Document:

<PAGE>

                                                                    Exhibit 10.4

                                     NDD-094
                                LICENSE AGREEMENT

                                     between

                               Novartis Pharma AG,

                                  Novartis AG

                                      and

                          Vanda Pharmaceuticals, Inc.

----------
CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.

<PAGE>

                            NDD-094 LICENSE AGREEMENT

     This LICENSE AGREEMENT (the "Agreement") dated the 4th day of June, 2004
(the "Effective Date") by and between Novartis Pharma AG, a corporation
organized and existing under the laws of Switzerland and having its principal
office at Lichtstrasse 35, 4056 Basel, Switzerland ("Novartis"), Novartis AG, a
corporation organized and existing under the laws of Switzerland and having its
principal office at Lichtstrasse 35, 4056 Basel, Switzerland ("Novartis AG") and
Vanda Pharmaceuticals, Inc., a corporation organized and existing under the laws
of the State of Delaware and having its principal office at 47 Hulfish Street,
Suite 310, Princeton, NJ 08542, The United States ("Vanda"). Novartis, Novartis
AG and Vanda may be referred to herein individually as a "Party" and
collectively as the "Parties".

                                  INTRODUCTION

     WHEREAS, Novartis AG owns or has rights to certain Novartis Patents (as
defined below) and Novartis AG and Novartis each have rights to Novartis
Know-How (as defined below) related to the Product (as defined below) and the
Compound (as defined below), and each has the right to grant certain rights and
licenses thereunder as set forth herein, and

     WHEREAS, Vanda has certain expertise in the development and
commercialization of pharmaceutical products, and Vanda wishes to obtain certain
licenses to the Compound for the purpose of developing and commercializing the
Product, and

     WHEREAS, Novartis AG and Novartis each wish to grant a license to Vanda in
respect of such development and commercialisation.

     NOW, THEREFORE, in consideration of the mutual promises, covenants and
agreements hereinafter set forth, the sufficiency of which is hereby
acknowledged, the Parties to this Agreement mutually agree as follows:

                                    ARTICLE 1
                                   DEFINITIONS

     For purposes of this Agreement, the following initially capitalized terms
in this Agreement, whether used in the singular or plural, shall have the
following meanings:

          1.1 "Affiliate" shall mean any corporation, company, partnership,
     joint venture and/or firm which controls, is controlled by, or is under
     common control with a specified person or entity. For purposes of this
     Section 1.1, "control" shall be presumed to exist if one of the following
     conditions is met: (a) in the case of corporate entities, control of at
     least fifty per cent (50%) of the voting rights at a meeting of the board
     of directors or direct or indirect ownership of at least fifty percent
     (50%) of the stock or shares having the right to vote for the election of
     directors, and (b) in the case of non-corporate entities, direct or
     indirect ownership of at least fifty percent (50%) of the equity interest
     with the power to direct the management and policies of such non-corporate
     entities. The Parties acknowledge that in the case of certain entities
     organized under the laws of certain countries outside of the United States,
     the

                                  Page 2 of 43

<PAGE>

     maximum percentage ownership permitted by law for a foreign investor may be
     less than fifty percent (50%), and that in such cases such lower percentage
     shall be substituted in the preceding sentence, provided that such foreign
     investor has the power to direct the management and policies of such
     entity. Notwithstanding the foregoing venture capital investors in Vanda
     shall not be considered Affiliates of Vanda.

          1.2 "Annex" or "Schedule" shall mean the annexes attached to the back
     of this Agreement. In the event of conflict between the drafting of the
     operative terms of the Agreement and the Annex, the operative terms of the
     Agreement shall prevail.

          1.3 "Back-up Compound" shall mean a compound currently available to
     Novartis and Novartis AG to be selected by Novartis in its sole discretion
     and offered by it to Vanda in the event that in the agreed opinion of
     Novartis and Vanda the Compound fails in a Phase II trial.

          1.4 "Business Day" shall mean any day on which banking institutions in
     New York, New York and Basel are open for business.

          1.5 "Commercialization" or "Commercialize" shall mean activities
     conducted by a Party either by itself or through a Third Party and directed
     to marketing, promoting, distributing, importing, exporting, offering for
     sale and selling a Product. When used as a verb, "Commercialize" means to
     engage in Commercialization.

          1.6 "Commercializing Party" shall mean Vanda, except that
     "Commercializing Party" shall mean Novartis as soon as Novartis has
     exercised either the Scenario II Option or the Scenario III Option and
     thereby has elected to Commercialize the Product.

          1.7 "Compound" shall mean the compound currently identified by
     Novartis and Novartis AG as NDD-094 or isomers or epimers thereof and any
     metabolites and salts thereof and more particularly described on Schedule
     1.7.

          1.8 "Confidential Information" has the meaning set forth in Section
     8.1.

          1.9 "Controlled" or "Controls", when used in reference to intellectual
     property, shall mean the legal authority or right of a Party hereto (or any
     of its Affiliates) to grant a license or sublicense of intellectual
     property rights to another party, or to otherwise disclose proprietary or
     trade secret information to such other Party, without breaching the terms
     of any agreement with a Third Party infringing upon the intellectual
     property rights of a Third Party, or misappropriating the proprietary or
     trade secret information of a Third Party.

          1.10 "Co-Promotion Agreement" has the meaning set forth in Section
     2.1(b).

          1.11 "Development Costs" shall mean all reasonable costs incurred by
     Vanda after the Effective Date in developing the Product in accordance with
     this Agreement, as set out in the Development Plan, which costs shall be
     proportionate and in line with the costs incurred by Vanda in
     commercializing other compounds at the same stage of development with
     equivalent sales and profit potential and including:

                                  Page 3 of 43

<PAGE>

          (a) all reasonable Out-of-Pocket Costs and expenses incurred;

          (b) the reasonable direct and indirect costs of internal scientific,
medical or technical personnel (including personnel expenses, travel expenses
and infrastructure costs but for the avoidance of doubt, not including the costs
of managerial, financial, legal or business development personnel) engaged in
such efforts, which costs shall be determined based on the FTE Rate, unless
another basis is otherwise agreed by the Parties in writing

          (c) the reasonable costs and expenses of clinical supplies for such
efforts, including without limitation (i) supply cost of clinical supplies of
the Product; (ii) costs and expenses incurred to purchase and/or package
comparator or combination drugs or devices; and (iii) costs and expenses of
disposal of clinical samples;

          (d) the reasonable costs and expenses incurred in connection with
manufacturing process development and validation, manufacturing scale-up and
improvements, stability testing and quality assurance/quality control
development; qualification and validation of Third Party contract manufacturers;

          (e) the reasonable direct and indirect costs of senior management of
Vanda to the extent reasonably related to the Product and

          (f) all regulatory filing fees.

     1.12 "Development Plan" shall mean the detailed plan drafted by Vanda and
showing its intentions and estimated costs with respect to the development of
the Compound.

     1.13 "Effective Date" shall mean the date specified in the first paragraph
of this Agreement.

     1.14 "EMEA" shall mean the European Agency for the Evaluation of Medicinal
Products.

     1.15 "FDA" shall mean the U.S. Food and Drug Administration or its
successor agency.

     1.16 "Field of Use" shall mean application to all conditions, disorders and
diseases in humans.

     1.17 "First Commercial Sale" shall mean the first sale of a Product to a
Third Party by a Party or an Affiliate or sublicensee of such Party in a country
in the Territory following the obtaining of the applicable Regulatory Approval
of such Product in such country.

     1.18 "FTE Rate" shall mean a rate of $ 200,000 per annum for the time of an
employee for a full-time equivalent person year (consisting of a total of 2,000
hours per annum) of work, to be pro-rated on a daily basis (per annum amount to
be divided by 250 to produce the rate per whole day consisting of eight hours)
if necessary, such rate to include all travel expenses.

                                  Page 4 of 43

<PAGE>

     1.19 "Good Clinical Practice" shall mean the current Good Clinical Practice
regulations promulgated by the FDA, published at 21 C.F.R. Part 50 and 56 as
such regulations may be amended, and such comparable regulations or standards as
may be applicable with respect to the design, conduct, performance, monitoring,
auditing, recording, analyses and reporting of clinical trials outside the
United States.

     1.20 "GMP" shall mean the current Good Manufacturing Practice regulations
promulgated by the FDA, published at 21 C.F.R. Part 210 et seq., as such
regulations may be amended, and such comparable regulations or standards as may
be applicable with respect to Compound or Product(s) manufactured or sold
outside the United States.

     1.21 "Investigational New Drug Application" or "IND" has the meaning set
forth in Section 2.2(a).

     1.22 "Indemnified Party" has the meaning set forth in Section 10.3.

     1.23 "Indemnifying Party" has the meaning set forth in Section 10.3.

     1.24 "Infringement Claim" has the meaning set forth in Section 6.2(a).

     1.25 "Joint Development Committee" or "JDC" shall mean the joint global
development committee to be set up by Vanda and Novartis to coordinate the
development and registration efforts described in this Agreement.

     1.26 "Loss" has the meaning set forth in Section 10.1

     1.27 "Major Market Country" means each and any of the USA, Japan, UK,
France, Germany, Italy and Spain.

     1.28 "NDA" or "New Drug Application" shall mean a new drug application and
all amendments and supplements thereto filed with the FDA pursuant to 21 C.F.R.
Section 314, the EMEA or an equivalent Regulatory Authority in a Major Market
Country, requiring such filing, and including all documents, data and other
information concerning a pharmaceutical product which are necessary for the
gaining of Regulatory Approval seeking permission to market and sell the Product
in a Major Market Country.

     1.29 "NDA Acceptance" means the written notification by the FDA or its
equivalent outside the United States, that the NDA has met all the criteria for
filing acceptance pursuant to 21 C.F.R. Section 314.101 or such equivalent.

     1.30 "NDA Filing" means the first submission of the NDA to the FDA, EMEA or
its equivalent in a Major Market Country.

     1.31 "Net Sales" shall mean the amount invoiced by or on behalf of a Party
and its Affiliates and sublicensees for sales of the Product to Third Parties in
the Territory in a bona fide arm's length transaction, less the following
deductions in respect of the Product (each as determined in accordance with
International Accounting Standards("IAS")) if not previously deducted or
reimbursed or paid by a Third Party in the amount invoiced or received: (a)
cash,

                                  Page 5 of 43

<PAGE>

and/or quantity discounts actually allowed or taken; (b) excise, sales and other
consumption taxes and customs duties to the extent included in the invoice price
(and excluding taxes based on Vanda's income); (c) all reasonable freight,
postage and shipping, insurance and other transportation charges to the extent
included in the invoice price to the customer; (d) all amounts repaid or
credited by reason of rejections, return of goods or price adjustments, in each
case specifically identifiable as relating to Product; (e) amounts incurred
resulting from governmental (or an agency thereof) mandated rebate programs;(f)
any Third Party rebates, administrative fees and chargebacks clearly and
directly related to the sale of Product to the extent actually allowed as agreed
by the parties in writing, any other specifically identifiable amounts included
in Product's gross sales that were or ultimately will be credited and that are
substantially similar to the items listed above. Sales from Novartis or Vanda to
their Affiliates, Sublicensees or to each other shall be disregarded for
purposes of calculating Net Sales.

          In the event that the Product is sold as part of a combination
product, the Net Sales of the Product, for the purposes of determining royalty
payments, shall be determined by multiplying the Net Sales (as defined above in
this Section) of the combination product by the fraction A/(A+B), where A is the
weighted (by sales volume) average sale price of Product when sold separately in
finished form and B is the weighted average sale price of the other product(s)
sold separately in finished form. In the event that such average sale price
cannot be determined for both Product and the other product(s) in combination,
Net Sales for purposes of determining royalty payments shall be mutually agreed
by the Parties within a reasonable period of time prior to the first Regulatory
Approval of such combination product based on all relevant factors including
relative cost and the relative value contributed by each component, and such
agreement shall not be unreasonably withheld.

     1.32 "Novartis Know-How" shall mean any proprietary or nonproprietary
information specific to the Compound or Product within the Field of Use and of a
confidential nature necessary or useful for the manufacture, preparation or
development of the Compound or Product Controlled by Novartis and/or Novartis AG
during the term of this Agreement and shall include, without limitation, data,
knowledge and information., including chemical, stability, pharmacological,
toxicological, pre-clinical, clinical and manufacturing data, samples,
documentation, analytical standards, and gene expression data, provided that
Novartis Know-How shall not include [*].

     1.33 "Novartis Monthly Average Exchange Rate" shall mean for a currency,
the mathematical average of Reuters Daily Rates between 9:00 a.m. and 10 a.m.
Basel time and the official European Central Bank daily rate fixed at 2p.m. for
each Business Day of a month, where applicable.

     1.34 "Novartis Patents" shall mean those Patents Controlled by Novartis AG
claiming Compound, Product, or their metabolites or any formulation of Compound,
processes, uses and intermediates of the foregoing, including those listed on
Annex 3 attached hereto. For the avoidance of doubt, such Novartis Patents shall
not include patents for [*].

----------
CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.

                                  Page 6 of 43

<PAGE>

     1.35 "Out of Pocket Costs" shall mean, in accordance with International
Accounting Standards, expenses incurred by a Party and for the avoidance of
doubt, not including pre-paid amounts and capital expenditure.

     1.36 "Patents" shall mean all rights under any patents or patent
applications and any continuations, continuations-in-part, divisions,
provisionals, substitutions, patents of addition, reissues, reexamination,
renewals or extensions thereof (including any supplemental patent certificates)
and any confirmation patent or registration patent and all foreign counterparts
of any of the foregoing.

     1.37 "Payee" has the meaning set forth in Section 5.6.

     1.38 "Payor" has the meaning set forth in Section.5.6

     1.39 "Person" shall mean any individual, corporation, partnership,
association, joint-stock company, trust, unincorporated organization or
government or political subdivision thereof.

     1.40 "Phase I Clinical Trial" shall mean the first phase of human clinical
trials of a drug required by the FDA to gain evidence of safety for Product(s),
as described in 21 C.F.R. 312(a), as may be amended and deemed to commence on
the date that the first patient is first dosed by or on behalf of Vanda.

     1.41 "Phase II Clinical Trials" shall mean that portion of the FDA
submission and approval process which provides for the initial trials of a
Product on a limited number of patients for the purposes of determining dose
and, evaluating safety and efficacy in the proposed therapeutic indication, as
more fully defined in 21 C.F.R. 312.21(b) as may be amended and deemed to
commence on the date that the first patient is first dosed by or on behalf of
Vanda.

     1.42 "Phase III Clinical Trials" shall mean that portion of the FDA
submission and approval process which provides for the continued trials of a
Product on sufficient numbers of patients to generate safety, efficacy and
pharmacoeconomic data to support regulatory approval in the proposed therapeutic
indication, as more fully defined in 21 C.F.R. 312.21(c) as may be amended and
deemed to commence on the date that the first patient is first dosed by or on
behalf of Vanda (and Novartis, if applicable).

     1.43 "Primary Market Research Development" shall mean all market research
activity undertaken by the Commercialising Party prior to the First Commercial
Sale.

     1.44 "Product" shall mean a formulated pharmaceutical product containing
the Compound or Back-up Compound as an active ingredient and packaged for the
use by the ultimate consumer.

     1.45 "Reasonable Commercial Efforts" shall mean the efforts and resources
normally used in the pharmaceutical industry by companies employing best
practice and the highest commercial standards for a product with equivalent
sales and profit potential.

                                  Page 7 of 43

<PAGE>

     1.46 "Regulatory Approval" shall mean, with respect to a country or group
of countries in the Territory, all authorizations by the appropriate Regulatory
Authority, governmental entity or entities necessary for commercial sale of a
Product in that country or group of countries including, without limitation and
where applicable, approval of labeling, price, reimbursement and manufacturing.

     1.47 "Regulatory Authority" shall mean the FDA, EMEA or any other
counterpart or additional governmental or regulatory agencies responsible for
applicable Regulatory Approvals.

     1.48 "Scenario I Option" has the meaning set forth in Section 2.2(c).

     1.49 "Scenario II Option" has the meaning set forth in Section 2.2(a).

     1.50 "Scenario III Option" has the meaning set forth in Section 2.2(b).

     1.51 "Sublicensee" shall mean a Person, other than a Vanda Affiliate, to
whom Vanda grants any right or license to use Novartis Patents or Novartis
Know-How or to make, use or sell any Product under all or part of Novartis'
Patents or Novartis' Know-How in the Territory.

     1.52 "Supply Agreement" has the meaning set forth in Section 3.2.

     1.53 "Support" or "Supporting" shall mean the preparation, filing,
prosecution, maintenance, renewal and defense of a Patent.

     1.54 "Term" has the meaning set forth in Section 9.1(a).

     1.55 "Territory" shall mean all the countries and territories of the world.

     1.56 "Third Party" shall mean any Person or other entity other than Vanda,
Novartis, Novartis AG or their respective Affiliates of rights conveyed under
this Agreement.

     1.57 "Valid Claim" shall mean (i) an unexpired or issued claim of a
Novartis Patent which claim has not been held invalid or unenforceable by final
decision of a court or other governmental agency of competent jurisdiction,
unappealable or unappealed within the time allowed for appeal, and which is not
admitted to be invalid or unenforceable through reissue, disclaimer or otherwise
or (ii) pending patent application that is a Novartis Patent Right, which claim
was filed in good faith and has not been abandoned or finally disallowed without
the possibility of appeal or refiling of said application.

     1.58 "Vanda Technology" means all Patents and know-how that are (i)
generated, identified, discovered, created or made by Vanda, its employees or a
Third Party on behalf of Vanda, (ii) controlled by Vanda, and (iii) necessary to
manufacture, use, research, develop, sell or seek regulatory approval,
including, without limitation, manufacturing processes, formulations, modes of
delivery and methods of use for the Compound, Back-up Compound, or Products
developed by Vanda pursuant to its development work with the Compound or the
Back-up Compound.

                                  Page 8 of 43

<PAGE>

                                    ARTICLE 2
                                     LICENSE

     2.1 Grant to Vanda.

          (a) Subject to the terms and conditions of this Agreement, on the
Effective Date, Novartis and Novartis AG hereby grant to Vanda an exclusive
license, with the right to sublicense with the prior written consent of Novartis
and Novartis AG, such consent not to be unreasonably withheld, under the
Novartis Patents and Novartis Know-How, to develop, use, make and have made
Compound and Product in the Field of Use and in the Territory.

          (b) Subject to the Scenario II Option pursuant to Section 2.2 (a) and
Scenario III Option pursuant to Section 2.2 (b) and the Co-Promotion Option
pursuant to Section 2.3 (a) and (b), Vanda shall have an exclusive license to
Commercialize the Compound and Product, with right to sublicense without
consent.

          (c) Novartis AG and Novartis retain all rights to Novartis Patents and
Novartis Know-How except to the extent explicitly granted to Vanda hereunder.

     2.2 Option.

          (a) Scenario II Option. Upon the execution of this Agreement, Vanda
agrees and undertakes that it shall commence Phase II Clinical Trials for the
Product on [*]. Vanda shall be responsible for the conduct and financing of each
of the Phase I Clinical Trials and Phase II Clinical Trials which it elects to
conduct. Within three (3) months of the completion of the Phase II Clinical
Trials, Vanda shall provide Novartis with a full written report of the results
of the Phase II Clinical Trials, including the conclusions thereof. Upon request
by Novartis, Vanda shall make available to Novartis any source data reasonably
necessary for Novartis to determine whether to exercise the Scenario II Option.
Novartis shall have sixty (60) Business Days immediately following the delivery
to Novartis of the final Phase II Clinical Trial report to provide notice of
exercise to Vanda stating, that Novartis wishes to co-develop and Commercialize
the Product (the "Scenario II Option").

          Upon exercise of the Scenario II Option, Novartis shall take over the
Investigational New Drug Application with the FDA or such other application
filed with any other Regulatory Authority ("IND") and Novartis shall be
responsible for the overall development and regulatory filings for the Product
in the Territory. After the exercise of the Scenario II Option, Vanda shall
remain responsible for continuing to conduct the development of the Product(s)
in accordance with the Development Plan as approved by the JDC. As per Section
4.2 below Novartis shall take over the Chairman of the JDC immediately after the
exercise of the Scenario II Option. Subject only to the option to co-promote in
Section 2.3 (c) below, under Scenario II Novartis and its Affiliates shall have
the exclusive rights for the Commercialisation of the Compound or Product and
Vanda shall grant Novartis an exclusive license under the Vanda Technology.

----------
CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.

                                  Page 9 of 43

<PAGE>

          Upon the exercise of the Scenario II Option by Novartis the Scenario I
Option, pursuant to Section 2.2(c) below and Scenario III Option pursuant to
Section 2.2(b) below as well the Co-Promotion Option pursuant to Section 2.3(a)
and (b) shall be deemed expired.

          (b) Scenario III Option. In the event that Novartis does not exercise
its Scenario II Option, Vanda will consider the results of the Phase II Clinical
Trial and may elect to commence Phase III Clinical Trials for the Product within
[*] of the delivery of the final Phase II Clinical Trial report to Novartis.
Vanda shall provide written notice of such election to Novartis. Upon such
election, Vanda shall be responsible for the conduct and financing of the Phase
III Clinical Trials. If Novartis does not receive such election notice within
the twelve (12) months period, Novartis may terminate this Agreement according
to Section 9.3. Within three months of the completion of the Phase III Clinical
Trials, Vanda shall provide Novartis with a full written report of the results
of the Phase III Clinical Trials, including the conclusions thereof. The Phase
III Clinical Trials shall be performed in accordance with a plan reviewed with
the relevant Regulatory Authority in a post Phase IIB meeting and be approved by
the JDC. Upon request by Novartis Vanda shall make available to Novartis any
source data reasonably necessary for Novartis to determine whether to exercise
the Scenario III Option. Novartis shall have sixty (60) Business Days
immediately following the delivery to Novartis of the final Phase III Clinical
Trials report to provide written notice to Vanda of exercise stating, Novartis
wishes to Commercialize the Product (the "Scenario III Option").

          Upon exercise of the Scenario III Option, Novartis shall take over the
Investigational New Drug application with the FDA or such other application
filed with any other Regulatory Authority ("IND") and Novartis shall be
responsible for the overall development and regulatory filings for the Product
in the Territory. As per Section 4.2 below Novartis shall take over the Chairman
of the JDC immediately after the exercise of the Scenario III Option. Subject
only to the option to co-promote in Section 2.3(c) below, under Scenario III
Novartis and its Affiliates shall have the exclusive rights for the
Commercialisation of the Compound or Product and Vanda shall grant Novartis and
exclusive license under the Vanda Technology.

          Upon the exercise of the Scenario III Option by Novartis the Scenario
I Option pursuant to Section 2.2(c) below and the Co-Promotion Option pursuant
to Section 2.3(a) and (b) shall be deemed expired.

          (c) Scenario I Option. In the event that Novartis does not exercise
the Scenario II Option or the Scenario III Option, Novartis shall be deemed to
have exercised the Scenario I Option. Under Scenario I Vanda shall be fully
responsible for the entire development, manufacturing and Commercialisation of
the Compound and the Product. Subject to the option to co-promote in Section
2.3(a) and (b) below, under Scenario I Novartis shall have no right or
obligation to the Commercialisation of the Compound or Product. Within three
months of the last date for Novartis to exercise the Scenario III Option, but
did not exercise such option, Vanda shall submit to Novartis a detailed
commercialisation plan demonstrating the planned application of Reasonable
Commercial Efforts.

----------
CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.

                                  Page 10 of 43

<PAGE>

          (d) Good Clinical Practices. All Phase I Clinical Trials, Phase II
Clinical Trials or Phase III Clinical Trials conducted by Vanda pursuant to this
Agreement shall be conducted in accordance to Good Clinical Practice.

     2.3 Co-Promotion Option.

          (a) Novartis First Right of Refusal - If pursuant to section 2.2(c)
above Novartis is deemed to have exercised its Scenario I Option, and Vanda
decides to co-promote the product with a Third Party, Vanda shall notify
Novartis in writing of its intention to co-promote the Products with such a
co-promotion partner. Novartis will have ninety (90) Business Days from the date
Vanda notifies Novartis of its intention to co-promote the Product with a Third
Party to provide written notice of its intent to exercise its option to
co-promote the Product with Vanda and to negotiate in good faith a Co-Promotion
Agreement on commercially reasonable terms and conditions.

          (b) If after such ninety-Business Day period, the Parties have not
entered into a Co-Promotion Agreement, Vanda would be free to enter into an
arrangement with a Third Party leading pharmaceutical company; provided, that
Vanda will provide Novartis a last opportunity to submit a Matching counteroffer
on terms no less favorable to Vanda than those terms last offered by the
potential Third Party leading pharmaceutical company. Vanda shall provide to
Novartis all reasonably available information belonging to Vanda, and not
subject to Third Party confidentiality restrictions, relating to the arrangement
as Novartis shall reasonably require, including proposed terms; provided,
however, that Vanda shall not be required to disclose the identity of such Third
Party. Within sixty (60) Business Days of Novartis' receipt of the written
notice, Novartis will respond to Vanda in writing regarding Novartis' interest
in Matching the counter-offer. During the same sixty (60) Business Day period
following receipt of such notice from Vanda, Novartis may submit to Vanda the
counter-offer. Vanda shall consider such counteroffer from Novartis in good
faith and agree to negotiate with Novartis in the event that the terms of such
Novartis counteroffer are more favourable to Vanda than those of a bona fide
definitive agreement negotiated by Vanda with a Third Party. As used herein,
"Matching" shall mean [*] or (ii) [*].

          (c) If Novartis exercises its Scenario II Option or Scenario III
Option, and intends to co-promote the product in a Major Market Country with a
Third Party, Novartis shall notify Vanda in writing of its intention to
co-promote the Products with a co-promotion partner. Vanda will have ninety (90)
Business Days from the date Novartis notifies Vanda of its intention to
co-promote the Product to provide written notice of its intent to exercise its
option to co-promote the Product with Novartis on commercially reasonable terms
and conditions to be negotiated in good faith and set forth in the Co-Promotion
Agreement. If after ninety (90) Business Days of such good faith negotiations
there is no agreement on the

----------
CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.

                                  Page 11 of 43

<PAGE>

terms of the Co-Promotion Agreement between the Parties, Novartis shall be free
to co-promote the Product with a Third Party.

                                    ARTICLE 3

                             MANUFACTURE AND SUPPLY

     3.1 Provision of Compound. Within twenty (20) Business days of the
Effective Date, Novartis will provide to Vanda, at no cost to Vanda, [*] EX
WORKS (as such term is defined in INCOTERMS 2000 of the International Chamber of
Commerce in Paris: delivery to Vanda shall occur when the Compound and Product
is placed at Vanda's disposal at Novartis' premises), as well as adequate data
in connection with the development of the Compound and Product. Further Novartis
shall sell to Vanda and Vanda shall buy (only if in useable condition, on an as
needed basis) from Novartis the remaining Compound available at Novartis in
addition to the 20 kg specified in this Section 3.1 at the terms and conditions
specified in SCHEDULE 3.1. For the avoidance of doubt, Novartis makes no
representation or warranty that any quantities of Compound provided to Vanda
under this Agreement will meet the GMP standards.

     3.2 Right to Manufacture Clinical Supply. Within thirty (30) Business Days
of the Effective Date, the Parties shall determine whether Novartis will
manufacture and supply to Vanda the clinical supplies of Compound and/or
Product, and the parties shall negotiate the terms and conditions of a clinical
supply agreement pursuant to which the Compound shall be supplied. To the extent
that the Parties do not enter into an agreement for the supply of Compound for
clinical purposes within such thirty (30) Business Day period, then Novartis
shall co-operate in all reasonable respects to transfer such Novartis Know-How
to Vanda and provide such other assistance reasonably necessary in order to
enable Vanda or a Third Parry to supply clinical supplies of Compound and/or
Product. Novartis shall have exclusive rights to manufacture the Compound and
Product in the event that Novartis exercises either the Scenario II Option or
the Scenario III Option.

     3.3 Transfer of Novartis Know-How and Novartis Patent Files. In furtherance
of the activities contemplated by this Agreement, Novartis and Novartis AG each
shall, or shall cause its Affiliates to, transfer as promptly as possible to
Vanda the Novartis Know-How and the files of the Novartis Patents, including
copies of all relevant laboratory notebook information, screening data and
synthesis schemes clinical trial information and clinical trial raw and derived
datasets, which includes description in any forms, data and other information
disclosed or transferred to Vanda before the Effective Date. Banked DNA samples
and or animal tissues treated with the compound will only be made available to
Vanda for further studies in accordance with the protocols and informed consents
set forth at the time of sample acquisition provided however that no human
tissue samples with identifiable patient data will be transferred to Vanda. All
raw data and individual clinical and genetic data will be transferred to Vanda
under a mutually agreed coding schema, in order to protect patient
confidentiality. All original identifiable patient data will, however be
provided to the FDA as part of the submission package. If Vanda requires
additional genotyping on existing samples, Novartis will contract this work out,
in accordance with the informed consents, on Vanda's

----------
CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.

                                  Page 12 of 43

<PAGE>

behalf and at Vanda's cost. If further DNA samples from past study patients are
desired, Vanda will revisit the sites and try to consent or reconsent these
patients for additional DNA sampling. Novartis and Vanda shall each be
responsible for the costs of their employees, representatives or agents
incurred in the transfer from Novartis to Vanda of the Novartis Know-How and the
files of the Novartis Patents. In addition, Novartis and Novartis AG shall make
a Novartis representative familiar with the Novartis Know-How and the files of
the Novartis Patents reasonably available within reasonable office hours of the
relevant employee to assist Vanda with the transfer as well as to answer any
questions Vanda may have concerning such transferred information. In the event a
translator is necessary or any of the materials need to be translated into
English, the Parties shall share equally in the cost of such translation. Upon
Novartis' exercise of the Scenario II option Vanda shall transfer back to
Novartis the files of the Novartis Patents.

     3.4 Transfer of Pharmacovigilance obligations and IND. In furtherance of
the activities contemplated by this Agreement, Novartis and Novartis AG each
shall, or shall cause its Affiliates to, transfer to Vanda the IND, including
copies of all relevant registration dossiers. Such transfer shall however be
subject to the transfer of all Pharmacovigilance obligations, with respect to
clinical trials of Products performed prior to the Effective Date by Novartis to
Vanda or Vanda's Affiliates.

                                    ARTICLE 4
                        DEVELOPMENT AND COMMERCIALIZATION

     4.1 Development. Subject to the exercise by Novartis of either the Scenario
II Option or the Scenario III Option, Vanda shall be responsible for overall
development and regulatory filings for the Product in the Territory. Vanda shall
use its Reasonable Commercial Efforts to perform its obligations under this
Agreement and cause or cause to be done, all things necessary to perform the
obligations contemplated hereby. Vanda shall use Reasonable Commercial Efforts
to make all registrations, filings and applications, to give all notices to the
relevant Regulatory Authority and obtain any governmental transfers, approvals,
orders, qualifications and waivers necessary or desirable for the
commercialisation of the Product hereby.

     4.2 The JDC shall be set up within four (4) weeks of the Scenario II Option
and shall be comprised of at least one member from Vanda and Novartis
respectively (or further equal numbers from both Parties on an ad hoc basis as
is agreed), plus the chairman from the Commercialising Party with the deciding
vote to assist in a consistent and harmonized development of the Product under
this Agreement, it being understood that each member shall be entitled and
expected to consult with their organization. The JDC shall discuss development
and registration issues and shall co-ordinate the development and registration
efforts described in this Agreement. Meetings of the JDC shall be at such times
and places and in such form (e.g., in person, telephonic or video conference) as
the members of the JDC shall determine but shall meet at least once every six
(6) months. Representatives of both Novartis and Vanda shall be present at any
meeting of the JDC. Decisions of the JDC shall be made by a majority vote at a
telephone or video conference or by a written consent signed by

                                  Page 13 of 43

<PAGE>

all members thereof. The JDC shall keep minutes of its deliberations (or appoint
a secretary to do so) setting forth, amongst other matters, all proposed actions
and all votes thereon.

     4.3 All records of the JDC shall at all times be available to the Parties.
The JDC may delegate to one Party or to a specific representative the authority
to make certain decisions. The costs incurred by each Party through its
participation in the JDC shall be borne by each Party.

     4.4 Quarterly Reports. While the Compound is under development and until
the completion of Phase II and Phase III Clinical Trials, Novartis will receive
reports every three months prepared by Vanda within forty-five (45) Business
Days after the end of each quarterly period. Such reports shall set forth in
summary form the results of development work performed and costs incurred during
the preceding quarterly period and the planned development work, time-lines,
launch plans, estimated costs to be incurred and commercialisation to be
performed by Vanda in the next quarterly interval and explain to Novartis in
detail the reasons for any disparity between product development work performed
and costs incurred during the preceding quarterly period and the description of
planned development work and costs estimate contained in the preceding quarterly
report.

     4.5 Discontinuance of or Delay in Development. If either (1) Vanda should
decide to discontinue the development of the Compound into Product or (2) if a
time period of more than one year, elapses between patient dosings prior to the
NDA Filing or (3) more than one year elapses between the receipt of guidance by
Vanda from a Regulatory Authority and the next dosing of a patient it shall
promptly notify Novartis in person and in writing and all licenses granted
hereunder will thereupon automatically terminate. Vanda will make available to
Novartis all results of development work carried out up to the point of
discontinuance and Novartis shall have a non-exclusive license to use all such
results of the Vanda Technology solely for use in any future development or
commercialisation work to be carried out in respect of the Compound, Product or
Back-up Compound. Should the Compound ultimately become a commercialized
Product, a [*]([*])% royalty on Net Sales will be payable to Vanda by Novartis
where such Net Sales are in countries where the Product is protected by Patents
in the name of Vanda. For countries where Net Sales are made and where the
Product is not protected by Patents in the name of Vanda, Novartis shall pay to
Vanda a royalty of [*] ([*]) per cent on Net Sales for a period of five (5)
years after the First Commercial sale of a Product.

     4.6 Regulatory and Marketing Efforts

          (a) Market Launch. The Commercializing Party shall use Reasonable
Commercial Efforts to seek marketing authorizations in Major Market Countries
and effect the introduction of Product into Major Market Countries within [*] of
such Product completing the Regulatory Approval process.

          (b) Sole Discretion. Subject to the terms and conditions of the
Co-Promotion Agreement, if entered into by the Parties, the Commercializing
Party shall be responsible for and have sole discretion over all
Commercialization of Product in the

----------
CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.

                                  Page 14 of 43

<PAGE>

Territory. The Commercialising Party shall have sole responsibility for all
Primary Market Research Development

     4.7 Commercialisation. The Commercialising Party shall have full
responsibility for the costs of the Commercialisation unless otherwise agreed in
writing by the parties.

                                    ARTICLE 5
                                    PAYMENTS

     5.1 Upfront Payment. Within ten Business Days of the Effective Date, Vanda
shall pay to Novartis an upfront payment of $500,000.

     5.2 Technology Access Fee. Vanda shall pay to Novartis a [*] milestone
payment upon [*] should Vanda's aggregate expenditure on [*] not reach [*]. If
upon the initiation of the first qualified Phase II Clinical Trial, Vanda's cost
of [*] exceeds [*], and is less than [*], Vanda will pay to Novartis a milestone
payment equal to [*] minus the cost of [*].

     5.3 Outside Funding from a Third Party. If Novartis has not exercised its
Scenario II Option and Vanda needs outside funding to support further
development, Vanda will provide written notice to Novartis of Vanda's intention
to seek a Third Party partner to assist Vanda with the continued development of
the Compound. Novartis will have thirty (30) Business Days from its receipt of
such notice to inform Vanda if Novartis is willing to provide a secured
interest-bearing loan facility to Vanda on terms to be negotiated, to be used to
fund all subsequent development costs that Vanda may need to complete its
obligations as set out in the Development Plan (or the Development plan
amendments as approved by the JDC). In the event that Vanda receives debt
funding from a Third Party it shall not grant any interest to that Third Party
which conflict with its obligations to Novartis. If Vanda requests that Novartis
relinquish Novartis' Scenario III Option rights (primarily for the purposes of
securing Third Party outside funding), financial consideration for these rights
shall be negotiated between Vanda and Novartis.

     5.4 Milestone Payments by Vanda

          (a) Scenario I Milestone Payments. In the event that Novartis does not
exercise its Scenario II Option or Scenario III Option, and Vanda continues with
the development, manufacture and Commercialization of the Product, then Vanda
will pay to Novartis or Novartis AG (as specified) upon achieving the following
milestones in addition and not instead of any payments received prior to such
milestones:

<TABLE>
<CAPTION>
MILESTONE   UNITED STATES DOLLARS
---------   ---------------------
<S>         <C>
[*]           [*] to Novartis AG
</TABLE>

----------
CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.

                                  Page 15 of 43

<PAGE>

<TABLE>
<S>         <C>
[*]         [*] to Novartis AG
[*]         [*] to Novartis
</TABLE>

          Each such milestone shall be payable only once upon the first Product
          to achieve a milestone.

     5.5  Milestone Payments by Novartis

          (a) Scenario II Milestone Payments. In the event that Novartis
exercises its Scenario II Option, then, Novartis shall pay to Vanda the
following milestones:

<TABLE>
<CAPTION>
MILESTONE   UNITED STATES DOLLARS
---------   ---------------------
<S>         <C>
[*]                  [*]
[*]                  [*]
[*]                  [*]
[*]                  [*]
</TABLE>

          Each such milestone shall be payable only once upon the first Product
          to achieve a milestone.

          (b) Scenario III Milestone Payments. In the event that Novartis
exercises its Scenario III Option, Novartis shall pay to Vanda the following
milestones:

<TABLE>
<CAPTION>
MILESTONE   UNITED STATES DOLLARS
---------   ---------------------
<S>         <C>
[*]         [*]
[*]         [*]
[*]         [*]
[*]         [*]
</TABLE>

          Each such milestone shall be payable only once upon the first Product
          to achieve a milestone.

     5.6  Timing.

          Payment to be made by one Party (the "Payor") to the other ("Payee")
shall be made within thirty (30) Business Days after its receipt of notification
by the Payee of the occurrence of a milestone event giving rise to a payment
obligation hereunder, with an accompanying invoice from the Payee. All payments
shall be made by wire transfer in United States Dollars to the credit of such
bank account as may be designated, from time to time, by the Payor in writing.
Vanda may receive a milestone amount stated in this clause (if payable) only
once from the applicable paying Party.

----------
CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.

                                  Page 16 of 43

<PAGE>

     5.7  Development Costs.

          (a) Scenario I or Scenario III Development Costs. In the event that
either the Scenario I Option or Scenario III Option applies, Vanda will be
responsible for all Development Costs for Product.

          (b) Scenario II Development Costs. In the event that Novartis
exercises its Scenario II Option, Novartis will reimburse Vanda for [*] percent
([*]%) of any and all Development Costs paid by Vanda prior to the exercise of
the Scenario II Option (as set forth in Section 5.2). Thereafter, Novartis shall
pay [*] percent ([*]%) of all future Development Costs to be incurred by Vanda
after such exercise date and Vanda will provide Novartis with quarterly invoices
for Novartis' share of the Development Costs and Novartis will pay such invoices
within thirty (30) days of the date of such invoice. Vanda shall reimburse
Novartis [*] percent ([*]%) of all future Development Costs to be incurred by
Novartis after such exercise date, should the JDC determine such costs are
warranted.

     5.8  Royalties.

          (a) Payment.

               (i) Scenario I Royalty. In the event that Novartis does not
exercise its Scenario II Option or Scenario III Option, Vanda will pay to
Novartis a [*] percent ([*]%) royalty on annual Net Sales of Product by Vanda,
its Affiliates and Sublicensees in the Territory in consideration of the license
granted under the Novartis Know-How and Novartis Patents.

               (ii) Scenario II Royalty. In the event that Novartis exercise its
Scenario II Option, Novartis will pay to Vanda a [*] percent ([*]%) royalty on
annual Net Sales of Product by Novartis, its Affiliates and Sublicensees in the
Territory in consideration of the license granted under the Vanda Technology.

               (iii) Scenario III Royalty. In the event that Novartis exercises
its Scenario III Option, Novartis will pay to Vanda a [*] percent ([*]%) royalty
on annual Net Sales of Product by Novartis, its Affiliates and Sublicensees in
the Territory in consideration of the license granted under the Vanda
Technology.

               (iv) Each of the foregoing shall be collectively and individually
referred to as "Royalties".

          (b) Royalty Offset for Third Party Royalty Payments. The
Commercialising Party may require additional patented technologies to which no
Party has rights, from a Third Party, in order to develop, manufacture and
Commercialize the Compound or Products. As between Novartis and Vanda, the
Commercialising Party shall have the right to deduct [*] percent ([*]%) of such
third person royalty or consideration from the royalty owed to the other Party
on Net Sales of the Product in such country, provided that any deduction under
this Section shall not exceed [*] percent ([*]%) of the royalty percentage (e.g.
[*]%, [*]%, [*]% respectively for [*]%, [*]%, and [*]% royalties as described
in Section 5.5(a) above) otherwise due to the other party for the Net Sales from
that country.

----------
CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.

                                  Page 17 of 43

<PAGE>

          (c) Royalty Offset for Third Party Intellectual Property Infringement.
As between Novartis and Vanda and in the event that the manufacture, use or sale
of Compound or Product in any country infringes a Third Party patent and the
Commercialising Party must pay to a Third Party a royalty or consideration
accordingly, the Commercialising Party shall have the right to deduct such third
person royalty or consideration from the royalty owed to the other Party on Net
Sales of the Product in such country, provided that any deduction under this
Section shall not exceed [*] percent ([*]%) of the royalty percentage (e.g.
[*]%, [*]%, [*]%, respectively for [*]%, [*]% and [*]% royalties as described in
Section 5.5 (a) above) otherwise due to the other Party for Net Sales from that
country, and provided further that such deduction shall be in addition to any
indemnification for breach of representation that such Party may be entitled to
receive under this Agreement.

          (d) Countries with No Valid Claim Covering Product. As between
Novartis and Vanda and for countries where there is no Valid Claim of an
applicable Patent related to the Compound or Product or a method of use thereof,
Royalty amounts payable by the Commercialising Party with respect to the Net
Sales of Product in such country shall be reduced by [*] percent ([*]%).

          (e) As between Novartis and Vanda and the maximum Royalty relief which
may be claimed by the Commercialising Party in respect of this Section 5.8 in
any one country is [*] percent ([*]%) of the royalty otherwise due to the other
Party.

          (f) Term for Royalty Payments. Royalties shall be payable on a
country by country basis from the First Commercial Sale until the later of
either the last applicable Patent to expire (including extensions thereof) with
a Valid Claim which in absence of the license would be infringed by the
Compound, the Product or a method of use thereof, or five (5) years from the
date of First Commercial Sale of a Product.

     5.9 Sales Reports.

          (a) Substance of Reports. After the First Commercial Sale of Product
and during the term of this Agreement, the Commercialising Party shall furnish
or cause to be furnished to the other Party on a quarterly basis no later than
one month after the end of the preceding quarter a written report showing the
Net Sales of Product in each country in the Territory.

          (b) Timing. Final yearly reports shall be due on the ninetieth (90)
day following the close of the calendar year.

          (c) Records. The Commercialising Party shall keep accurate records in
sufficient detail to enable the amounts due hereunder to be determined and to be
verified by an independent certified public accountant mutually agreed upon by
the Parties pursuant to Section 5.4(e).

          (d) Vanda Currency Exchange. With respect to payments to be made by
Vanda to Novartis in respect of Net Sales invoiced in United States Dollars, the
Net Sales and

----------
CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.

                                  Page 18 of 43

<PAGE>

the amounts due to Novartis hereunder shall be expressed in United States
Dollars. With respect to Net Sales invoiced in a currency other than United
States Dollars, the Net Sales shall be expressed in the domestic currency of the
entity making the sale, together with the Dollar equivalent, calculated using
the arithmetic average of the spot rates on the last Business Day of each month
of the calendar quarter in which the Net Sales were made. The "closing mid-point
rates" found in the "dollar spot forward against the dollar" table published by
The Financial Times or any other publication as agreed to by the Parties shall
be used as the source of spot rates to calculate the average as defined in the
preceding sentence. All payments shall be made in United States Dollars. If at
any time legal restrictions in any country in the Territory prevent the prompt
remittance of any payments with respect to sales in that country, Vanda shall
have the right and option to make such payments by depositing the amount thereof
in local currency to Novartis' account in a bank or depository in such country.

          (e) Novartis Currency Exchange. With respect to royalty payments to be
made by Novartis to Vanda in relation to Net Sales invoiced in United States
Dollars, payments to Vanda by Novartis shall be made in United States Dollars.
With respect to the calculation of royalty payments to be made by Novartis to
Vanda in relation to Net Sales invoiced in a currency other than United States
Dollars, for the conversion of the Net Sales amount into United States Dollars,
the Novartis Monthly Average Exchange Rate or such other standard methodology
for currency conversion as employed by Novartis at that time, shall be used.

          (f) In the event of a co-commercialization between Vanda and Novartis,
local payments to be made between Vanda and Novartis shall be made in the
applicable local currency.

          (g) Royalty Payment Due Date; Accrual. Royalties which have accrued
during any calendar year and are required to be shown on a sales report provided
for under this Section 5.4(a) of this Agreement shall be due and payable on the
date such sales report is due.

               (i) The Commercializing Party, its Affiliates and Sublicensees
          shall keep for [*] from the date of each payment of royalties complete
          and accurate records of sales by the Commercializing Party and its
          Affiliates and Sublicensees of Product in sufficient detail to allow
          the accruing royalties to be determined accurately.

               (ii) The non-Commercializing Party shall have the right for a
          period of [*] after receiving any report or statement with respect to
          royalties due and payable to appoint an independent certified public
          accountant reasonably acceptable to the Commercializing Party to
          inspect the relevant records of the Commercializing Party and its
          Affiliates and Sublicensees to verify such report or statement not
          more than once a year.

               (iii) The Commercializing Party and its Affiliates and
          Sublicensees shall each make its records available for inspection by
          such independent certified public accountant during regular business
          hours at such place or

----------
CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.

                                  Page 19 of 43

<PAGE>

          places where such records are customarily kept, upon reasonable notice
          from the non-Commercializing Party, solely to verify the accuracy of
          the reports and payments. Such inspection right shall not be exercised
          more than once in any calendar year.

               (iv) The non-Commercializing Party agrees to hold in strict
          confidence all information concerning royalty payments and reports,
          and all information learned in the course of any audit or inspection
          (and not to make copies of such reports and information), except to
          the extent necessary for the non-Commercializing Party to reveal such
          information in order to enforce its rights under this Agreement or if
          disclosure is required by law, regulation or judicial order. The
          results of each inspection, if any, shall be binding on both Parties.

               (v) The non-Commercializing Party shall pay for such inspections,
          except that in the event there is any upward adjustment in aggregate
          royalties payable for any year shown by such inspection of more than
          [*] ([*]%) of the amount paid, the Commercializing Party shall pay for
          such inspection. Any overpayments shall be fully creditable against
          amounts payable in subsequent payment periods.

               (vi) The Commercializing Party shall include in each sublicense
          or marketing agreement entered into by it pursuant to this Agreement a
          provision requiring the Sublicensee or marketing partner to keep and
          maintain adequate records of sales made pursuant to such sublicense or
          marketing agreement and to grant access to such records by the
          aforementioned independent public accountant for the reasons specified
          in this Section.

     5.10 Tax Withholding. The withholding tax, duties, and other levies (if
any) applied by a government of any country of the Territory on payments made by
one Party (the "Payor") to the other ("Payee") hereunder shall be borne by
Payee. Payor, its Affiliates and Sublicensees shall cooperate with Payee to
enable Payee to claim exemption therefrom under any double taxation or similar
agreement in force and shall provide to Payee proper evidence of payments of
withholding tax and assist Payee by obtaining or providing in as far as possible
the required documentation for the purpose of Payee's tax returns.

     5.11 Interest Due. In case of any delay in payment by Vanda to Novartis not
occasioned by Force Majeure, interest on the overdue payment shall accrue at an
annual interest rate, compounded monthly, equal to the three month London
Interbank Offer Rate (LIBOR) as determined for each month on the last Business
Day of that month, assessed from the day payment was initially due. The
foregoing interest shall be due from Vanda without any special notice.

     5.12 Payments to Novartis. All payments to be made by Vanda shall be made
to the following bank account of Novartis and Novartis AG:

----------
CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.

                                  Page 20 of 43

<PAGE>

Bank: [*]
Swift: [*]
Correspondent Bank for USD: [*]
USD Account Novartis AG, Basel / Switzerland: [*]
USD Account Novartis Pharma AG, Basel / Switzerland: [*]

     5.13 Payments to Vanda. All payments to be made by Novartis shall be made
to the following bank account of Vanda:

[*]
ABA: [*]
Account #: [*]
Account Name: [*]

                                    ARTICLE 6
                              INTELLECTUAL PROPERTY

     6.1 Novartis Patentable Inventions and Know-How.

     Any invention made by Novartis shall be owned by Novartis and any invention
made by Vanda shall be owned by Vanda.

          (a) Novartis Patent Prosecution.

               (i) During the term of the Agreement, the Commercializing Party
          shall, diligently and in the reasonable exercise of its commercial
          discretion, Support the Novartis Patents in the countries where such
          Novartis Patents are filed as of the Effective Date. Except as
          provided in Paragraph 6.1(a)(ii) for discontinued Novartis Patents,
          the Parties will split the costs of maintenance of the Novartis
          Patents worldwide equally (50:50).

               (ii) If the Commercializing party does not intend to file for
          patent protection or does not wish to continue Supporting a Novartis
          Patent, (a "discontinued Novartis Patent") then it shall give at least
          ninety (90) days advance notice, and in no event less than a
          reasonable period of time for the other Party to act in its stead.

                    (A) In such case, the other Party may elect at its sole
               discretion to continue Supporting the discontinued Novartis
               Patent at its sole expense.

----------
CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.

                                  Page 21 of 43

<PAGE>

                    (B) Discontinuance may be elected on a country-by-country
               basis or for a patent application or patent series in total.

          (b) Co-operation. Commercializing Party will consult with the other
Party and will keep the other Party continuously informed of all matters
relating to Support of the Novartis Patents.

               (i) Commercialising Party shall provide the other Party with a
          copy of any Novartis Patents relating to the Compound or Product,
          prior to filing the first of such Patents in any jurisdiction and
          copies of all material correspondence with the relevant patent office
          pertaining to the Novartis Patents and relating to the Compound or
          Product.

               (ii) In no event shall a Party relinquish control of the
          prosecution of Novartis Patents to a Third Party.

     6.2 Infringement Claims by Third Parties.

          (a) Notice. If the manufacture, use or sale of Product under the
Novartis Patents results in a claim or a threatened claim by a Third Party
against a Party hereto for patent infringement or for inducing or contributing
to patent infringement ("Infringement Claim"), the Party first having notice of
an Infringement Claim shall promptly notify the other in writing. The notice
shall set forth the facts of the Infringement Claim in reasonable detail.

          (b) Third Party Licenses. In the event that exploitation under the
Novartis Patents in connection with manufacture, use or sale of Compound or
Product in a country would infringe a Third Party Patent and a license to such
Third Party Patent is available and the Commercializing Party in its sole
discretion seeks such a license, the Parties agree that the Commercializing
Party will use commercially reasonable efforts to obtain any such required
licenses under the Third Party's Patents with a right to sublicense to the other
Party and if requested by other Party will grant such sublicense, under
reasonable sublicense terms mutually acceptable to both Novartis and Vanda.

          (c) Litigation. In the event of the institution of any suit by a Third
Party against Vanda as a result of Vanda's manufacture, use or sale of Compound
or Product, Vanda shall have the right but not the obligation to defend such
suit at its expense. Novartis shall cooperate and assist Vanda in any such
litigation at Vanda's expense.

     6.3 Infringement Claims Against Third Parties.

          (a) Cooperation. Novartis and Vanda each agree to take reasonable
actions to protect Novartis Patents from infringement, subject to the terms of
this Section 6.3. If one Party brings any such action or proceeding, the second
Party may be joined as a Party plaintiff if necessary for the action or
proceeding to proceed and, in case of joining, the second Party agrees to give
the first Party reasonable assistance and authority to file and to prosecute
such suit.

                                  Page 22 of 43

<PAGE>

          (b) Notice. If any Novartis Patents are infringed by a Third Party,
the Party to this Agreement first having knowledge of such infringement, or
knowledge of a reasonable probability of such infringement, shall promptly
notify the other in writing. The notice shall set forth the facts of such
infringement in reasonable detail.

          (c) Institution of Proceedings. Vanda, shall have the primary right,
but not the obligation, to institute, prosecute, and control with its own
counsel at its own expense any action or proceeding with respect to infringement
of the claims of such Novartis Patents and the other Party shall have the right,
but not the obligation at its own expense, to be represented in such action by
its own counsel.

          (d) Failure to Institute Proceedings. If Vanda fails to institute,
prosecute, and control such action or prosecution and fails to do so within a
period of sixty (60) Business Days after receiving notice of the infringement,
Novartis shall have the right but not the obligation to bring and control any
such action by counsel of its own choice, and Vanda shall have the right, at its
own expense, to be represented in any such action by counsel of its own choice.

          (e) Division of Damages Award. Each Party shall recover their
respective actual out-of-pocket expenses associated with any litigation or
settlement thereof from any recovery made by any party. Any excess amount
awarded in damages shall be retained by the Party instituting such action.

          (f) Settlement. The Parties shall keep each other informed of the
status of and of their respective activities regarding any litigation or
settlement thereof concerning Product; provided, however, that no settlement or
consent judgment or other voluntary final disposition of a suit under this
Section may be undertaken without the consent of the other Party if such
settlement would require the other Party to be subject to an injunction or to
make a monetary payment or would otherwise adversely affect the other Party's
rights under this Agreement.

     6.4 Notice of Certification. Novartis and Vanda each shall immediately give
notice to the other of any certification filed under the "U.S. Drug Price
Competition and Patent Term Restoration Act of 1984" (or its foreign equivalent)
claiming that a Novartis Patent is invalid or that infringement will not arise
from the manufacture, use or sale of any Product by a Third Party ("Hatch-Waxman
Suit Notice").

          (a) Within ten (10) Business Days after receipt of notice of such
certification Vanda shall give written notice to Novartis of its decision as to
whether to bring a suit at its expense within a thirty (30) Business Day period
from the date of such certification. Should Vanda inform Novartis that it is not
to bring a suit, then Novartis shall be free to immediately bring such a suit in
its name. If Vanda brings suit, at Vanda's written request Novartis agrees to be
named as a party to such suit. If Novartis brings such a suit, at Novartis'
written request Vanda agrees to be named as a party to such suit.

          (b) Novartis may then, but is not required to, bring suit against the
party that filed the certification.

                                  Page 23 of 43

<PAGE>

          (c) Any suit by Vanda or Novartis shall either be in the name of Vanda
or in the name of Novartis, or jointly in the name of Vanda and Novartis, as may
be required by law.

          (d) For this purpose, the Party not bringing suit shall execute such
legal papers necessary for the prosecution of such suit as may be reasonably
requested by the Party bringing suit.

     6.5 Patent Term Extensions. The Parties shall cooperate in good faith with
each other in gaining patent term extensions wherever applicable to Novartis
Patents covering Compound or Product.

          (a) Vanda and Novartis shall jointly determine which Novartis Patents
shall be extended.

          (b) All filings for such extension shall be made by the Party
responsible for prosecution and maintenance of the Novartis Patent, provided,
however, that in the event that the Party who is responsible for prosecution and
maintenance of the Novartis Patent elects not to file for an extension, such
Party shall (i) inform the other Party of its intention not to file and (ii)
grant the other Party the right to file for such extension.

          6.6 Trademarks. No trade mark shall be included in the licences
granted to Vanda under this Agreement. The parties agree to negotiate the terms
of a further agreement governing trade marks related to the Compound or Product.

                                    ARTICLE 7
                         REPRESENTATIONS AND WARRANTIES

     7.1 Novartis AG and Novartis Representations and Warranties. Each of
Novartis and Novartis AG hereby represents and warrants to Vanda as of the
Effective Date that:

          (a) This Agreement has been duly executed and delivered by it and
constitutes the valid and binding obligation of it, enforceable against it in
accordance with its terms except as enforceability may be limited by bankruptcy,
fraudulent conveyance, insolvency, reorganization, moratorium and other laws
relating to or affecting creditors' rights generally and by general equitable
principles. The execution, delivery and performance of this Agreement have been
duly authorized by all necessary action on the part of it, its officers and
directors;

          (b) to the best of Novartis' and Novartis AG's knowledge, the Novartis
Patents and Novartis Know-How exist and neither Novartis nor Novartis AG have
information that would render any Patent invalid or unenforceable, except as
disclosed to Vanda or available to Vanda in public information; notwithstanding
anything to the contrary in this Agreement, in no event shall Novartis or
Novartis AG be deemed to have guaranteed the validity of the Patents.

          (c) it has not previously assigned, transferred, conveyed or otherwise
encumbered its right, title and interest in Novartis Patents;

                                  Page 24 of 43

<PAGE>

          (d) to the best of Novartis AG's knowledge, (i) it is the sole and
exclusive owner of the Novartis Patents, (ii) all of which are free and clear of
any liens, charges and encumbrances, and (iii) no other person, corporate or
other private entity, or governmental entity or subdivision thereof, has or
shall have any claim of ownership with respect to the Novartis Patents,
whatsoever;

          (e) So far as it is aware, the execution, delivery and performance of
this Agreement does not conflict with any agreement, instrument or
understanding, oral or written, to which it is a Party or by which it may be
bound, and, to the best of its knowledge, does not violate any material law or
regulation of any court, governmental body or administrative or other agency
having authority over it that would be inconsistent with the obligations under
this Agreement;

          (f) It is not subject to any order, decree or injunction by a court of
competent jurisdiction which prevents or materially delays the consummation of
the transactions contemplated by this Agreement.

          NOVARTIS AND NOVARTIS AG MAKE NO REPRESENTATION OR WARRANTY AND
SPECIFICALLY DISCLAIMS ANY GUARANTEE THAT THE DEVELOPMENT OF COMPOUND OR
PRODUCTS WILL BE SUCCESSFUL, IN WHOLE OR IN PART, OR THAT NOVARTIS PATENTS AND
NOVARTIS KNOW-HOW WILL BE SUITABLE FOR COMMERCIALIZATION OR THAT THE COMPOUND
AND/OR PRODUCTS WILL BE SUITABLE FOR USE WITH ANY ADDITIONAL PATENTED
TECHNOLOGIES LICENSED FROM A THIRD PARTY. NOVARTIS AND NOVARTIS AG EXPRESSLY
DISCLAIM ANY WARRANTIES OR CONDITIONS, EXPRESS, IMPLIED, STATUTORY OR OTHERWISE
WITH RESPECT TO NOVARTIS PATENTS AND NOVARTIS KNOW-HOW, INCLUDING WITHOUT
LIMITATION, ANY WARRANTY OR MERCHANTABILITY OF FITNESS FOR A PARTICULAR PURPOSE
OR NON-INFRINGEMENT.

     7.2 Vanda Representation And Warranty. Vanda hereby represents and
warrants to each of Novartis and Novartis AG as of the Effective Date that:

          (a) The execution, delivery and performance of this Agreement by Vanda
does not conflict with any agreement, instrument or understanding, oral or
written, to which it is a Party or by which it may be bound, and, to the best of
its knowledge, does not violate any material law or regulation of any court,
governmental body or administrative or other agency having authority over it;

          (b) Vanda is not currently a party to, and during the term of this
Agreement will not enter into, any agreements, oral or written, that are
inconsistent with its obligations under this Agreement;

          (c) Vanda is duly organized and validly existing under the laws of the
country of its incorporation and has full legal power and authority to enter
into this Agreement; and

                                 Page 25 of 43

<PAGE>

          (d) Vanda is not subject to any order, decree or injunction by a court
of competent jurisdiction which prevents or materially delays the consummation
of the transactions contemplated by this Agreement.

     7.3 Disclaimer of Warranties. THE LIMITED WARRANTIES CONTAINED IN THIS
ARTICLE ARE THE SOLE WARRANTIES GIVEN BY THE PARTIES AND ARE MADE EXPRESSLY IN
LIEU OF AND EXCLUDE ANY IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A
PARTICULAR PURPOSE, TITLE, INFRINGEMENT OR OTHERWISE, AND ALL OTHER EXPRESS OR
IMPLIED REPRESENTATIONS AND WARRANTIES PROVIDED BY COMMON LAW, STATUTE OR
OTHERWISE ARE HEREBY DISCLAIMED BY EACH PARTY.

                                    ARTICLE 8
                                 CONFIDENTIALITY

     8.1 Confidentiality. During the term of this Agreement, and for a period of
[*] thereafter, Novartis and Novartis AG will maintain in confidence all
information disclosed by Vanda and Vanda will maintain in confidence all
information disclosed by Novartis and Novartis AG, including for the avoidance
of doubt, Novartis Know-how ("Confidential Information"). With respect to
Novartis and Novartis AG, Vanda shall not use, disclose or grant use of such
Confidential Information except as required under this Agreement. With respect
to Vanda, Novartis and Novartis AG shall not use, disclose or grant use of such
Confidential Information except as required under this Agreement, each Party
shall use at least the same standard of care as it uses to protect its own
Confidential Information to ensure that its and its Affiliates' employees,
agents, consultants, and clinical investigators only make use of Confidential
Information for the purpose of this Agreement and do not disclose any
Confidential Information without the express prior written consent of the other
Party, which consent shall not be unreasonably withheld, or make any
unauthorized use of such Confidential Information. Each Party shall promptly
notify the other upon discovery of any unauthorized use or disclosure of
Confidential Information. Confidential Information shall not include any
information which and to the extent:

          (a) was already known to the receiving Party, other than under an
obligation of confidentiality, at the time of disclosure by the other Party;

          (b) was generally available to the public or otherwise part of the
public domain at the time of its disclosure to the other Party;

          (c) becomes generally available to the public or otherwise part of the
public domain after its disclosure and other than through any act or omission of
the receiving Party in breach of this Agreement;

          (d) was disclosed to the receiving Party, other than under an
obligation of confidentiality, by a Third Party who had no obligation to the
other Party not to disclose such information; or

          (e) was independently developed by the receiving Party without
reference to the disclosure by the other Party.

----------
CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.

                                  Page 26 of 43

<PAGE>

     8.2 Terms of Agreement. The Parties agree that the material financial terms
of the Agreement shall be considered the Confidential Information of each Party.

     8.3 Permitted Disclosure. Each Party may disclose the Confidential
Information to the extent such disclosure is reasonably necessary in filing or
prosecuting patent applications, prosecuting or defending litigation, or
complying with any applicable statute or governmental regulation provided such
Party has given the disclosing Party prompt written notice allowing it to limit
such disclosure. In addition, each Party may disclose Confidential Information
to its Affiliates and to its Sublicensees; provided, however, in connection with
any such disclosure the disclosing Party shall secure confidential treatment of
such Confidential Information.

     8.4 Employee Obligations. The Parties shall undertake to ensure that all
their employees who have access to Confidential Information of the other Party
are under obligations of confidentiality fully consistent with those provided in
this Article.

     8.5 Publication. As between Novartis and Novartis AG on the one hand, and
Vanda on the other, no Party may publish confidential or proprietary information
of the other Party, without the consent of the other Party. The reviewing Party
shall have thirty (30) days from receipt of the proposed oral disclosure or
written publication to provide comments and/or proposed changes to the
disclosing Party. The review period may be extended for an additional two (2)
months to permit the reviewing Party to file one or more patent applications as
it deems appropriate. This Section 8.5 shall be inapplicable to the publication
of information presented in substantially the same form in which was previously
published or disclosed to the public, and to any other disclosures which, on the
advice of counsel, are required by law to be disclosed.

                                    ARTICLE 9
                              TERM AND TERMINATION

     9.1 Term.

          (a) Term. Unless earlier terminated as provided herein, the term of
this Agreement shall commence as of the Effective Date and shall remain in full
force and effect until the end of the last to expire milestone or royalty
payment obligation of a Party under this Agreement (the "Term").

          (b) Accrued Obligations. Except where explicitly provided elsewhere
herein, termination of this Agreement for any reason, or expiration of this
Agreement, will not affect: (i) obligations, including the payment of any
royalties or other sums which have accrued as of the date of termination or
expiration, and (ii) rights and obligations which, from the context thereof, are
intended to survive termination or expiration of this Agreement.

     9.2 Termination for Insolvency. Either Party may terminate this Agreement
immediately upon delivery of written notice to the other Party (a) upon the
institution by or against the other Party of insolvency, receivership or
bankruptcy proceedings or any other proceedings for the settlement of the other
Party's debts; provided, however with respect to involuntary proceedings, that
such proceedings are not dismissed within one hundred and twenty (120) days; (b)
upon the other Party's making an assignment for the benefit of

                                  Page 27 of 43

<PAGE>

creditors; or (c) upon the other Party's dissolution or ceasing to do business.
In the event that such insolvency, receivership or bankruptcy proceedings or any
other proceedings for the settlement of a Party's debts are instituted, that
Party shall immediately notify the other Party of such proceedings.

     9.3 Termination for Lack of Diligence. If Vanda ceases all research,
development, and commercialization activities with respect to the Compound or
Product for a one (1) year period for reasons other than a safety (including
toxicity), efficacy, regulatory, manufacturing, medical, legal issue, or a
technical or commercial issue, as determined by Vanda with the agreement of
Novartis or materially breaches the terms of this Agreement, then Novartis may
terminate this Agreement upon thirty (30) days' prior written notice to Vanda.
Such prior written notice shall specify that it is a notice of termination under
this Section 9.3. Within thirty (30) Business Days following Vanda's receipt of
such prior written notice (the "Response Period"), Vanda shall respond, in
writing with reasonable detail, indicating the manner in which it is performing
research, development, and commercialization activities in compliance with this
Agreement. At the request of either Vanda or Novartis, representatives of
Novartis and Vanda shall meet to discuss the status of Vanda's activities with
respect to the Products during the Response Period. For avoidance of doubt,
Vanda may remedy any remediable breach of its obligations under this Section 9.3
during the Response Period. Should Vanda, during the Response Period, fail to
(i) remedy such remediable breach, (ii) respond to Novartis' written notice of
termination under this Section, or (iii) provide to Novartis any written
response regarding compliance or remedy of breach under this Section, then
Novartis may terminate this Agreement pursuant to the termination provisions set
forth in Section 9.4.

     9.4 Material Breach. Either Party may terminate this Agreement upon thirty
(30) days prior written notice to the other Party upon the material breach by
the other Party of any of its obligations under this Agreement; provided,
however, that such termination shall become effective only if the other Party
shall fail to remedy or cure the breach within such thirty (30) day period. If
either Party is in breach of any material obligation hereunder and, in the case
of a breach incapable of remedy, the Party not in breach of the material
obligation may forthwith terminate this Agreement by notice without prejudice to
the accrued rights of either Party.

     9.5 Termination by Vanda. Vanda's obligations to develop and commercialise
under this Agreement may be terminated by it at any time upon six(6) months
prior written notice to Novartis in the event that Vanda determines after
consultation and prior mutual agreement with Novartis that there exists any
material safety (including toxicity), efficacy, regulatory, manufacturing,
medical, legal, technical or commercial issue with respect to the continued
development of the Compound or Product, and Vanda agrees to give Novartis prompt
notice in writing and in person thereof of such issue.

     9.6 Effect Of Termination.

          (a) Effect On License. Upon the expiration or earlier termination of
this Agreement, the rights licensed under this Agreement shall be treated as
follows:

                                  Page 28 of 43

<PAGE>

               (i) Upon the expiration of the Term, Vanda shall have a fully
paid-up, perpetual, irrevocable, royalty-free, transferable, worldwide,
non-exclusive right and license under the Novartis Patents and Novartis Know-How
existing as of the date of such expiration to make, have made, use, offer to
sell, and sell Product in the Territory.

               (ii) Upon termination by Novartis pursuant to Section 9.2, 9.3,
9.4 or by Vanda pursuant to Section 9.5 all rights to Product granted by
Novartis to Vanda shall revert to Novartis. Upon such termination, Vanda shall
grant to Novartis a non-exclusive, world-wide, transferable, irrevocable,
perpetual license, with the right to sublicense, under the Vanda Technology to
make, use, offer to sell, sell and import Products solely in the country or
countries in which Vanda's licenses under this Agreement were so terminated. If
the termination was not due to Section 9.4 and if the Product is ultimately
commercialized, Novartis would pay Vanda [*]% of Net Sales until the later of
either the last Novartis Patent to expire (including extensions thereof) with a
Valid Claim related to the Compound or Product or a method of use thereof, or
five (5) years from the date of First Commercial Sale.

          (b) Ongoing Obligations.

               (i) Upon expiration or termination of this Agreement for any
reason, each Party shall immediately return to the other Party or destroy any
Confidential Information disclosed by the other Party, except for one copy which
may be retained in its confidential files for archive purposes only.

               (ii) Upon termination of this Agreement by Novartis pursuant to
Sections 9.2, 9.3, 9.4 or by Vanda pursuant to Section 9.5, Vanda shall assign
and deliver to Novartis all data and information (including registration
dossiers) obtained for or in pursuing Regulatory Approvals, and all Regulatory
Approvals (e.g., to Novartis; designee in the Territory as permitted under the
applicable law) for Product in the Territory received as of such termination
date.

     9.7 Inventory. Notwithstanding the foregoing, upon early termination of
this Agreement pursuant to Sections 9.2, 9.3, 9.4 or 9.5, Vanda shall have the
right to sell all remaining Product in its inventory within four (4) months
after the date of termination, subject to the payment to Novartis of the amounts
specified in Article 5. Thereafter, Vanda agrees to destroy any remaining supply
of Product at Novartis' request and direction.

     9.8 Royal and Payment Obligations. Termination of this Agreement by either
Party for any reason Will not release the other Party from any obligation to pay
royalties or make any other payments to the Party which were accrued prior to
and including the effective date of termination or expiration (including for Net
Sales and milestones payable prior to the date of termination). Termination of
this Agreement by either Party for any reason will not release Vanda from any
obligation to pay royalties to Novartis on sales arising from Section 9.7. All
payments due to Novartis but not yet paid by Vanda as of the date of termination
shall become immediately due to Novartis.

----------
CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.

                                  Page 29 of 43

<PAGE>

                                   ARTICLE 10
                                 INDEMNIFICATION

     10.1 Indemnification by Novartis. Novartis will indemnify and hold Vanda
and its Affiliates, and their employees, officers and directors harmless against
any loss, damages, action, suit, claim, demand, liability, expense, bodily
injury, death or property damage (a "Loss"), that may be brought, instituted or
arise against or be incurred by such persons to the extent such Loss is based on
or arises out of the breach by Novartis, Novartis AG of any of its covenants,
representations or warranties set forth in this Agreement; provided however,
that the foregoing indemnification shall not apply to any Loss to the extent
such Loss is caused by the grossly negligent or willful misconduct of Vanda, its
Affiliates or Sublicensees.

     10.2 Indemnification by Vanda. Vanda will indemnify and hold Novartis and
Novartis AG, and its Affiliates, and their employees, officers and directors
harmless against any Loss that may be brought, instituted or arise against or be
incurred by such persons to the extent such Loss is based on or arises out of:

          (a) the development, manufacture, use, sale, storage or handling of a
Compound or a Product by Vanda or its Affiliates or their Sublicensees,
representatives, agents or subcontractors under this Agreement, or any actual or
alleged violation of law resulting therefrom; or

          (b) the breach by Vanda of any of its covenants, representations or
warranties set forth in this Agreement;

          (c) provided that the foregoing indemnification shall not apply to any
Loss to the extent such Loss is caused by the grossly negligent or willful
misconduct of Novartis, Novartis AG or its Affiliates.

     10.3 Claims Procedures. Each Party entitled to be indemnified by the other
Party (an "Indemnified Party") pursuant to Section 10.1 or 10.2 hereof shall
give notice to the other Party (an "Indemnifying Party") promptly after such
Indemnified Party has actual knowledge of any threatened or asserted claim as to
which indemnity may be sought, and shall permit the Indemnifying Party to assume
the defense of any such claim or any litigation resulting therefrom; provided:

          (a) That counsel for the Indemnifying Party, who shall conduct the
defense of such claim or any litigation resulting therefrom, shall be approved
by the Indemnified Party (whose approval shall not unreasonably be withheld)
and the Indemnified Party may participate in such defense at such Party's
expense (unless (i) the employment of counsel by such Indemnified Party has been
authorized by the Indemnifying Party; or (ii) the Indemnified Party shall have
reasonably concluded that there may be a conflict of interest between the
Indemnifying Party and the Indemnified Party in the defense of such action, in
each of which cases the Indemnifying Party shall pay the reasonable fees and
expenses of one law firm serving as counsel for the Indemnified Party, which law
firm shall be subject to approval, not to be unreasonably withheld, by the
Indemnifying Party).

                                  Page 30 of 43

<PAGE>

          (b) The failure of any Indemnified Party to give notice as provided
herein shall not relieve the Indemnifying Party of its obligations under this
Agreement to the extent that the failure to give notice did not result in harm
to the Indemnifying Party.

          (c) No Indemnifying Party, in the defense of any such claim or
litigation, shall, except with the approval of each Indemnified Party which
approval shall not be unreasonably withheld, consent to entry of any judgment or
enter into any settlement which (i) would result in injunctive or other relief
being imposed against the Indemnified Party; or (ii) does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability in respect to such claim or
litigation.

          (d) Each Indemnified Party shall furnish such information regarding
itself or the claim in question as an Indemnifying Party may reasonably request
in writing and shall be reasonably required in connection with the defense of
such claim and litigation resulting therefrom.

     10.4 Indemnification Amounts. An Indemnifying Party shall not have
liability with respect to any breach of any of this Agreement: (a) for any
individual item where the Loss relating thereto is less that $ 50,000, and (b)
in respect of each individual item where the Loss relating thereto is equal to
or greater than $ 50,000, unless and until the aggregate amount of such Losses
exceeds $ 200,000 and then the Indemnifying Party will be liable for the entire
amount of the Losses described in this clause. Each Party shall take and shall
cause its Affiliates to take all reasonable steps to mitigate any Loss upon
becoming aware of any event which would reasonably be expected to, or does, give
rise thereto, including incurring costs only to the minimum extent necessary to
remedy a breach that gives rise to the Loss.

     10.5 Compliance. The Parties shall comply fully with all applicable laws
and regulations in connection with their respective activities under this
Agreement.

                                   ARTICLE 11
                            MISCELLANEOUS PROVISIONS

     11.1 Dispute Resolution. In the event of any controversy or claim arising
out of relating to or in connection with any provision of this Agreement, or the
rights or obligations hereunder, the Parties shall try to settle their
differences amicably between themselves. As between Novartis and Novartis AG on
the one hand, and Vanda on the other, each Party may initiate such informal
dispute resolution by sending written notice of the dispute to the other Party
and within ten (10) Business Days after such notice appropriate representatives
of the Parties shall meet for attempted resolutions by good faith negotiations.
If such representatives are unable to resolve such disputed matters, it shall be
referred to the Chief Executive Officers of Novartis Pharma AG and Vanda, for
discussion and resolution.

     11.2 Governing Law. This Agreement shall be construed and the respective
rights of the Parties determined according to the substantive laws of the State
of New York notwithstanding the provisions governing conflict of laws under such
New York law to the contrary, except matters of intellectual property law which
shall be determined in accordance with the intellectual property laws relevant
to the intellectual property in question.

                                  Page 31 of 43

<PAGE>

     11.3 Jurisdiction. Any controversy or claim arising out of or in connection
with this Agreement, which cannot be settled within one hundred eighty (180)
days of the notice according to Section 11.1, shall be under the exclusive
jurisdiction of the courts in New York, NY, USA.

     11.4 Waiver. The failure on the part of Vanda or Novartis to exercise or
enforce any rights conferred upon it hereunder shall not be deemed to be a
waiver of any such rights nor operate to bar the exercise or enforcement thereof
at any time or times thereafter. The observance of any term of this Agreement
may be waived (either generally or in a particular instance and either
retroactively or prospectively) by the Party entitled to enforce such term, but
any such waiver shall be effective only if in writing signed by the Party
against whom such waiver is to be asserted.

     11.5 Force Majeure. No Party shall be held liable or responsible to the
other Party nor be deemed to have defaulted under or breached this Agreement for
failure or delay in fulfilling or performing any term of this Agreement, other
than an obligation to make a payment, when such failure or delay is caused by or
results from fire, foods, embargoes, government regulations, prohibitions or
interventions, war, acts of war (whether war be declared or not), insurrections,
riots, civil commotions, strikes, lockouts, acts of God, or any other cause
beyond the reasonable control of the affected Party.

     11.6 Severability. It is the intention of the Parties to comply with all
applicable laws domestic or foreign in connection with the performance of its
obligations hereunder. In the event that any provision of this Agreement, or any
part hereof, is found invalid or unenforceable, the remainder of this Agreement
will be binding on the Parties hereto, and will be construed as if the invalid
or unenforceable provision or part thereof had been deleted, and the Agreement
shall be deemed modified to the extent necessary to render the surviving
provisions enforceable to the fullest extent permitted by law.

     11.7 Government Acts. In the event that any act, regulation, directive, or
law of a government, including its departments, agencies or courts, should make
impossible or prohibit, restrain, modify or limit any material act or obligation
of Vanda or Novartis or Novartis AG under this Agreement, the Party, if any, not
so affected shall have the right, at its option, to suspend or terminate this
Agreement as to such country, if good faith negotiations between the Parties to
make such modifications to this Agreement as may be necessary to fairly address
the impact thereof, after a reasonable period of time are not successful in
producing mutually acceptable modifications to this Agreement.

     11.8 Assignment. This Agreement may not be assigned or otherwise
transferred by either Party without the prior written consent of the other
Party; provided, however, that either Party may assign this Agreement, without
the consent of the other Party, (i) to any of its Affiliates, if the assigning
Party guarantees the full performance of its Affiliates' obligations hereunder,
or (ii) in connection with the transfer or sale of all or substantially all of
its assets or business or in the event of its merger or consolidation with
another company. In all cases the assigning Party shall provide the other Party
with prompt notice of any such assignment. Any purported assignment in
contravention of this Section shall, at the option of the non-

                                  Page 32 of 43

<PAGE>

assigning Party, be null and void and of no effect. No assignment shall release
either Party from responsibility for the performance of any accrued obligation
of such Party hereunder.

     11.9 Counterparts. This Agreement may be executed in duplicate, both of
which shall be deemed to be originals, and both of which shall constitute one
and the same Agreement.

     11.10 No Agency. Nothing herein contained shall be deemed to create an
agency, joint venture, amalgamation, partnership or similar relationship between
Novartis AG and Novartis on the one hand, and Vanda on the other.
Notwithstanding any of the provisions of this Agreement, as between Novartis and
Novartis AG on the one hand, and Vanda on the other, no Party shall at any time
enter into, incur, or hold itself out to third Parties as having authority to
enter into or incur, on behalf of the other Party, any commitment, expense, or
liability whatsoever, and all contracts, expenses and liabilities undertaken or
incurred by one Party in connection with or relating to the development,
manufacture or sale of Compounds or Products shall be undertaken, incurred or
paid exclusively by that Party, and not as an agent or representative of the
other Party.

     11.11 Notice. As between Novartis and Novartis AG on the one hand, and
Vanda on the other, all communications between the Parties with respect to any
of the provisions of this Agreement will be sent to the addresses set out below,
or to other addresses as designated by one Party to the other by notice pursuant
hereto, by internationally recognized courier or by prepaid certified, air mail
(which shall be deemed received by the other Party on the seventh Business Day
following deposit in the mails), or by facsimile transmission or other
electronic means of communication (which shall be deemed received when
transmitted), with confirmation by letter given by the close of business on or
before the next following Business Day:

          If to Novartis AG, at:
          Novartis AG
          Postfach
          CH-4002 Basel, Switzerland
          Attn: General Counsel

          If to Novartis, at:
          Novartis Pharma AG
          Postfach
          CH-4002 Basel, Switzerland
          Attn: General Counsel, Pharma Legal

          If to Vanda at:
          Vanda Pharmaceuticals Inc.
          47 Hulfish Street, Suite 310
          Princeton, NJ 08542
          Attn: Patricia Nasshorn

                                  Page 33 of 43

<PAGE>

     11.12 Headings. The paragraph headings are for convenience only and will
not be deemed to affect in any way the language of the provisions to which they
refer.

     11.13 Entire Agreement. This Agreement contains the entire understanding of
the Parties relating to the matters referred to herein, and may only be amended
by a written document, duly executed on behalf of the respective Parties.

   ***[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK - SIGNATURE PAGE FOLLOWS]***

                                  Page 34 of 43

<PAGE>

     IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be
executed by their duly authorized representatives as of the Effective Date.

                                        VANDA PHARMACEUTICALS, INC.

                                        By: /s/ Mihael Polymeropoulos
                                            ------------------------------------
                                            Mihael Polymeropoulos
                                            Chief Executive Officer

                                        NOVARTIS PHARMA AG

                                        By: /s/ Herve Girsault
                                            ------------------------------------
                                        Name: Herve Girsault
                                        Title: Head, Global Partnering
                                               Business Development & Licensing
                                        June 4, 2004

                                        By: /s/ Tom Chakraborti
                                            ------------------------------------
                                        Name: Tom Chakraborti
                                        Title: Senior Legal Counsel
                                        22nd June, 2004

                                        NOVARTIS AG

                                        By: /s/ Jorg Walther
                                            ------------------------------------
                                        Name: Jorg Walther
                                        Title: Authorized Signatory

                                        By: /s/ Clive S. Morris
                                            ------------------------------------
                                        Name: Clive S. Morris
                                        Title: Authorized Signatory
                                        23.06.04

                                  Page 35 of 43

<PAGE>

                                  Schedule 1.7

NDD094 corresponds to [*]. It has the molecular formula [*] and the following
structure:

[*]

----------
CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.

                                  Page 36 of 43

<PAGE>

                                                                    SCHEDULE 3.1

TERMS AND CONDITIONS FOR THE SALE OF COMPOUND FORM NOVARTIS TO VANDA

     Available Compound Substance and Lot Number:

<TABLE>
<S>        <C>
     [*]   [*]

     [*]   [*]
     ---
     [*]   Total available Compound substance for technical use only
     ===
</TABLE>

     Price per kg of Compound substance:

     [*]

     Delivery Terms:

     EX WORKS (as such term is defined in INCOTERMS 2000 of the International
     Chamber of Commerce in Paris: delivery to Vanda shall occur when the
     Compound and Product is placed at Vanda's disposal at Novartis' premises)

     NOVARTIS AND NOVARTIS AG MAKE NO REPRESENTATION OR WARRANTY THAT ANY
     QUANTITIES OF COMPOUND PROVIDED TO VANDA UNDER THIS AGREEMENT WILL [*].

----------
CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.

                                  Page 37 of 43

<PAGE>

                      ANNEX 1- DEVELOPMENT PLAN AND BUDGET

A.   DEVELOPMENT TIMELINES

     [*]

B    CLINICAL TRIALS TO BE PERFORMED UNDER DEVELOPMENT PLAN BY VANDA:

B1   [*]

Primary objectives:

(1)  [*]

(2)  [*]

B2   [*]

Primary objectives:

(1)  [*]

(2)  [*]

----------
CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.

                                  Page 38 of 43

<PAGE>

B3   [*]

Primary objectives:

(1)  [*]

(2)  [*]

(3)  [*]

(4)  [*]

B4   [*]

Primary objectives:

(1)  [*]

(2)  [*]

(3)  [*]

----------
CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.

                                  Page 39 of 43

<PAGE>

C.   DEVELOPMENT COST

     [*]

VANDA PHARMACEUTICALS, INC.
NDD094

----------
CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.

                                   Page 40 of 43

<PAGE>

                                                                         ANNEX 2

                        ***[INTENTIONALLY LEFT BLANK]***

                                 Page 41 of 43

<PAGE>

                                                                         ANNEX 3

PATENT SCHEDULE

                                       [*]

----------
CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.

                                  Page 42 of 43

<PAGE>

                                     ANNEX 4

                            Novartis POLICY STATEMENT

VANDA agrees to abide by the following policy statement, which is binding on all
parties under contract with Novartis, and is in support of the protection of
internationally proclaimed human rights, ethical and legal behaviour, fair,
courteous and respectful treatment of others, and professionalism and good
business practice.

Gifts, favours, kickbacks, entertainment or other offering of financial
advantage to an official of a government or a government-controlled entity for
the purpose of obtaining business or other services, as set out in the OECD
Convention on Combating Bribery of Foreign Public Officials are not allowed.
Gifts, favours or entertainment to non-governmental officials may be provided to
others only if they meet all of the following criteria:

     (a)  they are consistent with government regulations and customary
          business practices;

     (b)  they are not excessive in value, and cannot be construed as a bribe or
          a pay-off;

     (c)  they are not in contravention of applicable law or ethical standards;
          and

     (d)  they will not embarrass Novartis, VANDA, or the recipient if publicly
          disclosed.

VANDA shall respect the principles and rules of fair competition and shall not
violate applicable antitrust laws.

VANDA hereby agrees that in its dealings on behalf of Novartis, it will take no
action, directly or indirectly, that is inconsistent with the language or,
spirit of this policy statement. VANDA further acknowledges and agrees that any
such action will serve as grounds for immediate termination of this Agreement by
Novartis.

                                  Page 43 of 43<PAGE>
                                                                  Exhibit 10.1

                AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER

     This Amended and Restated Agreement and Plan of Merger (the "Agreement") is
entered into as of April 3, 2006, by and among CNL HOTELS & RESORTS, INC., a
Maryland corporation ("CHP"), CNL HOTELS & RESORTS ACQUISITION, LLC, a Florida
limited liability company all of the membership interests of which are owned by
CHP ("CHPAC"), CNL HOSPITALITY CORP., a Florida corporation (the "Advisor"), and
CNL REAL ESTATE GROUP, INC., a Florida corporation ("CREG"), FIVE ARROWS REALTY
SECURITIES II L.L.C., a Delaware limited liability company ("FARS"), James M.
Seneff, Jr. ("Seneff"), Robert A. Bourne ("Bourne"), the other stockholders of
the Advisor listed on the signature page hereto under the heading "Stockholders"
(collectively, the "Other Stockholders") and by this reference made a party
hereof (CREG, FARS, Seneff, Bourne, and the Other Stockholders, are each
referred to herein as a "Stockholder" and collectively referred to as the
"Stockholders"), CNL FINANCIAL GROUP, INC., a Florida corporation ("Guarantor")
and an Affiliate (as defined below) of CREG and of Seneff, and CNL HOSPITALITY
PROPERTIES ACQUISITION CORP., a Florida corporation ("Former Merger Sub"). CHP,
CHPAC, the Advisor, the Stockholders and Guarantor are referred to collectively
herein as the "Parties" and individually as a "Party."

                                    RECITALS:

     WHEREAS, CHP has been considering a possible acquisition of the Advisor,
and the Board of Directors of CHP formed a special committee comprised of
certain of the independent directors of CHP (the "Special Committee"), among
other things, to consider and evaluate the terms of a possible acquisition of
the Advisor;

     WHEREAS, the Special Committee previously recommended and the Board of
Directors of CHP and the stockholders of CHP (at the 2004 annual meeting of the
stockholders of CHP) previously approved the proposed acquisition of the Advisor
pursuant to that certain Agreement and Plan of Merger entered into as of April
29, 2004, as amended by that certain First Amendment to Agreement and Plan of
Merger entered into as of June 17, 2004 (as amended, the "Initial Merger
Agreement");

     WHEREAS, certain conditions to the obligations of the parties to consummate
the transactions contemplated by the Initial Merger Agreement have not occurred
and have not been waived, but the Initial Merger Agreement has not been
terminated by the parties thereto, and the Special Committee, on behalf of CHP,
and the Advisor have re-engaged in discussions and negotiations to pursue a
possible acquisition of the Advisor by CHP on mutually acceptable terms and
conditions;

     WHEREAS, the Special Committee continues to believe that an acquisition by
CHP of the Advisor is in the best interests of CHP and its stockholders, but in
light of changes in market conditions and other factors, the Special Committee
has sought to modify various terms and conditions of the Initial Merger
Agreement, and the parties to the Initial Merger Agreement (other than Paul H.
Williams, who no longer owns Advisor Common Shares (as defined below) and who is
no longer an employee of the Advisor), including Former Merger Sub (which is
only a party to this Agreement because it is a party to the Initial Merger
Agreement, which is being

<PAGE>

amended and restated by this Agreement) have agreed to amend and restate the
Initial Merger Agreement on the revised terms and conditions set forth in this
Agreement;

     WHEREAS, after due deliberation and consideration of various relevant
factors, the Special Committee, having received a written fairness opinion from
Lehman Brothers, Inc. (the "Fairness Opinion") to the effect that as of the date
of this Agreement, subject to the assumptions, qualifications and limitations
stated therein, the consideration to be paid by CHP in the Merger (as defined
below) is fair, from a financial point of view, to CHP, has determined that it
is advisable and in the best interests of CHP and its stockholders to consummate
a merger whereby the Advisor would be merged with and into CHPAC and CHPAC would
be the surviving company in the merger (such merger, upon the terms and
conditions of this Agreement and in accordance with the Florida Business
Corporation Act, as amended from time to time (the "Florida BCA"), and the
Florida Limited Liability Company Act, as amended from time to time (the
"Florida LLCA"), is hereinafter referred to as the "Merger") and accordingly has
recommended that the Board of Directors of CHP approve the Merger;

     WHEREAS, the Board of Directors of CHP (the "CHP Board of Directors")
(excluding any member of the CHP Board of Directors who is a Stockholder or an
Affiliate of any Stockholder or the Advisor), based on the recommendation of the
Special Committee, has determined that the Merger is advisable and in the best
interests of CHP and its stockholders and, accordingly, has approved the Merger
and has directed that the Merger be submitted to the stockholders of CHP for
consideration at an annual or at a special meeting of stockholders of CHP (the
"CHP Stockholder Meeting");

     WHEREAS, CHP, the sole member of CHPAC, has determined that the Merger is
advisable and has approved the Merger;

     WHEREAS, the Board of Directors of the Advisor has unanimously determined
that the Merger is advisable and in the best interests of the Advisor and the
Stockholders and, accordingly, has unanimously approved the Merger, and the
Stockholders have by unanimous written consent approved this Agreement and the
Merger;

     WHEREAS, as an inducement to CHP and CHPAC to enter into this Agreement and
to consummate the Merger, (i) Guarantor has agreed to provide a guarantee of
certain of the obligations of the Stockholders on the terms and subject to the
conditions set forth in this Agreement, (ii) each member of the CNL Group (as
defined below) has agreed to enter into and to honor the terms and conditions of
the covenants contained in Section 9.5 of this Agreement, which covenants,
including the duration thereof, CHP and CHPAC have deemed to be necessary to
protect and enhance the long term financing and business strategy of CHP and the
Surviving Company (as defined herein), and (iii) each of Thomas J. Hutchison,
III, John A. Griswold, C. Brian Strickland and Barry A. N. Bloom have
simultaneously with the execution and delivery of this Agreement entered into
employment agreements with CHP effective as of the Effective Time (as defined
below) in form and substance satisfactory to the Compensation Committee of the
Board of Directors of CHP, on behalf of CHP (collectively, the "Employment
Agreements"); and

                                      -2-

<PAGE>

     WHEREAS, for federal income tax purposes, the Parties intend that the
Merger shall qualify as a reorganization under Section 368(a) of the Code (as
defined below).

     NOW, THEREFORE, in consideration of the premises and the mutual promises
herein made, and in consideration of the representations, warranties, and
covenants herein contained, the Parties agree as follows:

                                    ARTICLE 1

                                   DEFINITIONS

     1.1 Terms Defined in this Agreement. As used in this Agreement, the
following terms shall have the respective meanings set forth below:

     "Actual Knowledge" means an awareness and perception of the facts asserted
or stated.

     "Advisor" has the meaning set forth in the preface above.

     "Advisor Actions" has the meaning set forth in Section 8.21 below.

     "Advisor Amendment" has the meaning set forth in Section 8.19 below.

     "Advisor Common Shares" means the shares of the Class A common stock, $1.00
par value per share, and the shares of the Class B common stock, $1.00 par value
per share, of the Advisor.

     "Advisor Common Share Certificates" has the meaning set forth in Section
4.1 below.

     "Advisory Agreements" means that certain Advisory Agreement dated as of
April 1, 2003, that certain Advisory Agreement dated as of April 1, 2004, that
certain Renewal Agreement dated as of March 31, 2005 by and between CHP and the
Advisor, and any amendment, modification or extension of the terms of any of the
foregoing.

     "Affiliate" has the meaning set forth in Rule 12b-2 of the regulations
promulgated under the Securities Exchange Act.

     "Affiliated Group" means any affiliated group within the meaning of Code
Section 1504, or any similar group defined under a similar provision of state,
local or foreign law.

     "Agreement" has the meaning set forth in the preface above.

     "Articles/Certificate of Merger" has the meaning set forth in Section 2.2
below.

     "Assumed Advisor Liabilities" has the meaning set forth in Section 9.10(a)
below.

     "Basis" means any past or present fact, situation, circumstance, status,
condition, activity, practice, plan, occurrence, event, incident, action,
failure to act, or transaction that forms the basis for any specified
consequence.

                                      -3-

<PAGE>

     "Bourne" has the meaning set forth in the preface above.

     "Cash Reserve" has the meaning set forth in Section 8.15 below.

     "CHP" has the meaning set forth in the preface above.

     "CHP Board of Directors" has the meaning set forth in the sixth paragraph
of the Recitals above.

     "CHP Charter Amendments" has the meaning set forth in Section 8.6 below.

     "CHP Common Shares" means the common shares, par value $0.01 per share, of
CHP.

     "CHP Indemnity Claim" has the meaning set forth in Section 12.1 below.

     "CHP Note" means that certain Promissory Note dated as of December 30,
2005, in the principal amount of $27 million issued by CHP to and for the
benefit of the Advisor.

     "CHP SEC Documents" has the meaning set forth in Section 6.8 below.

     "CHP Stockholder Approval" has the meaning set forth in Section 6.4 below.

     "CHP Stockholder Meeting" has the meaning set forth in the sixth paragraph
of the Recitals above.

     "CHPAC" has the meaning set forth in the preface above.

     "Claims" has the meaning set forth in Section 12.6 below.

     "Class Action Lawsuit" means the lawsuit styled: In re CNL Hotels &
Resorts, Inc. Securities Litigation, case number 6:04-cv-1231-Orl-31 KRS
(consolidated with case number 6:09-cv-1341-Orl-19JGG), United States District
Court, Middle District of Florida, Orlando Division.

     "Closing" has the meaning set forth in Section 2.3 below.

     "Closing Date" has the meaning set forth in Section 2.3 below.

     "CNL Group" has the meaning set forth in Section 9.5(a) below.

     "CNL Group Party" has the meaning set forth in Section 9.5(a)(ii) below.

     "Code" means the Internal Revenue Code of 1986, as amended.

     "commercially reasonable efforts" means as to a Party, an undertaking by
such Party to perform or satisfy an obligation or duty or otherwise act in a
manner reasonably calculated to obtain the intended result by action or
expenditure not disproportionate or unduly burdensome in the circumstances,
which means, among other things, that such Party shall not be required to (i)
expend funds other than for the payment of the reasonable and customary costs
and expenses of

                                      -4-

<PAGE>

employees, counsel, consultants, representatives or agents of such Party in
connection with the performance or satisfaction of such obligation or duty or
other action, (ii) institute litigation or arbitration as a part of its
commercially reasonable efforts or (iii) amend, waive or modify a term or
condition of, or grant any concessions under or with respect to, or pay or
commit to pay any amount under or with respect to, any contract or relationship
with respect to which an approval, consent or waiver is sought or any other
agreement or relationship with such person (other than nominal filing and
application fees and reasonable and customary consent fees).

     "Confidential Information" means any information concerning the businesses
and affairs of the Advisor or CHP, if any, that is not already generally
available to the public.

     "CREG" has the meaning set forth in the preface above.

     "Deficiency Dividend" means either (a) any deficiency dividend within the
meaning of Section 860(f) of the Code, or (b) any distribution pursuant to
Section 852(e) of the Code or the application of principles similar thereto
pursuant to the regulations promulgated under Section 857(a)(2) of the Code in
connection with the distribution of earnings and profits (within the meaning of
the Code) that have been accumulated in, or are attributable to, any taxable
period of the Advisor through and including the Effective Time.

     "Determination" has the meaning set forth in Section 12.1 below.

     "Development Company" has the meaning set forth in the Section 7.6 below.

     "Disclosure Schedule" has the meaning set forth in the first paragraph of
Article 7 below.

     "Effective Time" has the meaning set forth in Section 2.2 below.

     "Employee Benefit Plan" means any (a) nonqualified deferred compensation or
retirement plan or arrangement which is an Employee Pension Benefit Plan, (b)
tax-qualified defined contribution retirement plan or arrangement which is an
Employee Pension Benefit Plan, (c) tax-qualified defined benefit retirement plan
or arrangement which is an Employee Pension Benefit Plan (including any
Multiemployer Plan), or (d) Employee Welfare Benefit Plan or material fringe
benefit plan or program.

     "Employee Pension Benefit Plan" has the meaning set forth in ERISA Section
3(2).

     "Employee Stock Purchase Agreement" means each of the CNL Hospitality Corp.
Employee Stock Purchase Agreements dated March 23, 2004, by and among the
Advisor, CREG and each of James M. Seneff, Jr., Robert A. Bourne, Thomas J.
Hutchison, III, C. Brian Strickland, John A. Griswold, and Barry A.N. Bloom, as
amended (except as to James M. Seneff, Jr. and Robert A. Bourne) by that certain
First Amendment to CNL Hospitality Corp. Employee Stock Purchase Agreement dated
as of June 17, 2004, and that certain Second Amendment to CNL Hospitality Corp.
Employee Stock Purchase Agreement dated as of July 28, 2004.

     "Employee Welfare Benefit Plan" has the meaning set forth in ERISA Section
3(1).

                                      -5-

<PAGE>

     "Employment Agreements" has the meaning set forth in the ninth paragraph of
the Recitals above.

     "Environmental, Health, and Safety Laws" means the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, the Resource
Conservation and Recovery Act of 1976, and the Occupational Safety and Health
Act of 1970, each as amended, together with all other laws (including rules,
regulations, codes, plans, injunctions, judgments, orders, decrees, rulings, and
charges thereunder) of federal, state, local, and foreign governments (and all
agencies thereof) concerning pollution or protection of the environment, public
health and safety, or employee health and safety, including laws relating to
emissions, discharges, releases, or threatened releases of pollutants,
contaminants, or chemical, industrial, hazardous, or toxic materials or wastes
into ambient air, surface water, ground water, or lands or otherwise relating to
the manufacture, processing, distribution, use, treatment, storage, disposal,
transport, or handling of pollutants, contaminants, or chemical, industrial,
hazardous, or toxic materials or wastes.

     "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.

     "Excluded Person" has the meaning set forth in Section 9.5(a)(i)(4) below.

     "Extremely Hazardous Substance" has the meaning set forth in Section 302 of
the Emergency Planning and Community Right-to-Know Act of 1986, as amended.

     "Fairness Opinion" has the meaning set forth in the fifth paragraph of the
Recitals above.

     "FARS" has the meaning set forth in the preface above.

     "FARS Note" has the meaning set forth in Section 7.30 below.

     "Fiduciary" has the meaning set forth in ERISA Section 3(21).

     "Financial Statements" has the meaning set forth in Section 7.7 below.

     "Florida BCA" has the meaning set forth in the fifth paragraph of the
Recitals above.

     "Florida LLCA" has the meaning set forth in the fifth paragraph of the
Recitals above.

     "Former Merger Sub" has the meaning set forth in the preface above.

     "GAAP" means United States generally accepted accounting principles as in
effect from time to time.

     "Guarantor" has the meaning set forth in the preface above.

     "Hospitality Asset" has the meaning set forth in Section 9.5(a)(ii) below.

     "Hospitality Asset Agreement" has the meaning set forth in Section
9.5(a)(ii) below.

     "Indemnifying Stockholders" has the meaning set forth in Section 12.1
below.

                                      -6-

<PAGE>

     "Initial Merger Agreement" has the meaning set forth in the second
paragraph of the Recitals above.

     "Intellectual Property" means (a) all inventions (whether patentable or
unpatentable and whether or not reduced to practice), all improvements thereto,
and all patents, patent applications, and patent disclosures, together with all
reissuances, continuations, continuations-in-part, revisions, extensions, and
reexaminations thereof, (b) all trademarks, service marks, trade dress, logos,
trade names, and corporate names, together with all translations, adaptations,
derivations, and combinations thereof and including all goodwill associated
therewith, and all applications, registrations, and renewals in connection
therewith, (c) all copyrightable works, all copyrights, and all applications,
registrations, and renewals in connection therewith, (d) all mask works and all
applications, registrations, and renewals in connection therewith, (e) all trade
secrets and confidential business information (including ideas, research and
development, know-how, formulas, compositions, manufacturing and production
processes and techniques, technical data, designs, drawings, specifications,
customer and supplier lists, pricing and cost information, and business and
marketing plans and proposals), (f) all computer software (including data and
related documentation) and domain name registrations, (g) all other proprietary
rights, and (h) all copies and tangible embodiments thereof (in whatever form or
medium).

     "Inter-Company FARS Final Payment Funding Note" means a promissory note in
the principal amount of $7,625,000.00 issued by the Advisor to CREG or its
Affiliate to evidence a loan made by CREG or its Affiliate to the Advisor that
is solely to enable the Advisor to pay the final principal installment under the
FARS Note due on June 30, 2006 and that has such terms that were approved in
writing by the Special Committee, on behalf of CHP, prior to the making of such
loan.

     "IRS" means the Internal Revenue Service.

     "Knowledge" means, (i) in the case of the Advisor, CHP and Guarantor, (A)
the Actual Knowledge of the directors and executive officers of such corporation
and (B) the knowledge the directors and executive officers of such corporation
would have following a reasonable investigation and, (ii) in the case of the
Stockholders, (A) the collective Actual Knowledge of all of the Stockholders
(which, in the case of any Stockholder that is a corporation or other entity,
shall mean the Actual Knowledge of the directors and executive officers of such
Stockholder following a reasonable investigation) and (B) the collective
knowledge the Stockholders would have following a reasonable investigation
(which, in the case of any Stockholder that is a corporation or other entity,
shall mean the knowledge the directors and executive officers of such
Stockholder would have following a reasonable investigation). For the purposes
of this Agreement, the knowledge of one Stockholder shall be attributed to the
other Stockholders.

     "Known" and "Knowingly" mean that the Advisor, the Stockholders or CHP, as
applicable, had Knowledge of the particular matter or took the action described
with prior Knowledge.

     "Liability" means, with respect to any Person, any liability or obligation
of such Person of any kind, character or description (whether known or unknown,
asserted or unasserted, absolute or contingent, accrued or unaccrued, liquidated
or unliquidated, joint or several, due or

                                      -7-

<PAGE>

to become due, executory, determined, determinable or otherwise, whether or not
the same is required to be accrued on the financial statements of such Person),
including any liability or obligation for or with respect to Taxes or any other
Losses (as defined below).

     "Listing" means the actual listing of CHP Common Shares on the NYSE or any
other national securities exchange or U.S. inter-dealer quotation system.

     "Losses" has the meaning set forth in Section 12.1 below.

     "Luxury Hotel Industry Sector" has the meaning set forth in Section
9.5(a)(i) below.

     "Management Stockholders" means all the Stockholders other than CREG,
Seneff, Bourne and FARS.

     "Majority Vote Charter Amendment" has the meaning set forth in Section 8.6
below.

     "Material Adverse Effect" means, as to any Party, a material adverse effect
on the business, properties, operations, results of operations, condition
(financial or otherwise) or future prospects of such Party; provided, however,
that an adverse change in general business or economic conditions or an adverse
change generally applicable to the industry in which such Party or any of its
subsidiaries operate, and not specifically relating to such Party or any of its
subsidiaries, so long as such adverse change does not have a materially greater
adverse effect on such Party and its subsidiaries, taken as a whole, than on
other participants in the industry in which such Party and its subsidiaries
operate (other than as a result solely of such Party's size relative to other
participants in the industry) shall not be deemed to constitute or shall not be
taken into account in determining the occurrence of a material adverse effect.

     "Merger" has the meaning set forth in the fifth paragraph of the Recitals
above.

     "Merger Consideration" has the meaning set forth in Section 4.1(a) below.

     "Most Recent Balance Sheet" means the balance sheet contained within the
Most Recent Financial Statements.

     "Most Recent Financial Statements" has the meaning set forth in Section 7.7
below.

     "Most Recent Fiscal Quarter End" has the meaning set forth in Section 7.7
below.

     "Multiemployer Plan" has the meaning set forth in ERISA Section 3(37).

     "New Brand License Agreement" has the meaning set forth in Section 8.17
below.

     "NYSE" means The New York Stock Exchange, Inc.

     "Ordinary Course of Business" means the ordinary course of business
consistent with past practice (including with respect to quantity and
frequency).

     "Party" or "Parties" has the meaning set forth in the preface above.

                                      -8-

<PAGE>

     "PBGC" means the Pension Benefit Guaranty Corporation.

     "Per Share Price" has the meaning set forth in Section 4.1(c) below.

     "Person" means an individual, a partnership, a corporation, an association,
a joint stock company, a trust, a joint venture, a limited liability company, an
unincorporated organization, governmental entity (or any department, agency, or
political subdivision thereof) or other entity.

     "Pledge and Security Agreement" has the meaning set forth in Section 8.20
below.

     "Post-Closing Straddle Period" has the meaning set forth in Section 9.8(f)
below.

     "Post-Closing Straddle Period Taxes" has the meaning set forth in Section
9.8(f) below.

     "Pre-Closing Straddle Period" has the meaning set forth in Section 9.8(f)
below.

     "Pre-Closing Straddle Period Taxes" has the meaning set forth in Section
9.8(f) below.

     "Prohibited Transaction" has the meaning set forth in ERISA Section 406 and
Code Section 4975.

     "Proposed Indemnity Action" has the meaning set forth in Section 12.9
below.

     "Pro Rata Percentage" has the meaning set forth in Section 4.2 below.

     "Proxy Statement" has the meaning set forth in Section 8.6 below.

     "Recreational Properties and Facilities" has the meaning set forth in
Section 9.5(a)(i) below.

     "REIT" has the meaning set forth in Section 8.18 below.

     "Registration Rights Agreement" has the meaning set forth in Section 8.14
below.

     "Reportable Event" has the meaning set forth in ERISA Section 4043.

     "Representative" has the meaning set forth in Section 12.3 below.

     "Right of First Refusal" has the meaning set forth in Section 9.5(a)(ii)
below.

     "ROFR Notice" has the meaning set forth in Section 9.5(a)(ii) below.

     "SEC" means the Securities and Exchange Commission.

     "Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.

     "Securities Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.

                                      -9-

<PAGE>

     "Security Interest" means any mortgage, pledge, lien, encumbrance, charge,
or other security interest, other than (a) mechanic's, materialmen's, and
similar liens, (b) liens for Taxes not yet due and payable or for Taxes that the
taxpayer is contesting in good faith through appropriate proceedings, (c)
purchase money liens and liens securing rental payments under capital lease
arrangements, and (d) other liens arising in the Ordinary Course of Business and
not incurred in connection with the borrowing of money.

     "Seneff" has the meaning set forth in the preface above.

     "Seneff Family" means Seneff, Seneff's spouse, and Seneff's lineal
descendants (including any adopted children) and their spouses.

     "Seneff Family Company" means a limited liability company, limited
liability partnership, limited liability limited partnership or limited
partnership of which (a) all of the members or partners, as the case may be,
consist only of Seneff, members of the Seneff Family, one or more Seneff Family
Trusts, or another Seneff Family Company, (b) Seneff is the controlling manager
(in the case of a limited liability company), the controlling managing partner
(in the case of a limited liability partnership) or the controlling general
partner in the case of a limited partnership or limited liability limited
partnership, and (c) its operating agreement (in the case of a limited liability
company) or partnership agreement (in the case of a limited liability
partnership, limited partnership, or limited liability limited partnership)
prohibits the sale, assignment, transfer or gift of any member interest or
partnership interest, as the case may be, to any Person other than (x) a member
of the Seneff Family, (y) a Seneff Family Trust, or (z) another Seneff Family
Company.

     "Seneff Family Trust" means a trust (x) as to which the only current
beneficiaries are members of the Seneff Family and (y) whose trust agreement
prohibits the transfer, assignment or distribution of any Advisor Common Stock
owned by or on behalf of such trust to any Person other than Seneff prior to the
Closing.

     "Special Committee" has the meaning set forth in the first paragraph of the
Recitals above.

     "Stockholder Consideration" has the meaning set forth in Section 12.6
below.

     "Stockholder Indemnity Claim" has the meaning set forth in Section 12.2
below.

     "Stockholders" has the meaning set forth in the preface above.

     "Stockholders' Obligations" has the meaning set forth in Section 13.2
below.

     "Straddle Year" has the meaning set forth in Section 9.8(f) below.

     "Straddle Year Jurisdiction" has the meaning set forth in Section 9.8(f)
below.

     "Subsidiary" means any corporation, partnership, joint venture, limited
liability company or other entity with respect to which a specified Person (or a
Subsidiary thereof) owns a majority of the common stock or other voting
interests or has the power to vote or direct the voting of

                                      -10-

<PAGE>

sufficient securities or interests to elect a majority of the directors or
otherwise control the management.

     "Surviving Company" has the meaning set forth in Section 2.1 below.

     "Takeover Statute" has the meaning set forth in Section 8.11 below.

     "Tax" means any federal, state, local, or foreign income, gross receipts,
license, payroll, employment, excise, severance, stamp, occupation, premium,
windfall profits, environmental (including taxes under Code Section 59A),
customs duties, capital stock, franchise, profits, withholding, social security
(or similar), unemployment, disability, real property, personal property, sales,
use, transfer, registration, value added, alternative or add-on minimum,
estimated, or other tax of any kind whatsoever, including any interest, penalty,
or addition thereto, whether disputed or not.

     "Tax Return" means any return, declaration, report, claim for refund, or
information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.

     "Tax Sharing Agreement" has the meaning set forth in Section 10.2(s) below.

     "Third Party Claim" has the meaning set forth in Section 12.4 below.

     "Tower II Lease" means that certain Lease Agreement between CNL Plaza II,
Ltd., a Florida limited partnership, as the landlord, and the Advisor, as the
tenant, dated as of November 23, 2005, for the "Premises" (as defined therein).

     "Tower II Office Space" means the "Premises" as defined in the Tower II
Lease.

     "Transition Services Agreement" has the meaning set forth in Section 8.16
below.

     "Two-Thirds Vote Charter Amendment" has the meaning set forth in Section
8.6 below.

     "Working Capital Schedule" has the meaning set forth in Section 8.15 below.

                                    ARTICLE 2

                         MERGER; EFFECTIVE TIME; CLOSING

     2.1 Merger. Upon the terms and subject to the conditions set forth in this
Agreement and in accordance with the Florida BCA and the Florida LLCA, at the
Effective Time, CHPAC and the Advisor shall consummate the Merger in which (i)
the Advisor shall be merged with and into CHPAC and the separate corporate
existence of the Advisor shall thereupon cease, (ii) CHPAC shall be the
successor or surviving company in the Merger and shall continue to be governed
by the laws of the State of Florida and (iii) the separate existence of CHPAC as
a limited liability company, with all its rights, privileges, immunities, powers
and franchises, shall continue unaffected by the Merger. The legal entity
surviving the Merger is sometimes

                                      -11-

<PAGE>

hereinafter referred to as the "Surviving Company." The Merger shall have the
effects set forth in Section 607.11101 of the Florida BCA and Section 608.4383
of the Florida LLCA.

     2.2 Effective Time. On the Closing Date, subject to the terms and
conditions of this Agreement, CHPAC and the Advisor shall (i) cause to be
executed Articles of Merger in the form required by Section 607.1109 of the
Florida BCA, which shall also constitute a Certificate of Merger in the form
required by Section 608.4382 of the Florida LLCA (the "Articles/Certificate of
Merger"), (ii) cause the Articles/Certificate of Merger to be filed with the
Florida Department of State as provided in Section 607.1109 of the Florida BCA
and Section 608.4382 of the Florida LLCA and (iii) make all other filings or
recordings required under the Florida BCA and the Florida LLCA to consummate the
Merger. The Merger shall become effective upon the later of (i) such time as the
Articles/Certificate of Merger is duly filed with the Florida Secretary of State
or (ii) such other time as is agreed upon by the Representative and CHP and
specified in the Articles/Certificate of Merger. Such time is hereinafter
referred to as the "Effective Time."

     2.3 The Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of Greenberg Traurig,
LLP, 450 South Orange Avenue, Suite 650, Orlando, Florida 32801, commencing at
9:00 a.m., Eastern Time, on the fifth (5th) business day following the
fulfillment or waiver (to the extent permitted by applicable law) of the
conditions set forth in Article 10 (other than conditions which by their nature
are intended to be fulfilled at the Closing) or such other place or time or on
such other date, time or place as CHP and the Representative may agree or as may
be necessary to permit the fulfillment or waiver of the conditions set forth in
Article 10 (the "Closing Date").

                                    ARTICLE 3

                 ARTICLES OF ORGANIZATION; OPERATING AGREEMENT;
                    AND MANAGING MEMBER OF SURVIVING COMPANY

     3.1 Articles of Organization. The articles of organization of CHPAC, as in
effect immediately prior to the Effective Time, shall be the articles of
organization of the Surviving Company until thereafter amended as provided
therein or under applicable law.

     3.2 Operating Agreement. The operating agreement of CHPAC, as in effect
immediately prior to the Effective Time, shall be the operating agreement of the
Surviving Company until thereafter changed or amended as provided therein or
under applicable law.

     3.3 Managing Member. The managing member of CHPAC immediately prior to the
Effective Time shall be the managing member of the Surviving Company from and
after the Effective Time until its successor has been duly elected, appointed or
qualified or until its earlier removal in accordance with the articles of
organization and operating agreement of the Surviving Company.

                                      -12-

<PAGE>

                                    ARTICLE 4

                              MERGER CONSIDERATION

     4.1 Merger Consideration; Conversion or Cancellation of Advisor Common
Shares in Merger; Repayment of FARS Note or Inter-Company FARS Final Payment
Funding Note. (a) At the Effective Time, by virtue of the Merger and without any
action by the Parties, all of the outstanding Advisor Common Shares shall be
converted into the right to receive a total of 3,600,000 CHP Common Shares
(subject to adjustment pursuant to the terms of Section 4.1(c) below), which
total number of shares was calculated by dividing $72.0 million by the Per Share
Price (such CHP Common Shares, the "Merger Consideration") pursuant to the terms
of Section 4.2 below. As of the Effective Time, all Advisor Common Shares shall
cease to be outstanding, and shall be canceled and retired and shall cease to
exist, and each Stockholder, as the holder of certificates representing any of
such Advisor Common Shares (the "Advisor Common Share Certificates"), shall
cease to have any rights with respect thereto, except the right to receive the
Merger Consideration. As of the Effective Time, all of the membership interests
of CHPAC issued and outstanding immediately prior to the Effective Time shall
remain issued and outstanding membership interests of the Surviving Company and
shall be unchanged and remain solely owned by CHP.

          (b) In addition to the Merger Consideration payable to the
Stockholders pursuant to this Agreement, at the Closing, (i) if the Closing Date
is on or before June 30, 2006, CHP shall assume and repay, or cause to be
repaid, in full the outstanding principal and accrued and unpaid interest on the
FARS Note otherwise due and payable up to and including the Closing Date and the
FARS Note shall be cancelled, or (ii) if the Closing Date is after June 30,
2006, CHP shall assume and repay, or cause to be repaid, in full the outstanding
principal and accrued and unpaid interest on the Inter-Company FARS Final
Payment Funding Note otherwise due and payable up to and including the Closing
Date and the Inter-Company FARS Final Payment Funding Note shall be cancelled.

          (c) For purposes of adjustments to the number of CHP Common Shares
issuable as part of the Merger Consideration and other provisions of this
Agreement that require or call for a price per CHP Common Share, such price
shall be deemed to be $20.00 per CHP Common Share (the "Per Share Price");
provided, however, that the Per Share Price and the number of CHP Common Shares
issuable as part of the Merger Consideration shall be proportionately and
appropriately adjusted in the event the number of outstanding CHP Common Shares
is increased or decreased after the date of this Agreement and before the
Effective Time on account of any recapitalization, reclassification, stock
split, reverse stock split, combination of shares, exchange of shares, stock
dividend or other pro rata distribution payable in capital stock of CHP, but
excluding any CHP Common Shares issued under any dividend reinvestment plan of
CHP.

     4.2 Exchange of Certificates; Payment of Merger Consideration. At the
Closing, upon surrender to CHP of the Advisor Common Share Certificates by the
Stockholders for cancellation, properly endorsed for transfer, together with any
other required documents, each of the Stockholders shall receive the Merger
Consideration pro rata based on their relative equity interests in the Advisor
as of the Closing Date, as set forth opposite such Stockholder's name on

                                      -13-

<PAGE>

Schedule I to the Agreement (which Schedule I will be amended to reflect any
transfer of any Advisor Common Shares between the date of the Agreement and the
Closing Date as contemplated in Section 4.4 below) (each such Stockholder's
equity percentage set forth on Schedule I, its "Pro Rata Percentage"), and each
of the Advisor Common Share Certificates so surrendered shall forthwith be
canceled. Prior to the Closing, Schedule I shall be amended by CHP and the
Advisor to reflect any adjustments that may be necessary in accordance with this
Agreement to the number of CHP Common Shares to be delivered to each of the
Stockholders pursuant to this Section 4.2 based on their Pro Rata Percentage of
the Merger Consideration. The Stockholders shall also receive cash in lieu of
fractional CHP Common Shares as contemplated by Section 4.3 below. If any
Advisor Common Share Certificate shall have been lost, stolen or destroyed, upon
the making of an affidavit of that fact by the Stockholder claiming such Advisor
Common Share Certificate to be lost, stolen or destroyed, and, if requested by
CHP, the posting by such Stockholder of a bond in such reasonable amount as CHP
reasonably may direct as indemnity against any claim that may be made against
them with respect to such Advisor Common Share Certificate, CHP will issue in
exchange for such lost, stolen or destroyed Advisor Common Share Certificate the
CHP Common Shares to which the holder thereof is entitled pursuant to this
Section 4.2.

     4.3 Fractional CHP Common Shares. No certificates representing fractional
CHP Common Shares shall be issued upon surrender of any Advisor Common Share
Certificates in payment of any Merger Consideration. In connection with the
payment of the Merger Consideration, in lieu of any fractional CHP Common
Shares, there shall be paid to each holder of Advisor Common Shares who
otherwise would be entitled to receive a fractional CHP Common Share an amount
of cash (without interest) determined by multiplying such fraction by the Per
Share Price.

     4.4 Transfer of Advisor Common Shares. (a) No transfers of Advisor Common
Shares that are not expressly permitted by this Section 4.4 shall be made on the
stock transfer books of the Advisor after the date of this Agreement, and (b)
each Stockholder agrees not to transfer any Advisor Common Shares after the date
of this Agreement and before the Closing Date to any Person that is not a
Stockholder; provided, however, that, in the event of any transfer by a
Stockholder to another Stockholder, the transferring Stockholder provides to CHP
at least ten (10) business days' prior written notice of such intended transfer,
which notice shall include a reasonably detailed summary of the terms and
conditions of such intended transfer, including the consideration to be received
by the transferring Stockholder for such Advisor Common Shares. Notwithstanding
the foregoing, Seneff may transfer or gift all or some of his Advisor Common
Shares to a Seneff Family Trust or to a Seneff Family Company; provided,
however, that, (i) prior to such transfer, such Seneff Family Trust or Seneff
Family Company execute and deliver an undertaking to become a Party to this
Agreement and, except as provided in the last sentence of this Section 4.4, to
have all the rights and obligations of a Stockholder hereunder and to approve
this Agreement, the Merger and the other transactions contemplated in this
Agreement and (ii) the Seneff Family Trust or a Seneff Family Company, as the
case may be, qualifies as an "accredited investor" within the meaning of the
Securities Act or the transfer to the Seneff Family Trust or Seneff Family
Company is exempt from registration under the Securities Act and will be
registered or exempt from registration under all applicable state securities
laws. In the case of any transfer of Advisor Common Shares made in accordance
with this Section 4.4, CHP shall have the absolute right to amend this Agreement
for the sole purpose of adding such

                                      -14-

<PAGE>

transferee (to the extent such transferee is not already a Party to this
Agreement) and to add such transferee's name and Pro Rata Percentage on Schedule
I (or otherwise amend Schedule I to reflect such transfers). Seneff hereby
agrees to assume and be responsible for (and the Seneff Family Trust or Seneff
Family Company shall not be responsible for) the pro rata portion of any
reimbursement, payment, indemnity or other obligation of the Seneff Family Trust
or Seneff Family Company as a Stockholder that may or would otherwise be or have
been attributable to the Seneff Family Trust or a Seneff Family Company pursuant
to this Agreement and is owed or payable to CHP or CHPAC.

                                    ARTICLE 5

               REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS

     Each of the Stockholders, severally, but not jointly, represents and
warrants to CHP and CHPAC that the statements contained in this Article 5 are
correct and complete as of the date hereof (and will be correct and complete as
of the Closing Date as if made on and as of the Closing Date) with respect to
itself or himself:

     5.1 Organization and Qualification. CREG is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Florida. FARS is a limited liability company duly organized, validly existing
and in good standing under the laws of the State of Delaware.

     5.2 Authorization of Transaction. Each of the Stockholders has full power
and authority to execute and deliver this Agreement and to perform its or his
obligations hereunder. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly and validly
authorized by the Board of Directors of CREG and the Board of Managers of FARS.
No other corporate proceedings on the part of CREG or FARS are necessary to
authorize the consummation of the transactions contemplated hereby on behalf of
CREG or FARS. This Agreement has been duly and validly executed and delivered by
each of the Stockholders and constitutes the valid and legally binding
obligation of each of the Stockholders, enforceable against such Stockholders in
accordance with its terms and conditions. No consents, approvals, orders or
authorizations of, or registration, declaration or filing with, any government
or governmental agency is required by or with respect to the Stockholders in
connection with the execution and delivery of this Agreement or the consummation
of the transactions contemplated hereby, other than (i) the filing with the SEC
of any reports and filings under the Securities Act and the Securities Exchange
Act as may be required in connection with this Agreement and the Merger, (ii)
the filing of the Articles/Certificate of Merger with the Florida Department of
State, and (iii) such other consents, approvals, orders, authorizations,
registrations, declarations and filings as (A) are set forth on Section 5.2 of
the Disclosure Schedule (as defined below) or (B) may be required under the
"blue sky" laws of various states, to the extent applicable.

     5.3 Noncontravention. Except as set forth in Section 5.3 of the Disclosure
Schedule, neither the execution and the delivery of this Agreement, nor the
consummation of the transactions contemplated hereby, by the Stockholders, will
(A) violate any constitution, statute, regulation, rule, injunction, judgment,
order, decree, ruling, charge, or other restriction of any

                                      -15-
<PAGE>

government, governmental agency, or court to which any Stockholder is subject or
any provision of its articles of incorporation, certificate of formation,
by-laws, limited liability company agreement or other organizational documents,
as applicable, or (B) result in a breach of, constitute a default under, result
in the acceleration of, create in any Person the right to accelerate, terminate,
modify, or cancel, or require any notice under any agreement, contract, lease,
license, instrument, or other arrangement to which any Stockholder is a party or
by which it or he is bound or to which any of its or his assets is subject,
except for any breaches or violations that would not, individually or in the
aggregate, have a Material Adverse Effect on the Advisor or substantially impair
or delay the consummation of the transactions contemplated hereby.

     5.4 Investment. (a) Each of the Stockholders who acquires CHP Common Shares
in the Merger: (i) understands that the CHP Common Shares acquired by such
Stockholder pursuant to this Agreement have not been registered under the
Securities Act, or under any state securities laws, and are being exchanged in
reliance upon federal and state exemptions for transactions not involving a
public offering and may not be offered or sold unless (A) such offer or sale has
been registered under the Securities Act, (B) such offer or sale is made in
conformity with the applicable holding period, volume and other limitations of
Rule 144 promulgated by the SEC under the Securities Act, or (C) in the written
opinion of counsel reasonably acceptable to CHP, some other exemption from
registration is available with respect to any proposed sale, transfer or other
disposition of such CHP Common Shares; (ii) is acquiring the CHP Common Shares
solely for its or his own account for investment purposes, and not with a view
towards the distribution thereof; (iii) is an "accredited investor" (as such
term is defined in Regulation D under the Securities Act) and is a sophisticated
investor with knowledge and experience in business and financial matters; (iv)
has received certain information concerning CHP, including, without limitation,
(A) the most recent annual report on Form 10-K, (B) any quarterly reports on
Form 10-Q since the most recent annual report on Form 10-K, (C) any current
reports on Form 8-K since December 31, 2004, in each case as filed by CHP under
the Securities Exchange Act, and (D) the most recent annual report to
stockholders of CHP, and has had the opportunity to obtain additional
information as desired in order to evaluate the merits and the risks inherent in
holding CHP Common Shares; and (v) is able to bear the economic risk and lack of
liquidity inherent in holding CHP Common Shares which have not been registered
under the Securities Act.

          (b) Each of the Stockholders who acquires CHP Common Shares in the
Merger represents that it or he has been advised and understands that, subject
to applicable federal and state securities laws, stop transfer instructions will
be given to CHP's transfer agent with respect to such CHP Common Shares and that
a legend setting forth the following restrictions on transfer will be set forth
on the certificates for such CHP Common Shares or any substitutions therefor:

     "THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT"), IN RELIANCE UPON THE
EXEMPTION FROM REGISTRATION CONTAINED IN SECTION 4(2) OF THE 1933 ACT AND
REGULATION D OF THE RULES AND REGULATIONS PROMULGATED UNDER THE 1933 ACT, AND IN
RELIANCE UPON THE REPRESENTATION BY THE HOLDER THAT THEY HAVE BEEN ACQUIRED FOR
INVESTMENT PURPOSES ONLY AND NOT WITH A VIEW TO RESALE OR FURTHER

                                      -16-

<PAGE>

DISTRIBUTION. SUCH SHARES MAY NOT BE OFFERED FOR SALE, SOLD, DELIVERED AFTER
SALE, HYPOTHECATED, NOR WILL ANY ASSIGNEE OR ENDORSEE HEREOF BE RECOGNIZED AS AN
OWNER HEREOF BY THE ISSUER FOR ANY PURPOSE, UNLESS A REGISTRATION STATEMENT
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION WITH RESPECT TO SUCH SHARES
SHALL THEN BE IN EFFECT OR UNLESS THE AVAILABILITY OF AN EXEMPTION FROM
REGISTRATION SHALL BE ESTABLISHED TO THE REASONABLE SATISFACTION OF COUNSEL OF
THE ISSUER."

     5.5 Advisor Common Shares. Except as set forth in Section 7.2 of the
Disclosure Schedule, each of the Stockholders holds of record and owns
beneficially the number and class of the Advisor Common Shares set forth next to
its or his name in Section 7.2 of the Disclosure Schedule, free and clear of any
restrictions on transfer (other than any restrictions under the Securities Act
and state securities laws), Taxes, Security Interests, options, warrants,
purchase rights, contracts, commitments, equities, claims, and demands. Except
for the agreements set forth on Section 5.5 of the Disclosure Schedule, none of
the Stockholders is a party to any option, warrant, purchase right, or other
contract or commitment that could require one or more Stockholders to sell,
transfer, or otherwise dispose of any the Advisor Common Shares (other than
pursuant to this Agreement) or is a party to any voting trust, proxy, or other
agreement or understanding with respect to the voting of any of the Advisor
Common Shares.

                                    ARTICLE 6

                 REPRESENTATIONS AND WARRANTIES OF CHP AND CHPAC

     CHP and CHPAC jointly and severally represent and warrant to the
Stockholders and the Advisor that the statements contained in this Article 6 are
correct and complete as of the date hereof (and will be correct and complete as
of the Closing Date as if made on and as of the Closing Date):

     6.1 Organization of CHP and CHPAC. CHP is a corporation, and CHPAC is a
limited liability company, duly organized, validly existing, and in good
standing under the laws of its jurisdiction of incorporation or organization, as
the case may be.

     6.2 Capital Stock and Membership Interests. The authorized capital stock of
CHP consists of 3,675,000,000 equity shares, 3,000,000,000 of which are CHP
Common Shares, 75,000,000 of which are preferred shares, par value $.01 per
share, and 600,000,000 of which are excess shares, par value $.01 per share. As
of March 1, 2006, 152,883,062 CHP Common Shares, no preferred shares and no
excess shares were issued and outstanding. Since December 31, 2005, CHP has not
issued any shares of capital stock except pursuant to the exercise of options
outstanding on such date to purchase CHP Common Shares or pursuant to CHP's
dividend reinvestment plan. All outstanding CHP Common Shares are, and all CHP
Common Shares issuable under stock option plans of CHP or pursuant to CHP's
dividend reinvestment plan will be when issued in accordance with the terms
thereof duly authorized, validly issued, fully paid and nonassessable. Except
for the CHP Common Shares reserved for issuance pursuant to stock option plans
of CHP or CHP's dividend reinvestment plan, there are outstanding on the date
hereof no options, warrants, calls, rights, commitments or any other

                                      -17-

<PAGE>

agreements of any character to which CHP is a party or by which it may be bound,
requiring it to issue, transfer, sell, purchase, register, redeem or acquire any
shares of capital stock or any securities or rights convertible into,
exchangeable for or evidencing the right to subscribe for or acquire any shares
of its capital stock. CHP is the sole member of CHPAC, and CHPAC has no other
issued and outstanding equity or similar interests.

     6.3 Authorization for CHP Common Shares. The CHP Common Shares issued as
Merger Consideration will, when issued, be duly authorized, validly issued,
fully paid and nonassessable, and no stockholder of CHP will have any preemptive
right or similar rights of subscription or purchase in respect thereof. The CHP
Common Shares issued as Merger Consideration will, subject to the accuracy of
the Stockholders' representations contained in Section 5.4 hereof, be exempt
from registration under the Securities Act and will be registered or exempt from
registration under all applicable state securities laws.

     6.4 Authorization of Transaction. Each of CHP and CHPAC has full corporate
or lawful power and authority to execute and deliver this Agreement and to
perform its respective obligations hereunder, subject to the approval of the
Merger at the CHP Stockholder Meeting by the affirmative vote of at least a
majority of the votes cast on the Merger by holders of CHP Common Shares
entitled to vote thereon (other than CHP Common Shares owned of record or
beneficially by interested directors or their Affiliates), provided that the
total votes cast represent over 50% of the CHP Common Shares entitled to vote on
the Merger (the "CHP Stockholder Approval"), as required pursuant to this
Agreement. The execution and delivery of this Agreement and the consummation of
the Merger have been duly and validly authorized by the Board of Directors of
CHP and by CHP, as the sole member of CHPAC. Other than the CHP Stockholder
Approval that is required pursuant to this Agreement, no other corporate or
legal proceedings on the part of CHP and CHPAC are necessary to authorize the
consummation of the Merger on behalf of CHP and CHPAC. This Agreement
constitutes the valid and legally binding obligation of each of CHP and CHPAC,
enforceable in accordance with its terms and conditions. No consents, approvals,
orders or authorizations of, or registration, declaration or filing with, any
government or governmental agency is required by or with respect to CHP or CHPAC
in connection with the execution and delivery of this Agreement or the
consummation of the Merger, other than (i) the filing with the SEC of any
reports and filings under the Securities Act and the Securities Exchange Act as
may be required in connection with this Agreement and the Merger, (ii) the
filing of the Articles/Certificate of Merger with the Florida Department of
State, and (iii) such other consents, approvals, orders, authorizations,
registrations, declarations and filings as may be required under the "blue sky"
laws of various states, to the extent applicable.

     6.5 Noncontravention. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby by CHP
or CHPAC, will (A) violate any constitution, statute, regulation, rule,
injunction, judgment, order, decree, ruling, charge, or other restriction of any
government, governmental agency, or court to which either CHP or CHPAC is
subject or any provision of CHP's articles of incorporation or by-laws or
CHPAC's articles of organization or operating agreement, as the case may be, or
(B) result in a breach of, constitute a default under, result in the
acceleration of, create in any Person the right to accelerate, terminate,
modify, or cancel, or require any notice under any agreement, contract, lease,
license, instrument, or other arrangement to which either CHP or CHPAC is a
party or by which it is bound or to which any of its assets is subject, except
for any breaches or violations

                                      -18-

<PAGE>

that would not, individually or in the aggregate, have a Material Adverse Effect
on CHP or CHPAC or substantially impair or delay the consummation of the
transactions contemplated hereby.

     6.6 Brokers' Fees. Except for the fees and expenses paid or payable to
Lehman Brothers, Inc. with respect to the delivery of the Fairness Opinion to
the Special Committee, including any updates thereto, and in connection with the
Initial Merger Agreement and related advisory services in connection with the
Initial Merger Agreement and this Agreement, neither CHP nor CHPAC has any
Liability or obligation to pay any fees or commissions to any broker, finder, or
agent with respect to the Merger.

     6.7 Proxy Statement. The Proxy Statement will not at the time filed with
the SEC, at the time of mailing the Proxy Statement to the stockholders of CHP
or at the time of the CHP Stockholder Meeting contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements made therein, in light of the
circumstances under which they were made, not misleading, except that no
representation is made by CHP with respect to statements made therein based on
information supplied by or on behalf of the Stockholders or the Advisor for
inclusion in the Proxy Statement. The Proxy Statement will comply as to form in
all material respects with the provisions of the Securities Exchange Act.

     6.8 SEC Documents. Since January 1, 2005, CHP has filed with the SEC all
reports and other documents required to be filed by it during such period under
the Securities Exchange Act (the "CHP SEC Documents"). At the respective times
they were filed, none of the CHP SEC Documents contained any untrue statement of
a material fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading except to the extent
corrected in a subsequently filed CHP SEC Document. The consolidated financial
statements (including in each case any notes thereto) of CHP included in the CHP
SEC Documents were prepared in conformity with GAAP consistently applied
throughout the periods covered thereby (except in each case as described in the
notes thereto) and fairly presented in all material respects the consolidated
financial position, results of operations and cash flows of CHP and its
consolidated subsidiaries as at the respective dates thereof and for the periods
then ended (subject, in the case of unaudited statements to normal year-end
adjustments and to any other adjustments described therein), except to the
extent corrected in a subsequently filed CHP SEC Document.

                                    ARTICLE 7

              REPRESENTATIONS AND WARRANTIES CONCERNING THE ADVISOR

     The Stockholders (other than FARS and, in the case of Sections 7.11(a) and
7.11(e), other than the Management Stockholders) and the Advisor represent and
warrant to CHP and CHPAC that the statements contained in this Article 7 are
correct and complete as of the date hereof (and will be correct and complete as
of the Closing Date as if made on and as of the Closing Date), except as set
forth in the disclosure schedule delivered by the Stockholders (other than FARS)
and the Advisor to CHP and CHPAC immediately prior to the execution and delivery
of this Agreement (the "Disclosure Schedule"); it being understood that with
respect to any matter

                                      -19-

<PAGE>

included in Sections 7.9, 7.10, 7.11(a), 7.11(c), 7.15(f), 7.19, 7.21 or 7.23 of
the Disclosure Schedule, for purposes of the indemnification provided in Article
12, such matter shall be treated as if such matter was not included in the
Disclosure Schedule and shall continue to be the subject of and covered by the
indemnification provisions of Article 12 of this Agreement notwithstanding its
inclusion therein. Nothing in the Disclosure Schedule shall be deemed adequate
to disclose an exception to a representation or warranty made herein, however,
unless the Disclosure Schedule identifies the exception with particularity and
describes the relevant facts in reasonable detail. Without limiting the
generality of the foregoing, the mere listing (or inclusion of a copy) of a
document or other item shall not be deemed adequate to disclose an exception to
a representation or warranty made herein (unless the representation or warranty
relates to the existence of the document or other item itself). The Disclosure
Schedule will be arranged in paragraphs corresponding to the lettered and
numbered paragraphs contained in this Article 7.

     7.1 Organization, Qualification, and Corporate Power. Each of the Advisor
and the Development Company (as defined below) is a corporation duly organized,
validly existing, and in good standing under the laws of the State of Florida.
Each of the Advisor and the Development Company is duly authorized to conduct
business and is in good standing under the laws of each jurisdiction where such
qualification is required, except where the failure to so qualify or obtain
authorization would not have a Material Adverse Effect on the Advisor or on the
ability of the Advisor to consummate the Merger. Except as set forth in Section
7.1 of the Disclosure Schedule, each of the Advisor and the Development Company
has full corporate power and authority and all licenses, permits, and
authorizations necessary to carry on the businesses in which it is engaged and
to own and use the properties owned and used by it except where the failure to
be so licensed, permitted or authorized would not have a Material Adverse Effect
on the Advisor. The Stockholders (other than FARS) have delivered to CHP correct
and complete copies of the articles of incorporation and by-laws of the Advisor
and the Development Company (in each case, as amended to date). The minute books
(containing the records of meetings of the stockholders, the board of directors,
and any committees of the board of directors), the stock certificate books, and
the stock record books of each of the Advisor and the Development Company are
correct and complete in all material respects. Each of the Advisor and the
Development Company is not in default under or in violation of any provision of
its articles of incorporation or by-laws. All corporate actions taken by the
Advisor and the Development Company have been taken in compliance with all
applicable provisions of the Florida BCA.

     7.2 Capitalization. The entire authorized capital stock of the Advisor
consists of (i) 10,000 shares of Class A common stock, $1.00 par value per
share, of which 2,000 shares are issued and outstanding, and (ii) 5,000 shares
of Class B common stock, $1.00 par value per share, of which 1,377.11 shares are
issued and outstanding. No Advisor Common Shares are held in treasury. All of
the issued and outstanding Advisor Common Shares have been duly authorized, are
validly issued, fully paid, and nonassessable, and are held of record and
beneficially by the respective Stockholders as set forth in Section 7.2 of the
Disclosure Schedule. The entire authorized capital stock of the Development
Company (as defined below) consists of 1,000 shares of common stock, $1.00 par
value per share, of which 1,000 shares are issued and outstanding. All of the
issued and outstanding shares of capital stock of the Development Company have
been duly authorized, are validly issued, fully paid and non-assessable, and are

                                      -20-

<PAGE>

held of record and beneficially by the Advisor. There are no outstanding or
authorized options, warrants, purchase rights, subscription rights, conversion
rights, exchange rights, or other contracts or commitments that could require
the Advisor or the Development Company to issue, sell, or otherwise cause to
become outstanding any of its capital stock. There are no outstanding or
authorized stock appreciation, phantom stock, profit participation, or similar
rights with respect to the Advisor or the Development Company. Except as set
forth in Section 7.2 of the Disclosure Schedule, there are no voting trusts,
proxies, or other agreements or understandings with respect to the voting of the
Advisor Common Shares or any shares of capital stock of the Development Company.

     7.3 Authorization of Transaction. The Advisor has full corporate power and
authority to execute and deliver this Agreement and to perform its obligations
hereunder. The execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby have been duly and validly authorized by
the Board of Directors of the Advisor. No other corporate proceedings on the
part of the Advisor are necessary to authorize the consummation of the
transactions contemplated hereby on behalf of the Advisor. This Agreement
constitutes the valid and legally binding obligation of the Advisor, enforceable
in accordance with its terms and conditions. No consents, approvals, orders or
authorizations of, or registration, declaration or filing with, any government
or governmental agency is required by or with respect to the Advisor or any
subsidiary of the Advisor in connection with the execution and delivery of this
Agreement or the consummation of the transactions contemplated hereby, other
than (i) the filing with the SEC of any reports and filings under the Securities
Act and the Securities Exchange Act as may be required in connection with this
Agreement and the Merger, (ii) the filing of the Articles/Certificate of Merger
with the Florida Department of State, and (iii) such other consents, approvals,
orders, authorizations, registrations, declarations and filings as (A) are set
forth on Section 7.3 of the Disclosure Schedule or (B) may be required under the
"blue sky" laws of various states, to the extent applicable.

     7.4 Noncontravention. Except as set forth in Section 7.4 of the Disclosure
Schedule, neither the execution and the delivery of this Agreement, nor the
consummation of the transactions contemplated hereby by the Advisor, will (i)
violate any constitution, statute, regulation, rule, injunction, judgment,
order, decree, ruling, charge, or other restriction of any government,
governmental agency, or court to which the Advisor or the Development Company is
subject or any provision of the articles of incorporation or bylaws of the
Advisor or the Development Company or (ii) result in a breach of, constitute a
default under, result in the acceleration of, create in any Person the right to
accelerate, terminate, modify, or cancel, or require any notice, consent or
approval under any agreement, contract, lease, license, instrument, or other
arrangement to which the Advisor or the Development Company is a party or by
which it is bound or to which any of its assets is subject (or result in the
imposition of any Security Interest upon any of its assets).

     7.5 Title to Assets. Except as set forth on Section 7.5 of the Disclosure
Schedule, each of the Advisor and the Development Company has good and
marketable title to, or a valid leasehold interest in, the properties and assets
used by it, located on its premises, or shown on the Most Recent Balance Sheet
or the Most Recent Pro Forma Balance Sheet or acquired after the date thereof,
free and clear of all Security Interests (other than those disclosed in the Most
Recent Balance Sheet), except for properties and assets disposed of in the
Ordinary Course of

                                      -21-

<PAGE>

Business since the date of the Most Recent Balance Sheet or the Most Recent Pro
Forma Balance Sheet.

     7.6 Subsidiaries. The Advisor's business is conducted entirely by and
through the Advisor and its wholly owned subsidiary, CNL Hotel Development
Company, a Florida corporation (the "Development Company"). The Advisor has no
direct or indirect Subsidiaries, operating or otherwise, other than the
Development Company, nor are there any other entities that the Advisor otherwise
directly or indirectly controls or in which it has any ownership or other
interest, and the Advisor does not have the right or obligation to acquire any
shares of stock or other interest in any other Person. The Stockholders (other
than FARS) or any other Affiliates have not taken or omitted to take any action
which has resulted in, or will result in, the Advisor being or becoming a party
to or bound by, any agreement, arrangement or understanding to which the Advisor
will remain obligated or bound following the Closing, relating to the
acquisition by the Advisor of any entity or all or substantially all of the
assets of any Person.

     7.7 Financial Statements. The Advisor has delivered to CHP its (i) audited
balance sheets and statements of income, changes in stockholders' equity, and
cash flow as of and for the fiscal years ended December 31, 2002, December 31,
2003, and December 31, 2004 and (ii) preliminary unaudited balance sheets and
statements of income (the "Most Recent Financial Statements") as of and for the
three- and twelve-months ended December 31, 2005 (the "Most Recent Fiscal
Quarter End") (the financial statements described in clauses (i) and (ii) of
this Section 7.7 are hereinafter referred to as the "Financial Statements"). The
Financial Statements (including the notes thereto) have been prepared in
accordance with GAAP applied on a consistent basis throughout the periods
covered thereby, present fairly the financial condition of the Advisor as of
such dates and the results of operations of the Advisor for such periods, and
are consistent with the books and records of the Advisor (which books and
records are correct and complete in all material respects); provided that, the
Most Recent Financial Statements do not contain any notes.

     7.8 Events Subsequent to December 31, 2003. Since December 31, 2003, there
has not been any Material Adverse Effect on the Advisor or on the ability of the
Advisor to consummate the transactions contemplated in this Agreement. Without
limiting the generality of the foregoing, except as set forth on Section 7.8 of
the Disclosure Schedule, since that date:

          (a) each of the Advisor and the Development Company has not sold,
leased, transferred, or assigned any of its assets, tangible or intangible,
other than for a fair consideration in the Ordinary Course of Business;

          (b) each of the Advisor and the Development Company has not entered
into any agreement, contract, lease, or license (or series of related
agreements, contracts, leases, and licenses) either involving more than $25,000
or outside the Ordinary Course of Business, other than contracts or subcontracts
entered into in the Ordinary Course of Business by the Development Company
involving less than $100,000;

          (c) no Person (including the Advisor and the Development Company) has
accelerated, terminated, modified, or canceled any material agreement, contract,
lease, or license

                                      -22-

<PAGE>

(or series of related agreements, contracts, leases, and licenses) to which the
Advisor or the Development Company is a party or by which it is bound;

          (d) each of the Advisor and the Development Company has not imposed
any Security Interest upon any of its assets, tangible or intangible other than
in the Ordinary Course of Business;

          (e) each of the Advisor and the Development Company has not made any
capital expenditure (or series of related capital expenditures) either involving
more than $50,000 or outside the Ordinary Course of Business;

          (f) each of the Advisor and the Development Company has not made any
capital investment in, any loan to, or any acquisition of the securities or
assets of, any other Person (or series of related capital investments, loans,
and acquisitions);

          (g) each of the Advisor and the Development Company has not issued any
note, bond, or other debt security or created, incurred, assumed, or guaranteed
any indebtedness for borrowed money or capitalized lease obligation;

          (h) each of the Advisor and the Development Company has not delayed or
postponed the payment of accounts payable and other Liabilities outside the
Ordinary Course of Business;

          (i) each of the Advisor and the Development Company has not canceled,
compromised, waived, or released any right or claim (or series of related rights
and claims) outside the Ordinary Course of Business;

          (j) each of the Advisor and the Development Company has not granted
any license or sublicense of any rights under or with respect to any
Intellectual Property;

          (k) there has been no change made or authorized in the articles of
incorporation or by-laws of the Advisor or the Development Company;

          (l) each of the Advisor and the Development Company has not issued,
sold, or otherwise disposed of any of its capital stock, or granted any options,
warrants, or other rights to purchase or obtain (including upon conversion,
exchange, or exercise) any of its capital stock;

          (m) each of the Advisor and the Development Company has not declared,
set aside, or paid any dividend or made any distribution with respect to its
capital stock (whether in cash or in kind) or redeemed, purchased, or otherwise
acquired any of its capital stock;

          (n) each of the Advisor and the Development Company has not
experienced any material damage, destruction, or loss (whether or not covered by
insurance) to its property;

          (o) each of the Advisor and the Development Company has not made any
loan to, or entered into any other transaction with, any of its directors,
officers, and employees outside the Ordinary Course of Business;

                                      -23-

<PAGE>

          (p) each of the Advisor and the Development Company has not entered
into any employment contract or collective bargaining agreement, written or
oral, or modified the terms of any such existing contract or agreement;

          (q) each of the Advisor and the Development Company has not granted
any increase in the base compensation of any of its directors, officers, and
employees outside the Ordinary Course of Business;

          (r) each of the Advisor and the Development Company has not adopted,
amended, modified, or terminated any bonus, profit-sharing, incentive,
severance, or other plan, contract, or commitment for the benefit of any of its
directors, officers, and employees (or taken any such action with respect to any
other Employee Benefit Plan);

          (s) each of the Advisor and the Development Company has not made any
other change in employment terms for any of its directors, officers, and
employees outside the Ordinary Course of Business or in the terms of its
agreements with any independent contractors;

          (t) each of the Advisor and the Development Company has not made or
pledged to make any charitable or other capital contribution outside the
Ordinary Course of Business;

          (u) to the Knowledge of the Stockholders and the Advisor, there has
not been any other material occurrence, event, incident, action, failure to act,
or transaction outside the Ordinary Course of Business involving the Advisor or
the Development Company; and

          (v) to the Knowledge of the Stockholders and the Advisor, each of the
Advisor and the Development Company is not under any legal obligation, whether
written or oral, to do any of the foregoing.

     7.9 Undisclosed Liabilities. Neither the Advisor nor the Development
Company has any Liability (and to the Knowledge of the Advisor and the
Stockholders, there is no Basis for any present or future action, suit,
proceeding, hearing, investigation, charge, complaint, claim, or demand against
it giving rise to any Liability), except for (i) Liabilities which are reflected
in, reserved against or otherwise described in the Most Recent Balance Sheet
(including the notes thereto), and (ii) Liabilities which have arisen after the
Most Recent Fiscal Quarter End in the Ordinary Course of Business (none of which
results from, arises out of, relates to, is in the nature of, or was caused by
any breach of contract, breach of warranty, tort, infringement, or violation of
law) and which are not material, individually or in the aggregate. As of the
Closing, the Advisor will not have any Liabilities other than as set forth on
Section 7.9 of the Disclosure Schedule.

     7.10 Legal Compliance. Each of the Advisor and the Development Company has
complied in all material respects with all applicable laws (including rules,
regulations, codes, plans, injunctions, judgments, orders, decrees, rulings, and
charges thereunder) of federal, state, local, and foreign governments (and all
agencies thereof), the violation of which could have a Material Adverse Effect
on the Advisor or on the ability of the Advisor to consummate the transactions
contemplated in this Agreement, and no action, suit, proceeding, hearing,
investigation, charge, complaint, claim, demand, or notice has been filed or
commenced against

                                      -24-

<PAGE>

it alleging any failure so to comply, except as disclosed in Section 7.10 of the
Disclosure Schedule.

     7.11 Tax Matters.

          (a) Except as disclosed in Section 7.11(a) of the Disclosure Schedule,
all Tax Returns required to have been filed with any taxing authority by or on
behalf of the Advisor or the Development Company, including, without limitation,
any Tax Returns required to be filed with any state, have been timely filed
(taking into account any extensions). All such Tax Returns were correct and
complete in all material respects. All Taxes owed by the Advisor or the
Development Company (whether or not shown on any filed Tax Return and whether or
not yet due) have been paid, or, if such Taxes are not yet due, the obligation
to pay such Taxes is set forth on the Most Recent Financial Statements. Without
limiting the foregoing, neither the Advisor nor the Development Company will
have any Liability for Taxes, whether or not yet payable, for the taxable period
of the Advisor and the Development Company that includes the Effective Time,
other than Taxes payable solely by reason of the Merger failing to qualify as a
reorganization under Section 368(a) of the Code (if such Taxes would not have
been imposed in such taxable period had the Merger qualified as a reorganization
under Section 368(a) of the Code), in excess of the amounts actually paid by or
on behalf of the Advisor or the Development Company at or prior to the Effective
Time to the applicable taxing authority or to be paid timely after the Effective
Time by the Guarantor, on behalf of the Advisor, in connection with any
consolidated, combined or unitary Tax Returns including the Advisor or the
Development Company and the Guarantor. Except as disclosed in Section 7.11(a) of
the Disclosure Schedule, neither the Advisor nor the Development Company is
currently the beneficiary of any extension of time within which to file any Tax
Return. No claim has ever been made by an authority in a jurisdiction where the
Advisor and the Development Company does not file Tax Returns that it is or may
be subject to taxation by that jurisdiction. There are no Security Interests on
any of the assets of the Advisor or the Development Company that arose in
connection with any failure (or alleged failure) to pay any Tax.

          (b) Each of the Advisor and the Development Company has withheld and
paid all Taxes required to have been withheld and paid in connection with
amounts paid or owing to any employee, independent contractor, creditor,
stockholder, or other third party.

          (c) To the Knowledge of the Advisor and each Stockholder, no Basis
exists for any authority to assess any additional Taxes for any period for which
Tax Returns have been filed. There is no dispute or claim concerning any Tax
Liability of the Advisor or the Development Company either (A) claimed or raised
by any authority in writing or (B) as to which the Advisor or any of the
Stockholders has Knowledge. Section 7.11(c) of the Disclosure Schedule lists all
federal, state, local, and foreign income Tax Returns filed with respect to the
Advisor and the Development Company for taxable periods ended on or after
December 31, 1999, indicates those Tax Returns that have been audited, and
indicates those Tax Returns that currently are the subject of audit.

          (d) Neither the Advisor nor the Development Company has waived any
statute of limitations in respect of Taxes or agreed to any extension of time
with respect to a Tax assessment or deficiency.

                                      -25-

<PAGE>

          (e) The Advisor has not filed a consent under Code Section 341(f)
concerning collapsible corporations. The Advisor has not made any payments, is
not obligated to make any payments, and is not a party to any agreement that
under any circumstances could obligate it to make any payments (whether in
connection with the Merger or otherwise) that would not be deductible under Code
Section 280G. The Advisor is not and has not been a United States real property
holding corporation within the meaning of Code Section 897(c)(2) during the
applicable period specified in Code Section 897(c)(1)(A)(ii). Each of the
Advisor and the Development Company has disclosed on its federal income Tax
Returns all positions taken therein that could give rise to a substantial
understatement of federal income Tax within the meaning of Code Section 6662.
Neither the Advisor nor the Development Company is a party to any Tax allocation
or sharing agreement, except as disclosed in Section 7.11(e) of the Disclosure
Schedule. Neither the Advisor nor the Development Company (a) has, or as of the
Effective Time will have, incurred any Liability with respect to (i) any
deferred intercompany gain within the meaning of Treas. Reg. Section 1.1502-13
or (ii) any excess loss account (within the meaning of Treas. Reg. Section
1.1502-19) with respect to any subsidiary of the Advisor, or (b) has any
Liability for the Taxes of any Person (other than the Advisor or the Development
Company, as applicable) under Treas. Reg. Section 1.1502-6 (or any similar
provision of state, local, or foreign law), as a transferee or successor, by
contract, or otherwise.

          (f) Except as set forth on Section 7.11(f) of the Disclosure Schedule,
each of the Advisor and the Development Company does not, and will not as of the
Effective Time, (i) own directly any "securities" of any issuer (within the
meaning of Section 856(c)(4) of the Code, other than assets described in Section
856(c)(4)(A) of the Code); or (ii) own directly an interest in any entity
treated as a partnership or a disregarded entity for federal income tax
purposes.

          (g) Neither the Advisor nor the Development Company will have as of
the Effective Time, any current or accumulated earnings and profits (as
calculated for federal income tax purposes).

     7.12 Real Property.

          (a) Section 7.12 of the Disclosure Schedule lists and describes
briefly all real property owned, leased or subleased to the Advisor and the
Development Company and sets forth a list of all leases and subleases to which
the Advisor or the Development Company is a party. The Stockholders (other than
FARS) have delivered to CHP correct and complete copies of the leases and
subleases listed in Section 7.12 of the Disclosure Schedule (as amended to
date). With respect to each lease and sublease listed in Section 7.12 of the
Disclosure Schedule:

               (i) the lease or sublease is legal, valid, binding, enforceable,
and in full force and effect;

               (ii) no consent is required with respect to the lease or sublease
as a result of this Agreement, and the actions contemplated by this Agreement
will not result in the change of any terms of the lease or sublease or otherwise
affect the ongoing validity of the lease or sublease;

                                      -26-

<PAGE>

               (iii) no party to the lease or sublease is in breach or default,
and no event has occurred which, with notice or lapse of time, would constitute
a breach or default or permit termination, modification, or acceleration
thereunder;

               (iv) no party to the lease or sublease has repudiated any
provision thereof;

               (v) there are no disputes, oral agreements, or forbearance
programs in effect as to the lease or sublease;

               (vi) the Advisor has not assigned, transferred, conveyed,
mortgaged, deeded in trust, or encumbered any interest in the leasehold or
subleasehold;

               (vii) all facilities leased or subleased thereunder have received
and maintained all approvals of governmental authorities (including licenses and
permits) required in connection with the operation thereof and have been
operated and maintained by the Advisor or the Development Company, as
applicable, in accordance with applicable laws, rules, and regulations; and
(viii) all facilities leased or subleased thereunder are supplied with all
utilities and other services necessary for the operation of said facilities.

     7.13 Intellectual Property.

          (a) Except as set forth on Section 7.13 of the Disclosure Schedule,
each of the Advisor and the Development Company owns or has the right to use
pursuant to license, sublicense, agreement, or permission all Intellectual
Property used in the operation of the businesses of the Advisor and the
Development Company as presently conducted. Each item of Intellectual Property
owned or used by the Advisor and the Development Company immediately prior to
the Closing hereunder will be owned or available for use by the Surviving
Company on similar terms and conditions immediately subsequent to the Closing
hereunder, subject to the execution and delivery of the New Brand License
Agreement and the receipt of third party consents and/or other arrangements
described in Section 7.13 of the Disclosure Schedule. Each of the Advisor and
the Development Company has taken all necessary action to maintain and protect
each item of Intellectual Property that it owns or uses. There is no pending
dispute with any current or former officer, employee or consultant of the
Advisor or the Development Company regarding ownership of Intellectual Property
used in the operation of the businesses of the Advisor or the Development
Company as presently conducted. There is no Intellectual Property that is
material to the business of the Advisor or the Development Company other than as
set forth on Section 7.13 of the Disclosure Schedule.

          (b) Neither the Advisor nor the Development Company has Knowingly
interfered with, infringed upon, misappropriated, or otherwise come into
conflict with any Intellectual Property rights of third parties, and each of the
Stockholders (other than FARS) and the directors and officers (and employees
with responsibility for Intellectual Property matters) of the Advisor and the
Development Company has not ever received any charge, complaint, claim, demand,
or notice alleging any such interference, infringement, misappropriation, or
violation (including any claim that the Advisor or the Development Company must
license or refrain from

                                      -27-

<PAGE>

using any Intellectual Property rights of any third party). To the Knowledge of
the Advisor and the Stockholders, no third party has interfered with, infringed
upon, misappropriated, or otherwise come into conflict with any Intellectual
Property rights of the Advisor or the Development Company.

          (c) No patent, trademark or copyright registrations have been issued
to or assigned to the Advisor or the Development Company with respect to any
Intellectual Property.

          (d) Section 7.13(d) of the Disclosure Schedule identifies each item of
Intellectual Property that any third party, including employees and consultants
of the Advisor or the Development Company, owns and that the Advisor or the
Development Company uses, identifying whether the use is pursuant to license,
sublicense, agreement, or other permission. The Stockholders (other than FARS)
have delivered to CHP correct and complete copies of all such licenses,
sublicenses, agreements, and permissions (as amended to date).

          (e) To the Knowledge of the Advisor and the Stockholders, nothing will
interfere with, infringe upon, misappropriate, or otherwise come into conflict
with, any Intellectual Property rights of third parties as a result of the
continued operation of the Advisor's and the Development Company's business as
presently conducted.

     7.14 Tangible Assets. Except as set forth on Section 7.14 of the Disclosure
Schedule, each of the Advisor and the Development Company owns or leases all
buildings, machinery, equipment, and other tangible assets used in the conduct
of its business as presently conducted and as presently proposed to be
conducted. Except as set forth on Section 7.14 of the Disclosure Schedule, each
such tangible asset is free from all material defects (patent and latent), has
been maintained in accordance with normal industry practice, is in good
operating condition and repair (subject to normal wear and tear), and is
suitable for the purposes for which it presently is used. The Most Recent
Balance Sheet sets forth all of the assets necessary to conduct the Advisor's
and the Development Company's business as it is currently being conducted and as
it is contemplated to be conducted in the future.

     7.15 Contracts. Section 7.15 of the Disclosure Schedule lists the following
contracts and other agreements to which the Advisor or the Development Company
is a party:

          (a) any agreement (or group of related agreements) for the lease of
personal property to or from any Person providing for lease payments in excess
of $50,000 per annum;

          (b) any agreement or arrangement concerning a partnership or joint
venture;

          (c) any agreement (or group of related agreements) under which it has
created, incurred, assumed, or guaranteed any indebtedness for borrowed money,
or any capitalized lease obligation or under which it has imposed a Security
Interest on any of its assets, tangible or intangible;

          (d) any agreement concerning confidentiality or noncompetition;

          (e) any agreement or arrangement between the Advisor or the
Development Company, on the one hand, and any of the Stockholders or their
Affiliates, on the other hand;

                                      -28-

<PAGE>

          (f) any profit sharing, stock option, stock purchase, stock
appreciation, deferred compensation, severance, or other material plan or
arrangement for the benefit of its current or former directors, officers, and
employees;

          (g) any agreement or arrangement for the employment of any individual
on a full-time, part-time, consulting, or other basis providing annual
compensation in excess of $100,000 or providing severance benefits;

          (h) any agreement or arrangement under which it has advanced or loaned
any amount to any of its directors, officers, and employees outside the Ordinary
Course of Business; or

          (i) any agreement under which the consequences of a default or
termination could have a Material Adverse Effect on the Advisor or on the
ability of the Advisor to consummate the transactions contemplated in this
Agreement.

The Stockholders (other than FARS) have delivered to CHP a correct and complete
copy of each written agreement listed in Section 7.15 of the Disclosure Schedule
(as amended to date) and a written summary setting forth the terms and
conditions of each oral agreement or arrangement referred to in Section 7.15 of
the Disclosure Schedule. With respect to each such agreement: (A) the agreement
is legal, valid, binding, enforceable, and in full force and effect; (B) the
agreement will continue to be legal, valid, binding, enforceable, and in full
force and effect on identical terms following the consummation of the
transactions contemplated hereby; (C) the Advisor is not, and to the Knowledge
of the Advisor and the Stockholders, no other party is in breach or default, and
no event has occurred which with notice or lapse of time would constitute a
breach or default, or permit termination, modification, or acceleration, under
the agreement; and (D) no party has repudiated any provision of the agreement.

     7.16 Notes and Accounts Receivable. All notes and accounts receivable of
the Advisor and the Development Company are reflected properly on its books and
records, are valid receivables subject to no setoffs or counterclaims and are
current and collectible in accordance with their terms at their recorded
amounts, subject only to the reserve for bad debts set forth on the face of the
Most Recent Balance Sheet (rather than in any notes thereto) as adjusted for the
passage of time through the Closing Date in accordance with the past practice of
the Advisor.

     7.17 Powers of Attorney. There are no outstanding powers of attorney
executed on behalf of the Advisor or the Development Company except as disclosed
in Section 7.17 of the Disclosure Schedule.

     7.18 Insurance. Section 7.18 of the Disclosure Schedule sets forth the
following information with respect to each insurance policy (including policies
providing property, casualty, liability, and workers' compensation coverage and
bond and surety arrangements) to which the Advisor or the Development Company
has been a party, a named insured, or otherwise the beneficiary of coverage at
any time within the past two years: (i) the name, address, and telephone number
of the agent; (ii) the name of the insurer and the name of the policyholder;
(iii) the policy number and the period of coverage; and (iv) the amount of
coverage. Except as set forth on Section 7.18 of the Disclosure Schedule, with
respect to each such insurance policy to

                                      -29-

<PAGE>

the Knowledge of the Stockholders and the Advisor: (A) the policy is legal,
valid, binding, enforceable, and in full force and effect; (B) the policy will
continue to be legal, valid, binding, enforceable, and in full force and effect
on identical terms following the consummation of the transactions contemplated
hereby; (C) neither the Advisor, the Development Company nor any other party to
the policy is in breach or default (including with respect to the payment of
premiums or the giving of notices), and no event has occurred which, with notice
or the lapse of time, would constitute such a breach or default, or permit
termination, modification, or acceleration, under the policy; and (D) no party
to the policy has repudiated any provision thereof. Each of the Advisor and the
Development Company has been covered during the past five years by insurance in
scope and amount customary and reasonable for the businesses in which it has
engaged during the aforementioned period. Section 7.18 of the Disclosure
Schedule describes any self-insurance arrangements affecting the Advisor and the
Development Company and any claims pending under any insurance policies
currently in effect.

     7.19 Litigation. Section 7.19 of the Disclosure Schedule sets forth each
instance in which the Advisor or the Development Company (i) is subject to any
outstanding injunction, judgment, order, decree or ruling or (ii) is a party to,
or to the Knowledge of the Advisor is threatened to be made a party to, any
action, suit, proceeding, hearing, or investigation of, in, or before any court
or quasi-judicial or administrative agency of any federal, state, local, or
foreign jurisdiction or before any arbitrator. Except as otherwise described in
Section 7.19 of the Disclosure Schedule, none of the actions, suits,
proceedings, hearings, and investigations set forth in Section 7.19 of the
Disclosure Schedule could result in any Material Adverse Effect on the Advisor
or on the ability of the Advisor to consummate the transactions contemplated in
this Agreement. None of the Stockholders has any specific reason to believe that
any such action, suit, proceeding, hearing, or investigation may be brought or
threatened against the Advisor.

     7.20 Employees. To the Knowledge of the Stockholders and the Advisor, no
executive, key employee, or group of employees currently has any plans to
terminate employment with the Advisor or the Development Company, as applicable,
as a result of this Agreement. Neither the Advisor nor the Development Company
has committed any unfair labor practice. Neither the Advisor nor the Development
Company is or has been a party to any collective bargaining (or other similar)
agreement, nor is any such agreement presently being negotiated. None of the
Stockholders or the Advisor has any Knowledge of any organizational effort
presently being made or threatened by or on behalf of any labor union with
respect to employees of the Advisor or the Development Company. Section 7.20 of
the Disclosure Schedule sets forth the names of all employees of the Advisor and
the Development Company and the annual salary and bonuses paid or accrued for
the year ended December 31, 2004, and for the period from January 1, 2005
through September 30, 2005, and any commitments by the Advisor or the
Development Company entered into on or prior to the date hereof to pay any
further bonuses for or increase in the salary of each such person set forth in
Section 7.20 of the Disclosure Schedule. The employees of the Advisor and the
Development Company set forth on Section 7.20 of the Disclosure Schedule
constitute all employees necessary in order to conduct the Advisor's business as
it is currently being conducted.

                                      -30-
<PAGE>

     7.21 Employee Benefits.

          (a) Section 7.21 of the Disclosure Schedule lists each Employee
Benefit Plan that the Advisor and the Development Company maintains or has
maintained or to which the Advisor or the Development Company contributes or has
contributed or to which the employees of the Advisor or the Development Company
are subject or have been subject.

          (b) Each such Employee Benefit Plan (and each related trust, insurance
contract, or fund) complies in form and in operation in all respects with the
applicable requirements of ERISA, the Code, and other applicable laws.

          (c) Except as set forth on Section 7.21 of the Disclosure Schedule,
all required reports and descriptions (including Form 5500 Annual Reports,
Summary Annual Reports and Summary Plan Descriptions) have been filed or
distributed appropriately with respect to each such Employee Benefit Plan. The
requirements of Part 6 of Subtitle B of Title 1 of ERISA and of Code Section
4980B have been met with respect to each such Employee Benefit Plan which is an
Employee Welfare Benefit Plan.

          (d) All contributions (including all employer contributions and
employee salary reduction contributions) which are due have been paid to each
such Employee Benefit Plan which is an Employee Pension Benefit Plan and all
contributions for any period ending on or before the Closing Date which are not
yet due have been paid to each such Employee Pension Benefit Plan or accrued in
accordance with the past custom and practice of the Advisor. All premiums or
other payments for all periods ending on or before the Closing Date have been
paid with respect to each such Employee Benefit Plan which is an Employee
Welfare Benefit Plan.

          (e) Each such Employee Benefit Plan which is an Employee Pension
Benefit Plan meets the requirements of a "qualified plan" under Code 401(a) and
has received, within the last two years, a favorable determination letter from
the IRS.

          (f) The market value of assets under each such Employee Benefit Plan
which is an Employee Pension Benefit Plan (other than any Multiemployer Plan),
subject to Title IV of ERISA, equals or exceeds the present value of all vested
and nonvested Liabilities thereunder determined in accordance with PBGC methods,
factors, and assumptions applicable to an Employee Pension Benefit Plan
terminating on the date for determination.

          (g) The Stockholders (other than FARS) have delivered to CHP correct
and complete copies of the plan documents and summary plan descriptions, the
most recent determination letter received from the IRS, the most recent Form
5500 Annual Report, and all related trust agreements, insurance contracts, and
other funding agreements which implement each such Employee Benefit Plan.

          (h) Except as set forth in Section 7.21(h) of the Disclosure Schedule,
with respect to each Employee Benefit Plan that the Advisor or the Development
Company maintains or ever has maintained or to which it contributes, ever has
contributed, or ever has been required to contribute:

                                      -31-

<PAGE>

               (i) No such Employee Benefit Plan which is an Employee Pension
Benefit Plan (other than any Multiemployer Plan), subject to Title IV of ERISA,
has been completely or partially terminated or been the subject of a Reportable
Event as to which notices would be required to be filed with the PBGC. No
proceeding by the PBGC to terminate any such Employee Pension Benefit Plan
(other than any Multiemployer Plan) has been instituted or threatened.

               (ii) There have been no Prohibited Transactions with respect to
any such Employee Benefit Plan. No Fiduciary has any Liability for breach of
fiduciary duty or any other failure to act or comply in connection with the
administration or investment of the assets of any such Employee Benefit Plan. No
action, suit, proceeding, hearing, or investigation with respect to the
administration or the investment of the assets of any such Employee Benefit Plan
(other than routine claims for benefits) is pending or threatened. None of the
Stockholders has any Knowledge of any Basis for any such action, suit,
proceeding, hearing, or investigation.

               (iii) Neither the Advisor nor the Development Company has
incurred, and none of the Stockholders and the directors and officers (and
employees with responsibility for employee benefits matters) of the Advisor or
the Development Company has any reason to expect that the Advisor or the
Development Company will incur, any Liability to the PBGC (other than PBGC
premium payments) or otherwise under Title IV of ERISA (including any withdrawal
Liability) or under the Code with respect to any such Employee Benefit Plan
which is an Employee Pension Benefit Plan.

          (i) Neither the Advisor nor the Development Company contributes to,
has ever contributed to, or has ever been required to contribute to, any
Multiemployer Plan or has ever had any Liability (including withdrawal
Liability) under any Multiemployer Plan.

          (j) Neither the Advisor nor the Development Company maintains or
contributes to, or has ever maintained or contributed to, or has ever been
required to contribute to, any Employee Welfare Benefit Plan providing medical,
health, or life insurance or other welfare-type benefits for current or future
retired or terminated employees, their spouses, or their dependents (other than
in accordance with Code Section 4980B).

     7.22 Guaranties. Except as described in Section 7.22 of the Disclosure
Schedule, neither the Advisor nor the Development Company is a guarantor of or
is otherwise liable for, any Liability or obligation (including indebtedness) of
any other Person.

     7.23 Environment, Health, and Safety.

          (a) Each of the Advisor and the Development Company has complied with
all Environmental, Health, and Safety Laws, and no action, suit, proceeding,
hearing, investigation, charge, complaint, claim, demand, or notice has been
filed or commenced against it alleging any failure so to comply. Without
limiting the generality of the preceding sentence, each of the Advisor and the
Development Company has obtained and been in compliance with all of the terms
and conditions of all permits, licenses, and other authorizations which are
required under, and has complied with all other limitations, restrictions,
conditions, standards, prohibitions, requirements, obligations, schedules, and
timetables which are contained in, all Environmental,

                                      -32-

<PAGE>

Health, and Safety Laws. A list of all permits, licenses and other
authorizations required by Environmental, Health and Safety Laws is listed on
Section 7.23 of the Disclosure Schedule and none of such permits, licenses and
authorizations require notice or consent or any other action to remain in full
force and effect following consummation of the transactions contemplated by this
Agreement.

          (b) Neither the Advisor nor the Development Company has any material
Liability, and there are no Known facts, circumstances or conditions that could
result in material Liability, and neither the Advisor nor the Development
Company has handled or disposed of any substance, arranged for the treatment or
disposal of any substance, exposed any employee or other individual to any
substance or condition, or owned or operated any property or facility in any
manner that could form the Basis for any present or future action, suit,
proceeding, hearing, investigation, charge, complaint, claim, or demand against
the Advisor or the Development Company giving rise to any Liability with respect
to any site, location, or body of water (surface or subsurface), for any illness
of or personal injury to any employee or other individual, or for any reason
under any Environmental, Health, and Safety Law.

          (c) Except as set forth on Section 7.23(c) of the Disclosure Schedule,
all properties and equipment owned or leased by the Advisor and the Development
Company have been free of friable asbestos in concentrations greater than one
percent (1%), PCBs, toxic mold, underground storage tanks, methylene chloride,
trichloroethylene, 1,2-trans-dichloroethylene, dioxins, dibenzofurans, and
Extremely Hazardous Substances.

          (d) The Advisor has furnished to CHP copies of all environmental
assessments, reports, audits, and other documents in its possession or under its
control that relate to the environmental condition of any real property
currently or formerly owned or operated by the Advisor or the Development
Company and the Advisor's and the Development Company's compliance with
Environmental Health and Safety Laws. All such information and documents are
accurate and complete.

     7.24 Proxy Statement. To the Knowledge of the Stockholders and the Advisor,
none of the information supplied or to be supplied by any of the Stockholders or
the Advisor for inclusion in the Proxy Statement will, at the time of filing the
Proxy Statement with the SEC, at the time of mailing the Proxy Statement to the
stockholders of CHP or at the time of the CHP Stockholder Meeting, contain any
untrue statement of a material fact or omit to state any material fact necessary
in order to make the statements contained in such information, in light of the
circumstances under which they are made, not misleading.

     7.25 Relationships with Tenants and Managers. The Advisor's and the
Development Company's respective relationships with CHP's existing tenants and
managers are sound, and there is no Basis to believe that any of CHP's primary
tenants and managers will materially and adversely change the manner in which
they currently conduct business with CHP.

     7.26 Brokers' Fees. Except for the fees and expenses paid to Stifel,
Nicolaus & Co., Inc., successor by acquisition to Legg Mason Wood Walker,
Incorporated, with respect to the Merger or in connection with the Initial
Merger Agreement as previously disclosed in writing by the Advisor to CHP, which
fees and expenses are to be paid by the Advisor at or prior to the

                                      -33-

<PAGE>

Closing (consistent with Section 8.15), the Advisor has no Liability or
obligation to pay any fees or commissions to any broker, finder, or agent with
respect to the transactions contemplated by this Agreement or in connection with
the Initial Merger Agreement. The Advisor has delivered to CHP a copy of any
engagement letter or similar agreement between the Advisor and Stifel, Nicolaus
& Co., Inc., successor by acquisition to Legg Mason Wood Walker, Incorporated.

     7.27 Transactions with Related Parties. There is no (i) loan outstanding
from or to the Advisor or the Development Company from or to any employee,
officer, director or Affiliate of the Advisor or the Development Company, (ii)
agreement between the Advisor or the Development Company, on the one hand, and
any employee, officer, director or Affiliate, on the other hand, that is not
reflected in Section 7.15 of the Disclosure Schedule, (iii) agreement requiring
payments to be made on a direct or indirect change of control of the Advisor or
the Development Company or otherwise as a result of the consummation of the
Merger or any of the other transactions contemplated by this Agreement with
respect to any employee, officer or director of the Advisor or the Development
Company or (iv) agreement between the Advisor or the Development Company and any
Person giving any Person the right to appoint or nominate any person as a
director of the Advisor or the Surviving Company or the Development Company.

     7.28 Books and Records. The books and records of each of the Advisor and
the Development Company are complete and correct and have been maintained in
accordance with good business practices and applicable legal requirements, and
contain a true and complete record of all meetings or proceedings of the Board
of Directors and stockholders of the Advisor and the Development Company. The
stock ledger of each of the Advisor and the Development Company is complete and
reflects all issuances, transfers, repurchases and cancellations of shares of
capital stock of the Advisor and the Development Company, respectively.

     7.29 Disclosure. The representations and warranties contained in this
Article 7 do not contain any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements and
information contained in this Article 7 not misleading.

     7.30 FARS Note. The aggregate amount of principal and accrued and unpaid
interest outstanding as of the date hereof on that certain promissory note dated
as of June __, 2001 issued by the Advisor to and for the benefit of FARS (the
"FARS Note") is $7,875,000 and the amortization and payment schedule for the
FARS Note is described on Section 7.30 of the Disclosure Schedule.

     7.31 Net Working Capital. The working capital (i.e., current assets minus
current liabilities) of the Advisor as of the Closing Date will not be less than
zero, after giving effect to the Cash Reserve and not taking into account the
FARS Note or the Inter-Company FARS Final Payment Funding Note, as applicable.
Section 7.31 of the Disclosure Schedule sets forth all Known Liabilities of the
Advisor other than current liabilities, including the amounts thereof,
outstanding as of the date of this Agreement and expected to be outstanding as
of the Closing Date.

     7.32 Expenses. Section 7.32(a) of the Disclosure Schedule sets forth a
complete list, listed by type and by estimated amount, of all anticipated fees
and expenses, that the Advisor has Knowledge could accrue or be payable by CHP
to the Advisor, any member of the CNL Group,

                                      -34-

<PAGE>

the CNL Group or any of their respective Affiliates between the date of this
Agreement and the Closing Date pursuant to the applicable Advisory Agreement or
pursuant to any other agreements or arrangements between CHP and the Advisor,
any member of the CNL Group, the CNL Group or any of their respective Affiliates
in effect as of the date of this Agreement. From and after the Closing Date, to
the Knowledge of the Advisor, except as set forth on Section 7.32(b) of the
Disclosure Schedule, no additional fees or expenses are contemplated to be
required to be paid by CHP or the Surviving Company to any member of the CNL
Group, the CNL Group or any of their respective Affiliates in order to enable
the Surviving Company to conduct its businesses following the Merger in
substantially the same manner as the business of the Advisor was conducted prior
to the Merger.

     7.33 Knowledge of Certain Transactions. Except as described in Section 7.33
of the Disclosure Schedule, neither the Advisor nor any Stockholder has
Knowledge of (a) any arrangements or understandings within the past twelve (12)
months with third parties relating to a sale of all or substantially all of
CHP's assets or a merger, business combination, direct or indirect change of
control transaction or any similar transaction involving CHP (other than the
Merger), and there are no discussions or negotiations regarding any such
arrangements or understandings with third parties regarding any such
transactions, or (b) any facts or circumstances that would make any
representation or warranty of CHP or CHPAC which is contained in this Agreement
or in any schedule, exhibit or certificate delivered pursuant hereto not true or
correct.

     7.34 Transition Services Agreement and New Brand License Agreement. CHP
will receive under the Transition Services Agreement and the New Brand License
Agreement all of the administrative services (except for those administrative
services provided directly by the Advisor or otherwise provided to CHP by one or
more third parties) and other rights from the applicable Affiliate(s) of
Guarantor reasonably necessary to operate the Advisor's business in the same
manner as conducted by the Advisor immediately prior to the Closing Date.

                                   ARTICLE 8

                              ADDITIONAL COVENANTS

     8.1 General.

          (a) Notwithstanding anything in this Article 8 to the contrary, FARS
shall not be subject to any obligation or liabilities under any of the
provisions of this Article 8 other than Section 8.14.

          (b) During the period from the date of this Agreement until the
Effective Time, each of the Parties will use commercially reasonable efforts to
take all action and to do all things necessary, proper, or advisable in order to
consummate and make effective the Merger (including satisfaction, but not
waiver, of the closing conditions set forth in Article 10 below).

     8.2 Notices and Consents. During the period from the date of this Agreement
until the Effective Time, (i) the Advisor shall give any notices to third
parties and shall use commercially reasonable efforts to obtain any third party
consents that CHP may reasonably

                                      -35-

<PAGE>

request in connection with the matters listed on Section 7.4 of the Disclosure
Schedule or referred to in Section 7.4 above, and (ii) each of the Parties shall
give any notices to, make any filings with, and use its commercially reasonable
efforts to obtain any authorizations, consents, and approvals of governments and
governmental agencies listed on Section 5.2 or 7.3 of the Disclosure Schedule
and in connection with the matters referred to in Section 5.2, Section 6.4, and
Section 7.3 above.

     8.3 Maintenance of Business; Prohibited Acts. During the period from the
date of this Agreement until the Effective Time, the Advisor will, and the
Advisor and the Stockholders will not take any action and the Stockholders will
not cause or permit the Advisor to take any action that adversely affects the
ability of the Advisor to, (i) pursue its business in the Ordinary Course of
Business, (ii) seek to preserve intact its current business organizations, (iii)
keep available the service of its current officers and employees, (iv) preserve
its relationships with customers, suppliers and others having business dealings
with it and (v) consummate the Merger and the transactions contemplated thereby
(including the satisfaction but not the waiver of any of the conditions set
forth in Article 10 of this Agreement); and the Advisor will not and the
Stockholders will not cause or permit the Advisor or the Development Company to,
without the approval of the Special Committee on behalf of CHP in its sole
discretion:

          (a) issue, deliver, sell, dispose of, pledge or otherwise encumber, or
authorize or propose the issuance, delivery, sale, disposition or pledge or
other encumbrances of (i) any additional shares of its capital stock of any
class (including the Advisor Common Shares), or any securities or rights
convertible into, exchangeable for or evidencing the right to subscribe for any
shares of its capital stock, or any rights, warrants, options, calls,
commitments or any other agreements of any character to purchase or acquire any
shares of its capital stock or any other securities or rights convertible into,
exchangeable for or evidencing the right to subscribe for any shares of its
capital stock, or (ii) any other securities in respect of, in lieu of or in
substitution for the Advisor Common Shares outstanding on the date hereof;
provided, however, the restrictions on transfer of the Advisor Common Shares
contained in this Section 8.3(a) shall not apply to any transfers made in
accordance with Section 4.4 of this Agreement;

          (b) redeem, purchase or otherwise acquire, or propose to redeem,
purchase or otherwise acquire, any of its outstanding securities (including the
Advisor Common Shares);

          (c) split, combine, subdivide or reclassify any shares of its capital
stock or otherwise make any payments to the Stockholders in their capacities as
stockholders of the Advisor; provided, however, that nothing shall prohibit: (i)
the payment of any ordinary distribution or dividend in respect of its capital
stock at such times and in such manner and amount as may be consistent with the
Advisor's past practice (which in any event shall include any and all
compensation paid or payable or expenses reimbursed or reimbursable for the
period from April 1, 2004 through the Effective Time, to the extent not
otherwise paid or distributed to the Stockholders), (ii) the payment of any
dividend as shall be required to be paid by the Advisor in order to permit
PricewaterhouseCoopers LLP to issue the letter required by Section 10.2(h),
(iii) any distribution of property necessary for the representation and warranty
set forth in Section 7.11(g) to be true and correct, (iv) distributions to
reduce to zero the Advisor's accumulated and current earnings and profits, (v)
distributions of cash by the Advisor to the Stockholders immediately prior to
the Closing, provided that the Advisor shall have provided to

                                      -36-

<PAGE>

CHP the Working Capital Schedule and otherwise complied with the terms and
conditions of Section 8.15 of this Agreement and provided further that such
distributions shall not result in a breach of any of the representations and
warranties in Section 7.31 of this Agreement, or (vi) the dividend contemplated
by Section 10.2(d) of this Agreement;

          (d) (i) grant any increases in the compensation of any of its
directors, officers or executives (except as approved by the Special Committee
on behalf of CHP in its sole discretion) or grant any increases in compensation
to any of its employees outside the Ordinary Course of Business (except as
approved by the Special Committee on behalf of CHP in its sole discretion), (ii)
pay or agree to pay any pension retirement allowance or other employee benefit
not required or contemplated by any Employee Benefit Plan as in effect on the
date hereof to any such director, officer or employee, whether, past or present,
(iii) enter into any new or amend any existing employment or severance agreement
with any such director, officer or employee, except as approved by the Special
Committee on behalf of CHP in its sole discretion, (iv) pay or agree to pay any
bonus to any director, officer or employee (whether in the form of cash, capital
stock or otherwise) except as approved by the Special Committee on behalf of CHP
in its sole discretion, or (v) except as may be required to comply with
applicable law, amend any existing, or become obligated under any new, Employee
Benefit Plan, except in the case of (i) through (v) inclusive, under and
pursuant to the Employment Agreements;

          (e) adopt a plan of complete or partial liquidation, dissolution,
merger, consolidation, restructuring, recapitalization or other reorganization
(other than the Merger);

          (f) make any acquisition, by means of merger, consolidation or
otherwise, of any direct or indirect ownership interest in or assets comprising
any business enterprise or operation;

          (g) adopt any amendments to its articles of incorporation or by-laws,
except as contemplated in Section 8.19 of this Agreement;

          (h) incur any indebtedness for borrowed money or guarantee such
indebtedness or agree to become contingently liable, by guaranty or otherwise,
for the obligations or indebtedness of any other person or make any loans,
advances or capital contributions to, or investments in, any other corporation,
any partnership or other legal entity or to any other persons, except for bank
deposits and other investments in marketable securities and cash equivalents
made in the Ordinary Course of Business;

          (i) engage in the conduct of any business the nature of which is
different from the business in which the Advisor or the Development Company, as
applicable, is currently engaged;

          (j) enter into any agreement providing for acceleration of payment or
performance or other consequence as a result of a direct or indirect change of
control of the Advisor or the Development Company;

          (k) forgive any indebtedness owed to the Advisor or the Development
Company or convert or contribute by way of capital contribution any such
indebtedness owed;

                                      -37-

<PAGE>

          (l) authorize or enter into any agreement providing for management
services to be provided by the Advisor or the Development Company to any third
party or an increase in management fees paid by any third party under existing
management agreements;

          (m) except as set forth in Section 7.22 of the Disclosure Schedule,
mortgage, pledge, encumber, sell, lease or transfer any assets of the Advisor or
the Development Company except as approved by the Special Committee on behalf of
CHP in its sole discretion or as contemplated by this Agreement;

          (n) take any of the actions that would otherwise be prohibited under
Section 9.5 of this Agreement if such Section 9.5 were in effect at such time;

          (o) authorize or announce an intention to do any of the foregoing, or
enter into any contract, agreement, commitment or arrangement to do any of the
foregoing; or

          (p) perform any act or omit to take any action that would make any of
the representations made above inaccurate or materially misleading as of the
Effective Time.

     8.4 Full Access. During the period from the date of this Agreement until
the Effective Time, the Advisor shall permit representatives of CHP and CHPAC to
have full access at all reasonable times, and in a manner so as not to interfere
with the normal business operations of the Advisor to all premises, properties,
personnel, books, records (including Tax records), contracts, and documents of
or pertaining to the Advisor and the Development Company.

     8.5 Meeting of Stockholders. During the period from the date of this
Agreement until the Effective Time, CHP will take all action necessary in
accordance with applicable law and CHP's charter and by-laws to arrange for its
stockholders to consider and vote upon the approval of the Merger at the CHP
Stockholder Meeting to be held in connection with, among other things, the
transactions contemplated by this Agreement. Subject to the fiduciary duties of
CHP's Board of Directors under applicable law and after consultation with
counsel, the Board of Directors of CHP shall recommend that the CHP stockholders
approve the Merger. In connection with such recommendation, CHP shall use its
commercially reasonable efforts to obtain such approval.

     8.6 Proxy Materials. As promptly as practicable after the execution and
delivery of this Agreement, CHP shall prepare, and the Advisor and the
Stockholders shall cooperate in the preparation of, a proxy statement and a form
of proxy to be used in connection with the vote of CHP's stockholders with
respect to the Merger on the terms and conditions of this Agreement (such proxy
statement, together with any amendments thereof or supplements thereto, in each
case in the form or forms mailed to CHP's stockholders, is herein called the
"Proxy Statement"). CHP shall include in the Proxy Statement proposals with
respect to amendments to the charter of CHP to reflect that CHP will have become
self-advised and to conform more closely to the articles of incorporation of
companies that are Listed, it being understood that certain of such amendments
may require only the affirmative vote of holders of a majority of CHP's
outstanding CHP Common Shares entitled to vote thereon (the "Majority Vote
Charter Amendment") in substantially the form attached to this Agreement as
Exhibit A or in such other form as CHP and the Advisor shall mutually agree in
writing, and that certain of such amendments may require the

                                      -38-

<PAGE>

affirmative vote of holders of two-thirds of CHP's outstanding CHP Common Shares
entitled to vote thereon (the "Two-Thirds Vote Charter Amendment" and together
with the Majority Vote Charter Amendment, the "CHP Charter Amendments"), with
Exhibit B attached hereto reflecting both CHP Charter Amendments. CHP shall file
the Proxy Statement with the SEC as soon as reasonably practicable after the
date hereof, shall use its commercially reasonable efforts to cause the Proxy
Statement to be mailed to stockholders of CHP at the earliest practicable date
as permitted by the SEC and shall take all such action as may be reasonably
necessary to qualify any CHP Common Shares to be received as Merger
Consideration for offering and sale under applicable state securities or "blue
sky" laws. If at any time prior to the Effective Time any event relating to or
affecting the Advisor, the Stockholders or CHP shall occur as a result of which
it is necessary, in the opinion of counsel for the Advisor and the Stockholders
or of counsel for CHP to supplement or amend the Proxy Statement in order to
make such document not misleading in light of the circumstances existing at the
time the CHP Stockholder Approval is sought, the Advisor, the Stockholders and
CHP, respectively, will promptly notify the others thereof and, in the case of
the Advisor or the Stockholders, will cooperate with CHP in the preparation of,
and, in the case of CHP, will prepare and file, an amendment or supplement with
the SEC and, if required, applicable state securities authorities, such that the
Proxy Statement, as so supplemented or amended, will not at such time contain
any untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements therein, in light of the circumstances
existing at such time, not misleading, and CHP will, as required by law,
disseminate to its stockholders such amendment or supplement.

     8.7 Notice of Developments. During the period from the date of this
Agreement until the Effective Time, each Party will give prompt written notice
to the others of any material adverse development Known to such Party which
results in, or is reasonably likely to result in, any of its or his own
representations and warranties set forth in this Agreement above becoming
untrue. No disclosure by any Party pursuant to this Section 8.7, however, shall
be deemed to amend or supplement the Disclosure Schedule or to prevent or cure
any misrepresentation, breach of warranty, or breach of covenant.

     8.8 Tax Matters. Each of the Stockholders, the Advisor, CHP and CHPAC
agrees to report the Merger on all Tax Returns and, if applicable, other filings
as a reorganization under Section 368(a) of the Code to the extent permitted by
law.

     8.9 Reorganization. During the period from the date of this Agreement until
the Effective Time, none of the Advisor, the Stockholders, CHP or CHPAC shall
take or cause to be taken an action, or fail to take an action, that could
reasonably be expected to disqualify the Merger as a reorganization under
Section 368(a) of the Code.

     8.10 Delivery of Certain Financial Statements. Promptly after they become
available, and in any event not later than the tenth business day prior to the
Closing Date, the Advisor shall provide CHP with true and correct copies of its
unaudited consolidated balance sheet as of September 30, 2005 and true and
correct copies of its unaudited balance sheet as of the last day of each month
occurring after the date thereof and prior to the Closing Date and the related
unaudited statements of income and cash flows for the year to date ending on the
last day of each such month. In addition, promptly after they become available
and in any event not later than the tenth business day prior to the Closing Date
(if the Closing Date is subsequent to March 31,

                                      -39-

<PAGE>

2006), the Advisor shall provide CHP with true and correct copies of its audited
consolidated balance sheet as of December 31, 2005 and the related audited
statements of income and cash flows for the year ended December 31, 2005.
Delivery of such financial statements shall be deemed to be a representation by
the Advisor and the Stockholders (other than FARS) that such balance sheet
(including the related notes, if any) presents fairly, in all material respects,
the financial position of the Advisor as of the specified date, and the other
related statements (including the related notes, if any) included therein
present fairly, in all material respects, the results of its operations and cash
flows for the respective periods or as of the respective dates set forth
therein, all in conformity with GAAP consistently applied during the periods
involved, except as otherwise stated in the notes thereto, subject to normal
year-end audit adjustments, as applicable.

     8.11 State Takeover Statutes. Each of CHP, CHPAC, the Advisor, the
Stockholders (other than FARS) and the members of their respective Boards of
Directors shall (i) take all action necessary so that no "fair price," "business
combination," "moratorium," "control share acquisition" or any other
anti-takeover statute or similar statute enacted under state or federal laws of
the United States or similar statute or regulation (each, a "Takeover Statute")
is or becomes applicable to the Merger, this Agreement or any of the other
transactions contemplated by this Agreement and (ii) if any Takeover Statute
becomes applicable to the Merger, this Agreement or any other transaction
contemplated by this Agreement, take all action necessary to minimize the effect
of such Takeover Statute on the Merger and the other transactions contemplated
by this Agreement.

     8.12 Exclusivity. During the period from the date of this Agreement until
the Effective Time or the earlier termination of this Agreement, none of the
Stockholders or the Advisor shall (i) solicit, initiate, or encourage the
submission of any proposal or offer from any Person relating to the acquisition
of any capital stock or other voting securities or any portion of the assets of
the Advisor (including any acquisition structured as a merger, consolidation, or
share exchange) or (ii) participate in any discussions or negotiations
regarding, furnish any information with respect to, assist or participate in, or
facilitate in any other manner any effort or attempt by any Person to do or seek
any of the foregoing. Each of the Stockholders agrees that it shall not vote any
Advisor Common Shares in favor of any such acquisition, including any such
acquisition structured as a merger, consolidation, or share exchange (other than
the Merger). The Stockholders and the Advisor shall notify CHP immediately if
any Person makes any proposal, offer, inquiry, or contact with respect to any of
the foregoing.

     8.13 Payment of FARS Note or Inter-Company FARS Final Payment Funding Note.
During the period from the date of this Agreement through the earlier to occur
of (x) the Closing Date or (y) June 30, 2006, the Advisor shall pay any
principal and interest as it becomes due under the FARS Note. If the Closing has
not occurred on or before June 30, 2006, during the period from June 30, 2006
through the Closing Date, the Advisor shall pay any interest as it becomes due
under the Inter-Company FARS Final Payment Funding Note.

     8.14 Registration Rights Agreement. At the Closing, CHP and the
Stockholders shall enter into a registration rights agreement in substantially
the form attached hereto as Exhibit C, except for such changes therein as may be
agreed upon by the Representative and the Special Committee, on behalf of CHP,
in their sole discretion, and provided that any change thereto that

                                      -40-

<PAGE>

adversely affects the rights and obligations of FARS thereunder must also be
approved in writing by FARS, which approval shall not be unreasonably withheld
or delayed, it being acknowledged and agreed by the Parties that FARS would not
be unreasonably withholding approval if FARS reasonably determines that such
withholding is necessary in relation to its own interests (the "Registration
Rights Agreement").

     8.15 Payment of Expenses/Cash Reserve. Prior to the Closing, the Advisor
shall have satisfied or shall have set aside a cash reserve of the Advisor in an
amount sufficient to satisfy (i) the payment of all Liabilities of the Advisor
and the Stockholders in connection with the negotiation, execution and delivery
of this Agreement, including the payment of any expenses due to any counsel of
the Advisor or the Stockholders and to any brokers, finders or other agents of
such Parties described in Section 7.26; it being understood and agreed that
neither the Surviving Company nor CHP shall have any liability for the payment
of such expenses or other liabilities except to the extent such amounts are
included in the Cash Reserve), (ii) any Tax obligations of the Advisor with
respect to any periods ending on or before the Closing Date (excluding amounts
due for any Taxes with respect to the Advisor's participation in Guarantor's
consolidated federal and state Tax Returns, all of which Taxes are and shall
continue to be after the Effective Time a Liability of Guarantor), and (iii) any
other Liabilities of the Advisor other than the FARS Note and any other
Liabilities set forth on Section 8.15 of the Disclosure Schedule (collective,
the "Cash Reserve"). At least two business days prior to the Closing, the
Advisor shall provide CHP with a schedule showing the amount of the Cash Reserve
and the amount of the estimated working capital of the Advisor as of the Closing
before and after giving effect to such Cash Reserve (the "Working Capital
Schedule"). No part of the Cash Reserve shall be distributed to the Stockholders
at any time.

     8.16 Transition Services Agreement. At the Closing, CHP shall enter into a
transition services agreement with Guarantor or its Affiliate in substantially
the form agreed upon by CHP and Guarantor immediately prior to execution and
delivery of this Agreement by the Parties (the "Transition Services Agreement").

     8.17 New Brand License Agreement. At the Closing, CHP shall enter into a
licensing agreement with Guarantor or its Affiliate in substantially the form
agreed upon by CHP and Guarantor immediately prior to execution and delivery of
this Agreement by the Parties (the "New Brand License Agreement").

     8.18 Cooperation with Auditors. Prior to the Closing, the Stockholders
shall provide to PricewaterhouseCoopers LLP all information reasonably available
to the Stockholders that is necessary to calculate the accumulated and current
earnings and profits of the Advisor as of the Effective Time, including, but not
limited to, all necessary federal income Tax information relating to the
Advisor, working papers created with respect to such Advisor Tax information,
and information with respect to any federal income Tax controversy, either
pending or resolved, with respect to such returns. Any information shall be
treated as strictly confidential by PricewaterhouseCoopers LLP and every
employee of, and advisor to, CHP and PricewaterhouseCoopers LLP; provided,
however, that the foregoing shall not preclude CHP from sharing such information
(i) with its tax counsel for purposes of permitting such counsel to render
opinions from and after the time of the Merger with respect to the qualification
of CHP as a real estate investment trust as defined within Section 856 of the
Code ("REIT") or (ii) with any

                                      -41-

<PAGE>

third party, including investment banks and their counsel, performing due
diligence with respect to CHP's continued qualification as a REIT following the
Merger. The aforesaid confidentiality provisions shall not apply to the
Surviving Company, as the successor to the Advisor in the Merger, or to CHP, as
the parent of the Surviving Company, following the Merger.

     8.19 Amendment to the Articles of Incorporation of the Advisor. Prior to
the Closing, the Advisor shall adopt and make effective any and all amendments
to the articles of incorporation of the Advisor that are reasonably requested by
the Special Committee on behalf of CHP to facilitate the Merger, subject to
approval of the Advisor, which approval shall not be unreasonably withheld or
delayed (the "Advisor Amendment").

     8.20 Pledge and Security Agreement. At the Closing, the Indemnifying
Stockholders and CHP shall enter into a pledge and security agreement in
substantially the form attached hereto as Exhibit D, except for such changes
therein as may be agreed upon by the Representative and the Special Committee on
behalf of CHP in its sole discretion (the "Pledge and Security Agreement").

     8.21 Additional Advisor Actions. The Advisor shall take all actions
reasonably necessary to effect the transactions described on Section 8.21 of the
Disclosure Schedule (the "Advisor Actions").

     8.22 CHP Note. At the Closing, the Advisor shall assign the CHP Note to the
Stockholders in such manner as determined by the Stockholders and described in
Section 8.22 of the Disclosure Schedule.

     8.23 Tower II Lease. At the Closing, the Advisor shall assign the Tower II
Lease and all of its rights and obligations as tenant thereunder to CHP, and CHP
shall (i) assume all of the Advisor's rights and obligations as tenant under the
Tower II Lease and (ii) reimburse Guarantor for its reasonably documented
out-of-pocket costs and expenses incurred or paid as of the Closing Date in
connection with (A) the purchase, on behalf of the Advisor, of the Advisor's
furniture, fixtures and equipment for the Tower II Office Space, and (B) amounts
paid by the Guarantor, on behalf of the Advisor, to the landlord under the Tower
II Lease for the cost of improvements to the Tower II Office Space that are in
excess of the tenant improvement allowance under said lease. Section 8.23 of the
Disclosure Schedule includes a reasonably detailed description of the
out-of-pocket costs and expenses and other amounts referred to in the
immediately preceding clause (ii) incurred or paid by the Guarantor without any
mark-up or profit by Guarantor, on behalf of the Advisor, as of the date of this
Agreement and reasonably expected to be incurred or paid by the Guarantor, on
behalf of the Advisor, prior to or as of the Closing Date.

                                   ARTICLE 9

                             POST-CLOSING COVENANTS

     The Parties agree as follows with respect to the period following the
Closing:

     9.1 General. In the event that at any time after the Closing any further
action is necessary or desirable to carry out the purposes of this Agreement,
each of the Parties will take

                                      -42-

<PAGE>

such further action (including the execution and delivery of such further
instruments and documents) as any other Party reasonably may request, all at the
sole cost and expense of the requesting Party (unless the requesting Party is
entitled to indemnification therefor under Article 12 below). The Stockholders
acknowledge and agree that from and after the Closing, the Surviving Company and
CHP will be entitled to possession of all documents, books, records (including
Tax records), agreements, and financial data of any sort relating to the
Advisor.

     9.2 Litigation Support. Without limiting Section 9.10, in the event and for
so long as any Party actively is contesting or defending against any third party
action, suit, proceeding, hearing, investigation, charge, complaint, claim, or
demand in connection with (i) any transaction contemplated under this Agreement
or (ii) any fact, situation, circumstance, status, condition, activity,
practice, plan, occurrence, event, incident, action, failure to act, or
transaction on or prior to the Closing Date involving the Advisor, each of the
other Parties will reasonably cooperate with such Party and its counsel in the
contest or defense, make available their personnel, and provide such testimony
and access to their books and records as shall be reasonably necessary in
connection with the contest or defense, all at the sole cost and expense of the
contesting or defending Party (unless the contesting or defending Party is
entitled to indemnification therefor under Article 12 below).

     9.3 Transition. None of the Stockholders will take any action that is
designed or intended to have the effect of discouraging any lessor, licensor,
customer, supplier, or other business associate of the Advisor or the
Development Company from maintaining the same business relationships with the
Surviving Company after the Closing as it maintained with the Advisor and the
Development Company prior to the Closing.

     9.4 Confidentiality. Each of the Stockholders will treat and hold as
confidential all of the Confidential Information, refrain from using any of the
Confidential Information except in connection with this Agreement, and deliver
promptly to CHP or destroy, at the request and option of CHP, all tangible
embodiments (and all copies) of the Confidential Information which are in his or
its possession. In the event that any of the Stockholders is requested or
required (by oral question or request for information or documents in any legal
proceeding, interrogatory, subpoena, civil investigative demand, or similar
process) to disclose any Confidential Information, the Stockholders will notify
CHP promptly of the request or requirement so that CHP may seek an appropriate
protective order or waive compliance with the provisions of this Section 9.4.
If, in the absence of a protective order or the receipt of a waiver hereunder,
any of the Stockholders is, on the advice of counsel, compelled to disclose any
Confidential Information to any tribunal or else stand liable for contempt, then
such Stockholder may disclose the Confidential Information to such tribunal;
provided, however, that the disclosing Stockholder shall use his or its
commercially reasonable efforts to obtain, at the request of CHP, an order or
other assurance that confidential treatment will be accorded to such portion of
the Confidential Information required to be disclosed as CHP shall designate.
The foregoing provisions shall not apply to any Confidential Information which
is generally available to the public immediately prior to the time of
disclosure.

     9.5 Covenant Not to Compete; Right of First Refusal; Non-Solicitation.

                                      -43-

<PAGE>

          (a) In consideration of CHP, CHPAC's and the Advisor's entering into
this Agreement pursuant to which, among other things, the Advisor Common Shares
owned by each of CREG, James M. Seneff, Jr. and Robert A. Bourne will be
converted into the right to receive such Party's respective Pro Rata Percentage
of the Merger Consideration as contemplated herein and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, and
acknowledging hereby that each of CHP, CHPAC and the Advisor would not have
agreed to enter into this Agreement and CHP would not have agreed to cause the
payment of any portion of the Merger Consideration to such Party, in each case
without such Party agreeing to enter into, and to honor the terms and conditions
of this Section 9.5(a), each of Guarantor, CREG, James M. Seneff, Jr. and Robert
A. Bourne (collectively, the "CNL Group") hereby acknowledges that such Party
shall be subject to, and hereby covenants and agrees to honor and comply with,
the terms and conditions of this Section 9.5 following the Closing as follows:

               (i) During the period commencing on the Closing Date and
terminating on the seventh (7th) anniversary of the Closing Date, each member of
the CNL Group shall not, and shall cause each of their respective Affiliates not
to, directly or indirectly engage in any activities within the United States of
America, Canada and Europe relating to the ownership, acquisition, development
or management of luxury and upper upscale hotels and luxury resorts, each as
classified by Smith Travel Research (the "Luxury Hotel Industry Sector"),
including, but not limited to, (A) sponsoring or organizing, or assisting any
other Person in sponsoring or organizing, an investment vehicle investing in the
Luxury Hotel Industry Sector or (B) providing asset management or other advisory
services to, or directly assisting another Person in providing asset management
or advisory services to, any investment vehicle investing in the Luxury Hotel
Industry Sector; provided, however, that (1) except as otherwise provided in
clause (5) below, activities taken by any member of the CNL Group, the CNL Group
or any of their respective Affiliates with respect to the investment in
recreational facilities or recreational properties, including golf courses, ski
resorts, campgrounds, recreational vehicle parks and marinas (the "Recreational
Properties and Facilities"), in which activities relating to the Luxury Hotel
Industry Sector is only incidental to the primary purpose of such facility or
property, shall not be deemed to violate this Section 9.5(a)(i), (2) activities
taken by any member of the CNL Group, the CNL Group or any of their respective
Affiliates with respect to facilities, such as condominiums and time share
properties, in which 50% or more of the ownership interests of such facility
exist on a fractional basis, shall not be deemed to violate this Section
9.5(a)(i), (3) the investment by any member of the CNL Group or any of their
respective Affiliates in the properties listed on Section 9.5 of the Disclosure
Schedule in which such Persons have interests as of the date of this Agreement,
shall not be deemed to violate this Section 9.5(a)(i), (4) activities taken by a
Person that has issued securities that are registered under Sections 12(b) or
12(g) of the Securities Exchange Act and that is a member of the CNL Group or an
Affiliate of a member of the CNL Group shall not be deemed to violate this
Section 9.5(a)(i) if, at the time such Person becomes actively involved in
pursuing plans to engage, and has knowingly taken affirmative steps to engage in
such activities and for twelve (12) consecutive calendar months thereafter, no
member of the CNL Group or Affiliate of a member of the CNL Group (A) serves as
a director, officer or employee of or consultant to such Person or holds a
similar position with such Person or its Subsidiary or direct or indirect parent
corporation or entity (which may, for example, require a member of the CNL Group
to resign from such positions with such Person or its Subsidiary or direct or
indirect parent corporation or entity) or (B) beneficially owns more

                                      -44-

<PAGE>

than five percent (5%) of the issued and outstanding securities of such Person
(which may, for example, require a member of the CNL Group to dispose or
disclaim beneficial ownership of certain securities of such Person or its
Subsidiary or direct or indirect parent corporation or entity), as applicable
(such Person or Affiliate referred to in the immediately preceding clause (A) or
(B), an "Excluded Person"), (5) activities taken by CNL Income Properties, Inc.
with respect to the investment in recreational facilities or recreational
properties, including golf courses, ski resorts, campgrounds, recreational
vehicle parks and marinas, in which activities relating to the Luxury Hotel
Industry Sector generated fifty percent (50%) or more of the revenues of such
recreational facility or recreational property during the most recently
completed fiscal year or is reasonably expected to generate fifty percent (50%)
or more of the revenue of such recreational facility or recreational property in
the fiscal year following the stabilization of operations of such recreational
facility or recreational property, shall not be deemed to violate this Section
9.5(a)(i) if and to the extent the applicable members of the CNL Group and its
or their applicable Affiliates comply or cause compliance with the Right of
First Refusal in Section 9.5(a)(ii) as if and to the same extent such
recreational facility or recreational property was a Hospitality Asset for
purposes of Section 9.5(a)(ii), in any case without regard to whether CNL Income
Properties, Inc. is an Excluded Person, and (6) the covenant not to compete in
this Section 9.5(a)(i) may be waived by prior written consent of CHP acting with
and based upon the approval in their sole discretion of at least a majority of
all of CHP's disinterested directors who are non-employee directors, it being
understood that, for purposes of this Agreement, a director of CHP will be
deemed not to be disinterested if such director is a member of the CNL Group or
an Affiliate of any member of the CNL Group.

               (ii) During the period commencing on the Closing Date and
terminating on the third (3rd) anniversary of the Closing Date, in the event
that a member of the CNL Group or any of their respective Affiliates (other than
an Excluded Person) (such member of the CNL Group or Affiliate thereof, the "CNL
Group Party") enters into or executes and delivers any binding agreement,
contract, letter agreement or other binding arrangement (a "Hospitality Asset
Agreement") relating to the ownership or acquisition of any hotel, or other
lodging asset in the United States of America, Canada or Europe outside of the
Luxury Hotel Industry Sector (such hotel, resort, motel or other lodging asset,
the "Hospitality Asset"), such CNL Group Party shall offer to CHP the right of
first refusal to assume and perform (or cause one of its Subsidiaries to assume
and perform) such Hospitality Asset Agreement (the "Right of First Refusal") in
accordance with this Section 9.5(a)(ii), it being acknowledged and agreed by the
Parties that (A) a Hospitality Asset Agreement would for purposes of this
Section 9.5(a)(ii) be deemed to be binding even if the only obligation of any
party thereto is an obligation to negotiate definitive documentation in good
faith and (B) such CNL Group Party(ies) shall not enter into or execute and
deliver such Hospitality Asset Agreement unless and until such Hospitality Asset
Agreement includes (1) an assignment provision that would enable such
Hospitality Asset Agreement to be assigned by the CNL Group Party(ies) to CHP or
one of its reasonably qualified Subsidiaries without the consent of the proposed
counterparty(ies) thereto if CHP exercises its Right of First Refusal and (2) a
requirement that if CHP exercises its Right of First Refusal the proposed
counterparty(ies) to the Hospitality Asset Agreement produce or make available
to CHP such financial information concerning the Hospitality Asset so as to
enable CHP to produce the financial statements and information required under
the federal securities laws to be filed by CHP in connection with the ownership
or acquisition of such Hospitality Asset(s); provided, however, that the Right
of First Refusal shall not apply to a Hospitality Asset

                                      -45-
<PAGE>

Agreement entered into by any member of the CNL Group or any of their respective
Affiliates relating to the ownership or acquisition of (Y) any Recreational
Properties and Facilities in which activities relating to any Hospitality Asset
is only incidental to the primary purpose of such Recreational Property or
Facility, or (Z) facilities, such as condominiums and time share properties in
which 50% or more of the ownership interests of such facility exists on a
fractional basis. Promptly following the execution and delivery of the
Hospitality Asset Agreement, which in no event shall be later than the tenth
(10th) day following the execution and delivery of the Hospitality Asset
Agreement by all parties thereto, the applicable CNL Group Party shall deliver
to CHP written notice of the proposed Hospitality Asset Agreement, which notice
(the "ROFR Notice") shall include (A) a complete and correct copy of the
Hospitality Asset Agreement, (B) a detailed description of the Hospitality
Asset(s) subject to such Hospitality Asset Agreement and (C) copies of all
written information provided to any member of the CNL Group Party and/or its
financial and other advisors (other than legal counsel) by the counterparty(ies)
to the Hospitality Asset Agreement concerning the Hospitality Asset Agreement
and the Hospitality Asset(s), including, if so provided, photographs of the
Hospitality Asset(s), environmental reports and title surveys of and concerning
the Hospitality Asset and financial information of the operating history of the
Hospitality Asset. In addition, upon delivery to CHP of the ROFR Notice, such
CNL Group Party shall provide or cause to be provided to CHP and to CHP's
authorized representatives reasonable access upon reasonable notice during
normal business hours to the properties, books, records, contracts, commitments,
facilities, premises and equipment that may be the subject of the Hospitality
Asset Agreement and that may otherwise comprise the Hospitality Asset, subject
to an appropriate confidentiality agreement not more restrictive on CHP than any
confidentiality agreement entered into by the CNL Group Party(ies) with such
counterparty(ies). Within forty-five (45) days after CHP's receipt of the ROFR
Notice, CHP shall notify the CNL Group Party whether CHP exercises its Right of
First Refusal. If CHP elects to exercise its Right of First Refusal, then such
CNL Group Party shall assign, and CHP shall assume or shall cause a reasonably
qualified Subsidiary to assume, all of the CNL Group Party(ies) rights and
obligations to and under the Hospitality Asset Agreement. If CHP elects not to
exercise its Right of First Refusal or does not inform such CNL Group Party that
it has elected to exercise its Right of First Refusal within such forty-five day
period, then such CNL Group Party may consummate the transactions contemplated
by the Hospitality Asset Agreement for the price and on terms materially no more
favorable to such CNL Group Party than were described in the ROFR Notice;
provided, however, that if CHP elects not to exercise its Right of First Refusal
or does not inform such CNL Group Party that it has elected to exercise its
Right of First Refusal within such forty-five (45) day period and such CNL Group
Party does not consummate the transactions contemplated by the Hospitality Asset
Agreement within one hundred eighty (180) days after CHP's receipt of the ROFR
Notice, then such CNL Group Party may not consummate the transactions
contemplated by the Hospitality Asset Agreement without again complying with the
restrictions contained in this Section 9.5(a)(ii). Notwithstanding anything to
the contrary contained herein, any CNL Group Party shall inform, and shall cause
each of his or its respective Affiliates to inform, each prospective
counterparty to a Hospitality Asset Agreement of CHP's Right of Refusal with
respect to such Hospitality Asset at the same time such CNL Group Party or any
of his or its respective Affiliates commences discussions with a prospective
counterparty(ies) to a Hospitality Asset Agreement relating to the ownership or
acquisition, of a Hospitality Asset.

                                      -46-

<PAGE>

               (iii) During the period commencing on the Closing Date and
continuing through the seventh (7th) anniversary of the Closing Date, each of
Guarantor, CREG, James M. Seneff, Jr. and Robert A. Bourne shall not, without
CHP's prior written consent, and shall cause each of their respective Affiliates
(other than an Excluded Person) not to, directly or indirectly, Knowingly
solicit for employment or encourage to leave the employment or other service of
CHP or any of its Subsidiaries, any employee thereof or hire (on his or its
behalf or on behalf of any other Person) any employee who has left the
employment or other service of CHP or any of its Subsidiaries (or any
predecessor of either) within one (1) year of the termination of such employee's
employment with CHP or any of its Subsidiaries.

          (b) If the final judgment of a court of competent jurisdiction
declares that any term or provision of this Section 9.5 is invalid or
unenforceable, the Parties agree that the court making the determination of
invalidity or unenforceability shall have the power to reduce the scope,
duration, or area of the term or provision, to delete specific words or phrases,
or to replace any invalid or unenforceable term or provision with a term or
provision that is valid and enforceable and that comes closest to expressing the
intention of the invalid or unenforceable term or provision, and this Agreement
shall be enforceable as so modified after the expiration of the time within
which the judgment may be appealed.

     9.6 CHP Common Shares. Each certificate issued to the Stockholders who are
acquiring CHP Common Shares in the Merger representing such CHP Common Shares
will be imprinted with a legend substantially in the following form:

          "THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
          UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT"), IN
          RELIANCE UPON THE EXEMPTION FROM REGISTRATION CONTAINED IN SECTION
          4(2) OF THE 1933 ACT AND REGULATION D OF THE RULES AND REGULATIONS
          PROMULGATED UNDER THE 1933 ACT, AND IN RELIANCE UPON THE
          REPRESENTATION BY THE HOLDER THAT THEY HAVE BEEN ACQUIRED FOR
          INVESTMENT PURPOSES ONLY AND NOT WITH A VIEW TO RESALE OR FURTHER
          DISTRIBUTION. SUCH SHARES MAY NOT BE OFFERED FOR SALE, SOLD, DELIVERED
          AFTER SALE, HYPOTHECATED, NOR WILL ANY ASSIGNEE OR ENDORSEE HEREOF BE
          RECOGNIZED AS AN OWNER HEREOF BY THE ISSUER FOR ANY PURPOSE, UNLESS A
          REGISTRATION STATEMENT FILED WITH THE SECURITIES AND EXCHANGE
          COMMISSION WITH RESPECT TO SUCH SHARES SHALL THEN BE IN EFFECT OR
          UNLESS THE AVAILABILITY OF AN EXEMPTION FROM REGISTRATION SHALL BE
          ESTABLISHED TO THE REASONABLE SATISFACTION OF COUNSEL OF THE ISSUER."

                                      -47-

<PAGE>

Each such Stockholder desiring to transfer any of the CHP Common Shares received
in connection with the Merger, other than in a registered offering or pursuant
to a sale which counsel for CHP confirms is in compliance with Rule 144 of the
Securities Act, must first furnish CHP with (i) a written opinion satisfactory
to CHP in form and substance from counsel reasonably satisfactory to CHP to the
effect that such Stockholder may transfer the CHP Common Shares as desired
without registration under the Securities Act and (ii) a written undertaking
executed by the desired transferee reasonably satisfactory to CHP in form and
substance agreeing to be bound by the restrictions on transfer contained herein.
Each of the Stockholders who hold Class B Advisor Common Shares subject to an
Employee Stock Purchase Agreement shall hold any CHP Common Shares received as
the Merger Consideration subject to the restrictions of the applicable Employee
Stock Purchase Agreement.

     9.7 Merger Consideration. Each Stockholder who acquires CHP Common Shares
in the Merger hereby agrees to be bound by the provisions of the lock-up letter
contemplated by the Registration Rights Agreement.

     9.8 Tax Matters.

          (a) The Stockholders (other than FARS and other than the Management
Stockholders) shall prepare or cause to be prepared and file or cause to be
filed all Tax Returns for the Advisor and the Development Company for all
periods ending on or prior to the Closing Date which are to be filed after the
Closing Date as part of the Guarantor's consolidated federal and state Tax
Returns or otherwise. The Stockholders (other than FARS and other than the
Management Stockholders) shall permit CHP to review and comment on each Tax
Return described in the preceding sentence (or, if any such Tax Return is to be
filed on a consolidated basis, the pro forma Tax Return of the Advisor and the
Development Company to be used in such consolidation) for such periods prior to
filing. The Stockholders (other than FARS) shall be responsible for the timely
payment of any Taxes of the Advisor or the Development Company with respect to
such periods.

          (b) Any refund or credit of Taxes (including any statutory interest
thereon) received by CHP, CHPAC or any of their Subsidiaries with respect to the
Advisor or the Development Company that are attributable to periods ending on or
prior to or including the Closing Date shall reduce any CHP Indemnity Claim that
the Stockholders (other than FARS) owe CHP pursuant to Article 12 below by an
amount equal to the amount of such refund or credit; provided, however, that to
the extent any such refund or credit exceeds the aggregate amount of any and all
CHP Indemnity Claims that the Stockholders owed CHP pursuant to this Agreement,
the excess amount of such refund or credit shall be paid to the Representative
for distribution to the Stockholders on a pro rata basis upon the expiration, in
accordance with Section 12.5 of this Agreement, of all rights of CHP to seek
indemnification pursuant to Article 12, but in any event not later than the end
of the eighteen (18) month period following the Closing Date.

          (c) In the event that CHP, CHPAC or any of their Subsidiaries receives
notice, whether orally or in writing, of any pending or threatened federal,
state, local or foreign tax examinations, claims settlements, proposed
adjustments or related matters with respect to Taxes that would reasonably be
expected to affect Advisor or any of the Stockholders, or if Advisor or

                                      -48-

<PAGE>

any of the Stockholders receives notice of such matters that would reasonably be
expected to affect CHP, CHPAC or any of their Subsidiaries, the Party receiving
such notice shall promptly notify in writing the potentially affected Party. The
failure of either Party to give the notice required by this Section 9.8(c) shall
not impair such Party's rights under this Agreement except to the extent that
the other Party demonstrates that it has been damaged thereby.

          (d) The Stockholders (other than FARS) shall have the responsibility
for, and shall be entitled, at their expense, to contest, control, compromise,
settle or appeal all proceedings with respect to pre-closing Taxes, provided,
however, that any decision or action with respect to any of the foregoing that
reasonably could be expected to affect either CHP or CHPAC adversely shall
require the prior written consent of CHP acting with and based upon the approval
in their sole discretion of at least a majority of all of CHP's disinterested
directors who are non-employee directors, it being understood that, for purposes
of this Agreement, a director of CHP will be deemed not to be disinterested if
such director is a member of the CNL Group or an Affiliate of any member of the
CNL Group, and provided further that the Stockholders (other than FARS), in
accordance with his or its Pro Rata Percentage of the Merger Consideration,
shall indemnify CHP and CHPAC from any and all costs incurred by CHP and CHPAC
in connection with or as a result thereof.

          (e) CREG hereby additionally agrees to assume and be responsible for
the pro rata portion of any reimbursement, payment, indemnity or other
obligation of FARS as a Stockholder that may or would otherwise have been
attributable to FARS pursuant to this Section 9.8 and is owed or payable to CHP
or CHPAC.

          (f) In the event that any taxable period for the Advisor or the
Development Company shall commence prior to the Closing Date and end after the
Closing Date (a "Straddle Year") under the applicable law of any taxing
jurisdiction (a "Straddle Year Jurisdiction"), then (i) the Stockholders (other
than FARS) shall prepare or cause to be prepared a pro forma Tax Return for the
Straddle Year Jurisdiction for the portion of the Straddle Year commencing prior
to the Closing Date and ending with the close of business on the Closing Date
(the "Pre-Closing Straddle Period") and shall deliver such pro forma Tax Return
to CHP, together with an amount of cash equal to all Taxes that would be payable
to the Straddle Year Jurisdiction with respect to the Pre-Closing Straddle
Period (referred to as "Pre-Closing Straddle Period Taxes") and (ii) CHP shall
prepare or cause to be prepared a pro forma Tax Return for the Straddle Year
Jurisdiction for the portion of the Straddle Year commencing on the day
following the Closing Date and ending on the last day of the Straddle Year (the
"Post-Closing Straddle Period") and shall deliver such pro forma Tax Return to
the Representative for his review, provided that CHP shall have the right to
make all determinations with respect thereto. CHP will be responsible for
preparing and filing with the Straddle Year Jurisdiction all required Tax
Returns for the Straddle Year, and shall be responsible for all Taxes
attributable to the Post-Closing Straddle Period (with such Taxes referred to as
"Post-Closing Straddle Period Taxes"). To the maximum extent practicable, the
rights and responsibilities of the Stockholders with respect to Pre-Closing
Straddle Period Taxes shall be as set forth in subparagraphs (a) through (e)
with respect to Taxes for periods ending on or prior to the Closing Date.

     9.9 Post-Closing Employment Arrangements. At or prior to the Closing, the
Advisor and its Affiliates will have entered into agreements or arrangements in
form and substance

                                      -49-

<PAGE>

satisfactory to the Special Committee on behalf of CHP in its sole discretion,
for the continuation and/or substitution of benefits to employees of the Advisor
and the Development Company following the Merger.

     9.10 Assumption of Certain Liabilities of the Advisor Concerning the Class
Action Lawsuit and Related Matters.

          (a) Without limiting the Indemnifying Stockholders' obligations under
Article 12, as of the Effective Time and without any further action by any of
the Parties, the Indemnifying Stockholders shall, according to his or its Pro
Rata Percentage, be deemed to have assumed and hereby expressly acknowledge and
agree that they shall assume from the Advisor and otherwise succeed to all the
rights and Liabilities of the Advisor, if any, with respect to the Class Action
Lawsuit and the matters out of which the Class Action Lawsuit arose as if such
rights and Liabilities originally were the rights and Liabilities of the
Indemnifying Stockholders (such Liabilities, the "Assumed Advisor Liabilities"),
provided that CREG hereby additionally agrees to assume and be responsible for
the pro rata portion of any Assumed Advisor Liabilities that otherwise would
have been attributable to FARS. The Indemnifying Stockholders shall diligently
pursue, control and bear the expense, including attorneys' fees, of the defense,
settlement, adjustment or compromise of the Assumed Advisor Liabilities, if any,
with counsel reasonably acceptable to CHP (and CHP acknowledges that the
Advisor's current counsel is acceptable), provided that the Indemnifying
Stockholders shall obtain the written consent of CHP and Surviving Company
before entering into any settlement, adjustment or compromise of such Assumed
Advisor Liabilities (if CHP is not a party to said settlement, adjustment, or
compromise), if any, or ceasing to defend against such Assumed Advisor
Liabilities, if any, if as a result thereof, or pursuant thereto, there would be
imposed on CHP and/or Surviving Company any additional Liability not covered by
the indemnity obligations of the Indemnifying Stockholders under this Agreement
and resulting from such settlement, adjustment or compromise (including, without
limitation, any injunctive relief or other remedy). The Parties intend and agree
that, by operation of this Section 9.10 and Article 12, (i) the Merger would not
diminish CHP's rights or increase CHP's Liabilities, if any, with respect to the
Class Action Lawsuit or the matters out of which the Class Action Lawsuit arose
and (ii) the Indemnifying Stockholders' rights and Liabilities with respect to
the Class Action Lawsuit or the matters out of which the Class Action Lawsuit
arose after the Effective Time be identical to the Advisor's rights and
Liabilities with respect to the Class Action Lawsuit and the matters out of
which the Class Action Lawsuit arose had this Agreement not been executed and
delivered by the Parties and had the Merger not occurred, including, but not
limited to, any rights or Liabilities with respect to any applicable fee sharing
agreements, arbitration awards, or court orders with respect to the Class Action
Lawsuit and the matters out of which the Class Action Lawsuit arose.

          (b) The Indemnifying Stockholders shall cooperate reasonably with CHP
and Surviving Company and with their respective representatives in connection
with any steps to be taken as part of their obligations under this Section 9.10
and shall (i) furnish upon request to each other and to CHP and Surviving
Company such further information, (ii) execute and deliver to each other and to
CHP and/or Surviving Company such other documents and (iii) do such other acts
and things, each as may be reasonably requested by CHP and/or the Surviving
Company for the purpose of carrying out the intent of this Section 9.10.

                                      -50-

<PAGE>

          (c) The Indemnifying Stockholders may allocate among themselves by
written agreement responsibility for their obligations under this Section 9.10
with respect to the Assumed Advisor Liabilities, subject to CHP's prior written
consent, which consent shall not be unreasonably be withheld, it being
understood that any such allocation shall not affect CHP's and/or the Surviving
Company's rights under Article 12.

                                   ARTICLE 10

                        CONDITIONS TO OBLIGATION TO CLOSE

     10.1 Conditions to Each Party's Obligation. The respective obligations of
CHP, CHPAC, the Advisor and the Stockholders to consummate the Merger are
subject to the satisfaction at or prior to the Closing Date of each of the
following conditions, which conditions may be waived upon the written consent of
the Special Committee on behalf of CHP and the Representative:

          (a) CHP Stockholder Approval. CHP shall have obtained the CHP
Stockholder Approval.

          (b) Governmental Approvals. The Parties shall have received all other
authorizations, consents, and approvals of governments and governmental agencies
listed on and Sections 5.2 and 7.3 of the Disclosure Schedule and otherwise
referred to in Section 5.2, Section 6.4, and Section 7.3 above and such consents
shall remain in effect as of the Closing Date.

          (c) Opinions. (i) CHP and CHPAC and the Stockholders shall have
received an opinion dated as of the Closing Date from Greenberg Traurig, LLP,
counsel to CHP and CHPAC, addressed to the Special Committee on behalf of CHP in
the form agreed upon by CHP, CHPAC, the Stockholders and Greenberg Traurig, LLP
immediately prior to the execution and delivery of this Agreement by the
Parties.

               (ii) CHP and CHPAC shall have received an opinion dated as of the
Closing Date from Greenberg Traurig, LLP, counsel to CHP and CHPAC, addressed to
the Special Committee on behalf of CHP in the form agreed upon by CHP, CHPAC and
Greenberg Traurig, LLP immediately prior to the execution and delivery of this
Agreement by the Parties. CHP, CHPAC and the Advisor shall provide
representation letters to Greenberg Traurig, LLP in the form agreed upon by CHP,
CHPAC, the Advisor and Greenberg Traurig, LLP immediately prior to the execution
and delivery of this Agreement by the Parties.

               (iii) The Advisor and the Stockholders shall have received an
opinion dated as of the Closing Date from Arnold & Porter LLP, special tax
counsel to the Advisor, addressed to the Advisor and the Stockholders in the
form agreed upon by the Advisor, the Stockholders and Arnold & Porter LLP
immediately prior to the execution and delivery of this Agreement by the
Parties. CHP, CHPAC and the Advisor shall provide representation letters to
Arnold & Porter LLP in the form agreed upon by CHP, CHPAC, the Advisor and
Arnold & Porter LLP immediately prior to the execution and delivery of this
Agreement by the Parties.

     10.2 Conditions to Obligation of CHP and CHPAC. The obligations of CHP and
CHPAC to consummate the Merger and take the actions to be performed by them in
connection

                                      -51-

<PAGE>

with the Closing are subject to satisfaction or waiver by the Special Committee
on behalf of CHP, in its sole discretion, of the following conditions:

          (a) No Injunction or Proceedings. There shall not be in effect any
action, suit, or proceeding pending or threatened before any court or
quasi-judicial or administrative agency of any federal, state, local, or foreign
jurisdiction or before any arbitrator wherein an unfavorable injunction,
judgment, order, decree or ruling that would, in the reasonable judgment of the
Special Committee on behalf of CHP, (i) prevent consummation of the Merger, (ii)
cause the Merger to be rescinded following consummation, (iii) affect adversely
the right of CHP to own the capital stock of the Surviving Company, or (iv)
affect adversely the right of the Surviving Company to own its assets and to
operate its businesses (and no such injunction, judgment, order, decree, ruling,
or charge is in effect);

          (b) Officers Certificate. Each of the Stockholders and the chief
executive officer of the Advisor shall have delivered to CHP a certificate to
the effect that, to the Actual Knowledge of such certifying Person (it being
acknowledged and agreed by the Parties that, for purposes of this Section
10.2(b), the Actual Knowledge of the chief executive officer of the Advisor
shall mean the Actual Knowledge of such officer following a reasonable
investigation, the Actual Knowledge of the certifying Stockholder shall mean the
individual Actual Knowledge of such certifying Stockholder, and the Actual
Knowledge of such individual Stockholder shall not be attributed to the other
Stockholders):

               (i) the representations and warranties set forth in Article 5 and
Article 7 above applicable to it that are qualified as to materiality shall be
true and correct, and those applicable to it not so qualified shall be true and
correct in all material respects, as of the date of this Agreement and as of the
Closing Date as though made on and as of the Closing Date, except that the
representation and warranty made in Section 7.30 shall be true and correct in
all material respects as of the date of this Agreement;

               (ii) the Stockholders and the Advisor shall have performed and
complied in all material respects with all of their covenants and obligations to
be performed by it under this Agreement at or prior to the Closing Date,
including the Advisor's performance of the actions contemplated by Section
10.2(d) below;

               (iii) the Advisor and the Stockholders have procured all of the
third party consents specified in Section 5.3 and 7.4 above and such consents
shall remain in effect as of the Closing Date; and

               (iv) no action, suit, or proceeding is pending or threatened
against the Advisor or such Stockholder before any court or quasi-judicial or
administrative agency of any federal, state, local, or foreign jurisdiction or
before any arbitrator wherein an unfavorable injunction, judgment, order, decree
or ruling that would (A) prevent consummation of the Merger, (B) cause the
Merger to be rescinded following consummation, (C) affect adversely the right of
CHP to own the membership interests of the Surviving Company, or (D) affect
adversely the right of the Surviving Company to own its assets and to operate
its businesses (and no such injunction, judgment, order, decree or ruling is in
effect) other than any action, suit, proceeding or claim that is pending or
threatened against the Advisor as of the date hereof;

                                      -52-

<PAGE>

          (c) Certain Advisor Actions. All of the Advisor Actions shall have
been effected prior the Closing Date and shall not have otherwise been rescinded
or be subject to rescission as of or following the Closing Date;

          (d) Declaration and Payment of Dividend by Advisor. The Board of
Directors of the Advisor shall have adopted the resolutions in substantially the
form presented to CHP by the Advisor and the Stockholders immediately prior to
the execution and delivery of this Agreement, such resolutions shall not have
been withdrawn, modified or otherwise rescinded as of the Closing Date, and the
Advisor shall have effected all of the actions contemplated by such resolutions,
including the payment of the dividend to the Stockholders declared by the Board
of Directors of the Advisor pursuant thereto;

          (e) Certain Agreement Among Stockholders. The Stockholders shall have
executed and delivered to each other and CHP an agreement in substantially the
form presented to CHP by the Advisor and the Stockholders immediately prior to
the execution and delivery of this Agreement concerning certain post-Closing
obligations of the Stockholders;

          (f) Pledge and Security Agreement. The Pledge and Security Agreement
shall have been executed and delivered by the parties thereto.

          (g) Opinion of LDDK&R. CHP and CHPAC shall have received an opinion
dated as of the Closing Date from Lowndes, Drosdick, Doster, Kantor & Reed,
P.A., counsel to the Advisor, in substantially the form agreed upon by CHP,
CHPAC, and Lowndes, Drosdick, Doster, Kantor & Reed, P.A. immediately prior to
the execution and delivery of this Agreement by the Parties;

          (h) Comfort Letter. CHP shall have received written comfort in form
and substance reasonably satisfactory to the Special Committee from
PricewaterhouseCoopers LLP that the Advisor will not have any accumulated or
current earning and profits within the meaning of Section 312 of the Code as of
the Effective Time, which written comfort tax counsel to CHP will be permitted
to rely upon for purposes of rendering opinions from and after the time of the
Merger with respect to the qualification of CHP as a REIT;

          (i) Fairness Opinion. Lehman Brothers, Inc. shall have not withdrawn
its Fairness Opinion issued in connection with the Merger and, if requested by
the Special Committee, shall have issued to the Special Committee an updated
opinion dated as of the Closing Date;

          (j) Resignations. CHP shall have received copies of the resignations,
effective as of the Closing, of each director and officer of the Advisor and the
Development Company other than those whom the Special Committee on behalf of
CHP, in its sole discretion, shall have specified in writing prior to the
Closing;

          (k) Bonus Arrangements. CHP shall have received satisfactory evidence
that all bonus plans under which officers, directors or employees of the Advisor
or the Development Company are beneficiaries have been terminated as of the
Closing Date;

                                      -53-

<PAGE>

          (l) Employment Agreements. Each of the Employment Agreements shall
become effective in accordance with its terms, effective as of the Effective
Time, and CHP shall not as of the Closing Date have any good faith reason to
believe that the counterparty to each such Employment Agreement does not intend
to perform his obligations under his Employment Agreement in accordance with the
terms thereof;

          (m) Transition Services Agreement, New Brand License Agreement and
Other Agreements. Guarantor or its Affiliate shall have executed and delivered
the Transition Services Agreement and the New Brand License Agreement referred
to in Sections 8.16 and 8.17, respectively, and any other agreements necessary
for the Surviving Company to conduct its business in substantially the same
manner as conducted by the Advisor immediately prior to the Closing Date
(including any furniture or equipment leases or subleases, office space leases
or subleases, and software licenses), in each case in form and substance
reasonably satisfactory to the Special Committee on behalf of CHP, in its sole
discretion, and CHP shall have obtained insurance for the Surviving Company of a
similar type to that maintained for the Advisor as of the date of this Agreement
on terms reasonably satisfactory to the Special Committee on behalf of CHP, in
its sole discretion;

          (n) Material Adverse Effect. Since December 31, 2003, there shall not
have occurred any Material Adverse Effect on the Advisor;

          (o) Advisor Amendment. The Advisor shall have filed any and all
Advisor Amendments with the Florida Department of State, and the Advisor
Amendment shall have become effective;

          (p) Opinion of Compensation Consultant. The Special Committee shall
have received a written report from the independent compensation consultant
engaged by the Compensation Committee of the CHP Board of Directors that would
provide a basis for such committees, in their sole discretion, to determine that
the terms and conditions of the Employment Agreements are fair and reasonable to
CHP;

          (q) Majority Vote Charter Amendment. The Majority Vote Charter
Amendment shall have been filed with the Maryland State Department of
Assessments and Taxation and shall have become effective;

          (r) Stockholders' Agreement. The Stockholders' Agreement dated as of
February 24, 1999 by and among the Advisor, CREG, FARS and the other
Stockholders identified therein, shall have been amended, modified or terminated
by the parties thereto, effective as of the Effective Time, as and to the extent
determined to be necessary or appropriate by the Special Committee, on behalf of
CHP, in its sole discretion;

          (s) Tax Sharing Agreement. The Tax Sharing Agreement dated as of
February 24, 1999 by and between CNL Group, Inc., the predecessor to the
Guarantor, and CNL Hospitality Advisors, Inc., the predecessor to the Advisor,
as the same shall have been amended from time to time (the "Tax Sharing
Agreement"), shall have been terminated as of the Effective Time with respect to
the Advisor and all Subsidiaries of the Advisor, with the Advisor and all of the
Subsidiaries of the Advisor expressly and unconditionally relieved of any and
all monetary

                                      -54-

<PAGE>

Liability of any kind or nature thereunder to the Guarantor and any other member
of the "Affiliated Group" (as defined in the Tax Sharing Agreement) attributable
to taxable years of the Advisor and/or its Subsidiaries ending after the
Effective Time. The termination of the Tax Sharing Agreement shall contain such
other terms and conditions as the Special Committee, on behalf of CHP, in its
sole discretion, shall determine to be necessary or appropriate. Any and all
amounts payable by the Surviving Company (as the successor to the Advisor under
the Tax Sharing Agreement) to the "Parent" (as defined in the Tax Sharing
Agreement) pursuant to or as a result of the Tax Sharing Agreement shall be a
CHP Indemnity Claim (as defined in Section 12.1 below) under Section 12.1(iv)
below, and shall be covered by the guaranty of the Guarantor pursuant to Section
13.2 of this Agreement. The termination of the Tax Sharing Agreement shall
provide that the Surviving Company (as the successor to the Advisor under the
Tax Sharing Agreement) shall have the right to satisfy any and all obligations
for payment thereunder by assigning to the party to which such payment is owed,
the Surviving Company's rights to the corresponding CHP Indemnity Claim
(including its rights against the Guarantor with respect thereto); and

          (t) Appraisal Rights. Holders of, in the aggregate, 1% or more of the
CHP Common Shares outstanding as of the date of the CHP Stockholder Meeting
shall not have exercised or purported to have exercised appraisal rights under
applicable provisions of Maryland General Corporation Law with respect to one or
more of the amendments contained in the CHP Charter Amendments by filing with
CHP a written objection thereto and not otherwise voting in favor thereof (or by
taking such other actions required to be taken at such time in order to exercise
appraisal rights pursuant to applicable provisions of Maryland General
Corporation Law).

     10.3 Conditions to Obligation of the Stockholders and the Advisor. The
obligation of the Stockholders and the Advisor to consummate the Merger and take
the actions to be performed by them in connection with the Closing is subject to
satisfaction or waiver by the Representative of the following conditions:

          (a) No Injunction or Proceedings. There shall not be in effect any
action, suit, or proceeding pending or threatened before any court or
quasi-judicial or administrative agency of any federal, state, local, or foreign
jurisdiction or before any arbitrator wherein an unfavorable injunction,
judgment, order, decree or ruling that would, in the reasonable judgment of the
Advisor, (i) prevent consummation of the Merger, (ii) cause the Merger to be
rescinded following consummation or (iii) affect adversely the right of the
Stockholders to receive the Merger Consideration;

          (b) Officers Certificate. The chief executive officer of CHP and the
Manager of CHPAC each shall have delivered to the Stockholders and the Advisor a
certificate to the effect that, to their Actual Knowledge, following a
reasonable investigation:

               (i) the representations and warranties set forth in Article 6
above that are qualified as to materiality shall be true and correct, and those
not so qualified shall be true and correct in all material respects, as of the
date of this Agreement and as of the Closing Date as though made on and as of
the Closing Date, except that the representation and warranty made in Section
6.2 shall be true and correct in all material respects as of the date of this
Agreement;

                                      -55-

<PAGE>

               (ii) CHP and CHPAC shall have performed and complied in all
material respects with all of its covenants and obligations to be performed by
it under this Agreement at or prior to the Closing Date; and

               (iii) no action, suit, or proceeding shall be pending or
threatened against CHP or CHPAC before any court or quasi-judicial or
administrative agency of any federal, state, local, or foreign jurisdiction or
before any arbitrator wherein an unfavorable injunction, judgment, order, decree
or ruling would (A) prevent consummation of the Merger or (B) cause the Merger
to be rescinded following consummation (and no such injunction, judgment, order,
decree or ruling shall be in effect) other than any action, suit, proceeding or
claim that is pending or threatened against CHP as of the date hereof;

          (c) Merger Consideration. CHP shall have delivered to the Stockholders
the Merger Consideration pursuant to Section 4.2;

          (d) Material Adverse Effect. Since the date hereof, there shall not
have occurred any Material Adverse Effect on CHP;

          (e) Registration Rights Agreement. The Registration Rights Agreement
shall have been executed and delivered by the parties thereto; and

          (f) FARS Note or Inter-Company FARS Final Payment Funding Note. CHP
shall have assumed and concurrently with the Closing shall repay in full, by
wire transfer to an account designated by FARS in writing not less than two (2)
business days prior to the Closing, the FARS Note; provided, however, that in
the event that prior to the Closing the Advisor has paid in full all of the
outstanding interest and principal due and payable under the FARS Note, then CHP
shall have assumed and concurrently with the Closing shall repay in full the
Inter-Company FARS Final Payment Funding Note by wire transfer to an account
designated by CREG in writing not less than two (2) business days prior to the
Closing.

                                   ARTICLE 11

                                   TERMINATION

     11.1 Termination by Mutual Consent. This Agreement may be terminated and
the Merger may be abandoned at any time prior to the Effective Time, before or
after the approval by the stockholders of CHP, by the mutual written consent of
the Advisor and the Special Committee on behalf of CHP.

     11.2 Termination by Either CHP or the Advisor. This Agreement may be
terminated and the Merger may be abandoned (a) by action of the Special
Committee on behalf of CHP (i) in the event of a failure of a condition to the
obligations of CHP and CHPAC set forth in Section 10.1 or Section 10.2 of this
Agreement or, (ii) no later than the time of the CHP Stockholder Meeting, in the
event that the Special Committee shall have determined that it is not satisfied,
in its sole discretion, with the results of its examination of the books,
records, assets, liabilities, prospects and business of the Advisor; (b) by the
Representative in the event of a failure of a condition to the obligations of
the Stockholders or the Advisor set forth in Section 10.1 or Section 10.3 of
this Agreement; (c) by either CHP or the Advisor in the event the Closing has
not

                                      -56-

<PAGE>

occurred on or before December 31, 2006; or (d) by either CHP or the Advisor in
the event that a United States federal or state court of competent jurisdiction
or United States federal or state governmental agency shall have issued an
order, decree or ruling or taken any other action permanently restraining,
enjoining or otherwise prohibiting the transactions contemplated by this
Agreement and such order, decree, ruling or other action shall have become final
and non-appealable; provided, however, that the right to terminate this
Agreement pursuant to clause (a), (b), or (c) above shall not be available to
any Party whose breach of this Agreement has been a principal cause for the
failure of the condition referred to in said clause.

     11.3 Effect of Termination and Abandonment. In the event of termination of
this Agreement and abandonment of the Merger pursuant to this Article 11, no
Party hereto (or any of its directors or officers) shall have any Liability or
further obligation to any other Party to this Agreement, except that nothing
herein will relieve any Party from Liability for any willful breach of this
Agreement.

                                   ARTICLE 12

                                 INDEMNIFICATION

     12.1 Indemnity Obligations of the Stockholders. Subject to Section 12.5 and
Section 12.6 hereof, each of the Stockholders, other than FARS (the
"Indemnifying Stockholders"), hereby severally, in accordance with his or its
Pro Rata Percentage of the Merger Consideration, agrees to indemnify and hold
CHP and the Surviving Company harmless from, and to reimburse CHP and the
Surviving Company for, any CHP Indemnity Claims arising under the terms and
conditions of this Agreement; provided, however, that CREG hereby additionally
agrees to assume and be responsible for the pro rata portion of any CHP
Indemnity Claim that would otherwise have been attributable to FARS as a
Stockholder pursuant to this Article 12. For purposes of this Agreement, the
term "CHP Indemnity Claim" shall mean any loss, damage, deficiency, claim,
liability, obligation, suit, action, fee, cost or expense of any nature
whatsoever (collectively, "Losses") to the extent resulting from (i) any breach
of any representation and warranty of the Indemnifying Stockholders or the
Advisor which is contained in this Agreement or in any Schedule, Exhibit or
certificate delivered pursuant hereto; (ii) any breach or non-fulfillment of, or
any failure to perform, any of the covenants, agreements or undertakings of the
Stockholders or the Advisor which are contained in or made pursuant to this
Agreement; (iii) any Liability for Taxes of the Advisor or the Development
Company for the taxable period of the Advisor and the Development Company that
includes the Effective Time; provided, however, that this clause (iii) shall not
apply to any Tax payable with respect to such taxable period solely by reason of
the Merger failing to qualify as a reorganization under Section 368(a) of the
Code (if such Tax would not have been imposed in such taxable period had the
Merger qualified as a reorganization under Section 368(a) of the Code); (iv) any
Taxes which may be imposed upon the Advisor or any Subsidiary of the Advisor (or
any successor to any of the foregoing) pursuant to Treas. Reg. Section 1.1502-6
(or any similar provision of state, local or foreign law) with respect to any
taxable period by reason of the inclusion of the Advisor or any Subsidiary of
the Advisor (or any predecessor to any of the foregoing), at any time prior to
or including the Effective Time, in any "affiliated group of corporations" as
defined for purposes of Section 1504 of the Code, whether pursuant to the Tax
Sharing Agreement or otherwise; (v) any amounts required to be

                                      -57-

<PAGE>

paid by CHP to the IRS or any state or local taxing authority by reason of or in
connection with a determination by any taxing authority or CHP (referred to as a
"Determination") that either the Advisor or the Development Company had, as of
the Effective Time, any accumulated earnings and profits (as calculated for
federal income tax purposes), with the indemnification hereunder to include, but
not be limited to, any Taxes required to be paid by CHP because distributions
made by CHP after the Effective Time are treated as distributions of any such
earnings and profits, rather than as dividends that are deductible in computing
the "real estate investment trust taxable income" of CHP under Section 857(b) of
the Code, any payment made by CHP pursuant to Section 860(c)(1) of the Code in
connection with any "deficiency dividend" paid by CHP in connection with or as a
result of any such determination, and/or any interest charge required to be paid
by reason of the application of the principles of Section 852(e)(3) of the Code
to CHP by reason of it being determined to have earnings and profits of a "C
corporation" as a result of the Merger, provided, however, that in the event
that there shall have been a Determination, CHP thereafter shall have an
affirmative duty to mitigate claims under this clause (v) to the extent such
steps are permitted under applicable Tax law and in the reasonable judgment of
CHP, after good faith consultation with its Tax advisors, the Representative and
the Representative's Tax advisor, would have the effect of mitigating the claims
under this clause (v), by (A) paying Deficiency Dividends and/or other
dividends, or (B) paying any amounts required in order to satisfy the
requirements of Section 856(g)(5) of the Code (the "REIT Savings" provisions) to
the extent permitted under applicable Tax law (with any such amounts payable
pursuant to the REIT Savings provisions to be subject to indemnification under
this clause (v)), provided, further that in the event that CHP shall, following
a Determination, fail to take either of the steps described in subclauses (A)
and (B) and such steps were available under applicable Tax law, and if taken,
would have mitigated the amounts payable under this clause (v)), the CHP
Indemnity Claim pursuant to this clause (v) shall be (A) reduced to take into
account the effect of any allowable deduction, under the applicable Tax law, for
any Deficiency Dividends or other dividends that could have been, but were not,
paid and (B) increased for (1) any interest charge that would have been payable
by CHP as a result of or in connection with such dividend or Deficiency
Dividend, and (2) any interest charge or penalty that would have been payable by
CHP as a result of or in connection with satisfying the requirements under
Section 856(g)(5) of the Code; and provided, further that a Loss pursuant to
this clause (v) or clause (i) of this Section 12.1 shall not in any event be
considered to include the actual amount of any Deficiency Dividend or other
dividend paid by CHP in connection herewith; (vi) any and all Liabilities of the
Advisor relating to any action, suit, proceeding or claim that is pending or
threatened against the Advisor immediately prior to the Effective Time or
instituted after the Effective Time based on actions or omissions of the Advisor
prior to or at the Effective Time; and (vii) all interest, penalties, costs and
expenses (including, without limitation, all reasonable fees and disbursements
of counsel) and other Losses arising out of or related to any indemnification
made under this Section 12.1. The Parties hereby expressly acknowledge and agree
that the Liabilities of the Advisor described in clause (vi) of the preceding
sentence include, with respect to the Class Action Lawsuit, only (A) any and all
Liabilities relating to or arising out of the Class Action Lawsuit or the
matters out of which the Class Action Lawsuit arose that would have been
attributed to the Advisor but for the Merger and that instead may become or have
become Liabilities of CHP and/or Surviving Company as a result of the Merger and
(B) any and all Liabilities that the Advisor would have had to CHP relating to
or arising out of the Class Action Lawsuit or the matters out of which the Class
Action Lawsuit arose had the Merger not occurred, including any obligation of
indemnity

                                      -58-

<PAGE>

or contribution of the Advisor (including, without limitation, any obligation of
indemnity pursuant to the Advisory Agreement in effect at the time the acts or
omissions that gave rise to such Liability occurred). In addition, the Parties
hereby expressly acknowledge and agree that any amounts that may become due and
payable by the Indemnifying Stockholders pursuant to clause (vi) of this Section
12.1 shall be offset by that amount that would have been due and payable to the
Advisor by CHP pursuant to any obligation of CHP to indemnify the Advisor for
such Liabilities arising out of CHP's charter and the Advisory Agreement in
effect at the time the acts or omissions that gave rise to such Liability
occurred, it being understood and agreed that the intent of such offset is to
provide the Indemnifying Stockholders the benefit of such indemnity rights to
the same extent that the Advisor would have benefited from such indemnities, if
at all, had the Merger not occurred.

     12.2 Indemnity Obligations of CHP. CHP and the Surviving Company hereby
jointly and severally agree to indemnify and hold each of the Stockholders
harmless from, and to reimburse each of the Stockholders for, any Stockholder
Indemnity Claims arising under the terms and conditions of this Agreement. For
purposes of this Agreement, the term "Stockholder Indemnity Claim" shall mean
any Loss incurred by any of the Stockholders resulting from (a) any breach of
any representation and warranty of CHP and CHPAC which is contained in this
Agreement or any schedule, exhibit or certificate delivered pursuant hereto, (b)
any breach or non-fulfillment of, or failure to perform, any of the covenants,
agreements or undertakings of CHP and CHPAC which are contained in or made
pursuant to the terms and conditions of this Agreement, and (c) all interest,
penalties, costs and expenses (including, without limitation, all reasonable
fees and disbursements of counsel) and other Losses arising out of or related to
any indemnification made under this Section 12.2. In addition, the term
Stockholder Indemnity Claim shall mean, with respect only to the Indemnifying
Stockholders, any Loss incurred by any of the Indemnifying Stockholders from a
Third Party Claim relating to the Assumed Advisor Liabilities that would have
been due and payable to the Advisor by CHP pursuant to any obligation of CHP to
indemnify the Advisor for such Third Party Claim or Loss arising out of CHP's
charter and the Advisory Agreement in effect at the time the acts or omissions
that gave rise to such Loss occurred, it being understood and agreed that the
intent of such indemnification obligation of CHP and the Surviving Company is to
provide the Indemnifying Stockholders the benefit of such indemnity rights to
the same extent that the Advisor would have benefited from such indemnities, if
at all, had the Merger not occurred. Notwithstanding anything to the contrary
contained in this Section 12.2, neither CHP nor the Surviving Company shall be
obligated to indemnify and hold any of the Stockholders harmless from (i) any
breach of any representation and warranty of CHP and CHPAC which is contained in
this Agreement or any schedule, exhibit or certificate delivered pursuant hereto
or (ii) any breach or non-fulfillment of, or failure to perform, any of the
covenants, agreements or undertakings of CHP and CHPAC which are contained in or
made pursuant to the terms and conditions of this Agreement if, in either case,
the Advisor or any Stockholder had Knowledge of any facts or circumstances that
(A) would have reasonably affected CHP or CHPAC's ability to make any
representation or warranty of CHP or CHPAC contained in this Agreement or any
schedule, exhibit or certificate delivered pursuant hereto or (B) would have
reasonably affected CHP or CHPAC's ability to fulfill or perform any of the
covenants, agreements or undertakings of CHP and CHP which are contained in or
made pursuant to the terms of this Agreement, and the Advisor did not inform CHP
and CHPAC of such facts and circumstances prior to making such representation or
warranty or undertaking to fulfill or perform such covenants, agreements or
undertakings.

                                      -59-
<PAGE>

     12.3 Appointment of Representative. Each of the Stockholders (other than
FARS) hereby appoints James M. Seneff, Jr. as its exclusive agent to act on its
behalf with respect to any and all Stockholder Indemnity Claims and any and all
CHP Indemnity Claims arising under this Agreement and for such other purposes
specified in this Agreement. In the event that James M. Seneff, Jr. is unable or
unwilling to serve in such capacity, then another representative of the
Stockholders (other than FARS) may be appointed by a majority in interest of the
Stockholders (other than FARS). Such agent is herein referred to as the
"Representative." The Representative shall take, and the Stockholders (other
than FARS) agree that the Representative shall take, any and all actions which
the Representative believes are necessary or appropriate under this Agreement
for and on behalf of the Stockholders (other than FARS), as fully as if such
Parties were acting on their own behalf, including, without limitation,
asserting Stockholder Indemnity Claims against CHP, defending all CHP Indemnity
Claims, consenting to, compromising or settling all Stockholder Indemnity Claims
and CHP Indemnity Claims, conducting negotiations with CHP and its
representatives regarding such claims, taking any and all other actions
specified in or contemplated by this Agreement and engaging counsel, accountants
or other representatives in connection with the foregoing matters. CHP shall
have the right to rely upon all actions taken or omitted to be taken by the
Representative pursuant to this Agreement, all of which actions or omissions
shall be legally binding upon the Stockholders (other than FARS). The
Representative, acting pursuant to this Section 12.3, shall not be liable to any
other Stockholder for any act or omission, except in connection with any act or
omission that was the result of the Representative's bad faith or gross
negligence.

     12.4 Notification of Claims. Subject to the provisions of Section 12.5 and
Section 12.9, in the event of the occurrence of an event which any Party asserts
constitutes a CHP Indemnity Claim or a Stockholder Indemnity Claim, as
applicable, such Party shall provide the indemnifying Party with prompt notice
of such event and shall otherwise make available to the indemnifying Party all
relevant information which is material to the claim and which is in the
possession of the indemnified Party. If such event involves the claim of any
third party (a "Third Party Claim"), the indemnifying Party shall have the right
to elect to join in the defense, settlement, adjustment or compromise of any
such Third Party Claim, and to employ counsel to assist such indemnifying Party
in connection with the handling of such claim, at the sole expense of the
indemnifying Party, and no such claim shall be settled, adjusted or compromised,
or the defense thereof terminated, without the prior written consent of the
indemnifying Party unless and until the indemnifying Party shall have failed,
after the lapse of a reasonable period of time, but in no event more than 30
days after written notice to it of the Third Party Claim, to join in the
defense, settlement, adjustment or compromise of the same. An indemnified
Party's failure to give timely notice or to furnish the indemnifying Party with
any relevant data and documents in connection with any Third Party Claim shall
not constitute a defense (in part or in whole) to any claim for indemnification
by such Party, except and only to the extent that such failure shall result in
any material prejudice to the indemnifying Party. If so desired by any
indemnifying Party, such Party may elect, at such Party's sole expense, to
assume control of the defense, settlement, adjustment or compromise of any Third
Party Claim, with counsel reasonably acceptable to the indemnified Parties,
insofar as such claim relates to the Liability of the indemnifying Party,
provided that such indemnifying Party shall obtain the written consent of all
indemnified Parties before entering into any settlement, adjustment or
compromise of such claims, or ceasing to defend against such claims, if as a
result thereof, or pursuant thereto, there would be imposed on an indemnified
Party any Liability not covered by the indemnity

                                      -60-

<PAGE>

obligations of the indemnifying Parties under this Agreement (including, without
limitation, any injunctive relief or other remedy). In connection with any Third
Party Claim, the indemnified Party, or the indemnifying Party if it has assumed
the defense of such claim pursuant to the preceding sentence, shall diligently
pursue the defense of such Third Party Claim.

     12.5 Survival. All representations and warranties contained in or made
pursuant to this Agreement, and the rights of the Parties to seek
indemnification hereunder with respect to such representations and warranties,
shall survive for a period equal to eighteen (18) months after the Closing Date;
provided, however, (a) the representations and warranties contained in Sections
5.2, 6.2, 6.4, 7.3, 7.9, 7.10, 7.11, 7.19, 7.20, 7.21, 7.23 and 7.33, and the
rights of the Parties to seek indemnification hereunder with respect to such
representations and warranties, shall survive until the expiration of the
applicable statute of limitations with respect to the matters covered thereby
and (b) the representations and warranties contained in Sections 6.7 and 6.8
shall not survive the Closing. Except as otherwise provided in the preceding
sentence or the last sentence of this Section 12.5, all covenants and agreements
of the Parties contained in or made pursuant to this Agreement, and the rights
of the Parties to seek indemnification hereunder with respect to such covenants
and agreements (other than Section 9.10, which shall survive indefinitely),
shall survive until the later of (i) eighteen (18) months after the Closing
Date, (ii) sixty (60) days after the expiration of the statute of limitations
applicable to the subject matter of such covenant or agreement, or (iii) sixty
(60) days after the end of the time period expressly set forth in such covenant
or agreement. No indemnification claim hereunder shall be made after expiration
of the applicable survival period, but (A) the expiration of the survival period
with respect to a representation and warranty or covenant and agreement shall
not limit or affect the right of a Party to obtain indemnification hereunder
after any such expiration date with respect to any Claim duly made in accordance
with this Agreement prior to such expiration date, (B) notwithstanding anything
to the contrary contained in this Agreement, CHP and the Surviving Company shall
be entitled to make a CHP Indemnity Claim, and indemnification rights of CHP and
the Surviving Company pursuant to clause (vi) of Section 12.1 with respect to
all matters relating to the Class Action Lawsuit shall survive, until eighteen
(18) months after the entry of a final judgment in such Class Actions Lawsuit
that is not subject to further review, and (C) notwithstanding anything to the
contrary contained in this Agreement, the Indemnifying Stockholders shall be
entitled to make a Stockholder Indemnity Claim of the type described in the
third sentence of Section 12.2, and indemnification rights of the Indemnifying
Stockholders pursuant to Section 12.2 with respect only to such type of
Stockholder Indemnity Claim shall survive, until eighteen (18) months after the
entry of a final judgment in the Class Action Lawsuit that is not subject to
further review.

     12.6 Limitations. Notwithstanding the foregoing provisions of this Article
12, subject to the last sentence of this Section 12.6, in no event (i) shall the
Stockholders or any of them have any liability to CHP and/or CHPAC on account of
any CHP Indemnity Claim or for any claim for breach of warranty or for
misrepresentation, or any other claim whatsoever arising under this Agreement or
in connection with the transactions contemplated herein (individually a "Claim"
and collectively, "Claims") or for any Losses directly resulting from Claims
unless, until and only to the extent that the accumulated amount of all Losses
exceeds the amount of $200,000 in the aggregate, nor (ii) shall the individual
liability of any Stockholder on account of Claims and Losses exceed an amount
equal to the sum of the following (the "Stockholder Consideration"): (A) the
amount of cash received by such Stockholder hereunder as Merger

                                      -61-

<PAGE>

Consideration in lieu of fractional shares, plus (B) the value of the CHP Common
Shares received by such Stockholder hereunder as Merger Consideration,
calculated based on the Per Share Price, provided, however, that in the case of
CREG, the amount of Stockholder Consideration received by FARS shall be added to
CREG's Stockholder Consideration. To the extent that any Claim is asserted
against one or more Stockholders, each Stockholder shall be liable only for such
Stockholder's pro rata share based upon the amount of the Stockholder
Consideration received by each such Stockholder (except for CREG, which will
also be liable for any Claims against FARS). If a Listing has occurred, any
Claim against a Stockholder, including a CHP Indemnity Claim, may be satisfied
by such Stockholder, in such Stockholder's sole discretion, by surrendering to
the claimant(s) CHP Common Shares at a value equal to the average closing price
per share of such shares on the NYSE for the 30-trading day period preceding the
date such CHP Common Shares are surrendered for payment. Notwithstanding the
foregoing, the limitations set forth in this Section 12.6 shall not apply to
Claims or Losses arising as a result of (i) a breach of the representations and
warranties contained in Sections 7.11, 7.31 and 7.33 of this Agreement, (ii) any
breach or non-fulfillment of, or any failure to perform, any of the covenants,
agreements or undertakings of the Stockholders or the Advisor which are
contained in or made pursuant to Sections 8.8, 8.13, 8.15, 9.5, 9.8 and 9.10 of
this Agreement, (iii) Taxes or other amounts described in clauses (iii), (iv) or
(v) of Section 12.1 of this Agreement, except that no Management Stockholder
shall be liable for Taxes or other amounts described in clauses (iii), (iv) or
(v) of Section 12.1 of this Agreement that exceed the Stockholder Consideration
received by such Management Stockholder, and CREG hereby additionally agrees to
assume and be responsible for the pro rata portion of any indemnity or other
obligation of the Management Stockholders that otherwise would have been
attributable to such Management Stockholders for Taxes or other amounts
described in clauses (iii), (iv) or (v) of Section 12.1 of this Agreement but
for the exception in this clause (iii), or (iv) any and all Liabilities
described in clause (vi) of Section 12.1.

     12.7 Exclusive Provisions; No Rescission. Except as set forth in this
Agreement, no Party is making any representation, warranty, covenant or
agreement with respect to the matters contained herein. Anything herein to the
contrary notwithstanding, no breach of any representation, warranty, covenant or
agreement contained herein or in any certificate or other document delivered
pursuant hereto relating to the Merger shall give rise to any right on the part
of any Party, after the consummation of the Merger, to rescind this Agreement or
the transactions contemplated by this Agreement. Following the consummation of
the Merger, the rights of the Parties under the provisions of Articles 12 and
13, Sections 9.8 and 9.10, and in any agreement that is both executed and
delivered by a Party to another Party in connection with the Merger and referred
to in this Agreement, including the Pledge and Security Agreement, shall be the
sole and exclusive remedy available to the Parties with respect to claims,
assertions, events or proceedings arising out of or relating to the Merger,
except (i) for any statutory or common law remedy for fraud and (ii) for any
liability for willful breach by FARS of the representations and warranties
contained in Article 5 of this Agreement, solely as they relate to FARS, and of
the covenants contained in Article 8 of this Agreement, solely as they relate to
FARS. The Parties hereby expressly acknowledge and agree that nothing in this
Agreement is intended by the Parties to affect (a) any directors' and officers'
insurance coverage for named insureds who are or were officers and/or directors
of CHP or the Advisor (or their respective

                                      -62-

<PAGE>

Affiliates, to the extent directors and officers of such Affiliates were
included in such insurance coverage) in their respective capacities as officers
and/or directors of CHP or the Advisor (or their respective Affiliates, to the
extent directors and officers of such Affiliates were included in such insurance
coverage) and (b) indemnification agreements between CHP and Persons who are or
were officers and/or directors of CHP in their capacities as such, it being
understood that the obligations of the Indemnifying Stockholders in Sections 9.8
and 9.10 and Article 12 are not obligations incurred by them as either (i)
present or former officers, directors or employees of CHP or (ii) present or
former officers, directors or employees of the Advisor or any of their
Affiliates and thus are not indemnifiable by CHP or any of its present or future
Subsidiaries, including Surviving Company, pursuant to (x) any obligation CHP
may have to indemnify present or former officers, directors or employees of CHP
or (y) any obligation the Advisor may have to indemnify present or former
officers, directors or employees of the Advisor or any of their Affiliates.

     12.8 Certain Claims for Indemnification. If and to the extent that any
Stockholder would in its capacity as a former stockholder of the Advisor or
Affiliate of the Advisor prior to the Effective Time have been entitled to seek
directly or indirectly any claim against CHP and/or the Surviving Company for
indemnification under the Advisory Agreements or the charter or bylaws of CHP,
each such Stockholder hereby waives and releases CHP and/or the Surviving
Company from any such potential claim for indemnification.

     12.9 Further Cooperation. Prior to taking any action or position, making
any election or filing any document, report, notice or return with respect to
any matter which may result in a CHP Indemnity Claim under Section 12.1(iii) (a
"Proposed Indemnity Action"), CHP shall notify the Representative or its
designee, of the Proposed Indemnity Action, including any relevant data and
documents of CHP supporting the Proposed Indemnity Action. CHP shall consult in
good faith with and permit the Representative a reasonable period of time not to
exceed ten (10) business days to comment on its proposed course of action
regarding such Proposed Indemnity Action prior to taking such action.

                                   ARTICLE 13

             REPRESENTATIONS, WARRANTIES AND GUARANTEES OF GUARANTOR

     13.1 Representations, Warranties and Covenants. Guarantor hereby
represents, warrants and covenants to CHP and CHPAC that:

          (a) Guarantor is a corporation duly organized, validly existing and in
good standing under the laws of the State of Florida, and has the full and
unrestricted corporate power and authority to execute and deliver this Agreement
and to carry out the obligations contemplated hereby, (b) this Agreement, when
executed and delivered by Guarantor, will be the legal, valid and binding
obligation of Guarantor, enforceable against Guarantor in accordance with its
terms, (c) the execution, delivery and performance of this Agreement, the
fulfillment of and compliance with the terms and provisions hereof, and the
obligations contemplated hereby by Guarantor do not and will not (i) conflict
with, or constitute a breach or default under, Guarantor's articles or
certificate of incorporation or bylaws or any agreement, contract, commitment,
or instrument to which Guarantor is a party or to which it is bound or subject,
(ii) require the consent, approval or authorization of, or notice, declaration,
filing or registration with, any third party or (iii) conflict with, or violate
any applicable law, and (d) Guarantor has

                                      -63-

<PAGE>

not previously granted and will not grant any rights to any third party which
are, nor contract with any third party in any manner which is, inconsistent with
the rights granted herein.

          (b) Guarantor owns, and as of the Effective Time will own, all of the
outstanding shares of capital stock of CREG and has, and will maintain through
the later to occur of (x) the seventh (7th) anniversary of the Closing Date or
(y) the date on which all CHP Indemnity Claims asserted prior to the seventh
(7th) anniversary of the Closing Date have been resolved or otherwise satisfied
in accordance with Section 12.1, a net worth of not less than $75 million.

          (c) There are no actions, suits, claims, arbitrations, proceedings or
investigations pending, or threatened against, affecting or involving Guarantor
that would affect Guarantor's ability to perform its obligations and agreements
in this Agreement, and there is no Basis for any such actions, suits, claims,
arbitrations, proceedings or investigations.

     13.2 Guarantee.

          (a) Guarantor hereby irrevocably, absolutely and unconditionally
guarantees to CHP and the Surviving Company the full and punctual payment and
performance of the obligations of each and every Stockholder pursuant to Section
9.8 and Article 12 of this Agreement (individually, a "Stockholder's
Obligations", and collectively referred to as "Stockholders' Obligations").
Guarantor consents to any and all amendments, modifications, forbearances and
extensions of time of payment and performance of the Stockholders' Obligations
under this Agreement as may be agreed in writing by the Advisor and/or the
Representative and CHP and/or the Surviving Company and to any and all changes
in terms, covenants, and conditions thereof as may be agreed in writing by the
Advisor and/or the Representative and CHP and/or the Surviving Company, it being
acknowledged and agreed by the Parties that, notwithstanding anything to the
contrary contained in this Agreement, (i) Guarantor shall be liable as a
principal with respect to the Stockholders' Obligations and (ii) CHP and the
Surviving Company will not be required to pursue or exhaust any remedies as
against any Stockholder as a condition to enforcing Guarantor's obligations
under this Section 13.2. It is further acknowledged and agreed by the Parties
that, notwithstanding anything to the contrary contained in this Agreement, (A)
Guarantor may be called upon by CHP and/or the Surviving Company to perform any
one or more Stockholders' Obligations in Section 9.8 of this Agreement beginning
at such time as CHP and/or the Surviving Company delivers to the applicable
Stockholder or Stockholders a written notice to the effect that such Stockholder
or Stockholders are required to reimburse or pay to CHP and/or the Surviving
Company or otherwise indemnify CHP and/or the Surviving Company for, any amount
pursuant to Section 9.8 of this Agreement and (B) Guarantor may be called upon
by CHP and/or the Surviving Company to perform any one or more Stockholders'
Obligations in Article 12 of this Agreement beginning on the thirtieth (30th)
day following the date on which CHP and/or the Surviving Company delivers to the
applicable Stockholder or Stockholders written notice of a CHP Indemnity Claim
in accordance with Section 12.4 of this Agreement, provided, however, that CHP
and/or the Surviving Company shall not be required to provide any further notice
or notices pursuant to Section 12.4 of this Agreement or otherwise in connection
with making any subsequent calls upon the Guarantor to perform such
Stockholders' Obligations relating to any CHP Indemnity Claim that previously
has been the subject of any written notice and (ii) CHP and/or the Surviving

                                      -64-

<PAGE>

Company, as the case may be, shall simultaneously provide to Guarantor copies of
all notices delivered to a Stockholder referred to in clauses (A) or (B) of this
sentence. In the event that Guarantor is required to pay any amount pursuant to
this Section 13.2(a), Guarantor shall have a right of subrogation and
contribution as to each Stockholder (other than FARS) for the Stockholder's pro
rata share (determined pursuant to Section 12.6 of this Agreement) of such
amount. Furthermore, neither CHP nor Surviving Company nor their respective
successors shall take any action to impair or diminish such right to subrogation
or contribution against or rights to implead such Stockholder.

          (b) Guarantor agrees that the obligations of Guarantor as a guarantor
shall not be impaired, modified, changed, released, or limited in any manner
whatsoever by any impairment, modification, change, release or limitation of
liability of any Stockholder resulting from the operation of any present or
future provision of the federal bankruptcy laws or other successor or similar
statute, or from the decision of any court applying, interpreting or enforcing
such laws. Without limiting the preceding sentence, it is expressly understood
and agreed among the Parties and Guarantor that Guarantor's obligation to CHP
and the Surviving Company will continue notwithstanding any Stockholder's
bankruptcy.

          (c) Guarantor agrees that in the event that CHP and/or the Surviving
Company demands in writing that Guarantor fulfill its obligations under this
Article 13 and Guarantor does not comply, then if CHP and/or the Surviving
Company retains or engages an attorney or attorneys to enforce this guarantee in
a court proceeding and CHP and/or the Surviving Company prevails in enforcement
of this guarantee in such court proceeding, Guarantor will reimburse CHP and/or
the Surviving Company for all reasonable expenses incurred by CHP and/or the
Surviving Company, including reasonable attorneys' fees and disbursements.

          (d) Guarantor agrees that, through the later to occur of (x) the
seventh (7th) anniversary of the Closing Date or (y) the date on which all CHP
Indemnity Claims asserted prior to the seventh (7th) anniversary of the Closing
Date have been resolved or otherwise satisfied in accordance with Section 12.1,
it will not enter into any transaction, including a merger, consolidation, sale
of all or substantially all of its assets, or similar transaction, unless the
obligations of the Guarantor pursuant to this Article 13 are expressly assumed
by the acquiring corporation or entity.

          (e) Guarantor waives any defense arising by reason of any disability
or other defense of any Stockholder, or the cessation from any cause whatsoever
of the liability of such Stockholder for any Stockholders' Obligations, except
for a voluntary release of the Stockholders' Obligations by CHP, Surviving
Company, or their respective successors, arising by operation of law or any
bankruptcy, insolvency or debtor relief proceeding, or from any other cause,
including any such defense or cessation of liability arising from or as a result
of any claim of fraudulent transfer or preference, or any claim that Guarantor's
obligations exceed or are more burdensome than the Stockholders' Obligations.
Guarantor waives any defense arising by reason of any statute of limitations
affecting any Stockholders' Obligations if a Stockholder was called upon to
perform the applicable Stockholders' Obligations prior to the expiration of such
statute of limitations. Until the Stockholders' Obligations are satisfied in
full, Guarantor waives all rights and defenses arising out of an election of
remedies by CHP or the Surviving Company,

                                      -65-

<PAGE>

even though that election of remedies, such as a nonjudicial foreclosure with
respect to security for the Guaranteed Obligations, has eliminated Guarantor's
rights of subrogation and reimbursement against any Stockholder and all rights
or defenses the Guarantor may have by reason of protection afforded to a
Stockholder with respect to such Stockholders' Obligations pursuant to the
antideficiency laws of any jurisdiction limiting or discharging such
Stockholders' Obligations.

          (f) Guarantor waives any right to enforce any remedy which any
Stockholder now has or may hereafter have against CHP or the Surviving Company
and waives any benefit of and any right to participate in any security now or
hereafter held by CHP or the Surviving Company to secure any Stockholders'
Obligations or Guarantor's guarantee thereof.

          (g) Guarantor waives any right or defense it may have at law or
equity, including a fair market value hearing or action to determine a
deficiency judgment after a foreclosure in connection with the payment and
performance of its obligations pursuant to this Article 13. Guarantor waives all
presentments, demands for performance, notices of nonperformance, protests,
notices of protest, notices of dishonor and notices of acceptance of this
guarantee and of the existence, creation, or incurring of new or additional
Stockholders' Obligations.

          (h) If any payment or transfer of any interest in property by a
Stockholder to CHP or the Surviving Company in fulfillment of any Stockholder's
Obligation is rescinded or must at any time (including after the return or
cancellation of this guarantee) be returned, in whole or in part, by CHP or the
Surviving Company to such Stockholder or any other Person, upon the insolvency,
bankruptcy or reorganization of such Stockholder or otherwise, this guarantee
shall be reinstated with respect to any such payment or transfer, regardless of
any such prior return or cancellation.

     13.3 Additional Guarantor Covenants. Through the later to occur of (x) the
seventh (7th) anniversary of the Closing Date or (y) the date on which all CHP
Indemnity Claims asserted prior to the seventh (7th) anniversary of the Closing
Date have been resolved or otherwise satisfied in accordance with Section 12.1,
Guarantor will:

          (a) (i) preserve and maintain its existence as a corporation and all
rights, privileges and franchises necessary and desirable in the normal conduct
of its business, in the operation and ownership of its properties and assets,
and in the performance of its obligations hereunder and not dissolve or
otherwise discontinue its existence or operations and (ii) take no action or
suffer any actions to be taken by others which would alter, change or destroy
its status as a corporation or would reasonably be expected to adversely affect
its ability to perform its obligations hereunder;

          (b) comply with the requirements of all applicable laws, rules, and
regulations (including those related to Taxes), non-compliance with which would
have a Material Adverse Effect on Guarantor's business, properties or condition,
financial or otherwise, or would reasonably be expected to have a Material
Adverse Effect on the Guarantor's ability to perform its obligations hereunder;

                                      -66-

<PAGE>

          (c) maintain insurance with responsible and reputable insurance
companies or associations in such amounts and covering such risks as is usually
carried by companies engaged in similar businesses and owning similar properties
in the same general areas in which it operates;

          (d) pay when due all of its obligations and liabilities, except where
the same are being contested in good faith by appropriate proceedings diligently
prosecuted and appropriate reserves or other provision, if any, as shall be
required in conformity with GAAP shall have been made therefor; and

          (e) furnish to CHP and the Surviving Company:

               (i) as soon as possible, and in any event within five (5)
business days, after any officer of Guarantor obtains Knowledge of any condition
or event that constitutes a breach of or default under any covenant in this
Article 13, or any event, development or occurrence reasonably likely to have a
Material Adverse Effect continuing on the date of such statement, a statement of
the chief executive officer or person holding a similar position of Guarantor
setting forth details of such breach or default, or any such event, development
or occurrence and the action that Guarantor has taken and proposes to take with
respect thereto; and

               (ii) no later than sixty (60) days after the end of each of
Guarantor's fiscal year, an officer's certificate of Guarantor stating that the
signing officer has reviewed the terms of Article 13 of this Agreement and has
made, or caused to be made under his or her supervision, a review in reasonable
detail of the transactions and condition of Guarantor and its Subsidiaries
during the fiscal year and that such review has not disclosed the existence
during or at the end of such fiscal year, and that the signing officer does not
have Knowledge of the existence as at the date of such officer's certificate, of
any condition or event that constitutes a breach or default of this Article 13,
or, if any such condition or event existed or exists, specifying the nature and
period of existence thereof and what action Guarantor has taken, is taking and
proposes to take with respect thereto.

                                   ARTICLE 14

                                  MISCELLANEOUS

     14.1 Limitation on Obligations of FARS. Notwithstanding anything in this
Agreement to the contrary, FARS shall not have any liabilities or obligations
pursuant to this Agreement as a Stockholder or otherwise as a Party to this
Agreement, including pursuant to Article 8 of this Agreement, except (i) as set
forth in Article 4 of this Agreement in connection with the procedures for the
surrender of any Advisor Common Share Certificates in exchange for the payment
of the Merger Consideration, (ii) any liability for the willful breach by FARS
of the representations and warranties contained in Article 5 of this Agreement,
solely as they relate to FARS (it being acknowledged and agreed by the Parties
that, for the avoidance of doubt and notwithstanding anything to the contrary
contained in this Agreement, the representations and warranties of FARS in
Article 5 relate only to matters respecting or concerning FARS and not any other
Stockholder), and (iii) any liability for the willful breach by FARS of the
covenants of FARS set forth in the immediately succeeding sentence, as described
below. Notwithstanding

                                      -67-

<PAGE>

anything in this Agreement to the contrary, FARS (x) shall not take any action,
or omit to take any action, that would be reasonably likely to adversely affect
the ability of the Advisor, CHP or CHPAC to consummate the Merger on the terms
set forth in this Agreement, and (y) shall reasonably cooperate with the other
Parties to this Agreement in order to effectuate the consummation of the Merger
on the terms set forth in this Agreement; it being understood and agreed that
FARS shall not have any liability or obligation with respect to the covenants
contained in this sentence except to the extent of a willful breach thereof by
FARS. The Parties acknowledge that FARS would not have agreed to enter into this
Agreement without the limitations on its liabilities and obligations as a Party
to this Agreement specified in this Section 14.1.

     14.2 Press Releases and Public Announcements. No Party shall issue any
press release or make any public announcement relating to the subject matter of
this Agreement prior to the Closing without the prior written approval of CHP
and the Representative; provided, however, that any Party may make any public
disclosure it believes in good faith is required by applicable law (in which
case the disclosing Party will use its commercially reasonable efforts to
consult with the other Parties prior to making the disclosure).

     14.3 No Third Party Beneficiaries. This Agreement shall not confer any
rights or remedies upon any Person other than the Parties and their respective
successors and permitted assigns.

     14.4 Entire Agreement. This Agreement (including the documents referred to
herein) constitutes the entire agreement among the Parties and supersedes any
prior understandings, agreements, or representations by or among the Parties,
written or oral, to the extent they related in any way to the subject matter
hereof, including the Initial Merger Agreement.

     14.5 Succession and Assignment. This Agreement shall be binding upon and
inure to the benefit of the Parties named herein and their respective successors
and permitted assigns. No Party may assign either this Agreement or any of his
rights, interests, or obligations hereunder without the prior written approval
of CHP and the Representative; provided, however, that CHP may (i) assign any or
all of its rights and interests hereunder to one or more of its Affiliates and
(ii) designate one or more of its Affiliates to perform its obligations
hereunder (in any or all of which cases CHP nonetheless shall remain responsible
for the performance of all of its obligations hereunder).

     14.6 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.

     14.7 Headings. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.

     14.8 Notices. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request, demand, claim,
or other communication hereunder shall be deemed duly given if (and then
effective two business days after) it is sent by

                                      -68-

<PAGE>

registered or certified mail, return receipt requested, postage prepaid, and
addressed to the intended recipient as set forth below:

If to the Advisor, the Stockholders or Guarantor:

c/o James M. Seneff, Jr.
CNL Center II at City Commons
420 South Orange Avenue
Orlando, Florida 32801
Telecopy: (407) 650-1011

With copy to:

Lowndes, Drosdick, Doster, Kantor & Reed, P.A.
450 South Orange Avenue, Suite 800
Orlando, Florida 32801
Attn: Richard Davidson, Esq.
Telecopy: (407) 843-4444

Arnold & Porter LLP
555 Twelfth Street, N.W.
Washington, D.C. 20004
Attn: Scott B. Schreiber, Esq.
Telecopy: (202) 942-5999

If to FARS:

Five Arrows Realty Securities II, L.L.C.
c/o John D. McGurk, President
Matthew W. Kaplan, Managing Director
Rothschild Realty Inc.
1251 Avenue of the Americas
New York, NY 10020
Telecopy: (212) 403-3578

With copy to:

Schulte Roth & Zabel LLP
919 Third Avenue
New York, NY 10022
Attn: Andre Weiss, Esq.
Telecopy: (212) 593-5955

                                      -69-

<PAGE>

If to CHP, CHPAC or Former Merger Sub:

Thomas J. Hutchison, III
Chief Executive Officer
CNL Hotels & Resorts, Inc.
CNL Center II at City Commons
420 South Orange Avenue
Orlando, Florida 32801
Telecopy: (407) 835-3229

With copy to:

Special Committee of CNL Hotels & Resorts, Inc.
CNL Center II at City Commons
420 South Orange Avenue
Orlando, Florida 32801
Attn: Chairman of the Special Committee
Telecopy: (407) 835-3229

Greenberg Traurig, LLP
The MetLife Building
200 Park Avenue
New York, NY 10166
Attn: Judith D. Fryer, Esq.
Telecopy: (212) 801-6400

Hogan & Hartson L.L.P.
555 Thirteenth Street, N.W.
Washington, D.C. 20004
Attn: J. Warren Gorrell, Jr., Esq.
Telecopy: (202) 637-5910

Any Party may send any notice, request, demand, claim, or other communication
hereunder to the intended recipient at the address set forth above using any
other means (including personal delivery, expedited courier, messenger service,
telecopy, ordinary mail, or electronic mail), but no such notice, request,
demand, claim, or other communication shall be deemed to have been duly given
unless and until it actually is received by the intended recipient. Any Party
may change the address to which notices, requests, demands, claims, and other
communications hereunder are to be delivered by giving the other Parties notice
in the manner herein set forth.

     14.9 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE DOMESTIC LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT
TO ANY CHOICE OR CONFLICT OF LAW PROVISION OR RULE (WHETHER OF THE STATE OF NEW
YORK OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE APPLICATION OF THE LAWS OF
ANY JURISDICTION OTHER THAN THE STATE OF NEW YORK (EXCEPT FOR THE RELATIVE
RIGHTS AND OBLIGATIONS OF THE STOCKHOLDERS OF CHPAC AND

                                      -70-

<PAGE>

THE ADVISOR, WHICH WILL BE GOVERNED BY THE CORPORATE LAWS OF THE STATES OF
FLORIDA).

     14.10 Amendments and Waivers. This Agreement may be amended by CHP and the
Representative at any time before or after receipt of the CHP Stockholder
Approval; provided, however, that (a) after receipt of the CHP Stockholder
Approval, there shall be made no amendment that by applicable law requires
further approval by the stockholders of CHP without the further approval of such
stockholders, it being acknowledged and agreed that, following the receipt of
CHP Stockholder Approval, if the parties agree to amend this Agreement to reduce
the amount of the Merger Consideration, no approval of the stockholders of CHP
shall be required for such amendment to be effected, (b) no amendment shall be
made to this Agreement after the Effective Time and (c) except as provided above
no amendment of this Agreement shall require the approval of the stockholders of
CHP. This Agreement may not be amended except by an instrument in writing signed
by CHP and the Representative. Any amendment that adversely affects the rights
and obligations of FARS pursuant to this Agreement must also be approved in
writing by FARS. No waiver by any Party of any default, misrepresentation, or
breach of warranty or covenant hereunder, whether intentional or not, shall be
deemed to extend to any prior or subsequent default, misrepresentation, or
breach of warranty or covenant hereunder or affect in any way any rights arising
by virtue of any prior or subsequent occurrence.

     14.11 Severability. Any term or provision of this Agreement that is invalid
or unenforceable in any situation in any jurisdiction shall not affect the
validity or enforceability of the remaining terms and provisions hereof or the
validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.

     14.12 Expenses. Each of the Parties will bear his, her or its own costs and
expenses (including legal fees and expenses) incurred in connection with this
Agreement and the transactions contemplated hereby; it being understood and
agreed that the expenses of Legg Mason as set forth in Section 7.26 and of
counsel to the Advisor will be paid by the Advisor prior to the Closing
(consistent with Section 8.15 above).

     14.13 Construction. The Parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the Parties and no presumption or burden of proof shall
arise favoring or disfavoring any Party by virtue of the authorship of any of
the provisions of this Agreement. Any reference to any federal, state, local, or
foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context requires otherwise. The
word "including" shall mean including without limitation. The Parties intend
that each representation, warranty, and covenant contained herein shall have
independent significance. If any Party has breached any representation,
warranty, or covenant contained herein in any respect, the fact that there
exists another representation, warranty, or covenant relating to the same
subject matter (regardless of the relative levels of specificity) which the
Party has not breached shall not detract from or mitigate the fact that the
Party is in breach of the first representation, warranty, or covenant.

     14.14 Incorporation of Exhibits and Schedules. The Exhibits and Schedules
identified in this Agreement are incorporated herein by reference and made a
part hereof.

                                      -71-

<PAGE>

     14.15 Specific Performance. Each of the Parties acknowledges and agrees
that the other Parties would be damaged irreparably in the event any of the
provisions of this Agreement are not performed in accordance with their specific
terms or otherwise are breached. Accordingly, each of the Parties agrees that
the other Parties shall be entitled to an injunction or injunctions to prevent
breaches of the provisions of this Agreement and to enforce specifically this
Agreement and the terms and provisions hereof in any action instituted in any
court of the United States or any state thereof having jurisdiction over the
Parties and the matter (subject to the provisions set forth in Section 13.15
below), in addition to any other remedy to which they may be entitled, at law or
in equity.

     14.16 Submission to Jurisdiction. EACH OF THE PARTIES SUBMITS TO THE
JURISDICTION OF ANY STATE OR FEDERAL COURT SITTING IN THE STATE OF NEW YORK, IN
ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT AND AGREES
THAT ALL CLAIMS IN RESPECT OF THE ACTION OR PROCEEDING MAY BE HEARD AND
DETERMINED IN ANY SUCH COURT.

                           [SIGNATURE PAGES TO FOLLOW]

                                      -72-

<PAGE>

     IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date first above written.

                                        CNL HOTELS & RESORTS, INC.

                                        By: /s/ Greerson G. McMullen
                                            ------------------------------------
                                        Name: Greerson G. McMullen
                                        Title: Chief General Counsel and
                                               Corporate Secretary

                                        CNL HOTELS & RESORTS ACQUISITION, LLC

                                        By: /s/ Greerson G. McMullen
                                            ------------------------------------
                                        Name: Greerson G. McMullen
                                        Title: Chief General Counsel and
                                               Corporate Secretary

                                        CNL HOSPITALITY PROPERTIES ACQUISITION
                                        CORP.

                                        By: /s/ Greerson G. McMullen
                                            ------------------------------------
                                        Name: Greerson G. McMullen
                                        Title: Chief General Counsel and
                                               Corporate Secretary

                                        ADVISOR:

                                        CNL HOSPITALITY CORP.

                                        By /s/ James M. Seneff, Jr.
                                           -------------------------------------
                                        Name: James M. Seneff, Jr.
                                        Title: Chairman

                                      -73-

<PAGE>

                                        STOCKHOLDERS:

                                        CNL REAL ESTATE GROUP, INC.

                                        By: /s/ Robert A. Bourne
                                            ------------------------------------
                                        Name:  Robert A. Bourne
                                        Title: Director and Vice President

                                        /s/ James M. Seneff, Jr.
                                        ----------------------------------------
                                        James M. Seneff, Jr.

                                        /s/ Robert A.Bourne
                                        ----------------------------------------
                                        Robert A. Bourne

                                        /s/ C. Brian Strickland
                                        ----------------------------------------
                                        C. Brian Strickland

                                        /s/ Thomas J. Hutchison, III
                                        ----------------------------------------
                                        Thomas J. Hutchison, III

                                        /s/ John A. Griswold
                                        ----------------------------------------
                                        John A. Griswold

                                        /s/ Barry A. N. Bloom
                                        ----------------------------------------
                                        Barry A.N. Bloom

                                        /s/ Marcel Verbaas
                                        ----------------------------------------
                                        Marcel Verbaas

                                      -74-

<PAGE>

                                        FIVE ARROWS REALTY SECURITIES II L.L.C.

                                        By: /s/ Matthew W. Kaplan
                                            ------------------------------------
                                        Name:  Matthew W. Kaplan
                                        Title: Manager

                                        GUARANTOR:

                                        CNL FINANCIAL GROUP, INC.

                                        By: /s/ James M. Seneff, Jr.
                                            ------------------------------------
                                        Name:  James M. Seneff, Jr.
                                        Title: Chief Executive Officer

                                      -75-

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00101-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00101-of-00352.parquet"}]]