Document:

<PAGE>
[SECURED CAPITAL CORP LOGO]             11150 Santa Monica Boulevard, Suite 1400
                                                           Los Angeles, CA 90025

                                                            phone (310) 477-9600
                                                              fax (310) 477-3436

May 10, 2004                                                           VIA FEDEX

Mr. Monty Bennett
Mr. Douglas Kessler
Ashford Hospitality Trust, Inc.
14185 Dallas Parkway
Suite 1100
Dallas, Texas 75254

RE: FINANCING OF HOSPITALITY PORTFOLIO

Dear Monty and Doug:

This letter, when countersigned below, will confirm that Ashford Hospitality
Trust, Inc. (the "Company") has engaged Secured Capital Corp ("SCC") to use its
best efforts as the Company's exclusive financial advisor with respect to
obtaining proposals for the permanent financing (the "Financing") of various
hotel properties (as opposed to single asset structured financings) set forth on
Exhibit A attached hereto, which Exhibit may be modified as mutually agreed by
the Company and SCC (each, a "Property" and collectively, the "Properties"). It
is anticipated that the Financing will be solicited in one to four offerings,
which may be provided by a single lender or multiple lenders, and will result in
total loan proceeds of approximately $100-$200 million, which will be secured by
the Properties.

         1. SCC'S SERVICES. SCC's services pursuant to this engagement shall
include the following:

-        Prepare and provide descriptive financing materials to be sent to
         prospective lenders (all matters of form and content in respect of such
         materials shall be subject to approval by the Company, which shall be
         responsible for the accuracy and completeness of such materials).

-        Contact a target list of prospective lenders (approved by Company) to
         present the Financing opportunity.

-        Prepare analysis and structuring concepts for prospective lenders in
         order to facilitate their proposal.

<PAGE>

Letter to Mr. Monty Bennett
and Mr. Douglas Kessler
May 10, 2004
Page 2

-        Respond to prospective lenders' questions and inquiries about the
Properties.

-        Obtain proposals from prospective lenders and present them to the
Company.

-        Negotiate, in coordination with representatives of the Company, the
terms and conditions of the Financing.

-        Assist the Company and its counsel in coordinating efforts to achieve
timely and efficient documentation and closing of the Financing.

-        Such other services reasonably required by the Company in connection
with the above.

         2. COMPANY APPROVAL REQUIRED; REFERRAL OF INQUIRIES TO SCC. The terms
and conditions of any proposal shall be subject to acceptance by the Company in
its sole and absolute discretion. SCC shall not have the authority to accept any
offer or proposal or to enter into any commitment on behalf of the Company. The
Company shall refer all inquiries from prospective lenders regarding the
Financing to SCC and agrees to cooperate with SCC in pursuing discussions or
negotiations with such prospective lenders.

         3. COMPANY TO FURNISH INFORMATION. The Company shall furnish to SCC
such information with respect to the Properties and the Company in the Company's
possession as SCC may reasonably request in order to render its services
effectively. The Company represents to the best of its knowledge that all
information furnished by it to SCC will be materially accurate and complete.
Company shall keep SCC informed of any financing or sale proposals it obtains on
any of the Properties.

         4. COMPENSATION. The parties hereto agree that the compensation payable
to SCC shall be as set forth on Exhibit B attached hereto.

         5. EXPENSES. The Company shall be responsible to pay directly or
reimburse SCC, whether or not SCC earns the Success Fee all reasonable
third-party, out of pocket expenses associated with analyzing the Properties,
preparing marketing materials, and marketing the Financing (collectively, the
"Out of Pocket Expenses") incurred by SCC in connection with the marketing of
the Financing. The Out of Pocket Expenses shall include reasonable travel costs
associated with the Financing as well as printing, copying and delivering
financing materials and due diligence materials, including updates. The Company
understands and agrees that all expenses incurred to date will be invoiced and
due at the time the financing materials are ready for distribution. Thereafter,
SCC will periodically invoice the Company for expenses that are subsequently
incurred. In no case will the total Out of Pocket expenses exceed $80,000 in the
aggregate for the Financing.

<PAGE>

Letter to Mr. Monty Bennett
and Mr. Douglas Kessler
May 10, 2004
Page 3

If the Company requests changes in the financing materials after final approval
of said materials is given by the Company and production of the material has
commenced, the Company will pay (or reimburse) SCC for any costs incurred in
making such changes. These costs are in addition to any costs incurred by SCC
and are not subject to the cap on expenses set forth above.

         6. PUBLICATION OF TRANSACTION. After the closing of a transaction for
which SCC is entitled to compensation hereunder, SCC may publish a notice of the
transaction in such format, in such publications and at such times as SCC may
deem appropriate and consistent with its customary practices subject to the
reasonable approval of the Company and applicable laws. Such announcement shall
not disclose the monetary terms of the transaction.

         7. TERM OF ENGAGEMENT. SCC's engagement hereunder shall commence upon
the date of this letter and shall terminate three (3) months following the date
of this letter unless extended by the Company in its sole and absolute
discretion. If, at the termination of SCC's engagement, the Company has not
previously accepted a financing proposal with respect to all of the Properties,
SCC may furnish the Company a list of prospective lenders from whom SCC received
a signed confidentiality agreement and to whom SCC has delivered a copy of SCC's
Financing Memorandum or which SCC requested but did not receive the Company's
consent to approach. If a proposal for mortgage financing is accepted by the
Company with respect to any of the Properties from any entity named in such
list, or any affiliate of any entity named in such list within four (4) months
following the termination or expiration of SCC's engagement, SCC shall be deemed
to have earned the Success Fee specified in this letter upon the Company's
acceptance of the financing proposal, such fees to be payable if and when said
transaction actually closes in the manner set forth herein. The Company's
obligations under paragraphs 4, 5, 7 and 8 shall survive the termination or
expiration of SCC's engagement.

         8. INDEMNIFICATION. The Company shall indemnify and hold harmless SCC
and its affiliates, the respective directors, officer, and employees of SCC and
its affiliates and each of the persons, if any, controlling SCC or any of its
affiliates, to the full extent lawful, from and against all claims, demands,
damages, losses, liabilities and expenses (including, without limitation,
reasonable attorneys' fees and expenses) (collectively, "Claims") related to or
arising from the engagement hereunder, provided that this Section 8 shall not
apply to any Claims related to or arising from SCC's gross negligence, bad
faith, willful misconduct, breach of the provisions of this agreement, or
actions outside of the scope of this agreement.

SCC shall indemnify and hold harmless Company and its affiliates, the respective
directors, officers, agents and employees of Company and its affiliates and each
of the persons, if any, controlling Company or any of its affiliates, to the
full extent lawful, from and against all Claims related to or arising from SCC's
gross negligence, bad faith,

<PAGE>

Letter to Mr. Monty Bennett
and Mr. Douglas Kessler
May 10, 2004
Page 4

willful misconduct, material breach of the provisions of this agreement, or
actions outside the scope of this agreement.

         9. OTHER MATTERS. Company acknowledges that SCC reserves the right to
retain at its sole expense and responsibility a local real estate or other
broker to comply with local licensing requirements.

If this letter correctly sets forth the Company's understanding, please so
confirm by countersigning and returning the enclosed copy. Upon receipt of the
copy by SCC, this letter shall be deemed a binding agreement to be construed in
accordance with the laws of the State of California.

                                                  Very truly yours,

                                                  SECURED CAPITAL CORP

                                     By: /s/ D. MICHAEL VAN KONYNENBURG
                                         ------------------------------
                                         President and CEO

AGREED AND ACCEPTED:

ASHFORD HOSPITALITY TRUST, INC.

BY: /S/ DAVID A. BROOKS
----------------------------
   NAME: DAVID A. BROOKS
   TITLE: CHIEF LEGAL OFFICER<PAGE>

                                                                   EXHIBIT 10.18

                         AGREEMENT OF PURCHASE AND SALE

                                     between

                    ASHFORD HOSPITALITY LIMITED PARTNERSHIP,
                         a Delaware limited partnership

                                  ("Purchaser")

                                       and

                              DUNN GROUP OF INDIANA
                           DUNN FAMILY ASSOCIATES, LLP
                              HOTEL INVESTMENT, LLC
                       ENCORE HOTELS OF BLOOMINGTON, INC.
                        ENCORE HOTELS OF TERRE HAUTE, LLC
                   ENCORE RESIDENTIAL HOTEL OF EVANSVILLE, LLC
                         ENCORE HOTELS OF COLUMBUS, LLC
                        ENCORE HOTELS OF HORSE CAVE, LLC
                       ENCORE HOTELS OF PRINCETON II, LLC
                           DUNN HOSPITALITY GROUP, LLC

                            (collectively, "Seller")

                        HAMPTON INN, EVANSVILLE, INDIANA
                        HAMPTON INN, TERRA HAUTE, INDIANA
                        HAMPTON INN, HORSE CAVE, KENTUCKY
                       FAIRFIELD INN, EVANSVILLE, INDIANA
                        FAIRFIELD INN, PRINCETON, INDIANA
                         COURTYARD, BLOOMINGTON, INDIANA
                          COURTYARD, COLUMBUS, INDIANA
                         COURTYARD, LOUISVILLE, KENTUCKY
                       RESIDENCE INN, EVANSVILLE, INDIANA

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                                           Page
<S>                                                                                                                        <C>
ARTICLE I DEFINITIONS................................................................................................       1
    1.1         Definitions..........................................................................................       1

ARTICLE II PURCHASE AND SALE; DEPOSIT; PAYMENT OF PURCHASE PRICE; STUDY PERIOD.......................................       8
    2.1         Purchase and Sale....................................................................................       8
    2.2         Payment of Purchase Price............................................................................       9
    2.3         Deposit..............................................................................................       9
    2.4         Study Period.........................................................................................      10

ARTICLE III SELLER'S REPRESENTATIONS AND WARRANTIES..................................................................      15
    3.1         Organization and Power...............................................................................      15
    3.2         Authorization and Execution..........................................................................      16
    3.3         Non-contravention....................................................................................      16
    3.4         Title To Real Property...............................................................................      16
    3.5         No Special Taxes.....................................................................................      16
    3.6         Compliance with Existing Laws........................................................................      16
    3.7         Personal Property and Inventory......................................................................      17
    3.8         Franchise Agreements/Management Agreements/Operating Agreements/Off-Site Facility Agreements.........      17
    3.9         Insurance............................................................................................      17
    3.10        Condemnation Proceedings; Roadways...................................................................      17
    3.11        Actions or Proceedings...............................................................................      17
    3.12        Labor and Employment Matters.........................................................................      18
    3.13        Financial Information and Submission Matters.........................................................      18
    3.14        Bankruptcy...........................................................................................      18
    3.15        Historical Districts.................................................................................      18
    3.16        Hazardous Substances.................................................................................      18
    3.17        Sales, Use and Occupancy Taxes.......................................................................      19
    3.18        Personal Property Taxes..............................................................................      19
    3.19        Occupancy Agreements.................................................................................      19
    3.20        Utilities............................................................................................      19
    3.21        Curb Cuts............................................................................................      20
    3.22        Leased Property......................................................................................      20
    3.23        Advance Bookings.....................................................................................      20
    3.24        Americans With Disabilities Act......................................................................      20
    3.25        Structural Condition.................................................................................      20
    3.26        Zoning and Platting..................................................................................      20
    3.27        Access...............................................................................................      20
    3.28        No Commitments.......................................................................................      20
    3.29        Seller Is Not a "Foreign Person".....................................................................      20
    3.30        No Other Property Interests..........................................................................      20
</TABLE>

                                       i

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<TABLE>
<S>                                                                                                                      <C>
ARTICLE IV PURCHASER'S REPRESENTATIONS AND WARRANTIES................................................................    22
    4.1         Organization and Power...............................................................................    22
    4.2         Authorization and Execution..........................................................................    22
    4.3         Non-contravention....................................................................................    22
    4.4         Litigation...........................................................................................    22
    4.5         Bankruptcy...........................................................................................    22

ARTICLE V CONDITIONS PRECEDENT.......................................................................................    22
    5.1         As to Purchaser's Obligations........................................................................    22
    5.2         As to Seller's Obligations...........................................................................    25

ARTICLE VI COVENANTS OF SELLER.......................................................................................    26
    6.1         Operating Agreements/Off-Site Facility Agreements....................................................    26
    6.2         Warranties and Guaranties............................................................................    26
    6.3         Insurance............................................................................................    26
    6.4         Independent Audit....................................................................................    26
    6.5         Operation of Property Prior to Closing...............................................................    27
    6.6         No Marketing.........................................................................................    29
    6.7         Employees and Continuation of Seller's Group Health Plans............................................    29
    6.8         Rights of First Refusal and Options..................................................................    29
    6.9         Liquor License.......................................................................................    29

ARTICLE VII CLOSING..................................................................................................    30
    7.1         Closing..............................................................................................    30
    7.2         Seller's Deliveries..................................................................................    31
    7.3         Purchaser's Deliveries...............................................................................    34
    7.4         Mutual Deliveries....................................................................................    34
    7.5         Closing Costs........................................................................................    35
    7.6         Revenue and Expense Allocations......................................................................    35
    7.7         Acquisition and Transfer of Inventory and Personal Property..........................................    37
    7.8         Product Improvement Plan Requirements................................................................    37

ARTICLE VIII GENERAL PROVISIONS......................................................................................    38
    8.1         Condemnation.........................................................................................    38
    8.2         Risk of Loss.........................................................................................    38
    8.3         Broker...............................................................................................    39
    8.4         Bulk Sale............................................................................................    39
    8.5         Confidentiality......................................................................................    39
    8.6         Seller's Accounts Receivable.........................................................................    40

ARTICLE IX LIABILITY OF PURCHASER AND SELLER; INDEMNIFICATION BY SELLER; DEFAULT; TERMINATION RIGHTS.................    40
    9.1         Liability of Purchaser and Seller....................................................................    40
    9.2         Indemnification by Seller............................................................................    41
    9.3         Default by Seller/Failure of Conditions Precedent....................................................    41
    9.4         Default by Purchaser/Failure of Conditions Precedent.................................................    42
    9.5         Costs and Attorneys' Fees............................................................................    42
</TABLE>

                                       ii

<PAGE>

<TABLE>
<S>                                                                                                                      <C>
    9.6         Limitation of Liability..............................................................................    42

ARTICLE X MISCELLANEOUS PROVISIONS...................................................................................    43
    10.1        Completeness; Modification...........................................................................    43
    10.2        Assignments..........................................................................................    43
    10.3        Successors and Assigns...............................................................................    43
    10.4        Days.................................................................................................    43
    10.5        Governing Law........................................................................................    43
    10.6        Counterparts.........................................................................................    43
    10.7        Severability.........................................................................................    43
    10.8        Costs................................................................................................    43
    10.9        Notices..............................................................................................    44
    10.10       Escrow Agent.........................................................................................    45
    10.11       Incorporation by Reference...........................................................................    45
    10.12       Survival.............................................................................................    45
    10.13       Further Assurances...................................................................................    45
    10.14       No Partnership.......................................................................................    46
    10.15       Time of Essence......................................................................................    46
    10.16       Signatory Exculpation................................................................................    46
    10.17       Rules of Construction................................................................................    46
</TABLE>

                                      iii

<PAGE>

EXHIBITS

Exhibit A   -- Land
Exhibit B   -- Surveyor's Certificate
Exhibit C   -- Submission Matters Certificate
Exhibit D   -- Assignment and Assumption Agreement
Exhibit E   -- Special Warranty Bill of Sale
Exhibit F   -- Special Warranty Deed
Exhibit G   -- Assignment of Occupancy Agreements
Exhibit H   -- Alcoholic Beverage Management Agreement

SCHEDULES

Schedule 1  -- Authorizations
Schedule 2  -- Operating Agreements
Schedule 3  -- Employment Agreements
Schedule 4  -- Occupancy Agreements
Schedule 5  -- Off-Site Facility Agreements
Schedule 6  -- Franchise Agreements
Schedule 7  -- Management Agreements
Schedule 8  -- Allocated Purchase Price for the Hotels
Schedule 9  -- Required Seller Consents
Schedule 10 -- Seller Disclosures and Exceptions

                                       iv

<PAGE>

                         AGREEMENT OF PURCHASE AND SALE

      THIS AGREEMENT OF PURCHASE AND SALE (this "Agreement") is made as of this
19th day of May, 2004, between ASHFORD HOSPITALITY LIMITED PARTNERSHIP, a
Delaware limited partnership ("Purchaser"), and DUNN FAMILY ASSOCIATES, LLP, an
Indiana limited liability partnership, HOTEL INVESTMENT, LLC, an Indiana limited
liability company, ENCORE HOTELS OF BLOOMINGTON, INC., an Indiana corporation,
ENCORE HOTELS OF TERRE HAUTE, LLC, an Indiana limited liability company, ENCORE
RESIDENTIAL HOTEL OF EVANSVILLE, LLC, an Indiana limited liability company,
ENCORE HOTELS OF COLUMBUS, LLC, an Indiana limited liability company, ENCORE
HOTELS OF HORSE CAVE, LLC, a Kentucky limited liability company, ENCORE HOTELS
OF PRINCETON II, LLC, an Indiana limited liability company, and ENCORE DUNN
HOSPITALITY GROUP, LLC, an Indiana limited liability company (collectively,
"Seller").

                             R E C I T A T I O N S:

      A. Seller is the owner of those certain real properties as more
particularly described on Exhibits A-1 through A-9 attached hereto and made a
part hereof, commonly known as "Hampton Inn - Evansville" located in Evansville,
Indiana, "Hampton Inn - Terra Haute" located in Terra Haute, Indiana, "Hampton
Inn - Horse Cave" located in Horse Cave, Kentucky, "Fairfield Inn - Evansville"
located in Evansville, Indiana, "Fairfield Inn - Princeton" located in
Princeton, Indiana, "Courtyard - Bloomington" located in Bloomington, Indiana,
"Courtyard - Columbus" located in Columbus, Indiana, "Courtyard - Louisville"
located in Louisville, Kentucky, and "Residence Inn - Evansville" located in
Evansville, Indiana.

      B. Purchaser is desirous of purchasing such hotel properties from the
applicable Seller entity and the applicable Seller entity is desirous of selling
such hotel properties to Purchaser, for the purchase price and upon the terms
and conditions hereinafter set forth.

      NOW, THEREFORE, in consideration of premises and in consideration of the
mutual covenants, promises and undertakings of the parties hereinafter set
forth, and for other good and valuable considerations, the receipt and
sufficiency of which is hereby acknowledged by the parties, it is agreed:

                                   ARTICLE I
                                  DEFINITIONS

      1.1 Definitions. The following terms shall have the indicated meanings:

            "Act of Bankruptcy" shall mean if a party hereto or any general
partner or member thereof shall (a) apply for or consent to the appointment of,
or the taking of possession by, a receiver, custodian, trustee or liquidator of
itself or of all or a substantial part of its property, (b) admit in writing its
inability to pay its debts as they become due, (c) make a general assignment for
the benefit of its creditors, (d) file a voluntary petition or commence a
voluntary case or proceeding under the Federal Bankruptcy Code (as now or
hereafter in effect), (e) be adjudicated a bankrupt or insolvent, (f) file a
petition seeking to take advantage of any other law

AGREEMENT OF PURCHASE AND SALE
ASHFORD/DUNN PORTFOLIO

                                       1

<PAGE>

relating to bankruptcy, insolvency, reorganization, winding-up or composition or
adjustment of debts, (g) fail to controvert in a timely and appropriate manner,
or acquiesce in writing to, any petition filed against it in an involuntary case
or proceeding under the Federal Bankruptcy Code (as now or hereafter in effect),
or (h) take any corporate or partnership action for the purpose of effecting any
of the foregoing; or if a proceeding or case shall be commenced, without the
application or consent of a party hereto or any general partner or member
thereof, in any court of competent jurisdiction seeking (1) the liquidation,
reorganization, dissolution or winding-up, or the composition or readjustment of
debts, of such party or general partner or member, (2) the appointment of a
receiver, custodian, trustee or liquidator for such party or general partner or
member or all or any substantial part of its assets, or (3) other similar relief
under any law relating to bankruptcy, insolvency, reorganization, winding-up or
composition or adjustment of debts, and such proceeding or case shall continue
undismissed; or an order (including an order for relief entered in an
involuntary case under the Federal Bankruptcy Code, as now or hereafter in
effect) judgment or decree approving or ordering any of the foregoing shall be
entered and continue unstayed and in effect, for a period of sixty (60)
consecutive days.

            "Advance Bookings" shall mean reservations made by Seller or its
manager prior to Closing for Hotel rooms or meeting rooms to be utilized after
Closing, or for catering services or other Hotel services to be provided after
Closing, in the ordinary course of business as consistent with Seller's past
practices.

            "Affiliate" of a Person shall mean (i) any other Person that is
directly or indirectly (through one or more intermediaries) controlled by, under
common control with, or controlling such Person, or (ii) any other Person in
which such Person has a direct or indirect equity interest constituting at least
a majority interest of the total equity of such other Person. For purposes of
this definition, "control" shall mean the possession, directly or indirectly, of
the power to direct or cause the direction of the management and policies of any
Person or the power to veto major policy decisions of any Person, whether
through the ownership of voting securities, by contract or otherwise.

            "Affiliated Company" means any other entity which is, along with
Seller and/or Seller's management company, a member of a controlled group of
corporations or a controlled group of trades or businesses (as defined in
Section 414(b) or (c) of the Internal Revenue Code), any entity which along with
Seller and/or Seller's management company is included in an affiliated service
group as defined in Section 414(m) of the Internal Revenue Code, and any other
entity which is required to be aggregated with Seller and/or Seller's management
company pursuant to Treasury Regulations under Section 414(o) of the Internal
Revenue Code.

            "Allocated Purchase Price" shall mean the Purchase Price as
allocated among each Hotel as set forth on the Schedule 8 attached hereto.

            "Applicable Laws" shall mean any applicable building, zoning,
subdivision, environmental, health, safety or other governmental laws, statutes,
ordinances, resolutions, rules, codes, regulations, orders or determinations of
any Governmental Authority or of any insurance boards of underwriters (or other
body exercising similar functions), or any restrictive covenants

AGREEMENT OF PURCHASE AND SALE
ASHFORD/DUNN PORTFOLIO

                                       2

<PAGE>

or deed restrictions affecting the Property or the ownership, operation, use,
maintenance or condition thereof.

            "Assignment and Assumption Agreement" shall mean one or more
assignment and assumption agreements for each Hotel whereby (a) Seller (1)
assigns and Purchaser and/or its lessee (as Purchaser shall specify) assumes the
Operating Agreements and Off-Site Facility Agreements for the applicable Hotel
that have not been terminated prior to Closing in accordance herewith, (2)
assigns all of Seller's right, title and interest in and to the Intangible
Personal Property for the applicable Hotel, to the extent assignable, and (3)
indemnifies, defends and holds Purchaser and/or its lessee harmless with respect
to all defaults, liabilities, claims, costs and expenses (including, without
limitation, reasonable attorneys' fees) relating to acts or omissions accruing
under such Operating Agreements and Off-Site Facility Agreements before the
Closing Date; and (b) Purchaser and/or its lessee, as applicable, indemnifies,
defends and holds Seller harmless with respect to all defaults, liabilities,
claims, costs and expenses (including, without limitation, reasonable attorneys'
fees) relating to acts or omissions accruing under such Operating Agreements and
Off-Site Facility Agreements from and after the Closing Date.

            "Assignment of Occupancy Agreements" shall mean one or more
assignment agreements for each Hotel, whereby (a) Seller (1) assigns and
Purchaser and/or its lessee (as Purchaser shall specify) assumes all of Seller's
right, title and interest in and to the Occupancy Agreements for the applicable
Hotel, and (2) indemnifies, defends and holds Purchaser and/or its lessee
harmless with respect to all defaults, liabilities, claims, costs and expenses
(including, without limitation, reasonable attorneys' fees) relating to acts or
omissions accruing under such Occupancy Agreements before the Closing Date; and
(b) Purchaser and/or its lessee, as applicable, indemnifies, defends and holds
Seller harmless with respect to all defaults, liabilities, claims, costs and
expenses (including, without limitation, reasonable attorneys' fees) relating to
acts or omissions accruing under such Occupancy Agreements from and after the
Closing Date.

            "Authorizations" shall mean all licenses, permits and approvals
required by any governmental or quasi-governmental agency, body, department,
commission, board, bureau, instrumentality or officer, or otherwise appropriate
with respect to the construction, ownership, operation, leasing, maintenance, or
use of a Property or any part thereof.

            "Bill of Sale" shall mean one or more bills of sale for each Hotel
conveying title to the Inventory, Tangible Personal Property and the Intangible
Personal Property for the applicable Hotel to Purchaser or Purchaser's property
manager, lessee or other designee (as Purchaser shall specify).

            "Broker" shall mean Solid Rock Advisors.

            "Closing" shall mean the Closing of the purchase and sale of the
Property pursuant to this Agreement and shall be deemed to occur on the Closing
Date.

            "Closing Date" shall mean the date on which the Closing occurs.

AGREEMENT OF PURCHASE AND SALE
ASHFORD/DUNN PORTFOLIO

                                       3

<PAGE>

            "Closing Documents" shall mean the documents defined as such in
Section 7.1 hereof.

            "Deeds" shall mean those certain deeds conveying title to the Real
Property with special warranty covenants of title from Seller to Purchaser or
Purchaser's designee, and subject only to Permitted Title Exceptions. If for a
subject Hotel there is any difference between the description of the Land, as
shown on the applicable Exhibits A-1 through A-9 attached hereto and the
description of the Land as shown on the applicable Survey for such Hotel then,
if so requested by Purchaser, Seller shall convey title to the description of
the Land contained in the Survey by quitclaim deed.

            "Deposit" shall mean all amounts deposited from time to time with
Escrow Agent by Purchaser pursuant to Section 2.3 hereof, plus all interest or
other earnings that may accrue thereon. All cash Deposits shall be invested by
Escrow Agent in a commercial bank or banks acceptable to Purchaser at money
market rates, or in such other investments as shall be approved in writing by
Seller and Purchaser. The Deposit shall be held and disbursed by Escrow Agent in
strict accordance with the terms and provisions of this Agreement.

            "Employment Agreements" shall mean all employment agreements,
written or oral, between Seller or its managing agent and the persons employed
with respect to a Property.

            "Environmental Damages" shall mean all third-party claims,
judgments, damages, losses, penalties, fines, liabilities (including, without
limitation, punitive damages and strict liability), encumbrances, liens, costs
and expenses of investigation and defense of any claim, whether or not such is
ultimately defeated, and of any settlement or judgment, of whatever kind or
nature, contingent or otherwise, matured or unmatured, including, without
limitation, attorneys' fees and disbursements and consultants' fees, any of
which arise as a result of the existence of Hazardous Materials upon, about or
beneath a Property or migrating or threatening to migrate from a Property, or as
a result of the existence of a violation of Environmental Requirements
pertaining to a Property.

            "Environmental Requirements" shall mean (i) all applicable statutes,
regulations, rules, policies, ordinances, codes, licenses, permits, orders,
approvals, plans, authorizations, and similar items, of all Governmental
Authorities, and (ii) all judicial, administrative and regulatory decrees,
judgments and orders, in each case of (i) and (ii) relating to the protection of
human health or the environment from Hazardous Materials, including, without
limitation: (a) all requirements thereof, including, without limitation, those
pertaining to reporting, licensing, permitting, investigation and remediation of
emissions, discharges, releases or threatened releases of Hazardous Materials
into the air, surface water, groundwater or land, or relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of Hazardous Materials; and (b) all requirements
pertaining to the protection of the health and safety of employees or the public
from Hazardous Materials.

            "Escrow Agent" shall mean Chicago Title Insurance Company, 711 Third
Avenue, 5th Floor, New York, New York 10017, Attn: Sie Cheung.

AGREEMENT OF PURCHASE AND SALE
ASHFORD/DUNN PORTFOLIO

                                       4

<PAGE>

            "Financial Information" shall mean the financial information defined
as such in Section 3.13 hereof.

            "FIRPTA Certificate" shall mean the affidavit of Seller under
Section 1445 of the Internal Revenue Code, as amended, certifying that Seller is
not a foreign corporation, foreign partnership, foreign trust, foreign estate or
foreign person (as those terms are defined in the Internal Revenue Code and
regulations promulgated thereunder), in form and substance satisfactory to
Purchaser.

            "Franchise Agreements" shall collectively mean those certain
franchise agreements relating to each Property as described on Schedule 6
attached hereto.

            "Franchisors" shall mean the franchisors for each Property as
identified on Schedule 6 attached hereto.

            "Guaranty" shall have the meaning as set forth in Section 5.1(h)
hereof.

            "Governmental Authority" shall mean any federal, state, county,
municipal or other government or any governmental or quasi-governmental agency,
department, commission, board, bureau, officer or instrumentality, foreign or
domestic, or any of them.

            "Hazardous Materials" shall mean any chemical substance: (i) which
at the time of Closing is or becomes defined as a "hazardous substance,"
"hazardous waste," "hazardous material," "pollutant," "contaminant," or "toxic,"
"explosive," "corrosive," "flammable," "infectious," "radioactive,"
"carcinogenic," or "mutagenic" material under any law, regulation, rule, order,
or other authority of the federal, state or local governments, or any agency,
department, commission, board, or instrumentality thereof, regarding the
protection of human health or the environment from such chemical substances
including, but not limited to, the following federal laws and their amendments,
analogous state and local laws, and any regulations promulgated thereunder: the
Clean Air Act, the Clean Water Act, the Oil Pollution Control Act, the
Comprehensive Environmental Response, Compensation, and Liability Act of 1986,
the Emergency Planning and Community Right to Know Act, the Solid Waste Disposal
Act, the Resource Conservation and Recovery Act, the Safe Drinking Water Act,
the Federal Insecticide, Fungicide and Rodenticide Act, and the Toxic Substances
Control Act, including, without limitation, asbestos and gasoline and other
petroleum products (including crude oil or any fraction thereof); (ii) without
limitation, which contains gasoline, diesel fuel or other petroleum
hydrocarbons; (iii) without limitation, which contains drinking biphenyls or
asbestos or asbestos-containing materials or urea formaldehyde foam insulation;
or (iv) without limitation, radon gas.

            "Hotels" shall collectively mean (and "Hotel" shall individually
mean each of) the hotels and related amenities located on the Land.

            "Improvements" shall mean the Hotels and all other buildings,
improvements, fixtures and other items of real estate located on the Land.

AGREEMENT OF PURCHASE AND SALE
ASHFORD/DUNN PORTFOLIO

                                       5

<PAGE>

            "Insurance Policies" shall mean all policies of insurance maintained
by or on behalf of Seller pertaining to each Property, its operation, or any
part thereof.

            "Intangible Personal Property" shall mean all intangible personal
property owned or possessed by Seller and used in connection with the ownership,
operation, leasing, occupancy or maintenance of a Property, including, without
limitation as to each Property, (1) the Authorizations, (2) telephone numbers,
TWX numbers, post office boxes, warranties, signage rights, utility and
development rights and privileges, general intangibles, business records, site
plans, surveys, environmental and other physical reports, plans and
specifications pertaining to the Real Property and the Personal Property, (3)
all websites and domains used for each Hotel, including access to the FTP files
of the websites to obtain website information and content pertaining to each
such Hotel, (4) any unpaid award for taking by condemnation or any damage to the
Land by reason of a change of grade or location of or access to any street or
highway, and (5) the share of the Rooms Ledger determined under Section 7.6
hereof, excluding (a) any of the aforesaid rights Purchaser elects not to
acquire, (b) Seller's cash on hand, in bank accounts and invested with financial
or other institutions and (c) accounts receivable except for the above described
share of the Rooms Ledger.

            "Inventory" shall mean all inventories described in Section 7.7
hereof.

            "Land" shall mean those certain parcels of real estate more
particularly described on Exhibits A-1 through A-9 attached hereto, together
with all easements, rights, privileges, remainders, reversions and appurtenances
thereunto belonging or in any way appertaining, and all of the estate, right,
title, interest, claim or demand whatsoever of Seller therein, in the streets
and ways adjacent thereto and in the beds thereof, either at law or in equity,
in possession or expectancy, now or hereafter acquired.

            "Leased Property" shall mean for each Hotel all leased items of
Tangible Personal Property at each such Hotel.

            "Management Agreements" shall mean those certain Management
Contracts described on Schedule 7 attached hereto.

            "Occupancy Agreements" shall mean all leases, concession or
occupancy agreements in effect with respect to a Real Property under which any
tenants (other than Hotel guests) or concessionaires occupy space upon a Real
Property.

            "Off-Site Facility Agreements" shall mean those easements, leases,
contracts and agreements pertaining to facilities not located on a Property but
which Purchaser deems necessary, beneficial or related to the operation of the
related Hotel including, without limitation, use agreements for local golf
courses, parking contracts or leases, garage contracts or leases, skybridge
easements, tunnel easements, utility easements, and storm water management
agreements.

            "Operating Agreements" shall mean all service, supply and
maintenance contracts, if any, in effect with respect to a Property and all
other contracts (other than the

AGREEMENT OF PURCHASE AND SALE
ASHFORD/DUNN PORTFOLIO

                                       6

<PAGE>

Occupancy Agreements, Management Agreements, Off-Site Facility Agreements and
the Employment Agreements) that affect such Property or are otherwise related to
the construction, ownership, operation, occupancy or maintenance of such
Property.

            "Owner's Title Policy" shall mean an owner's policy of title
insurance issued to Purchaser by the Title Company, pursuant to which the Title
Company insures Purchaser's ownership of fee simple title to each Real Property
(including the marketability thereof) subject only to Permitted Title
Exceptions. The Owner's Title Policy shall insure Purchaser in the amount of the
Purchase Price and shall be acceptable in form and substance to Purchaser.
Purchaser may require such deletions of standard exceptions and such title
endorsements as are legally available and customarily required by institutional
investors purchasing property comparable to a Property in the States where each
Property is situated.

            "Permitted Title Exceptions" shall mean those exceptions to title to
each Real Property that are satisfactory to Purchaser as determined pursuant to
Section 2.4(d) hereof.

            "Person" shall mean an individual, a partnership, a limited
liability company, a corporation, an association, a joint stock company, a
trust, a joint venture, an unincorporated organization, or a Governmental
Authority.

            "Personal Property" shall mean collectively the Tangible Personal
Property and the Intangible Personal Property, but shall not include any
property located on a Property which is owned by Seller's property manager.

            "PIPs" shall mean all product improvement plan requirements
described in Section 7.8 hereof.

            "Property" shall mean collectively all Real Property, all Inventory,
all Tangible Personal Property and all Intangible Personal Property.

            "Purchase Price" shall mean $63,500,000.00 payable in the manner
described in Section 2.2 hereof.

            "Purchaser's Objections" shall mean the objections defined as such
in Section 2.4(d) hereof.

            "Real Property" shall collectively mean the Land and the
Improvements relating to each Hotel.

            "Rooms Ledger" shall mean the final night's room revenue at a Hotel
(revenue from rooms occupied as of 6:00 a.m. on the Closing Date, exclusive of
food, beverage, telephone and similar charges which shall be retained by
Seller), including any sales taxes, room taxes or other taxes thereon.

            "Seller's Organizational Documents" shall mean the current
partnership agreement, operating agreement, or articles of incorporation, and
related certificates of limited liability partnership, organization or
incorporation of each Seller and its general partners or

AGREEMENT OF PURCHASE AND SALE
ASHFORD/DUNN PORTFOLIO

                                       7

<PAGE>

members, as applicable, true and correct copies of which shall be provided to
Purchaser prior to Closing.

            "Study Period" shall mean the period commencing on the date this
Agreement has been fully executed and delivered by all parties hereto, and
continuing through the date that is forty-five (45) days thereafter; provided,
however, Purchaser shall have the option to shorten the Study Period. Except as
expressly noted herein to the contrary, time periods herein referred to shall
mean the time periods as in effect, from time to time, in Dallas, Texas.

            "Submission Matters" shall mean all items Seller is required to
deliver and/or make available to Purchaser pursuant to Section 2.4(b) hereof.

            "Submission Matters Certificate" shall mean the certificate defined
as such in Section 2.4(b) hereof.

            "Surveys" shall collectively mean the surveys defined as such in and
prepared pursuant to Section 2.4(d) hereof.

            "Tangible Personal Property" shall mean the items of tangible
personal property consisting of all furniture, fixtures, equipment, machinery,
Inventory and other personal property of every kind and nature (including
cash-on-hand and petty cash funds) located on or used or useful in the operation
of the Hotels and owned by Seller, including, without limitation, Seller's
interest as lessee with respect to any such Tangible Personal Property.

            "Title Commitments" shall collectively mean the title commitments
and exception documents defined as such in Section 2.4(d) hereof.

            "Title Company" shall mean Escrow Agent on behalf of Chicago Title
Insurance Company or other title insurance underwriter selected by Purchaser.

            "UCC Reports" shall mean the reports defined as such in Section
2.4(d) hereof.

            "Utilities" shall mean public sanitary and storm sewers, natural
gas, telephone, public water facilities, electrical facilities and all other
utility facilities and services necessary or appropriate for the operation and
occupancy of each Property as a hotel.

            "Warranties and Guaranties" shall mean all warranties and guaranties
relating to the Improvements or the Tangible Personal Property or any part
thereof.

                                   ARTICLE II
                       PURCHASE AND SALE; DEPOSIT; PAYMENT
                         OF PURCHASE PRICE; STUDY PERIOD

      2.1 Purchase and Sale. Seller agrees to sell and Purchaser agrees to
purchase the Property for the Purchase Price and in accordance with and subject
to the other terms and conditions set forth herein.

AGREEMENT OF PURCHASE AND SALE
ASHFORD/DUNN PORTFOLIO

                                       8

<PAGE>

      2.2 Payment of Purchase Price. The Purchase Price shall be paid to Seller
in the following manner:

            (a) Purchaser shall receive a credit against the Purchase Price in
an amount equal to the amount of the Deposit.

            (b) Purchaser shall pay the balance of the Purchase Price, as
adjusted in the manner specified in Article VII and as set forth below, to
Seller or other applicable party at Closing by making a wire transfer of
immediately available federal funds to the account of Seller or other applicable
party as specified in writing by Seller.

            (c) Purchaser and Seller shall in good faith agree, prior to the
expiration of the Study Period, to an allocation of the Purchase Price among the
Real Property and the Personal Property for each Hotel ("Allocation"). Within
seven (7) days after execution of this Agreement, Purchaser will provide to
Seller an initial proposed Allocation for Seller's consideration which Purchaser
and Seller agree to adjust as of the date of Closing if either such party
reasonably deems necessary. Seller and Purchaser agree to (i) be bound by the
Allocation, (ii) act in accordance with the Allocation in the preparation of
financial statements and the filing of all tax returns and in the course of any
tax audit, tax review or tax litigation relating thereto, and (iii) refrain
from, and cause their Affiliates to refrain from, taking a position inconsistent
with the Allocation for all tax purposes.

      2.3 Deposit. Within two (2) business days after the execution hereof by
both Seller and Purchaser and as a condition precedent to the effectiveness of
this Agreement, Purchaser shall deliver to Escrow Agent (i) a wire transfer or
check in the sum of Fifty Dollars ($50.00) payable to the order of Seller
representing the independent consideration for Seller's execution of this
Agreement and agreement to provide Purchaser with the Study Period (which check
or the proceeds of which wire transfer shall thereafter be delivered by Escrow
Agent to Seller) and (ii) a wire transfer or check in the sum of Three Hundred
Thousand and No/100 Dollars ($300,000.00) (the "Initial Deposit"), the proceeds
of which wire transfer or check Escrow Agent shall deposit and invest in an
interest bearing account at a financial institution acceptable to Purchaser or
as otherwise agreed to in writing by Seller and Purchaser. Within two (2)
business days after the expiration of the Study Period, if this Agreement has
not been sooner terminated, Purchaser shall deposit with Escrow Agent, by wire
transfer an additional deposit in the amount of Three Hundred Thousand and
No/100 Dollars ($300,000.00) (the "Additional Deposit"). If Purchaser fails to
timely deposit the Additional Deposit with Escrow Agent, Seller shall be
entitled, as Seller's sole and exclusive remedy, to terminate this Agreement by
written notice to Purchaser at any time before the Additional Deposit is
delivered to Escrow Agent, in which event the Initial Deposit shall be refunded
to Purchaser and neither party shall have any obligations hereunder, except
those which expressly survive a termination of this Agreement. If Purchaser
deposits the Additional Deposit with Escrow Agent before Purchaser's receipt of
Seller's termination notice, Purchaser shall be deemed to have timely deposited
the Additional Deposit and Seller shall not thereafter be entitled to terminate
this Agreement as a result of any delay in depositing the Additional Deposit.
The Initial Deposit and the Additional Deposit (when it is deposited by
Purchaser with Escrow Agent) are collectively and individually referred to
herein as the "Deposit". Escrow Agent shall hold and invest the Deposit pursuant
to the

AGREEMENT OF PURCHASE AND SALE
ASHFORD/DUNN PORTFOLIO

                                       9

<PAGE>

terms, conditions and provisions of this Agreement. All accrued interest on the
Deposit shall become part of the Deposit. The Deposit shall be returned to
Purchaser if Purchaser, prior to the end of the Study Period, notifies Seller in
writing, pursuant to Section 2.4 hereof, that Purchaser is electing to terminate
this Agreement. If no such written notice is received by the Seller on or before
the expiration of the Due Diligence Period, the Purchaser is deemed to have
approved the Hotels and the Deposit shall become non-refundable. The Deposit
shall be either (a) applied at the Closing against the Purchase Price, (b)
returned to Purchaser pursuant hereto, or (c) paid to Seller pursuant hereto.
For purposes of reporting earned interest with respect to the Deposit,
Purchaser's Federal Tax Identification Number is 20 0110897, and each Seller's
Federal Tax Identification Number is as follows:

<TABLE>
<CAPTION>
Seller Entity                                        Federal Tax ID No.
-------------                                        -----------------
<S>                                                  <C>
Dunn Family Associates, LLP                          35-1826022

Hotel Investment, LLC                                35-0559650

Encore Hotel of Bloomington, Inc.                    35-1934951

Encore Hotel of Terre Haute, LLC                     35-2012478

Encore Residential Hotel of Evansville, LLC          35-2007849

Encore Hotel of Columbus, LLC                        35-1984448

Encore Hotel of Horse Cave, LLC                      35-1988963

Encore Hotel of Princeton II, LLC                    35-2007857

Dunn Hospitality Group, LLC                          35-2045445
</TABLE>

      2.4 Study Period.

            (a) Purchaser and Purchaser's potential lessee or manager shall have
the right, until 5:00 p.m., Dallas, Texas time on the last day of the Study
Period, and thereafter if Purchaser does not notify Seller in writing prior to
the expiration of the Study Period that Purchaser has elected to terminate this
Agreement, to enter upon the Real Property at each Hotel upon two (2) business
days notice to Seller and to perform, at Purchaser's expense and without
materially interfering with the Seller's normal business operations at the
Hotel, such economic, surveying, engineering, topographic, environmental,
marketing and other tests, studies and investigations as Purchaser and
Purchaser's potential lessee may deem appropriate. If such tests, studies and
investigations warrant, in Purchaser's sole, absolute and unreviewable
discretion, that the purchase of the Property for the purposes contemplated by
Purchaser is not desirable, then Purchaser may elect, prior to the expiration of
the Study Period, to notify Seller in writing that Purchaser has elected to
terminate this Agreement. In such event, this Agreement automatically shall
terminate, the Deposit shall be promptly returned to Purchaser and Purchaser and
Seller

AGREEMENT OF PURCHASE AND SALE
ASHFORD/DUNN PORTFOLIO

                                       10

<PAGE>

shall be released from all further liability or obligation hereunder except
those which expressly survive a termination of this Agreement.

            (b) For the purpose of this Agreement any Submission Matters in the
possession of Seller's management company shall be deemed to be "reasonably
available to Seller." Within five (5) days after executing this Agreement,
Seller shall make available to Purchaser at Seller's principal place of business
(as noted below) the following to Purchaser for each Hotel:

            (1)   All Occupancy Agreements in effect as of the date of this
                  Agreement, together with, if in Seller's possession or
                  reasonably available to Seller, summaries of the pertinent
                  terms.

            (2)   To the extent in Seller's possession or reasonably available
                  to Seller, copies of all Authorizations including, without
                  limitation, all certificates of occupancy, permits,
                  authorizations, approvals, liquor licenses, liquor license
                  applications and licenses issued by Governmental Authorities
                  having jurisdiction over the Property and copies of all
                  certificates issued by the local board of fire underwriters
                  (or other body exercising similar functions) relating to the
                  Property.

            (3)   A complete list of Advance Bookings.

            (4)   The Franchise Agreements (including PIP's), Management
                  Agreements and a complete list of all Operating Agreements and
                  Off-Site Facility Agreements in effect as of the date of this
                  Agreement and complete copies of the Franchise Agreements
                  (including PIP's), Management Agreements and all such
                  Operating Agreements and Off-Site Facility Agreements,
                  together with, if in Seller's possession or reasonably
                  available to Seller, summaries of the pertinent terms.

            (5)   A schedule indicating all pertinent information with respect
                  to each Employment Agreement in effect as of the date hereof
                  (including name of employee, social security number, wage or
                  salary, accrued vacation benefits, other fringe benefits,
                  etc.) and copies of all such Employment Agreements.

            (6)   To the extent in Seller's possession or reasonably available
                  to Seller, a schedule setting forth the type and amounts of
                  insurance coverage maintained by Seller with respect to the
                  Property as of the date of this Agreement and complete copies
                  of all such Insurance Policies and loss history reports.

            (7)   To the extent in Seller's possession or reasonably available
                  to Seller, monthly and annual financial and operating
                  statements for the Property

AGREEMENT OF PURCHASE AND SALE
ASHFORD/DUNN PORTFOLIO

                                       11

<PAGE>

                  (including audited statements, if available), for the previous
                  three (3) calendar years and the year to date.

            (8)   The operating and capital expenditure budget for the Property
                  for the current calendar year and, to the extent in Seller's
                  possession or reasonably available to Seller, for the previous
                  three (3) calendar years.

            (9)   A complete list of all Tangible Personal Property.

            (10)  A complete list of all Leased Property and deliver a complete
                  copies of all lease agreements and summaries related thereto.

            (11)  To the extent in Seller's possession or reasonably available
                  to Seller, copies of receipts for all personal property taxes
                  and ad valorem taxes and special assessments assessed against
                  the Property for the current calendar year and prior three
                  calendar years, statements for Utilities payable for the
                  current calendar year and prior calendar year, and any
                  information in Seller's possession or reasonably available to
                  Seller regarding current renditions or assessments on the
                  Property or notices relative to change in valuation for ad
                  valorem taxes.

            (12)  A complete list of all Warranties and Guaranties in effect as
                  of the date of this Agreement and complete copies of all such
                  Warranties and Guaranties.

            (13)  Copies of all soil tests, structural engineering tests,
                  masonry tests, percolation tests, water, oil, gas, mineral,
                  radon, formaldehyde, PCB or other environmental tests, audits
                  or reports, market studies and site plans related to the
                  Property in Seller's possession or reasonably available to
                  Seller.

            (14)  If in Seller's possession or reasonably available to Seller,
                  copies of complete sets of all architectural, mechanical,
                  structural and/or electrical plans and specifications used in
                  connection with the construction of or alterations or repairs
                  to the Property.

            (15)  If in Seller's possession or reasonably available to Seller,
                  copies of as-built plans and specifications for the Property.

            (16)  Parking, structural, mechanical or other engineering reports
                  or studies related to the Property, if any, in Seller's
                  possession or reasonably available to Seller.

            (17)  If in Seller's possession or reasonably available to Seller,
                  copies of any title insurance policies covering the Real
                  Property and any surveys of all or any portion of the
                  Property.

AGREEMENT OF PURCHASE AND SALE
ASHFORD/DUNN PORTFOLIO

                                       12

<PAGE>

            (18)  If in Seller's possession or reasonably available to Seller,
                  copies of any and all health inspection reports with respect
                  to the Property.

            (19)  Copies of all appraisals of the Property in Seller's
                  possession or reasonably available to Seller.

            (20)  Photos of the Property in Seller's possession or reasonably
                  available to Seller.

            (21)  A complete list of all prepaid expenses with respect to the
                  Property.

            (22)  A schedule of pending litigation affecting the Property.

            (23)  An employee census listing the name, date of hire, last
                  increase, department, title and rate of pay with respect to
                  each employee at the Property, a payroll run, copies of all
                  pension documents and a schedule of liabilities therefor and
                  copies of all union and collective bargaining agreements
                  affecting the Property.

            (24)  A copy of the most recent STAR Report as well as market
                  segmentation information, sales kits and brochures, marketing
                  plans and Property fact sheets which include Property
                  amenities, rooms and food and beverage facilities.

            (25)  A schedule setting forth the occupancy and average rates for
                  the Property on a monthly basis for the previous three (3)
                  calendar years and the year to date.

            (26)  Copies of any and all franchise quality inspection reports.

            (27)  Copies of all existing zoning and utility letters affecting
                  the Property.

All Submission Matters shall be delivered to Purchaser together with a
certificate of Seller (the "Submission Matters Certificate") in which Seller
shall represent that, to the best of Seller's knowledge, the Submission Matters
delivered to Purchaser are true, accurate and complete copies thereof in
Seller's possession or reasonably available to Seller and that those Submission
Matters that have been prepared by Seller are true, accurate and complete in all
material respects but Seller makes no representations and warranties as to the
truth, accuracy and completeness of any materials, data or information prepared
by or obtained from a party other than the Seller and included as a part of the
Submission Matters delivered to Purchaser. The form of Submission Matters
Certificate is attached hereto as Exhibit C and incorporated herein. Such
certification shall constitute a representation and warranty of Seller contained
in and made under this Agreement. During the Study Period and thereafter until
the Closing, Seller shall make available to Purchaser, its agents, auditors,
engineers, attorneys, potential lessees and other designees, for inspection
and/or copying, copies of all existing architectural and engineering studies,
surveys, title insurance policies, zoning and site plan materials,
correspondence, environmental audits and reviews, books, records, tax returns,
bank statements, financial statements, advance reservations

AGREEMENT OF PURCHASE AND SALE
ASHFORD/DUNN PORTFOLIO

                                       13

<PAGE>

and room bookings and function bookings, rate schedules and any and all other
materials or information relating to each Property which are in, or come into,
Seller's possession or control or are otherwise reasonably available to Seller.

            (c) Purchaser shall indemnify and defend Seller against any loss,
damage or claim for death, personal injury or property damage arising from the
acts upon the Real Property by Purchaser or any agents, contractors or employees
of Purchaser. Purchaser, at its own expense, shall restore any damage to the
Property caused by any of the tests or studies made by Purchaser unless arising
from the negligent or willful acts of Seller or any of its agents, contractors
or employees. This provision shall survive any termination of this Agreement and
a closing of the transaction contemplated hereby.

            (d) Within ten (10) days following the execution of this Agreement
by the last of Purchaser or Seller, Purchaser shall obtain, at Purchaser's sole
cost and expense (which cost and expense shall be applied as a credit to the
Purchase Price at Closing), for each Real Property, a Survey of the Land and the
Improvements, prepared by a Surveyor licensed to practice as such in the State
where the Land is located, bearing a date not earlier than thirty (30) days from
the date of its delivery, containing the certificate attached hereto as Exhibit
B, and conforming to the requirements set forth in such certificate. Within ten
(10) days following the execution of this Agreement by the last of Purchaser or
Seller, Seller shall cause the Title Company to furnish to Purchaser, at
Seller's sole cost and expense, (i) for each Real Property, a title insurance
commitment bearing an effective date subsequent to the date of this Agreement
issued by the Title Company covering the Real Property, binding the Title
Company to issue its 1990 Form ALTA Owner's Policy of Title Insurance (without a
creditors' rights exception), in form approved for use in the state where the
Property is located in favor of Purchaser, showing title to be held currently by
Seller in a good, marketable and insurable condition, together with legible
copies of all documents identified in such title insurance commitment as
exceptions to title certified as true and complete by the Title Company (the
"Title Commitment"), and (ii) reports of searches of the Uniform Commercial Code
records of both the county and State in which each Property is located and the
state of Seller's formation (collectively, the "UCC Reports") with respect to
the state of title to the Property. Prior to the expiration of the Study Period,
Purchaser shall notify Seller of any matters shown on the Surveys or identified
in the Title Commitments or the UCC Reports that Purchaser is unwilling to
accept (collectively, "Purchaser's Objections"). In the event that any of the
Surveys, the Title Commitments and/or the UCC Reports are not delivered to
Purchaser within the required ten (10) day period, the Study Period shall be
extended by a period of time equal to the number of days after the expiration of
the required ten (10) day period Seller takes to deliver the Surveys, the Title
Commitments and/or the UCC Reports. If any of Purchaser's Objections consist of
delinquent taxes, mortgages, deeds of trust, security agreements, construction
or mechanics' liens, tax liens or other liens or charges in a fixed sum or
capable of computation as a fixed sum, then, to that extent, notwithstanding
anything herein to the contrary, Seller shall be obligated to pay and discharge
(or bond against in a manner sufficient to cause the Title Company to insure
over such Purchaser's Objections) any such Purchaser's Objections and Escrow
Agent is authorized to pay and discharge at Closing such Purchaser's Objections
to the extent not paid and discharged or bonded against at Closing. For such
purposes, Seller may use all or a portion of the cash to close. Seller shall not
be obligated to incur any expenses to cure any non-monetary Purchaser's
Objections unless Seller

AGREEMENT OF PURCHASE AND SALE
ASHFORD/DUNN PORTFOLIO

                                       14

<PAGE>

agrees to cure such non-monetary Purchaser's Objections as hereinafter provided.
Seller shall notify Purchaser within five (5) days after receipt of notice of
Purchaser's Objections whether Seller agrees to cure such non-monetary
Purchaser's Objections. If Seller notifies Purchaser in writing within such five
(5) day period that Seller agrees to cure such non-monetary Purchaser's
Objections, Seller shall correct such non-monetary Purchaser's Objections on or
before the Closing Date to the reasonable satisfaction of Purchaser. If Seller
does not notify Purchaser within such five (5) day period of Seller's agreement
to cure such non-monetary Purchaser's Objections, Seller shall be deemed to have
elected not to cure such non-monetary Purchaser's Objections, and Purchaser
shall elect (1) to waive such non-monetary Purchaser's Objections without any
abatement in the Purchase Price, (2) to terminate this Agreement in its
entirety, in which case the Deposit shall be promptly returned to Purchaser and
the parties hereto shall be released from all further obligations hereunder
except those which expressly survive a termination of this Agreement. Seller
shall not, after the date of this Agreement, subject the Real Property to or
permit or suffer to exist any liens, encumbrances, covenants, conditions,
restrictions, easements or other title matters or seek any zoning changes or
take any other action which may affect or modify the status of title without
Purchaser's prior written consent. All title matters revealed by the Title
Commitments, UCC Reports and Surveys and not objected to by Purchaser as
provided above (other than those rendering title defeasible and delinquent
taxes, mortgages, deeds of trust, security agreements and other liens and
charges that are to be paid at Closing as provided above) shall be deemed
Permitted Title Exceptions. Notwithstanding the foregoing, Purchaser shall not
be required to take title to the Real Property subject to any matters which may
arise subsequent to the effective date of the Title Commitments, UCC Reports and
Surveys examined by Purchaser during the Study Period.

            (e) The parties acknowledge that Purchaser is attempting to obtain
"Hampton Inn," "Fairfield Inn," "Courtyard," and "Residence Inn" franchise
agreements with respect to the applicable Property as of the Closing Date and in
connection therewith, Purchaser agrees to initiate the application process with
the Franchisors within ten (10) days after the ten (10) day waiting period in
connection with Purchaser's receipt of the Uniform Franchise Offering Circular
and application ("UFOC") from the Franchisors, which UFOC Purchaser agrees to
request from such franchisors within ten (10) days after execution of this
Agreement.

                                   ARTICLE III
                     SELLER'S REPRESENTATIONS AND WARRANTIES

      To induce Purchaser to enter into this Agreement and to purchase the
Property, and to pay the Purchase Price therefor, each Seller hereby makes the
following representations and warranties with respect to the Property owned by
such Seller, subject to the disclosures and exceptions made by Seller as set
forth on Schedule 10 attached hereto, upon each of which Seller acknowledges and
agrees that Purchaser is entitled to rely and has relied:

      3.1 Organization and Power. Seller, as applicable, is a corporation,
limited liability company or limited liability partnership, validly existing and
in good standing under the laws of the State of its formation or organization,
is duly qualified to transact business in the State where its Property is
located, and has all requisite powers and all governmental licenses,
authorizations, consents and approvals to carry on its business as now conducted
and to enter into and perform

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its obligations hereunder and under any document or instrument required to be
executed and delivered on behalf of Seller hereunder, except where the failure
to qualify or to obtain licenses, authorizations, or consents does not have a
material adverse effect on the ability of Seller to carry on its business as now
conducted.

      3.2 Authorization and Execution. This Agreement has been duly authorized
by all necessary action on the part of Seller, has been duly executed and
delivered by Seller, constitutes the valid and binding agreement of Seller and
is enforceable in accordance with its terms. In the event the consent of any
person or entity is required in connection with the execution of this Agreement,
or in the performance of Seller's performance of its obligations hereunder,
Seller shall, prior to closing, obtain such persons and/or entities written
consent to the same. As of the date of this Agreement, the Persons identified on
Schedule 9 are required to consent to the transactions contemplated hereby. The
person executing this Agreement on behalf of Seller has the authority to do so.

      3.3 Non-contravention. The execution and delivery of, and the performance
by Seller of its obligations under, this Agreement do not and will not
contravene, or constitute a default under, any provision of applicable law or
regulation known to Seller , Seller's Organizational Documents or any agreement,
judgment, injunction, order, decree or other instrument binding upon Seller or
to which its Property is subject, or result in the creation of any lien or other
encumbrance on any asset of Seller. There are no outstanding agreements (written
or oral) pursuant to which Seller or a representative of Seller (or to the best
of Seller's knowledge, a predecessor to Seller) has agreed to sell or has
granted an option or right of first refusal to purchase the Property or any part
thereof or to which the Property is subject.

      3.4 Title To Real Property. Seller is the sole owner of fee simple
absolute title to the Real Property which it owns, subject to the Permitted
Title Exceptions.

      3.5 No Special Taxes. Seller has no knowledge of, nor has it received any
notice of, any special taxes or assessments relating to its Property or any part
thereof or any planned public improvements that may result in a special tax or
assessment against such Property.

      3.6 Compliance with Existing Laws. To Seller's knowledge, Seller possesses
all Authorizations, each of which is valid and in full force and effect, and no
provision, condition or limitation of any of the Authorizations has been
breached or violated in any material respect. To Seller's knowledge, Schedule 1
attached hereto is a complete list of Authorizations. To Seller's knowledge,
Seller has not misrepresented or failed to disclose any relevant fact in
obtaining any Authorizations, and Seller has no knowledge of any change in the
circumstances under which those Authorizations were obtained that result in
their termination, suspension, modification or limitation. Seller has no
knowledge, nor has it received notice within the past three (3) years, of any
existing or threatened violation of any provision of any Applicable Laws
including, but not limited to, those of environmental agencies or insurance
boards of underwriters with respect to the ownership, operation, use,
maintenance or condition of the Property or any part thereof, or requiring any
repairs or alterations to the Property other than those that have been made
prior to the date hereof. Seller has no knowledge, nor has it received notice
within the past three (3)

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years, of any existing or threatened violation of any restrictive covenants or
deed restrictions affecting the Property.

      3.7 Personal Property and Inventory. All of the Personal Property and
Inventory being conveyed by Seller hereunder are free and clear of all liens and
encumbrances except for those which will be discharged by Seller at Closing, and
Seller has good and merchantable title thereto and the right to convey same in
accordance with the terms of this Agreement.

      3.8 Franchise Agreements/Management Agreements/Operating
Agreements/Off-Site Facility Agreements. There are no management, service,
supply or maintenance contracts in effect with respect to the Property other
than the Franchise Agreements, Management Agreements, Operating Agreements or
Off-Site Facility Agreements. Schedule 2 is a complete list of the Operating
Agreements, and Schedule 5 is a complete list of the Off-Site Facility
Agreements. To Seller's knowledge, Seller has performed all of its obligations
under the Franchise Agreements, Management Agreements and each of the Operating
Agreements and Off-Site Facility Agreements and to Seller's knowledge, no fact
or circumstance has occurred which, by itself or with the passage of time or the
giving of notice or both, would constitute a default under the Franchise
Agreements, Management Agreements or any of the Operating Agreements or Off-Site
Facility Agreements. To Seller's knowledge, all other parties to the Franchise
Agreements, Management Agreements, Operating Agreements and Off-Site Facility
Agreements have performed all of their obligations thereunder in all material
respects, and are not in default thereunder in any material respect. Seller has
received no notice of any intention by any of the parties to the Franchise
Agreements, Management Agreements or any of the Operating Agreements or Off-Site
Facility Agreements to cancel the same, nor has Seller canceled any of same.
Seller has provided to Purchaser a true, correct and complete copy of each of
the Franchise Agreements and Management Agreements.

      3.9 Insurance. To Seller's knowledge, all of Seller's Insurance Policies
are valid and in full force and effect and Seller has complied with all material
requirements or recommendations of the insurance carriers of the Insurance
Policies.

      3.10 Condemnation Proceedings; Roadways. Seller has received no notice of
any condemnation or eminent domain proceeding pending or threatened against the
Property or any part thereof. Seller has no knowledge of any change or proposed
change in the route, grade or width of, or otherwise affecting, any street,
creek or road adjacent to or serving the Real Property.

      3.11 Actions or Proceedings. There is no action, suit or proceeding
pending or known to Seller to be threatened against or affecting Seller in any
court, before any arbitrator or before or by any Governmental Authority which
(a) in any manner raises any question affecting the validity or enforceability
of this Agreement or any other agreement or instrument to which Seller is a
party or by which it is bound and that is or is to be used in connection with,
or is contemplated by, this Agreement, (b) could materially and adversely affect
the business, financial position or results of operations of Seller or the
Property, (c) could materially and adversely affect the ability of Seller to
perform its obligations hereunder, or under any document to be delivered
pursuant hereto, (d) could create a lien on the Property, any part any

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interest therein, (e) concerns any past or present employee of Seller or its
managing agent or (f) could otherwise adversely affect the Property, any part
thereof or any interest therein or the use, operation, condition or occupancy
thereof.

      3.12 Labor and Employment Matters. To Seller's knowledge, neither Seller
nor its management company is a party to any oral or written employment
contracts or agreements with respect to the Property other than the Employment
Agreements. Schedule 3 is a complete list of the Employment Agreements. To
Seller's knowledge, no party is in default under any Employment Agreement. To
Seller's knowledge, there are no labor disputes or organizing activities pending
or threatened as to the operation or maintenance of the Property or any part
thereof. Neither Seller nor its management company is a party to any union or
other collective bargaining agreement with employees employed in connection with
the ownership, operation or maintenance of the Property, except for those
described on Schedule 3. To Seller's knowledge, the Property has been operated
in such a way as to materially comply with all applicable labor and employment
laws, including, but not limited to, laws related to equal employment, plant
closings, employment taxes and withholding requirements.

      3.13 Financial Information and Submission Matters. To Seller's knowledge,
all of Seller's financial information, including, without limitation, all books
and records and financial statements ("Financial Information") is correct and
complete in all material respects and presents accurately the results of the
operations of the Property for the periods indicated. Since the date of the last
financial statement included in Seller's Financial Information, there has been
no material adverse change in the financial condition or in the operations of
the Property. Unless assumed by the Purchaser, or Purchaser's lessee or
management company, neither Purchaser nor Purchaser's lessee or its management
company shall have any liability under any pension, profit sharing or welfare
benefit plan that Seller, its management company or any Affiliated Company may
have established with respect to the Property or their or its employees. To
Seller's knowledge, all such pension, profit sharing and welfare benefit plans
have been fully funded and administered in accordance with Applicable Laws and
regulations.

      3.14 Bankruptcy. No Act of Bankruptcy has occurred with respect to Seller.

      3.15 Historical Districts. Neither the Property, nor any portion thereof,
is (a) listed, or eligible to be listed, in any national, state or local
register of historic places or areas, or (b) located within any designated
district or area in which the permitted uses of land located therein are
restricted by regulations, rules or laws other than those specified under local
generally applicable zoning ordinances.

      3.16 Hazardous Substances. To Seller's knowledge, neither Seller nor any
previous owner, tenant, occupant or user of the Property, nor any other person,
has engaged in or permitted any operations or activities upon, or any use or
occupancy of the Property or any portion thereof, for the purpose of or in any
way involving the handling, manufacture, treatment, storage, use, generation,
release, discharge, refining, dumping or disposal of any Hazardous Materials on,
under, in or about the Property in violation of any Applicable Laws. To Seller's
knowledge, no Hazardous Materials have migrated from or to the Property upon,
about, or beneath other properties in violation of any Environmental
Requirements. To Seller's

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<PAGE>

knowledge, neither the Property nor its existing or prior uses fail or failed
to materially comply with Environmental Requirements. Seller has no knowledge of
any permits, licenses or other authorizations which are required under any
Environmental Requirements with regard to the current uses of the Property which
have not been obtained and complied with. To Seller's knowledge, neither Seller
nor any prior owner, occupant or user of the Property has received any written
notice concerning any alleged violation of Environmental Requirements in
connection with the Property or any liability for Environmental Damages in
connection with the Property for which Seller (or Purchaser after Closing) may
be liable. To Seller's knowledge, no Hazardous Materials are constructed,
deposited, stored or otherwise located on, under, in or about the Property in
violation of any Environmental Requirements. To Seller's knowledge, there exists
no writ, injunction, decree, order or judgment outstanding, nor any lawsuit,
claim, proceeding, citation, summons or investigation, pending or threatened,
relating to any alleged violation of Environmental Requirements on the Property,
or from the suspected presence of Hazardous Materials thereon, or relating to
any Environmental Damages. To Seller's knowledge, no underground or above ground
chemical treatment or storage tanks, or gas or oil wells are located on the
Property.

      3.17 Sales, Use and Occupancy Taxes. All sales, use and occupancy taxes
due and owing with respect to the Property have been paid or will be paid by
Seller within forty-five (45) days after Closing.

      3.18 Personal Property Taxes. All ad valorem personal property taxes due
and owing with respect to the Property have been paid.

      3.19 Occupancy Agreements. There are no leases, concessions or occupancy
agreements in effect with respect to the Real Property other than the Occupancy
Agreements. A complete list of the Occupancy Agreements is attached hereto as
Schedule 4. Except as specifically provided in the Occupancy Agreements, no
tenant or concessionaire is entitled to any rebates, allowances, free rent or
rent abatement for any period after the Closing of the transaction contemplated
hereby. Seller has received no notice of any intention by any of the parties to
any of the Occupancy Agreements to cancel the same, nor has Seller canceled any
of same. To the extent that any of the Occupancy Agreements call for security,
such security remains on deposit with Seller, and has not been applied towards
any payment due under said Occupancy Agreements. Seller has not received any
advance rent or advance compensation under any of said Occupancy Agreements in
excess of one month. No brokerage commissions or compensation of any kind shall
be due in connection with the Occupancy Agreements, and the rents or revenues to
be derived therefrom. To Seller's knowledge, no party is in default under any
Occupancy Agreement. To Seller's knowledge, Seller has performed all obligations
required of it under all of the Occupancy Agreements and there remain no
unfulfilled obligations of Seller under the Occupancy Agreements. To Seller's
knowledge, no tenant has given notice to Seller of its intention to institute
litigation with respect to any Occupancy Agreement.

      3.20 Utilities. To Seller's knowledge, all Utilities required for the
operation of the Property either enter the Property through adjoining streets,
or they pass through adjoining land, do so in accordance with valid public
easements or irrevocable private easements, and all of said

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Utilities are installed and operating and all installation and connection
charges therefor have been paid in full.

      3.21 Curb Cuts. To Seller's knowledge, all curb cut street opening permits
or licenses required for vehicular access to and from the Property from any
adjoining public street have been obtained and paid for and are in full force
and effect.

      3.22 Leased Property. To Seller's knowledge, all leases of the Leased
Property are in good standing and free from default.

      3.23 Advance Bookings. To Seller's knowledge, the Advance Bookings are
true and correct in all material respects.

      3.24 Americans With Disabilities Act. To Seller's knowledge, the Property
is in compliance with the Americans With Disabilities Act.

      3.25 Structural Condition. To Seller's knowledge, there is no latent
material defect in the Improvements or structural elements thereof, mechanical
systems (including, without limitation, all heating, ventilating, air
conditioning, plumbing, electrical, utility and sprinkler systems) therein, the
utility system servicing the Property and the roofs.

      3.26 Zoning and Platting. To Seller's knowledge, the present zoning of the
Property permits the current use thereof without special variances. Seller has
no knowledge of any fact, proceeding or threatened action or proceeding which
could result in a modification or termination of the present zoning of the
Property. To Seller's knowledge, each Property is properly platted as a separate
lot under Applicable Laws and constitute separate tax lots.

      3.27 Access. Seller has no knowledge of any pending or threatened
governmental proceeding or any other fact or condition which would limit or
result in the termination of the Property's existing access to and from public
streets or roads.

      3.28 No Commitments. No commitments have been made by Seller to any
Governmental Authority, utility company, school board, church or other religious
body, or any homeowners' association or any other organization, group or
individual, relating to the Property which would impose an obligation upon
Purchaser to make any contribution or dedication of money or land or to
construct, install or maintain any improvements of a public or private nature on
or off the Property.

      3.29 Seller Is Not a "Foreign Person". Seller is not a "foreign person"
within the meaning of Section 1445 of the Internal Revenue Code, as amended
(i.e., Seller is not a foreign corporation, foreign partnership, foreign trust,
foreign estate or foreign person as those terms are defined in the Internal
Revenue Code and regulations promulgated thereunder).

      3.30 No Other Property Interests. There are no property interests,
buildings, structures or other improvements or personal property that are owned
by Seller which are necessary for the operation of the Hotels that are not being
conveyed pursuant to this Agreement.

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Except as set forth in this Article III and except as to the specific
representation and warranty set forth in the last paragraph of Section 2.4(b)
with respect to the Submission Matters or contained in any Closing Document,
Seller makes no other representations or warranties, express or implied of any
kind. Each of the representations and warranties contained in this Article III
and its various subparagraphs and in Section 2.4(b) with respect to the
Submission Matters are intended for the benefit of Purchaser and may be waived
in whole or in part, by Purchaser, but only by an instrument in writing signed
by Purchaser. All rights and remedies arising in connection with the untruth or
inaccuracy of any such representations and warranties shall survive the Closing
of the transaction contemplated hereby except to the extent that Seller gives
Purchaser written notice prior to Closing of the untruth or inaccuracy of any
representation or warranty, or Purchaser otherwise obtains actual knowledge
prior to Closing of the untruth or inaccuracy of any representation or warranty,
and Purchaser nevertheless elects to close this transaction. Any such written
notice from Seller to Purchaser shall state in the first paragraph thereof and
in all capitalized letters that "THIS NOTICE IS GIVEN PURSUANT TO THE AGREEMENT
OF PURCHASE AND SALE MADE AS OF MAY __, 2004, AND RELATES TO THE UNTRUTH OR
INACCURACY OF SELLER'S REPRESENTATIONS OR WARRANTIES." Purchaser shall be deemed
to have actual knowledge of the untruth or inaccuracy of any representation or
warranty only if (i) Purchaser receives written notice from Seller satisfying
the foregoing requirements, or (ii) David A. Brooks has actual knowledge of any
such untruth or inaccuracy. Except to the extent otherwise expressly provided in
the immediately preceding sentence, no investigation, audit, inspection, review
or the like conducted by or on behalf of Purchaser shall be deemed to terminate
the effect of any such representations, warranties and covenants, it being
understood that Purchaser has the right to rely thereon and that each such
representation and warranty constitutes a material inducement to Purchaser to
execute this Agreement and to close the transaction contemplated hereby and to
pay the Purchase Price to Seller.

Notwithstanding anything herein contained to the contrary, Seller's
representations and warranties in this Article III and in the last paragraph of
Section 2.4(b) with respect to the Submission Matters shall survive the Closing
Date for a period of one (1) year thereafter, provided that the party claiming a
breach within said one (1) year period notifies the other party in writing of
any damage, claim, loss, liability or expense which the Purchaser has determined
has given or could give rise to a claim under Section 9.2 hereof, and such
notice contains a description of the nature and amount (actual or estimated) of
any such claim, together with a statement as to the basis for Seller's
liability. A party's liability under this Agreement for specific breach of any
representation or warranty identified in such notice shall continue beyond the
survival period.

As of the date of execution of this Agreement, the term "to Seller's knowledge"
or similar phrase shall mean the knowledge of one or more of the following
individuals: John Dunn or Bob Jobes. Following the date of execution and
continuing until the Closing Date, the term "to Seller's knowledge" or similar
phrase shall mean the knowledge of one or more of the following individuals:
John Dunn or Bob Jobes, following a commercially reasonable inquiry of Seller's
own personnel involved in the operation, ownership, maintenance and management
of the Property and of its current manager for the Property, and such inquiry
shall include the direction

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<PAGE>

to its personnel and manager to review all files in their possession relating to
the operation, ownership, maintenance and management of the Property.

                                   ARTICLE IV
                   PURCHASER'S REPRESENTATIONS AND WARRANTIES

      To induce Seller to enter into this Agreement and to sell the Property,
Purchaser hereby makes the following representations and warranties, upon each
of which Purchaser acknowledges and agrees that Seller is entitled to rely and
has relied:

      4.1 Organization and Power. Purchaser is a limited partnership duly
formed, validly existing and in good standing under the laws of the State of
Delaware, and has all partnership power and all governmental licenses,
authorizations, consents and approvals required to carry on its business as now
conducted and to enter into and perform its obligations under this Agreement and
any document or instrument required to be executed and delivered on behalf of
Purchaser hereunder.

      4.2 Authorization and Execution. This Agreement has been duly authorized
by all necessary action on the part of Purchaser, has been duly executed and
delivered by Purchaser, constitutes the valid and binding agreement of Purchaser
and is enforceable in accordance with its terms. The person executing this
Agreement on behalf of Purchaser has the authority to do so.

      4.3 Non-contravention. The execution and delivery of this Agreement and
the performance by Purchaser of its obligations hereunder do not and will not
contravene, or constitute a default under, any provisions of applicable law or
regulation, or any agreement, judgment, injunction, order, decree or other
instrument binding upon Purchaser or result in the creation of any lien or other
encumbrance on any asset of Purchaser.

      4.4 Litigation. There is no action, suit or proceeding, pending or known
to be threatened, against or affecting Purchaser in any court or before any
arbitrator or before any Governmental Authority which (a) in any manner raises
any question affecting the validity or enforceability of this Agreement or any
other agreement or instrument to which Purchaser is a party or by which it is
bound and that is to be used in connection with, or is contemplated by, this
Agreement, (b) could materially and adversely affect the business, financial
position or results of operations of Purchaser, and (c) could materially and
adversely affect the ability of Purchaser to perform its obligations hereunder,
or under any document to be delivered pursuant hereto.

      4.5 Bankruptcy. No Act of Bankruptcy has occurred with respect to
Purchaser.

                                    ARTICLE V
                              CONDITIONS PRECEDENT

      5.1 As to Purchaser's Obligations. Purchaser's obligations hereunder are
subject to the satisfaction of the following conditions precedent:

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            (a) Seller's Deliveries. Seller shall have delivered to or for the
benefit of Purchaser, on or before the Closing Date, all of the documents and
other information required of Seller pursuant to Sections 7.2 and 7.4 hereof,
unless, as set forth therein, such matters have previously been provided or made
available to Purchaser for copying during the Study Period (if originals are not
in the possession or control of Seller).

            (b) Representations, Warranties and Covenants; Obligations of
Seller; Certificate. All of Seller's representations and warranties made in this
Agreement shall be true and correct in all material respects as of the date
hereof and as of the date of Closing as if then made; there shall have been no
material adverse change in the business conducted at a Property or the financial
results thereof from the date of acceptance of this Agreement and no matter,
condition or event shall have occurred which could materially and adversely
affect the operation, value or marketability of a Property or any part thereof;
Seller shall have performed in all material respects all of its covenants and
other obligations under this Agreement and Seller shall have executed and
delivered to Purchaser at Closing a certificate to the foregoing effect.

            (c) Title Insurance. Good and marketable fee simple title to the
Real Property shall be insurable as such by the Title Company subject only to
Permitted Title Exceptions as determined in accordance with Section 2.4 hereof
and including, without limitation, all applicable deletions of standard
exceptions and endorsements permitted under applicable state law which are
customarily required by institutional investors purchasing property comparable
to the Property.

            (d) Surveys. The Surveys shall be adequate for the Title Company to
delete any exception for general survey matters in the Owner's Title Policy
except for "shortages in area".

            (e) Title to Property. Seller shall be the sole owner of good and
marketable fee simple title to the Real Property and good and marketable fee
simple title to the Tangible Personal Property, free and clear of all liens,
encumbrances, restrictions, conditions and agreements except for Permitted Title
Exceptions. Seller shall not have taken any action or permitted or suffered any
action to be taken by others from the date hereof and through and including the
date of Closing that would adversely affect the status of title to the Real
Property and Tangible Personal Property.

            (f) Condition of Improvements. The Improvements and the Tangible
Personal Property (including but not limited to the mechanical systems,
plumbing, electrical, wiring, appliances, fixtures, heating, air conditioning
and ventilating equipment, elevators, boilers, equipment, roofs, structural
members and furnaces) shall be in the same condition at Closing as they are as
of the date hereof, reasonable wear and tear excepted. Prior to Closing, Seller
shall not have diminished the quality or quantity of maintenance and upkeep
services heretofore provided to the Real Property and the Tangible Personal
Property (except in the ordinary course of business and consistent with Seller's
past practices) and, except in the ordinary course of business as consistent
with Seller's past practices, Seller shall not have diminished the Inventory at
each Hotel without replacing same as necessary to continue Seller's business at
such Hotels. Seller shall not have removed or caused or permitted to be removed
any

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<PAGE>

part or portion of the Real Property or the Tangible Personal Property without
Purchaser's prior written consent unless the same is replaced, prior to Closing,
with a similar item of at least equal suitability, quality and value, free and
clear of any lien or security interest.

            (g) Liquor License. All liquor licenses, alcoholic beverage licenses
and other permits and Authorizations necessary to operate the restaurants, bars
and lounges presently located in the Hotels shall be in full force and effect.
To that end, Seller and Purchaser shall have cooperated with each other, and
each shall have executed such transfer forms, license applications and other
documents as may be necessary to effect the continued operation of the
restaurants, bars and lounges at the Hotels from and after Closing as set forth
in Section 6.9 hereof.

            (h) Taxes. Seller shall use its best efforts to provide to Purchaser
written evidence from the appropriate taxing authorities of the payment of all
sales, gross receipts, hotel occupancy and other similar taxes in connection
with the operation of the Hotels before Closing. In the event for any Hotel,
Seller is unable or unwilling to obtain such clearance certificates prior to
Closing, Purchaser shall cause John Dunn to deliver to Purchaser a guaranty in
form and substance reasonably acceptable to Purchaser on or before Closing (the
"Guaranty"). Notwithstanding the foregoing, Seller shall indemnify Purchaser for
the amount by which the full amount of all such sales, gross receipts, hotel
occupancy and other similar taxes in connection with the operation of the Hotels
before Closing exceeds the amount so withheld by Purchaser. The provisions of
this Section 5.1(h) shall survive the Closing.

            (i) Estoppels for Off-Site Facility Agreements. On or before the
Closing Date, Seller shall provide Purchaser with a fully executed estoppel
certificate related to each of the Off-Site Facility Agreements, if any, (the
"Off-Site Facility Estoppel"). The Off-Site Facility Estoppel must be in a form
reasonably satisfactory to Purchaser. To that end, Purchaser shall provide
Seller with a recommended form of Off-Site Facility Estoppel within fifteen (15)
days after the delivery of the Surveys and Title Commitments to Purchaser.

            (j) Third-Party Consents. On or before the Closing Date, Seller
shall furnish Purchaser, in form and content reasonably satisfactory to
Purchaser, with any and all third party consents (the "Third Party Consents"),
which are necessary to consummate the transaction contemplated in this
Agreement.

            (k) Tenant Estoppels. On or before the Closing Date, Seller shall
provide Purchaser with fully executed estoppel certificates ("Major Tenant
Estoppels") from one-hundred percent (100%) of the tenants occupying over 2,000
square feet of the Hotels ("Major Tenants"), and shall provide Purchaser with
fully executed estoppel certificates from at least seventy-five percent (75%) of
the tenants occupying less than 2,000 square feet of the Hotels (the Major
Tenant Estoppels and all other tenant estoppels provided for in this paragraph
are sometimes referred to collectively as the "Tenant Estoppels"). The Tenant
Estoppels shall be in a form reasonably satisfactory to Purchaser. To that end,
Purchaser shall provide Seller with a recommended form of Tenant Estoppel within
fifteen (15) days after the delivery of the Surveys and Title Commitments to
Purchaser. In the event Seller fails to procure the appropriate percentage of
fully executed Tenant Estoppels, Purchaser may, at its election, (i) terminate
this

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<PAGE>

Agreement, in which case the Deposit shall be promptly returned to Purchaser,
and all rights and obligations of Seller and Purchaser hereunder (except those
which expressly survive a termination of this Agreement) shall terminate
immediately or (ii) Purchaser may proceed to Closing and Seller shall, with
respect to the undelivered Tenant Estoppels, execute and deliver to Purchaser
estoppels conforming to the requirements of the Tenant Estoppels. As of the date
of this Agreement, there are no Major Tenants at the Hotels.

            (l) No Code Violations. There shall be no material violations of
Applicable Laws.

            (m) Management Agreements. Seller agrees that Purchaser shall have
the right on or before expiration of the Study Period to either (a) elect that
Manager operate the Property for a period of three (3) years to expire on the
third anniversary date of Closing subject to a new management agreement in form
and substance acceptable to Purchaser and Manager (the "New Management
Agreement") to be negotiated and finalized prior to the expiration of the Study
Period (the "Management Election"), or (b) to elect that Purchaser engage its
own manager to operate the Property. Seller and Purchaser agree that in any
event, the Management Agreements shall be terminated on or before Closing.

            (n) Franchise Agreements. Purchaser shall have received, in a form
reasonably acceptable to Purchaser, a consent from each Franchisor under each of
the Franchise Agreements consenting to the assignment and assumption of the
Franchise Agreements, together with an estoppel certificate wherein each
Franchisor represents that a true, correct and complete copy of the Franchise
Agreements have been provided to Purchaser and that there are no events of
default under said Franchise Agreements, or any event which, after the passage
of time or the giving of notice, or both, would constitute an event of default
thereunder.

Each of the conditions contained in this Section are intended for the benefit of
Purchaser and may be waived in whole or in part, by Purchaser, but only by an
instrument in writing signed by Purchaser.

      5.2 As to Seller's Obligations. Seller's obligations hereunder are subject
to the satisfaction of the following conditions precedent:

            (a) Purchaser's Deliveries. Purchaser shall have delivered to or for
the benefit of Seller, on or before the Closing Date, all of the documents and
payments required of Purchaser pursuant to Sections 7.3 and 7.4 hereof.

            (b) Representations, Warranties and Covenants; Obligations of
Purchaser. All of Purchaser's representations and warranties made in this
Agreement shall be true and correct in all material respects as of the date
hereof and as of the date of Closing as if then made and Purchaser shall have
performed in all material respects all of its covenants and other obligations
under this Agreement.

Each of the conditions contained in this Section are intended for the benefit of
Seller and may be waived in whole or in part, by Seller, but only by an
instrument in writing signed by Seller.

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                                   ARTICLE VI
                              COVENANTS OF SELLER

      To induce Purchaser to enter into this Agreement and to purchase the
Property, and to pay the Purchase Price therefor, each Seller covenants and
agrees to the following with respect to the Property owned by such Seller:

      6.1 Operating Agreements/Off-Site Facility Agreements. All Operating
Agreements or Off-Site Facility Agreements are terminable upon either 15 days or
30 days notice. Seller shall not enter into any new management agreement,
maintenance or repair contract, supply contract, lease in which it is lessee or
other agreements with respect to the Property, nor shall Seller enter into any
agreements modifying the Operating Agreements or Off-Site Facility Agreements,
unless (a) any such agreement or modification will not bind Purchaser or the
Property after the date of Closing or is subject to termination on not more than
thirty (30) days' notice without penalty, or (b) Seller has obtained Purchaser's
prior written consent to such agreement or modification. Seller agrees to cancel
and terminate on the Closing Date any Operating Agreements or Off-Site Facility
Agreements unless Purchaser requests in writing prior to the expiration of the
Study Period that one or more remain in effect after Closing. Purchaser shall be
responsible for the term of any Operating Agreement or Off-Site Facility
Agreement continuing after Closing.

      6.2 Warranties and Guaranties. Seller shall not before or after Closing
release or modify any Warranties and Guaranties, if any, except with the prior
written consent of Purchaser.

      6.3 Insurance. Seller shall pay all premiums on, and shall not cancel or
voluntarily allow to expire, any of Seller's Insurance Policies unless such
policy is replaced, without any lapse of coverage, by another policy or policies
providing coverage at least as extensive as the policy or policies being
replaced.

      6.4 Independent Audit. Promptly following the execution of this Agreement
and prior to Closing, Seller shall make available and shall cause its management
company to make available to Purchaser's representatives and independent
accounting firm at the Seller's principal place of business (or shall deliver to
Purchaser, at Purchaser's cost and expense if so requested by Purchaser)
financial and other information relating to the Property in the possession of or
otherwise available to Seller, its affiliates or Seller's management company
which would be sufficient to enable Purchaser's representatives and independent
accounting firm to prepare audited financial statements for the three (3)
calendar years prior to the Closing and during the year in which the Closing
occurs in conformity with generally accepted accounting principles and to enable
them to prepare such statements, reports or disclosures as Purchaser may deem
necessary or advisable. Seller shall also provide and/or shall cause its
management company to make reasonable efforts to provide to Purchaser's
independent accounting firm a signed representation letter which would be
sufficient to enable an independent public accountant to render an opinion on
the financial statements related to the Property. Seller shall authorize and
shall cause its management company to authorize any attorneys who have
represented Seller or its management company in material litigation pertaining
to or affecting the Property to respond,

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at Purchaser's expense, to inquiries from Purchaser's representatives and
independent accounting firm. If and to the extent Seller's financial statements
pertaining to the Property for any periods during the three (3) calendar years
prior to the Closing and during the year in which the Closing occurs have been
audited, promptly after the execution of this Agreement Seller shall provide
Purchaser with copies of such audited financial statements and shall cooperate
with Purchaser's representatives and independent public accountants to enable
them to contact the auditors who prepared such audited financial statements and
to obtain, at Purchaser's expense, a reissuance of such audited financial
statements.

      6.5 Operation of Property Prior to Closing. Seller covenants and agrees
with Purchaser that, between the date of this Agreement and the date of Closing:

            (a) Subject to the restrictions contained herein, Seller shall
operate the Property in the same manner in which Seller operated the Property
prior to the execution of this Agreement, so as to keep the Property in good
condition, reasonable wear and tear excepted, so as to maintain consistent
inventory levels, so as to maintain the existing caliber of the Hotels
operations conducted at the Property, and so as to maintain the reasonable good
will of all tenants of the Property and all employees, guests and other
customers of the Hotels.

            (b) Seller shall maintain its books of account and records in the
usual, regular and ordinary manner, in accordance with sound accounting
principles applied on a basis consistent with the basis used in keeping its
books in prior years.

            (c) Seller shall maintain in full force and effect all Insurance
Policies.

            (d) Seller shall maintain in full force and effect, and not cause or
permit a default under (with or without the giving of any required notice and/or
lapse of time), the Franchise Agreements and/or the Management Agreements.

            (e) Seller shall use and operate the Property in material compliance
with Applicable Laws and the requirements of the Franchise Agreements, the
Management Agreements, any mortgage, and any lease, Occupancy Agreement,
Operating Agreement and Insurance Policy affecting the Property.

            (f) Seller shall cause to be paid prior to delinquency all ad
valorem, occupancy and sales taxes due and payable with respect to the Property
or the operation of the Hotels.

            (g) Except as otherwise permitted hereby, Seller shall not take any
action or fail to take action the result of which would have a material adverse
effect on the Property or Purchaser's ability to continue the operation thereof
after the date of Closing in substantially the same manner as presently
conducted, or which would cause any of the representations and warranties
contained in Article III hereof to be untrue as of Closing in any material
respect.

            (h) Except in the ordinary course of Seller's business as consistent
with Seller's past practices, Seller shall not enter into new Occupancy
Agreements of any kind or nature affecting the Property without the express
written consent of Purchaser. Except in the

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<PAGE>

ordinary course of Seller's business as consistent with Seller's past practices,
Seller shall not, without the express written consent of Purchaser, in any
manner change, modify, extend, renew or terminate any Occupancy Agreement except
as required by the terms thereof. Copies of any new Occupancy Agreement or
modifications, renewals, extensions or terminations shall be promptly delivered
to Purchaser. Seller shall not apply all or any part of the security or damage
deposit of a tenant under any Occupancy Agreement to obligations of such tenant
unless such tenant has vacated its portion of the Property as of the Closing
Date.

            (i) Seller shall not fail to maintain the Improvements and the
Tangible Personal Property (including, but not limited to, the mechanical
systems, plumbing, electrical, wiring, appliances, fixtures, heating, air
conditioning and ventilating equipment, elevators, boilers, equipment, roofs,
structural members and furnaces) in the same condition as they are as of the
date hereof, reasonable wear and tear excepted.

            (j) Seller shall not diminish the quality or quantity of maintenance
and upkeep services heretofore provided to the Real Property and the Tangible
Personal Property and Seller shall not permit the Inventory to be diminished
other than as a result of the ordinary and necessary operation of the Hotels by
Seller.

            (k) Seller shall not remove or cause or permit to be removed any
part or portion of the Real Property or the Tangible Personal Property without
the express written consent of Purchaser unless the same is replaced, prior to
Closing, with similar items of at least equal suitability, quality and value,
free and clear of any liens or security interests.

            (l) Seller and Seller's managing agent shall continue to use its
best efforts to take guest room reservations and to book functions and meetings
and otherwise to promote the business of the Property in generally the same
manner as Seller did prior to the execution of this Agreement; and all advance
room bookings and reservations and all meetings and function bookings shall be
booked at rates, prices and charges heretofore customarily charged by Seller for
such purposes, and in accordance with Seller's published rate schedules. Seller
acknowledges that the Purchase Price includes the transfer of Advance Bookings.

            (m) Neither Seller nor Seller's managing agent shall (1) make any
agreements which shall be binding upon Purchaser with respect to the Property or
that otherwise cannot be terminated without penalty upon thirty (30) days
notice, or (2) materially reduce or cause to be reduced any room rents or any
other charges over which Seller has operational control.

            (n) Seller shall promptly deliver to Purchaser upon Purchaser's
request such reports showing the revenue and expenses of the Hotels and all
departments thereof, together with such periodic information with respect to
room reservations and other bookings, as Seller customarily keeps or receives
internally for its own use.

            (o) Seller or Seller's managing agent (1) shall not enter into any
new Employment Agreements which would be binding on Purchaser with respect to
the Property without the express written consent of Purchaser, and (2) shall not
change, modify, extend, renew or terminate any Employment Agreement in effect as
of the date hereof which would be

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<PAGE>

binding on Purchaser with respect to the Property without the express written
consent of Purchaser.

            (p) Except as required by the terms thereof or hereof, Seller shall
not in any material manner change, modify, extend, renew or terminate any
Operating Agreement which would be binding on Purchaser with respect to the
Property without the express written consent of Purchaser, and any such change
shall be promptly copied to Purchaser.

            (q) Seller shall promptly advise Purchaser of any litigation,
arbitration or administrative hearing concerning or affecting the Property of
which Seller obtains actual knowledge.

            (r) Seller shall not modify or release any warranties or guaranties
applicable to the Property.

            (s) Seller shall not grant any encumbrances on the Property or
contract for any construction or service for the Property which may impose any
mechanics' or materialmen's lien on the Property, except in the ordinary course
of business as consistent with Seller's past practices and except as removed
and/or cleared or paid prior to Closing.

      6.6 No Marketing. Seller shall not market the Property for sale or enter
into discussions or negotiations with potential purchasers of the Property upon
expiration of the Study Period.

      6.7 Employees and Continuation of Seller's Group Health Plans. Payment of
all costs and expenses associated with accrued but unpaid salary, earned but
unpaid vacation pay, accrued but unearned vacation pay, pension and welfare
benefits, the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended
("COBRA") benefits, employee fringe benefits, employee termination payments or
any other employee benefits due to Seller's, or Seller's management company's
employees up to the Closing Date shall be the sole responsibility and obligation
of and shall be paid promptly by Seller or Seller's management company. Seller
shall indemnify and defend Purchaser and/or its lessee or management company,
from and against any and all claims, causes of action, proceedings, judgments,
damages, penalties and liabilities made, assessed or rendered against Purchaser
and/or its lessee or management company and any costs and expenses (including
attorneys' fees and disbursements) incurred by Purchaser and/or its lessee or
management company with respect to claims, causes of action, judgments, damages,
penalties and liabilities asserted by such employees arising out of the failure
of Seller or its management company to comply with the provisions of this
Subsection 6.9.

      6.8 Rights of First Refusal and Options. Seller shall provide Purchaser
with reasonably satisfactory evidence of the waiver of any and all rights of
first refusal or options related to the Property that may have been granted to
any party

      6.9 Liquor License. Upon Closing, Seller shall transfer to Purchaser or
its designee, or cause to be transferred to Purchaser or its designee, all
liquor licenses and alcoholic beverage licenses necessary to operate the
restaurant, bars and lounges presently located within each

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<PAGE>

Hotel. To that end, Seller and Purchaser shall cooperate each with the other,
and each shall execute such transfer forms, license applications and other
documents as may be necessary to effect such transfer. If permitted under the
laws of the jurisdiction in which each Hotel is located, the parties shall
execute and file all necessary transfer forms, applications and papers with the
appropriate liquor and alcoholic beverage authorities prior to Closing, to the
end that the transfer shall take effect, if possible, on the Closing Date,
simultaneously with Closing. If not so permitted, then the parties agree each
with the other that they will promptly execute all transfer forms, applications
and other documents required by the appropriate liquor and alcoholic beverage
authorities in order to effect such transfer at the earliest date in time
possible consistent with the laws of the State where the Property is located, in
order that all liquor licenses may be transferred from Seller to Purchaser or
its designee at the earliest possible time. If under the laws of the State where
the Property is located, such licenses cannot be transferred until after the
Closing of the transaction contemplated hereby, then Seller covenants and agrees
that Seller shall cooperate with Purchaser in keeping open the bars and lounges
and liquor facilities of the Hotels between the Closing Date and the time when
such liquor license transfers actually become effective, by exercising
management and supervision of such facilities until such time under Seller's
licenses pursuant to a written agreement in form and substance substantially as
attached hereto as Exhibit H (the "Alcoholic Beverage Management Agreement");
provided, however, that Purchaser, at Purchaser's cost and expense, shall
maintain in force and effect at all times insurance reasonably acceptable to
Seller (with Seller as an additional named insured) and shall indemnify and hold
Seller harmless from any liability, damages or claims encountered in connection
with such operations during said period of time, except for Seller's gross
negligence or willful misconduct. All cost and expense of such operations during
said period of time shall be the sole responsibility of and be promptly paid by
Purchaser. All costs and expenses of obtaining the transfer of existing and/or
the issuance of new licenses and permits hereunder shall be the sole
responsibility of Purchaser (except for any legal fees and expenses incurred by
Purchaser in connection with the Alcoholic Beverage Management Agreement, if
applicable). Purchaser covenants and agrees that upon the filing of all
necessary transfer forms, applications and other documents with the appropriate
liquor and alcoholic beverage authorities, Purchaser will diligently and in good
faith prosecute the transfer of the liquor licenses to completion.

                                   ARTICLE VII
                                     CLOSING

      7.1 Closing. The Closing shall occur on a business day designated by
Purchaser, with at least five (5) days notice to Seller (which such day shall be
no later than thirty (30) days following the expiration of the Study Period). As
more particularly described below, at the Closing the parties hereto will meet
to (i) execute all of the documents required to be delivered in connection with
the transactions contemplated hereby (the "Closing Documents"), (ii) deliver the
same to Escrow Agent, and (iii) take all other action required to be taken in
respect of the transactions contemplated hereby. The Closing will occur either
through escrow or at the offices of Andrews Kurth LLP, 1717 Main Street, Suite
3700, Dallas, Texas 75201. At the Closing, Purchaser shall deliver the balance
of the Purchase Price to Escrow Agent, Escrow Agent shall update the title to
the Property and, provided there has been no change in the status of title as
reflected in the Title Commitments and the Surveys, Escrow Agent shall record
the Deeds, release and date, where appropriate, the Closing Documents in
accordance with the instructions

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<PAGE>

of Seller and Purchaser and shall send, by wire transfer or otherwise, all sums
owing to Seller hereunder to Seller. As provided herein, the parties hereto will
agree upon adjustments and prorations to certain items which cannot be exactly
determined at the Closing and will make the appropriate adjustments with respect
thereto. Possession of the Property shall be delivered to Purchaser at the
Closing, subject only to Permitted Title Exceptions and the rights of tenants
under the Occupancy Agreements and guests in possession.

      7.2 Seller's Deliveries. At the Closing, each Seller shall deliver to
Escrow Agent originals of all of the following instruments for the Property
owned by such Seller (unless previously provided or made available to Purchaser
for copying during the Study Period and originals are not in the possession or
within the control of Seller), each of which shall have been duly executed and,
where applicable, acknowledged and/or sworn on behalf of such Seller and shall
be dated as of the Closing Date:

            (a) The certificate required by Section 5.1(b) hereof.

            (b) The Deeds, each in the form attached hereto as Exhibit F.

            (c) Intentionally Deleted.

            (d) The Bill of Sale, in the form attached hereto as Exhibit E.

            (e) The Assignment of Occupancy Agreements, in the form attached
hereto as Exhibit G.

            (f) The Assignment and Assumption Agreement, in the form attached
hereto as Exhibit D.

            (g) Off-Site Facility Estoppels, Tenant Estoppels (Seller's
estoppel, if necessary) and All Third Party Consents.

            (h) Certificates from the applicable State taxing authority and
local taxing authorities stating that all occupancy, sales and ad valorem real
and personal property taxes due and payable for the Property have been paid and,
if any such taxes have not been paid, the amount due and payable as of the
Closing Date, and if such certificates are not delivered at Closing, the
Guaranty.

            (i) Certificate(s)/Registration of Title for any vehicle owned by
Seller and used in connection with the Property.

            (j) Such agreements, affidavits or other documents as may be
required by the Title Company to issue the Owner's Title Policy subject only to
the Permitted Title Exceptions and to eliminate such standard exceptions and to
issue such endorsements thereto which may be eliminated and issued under
applicable State law and which are customarily required by institutional
investors purchasing property comparable to the Property.

            (k) The FIRPTA Certificate.

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            (l) All original Warranties and Guaranties in Seller's possession or
reasonably available to Seller.

            (m) Copies of Seller's Organizational Documents.

            (n) Appropriate resolutions of the partners, members or officers of
Seller, together with all other necessary approvals and consents of Seller and
such documentary and other evidence as may be reasonably required by Purchaser
or Escrow Agent, authorizing and evidencing the authorization of (i) the
execution on behalf of Seller of this Agreement and the authority of the person
or persons who are executing the various documents to be executed and delivered
by Seller prior to, at or otherwise in connection with the Closing, and (ii) the
performance by Seller of its obligations hereunder and under such documents.

            (o) A valid, final and unconditional certificate of occupancy for
each Real Property and Improvements, issued by the appropriate Governmental
Authority.

            (p) If Purchaser is assuming Seller's obligations under any or all
of the Operating Agreements or Off-Site Facility Agreements, to the extent in
Seller's possession or reasonably available to Seller, the originals of such
agreements, duly assigned to Purchaser and with such assignment acknowledged and
approved by the other parties to such Operating Agreements or Off-Site Facility
Agreements to the extent required by such Operating Agreements or Off-Site
Facility Agreements.

            (q) An assignment of each of the leases of the Leased Property to
Purchaser and/or its property manager, lessee or other designee (as Purchaser
shall specify), together with (1) the written consent of the lessors of such
leases to such assignment, if required by such leases, and (2) executed
originals of all such leases in Seller's possession or reasonably available to
Seller. If any Leased Property is leased pursuant to a lease which is a capital
lease, in accordance with generally accepted accounting principles, Seller shall
cancel such capital lease at its expense and convey good and marketable title to
such property (which shall constitute Tangible Personal Property hereunder) to
Purchaser and/or its property manager, lessee or other designee (as Purchaser
shall specify) free from any lien or encumbrance pursuant to the Bill of Sale -
Personal Property.

            (r) Such proof as Purchaser may reasonably require with respect to
Seller's compliance with the bulk sales laws or similar statutes, if applicable.

            (s) Copies of all existing Insurance Policies.

            (t) To the extent in Seller's possession or reasonably available to
Seller, originals of the following items (copies of which were delivered by
Seller to Purchaser with the Submission Matters): (1) complete sets of all
architectural, mechanical, structural and/or electrical plans and specifications
used in connection with the construction of or alterations or repairs to the
Property; and (2) as-built plans and specifications for the Property.

            (u) A written instrument executed by Seller, conveying and
transferring to Purchaser all of Seller's right, title and interest in any
telephone numbers and TWX numbers

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<PAGE>

relating to the Property, and, if Seller maintains a post office box, conveying
to Purchaser all of its interest in and to such post office box and the number
associated therewith, so as to assure a continuity in operation and
communication.

            (v) Duplicate originals of all agreements, leases, concession
agreements and other instruments affecting the Property and the Hotels and/or
restaurant business conducted thereon.

            (w) All current real estate and personal property tax bills in
Seller's possession or under its control.

            (x) An Affidavit from the chief executive officer of Seller or
Seller's management company, setting forth the date to which all employees have
been paid and setting forth and describing, in detail, as to each employee, all
accrued but unpaid vacation pay, a description of whether any of Seller's
employees are participating in Seller's group health plan through the exercise
of COBRA benefits and all other fringe benefits.

            (y) A complete set of all guest registration cards, guest
transcripts, guest histories, and all other available guest information.

            (z) All surveys and plot plans of the Real Property in possession of
or in the control of Seller.

            (aa) An updated schedule of employees, showing salaries and duties,
with a statement of the length of service of each such employee, brought current
to a date not more than forty-eight (48) hours prior to the Closing.

            (bb) A complete list of all advance room reservations, functions and
the like, in reasonable detail so as to enable Purchaser to honor Seller's
commitments in that regard.

            (cc) A list of Seller's outstanding accounts receivable as of
midnight on the date prior to the Closing, specifying the name of each account
and the amount due Seller.

            (dd) A list of all vendors and suppliers servicing the Hotels.

            (ee) All books, records, operating reports, appraisal reports, files
and other materials in Seller's possession or control which are necessary in
Purchaser's discretion to maintain continuity of operation of the Property.

            (ff) Written notice executed by Seller notifying all interested
parties, including, without limitation, all tenants under any Occupancy
Agreements, that the Property has been conveyed to Purchaser and directing that
all payments, inquiries and the like be forwarded to Purchaser at the address to
be provided by Purchaser.

            (gg) A current UCC Report showing no financing statements by Seller
as Debtor covering the Property.

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<PAGE>

            (hh) Executed originals of all Occupancy Agreements, Employment
Agreements and, to the extent available, Authorizations transferred or assigned
to Purchaser at Closing as required hereunder.

            (ii) Evidence in writing that Seller and Manager have terminated the
Management Agreements.

            (jj) If Purchaser makes the Management Election, the New Management
Agreement.

            (kk) A termination of the lease agreement between Dunn Group of
Indiana, as landlord, and Dunn Family Associates, LLP, as tenant.

            (ll) Any other document or instrument reasonably necessary or
required to consummate the transactions contemplated by this Agreement.

      7.3 Purchaser's Deliveries. At the Closing, Purchaser shall deliver to
Escrow Agent all of the following, each of which, if required, shall have been
duly executed and, where applicable, acknowledged and/or sworn on behalf of
Purchaser and shall be dated as of the Closing Date:

            (a) The portion of the Purchase Price described in Section 2.2
hereof.

            (b) The Assignment and Assumption Agreement.

            (c) The Assignment of Occupancy Agreements.

            (d) If Purchaser makes the Management Election, the New Management
Agreement.

            (e) Any other document or instrument reasonably necessary or
required to consummate the transactions contemplated by this Agreement.

      7.4 Mutual Deliveries. At the Closing, Purchaser and Seller shall mutually
execute and deliver each to the other:

            (a) A final closing statement reflecting the Purchase Price and the
adjustments and prorations required hereunder and the allocation of income and
expenses required hereby.

            (b) The Alcoholic Beverage Management Agreement and such other
documents, instruments and undertakings as may be required by the liquor
authorities of the State where the Property is located, or of any county or
municipality or governmental entity having jurisdiction with respect to the
transfer or issue of liquor licenses or alcoholic beverage licenses or permits
for the Hotels, to the extent not theretofore executed and delivered.

            (c) Such other and further documents, papers and instruments as may
be reasonably required by the parties hereto or their respective counsel.

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<PAGE>

      7.5 Closing Costs. Except as is explicitly provided in this Agreement,
each party hereto shall pay its own legal fees and expenses. The escrow fees,
costs of title examination and the title insurance premium for the issuance of
the Title Policy shall be shared equally between Seller and Purchaser. All
filing fees for the Deeds shall be paid by Seller. All costs of supplying tax
certificates to the title company shall be paid by Seller. The transfer,
recording, sales or other similar taxes and surtaxes due with respect to the
transfer of title shall be paid by Seller. Seller shall pay for all prepayment
charges or other costs associated with the releases of any deeds of trust,
mortgages and other financing encumbering the Property and for any costs
associated with any corrective instruments. The UCC Searches, endorsements to
the Title Policy and the costs of any Property inspections shall be paid by
Purchaser. The Purchaser shall pay all costs and expenses associated with the
Surveys, however, if the Closing is consummated, Purchaser shall be allowed a
credit against the Purchase Price for such costs and expenses at Closing. All
other costs (except any costs incurred by Seller for its own account) which are
necessary to carry out the transactions contemplated hereunder shall be
allocated between Purchaser and Seller in accordance with local custom in the
jurisdiction in which the Property is located. Any and all costs incurred in
obtaining a product improvement plan and related inspection fees with respect to
the Franchise Agreements, including transfer fees with respect to the Franchise
Agreements, shall be paid by Purchaser.

      7.6 Revenue and Expense Allocations. All revenues and expenses with
respect to the Property, and applicable to the period of time before and after
Closing, determined in accordance with sound accounting principles consistently
applied, shall be allocated between Seller and Purchaser as provided herein.
Seller shall be entitled to all revenue and shall be responsible for all
expenses for the period of time up to but not including the date of Closing, and
Purchaser shall be entitled to all revenue and shall be responsible for all
expenses for the period of time from, after and including the date of Closing
(provided that housekeeping costs and the Rooms Ledger for the date of Closing
shall be shared equally between Purchaser and Seller). Such adjustments shall be
shown on the closing statements (with such supporting documentation as the
parties hereto may require being attached as exhibits to the closing statements)
and shall increase or decrease (as the case may be) the cash amount payable by
Purchaser pursuant to Section 2.2 hereof. Without limiting the generality of the
foregoing, the following items of revenue and expense shall be allocated at
Closing:

            (a) Current rents.

            (b) Real estate and personal property taxes.

            (c) Revenue and expenses under the Operating Agreements and Off-Site
Facility Agreements to be assigned to and assumed by Purchaser.

            (d) Utility charges (including, but not limited to, charges for
water, sewer and electricity).

            (e) Municipal or other governmental improvement liens, which shall
be paid by Seller at Closing where the work has physically commenced, and which
shall be assumed by Purchaser at Closing where the work has been authorized, but
not physically commenced.

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            (f) Insurance premiums, to the extent required hereby.

            (g) License and permit fees, where transferable.

            (h) All other revenues and expenses of the Property, including, but
not limited to, such things as restaurant, bar and meeting room income and
expenses and the like.

            (i) The Rooms Ledger and housekeeping costs for the date of Closing
(to be apportioned equally between Seller and Purchaser).

            (j) Such other items as are usually and customarily prorated between
purchasers and sellers of hotel properties in the area where the Property is
located.

Purchaser shall receive a credit against the Purchase Price for the total of (i)
prepaid rents, (ii) prepaid room receipts and deposits, function receipts and
deposits and other reservation receipts and deposits, (iii) unforfeited security
deposits together with interest thereon held by Seller under Occupancy
Agreements, and (iv) the value of any complimentary rooms (based upon the "rack"
rate for each room) and any complimentary food or beverages (based upon the
advertised rate for each food and beverage) provided by Seller from and after
6:00 a.m. on the Closing Date. At Closing, Seller shall sell to Purchaser in
connection with the Hotels, and Purchaser shall purchase from Seller, at face
value: (i) all petty cash funds in the hands of the Seller (or its manager) in
connection with the Hotel guest operations at the Property; and (ii) the
so-called "guest ledger" as mutually approved by Purchaser and Seller for the
Hotels of guest accounts receivable payable to the Hotels as of the check out
time for the Hotels on the Closing Date (based on guests and customers then
using the Hotels) both (1) in occupancy from the preceding night through check
out time the morning of the Closing Date, and (2) previously in occupancy prior
to check out time on the Closing Date; provided, however, that the term "guest
ledger" shall not include any accounts receivable which have been or are to be
paid by any means other than a credit card. Purchaser shall not be obligated to
purchase such non-credit card accounts receivable. For purposes of this
Agreement, transfer or sale at face value shall have the following meanings: (i)
for petty cash, an amount equal to the total of all petty cash funds on hand and
transferred to Purchaser; and (ii) for the guest ledger, the total of all credit
card accounts receivable as shown on the records of the Hotels, less actual
collection costs (i.e., fees retained by credit card companies), less accounting
charges for rooms furnished on a gratuity or complimentary basis to any hotel
staff or as an accommodation to other parties and less Purchaser's one-half
(-1/2) share of Rooms Ledger. The purchase price of said petty cash fund and
guest ledger, as determined above, shall be paid to Seller at Closing by a
credit to Seller in the computation of the adjustments and prorations on the
Closing Date.

Seller shall pay or cause to be paid a prorate amount of the real property taxes
for the Property due and payable in November 2004 based on the number of days
Seller owned the Property in 2004 relative to the total number of days in 2004
up to the date such real property taxes are due and payable. Purchaser will pay
all such taxes due and payable thereafter. All special assessments pending,
levied or due and payable on or prior to the Closing Date shall be paid by
Seller on or before the Closing Date. All subdivision and platting costs and
expenses heretofore incurred by Seller, including, without limitation, all
subdivision exactions, fees and costs and all

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dedication of land for parks and other public uses or payment of fees in lieu
thereof, shall be paid by Seller on or prior to the Closing Date.

Seller shall be required to pay or cause to be paid on or before the Closing
Date any wages, vacation pay, sick leave, bonuses, pension, profit-sharing and
welfare benefits and other compensation and fringe benefits of all persons
employed at the Property on or before the Closing Date, including any employment
taxes or other fees or assessments attributable thereto.

Seller shall be required to pay all sales, occupancy and liquor taxes and like
impositions currently through the date of Closing and deliver copies of paid
checks and applicable statements to Purchaser.

Seller shall be responsible for payments of amounts owing to third parties in
respect of inventory and supplies ordered by Seller in respect of the Hotels
prior to the Closing Date. Notwithstanding the foregoing, special purchases
needed for future Advance Bookings which have been approved by Purchaser "in
writing" and which relate to the period from and after Closing shall be the
responsibility of Purchaser.

Purchaser shall not be obligated to collect any delinquent rents, accounts
receivable or revenues accrued prior to the Closing Date for Seller, but if
Purchaser collects same, such amounts shall be promptly remitted to Seller in
the form received.

If accurate allocations cannot be made at Closing because current bills are not
obtainable (as, for example, in the case of utility bills and/or real estate or
personal property taxes), the parties shall allocate such revenue or expenses at
Closing on the best available information, subject to adjustment upon receipt of
the final bill or other evidence of the applicable revenue or expense. The
obligation to make the adjustment shall survive the closing of the transaction
contemplated by this Agreement. Any revenue received or expense incurred by
Seller or Purchaser with respect to the Property after the date of Closing shall
be promptly allocated in the manner described herein and the parties shall
promptly pay or reimburse any amount due. The proration provisions of this
Agreement shall survive the closing of the transaction contemplated hereby for a
period of twelve (12) months.

      7.7 Acquisition and Transfer of Inventory and Personal Property. As part
of the Property and included in the Purchase Price, Seller agrees to transfer to
Purchaser or its lessee, property manager or other designee (as Purchaser shall
specify) all inventories of food and beverage and unused reserve stock
(including in-use operating supplies) of linens, towels, paper goods, soaps,
cleaning supplies, china, glassware, silverware and miscellaneous guest
supplies, engineering cleaning supplies and the like at each Hotel
(collectively, the "Inventory") and Personal Property.

      7.8 Product Improvement Plan Requirements. In determining the Purchase
Price, the parties hereto have assumed that product improvement plan
requirements imposed by the Franchisor under the Franchise Agreements in
connection with the contemplated change of ownership ("PIPs") will not exceed
$1,000,000.00 in the aggregate. If Purchaser's reasonable estimates of the final
PIPs for all of the Franchisors exceed $1,000,000.00 in the aggregate, and

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Seller reasonably agrees with Purchaser's estimates, then the Seller will pay
the excess over such $1,000,000.00 of up to $1,500,000.00. If however, such
estimates exceed $1,500,000.00 in the aggregate, Purchaser shall have the right
(prior to the expiration of the Study Period) to either (a) terminate this
Agreement upon written notice to Seller, whereupon the Deposit shall be returned
to Purchaser without any further obligations between the parties hereunder
except for any provisions which expressly survive this Agreement, (b) continue
this Agreement and pay the excess over $1,500,000.00, or (c) obtain a credit to
the Purchase Price by the amount of such excess to which Seller reasonably
agrees up to $1,500,000 (the "PIP Excess") and issue to Seller "Common
Partnership Units" in Purchaser (as defined and described in the agreement of
limited partnership of Purchaser), the number of which (at issuance in value
equal to the PIP Excess) and terms regarding the issuance of such units to be
governed by an amendment to this Agreement in form and substance reasonably
satisfactory to Seller and Purchaser (and in compliance with any public company
requirements imposed on Purchaser by applicable laws).

                                  ARTICLE VIII
                               GENERAL PROVISIONS

      8.1 Condemnation. In the event of any actual or threatened taking,
pursuant to the power of eminent domain, of all or any portion of the Real
Property, or any proposed sale in lieu thereof, Seller shall give written notice
thereof to Purchaser promptly after Seller learns or receives notice thereof. If
all or any part of the Real Property is, or is to be, so condemned or sold
(except for any condemnation or sale which does not affect the Purchaser's
ability to own and operate the Hotels), Purchaser shall have the right to either
terminate this Agreement pursuant to Section 9.3 hereof or terminate the Hotel
subject to such condemnation or sale whereupon the Purchase Price shall be
reduced by the applicable Allocated Purchase Price. If Purchaser elects not to
terminate this Agreement (or if a sale or condemnation occurs for which
Purchaser is not entitled to terminate this Agreement), all proceeds, awards and
other payments arising out of such condemnation or sale (actual or threatened)
shall be paid or assigned, as applicable, to Purchaser at Closing. Seller shall
not settle or compromise any such proceeding without Purchaser's written
consent. If Purchaser elects to terminate this Agreement in its entirety by
giving Seller written notice thereof prior to the Closing, the Deposit shall be
promptly returned to Purchaser and all rights and obligations of Seller and
Purchaser hereunder (except those set forth herein which expressly survive a
termination of this Agreement) shall terminate immediately.

      8.2 Risk of Loss. The risk of any loss or damage to the Property prior to
the Closing shall remain upon Seller. If any such loss or damage occurs prior to
Closing, Purchaser shall have the right to terminate this Agreement pursuant to
Section 9.3 hereof or terminate the Hotel subject to such loss or damage
whereupon the Purchase Price shall be reduced by the applicable Allocated
Purchase Price. If Purchaser elects not to terminate this Agreement, all
insurance proceeds and rights to proceeds arising out of such loss or damage
shall be paid or assigned, as applicable, to Purchaser at Closing and Purchaser
shall receive as a credit against the Purchase Price the amount of any
deductibles under the policies of insurance covering such loss or damage. If
Purchaser elects to terminate this Agreement in its entirety by giving Seller
written notice thereof prior to the Closing, the Deposit shall be promptly
returned to Purchaser and all

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rights and obligations of Seller and Purchaser hereunder (except those set forth
herein which expressly survive a termination of this Agreement) shall terminate
immediately.

      8.3 Broker. The parties acknowledge that Broker has been the procuring
cause of this Agreement. It shall be the obligation of Seller to pay Broker its
commission, when, as and if the transaction contemplated hereby actually closes,
in accordance with a separate agreement between the Broker and Seller. There is
no other real estate broker involved in this transaction. Purchaser warrants and
represents to Seller that Purchaser has not dealt with any other real estate
broker in connection with this transaction, nor has Purchaser been introduced to
the Property or to Seller by any other real estate broker, and Purchaser shall
indemnify Seller and hold Seller harmless from and against any claims, suits,
demands or liabilities of any kind or nature whatsoever arising on account of
the claim of any other person, firm or corporation to a real estate brokerage
commission or a finder's fee as a result of having dealt with Purchaser, or as a
result of having introduced Purchaser to Seller or to the Property. In like
manner, Seller warrants and represents to Purchaser that Seller has not dealt
with any other real estate broker in connection with this transaction, nor has
Seller been introduced to Purchaser by any other real estate broker, and Seller
shall indemnify Purchaser and save and hold Purchaser harmless from and against
any claims, suits, demands or liabilities of any kind or nature whatsoever
arising on account of the claim of any person, firm or corporation to a real
estate brokerage commission or a finder's fee as a result of having dealt with
Seller in connection with this transaction. This provision shall survive any
termination of this Agreement and a closing of the transaction contemplated
hereby.

      8.4 Bulk Sale. It shall be the obligation of Seller to comply with any
bulk sale requirements, statutes, laws, ordinances and regulations promulgated
with respect thereto, if any, in the State in which the Property is located, or
in or by any governmental entity having jurisdiction with respect thereto, and
to provide proof of such compliance or proof that no such compliance is
required, to Purchaser, at or prior to Closing. In any event, Seller shall
indemnify Purchaser and save and hold Purchaser harmless from and against any
claims, suits, demands, liabilities or obligations of any kind or nature
whatsoever, including all costs of defending same, and reasonable attorneys'
fees paid or incurred in connection therewith, arising out of or relating to any
claim made by any third party or any liability asserted by any third party that
any applicable bulk sales law or like statute has not been complied with. The
provisions of this Section shall survive the Closing of the transaction
contemplated hereby.

      8.5 Confidentiality. Except as hereinafter provided, from and after the
execution of this Agreement, Purchaser and Seller shall keep the terms,
conditions and provisions of this Agreement confidential and neither shall make
any public announcements hereof unless the other first approves of same in
writing, nor shall either disclose the terms, conditions and provisions hereof,
except to persons who "need to know," such as their respective officers,
directors, employees, attorneys, accountants, engineers, surveyors, consultants,
financiers, partners, investors, potential lessees and bankers and such other
third parties whose assistance is required in connection with the consummation
of this transaction. Notwithstanding the foregoing, it is acknowledged that
Purchaser is, or is an affiliate of, a real estate investment trust (the
"REIT"), and the REIT has and will seek to sell shares to the general public;
consequently, Purchaser shall have the absolute and unbridled right to disclose
any information regarding the transaction

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<PAGE>

contemplated by this Agreement required by law or as determined to be necessary
or appropriate by Purchaser or Purchaser's attorneys to satisfy disclosure and
reporting obligations of Purchaser or its affiliates.

      8.6 Seller's Accounts Receivable. It is expressly agreed by and between
Purchaser and Seller that Seller is not hereby agreeing to sell to Purchaser,
and Purchaser is not hereby agreeing to purchase from Seller, any of Seller's
accounts receivable. All of Seller's accounts receivable shall be and remain the
property of Seller, subsequent to the Closing of the transaction contemplated
hereby. At the Closing, Seller shall prepare a list of its outstanding accounts
receivable as of midnight on the date prior to the Closing, specifying the name
of each account and the amount due to Seller. Purchaser shall hold any funds
received by Purchaser explicitly designated as payment of such accounts
receivable, in trust, if Purchaser actually collects any such amounts, and shall
pay the monies collected in respect thereof to Seller at the end of each
calendar month, accompanied by a statement showing the amount collected on each
such account. After Closing, at Seller's sole cost and expense, upon two (2)
business days notice to Purchaser, and without materially interfering with the
business conducted by Purchaser at the Hotels, Seller may review the account
receivable records of Purchaser to confirm any statements issued by Purchaser
with respect to any Seller receivables collected by Purchaser. Other than the
foregoing, Purchaser shall have no obligation with respect to any such account,
and Purchaser shall not be required to take any legal proceeding or action to
effect collection on behalf of Seller. It is generally the intention of
Purchaser and Seller that although all of Seller's accounts receivable shall be
and remain the property of Seller, still, if any such accounts are paid to
Purchaser, then Purchaser shall collect same and remit to Seller in the manner
above provided. Nothing herein contained shall be construed as requiring
Purchaser to remit to Seller any funds collected by Purchaser on account of
Purchaser's accounts receivable generated from Hotel operations, even if the
person or entity paying same is also indebted to Seller.

                                   ARTICLE IX
                       LIABILITY OF PURCHASER AND SELLER;
             INDEMNIFICATION BY SELLER; DEFAULT; TERMINATION RIGHTS

      9.1 Liability of Purchaser and Seller. Except for obligations expressly
assumed or agreed to be assumed by Purchaser hereunder, Purchaser is not
assuming any obligations of Seller or any liability for claims arising out of
any act, omission or occurrence which occurs, accrues or arises prior to the
Closing Date, and Seller hereby indemnifies and holds Purchaser harmless from
and against any and all claims, costs, penalties, damages, losses, liabilities
and expenses (including reasonable attorneys' fees) that may at any time be
incurred by Purchaser as a result of (1) obligations of Seller not expressly
assumed or agreed to be assumed by Purchaser hereunder, or (2) acts, omissions
or occurrences which occur, accrue or arise prior to the Closing Date. Except as
set forth in this Section 9.1 above, Purchaser hereby indemnifies and holds
Seller harmless from and against any and all claims, costs, penalties, damages,
losses, liabilities and expenses (including reasonable attorneys' fees) that may
at any time be incurred by Seller as a result of (1) obligations of Purchaser
expressly assumed by Purchaser hereunder, or (2) acts, omissions or occurrences
which first occur, accrue, or arise after the Closing Date. The provisions of
this Section shall survive the Closing of the transaction contemplated hereby.

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      9.2 Indemnification by Seller. Seller hereby indemnifies and holds
Purchaser harmless from and against any and all claims, costs, penalties,
damages, losses, liabilities and expenses (including reasonable attorneys' fees)
that may at any time be incurred by Purchaser, whether before or after Closing,
as a result of any inaccuracy or breach by Seller of any of its representations,
warranties, covenants or obligations set forth herein or in any other document
delivered by Seller pursuant hereto except for any breach or inaccuracy of any
representation or warranty as to which Seller has given Purchaser written notice
prior to Closing of the untruth or inaccuracy or of which Purchaser otherwise
had actual knowledge prior to the Closing and nevertheless elected to consummate
the Closing; provided, however, the foregoing knowledge limitation on Seller's
indemnity shall not limit Purchaser's remedy described in Section 9.3(a)(ii)
hereof. Notwithstanding anything herein contained to the contrary, Seller's
indemnity set forth herein, shall survive the Closing Date for a period of one
(1) year thereafter, provided that Purchaser provides to Seller written notice
within such one (1) year period of any damage, claim, loss, liability or expense
which the Purchaser has determined has given or could give rise to a claim under
this Section 9.2, and such notice contains a description of the nature and
amount (actual or estimated) of any such claim, together with a statement as to
the basis for Seller's liability. Any indemnity obligations of Seller hereunder
shall be limited to $3,500,000.00 and Purchaser agrees not to make any indemnity
claims hereunder against Seller until the aggregate of such claims exceeds
$50,000.00. The provisions of this Section shall survive the Closing of the
transaction contemplated hereby. If any third party shall notify Purchaser with
respect to any matter (a "Claim") which may give rise to a claim for
indemnification against Seller under this Section 9.2, then Purchaser shall
promptly (and in any event within five (5) business days after receiving notice
of the Claim) notify Seller thereof in writing. Seller will have the right at
any time to assume and thereafter conduct the defense of the Claim with counsel
of Seller's choice reasonably satisfactory to Purchaser; provided, however, that
Seller will not consent to the entry of any judgment or enter into any
settlement with respect to the Claim without the prior written consent of
Purchaser (not to be withheld unreasonably) unless the judgment or proposed
settlement involves only the payment of money damages and does not impose an
injunction or other equitable relief upon Purchaser. Unless and until Seller
assumes the defense of the Claim as provided hereinabove, however, Purchaser may
defend against the Claim in any manner Purchaser reasonably may deem
appropriate. In no event will Purchaser consent to the entry of any judgment or
enter into any settlement with respect to the Claim without the prior written
consent of Seller (not to be unreasonably withheld).

      9.3 Default by Seller/Failure of Conditions Precedent. If any condition
set forth herein for the benefit of Purchaser cannot or will not be satisfied
prior to Closing, or upon the occurrence of any other event that would entitle
Purchaser to terminate this Agreement and its obligations hereunder, and if
Seller fails to cure any such matter or satisfy that condition within ten (10)
business days after notice thereof from Purchaser (or such other time period as
may be explicitly provided for herein), Purchaser, at its option, may elect (a)
to terminate this Agreement in its entirety, in which event (i) the Deposit
shall be promptly returned to Purchaser, (ii) if the condition which has not
been satisfied is a material breach of a representation, warranty or covenant,
then Seller shall be obligated upon demand to reimburse Purchaser for
Purchaser's actual out-of-pocket inspection, financing and other costs related
to Purchaser's entering into this Agreement, inspecting the Property and
preparing for a Closing of the transaction contemplated hereby, including,
without limitation, Purchaser's attorneys' fees incurred in connection with the

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preparation, negotiation and execution of this Agreement and in connection with
Purchaser's due diligence review, audits and preparation for a Closing, in an
amount not to exceed $200,000.00 in the aggregate, and (iii) all other rights
and obligations of Seller and Purchaser hereunder (except those set forth herein
which expressly survive a termination of this Agreement) shall terminate
immediately; or (b) elect to proceed to Closing. If Purchaser elects to proceed
to Closing and there is either a material misrepresentation or material breach
of a warranty by Seller (other than a material breach of a representation or
warranty of which Purchaser had actual knowledge prior to the Closing and
nevertheless elected to consummate the Closing) or the material breach of a
covenant by Seller or a material failure by Seller to perform its obligations
hereunder, Purchaser shall retain all remedies accruing as a result thereof,
including, but not limited to the remedy of specific performance of Seller's
covenants and obligations and the remedy of the recovery of all reasonable
damages resulting from Seller's breach of warranty or covenant.

      9.4 Default by Purchaser/Failure of Conditions Precedent. If any condition
set forth herein for the benefit of Seller (other than a default by Purchaser)
cannot or will not be satisfied prior to Closing, and if Purchaser fails to
satisfy that condition within ten (10) business days after notice thereof from
Seller (or such other time period as may be explicitly provided for herein),
Seller may, at its option, elect either (a) to terminate this Agreement in which
event the Deposit shall be promptly returned to Purchaser and the parties hereto
shall be released from all further obligations hereunder except those which
expressly survive a termination of this Agreement, or (b) to waive its right to
terminate, and instead, to proceed to Closing. If, prior to Closing, Purchaser
defaults in performing any of its obligations under this Agreement (including
its obligation to purchase the Property), and Purchaser fails to cure any such
default within ten (10) business days after notice thereof from Seller, then
Seller's sole remedy for such default shall be to terminate this Agreement and
retain the Deposit. Seller and Purchaser agree that, in the event of such a
default, the damages that Seller would sustain as a result thereof would be
difficult if not impossible to ascertain. Therefore, Seller and Purchaser agree
that, Seller shall retain the Deposit as full and complete liquidated damages
and as Seller's sole remedy.

      9.5 Costs and Attorneys' Fees. In the event of any litigation or dispute
between the parties arising out of or in any way connected with this Agreement,
resulting in any litigation, then the prevailing party in such litigation shall
be entitled to recover its costs of prosecuting and/or defending same,
including, without limitation, reasonable attorneys' fees at trial and all
appellate levels. The provisions of this Section shall survive the Closing of
the transaction contemplated hereby.

      9.6 Limitation of Liability. Notwithstanding anything herein to the
contrary, except in the case of fraud by either party, the liability of each
party hereto resulting from the breach or default by either party shall be
limited to actual damages incurred by the injured party and except in the case
of fraud by either party, the parties hereto hereby waive their rights to
recover from the other party consequential, punitive, exemplary, and speculative
damages. The provisions of this Section 9.6 shall survive the Closing of the
transaction contemplated hereby.

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<PAGE>

                                   ARTICLE X
                            MISCELLANEOUS PROVISIONS

      10.1 Completeness; Modification. This Agreement constitutes the entire
agreement between the parties hereto with respect to the transactions
contemplated hereby and supersedes all prior discussions, understandings,
agreements and negotiations between the parties hereto. This Agreement may be
modified only by a written instrument duly executed by the parties hereto.

      10.2 Assignments. Purchaser may assign all or any portion of its rights
hereunder to one or more Affiliates of Purchaser without the consent of Seller;
however, any such assignment shall not relieve Purchaser of its obligations
under this Agreement.

      10.3 Successors and Assigns. This Agreement shall bind and inure to the
benefit of the parties hereto and their respective successors and assigns.

      10.4 Days. If any action is required to be performed, or if any notice,
consent or other communication is given, on a day that is a Saturday or Sunday
or a legal holiday in the jurisdiction in which the action is required to be
performed or in which is located the intended recipient of such notice, consent
or other communication, such performance shall be deemed to be required, and
such notice, consent or other communication shall be deemed to be given, on the
first business day following such Saturday, Sunday or legal holiday. Unless
otherwise specified herein, all references herein to a "day" or "days" shall
refer to calendar days and not business days.

      10.5 Governing Law. This Agreement and all documents referred to herein
shall be governed by and construed and interpreted in accordance with the laws
of the state where the Property is located.

      10.6 Counterparts. To facilitate execution, this Agreement may be executed
in as many counterparts as may be required. It shall not be necessary that the
signature on behalf of both parties hereto appear on each counterpart hereof.
All counterparts hereof shall collectively constitute a single agreement.

      10.7 Severability. If any term, covenant or condition of this Agreement,
or the application thereof to any person or circumstance, shall to any extent be
invalid or unenforceable, the remainder of this Agreement, or the application of
such term, covenant or condition to other persons or circumstances, shall not be
affected thereby, and each term, covenant or condition of this Agreement shall
be valid and enforceable to the fullest extent permitted by law.

      10.8 Costs. Regardless of whether Closing occurs hereunder, and except as
otherwise expressly provided herein, each party hereto shall be responsible for
its own costs in connection with this Agreement and the transactions
contemplated hereby, including, without limitation, fees of attorneys, engineers
and accountants.

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<PAGE>

      10.9 Notices. All notices, requests, demands and other communications
hereunder shall be in writing and shall be delivered by hand, transmitted by
facsimile transmission, sent prepaid by Federal Express (or a comparable
overnight delivery service) or sent by the United States mail, certified,
postage prepaid, return receipt requested, at the addresses and with such copies
as designated below. Any notice, request, demand or other communication
delivered or sent in the manner aforesaid shall be deemed given or made (as the
case may be) when actually delivered to the intended recipient.

     If to Seller:             Dunn Hospitality Group, LLC
                               100 South Green River Road
                               Evansville, Indiana  47715
                               Attn: John Dunn
                               Telecopy: _________________________________

     With a copy to:           Merritt & Tenney LLP
                               Suite 500, 200 Galleria Parkway, N.W.
                               Atlanta, Georgia 30339
                               Attn: James F. Tenney
                               Telecopy: 770.952.0028

     If to Purchaser:          Ashford Hospitality Limited Partnership
                               c/o Ashford Hospitality Trust, Inc.
                               14185 Dallas Parkway
                               Suite 1100
                               Dallas,  Texas  75254
                               Attn: David A. Brooks and Christopher A. Peckham
                               Telecopy: (972) 490-9605

     With a copy to:           Andrews Kurth LLP
                               1717 Main Street, Suite 3700
                               Dallas, Texas  75201
                               Attn: Brigitte Kimichik
                               Telecopy: (214) 659-4777

     If to Escrow Agent:       Chicago Title Insurance Company
                               711 Third Avenue, 5th Floor
                               New York, New York 10017
                               Attn: Sie Cheung
                               Telecopy: (214) 880-9623

or to such other address as the intended recipient may have specified in a
notice to the other party. Any party hereto may change its address or designate
different or other persons or entities to receive copies by notifying the other
party and Escrow Agent in a manner described in this Section.

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<PAGE>

      10.10 Escrow Agent. Escrow Agent referred to in the definition thereof
contained in Section 1.1 hereof has agreed to act as such for the convenience of
the parties without fee or other charges for such services as Escrow Agent.
Escrow Agent shall not be liable: (a) to any of the parties for any act or
omission to act except for its own willful misconduct or gross negligence; (b)
for any legal effect, insufficiency, or undesirability of any instrument
deposited with or delivered by Escrow Agent or exchanged by the parties
hereunder, whether or not Escrow Agent prepared such instrument; (c) for any
loss or impairment of funds that have been deposited in escrow while those funds
are in the course of collection, or while those funds are on deposit in a
financial institution, if such loss or impairment results from the failure,
insolvency or suspension of a financial institution; (d) for the expiration of
any time limit or other consequence of delay, unless a properly executed written
instruction, accepted by Escrow Agent, has instructed Escrow Agent to comply
with said time limit; (e) for the default, error, action or omission of either
party to the escrow. Escrow Agent, in its capacity as escrow agent, shall be
entitled to rely on any document or paper received by it, believed by such
Escrow Agent, in good faith, to be bona fide and genuine. In the event of any
dispute as to the disposition of the Deposit or any other monies held in escrow,
or of any documents held in escrow, Escrow Agent may, if such Escrow Agent so
elects, interplead the matter by filing an interpleader action in a court of
general jurisdiction in the county or circuit where the Real Property is located
(to the jurisdiction of which both parties do hereby consent), and pay into the
registry of the court the Deposit, or deposit any such documents with respect to
which there is a dispute in the Registry of such court, whereupon such Escrow
Agent shall be relieved and released from any further liability as Escrow Agent
hereunder. Escrow Agent shall not be liable for Escrow Agent's compliance with
any legal process, subpoena, writ, order, judgment and decree of any court,
whether issued with or without jurisdiction, and whether or not subsequently
vacated, modified, set aside or reversed.

      10.11 Incorporation by Reference. All of the exhibits attached hereto are
by this reference incorporated herein and made a part hereof. Notwithstanding
the foregoing, Seller and Purchaser agree that to the extent any of the exhibits
or schedules are not attached hereto on the date of execution of this Agreement,
the parties hereto shall use their best efforts to complete and agree to such
exhibits and schedules within ten (10) days after execution of this Agreement.
With respect to Schedule 10 attached hereto, Seller shall have the right to
supplement such schedule within the herein referenced ten (10) day period, upon
written notice thereof to Purchaser.

      10.12 Survival. All of the covenants and agreements of Seller and
Purchaser made in, or pursuant to, this Agreement shall survive Closing and
shall not merge into the Deed or any other document or instrument executed and
delivered in connection herewith.

      10.13 Further Assurances. Seller and Purchaser each covenant and agree to
sign, execute and deliver, or cause to be signed, executed and delivered, and to
do or make, or cause to be done or made, upon the written request of the other
party, any and all agreements, instruments, papers, deeds, acts or things,
supplemental, confirmatory or otherwise, as may be reasonably required by either
party hereto for the purpose of or in connection with consummating the
transactions described herein.

AGREEMENT OF PURCHASE AND SALE
ASHFORD/DUNN PORTFOLIO

                                       45

<PAGE>

      10.14 No Partnership. This Agreement does not and shall not be construed
to create a partnership, joint venture or any other relationship between the
parties hereto except the relationship of Seller and Purchaser specifically
established hereby.

      10.15 Time of Essence. Time is of the essence with respect to every
provision hereof.

      10.16 Signatory Exculpation. The signatory(ies) for Purchaser and Seller
is/are executing this Agreement in his/their capacity as representative of
Purchaser and Seller and not individually and, therefore, shall have no personal
or individual liability of any kind in connection with this Agreement and the
transactions contemplated by it.

      10.17 Rules of Construction. The following rules shall apply to the
construction and interpretation of this Agreement:

            (a) Singular words shall connote the plural number as well as the
singular and vice versa, and the masculine shall include the feminine and the
neuter.

            (b) All references herein to particular articles, sections,
subsections, clauses or exhibits are references to articles, sections,
subsections, clauses or exhibits of this Agreement.

            (c) The table of contents and headings contained herein are solely
for convenience of reference and shall not constitute a part of this Agreement
nor shall they affect its meaning, construction or effect.

            (d) Each party hereto and its counsel have reviewed and revised (or
requested revisions of) this Agreement and have participated in the preparation
of this Agreement, and therefore any usual rules of construction requiring that
ambiguities are to be resolved against a particular party shall not be
applicable in the construction and interpretation of this Agreement or any
exhibits hereto.

            (e) As used herein, the term "Seller" shall mean the entities listed
in the opening paragraph of this Agreement, however, any representations,
warranties and covenants made by Seller herein are deemed to apply only to what
is owned and to be sold by such Seller.

            (f) As used herein, the term or phrases "Effective Date," "date of
this Agreement" or "date hereof" shall mean the first date Escrow Agent is in
receipt of this Agreement executed by Seller and Purchaser.

  [Remainder of page intentionally left blank - signatures follow on next page]

AGREEMENT OF PURCHASE AND SALE
ASHFORD/DUNN PORTFOLIO

                                       46

<PAGE>

      IN WITNESS WHEREOF, Seller and Purchaser have caused this Agreement to be
executed in their names by their respective duly authorized representatives.

                               SELLER:

                               DUNN FAMILY ASSOCIATES, LLP, an Indiana limited
                               liability partnership

                               By: /s/: JOHN M. DUNN
                                   --------------------
                               Name: John M. Dunn
                               Title: Manager

                               Date of Execution: May 19, 2004

                               HOTEL INVESTMENT, LLC, an Indiana limited
                               liability company

                               By: /s/: JOHN M. DUNN
                                   --------------------------------
                               Name: John M. Dunn
                               Title: Manager

                               Date of Execution: May 19, 2004

                               ENCORE HOTEL OF BLOOMINGTON, INC., an Indiana
                               corporation

                               By: /s/: JOHN M. DUNN
                                   ----------------------------------
                               Name: John M. Dunn
                               Title: President

                               Date of Execution: May 19, 2004

                               ENCORE HOTEL OF TERRE HAUTE, LLC, an Indiana
                               limited liability company

                               By: /s/: JOHN M. DUNN
                                   -----------------------------------
                               Name: John M. Dunn
                               Title: Manager
                               Date of Execution: May 19, 2004

AGREEMENT OF PURCHASE AND SALE
ASHFORD/DUNN PORTFOLIO

                                       47

<PAGE>

                               ENCORE RESIDENTIAL HOTEL OF EVANSVILLE, LLC,
                               an Indiana limited liability company

                               By: /s/: JOHN M. DUNN
                                   ------------------------------
                               Name: John M. Dunn
                               Title: Manager

                               Date of Execution: May 19, 2004

                               ENCORE HOTEL OF COLUMBUS, LLC, an Indiana
                               limited liability company

                               By: /s/: JOHN M. DUNN
                                   --------------------------------
                               Name: John M. Dunn
                               Title: Manager

                               Date of Execution: May 19, 2004

                               ENCORE HOTEL OF HORSE CAVE, LLC, a limited
                               liability company

                               By: /s/: JOHN M. DUNN
                                   --------------------
                               Name: John M. Dunn
                               Title: Manager

                               Date of Execution: May 19, 2004

                               ENCORE HOTEL OF PRINCETON II, LLC, an Indiana
                               limited liability company

                               By: /s/: JOHN M. DUNN
                                   ---------------------------------
                               Name: John M. Dunn
                               Title: Manager

                               Date of Execution: May 19, 2004

AGREEMENT OF PURCHASE AND SALE
ASHFORD/DUNN PORTFOLIO

                                       48

<PAGE>

                               ENCORE DUNN HOSPITALITY GROUP, LLC, an
                               Indiana limited liability company

                               By: /s/: JOHN M. DUNN
                                   ----------------------------
                               Name: John M. Dunn
                               Title: Manager

                               Date of Execution: May 19, 2004

                               PURCHASER:

                               ASHFORD HOSPITALITY LIMITED PARTNERSHIP,
                               a Delaware limited partnership

                               By: Ashford OP General Partner, LLC,
                                   a Delaware limited liability company

                                   By: /s/ DAVID A. BROOKS
                                       ----------------------------
                                   Name: David A. Brooks
                                   Title: Vice President

                                          Date of Execution: May 19, 2004

                              ESCROW AGENT:

                              Chicago Title Insurance Company (Escrow Agent
                              hereby acknowledges receipt of a fully executed
                              Agreement from both Seller and Purchaser for
                              purposes of Sections 10.10 and 10.17 hereof.)

                              By: /s/ FRANNY TRATAROS
                                  ----------------------------
                              Name: Franny Trataros
                              Title: Vice President
                              Date: May 20, 2004

AGREEMENT OF PURCHASE AND SALE
ASHFORD/DUNN PORTFOLIO

                                       49

<PAGE>

                             RECEIPT OF ESCROW AGENT

      Chicago Title Insurance Company, as Escrow Agent, acknowledges receipt of
the sum of $300,000.00 by check or by wire transfer from Purchaser as described
in Section 2.2 of the foregoing Agreement of Purchase and Sale, said check or
wire transfer to be held pursuant to the terms and provisions of said Agreement.

      DATED this 24th day of May, 2004.

                                     CHICAGO TITLE INSURANCE COMPANY

                                     By: /s/ FRANNY TRATAROS
                                         ----------------------------------
                                     Name: Franny Trataros
                                     Title: Vice President

AGREEMENT OF PURCHASE AND SALE
ASHFORD/DUNN PORTFOLIO

                                       50

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