHYSICAL ANDENVIRONMENTAL CONDITIONS, MAY NOT HAVE BEEN REVEALED BY PURCHASER’S INVESTIGATIONS.     EXCEPT AS MAY BE EXPRESSLY PROVIDED IN THIS AGREEMENT OR IN ANY DOCUMENT DELIVERED TOPURCHASER BY SELLER AT CLOSING, PURCHASER, FOR ITSELF AND ITS SUCCESSORS IN INTEREST, (X) RELEASESSELLER FROM, AND WAIVES ALL CLAIMS AND LIABILITY AGAINST SELLER FOR, ANY ENVIRONMENTAL CONDITION ATTHE PROPERTY, AND (Y) RELEASES SELLER
 

 
FROM, AND WAIVES ALL LIABILITY AGAINST SELLER ATTRIBUTABLETO, THE ENVIRONMENTAL CONDITION OF THE PROPERTY, INCLUDING WITHOUT LIMITATION THE PRESENCE,DISCOVERY OR REMOVAL OF ANY HAZARDOUS SUBSTANCES IN, AT, ABOUT OR UNDER THE PROPERTY, CONNECTEDWITH OR ARISING OUT OF ANY AND ALL CLAIMS OR CAUSES OF ACTION BASED UPON CERCLA (COMPREHENSIVEENVIRONMENTAL RESPONSE, COMPENSATION, AND LIABILITY ACT OF 1980, AS AMENDED BY SARA SUPERFUNDAMENDMENT AND REAUTHORIZATION ACT OF 1986 AND AS MAY BE FURTHER AMENDED FROM TIME TO TIME) OR ANYRELATED CLAIMS OR CAUSES OF ACTION OR ANY OTHER FEDERAL OR STATE BASED STATUTORY OR REGULATORYCAUSES OF ACTION FOR ENVIRONMENTAL CONTAMINATION AT, IN OR UNDER THE PROPERTY. THE PROVISIONS OFTHIS SECTION SHALL SURVIVE THE CLOSING.**II.****Consideration**     **2.01****Purchase Price****.**The purchase price (**“Purchase Price”**) to be paid by Purchaser toSeller at the closing of the purchase and sale of the Property (the **“Closing”**) shall be **TWENTY NINEMILLION ONE HUNDRED FIFTY THOUSAND DOLLARS ($29,150,000)**. The Purchase Price shall be payable byPurchaser as follows:     (a) **FIVE HUNDRED THOUSAND DOLLARS ($500,000)**as an earnest money deposit (togetherwith any interest earned thereon, the **“First Deposit”**), by check or wire transferpayable to First American Title Insurance Company (in its capacity as holder of theEarnest Money, the **“Escrow Agent”**), through its Washington, D.C. office, within two (2)business days after the date hereof;     (b) **ONE MILLION FIVE HUNDRED THOUSAND DOLLARS ($1,500,000)**by wire transfer of goodfunds to the Escrow Agent as an additional earnest money deposit (together with anyinterest earned thereon, the **“Second Deposit”**, and the First Deposit and after thedeposit thereof the Second Deposit being hereinafter collectively referred to as the**“Earnest Money”**) within two (2) business days after the expiration of the InspectionPeriod (as hereinafter defined), if Purchaser shall not have terminated this Agreementas provided in this Agreement; and     (c) The balance (as adjusted for the prorations and credits hereinafter set forth)at the Closing by wire transfer of good funds to an account to be designated by Sellerprior to the Closing.     **2.02****Earnest Money****.**The Earnest Money shall be delivered to and held by Escrow Agentin escrow in an interest-bearing account pursuant to terms of this Agreement. If the Closingoccurs in accordance with the terms and provisions of this Agreement, the Earnest Money shall bepaid to Seller and credited against the Purchase Price. If the Closing does not occur, the EarnestMoney shall be held and delivered as provided in this Agreement.     **2.03****Allocation**. The Purchase Price shall be allocated between the Land, theImprovements and the other Purchased Assets as set forth on Exhibit B attached hereto subject tosuch changes as the parties may reasonably and in good faith agree upon prior to the expiration ofthe Inspection Period.
 

 
**III.****Survey**     **3.01****Survey****.**Promptly after the Effective Date, Seller will obtain, at Purchaser’scost and expense, a current survey (the **“Survey”**) of the Property prepared by a licensed surveyorapproved by Purchaser. The Survey, which shall be certified to Purchaser, Purchaser’s lender, ifany, and Purchaser’s title insurer, shall indicate the metes and bounds of the Land, shall indicatethe Improvements and the location of any easements, utility lines, rights-of-way, water courses,drains, sewers, driveways, roads and encroachments affecting the Property, and shall indicate thatall Improvements are located within the record and setback lines of the Property and that noeasements or other encroachments located on the Property interfere with the use of the Property andshall otherwise be in accordance with the Minimum Standard Detail Requirements and Classificationsfor ALTA/ACSM Land Title Surveys (including items 1, 2, 3, 6, 7A, 7B, 7C, 8, 9, 10, 11 and 13 ofTable A thereof) and the standards of any board or organization promulgating standards for surveysin the State of California.**IV.****Title Insurance**     **4.01****Title Commitment****.**Within ten days after the Effective Date, Purchaser will causeFirst American Title Insurance Company (in its capacity as title insurer, the **“Title Company”**),through its Washington, D.C. office to deliver to Purchaser an up-to-date and complete commitmentfor an ALTA Owner’s Policy of Title Insurance with extended coverage (the **“Title Commitment”**)accompanied by a legible copy of all recorded documents relating to liens, easements,rights-of-way, restrictions and other matters affecting title to the Property.     **4.02****Title Objections**. Purchaser shall have ten (10) days from the last to bereceived of the Title Commitment and the Survey to notify Seller as to any items that areunsatisfactory to Purchaser. Unless Purchaser or its attorney so notifies Seller within such10-day period, Purchaser shall be deemed to have approved the condition of title to the Property asreflected by the Title Commitment and Survey. If within such period Purchaser notifies Seller thatany of the items are unacceptable (**“Objections”**), Seller shall within five (5) business days afterreceipt of such notice notify Purchaser whether Seller shall elect to cure any or all of suchObjections (provided, however, that Seller must satisfy and remove of record or cure, as the casemay be, and shall not have any right to elect not to cure, any matter which it is required to curepursuant to Section 4.04 below. If Seller elects to cure any such Objections, then Seller shallpromptly cure the Objections which it has elected to cure to Purchaser’s and the Title Company’ssatisfaction. If Seller elects not to cure any such Objections, or is unable to cure any suchObjections, then Purchaser at its sole and absolute option may either (i) accept title tothe Property subject to such Objections or (ii) terminate this Agreement by writtennotice to Seller, whereupon the Earnest Money shall be promptly returned to Purchaser and theparties shall have no further rights or liabilities under this Agreement other than those whichexpressly survive the termination of this Agreement. Purchaser shall make such election by writtennotice to Seller or on before the Closing Date or within five business days after Seller hasadvised Purchaser in writing that has elected not to cure any such Objections or is unable to cureany such Objections, whichever occurs first, and in the event Purchaser does not make suchelection, Purchaser shall be conclusively deemed to have terminated this Agreement. Thoserestrictions, liens, encumbrances, easements, rights of way and other matters as are not objectedto by Purchaser in the manner provided in this Section shall be deemed “Permitted Exceptions”.Nothing herein shall be deemed to prohibit Purchaser from objecting to title defects revealedsubsequent to approval of the title reflected by the Title Commitment and the Survey and any suchobjections will be treated as “Objections” in accordance with this Section.     **4.03****Title Conveyed**. Seller shall, on the Closing Date, convey to Purchaser good,marketable and insurable title to the Property subject only to the Permitted Exceptions.     **4.04****Monetary Liens**. Notwithstanding anything to the contrary set forth in Section4.02 above, Seller shall satisfy and remove of record or cure, as the case may be, at or before theClosing (x) any mortgage or deed of trust lien
 

 
affecting the Property, (y) any liens for unpaidtaxes, and (z) any other Objection which may be removed by the payment of a liquidated sum of moneyand which when aggregated with all other Objections to be cured under this clause (z) is equal toor less than $100,000 in the aggregate, and Seller may not refuse to cure the same. Seller may useall or any portion of the Purchase Price to affect such cure at the Closing.     **4.05****Searches**. Promptly after the Effective Date, Seller shall furnish to Purchaser,at Seller’s expense, written reports of searches (the **“Searches”**) of the records of the appropriategovernmental agencies confirming the absence of security interests, judgments, tax liens andbankruptcy proceedings which affect or could affect the Purchased Assets or any interest therein(except the Permitted Exceptions). If such Searches disclose the existence of any securityinterests, judgments, tax liens or bankruptcy proceedings which affect or could affect thePurchased Assets or any interest therein (except the Permitted Exceptions), Seller shall havethirty (30) days from the date of delivery of such written reports to secure the release, or commitin writing to secure the release, of all such security interests, judgments, tax liens andbankruptcy proceedings and provide evidence of such release to Purchaser. If Seller fails tosecure all such releases or commit to secure such releases within such thirty (30) day period,without limiting any other obligation which Seller may have under Section 4.05 or elsewhere in thisAgreement, and/or right or remedy which Purchaser may have with respect thereto under thisAgreement, Purchaser may elect, upon notice to Seller on or before the Closing Date, to (i)terminate this Agreement, in which event the Earnest Money shall promptly be returned to Purchaser,or (ii) accept title subject only to such then unreleased security interests, judgments and taxliens with the further right to deduct from the Purchase Price amounts secured by any such securityinterests, judgments and tax liens (other than the Permitted Exceptions) of a definite orascertainable amount. Said Searches shall be updated, at Seller’s sole cost and expense, as of adate not earlier than three (10) days prior to the Closing Date confirming that there are nosecurity interests, judgments, tax liens or bankruptcy proceedings affecting the Purchased Assetsor any interest therein.**V.****Representations, Warranties, Covenants And Conditions Precedent**     **5.01****Seller’s Representations and Warranties****.**Seller represents and warrants toPurchaser that:     (a) Seller is a duly organized and validly existing California limited liabilitycompany, is in good standing in the State of California and in the state of itsformation, if different, and has full power to enter into this Agreement and to performits obligations under this Agreement.     (b) The execution and delivery of this Agreement has been duly authorized by allnecessary and appropriate action of Seller. This Agreement constitutes a legal, validand binding obligation of Seller enforceable in accordance with its terms, subject tobankruptcy, fraudulent conveyance, moratorium or other creditor’s rights and limitationson equitable remedies.     (c) No consent or approval of any person, entity, or governmental authority isrequired with respect to the execution and delivery of this Agreement by Seller or theconsummation by Seller of the transactions contemplated hereby or the performance bySeller of its obligations under this Agreement.     (d) There are no Space Leases, ground leases, license agreements, occupancyagreements or other similar agreements affecting all or any portion of the Propertyexcept for the leases (collectively, the **“Space Leases”**) listed in Exhibit C (assupplemented pursuant to Section 5.05(p) below) to this Agreement. All of the SpaceLeases described in Exhibit C are in full force and effect, there are no defaults by anyparty thereunder, and true and complete copies of the Space Leases and all instrumentsand documents related to the Space Leases have been provided to Purchaser.     (e) There are no Hotel Contracts or similar agreements affecting the Propertyexcept as set forth in Exhibit D to this Agreement (as supplemented pursuant to Section5.05(p) below). Any equipment leases set forth on Exhibit D (as supplemented pursuantto Section 5.05(p) below) are specifically identified as such. All of the HotelContracts are in full force and effect, there are no defaults
 

 
by Seller or, to Seller’sknowledge, any other party thereunder, and true and complete copies of the HotelContracts and all instruments and documents related to the Hotel Contracts have beenprovided to Purchaser.     (f) The Existing Franchise Agreement is in full force and effect and has not beenextended, amended, modified or otherwise supplemented. To Seller’s knowledge, after dueinquiry of Hilton, there are no defaults by Seller under the Existing FranchiseAgreement or, to the knowledge of Seller, by any other party thereunder, nor has anyevent occurred which, with passage of time or the giving of notice or both, wouldconstitute a default by Seller or, to the knowledge of Seller, by any other partythereunder. True and complete copies of the Existing Franchise Agreement have beenprovided to Purchaser.     (g) To Seller’s knowledge all Permits necessary for the operation of the Hotel areset forth in Exhibit E to this Agreement. The Permits are in full force and effect,Seller has received no notice of any violations thereof, and true and complete copies ofall of the Permits have been delivered to Purchaser.     (h) All Hotel Employees are employed by Seller or the Hotel’s property manager.There are no agreements relating to any representation, labor or collective bargainingagreement affecting the Hotel, and no Hotel Employees are employed under unionagreements, collective bargaining, written or oral employment agreements or similararrangements. Neither Seller nor to Seller’s knowledge, Seller’s property manager hasreceived any notice from any labor union or group of employees that such union or grouprepresents or believes or claims it represents or intends to represent any of the HotelEmployees. There are no current strikes or work stoppages at the Hotel nor, to Seller’sknowledge, has any such strike or work stoppage been threatened.     (i) Seller has received no notice of, and, to Seller’s knowledge, there are noviolations of laws, ordinances, orders or regulations (**“Laws”**) of governmental orquasi-governmental authorities with respect to the Property (including, withoutlimitation, those related to environmental, labor or employment matters) and the currentuse of the Property is in compliance with all zoning and land-use laws and ordinances.     (j) To Seller’s knowledge, except as set forth on Exhibit I attached hereto noasbestos or petroleum or any substances defined as hazardous materials or hazardouswastes under any applicable Laws are or have been used, stored, generated or released atthe Property.     (k) Except as set forth on Exhibit J attached hereto, there is no litigation,action, or proceeding pending or, to the best of Seller’s knowledge, threatened relatingto the Property or the transactions contemplated by this Agreement, including, but notlimited to, those alleging the violation of any Laws pertaining to employment oremployment practices or those alleging violation of the Americans withDisabilities Act, nor is the Hotel affected by any settlement agreement, consentdecree or other resolution to any prior litigation, action or proceeding.     (l) Seller has provided to Purchaser (i) true and complete copies of allbills for real estate and personal property taxes and assessments for the 2004 tax yearand the two immediately preceding tax years and (ii) a true and complete listof the current Hotel Employees together with a schedule setting forth the compensationand fringe benefits (including, but not limited to, benefit plans) accorded to suchHotel Employees.     (m) Seller has provided to Purchaser unaudited financial statements and STR reportsfor the 2000, 2001, 2002 and 2003 calendar years and year-to-date financial statementsfor the 2004 calendar year. All such statements for the Hotel are, and any financialstatements for later periods to be provided by Seller pursuant to this Agreement shallbe, true and correct and have, or will, accurately reflect in all material respects thefinancial condition of the Hotel for the applicable period. There have been no material
 

 
adverse changes in the financial condition of the Hotel since the date of the last suchstatement delivered to Purchaser prior to the execution of this Agreement.     (n) Seller owns good and marketable title to the Purchased Assets, subject only tothe Permitted Exceptions.     (o) Other than to Hilton pursuant to the Franchise Agreement, Seller has notgranted to any person or entity any options or other agreements of any kind, whereby anyperson or entity other than Purchaser will have acquired or will have any right toacquire title to all or any portion of the Purchased Assets.     (p) Seller has paid all taxes (including, without limitation, transient occupancy(bed) taxes), assessments and other governmental charges relating to the operation ofthe Hotel that were due and payable prior to the Effective Date.     (q) Other than the agreements disclosed in this Agreement, and to Seller’sknowledge, there are no agreements, written or oral, affecting the Property, which wouldbe binding on Purchaser following the Closing.     (r) Seller is not a “foreign person” as defined in the Internal Revenue Code of1986, as amended.     (s) Michael McGlone is President and Chief Operating Officer of Seller and PeterTrapolino is Vice President — Development of Seller. Mr. McGlone and Mr. Trapolino arethe individuals employed by Seller having supervisory responsibility for and control ofthe Hotel and are the employees of Seller having the most knowledge of the matters whichare the subject of the foregoing representations which are limited to Seller’sknowledge.     (t) Neither Seller nor any of its respective officers, directors, shareholders,partners, members or affiliates (including the indirect holders of equity interests inBorrower) is an entity or person: (i) that is listed in the Annex to, or is otherwisesubject to the provisions of Executive Order 13224 issued on September 24, 2001(“EO13224”); (ii) whose name appears on the United States Treasury Department’sOffice of Foreign Assets Control (“OFAC”) most current list of “SpecificallyDesignated National and Blocked Persons” (which list may be published from time to timein various mediums including, but not limited to, the OFAC website,http:www.treas.gov/ofac/t11sdn.pdf)(the “OFAC List”); (iii) who commits,threatens to commit or supports “terrorism”, as that term is defined in EO 13224; or(iv) who is otherwise affiliated with any entity or person listed above.     **5.02****Purchaser’s Representations and Warranties****.**Purchaser represents and warrants to Seller that:     (a) Purchaser is a duly organized and validly existing limited liability company,is in good standing in the State of Delaware and has full power to enter into thisAgreement and to perform its obligations under this Agreement.     (b) The execution and delivery of this Agreement has been duly authorized by allnecessary and appropriate limited liability company action of Purchaser. This Agreementconstitutes a legal, valid and binding obligation of Purchaser enforceable in accordancewith its terms, subject to bankruptcy, fraudulent conveyance, moratorium or othercreditor’s rights and limitations on equitable remedies.     **5.03****Knowledge Defined**. For purposes of this Agreement, **“knowledge”**means (a) withrespect to Seller, the actual knowledge of Michael McGlone and/or Peter Trapolino and/or, ifdifferent, the general manager of the Hotel, (provided that, in no event shall any such person haveany personal liability arising under this Agreement), without any duty of inquiry or investigationother than reasonable inquiries of the general manager and executive staff of the Property,
 

 
andexpressly excluding the knowledge of any other shareholder, partner, member, trustee, beneficiary,director, officer, manager, employee, agent or representative of Seller or any of its affiliates,and (b) with respect to Purchaser, (i) the actual knowledge of C.A. Anderson and expresslyexcluding the knowledge of any other shareholder, partner, member, trustee, beneficiary, director,officer, manager, employee, agent or representative of Purchaser or any of its Affiliates and (ii)any matter disclosed in any exhibits or schedules to this Agreement. For the purposes of thisdefinition, the term “knowledge” means, with respect to any person, the conscious awareness of suchperson at or prior to the time in question, but expressly excludes any constructive or impliedknowledge of such person.     **5.04****Survival of and Other Matters with respect to Seller’s Representations andWarranties**.     (a) The representations and warranties of Seller set forth in Section 5.01 as updated by thecertificate of Seller to be delivered to Purchaser at Closing, shall survive Closing for a periodof two hundred seventy (270) days. No claim for a breach of any representation or warranty ofSeller shall be actionable or payable (a) if the breach in question results from or is based on acondition, state of facts or other matter which was actually known to Purchaser prior to Closing,(b) unless the valid claims for all such breaches, if any, collectively aggregate more than FiftyThousand Dollars ($50,000), in which event the full amount of such claims shall be actionable, and(c) unless written notice containing a reasonable description of the nature of such breach shallhave been given by Purchaser to Seller prior to the expiration of said two hundred seventy (270)day period and an action shall have been commenced by Purchaser against Seller within ninety (90)days after the termination of the survival period provided for above in this Section 5.04 (exceptthat if Purchaser is seeking recovery from any third party as provided in the following sentencePurchaser shall only be required to provide written notice to Seller within the two hundred seventy(270) day period and shall not be required to commence an action against Seller to preserve itsclaims). As used herein, the term **“Cap”**shall mean the total aggregate amount of One Million FiveHundred Thousand Dollars ($1,500,000). In no event shall (i) Seller’s aggregate liability toPurchaser for breach of any representation or warranty of Seller in this Agreement (as modified byany certificate to be delivered by Seller at Closing) exceed the amount of the Cap, or (ii) Sellerbe liable for any consequential or punitive damages unless the same are payable to third parties.     (b) By executing and delivering the documents required of such party in Section 7.04 below,(i) Seller shall be deemed to have remade all of the foregoing representations and warranties ofSeller in Section 5.01 as of Closing and (ii) Purchaser shall be deemed to have made all of theforegoing representations and warranties of Purchaser in Section 5.02 as of Closing. Should any ofsuch representations and warranties of Seller be found to be incorrect prior to Closing, Sellershall attempt to cure the same by Closing. If Seller is unable to cure same by Closing, atPurchaser’s option the Closing shall be postponed until five (5) business days followingPurchaser’s receipt of proof satisfactory to Purchaser that such matters have been cured,provided, however, if Seller is unable to cure the same within thirty (30) days from the date ofnotice of the same, Purchaser shall be entitled either to waive the same and close thistransaction, exercise its rights pursuant to Article VI of this Agreement or to terminate thisAgreement. In the event the Purchaser elects to terminate this Agreement, EscrowAgent shall return the Earnest Money to Purchaser and neither party to this Agreement shallthereafter have any further rights or liabilities under this Agreement.     **5.05****Seller’s Covenants****.**Seller covenants and agrees with Purchaser that prior to theClosing:     (a) Seller will assist Purchaser and Purchaser’s agents, on or before Closing, inacquiring all information necessary to enable Purchaser’s agents and Seller’s agents tocompute the prorations described in Section 7.02 of this Agreement.     (b) Seller will not sell, exchange, assign, transfer, convey, lease or otherwisedispose of all or any part of the Purchased Assets or any interest therein except forFurnishings, Consumables and Expendables which are sold or consumed in the ordinarycourse of business.     (c) Seller will keep the Space Leases, the Hotel Contracts, the Existing FranchiseAgreement and the Permits in full force and effect, will pay all charges when duethereunder and will perform all of its material obligations thereunder.
 

 
     (d) Seller will keep the Purchased Assets free and clear of liens and encumbrancesother than the Permitted Exceptions and the lien of taxes not yet due and payable.     (e) Seller will not enter into any contracts, leases, licenses, easements or otheragreements relating to the Purchased Assets which will obligate Purchaser or be a chargeor lien against the Property, except those necessary to continue the operation of theHotel in the ordinary course of business and which are terminable by the owner of theProperty without penalty on thirty days notice.     (f) Seller will cause the Property to be operated and maintained in the manner inwhich it is being operated and maintained as of the date of this Agreement whichundertaking includes, but is not limited to, (i) maintaining Expendables, Consumablesand Furnishings in those quantities and at those levels present as of the Effective Dateand (y) with respect to Expendables, also not less than the average levels maintainedwith respect to each such Expendable over the five years previous to the Closing Date,(ii) entering into Bookings in the ordinary course of business, (iii) performing allrepairs and maintenance necessary to keep the Property in good repair, to comply withLaws and to maintain at least the same condition as exists on the Effective Date and(iv) keeping the Hotel staffed with Hotel Employees in accordance with Seller’s currentpractice.     (g) Seller shall permit Purchaser and its representatives, employees, contractorsand agents to enter upon and inspect the Property and perform such investigations of theProperty and all applicable Books and Records as Purchaser may from time to time deemdesirable. Purchaser and Purchaser’s agents and contractors shall have the right duringthe term of this Agreement to enter upon the Property at reasonable times and uponreasonable prior notice to Seller. Purchaser acknowledges and agrees that any and allinspections of the Property shall be conducted in a manner not unreasonably disruptiveto tenants, guests, or otherwise to the operation of the Property and shall be performedupon reasonable prior notice to Seller. In the event Purchaser desires to conduct anyphysically intrusive due diligence such as sampling of soils or drilling wells,Purchaser will request Seller’s prior consent thereto, which consent shall not beunreasonably withheld. Purchaser agrees to indemnify Seller and hold Seller, Seller’saffiliates, officers, directors, employees, agents and representatives harmless from andagainst any and all losses, costs, damages, claims or liabilities, including, withoutlimit, to mechanic’s and materialmen’s liens and attorneys fees arising out of or inconnection with the entry by Purchaser and/or any of Purchaser’s agents onto theProperty pursuant to this Section except to the extent the same arise from themisconduct or negligence of Seller or Seller’s representatives. Purchaser’s indemnityand hold harmless provisions pursuant to this Section shall survive the closing of thistransaction or earlier termination of this Agreement. In addition to the foregoing,Seller shall assist Purchaser and provide such other information as shall be required toenable an accounting firm ofPurchaser’s choosing to prepare audited financial statements of the Property forcalendar years 2000 through 2003, the cost of which shall be borne by Purchaser.     (h) Within twenty (20) days after the end of each calendar month until the ClosingDate, Seller shall provide to Purchaser financial statements and STR reports for suchmonth and on a year-to-date basis which statements shall be prepared in accordance witheither generally accepted accounting principles or the Uniform System of Accounts forHotels and Motels, and otherwise in form reasonably acceptable to Purchaser.     (i) Upon Purchaser’s request, Seller shall from time to time make available asenior representative of Seller and the general manager of the Hotel at a reasonabletime to meet with an asset manager of Purchaser to review the operations of the Hotel inreasonable detail     (j) Seller will promptly notify Purchaser of any matter arising prior to Closingwhich might materially and adversely affect the condition or operation of the Hotelincluding, without limitation, the commencement of any litigation or proceeding or anynotice of a violation of Laws issued by any governmental or quasi-governmentalauthority.
 

 
     (k) Seller will cooperate with Purchaser in all reasonable respects (which shallinclude, without limitation, supplying information known to Seller and execution of suchdocuments as may be legally required) in connection with the application for transfer ofany existing alcoholic beverage licenses held by or on behalf of Seller or its agent inconnection with its operation of the Hotel (collectively, the **“Liquor License”**) toPurchaser or Purchaser’s designee or Purchaser’s (or Purchaser’s designee’s) applicationfor a new Liquor License (as the case may be, the “**Liquor Application”**). Withoutlimiting the generality of the foregoing, Seller and either Purchaser or Purchaser’sdesignee shall, if required, open a separate escrow (the **“Liquor Escrow”**) with an escrowcompany selected by Purchaser and reasonably acceptable to Seller to effect the transferof the Liquor License and certain food and beverage inventory attendant to the alcoholicbeverage operation at the Hotel (collectively, **“Liquor License Property”**) with areasonable portion of the Purchase Price (not to exceed $20,000) designated asconsideration for transfer of the Liquor License Property. Seller shall satisfy throughthe Liquor Escrow all claims of creditors of Seller relating to the purchase and sale ofalcoholic beverages at the Hotel arising prior to the Cut-Off Time. Prior to Closing,Purchaser or Purchaser’s designee shall file with the Department of Alcoholic BeverageControl (**“ABC”**) an application for a temporary permit (**“Temporary License”**) allowingPurchaser to operate the Liquor License Property effective as of the Closing while thetransfer application for a permanent alcoholic beverage license or licenses (the**“Permanent License”**) is pending. To the extent required by the ABC, Seller shallsurrender the Liquor License to the ABC as of the Closing in accordance with the ABC’srules and execute all necessary forms required by the ABC for the Purchaser or thePurchaser’s designee to obtain a Temporary License. If a Temporary License is grantedto Purchaser or Purchaser’s designee, then as of the Closing Date and prior to theissuance of a Permanent License, Purchaser shall operate the alcoholic beverageoperations pursuant to the Temporary License in a lawful manner. Purchaser orPurchaser’s designee shall pay any application fees or other transfer costs required toeffectuate the transfer of the Liquor License, except that Seller and Purchaser shalleach pay one-half of the charges for the Liquor Escrow. If the Purchaser is unable toobtain the transfer of the Liquor License, or obtain a Temporary License, or obtain anew Permanent License prior to the Closing, then, on the Closing Date, Seller andPurchaser shall enter into an interim arrangement (the**“Interim Arrangement”**) whereby Seller shall operate the liquor concessions at the Hotel onbehalf of Purchaser pending the transfer or issuance of the Liquor License to Purchaserand Purchaser shall indemnify Seller against any liabilities incurred in such operation.Seller represents and warrants to Purchaser that it is unaware of any reason why the ABCshould deny the application to transfer the Liquor License or a Temporary License fromthe Seller to the Purchaser or the Purchaser’s designee. The provisions of this Section5.05(k) shall survive the Closing.     (l) Seller will promptly provide Purchaser with notice of any actual or proposedchange in the assessed value of the Property or any portion of the Property (includingany tentative or preliminary assessment) and of the institution or proposed institutionof any proceeding (whether formal, informal, judicialor administrative) relating to any such change or proposed change. Seller will nottake any action with respect to the contesting and/or resolution of the taxable assessedvalue of the Land and Improvements without the prior written consent of Purchaser, whichconsent shall not be unreasonably withheld.     (m) Seller shall not request or initiate any proceeding or other action to changeany zoning classification applicable to the Property or any other Law which governs theuse or occupancy of the Property.     (n) Seller shall prior to the Closing obtain an estoppel certificate, in the formand substance required by Purchaser’s lender and reasonably acceptable to Purchaser anddated no earlier than thirty (30) days prior to the Closing Date, from each tenant undera Space Lease and from any owner’s association to which the Property is subject.     (o) Seller shall within five (5) days after the Effective Date apply for, andthereafter diligently seek to obtain from Hilton, Hilton’s written waiver of itsexisting right to purchase the Property as set forth in the Existing FranchiseAgreement, and shall notify Purchaser in writing promptly upon Seller’s receipt of same,which notice shall contain a copy of said waiver.
 

 
     (p) Seller shall within ten days after the Effective Date deliver to Purchaser asupplement to Exhibits C and D listing, for each Space Lease and Hotel Contract setforth thereon, (i) a brief description of (x) the space demised under each such SpaceLease and (y) the services or materials provided under each suchHotel Contract, (ii) thedate on which the current term of such Space Lease or Hotel Contract expires, (iii) abrief description of any automatic renewal provisions in each such Space Lease or HotelContract and (iv) the current monthly rent payable under each such Space Lease and thecurrent payments due under each Hotel Contract (on a monthly or quarterly basis, asapplicable). To the extent any equipment lease is listed on Exhibit D and is notidentified as such on Exhibit D as attached hereto, such supplement shall specificallyidentify such equipment lease as an equipment lease.     **5.06****Inspection Period**. Purchaser and its representatives, employees, contractors andagents shall have a period from the Effective Date through the close of business on the date (or,if such date is not a business day, the next succeeding business day) forty-five (45) days afterthe Effective Date (the **“Inspection Period”**) within which to undertake such inspections andinvestigations of the Property (including, but not limited to, engineering and environmentalstudies, financial analysis, and feasibility studies) as Purchaser deems desirable to evaluate thefinancial and physical condition of the Property and such other matters that Purchaser may deemrelevant. If Purchaser shall, in its sole and absolute discretion, (x) determine that the PurchasedAssets or any matters related to the Purchased Assets and/or Purchaser’s acquisition thereof areunsatisfactory in any respect, and/or (y) otherwise decide not to acquire the Purchased Assets forany reason or no reason, then Purchaser may terminate this Agreement by written notice (the**“Termination Notice”**) given to Seller prior to the end of the Inspection Period. Upon the givingof the Termination Notice, this Agreement shall terminate, Escrow Agent shall return the EarnestMoney (less Fifty and no/100 Dollars ($50.00) to be disbursed to Seller as sole considerationhereunder) to Purchaser and neither party to this Agreement shall thereafter have any furtherrights or liabilities under this Agreement.     **5.07****Conditions Precedent to Purchaser’s Obligations****.**Purchaser’s obligations underthis Agreement are conditioned upon the satisfaction of the following conditions as of the ClosingDate:     (a) Purchaser shall not have terminated this Agreement pursuant to Section 5.06 orany other applicable provision of this Agreement.     (b) Seller’s representations and warranties set forth in this Agreement shallcontinue to be true and accurate in all material respects (provided, furthermore, andnotwithstanding any provision of this Agreement to the contrary, it shall be a conditionprecedent to Purchaser’s obligation to close the transactionsset forth herein that each representation and warranty of Seller which is limitedto or by Seller’s knowledge be true and correct as if it were not so limited).     (c) Seller shall have delivered all of the documents required under this Agreementand performed all of its obligations under this Agreement in all material respects.     (d) After payments made at Closing, there shall be no unpaid charges, judgments,debts, liabilities, claims, liens or obligations which burden the Property other thanthe Permitted Exceptions.     (e) The Property shall on the Closing Date be in the same condition as on the lastday of the Inspection Period except as attributable to ordinary wear and tear.     (f) There shall have been no material adverse change in the condition or operationsof the Hotel from the last day of the Inspection Period through the date of Closing(which change may include, but shall not be limited to, the existence of violation ofany Laws or the revocation or suspension of any Permit or the right to operate the Hotelor any of its facilities).     (g) Hilton shall have waived in writing its existing right to purchase the Propertyas set forth in the Existing Franchise Agreement and Purchaser shall have either (i)obtained Hilton’s consent to the assumption by Purchaser of, and shall have assumed, theExisting Franchise Agreement, or (ii) entered into a franchise or license agreement withHilton for the Hotel, such assumption or agreement to be on
 

 
terms satisfactory toPurchaser in its sole discretion. In no event shall Purchaser be required to assume orhave any liability or obligation under the Existing Franchise Agreement for (x) anyfranchise or other fees under the Existing Franchise Agreement accrued and unpaid withrespect to all periods on or prior to the Closing Date or (y) with respect to anymonetary or other default under the Existing Franchise Agreement, nor shall Purchaser berequired to agree to any amendment of the Existing Franchise Agreement or to any newfranchise agreement with Hilton, or to any capital or other improvements requested orrequired by Hilton in connection with such assumption or new franchise agreement.     (h) Purchaser shall have obtained the transfer or the issuance of the LiquorLicense or Seller and Purchaser shall have entered into the Interim Arrangement.The conditions precedent set forth in this Section 5.07 are solely for the benefit of Purchaser andmay be waived only by Purchaser, which waiver may be granted or withheld by Purchaser in its soleand absolute discretion. Without limiting and without prejudice to any of Purchaser’s other rightsor remedies under this Agreement in the event any such failure of condition is the result of orarises out of Seller’s default under this Agreement, if any condition precedent to Purchaser’sobligations under this Agreement has not been satisfied as of the Closing Date or waived byPurchaser, then Purchaser shall be entitled in its sole and absolute discretion to terminate thisAgreement by giving Seller and Escrow Agent written notice to such effect, whereupon Escrow Agentshall return the Earnest Money to Purchaser and the parties shall thereafter have no further rightsor liabilities under this Agreement.     **5.08****Conditions Precedent to Seller’s Obligations**. Seller’s obligations under thisAgreement are conditioned upon the satisfaction of the following conditions as of the Closing Date:     (a) Purchaser’s representations and warranties set forth in this Agreement shallcontinue to be true and accurate in all material respects.     (b) Purchaser shall have performed all of its obligations under this Agreement inall material respects.     (c) Hilton shall have waived in writing its existing right to purchase the Propertyas set forth in the Existing Franchise Agreement and Purchaser shall have either (i)obtained Hilton’s consent to theassumption by Purchaser of, and shall have assumed, the Existing FranchiseAgreement, or (ii) entered into a franchise or license agreement with Hilton for theHotel, such agreement to be on terms satisfactory to Purchaser.The conditions precedent set forth in this Section 5.08 are solely for the benefit of Seller andmay be waived only by Seller, which waiver may be granted or withheld by Seller in its sole andabsolute discretion. Without limiting and without prejudice to any of Seller’s other rights orremedies under this Agreement in the event any such failure of condition is the result of or arisesout of Purchaser’s default under this Agreement, if any condition precedent to Seller’s obligationsunder this Agreement has not been satisfied as of the Closing Date or waived by Seller, then Sellershall be entitled in its sole and absolute discretion to terminate this Agreement by givingPurchaser and Escrow Agent written notice to such effect, whereupon Escrow Agent shall return theEarnest Money to Purchaser and the parties shall thereafter have no further rights or liabilitiesunder this Agreement.**VI.****Remedies**     **6.01****Seller’s Remedies** IF PURCHASER DEFAULTS UNDER THIS AGREEMENT OR OTHERWISE FAILSTO CLOSE THE TRANSACTIONS SET FORTH IN THIS AGREEMENT, FOR ANY REASON EXCEPT (A) THE FAILURE OF ANYCONDITION PRECEDENT TO PURCHASER’S OBLIGATIONS UNDER THIS AGREEMENT OR (B) PURCHASER’S TERMINATIONOF THIS AGREEMENT IN ACCORDANCE WITH ITS TERMS, SELLER SHALL BE ENTITLED AS ITS SOLE REMEDY UNDERTHIS AGREEMENT TO TERMINATE
 

 
THIS AGREEMENT AND RECOVER THE EARNEST MONEY (IN ADDITION TO ATTORNEYS’FEES PURSUANT TO SECTION 6.03 BELOW) AS LIQUIDATED DAMAGES AND NOT AS A PENALTY, IN FULLSATISFACTION OF ANY CLAIMS AGAINST PURCHASER UNDER THIS AGREEMENT. IN CONNECTION THEREWITH, SELLERWAIVES ITS RIGHT TO SEEK SPECIFIC PERFORMANCE OF THIS AGREEMENT FROM PURCHASER. SELLER ANDPURCHASER AGREE THAT THE SELLER’S DAMAGES RESULTING FROM PURCHASER’S DEFAULT ARE DIFFICULT TODETERMINE AND THE AMOUNT OF THE EARNEST MONEY IS A FAIR ESTIMATE OF THOSE DAMAGES. EACH PARTYHEREBY WAIVES ANY AND ALL RIGHTS TO CONTEST THE VALIDITY OF THE FOREGOING LIQUIDATED DAMAGESPROVISIONS FOR ANY REASON WHATSOEVER, INCLUDING, BUT NOT LIMITED TO, SUCH PROVISION BEINGUNREASONABLE UNDER CIRCUMSTANCES EXISTING ON THE EFFECTIVE DATE OR AT THE TIME OF DEFAULT. THEPAYMENT OF SUCH AMOUNT AS LIQUIDATED DAMAGES IS NOT INTENDED AS A FORFEITURE OR PENALTY WITHIN THEMEANING OF CALIFORNIA CIVIL CODE SECTIONS 3275 OR 3369, BUT IS INTENDED TO CONSTITUTE LIQUIDATEDDAMAGES TO SELLER PURSUANT TO CALIFORNIA CIVIL CODE SECTIONS 1671, 1676 AND 1677.INITIALS:           SELLER                               PURCHASER                         **6.02****Purchaser’s Remedies****.**If Seller fails to perform its obligations under thisAgreement for any reason except the failure of any condition precedent to Seller’s obligationsunder this Agreement, then Purchaser’s sole remedies shall be: (a) to terminate this Agreement bygiving Seller written notice of such election prior to or at Closing whereupon (i) the Escrow Agentshall promptly return to Purchaser the Earnest Money and (ii) Seller shall pay to Purchaser ondemand all out-of-pocket costs (including, but not limited to, due diligence costs and reasonableattorneys’ fees) , incurred by Purchaser in connection with this Agreement and the transactionscontemplated by this Agreement (provided, however, that Seller shall not be required to pay morethan $85,000 pursuant to this clause 6.02(a)(ii)); (b) to waive the default and close; or (c) toenforce specific performance of this Agreement, provided Purchaser initiates such specificperformance action within 60 days from the scheduled date of closing (as the same may have beenadjusted as permitted by this Agreement).     **6.03****Attorney’s Fees****.**In the event either party hereto is required to employ anattorney because of the other party’s default, then the defaulting party shall pay thenondefaulting party’s reasonable attorney’s fees incurred in the enforcement of this Agreement.**VII.****Closing Matters**     **7.01****Closing Date****.**The delivery of the conveyancing instruments with respect to thePurchased Assets and other documents required hereunder (the **“Closing”**) shall be held at the TitleCompany’s offices or by mail, or through escrow with the Escrow Agent, on the date forty-five (45)days after the expiration of the Inspection Period (provided that if such date is not a businessday then the Closing Date shall be the next succeeding business day) (the **“Closing Date**”), or suchearlier date as may be agreed to by Seller and Purchaser in their sole and absolute discretion.     **7.02****Adjustment and Prorations**. The matters and items set forth below shall beapportioned between Seller and Purchaser or, where applicable, credited in total to a particularparty:     (a) Taxes. All real and personal property taxes and special assessments,if any, whether payable in installments or not, shall be prorated as of the Cut-OffTime. If such taxes for the tax year in which the Closing occurs have not been finallydetermined on the Closing Date, then such taxes shall be prorated on an estimated basisusing the most current information available. When such taxes have been finallydetermined, the parties shall recalculate such prorations and any amount payable bySeller or Purchaser shall be paid to the other party within fifteen days after suchtaxes are finally determined.
 

 
     (b) Room Rentals. One-half (50%) of the room rentals attributable to thenight prior to the Closing Date shall be the property of Seller and the remainingone-half (50%) shall be the property of Purchaser. Room rentals attributable to anynight prior to the night prior to the Closing Date shall be the property of Seller.     (c) Reservation Deposits. Prepaid and unearned reservation deposits andother items prepaid by guests of the Hotel shall be transferred to Purchaser at theClosing.     (d) Utility Charges. Utility charges for telephone, gas, electricity,sewer, water and other services shall not be prorated to the extent that Seller can makearrangements for the rendering of final bills based on meter readings as of the Cut-OffTime. Seller shall be responsible for the payment at the Closing of all bills forutility charges up to and including the Cut-Off Time. To the extent that utility billscannot be rendered as of the Closing Date, such charges for the period through theCut-Off Time shall be prorated as of the Cut-Off Time based upon the most recentavailable bills and readjusted on the basis of the actual bills as and when received.Any utility deposits shall be either returned to Seller or transferred to Purchaser andcredited to Seller.     (e) Operating Expenses and Trade Accounts. Seller shall be responsible forall operating expenses and trade accounts of the Property (including charges and feespayable under the Hotel Contracts) up to and including the Cut-Off Time. To the extentthe amounts of such items are then known, Seller shall pay such items at Closing andshall pay the balance of such amounts in the ordinary course of business but in no eventlater than 45 days after the Closing Date. Seller agrees to indemnify and holdPurchaser harmless for and against any such amounts. Purchaser shall assumeresponsibility for purchase orders made by Seller in the ordinary course of business forExpendables or Consumables not delivered to the Hotel as of the Closing Date.     (f) Food, Beverage and Other Income. Revenues from food, beverage andbanquet services, room service, public room revenues, health club revenues and otherservices rendered to guests of the Hotel shall be prorated as of the Cut-Off Time, if,as and when collected, provided that with respect to food, beverage and banquetservices, such revenues shall be prorated as of the end of the employee shift on thenight preceding the Closing.     (g) Rents. All rentals under the Space Leases (including fixed rents andcharges in respect of electricity, operating expenses and taxes) shall be prorated as ofthe Cut-Off Time if, as and when collected. Payments from tenants for electricity,operating expenses and taxes which are billed to tenants in arrears or on an estimatedbasis shall be prorated on such basis and readjusted if, as and when such amounts arefinally determined and collected.     (h) Employees. Wages and fringe benefits (including, but not limited to,accrued vacation pay) of Hotel Employees shall be paid or prorated as provided inSection 7.07.     (i) Security Deposits. Any security deposits under the Space Leases shallbe transferred to Purchaser at the Closing or credited against the Purchase Price.     (j) Cash. All cash on hand in house banks on the morning of the ClosingDate shall become the property of Purchaser and the amount thereof shall be credited toSeller.     (k) Ledger and other receivables. All accounts receivable attributable toguests in the Hotel on the night preceding the Closing (the **“Ledger”**) shall be proratedas provided in this Agreement, Seller’s share shall be credited to Seller and the Ledgershall become the property of Purchaser. All other accounts receivable that are theproperty of Seller under this Agreement shall be set forth in a schedule on the ClosingDate and shall remain the property of Seller. Purchaser shall have no obligation tocollect such accounts receivable, but shall cooperate with Seller, at Seller’s cost, inreasonable respects in connection
 

 
with any collection efforts. If any receivables whichare the property of Seller under this Agreement shall be collected by Purchaser,Purchaser shall promptly remit the same to Seller.     (l) The prepaid expenses paid by Seller set forth on Exhibit H attached heretoshall be prorated as of the Cut-Off Time and Seller shall receive a credit for theportion of said expenses which cover periods after the Cut-Off Time.     **7.03****Guest Property in Seller’s Possession on Closing Date****.**Property of guests of theHotel in Seller’s care, possession or control (excluding that in guest rooms) on the Closing Dateshall be handled in the following manner:     (a) Safe Deposit Boxes. On the Closing Date, Seller shall cause notice tobe sent to all guests of the Hotel who have safe deposit boxes advising them of thepending sale of the Property and requesting the removal and verification of the contentsof such safe deposit boxes within three days after the Closing Date. Seller may have arepresentative present at the Hotel during such three-day period for the purpose ofviewing such removal and verification. Boxes of guests not responding to the writtennotice shall be listed at the end of such three day period. Such boxes shall be openedon the following day in the presence of representatives of Seller and Purchaser to beagreed upon between Seller and Purchaser and the contents thereof shall be recorded.Any property contained in the safe deposit boxes and so recorded and thereafterremaining in the hands of Purchaser shall be the responsibility of Purchaser; andPurchaser hereby agrees to indemnify and save and hold Seller harmless from and againstany claim or obligation arising out of or with respect to such property.     (b) Baggage Inventory. All guest baggage checked and left in thepossession, care and control of Seller shall be listed in an inventory to be prepared induplicate and signed by Seller’s and Purchaser’s representatives on the Closing Date.Purchaser shall be responsible from and after the ClosingDate for all baggage listed in inventory, and Purchaser hereby agrees to indemnifyand save and hold Seller harmless from and against any claim arising out of or withrespect to the baggage listed in the inventory.     (c) Other Property. All other guest property left in the possession, careor control of Seller prior to the Closing Date shall be returned by Seller to guestsprior to the Closing Date and if not so returned prior to the Closing Date shall be thesole responsibility of Seller subsequent to the Closing Date.     **7.04****Closing Documents.**     (a) At Closing, Seller shall deliver or cause to be delivered to Purchaser thefollowing:     (i) a grant deed (or local equivalent) with covenant againstgrantor’s acts conveying the fee estate in the Property to Purchasersubject only to the Permitted Exceptions.     (ii) an owner’s policy of title insurance issued by the Title Companyin the amount of the Purchase Price meeting the requirements of thecommitment as provided in Article IV, and containing such affirmativecoverage and endorsements as Purchaser shall reasonably request.     (iii) a warranty bill of sale transferring to Purchaser all of theFurnishings, Consumables, Expendables, and other tangible personal propertyfree of all encumbrances except for the Permitted Exceptions.     (iv) an assignment conveying and transferring to Purchaser all of theBookings, Books and Records, Space Leases, assignable Permits, HotelContracts (to the extent set forth on Exhibit D), Miscellaneous PersonalProperty and Warranties containing a provision pursuant to which Sellershall indemnify Purchaser with respect to matters arising thereunder priorto the Closing Date.
 

 
     (v) an appropriate instrument executed by Seller and other necessaryparties pursuant to which any existing management agreement will beterminated as of the Cut-off Time.     (vi) possession of the Property.     (vii) a certified copy of such corporate or partnership authorizations,approvals and incumbencies of Seller as Purchaser or the Title Company shallreasonably require.     (viii) a FIRPTA Affidavit in form required by the Internal RevenueService.     (ix) all Books and Records relating to the Property and the Hotel inSeller’s possession.     (x) any and all plans and specifications for the Improvements on theProperty in Seller’s possession.     (xi) the certificate of occupancy with respect to the Property.     (xii) such notices of the sale to third parties as may be reasonablyrequested by the Purchaser.     (xiii) such affidavits, indemnities and related matters as the TitleCompany may reasonably request including without limitation such affidavitsand indemnities as may be required to permit the Title Company to delete anyexceptions for mechanic’s liens.     (xiv) tax clearance certificates from (i) the California EmploymentDevelopment Department, with respect to income tax withholding, disability,and unemployment compensation premiums, and (ii) the California State Boardof Equalization, with respect to sales taxes.     (xv) such documents and instruments as may be required or reasonablydesirable under California law to effectuate the Liquor Escrow, all to be inform reasonably acceptable to Seller and Purchaser.     (xvi) such transfer and sales tax returns as may be required by law tobe executed by Seller.     (b) Purchaser shall deliver or cause to be delivered to Seller the following:     (i) the balance of the Purchase Price.     (ii) such corporate or partnership authorizations, approvals andincumbencies as Seller or the Title Company shall reasonably require.     (iii) an assumption of the obligations of Seller from and after theClosing under the Bookings, the Space Leases, and Hotel Contracts containinga provision whereby Purchaser shall indemnify Seller with respect to mattersarising thereunder after the Closing Date.
 

 
     (iv) such documents and instruments as may be required or reasonablydesirable under California law to effectuate the Liquor Escrow, all to be inform reasonably acceptable to Seller and Purchaser.     (v) such transfer and sales tax returns as may be required by law to beexecuted by Purchaser.     **7.05****Closing Costs.**     (a) Purchaser shall pay (i) the premiums for the Title Policy, (ii) the cost of theSurvey, (iii) the costs of its due diligence investigation of the Purchased Assets, (iv)all amounts incurred in connection with the issuance of a new franchise agreement orlicense agreement for the Hotel, including, but not limited to, application fees,transfer fees, costs of implementing a property improvement plan and (but withoutlimiting any of the provisions of Section 5.07(g) above) any termination fees payable toHilton under the Existing Franchise Agreement in connection with a termination of theExisting Franchise Agreement, (v) any costs to obtain the Liquor License, (vi) salestaxes imposed in connection with any items of personal property, (vii) one-half of theescrow fees, if any, of the Escrow Agent and (vi) the fees and disbursements ofPurchaser’s attorneys.     (b) Seller shall pay (i) any county or city transfer taxes, deed stamps, recordingfees and the like imposed in connection with the conveyance of the Property, (ii) anycosts of terminating any property management agreement affecting the Hotel, (iii)one-half of the escrow fees, if any, of the Escrow Agent and (iv) the fees anddisbursements of Seller’s attorneys in connection with this transaction. Any otherclosing cost not specifically allocated by this Agreement shall be allocated inaccordance with closing customs for similar properties in Contra Costa County,California.     (c) The provisions of this Section 7.05 shall survive the Closing or anytermination of this Agreement.     **7.06****Real Estate Commissions****.**Seller and Purchaser each represent and warrant to theother that it has not dealt with any broker in the negotiation of this transaction. Each partyagrees to and does hereby indemnify and hold the other harmless against the payment of anybrokerage commission to any person or entity claiming by, through or under Seller or Purchaser, asapplicable.     **7.07****Staff****.**Seller shall terminate or arrange for the termination of all HotelEmployees as of the Closing Date and shall pay all wages and fringe benefits, including, but notlimited to, accrued vacation and payroll taxes, through the Closing Date. Purchaser shall hire,subject to its standard interview and qualification procedures, criteria and staffing guidelines,the Hotel Employees employed in non-managerial capacities, which such Hotel Employees shall at orin connection with the Closing be offered the standard health and fringe benefit package providedby Interstate Management Company, as operator of the Hotel after the Closing, to the majority ofits other hotel employees in the area of the Hotel. If Purchaser or its management company shallrehire any of such Hotel Employees pursuant to the foregoing sentence or otherwise, then such wagesand fringe benefits shall be apportioned as of the Cut-off Time. Seller will indemnify and holdPurchaser harmless from and against any loss, damage, liability, claim, cost or expense (including,without limitation, reasonable attorney’s fees) that may be incurred by, or asserted against,Purchaser after Closing which involves any matter relating to a past or present Hotel Employeeconcerning acts or omissions occurring prior to the Closing Date. Notwithstanding the foregoing,Purchaser agrees to indemnify and hold Seller harmless from and against any loss, damage,liability, claim, cost or expense (including, without limitation, reasonable attorney’s fees) thatmay be incurred by, or asserted against, Seller arising out of or relating to Purchaser’s orSeller’s failure, if any, to comply with the Worker Adjustment Retraining and Notification Act (the“**WARN Act**”) with respect to the Hotel Employees and arising out of or in connection with thetransactions contemplated by this Agreement. Seller agrees not to give any termination noticesunder the WARN Act to its Hotel Employees without the prior written consent of Purchaser, whichconsent may be withheld in Purchaser’s sole and absolute discretion.
 

 
     **7.08****Indemnities****.**(a) Purchaser shall indemnify, defend and hold Sellerharmless from any and all actual costs, loss, damages (excluding consequential and punitivedamages) or expenses (including without limitation reasonable attorneys fees) incurred by Sellerwith respect to the breach by Purchaser of any provision of this Agreement which survives theClosing and, except as may be the obligation of Seller pursuant to an express provision of thisAgreement, the existence, use, ownership, occupancy, operation and/or maintenance of the Propertyarising from acts, commissions, omissions, occurrences or other matters that occur from and afterthe Closing.     (b) From and after the Closing, Seller shall indemnify, defend and hold Purchaser harmlessfrom any and all actual costs, loss, damages or expenses (including without limitation reasonableattorneys fees) incurred by or asserted against Purchaser with respect to or arising out of (i)any amounts due and owing to Purchaser pursuant to Section 7.02 above, (ii) any physical injury ordeath caused to any person, or damage to property of unaffiliated third parties, which such injury,death or damage occurred prior to the Closing Date in or about the Property, (iii) (subject to theapplicable limitations on Seller’s liability set forth in Section 5.04(a) above, including withoutlimitation the Cap, any breach of any representation or warranty of Seller set forth in thisAgreement, and/or (iv) any litigation arising with respect to matters or occurrences on oraffecting the Real Property, which first arose, occurred or were asserted or threatened prior tothe Closing Date, including without limitation those matters set forth on Exhibit J attachedhereto. The provisions of this Section shall survive the Closing.     **7.09****Survival****.**The provisions of Article VII shall survive the Closing.**VIII.****Condemnation and Risk of Loss**     **8.01****Condemnation****.**If, prior to Closing, any governmental authority or other entityhaving condemnation authority shall institute an eminent domain proceeding or take any stepspreliminary thereto (including the giving of any direct or indirect notice of intent to institutesuch proceedings) with regard to the Property, and the same is not dismissed on or before ten (10)days prior to Closing, Purchaser shall be entitled either to terminate this Agreement upon writtennotice to Seller or to waive such right of termination and receive all such condemnation proceedsor an assignment thereof at the Closing. In the event Purchaser elects to terminate this Agreementunder this Section 8.01, Escrow Agent shall promptly return to Purchaser the Earnest Money andneither party to this Agreement shall thereafter have any further rights or obligations hereunder.     **8.02****Risk of Loss****.**Until Closing, Seller shall bear the risk of loss should there bedamage to any of the Improvements by fire or other casualty. If prior to the Closing any of theimprovements shall be damaged by fire or other casualty, Seller shall take all action necessary topreserve and protect the Improvements from further loss or damage, and within ten (10) businessdays after such loss deliver to Purchaser the following items (collectively **“Casualty LossInformation”**): (a) copies of all casualty and business interruption policies relating to theProperty; (b) the names, addresses and telephone numbers of the adjustors assigned to adjust theloss; (c) letters addressed to each insurance company issuing a policy covering such loss andexecuted by Seller authorizing said company and its adjustors to discuss all matters relating tosuch loss with purchaser, its agents and attorneys; and (d) a detailed written description of thedamages incurred and an estimate of the cost of restoration. If the Improvements suffer materialdamage by a casualty, which, for the purpose of this Agreement, shall mean damage in excess of$1,000,000 or damage of a lesser amount to any area of the Hotel necessary for the day to dayoperation of the Hotel that cannot reasonably be expected to be repaired within ten business days,Purchaser may within five business days after delivery of the Casualty Loss Information either:     (a) terminate this Agreement by delivering written notice of same to Seller, inwhich event Escrow Agent shall promptly return to Purchaser the Earnest Money andneither party to this Agreement shall thereafter have any further rights or obligationshereunder; or
 

 
     (b) waive its right of termination, by delivering written notice of same to Seller,and proceed to close this transaction in accordance with the terms hereof.At Closing, (i) all insurance proceeds received prior to Closing shall be delivered toPurchaser at Closing, (ii) Purchaser and Seller shall each notify all appropriateinsurance companies of Purchaser’s interest in the insurance proceeds, (iii) all casualtyinsurance proceeds payable as a result of the loss and Purchaser’s pro rata share of any rental orbusiness loss proceeds shall be assigned to Purchaser at Closing and Purchaser as a conditionprecedent to its obligations to close hereunder in such event shall have received the writtenrecognition of and consent to such assignment (as well as to any assignment of such proceeds fromPurchaser to Purchaser’s lender), from the applicable insurance company or companies, in formand content reasonably acceptable to Purchaser and acceptable to Purchaser’s lender, and(iv) Purchaser shall receive a credit against the Purchase Price in the amount of anyapplicable deductible or self-insured amounts.**IX.****Miscellaneous**     **9.01****Entire Agreement****.**This Agreement contains the entire agreement of the parties hereto. There are no otheragreements, oral or written, and this Agreement can be amended only by written agreement signed bySeller and Purchaser.     **9.02****Binding Effect; Assignment****.**This Agreement shall inure to the benefit of and bebinding upon the heirs, personal representatives, successors and assigns of each of the parties tothis Agreement. Purchaser may assign its rights under this Agreement without Seller’s consent to(i) any successor of Purchaser or its direct or indirect parent entity or entities by merger,reorganization or sale of assets; (ii) any entity directly or indirectly controlling, controlled byor under common control with Purchaser or such successor or entity, (iii) any partnership orlimited liability company in which Purchaser or Interstate Operating Company, L.P. (“InterstateOP”), or any entity directly or indirectly controlling, controlled by or under common control withPurchaser or Interstate OP, is a partner or limited liability company member, (iv) any entity inwhich Purchaser, or any entity which is a permitted assignee under any of the foregoing clauses(i), (ii) or (iii), owns, directly or indirectly, an economic interest, or (v) any other entityprovided that such entity enters into (x) a sublease of the entire Property with an entity to whomthis Agreement could have been assigned under clauses (i), (ii) or (iii) above and/or (y) amanagement agreement with respect to the entire Property with Interstate Management Company, LLC orits successors or assigns; provided, however, that no such assignment shall relieve Purchaser ofits obligations hereunder. Except as set forth in the foregoing sentence, Purchaser may assign itsrights under this Agreement to any other entity only with the prior consent of Seller which shallnot be unreasonably withheld or delayed.     **9.03****Notices****.**Any notice, communication, request, reply or advice (collectively,“Notice”) provided for or permitted by this Agreement to be made or accepted by either party mustbe in writing except as otherwise provided in this Agreement. Written Notice shall be delivered byovernight courier or by facsimile transmission. Notice by overnight courier shall be effective one(1) business day after deposit with the courier service. Notice given by facsimile transmissionshall be effective on the business date delivered. For the purposes of Notice, the addresses ofthe parties shall be:
 

 
           Seller: Hanford Hotels, LLC                                      Attention:                        with copy to: Greenberg Traurig, LLP                                      Attn:                 Fax No.:                        Purchaser: 4501 N. Fairfax Boulevard      Arlington, VA 22203      Attn: Christopher H. Bennett, Esq.      Fax No.: 703-387-3389             with copy to: DeCampo, Diamond & Ash                                      Attn:                 Fax No.:             The parties shall have the right from time to time to change their respective addresses for noticeby at least five days’ written notice to the other party.     **9.04****Governing Law****.**This Agreement shall be construed in accordance with the laws of the State of California.     **9.05****Section Headings****.**The section headings contained in this Agreement are forconvenience only and shall in no way enlarge or limit the scope or meaning of the various andseveral sections of this Agreement.     **9.06****Obligations****.**To the extent necessary to carry out the terms and provisions ofthis Agreement, the terms, conditions, warranties, representations, obligations, indemnities andrights set forth in this Agreement shall not be terminated at the time of Closing, nor will theymerge into the various documents executed and delivered at the time of Closing.     **9.07****Counterparts; Facsimile Transmission****.**This Agreement may be executed in two ormore counterparts, each of which shall be deemed an original but all of which together shallconstitute one and the same instrument. Executed counterparts of this Agreement exchanged byfacsimile transmission shall be fully enforceable.     **9.08****No Third-Party Beneficiaries**. Seller and Purchaser agree that there are no thirdparties who are intended to benefit from or who are entitled to rely on any of the provisions ofthis Agreement. No third party shall be entitled to assert any claims or to enforce any rightswhatsoever pursuant to this Agreement. The covenants and agreements provided in this Agreement aresolely for the benefit of Seller and Purchaser and their permitted successors and assignsrespectively.     **9.09****Contract Construction**. In the event of litigation between the parties hereto thisAgreement shall not be construed against any party on the basis of which party’s counsel draftedthis Agreement.     **9.10****Saturdays, Sundays, Legal Holidays**. If the time period by which any right,option, or election provided under this Agreement must be exercised or by which any acts orpayments required hereunder must be performed or paid, or by which the Closing must be held,expires on a Saturday, Sunday, legal or bank holiday, then such time period shall be automaticallyextended to the next regularly scheduled business day.
 

 
**9.11****Confidentiality.**     (a) Purchaser and Seller agree that any materials provided by Seller in the courseof Purchaser’s investigations of the Property, other than materials which are otherwiseavailable to the public, shall be treated as confidential information by Purchaser andits agents, employees and representatives, and shall not be disclosed by Purchaser orsuch parties, except disclosures required by law to be made to Purchaser’s lenders (orprospective lenders), investors (or prospective investors), underwriters, accountants,attorneys, engineers and other professionals who need to know such information inconnection with making a loan to, sponsoring an offering for or otherwise advisingPurchaser, or as may be required by law, litigation or court order, or in connectionwith the offering of securities or by any applicable rule, regulation or requirement ofthe New York Stock Exchange. Purchaser may however make appropriate disclosures to itsinvestors and lenders and to its and their respective attorneys, accountants andconsultants engaged in connection with this transaction or to such other persons orentities to which disclosure is legally required.     (b) If Purchaser does not acquire the Property for any reason whatsoever, Purchasershall deliver to Seller promptly upon demand at no cost to Seller, all materials anddocuments previously obtained by Purchaser from Seller (with no retention by Purchaserof copies of any such materials and documents).     (c) Prior to the Closing, neither party shall, without the prior written consent ofthe other party (which consent shall not be unreasonably withheld), issue any pressrelease or other public statement (except such statements as may be required by law) inconnection with the transactions contemplated hereby. From and after the Closing, theparties may issue such a press release or other public statement provided that the samedoes not describe the economic terms of this transaction except to the extent requiredby law.     (d) Each party is authorized to disclose the tax treatment and tax structure of thetransactions set forth in this Agreement.     (e) Notwithstanding any provision in this Agreement to the contrary, this Sectionshall survive the expiration or termination of this Agreement for one (1) year or, ifthe Closing shall occur, shall expire and terminate as of the Closing Date except forthe provisions of Section 9.11(c) and (d) above, which shall survive the Closing.     **9.12****Bulk Transfers****.**Purchaser and Seller specifically waive compliance withCalifornia Uniform Commercial Code, Sections 6101, et seq., commonly referred to as the UniformCommercial Code — Bulk Transfers, with any similar provision under the laws of the State ofCalifornia and with any similar provisions under the in which the Property is located. In theevent that such waiver is ineffective, Seller shall indemnify Buyer for any claims made bycreditors under the applicable bulk sales laws relating solely to any pre-Closing paymentobligations to such creditors and only in the amount of the payments due such creditors. Theprovisions of this Section 9.12 shall survive the Closing.     **IN WITNESS WHEREOF,**Seller and Purchaser have executed this Agreement as of the date firstwritten above.       **SELLER:**             **HANFORD HOTELS, INC.**, a California limited liability company         By: /s/  WILLIAM A. CAINE, JR.           Name: William A. Caine, Jr.    Title: Executive Vice President         **PURCHASER:**     **INTERSTATE CONCORD, LLC**, a Delaware limited liability company     By: /s/  CHRISTOPHER L.BENNETT     Name: Christopher L. Bennett  Title: Senior Vice President and GeneralCounsel
 

 
**FIRSTAMENDMENT TO AGREEMENT OF SALE AND PURCHASE**     **THISFIRST AGREEMENT TO AGREEMENT OF SALE AND PURCHASE** (this “Amendment”), dated as ofDecember 27, 2004 (the “Effective Date”), is made by and between HANFORD HOTELS, LLC, aCalifornia limited liability company, having an address at 4 Corporate Plaza Drive, Suite102, Newport Beach, CA 92660 (“Seller”), and INTERSTATE CONCORD, LLC, a Delaware limitedliability company having an address c/o Interstate Hotels & Resorts, Inc., 4501 N. FairfaxDrive, Arlington, VA 22203 (“Purchaser”).     WHEREAS, Seller and Purchaser have entered into that certain Agreement of Sale andPurchase (the “Purchase Agreement”), dated as of November 12, 2004, with respect to certainproperty more particularly set forth therein;     WHEREAS, the Inspection Period (as defined in the Purchase Agreement) is to terminate onDecember 27, 2004;     WHEREAS, Purchaser is satisfied with (i) the physical and environmental condition of theProperty as of the date hereof, (ii) the zoning of the Property as of the date hereof, (iii)the Hotel Contracts set forth on Exhibit D of the Purchase Agreement (as revised pursuant to aspreadsheet attached to an e-mail from William Caine to C,A. Anderson dated November 18, 2004)and (iv) the Permits set forth on Exhibit E of the Purchase Agreement;     WHEREAS, Purchaser among other things (1) has not yet obtained financing for thetransactions set forth in the Purchase Agreement on terms satisfactory to Purchaser, (2) hasnot yet agreed with Hilton (as defined in the Purchase Agreement) on a product improvementplan for the Property, and (3) has not finalized its announced Interstate Investors Fund, Inc.or had a first closing thereof, and for those and other reasons will terminate the PurchaseAgreement on or prior to December 27, 2004 if the Inspection Period is not extended; and     WHEREAS, Seller is willing to extend the Inspection Period for the Extension Payment asprovided herein; and     WHEREAS, Purchaser and Seller now desire to amend the Purchase Agreement on the terms andconditions more particularly set forth herein;     NOW, THEREFORE, in consideration of Ten Dollars ($10.00) and other good andvaluable consideration, and the payment by Purchaser of the Extension Payment (asdefined below), the receipt and sufficiency of which are hereby acknowledged, Sellerand Purchaser hereby amend the Purchase Agreement as follows:     1. In consideration of the Extension Payment, the Inspection Period (as such term isdefined in the Purchase Agreement; any capitalized term used herein and not otherwisedefinedherein having the meaning given to such term in the Purchase Agreement) is herebyextendedthrough the close of business on January 24, 2005,     2, Section 7,01 of the Purchase Agreement is deleted in its entirety and thefollowing Section 7.01 substituted therefore:     “7.01 Closing Date, The delivery of the conveyancing instruments with respect tothe Purchased Assets and other documents required hereunder (the “Closing”) shall beheld at the Title Company’s offices or by mail, or through escrow with the
 

 
Escrow Agent, on the date seventeen (17) days after the expiration of the InspectionPeriod (provided that if such date is not a business day then the Closing Date shall be thenext succeeding business day) (the “Closing Date”), or such earlier date as may be agreed toby Seller and Purchaser in their sole and absolute discretion.     3. Within one (1) business day after the date hereof, Purchaser shall pay to Seller anamount (the “Extension Payment”) equal to Two Hundred Thousand Dollars ($200,000) inconsideration of such extension of the Inspection Period. In the event that the Closingoccurs,such amount shall be credited against the Purchase Price payable under the Agreement. In theevent the Closing fails to occur due to the default of Seller under the Agreement, Sellershallrepay the Extension Deposit to Purchaser within five (5) days after demand therefore byPurchaser. Otherwise, the Extension Payment shall belong to Seller.     4. The phrase “within five (5) business days” on the sixth line of Section 4.02 of thePurchase Agreement is hereby deleted and replaced with the phrase “within fifteen (15)businessdays”.     5. Nothing set forth in this Amendment shall limit or be construed to limitPurchaser’s rights under Sections 5.06 (as amended only by Paragraph 1 above extending theInspection Period through January 24,2005) or 5.07 of the Purchase Agreement.     6 Except as amended by this Amendment, the Purchase Agreement is unamended and remainsin full force and effect.     7. This Amendment may be executed and delivered by counterparts and by facsimiletransmission.     IN WITNESS WHEREOF, this Amendment has been entered into as of the ____ day of December, 2004.**SELLER:****HANFORD HOTELS, INC.,**a California limited liability company     By: /s/ WILLIAM A. CAINE, JR.   Name: William A. Caine, Jr.  Title: Executive Vice President  **PURCHASER:****INTERSTATE CONCORD, LLC,**a Delaware limited liability company     By: /s/ ALICIA KABIRI   Name: Alicia Kabiri  Title: Assistant General Counsel  
 

 
**SECOND AMENDMENT TO AGREEMENT OF SALE AND PURCHASE**     **THIS SECOND AGREEMENT TO AGREEMENT OF SALE AND PURCHASE** (this “Amendment”), datedas of January 21, 2005 (the “Effective Date”), is made by and between HANFORD HOTELS,LLC, a California limited liability company, having an address at 4 Corporate PlazaDrive, Suite 102, Newport Beach, CA 92660 (“Seller”), INTERSTATE CONCORD, LLC, aDelaware limited liability company having an address c/o Interstate Hotels & Resorts,Inc., 4501 N. Fairfax Drive, Arlington, VA 22203 (“Purchaser”).     WHEREAS, Seller and Purchaser have entered into that certain Agreement of Sale andPurchase (as amended by the First Amendment (as hereinafter defined), the “AmendedPurchase Agreement”), dated as of November 12, 2004, as amended by that certain FirstAmendment to Agreement of Sale and Purchase (the “First Amendment”) dated as of December27, 2004 with respect to certain property more particularly set forth therein;     WHEREAS, the Inspection Period (as such term is defined in the Amended PurchaseAgreement; any capitalized term used herein and not otherwise defined herein having themeaning given to such term in the Amended Purchase Agreement) is toterminate on January 24,2004;     WHEREAS, Purchaser is satisfied with, (i) the physical and environmentalcondition of the Property as of the date hereof, (ii) the zoning of the Property as of the datehereof, (iii) the Hotel Contracts set forth on Exhibit D of the Amended Purchase Agreement (asrevised pursuant to a spreadsheet attached to an e-mail from William Caine to C.A. Anderson datedNovember 18, 2004), (iv) the Permits set forth on Exhibit E of the Amended Purchase Agreement;and (v) has agreed with Hilton on a product improvement plan forthe property;     WHEREAS, Purchaser among other things (1) has not yet obtained financing forthe transactions set forth in the Amended Purchase Agreement on terms satisfactory toPurchaser, (2) has not finalized the announced Interstate Investors Fund, Inc. or had afirst closing thereof, and for those and other reasons will terminate the AmendedPurchase Agreement on or prior to January 24, 2004 if the Inspection Period is not furtherextended; and     WHEREAS, Seller is willing to further extend the Inspection Period for theSecond Extension Payment (as defined below) as provided herein; and     WHEREAS, Purchaser and Seller now desire to further amend the Amended PurchaseAgreement on the terms and conditions more particularly set forth herein;     NOW,THEREFORE, in consideration of Ten Dollars ($10.00) and other good andvaluable consideration, and the payment by Purchaser of the Second Extension Payment,the receipt and sufficiency of which are hereby acknowledged, Seller and
 

 
Purchaser hereby amend the Amended Purchase Agreement as follows:     1. In consideration of the Second Extension Payment, the Inspection Period is herebyfurther extended through the close of business on January 28,2005.     2*. *Section 7.01of the Amended Purchase Agreement is deleted in its entircty and the following Section 7.01 substituted therefore:     “7.01 Closing Date. The delivery of the conveyancing instruments with respect to thePurchased Assets and other documents required hereunder (the “Closing”) shall be held atthe Title Company’s offices or by mail, or through escrow with the Escrow Agent, on thedate thirteen (13) days after the expiration of the Inspection Period (provided that ifsuch date is not a business day then the Closing Date shall be the next succeedingbusiness day) (the “Closing Date”), or such earlier date as may be agreed to by Seller andPurchaser in their sole and absolute discretion.     3. Within one (1) business day after the date hereof, Purchaser shall pay to Seller anamount (the “Second Extension Payment”) equal to OneHundred Thousand Dollars ($100,000) inconsideration of such extension of the Inspection Period. In the event that the Closing occurs,such amount shall be credited against the Purchase Price payable under the Amended PurchaseAgreement. In the event the Closing fails to occur due to the default of Seller under the AmendedPurchase Agreement, Seller shall repay the Second Extension Deposit to Purchaser within five (5)days after demand therefore by Purchaser. Otherwise, the Second Extension Payment shall belong toSeller.     4. Nothing set forth in this Amendment shall limit or be construed to limitPurchaser’s rights under Sections 5.06 (as amended only by Paragraph 1 of the FirstAmendment and by Paragraph 1 above extending the Inspection Period through January28, 2005) or 5.07 of the Amended Purchase Agreement.     5. Except as amended by this Amendment, the Amended PurchaseAgreement is unamended and remains in full force and effect.
 

 
     6. This Amendment may be executed and delivered by counterparts and byfacsimile transmission,     IN WITNESS WHEREOF, this Amendment has been entered into as of the 20th day of January, 2004.**SELLER:****HANFORD HOTELS, INC.,**a California limited liability company     By: /s/ WILLIAM A. CAINE, JR.   Name: William A. Caine, Jr.  Title: Executive Vice President  **PURCHASER:****INTERSTATE CONCORD LLC.,** a Delaware limited liability company     By: /s/ CHRISTOPHER L. BENNETT   Name: Christopher L. Bennett  Title: Senior Vice President and General Counsel