8-K/A

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K/A

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of Earliest Event Reported):June 4, 2010

PEBBLEBROOK HOTEL TRUST

(Exact name of registrant as specified in its charter)

Maryland	001-34571	27-1055421
(State or other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)

2 Bethesda Metro Center, Suite 1530, Bethesda, Maryland	20814
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (240) 507-1300

Not Applicable

Former name or former address, if changed since last report

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

This Form 8-K/A amends and supplements each of the Registrant’s following Forms 8-K, (i) Form 8-K filed on June 10, 2010 reporting the acquisition of the Doubletree Bethesda Hotel and Executive Meeting Center, (ii) Form 8-K filed on June 25, 2010 reporting the acquisition of the Sir Francis Drake Hotel, and (iii) Form 8-K filed on July 1, 2010 reporting the acquisition of the InterContinental Buckhead Hotel, to include the historical financial statements and unaudited pro forma financial information required by Item 9.01(a) and (b).

Item 9.01. Financial Statements and Exhibits.

(a) Financial statements of businesses acquired.

Doubletree Bethesda Hotel and Executive Meeting Center

Independent Auditors’ Report

Balance Sheets as of March 31, 2010 (unaudited), December 31, 2009 and 2008

Statements of Operations for the three months ended March 31, 2010 and 2009 (unaudited) and for the years ended December 31, 2009 and 2008

Statements of Owner’s Equity in Hotel for the years ended December 31, 2009 and 2008 and the three months ended March 31, 2010 (unaudited)

Statements of Cash Flows for the three months ended March 31, 2010 and 2009 (unaudited) and for the years ended December 31, 2009 and 2008

Notes to Financial Statements

Sir Francis Drake Hotel

Independent Auditors’ Report

Balance Sheets as of March 31, 2010 (unaudited), December 31, 2009 and 2008

Statements of Operations for the three months ended March 31, 2010 and 2009 (unaudited) and for the years ended December 31, 2009 and 2008

Statements of Owner’s Equity in Hotel for the years ended December 31, 2009 and 2008 and the three months ended March 31, 2010 (unaudited)

Statements of Cash Flows for the three months ended March 31, 2010 and 2009 (unaudited) and for the years ended December 31, 2009 and 2008

Notes to Financial Statements

InterContinental Buckhead Hotel

Independent Auditors’ Report

Balance Sheets as of March 31, 2010 (unaudited), December 31, 2009 and 2008

Statements of Operations for the three months ended March 31, 2010 and 2009 (unaudited) and for the years ended December 31, 2009 and 2008

Statements of Owner’s Equity in Hotel for the years ended December 31, 2009 and 2008 and the three months ended March 31, 2010 (unaudited)

Statements of Cash Flows for the three months ended March 31, 2010 and 2009 (unaudited) and for the years ended December 31, 2009 and 2008

Notes to Financial Statements

(b) Unaudited pro forma financial information.

Pebblebrook Hotel Trust

Unaudited Pro Forma Consolidated Balance Sheet as of March 31, 2010

Unaudited Pro Forma Consolidated Statement of Operations for the three months ended March 31, 2010

Unaudited Pro Forma Consolidated Statement of Operations for the year ended December 31, 2009

(d) Exhibits

Exhibit
Number	Exhibit Description
10.1	Purchase and Sale Agreement (Doubletree Bethesda Hotel and Executive Meeting Center)
10.2	Purchase and Sale Agreement (Sir Francis Drake Hotel)
10.3	Purchase and Sale Agreement (InterContinental Buckhead Hotel)

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	PEBBLEBROOK HOTEL TRUST
July 12, 2010	By:	/s/ Raymond D. Martz
		Name:	Raymond D. Martz
		Title:	Executive Vice President, Chief Financial Officer, Treasurer and Secretary

Exhibit Index

Exhibit
Number	Exhibit Description
10.1	Purchase and Sale Agreement (Doubletree Bethesda Hotel and Executive Meeting Center)
10.2	Purchase and Sale Agreement (Sir Francis Drake Hotel)
10.3	Purchase and Sale Agreement (InterContinental Buckhead Hotel)

Independent Auditors’ Report

The Manager of
Doubletree Bethesda Hotel and Executive Meeting Center:

We have audited the accompanying balance sheets of Doubletree Bethesda Hotel and Executive Meeting Center (the “Hotel”) as of December 31, 2009 and 2008, and the related statements of operations, owner’s equity in Hotel, and cash flows for the years then ended. These financial statements are the responsibility of the Hotel’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Hotel’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Hotel as of December 31, 2009 and 2008, and the results of its operations and its cash flows for the years then ended in conformity with U.S. generally accepted accounting principles.

/s/ KPMG, LLP

McLean, Virginia
July 9, 2010

DOUBLETREE BETHESDA HOTEL AND EXECUTIVE MEETING CENTER
Balance Sheets

	March 31,
	2010			December 31,
	(Unaudited)			2009			2008
Assets
Cash	$	190,387		$	826,027		$	339,634
Restricted cash		1,029,501			685,181			1,146,210
Accounts receivable, net		1,267,991			691,503			868,403
Reserve funds		281,889			167,766			740,860
Prepaid expenses and other current assets		399,573			442,600			448,797
Total current assets		3,169,341			2,813,077			3,543,904
Property and equipment, at cost		66,122,023			65,972,687			65,443,416
Less: accumulated depreciation		(7,591,964	)		(7,111,605	)		(5,185,696	)
		58,530,059			58,861,082			60,257,720
Other assets		235,464			300,810			652,956
Total assets	$	61,934,864		$	61,974,969		$	64,454,580
Liabilities and Owner’s Equity in Hotel
Note payable	$	38,000,000		$	38,000,000		$	—
Accounts payable		464,616			331,758			294,149
Accrued wages and benefits		362,138			264,756			356,804
Accrued interest payable		165,510			165,510			165,510
Other current lilabilities		529,065			301,624			573,098
Total current liabilities		39,521,329			39,063,648			1,389,561
Note payable		—			—			38,000,000
Total liabilities		39,521,329			39,063,648			39,389,561
Owner’s equity in Hotel		22,413,535			22,911,321			25,065,019
Total liabilities and owner’s equity in Hotel	$	61,934,864		$	61,974,969		$	64,454,580

See accompanying notes to financial statements.

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DOUBLETREE BETHESDA HOTEL AND EXECUTIVE MEETING CENTER
Statements of Operations

	Three Month Ended March 31,						Year Ended December 31,
	2010			2009			2009			2008
	(unaudited)			(unaudited)
Revenues:
Rooms	$	2,197,496		$	2,873,489		$	11,118,997		$	11,579,628
Food and beverage		503,253			528,198			2,184,447			2,326,770
Conference center		329,821			387,835			1,959,241			1,829,544
Other		135,876			77,653			446,409			554,097
Total revenues		3,166,446			3,867,175			15,709,094			16,290,039
Operating expenses:
Rooms		452,802			599,944			2,143,009			2,121,882
Food and beverage		483,034			508,979			2,013,816			2,080,240
Conference center		151,287			137,455			647,787			651,902
General and administrative		274,354			334,667			1,322,334			1,304,393
Marketing		211,760			224,242			1,071,695			925,103
Royalty fees		87,920			114,952			444,787			449,810
Program fees		107,502			160,268			427,471			506,213
Energy		184,496			216,747			729,072			1,332,155
Property operation and maintenance		199,807			178,951			768,050			721,870
Property taxes and insurance		147,451			129,099			491,026			507,233
Depreciation		480,359			472,047			1,925,909			1,888,190
Management fees		94,931			116,015			471,291			488,701
Other expenses		145,995			173,366			550,429			913,428
Total operating expenses		3,021,698			3,366,732			13,006,676			13,891,120
Other (expenses) income:
Interest expense		(648,728	)		(648,728	)		(2,638,350	)		(2,644,971	)
Other income		121			501			2,555			25,638
Total other expenses, net		(648,607	)		(648,227	)		(2,635,795	)		(2,619,333	)
Net income (loss)	$	(503,859	)	$	(147,784	)	$	66,623		$	(220,414	)

See accompanying notes to financial statements.

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DOUBLETREE BETHESDA HOTEL AND EXECUTIVE MEETING CENTER
Statements of Owner’s Equity in Hotel

Balance at December 31, 2007	$	25,537,746
Hotel owner distributions, net		(252,313	)
Net loss		(220,414	)
Balance at December 31, 2008		25,065,019
Hotel owner distributions, net		(2,220,321	)
Net income		66,623
Balance at December 31, 2009		22,911,321
Hotel owner distributions, net (unaudited)		6,073
Net loss (unaudited)		(503,859	)
Balance at March 31, 2010 (unaudited)	$	22,413,535

See accompanying notes to financial statements.

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DOUBLETREE BETHESDA HOTEL AND EXECUTIVE MEETING CENTER
Statements of Cash Flows

	Three Month Ended March 31,						Year Ended December 31,
	2010			2009			2009			2008
	(unaudited)			(unaudited)
Cash flows from operating activities:
Net income (loss)	$	(503,859	)	$	(147,784	)	$	66,623		$	(220,414	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Amortization of deferred costs		65,346			65,346			271,718			271,718
Depreciation		480,359			472,047			1,925,909			1,888,190
Changes in operating assets and liabilities:
Accounts receivable		(576,488	)		(362,985	)		176,900			(121,480	)
Restricted cash		(344,320	)		157,151			461,029			(146,578	)
Prepaid expenses and other current assets		43,027			47,693			6,197			(73,269	)
Other assets		—			25,914			80,428			78,148
Accounts payable		132,858			153,040			37,609			(283,166	)
Accrued wages and benefits		97,382			(21,678	)		(92,048	)		43,569
Other current liabilities		227,441			(45,993	)		(271,474	)		179,944
Net cash provided by (used in) operating activities		(378,254	)		342,751			2,662,891			1,616,662
Cash flows from investing activities:
Change in reserve funds		(114,123	)		(114,500	)		573,094			(45,361	)
Purchases of property and equipment		(149,336	)		—			(529,271	)		(1,230,121	)
Net cash provided by (used in) investing activities		(263,459	)		(114,500	)		43,823			(1,275,482	)
Contributions (distributions) to hotel owner, net		6,073			39,063			(2,220,321	)		(252,313	)
Net increase (decrease) in cash		(635,640	)		267,314			486,393			88,867
Cash and cash equivalents:
Beginning of period		826,027			339,634			339,634			250,767
End of period	$	190,387		$	606,948		$	826,027		$	339,634
Supplemental cash flow disclosures:
Cash paid for interest	$	595,840		$	595,840		$	2,416,462		$	2,423,083

See accompanying notes to financial statements.

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DOUBLETREE BETHESDA HOTEL AND EXECUTIVE MEETING CENTER

Notes to Financial Statements

(1)	Description of Business and Basis of Accounting
	The Doubletree Bethesda Hotel and Executive Meeting Center (the Hotel), is a full service 269-room hotel located in Bethesda, Maryland. The Hotel is owned by THI IV Bethesda, LLC (the Company). The Hotel is managed under an agreement with Thayer Lodging Group, Inc. (Thayer), an affiliate of the Company.
	The accompanying unaudited financial statements of the Hotel as of March 31, 2010 and for the three-month periods ended March 31, 2010 and 2009, have been prepared pursuant to the Securities and Exchange Commission (SEC) rules and regulations. All amounts included in the notes to the financial statements referring to March 31, 2010, and for the three-month periods ended March 31, 2010 and 2009, are unaudited. The accompanying financial statements reflect, in the opinion of management, all adjustments considered necessary for a fair presentation of the interim financial statements. All such adjustments are of a normal and recurring nature.
	The accompanying financial statements are presented in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP). The preparation of the financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and the accompanying notes. Such estimates and assumptions could change in the future as more information becomes known, which could impact the amounts reported and disclosed herein. Actual results could differ from those estimates.
	The Hotel collateralizes a note payable obligation of a wholly-owned subsidiary of the Company. Cash from the Hotel’s operations is used to fund interest payments. Although technically an obligation of the Company and not the Hotel, the outstanding principal balance of the note payable, interest expense, deferred financing costs and related amortization are presented in the financial statements. The outstanding principal balance on the note payable is $38 million. The note bears interest equal to 6.72%. The note payable requires monthly interest only payments through maturity. The maturity date was scheduled for November 6, 2010.
	The note contains a debt covenant requiring the Company to maintain a debt service coverage ratio (DSCR). The Company was not in compliance with this DSCR as of and for the years ending December 31, 2009 and 2008. The violation of the DSCR covenant triggered the cash management agreement discussed in footnote 2(b). There were no other consequences of the violation of the DSCR covenant.
	On June 4, 2010, the Hotel was acquired by Pebblebrook Hotel Trust (Pebblebrook) for cash consideration of approximately $67.1 million. Pebblebrook did not assume any amounts due under the note payable obligation. At closing, the settlement agent wired approximately $38 million plus accrued interest to the lender.

6

DOUBLETREE BETHESDA HOTEL AND EXECUTIVE MEETING CENTER

Notes to Financial Statements

(2) Significant Accounting Policies

(a)	Cash and Cash Equivalents
	Includes the Hotel’s operating cash accounts, which may include liquid temporary cash investments with maturities of three months or less at the date of purchase which are considered to be cash and cash equivalents.
(b)	Restricted Cash
	Pursuant to the terms of a cash management agreement required by the lender, cash receipts are deposited into a bank account controlled by the lender. On a monthly basis, amounts on deposit are first used to fund required escrow accounts, hotel operating expenses, debt service, and management fees. The remaining cash is transferred to the Hotel’s operating account.
	Under the same agreement, monthly deposits to an escrow account are required to fund real estate taxes and insurance premiums. The escrow account also serves as additional collateral for the mortgage loan.
(c)	Reserve Funds
	Reserve funds consist of funds required by the lender to be set aside as replacement, renovation, and repair reserves. The required monthly deposits to the replacement reserve account are 4% of hotel gross revenues.
(d)	Property and Equipment
	Building and improvements, furniture, fixtures and equipment are stated at cost. The cost of additions, alterations, and improvements is capitalized. Expenditures for repairs and maintenance are expensed as incurred. Depreciation is computed utilizing the straight-line method over lives of 3 to 40 years.
	Construction in progress totaling $176,222 (unaudited); $26,885; and $589,380 at March 31, 2010 and December 31, 2009 and 2008, respectively, is included in property and equipment. Construction in progress represents renovations to the hotel and is capitalized as the costs are incurred. Renovation projects are generally less than six months in duration, and the hotel remains fully operational while renovations occur. Upon completion of the renovations, depreciation of the improvements commences.
(e)	Impairment of Long-Lived Assets
	The Hotel evaluates its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets is measured by a comparison of the carrying amount of an asset to future net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the asset exceeds the fair value of the asset. No such impairment losses have been recognized to date.

7

DOUBLETREE BETHESDA HOTEL AND EXECUTIVE MEETING CENTER

Notes to Financial Statements

(f)	Revenue Recognition
	Hotel revenues are recognized when the services are provided. Revenues consist of room sales, food and beverage sales, conference center, and other department revenues such as telephone and gift shop. Additionally, the Hotel collects sales, use, occupancy, and similar taxes, which is presented on a net basis (excluded from revenues) on our statements of operations.
(g)	Accounts Receivable
	Accounts receivable, which represent amounts due from Hotel guests, are presented net of allowances, which were not material at December 31, 2009 or 2008.
(h)	Deferred Financing Costs
	Deferred financing costs incurred in connection with the note payable are amortized to interest expense using the straight-line method over the contractual life of the note payable, which approximates the effective-interest method.
(i)	Marketing and Advertising Expenses
	Marketing and advertising costs are expensed as incurred.
(j)	Income Taxes
	The Hotel is not directly subject to federal, state or local income taxes. The owner of the Hotel is a limited liability company and is taxed as a partnership and the members are individually responsible for reporting their share of taxable income or loss on their income tax returns.

(3) Related-Party Transactions

(a)	Management Fees
	The term of the management agreement with affiliates of Thayer is five years and it expires on August 12, 2010. The agreement requires the Hotel to pay a management fee equal to 3% of gross revenues.
(b)	Due to Manager
	At March 31, 2010 and December 31, 2009 and 2008, the Hotel was obligated to affiliates of Thayer in the amount of $97,966 (unaudited); $66,898; and $26,881, respectively, for management fees and other expenditures made on its behalf.

(4) Royalty Fee, Program Fee, and Services Contribution

(a)	Royalty Fee
	The Hotel entered into a franchise agreement with Hilton Hotels Corporation (HHC) commencing on February 28, 2006, and expiring February 27, 2016. Under the agreement, the Company is required to pay a royalty fee to HHC, as follows:

March 1, 2007 — February 28, 2008	3% of rooms revenue
March 1, 2008 — February 28, 2016	4% of rooms revenue

8

DOUBLETREE BETHESDA HOTEL AND EXECUTIVE MEETING CENTER

Notes to Financial Statements

(b)	Program Fee and Services Contribution
	The Hotel is assessed a monthly program fee by HHC for advertising, promotions, marketing, reservation services, and other administrative support services. The assessment is 4% of gross room revenue.

(5)	Subsequent Event
	The Hotel has evaluated the need for disclosures and/or adjustments resulting from subsequent events through July 9, 2010, the date the financial statements were available to be issued.

9

Independent Auditors’ Report

The Manager of
Sir Francis Drake Hotel:

We have audited the accompanying balance sheets of Sir Francis Drake Hotel (the “Hotel”) as of December 31, 2009 and 2008, and the related statements of operations, owner’s equity (deficit) in Hotel, and cash flows for the years then ended. These financial statements are the responsibility of the Hotel’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Hotel’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Hotel as of December 31, 2009 and 2008, and the results of its operations and its cash flows for the years then ended in conformity with U.S. generally accepted accounting principles.

/s/ KPMG, LLP

McLean, Virginia
July 9, 2010

SIR FRANCIS DRAKE HOTEL

Balance Sheets

	March 31,
	2010			December 31,
	(Unaudited)			2009			2008
Assets
Cash and cash equivalents	$	930,010		$	689,995		$	1,945,150
Restricted cash — (replacement reserve fund)		411,900			519,733			344,373
Accounts receivable, net		590,680			636,172			567,956
Deferred financing costs, net		44,173			88,344			94,198
Prepaid expenses		907,980			668,780			561,350
Total current assets		2,884,743			2,603,024			3,513,027
Property and equipment:
Land		23,995,825			23,995,825			23,995,825
Building and improvements		43,947,747			43,947,747			43,755,379
Intangible assets		3,837,946			3,837,946			3,837,946
Furniture, fixtures, and equipment		17,972,226			17,684,955			17,185,669
		89,753,744			89,466,473			88,774,819
Accumulated depreciation		(21,482,664	)		(20,107,789	)		(14,669,060	)
Total property and equipment, net		68,271,080			69,358,684			74,105,759
Restricted cash (tax escrow)		266,820			91,670			142,237
Other assets		507,682			765,848			783,173
Total assets	$	71,930,325		$	72,819,226		$	78,544,196
Liabilities and Owner’s Equity (Deficit) in Hotel
Current liabilities:
Note payable	$	68,500,000		$	68,500,000		$	68,500,000
Accounts payable		1,702,851			1,096,624			659,497
Accrued expenses		1,340,234			1,152,268			1,941,217
Advance deposits		388,129			480,377			664,711
Other liabilities		814,857			1,107,454			617,692
Total current liabilities		72,746,071			72,336,723			72,383,117
Owner’s equity (deficit) in Hotel		(815,746	)		482,503			6,161,079
Total liabilities and owners’ equity (deficit) in Hotel	$	71,930,325		$	72,819,226		$	78,544,196

See accompanying notes to financial statements.

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SIR FRANCIS DRAKE HOTEL

Statements of Operations

	Three Months Ended March 31,						Year Ended December 31,
	2010			2009			2009			2008
	(unaudited)			(unaudited)
Revenue:
Room	$	3,353,558		$	3,406,087		$	16,064,602		$	21,386,617
Food and beverage		3,249,420			3,426,079			14,348,867			17,438,459
Other		482,277			588,688			2,063,677			1,820,070
Total revenues		7,085,255			7,420,854			32,477,146			40,645,146
Operating expenses:
Room		1,598,133			1,669,270			6,969,660			7,098,155
Food and beverage		2,539,290			2,696,618			10,766,856			12,264,512
General and administrative		767,657			949,764			3,501,234			4,397,960
Asset management fees		106,277			111,311			487,148			610,573
Depreciation and amortization		1,374,875			1,347,369			5,438,729			5,449,555
Management fees		282,523			293,300			1,291,732			1,612,614
Property management		362,399			383,221			1,478,808			1,674,333
Utilities		323,890			308,026			1,300,182			1,248,530
Marketing and advertising		486,435			378,649			1,632,501			1,671,584
Liability insurance		135,636			168,333			756,309			673,106
Property taxes		250,185			246,336			1,000,128			651,204
Other		256,170			368,688			758,977			934,400
Total operating expenses		8,483,470			8,920,885			35,382,264			38,286,526
Other (expenses) income:
Interest expense		(460,494	)		(503,019	)		(1,957,757	)		(3,530,303	)
Other income		107			2,367			5,326			18,861
Total other expenses		(460,387	)		(500,652	)		(1,952,431	)		(3,511,442	)
Net loss	$	(1,858,602	)	$	(2,000,683	)	$	(4,857,549	)	$	(1,152,822	)

See accompanying notes to financial statements.

3

SIR FRANCIS DRAKE HOTEL

Statements of Owner’s Equity (Deficit) in Hotel

Balance at December 31, 2007	$	10,760,159
Net loss		(1,152,822	)
Hotel owner distribution, net		(3,446,258	)
Balance at December 31, 2008		6,161,079
Net loss		(4,857,549	)
Hotel owner distribution, net		(821,027	)
Balance at December 31, 2009		482,503
Hotel owner funding, net (unaudited)		560,353
Net loss (unaudited)		(1,858,602	)
Balance at March 31, 2010 (unaudited)	$	(815,746	)

See accompanying notes to financial statements.

4

SIR FRANCIS DRAKE HOTEL

Statements of Cash Flows

	Three Months Ended March 31,						Year Ended December 31,
	2010			2009			2009			2008
	(unaudited)			(unaudited)
Cash flows from operating activities:
Net loss	$	(1,858,602	)	$	(2,000,683	)	$	(4,857,549	)	$	(1,152,822	)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Depreciation and amortization		1,374,875			1,347,369			5,438,729			5,449,555
Amortization of deferred financing costs		44,171			49,241			182,544			85,625
Changes in operating assets and liabilities:
Accounts receivable, net		45,492			(479,072	)		(68,216	)		(79,420	)
Prepaid expenses		(239,200	)		48,587			(107,430	)		(152,828	)
Other assets		258,166			306,232			17,325			(186,998	)
Accounts payable		606,227			303,182			437,127			(1,226,648	)
Advance deposits		(92,248	)		(80,666	)		(184,334	)		(68,824	)
Accrued expenses and other liabilities		(104,631	)		391,202			(299,187	)		(991,008	)
Restricted cash (tax escrow)		(175,150	)		(236,533	)		50,567			1,214,076
Net cash (used in) provided by operating activities		(140,900	)		(351,141	)		609,576			2,890,708
Cash flows from investing activities:
Additions to property and equipment		(287,271	)		(463,125	)		(691,654	)		(1,770,019	)
Change in restricted cash (reserve replacement fund)		107,833			38,806			(175,360	)		825,162
Net cash used in investing activities		(179,438	)		(424,319	)		(867,014	)		(944,857	)
Cash flows from financing activities:
Deferred financing costs		—			—			(176,690	)		(179,823	)
Hotel owner (distribution) funding, net		560,353			(184,674	)		(821,027	)		(3,446,258	)
Net cash (used in) provided by financing activities		560,353			(184,674	)		(997,717	)		(3,626,081	)
Net change in cash and cash equivalents		240,015			(960,134	)		(1,255,155	)		(1,680,230	)
Cash and cash equivalents:
Beginning of period		689,995			1,945,150			1,945,150			3,625,380
End of period	$	930,010		$	985,016		$	689,995		$	1,945,150
Supplemental disclosure of cash flow information:
Cash paid for interest	$	460,494		$	503,019		$	1,615,180		$	3,222,502

See accompanying notes to financial statements.

5

SIR FRANCIS DRAKE HOTEL
Notes to Financial Statements

(1)	Description of Business and Basis of Accounting
	The Sir Francis Drake Hotel (the Hotel), is a full service 416-room hotel located at 450 Powell Street, San Francisco, California. The Hotel is owned by SFD Partners, LLC, a Delaware limited liability company (the Company).
	The accompanying unaudited financial statements of the Hotel as of March 31, 2010 and for the three-month periods ended March 31, 2010 and 2009, have been prepared pursuant to the Securities and Exchange Commission (SEC) rules and regulations. All amounts included in the notes to the financial statements referring to March 31, 2010, and for the three-month periods ended March 31, 2010 and 2009, are unaudited. The accompanying financial statements reflect, in the opinion of management, all adjustments considered necessary for a fair presentation of the interim financial statements. All such adjustments are of a normal and recurring nature.
	The accompanying financial statements are presented in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP). The preparation of the financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and the accompanying notes. Such estimates and assumptions could change in the future as more information becomes known, which could impact the amounts reported and disclosed herein. Actual results could differ from those estimates.
	The Hotel collateralizes a note payable obligation of SFD Partners, LLC. Cash from the Hotel’s operations account is used to fund interest payments. Although technically an obligation of SFD Partners, LLC and not the Hotel, the outstanding principal balance of the note payable, interest expense, deferred financing costs and related amortization are presented in the financial statements. The outstanding principal balance on the note payable is $68.5 million. The note bears interest equal to 30-day LIBOR plus 220 basis points, or 2.43% and 3.49%, at December 31, 2009 and 2008, respectively. The note payable requires monthly interest only payments through maturity. The maturity date was scheduled for July 7, 2010.
	On June 22, 2010, the Hotel was acquired by Pebblebrook Hotel Trust (Pebblebrook) for cash consideration of approximately $90 million. Pebblebrook did not assume any amounts due under the note payable obligation. At closing, the settlement agent wired $68.5 million plus accrued interest to the lender.
(2)	Summary of Accounting Policies

(a)	Cash and Cash Equivalents
	Includes the Hotel’s operating cash accounts, which may include liquid temporary cash investments with maturities of three months or less at the date of purchase which are considered to be cash and cash equivalents.
(b)	Replacement Reserve Fund and Tax Escrow
	In accordance with the management agreement with the Kimpton Hotels & Restaurant Group, LLC (the Management Company), a replacement reserve fund for the purpose of replacements to, and additions of, property improvements, adjacent grounds, furniture, fixtures, and equipment is required. The replacement reserve fund is funded with an amount equal to 3% of gross revenue, as defined, on a monthly basis.

6

SIR FRANCIS DRAKE HOTEL
Notes to Financial Statements

In accordance with the loan agreement between the Hotel’s owner and Column Financial Inc. (the Lender), a tax escrow account is required.

(c)   Property and Equipment

Building and improvements, furniture, fixtures, and equipment are stated at cost. The cost of additions, alterations, and improvements is capitalized. Expenditures for repairs and maintenance are expensed as incurred.

    Depreciation and amortization are computed on the straight-line basis over the following estimated useful lives:

Building and improvements	15 — 39 years
Intangible assets — trade names and franchise value	20 years
Furniture, fixtures and equipment	5 years

Construction in progress totaling $0 and $241,291 at December 31, 2009 and 2008, respectively, and $0 at March 31, 2010 (unaudited), is included in furniture, fixtures and equipment. Construction in progress represents renovations to the Hotel and is capitalized as the costs are incurred. Renovation projects are generally less than six months in duration, and the Hotel remains fully operational while renovations occur. Upon completion of the renovations, depreciation of the improvements commences.

(d)   Deferred Financing Costs

Deferred financing costs incurred in connection with the note payable are amortized to interest expense using the straight-line method over the contractual life of the note payable, which approximates the effective-interest method.

(e)   Other Assets

Other assets consist of inventories and the Hotel liquor license. Inventories are stated at the lower of cost or market, with market determined on a first-in, first-out basis.

(f)   Revenue Recognition

Hotel revenues are recognized when the services are provided. Revenues consist of room sales, food and beverage sales, and other department revenues such as telephone and gift shop.

(g)    Accounts Receivable

Accounts receivable, which represent amounts due from Hotel guests, are presented net of allowances, which were not material at December 31, 2009 or 2008.

7

SIR FRANCIS DRAKE HOTEL
Notes to Financial Statements

	(h)   Impairment of Long-Lived Assets
	The Hotel evaluates its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets is measured by a comparison of the carrying amount of an asset to estimated future net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the asset exceeds the fair value of the asset. No such impairment losses have been recognized to date.
	(i)   Marketing and Advertising Expenses
	Marketing and advertising costs are expensed as incurred.
	(j)   Income Taxes
	The Hotel is not directly subject to federal, state or local income taxes. However the owner of the Hotel is a limited liability company and may be subject to certain income taxes and the members of the limited liability company are responsible for reporting their share of taxable income or loss on their respective income tax returns.
(3)	Related-Party Transactions
	The Charters Lodging Group, LLC, an investor in SFD Partners, LLC, provides asset management services for the Hotel for a fee equal to 1.5% of gross revenues as defined in the agreement. The Hotel incurred asset management fees of $487,148 and $610,573 for the years ended December 31, 2009 and 2008, respectively, and $106,277 and $111,313 for the quarters ended March 31, 2010 and 2009 (unaudited), respectively.
(4)	Management Agreement with Kimpton Hotel and Restaurant Group, LLC
	The owner of the Hotel entered into a management agreement with Kimpton Hotels & Restaurant Group, LLC (the Management Company) for the operation, management, maintenance, and marketing of the Hotel. The agreement expires on April 30, 2024. Under the agreement, the Management Company manages the Hotel for a base fee equal to 3% of the Gross Revenue, as defined, and an incentive fee equal to 1% of the Gross Revenue up to the amount of cash available from Cash Flow, as defined, after debt service. The Management Company is reimbursed for its costs and expenses, including but not limited to compensation of its employees, up to 1% of Gross Revenue. Total reimbursable expenses for the years ended December 31, 2009 and 2008 were $250,047 and $290,870, respectively. Base management fees totaling $968,797 and $1,209,462 were incurred for the years ended December 31, 2009 and 2008, respectively, and are included in management fees in the accompanying statements of operations. Incentive management fees totaling $322,935 and $403,152 were earned for the years ended December 31, 2009 and 2008, respectively, and are included in management fees in the accompanying statements of operations.
	Certain of the Hotel’s expenses were paid on behalf of the Hotel by affiliates of SFD Partners, LLC in the normal course of business. The Hotel reimburses these affiliates on a regular basis for disbursements made on its behalf. All such disbursements and reimbursements are accounted for by the Hotel as due to or from affiliates of SFD Partners, LLC and presented net of management fees due to affiliates. These amounts were $57,619 and $135,516 at December 31, 2009 and 2008, respectively, and included in accounts payable in the accompanying balance sheets.

8

SIR FRANCIS DRAKE HOTEL
Notes to Financial Statements

(5)	Subsequent Events
	The Hotel has evaluated the need for disclosures and/or adjustments resulting from subsequent events through July 9, 2010, the date the financial statements were available to be issued.

9

Independent Auditors’ Report

The Manager of
the InterContinental Buckhead Hotel:

We have audited the accompanying balance sheets of the InterContinental Buckhead Hotel (the “Hotel”) as of December 31, 2009 and 2008, and the related statements of operations, owner’s equity in Hotel, and cash flows for the years then ended. These financial statements are the responsibility of the Hotel’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Hotel’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Hotel as of December 31, 2009 and 2008, and the results of its operations and its cash flows for the years then ended in conformity with U.S. generally accepted accounting principles.

/s/ KPMG, LLP

McLean, Virginia
July 9, 2010

InterContinental Buckhead Hotel

Balance Sheets

	March 31,
	2010			December 31,
	(Unaudited)			2009			2008
Assets
Cash and cash equivalents	$	85,356		$	109,646		$	150,136
Accounts receivable, net		1,451,578			471,173			1,832,067
Prepaid expenses		224,753			299,817			405,383
Total current assets		1,761,687			880,636			2,387,586
Property and equipment:
Land		9,742,453			9,742,453			9,742,453
Building and improvements		68,526,838			68,526,838			68,452,458
Furniture, fixtures, and equipment		33,898,162			33,901,070			33,769,969
		112,167,453			112,170,361			111,964,880
Accumulated depreciation		(29,495,385	)		(28,499,981	)		(22,792,395	)
Total property and equipment, net		82,672,068			83,670,380			89,172,485
Other assets		264,346			223,639			109,707
Total assets	$	84,698,101		$	84,774,655		$	91,669,778
Liabilities and Owner’s Equity in Hotel
Current liabilities:
Accounts payable	$	509,898		$	412,093		$	227,142
Accrued expenses		1,565,470			1,304,651			1,318,139
Advance deposits		964,572			373,129			821,210
Other liabilities		605,614			255,950			254,029
Total current liabilities		3,645,554			2,345,823			2,620,520
Owner’s Equity in Hotel		81,052,547			82,428,832			89,049,258
Total liabilities and owner’s equity in Hotel	$	84,698,101		$	84,774,655		$	91,669,778

See accompanying notes to financial statements.

2

InterContinental Buckhead Hotel

Statements of Operations

	Three Months Ended March 31,				Year Ended December 31,
	2010		2009		2009		2008
	(Unaudited)		(Unaudited)
Revenue:
Room	$	4,302,604	$	4,567,532	$	16,188,439	$	20,887,725
Food and beverage		3,340,804		3,235,374		12,344,683		15,086,269
Other		475,071		420,912		2,077,462		2,050,888
Total revenues		8,118,479		8,223,818		30,610,584		38,024,882
Operating expenses:
Room		1,281,393		1,290,551		4,774,663		6,111,494
Food and beverage		2,069,504		2,052,108		7,749,219		9,878,389
General and administrative		651,025		781,860		2,572,470		3,742,779
Depreciation		995,404		1,466,545		5,707,586		5,840,285
Property management		287,474		292,170		1,052,915		1,211,991
Utilities		297,220		297,009		1,166,102		1,528,306
Marketing and advertising		514,603		526,802		2,086,031		2,221,358
Insurance		174,429		111,254		473,074		447,874
Property taxes		271,836		371,403		787,532		965,973
Other		149,723		169,408		650,423		842,627
Total operating expenses		6,692,611		7,359,110		27,020,015		32,791,076
Net income	$	1,425,868	$	864,708	$	3,590,569	$	5,233,806

See accompanying notes to financial statements.

3

InterContinental Buckhead Hotel

Statements of Owner’s Equity in Hotel

Balance at December 31, 2007	$	95,244,437
Hotel owner distributions		(11,428,985	)
Net income		5,233,806
Balance at December 31, 2008		89,049,258
Hotel owner distributions		(10,210,995	)
Net income		3,590,569
Balance at December 31, 2009		82,428,832
Hotel owner distributions (unaudited)		(2,802,153	)
Net income (unaudited)		1,425,868
Balance at March 31, 2010 (unaudited)	$	81,052,547

See accompanying notes to financial statements.

4

InterContinental Buckhead Hotel

Statements of Cash Flows

	Three Month Ended March 31,						Year Ended December 31,
	2010			2009			2009			2008
	(unaudited)			(unaudited)
Cash flows from operating activities:
Net income	$	1,425,868		$	864,708		$	3,590,569		$	5,233,806
Adjustments to reconcile net income to net cash provided operating activities:
Depreciation		995,404			1,466,545			5,707,586			5,840,285
Changes in operating assets and liabilities:
Accounts receivable, net		(980,405	)		(1,518,413	)		1,360,894			525,749
Prepaid expenses		75,064			(196,846	)		105,566			(13,441	)
Other assets		(40,707	)		(128,326	)		(113,932	)		297,251
Accounts payable		97,805			132,833			184,951			(453,735	)
Advance deposits		591,443			(46,053	)		(448,081	)		306,539
Accrued expenses and other liabilities		613,391			977,613			(11,567	)		(272,826	)
Net cash provided by operating activities		2,777,863			1,552,061			10,375,986			11,463,628
Cash flows from investing activities — purchase of property and equipment		—			(27,688	)		(205,481	)		(168,072	)
Cash flows from financing activities — Hotel owner distributions		(2,802,153	)		(1,506,947	)		(10,210,995	)		(11,428,985	)
Net change in cash and cash equivalents		(24,290	)		17,426			(40,490	)		(133,429	)
Cash and cash equivalents:
Beginning of period		109,646			150,136			150,136			283,565
End of period	$	85,356		$	167,562		$	109,646		$	150,136

See accompanying notes to financial statements.

5

INTERCONTINENTAL BUCKHEAD HOTEL

Notes to Financial Statements

(1)	Description of Business and Basis of Accounting
	The Intercontinental Buckhead Atlanta hotel (the Hotel), is a full service 422-room hotel located at 3315 Peachtree Road, Atlanta, Georgia. The Hotel is owned by IHC Buckhead, LLC, a Georgia limited liability company (the Company).
	The accompanying unaudited financial statements of the Hotel as of March 31, 2010 and for the three-month periods ended March 31, 2010 and 2009, have been prepared pursuant to the Securities and Exchange Commission (SEC) rules and regulations. All amounts included in the notes to the financial statements referring to March 31, 2010, and for the three-month periods ended March 31, 2010 and 2009, are unaudited. The accompanying financial statements reflect, in the opinion of management, all adjustments considered necessary for a fair presentation of the interim financial statements. All such adjustments are of a normal and recurring nature.
	The accompanying financial statements are presented in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP). The preparation of the financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and the accompanying notes. Such estimates and assumptions could change in the future as more information becomes known, which could impact the amounts reported and disclosed herein. Actual results could differ from those estimates.
	On July 1, 2010, the Hotel was acquired by Pebblebrook Hotel Trust (Pebblebrook) for cash consideration of approximately $105 million.
	IHC Buckhead, LLC was a party to a title/leasehold interest exchange arrangement with the Development Authority of Fulton County. The purpose of the arrangement was to obtain a reduction of real estate taxes through 2014. A subsidiary of Pebblebrook was assigned the rights under the agreement in connection with the acquisition of the Hotel. The arrangement with the Development Authority of Fulton County is cancelable by Pebblebrook at any time.
(2)	Summary of Accounting Policies

(a)	Cash and Cash Equivalents
	Includes the Hotel’s operating cash accounts, which may include liquid temporary cash investments with maturities of three months or less at the date of purchase which are considered to be cash and cash equivalents.
(b)	Property and Equipment
	Building and improvements, furniture, fixtures, and equipment are stated at cost. The cost of additions, alterations, and improvements is capitalized. Expenditures for repairs and maintenance are expensed as incurred.

6

INTERCONTINENTAL BUCKHEAD HOTEL

Notes to Financial Statements

Depreciation and amortization are computed on the straight-line basis over the following estimated useful lives:

Building and improvements	20 – 50 years
Furniture, fixtures and equipment	3 – 10 years

(c)	Impairment of Long-Lived Assets
	Long-lived assets are evaluated for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets is measured by a comparison of the carrying amount of an asset to future net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the asset exceeds the fair value of the asset. No such impairment losses have been recognized to date.
(d)	Revenue Recognition
	Hotel revenues are recognized when the services are provided. Revenues consist of room sales, food and beverage sales, and other department revenues such as telephone and gift shop. Additionally, we collect sales, use, occupancy and similar taxes at our hotels which we present on a net basis (excluded from revenues) on our statements of operations.
(e)	Accounts Receivable
	Accounts receivable, which primarily represent amounts due from Hotel guests, are presented net of allowances, which were not material at December 31, 2009 or 2008.
(f)	Marketing and Advertising Expenses
	Marketing and advertising costs are expensed as incurred.
(g)	Income Taxes
	The Hotel is not directly subject to federal, state or local income taxes. However the owner of the Hotel is a limited liability company and may be subject to certain income taxes and the members of the limited liability company are responsible for reporting their share of taxable income or loss on their respective income tax returns.

(3)	Subsequent Events
	The Hotel has evaluated the need for disclosures and/or adjustments resulting from subsequent events through July 9, 2010, the date the financial statements were available to be issued.

7

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF PEBBLEBROOK HOTEL TRUST

Pebblebrook Hotel Trust (the “Company”) completed its initial public offering and concurrent private placement of common shares of beneficial interest on December 14, 2009. The Company raised $379.6 million, net of underwriting discounts and offering costs.

On June 4, 2010, the Company acquired the 269-room Doubletree Bethesda Hotel and Executive Meeting Center in Bethesda, Maryland for a purchase price of $67.1 million, plus closing costs and net working capital.

On June 22, 2010, the Company acquired the 416-room Sir Francis Drake Hotel in San Francisco, California for a purchase price of $90.0 million, plus closing costs and net working capital.

On July 1, 2010, the Company acquired the 422-room InterContinental Buckhead Hotel in Atlanta, Georgia for a purchase price of $105.0 million, plus closing costs and net working capital.

The unaudited pro forma consolidated balance sheet as of March 31, 2010 is presented as if the acquisitions of the Doubletree Bethesda Hotel and Executive Meeting Center, Sir Francis Drake Hotel, and InterContinental Buckhead Hotel occurred on March 31, 2010. The unaudited pro forma consolidated statements of operations for the three months ended March 31, 2010 and for the year ended December 31, 2009 are presented as if the acquisitions of the Doubletree Bethesda Hotel and Executive Meeting Center, Sir Francis Drake Hotel, and InterContinental Buckhead Hotel had been completed at the beginning of 2009.

The unaudited pro forma financial information is not necessarily indicative of what the Company’s results of operations or financial condition would have been assuming such transactions had been completed at the beginning of the periods presented, nor is it indicative of the results of operations for future periods. The unaudited pro forma financial information reflects the preliminary application of purchase accounting to the acquisitions of the Doubletree Bethesda Hotel and Executive Meeting Center, Sir Francis Drake Hotel, and InterContinental Buckhead Hotel. The preliminary purchase accounting may be adjusted if any of the assumptions underlying the purchase accounting change. In management’s opinion, all adjustments necessary to reflect the effects of the significant acquisitions described above have been made. This unaudited pro forma financial information should be read in conjunction with the historical financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2009, and the Quarterly Report on Form 10-Q for the three months ended March 31, 2010.

Pebblebrook Hotel Trust
Unaudited Pro Forma Consolidated Balance Sheet
As of March 31, 2010
(in thousands, except share and per share data)

				Acquisition of
				Doubletree						Acquisition of
	Historical			Bethesda Hotel and			Acquisition of			InterContinental			Pro Forma
	Pebblebrook			Executive Meeting			Sir Francis			Buckhead Hotel			Pebblebrook Hotel
	Hotel Trust			Center (1)			Drake Hotel (2)			(3)			Trust
ASSETS
Investment in hotel properties, net	$	—		$	67,100		$	90,000		$	105,000		$	262,100
Cash and cash equivalents		302,898			(68,882	)		(91,096	)		(103,858	)		39,062
Accounts receivable, net		—			203			121			7			331
Investments		85,000			—			—			—			85,000
Prepaid expenses and other assets		409			144			545			61			1,159
Total assets	$	388,307		$	(1,435	)	$	(430	)	$	1,210		$	387,652
LIABILITIES AND SHAREHOLDERS’ EQUITY
Accounts payable and accrued expenses	$	1,367		$	280		$	404		$	1,171		$	3,222
Accrued underwriter fees		8,050			—			—			—			8,050
Advance deposits		—			85			266			439			790
Other liabilities		—			—			—			—			—
Total liabilities		9,417			365			670			1,610			12,062
Commitments and contingencies
Shareholders’ equity:
Common shares of beneficial interest, $0.01 par value; 500,000,000 shares authorized; 20,260,590 shares issued and outstanding		203			—			—			—			203
Additional paid-in capital		379,433			—			—			—			379,433
Retained deficit		(746	)		(1,800	)		(1,100	)		(400	)		(4,046	)
Total shareholders’ equity		378,890			(1,800	)		(1,100	)		(400	)		375,590
Total liabilities and shareholders’ equity	$	388,307		$	(1,435	)	$	(430	)	$	1,210		$	387,652

(1)	Reflects the purchase of the Doubletree Bethesda Hotel and Executive Meeting Center as if it had occurred on March 31, 2010 for $68,882. The acquisition was funded with proceeds from the Company’s IPO, which was completed on December 14, 2009. The pro forma adjustment reflects the following: Purchase of land, building, and furniture, fixtures and equipment of $67,100; and Cash paid of $1,800 for hotel acquisition costs; and Net working capital deficit of $18.
(2)	Reflects the purchase of the Sir Francis Drake Hotel as if it had occurred on March 31, 2010 for $91,096. The acquisition was funded with proceeds from the Company’s IPO, which was completed on December 14, 2009. The pro forma adjustment reflects the following: Purchase of land, building, and furniture, fixtures and equipment of $90,000; and Cash paid of $1,100 for hotel acquisition costs; and Net working capital deficit of $4.
(3)	Reflects the purchase of the InterContinental Buckhead Hotel as if it had occurred on March 31, 2010 for $103,858. The acquisition was funded with proceeds from the Company’s IPO, which was completed on December 14, 2009. The pro forma adjustment reflects the following: Purchase of land, building, and furniture, fixtures and equipment of $105,000; and Cash paid of $400 for hotel acquisition costs; and Net working capital deficit of $1,542.

Pebblebrook Hotel Trust
Unaudited Pro Forma Income Statement
For the three months March 31, 2010
(in thousands, except share and per share data)

				Acquisition of
	Historical			Doubletree Bethesda			Acquisition of Sir			Acquisition of					Pro Forma
	Pebblebrook			Hotel and Executive			Francis Drake			InterContinental		Pro Forma			Pebblebrook
	Hotel Trust			Meeting Center (1)			Hotel (2)			Buckhead Hotel (3)		Adjustments			Hotel Trust
REVENUE
Room	$	—		$	2,197		$	3,354		$	4,303	$	—		$	9,854
Food and beverage		—			503			3,249			3,341		—			7,093
Other operating department		—			466			482			475		—			1,423
Total revenues		—			3,166			7,085			8,119		—			18,370
EXPENSES
Hotel operating expenses:
Room		—			453			1,598			1,281		14	(4)		3,346
Food and beverage		—			483			2,539			2,070		—			5,092
Other direct expenses		—			151			—			—		—			151
Other indirect expenses		—			1,307			2,585			1,900		224	(4)		6,016
Total hotel operating expenses		—			2,394			6,722			5,251		238			14,605
Depreciation and amortization		—			480			1,375			995		(983)	(5)		1,867
Real estate taxes, personal property taxes & insurance		—			147			386			446		—			979
Ground rent		—			—			—			—		—			—
General and administrative		1,576			—			—			—		—			1,576
Acquisition transaction costs		—			—			—			—		—			—
Total operating expenses		1,576			3,021			8,483			6,692		(745	)		19,027
Operating income (loss)		(1,576	)		145			(1,398	)		1,427		745			(657	)
Interest income		977			—			—			—		(667)	(6)		310
Interest expense		—			(649	)		(460	)		—		1,109	(7)		—
Other income		—			—			—			—		—			—
Income (loss) before income taxes		(599	)		(504	)		(1,858	)		1,427		1,187			(347	)
Income tax benefit (expense)		—			—			—			—		(73)	(8)		(73	)
Net income (loss)	$	(599	)	$	(504	)	$	(1,858	)	$	1,427	$	1,114		$	(420	)
Loss per common share, basic and diluted	$	(0.03	)												$	(0.02	)
Weighted average number of common shares, basic and diluted		20,260,046														20,260,046

(1)	Reflects the historical unaudited statement of operations of the Doubletree Bethesda Hotel and Executive Meeting Center for the three months ended March 31, 2010.
(2)	Reflects the historical unaudited statement of operations of the Sir Francis Drake Hotel for the three months ended March 31, 2010.
(3)	Reflects the historical unaudited statement of operations of the InterContinental Buckhead Hotel for the three months ended March 31, 2010.
(4)	Reflects adjustment to record management fees, based on the new management agreement, for the Intercontinental Buckhead Hotel as the fees were not assessed since the hotel was self-managed.
(5)	Reflects adjustment to depreciation expense based on the Company’s cost basis in the acquired hotel properties and its accounting policy for depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the assets, generally 40 years for building and seven years for furniture, fixtures and equipment.
(6)	Reflects removal of historical interest income associated with a reduction in cash invested in interest bearing accounts in conjunction with the acquisitions of the Doubletree Bethesda Hotel, Sir Francis Drake Hotel, and the InterContinental Buckhead Hotel.
(7)	Reflects removal of historical interest expense associated with debt which was not assumed in conjunction with the acquisitions of the Doubletree Bethesda Hotel and Sir Francis Drake Hotel. The InterContinental Buckhead Hotel did not have debt prior to acquisition.
(8)	Reflects adjustment to record pro forma income taxes related to the Company’s taxable REIT subsidiary subsequent to the hotel acquisitions. The Company’s taxable REIT subsidiary’s pro forma pre-tax net income was $184 for the three months ended March 31, 2010. The pro forma income tax was calculated using the taxable REIT subsidiary’s estimated effective tax rate of 40%.

Pebblebrook Hotel Trust
Unaudited Pro Forma Income Statement
For the year ended December 31, 2009
(in thousands, except share and per share data)

				Acquisition of
	Historical			Doubletree Bethesda			Acquisition of Sir			Acquisition of							Pro Forma
	Pebblebrook Hotel			Hotel and Executive			Francis Drake Hotel			InterContinental		Pro Forma					Pebblebrook Hotel
	Trust			Meeting Center (1)			(2)			Buckhead Hotel (3)		Adjustments					Trust
REVENUE
Room	$	—		$	11,119		$	16,065		$	16,188	$	—				$	43,372
Food and beverage		—			2,184			14,349			12,345		—					28,878
Other operating department		—			2,406			2,063			2,077		—					6,546
Total revenues		—			15,709			32,477			30,610		—					78,796
EXPENSES
Hotel operating expenses:
Room		—			2,143			6,970			4,775		57		(4	)		13,945
Food and beverage		—			2,014			10,767			7,749		—					20,530
Other direct expenses		—			648			—			—		—					648
Other indirect expenses		—			5,785			10,450			7,527		849		(4	)		24,611
Total hotel operating expenses		—			10,590			28,187			20,051		906					59,734
Depreciation and amortization		—			1,926			5,439			5,708		(5,600	)	(5	)		7,473
Real estate taxes, personal property taxes & insurance		—			491			1,756			1,261		—					3,508
Ground rent		—			—			—			—		—					—
General and administrative		262			—						—		7,363		(6	)		7,625
Acquisition transaction costs		—			—			—			—		3,300		(7	)		3,300
Total operating expenses		262			13,007			35,382			27,020		5,969					81,640
Operating income (loss)		(262	)		2,702			(2,905	)		3,590		(5,969	)				(2,844	)
Interest income		115			—			—			—		—					115
Interest expense		—			(2,638	)		(1,958	)		—		4,596		(8	)		—
Other income		—			3			5			—		—					8
Income (loss) before income taxes		(147	)		67			(4,858	)		3,590		(1,373	)				(2,721	)
Income tax benefit (expense)		—			—			—			—		(315	)	(9	)		(315	)
Net income (loss)	$	(147	)	$	67		$	(4,858	)	$	3,590	$	(1,688	)			$	(3,036	)
Loss per common share, basic and diluted	$	(0.04	)														$	(0.15	)
Weighted average number of common shares, basic and diluted		4,011,198													(10	)		20,260,046

(1)	Reflects the historical audited statement of operations of the Doubletree Bethesda Hotel and Executive Meeting Center for the year ended December 31, 2009.
(2)	Reflects the historical audited statement of operations of the Sir Francis Drake Hotel for the year ended December 31, 2009.
(3)	Reflects the historical audited statement of operations of the InterContinental Buckhead Hotel for the year ended December 31, 2009.
(4)	Reflects adjustment to record management fees, based on the new management agreement, for the Intercontinental Buckhead Hotel as the fees were not assessed since the hotel was self-managed.
(5)	Reflects adjustment to depreciation expense based on the Company’s cost basis in the acquired hotel properties and its accounting policy for depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the assets, generally 40 years for building and seven years for furniture, fixtures and equipment.
(6)	Reflects adjustment to record full year corporate general and adminstrative expenses, including employee payroll and benefits, share-based compensation expense, board of trustee fees, investor relation costs, professional fees, and other costs of being a public company.
(7)	Reflects adjustment to record transaction costs incurred to acquire the three hotels.
(8)	Reflects removal of historical interest expense associated with debt which was not assumed in conjunction with the acquisitions of the Doubletree Bethesda Hotel and Sir Francis Drake Hotel. The InterContinental Buckhead Hotel did not have debt prior to acquisition.
(9)	Reflects adjustment to record pro forma income taxes related to the Company’s taxable REIT subsidiary subsequent to the hotel acquisitions. The Company’s taxable REIT subsidiary’s pro forma pre-tax net income was $788 for the year ended December 31, 2009. The pro forma income tax was calculated using the taxable REIT subsidiary’s estimated effective tax rate of 40%.
(10)	Reflects number of common shares issued and outstanding as if the Company’s IPO and private placement transactions had occurred on January 1, 2009 .

EX-10.1

Exhibit 10.1

EXECUTION VERSION

PURCHASE AND SALE AGREEMENT

BY AND BETWEEN

THI IV BETHESDA LLC

AS SELLER

AND

TAR HEEL OWNER LLC

AS PURCHASER

TABLE OF CONTENTS

			Page
ARTICLE I SALE				1
	1.1	Hotel		1
	1.2	Personal Property		1
ARTICLE II PURCHASE PRICE				3
	2.1	Purchase Price		3
	2.2	Allocation of Purchase Price		3
	2.3	Deposit		3
ARTICLE III SELLER’S REPRESENTATIONS, WARRANTIES AND COVENANTS				3
	3.1	Good Standing		3
	3.2	Title.		4
	3.3	Due Authorization		4
	3.4	No Violations or Defaults		4
	3.5	Leases		5
	3.6	Equipment Leases, Service Contracts and Rooms Agreements		5
	3.7	Litigation		5
	3.8	Tax Returns		5
	3.9	Condemnation Actions		6
	3.10	Hazardous Materials		6
	3.11	Management and Franchise Agreements		7
	3.12	Labor Disputes and Agreements		7
	3.13	Financial Information		7
	3.14	Independent Audit		7
	3.15	Liquor License		8
	3.16	Money Laundering		8
	3.17	Certain Limitations on Seller’s Representations and Warranties		8
ARTICLE IV PURCHASER’S REPRESENTATIONS, WARRANTIES AND COVENANTS				9
	4.1	Good Standing		9
	4.2	Due Authorization		9
	4.3	Litigation		9
	4.4	Money Laundering.		9
ARTICLE V CLOSING				10
	5.1	Closing		10
	5.2	Costs		10
ARTICLE VI ACTIONS PENDING CLOSING				10
	6.1	Conduct of Business; Maintenance and Operation of Property		10
	6.2	Title		11
	6.3	Survey		11
	6.4	Cooperation		12

i

TABLE OF CONTENTS

			Page
	6.5	Service Contracts; Equipment Leases; Space Leases		12
	6.6	Liquor License		12
	6.7	Inspection		12
	6.8	Management Agreement		13
	6.9	Franchise Agreement		13
	6.10	Employees		13
ARTICLE VII PURCHASER’S CONDITIONS PRECEDENT TO CLOSING				14
	7.1	Representations and Warranties		14
	7.2	Covenants of Seller		14
	7.3	Termination of Operating Lease, Service Contracts and Equipment Leases		14
	7.4	Title		14
	7.5	Replacement Management Agreement		14
	7.6	Liquor License		14
	7.7	Franchise Agreement		15
	7.8	Stairwell Project		15
	7.9	Failure of Condition		15
ARTICLE VIII SELLER’S CONDITIONS PRECEDENT TO CLOSING				15
	8.1	Representations and Warranties		15
	8.2	Covenants of Purchaser		15
	8.3	Purchase Price		15
	8.4	Replacement Management Agreement		15
	8.5	Franchise Agreement		15
ARTICLE IX CLOSING DELIVERIES				16
	9.1	Deed		16
	9.2	Bill of Sale		16
	9.3	Assignment of Permits		16
	9.4	Assignment of Service Contracts, Rooms Agreements and Equipment Leases		16
	9.5	FIRPTA Certificate		16
	9.6	Assignment of Space Leases		16
	9.7	Replacement Management Agreement		16
	9.8	Original Documents		16
	9.9	Other Documents		16
	9.10	Possession; Keys		16
	9.11	Purchase Price		16
	9.12	Settlement Statement		17
ARTICLE X DEFAULT				17
	10.1	Purchaser’s Default		17
	10.2	Seller’s Default		17
ARTICLE XI INDEMNIFICATION				17
	11.1	Agreement to Indemnify		17

ii

TABLE OF CONTENTS

			Page
	11.2	Indemnification Regarding Assumed Obligations		18
	11.3	Notice and Cooperation on Indemnification		18
ARTICLE XII CASUALTY OR CONDEMNATION				18
ARTICLE XIII APPORTIONMENTS				19
	13.1	Apportionments		19
	13.2	Deposits		20
	13.3	Room Revenue		20
	13.4	Accounts Receivable; Accounts Payable		20
	13.5	Food and Beverage Revenue; Vending Machine Revenue		21
	13.6	Guests’ Property		21
	13.7	Accounting		21
	13.8	Employee Compensation		21
ARTICLE XIV MISCELLANEOUS				22
	14.1	Survival		22
	14.2	Assignment		22
	14.3	Consents		22
	14.4	Applicable Law		22
	14.5	Headings; Exhibits		23
	14.6	Notices		23
	14.7	Limitation on Liability		24
	14.8	Waiver		24

iii

Definitions

The following capitalized terms used in this Agreement are defined in the sections indicated below:

Section
Agreement	1
Apportionment Date	20
Appurtenances	1
Closing	10
Closing Date	11
Contract Date	3
Current Ledger	21
Deed	17
Deposit	3
Encumbrances	12
Environmental Laws	6
Equipment Leases	1
Escrow Instructions	3
Executive Order	8
Existing Management Agreement	7
FF&E	1
Fixed Asset Supplies	2
Franchise Agreement	7
Franchisor	2,7
Government List	9

iv

Hazardous Materials	6
Hotel	1
Improvements	1
Inventories	2
Land	1
Manager	2
Permitted Exceptions	12
Personal Property	2
Property	3
PTO Credit	23
Purchase Price	3
Purchaser	1
Purchaser’s Operating Tenant	7
Rehired Employees	15
Replacement Management Agreement	7
Rooms Agreements	2
SEC	8
Seller	1
Seller’s Operating Tenant	5
Service Contracts	2
Space Leases	2
Stairwell Project	4
Survey	13
Title Commitment	12
Title Company	3

v

Title Policy	12
Uniform System of Accounts	1

vi

PURCHASE AND SALE AGREEMENT

     THIS PURCHASE AND SALE AGREEMENT (this “Agreement”) is executed as of the 6^th day of May, 2010, by and between THI IV BETHESDA LLC, a Delaware limited liability company (the “Seller”), and TAR HEEL OWNER LLC, a Delaware limited liability company (the “Purchaser”).

Article I

SALE

     Subject to the terms and conditions set forth in this Agreement, Seller agrees to sell and convey to Purchaser, and Purchaser agrees to buy from Seller:

          1.1 Hotel. All that certain parcel of land located at 8120 Wisconsin Avenue, Bethesda, Maryland 20814, as further described on Exhibit A attached hereto (the “Land”), including all right, title and interest of Seller, if any, in and to the land lying in the bed of any street or highway in front of or adjoining each such parcel to the center line thereof, all water and mineral rights, development rights and all easements, rights and other interests appurtenant thereto (the “Appurtenances”), and together with a 269 room hotel and all other buildings and improvements that are located on the Land, including, without limitation, all elevators, escalators, furnaces, heating, ventilating and air-conditioning systems and equipment, fixtures, electrical equipment, fire prevention and extinguishing apparatus located therein (the "Improvements”). The Land, the Appurtenances and the Improvements collectively are referred to herein as the “Hotel.”

          1.2 Personal Property. All of Seller’s and Seller’s Operating Tenant’s right, title and interest, if any, in the following personalty: (a) all furniture, furnishings, fixtures (other than those which are part of the Improvements), vehicles, rugs, mats, carpeting, appliances, devices, engines, telephone and other communications equipment, televisions and other video equipment, plumbing fixtures, works of art, computers, computer manuals and other equipment, furnishings or personal property located at, and used in connection with, the operation of the Hotel (the “FF&E”); (b) the assignable leases of FF&E identified in Exhibit G attached hereto (the “Equipment Leases”); (c) all items included within the definition of “Property and Equipment” under the Uniform System of Accounts for the Lodging Industry, Tenth Revised Edition, 2006, as published by the Hotel Association of New York City, Inc. (the “Uniform System of Accounts”), including, without limitation, linen, china, glassware, tableware, uniforms and similar items, whether in use or held in stock for future use, in connection with the operation of the Hotel, subject to such depletion and including such resupplies prior to the Closing Date as shall occur in the ordinary course of business (the “Fixed Asset Supplies”); (d) all “Inventories” as defined in the Uniform System of Accounts, such as provisions in storerooms, refrigerators, pantries, and kitchens, beverages in wine cellars and bars, other merchandise intended for sale or resale,

1

fuel, mechanical supplies, stationery, guest supplies, maintenance and housekeeping supplies and other expensed supplies and similar items (the “Inventories”), provided that to the extent that any applicable law prohibits the transfer of alcoholic beverages from Seller to Purchaser, such beverages shall not be considered a part of Inventories (but Seller shall credit against the Purchase Price an amount equal to the cost of such beverages); (e) the assignable service, maintenance and other agreements in connection with the operation of the Hotel identified in Exhibit B attached hereto (the “Service Contracts”); (f) the leases, licenses, concessions and other agreements granting any occupancy, possessory or entry rights in or to the Hotel, identified in Exhibit C attached hereto (the “Space Leases”), including any prepaid rents or deposits held by Seller, Seller’s Operating Tenant or Thayer Lodging Group, Inc., as manager of the Hotel (the “Manager”); (g) the corporate, airline, bus, tour operator, barter and similar agreements to be identified on Exhibit D attached hereto, pursuant to which third parties have been given certain rights to rooms or services at the Hotel from and/or after the Closing Date (the “Rooms Agreements”); (h) the aggregate amount of any deposits received by Seller (whether paid in cash or by credit card) as a downpayment for reservations made for rooms, banquets, meals or other services to be supplied from and/or after the Closing Date; (i) to the extent in Seller’s (or its agent’s) possession, surveys, architectural, consulting and engineering blueprints, plans and specifications and drawings related to the Hotel, all telephone numbers, computer manuals, computer software, programs and data bases, warranties, licenses, permits, sales and marketing materials, books and records, all non-proprietary customer and guest lists and information and any goodwill of Seller, solely to the extent that any of the foregoing are not the property of Doubletree Hotel Systems, Inc. (the “Franchisor”); (j) any and all vehicles and other items of personalty located on, or used in connection with the operation of, the Hotel, but excluding (i) property of guests; (ii) items owned by tenants under the Space Leases; (iii) tax deposits, utility deposits and other deposits held by parties other than Seller, except for any transferable deposits assigned to Purchaser, for which Seller is to be reimbursed as herein provided; (iv) any tax, insurance, FF&E, capital improvement and/or other escrows, impounds or reserves held by Manager or any other party, except to the extent such items are specifically assigned to Purchaser and for which Seller is reimbursed; (v) all checks, drafts, notes and other evidence of indebtedness held at the Hotel on the Closing Date, and any balances on deposit with banking institutions relating to the Hotel, including amounts held in “house banks” and (vi) property of Franchisor (all of the foregoing, collectively, the “Personal Property”). The Personal Property and the Hotel collectively are referred to herein as the “Property.”

2

Article II

PURCHASE PRICE

          2.1 Purchase Price. In accordance with the terms of this Agreement, Seller shall sell and Purchaser shall buy the Property for a total purchase price of SIXTY-SEVEN MILLION ONE HUNDRED THOUSAND AND 00/100 DOLLARS ($67,100,000.00), subject to adjustment as described in Article XIII below (the “Purchase Price”), payable to Seller on the Closing Date by wire transfer to Chicago Title Insurance Company, (the “Title Company”).

          2.2 Allocation of Purchase Price. Solely for purposes of the settlement sheet, the parties agree that the portion of the Purchase Price allocable to the real estate shall be in an amount equal to $52,865,000.00. Notwithstanding the foregoing, Seller and Purchaser shall use commercially reasonable efforts to mutually agree to an allocation of the Purchase Price among the Land, the Improvements and Personal Property for federal, state and local tax purposes and in the event of such agreement, the parties shall file all federal, state and local tax returns and related documents in a manner consistent with such allocations. Notwithstanding the foregoing, in the event Seller and Purchaser shall fail to reach such agreement, each party shall make their own allocation of the Purchase Price for their own tax returns separately in accordance with their respective judgment.

          2.3 Deposit. Within one (1) business day following the date upon which this Agreement is executed fully by Purchaser and Seller, as evidenced by the last date on the signature page hereof (the “Contract Date”), Purchaser shall deliver to Title Company a deposit (together with any interest earned thereon, the “Deposit”) in the amount of THREE MILLION FIVE HUNDRED THOUSAND AND 00/100 DOLLARS ($3,500,000.00), comprised of immediately available funds. Title Company shall hold the Deposit in accordance with the form of escrow instructions (the “Escrow Instructions”) attached hereto as Exhibit E.

Article III

SELLER’S REPRESENTATIONS, WARRANTIES AND COVENANTS

     In order to induce Purchaser to enter into this Agreement and to consummate the transactions contemplated hereby, Seller represents and warrants to Purchaser that, and/or covenants with Purchaser that:

          3.1 Good Standing. Seller is a limited liability company organized, validly existing and in good standing under the laws of the State of Delaware and is qualified to business and in good standing in the State of Maryland.

3

          3.2 Title.

               3.2.1 Seller has good fee simple title to the Hotel, which shall be subject only to the Permitted Exceptions on the Closing Date.

               3.2.2 Seller has good title to the Personal Property, which shall be subject only to the Permitted Exceptions on the Closing Date.

          3.3 Due Authorization. The execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby have been authorized by all requisite limited liability company actions of Seller (none of which actions have been modified or rescinded, and all of which actions are in full force and effect). This Agreement constitutes a valid and binding obligation of Seller, enforceable against Seller in accordance with its terms.

          3.4 No Violations or Defaults. Seller has not received any written notice of violation or default under and, to Seller’s knowledge, Seller is not in violation or default under, any agreement with any third party, or under any judgment, order, decree, rule or regulation of any court, arbitrator, administrative agency or other governmental authority to which it may be subject, which violation or default will, in any one case or in the aggregate, materially and adversely affect the ownership or operation of the Property or adversely affect Seller’s ability to consummate the transactions contemplated hereby. To Seller’s knowledge, upon closing of the permit relating to the stairwell pressurization project (the “Stairwell Project”), a copy of which is attached hereto as Exhibit J, Seller and Seller’s Operating Tenant will possess all licenses, permits and approvals required by any governmental or quasi-governmental agency, body or officer for the ownership, operation and use of the Property or any part thereof, each of which is valid and in full force and effect. Seller will complete the Stairwell Project in compliance will all applicable governmental ordinances, resolutions, statutes, rules, orders or regulations prior to Closing. Except with respect to the Stairwell Project, Seller has not received written notice within the past two (2) years of any existing violations of any provision of any applicable building, zoning, subdivision, environmental or other governmental ordinance, resolution, statute, rule, order or regulation with respect to the ownership, operation, use, maintenance or condition of the Property or any part thereof requiring any repairs or alterations other than those that have been made prior to the date hereof. To Seller’s knowledge, the execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby by Seller will not (a) violate any law or any order of any court or governmental authority with proper jurisdiction; (b) result in a breach or default under any provision of the organizational documents of Seller; (c) require any consent, or approval or vote of any court or governmental authority or of any third person or entity that, as of the Closing Date, has not been given or taken, and does not remain effective; or (d) result in any Encumbrance, other than a Permitted Exception, against the Property.

4

          3.5 Leases. Other than the operating lease between Seller and THI IV Bethesda Lessee LLC, a Delaware limited liability company (the “Seller’s Operating Tenant”), which shall be terminated as of the Closing, there are no leases, licenses, concessions or any other agreements giving anyone other than Seller and transient hotel guests a right to use or occupy the Property or any part thereof, except for the Space Leases. Each of the Space Leases is in full force and effect and there are no material defaults thereunder on the part of Seller or Seller’s Operating Tenant and, to Seller’s knowledge, on the part of the applicable tenant thereunder. True and complete copies of each Space Lease have been made available to Purchaser prior to the date of this Agreement on Seller’s due diligence website.

          3.6 Equipment Leases, Service Contracts and Rooms Agreements. Other than agreements pertaining to the performance by the Manager of the centralized services pursuant to the Management Agreement, there are no service, maintenance or other third party agreements necessary in connection with the operation of the Hotel other than the Service Contracts. There are no corporate, airline, bus, tour operator, barter or similar agreements pursuant to which third parties have been given rights to rooms or services at the Hotel from and/or after the Closing Date other than the Rooms Agreements. None of the FF&E is subject to a lease other than an Equipment Lease. True and complete copies of each of the Service Contracts, Rooms Agreements and Equipment Leases have been made available to Purchaser prior to the date of this Agreement on Seller’s due diligence website. Each of the Equipment Leases, Service Contracts and Rooms Agreements are in full force and effect and there are no material defaults thereunder on the part of Seller or Seller’s Operating Tenant and, to Seller’s knowledge, on the part of any counterparty thereto.

          3.7 Litigation. There are no legal suits or arbitration pending against Seller or Seller’s Operating Tenant and Seller has not received any written notice of, and to Seller’s knowledge, there are not, any actions, governmental investigations or other proceedings pending against Seller or threatened against Seller or Seller’s Operating Tenant or affecting the Property before any court or governmental authority which, if determined adversely to Seller or Seller’s Operating Tenant, (a) would reasonably be expected to have a material adverse effect on the financial condition or operations of Seller or the Property or create a lien on the Property or (b) would reasonably be expected to prohibit Seller from entering into or performing this Agreement.

          3.8 Tax Returns. To Seller’s knowledge, all tax returns required of Seller for the Property have been filed or, if not now due, will be duly filed by Seller in a timely manner. All taxes shown on the returns as being due as of the Closing Date have been paid.

5

          3.9 Condemnation Actions. There are no pending or, to Seller’s knowledge, threatened, eminent domain or condemnation actions or special assessments of any nature with respect to the Property or any part thereof.

          3.10 Hazardous Materials.

               3.10.1 As used herein, “Environmental Laws” shall mean all federal, state and local laws, statues, rules, codes, ordinances, regulations, orders, judgments, decrees, binding and enforceable guidelines, policies or common law now or hereafter in effect and in each case as amended, or any judicial or administrative interpretation thereof, including any judicial or administrative order, consent decree or judgment in each case, to the extent binding, relating to the environment, the protection of health or Hazardous Materials, including, without limitation, the Comprehensive Environmental Response Compensation and Liability Act, 42 USC §9601 et seq.; the Resource Conservation and Recovery Act, 42 USC §6901 et seq.; the Federal Water Pollution Control Act, 33 USC §1251 et seq.; the Toxic Substances Control Act, 15 USC §2601 et seq.; the Clean Air Act, 42 USC §7401 et seq.; the Safe Drinking Water act, 42 USC §3803 et seq.; the Oil Pollution Act of 1990, 33 USC §2701 et seq.; the Emergency Planning and Community Right-to-Know Act of 1986, 42 USC §11001 et seq.; the Hazardous Material Transportation Act, 49 USC §1801 et seq.; and the Occupational Safety and Health Act, 29 USC §651 et seq. (to the extent it regulates occupational exposure to Hazardous Materials); any state, local or foreign counterparts or equivalents, in each case as amended from time to time. As used herein, “Hazardous Materials” shall mean (i) substances that are defined or listed in, or otherwise classified pursuant to, any applicable law or regulations as “hazardous substances,” hazardous materials,” “hazardous wastes,” “toxic substances,” “pollutants,” “contaminants” or other similar term intended to define, list or classify a substance by reason of such substance’s ignitability, corrosivity, reactivity, carcinogenicity, reproductive toxicity or “EP toxicity”, (ii) oil, petroleum or petroleum derivative substances, natural gas, natural gas liquids, synthetic gas, drilling fluids, produced waters and other wastes associated with the exploration, development or production of crude oil, natural gas or geothermal resources, (iii) any flammable substances or explosives or any radioactive materials, (iv) asbestos in any form, (v) polychlorinated biphenyls, (vi) mold, mycotoxins or microbial matter (naturally occurring or otherwise) and (vii) infectious waste.

               3.10.2 Seller has not used, stored, disposed of or released (or permitted to be used, stored, disposed of or released) Hazardous Materials in any manner which, to Seller’s knowledge, would result in any of the following against the Purchaser: any claims, demands, penalties, fines, liabilities, losses, settlements, damages, costs or expenses asserted against or incurred by Purchaser, directly or indirectly, as a result of any governmental action or action by a third party as a result of an alleged violation of Environmental Laws. Seller does not have any knowledge of the presence of any Hazardous Materials on or affecting the

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Property except for such Hazardous Materials as are used in the ordinary course of business of the Property in accordance with Environmental Laws or as otherwise described in the reports listed on Exhibit H, copies of which have been or will be provided to Purchaser.

          3.11 Management and Franchise Agreements. There are no existing management contracts or franchise agreements relating to the Property other than (a) the Management Agreement, dated as of August 12, 2005, by and between Seller’s Operating Tenant and Manager (together with all amendments thereto, the “Existing Management Agreement”), which is intended to be terminated and replaced by a management agreement between Tar Heel Lessee LLC, a Delaware limited liability company (“Purchaser’s Operating Tenant”) and Manager, concurrently with the Closing (the “Replacement Management Agreement”) and (b) the Franchise License Agreement, effective as of August 25, 2005, by and between Seller’s Operating Tenant and Doubletree Hotel Systems, Inc. (the “Franchisor”), which is intended to be terminated and replaced by a franchise license agreement between Purchaser’s Operating Tenant and Franchisor concurrently with the Closing (the “Franchise Agreement”).

          3.12 Labor Disputes and Agreements. To Seller’s knowledge, there are no labor disputes pending or threatened as to the operation or maintenance of the Property or any part thereof. Neither Seller nor Seller’s Operating Tenant is a party to any union or other collective bargaining agreement with employees employed in connection with the ownership, operation or maintenance of the Property. Neither Seller nor Seller’s Operating Tenant is a party to any employment contracts or agreements, and neither Seller nor Seller’s Operating Tenant will, between the date hereof and the Closing Date, enter into any new employment contracts or agreements or hire any new employees without the prior written consent of Purchaser.

          3.13 Financial Information. To Seller’s Knowledge, all of Seller’s audited financial information provided to Purchaser is a fair presentation of financial statements of financial position, results of the operations and cash flows of the Property for the periods indicated.

          3.14 Independent Audit. From and after the date hereof until two (2) years after the Closing, Seller shall make the books and records for the years ended December 31, 2009, 2008 and 2007 available to Purchaser and Purchaser’s independent accountants for inspection, copying and audit by Purchaser’s designated accountants at the expense of Purchaser. In the event Purchaser is unable to rely on the audits performed by Seller’s auditors for such years in order to comply with the rules and regulations of the SEC, Seller shall reasonably cooperate with Purchaser to provide such other information and reasonable certifications with respect to the audited historical financial statements of the Property/Seller for the years ended December 31, 2009, 2008, and 2007 as may be necessary in order for

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Purchaser to comply with the rules and regulations of the SEC. Seller shall provide Purchaser with copies of, or access to, such factual information, accounting records and financial information as may be reasonably requested by Purchaser or its auditors, and in the possession or control of Seller, to enable Purchaser or its affiliates to file reports or registration statements in compliance with the rules and regulations of the SEC. This Section 3.14 shall survive the Closing for a period of two (2) years.

          3.15 Liquor License. To Seller’s knowledge, the liquor license for the Hotel is in full force and effect.

          3.16 Money Laundering.

               3.16.1 Seller is not acting, directly or indirectly, for or on behalf of any person, group, entity or nation named by the United States Treasury Department as a Specifically Designated National and Blocked person, or for or on behalf of any person, group, entity or nation designated in Presidential Executive Order 13224 (the “Executive Order”) as a person who commits, threatens to commit, or supports terrorism; and it is not engaged in this transaction directly or indirectly on behalf of, or facilitating this transaction directly or indirectly on behalf of, any such person, group, entity or nation terrorists, terrorist organizations or narcotics traffickers, including, without limitation, those persons or entities that appear on the Annex to the Executive Order, or are included on any relevant lists maintained by the Office of Foreign Assets Control of U.S. Department of Treasury, U.S. Department of State, or other U.S. government agencies, all as may be amended from time to time.

               3.16.2 Neither Seller, nor any person controlling or controlled by Seller, is a country, territory, individual or entity named on a Government List, and the monies used in connection with this Agreement and amounts committed with respect thereto, were not and are not derived from any activities that contravene any applicable anti-money laundering or anti bribery laws and regulations (including, without limitation, funds being derived from any person, entity, country or territory on a Government List or engaged in any unlawful activity defined under 18 USC §1956(c)(7)). For purposes of this Agreement, “Government List” means of any of (i) the two lists maintained by the United States Department of Commerce (Denied Persons and Entities), (ii) the list maintained by the United States Department of Treasury (Specially Designated Nationals and Blocked Persons) and (iii) the two lists maintained by the United States Department of State (Terrorist Organizations and Debarred Parties).

          3.17 Certain Limitations on Seller’s Representations and Warranties. The representations and warranties of Seller set forth in this Article III are subject to the following express limitations:

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               3.17.1 The expiration or termination of any Space Lease, Equipment Lease, Rooms Agreement or Service Contract by its terms shall not affect the obligations of Purchaser hereunder or render any representation or warranty of Seller untrue;

               3.17.2 For purposes of this Agreement, “to Seller’s knowledge”, “to the knowledge of Seller”, or “known to Seller” (or words of similar meaning) shall mean the actual, present knowledge of Kim Gauthier and Selim Soliman; and

               3.17.3 Seller’s liability shall be limited as set forth in Section 14.7.

Article IV

PURCHASER’S REPRESENTATIONS, WARRANTIES AND COVENANTS

     In order to induce Seller to enter into this Agreement and to consummate the transactions contemplated hereby, Purchaser represents and warrants to, and covenants with, Seller as follows:

          4.1 Good Standing. Purchaser is a limited liability company organized and validly existing and in good standing under the laws of the State of Delaware and is, or as of the Closing Date shall be, qualified to do business in the State of Maryland.

          4.2 Due Authorization. The execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby have been authorized by all requisite limited liability company actions of Purchaser (none of which actions have been modified or rescinded, and all of which actions are in full force and effect). This Agreement constitutes a valid and binding obligation of Purchaser, enforceable against Purchaser in accordance with its terms.

          4.3 Litigation. To Purchaser’s knowledge, there are no actions, suits, arbitrations, proceedings, governmental investigations or other proceedings that are pending against Purchaser that would materially and adversely affect its ability to enter into, or perform its obligations under, this Agreement.

          4.4 Money Laundering.

               4.4.1 Purchaser is not acting, directly or indirectly, for or on behalf of any person, group, entity or nation named by the United States Treasury Department as a Specifically Designated National and Blocked person, or for or on behalf of any person, group, entity or nation designated in the Executive Order as a person who commits, threatens to commit, or supports terrorism; and it is not engaged in this transaction directly or indirectly on behalf of, or facilitating this transaction directly or indirectly on behalf of, any such person, group, entity or nation terrorists, terrorist organizations or narcotics traffickers, including, without limitation, those persons or entities that appear on the Annex to the Executive

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Order, or are included on any relevant lists maintained by the Office of Foreign Assets Control of U.S. Department of Treasury, U.S. Department of State, or other U.S. government agencies, all as may be amended from time to time.

               4.4.2 Neither Purchaser, nor any person controlling or controlled by Purchaser, is a country, territory, individual or entity named on a Government List, and the monies used in connection with this Agreement and amounts committed with respect thereto, were not and are not derived from any activities that contravene any applicable anti-money laundering or anti bribery laws and regulations (including, without limitation, funds being derived from any person, entity, country or territory on a Government List or engaged in any unlawful activity defined under 18 USC §1956(c)(7)).

Article V

CLOSING

          5.1 Closing. Unless otherwise agreed to by the parties hereto, the consummation of the purchase and sale of the Property as contemplated by this Agreement (the “Closing”) shall take place on the date that is thirty (30) days following the Contract Date (the “Closing Date”). All of Seller’s deliveries and the Purchase Price shall be delivered in escrow to the Title Company prior to the Closing. All transactions at the Closing shall be interdependent and are to be considered simultaneous, so that none are effective until all are effective.

          5.2 Costs. Purchaser shall be responsible for the cost of all transfer taxes, recording taxes and fees (and any bulk sales taxes and other personal property taxes associated with the Closing, if any). Purchaser shall pay for all costs associated with the Title Policy and the Survey. Seller shall pay for any and all fees associated with the defeasance or prepayment of any existing financing on the Property and Purchaser shall pay all costs associated with its financing of the Property, if any; provided that Purchaser’s ability to obtain any such financing for the acquisition of the Property shall not be a condition to the Closing contemplated hereby. Each party shall pay its own attorneys’ fees incurred in connection with this transaction.

Article VI

ACTIONS PENDING CLOSING

          6.1 Conduct of Business; Maintenance and Operation of Property. Between the Contract Date and the Closing Date, Seller shall, or shall cause Operating Tenant and the Manager to, (a) carry on the business of the Property as a full-service hotel in the ordinary course and in a good and diligent manner consistent with prior practice, (b) maintain its books of account and records in the usual, regular and ordinary manner, in accordance with accounting principles

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applied on a basis consistent with that used in keeping its books in prior years and (c) use reasonable efforts to preserve its present business organization, retain the services of its present officers, partners and employees and preserve its relationships with suppliers and others having business dealings with it. Seller shall continue to take guest room reservations and to book functions and meetings and otherwise to promote the business of the Property in generally the same manner as the Seller did prior to the execution of this Agreement. Seller shall cause the Property to be maintained in its present order and condition, normal wear and tear excepted, and shall cause the continuation of the normal operation thereof, including the purchase and replacement of supplies and equipment, the maintenance of its beneficial relations with guests, suppliers and others having business dealings with the Seller. Seller shall not remove or permit to be removed any Personal Property except as necessary for repairs or replacements of worn out or obsolete items.

          6.2 Title.

               6.2.1 Purchaser has obtained a binding commitment for an owner’s policy of title insurance to be issued by the Title Company to Purchaser on American Land Title Association Form 2006, commitment number 4510-45495 (the “Title Commitment”), committing to insure Purchaser’s good and marketable fee simple title to the Hotel. Seller shall satisfy the requirement, set forth as item numbers 1, 5, 7, 8, 9 and 10 of Schedule B, Section I of the Title Commitment. The title policy to be issued pursuant to the Title Commitment (the “Title Policy”) shall be in an amount equal to $52,865,000.00. The Title Policy shall show no liens, mortgages, deeds of trust, security interests, pledges, charges, options, encroachments, easements, covenants, leases, reservations or restrictions of any kind (the “Encumbrances”) other than: (i) the lien of any mortgage or deed of trust executed by Purchaser in favor of Purchaser’s lender; (ii) applicable zoning regulations and ordinances; (iii) liens for taxes, assessments, and governmental charges not yet due and payable; (iv) minor encroachments as disclosed on the existing survey of the Property, a copy of which has been made available to Purchaser for its review and (v) the Permitted Exceptions.

               6.2.2 Purchaser has agreed to accept all exceptions shown on the Title Commitment (the “Permitted Exceptions”), which list is attached hereto as Exhibit G.

          6.3 Survey. Purchaser has obtained an as-built survey of the Property, prepared in conformity with current American Land Title Association/American Congress on Surveying and Mapping standards for “Class-A” surveys and certified, pursuant to a certification reasonably acceptable to Purchaser, to Purchaser, any lender designated by Purchaser and the Title Company by a duly licensed land surveyor or professional engineer (the “Survey”).

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          6.4 Cooperation. Seller shall cooperate reasonably, at no cost to Seller, with Purchaser in securing the transfer or issuance of any permits or licenses necessary to permit the lawful, continuous operation of the Property by Purchaser immediately following the Closing Date.

          6.5 Service Contracts; Equipment Leases; Space Leases. Between the Contract Date and the Closing Date, Seller shall not permit Seller’s Operating Tenant to, renew, extend or modify any Service Contract, Equipment Lease or Space Lease or enter into any new such agreements that would survive the Closing Date, without Purchaser’s prior written consent in each instance (which consent shall not be withheld or delayed unreasonably).

          6.6 Liquor License. Promptly following the Contract Date, Purchaser shall make an application to the appropriate governmental authorities to have the existing liquor license for the Hotel transferred to an entity designated by Purchaser in compliance with local law, and Seller shall fully cooperate with Purchaser in this regard, including, without limitation by (i) for up to one-hundred eighty (180) days after the Closing, executing such documents as are legal and customary to permit the continued sale of alcoholic beverages at the Hotel pending such approval and (ii) ensuring that all fees and obligations with respect to the existing liquor license are current, such cooperation shall be at Purchaser’s sole cost and expense to the extent not otherwise Seller’s obligation under this Agreement. Purchaser shall use all reasonable efforts, at its sole cost and expense, to obtain the approval of applicable authorities for the transfer of the existing liquor license as soon as is practical following Closing. Purchaser shall maintain liquor liability insurance in amounts currently maintained by Seller naming Seller as an additional insured, and further agrees to indemnify, defend and hold Seller harmless from and against any liability, cost or expense arising out of Seller’s cooperation with Purchaser during such interim period. The provisions of this Section 6.6 shall survive the Closing.

          6.7 Inspection. Purchaser shall have the right, upon reasonable notice to Seller, at its own risk, cost and expense and at any date or dates prior to Closing, to enter, or cause its agents or representatives to enter, upon the Property for the purpose of making surveys or other tests, test borings, inspections, investigations and/or studies of the Property, provided that any invasive testing shall require Seller’s consent, which may be withheld in its discretion. In addition, Purchaser may conduct such architectural, environmental, economic and other studies of the Property as Purchaser may, in its sole discretion, deem desirable. Purchaser shall not make any physical alterations to the Property, such entry shall not interfere with the guests or management of the Property, and Purchaser shall indemnify and hold Seller harmless from any cost, claim or expense in connection therewith, except that Purchaser’s obligations as set forth in this sentence shall not extend to previously existing conditions that are discovered by Purchaser to be present on, under or about the Property. Purchaser shall have reasonable access during normal

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business hours to documentation, agreements and other information in the possession of Seller or Seller’s agents related to the Property and shall have the right to make copies of same. Seller shall permit Purchaser, its agents and employees, reasonable use of complimentary rooms at the Property and food and beverage services at cost, subject to availability. If Purchaser elects to terminate this Agreement pursuant to the provisions of Section 6.7(b) below, Purchaser agrees to supply Seller with copies of any tests, studies or inspections of the Property performed pursuant to this Section 6.7(a).

          6.8 Management Agreement. Purchaser and Seller shall enter into the Replacement Management Agreement, substantially in the form attached hereto as Exhibit I.

          6.9 Franchise Agreement. Purchaser acknowledges that Purchaser’s purchase of the Hotel as contemplated by this Agreement requires obtaining Franchisor’s prior written consent and the execution of a new franchise agreement between Franchisor and Purchaser’s Operating Tenant for the operation of the Hotel as a “Doubletree” hotel. Purchaser shall use commercially reasonable efforts to obtain the consent of Franchisor to the transactions contemplated by this Agreement in accordance with the terms of the Franchise Agreement, and shall cause Purchaser’s Operating Tenant to enter into a new franchise agreement with the Franchisor for the continued operation of the Hotel as a “Doubletree” hotel on such terms as Franchisor shall require and Purchaser shall approve. Purchaser shall promptly (and in any event within five (5) days after the Contract Date) provide Franchisor with any and all applications and information reasonably required by Franchisor in connection with such consent and otherwise comply with the Franchise Agreement (including the payment of any required fees). Purchaser shall pay any and all fees, costs and expenses payable to Franchisor in connection with the review and approval by the Franchisor of Purchaser’s application to purchase the Hotel and Purchaser’s Operating Tenant entering into of a new franchise agreement with Franchisor at the Property. In the event Purchaser has complied with the requirements of this Section and Franchisor has not approved the new franchise agreement for Purchaser’s designee by the date for Closing specified in Article 5, Purchaser shall have the right to delay the Closing for a period of not more than sixty (60) days by giving written notice to Seller no later than the scheduled time for Closing.

          6.10 Employees. Purchaser agrees that it will permit Manager to offer employment to a sufficient number of the hotel employees so that there shall not be more than forty-nine (49) employees who are not offered employment upon Closing with the Purchaser or its designee. All hotel employees who are hired by Manager shall herein be referred to as “Rehired Employees.” Purchaser agrees to permit Manager to hire the Rehired Employees on terms and conditions, including, without limitation, aggregate compensation, seniority status (for purposes of benefits eligibility and vacation accrual), job duties and responsibilities, that are

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substantially similar to the employment terms and conditions that are applicable to such Rehired Employees in their employment by Manager prior to the Closing. Purchaser further agrees that, absent good cause (as determined solely by Purchaser) for terminating any Rehired Employee, the employment of each Rehired Employee on the terms described above shall continue for at least thirty (30) days following the Closing. Seller shall not be required to give, or cause the Manager to give, any layoff, closing or other termination notices or otherwise incur any liability pursuant to the provisions of the Federal Worker Adjustment and Retraining Notification Act. 29 U.S.C. 2101-2109 and/or any similar law in effect in the State of Maryland.

Article VII

PURCHASER’S CONDITIONS PRECEDENT TO CLOSING

     It shall be an express precondition to Purchaser’s obligation to purchase the Property that each and every one of the following conditions shall have been satisfied as of the Closing Date (or waived by Purchaser).

          7.1 Representations and Warranties. Each of Seller’s representations and warranties shall be true and accurate in all material respects as if made on and as of the Closing Date.

          7.2 Covenants of Seller. All actions Seller covenants herein to take shall have been completed in all material respects.

          7.3 Termination of Operating Lease, Service Contracts and Equipment Leases. The Operating Lease shall have been terminated, at Seller’s sole cost. Each Service Contract and Equipment Lease shall have been terminated at Seller’s sole cost unless Purchaser requests in writing prior to Closing that it remain in effect after Closing. On the Closing Date, there shall be no contract or agreement in effect between Seller or Operating Tenant and any third party for management of the Property after the Closing Date.

          7.4 Title. Purchaser shall be able to obtain the Title Policy in conformance with the Title Commitment, subject only to the Permitted Exceptions.

          7.5 Replacement Management Agreement. Manager shall have entered into the Replacement Management Agreement.

          7.6 Liquor License. Purchaser and Seller shall have entered into the document set forth on Exhibit K relating to the transfer of the existing liquor license for the Hotel to Purchaser’s designee in accordance with Section 6.6 and the continued sale of alcoholic beverages at the Hotel pending approval of such transfer.

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          7.7 Franchise Agreement. The Franchise Agreement shall have been transferred or replaced, as applicable, at Purchaser’s sole cost, subject to the provisions of Section 6.9.

          7.8 Stairwell Project. Seller shall have completed the Stairwell Project and achieved closure of the building permit related to the Stairwell Project.

          7.9 Failure of Condition. In the event of the failure of any condition precedent set forth above, Purchaser, at its sole election, may (a) terminate this Agreement (and receive a return of the Deposit and all interest earned thereon); (b) waive the condition and proceed to Closing; (c) extend the Closing Date for such additional period of time as may be reasonably required to allow Seller to remedy such failure; or (d) if such failure arises from Seller’s breach of this Agreement, avail itself of any remedies provided in Section 10.2.

Article VIII

SELLER’S CONDITIONS PRECEDENT TO CLOSING

     It shall be an express precondition to Seller’s obligation to convey the Property that each and every one of the following conditions shall have been satisfied as of the Closing Date (or waived by Seller).

          8.1 Representations and Warranties. Each of Purchaser’s representations and warranties shall be true and accurate in all material respects as if made on and as of the Closing Date.

          8.2 Covenants of Purchaser. All actions Purchaser covenants herein to take shall have been completed in all material respects.

          8.3 Purchase Price. Purchaser shall be able to deliver the Purchase Price to the Title Company.

          8.4 Replacement Management Agreement. Purchaser’s Operating Tenant shall have entered into the Replacement Management Agreement.

          8.5 Franchise Agreement. The Franchise Agreement shall have been transferred or replaced, as applicable, at Purchaser’s sole cost, subject to the provisions of Section 6.9. Each of Seller, Operating Tenant and their respective affiliates shall have been released, in writing, from any further liability under the Existing Franchise Agreement.

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Article IX

CLOSING DELIVERIES

          9.1 Deed. Seller shall deliver a special warranty deed in recordable form conveying to Purchaser Seller’s fee simple interest in the Hotel (the “Deed”) free of all Encumbrances other than the Permitted Exceptions.

          9.2 Bill of Sale. Seller shall deliver a bill of sale, dated as of the Closing Date, conveying to Purchaser, the Personal Property, free of all Encumbrances other than the Permitted Exceptions.

          9.3 Assignment of Permits. Seller shall deliver an assignment of all existing permits relating to the Property, if and to the extent assignable, to Purchaser.

          9.4 Assignment of Service Contracts, Rooms Agreements and Equipment Leases. Seller shall deliver an assignment of all Service Contracts, Rooms Agreements and Equipment Leases to Purchaser, which Purchaser shall assume.

          9.5 FIRPTA Certificate. Seller shall deliver a certificate, dated as of the Closing Date, to establish that Seller is not a foreign person for the purposes of the Foreign Investors in Real Property Tax Act.

          9.6 Assignment of Space Leases. Seller shall deliver an assignment of the Space Leases to Purchaser, which Purchaser shall assume.

          9.7 Replacement Management Agreement. Purchaser’s Operating Tenant and Manager shall have entered into the New Management Agreement.

          9.8 Original Documents. Seller shall deliver the original permits, Service Contracts, Room Agreements, Equipment Leases and Space Leases which are to be assigned to Purchaser.

          9.9 Other Documents. Seller shall deliver such other documents and instruments as may be reasonably requested by the Title Company to effectuate the transactions contemplated by this Agreement and to induce the Title Company to insure title to the Hotel as described herein.

          9.10 Possession; Keys. Seller shall deliver possession of the Property to Purchaser, together with all keys, including, without limitation, keys for all security systems, rooms and offices.

          9.11 Purchase Price. Purchaser shall deliver the Purchase Price.

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          9.12 Settlement Statement. Purchaser and Seller each shall execute and deliver a settlement statement(s) prepared by the Title Company in connection with the transactions contemplated hereunder.

Article X

DEFAULT

          10.1 Purchaser’s Default. If Purchaser fails to consummate the purchase and sale contemplated herein after all conditions precedent to Purchaser’s obligation to do so have been satisfied or waived by Purchaser, the Title Company shall pay the Deposit to Seller in accordance with the Escrow Instructions, as full and complete liquidated damages, and as the exclusive and sole right and remedy of Seller, whereupon this Agreement shall terminate and neither party shall have any further obligations or liabilities to the other party except for those expressly stated to survive the termination of this Agreement.

          10.2 Seller’s Default. If Seller breaches its representations, warranties, covenants and/or agreements under this Agreement or has failed or is unable to consummate the purchase and sale contemplated herein by the Closing Date, Purchaser either may (a) waive such default and proceed to Closing, (b) within sixty (60) days following the scheduled Closing Date, commence an action for specific performance, or (c) terminate this Agreement, whereupon the Title Company shall return the Deposit to Purchaser in accordance with the Escrow Instructions, Seller shall reimburse Purchaser for its actual costs incurred in connection with the transaction contemplated by this Agreement not to exceed ONE HUNDRED THOUSAND AND 00/100 DOLLARS ($100,000.00), and neither party shall have any further obligations or liabilities to the other party except for those expressly stated to survive the termination of this Agreement.

Article XI

INDEMNIFICATION

          11.1 Agreement to Indemnify. Subject to any express provisions of this Agreement to the contrary, (a) Seller shall hold harmless, indemnify and defend Purchaser against any and all obligations, claims, losses, damages, liabilities and expenses (including reasonable attorneys’ fees and other charges) arising out of (i) the material inaccuracy of any representation or warranty of Seller herein, (ii) the failure of Seller to perform any of its obligations hereunder in any material respect, (iii) damage to property or injury to or death of any person occurring on or about the Property or any portion thereof at any time or times prior to the Closing, and (b) Purchaser shall hold harmless, indemnify and defend Seller against any and all obligations, claims, losses, damages, liabilities and expenses (including, without limitation, reasonable attorneys’ fees and other charges) arising out of (i) the material inaccuracy of any representation or warranty of Purchaser herein, (ii) the

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failure of Purchaser to perform any of its obligations hereunder in any material respect, or (iii) damage to property or injury to or death of any person or otherwise occurring in connection with the Property at any time or times after the Closing.

          11.2 Indemnification Regarding Assumed Obligations. Whenever it is provided in this Agreement that an obligation of one party will be assumed by the other party after the Closing, the party so assuming such liability also shall be deemed to have agreed to indemnify, defend and hold harmless the other party and its successors and assigns, from all claims, losses, damages, liabilities, costs and expenses (including reasonable attorneys’ fees and other charges) arising from any failure of the assuming party to perform the obligation so assumed after the Closing.

          11.3 Notice and Cooperation on Indemnification. Whenever either party shall learn through the filing of a claim or the commencement of a proceeding or otherwise of the existence of any liability for which the other party is or may be responsible under this Agreement, the party learning of such liability shall notify the other party promptly and furnish such copies of documents (and make originals thereof available) and such other information as such party may have that may be used or useful in the defense of such claims and shall afford said other party full opportunity to defend the same in the name of such party and generally shall cooperate with said other party in the defense of any such claim.

Article XII

CASUALTY OR CONDEMNATION

     If, prior to Closing, (a) condemnation proceedings are commenced against all or any material portion of the Property or (b) the Property is damaged by fire or other casualty to the extent that the cost of repairing such damage shall be TWO MILLION AND 00/100 DOLLARS ($2,000,000.00) or more, Purchaser shall have the right, upon notice in writing to the Seller delivered within fifteen (15) days after actual notice of such condemnation, fire or other casualty, to terminate this Agreement, whereupon the Deposit and all interest earned thereon shall be returned immediately to Purchaser, and neither party shall have any further liability to the other hereunder except for those liabilities which expressly survive the termination hereof. If Purchaser does not elect, or is not entitled, to terminate this Agreement, the Purchase Price shall not be reduced except as hereinafter set forth, but Purchaser shall be entitled to an assignment of all of Seller’s share of the proceeds of fire or other casualty insurance proceeds (if any) payable with respect to the period after Closing or of the condemnation award, as the case may be, and Seller shall have no obligation to repair or restore the Property; provided, however, that the Purchase Price shall be reduced by an amount equal to the sum of (a) any uninsured or unreimbursed amount, (b) the “deductible” applied by Seller’s insurer with respect to such fire or casualty and (c) the amount by which the proceeds of

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such insurance will be reduced by reason of the application of any co-insurance clause in Seller’s insurance policy. If Purchaser proceeds to Closing hereunder, Seller shall not compromise, settle or adjust any claims to such proceeds or awards, without Purchaser’s prior written consent, which shall not be unreasonably withheld, conditioned or delayed.

Article XIII

APPORTIONMENTS

          13.1 Apportionments. The following apportionments shall be made between the parties at the Closing as of the close of business on the day immediately prior to the Closing Date (the “Apportionment Date”).

               13.1.1 real estate taxes, personal property taxes, special assessments and vault charges, if any, on the basis of the fiscal period for which assessed; provided that Seller shall be entitled to any refunds thereof which relate to the period prior to the Closing Date (and if any prorations made hereunder are made based upon assessments which are subsequently changed, appropriate adjustments of such prorated amounts shall be made by Seller and Purchaser and reconciled following Closing);

               13.1.2 fuel oil in the tank at the Property, if any, (based upon invoice cost, first in, first out), water and sewer service charges and charges for gas, electricity, telephone and all other public utilities. If there are meters measuring the consumption of water, gas or electric current, Seller, not more than one day prior to the Apportionment Date, if possible, shall cause such meters to be read, and shall pay all utility bills for which Seller is liable upon receipt of statements therefor. Purchaser shall be responsible for causing such utilities and services to be changed to its name and shall be liable for and shall pay all utility bills for services rendered after the Apportionment Date;

               13.1.3 amounts which have been paid or are payable under the Service Contracts, Equipment Leases and Space Leases assigned to and assumed by Purchaser at Closing;

               13.1.4 prepaid advertising expenses;

               13.1.5 commissions of credit and referral organizations;

               13.1.6 Seller shall be responsible for paying all sales taxes on revenues received on or prior to the Apportionment Date and Purchaser shall be responsible for paying all sales taxes on revenues received after the Apportionment Date; and

               13.1.7 all other charges and fees customarily prorated and adjusted in similar transactions.

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          13.2 Deposits. All deposits (including any interest thereon due the party making such deposit) from guests or others made as security or in connection with future services to be rendered, including deposits made under the Space Leases and Rooms Agreements and deposits for banquets and meetings at the Hotel, shall be credited to Purchaser at the Closing. Purchaser shall assume responsibility for the amount so credited and shall hold Seller harmless therefrom. Seller shall hold Purchaser harmless from any liability for deposits not so credited.

          13.3 Room Revenue. All revenues received or to be received from transient guests on account of room rents for the period ending on the Apportionment Date shall belong to Seller, and for the period beginning on the day immediately following the Apportionment Date such revenues shall belong to Purchaser. The accounts receivable of registered guests at the Property who have not checked out and were occupying rooms as of 12:01 a.m. on the Closing Date are collectively called the “Current Ledger”, and Purchaser shall pay over to Seller, as received by Purchaser, Seller’s share of the proceeds of the Current Ledger attributable to payments of each guest’s account for the period ending on the Apportionment Date, less applicable credit card and travel agent commissions allocable to such share, which commissions shall be paid by Purchaser out of such proceeds when and as collected; provided, however, that the portion of the Current Ledger attributable to room rents for the final night prior to Closing shall be shared equally between Seller and Purchaser. In the event that an amount less than the total amount due from a guest is collected and the guest continued in occupancy after the Apportionment Date, such amount shall be applied first to any indebtedness owing by such person to Purchaser and thereafter to such person’s indebtedness to Seller.

          13.4 Accounts Receivable; Accounts Payable.

               13.4.1 All accounts receivable (other than the Current Ledger) originating prior to the Apportionment Date shall belong to Seller. A list of all such accounts receivable (other than the Current Ledger) shall be presented to and be initialed by Purchaser and Seller at Closing. Following Closing, Purchaser shall use good faith efforts toward the collection of such accounts receivable, but Purchaser shall have no responsibility or liability with regard to such accounts receivable nor be expected to incur any cost with respect to such collections. Seller shall be entitled to undertake its own collection efforts with respect to such accounts receivable. With regard to any collection made from any person or entity who is indebted to the Property both with respect to accounts receivable accruing prior to the Apportionment Date and to accounts receivable accruing subsequent to the Apportionment Date, any such collection that is undesignated shall be applied first to the payment in full of any amounts due to Purchaser on accounts accruing subsequent to the Apportionment Date and then to amounts due to Seller on accounts accruing prior to the Apportionment Date; provided, however, that any such collection that is specifically designated as payable to amounts due to Seller on

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accounts accruing prior to the Apportionment Date shall be applied to the payment of such amounts.

               13.4.2 All accounts payable related to the Property for the periods prior to and including the Apportionment Date shall be retained by and shall remain the obligation of Seller, and Purchaser shall not be liable therefor, except to the extent Purchaser receives a credit therefor at Closing or otherwise expressly assumes such liabilities in writing pursuant to this Agreement.

          13.5 Food and Beverage Revenue; Vending Machine Revenue. All monies received in connection with bar and restaurant services at the Property (other than amounts due from any guest) during the Apportionment Date shall belong to Seller. Vending machine proceeds shall be counted on the Apportionment Date and the net amount thereof shall be credited to Seller at Closing.

          13.6 Guests’ Property. All baggage or other property of patrons of the Property checked or left in care of Seller shall be listed in an inventory to be prepared in duplicate and signed by Seller’s and Purchaser’s representatives on the Closing Date. Purchaser shall be responsible from and after the Closing Date and will indemnify and hold Seller harmless from and against all claims for all baggage and property listed in such inventory. Seller shall indemnify and hold harmless Purchaser from and against claims for baggage and property not listed in such inventory but claimed to have been left in custody at the Property prior to the Closing Date. All baggage or other property of guests retained by Seller as security for unpaid accounts receivable may be left on the Property without any responsibility or liability therefor on the part of Purchaser, for a period not to exceed one (1) month from Closing Date, within which time such baggage or other property shall be removed or otherwise disposed of by Seller and Seller shall indemnify and hold harmless Purchaser from and against claims for such baggage and property.

          13.7 Accounting. Except as otherwise expressly provided herein, all apportionments and adjustments shall be made on an accrual basis in accordance with generally accepted accounting principles. The computation of the adjustments shall be jointly prepared by Seller and Purchaser. To the extent the exact amount of any adjustment item provided for in this Article XIII cannot be precisely determined on the Closing Date, the Seller and Purchaser shall estimate the amount thereof, for purposes of computing the net amount due Seller or Purchaser pursuant to this Article XIII and shall determine the exact amount thereof not later than sixty (60) days after the Closing Date.

          13.8 Employee Compensation. Seller and the Manager shall be solely responsible for any liability for payment of all employees’ wages, accrued vacation pay, sick leave, bonuses, pension benefits, including, without limitation, any COBRA rights, and other benefits earned by and due to employees at the Property

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through 12:01 a.m. on the Closing Date, together with F.I.C.A., unemployment and other taxes and benefits due from any employer of such employees. Seller shall indemnify and hold Purchaser harmless from and against any and all liability, loss, cost, damage or expense related to any of the foregoing items. Such indemnity shall survive Closing.

               Notwithstanding the foregoing, Purchaser may elect, at its option, to receive a credit against the Purchase Price for the amount of accrued vacation pay (the “PTO Credit”) for employees who will be retained by Manager. Purchaser shall indemnify and hold Seller harmless from and against any and all liability, loss, cost, damage or expense for claims by such employees for vacation pay to the extent of the PTO Credit.

Article XIV
MISCELLANEOUS

          14.1 Survival. Unless otherwise expressly provided for in this Agreement, the representations, warranties, covenants and indemnities contained in this Agreement shall be effective as of the Closing Date, and any liability with respect to breach thereof shall survive the Closing for a period of twelve (12) months. Notwithstanding the foregoing, the representation of Seller set forth in Section 3.2.1 shall expire and be of no further force and effect as of the Closing and Seller’s obligation to pay sales taxes on revenues received on or prior to the Apportionment Date under Section 13.1.6 shall survive until December 31, 2011.

          14.2 Assignment. This Agreement may not be assigned by Purchaser without the prior written consent of Seller, which Seller may grant or deny in its sole and absolute discretion; provided, however that Purchaser shall be permitted to assign this Agreement without the prior consent of Seller to any entity wholly owned and controlled by Purchaser, provided notice thereof is given to Seller at least ten (10) business days prior to the Closing and such assignee assumes in writing all of Purchaser’s obligations hereunder. Notwithstanding the assumption of this Agreement by such assignee, the Purchaser named herein shall remain liable for all of the Purchaser’s obligations hereunder until the Closing Date and shall not be deemed to be released as a result of such permitted assignment and assumption prior to the Closing Date.

          14.3 Consents. If, under this Agreement, the consent of a party is required, the consent shall be in writing and shall be executed by a duly authorized officer or agent.

          14.4 Applicable Law. This Agreement shall be governed by the laws of the State of Maryland, without resort to the choice of law rules thereof.

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          14.5 Headings; Exhibits. The headings of articles and sections of this Agreement are inserted only for convenience; they are not to be construed as a limitation of the scope of the particular provision to which they refer. All exhibits attached or to be attached to this Agreement are incorporated herein by this reference.

          14.6 Notices. Notices and other communications required by this Agreement shall be in writing and delivered by hand against receipt or sent by recognized overnight delivery service or by certified or registered mail, postage prepaid, with return receipt requested. All notices shall be addressed as follows:

If to Purchaser:

Tar Heel Owner LLC
c/o Pebblebrook Hotel Trust
2 Bethesda Metro Center
Suite 1530
Bethesda, Maryland 20814
Attention: Thomas C. Fisher

with a copy to:

John M. Ratino, Esquire
Hunton & Williams LLP
1900 K Street, N.W.
Washington, DC 20006

If to Seller:

THI IV Bethesda LLC
c/o Thayer Lodging Group, Inc.
1997 Annapolis Exchange Parkway
Suite 550
Annapolis, Maryland 21401
Attention: Carroll Warfield, President

with a copy to:

Carol Weld King, Esquire
Hogan & Hartson L.L.P.
555 13th Street, N.W.
Washington, D.C. 20004

                  or to such other address as may be designated by a proper notice. Notices shall be deemed to be effective upon receipt (or refusal thereof) if personally

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delivered or sent by recognized overnight delivery service or three (3) days following the date of mailing if sent by certified mail.

          14.7 Limitation on Liability. Seller shall have no liability for the breach of any representation, warranty, covenant indemnity or other obligation expressly stated to survive the Closing hereunder unless and until the aggregate amount of Purchaser’s out-of-pocket damages and expenses directly resulting from such breaches exceeds ONE HUNDRED FIFTY THOUSAND AND 00/100 DOLLARS ($150,000.00) and shall not, in any event exceed, in the aggregate, an amount equal to three percent (3%) of the Purchase Price.

          14.8 Waiver. The failure of either party to insist on strict performance of any of the provisions of this Agreement or to exercise any right granted to it shall not be construed as a relinquishment or future waiver; rather, the provision or right shall continue in full force. No waiver of any provision or right shall be valid unless it is in writing and signed by the party giving it.

               14.8.1 Partial Invalidity. If any part of this Agreement is declared invalid by a court of competent jurisdiction, this Agreement shall be construed as if such portion had never existed, unless this construction would operate as an undue hardship on Seller or Purchaser or would constitute a substantial deviation from the general intent of the parties as reflected in this Agreement.

               14.8.2 Entire Agreement. This Agreement, together with the other writings signed by the parties and incorporated by reference and together with any instruments to be executed and delivered under this Agreement, constitutes the entire agreement between the parties with respect to the purchase and sale of the Property and supersedes all prior oral and written understandings. Amendments to this Agreement shall not be effective unless in writing and signed by the parties hereto.

               14.8.3 Time is of the Essence. Time is of the essence with respect to performance of all obligations under this Agreement.

               14.8.4 Waiver of Jury Trial. Seller and Purchaser each hereby waives any right to jury trial in the event any party files an action relating to this Agreement or to the transactions or obligations contemplated hereunder.

               14.8.5 Counterparts. This Agreement may be executed in any number of counterparts which, when taken together, shall constitute a single, binding instrument.

               14.8.6 Brokerage. Purchaser and Seller represent to each other that no broker or consultant acting on its behalf (other than Eastdil, who shall be compensated by Seller pursuant to the terms of a separate agreement) brought about this transaction. Each of the parties hereto agrees to indemnify and hold the

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other harmless from claims made by any broker, attorney or finder claiming through such party for a commission, fee or compensation in connection with this Agreement or the sale of the Property hereunder. The provisions of this Section 14.14 shall survive Closing.

               14.8.7 Time for Performance. If the date for the performance of any obligation, or the giving of any notice, by Seller or Purchaser hereunder falls upon a Saturday, Sunday or legal holiday recognized by the United States government, then the time for such performance or notice shall be extended until the next business day.

               14.8.8 Confidentiality. Except as hereinafter provided, Purchaser and Seller and their representatives shall keep the terms, conditions and provisions of this Agreement and all documents or information disclosed to or made available to or discovered by each party in connection with this Agreement confidential and such information shall be used solely for the purpose of evaluating or effecting the transactions contemplated by this Agreement, and neither Purchaser nor Seller shall make any public announcements hereof unless and until the Closing occurs unless the other first reasonably approves of same in writing, nor shall either disclose unless and until the Closing occurs the terms, conditions and provisions of this Agreement or such other documents or information, except to persons who, in the reasonable business judgment of Seller or Purchaser, as applicable, “need to know” for the purpose of evaluating or effecting the transactions contemplated by this Agreement, and who are instructed to keep such information confidential, such as their respective officers, directors, employees, attorneys, accountants, engineers, surveyors, consultants, financiers, partners, investors, potential lessees and bankers and such other third parties whose assistance is required in connection with the consummation of this transaction; provided, however, that information or documents shall not be subject to the provisions of this Section 14.16 if, not otherwise in violation of this Section 14.16, such information or documents, (i) were or become(s) generally available to the public, or (ii) were or become(s) available to Purchaser on a non-confidential basis from a source other than Seller or its representatives or Manager. Upon full execution of this Agreement and if the Closing occurs, the parties may either make a joint press release, or each party may make an individual press release that is mutually and reasonably agreed to by the other party. The terms of this Section 14.16 shall supersede any prior confidentiality agreements executed by Seller, Purchaser, or any of their respective affiliates to the extent such confidentiality agreements relate or refer, directly or indirectly, to the transactions contemplated by this Agreement. If either Seller or Purchaser or any of their representatives is required by any subpoena, interrogatories, request for production, or other legal process or by any applicable laws to disclose any confidential information, Seller or Purchaser, as applicable, will give the other party prompt written notice of the requirement and will cooperate with the other party so that the other party, at its expense, may seek an appropriate protective order. In the absence of a protective order, the party

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required to disclose, including any representatives, may disclose only such confidential information as may be necessary to avoid any penalty, sanction, or other material adverse consequence, and the party required to disclose will use reasonable efforts to secure confidential treatment of any confidential information so disclosed. Notwithstanding the foregoing, if Purchaser determines, after consultation with counsel, that it is required by Federal or state securities laws or regulations to publicly disclose the existence or terms of this Agreement, before or after Closing occurs, Purchaser shall allow Seller a reasonable period of time, not to exceed two (2) business days, to review Purchaser’s proposed disclosure in advance of Purchaser making such disclosure but, for the avoidance of doubt, Purchaser shall be permitted to make such disclosure and shall not be required to obtain the consent of Seller prior to making such disclosure.

[SIGNATURES APPEAR ON FOLLOWING PAGE]

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     IN WITNESS WHEREOF, Seller and Purchaser have caused this Agreement to be executed as of the date indicated below.

	SELLER
WITNESS:	THI IV BETHESDA LLC
/s/ Constantine Kern	By:	/s/ Kimberly Gauthier Kimberly Gauthier
		Vice President and Secretary
		Date:
	PURCHASER
	TAR HEEL OWNER LLC
/s/ Raymond D. Martz	By:	/s/ Thomas C. Fisher
		Name:	Thomas C. Fisher
		Its:	Vice President
		Date:	5/6/10

[Purchase and Sale Agreement Signature Page]

EXHIBITS

A	Legal Description of Land
B	List of Service Contracts
C	List of Space Leases
D	List of Rooms Agreements
E	Form of Escrow Instructions For Deposit
F	List of Equipment Leases
G	Permitted Exceptions
H	Environmental Reports
I	Form of New Management Agreement
J	Stairwell Pressurization Project
K	Centralized Services

[Purchase and Sale Agreement Signature Page]

EX-10.2

Exhibit 10.2

THE SIR FRANCIS DRAKE HOTEL

PURCHASE AND SALE AGREEMENT AND JOINT ESCROW INSTRUCTIONS

BETWEEN

SFD UNION SQUARE, LLC,

a Delaware limited liability company,

AS SELLER

AND

HUSKIES OWNER LLC,

a Delaware limited liability company,

AS PURCHASER

As of May 20, 2010

PURCHASE AND SALE AGREEMENT AND JOINT ESCROW INSTRUCTIONS

     THIS PURCHASE AND SALE AGREEMENT AND JOINT ESCROW INSTRUCTIONS (this “Agreement”) is made as of May 20, 2010 (the “Effective Date”), by and between SFD UNION SQUARE, LLC, a Delaware limited liability company (“Seller”), and HUSKIES OWNER LLC, a Delaware limited liability company (“Purchaser”).

W I T N E S S E T H:

     A. Seller is the owner of the Property (defined below). The Property is located in San Francisco, California.

     B. Seller desires to sell the Property and Purchaser desires to purchase the Property, on the terms and conditions set forth in this Agreement.

     NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged by the parties, Purchaser and Seller agree as follows:

ARTICLE I

PURCHASE AND SALE

1.1 Agreement of Purchase and Sale. Subject to the terms and conditions hereinafter set forth, Seller agrees to sell and convey and Purchaser agrees to purchase, all of Seller’s right, title and interest in and to the following:

(a) Seller’s interest in the real property commonly known as 450 Powell Street, San Francisco, California, as more particularly described on Schedule 1.1(a) attached hereto, together with all of the right, title and interest of Seller pertaining to such real property, including without limitation all appurtenant rights, rights of way, easements, water or littoral rights, all rights to any minerals, oil, gas and other hydrocarbon substances, or any portion thereof and Seller’s right, title and interest in and to all streets, alleys, strips and gores abutting the real property (the property described in this clause (a) of Section 1.1 being herein referred to collectively as the “Land”);

(b) the buildings, structures, fixtures and other improvements on the Land, including specifically, without limitation, that certain hotel commonly known as “The Sir Francis Drake” (the “Hotel”), including without limitation any and all hotel rooms, meeting facilities, conference rooms, parking facilities, restaurants, spa and pool facilities (the property described in this clause (b) of this Section 1.1 being herein referred to collectively as the “Improvements”);

(c) all tangible personal property owned by Seller and located upon the Land or within the Improvements and used solely in connection with the operation of the Land and Improvements, including, without limitation, appliances, furniture, furnishings, equipment, carpeting, draperies and curtains, tools and supplies, decorations, china, glassware, linens, silver, utensils, all vehicles (if any), and other items of personal property (excluding cash and deposit accounts) in all cases subject to (i) depletion,

resupply, substitution, replacement and disposition in the ordinary course of business and (ii) the provisions of subparagraph (g) below and the provisions of Section 4.4.7 regarding unopened inventories (the property set forth in this Section 1.1(c) being herein referred to collectively as the “Personal Property”);

(d) subject to Section 4.4 below, all contracts or reservations for the use of guest rooms, ballroom and banquet facilities, conference facilities, meeting rooms or other facilities of the Hotel or located within the Improvements (“Bookings”);

(e) all assignable contracts and agreements (collectively, the “Service Contracts”) relating to the upkeep, repair, maintenance or operation of the Land, the Improvements or the Personal Property or other property used in connection with the operation of the Hotel which are (i) listed on Schedule 1.1(e)-1 attached hereto but excluding the Management Agreement (defined below) and any Service Contracts that are terminated on or before Closing pursuant to the terms of this Agreement, (ii) listed on Schedule 1.1(e)-2 (the “Equipment Leases”), and (iii) entered into after the Effective Date and which Seller is permitted to enter into under the terms of this Agreement.

(f) (i) all assignable existing warranties and guaranties (expressed or implied) issued to Seller in connection with the Improvements or the Personal Property; (ii) all transferable names, marks, logos and designs, used in the operation or ownership of the Land, the Improvements or the Personal Property or any part thereof, if any, including Seller’s right to the mark SIR FRANCIS DRAKE (Reg. No. 1,067,912) but specifically excluding any name including “Kimpton” (e.g. “Kimpton Hotels & Restaurants”, “Kimpton Group”, etc.) and the name “Scala’s Bistro”, and all derivatives and cognates thereof and any logos or other identification or trade marks relating thereto (and Buyer acknowledges that Seller expressly disclaims any representation or warranty, express or implied, regarding (A) ownership, right to use or registration of any names, marks, logos, designs or other intellectual property, or (B) whether use of any intellectual property violates any ownership or other rights of any third parties); (iii) all transferable licenses, franchises and permits owned by Seller and used in or relating to the ownership, occupancy or operation of the Land, the Improvements or the Personal Property or any part thereof, subject to Purchaser’s compliance with any limitations or restrictions on transfer or assignment of any computer-related materials or software which are contained in any license or similar agreement; (iv) all assignable telephone numbers, TWX numbers, post office boxes, signage rights, utility and development rights and privileges, general intangibles, business records, site plans, surveys, environmental and other physical reports, plans and specifications pertaining to the Land and the Personal Property; and (v) all assignable websites and domains used exclusively for the Hotel, including access to the FTP files of the websites to obtain website information and content pertaining to the Hotel (the property described in this clause (f) of this Section 1.1 being herein referred to collectively as the “Intangibles”);

(g) subject to Section 4.4.7 below, (i) all food and beverages (subject to any legal restrictions pertaining to the sale or transfer of alcoholic beverages and excluding all food and beverage inventory in room minibars which is owned by Club Minibar (defined below) and shall be retained by Club Minibar if the Club Minibar contract is terminated

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at Closing); (ii) inventory held for sale to Hotel guests and others in the ordinary course of business including all opened and unopened retail inventory in any area at the Hotel conducting retail sales (collectively, “Retail Inventory”); (iii) engineering, maintenance and housekeeping supplies, including soap and cleaning materials, fuel and materials; stationery and printing items and supplies; and (iv) other supplies of all kinds, whether used, unused or held in reserve storage for future use in connection with the maintenance and operation of the Land, the Improvements or the Personal Property, in each case wherever located, together with any additions thereto prior to Closing (defined below) and subject to depletion, resupply, substitution, replacement and disposition in the ordinary course of business (all of the foregoing being referred to herein as the “Consumable Inventory” and, to the extent contained in unopened boxes, bottles, jars or containers of any type as of the Closing Date (defined below), shall collectively be referred to, together with unopened packages of china, glass, silver and linens, as the “Unopened Inventory”);

(h) all leases for the lease and occupancy of space at the Hotel (collectively, the “Leases”) listed and described on Schedule 1.1(h) attached hereto and made a part hereof, including any deposits relating to such Leases held by Seller and not applied to the tenant’s obligations as of the Closing Date. For purposes of this Agreement, “Leases” do not include Bookings;

(i) [Intentionally omitted];

(j) subject to Section 4.4.9 hereof, Seller’s interest in the funds contained in “house banks” for the Hotel as of the Cut-Off Time (defined in Section 4.4.10 below), whether held in the name of Seller, the Hotel or Manager and owned by Seller (collectively, the “House Bank Funds”). Purchaser expressly acknowledges and agrees that the Property to be transferred to Purchaser pursuant to this Agreement does not include any reserve or other accounts created or maintained by Seller or Manager (defined below) in connection with the ownership or operation of the Hotel; and

(k) files and records (including but not limited to all files and records relating to the Hotel and the development, operation, management, maintenance, repair, marketing and promotion thereof, such as financial records and statements, maintenance records, building plans, specifications and drawings, group and individual guest history records and all reservation and booking records for rooms and meeting space, regardless of whether such files and records are stored in paper form, on computer hard drive, computer disk, CD Rom, DVD or other medium).

1.2 Property Defined.

(a) The Land and the Improvements are sometimes collectively referred to herein as the “Real Property” and the Real Property, the Personal Property, the Bookings, the Service Contracts, the Intangibles, the Consumable Inventory, the Leases and the House Bank Funds are hereinafter sometimes referred to collectively as the “Property”; provided that, the Purchase Price does not include, and shall be adjusted with respect to, the House

3

Bank Funds, the Unopened Inventory, and the other adjustment items described in Section 4.4 below.

(b) Notwithstanding anything to the contrary in Section 1.1 or Section 1.2(a) above, the following items are expressly excluded from the Property:

(i) All cash on hand or on deposit in any operating account or other account or reserve, except for security deposits held by Seller as landlord with respect to any Lease and the House Bank Funds which are to be transferred at Closing subject to the terms of this Agreement;

(ii) Any tangible or intangible property (including, without limitations, fixtures, personal property or intellectual property) owned by (A) the supplier, vendor, licensor, lessor or other party under any Service Contracts, (B) the tenants under any Leases, (C) Manager, (D) any employees, or (E) any guests or customers of the Hotel; and

(iii) All accounts receivable of the Hotel and related operations which are outstanding as of the Closing Date (collectively, “Receivables”), provided that, from and after the Closing Date Purchaser shall cause Manager to continue to collect Receivables in the ordinary course of business of the operation of the Hotel in a manner consistent with Manager’s collection of accounts receivable owed to Purchaser and shall promptly deliver to Seller any funds received by Purchaser or Manager after the Closing Date in connection with the Receivables. The provisions of this Section 1.2(b)(iv) shall survive Closing.

1.3	Permitted Exceptions. The Property shall be conveyed subject to all matters which are, or are deemed to be, Permitted Exceptions pursuant to Article II hereof (collectively, the “Permitted Exceptions”).
1.4	Purchase Price. Seller is to sell and Purchaser is to purchase the Property for a total of NINETY MILLION AND NO/100 DOLLARS ($90,000,000.00) (the “Purchase Price”).
1.5	Payment of Purchase Price.

(a) On the Closing Date, Purchaser shall deliver to Escrow Agent (defined below) by wire transfer an amount equal to the Purchase Price, as increased or decreased by prorations and adjustments as herein provided, less the Earnest Money (defined below) previously delivered to Escrow Agent.

(b) The Purchase Price, as increased or decreased by prorations and adjustments as herein provided, shall be payable in full at Closing by wire transfer of immediately available federal funds to a bank account designated by Seller in writing to Purchaser and Escrow Agent prior to the Closing.

1.6 Earnest Money.

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(a) Within one (1) business days following the full execution and delivery of this Agreement by Seller and Purchaser, Purchaser shall deposit with Chicago Title Insurance Company (“Escrow Agent”) having its office at 700 South Flower, Suite 3305, Los Angeles, CA 90017, Attention: Marley Harrill, the sum of FIVE MILLION AND NO/100 DOLLARS ($5,000,000) (together with interest earned thereon, the “Earnest Money”) in good funds, either by certified bank or cashier’s check or by federal wire transfer. The full amount of the Earnest Money is deemed earned by Seller when delivered pursuant hereto by Purchaser and is fully non-refundable to Purchaser except in the event that this Agreement is timely terminated as a result of Purchaser’s election to terminate strictly in accordance with and pursuant to Section 2.3(b), Section 4.8, Section 6.3, or Section 7.2 below, in which case the full amount of the Earnest Money shall be refunded to Purchaser within two (2) business days after receipt of the notice of exercise of such right or notice of such termination.

(b) Escrow Agent shall hold the Earnest Money in an interest-bearing account in accordance with the terms and conditions of this Agreement. All interest accruing on such sums shall become a part of the Earnest Money and shall be distributed as Earnest Money in accordance with the terms of this Agreement. Notwithstanding any provision of this Agreement to the contrary, in no event shall Seller have any responsibility or liability to Purchaser in connection with the accrual or payment of interest on any portion of the Earnest Money.

(c) Time is of the essence for the delivery of Earnest Money under this Agreement and the failure of Purchaser to timely deliver any portion of the same shall be a material default, and shall entitle Seller, as Seller’s sole remedy on account thereof, the right to terminate this Agreement by notice thereof to Purchaser at any time on or before the date on which the Earnest Money has been delivered, anything herein contained to the contrary notwithstanding.

1.7 Escrow Instructions. The terms and conditions set forth in this Agreement shall constitute both an agreement between Seller and Purchaser and escrow instructions for Escrow Agent. Seller and Purchaser shall promptly execute and deliver to Escrow Agent any separate or additional escrow instructions requested by Escrow Agent that are consistent with the terms of this Agreement. Any separate or additional instructions shall not modify or amend this Agreement unless expressly set forth by the mutual consent of Seller and Purchaser and to the extent of any conflict between this Agreement and any such separate/additional instructions, the provisions of this Agreement shall control.

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1.8 Management Agreement. Purchaser acknowledges that (a) the Hotel is being operated and managed by Kimpton Hotel & Restaurant Group, LLC, a Delaware limited liability company (as successor in interest to Kimco Hotel & Restaurant Management Co.) (“Manager”), pursuant to that certain Hotel Operating Agreement, dated as of December 2, 1993, together with that certain Reconciliation Agreement dated as of December 2, 1993, as amended by that certain (i) letter agreement dated January 3, 1997, and (ii) Amendment to and Assignment of Hotel Operating Agreement dated as of June 30, 2005 between Manager and Seller (as amended, the “Management Agreement”), and (b) the Management Agreement will be assigned to, and assumed by, Purchaser at Closing.

ARTICLE II

TITLE AND SURVEY

2.1 Title Report. Seller has obtained and delivered to Purchaser, a title report dated March 11, 2010 (Order No. 81000549-56) (the “Title Report”) covering the Land and the Improvements from Chicago Title Company (the “Title Company”) (to be coordinated with both Seller and Purchaser’s title representatives) and, promptly following execution of this Agreement, shall deliver a copy of each document referenced in the Title Report as an exception to title to the Real Property. Purchaser shall deliver to Seller, within five (5) days after receipt by Purchaser, a copy of any updates (each a “Title Update”) to the Title Report issued by the Title Company.

2.2	Survey. Seller has obtained and delivered to Purchaser and the Title Company, at Purchaser’s expense, an ALTA survey of the Real Property prepared by Martin M. Ron Associates dated April 12, 2010 (Job No. S-7446) (the “Survey”).
2.3	Title Updates.

(a) Except for Monetary Encumbrances (defined below), Purchaser has approved all matters disclosed by the Title Report and the Survey and all title exceptions and survey matters so disclosed shall constitute “Permitted Exceptions”.

(b) Purchaser shall have five (5) days after receipt of a Title Update, if any, to notify Seller, in writing, of such objections as Purchaser may have to anything contained in such Title Update. In the event Purchaser shall notify Seller, in writing, of objections to title or to matters shown on a Title Update, Seller shall have the right, but not the obligation, to cure such objections. Within five (5) days after receipt of Purchaser’s notice of objections, Seller shall notify Purchaser in writing whether Seller elects to attempt to cure any or all of such objections. If Seller elects to attempt to cure, Seller shall have the right to attempt to remove, satisfy or cure the same and for this purpose Seller shall, at Seller’s election, be entitled to a reasonable adjournment of the Closing if additional time is required, but in no event shall the adjournment exceed sixty (60) days after the Outside Closing Date (any cure to be effected by affirmative title insurance shall first be subject to the prior consent of Purchaser, same to be granted or denied in its reasonable discretion). If Seller elects not to cure any objections specified in Purchaser’s notice, or if Seller is unable to effect a cure of those objections which it elected to cure prior to the

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Closing (or any date to which the Closing has been adjourned) and so notifies Purchaser in writing, or if Seller fails to respond to Purchaser’s notice within said five (5) day period, Purchaser shall have the following options: (i) to accept a conveyance of the Property subject to the Permitted Exceptions and any matter objected to by Purchaser which Seller is unwilling or unable to cure (each of which shall also be deemed to be Permitted Exceptions), and without reduction of the Purchase Price; or (ii) only if the title exception is materially adverse to the ownership or operation of the Real Property, to terminate this Agreement by sending written notice thereof to Seller, and upon delivery of such notice of termination, this Agreement shall terminate and the Earnest Money shall be returned to Purchaser, and thereafter neither party hereto shall have any further rights, obligations or liabilities hereunder except to the extent that any right, obligation or liability set forth herein expressly survives termination of this Agreement. If Seller notifies Purchaser that Seller does not intend to attempt to cure any title objection or fails to respond to Purchaser’s notice within said five (5) day period; or if, having commenced attempts to cure any objection, Seller later notifies Purchaser in writing that Seller will be unable to effect a cure thereof; Purchaser shall, within five (5) days after such notice has been given, notify Seller in writing whether Purchaser shall elect to accept the conveyance under clause (i) or to terminate this Agreement under clause (ii). Purchaser’s failure to notify Seller of termination of this Agreement within such five (5) day period shall be deemed to be an irrevocable election under clause (i) to accept conveyance of the Property. Notwithstanding any provision of this Agreement to the contrary, in no event shall Seller have any obligation to cure any title matter objected to by Purchaser; provided, however, (A) if any of the objections (1) consist of delinquent taxes, mortgages, deeds of trust, security agreements, construction or mechanics’ liens, tax liens or other liens or charges in a fixed sum or capable of computation as a fixed sum and (2) were caused, assumed or created by Seller (collectively, “Monetary Encumbrances”), then, to that extent, Seller shall be obligated to pay and discharge (or cause the Title Company to insure over such objections) any such objections and Escrow Agent is authorized to pay and discharge at Closing such objections, and (B) Purchaser acknowledges that Seller’s existing financing for the Property matures on July 8, 2010 and in the event any Title Update discloses an exception to title arising from such financing, Seller may cure such title matter by repaying the financing in full at the Closing. Notwithstanding the foregoing, Seller shall cause the release and discharge of all Monetary Encumbrances.

2.4 Conveyance of Title. At Closing, Seller shall convey and transfer to Purchaser its interest in the Land and fee title to the Improvements subject to the Permitted Exceptions. Notwithstanding anything contained herein to the contrary, the Real Property shall be conveyed subject to the following matters, all of which shall be deemed to be Permitted Exceptions:

(a) the lien of all ad valorem real estate taxes and assessments not yet due and payable as of the Closing Date, subject to adjustment as herein provided;

(b) local, state and federal laws, ordinances or governmental regulations, including but not limited to, building and zoning laws, ordinances and regulations, now or hereafter in effect relating to the Real Property;

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(c) items appearing of record or shown on the Survey and, in either case, not objected to by Purchaser or waived or deemed waived by Purchaser in accordance with Section 2.3 hereof; and

(d) the rights of the tenants under the Leases.

2.5 Title Policy. It shall be an express condition precedent hereunder to Purchaser’s obligations that, at Closing, the Title Company issue an ALTA owner’s title insurance policy Form B (6/17/06) (“Title Policy”) to Purchaser in accordance with the Title Report, in the amount of the Purchase Price, without those standard exceptions objected to by Purchaser which Title Company has expressly agreed in writing to remove, insuring Purchaser’s interest in and to the Real Property as of the date and time of Closing (with appropriate gap coverage to date of recordation, if applicable), subject only to the Permitted Exceptions. The Title Policy shall include an encroachment endorsement (ALTA Form 9.2-06 modified) in the form delivered to Purchaser on May 19, 2010 without inclusion of a liability limitation of $54,727,454 (“Encroachment Endorsement”). Purchaser may request issuance of endorsements to the Title Policy in addition to the Encroachment Endorsement as may required by Purchaser, at Purchaser’s expense, but issuance of such endorsements (other than the Encroachment Endorsement) shall not be a condition to Purchaser’s obligation to purchase the Property under this Agreement. Seller shall, at Closing, deliver an owner’s affidavit in the form attached hereto as Exhibit H hereto (the “Owner’s Affidavit”).

ARTICLE III

INSPECTION

3.1 Right of Inspection. Purchaser shall, subject to the rights of the Manager under the Management Agreement, guests of the Hotel and the tenants under the Leases, have the right to make a physical inspections of the Real Property and to examine at such place or places at the Hotel or elsewhere as the same may be located, any operating files maintained by or for the benefit of Seller in connection with the leasing, operation, current maintenance and/or management of the Property (“Property Information”), including, without limitation, the Leases, the Service Contracts, insurance policies, bills, invoices, receipts and other general records relating to the income and expenses of the Hotel, correspondence, surveys, plans and specifications, warranties for services and materials provided to the Hotel, environmental audits and similar materials and any other documents relating to the Property in Seller’s or Manager’s possession or control, but excluding materials not directly related to the current maintenance and/or management of the Property such as, without limitation, Seller’s financial projections, forecasts, budgets, appraisals, accounting and tax records, internal memoranda, correspondence and reports and similar proprietary, elective or confidential information. Purchaser shall keep all Property Information strictly confidential, provided that Purchaser may deliver copies of Property Information to its attorneys, accountants and other advisors in connection with the acquisition of the Property and to current and prospective lenders and partners provided that such parties agree to maintain the confidentiality of such Property Information. Purchaser understands and agrees that any on-site inspections of the

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Property shall be conducted upon at least twenty-four (24) hours’ prior notice to Seller (which notice may be given via telephone or e-mail, anything herein contained to the contrary notwithstanding). Seller may have its respective representatives attend any such inspections. Such physical inspection shall not disturb Hotel guests or tenants under the Leases nor unreasonably interfere with the use of the Property by Seller or Manager. Such physical inspection shall not be invasive in any respect (unless Purchaser obtains Seller’s prior written consent, which shall not be unreasonably withheld), and in any event shall be conducted in accordance with standards customarily employed in the industry and in compliance with all governmental laws, rules and regulations. Following each entry by Purchaser with respect to inspections and/or tests on the Real Property, Purchaser shall repair any damage caused to the Property on account of any such inspections and/or tests, at Purchaser’s sole cost and expense. Seller shall reasonably cooperate with Purchaser in its due diligence but shall not be obligated to incur any liability or expense in connection therewith. Purchaser shall not disrupt Seller’s or Manager’s or any tenant’s or guest’s activities on the Real Property and shall not contact Manager, any of its employees, or any other employees working at the Hotel, any guests of the Property, any party to a Service Contract, any tenants under the Leases, any lender providing financing secured by the Real Property or any governmental authority without (a) providing reasonable advance notice to Seller (via telephone or e-mail being acceptable for this purpose, anything herein contained to the contrary notwithstanding), and (b) irrespective of whether Purchaser delivers such notice, providing Seller with the option to either attend or participate in any meetings, conversations or communications between Purchaser and such party or expressly waiving its right to do so in writing and Purchaser shall not communicate in any manner with any such party without satisfying the foregoing. Purchaser agrees to indemnify against, defend, protect and hold Seller harmless from and against any claim for liabilities, losses, costs, expenses (including reasonable attorneys’ fees actually incurred), damages or injuries arising out of or resulting from or in connection with the inspection of the Property by Purchaser or its agents, employees, representatives, consultants or contractors and notwithstanding anything to the contrary in this Agreement, such obligation to indemnify, defend, protect and hold harmless Seller shall survive Closing or any termination of this Agreement. All inspections shall occur at reasonable times agreed upon by Seller and Purchaser. Purchaser agrees (i) that prior to entering the Property to conduct any inspection, Purchaser shall obtain and maintain, and shall cause each of its contractors and agents to maintain (and shall deliver evidence satisfactory to Seller thereof), at no cost or expense to Seller, commercial general liability insurance from an insurer reasonably acceptable to Seller in the amount of Three Million Dollars ($3,000,000) with combined single limit for personal injury or property damage per occurrence, such policies to name Seller as an additional insured party, which insurance shall provide coverage against any claim for personal injury or property damage caused by Purchaser or its agents, representatives or consultants in connection with any such tests and investigations, and (ii) to keep the Property free from all liens and encumbrances on account of any such inspections and/or tests. Purchaser’s insurance may not be canceled or amended except upon thirty (30) days’ prior written notice to Seller.

3.2

Seller Due Diligence Materials. PURCHASER ACKNOWLEDGES THAT INFORMATION RELATED TO THE PROPERTY CONTAINED IN THE SECURE

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WEBSITE (THE “E-ROOM”) TO WHICH PURCHASER HAS PREVIOUSLY BEEN GRANTED ACCESS HAS BEEN MADE AVAILABLE TO PURCHASER IN THE E-ROOM BY SELLER. BY EXECUTING THIS AGREEMENT, PURCHASER ACKNOWLEDGES ITS RECEIPT THEREOF OR THE AVAILABILITY OF IT THEREOF AND THAT (1) PURCHASER HAS RECEIVED COPIES OF THE ENVIRONMENTAL, ENGINEERING, SOILS AND OTHER REPORTS REGARDING THE CONDITION OF THE PROPERTY (COLLECTIVELY, THE “REPORTS”) LISTED ON SCHEDULE 3.2 ATTACHED HERETO, (2) IF SELLER DELIVERS ANY ADDITIONAL REPORTS OR OTHER DOCUMENTS TO PURCHASER, PURCHASER WILL ACKNOWLEDGE IN WRITING THAT IT HAS RECEIVED SUCH REPORTS OR OTHER DOCUMENTS PROMPTLY UPON RECEIPT THEREOF, AND (3) ANY REPORTS OR OTHER DOCUMENTS DELIVERED OR TO BE DELIVERED BY SELLER OR ITS AGENTS OR CONSULTANTS TO PURCHASER ARE BEING MADE AVAILABLE SOLELY AS AN ACCOMMODATION TO PURCHASER AND WITHOUT ANY REPRESENTATION OR WARRANTY OF SELLER AS TO THEIR ACCURACY OR COMPLETENESS OF FACTS OR OPINIONS SET FORTH THEREIN EXCEPT AS EXPRESSLY SET FORTH IN SECTION 5.1 AND THAT ANY RELIANCE BY PURCHASER ON SUCH REPORTS OR OTHER DOCUMENTS IN CONNECTION WITH THE PURCHASE OF THE PROPERTY IS UNDERTAKEN AT PURCHASER’S SOLE RISK. PURCHASER AGREES THAT SELLER SHALL HAVE NO LIABILITY OR OBLIGATION WHATSOEVER FOR ANY INACCURACY IN OR OMISSION FROM THE OFFERING MATERIALS PREPARED IN CONNECTION WITH THE SALE OF THE PROPERTY OR ANY REPORT OR OTHER DOCUMENTS MADE AVAILABLE TO PURCHASER OR ITS REPRESENTATIVES SUBJECT TO SELLER’S REPRESENTATIONS AND WARRANTIES SET FORTH IN SECTION 5.1. PURCHASER HAS CONDUCTED ITS OWN INVESTIGATION OF THE CONDITION OF THE PROPERTY TO THE EXTENT PURCHASER DEEMS SUCH AN INVESTIGATION TO BE NECESSARY OR APPROPRIATE. Prior to closing the E-Room, Seller shall supply to Purchaser a disc or discs with all reports and other information posted to the E-Room as of Closing (this sentence shall survive Closing). For purposes of this Agreement, the term “Seller Due Diligence Materials” shall mean (i) the Reports, the Property Information and all other documents and materials provided or otherwise made available by Seller to Purchaser pursuant to Section 3.1 and the other provisions of this Agreement or otherwise, together with any copies or reproductions of such documents or materials, or any summaries, abstracts, compilations, or other analyses made by Purchaser based on the information in such documents or materials, and (ii) all information set forth in this Agreement and the exhibits and schedules attached hereto and hereby made a part hereof.

3.3

No Right of Termination on Account of Inspections. Purchaser acknowledges that prior to its execution and delivery of this agreement, it conducted such inspections and tests with respect to the Property as it desired. Purchaser hereby waives its right to terminate this Agreement on account of its dissatisfaction with any of its inspections and/or tests of the Property. Purchaser acknowledges that, subject to any express right of Purchaser to terminate this Agreement set forth elsewhere herein, Purchaser is bound to proceed to

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Closing and consummate the transaction contemplated hereby pursuant to the terms of this Agreement.

ARTICLE IV

CLOSING

4.1 Time and Place; Pre-Closing.

     4.1.1 Subject to the provisions of Sections 4.6 and 4.7 below, the consummation of the transaction contemplated hereby (“Closing”), as evidenced by the payment and release of the Purchase Price to Seller, shall occur on or before 12:00 Noon (San Francisco time) on June 21, 2010 (“Outside Closing Date”), provided that the same is a business day, and if not, then on the immediately next succeeding business day (with the actual date of Closing being referred to herein as the “Closing Date”). The Closing shall occur through an escrow administered by Escrow Agent with the Purchase Price and all documents (unless otherwise mutually agreed) shall be deposited with the Escrow Agent as escrowee. At Closing, Seller and Purchaser shall perform the obligations set forth in, respectively, Section 4.2 and Section 4.3, the performance of which obligations shall be concurrent conditions. Seller and Purchaser acknowledge that, if a “special” recording is not available, the Closing may occur pursuant to a “gap closing” whereby the Deed (defined below) is recorded after the Closing Date.

     4.1.2 Notwithstanding anything herein to the contrary, the parties shall “pre-close” the sale of the Property on the business day before the Closing Date (the “Pre-Closing Date”). The term “pre-close” shall mean that each of the parties shall deliver to the Escrow Agent no later than 4:00 p.m. (San Francisco time) on the Pre-Closing Date all of the documents and other items (other than the closing proceeds) required to be delivered by such party for Closing (“Closing Deliveries”), including all of the closing documents required pursuant to Section 4.3 hereof. Further, the Title Company shall have acknowledged that it has all Closing Deliveries necessary to close and issue the Title Policy, and that the only remaining tasks to complete the Closing are for Purchaser to fund the balance of the Purchase Price to escrow on the Closing Date, the Title Company, on the Closing Date, to record the Closing Deliveries which are to be recorded (provided that Title Company may record such documents after the Closing Date provided that the Closing is deemed to occur on the Closing Date and all other conditions to Closing are satisfied) and to release the remaining Closing Deliveries to the party entitled thereto, including, without limitation, delivery of the Purchase Price to Seller, which tasks the parties (and Purchaser’s lender, if necessary) shall authorize the Title Company to perform no later than 12:00 Noon (San Francisco time) on the Closing Date. With respect to the closing adjustments to be made between the parties pursuant to Section 4.4 hereof, the adjustments shall continue to be made effective as of the Cutoff Time, but on the closing statement executed by the parties on the Pre-Closing Date, the parties shall in good faith estimate those adjustments which are not capable of being finalized prior to the Cutoff Time, and the parties shall reconcile said estimated adjustments pursuant to Section 4.4.13 hereof.

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4.2 Seller’s Closing Obligations and Deliveries. At Closing, subject to Section 4.1 above, Seller shall through Escrow Agent make the following deliveries and take the following actions:

(a) Execute and deliver to Purchaser one (1) original grant deed (“Deed”) in the form attached hereto as Exhibit A and made part hereof, conveying fee title in and to the Land and Improvements subject to the Permitted Exceptions, together with any required real estate transfer tax declarations or any other similar documentation required to evidence the payment of any tax imposed by the State of California, the County of San Francisco or the City of San Francisco on the transaction contemplated hereby;

(b) Execute and deliver to Purchaser two (2) original counterparts of a bill of sale in the form attached hereto as Exhibit B and made a part hereof conveying the Personal Property and Consumable Inventory without warranty of title or use and without warranty, expressed or implied, as to merchantability and fitness for any purpose but subject to the representations and warranties of Seller expressly set forth in Section 5.1 of this Agreement;

(c) Execute and deliver to Purchaser two (2) original counterparts of an assignment of Seller’s interest in the Service Contracts, the Bookings and the other Intangibles (in each case to the extent assignable) (“Assignment of Contracts”) in the form attached hereto as Exhibit C and made a part hereof;

(d) Execute and deliver to Purchaser two (2) original counterparts of an assignment of Seller’s interest in the Leases in the form attached hereto as Exhibit D and made a part hereof;

(e) Deliver to Purchaser a certificate, dated as of the Closing Date and executed on behalf of Seller by a duly authorized officer thereof, stating that the representations and warranties of Seller contained in this Agreement are true and correct in all material respects as of the Closing Date (with appropriate modifications of those representations and warranties made in Section 5.1 hereof to reflect any changes therein including without limitation any changes resulting from actions under Section 5.4 hereof) or identifying any representation or warranty which is not, or no longer is, true and correct and explaining the state of facts giving rise to the change. In no event shall Seller be liable to Purchaser for, or be deemed to be in default hereunder by reason of, any breach of representation or warranty which results from any change that (i) occurs between the Effective Date and the Closing Date and (ii) is permitted under the terms of this Agreement or is beyond the reasonable control of Seller to prevent; provided, however, any of the foregoing (other than those that are permitted under the terms of this Agreement) shall, if materially adverse, constitute the non-fulfillment of the condition set forth in Section 4.6(a). If, despite changes or other matters described in such certificate, the Closing occurs, Seller’s representations and warranties set forth in this Agreement shall be deemed to have been modified by all statements made in such certificate;

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(f) Deliver to Purchaser and the Title Company such evidence as the Title Company may reasonably require as to the authority of the person or persons executing documents on behalf of Seller;

(g) Deliver to Purchaser an affidavit duly executed by Seller stating (i) that Seller is not a “foreign person” as defined in the Federal Foreign Investment in Real Property Tax Act of 1980 and the 1984 Tax Reform Act in the form attached as Exhibit E attached hereto, and (ii) satisfying the requirements of California Form 590 under California law disclosure requirements, in the form attached hereto as Exhibit F and made a part hereof;

(h) If not already delivered to Purchaser, deliver to Purchaser, originals of the Leases, the Service Contracts and the licenses and permits, if any, in the possession of Seller or Seller’s agents, together with such leasing and property files and records which are material in connection with the continued operation, leasing and maintenance of the Property and any keys to security deposit boxes. For a period of seven (7) years after Closing in case of Seller’s need in response to any legal requirement, a tax audit, tax return preparation or litigation threatened or brought against Seller, Purchaser shall maintain the books and records for the Property at Purchaser’s expense and allow Seller and its agents or representatives access, upon reasonable advance notice (which notice shall identify the nature of the information sought by Seller), at all reasonable times to examine and make copies of any and all such books and records, which right shall survive the Closing;

(i) Deliver to the Escrow Agent an executed closing statement consistent with this Agreement and in a customary form;

(j) Deliver two (2) original copies of the Designation Agreement (defined below);

(k) Deliver such additional documents as shall be reasonably required to consummate the transaction expressly contemplated by this Agreement;

(l) Deliver an assignment and assumption of the Management Agreement in substantially the form of Exhibit I attached hereto (or such other form as may be mutually satisfactory to Seller, Purchaser and Manager);

(m) Deliver to Title Company the Owner’s Affidavit and, if required for the Closing, a so-called “gap indemnity”; and

(n) Deliver written notice executed by Seller notifying all interested parties, including, without limitation, all tenants under the Leases, that the Property has been conveyed to Purchaser and directing all payments, inquiries and the like be forwarded to Purchaser at the address to be provided by Purchaser.

4.3 Purchaser’s Closing Obligations and Deliveries. At Closing, Purchaser shall through Escrow Agent make the following deliveries and take the following actions:

(a) Pay the Purchase Price, as increased or decreased by prorations and adjustments as herein provided, to Seller in immediately available wire transferred funds pursuant to

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Section 1.5 above, it being agreed that at Closing the Earnest Money shall be applied towards payment of the Purchase Price;

(b) Deliver to Seller original executed counterparts of the instruments described in clauses (c), (d), (i), (j) and (l) of Sections 4.2 above;

(c) Deliver to Seller a certificate, dated as of the Closing Date and executed on behalf of Purchaser by a duly authorized officer thereof, stating that the representations and warranties of Purchaser contained in this Agreement are true and correct in all material respects as of the Closing Date;

(d) Deliver to Seller and Title Company such evidence as Title Company may reasonably require as to the authority of the person or persons executing documents on behalf of Purchaser; and

(e) Deliver such additional documents as shall be reasonably required to consummate the transaction contemplated by this Agreement.

4.4 Prorations, Credits and Other Adjustments. At Closing, Purchaser and Seller shall prorate all items of income and expense which are customarily prorated between a purchaser and seller for hotel properties comparable to the Hotel including, without limitation, the prorations and other adjustments provided below, and the net amount consequently owing to Seller or Purchaser shall be added to or subtracted from the proceeds of the Purchase Price payable to Seller at Closing. Beginning as close to the anticipated Closing Date as practicable, Seller shall, in consultation with Purchaser and with Purchaser’s reasonable cooperation, cause to be prepared a prorations and credit statement (the “Preliminary Statement”) which shall reflect all of the prorations, credits and other adjustments to the Purchase Price at Closing required under this Section 4.4 or under any other provision of this Agreement. As soon as Purchaser and Seller have agreed upon the Preliminary Statement, they shall jointly deliver a mutually signed copy thereof to Escrow Agent.

     4.4.1 Proration of Taxes.

     (a) All real estate ad valorem taxes, general assessments and special assessments and all personal property ad valorem taxes assessed against the Hotel (generically, “Taxes”) shall be prorated between Purchaser and Seller as of the Closing Date in accordance with local custom used in connection with the sale of commercial property located in San Francisco, California between sophisticated purchasers and sellers (unless otherwise expressly set forth in this Agreement). If the amount of any such Taxes is not ascertainable on the Closing Date, the proration for such Taxes shall be based on the tax rates set forth in the most recent available bill and the latest assessed valuation of the Property; provided, however, that after the Closing, Seller and Purchaser shall reprorate the Taxes in accordance with Section 4.4.13 below and pay any deficiency in the original proration to the other party promptly upon receipt of the actual bill for the relevant taxable period. Taxes for all subsequent tax years shall be the responsibility of Purchaser.

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     (b) Seller retains the right to commence, continue and settle any proceeding to contest any taxes for any taxable period which encompasses any period prior to the date of the Closing, and shall be entitled to any refunds or abatements of Taxes awarded in such proceedings.

     (c) Seller shall retain 100% of the benefit of any enterprise zone tax credit afforded to Seller or any of its affiliates in connection with Seller’s ownership and/or operation of the Property prior to Closing and no credit or adjustment to the Purchase Price shall be made in connection with any such tax credit.

     4.4.2 General Proration of Expenses.

(a) The following items of expense with respect to any portion or aspect of the Hotel shall be prorated between Seller and Purchaser as of the Closing Date:

(i) All charges and expenses under any Service Contracts.

(ii) All utility charges (but excluding any utility deposits). To the extent reasonably practicable, though, in lieu of prorating the charges for any metered utility service, Purchaser and Seller shall endeavor to have the utility read the meter as early as possible on the Closing Date, render a final bill to Seller based on such reading and bill all subsequent service to Purchaser.

(iii) Prepaid expenses of the Hotel, excluding insurance but including without limitation, (1) amounts incurred to pay for natural gas held in storage pending use at the Hotel and (2) the expense of all licenses and permits obtained in connection with the operation of the Hotel.

(iv) All other Hotel operating expenses, other than employment expenses (which are covered by Section 4.4.3 below).

     4.4.3 Employment Expenses. Seller shall pay to all Hotel Employees (as defined below), upon their termination of employment by Seller at or prior to Closing, all salaries, bonuses and employment benefits for unused vacation, holiday, sick leave, and personal days if, and to the extent, that amounts are accrued and vested prior to the Closing Date, and Purchaser shall have no obligation to such Hotel Employees with respect to such accrued salaries and benefits, even if such employees are Retained Employees (defined below). Purchaser and Seller shall split equally all salaries and related benefits that are payable to any Hotel Employees for work performed at the Hotel on the Closing Date, whether prior to or following the time of Closing, regardless of whether such persons are employees of Seller or Purchaser. Notwithstanding the foregoing, Seller shall bear the relocation costs of the new general manager.

     4.4.4 Hotel Revenues.

(a) At Closing, Seller and Purchaser shall share equally all revenues from the Hotel guest rooms and facilities occupied on the evening immediately preceding

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the Closing Date, including any sales taxes, room taxes, occupancy taxes and other taxes charged to guests in such rooms, all parking charges, sales from mini-bars, in-room food and beverage, telephone, facsimile and data communications, in-room movie, laundry, and other service charges allocable to such rooms with respect to the evening immediately preceding the Closing Date. All revenues from restaurants, lounges, vending machines and other service operations conducted at the Property shall be allocated based on whether the same accrued before or after the Cut-Off Time, and Seller shall cause the Manager to separately record sales occurring before and after the Cut-Off Time at the Property. The foregoing amounts are referred to collectively as “Guest Revenues”. Notwithstanding the foregoing, all revenues from any bars and lounges at the Property shall be prorated based on the actual closing time for such bar or lounge. For example, if such bar or lounge closes at 2 a.m. on the Closing Date, Seller shall retain the revenues from such services and operations even though such revenues were generated two (2) hours after the Cut-Off Time.

(b) Revenues from conferences, receptions, meetings, and other functions occurring in any conference, banquet or meeting rooms in the Hotel, or in any adjacent facilities owned or operated by Seller, including usage charges and related taxes, food and beverage sales, valet parking charges, equipment rentals, and telecommunications charges, shall be allocated between Seller and Purchaser, based on when the function therein commenced, with (i) one-day functions commencing prior to the Cut-Off Time being allocable to Seller, (ii) functions commencing after the Cut-Off Time being allocable to Purchaser, and (iii) multi-day functions being allocated between Seller and Purchaser according to when the event commences and is scheduled to end. The foregoing amounts are referred to collectively as “Conference Revenues.”

(c) [Intentionally omitted.]

(d) Any operating revenues not otherwise provided for in this Section 4.4, shall be prorated between Purchaser and Seller as of Closing.

     4.4.5 Rent. Rent and other payments payable by tenants, licensees, concessionaires, and other persons using or occupying the Real Property or any part thereof under a Lease or otherwise, if any, for or in connection with such use or occupancy, including, without limitation, fixed monthly rentals, additional rentals, percentage rentals, escalation rentals, retroactive rentals, operating cost pass-throughs, common area maintenance charges, HVAC charges, payments of taxes and insurance expenses, promotional/marketing charges, construction receivables and other sums and charges payable by the tenants under the Leases (collectively, “Rent”) shall be prorated as of the Closing such that Seller will be entitled to Rent attributable to periods prior to the Closing and Purchaser will be entitled to Rent attributable to periods from and after the Closing, all as more particularly set forth below:

(a) All Rent collected by Seller under the Leases prior to Closing (“Current Rent”) shall be prorated as of the Closing Date.

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(b) All Rent other than Current Rent (“Rent Arrears”) shall not be prorated at Closing. In the event that either Purchaser or Seller receives Rent from a tenant after the Closing Date, such Rent shall be applied in the following order of priority (after deduction of actual out-of-pocket costs of collection paid by Purchaser to third parties): (a) first to current rent due to Purchaser, (b) second to delinquent rent due to Purchaser, and (c) thereafter to Rent Arrears due to Seller from such tenant. Any sums owed to Seller pursuant to the foregoing shall be paid by Purchaser within thirty (30) days following receipt by Purchaser. Purchaser shall pursue all Rent Arrears in the ordinary course of business and shall have the right to negotiate settlements with tenants who have Rent Arrears as it may determine in good faith; provided that, at its sole cost and expense (x) Seller shall have the unrestricted right to pursue collection from any tenant not in possession of its space as of the Closing Date in Seller’s sole discretion including, without limitation, initiating and prosecuting a lawsuit against the applicable tenant, and (y) in the event that after Closing Purchaser evicts or otherwise terminates the possession of any tenant with Rent Arrears, if Purchaser has neither released the tenant nor pursued eviction to judgment, Seller shall have the unrestricted right to pursue collection from such tenant in Seller’s sole discretion including, without limitation, initiating and prosecuting a lawsuit against the applicable tenant. Should Seller take the action permitted in either item (x) or (y), Purchaser shall be relieved of and shall have no obligation to pursue the applicable Rent Arrears.

(c) Percentage rent or overage rent (referred to herein as “Percentage Rent”) collected under the Leases prior to the Closing shall be prorated between Purchaser and Seller at Closing based on Percentage Rents which were due and payable for the periods prior to and after the Closing Date. As soon as reasonably possible after the end of the year in which the Closing occurs, the Percentage Rent shall be re-prorated on a Lease by Lease basis with Seller entitled to the portion of total Percentage Rent due under each Lease for the Lease Year (as defined below) in which the Closing occurs (the “Subject Lease Year”) based on the portion of the Subject Lease Year occurring prior to the Closing Date and Purchaser entitled to the portion of total Percentage Rent due under each Lease for the Subject Lease Year based on the portion of the Subject Lease Year occurring from and after the Closing Date; provided, however, there shall be no proration of any delinquent rent Percentage Rent until such Percentage Rent is collected and all such collections shall be paid to Seller and Purchaser in the order for payment of delinquent Rent set forth in Section 4.5(b) above. As used herein, the term “Lease Year” means the twelve (12) month period (or, as to tenants for which the Closing occurs during a partial Lease Year, such applicable shorter period) as to which annual Percentage Rent is owed under each Lease.

     4.4.6 Hotel Payables. At Closing, Purchaser shall receive a proration credit equal to the excess of (a) the aggregate estimated amount of all outstanding accounts payable for the Hotel as of the Closing Date (“Hotel Payables”) in the Preliminary Statement over (b) Purchaser’s prorated share of such Hotel Payables under Section 4.4.2, and Purchaser shall assume the obligation to satisfy all Hotel Payables. After

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Closing, before paying any amount invoiced or otherwise claimed by a third party due with respect to the Hotel operations prior to Closing which is not included on such schedule (or is claimed in an amount larger than that shown on such schedule), Purchaser shall first submit such invoice or claim to Seller. Unless Seller, within ten (10) days after receiving such submission, objects to such invoice or claim (thereby making it a “Seller Disputed Payable”), Purchaser may pay the same and take a credit for such payment on the Final Statement. Notwithstanding the foregoing, upon Closing Purchaser shall assume all obligations of Seller to pay for any (i) consumables or other items ordered by or for the benefit of Seller in the ordinary course of business but which are not yet received as of the Closing Date, and (ii) items or services listed on a purchase order log prepared by Manager, which list shall be updated by Manager immediately prior to Closing; provided that, there shall not be any adjustment to the Purchase Price in connection with Purchaser’s assumption of the liabilities described in clauses (i) and (ii) of this sentence.

     4.4.7 Credit for Certain Inventories. As of the date immediately prior to the Closing Date, Seller and Purchaser shall jointly conduct or cause the Manager to conduct an inventory of all (a) Unopened Inventory, and (b) all Retail Inventory in the Hotel gift shop, spa, fitness center or any other area at the Hotel conducting retail sales (excluding areas operated by third parties under a Lease), and shall deliver a written report thereon to Seller and Purchaser. Such report shall reflect the cost of the Unopened Inventory and the Retail Inventory at the acquisition cost thereof. Seller shall receive a credit at Closing in an amount equal to the total cost of the Unopened Inventory attributable to beer, wine and other alcoholic beverages, as reflected in such report, but the remainder of the Unopened Inventory and Retail Inventory shall not result in any adjustment to the Purchase Price at Closing.

     4.4.8 Credit for Reservation Deposits. Purchaser shall receive a proration credit equal to the aggregate amount of advance deposits that shall have been received by Seller prior to the Cut-Off Time on account of reservations for use or occupancy of the Property after the Cut-Off Time.

     4.4.9 Credit for Cash Banks. Seller shall receive a credit at Closing in an amount equal to all House Bank Funds.

     4.4.10 Regarding Hotel Prorations Generally. Unless this Section 4.4 expressly provides otherwise: (A) all prorations hereunder with respect to the Hotel shall be made as of 12:00:01 a.m., local time at the Hotel (“Cut-Off Time”) on the Closing Date, (B) all prorations shall be made on an actual daily basis, and (C) for purposes of such prorations, all items of revenue and expense with respect to the Hotel’s operations shall be classified and determined in accordance with the Uniform System of Accounts for the Lodging Industry, as reasonably modified by Manager for use at the Hotel consistent with past practices and otherwise in accordance with generally accepted accounting principles. Except as otherwise expressly provided herein, in any case in which Purchaser receives a credit at Closing on account of any obligation of Seller hereunder, Seller shall have no further liability for such obligation to the extent of the credit so given, and Purchaser shall pay and discharge the same.

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     4.4.11 Vouchers. Purchaser shall (a) honor all outstanding unexpired gift certificates, coupons or other writings issued by Seller set forth in Schedule 4.4.11 attached hereto and incorporated herein by this reference that entitles the holder or bearer thereof to a credit (whether in a specified dollar amount as for a specified item, such as room night or meals) to be applied against the usual charge for rooms, meals and/or goods and services at the Hotel (collectively, “Vouchers”) and shall assume all liability, if any, for all outstanding Vouchers as of the Closing Date regardless of any purported expiration, (b) receive a credit against the Purchase Price payable at Closing as set forth in Schedule 4.4.11 attached hereto and incorporated herein by this reference, as updated as of the Closing Date, but Purchaser shall not receive a credit for any complimentary or discounted room nights or Hotel or spa goods or services to the extent issued by either the sale office or the executive office, and (c) indemnify, defend and hold Seller harmless from and against all claims, liabilities, costs and expenses arising out of the Vouchers from and after the Closing Date.

     4.4.12 Utility and Other Deposits.

          (a) At Closing, Seller shall receive a credit for all refundable cash or other deposits posted with utility companies serving the Property or any governmental agencies or authorities or posted pursuant to any Service Contract and Seller shall assign to Purchaser all right, title and interest in and to such refundable cash or other deposits, or, at Seller’s option, Seller shall be entitled to receive and retain such refundable cash and deposits.

          (b) Purchaser shall be entitled to a credit for all unapplied and refundable security and other deposits retained by Seller as of the Closing Date with respect to any Leases at the Hotel.

     4.4.13 Final Statement; Post-Closing Adjustments. Except for (a) prorations for real estate taxes and other assessments, which shall be adjusted within fifteen (15) business days of receipt of the tax bill for the tax year in which the Closing occurs, and (b) Percentage Rent, which shall be adjusted as provided in Section 4.4.5(c) above, Seller shall make a one-time post-Closing adjustment of any item of income and expense subject to adjustment as provided above which was either incomplete or incorrect (whether as a result of an error in calculation or a lack of complete and accurate information) as of the Closing. Purchaser will prepare and deliver to Seller for its review and approval a statement of prorations (the “Final Statement”) within sixty (60) days following the Closing Date, and the party in whose favor the original incorrect adjustment or error was made (“Adjusting Party”) shall pay to the other party (“Requesting Party”) the sum necessary to correct such prior incorrect adjustment or error within ten (10) days after completion of the Final Statement. Notwithstanding any provision of this Agreement to the contrary, all items required to be adjusted pursuant to this Section 4.4 shall be adjusted within seventy-five (75) days of Closing (except real estate taxes, which shall be re-adjusted within the period set forth above), and such adjustment shall be final and no further adjustment to the prorations or the Purchase Price shall be made.

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     4.4.14 Resolution of Disputes. In the case of a dispute, the parties shall attempt to resolve such dispute, but if for any reason such dispute is not resolved by the date that is thirty (30) days after the delivery of the original notice of the claimed adjustment by Purchaser or Seller, but not to exceed seventy-five (75) days after Closing, then the parties shall submit such dispute to PricewaterhouseCoopers, LLC (“Outside Accountants”), and the determination of the Outside Accountants, which shall be made within a period of fifteen (15) days after such submittal by the parties, shall be conclusive. The fees and expenses of the Outside Accountants shall be paid equally by Purchaser and Seller. At such time as the amount of any adjustment or dispute shall be determined (either by agreement or by determination of the Outside Accountants), any amount that shall be payable by the Requesting Party to the Adjusting Party as a result of such adjustment or determination shall be paid within ten (10) business days after the date on which such agreement or determination shall have been made.

     4.4.15 Seller Tax Appeal. Purchaser acknowledges that Seller has a pending appeal of the real property tax assessment for tax years related to the period of Seller’s ownership of the Real Property, and that Seller may take related action which Seller deems appropriate in connection therewith. Purchaser shall cooperate with Seller in connection with such appeal (at Seller’s expense if requested by Seller) and collection of a refund of real property taxes paid. Seller owns and holds (and shall retain following the Closing) all right, title and interest in and to such appeal and refund, and all amounts payable in connection therewith shall be paid directly to Seller by the applicable authorities. If such refund or any part thereof is received by Purchaser, Purchaser shall promptly pay such amount to Seller. Any refund received by Seller (or Purchaser in connection with any appeal initiated by Seller) shall be distributed as follows (subject, however, to any conflicting provisions of any Lease): first, to reimburse Seller for all costs incurred in connection with the appeal; second, to Purchaser to the extent such refund is attributable to taxes for which Seller received a proration credit at Closing pursuant to Section 4.4.1 above; third, with respect to refunds payable to tenants of the Real Property pursuant to the Leases, to such tenants in accordance with the terms of such Leases; fourth, to Seller to the extent such appeal covers the period prior to the Closing Date; and lastly to Purchaser to the extent such appeal covers the period as of the Closing Date and thereafter. Purchaser shall have the right to direct any appeal of the real property tax assessment, if any, for the tax years occurring after the Closing Date.

     4.4.16 Survival. The provisions of this Section 4.4 shall survive Closing.

4.5 Closing Costs. Seller shall pay (a) the fees of any counsel representing it in connection with this transaction, (b) 50% of the documentary transfer tax or conveyance tax payable by reason of the transfer of the Real Property, (c) the $5,000 premium charged by Title Company to remove the $54,727,454 liability cap in the Encroachment Endorsement, and (d) 50% of any escrow fees charged by the Escrow Agent. Purchaser shall pay (i) the fees of any counsel representing Purchaser in connection with this transaction, (ii) 50% of the documentary transfer tax or conveyance tax payable by reason of the transfer of the Real Property, (iii) 100% of the (A) premium for the Title Policy, (B) cost of any endorsements to the Title Policy (except for the amount described in (c) above, and (C) the cost of any title insurance provided to Purchaser’s lender, (iv) the cost of any

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modifications or updates to the Survey, (v) 50% of any escrow fees charged by the Escrow Agent, (vi) the cost of the property condition report prepared by Marx Okubo Associates Inc. dated April 21, 2010, (vii) all sales tax on the sale of the Personal Property (or any part thereof) and any taxes other than those required to be paid by Seller as set forth above, and (viii) the fees for recording the Deed and any other recordable documents. All other costs and expenses incident to this transaction and the closing thereof shall be paid in a manner consistent with custom for similar transactions in San Francisco, California. Notwithstanding the foregoing, in the event that this Agreement is terminated as a result of a party’s default, such defaulting party shall pay all escrow and title cancellation fees charged in connection with such cancellation.

4.6

Conditions Precedent to Obligation of Purchaser. The obligation of Purchaser to consummate the transaction hereunder shall be subject to the fulfillment on or before the Closing Date of all of the following conditions, any or all of which may be waived by Purchaser in its sole discretion:

(a) All of the representations and warranties of Seller contained in this Agreement shall be true and correct in all material respects as of the Closing Date (with appropriate modifications permitted under this Agreement or not materially adverse to Purchaser).

(b) Seller shall have performed and observed, in all material respects, all covenants and agreements of this Agreement to be performed and observed by Seller as of the Closing Date.

(c) Seller shall have delivered to Purchaser executed tenant estoppel certificates (each a “Tenant Estoppel” and collectively, the “Tenant Estoppels”) from Starbucks Corporation (“Starbucks”) and from Uomo European Menswear (“Uomo”). The Tenant Estoppel for (i) Starbucks shall be on Starbucks’ standard form or on such other form as is acceptable to Starbucks and shall (A) certify that its Lease is unmodified and in full force and effect (or, if modified, sating the nature of such modification and certifying that such Lease as modified is in full force and effect); (B) state the date to which base rent and other charges have been paid and the amount of any security deposit held by landlord, if any; and (C) acknowledge that there are not, to the actual knowledge of the person executing the certificate, any uncured defaults on the part of landlord, or specifying such defaults, if any, which are claimed, and (ii) Uomo shall be substantially in the form of Exhibit K attached hereto. Purchaser may request that additional matters be addressed by Starbucks or Uomo but any Tenant Estoppel addressing the matters described in clauses (i)(A) – (C) and in the form of Exhibit K, respectively, shall satisfy the condition set forth in this Section 4.6(c).

(d) Title Company shall be irrevocably committed to issue the Title Policy as required in Section 2.5.

(e) The Closing of the Liquor Escrow or the execution and delivery of the Interim Beverage Agreement (defined below).

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4.7 Conditions Precedent to Obligation of Seller. The obligation of Seller to consummate the transaction hereunder shall be subject to the fulfillment on or before the of Closing Date of all of the following conditions, any or all of which may be waived by Seller in writing in its sole discretion:

(a) All of the representations and warranties of Purchaser contained in this Agreement shall be true and correct in all material respects as of the Closing Date.

(b) Purchaser shall have performed and observed, in all material respects, all covenants and agreements of this Agreement to be performed and observed by Purchaser as of the Closing Date.

4.8

Failure or Waiver of Conditions Precedent. In the event any of the conditions set forth in Sections 4.6 or 4.7 are not fulfilled or waived on or before the Outside Closing Date, the party benefited by such conditions may, by written notice to the other party, terminate this Agreement, whereupon all rights and obligations hereunder of each party shall be at an end except those that expressly survive any termination. Either party benefited by a condition set forth in Sections 4.6 and 4.7 above may, at its election, at any time or times on or before the date specified for the satisfaction of the condition, waive in writing the benefit of such condition. Purchaser’s consent to the Closing pursuant to this Agreement shall waive any remaining unfulfilled conditions, and any liability on the part of Seller for breaches of representations and warranties of which Purchaser had knowledge as of the Closing. If Purchaser terminates this Agreement due to the failure of any condition set forth in Section 4.6 not being satisfied, then the Earnest Money shall be refunded to Purchaser less Purchaser’s share of any escrow charges.

4.9

Alcoholic Beverage License.

(a) Purchaser acknowledges that Oxford Union Square Beverage Company LLC, a Delaware limited liability company and affiliate of Seller (“BevCo”), and Club Minibar Inc., a California corporation (“Club Minibar”), are the current licensees under the existing alcoholic beverage license(s) for the Hotel (collectively, the “Existing Liquor License”). The Existing Liquor License and the alcoholic beverages on hand at the Hotel, whether issued to the food and beverage departments or held in reserve storage (but excluding the minibar inventory)(“Alcoholic Beverages”), shall be transferred pursuant to a separate escrow (“Liquor Escrow”) between Seller, BevCo, Club Minibar and Purchaser and the parties shall execute customary escrow instructions in connection therewith and consistent with the terms of this Agreement.

(b) The Existing Liquor License shall be included in the Purchase Price, but a value of Twenty Thousand Dollars ($20,000) (“Liquor License Purchase Price”) shall be separately allocated to it for the purposes of the Liquor Escrow. The cost of the Alcoholic Beverages is not included in the Purchase Price. A value shall be separately allocated to it for the purposes of the Liquor Escrow at Closing and, collectively with the Liquor License Purchase Price, shall constitute the “Liquor Purchase Price”.

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(c) The Liquor Escrow shall be established at Heritage Bank of Commerce (the “Liquor Escrow Holder”), attention: Chloe Flowers, unless the parties mutually agree otherwise. The parties acknowledge that the terms and conditions of the Liquor Escrow shall be conducted under Sections 24049 and 24070-24082 of the California Business & Professions Code (“B & P Code”), and the Liquor Escrow Holder shall be authorized and instructed to publish and record all required notices, handle creditor claims, and to obtain tax releases in accordance therewith. Liquor Escrow Holder shall further be directed to handle funds in the Liquor Escrow in accordance with Section 24049 and 24070-24082 of the B & P Code. The Liquor Escrow shall close and the Liquor License Purchase Price shall be paid over and released to Seller, without further claim by Purchaser, on the date that the California Department of Alcoholic Beverage Control (“ABC”) approves the transfer of the Liquor License to Purchaser. The Closing of the Liquor Escrow is not a condition to Closing.

(d) Purchaser shall use commercially reasonable efforts to file all necessary applications and supporting materials with the ABC as may be required to obtain a permanent or temporary liquor license for the Hotel as soon as possible, but in any event such filing shall occur on or before June 14, 2010, and following filing shall diligently pursue the issuance of such liquor license. Seller agrees to (and shall request BevCo and Club Minibar to) promptly execute and deposit into the Liquor Escrow all other documents and instruments (including, but not limited to, liquor license applications and transfer agreements) that may be required by the Liquor Escrow Holder and/or the ABC.

(e) Seller agrees to cause to be prepared a certified schedule of the inventory of Alcoholic Beverages on hand at the Hotel as of 11:59 p.m. of the day before the Closing Date. Such schedule shall list all items of Alcoholic Beverages and shall set forth the amount of each item on hand and the net cost paid by Seller for each item. If the net cost for any item cannot be established, then the current replacement cost for such item shall be used based upon the price lists from the Hotel’s suppliers then in effect. The total cost of the Alcoholic Beverages as established above shall be the portion of the Purchase Price allocated to the Alcoholic Beverages.

(f) On the Closing Date, the Escrow Agent shall transfer the Liquor Purchase Price to the Liquor Escrow Holder for deposit into the Liquor Escrow and the Liquor Escrow shall close on the terms and conditions set forth in the separate Liquor Escrow instructions executed by Seller and Purchaser. Purchaser shall pay any sales tax attributable to the sale of the Liquor License and Alcoholic Beverages or any other personal property transferred through the Liquor Escrow. Liquor Escrow fees charged by Liquor Escrow Holder shall be paid equally by Seller and Purchaser. Purchaser shall pay all fees and costs payable to the ABC in connection with transferring the Liquor License and all license and transfer fees, costs of recordation and publication.

(g) If Purchaser is unable prior to Closing to obtain a temporary liquor license permitting Purchaser or Manager to continue to sell Alcoholic Beverages at the Hotel, then BevCo and Club Minibar shall execute and deliver to Purchaser, subject to the indemnification below, an interim management agreement (the “Interim Beverage Agreement”) in substantially the form attached as Exhibit J hereto, and shall keep open the bars and

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lounges and liquor facilities of the Hotel between the Closing Date and the time when such existing alcoholic beverage license transfers or the issuance of new licenses actually become effective, in the manner in which such bars, lounges and liquor facilities were operated prior to Closing, by such license holders exercising management and supervision of such facilities under the Existing Liquor License until such time of transfer or issuance; provided, however, that Purchaser at Closing shall indemnify and hold Seller, BevCo and Club Minibar harmless from any liability, damages or claims encountered in connection with such operations during said period of time and all costs and expenses (including reasonable attorneys’ fees) arising therefrom. Seller’s obligation under this Section 4.9(g) to enter into the Interim Beverage Agreement shall be conditioned upon none of Seller, BevCo or Club Minibar being obligated to assume (except to the extent provided in the preceding sentence) any liability with respect to any Liquor License or the serving of alcoholic beverages following Closing unless each of them is satisfied as to the scope of its or their potential liability and such liability is indemnified and insured against by Purchaser in an amount, form and from a third party carrier, all reasonably satisfactory to each of Seller, BevCo and Club Minibar. In no event shall Seller, BevCo nor Club Minibar be obligated to assume any liability for activities of Purchaser that would expose any of them to criminal liability.

4.10	Designation Agreement. On or before the Closing Date, Seller and Purchaser shall each execute an original counterpart of a Designation Agreement, substantially in the form of Exhibit G attached hereto, which Designation Agreement names the Title Company as the “Reporting Person” under Section 6045(e) of the Internal Revenue Code (the “Designation Agreement”).
4.11	Disbursements and Other Actions by Escrow Agent. Upon the Closing, Escrow Agent shall promptly undertake all of the following, same to be deemed to have been completed simultaneously:

(a) Cause the Grant Deed and any other documents which the parties hereto may mutually direct to be recorded in the Official Records of San Francisco County, California in the order directed by the parties;

(b) Disburse to Seller from funds deposited by Purchaser with Escrow Agent towards payment of all items (including, without limitation, the Purchase Price) chargeable to the account of Purchaser;

(c) Deliver to Seller a fully executed original of the instruments described in clauses (c), (d), (j), (k) and (l) of Section 4.2 above and clauses (c), (d) and (e) of Section 4.3 above and a conformed copy of the Grant Deed;

(d) Deliver to Purchaser a fully executed original of the instruments described in clauses (b), (c), (d), (e), (f), (g), (h), (i), (j), (k), (l), and (n) of Section 4.2 above and a conformed copy of the Grant Deed;

(e) Direct the Title Company to issue the Title Policy to Purchaser; and

(f) File the Designation Agreement.

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ARTICLE V

REPRESENTATIONS, WARRANTIES AND COVENANTS

5.1 Representations and Warranties of Seller. Seller hereby makes the following representations and warranties to Purchaser as of the Effective Date, subject to the qualifications and exceptions set forth below:

(a) Organization and Authority. Seller has been duly organized and is validly existing and in good standing under the laws of Delaware. Seller has the full right and authority to enter into this Agreement and to transfer all of the Property to be conveyed by Seller pursuant hereto and to consummate or cause to be consummated the transactions contemplated herein to be made by Seller. The person signing this Agreement on behalf of Seller is authorized to do so.

(b) No Breach. The execution, delivery and performance of this Agreement by Seller and the consummation of the transaction contemplated herein will not: (i) result in a breach or acceleration of or constitute a default or event of termination under the provisions of any agreement or instrument by which the Property is bound or affected which would have a material adverse impact on the ownership and operation of the Property by Purchaser; (ii) result in the creation or imposition of any lien, charge or encumbrance, against the Property or any portion thereof; or (iii) constitute or result in the violation or breach by Seller of any judgment, order, writ, injunction or decree issued against or imposed upon Seller or result in the violation of any applicable law, rule or regulation of any governmental authority which, with respect to any of the foregoing, would have a material adverse impact on the ownership or operation of the Property by Purchaser.

(c) Litigation/Condemnation. Except as set forth on Schedule 5.1(c) attached hereto, Seller has not received written notice of any litigation which has been filed against Seller that arises out of the ownership of the Property and would materially and adversely affect the Property or use thereof, or Seller’s ability to perform its obligations hereunder, nor has Seller received written notice of any condemnation proceedings. To Seller’s knowledge, there is no threatened litigation that arises out of the ownership of the Property and would materially and adversely affect the Property or use thereof, or Seller’s ability to perform its obligations hereunder. Seller hereby agrees to indemnify against, defend, protect and hold Purchaser harmless from and against any claim for liabilities, losses, costs, expenses (including reasonable attorneys’ fees actually incurred), damages or injuries arising out of or resulting from or in connection with any litigation filed against Seller and relating to the ownership of the Property on or before the Effective Date; provided that, such indemnity (i) is limited to claims covered by Seller’s insurance, and (ii) does not extend to any claim arising from ownership or operation of the Property after the Closing.

(d) Leases. To Seller’s knowledge, (i) the list of Leases attached hereto as Schedule 1.1(h) is accurate and lists all Leases currently affecting the Hotel, and Seller has delivered (or otherwise made available to Purchaser) a true and correct copy of such

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Leases and no uncured notice of default has been delivered by Seller or received by Seller with respect to any Leases and (ii) there are no oral or other agreements between Seller and any tenant of the Property that has not been reduced to a writing and which is not set forth among the Leases. To Seller’s knowledge, there are no outstanding defenses, counterclaims or offsets against the payment of rent or any other amount payable or against the performance of any other obligation under any of the Leases. Any and all brokerage, leasing and other commissions and tenant improvement credits or contributions due under any such Leases have been fully performed in all material respects and all amounts due from Seller as of the Closing Date have been (or will be) paid in full by the Closing Date.

(e) No Violations. Except as set forth on Schedule 5.1(e) attached hereto, to Seller’s knowledge, Seller has not received prior to the Effective Date any written notification from any governmental or public authority that the Property is in violation of any applicable fire, health, building, use, occupancy or zoning laws or other statute, ordinance, law or code (including without limitation Environmental Laws and the Americans with Disabilities Act, as amended) bearing on the construction, operation or use of the Property or any part thereof where such violation remains outstanding and, if unaddressed, would have a material adverse effect on the use of the Property as currently owned and operated.

(f) Service Contracts and Equipment Leases. To Seller’s knowledge, there are no Service Contracts or Equipment Leases which will affect the Property after the Closing Date except as set forth on the Schedule 1.1(e)-1 and Schedule 1.1(e)-2, respectively, and no Service Contracts or Equipment Leases have been amended except as set forth in said Schedules. To Seller’s knowledge, no uncured written notice of material default has been delivered by Seller or received by Seller with respect to any Service Contracts or Equipment Leases. To Seller’s Knowledge, the copies of Service Contracts and Equipment Leases delivered or made available to Purchaser by Seller are true and complete.

(g) Personal Property. To Seller’s knowledge, Seller owns the Personal Property, other than any leased Personal Property under the Equipment Leases, free of all liens and encumbrances.

(h) No Consents. No consent, approval or action of, filing with or notice to any governmental or regulatory authority or any other person or entity on the part of Seller is required in connection with the execution, delivery and performance of Agreement or the consummation of the transactions contemplated except those that have already been obtained.

(i) Patriot Act Compliance. Neither Seller nor any individual or entity having an interest in Seller is a person or entity either (i) is listed on the Specially Designated Nationals and Blocked Persons List maintained by the Office of Foreign Assets Control, Department of the Treasury (“OFAC”) pursuant to Executive Order No. 133224, 66 Fed. Reg. 49079 (September 25, 2001) (the “Order”) and/or on any other list of terrorists or terrorist organizations maintained pursuant to any of the rules and regulations of OFAC or

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pursuant to any other applicable orders (such lists are collectively referred to as the “Lists”); (ii) is a person or entity who has been determined by competent authority to be subject to the prohibitions contained in the Orders; or (iii) is owned or controlled by, or acts for or on behalf of, any person or entity on the Lists or any other person or entity who has been determined by competent authority to be subject to the prohibitions contained in the Order.

(j) Management Agreement. The Management Agreement is the entire agreement between Seller and Manager regarding the operation and management of the Hotel by Manager. Seller has delivered (or otherwise made available to Purchaser) a true, correct and complete copy of the Management Agreement and no uncured notice of default has been delivered by Seller or received by Seller from Manager.

(k) Sale of Assets. The sale of the Hotel pursuant to this Agreement is the sale of all or substantially all Seller’s assets and is not one in a series of three or more sales of assets by Seller within a twelve (12) month period.

     Notwithstanding the foregoing, if Purchaser has knowledge of a breach of any representation or warranty made by Seller in this Agreement prior to Closing and Purchaser nevertheless proceeds to close the purchase of the Property, such representation or warranty by Seller shall be deemed to be qualified or modified to reflect Purchaser’s knowledge of such breach and Seller shall have no liability whatsoever respecting the same.

5.2 Knowledge Defined. For purposes of this Agreement, “knowledge” means (a) with respect to Seller, the actual knowledge of Robert D. Kline, who is President of Chartres Lodging Group, LLC and Maxine Taylor, who is the asset manager for Seller (provided that, in no event shall such persons have any personal liability arising under this Agreement), without any duty of inquiry or investigation, and expressly excluding the knowledge of any other shareholder, partner, member, trustee, beneficiary, director, officer, manager, employee, agent or representative of Seller or any of its affiliates, and (b) with respect to Purchaser, (i) the actual knowledge of Thomas C. Fisher and Cody Bradshaw, Chief Investment Officer and Vice President of Acquisitions, respectively, of Purchaser (provided that, in no event shall such person have any personal liability arising under this Agreement), (ii) any matter disclosed in any exhibits or schedules to this Agreement, (iii) any matter disclosed in any of the Seller Due Diligence Materials or any other documents or materials provided or made available by Seller or its agents to Purchaser prior to Closing, (iv) any matter disclosed by Purchaser’s inspections or investigations of the Property , and (v) any matter disclosed by a Tenant Estoppel.

5.3 Survival of Seller’s Representations and Warranties. The representations and warranties of Seller set forth in Section 5.1 as updated by the certificate of Seller to be delivered to Purchaser at Closing in accordance with Section 4.2(e) hereof, shall survive Closing for a period of one hundred eighty (180) days. No claim for a breach of any representation, warranty or covenant of Seller shall be actionable or payable unless each of the following conditions is satisfied: (a) the breach in question results from or is based on a condition, state of facts or other matter which was not known to Purchaser prior to Closing, (b) the

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valid claims for all such breaches, if any, collectively aggregate more than One Hundred Thousand and No/100 Dollars ($100,000), in which event the amount in excess of such amount of such claims shall be actionable, and (c) written notice containing a description of the specific nature of such breach shall have been given by Purchaser to Seller prior to the expiration of said one hundred eighty (180) day period and an action shall have been commenced by Purchaser against Seller within sixty (60) days after the termination of the survival period provided for above in this Section 5.3. To the extent applicable, Purchaser agrees to first seek recovery under any insurance policies, the Title Policy and the Service Contracts prior to seeking recovery from Seller, and Seller shall not be liable to Purchaser if Purchaser’s claim is satisfied from such insurance policies, Title Policy or Service Contracts. As used herein, the term “Cap” shall mean the total aggregate amount of One Million Five Hundred Thousand and No/100 Dollars ($1,500,000). Notwithstanding any provision of this Agreement to the contrary, in no event shall (i) Seller’s aggregate liability to Purchaser for breach of any representation, warranty or covenant of Seller in this Agreement or the certificate to be delivered by Seller at Closing pursuant to Section 4.2(e) hereof, taken in the aggregate with any other claims by Purchaser against Seller (including any indemnification obligations), exceed the amount of the Cap, or (ii) Seller be liable for any consequential damages of Purchaser or any punitive damages.

5.4 Covenants of Seller. Notwithstanding any other provisions of this Agreement to the contrary, Purchaser acknowledges and agrees that, pursuant to the Management Agreement, Manager is vested with decision making authority over the Hotel and therefore Seller’s ability to control the management and operation of the Hotel is circumscribed by and must be exercised in accordance with its rights as “Owner” under the Management Agreement; provided, however, Seller shall enforce its rights under the Management Agreement to the extent such enforcement would effectuate Manager complying with the covenants contained in this Agreement. Subject to the foregoing, Seller hereby covenants with Purchaser as follows:

(a) From the Effective Date hereof until the Closing or earlier termination of this Agreement, Seller shall use reasonable efforts to cause Manager to operate and maintain the Hotel in a manner generally consistent with the manner in which Seller has operated and maintained the Hotel prior to the date hereof, in good condition consistent with past practice, reasonable wear and tear excepted and so as to maintain levels of Retail Inventory and Consumable Inventory consistent with past practice.

(b) From the Effective Date hereof until Closing or the earlier termination of this Agreement, Seller shall use commercially reasonable efforts to perform its material obligations under the Management Agreement, the Service Contracts and other agreements that may affect the Property.

(c) Seller shall not enter into any new management agreement or Service Contracts or other agreements or encumbrances with respect to the Property, nor shall Seller enter into any agreements modifying the Service Contracts, Permitted Exceptions or Leases unless (i) any such agreement or modification will not bind Purchaser or the Property after the Closing Date or is subject to termination on not more than thirty (30) days’ notice

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without penalty, or (ii) Seller has obtained Purchaser’s prior written consent to such agreement or modification, same to be granted or denied in Purchaser’s sole discretion. Seller agrees to cancel and terminate effective as of the Closing Date any Service Contracts requested in writing by Purchaser to the extent permissible under the terms of such Service Contracts, provided any fee or penalty for such cancellation shall be paid for by Purchaser.

(d) From the Effective Date until the Closing or earlier termination of this Agreement, Seller shall conduct the business of the Hotel in the ordinary course, and will not: (i) transfer or convey the Property or any interest in Seller, or enter into any agreement to do so; (ii) create or agree to any easements, liens, mortgages, encumbrances or other interests that would affect the Property or Seller’s ability to comply with this Agreement; (iii) fail to maintain and repair the Property in a manner consistent with the maintenance standards of Seller prior to the Effective Date; (iv) change Seller’s existing policies of public liability and hazard and extended coverage insurance insuring the Property; (v) fail to comply promptly with any notices of violation of laws or municipal ordinances, regulations, orders or requirements of departments of housing, building, fire, labor, health, or other state, city or municipal departments or other governmental authorities having jurisdiction against or affecting the Property or the use or operation thereof, without the prior written consent of Purchaser, which consent may be granted or denied in Purchaser’s sole discretion; and/or (vi) terminate any condemnation awards proceedings, insurance settlement negotiations or proceedings, zoning changes, public roadway and/or traffic realignment negotiations with public authorities or the like, and/or storm water management agreements, and the like benefiting the Property.

(e) Seller shall promptly deliver to Purchaser copies of any written communications (including e-mails, letters, invoices and the like) sent by Seller to, or received by Seller from, any tenants of the Property or service or materials providers to the Property sent or received from and after the Effective Date up through the Closing.

(f) Seller shall, within five (5) business days after the Effective Date, apply to the California State Board of Equalization for a “tax clearance” letter showing that all sales and other taxes with respect to the Hotel to be paid by Seller to the State of California have been paid or that none are owing and Seller shall thereafter diligently pursue obtaining the same and Seller shall deliver the same to Purchaser promptly upon receipt. Purchaser acknowledges that delivery of a tax clearance letter is not a condition to Purchaser’s obligation to close the purchase of the Property.

Failure of Seller to deliver an executed Tenant Estoppel from Starbucks and Uomo shall not be deemed a Seller default, but is a condition precedent to Purchaser’s obligations to consummate this transaction as specified in Section 4.6(c) above.

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5.5 Representations and Warranties of Purchaser. Purchaser hereby represents and warrants to Seller:

(a) ERISA. Purchaser is not acquiring the Property with the assets of an employee benefit plan as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974.

(b) Organization and Authority. Purchaser has been duly organized and is validly existing and in good standing under the laws of Delaware and is qualified to do business in California. Purchaser has the full right, power and authority to purchase the Property as provided in this Agreement and to carry out Purchaser’s obligations hereunder, and all requisite action necessary to authorize Purchaser to enter into this Agreement and to carry out its obligations hereunder have been, or by the Closing will have been, taken. The person signing this Agreement on behalf of Purchaser is authorized to do so, and this Agreement is enforceable against Purchaser in accordance with its terms, subject to bankruptcy, insolvency and similar laws.

(c) No Breach. The execution, delivery and performance of this Agreement by Purchaser and the consummation of the transaction contemplated herein will not: (i) result in a breach or acceleration of or constitute a default under any agreement or instrument by which Purchaser is bound or affected which would have a material adverse impact on the ability of Purchaser to timely close the acquisition of the Property pursuant to the terms of this Agreement; or (ii) constitute or result in the violation or breach by Purchaser of any judgment, order, writ, injunction or decree issued against or imposed upon Purchaser or result in the violation of any applicable law, rule or regulation of any governmental authority which, with respect to any of the foregoing, would have a material adverse impact on the ability of Purchaser to timely complete the acquisition of the Property pursuant to this Agreement.

(d) No Consents. No consent, approval or action of, filing with or notice to any governmental or regulatory authority or any other person or entity on the part of Purchaser is required in connection with the execution, delivery and performance of Agreement or the consummation of the transactions contemplated.

(e) Pending Actions. There is no action, suit, arbitration, unsatisfied order or judgment, government investigation or proceeding pending against Purchaser which, if adversely determined, could individually or in the aggregate materially interfere with the consummation of the transaction contemplated by this Agreement.

(f) Patriot Act Compliance. Neither Purchaser nor any individual or entity having an interest in Purchaser is a person or entity either (i) is listed on the Specially Designated Nationals and Blocked Persons List maintained by the OFAC pursuant to the Order and/or on any Lists; (ii) is a person or entity who has been determined by competent authority to be subject to the prohibitions contained in the Orders; or (iii) is owned or controlled by, or acts for or on behalf of, any person or entity on the Lists or any other person or entity who has been determined by competent authority to be subject to the prohibitions contained in the Order.

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(g) Tax Identification Number. Purchaser’s valid tax identification number is 27-2615441.

(h) Bankruptcy. No petition in bankruptcy (voluntary or otherwise), assignment for the benefit of creditors, or petition seeking reorganization or arrangement or other action under federal or state bankruptcy laws is pending against or contemplated by Purchaser or its general partner(s) or controlling shareholders or members.

5.6 Survival of Purchaser’s Representations and Warranties. The representations and warranties of Purchaser set forth in Sections 5.5(a) and (f) shall survive Closing and shall be a continuing representation and warranty without limitation. All other representations and warranties of Purchaser shall survive Closing for a period of one hundred eighty (180) days.

5.7 Covenants of Purchaser.

(a) Purchaser may at its election (but subject to the limitations of Section 3.1 above), inspect the Property for the presence of Hazardous Substances (as defined below), and, at Seller’s request, shall furnish to Seller copies of any reports received by Purchaser in connection with any such inspection. Purchaser hereby assumes full responsibility for such inspections and irrevocably waives any claim against Seller and releases Seller from all liability arising from the presence of Hazardous Substances on the Property. Purchaser shall also furnish to Seller copies of any other reports received by Purchaser relating to any other inspections of the Property conducted on Purchaser’s behalf, if any (including, specifically, without limitation, any reports analyzing compliance of the Property with the provisions of the Americans with Disabilities Act (“ADA”), 42 U.S.C. §12101, et seq., if applicable). As used herein, “Hazardous Substances” means all hazardous or toxic materials, substances, pollutants, contaminants, or wastes currently identified as a hazardous substance or waste in the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (commonly known as “CERCLA”), as amended, the Superfund Amendments and Reauthorization Act (commonly known as “SARA”), the Resource Conservation and Recovery Act (commonly known as “RCRA”), or any other federal, state or local legislation or ordinances applicable to the Property (collectively, “Environmental Laws”). The provisions of this Section 5.7(a) shall survive Closing.

(b) Without limiting anything herein to the contrary, Purchaser waives any right of contribution with respect to Seller relating to any matter arising from, or relating to the existence of, Hazardous Substances or the violation or enforcement of Environmental Laws in connection with the Property or operation thereof. Seller makes no representations or warranties as to whether the Property or any portion thereof contains asbestos, harmful or toxic substances or other Hazardous Substances or is in compliance with Environmental Laws. The provisions of this Section 5.7(b) shall survive Closing or any termination of this Agreement.

(c) Not later than two (2) days prior to the Closing, Seller shall send, or cause the Manager to send, written notice to guests or other persons who have safe deposit boxes at

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the Hotel advising of the sale of the Hotel and requesting verification or removal of the contents within five (5) days. The safe deposit boxes of guests or other persons not responding to said written notice shall be opened only in the presence of the Manager or representatives of both Seller and Purchaser. The contents of all boxes opened as aforesaid shall be listed at the time such boxes are opened and each such list shall be signed by or on behalf of the Manager or by or on behalf of Seller and Purchaser, and Purchaser shall not be liable or responsible for any items claimed to have been in said boxes unless such items are included in such list. Seller agrees to indemnify, defend and hold Purchaser harmless from and against any liability or responsibility for any items claimed to have been in said boxes but not included on such list and Purchaser agrees to indemnify, defend and hold Seller harmless from and against any liability or responsibility for items claimed to have been in said boxes and included in such list and all claims, losses and liabilities with respect thereto arising out of the acts or omissions of Purchaser after the Closing Date. The provisions of this Section 5.7(c) shall survive Closing.

(d) All baggage or other property of guests of the Hotel which has been checked with or left in the care of Seller and remains in Seller’s care as of the Cut-Off Time shall be inventoried and tagged jointly by Seller and Purchaser. Purchaser hereby agrees to defend, indemnify and hold harmless Seller against any claims, losses or liabilities in connection with such baggage and property arising out of the acts or omissions of Purchaser from and after the Closing Date. Seller hereby agrees to defend, indemnify and hold harmless Purchaser against all claims, losses and liabilities with respect to such baggage and property arising out of the acts or omissions of Seller prior to the Closing Date. This Section 5.7(d) shall survive Closing.

(e) Purchaser shall honor (and shall cause its manager to honor) all reservations at the Hotel (including honoring the rates at which such reservations were made, including reservations made on a wholesale, reward points redemption, or other basis), or for any related conference, banquet, or meeting space or any other facilities in connection with the Hotel made by Seller on or prior to the Cut-Off Time for periods on or after the Closing Date. The provisions of this Section 5.7(e) shall survive Closing.

5.8 Employees.

(a) Effective at and upon Closing, Seller shall terminate, or cause the termination of, the employment of all individuals employed at the Hotel by Manager and/or Seller as of the Closing Date, irrespective of whether such individuals are active or on leaves of absence or otherwise inactive (“Hotel Employees”).

(b) Purchaser agrees that it or Manager will offer to hire or cause to be hired effective at and upon Closing, and after Closing will maintain or cause to be maintained the employment of (directly or indirectly through any designee of Purchaser or Manager used to employ Hotel personnel), a sufficient number of the Hotel Employees (“Retained Employees”) with compensation, seniority, health benefits, vacation and other benefits (i) so that Seller shall not be required to give any layoff, closing or other termination notices or otherwise incur any liability pursuant to the provisions of the

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Federal Worker Adjustment and Retraining Notification Act. 29 U.S.C. 2101-2109 (the “Federal WARN Act”) and/or the California Worker Notification Law (California Assembly Bill 2957, effective January 1, 2003) (the “California WARN Act”). If Purchaser, Manager or their designee used by Purchaser to employ Hotel personnel does not rehire a particular Hotel Employee at Closing, or if following Closing Purchaser, Manager or such designee desires to terminate the employment of any Retained Employee, Purchaser shall be solely responsible for complying or causing compliance with all applicable provisions of federal, state and municipal laws and regulations relating to such action, including without limitation any applicable provisions of the Federal WARN Act or the California WARN Act.

(c) The parties agree to cooperate in scheduling and otherwise handling matters relating to Hotel Employees pursuant to this Section 5.8, so as to minimize prior to Closing any potential employee morale problems arising from the sale of the Hotel to Purchaser and any resulting disruption to Hotel services or the quality thereof. During the period prior to Closing, the parties shall also consult on a regular basis and coordinate their activities relating to employee matters so as to facilitate a smooth transition of Hotel operations and the continued proper performance by the Hotel Employees of their respective duties up to Closing.

(d) The parties hereto agree that (i) Purchaser will not be subject to any of the debts, obligations and/or liabilities of Seller which may exist with respect to the employment or termination of any Hotel Employees prior to Closing, or which are attributable to the termination of such employees by Seller at or prior to Closing (except to the extent that such debts, obligations and/or liabilities (A) arise from or under any employee benefit plan, and (B) are expressly covered by a credit against the Purchase Price specifically provided in this Agreement) (“Seller’s Employee Obligations”); and (ii) Seller will not be subject to any of the debts, obligations and/or liabilities of Purchaser, Manager or their designee used to employ Hotel personnel, which are attributable to any actions or omissions of Purchaser, Manager or such designee, or any agents or representatives thereof, in the process of the retaining, hiring or rehiring of any employees, including, without limitation, any claims arising out of or relating to whether, and upon which terms and conditions, any such employees are offered employment by Purchaser, Manager or such designee, or are hired or rehired by Purchaser, Manager or such designee, or which may otherwise exist regarding the employment of employees at the Hotel by Purchaser, Manager or such designee from and after Closing (“Purchaser’s Employee Obligations”).

(e) Purchaser agrees to indemnify, defend and hold harmless the Seller, its officers, directors, members, owners and affiliates (herein, the “Seller-Related Parties”) from and against any claim, liability, or judgment asserted against any of the Seller-Related Parties on account of or with respect to any of Purchaser’s Employee Obligations, including, without limitation, (i) any causes of action, damages, complaints, judgments, orders and/or claims, whatsoever, and all costs and expenses (including, without limitation, reasonable attorneys’ fees and costs) incurred in connection therewith, which may be asserted against any of the Seller-Related Parties on account of any violation of the National Labor Relations Act, Title VII of the Civil Rights Act,

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the Fair Labor Standards Act, the Age Discrimination in Employment Act, the Vocational Rehabilitation Act of 1973, the Federal WARN Act and/or the California WARN Act (other than as expressly provided in paragraph (c) of this Section 5.8), California State Wage/Hour laws, the California Fair Employment and Housing Act, the California Labor Code, and/or any other applicable federal or state employment statutes, rules and regulations (collectively, “Employment Laws”) by Purchaser, or any designee or management company engaged by Purchaser to employ Hotel personnel, and (ii) any claims or liabilities (A) arising under the federal Employee Retirement Income Security Act, as amended, and/or any other applicable federal or state law or regulation concerning employee benefit plans with respect to the employment of employees by Purchaser or such designee or management company from and after the Closing, or (B) arising from or under any employee benefit plan applicable to any Retained Employee or any other employee hired by Purchaser or such designee or management company to perform services at or for the Hotel, to the extent that any such claim or liability relates solely to any period of employment from and after the Closing.

(f) Seller shall settle, with respect to any Hotel Employees employed by Seller prior to Closing, any and all claims and obligations which may be due and owing to any such Hotel Employees which have accrued or are otherwise payable with respect to any period prior to the Closing or in connection with their termination of employment by Seller prior to Closing, unless otherwise agreed upon by Seller, Purchaser and/or the Union, including, without limitation, (i) all wages and/or benefits payable to such Hotel Employees for periods prior to the Closing, (ii) all accrued but unpaid vacation, holidays or holiday pay, personal days, sick leave and/or any other benefit entitlement payable with respect to any period prior to the Closing, (iii) and any charges or other compensation owing by reason of the termination of such employees by Seller.

(g) Seller agrees to indemnify, defend and hold harmless the Purchaser, its officers, directors, members, owners and affiliates (herein, the “Purchaser-Related Parties”) from and against any claim, liability, or judgment asserted against any of the Purchaser-Related Parties on account of or with respect to any of Seller’s Employee Obligations, including, without limitation, (i) any causes of action, damages, complaints, judgments, orders and/or claims, whatsoever, and all costs and expenses (including, without limitation, reasonable attorneys’ fees and costs) incurred in connection therewith, which may be asserted against any of the Purchaser-Related Parties on account of any violation Employment Laws by Seller, or any designee or management company engaged by Seller to employ Hotel personnel, and (ii) any claims or liabilities (A) arising under the federal Employee Retirement Income Security Act, as amended, and/or any other applicable federal or state law or regulation concerning employee benefit plans with respect to the employment of employees by Seller or such designee or management company prior to the Closing, or (B) arising from or under any employee benefit plan applicable to any Hotel personnel employed by Seller or such designee or management company to perform services at or for the Hotel, to the extent that any such claim or liability relates solely to any period of employment prior to the Closing.

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(h) Purchaser shall: (i) credit Retained Employees with their original date of hire by Seller for purposes of any length of service requirements, waiting periods, vesting periods, or differential benefits based on length of service in any benefit plan established or maintained by or on behalf of Purchaser for which such Hotel Employees may be eligible after the Closing, such that Seller shall not have any COBRA obligations for Retained Employees hired by Purchaser; (ii) ensure that any pre-existing conditions, restrictions or waiting periods under any benefit plan established by or on behalf of Purchaser providing medical, dental, vision, or prescription drug coverage or benefits are waived to the extent necessary to provide immediate coverage for Hotel employees who are hired for the Hotel following termination of such Hotel Employees’ coverage under the benefit plans maintained by or on behalf of Seller, such that Seller shall not have COBRA obligations for any such Hotel Employees who are hired by Purchaser; and (iii) indemnify, defend and hold Seller harmless from and against all loss, expense (including reasonable attorneys’ fees and disbursements incurred to enforce this indemnity), damage and liability resulting from any COBRA claims or obligations arising in respect of Retained Employees and any claims or disputes with Retained Employees regarding employee benefits arising from and after the Closing Date.

(i) Without limiting any other provision of this Section 5.8, Purchaser acknowledges and agrees that (i) Seller is a party to and is bound by the terms of the collective bargaining agreement, related memorandum of understanding and other related agreements, as provided by their terms (collectively, the “Collective Bargaining Agreements”), with Unite Here! Local 2 (the “Union”), (ii) copies of the Collective Bargaining Agreements have previously been delivered or made available to Purchaser for its review, and (iii) Purchaser shall recognize and assume all of Seller’s obligations, arising from and after the Closing Date under the Collective Bargaining Agreement. Purchaser further agrees to (A) recognize the Union as the exclusive bargaining representative for the employees covered under the Collective Bargaining Agreements (the “Union Employees”), (B) execute a copy of the Collective Bargaining Agreement (without modification or amendment) and such other documents, if any, as are required to be executed pursuant to the provisions of the Collective Bargaining Agreement, (C) offer employment to 100% of the Union Employees, which employment shall be at wages and/or other compensation and with benefits at least equivalent to the wages and/or other compensation and benefits (including, without limitation, sick leave, vacation, health insurance and other pension and welfare benefits) that such Union Employees enjoy as of the Closing Date, and (D) credit those Union Employees that elect to continue employment with their original dates of hire.

(j) Under the Collective Bargaining Agreement, Seller currently contributes, on a monthly basis, various amounts under the (A) Health and Welfare Fund, (B) Pension Fund, (B) Group Legal Service Trust Fund, and (C) Education Trust Fund (collectively, the “Union Employee Benefit Funds”). Purchaser shall receive at Closing a credit against the Purchase Price, on a pro rata basis for the month in which the Closing occurs, for any of the monthly Union Employee Benefit Funds contributions that have accrued to Seller prior to Closing but for which payment is not yet due under the Collective Bargaining Agreement.

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(k)	Retirement Plan.
	(i) Seller and Purchaser agree that during the Contribution Period (as defined below), Purchaser shall make contributions to the San Francisco Culinary, Bartenders and Service Employees Pension Trust Fund (“Retirement Plan”), in accordance with the Collective Bargaining Agreement, for substantially the same number of contribution base units, within the meaning of Section 4001(a)(11) of ERISA, for which Seller had an obligation to contribute with respect to the Hotel. If, as a result of Purchaser’s failure to comply with the foregoing requirement or as a result of any other action by Purchaser, Seller incurs any withdrawal liability under the Retirement Plan with respect to the Hotel, or Seller incurs any other liability in connection with the Retirement Plan for any reason, the Purchaser shall indemnify, defend, and hold Seller and any of its ERISA affiliates harmless from and against any such liability and all related costs and expenses, including reasonable attorneys’ fees.
	(ii) Purchaser agrees to cooperate with Seller and/or Retirement Plan representative with respect to any inquiry or reasonable request for information and assistance in order to facilitate the transfer of Retirement Plan from Seller to Purchaser.
	(iii) Subject to Section 5.8(j)(vi), during the period commencing on the first day of the plan year following the Closing Date and ending on the expiration of the fifth such plan year (the “Contribution Period”), Purchaser shall provide to the Retirement Plan either a bond, letter of credit, or an escrow in an amount and manner meeting the requirements of Section 4204 of ERISA. The cost of any bond, letter of credit, or escrow provided under this Section 5.8(j)(iii) shall be paid by Purchaser.
	(iv) To the extent required pursuant to Section 4204(a)(3) of ERISA, Seller shall provide to the Retirement Plan a bond or escrow equal to the present value of the withdrawal liability Seller would have had to the Retirement Plan with respect to the assets acquired by Purchaser pursuant to this Agreement (but for the provisions of Section 4204 of ERISA), reduced to the extent provided under Section 4204(a)(3) of ERISA in the event only a portion of Seller’ assets are distributed during the Contribution Period.
	(v) If Purchaser at any time withdraws from the Retirement Plan in a complete or partial withdrawal with respect to the assets acquired by Purchaser pursuant to this Agreement during the Contribution Period, Purchaser shall be primarily liable and pay, and Seller shall be secondarily liable for any withdrawal liability Seller would have had to the Retirement Plan with respect to the Hotel (but for the provisions of Section 4204 of ERISA) if the withdrawal liability of Purchaser with respect to such Retirement Plan is not paid. Purchaser shall indemnify and hold Seller harmless for any withdrawal liability incurred by Seller pursuant to the preceding sentence. Purchaser agrees to provide Seller with reasonable advance notice of any action or event which could result in the imposition of any

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	withdrawal liability contemplated by this Section 5.8(j)(v), and in any event Purchaser shall immediately furnish Seller with a copy of any notice including, but not limited to a notice of withdrawal liability, it may receive with respect to the Retirement Plan, together with all the pertinent details. If any such withdrawal liability shall be assessed against Purchaser, Purchaser further agrees to provide Seller with reasonable advance notice of any intention on the part of Purchaser not to make full payment of any withdrawal liability when the same shall become due. Any proposed notice or communication to the Retirement Plan relating to Purchaser’s obligations under this Section shall be provided to Seller at least ten (10) days before such notice is provided to the Retirement Plan, and the form of such notice and communication shall be subject to Seller’s written approval, which approval shall not be unreasonably withheld.
	(vi) Notwithstanding anything contained in Section 5.8(j)(iii) to the contrary, Purchaser shall not be obligated to provide any bond, letter of credit, or escrow in the event and to the extent Purchaser obtains from the Retirement Plan or the Pension Benefit Guaranty Corporation a proper variance or exemption under Section 4204(c) of ERISA and the applicable regulations thereunder, provided any and all requirements of said variance or exemption are met and Purchaser approves such exception.
(l)	Purchaser’s obligations under this Section 5.8 shall survive Closing.

ARTICLE VI

DEFAULT

6.1 Default by Purchaser. If Purchaser defaults under this Agreement prior to Closing, Seller shall be entitled, as its sole remedy (without limiting Seller’s rights with respect to any indemnification obligations of Purchaser under this Agreement or under Section 10.19 below), to terminate this Agreement and receive the Earnest Money as liquidated damages for the breach of this Agreement, it being agreed between the parties hereto that the actual damages to Seller in the event of such breach are impractical to ascertain and the amount of the Earnest Money is a reasonable estimate thereof. THEREFORE, BY PLACING THEIR INITIALS BELOW, THE PARTIES ACKNOWLEDGE THAT THE EARNEST MONEY HAS BEEN AGREED UPON, AFTER NEGOTIATION, AS THE PARTIES’ REASONABLE ESTIMATE OF SELLER’S DAMAGES AND AS SELLER’S EXCLUSIVE REMEDY AGAINST PURCHASER, AT LAW OR IN EQUITY, IN THE EVENT OF A DEFAULT UNDER THIS AGREEMENT ON THE PART OF PURCHASER. THE PARTIES ACKNOWLEDGE THAT THE PAYMENT OF SUCH LIQUIDATED DAMAGES IS NOT INTENDED AS A FORFEITURE OR PENALTY, BUT IS INTENDED TO CONSTITUTE LIQUIDATED DAMAGES TO SELLER.

Initials:            Seller                                 Purchaser                     

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Nothing contained in this Section 6.1 shall limit or prevent Seller from (a) asserting any legal or equitable claims against Purchaser for Purchaser’s obligation to pay attorneys’ fees and other amounts under Section 10.19, or (b) enforcing any indemnity obligation of Purchaser under this Agreement or preclude Seller from obtaining a damage award in connection therewith, or (c) enforcing Purchaser’s other obligations and liabilities which survive Closing or a termination of this Agreement.

6.2 Purchaser’s Right to Cure Defaults. Notwithstanding anything to the contrary in this Agreement, Seller shall not have the right to exercise its remedies under Section 6.1 for a Purchaser default unless Seller has provided written notice to Purchaser specifying in reasonable detail the nature of the Purchaser default, and Purchaser has not cured the same within five (5) days after Purchaser’s receipt of such notice (the “Purchaser Cure Period”), in which case the Outside Closing Date shall be extended until the date which is two (2) business days after the expiration of the Purchaser Cure Period.

6.3 Default by Seller. In the event that Seller fails to consummate this Agreement for any reason other than Purchaser’s default or the permitted termination of this Agreement by Seller or Purchaser as herein expressly provided, Purchaser shall be entitled, as its sole remedy, either (a) to receive the return of the Earnest Money, which return shall operate to terminate this Agreement and release Seller from any and all liability hereunder, or (b) to enforce specific performance of Seller’s obligation to execute the documents required to convey the Property to Purchaser, it being understood and agreed that the remedy of specific performance shall not be available to enforce any other obligation of Seller hereunder. Purchaser expressly waives its rights to seek damages in the event of Seller’s default hereunder. Purchaser shall be deemed to have elected to terminate this Agreement and receive back the Earnest Money if Purchaser fails to file suit for specific performance against Seller in a court having jurisdiction in the county and state in which the Property is located, on or before thirty (30) days following the date upon which Closing was to have occurred. Notwithstanding the foregoing, (a) nothing contained in this Section 6.3 shall limit or prevent Purchaser from (i) asserting any legal or equitable claims against Seller for Purchaser’s obligation to pay attorneys’ fees and other amounts under Section 10.19, or (ii) enforcing any indemnity obligation of Seller under this Agreement or preclude Purchaser from obtaining a damage award in connection therewith, or (iii) enforcing Seller’s other obligations and liabilities which survive Closing or a termination of this Agreement, and (b) in the event that any such failure by Seller is of such a nature that specific performance as a remedy is not available as a matter of law, then, Purchaser shall have the right, anything herein contained to the contrary notwithstanding, to damages against Seller on account of such failure to compensate Purchaser for all of its third party out of pocket costs and expenses incurred in connection with the transaction contemplated hereby and this Agreement, but not in excess of the sum of One Hundred Thousand and No/100 Dollars ($100,000.00) and Purchaser shall have the right to pursue an action for such damages in a court of competent jurisdiction.

6.4 Seller’s Right to Cure Defaults. Notwithstanding anything to the contrary in this Agreement, Purchaser shall not have the right to exercise its remedies under Section 6.3 for a Seller default unless Purchaser has provided written notice to Seller specifying in

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reasonable detail the nature of the Seller default, and Seller has not cured the same within thirty (30) days after Seller’s receipt of such notice (the “Seller Cure Period”), in which case the Outside Closing Date shall be extended until the date which is five (5) business days after the expiration of the Seller Cure Period.

ARTICLE VII

RISK OF LOSS

7.1 Minor Damage. In the event of loss or damage to the Real Property or any portion thereof which is not “major” (as hereinafter defined), this Agreement shall remain in full force and effect provided Seller performs any necessary repairs or, at Seller’s option, assigns to Purchaser all of Seller’s right, title and interest to any claims and proceeds Seller may have with respect to any casualty insurance policies or condemnation awards relating to the premises in question (other than business interruption proceeds attributable to the period prior to Closing). In the event that Seller elects to perform repairs upon the Real Property, Seller shall use reasonable efforts to complete such repairs promptly and the Outside Closing Date shall be extended a reasonable time in order to allow for the completion of such repairs. If Seller elects to assign a casualty claim to Purchaser, the Purchase Price shall be reduced by an amount equal to the deductible amount under Seller’s insurance policy. Upon Closing, full risk of loss with respect to the Property shall pass to Purchaser.

7.2 Major Damage. In the event of a “major” loss or damage to the Real Property, Purchaser may terminate this Agreement by written notice to Seller, in which event the Earnest Money shall be returned to Purchaser. If Purchaser fails for any reason to deliver written notice of termination to Seller within ten (10) days after Seller sends Purchaser written notice of the occurrence of major loss or damage, then Purchaser shall be deemed to have elected to proceed with Closing, in which event Seller shall, at Seller’s option, either (a) perform any necessary repairs, or (b) assign to Purchaser all of Seller’s right, title and interest to any claims and proceeds Seller may have with respect to any casualty insurance policies or condemnation awards relating to the premises in question. In the event that Seller elects to perform repairs upon the Real Property, Seller shall use reasonable efforts to complete such repairs promptly and the Outside Closing Date shall be extended a reasonable time in order to allow for the completion of such repairs. If Seller elects to assign a casualty claim to Purchaser, the Purchase Price shall be reduced by an amount equal to the deductible amount under Seller’s insurance policy and Seller shall assign all of its rights to proceeds under the applicable policy with respect to any claim for the applicable loss (other than business interruption proceeds attributable to the period prior to Closing). Upon Closing, full risk of loss with respect to the Property shall pass to Purchaser.

7.3 Definition of “Major” Loss or Damage. For purposes of Sections 7.1 and 7.2, “major” loss or damage refers to the following: (a) loss or damage to the Real Property or any portion thereof such that the cost of repairing or restoring the premises in question to a condition substantially identical to that of the premises in question prior to the event of damage would be, in the opinion of an architect selected by Seller and reasonably

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approved by Purchaser, equal to or greater than Two Million Five Hundred Thousand and No/100 Dollars ($2,500,000), and (b) any loss due to a condemnation which permanently and materially impairs the current use of the Real Property. If Purchaser does not give notice to Seller of Purchaser’s reasons for disapproving an architect within five (5) business days after receipt of notice of the proposed architect, Purchaser shall be deemed to have approved the architect selected by Seller.

ARTICLE VIII

COMMISSIONS

8.1 Brokerage Commissions. In the event the transaction contemplated by this Agreement is consummated, but not otherwise, Seller agrees to pay to Eastdil Secured (“Broker”) at Closing a brokerage commission pursuant to a separate written agreement between Seller and Broker and Seller shall indemnify and hold Purchaser harmless with respect to any payments due and owing to Broker in connection with this transaction under such agreement. Each party agrees that should any claim be made for brokerage commissions or finder’s fees by any broker or finder other than the Broker by, through or on account of any acts of said party or its representatives, said party will indemnify, defend, protect and hold the other party free and harmless from and against any and all loss, liability, cost, damage and expense in connection therewith. The provisions of this Section 8.1 shall survive Closing or earlier termination of this Agreement.

ARTICLE IX

DISCLAIMERS AND WAIVERS

9.1 No Reliance on Documents. Except as expressly set forth in Section 5.1 above, Seller makes no representation or warranty as to the truth, accuracy or completeness of any materials, data or information delivered by or on behalf of Seller or its brokers to Purchaser in connection with the transaction contemplated hereby including, without limitation, the Reports and other Seller Due Diligence Materials. Purchaser acknowledges and agrees that all materials, data and information delivered by Seller to Purchaser in connection with the transaction contemplated hereby are provided to Purchaser as a convenience only and that any reliance on or use of such materials, data or information by Purchaser shall be at the sole risk of Purchaser, except as otherwise expressly stated herein. Without limiting the generality of the foregoing provisions, Purchaser acknowledges and agrees that (a) any environmental or other report with respect to the Property which is delivered by Seller to Purchaser shall be for general informational purposes only, (b) Purchaser shall not have any right to rely on any such report delivered by Seller to Purchaser, but rather will rely on its own inspections and investigations of the Property and any reports commissioned by Purchaser with respect thereto, and (c) neither Seller nor any affiliate of Seller nor the person or entity which prepared any such report delivered by Seller to Purchaser shall have any liability to Purchaser for any inaccuracy in or omission from any such report or other materials provided to Purchaser in connection with this Agreement.

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9.2 DISCLAIMERS. EXCEPT AS EXPRESSLY SET FORTH IN SECTION 5.1 OF THIS AGREEMENT, IT IS UNDERSTOOD AND AGREED THAT SELLER IS NOT MAKING AND HAS NOT AT ANY TIME MADE ANY WARRANTIES OR REPRESENTATIONS OF ANY KIND OR CHARACTER, EXPRESSED OR IMPLIED, WITH RESPECT TO THE PROPERTY, INCLUDING, BUT NOT LIMITED TO, ANY WARRANTIES OR REPRESENTATIONS AS TO HABITABILITY, MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, TITLE, ZONING, TAX CONSEQUENCES, LATENT OR PATENT PHYSICAL OR ENVIRONMENTAL CONDITION, UTILITIES, OPERATING HISTORY OR PROJECTIONS, VALUATION, GOVERNMENTAL APPROVALS, THE COMPLIANCE OF THE PROPERTY WITH GOVERNMENTAL LAWS, THE TRUTH, ACCURACY OR COMPLETENESS OF THE PROPERTY DOCUMENTS OR ANY OTHER INFORMATION PROVIDED BY OR ON BEHALF OF SELLER TO PURCHASER, OR ANY OTHER MATTER OR THING REGARDING THE PROPERTY. PURCHASER ACKNOWLEDGES AND AGREES THAT UPON CLOSING SELLER SHALL SELL AND CONVEY TO PURCHASER AND PURCHASER SHALL ACCEPT THE PROPERTY “AS IS, WHERE IS, WITH ALL FAULTS”, EXCEPT TO THE EXTENT EXPRESSLY PROVIDED OTHERWISE IN SECTION 5.1 OF THIS AGREEMENT. PURCHASER HAS NOT RELIED AND WILL NOT RELY ON, AND SELLER IS NOT LIABLE FOR OR BOUND BY, ANY EXPRESSED OR IMPLIED WARRANTIES, GUARANTIES, STATEMENTS, REPRESENTATIONS OR INFORMATION PERTAINING TO THE PROPERTY OR RELATING THERETO (INCLUDING SPECIFICALLY, WITHOUT LIMITATION, PROPERTY INFORMATION PACKAGES DISTRIBUTED WITH RESPECT TO THE PROPERTY AND ANY ACTUAL OR PROPOSED BUDGETS FOR THE REAL PROPERTY) MADE OR FURNISHED BY SELLER, THE MANAGER OF THE PROPERTY, OR ANY REAL ESTATE BROKER OR AGENT REPRESENTING OR PURPORTING TO REPRESENT SELLER, TO WHOMEVER MADE OR GIVEN, DIRECTLY OR INDIRECTLY, ORALLY OR IN WRITING, UNLESS SPECIFICALLY SET FORTH IN THIS AGREEMENT. PURCHASER REPRESENTS TO SELLER THAT PURCHASER IS A SOPHISTICATED INSTITUTIONAL INVESTOR WITH SUBSTANTIAL EXPERIENCE AND EXPERTISE WITH INVESTMENT PROPERTIES AND HAS CONDUCTED, OR WILL CONDUCT PRIOR TO CLOSING, SUCH INVESTIGATIONS OF THE PROPERTY, INCLUDING BUT NOT LIMITED TO, THE PHYSICAL AND ENVIRONMENTAL CONDITIONS THEREOF, AS PURCHASER DEEMS NECESSARY TO SATISFY ITSELF AS TO THE CONDITION OF THE PROPERTY AND THE EXISTENCE OR NONEXISTENCE OR CURATIVE ACTION TO BE TAKEN WITH RESPECT TO ANY HAZARDOUS OR TOXIC SUBSTANCES ON OR DISCHARGED FROM THE PROPERTY, AND WILL RELY SOLELY UPON SAME AND NOT UPON ANY INFORMATION PROVIDED BY OR ON BEHALF OF SELLER OR ITS AGENTS OR EMPLOYEES WITH RESPECT THERETO, OTHER THAN SUCH REPRESENTATIONS, WARRANTIES AND COVENANTS OF SELLER AS ARE EXPRESSLY SET FORTH IN THIS AGREEMENT AND THE DOCUMENTS DELIVERED AT CLOSING. UPON CLOSING AND SUBJECT TO THE REPRESENTATIONS AND WARRANTIES OF SELLER EXPRESSLY SET FORTH

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IN SECTION 5.1 AND THE DOCUMENTS DELIVERED AT CLOSING, PURCHASER SHALL ASSUME THE RISK THAT ADVERSE MATTERS, INCLUDING BUT NOT LIMITED TO, CONSTRUCTION DEFECTS AND ADVERSE PHYSICAL AND ENVIRONMENTAL CONDITIONS, MAY NOT HAVE BEEN REVEALED BY PURCHASER’S INVESTIGATIONS, AND PURCHASER, UPON CLOSING, SHALL BE DEEMED TO HAVE WAIVED, RELINQUISHED AND RELEASED SELLER (AND SELLER’S OFFICERS, DIRECTORS, SHAREHOLDERS, EMPLOYEES AND AGENTS) FROM AND AGAINST ANY AND ALL CLAIMS, DEMANDS, CAUSES OF ACTION (INCLUDING CAUSES OF ACTION IN TORT), LOSSES, DAMAGES, LIABILITIES, COSTS AND EXPENSES (INCLUDING ATTORNEYS’ FEES AND COURT COSTS) OF ANY AND EVERY KIND OR CHARACTER, KNOWN OR UNKNOWN, WHICH PURCHASER MIGHT HAVE ASSERTED OR ALLEGED AGAINST SELLER (AND SELLER’S OFFICERS, DIRECTORS, SHAREHOLDERS, EMPLOYEES AND AGENTS) AT ANY TIME BY REASON OF OR ARISING OUT OF ANY LATENT OR PATENT CONSTRUCTION DEFECTS OR PHYSICAL CONDITIONS, VIOLATIONS OF ANY APPLICABLE LAWS (INCLUDING, WITHOUT LIMITATION, ANY ENVIRONMENTAL LAWS) AND ANY AND ALL OTHER ACTS, OMISSIONS, EVENTS, CIRCUMSTANCES OR MATTERS REGARDING THE PROPERTY EXCEPT FOR FRAUD AND OBLIGATIONS OF SELLER UNDER THIS AGREEMENT OR ANY AGREEMENTS EXECUTED AND DELIVERED BY SELLER AT CLOSING. PURCHASER AGREES THAT SHOULD ANY CLEANUP, REMEDIATION OR REMOVAL OF HAZARDOUS SUBSTANCES OR OTHER ENVIRONMENTAL CONDITIONS ON THE PROPERTY BE REQUIRED AFTER THE CLOSING DATE, SUCH CLEAN-UP, REMOVAL OR REMEDIATION SHALL BE THE RESPONSIBILITY OF AND SHALL BE PERFORMED AT THE SOLE COST AND EXPENSE OF PURCHASER.

     The waivers and releases set forth in Sections 5.7(a) and (b) and in the immediately preceding paragraph include claims of which Purchaser is presently unaware or which Purchaser does not presently suspect to exist which, if known by Purchaser, would materially affect Purchaser’s waiver or release of Seller and the other parties referenced in this Section. Purchaser specifically waives the provisions of California Civil Code Section 1542, which provides as follows:

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

INITIALS: Purchaser                     

9.3 Repairs, Reserves, and Capital Expenditures. Purchaser acknowledges and agrees that except as provided in Section 5.4 of this Agreement, (a) Seller shall have no obligation to make any repairs, replacements, improvements or alterations to the Property or to expend any funds therefor, including, without limitation, any reserves that may be held for such purpose, and (b) Purchaser shall not be entitled to a credit to the Purchase Price at

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Closing in the event capital expenditures actually made at the Hotel for any year are less than the budgeted amount as of the date of the Closing.

9.4 Effect and Survival of Disclaimers. Seller and Purchaser acknowledge that the compensation to be paid to Seller for the Property has been decreased to take into account that the Property is being sold subject to the provisions of this Article IX. Seller and Purchaser agree that the provisions of this Article IX shall survive Closing.

ARTICLE X

MISCELLANEOUS

10.1 Confidentiality. Subject to Section 10.2 below, this Agreement, the terms hereof and the Property Information shall be treated in accordance with that certain Confidentiality Agreement date March 24, 2010 executed by Pebblebrook Hospitality Trust in favor of Seller (the “Confidentiality Agreement”). The provisions of this Section 10.1 shall survive the Closing.

10.2 Public Disclosure. Any release to the public, at any time prior to or after Closing, of information with respect to the sale contemplated herein or any matters set forth in this Agreement will be made only in the form approved by Purchaser and Seller and their respective counsel. The provisions of this Section 10.2 shall survive the Closing. Notwithstanding the foregoing, at any time following the Effective Date, Purchaser may file with the United States Securities Exchange Commission (“SEC”) information regarding the transaction contemplated by this Agreement (including a copy of this Agreement) to the extent required by law, and make a press release reasonably acceptable to Seller in connection therewith.

10.3 Discharge of Obligations. The acceptance of the Deed by Purchaser shall be deemed to be a full performance and discharge of every representation and warranty made by Seller herein and every agreement and obligation on the part of Seller to be performed pursuant to the provisions of this Agreement, except those which are herein specifically stated to survive Closing.

10.4 Assignment. Purchaser may not assign its rights under this Agreement without first obtaining Seller’s written approval which may be given or withheld in Seller’s sole discretion; provided that, Purchaser may assign all or any portion of this Agreement to one or more entities which are directly or indirectly controlled by, or under common control with, Purchaser. Any assignment by Purchaser of this Agreement shall not relieve Purchaser of its obligations under this Agreement and any permitted assignee must expressly assume the obligations of Purchaser in writing. Without limiting the foregoing, in no event shall Purchaser assign this Agreement to any assignee which, in the reasonable judgment of Seller, will cause the transaction contemplated hereby or any party thereto to violate the requirements of ERISA.

10.5 Notices. Any notice pursuant to this Agreement shall be given in writing by (a) personal delivery, or (b) reputable overnight delivery service with proof of delivery, or (c) United

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States Mail, postage prepaid, registered or certified mail, return receipt requested, or (d) legible facsimile or e-mail transmission completed before 5:00 p.m. (San Francisco time) on a business day sent to the intended addressee at the address set forth below, or to such other address or to the attention of such other person as the addressee shall have designated by written notice sent in accordance herewith, and shall be deemed to have been given either at the time of personal delivery, or, in the case of expedited delivery service or mail, as of the date of first attempted delivery at the address and in the manner provided herein, or, in the case of facsimile or e-mail transmission, as of the date of the facsimile or e-mail transmission provided that an original of such facsimile or e-mail is also sent to the intended addressee by means described in clauses (a), (b) or (c) above. Unless changed in accordance with the preceding sentence, the addresses for notices given pursuant to this Agreement shall be as follows:

If to Seller:

c/o Chartres Lodging Group, LLC
50 California Street, Suite 3300
San Francisco, California 94111
Attention: Mr. Robert D. Kline
Facsimile no. (415) 946-2322
E-mail: rob.kline@chartreslodging.com

With a copy to:

Paul, Hastings, Janofsky & Walker LLP
515 South Flower Street, 25th Floor
Los Angeles, California 90071
Attention: Alan Weakland, Esq.
Facsimile no. (213) 996-3241
E-mail: alanweakland@paulhastings.com

If to Purchaser:

Pebblebrook Hotel Trust
2 Bethesda Metro Center, Suite 1530
Bethesda, Maryland 20814
Attention: Thomas C. Fisher
Facsimile no. (240) 396-5763
E-mail: tfisher@pebblebrookhotels.com

With a copy to:

Honigman Miller Schwartz and Cohn LLP
38500 Woodward Avenue, Suite 100
Bloomfield Hills, Michigan
Attention: J. Adam Rothstein, Esq.
Facsimile no. (248) 566-8479
E-mail:arothstein@honigman.com

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10.6	Modifications. This Agreement cannot be changed orally, and no executory agreement shall be effective to waive, change, modify or discharge it in whole or in part unless such executory agreement is in writing and is signed by the parties against whom enforcement of any waiver, change, modification or discharge is sought.
10.7	Calculation of Time Periods; Time is of the Essence. Unless otherwise specified, in computing any period of time described in this Agreement, the day of the act or event after which the designated period of time begins to run is not to be included and the last day of the period so computed is to be included, unless such last day is a Saturday, Sunday or legal holiday under the laws of the State in which the Real Property is located, in which event the period shall run until the end of the next day which is neither a Saturday, Sunday or legal holiday. The final day of any such period shall be deemed to end at 5:00 p.m., local time where the Real Property is located. Time is of the essence with respect to each and every term and provision of this Agreement.
10.8	Successors and Assigns. Subject to the limitations on assignment set forth in Section 10.4 above, the terms and provisions of this Agreement are to apply to and bind the permitted successors and assigns of the parties hereto.
10.9	Entire Agreement. This Agreement, including the Exhibits, the Schedules and the Confidentiality Agreement contain the entire agreement between the parties pertaining to the subject matter hereof and fully supersedes all prior written or oral agreements and understandings between the parties pertaining to such subject matter.
10.10	Further Assurances. Each party agrees that it will without further consideration execute and deliver such other documents and take such other action, whether prior or subsequent to Closing, as may be reasonably requested by the other party to consummate more effectively the purposes or subject matter of this Agreement. Without limiting the generality of the foregoing, Purchaser shall, if requested by Seller, (a) execute acknowledgments of receipt with respect to any materials delivered by Seller to Purchaser with respect to the Property, and (b) obtain sellers’ permits for any sales activities conducted at the Property prior to Closing and/or obtain “sale for resale certificates” for any Personal Property that may be sold after the Closing. The provisions of this Section 10.10 shall survive Closing.
10.11	Counterparts; Facsimile or e-mail Signatures. This Agreement may be executed in counterparts, and all such executed counterparts shall constitute the same agreement. It shall be necessary to account for only one such counterpart in proving this Agreement. In order to expedite the transaction contemplated herein, telecopied or facsimile or e-mail signatures may be used in place of original signatures on this Agreement. Seller and Purchaser intend to be bound by the signatures on the telecopied or e-mailed document, are aware that the other party will rely on the telecopied or e-mailed signatures, and hereby waive any defenses to the enforcement of the terms of this Agreement based on the form of delivery of the signature.

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10.12	Severability. If any provision of this Agreement is determined by a court of competent jurisdiction to be invalid or unenforceable, the remainder of this Agreement shall nonetheless remain in full force and effect.
10.13	Applicable Law. THIS AGREEMENT IS PERFORMABLE IN THE STATE IN WHICH THE LAND IS LOCATED AND SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE SUBSTANTIVE FEDERAL LAWS OF THE UNITED STATES AND THE LAWS OF SUCH STATE. SELLER AND PURCHASER HEREBY IRREVOCABLY SUBMIT TO THE JURISDICTION OF ANY STATE OR FEDERAL COURT SITTING IN THE STATE IN WHICH THE LAND IS LOCATED IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT AND HEREBY IRREVOCABLY AGREE THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING SHALL BE HEARD AND DETERMINED IN A STATE OR FEDERAL COURT SITTING IN THE STATE IN WHICH THE LAND IS LOCATED. PURCHASER AND SELLER AGREE THAT THE PROVISIONS OF THIS SECTION 10.13 SHALL SURVIVE THE CLOSING OF THE TRANSACTION CONTEMPLATED BY THIS AGREEMENT.
10.14	No Third Party Beneficiary. The provisions of this Agreement and of the documents to be executed and delivered at Closing are and will be for the benefit of Seller and Purchaser only and are not for the benefit of any third party, and accordingly, no third party shall have the right to enforce the provisions of this Agreement or of the documents to be executed and delivered at Closing.
10.15	Exhibits and Schedules. The following schedules or exhibits attached hereto shall be deemed to be an integral part of this Agreement:

Schedule 1.1(a)	-	Legal Description of the Land
Schedule 1.1(e)-1	-	Service Contracts
Schedule 1.1(e)-2	-	Equipment Leases
Schedule 1.1(h)	-	List of Leases
Schedule 3.2	-	Reports
Schedule 4.4.11	-	Vouchers
Schedule 5.1(c)	-	Litigation
Schedule 5.1(e)	-	Violations
Exhibit A	-	Grant Deed
Exhibit B	-	Bill of Sale
Exhibit C	-	Assignment and Assumption of Contracts
Exhibit D	-	Assignment and Assumption of Leases
Exhibit E	-	FIRPTA Certificate
Exhibit F	-	CA Form 590
Exhibit G	-	Designation Agreement
Exhibit H	-	Form of Owner’s Affidavit
Exhibit I	-	Assignment and Assumption of Management Agreement
Exhibit J	-	Form of Interim Beverage Agreement

Exhibit K - Form of Uomo Estoppel

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10.16	Captions. The section headings appearing in this Agreement are for convenience of reference only and are not intended, to any extent and for any purpose, to limit or define the text of any section or any subsection hereof.
10.17	Construction. The parties acknowledge that the parties and their counsel have reviewed and revised this Agreement and that the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of this Agreement or any exhibits, schedules or amendments hereto. Singular words shall connote the plural as well as the singular, and plural words shall connote the singular as well as the plural, and the masculine shall include the feminine and the neuter, as the context may require.
10.18	Termination of Agreement. It is understood and agreed that if either Purchaser or Seller terminates this Agreement pursuant to a right of termination granted hereunder, such termination shall operate to relieve Seller and Purchaser from all obligations under this Agreement, except for such obligations as are specifically stated herein to survive the termination of this Agreement.
10.19	Attorneys Fees. If any action or proceeding is commenced by either party to enforce their rights under this Agreement or to collect damages as a result of the breach of any of the provisions of this Agreement, the prevailing party in such action or proceeding, including any bankruptcy, insolvency or appellate proceedings, shall be entitled to recover all reasonable costs and expenses, including, without limitation, reasonable attorneys’ fees and court costs, in addition to any other relief awarded by the court.
10.20	Arbitration of Disputes. NOTICE: BY INITIALING IN THE SPACE BELOW YOU ARE AGREEING TO HAVE ANY DISPUTE ARISING OUT OF THIS AGREEMENT DECIDED BY NEUTRAL ARBITRATION AS PROVIDED BY CALIFORNIA LAW AND YOU ARE GIVING UP ANY RIGHTS YOU MIGHT POSSESS TO HAVE THE DISPUTE LITIGATED IN A COURT OR JURY TRIAL. BY INITIALING IN THE SPACE BELOW YOU ARE GIVING UP YOUR JUDICIAL RIGHTS TO DISCOVERY AND APPEAL, UNLESS SUCH RIGHTS ARE SPECIFICALLY INCLUDED IN THE “ARBITRATION OF DISPUTES” PROVISION. IF YOU REFUSE TO SUBMIT TO ARBITRATION AFTER AGREEING TO THIS PROVISION, YOU MAY BE COMPELLED TO ARBITRATE UNDER THE AUTHORITY OF THE CALIFORNIA CODE OF CIVIL PROCEDURE. YOUR AGREEMENT TO THIS ARBITRATION PROVISION IS VOLUNTARY.

(a) Any dispute, controversy or claim expressly required pursuant to the terms of this Agreement to be submitted to arbitration shall be submitted to and settled by binding arbitration in the City of San Francisco, California, pursuant to the rules of the Judicial Arbitration and Mediation Services, Inc., then in effect (or at any other place or under any other form of arbitration mutually acceptable to the parties). Notwithstanding the

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foregoing, the parties hereto agree that any such arbitration shall be governed by the following requirements:

(b) A single neutral arbitrator (with at least five (5) years experience in real property transactions in the location of the Property) mutually selected by the parties shall conduct the arbitration proceedings. If the parties are unable to agree upon a single neutral arbitrator within fifteen (15) days from the date of any notice of demand for arbitration, the parties shall each select a neutral arbitrator within ten (10) days. The two (2) arbitrators so selected shall then choose a third neutral arbitrator within five (5) days. The three neutral arbitrators (“Arbitrators”) so selected shall conduct the arbitration proceeding and render the arbitration decision.

(c) Any arbitration decision shall be in writing, with the bases of such decision specified in reasonable detail.

(d) Each party shall submit to the other party, not less than five (5) business days (or such longer period as the Arbitrators may specify) prior to the commencement of the arbitration hearing, (i) a list of the persons whose testimony the other party intends to elicit at the arbitration hearing, (ii) copies of any and all documents to be offered into evidence, and (iii) a description in reasonable detail of any other evidence such party intends to offer into evidence. The foregoing shall not limit the parties’ rights to such other discovery as may be permitted pursuant to the rules of the arbitrating entity.

(e) If the Parties elect arbitration, any award rendered shall be final and conclusive upon the parties and a judgment thereon may be entered in the highest court of the state forum having jurisdiction over the subject matter of such arbitration. The expenses of the arbitration shall be borne equally by the parties to the arbitration, provided that each party shall pay for and bear the cost of its own experts, evidence and counsel’s fees; and provided, further, that the Arbitrators may award all or any portion of the costs of either party to be borne by the other party where the Arbitrators find that such other party’s claim or defense was manifestly unreasonably maintained.

WE HAVE READ AND UNDERSTAND THE FOREGOING AND AGREE TO SUBMIT DISPUTES ARISING OUT OF THE MATTERS INCLUDED IN THE “ARBITRATION OF DISPUTES” PROVISION TO NEUTRAL ARBITRATION.

SELLER’S INITIALS BUYER’S INITIALS

The foregoing shall not apply to or limit the right of Purchaser to bring suit for specific performance in an appropriate court of law in accordance with the terms of this Agreement.

10.21 No Waiver. Failure of either party at any time to require performance of any provision of this Agreement shall not limit the party’s right to enforce the provision. Waiver of any breach of any provision shall not be a waiver of any succeeding breach of the provision or a waiver of the provision itself or any other provision.

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10.22 No Reservation of Property. The preparation and/or delivery of unsigned drafts of this Agreement shall not create any legally binding rights in the Property and/or obligations of the parties, and Purchaser and Seller acknowledge that this Agreement shall be of no effect until it is duly executed by both Purchaser and Seller.

10.23 No Recordation. Subject to Section 10.2 above and any filings required to be made by Purchaser with the SEC, Purchaser shall not record this Agreement, nor any memorandum or other notice of this Agreement, in any public records.

10.24 Like-Kind Exchange. Notwithstanding anything to the contrary in this Agreement, Purchaser or Seller may elect to exchange the Property for other real estate of a like kind in accordance with Section 1031 of the Internal Revenue Code of 1986, as amended (the “Code”. To the extent possible, the provisions of this Section shall be interpreted consistently with this intent. To exercise any rights under this Section, the party electing to exchange the Property shall provide the other with a written statement stating its intent to enter into an exchange at least five (5) days prior to Closing. Either party’s election to exchange, rather than sell or buy, the Property for other real estate of a like kind shall be at no cost or liability to the other. Should this Agreement become part of a 1031 transaction, the party electing to exchange the Property (the “Exchanger”) hereby agrees that the other party may enforce any and all representations, warranties, covenants and other obligations of the Exchanger under this Agreement directly against Exchanger, and the other party agrees that Exchanger may enforce any and all representations, warranties, covenants and other obligations of the other party under this Agreement directly against the other party.

10.25 Continuing Access to Books and Records. Throughout the period expiring on the date two (2) years from and after Closing, Seller shall make all of all books and records of Seller and the Property for the years ended December 31, 2007, 2008 and 2009 and interim periods as required by the rules and regulations of the SEC available to Purchaser and Purchaser’s independent accountants for inspection, copying and audit at the expense of the Purchaser. Upon reasonable prior written notice, Seller shall provide Purchaser and/or its independent accountant with copies of, or reasonable access to, such factual information, accounting records and financial information as may be reasonably requested by Purchaser or its auditors, and in the possession or control of Seller, to enable Purchaser or its affiliates to file reports or registration statements in compliance with the rules and regulations of the SEC. Seller shall also, upon request, supply to Purchaser letters of representation to such accountants, in form and substance reasonably satisfactory to Purchaser. This Section 10.25 shall survive the Closing.

[SIGNATURE PAGE FOLLOWS]

49

     IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the Effective Date.

SELLER:

SFD UNION SQUARE, LLC,
a Delaware limited liability company

By:	SFD Mezz, LLC,
	a Delaware limited liability company,
	its sole member
	By:	SFD Partners, LLC,
		a Delaware limited liability company,
		its sole member
			By:	Oxford Lodging Union Square, LLC,
				a Delaware limited liability company,
				its managing member
					By:	The Chartres Lodging Group, LLC,
						a Delaware limited liability company,
						its manager

By:	/s/ Robert Kline
	Name:	Robert Kline
	Title:	President

50

PURCHASER: HUSKIES OWNER LLC, a Delaware limited liability company
By:	/s/ Thomas C. Fisher
	Its: Vice President

-51-

AGREED TO THIS 20 DAY OF MAY, 2010, AS TO PROVISIONS RELATING TO ESCROW AGENT: CHICAGO TITLE INSURANCE COMPANY
By:	/s/ Scott M. Green
	Its Authorized Signatory

-52-

EX-10.3

Exhibit 10.3

PURCHASE AND SALE AGREEMENT

by and between

IHC BUCKHEAD, LLC
a Georgia limited liability company

as Seller,

and

ORANGEMEN OWNER LLC
a Delaware limited liability company
as Buyer

May 25, 2010

Property: InterContinental Buckhead, Atlanta, Fulton County, Georgia

Table of Contents
Property: IC Buckhead, Atlanta GA

TABLE OF CONTENTS

1.	Deadlines and Definitions			1
		1.1	Deadlines	1
		1.2	Definitions	1
2.	Purchase and Sale			1
3.	Purchase Price			2
		3.1	Deposit	2
		3.2	Remainder of Purchase Price	2
		3.3	Purchase Price Allocation	2
4.	Buyer’s Due Diligence and Inspection Rights; Termination Right			2
		4.1	Review of Property and Property Documents	2
		4.2	Guidelines for Inspection Rights	3
		4.3	Title and Survey Objections	4
			A. Title and Survey Objections	4
			B. Cure of Title Matters	4
		4.4	Termination Right	4
		4.5	As-Is, Where-Is, With All Faults Sale	5
5.	Seller’s Covenants			5
		5.1	No Alteration of Title	5
		5.2	New Leases and Modifications to Existing Leases	5
		5.3	Contracts	6
		5.4	Status of Property	6
		5.5	Tax Appeals	6
		5.6	Personal Property	7
		5.7	Intellectual Property	7
		5.8	Liquor License	7
		5.9	Continued Marketing of the Hotel for Sale	8
		5.10	Operation of Property	8
6.	Closing			8
		6.1	Closing Mechanics	8
		6.2	Seller’s Deliveries	8
			A. Deed/Assignment of Master Lease	8
			B. Bill of Sale	8
			C. Assignment of Leases	8
			D. Assignment of Contracts, Warranties and Other Interests	9
			E. Notices of Assignment and Assumption	9
			F. Withholding and Tax Certificates	9
			G. Affidavit of Title/Gap Indemnity	9
			H. Closing Statement	9
			I. Evidence of Authority	9
			J. Reaffirmation	9

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Property: IC Buckhead, Atlanta GA

			K. Transfer Tax Declaration	9
			L. Delivery of Keys and Property Documents	9
			M. Tenant Estoppels	9
			N. Management Agreement	10
			O. Transfer of Bonds	10
			P. Assignment and Assumption and Release Agreement	10
			Q. Georgia Withholding Certificate	10
			R. Affidavit Regarding Brokers	10
			S. Broker Lien Waiver	10
			T. Other Instruments	10
		6.3	Buyer’s Deliveries	10
			A. Net Purchase Price	10
			B. As Is Agreement	10
			C. Closing Document Counterparts	10
			D. Investment Letter	10
			E. Certificate Designating Authorized Lessee Representatives	10
			F. Affidavit Regarding Brokers	11
			G. Broker Lien Waiver	11
			H. Initial Working Capital Deposit & Management Agreement Conditions	11
			I. Other Instruments	11
		6.4	Tax-Deferred Exchange of Property	11
7.	Prorations, Credits and Closing Costs			11
		7.1	Proration Items	11
			A. Real Estate Taxes and Assessments	12
			B. Hotel Revenues	12
			(i) Guest Ledger Receivables	12
			(ii) Booking Deposits	12
			(iii) Vending Machines	12
			(iv) Working Capital, Hotel Accounts & Petty Cash	13
			(v) Accounts Receivable	13
			C. Rental Payments	13
			(i) Percentage Rents	13
			D. Security Deposits/Advance Rent	13
			E. Utility Expenses and Deposits	14
			F. Inventories and Hotel Consumables	14
			G. Other Operating Expenses	14
			H. Reimbursable Lease Expenses	14
		7.2	Closing Statement and Schedules	15
		7.3	Reprorations after Closing	15
		7.4	Seller’s Closing Costs	15
		7.5	Buyer’s Closing Costs	15
8.	Representations and Warranties			15
		8.1	Seller’s Representations and Warranties	15
			A. Organization, Power and Authority	16

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Property: IC Buckhead, Atlanta GA

- ii -

			B. Title to Real and Personal Property	16
			C. Leases	16
			(i) Tenants	16
			(ii) Lease Defaults	16
			(iii) Title	16
			(iv) Leases	16
			D. Contracts	17
			E. Litigation Proceedings	17
			F. Tax Incentive Documents	17
			G. Other Property Conditions	17
			(i) Land Use Regulations	17
			(ii) Insurance Compliance	17
			(iii) Taxes and Assessments	18
			(iv) Special Assessments and Exactions	18
			H. Condemnation.	18
			I. Compliance	18
			(i) No Violations	18
			(ii) Hazardous Materials	18
			(iii) No Transport	18
			(iv) No Release	18
			(v) No Underground Storage Tanks	18
			(vi) No Asbestos	18
			J. Hotel Employee Matters	18
			K. Financial Information	19
			L Independent Audit	19
			M. Liquor License	19
			N. Foreign Person	19
			O. Patriot Act	19
		8.2	Seller’s Warranties Deemed Modified	20
		8.3	Claims of Breach of Warranty Prior To Closing	20
		8.4	Survival and Limits On Buyer’s Claims	20
		8.5	Buyer’s Representations and Warranties	21
			A. Organization, Power and Authority	21
			B. No Bankruptcy	21
			C. Sophisticated Buyer	21
			D. Reimbursement of Rebates	22
		8.6	Buyer’s Assumption of Seller Obligations.	22
			A. Wages and Salaries	22
			B. Contracts and Leases	22
			C. Guest Baggage	23
			D. Safe Deposit Boxes	23
			E. Bond Documents	23
9.	Casualty and Condemnation			24
		9.1	Major Event	24
		9.2	Closing Despite Casualty/Condemnation	24

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Property: IC Buckhead, Atlanta GA

- iii -

10.	Other Conditions to Closing			24
		10.1	Conditions to Buyer’s Obligations	25
			A. Representations	25
			B. Representations	25
			C. ROFO Compliance	25
			D. Liquor License	25
			E. Tax Abatement Transfer or Termination	25
		10.2	Conditions to Seller’s Obligations	25
			A. Representations	25
			B. Buyer Compliance	26
			C. ROFO Compliance	26
			D. Tax Abatement Transfer or Termination	26
		10.3	Waiver of Conditions	26
11.	Transaction Issues: Brokers, Confidentiality and Indemnity			26
		11.1	Brokers	26
		11.2	Confidentiality	26
		11.3	Indemnity	28
12.	Default At or Prior to Closing			28
		12.1	Buyer Default	28
		12.2	Seller Default	29
13.	Notices			29
14.	General Provisions			30
		14.1	Execution Necessary	30
		14.2	Counterparts	31
		14.3	Successors and Assigns	31
		14.4	Governing Law	31
		14.5	Entire Agreement	31
		14.6	Time is of the Essence	31
		14.7	Interpretation	31
		14.8	Survival	32
		14.9	Further Assurances	32
		14.10	Exclusive Application	32
		14.11	Partial Invalidity	32
		14.12	Waiver Rights	32
		14.13	No Implied Waiver	32
		14.14	Rights Cumulative	33
		14.15	Attorney’s Fees	33
		14.16	Waiver of Jury Trial	33
		14.17	Facsimile Signatures	33
		14.18	No Recordation	33
		14.19	Maximum Aggregate Liability	33
		14.20	Exhibits and Schedules	34
		14.21	Jurisdiction	34

Table of Contents
Property: IC Buckhead, Atlanta GA

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15.	Retention of Hotel Employees	34
16.	On-Going Management of Hotel	34
17.	Drainage	34
18.	Buyer’s Successor Payment Obligations	35
19.	Au Pied De Cochon License	36

SCHEDULE OF EXHIBITS

		REFERENCE
EXHIBIT	TITLE	PARAGRAPH
A.	Legal Description of Land	Recitals
A-1	Purchase Price Allocation		3.3
B.	Deed		6.2
B-1	Assignment and Assumption of Lease		6.2
B-2	Certificate Designating Authorized Lessee Representatives
C.	Bill of Sale		6.2
D.	Assignment and Assumption of Leases		6.2
E.	Assignment and Assumption of Contracts, Warranties and Other Interests		6.2
F.	Notices:		6.2
	-1: To Tenants
	-2: To Contract Parties
G.	Non-Foreign Affidavit		6.2
H.	Affidavit of Title		6.2
I.	Closing Statement		6.2
J.	Litigation		8.1
K.	Reaffirmation of Representations		6.2
L.	As Is Agreement		6.3
L-1	Assignment and Assumption and Release Agreement		6.2
M.	List of Tenants (Rent Roll)		8.1

Table of Contents
Property: IC Buckhead, Atlanta GA

- v -

		REFERENCE
EXHIBIT	TITLE	PARAGRAPH
N.	List of Contracts		8.1
O.	Management Representation Letter		8.1	(L)
P.	Management Agreement		16
Q.	Licensed Intellectual Property		5.7
R.	Seller Estoppel Certificate	Schedule A
S.	Tenant Estoppel Certificate Form	Schedule A
U.	Transfer of Bonds		6.2
U-1	Form of Bond		6.2
V.	Investment Letter		6.3
W-1	Seller’s Affidavit Regarding Brokers		6.2
W-2	Buyer’s Affidavit Regarding Brokers		6.3
W-3	Broker’s Lien Waiver		6.2
X.	Seller’s Affidavit of Residence		6.2

Table of Contents
Property: IC Buckhead, Atlanta GA

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HOTEL PURCHASE AND SALE AGREEMENT

     THIS HOTEL PURCHASE AND SALE AGREEMENT (this “Agreement”) is made and entered into as of May 25, 2010 (the “Effective Date”), by and between IHC BUCKHEAD, LLC, a Georgia limited liability company (“Seller”), ORANGEMEN OWNER LLC, a Delaware limited liability company (“Buyer”).

R E C I T A L S:

     WHEREAS, Seller is the owner of that certain hotel and ground leases the parcel of land the hotel is located on, in Atlanta, Fulton County, Georgia, and more particularly described on Exhibit A (the “Land”), and the Property (as hereinafter defined), and known as the InterContinental Buckhead Hotel located at 3315 Peachtree Road, NE, Atlanta, Georgia 30326; and,

     WHEREAS, Buyer desires to acquire the Property from Seller for the purchase price of One Hundred Five Million and No/100 Dollars ($105,000,000.00) (“Purchase Price”) and Seller desires to convey the Property to Buyer all upon the terms and conditions hereinafter set forth.

          NOW, THEREFORE, for and in consideration of the promises, covenants, representations and warranties hereinafter set forth, the sum of One Hundred Dollars ($100.00) and other good and valuable consideration in hand paid by Seller to Buyer and by Buyer to Seller upon the execution of this Agreement, the receipt and sufficiency of which are hereby acknowledged by each of the parties hereto, the parties hereto hereby agree as follows:

     1. Deadlines and Definitions.

          1.1 Deadlines. Wherever used in this Agreement, the following terms shall have the meanings set forth below:

     “Closing Deadline” shall mean the date ten (10) days after the expiration of the Due Diligence Deadline. Except as set forth in Section 8.6E, in no event will the Closing Date be after June 30, 2010.

     “Due Diligence Deadline” shall mean 6:00 P.M. local Atlanta, Georgia time on the date thirty (30) calendar days after the Effective Date.

          1.2 Definitions. In addition, wherever used in this Agreement, the terms set forth on Schedule A shall have the meanings set forth on Schedule A.

     2. Purchase and Sale. Seller agrees to convey, transfer and assign, and Buyer agrees to acquire, accept and assume, Seller’s interest in the Property, on the terms, conditions and provisions set forth in this Agreement. Buyer hereby acknowledges that fee simple title to the Real Property is currently held by the Development Authority of Fulton County (the “Development Authority”) and that Seller is conveying to Buyer only its rights and obligations as lessee under that certain Lease Agreement by and between the Development Authority and

Purchase Agreement
Property: IC Buckhead, Atlanta GA

Seller, dated December 1, 2002 (the “Master Lease”). For purposes of this Agreement, whenever the words “purchase” and “sale” or words of similar import are used in connection with the Real Property, they shall be deemed to be mean the assignment of Seller’s interest as lessee under the Master Lease and shall not be deemed to suggest that any fee simple interest in the Real Property is being transferred. Seller acknowledges and agrees that Seller has no right to the Excluded Property by virtue of the Transaction.

     3. Purchase Price. The Purchase Price, subject to the prorations and credits set forth herein, shall be due and payable as follows:

          3.1 Deposit. Within one (1) Business Day after the full and final execution of this Agreement, Buyer shall make the Initial Deposit, in immediately available funds to the Title Company. Notwithstanding any provision in this Agreement to the contrary, if Buyer fails to timely make the Initial Deposit as provided herein, then Seller, at Seller’s option, may Terminate this Agreement and, if Seller elects such option, the parties shall have no further rights or obligations hereunder except for obligations which expressly survive the termination of this Agreement. The Initial Deposit shall be fully refundable to Buyer if, on or before the Due Diligence Deadline, Buyer terminates this Agreement in accordance with Paragraph 4.4. In addition, no later than the Due Diligence Deadline (provided that this Agreement is not sooner Terminated in accordance with the terms hereof), Buyer shall make the Secondary Deposit. Except for a Seller default of this Agreement after expiration of any applicable cure period and the subsequent termination of this Agreement by Buyer all in accordance with Section 12.2 hereof, the Deposit shall be non-refundable to Buyer after the Due Diligence Deadline, but shall be applied against the Purchase Price on the Closing Date.

          3.2 Remainder of Purchase Price. At Closing, Buyer shall pay to Seller an amount equal to the difference between (a) the Purchase Price, and (b) the Deposit, subject to the credits, prorations and adjustments set forth herein, in cash by federal reserve bank wire transfer to such account and bank as Seller shall designate in writing to Buyer at or prior to Closing to be confirmed received in Seller’s account on or before 2:00 p.m. Atlanta, Georgia time on the Closing Date.

          3.3 Purchase Price Allocation. The Purchase Price and other relevant items shall be allocated among the Real Property (which shall be further broken out between the cost for Land, excluding improvements, and the cost for the Hotel building and other improvements) and Personal Property for tax and financial accounting purposes in accordance with Exhibit A-1. Buyer and Seller shall file, and shall cause their respective affiliates to file, all tax returns (including amended returns and claims for refunds) and information reports in a manner consistent with such Exhibit A-1.

     4. Buyer’s Due Diligence, Financing and Inspection Rights; Termination Right.

          4.1 Review of Property and Property Documents. Until Closing, and subject to the terms of Paragraph 4.2, Seller shall provide Buyer and Buyer’s Representatives with access to the Property and the Property Documents, wherever located, upon reasonable prior notice at reasonable times during business hours, with the right and license to conduct Due

Purchase Agreement
Property: IC Buckhead, Atlanta GA

- 2 -

Diligence with respect to the Property. Buyer covenants and agrees that it will inspect the Hotels at its sole cost and expense and will not allow any liens to attach against the Hotel as a result of its Due Diligence. On written request from Seller, Buyer shall deliver promptly to Seller copies of all Buyer’s Diligence Reports, but with no liability for the accuracy thereof and no representation that Seller or any other party may rely thereon. Buyer acknowledges that the Property Documents may not be complete in all respects and that Seller may not have complete information concerning the Hotel and Buyer acknowledges that such information should not be relied upon and should be verified to Buyer’s satisfaction during Due Diligence.

          4.2 Guidelines for Inspection Rights. Buyer’s rights to conduct Due Diligence shall be subject to the following further requirements: (a) Due Diligence may only be preformed from 8:00 a.m. through 6:00 p.m. and must not interfere with the operation or management of the Hotel or disturb the rights of guests or Tenants; (b) Buyer must provide Seller with at least twenty-four (24) hours prior written notice of its intent to perform Due Diligence on the Property and Seller shall have the right to have a representative of Seller present during any such entry upon the Property by Buyer or Buyer’s Representatives; (c) Buyer shall not contact any Tenant, Hotel contractor, Hotel guest, or Hotel Employee without Seller’s prior written consent, which shall not be unreasonably withheld, conditional or delayed; (d) Seller or its designated representative shall have the right to pre-approve, and be present during, any physical testing of the Property; (e) Buyer shall immediately return the Property to the condition existing prior to any tests and inspections in all material respects; (f) Due Diligence activities may not materially adversely affect the appearance of the Hotel in any way; and (g) Buyer may not perform any activity which bores, penetrates or damages the Property and may not conduct any invasive sampling, boring, testing, or analysis of soils, surface water or groundwater at the Property without first having obtained prior written approval of Seller, which may not be unreasonably withheld, conditioned or delayed. Prior to such time as Buyer or any of Buyer’s Representatives enter the Property for any purpose other than traditional business meetings or observational “walk throughs” of public areas and rooms not involving testing or inspection, Buyer shall (i) obtain policies of general liability insurance which insure Buyer and Buyer’s Representatives with liability insurance limits of not less than $1,000,000 combined single limit for personal injury and property damage and name Seller, and its affiliates, as additional insureds and which are with such insurance companies, provide such coverages and carry such other limits as Seller shall reasonably require, and (ii) provide Seller with certificates of insurance evidencing that Buyer has obtained the aforementioned policies of insurance. Notwithstanding any provision in this Agreement to the contrary, except in connection with the preparation of a so-called “Phase I” environmental report with respect to the Property or the issuance of a standard “zoning and building code compliance letter”, to the extent available, with respect to the Property, Buyer shall not contact any governmental official or representative regarding hazardous materials on, or the environmental condition of, the Property, or the status of compliance of the Property with zoning, building code or similar Laws, without Seller’s prior written consent thereto, which consent shall not be unreasonably withheld or delayed. In addition, if Seller’s consent is obtained by Buyer, Seller shall be entitled to receive at least two (2) Business Days prior written notice of the intended contact and to have a representative present when Buyer has any such contact with any governmental official or representative.

Purchase Agreement
Property: IC Buckhead, Atlanta GA

- 3 -

          4.3 Title and Survey Objections. Seller shall deliver to Buyer a copy of Seller’s most recent survey of the Property, if any, in Seller’s possession, and either (i) Seller’s title insurance policy in Seller’s possession, or (ii) a Title Commitment dated within 90 days of the Effective Date.

          A. Title and Survey Objections. Buyer shall have until ten (10) days prior to the Due Diligence Deadline to notify Seller in writing of any Title Objections; any such notice shall be accompanied by the Title Commitment and Survey and any other materials which evidence or disclose such objections to title. If Buyer fails to notify Seller of any Title Objections on or before such date, then, notwithstanding any other provisions set forth herein, such failure to notify Seller shall constitute a waiver of such right to object to such matters existing as of the Effective Date. Seller shall notify Buyer within five (5) days of its receipt of such notice if Seller has elected to Remove any such Title Objections. If Seller fails to respond within such timeframe, Seller shall be deemed to have declined to remove such Title Objections (other than Required Removal Items). If Seller does not covenant to Buyer that Seller will Remove the Title Objections prior to Closing, Buyer shall have until the Due Diligence Deadline to elect in writing, either to (a) terminate this Agreement, in which case the Deposit shall be returned to Buyer, and the parties shall have no further rights or obligations hereunder, except for those which expressly survive any such termination, or (b) waive its Title Objections (other than Required Removal Items) and proceed with the transaction pursuant to the remaining terms and conditions of this Agreement. If Buyer fails to give Seller notice of its election by such time, it shall be deemed to have elected the option contained in clause (b) above. Any such Title Objection so waived (or deemed waived) by Buyer shall be deemed to constitute a Permitted Title Exception and the Closing shall occur as herein provided without any reduction of or credit against the Purchase Price.

          B. Cure of Title Matters. At Closing, if this Agreement is not Terminated as permitted herein, Seller shall Remove or cause to be Removed any Title Objections to the extent (and only to the extent) that the same constitute Required Removal Items or Seller has agreed to Remove a Title Objection pursuant to subsection (A) above.

          4.4 Termination Right. If Buyer, in its sole and absolute discretion, determines not to proceed with the Transaction or is not satisfied with any matters relating to the Property, Buyer may Terminate this Agreement by written notice to Seller at any time prior to the Due Diligence Deadline and Buyer shall be entitled to the return of the Deposit. If, at or prior to the Due Diligence Deadline, Buyer has not delivered to Seller a termination notice as aforesaid, then Buyer shall be deemed to have accepted the condition of the Property (subject to Seller’s compliance with the representations, warranties and covenants of this Agreement, and the conditions set forth in Paragraph 10) and shall thereafter have no right to Terminate this Agreement on account of such Due Diligence termination right under this Paragraph 4.4. If, after the Due Diligence Deadline, Buyer conducts further Due Diligence, Buyer acknowledges and agrees that Buyer shall have no further right to terminate this Agreement with respect to such further Due Diligence or otherwise in accordance with this Paragraph 4.4 after the Due Diligence Deadline. Buyer acknowledges that, except as specifically set forth herein to the contrary, after the Due Diligence Deadline, the Deposit shall be non-refundable to Buyer.

Purchase Agreement
Property: IC Buckhead, Atlanta GA

- 4 -

          4.5 As-Is, Where-Is, With All Faults Sale. Because Buyer is to conduct such Due Diligence as Buyer deems necessary or appropriate prior to the Due Diligence Deadline, Buyer acknowledges that it shall independently confirm to its satisfaction all information that it considers material to its purchase of the Property or the Transaction, and the Property shall be sold, and Buyer shall accept possession of the Property on the Closing Date, “AS IS, WHERE IS, WITH ALL FAULTS”, with no right of setoff or reduction in the Purchase Price. Without limiting the foregoing, except for Seller’s Warranties, none of the Seller Parties have or shall be deemed to have made any verbal or written representations, warranties, promises or guarantees (whether express, implied, statutory or otherwise) to Buyer with respect to the Property, any matter set forth, contained or addressed in the Documents (including, but not limited to, the accuracy and completeness thereof) or the results of Buyer’s Due Diligence. Notwithstanding the foregoing, such acknowledgment is not intended to, and shall not be construed to affect or impair any rights or remedies that Buyer may have against Seller as a result of a breach of any of Seller’s Warranties. To evidence the foregoing, Buyer shall deliver to Seller at the Closing, an As Is Agreement as required by Paragraph 6.3.

     5. Seller’s Covenants. Seller agrees that between the Effective Date and the Closing Date:

          5.1 No Alteration of Title. Seller shall not transfer or further alter or encumber in any way Seller’s title to the Real Property as it exists as of the Effective Date without written notice to, and the prior written consent of, Buyer. If Buyer fails to object in writing to any such proposed instrument within three (3) Business Days after receipt of the aforementioned notice, Buyer shall be deemed to have approved the proposed instrument. Buyer’s consent shall not be unreasonably withheld or delayed with respect to any such instrument.

          5.2 New Leases and Modifications to Existing Leases. If Seller desires to (i) enter into any new Lease, (ii) cancel, modify, amend, extend or renew any existing Lease, (iii) consent to any assignment or sublease in connection with any Lease, or (iv) accept any prepayment of rent thereunder (more than thirty (30) days in advance), Seller shall deliver to Buyer written notice of such action, which notice shall contain information regarding the proposed action that Seller believes is reasonably necessary to enable Buyer to make informed decisions with respect to the advisability of the proposed action. Seller shall not be entitled to take such action without Buyer’s prior written consent, which consent will not be unreasonably withheld, conditioned or delayed (and if no response by Buyer is made within three (3) Business Days after Buyer’s receipt of such request and all documents related thereto, such consent shall be deemed to have been granted). If Buyer refuses to consent to the proposed action, Seller nevertheless shall be entitled to execute a short-term Lease that may be terminated, without penalty, upon thirty (30) days (or less) written notice from the owner of the Property. Seller shall promptly provide Buyer with true, correct and complete copies of any Lease, modification, or amendment entered into by Seller. Notwithstanding any provision of this Agreement to the contrary, without any requirement for notice or consent from Buyer, Seller may, but shall not be obligated to, pursue any of its legal rights for contract enforcement (including, but not limited to, commencing a dispossessory action) against any Tenant.

Purchase Agreement
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          5.3 Contracts. If Seller desires to (i) enter into any new Contracts, (ii) cancel, modify, amend, extend or renew any existing Contracts, or (iii) waive any default under, accept any surrender of, any Contracts, Seller shall deliver to Buyer written notice of such action, which notice shall contain information regarding the proposed action that Seller believes is reasonably necessary to enable Buyer to make informed decisions with respect to the advisability of the proposed action. Except for Contracts that can be terminated, without penalty, upon thirty (30) days (or less) written notice from the owner of the Property, Seller shall not be entitled to take such action without Buyer’s prior written consent, which consent will not be unreasonably withheld, conditioned or delayed (and if no response by Buyer is made within three (3) Business Days after Buyer’s receipt of such request and all documents related thereto, such consent shall be deemed to have been granted); upon delivery of such written consent, such Contract or modification thereof shall thereupon be included within the definition of “Contracts” set forth herein. Seller shall promptly provide Buyer with true, correct and complete copies of any Contract, modification, or amendment entered into by Seller. Notwithstanding any provision of this Agreement to the contrary, without any requirement for notice or consent from Buyer, Seller may, but shall not be obligated to, pursue any of its legal rights to enforce any Contract.

          5.4 Status of Property. Between the Effective Date and Closing, Seller shall maintain and keep the Property in a manner consistent with Seller’s past practices with respect to the Property. Buyer hereby agrees that Buyer shall accept the Property subject to, and Seller shall have no obligation to cure, (a) any violations of Laws, or (b) any physical conditions that would give rise to violations of Laws, whether the same now exist or arise prior to Closing.

          5.5 Tax Appeals. Buyer acknowledges that it has been informed that Seller is in the process of contesting its 2009 real estate taxes for the Property and may contest its 2010 taxes as well. If Seller is successful in obtaining a lower tax assessment for the Property, all credits, refunds or other compensation related to (a) the prorated portion of the 2010 tax year ending on the Closing Date, and (b) the 2009 and prior tax years (collectively, the “Seller Tax Period”) shall belong to Seller. Buyer shall promptly pay Seller for (i) the amount of any refund Buyer receives related to the Seller Tax Period and (ii) the cash equivalent of any non-monetary benefit or other compensation Buyer receives related to the Seller Tax Period, including, but not limited to, tax credits applied to subsequent tax years, whereupon Buyer will be entitled to receive the benefit of such tax credits. Seller shall not be entitled to any compensation related to a lower tax assessment for the 2011 and subsequent tax years. Buyer agrees to take such other actions as may be required to fulfill the intent of the parties hereunder. Seller shall have the right to continue and to control the progress of and to make all decisions with respect to any contest of the real estate taxes and personal property taxes for the Property due and payable during the Closing Tax Year and all prior Tax Years. Seller shall keep Buyer apprised of any contest of the real estate taxes and personal property taxes for the Property due and payable during the Closing Tax Year and all prior Tax Years. Buyer shall have the right to control the progress of and to make all decisions with respect to any tax contest of the real estate taxes and personal property taxes for the Property due and payable during all Tax Years subsequent to the Closing Tax Year. All real estate and personal property tax refunds and credits received after Closing with respect to the Property shall be applied in the following order of priority: first, to pay the costs and expenses (including reasonable attorneys’ fees, expenses and disbursements and fees contingent on the amount of recovery) incurred in connection with obtaining such tax refund or credit;

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second, to pay any amounts due to any past or present tenant of the Property as a result of such tax refund or credit to the extent required pursuant to the terms of the Leases; and third, apportioned between Buyer and Seller as follows: (a) any refunds or credits attributable to the Closing Tax Year shall be apportioned between Buyer and Seller in the manner provided in Paragraph 7.1; (b) any refunds or credits attributable to any period prior to the Closing Tax Year, shall be paid to Seller; and (c) any refunds or credits attributable to any period after the Closing Tax Year shall be paid to Buyer. Buyer and Seller agree to cooperate with each other and to execute any and all documents reasonably requested in furtherance of the foregoing. The provisions of Section shall survive the Closing.

          5.6 Personal Property. Seller shall not remove any of the Property, including Personal Property, from the Real Property nor use any of the Personal Property prior to the Closing Date except such use thereof as is normal and customary in the operation and maintenance of the Property. Seller covenants that items of Personal Property which consist of common area furniture and furnishings, common area artwork and supplies and maintenance items shall be maintained at Seller’s customary level of quality and will be available and conveyed to Buyer on the Closing Date.

          5.7 Intellectual Property. On or before the Closing, Buyer shall be responsible for obtaining authorization or consent from third party lessors or licensors for the assignment or other transfer to Buyer of such computer hardware, software or system(s) leases or licenses as are integral to the operation of the Property as of the Effective Date. Upon Buyer’s reasonable request, Seller shall in good faith, but without cost or obligation to itself, exercise reasonable efforts to assist Buyer in Buyer’s efforts to obtain such authorization or consent from third party lessors or licensors. Seller will not be required to pay any sums or otherwise incur any obligation in connection with any such requested assignment or transfer. Buyer shall be solely responsible for any early termination, transfer, re-licensing or other fees of any nature payable in connection any such assignment or transfer. Buyer shall indemnify and hold harmless Seller from and against any loss, liability, damage, cost or expense, including reasonable attorneys’ fees, arising from or related to the early termination or breach of any such leases or licenses. In the absence of an express assignment of any such lease or license, the Buyer acknowledges that no such lease or license shall be transferred to Buyer at Closing. Buyer also acknowledges that Seller and the Seller Parties are retaining all right, title and interest in and to all their respective intellectual property rights that may be used within or comprise any part of the Property except as may be specifically licensed to Buyer pursuant to Exhibit Q.

          5.8 Liquor License. The Manager, or an affiliate, will continue to maintain the liquor license for the Hotel after Closing and/or will apply for a new liquor license while maintaining the current liquor license. Buyer agrees to reasonably cooperate with Seller and Manager in any filings or other requirements necessary to maintain the liquor license after the change of ownership of the Hotel. Buyer acknowledges that Buyer shall be liable for, and shall conduct in accordance with applicable law, all liquor operations at the Property on and after the Closing Date in accordance with the Management Agreement.

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          5.9 Continued Marketing of the Hotel for Sale. Seller shall not solicit, negotiate, execute or otherwise pursue offers for the purchase and sale of the Property with any party, other than Buyer, during the term of this agreement.

          5.10 Operation of Property. Seller covenants, that between the Effective Date hereof and Closing, it will (a) operate the Hotel only in the usual, regular and ordinary manner consistent with the Seller’s prior practice, (b) maintain its books of account and records in the usual, regular and ordinary manner, in accordance with sound accounting principles applied on a basis consistent with the basis used in keeping its books in prior years and (c) use all reasonable efforts to preserve intact its present business organization, keep available the services of its present officers, partners and employees and preserve its relationships with suppliers and others having business dealings. Seller shall continue to use its reasonable efforts to take guest room reservations and to book functions and meetings and otherwise to promote the business of the Hotel in generally the same manner as Seller did prior to the execution of this Agreement. All advance room bookings and reservations and all meetings and function bookings shall continue to be booked in accordance with Seller’s current and customary practices. Except as otherwise permitted hereby, from the Effective Date until Closing, Seller shall not take any action or fail to take action the result of which (i) would have a material adverse effect on the Hotel or the Purchaser’s ability to continue the operation thereof after Closing in substantially the same manner as presently conducted, or (ii) would cause any of the representations and warranties contained in Section 8 to be untrue as of Closing.

     6. Closing. The time and place of Closing shall be held at 9:00 a.m. local Atlanta, Georgia time on the Closing Deadline at or through the offices of Seller’s attorneys.

          6.1 Closing Mechanics. If agreed to by both parties, Buyer and Seller shall conduct an escrow-style closing through the Closing Agent so that it will not be necessary for any party to attend the Closing (Buyer and Seller shall have pre-Closings to finalize and sign all documents not later than the day prior to Closing, and deliver such items to the Closing Agent). Upon Closing, Buyer shall deliver to Seller the Purchase Price and the other items required of Buyer as elsewhere set forth herein, and Seller shall deliver to Buyer possession of the Property, subject only to the Permitted Title Exceptions, and the other items required of Seller as elsewhere set forth herein.

          6.2 Seller’s Deliveries. At Closing, Seller shall deliver or cause to be delivered to Buyer the following:

          A. Deed/Assignment of Master Lease. A Limited Warranty Deed in the form of Exhibit B or an Assignment and Assumption of Lease in the form of Exhibit B-1, if applicable.

          B. Bill of Sale. A Bill of Sale in the form of Exhibit C.

          C. Assignment of Leases. An Assignment and Assumption of Leases in the form of Exhibit D.

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          D. Assignment of Contracts, Warranties and Other Interests. An Assignment and Assumption of Contracts, Warranties and Other Interests in the form of Exhibit E.

          E. Notices of Assignment and Assumption. If applicable, a written notice in the form of Exhibit F-1, a copy of which shall be sent to each Tenant under a Lease (the “Tenant Notice”), and a written notice in the form of Exhibit F-2 to each party to a Contract (the “Contract Notice”).

          F. Withholding and Tax Certificates. A certificate in the form of Exhibit G with respect to Section 1445 of the Internal Revenue Code stating whether or not Seller is a foreign person as defined in said Section 1445 and applicable regulations thereunder.

          G. Affidavit of Title/Gap Indemnity. An Affidavit of Title with respect to liens and title matters in substantially the form of Exhibit H.

          H. Closing Statement. A Closing Statement Agreement in the form of Exhibit I attached hereto and incorporated herein by this reference. Seller and Buyer shall authorize and instruct the Closing Agent to file, as the “reporting person,” Internal Revenue Service Form 1099-B (“Proceeds from Real Estate, Broker, and Barter Exchange Transactions”), if and as required by Section 6045(d) of the Code.

          I. Evidence of Authority. Evidence that Seller has the requisite power and authority to execute and deliver, and perform under, this Agreement and all Closing Documents.

          J. Reaffirmation. A reaffirmation of the representations, warranties and covenants set forth in Paragraph 8 hereof in the form of Exhibit K and made a part hereof.

          K. Transfer Tax Declaration. If applicable, a duly completed real estate transfer tax declaration or return.

          L. Delivery of Keys and Property Documents. The Property Documents; all keys to the Property or any portion thereof will be retained by the Manager on behalf of Buyer, pursuant to the Management Agreement.

          M. Tenant Estoppels. Seller shall request that each Tenant deliver to Seller a Tenant Estoppel. As a condition precedent to Buyer’s obligation to consummate the Transaction, at or prior to Closing Buyer must receive Tenant Estoppels or Seller Estoppels for all Leases. Notwithstanding the foregoing, Seller shall not have any obligation to incur expenditures in order to obtain such Tenant Estoppels other than expenditures required in order to comply with the terms of the Leases. To the extent that any such estoppel certificate is received by Buyer after the Due Diligence Deadline, such estoppel certificate shall not disclose any information or facts that differ in any material respect from the information or facts that Buyer knows about or is deemed to know about prior to the Due Diligence Deadline. Seller shall deliver to Buyer at Closing, Seller Estoppels with respect to all Leases for which it does not deliver a Tenant Estoppel.

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          N. Management Agreement. The Management Agreement attached hereto as Exhibit P.

          O. Transfer of Bonds. Four (4) duly executed counterparts of the Transfer of Bonds in the form attached hereto as Exhibit U (the “Transfer of Bonds”), whereby Six Continents Hotels, Inc. shall transfer the Bond to Buyer. The newly issued bond shall be in the form attached hereto as Exhibit U-1.

          P. Assignment and Assumption and Release Agreement. In the event an Assignment and Assumption of Lease is delivered, four (4) duly executed counterparts of the Assignment and Assumption and Release Agreement in the form attached hereto as Exhibit L-1.

          Q. Georgia Withholding Certificate. A Seller’s Affidavit of Residence in the form of Exhibit X attached hereto and incorporated herein by this reference.

          R. Affidavit Regarding Brokers. An Affidavit Regarding Brokers in the form of Exhibit W-1 attached hereto and incorporated herein by this reference.

          S. Broker Lien Waiver. A Broker Lien Waiver in the form of Exhibit W-3 attached hereto and incorporated herein by this reference signed by Seller’s Broker.

          T. Other Instruments. Such other instruments or documents as may be reasonably requested by Buyer or the Title Company, or reasonably necessary, to effect or carry out the purposes of this Agreement, subject to Seller’s prior approval thereof, which approval shall not be unreasonably withheld or delayed.

          6.3 Buyer’s Deliveries. At the Closing, Buyer shall deliver or cause to be delivered to Seller the following:

          A. Net Purchase Price. The net Purchase Price due at Closing under this Agreement.

          B. As Is Agreement. The As Is Agreement of Buyer in the form of Exhibit L attached hereto and incorporated herein by this reference.

          C. Closing Document Counterparts. Executed counterparts of any of the Closing Documents described in Paragraph 6.2 which are to be signed by Buyer.

          D. Investment Letter. Four (4) duly executed counterparts of the Investment Letter in the form and substance attached hereto as Exhibit V.

          E. Certificate Designating Authorized Lessee Representatives. In the event an Assignment and Assumption of Lease is delivered, a duly authorized Certificate Designating Authorized Lessee Representatives in the form attached hereto as Exhibit B-2.

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          F. Affidavit Regarding Brokers. An Affidavit Regarding Brokers in the form of Exhibit W-2 attached hereto and incorporated herein by this reference.

          G. Broker Lien Waiver. A Broker Lien Waiver in the form of Exhibit W-3 attached hereto and incorporated herein by this reference signed by Buyer’s Broker.

          H. Initial Working Capital Deposit & Management Agreement Conditions. On the Closing Date, Buyer shall deposit $422,000.00 of Initial Working Capital (as defined in the Management Agreement) into the Hotel accounts and shall comply with all other conditions and requirements of the Management Agreement (including without limitation, all insurance requirements).

          I. Other Instruments. Such other funds, instruments or documents as may be reasonably requested by Seller or the Title Company, or reasonably necessary, to effect or carry out the purposes of this Agreement, subject to Buyer’s prior approval thereof, which approval shall not be unreasonably withheld or delayed.

          6.4 Tax-Deferred Exchange of Property. Seller desires, and Buyer is willing, to effectuate the sale of the Real Property by means of an exchange of “like-kind” property which will qualify as such under § 1031 of the Internal Revenue Code and all regulations issued thereunder, provided Buyer incurs no additional expenses or liability. In such event, notwithstanding any provisions hereof to the contrary, Seller shall have the right to elect to assign all of Seller’s rights and obligations under this Agreement to a third party intermediary as part of and in furtherance of such a tax deferred exchange of properties, which assignment may reserve the right of Seller to directly transfer title to the Real Property to Buyer in order to eliminate duplicative documentation expenses and transfer taxes. Buyer further agrees to assist and cooperate in such exchange and to execute any and all documents as are reasonably necessary in connection with such exchange, provided that such assistance and cooperation is at no cost, expense or liability to Buyer. It is understood and agreed that as part of such exchange, Buyer shall not be obligated to acquire title to or convey any property (other than the Real Property) as part of such exchange. This Agreement is neither subject to nor contingent upon Seller’s ability to effectuate a like-kind exchange. In the event any exchange contemplated by Seller should fail to occur, for whatever reason, the sale of the Property shall none the less be consummated as provided herein.

     7. Prorations, Credits and Closing Costs.

          7.1 Proration Items. Except as otherwise noted, in each such proration set forth below, the portion thereof allocable to periods beginning as of the Closing Proration Time shall be credited to Buyer, or charged to Buyer, as applicable, and the portion thereof allocable to periods ending as of the Closing Proration Time shall be credited to Seller, or charged to Seller, as applicable, all of which prorations shall be made at Closing or, in the case of allocations to be made after Closing, upon receipt of such payments or payment of such expenses. The following items shall be prorated between Buyer and Seller or credited to Buyer or Seller:

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          A. Real Estate Taxes and Assessments. All ad valorem real estate and personal property taxes, and any sales taxes with respect to Rental Payments, with respect to the Property for the Closing Tax Year (regardless of the year for which such taxes are assessed) shall be prorated as of the Closing Proration Time. Seller shall pay all installments of special assessments due and payable prior to the Closing Date and Buyer shall pay all installments of special assessments due and payable on and after the Closing Date; provided, however, that Seller shall not be required by the foregoing to pay any installments of special assessments which have not been confirmed or which relate to projects that have not been completed on the Effective Date. If tax bills for the Closing Tax Year are not available on the Closing Date, taxes shall be prorated at Closing based upon the tax bills for the previous Tax Year, or, if available, based upon the current assessed valuation and current millage rates, and in such event Seller and Buyer shall reprorate the taxes as actual or final tax bills for the current year are available.

          B. Hotel Revenues.

     (i) Guest Ledger Receivables. Seller shall retain all rights to all Guest Ledger Receivables for all room nights up to and including the room night immediately prior to the night when the Closing Proration Time occurs, and Buyer shall be entitled to the amounts of Guest Ledger Receivables for the room nights after the Closing Proration Time. Seller and Buyer shall each receive a credit of fifty percent (50%) of Guest Ledger Receivables for the room night when the Closing Proration Time occurs. Seller shall receive the income from all restaurant and bar facilities located on the Real Property through the Closing Proration Time and Buyer shall receive such income thereafter. Notwithstanding the foregoing, after Closing, Manager shall be entitled to continue to collect all Guest Ledger Receivables owed to Seller hereunder and immediately disburse such funds to Seller. Any Guest Ledger Receivables amounts received by Manager, that are not designated as payment for any specific time period shall be evenly divided between Buyer and Seller with one half of such amount deemed to apply to pay the Guest Ledger Receivables that accrued after the Closing Proration Time for the benefit of Buyer and one half of such amount deemed to apply to pay Guest Ledger Receivables that accrued prior to the Closing Proration Time for the benefit of Seller. After Buyer or Seller, as applicable, has received full credit for the Accounts Receivables owed to such party, the remaining portion of such Accounts Receivable shall be credited to the other party.

     (ii) Booking Deposits. Seller shall retain all advanced payments and deposits for all Bookings, and Buyer shall receive a credit at Closing for advance payments and deposits, if any, under Bookings to the extent the Bookings relate to a period after the Closing Proration Time. Buyer shall assume and honor for its account all Bookings relating to dates after the Closing Proration Time provided that Seller provides a written account to Buyer of all such Bookings at the Closing.

     (iii) Vending Machines. Vending machine and coin-operated amusement game monies will be removed by Seller as of the Closing Proration Time for the benefit of Seller.

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     (iv) Working Capital, Hotel Accounts & Petty Cash. Seller shall receive a credit at Closing for all working capital and petty cash funds as well as any amounts in the Hotel accounts (if not otherwise distributed by Seller prior to Closing) and cash in the Hotel’s house banks at 100% of face value at the Closing Proration Time.

     (v) Accounts Receivable. Seller shall retain all rights to all Accounts Receivable accrued through the Closing Proration Time and Buyer will be entitled to all Accounts Receivables that accrue after the Closing Proration Time. Notwithstanding anything herein to the contrary, Manager shall be entitled to continue to collect all Accounts Receivables owed to Seller hereunder and immediately disburse such funds to Seller. Any Accounts Receivable amounts received by Manager that are not designated as payment for any specific time period shall be evenly divided between Buyer and Seller with one half of such amount deemed to apply to pay the Accounts Receivables that accrued after the Closing Proration Time for the benefit Buyer and one half of such amount deemed to apply to pay the Accounts Receivables that accrued prior to the Closing Proration Time for the benefit of Seller. After Buyer or Seller, as applicable, has received full credit for the Accounts Receivables owed to such party, the remaining portion of such Accounts Receivable shall be credited to the other party.

          C. Rental Payments. All Rental Payments received by Seller prior to Closing shall be prorated as of the Closing Proration Time. All rent and other charges payable pursuant to any ground lease affecting the Property shall be prorated as of the Closing Proration Time. Any Rental Payments received after Closing by Seller or its agents shall be promptly endorsed to Buyer by the payee thereof and delivered to Buyer; if any of such Rental Payments belong also in part to Seller, upon such endorsement, deposit and receipt of collected funds, the part thereof belonging to Seller shall be promptly paid to Seller and the balance shall be retained by Buyer.

     (i) Percentage Rents. To the extent percentage rents apply to any of the Leases, with respect to percentage rent due from any Tenant, notwithstanding the foregoing, Buyer and Seller agree that at Closing estimated percentage rent shall be prorated for the calendar year in which the Closing occurs (even though the same may not have been collected as of the Closing) based upon the amount of percentage rent due from such Tenant for the calendar year immediately prior to the calendar year in which the Closing occurs. For proration of percentage rents, the amount attributable to the period prior to the Closing Proration Time shall be equal to (a) the aggregate amount of such percentage rents actually collected for the calendar year in which the Closing occurs multiplied by (b) a fraction, the numerator of which shall be the number of days prior to the Closing Proration Time that the applicable Tenant leases space at the Property during the calendar year in which the Closing occurs and the denominator of which shall be 365.

          D. Security Deposits/Advance Rent. Buyer shall receive a credit against the Purchase Price at Closing for all cash Tenant Deposits then outstanding under the Leases. To the extent applicable, with respect to any Tenant Deposits which are letters of credit, Seller shall, if the same may be assigned or quitclaimed by Seller, deliver to Buyer at the Closing such original

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letters of credit, properly endorsed and acknowledged by the issuer thereof in the name of Buyer as the named beneficiary thereunder; to the extent such is not available at Closing, Seller shall: (i) deliver to Buyer at the Closing such original letters of credit, (ii) execute and deliver such other instruments as the issuers of such letters of credit shall reasonably require, including, as applicable, pending acceptance of the transfer of such letter of credit, acting as the indemnified agent of Buyer in connection with any draws thereunder, and (iii) cooperate with Buyer to change the named beneficiary under such letters of credit to Buyer so long as Seller does not incur any additional liability or expense in connection therewith.

          E. Utility Expenses and Deposits. Water, sewer, gas, waste fee, fire protection, electric and all other utility expenses and payments due or made with respect to the Property shall be prorated as of the Closing Proration Time (except for those utility charges and operating expenses payable by tenants in accordance with the Leases), based upon the utility bills for the preceding period, or, at Seller’s option, the meters with respect thereto read as of Closing. Seller shall assign and/or transfer all utility deposits, bonds, letters of credit or other security to Buyer and receive a credit therefor at Closing; Buyer shall notify all utilities, governmental agencies, suppliers and others providing services to the Real Property of the prospective change in ownership and operation of the Hotel. Notwithstanding the foregoing, at Seller’s election, any utility deposit, bond, letter of credit or other security may be released directly to Seller.

          F. Inventories and Hotel Consumables. Seller shall sell to Buyer, and Buyer shall purchase from Seller (the amounts of which are included in the Purchase Price for the Property), all of the food and beverages (including alcoholic and non-alcoholic to the extent permitted by Law), engineering, maintenance, and housekeeping supplies (including soap and matches), stationery, printing and other supplies of all kinds (collectively, the “Consumables”) as well as all other Hotel Inventories owned by Seller, located on the Property and used in connection with the ownership, use, operation and maintenance of the Hotel as of the Closing Date.

          G. Other Operating Expenses. All other operating expenses of the Property, including payments due or owing under any Contracts assumed by Buyer at Closing and any fees as to which periodic payments are made for applicable licenses and permits, if any, shall be prorated as of the Closing Proration Time, except that no insurance policies shall be assumed as Contracts and no insurance premiums shall be prorated, and Seller shall be entitled to any refunds of any premiums for such policies. Seller shall receive a credit at Closing for all pre-paid operating expenses applicable to periods after the Closing Proration Time. Seller shall assign and/or transfer all Contract deposits or other security, if any, to Buyer and receive a credit therefor at Closing; Buyer shall notify all such Contract parties of the prospective change in ownership and operation of the Hotel.

          H. Reimbursable Lease Expenses. At Closing, Buyer shall reimburse Seller for any and all Reimbursable Lease Expenses to the extent that the same have been paid by Seller prior to Closing. In addition, at Closing, Buyer shall assume Seller’s obligations to pay, when due (whether on a stated due date or accelerated) any Reimbursable Lease Expenses unpaid as of the Closing, and Buyer hereby agrees to indemnify and hold Seller harmless from

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and against any and all Liabilities (including reasonable attorneys’ fees, expenses and disbursements) with respect to such Reimbursable Lease Expenses which remain unpaid for any reason at the time of Closing, which obligations of Buyer shall survive the Closing and shall not be merged therein. Each party shall make available to the other all records, bills, vouchers and other data in such party’s control verifying Reimbursable Lease Expenses and the payment thereof.

          7.2 Closing Statement and Schedules. On or before five (5) days prior to the Closing Date, Seller shall deliver to Buyer a current schedule of the items and amounts to be prorated or credited as set forth in this Paragraph 7, and a draft closing statement for the Transaction.

          7.3 Reproration after Closing. The provisions of Paragraph 7 shall survive the Closing. If the actual amounts of any of the aforesaid proration items are unavailable as of the Closing Date, then such proration shall be made on the basis of an amount reasonably estimated by Buyer and Seller at Closing and Buyer and Seller shall thereupon reprorate such items at such times as the exact amounts for such proration items become available (but such prorations will be made within forty-five (45) days after the Closing Date or upon such later date as the exact amounts for such proration become available); provided however, that no reproration adjustment shall be made if the net amount due is $1,000 or less, and provided that any request is delivered to the party from whom payment is requested on or before one (1) year after Closing. In order to enable Seller to determine whether any such delayed adjustment is necessary, Buyer shall authorize Manager to provide to Seller current operating and financial statements for the Property no later than one (1) month after Closing.

          7.4 Seller’s Closing Costs. Seller shall pay the following: (a) the fees and expenses of Seller’s attorneys, (b) the commission due any Broker retained by Seller, (c) the Georgia real estate transfer taxes imposed by virtue of the Transaction, and (d) one-half of all escrow agent fees (if any are charged in connection with this Transaction).

          7.5 Buyer’s Closing Costs. Buyer shall pay the following: (a) the costs of Buyer’s Due Diligence, (b) the fees and expenses of Buyer’s attorneys, (c) all lenders’ fees related to any financing to be obtained by Buyer; (d) one-half of all escrow agent fees (if any are charged in connection with this Transaction), (e) the costs, expenses and premiums for the Title Commitment and Title Policy (including all examinations and reports in connection therewith, and all endorsements and reinsurance required by Buyer), (f) the costs of the Survey, and (g) all recording charges due on recordation of any Closing Documents and (h) all costs incurred in connection with the transfer and/or assignment of the Bonds, Master Lease, and Guaranty.

     8. Representations and Warranties.

          8.1 Seller’s Representations and Warranties. Seller, as of the date of the execution of this Agreement by Seller, represents and warrants to Buyer, and covenants with Buyer, subject to the matters on the Representation Exception Schedule, as follows:

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          A. Organization, Power and Authority. Seller is duly organized, validly existing and in good standing under the Laws of the State of its organization or incorporation; is, to the extent required by Law, duly qualified to do business in the State in which the Property is located; and has all necessary power to execute and deliver this Agreement and perform all its obligations hereunder. Seller has the full power and authority to enter into and perform this Agreement and the execution, delivery and performance of this Agreement by such parties (i) has been duly and validly authorized by all necessary action on the part of such parties, (ii) does not conflict with or result in a violation of the organizational documents of such parties (including, as applicable, its articles of incorporation, charter or by-laws, its partnership agreement or its operating agreement), or any judgment, order or decree of any court or arbiter in any proceeding to which any such party is a party, and (iii) except as to the ROFO Agreement and the Bond Documents, does not conflict with or constitute a material breach of, or constitute a material default under, any contract, agreement or other instrument by which any such party is bound or to which it is a party.

          B. Title to Real and Personal Property. Seller has not entered into any currently effective agreement to sell or dispose of all or any portion of its interest in and to the Real Property. Except as to Personal Property leased to Seller pursuant to equipment leases or similar agreements, Seller has legal title to the Personal Property to be transferred to Buyer and the Personal Property to be transferred to Buyer is free and clear of liens, security interests and other encumbrances.

          C. Leases.

     (i) Tenants. As of the Effective Date, the only tenants under leases at the Property are the tenants listed in Exhibit M attached hereto and incorporated herein by this reference; provided however, Seller does not represent or warrant that any particular Lease or Leases will be in force or effect on the Closing Date or that the Tenants will have performed their obligations thereunder.

     (ii) Lease Defaults. Except for defaults cured on or before the date hereof, Seller has neither (1) received any written notice from any tenant of the Property asserting or alleging that Seller is in default under such tenant’s Lease, nor (2) sent to any tenant of the Property any written notice alleging or asserting that such tenant is in default under such tenant’s Lease.

     (iii) Title. No Rents or Leases have been assigned, transferred or hypothecated by Seller, except by virtue of mortgage loan instruments which shall be paid in full by Seller at or prior to Closing, and except as set forth in the list of Contracts attached hereto with respect to any surviving leasing commission agreements with respect to the Property.

     (iv) Leases. Seller has made available to Buyer true and correct copies of all of the Leases.

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          D. Contracts. Subject to the assignment provisions in Section 8.6(B), except for (i) the Contracts listed in Exhibit N attached hereto, (ii) the Leases, and (iii) the Permitted Title Exceptions, there are no contracts, subcontracts or agreements affecting the Property that will be binding upon Buyer after the Closing. Seller has not received any written notice of default from any parties to the Contracts that has not been cured by Seller on or before the date hereof. Seller has made available to Buyer true and correct copies of all of the Contracts.

          E. Litigation Proceedings. Except as disclosed on Exhibit J, there is no current or pending litigation against Seller (including, but not limited to, condemnation proceedings against the Property) of which Seller has received written notice which may affect the Property in any manner. No petition has been filed by Seller, nor has Seller received written notice of any petition filed against Seller, under the Federal Bankruptcy Code or any similar state or federal Law.

          F. Bond Documents. Except for defaults cured on or before the date hereof, Seller has not received any written notice under any of the following documents asserting or alleging that Seller is in default under such document: (i) the Master Lease, (ii) that certain Deed to Secure Debt and Security Agreement dated December 1, 2002 (the “Security Deed”), by the Development Authority in favor of U.S. Bank national association (as successor to SunTrust Bank), as trustee (the “Trustee”), (iii) that certain Bond Purchase Agreement dated December 1, 2002, by and between the Development Authority and Six Continents Hotels, Inc., a Delaware corporation (the “Bond Agreement”), (iv) that certain Guaranty Agreement dated December 1, 2002, by Seller in favor of the Trustee (the “Guaranty”), (v) that certain Taxable Economic Development Revenue Bond (IHC Buckhead, LLC Project), Series 2002 issued by the Development Authority in the principal amount of $105,000,000.00 (the “Bond”), (vi) that certain Documents Escrow Agreement dated December 1, 2002, by and between Development Authority, Seller and Trustee (the “Documents Escrow Agreement”), and (vii) that certain Bond Resolution adopted by the Development Authority on December 19, 2002 (the “Bond Resolution”, and together with the Master Lease, Security Deed, Bond Agreement, Guaranty, the Bond, and the Documents Escrow Agreement, collectively, the “Bond Documents”). Seller has made available to Buyer true and correct copies of all of the Bond Documents. Seller has paid the Development Authority any and all fees and expenses that are currently due and payable under the Bond Documents and there are no claims subject to the indemnification provisions of the Master Lease.

          G. Other Property Conditions.

     (i) Land Use Regulations. Except for violations that have been cured, Seller has not received any written notice from any governmental authority with respect to the violation of any zoning law or ordinance applicable to the Property.

     (ii) Insurance Compliance. Except for violations that have been cured, Seller has not received any written notice from any insurance company that carries any of Seller’s insurance with respect to the Property that any portion of the Property violates any building, fire, or health code, statute, ordinance, rule or regulation applicable to the Property.

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     (iii) Taxes and Assessments. Except as disclosed in the Title Commitment, Seller has not received any written notice of any proposed reassessments of the Property from the local taxing agencies that would, in the reasonable judgment of Seller, increase real property taxes or assessments against the Property.

     (iv) Special Assessments and Exactions. Except as disclosed in the Title Commitment, Seller has not received any written notice from any governmental agency that any special assessments are pending, noted or levied against the Property.

          H. Condemnation. Seller has not received any written notice advising it of any pending or threatened Condemnation Proceeding or other governmental taking proceedings affecting all or any part of the Property.

          I. Compliance.

          (i) No Violations . Seller has not received any written notice of any claims, complaints, notices, correspondence or written notice of any violation of any Law with respect to the Property or the Land which has not been cured or dismissed.

          (ii) Hazardous Materials . Seller has not received any written notice of any claims, complaints, notices, correspondence or requests for information from any governmental authority with respect to any violation or alleged violation of any Laws, any releases of Hazardous Materials or with respect to any corrective or remedial action for or cleanup of the Property or the Land any portion thereof.

          (iii) No Transport . To Seller’s Knowledge, Seller has not transported, disposed of or treated, or arranged for the transportation, disposal or treatment of, any Hazardous Materials to or from the Property or the Land in violation of Laws.

          (iv) No Release . To Seller’s Knowledge, no written notification of a release or discharge of a Hazardous Materials in violation of any Laws has been filed by or on behalf of, or received by, Seller with respect to the Property or the Land.

          (v) No Underground Storage Tanks . To Seller’s Knowledge, there are no underground storage tanks at, in, under or about the Property or Land and Seller has not removed or installed any underground storage from the Property or the Land.

          (vi) No Asbestos . To Seller’s Knowledge, no asbestos, polychlorinated biphenyls or urea formaldehyde is or has been present at the Property or the Land in amounts that violate any Laws, nor have any of the foregoing been removed by Seller from the Property or the Land in violation of any Laws.

          J. Hotel Employee Matters. As of the Effective Date, Seller’s affiliate, Intercontinental Hotels Group Resources, Inc. (“IHG Management”), is the employer of the Hotel Employees. Seller shall retain all liabilities and obligations in connection with (A) any

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employment claims, charges or grievances by any Employees to the extent resulting from events or occurrences prior to the Closing Date. There are no (i) collective bargaining agreements with any labor union with respect to the Hotel Employees or the Property or the Hotel, (ii) written employment or compensation agreements with any of the Employees (other than written employment offers made by Seller, Manager, IHG Management or an Affiliate of Manager that (x) provide for at-will employment with no more than two weeks’ notice of termination required and (y) do not include any other binding terms or conditions of employment except for starting compensation terms) (“Employment Agreements”).

          K. Financial Information. To Seller’s Knowledge, all of Seller’s financial information provided to Buyer is correct and complete in all material respects and presents accurately the results of the operations of the Property for the periods indicated.

          L Independent Audit. From and after the Effective Date until two (2) years after the Closing, Seller shall make the books and records for the years ended December 31, 2009, 2008 and 2007 of the Property/Seller available to Buyer and a nationally-recognized, independent accountant, mutually acceptable to both Buyer and Seller (the “Independent Auditor”) for inspection, copying and audit by the Independent Auditor at the expense of the Buyer. Buyer shall reimburse Seller, and Seller’s affiliates for all costs and expenses reasonably associated with complying with this Paragraph. From and after the Effective Date until two (2) years after the Closing, upon request, but not more frequently than annually, Seller will provide the Independent Auditor with a management representation letter substantially in the form attached hereto as Exhibit O for the years ending December 31, 2007, 2008 and 2009. Seller shall provide Buyer with copies of, or access to, such factual information, accounting records and financial information as may be reasonably requested by Buyer or its auditors, and in the possession or control of Seller, to enable Buyer or its affiliates to file reports or registration statements in compliance with the rules and regulations of the SEC. This Section 8.1(L) shall survive the Closing for two (2) years.

          M. Liquor License. To Seller’s Knowledge, the existing liquor licenses for the Hotel is in full force and effect.

          N. Foreign Person. Seller is a “United States person” (as defined in Section 7701(a)(30)(B) or (C) of the Code) for the purposes of the provisions of Section 1445(a) of the Code.

          O. Patriot Act. Neither Seller nor any beneficial owner of Seller: (i) is listed on the Specially Designated Nationals and Blocked Persons List maintained by the Office of Foreign Assets Control, Department of the Treasury (“OFAC”) pursuant to Executive Order No. 133224, 66 Fed. Reg. 49079 (September 25, 2001) (the “Order”) and/or on any other list of terrorists or terrorist organizations maintained pursuant to any of the rules and regulations of OFAC or pursuant to any other applicable orders (such lists are collectively referred to as the “Lists”); (ii) is a person or entity who has been determined by competent authority to be subject to the prohibitions contained in the Orders; or (iii) is owned or controlled by, or acts for or on behalf of, any person or entity on the Lists or any other person or entity who has been determined by competent authority to be subject to the prohibitions contained in the Order.

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Notwithstanding the foregoing, this representation does not apply to, or address, any shareholders of the publicly traded parent of Seller.

          8.2 Seller’s Warranties Deemed Modified. Because Buyer’s primary reliance on the status of the matters addressed by Seller’s Warranties is Buyer’s own Due Diligence, to the extent that Buyer (i) has actual knowledge of, or (ii) has received information in writing or in Buyer’s Diligence Reports (whether such information is actually know to the Buyer or not) prior to the Due Diligence Deadline indicating that Seller’s Warranties are inaccurate, untrue or incorrect in any way, such Seller’s Warranties shall be deemed modified to reflect Buyer’s knowledge or deemed knowledge, as the case may be.

          8.3 Claims of Breach of Warranty Prior To Closing. If, at or prior to the Closing, Seller obtains actual knowledge that any Seller’s Warranty is untrue, inaccurate or incorrect in any material respect, Seller shall give Buyer written notice thereof within five (5) Business Days of obtaining such knowledge (but, in any event, prior to the Closing). After the Due Diligence Deadline but prior to the Closing, if Buyer or any Buyer’s Representative obtains actual knowledge that any Seller’s Warranty is untrue, inaccurate or incorrect in any material respect, Buyer shall give Seller written notice thereof within five (5) Business Days of obtaining such knowledge (but, in any event, prior to the Closing). In either such event, Seller shall have the right to cure such misrepresentation or breach and shall be entitled to a reasonable adjournment of the Closing (not to exceed fifteen (15) days) to attempt such cure. If Buyer fails to notify Seller within five (5) Business Days of obtaining knowledge that any Seller’s Warranty is untrue, inaccurate or incorrect, then Buyer shall be deemed to waive such misrepresentation or breach of warranty. If any Seller’s Warranty is untrue, inaccurate or incorrect in any material respect as of the date made, and Seller is unable to so cure such misrepresentation or breach, then Buyer, as its sole remedy shall elect either (a) to waive such misrepresentation or breach and consummate the Transaction without any reduction of or credit against the Purchase Price, or (b) to Terminate this Agreement by written notice given to Seller on the Closing Date, in which event any Deposit shall be returned to Buyer. If any of Seller’s Warranties are untrue, inaccurate or incorrect but are not, in the aggregate, untrue, inaccurate or incorrect in any material respect, Buyer shall be deemed to waive such misrepresentation or breach of warranty, and Buyer shall be required to consummate the Transaction without any reduction of or credit against the Purchase Price. The untruth, inaccuracy or incorrectness of Seller’s Warranties shall be deemed material only if Buyer’s aggregate damages resulting from the untruth, inaccuracy or incorrectness of Seller’s Warranties are reasonably estimated to exceed $100,000.00.

          8.4 Survival and Limits On Buyer’s Claims. Seller’s Warranties shall survive the Closing and not be merged therein for a period of three hundred sixty-five (365) days and Seller shall only be liable to Buyer hereunder for a breach of Seller’s Warranties made herein or in any of the documents executed by Seller at the Closing with respect to which a claim is made by Buyer against Seller in writing on or before three hundred sixty-five (365) days after the date of the Closing. Anything in this Agreement to the contrary notwithstanding, the maximum aggregate liability of Seller for breaches of Seller’s Warranties shall be subject to Seller’s Liability Limit. Notwithstanding the foregoing, however, if the Closing occurs, Buyer hereby expressly waives, relinquishes and releases any right or remedy available to it at law, in equity, under this Agreement or otherwise to make a claim against Seller for damages that Buyer

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may incur, or to rescind this Agreement and the Transaction, as the result of any of Seller’s Warranties being untrue, inaccurate or incorrect if (a) Buyer knew or is deemed to know that such representation or warranty was untrue, inaccurate or incorrect at the time of the Closing (Buyer’s remedy being as set forth in Paragraph 8.3), or (b) Buyer’s damages as a result of such representations or warranties being untrue, inaccurate or incorrect are reasonably estimated to aggregate less than $100,000.00.

          8.5 Buyer’s Representations and Warranties. Buyer, as of the date of the execution of this Agreement by Buyer, represents and warrants to Seller as follows, and as a condition precedent to Seller’s obligation to consummate the Transaction at Closing pursuant to the terms of this Agreement, the following representations of Buyer shall be true and correct in all material respects as of the Closing Date:

          A. Organization, Power and Authority. Buyer is a Delaware limited liability company duly organized, validly existing and in good standing under the Laws of the state of its organization, is, or will by the Closing Date be, to the extent required by Law, duly qualified to do business in the State in which the Property is located and has all necessary power to execute and deliver this Agreement and perform all its obligations hereunder. Buyer has the full power and authority to enter into this Agreement and the execution and delivery of this Agreement by Buyer (i) has been duly and validly authorized by all necessary action on the part of Buyer, (ii) to the knowledge of the officer of Buyer signing this Agreement, does not conflict with or result in a violation of Buyer’s Articles of Incorporation or By-Laws or any judgment, order or decree of any court or arbiter in any proceeding to which Buyer is a party, and (iii) to the knowledge of the officer of Buyer signing this Agreement, does not conflict with or constitute a material breach of, or constitute a material default under, any contract, agreement or other instrument by which Buyer is bound or to which it is a party. There are no lawsuits filed or served against Buyer or, to Buyer’s knowledge, otherwise pending or threatened the outcome of which could adversely affect Buyer’s ability to purchase the Hotel or otherwise perform its obligations under this Agreement.

          B. No Bankruptcy. Buyer has not (A) commenced a voluntary case, or had entered against it a petition, for relief under any federal bankruptcy act or any similar petition, order or decree under any federal or state Law relative to bankruptcy, insolvency or other relief for debtors, (B) caused, suffered or consented to the appointment of a receiver, trustee, administrator, conservator, liquidator or similar official in any federal, state or foreign judicial or non-judicial proceeding, to hold, administer and/or liquidate all or substantially all of its assets, or (C) made an assignment for the benefit of creditors.

          C. Sophisticated Buyer. Buyer is an experienced investor that specializes in the investment in and ownership and operation of hotel properties in geographically diverse markets. As such, it is a sophisticated real estate owner, investor and manager with particular experience in the acquisition, ownership and operation of hotels similar to the Hotel. Buyer warrants and represents that it has the ability through its own employees, or through agents, independent contractors, consultants or other experts with whom it has a relationship, to evaluate fully the investment characteristics of the Hotel and to assess fully all issues pertaining to title to the Real Property, the value of the Property, the rights and liabilities of Buyer as the successor to

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Seller under any management agreements, the past performance of the Hotel, the projected performance of the Hotel, the structural integrity and soundness of all improvements and structures located on the Real Property, the environmental condition of the Real Property, and the compliance of the Hotel and the operation and management thereof with all Laws. Accordingly, Buyer warrants and represents that, except for the representations and warranties expressly made by Seller in this Agreement, Buyer has not and will not rely upon any warranty, representation, statement of fact, or other information made by or furnished by or on behalf of Seller or any of their affiliates, but, except for the representation, and warranties contained herein, is relying solely on its own investigations, assessment, evaluations, and those of its own employees, agents, independent contractors, consultants, and other experts with whom it is dealing in connection with this Transaction.

          D. Reimbursement of Rebates. Buyer acknowledges that Seller may participate in various incentive programs with various suppliers for the Property whereby rebates are earned by Seller for Seller’s purchase of designated goods and services from such suppliers. Buyer acknowledges that Seller may have earned substantial credits toward a rebate prior to Closing and that after Closing, Buyer may benefit from credits earned by Seller prior to Closing. Buyer therefore agrees to notify Seller of any rebate related to the Property received by, or credited to, Buyer within one (1) year of the Closing Date and to cooperate with Seller’s inquires into the status of any such rebates. Buyer and Seller shall cooperate in good faith to determine which, if any, portion of such rebate is attributable to Seller’s activities prior to the Closing Date, whereupon Buyer shall promptly reimburse Seller for Seller’s share of each rebate. If the parties are unable to determine Seller’s precise share of a rebate, they shall work in good faith to equitably prorate the rebate into Buyer’s and Seller’s shares. Buyer shall make available to Seller all records and other data verifying each rebate and the payment thereof. The provisions of Section shall survive the Closing.

          8.6 Buyer’s Assumption of Seller Obligations.

          A. Wages and Salaries. IHG Management (as defined in Section 8.1 J) will continue to employ all Hotel Employees at the Hotel with Buyer having the responsibilities relative to the employment of and services of these employees as set forth in the Management Agreement. Notwithstanding the foregoing, nothing herein shall be deemed to limit Manager’s right to terminate or reassign any Hotel Employee pursuant to its authority under the Management Agreement.

          B. Contracts and Leases. At the Closing, Seller shall assign to Buyer, pursuant to the terms of the Assignment and Assumption of Contracts, Warranties and Other Interests (attached hereto as Exhibit E) and Assignment and Assumption of Leases (attached hereto as Exhibit D), all right, title and interest of Seller in and to the Contracts and Leases which, by their terms, are assignable without consent. If a Contract or Lease requires the consent of the other contracting party before such Contract or Lease may be assigned, Buyer authorizes Seller to request such consent and shall reasonably cooperate with Seller in obtaining such consent. If such consent is granted, the applicable Contract or Lease shall be assigned to Buyer in the manner set forth above. Buyer shall assume all of the obligations of Seller under the Contracts and Leases arising from and after the Closing Date. Buyer shall be responsible to pay

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all assignment, termination and other fees required to effectuate the provisions of this Paragraph. If any Contract or Lease cannot, by its terms or otherwise (including Seller’s inability to obtain a consent to the assignment), be assigned to Buyer, then Buyer authorizes Seller to facilitate negotiations of a new direct Contract or Lease between Buyer and the counter-party of the necessary non-assignable Contract or Lease on equivalent terms with the original Contract or Lease and Buyer agrees to execute the new Contract or Lease and otherwise cooperate with Seller to carry out the intent of this Paragraph. Notwithstanding the foregoing, nothing herein shall be deemed to limit Buyer’s right to object to any Contract or Lease as part of its review and termination rights in Section 4.4. The provisions of this Section shall survive the Closing.

          C. Guest Baggage. Buyer assumes all liability for all baggage of Hotel guests, subject to the Management Agreement, immediately after the Closing Date. Buyer hereby indemnifies Seller against all claims, losses or liabilities with respect to such baggage arising out of the acts or omissions of Buyer after the Closing Date. Seller hereby indemnifies Buyer against all claims, losses or liabilities with respect to such baggage arising out of the acts or omissions of Seller prior to the Closing Date. The provisions of this Section shall survive the Closing.

          D. Safe Deposit Boxes. Manager shall retain and control all keys to any safe deposit boxes at the Hotel in accordance with the Management Agreement. Any property in safe deposit boxes as of the Closing Date (whether or not so recorded) shall be the responsibility of Buyer. The obligations of Buyer and Seller under this Section shall survive the Closing.

          E. Bond Documents. Buyer shall (i) be responsible, at its sole cost and expense, to obtain all necessary consents, authorizations and approvals required in order to assign and/or transfer the tax abatement benefits and burdens to Buyer, including, but not limited to assignment of the Guaranty, Master Lease and other Bond Documents from Seller or Six Continents Hotels, Inc., as applicable, to Buyer (ii) execute any documents at Closing required to assign and/or transfer the Bond Documents benefits and burdens to Buyer and cause Seller to be released from all liability to the Development Authority and Buyer pursuant to the Bond Documents, including without limitation, the Guaranty; and (iii) have all such consents, authorizations and approvals required for such assignment to be obtained, with evidence thereof delivered to Seller at least three (3) Business Days prior to the Closing Deadline (the “Bond Assignment Deadline”). Seller and Six Continents Hotels, Inc. agree to reasonably cooperate with Buyer, at no cost to Seller, and to execute any and all documents reasonably requested in furtherance of the foregoing. If Buyer fails to achieve the following on or before the Bond Assignment Deadline (a) obtain any necessary consents, authorizations or approvals required in order to assign the Bond Documents from Seller or Six Continents Hotels, Inc., as applicable, to Buyer, (b) execute any documents required to assign and/or transfer the Bond Documents benefits and burdens to Buyer, (c) cause the Development Authority to release Seller from all liability under the Bond Documents, including, but not limited to the Guaranty, or (d) deliver evidence of the foregoing (a) through (b) to Seller, then, Seller shall have the right, in its discretion, to (i) unwind the tax abatement structure by causing the Development Authority to convey the fee simple title to the Real Property directly to Seller and terminating all Bond Documents and the related tax abatement, (ii) extend the Closing Date by the amount of time necessary to accomplish the foregoing (but such extension shall not exceed thirty (30) calendar

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days), (iii) require Buyer to acquire Seller’s fee simple interest in the Real Property, and (iv) require Buyer to pay any additional transfer taxes or other costs associated with the conveyance of the restructured sale of the Real Property.

     9. Casualty and Condemnation. Seller shall maintain the property insurance coverage currently in effect for the Property, or comparable coverage, through the Closing Date. If after the Effective Date and prior to the Closing Date, any portion of the improvements is materially damaged or destroyed by fire or other casualty, or there shall be commenced or instituted against the Property any Condemnation Proceeding, Seller shall promptly give written notice of such event to Buyer, and the following provisions shall apply notwithstanding the contrary terms of any applicable Laws with respect to the subject matter of Paragraph 9:

          9.1 Major Event. If such damage or destruction results in a casualty loss in excess of Five Million and No/100 Dollars ($5,000,000.00), as reasonably determined by Seller, or if such Condemnation Proceeding would result in the taking of a portion of the Property worth in excess of Five Million and No/100 Dollars ($5,000,000.00), then Buyer shall have the right to Terminate this Agreement by written notice to Seller given no later than ten (10) Business Days after the giving of Seller’s notice of such event, in which event any Deposit shall be returned to Buyer, and the Closing Date shall be extended, if necessary, to provide sufficient time for Buyer to make such election. The failure by Buyer to so elect in writing to terminate this Agreement within such period shall be deemed an election not to terminate this Agreement.

          9.2 Closing Despite Casualty/Condemnation. If a casualty or Condemnation Proceeding occurs and Buyer shall not, or has no right to, Terminate this Agreement on account thereof, then at Closing (a) the conveyance of the Property shall be less such portion of the Property so taken by (or, as applicable, shall be subject to) said Condemnation Proceeding, without adjustment of the Purchase Price, (b) Seller shall assign to Buyer (without recourse to Seller) all the rights to all awards or insurance proceeds with respect to such casualty or Condemnation Proceeding (except for business interruption coverage with respect to Rental Payments prior to Closing); (c) Seller shall provide a credit at Closing equal to (i) Seller’s deductible under Seller’s insurance policy, plus all proceeds or awards previously paid to Seller with respect to such casualty or Condemnation Proceeding, less (ii) an amount equal to the sum of (A) the costs, expenses and fees, including reasonable attorneys’ fees, expenses and disbursements, incurred by Seller in connection with such casualty or Condemnation Proceeding, (B) any portion of any Condemnation Proceeding award that is allocable to loss of use of the Property prior to Closing, and the proceeds of any rental loss, business interruption or similar insurance to the extent allocable to the period prior to the Closing Date, and (C) the reasonable and actual costs incurred by Seller in stabilizing and/or repairing the Property following a casualty (and to the extent the sum of the items in (ii) is greater than the items in (i), Buyer shall pay such excess to Seller within five (5) Business Days after receipt of such awards or proceeds after Closing).

     10. Other Conditions to Closing. The obligation of Buyer and Seller to close the Transaction shall be further subject to the satisfaction at or prior to Closing of the conditions precedent set forth in this Paragraph.

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          10.1 Conditions to Buyer’s Obligations. The conditions precedent to Buyer’s obligations at Closing referenced above are as follows, any or all of which may be expressly waived by Buyer in writing, at its sole option:

          A. Representations. Seller’s Warranties, subject to Paragraphs 8.2 and 8.3, shall be true and correct in all material respects on and as of the Closing Date, except as modified in a manner permitted by the Agreement, as if made on and as of such date except to the extent that they expressly relate to an earlier date;

          B. Seller Compliance. Seller shall have performed all of the covenants, undertakings and obligations to be performed or complied with by Seller at or prior to the Closing.

          C. ROFO Compliance. Buyer shall have received satisfactory evidence that Seller has received notice from Hospitality Properties Trust that Hospitality Properties Trust waives its rights under the ROFO Agreement, or Hospitality Properties Trust shall have deemed to have waived such rights.

          D. Liquor License. Alcohol shall be lawfully available in the bars, lounges and other facilities of the Hotel which require a liquor license provided that the Buyer does not prejudice any existing license and satisfies all the requirements of Law necessary to obtain such liquor license and cooperates with Seller and its affiliates in the application for the liquor license.

          E. Tax Abatement Transfer or Termination. Either (i) the tax abatement benefits and burdens as described in Section 8.6(E) shall be assigned and/or transfered to Buyer, or (ii) such tax abatement structure shall be unwound by causing the Development Authority to convey the fee simple title to the Real Property directly to Seller and terminating all Bond Documents and the related tax abatement.

          F. No Change to Title. There shall be no material adverse change affecting title to the Real Property not caused by Buyer between the date of the Title Commitment and the Closing Date. Notwithstanding the foregoing, in the event that this condition is not satisfied at Closing, Seller shall have the right to extend the Closing Date by the amount of time necessary to cure or satisfy this condition (but such extension shall not exceed ninety (90) calendar days).

          10.2 Conditions to Seller’s Obligations. The conditions precedent to Seller’s obligations at Closing referenced above are as follows, any or all of which may be expressly waived by Seller in writing, at its sole option:

          A. Representations. Buyer’s warranties set forth in Paragraph 8.3, shall be true and correct in all material respects on and as of the Closing Date, except as modified in a manner permitted by the Agreement, as if made on and as of such date except to the extent that they expressly relate to an earlier date;

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          B. Buyer Compliance. Buyer shall have performed all of the covenants, undertakings and obligations to be performed or complied with by Buyer at or prior to the Closing.

          C. ROFO Compliance. Seller shall have received notice from Hospitality Properties Trust that Hospitality Properties Trust waives its rights under the ROFO Agreement, or Hospitality Properties Trust shall have deemed to have waived such rights.

          D. Tax Abatement Transfer or Termination. Either (i) the tax abatement benefits and burdens as described in Section 8.6(E) shall be assigned and/or transfered to Buyer, or (ii) such tax abatement structure shall be unwound by causing the Development Authority to convey the fee simple title to the Real Property directly to Seller and terminating all Bond Documents and the related tax abatement.

          10.3 Waiver of Conditions. By closing the Transaction, Seller and Buyer shall be conclusively deemed to have waived the benefit of any remaining unfulfilled conditions set forth in Paragraph 10.1 and 10.2, respectively.

     11. Transaction Issues: Brokers, Confidentiality and Indemnity.

          11.1 Brokers. Each party represents to the other that such party has not incurred any obligation to any broker or real estate agent with respect to the purchase or sale of the Property except for the Broker defined herein, which obligation has been incurred by Seller pursuant to a separate agreement with Broker executed in connection with the Transaction. Seller shall, upon the Closing of this Transaction and receipt by Seller of the Purchase Price, pay to Broker the appropriate sales commission pursuant to the terms of the brokerage agreement with Broker. Except for Broker and such commission payable as set forth above, Seller and Buyer each hereby (a) represent and warrant to the other that it has not employed, retained or consulted any broker, agent, or finder in carrying on a negotiation in connection with this Agreement or the Transaction, and (b) indemnify and agree to hold the other harmless from and against any and all claims, demands, causes of action, debts, liabilities, judgments and damages (including costs and reasonable attorneys’ fees actually incurred in connection with the enforcement of this indemnity) which may be asserted or recovered against the indemnified party on account of any brokerage fee, commission or other compensation arising by reason of the indemnitor’s breach of this representation and warranty. This Paragraph shall survive the Closing or any termination of this Agreement.

          11.2 Confidentiality. A. Buyer hereby agrees that prior to Closing it and the Buyer’s representatives will not release or cause or permit to be released, any press notices, publicity (oral or written) or advertising promotion relating to, or otherwise announce or disclose or cause or permit to be announced or disclosed, in any manner whatsoever, the terms, conditions or substance of this Agreement or the Transaction, without first obtaining the written consent of the Seller. The foregoing shall not preclude Buyer from (a) discussing the substance or any relevant details of the transactions contemplated in this Agreement with any of its representatives as described above, or (b) from complying with any Laws applicable to such party, including, without limitation, governmental regulatory, disclosure, tax and reporting requirements, or, at or

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about the Closing Date, issuing or causing the issuance of a press or media release or other information in the nature of a press release relating to this Agreement or the Transaction (the “Transaction Closing Disclosure”), provided, however, that the Transaction Closing Disclosure has received the prior written approval of Seller as to the exact text of such press release, or any other public disclosure of this Agreement or this Transaction, and of the extent of distribution thereof. Notwithstanding the foregoing, if Buyer reasonably determines, after consultation with counsel, that it is required by Law to publicly disclose the existence or terms of this Agreement, before, at or within five (5) Business Days after Closing occurs, Buyer shall allow Seller a reasonable period of time, not to exceed five (5) Business Days, to review any proposed disclosure made by Buyer before, at or immediately after Closing, including, without limitation, the Transaction Closing Disclosure, in advance of Buyer making such disclosure (the “Publicity Notice Requirement”) but, for the avoidance of doubt, Buyer shall be permitted to make such disclosure and shall not be required to obtain the consent of Seller prior to making such disclosure. Buyer represents that, to the best of its knowledge, the Law only requires Buyer to make the following statement in an 8K disclosure prior to Closing: “On May 25, 2010, a subsidiary of Pebblebrook Hotel Trust (the “Company”) entered into an agreement to acquire an upscale full-service hotel in the Atlanta region for $105.0 million from an unaffiliated third party. The Company expects to fund the purchase price with proceeds from the Company’s initial public offering. The closing is expected to occur within 45 days, however, because the acquisition is subject to customary closing requirements and conditions, the Company can give no assurance that the transaction will be consummated during that time period, or at all” (the foregoing statement being referred to herein as the “Pre-Approved Statement”). Buyer shall be permitted to release the Pre-Approved Statement as part of (i) its 8K disclosure obligations pursuant to Securities and Exchange Commission legal requirements and (ii) a routine press release and, subject to the foregoing limitation, Buyer shall be permitted to the release of the Pre-Approved Statement within five (5) Business Days after the Effective Date without having to comply with the Publicity Notice Requirement. For all public disclosures different from the foregoing made by Buyer before, at or within five (5) Business Days after Closing, including without limitation the Transaction Closing Disclosure, Buyer must comply with the Publicity Notice Requirement. For the avoidance of doubt, except for the Transaction Closing Disclosure, Buyer shall not need to comply with the Publicity Notice Requirement for any public disclosures made five (5) or more Business Days after Closing. Buyer agrees that it any public communications, including, but not limited to, press notices, publicity (oral or written) or other promotions, this Transaction shall be characterized as a “strategic relationship” with Seller and its affiliates and shall not be characterized, or referred to, as a “distressed” or “discounted” sale or transaction. For clarification, discount shall not mean the concept of Discount to Replacement Cost which Owner will be allowed to discuss. Buyer shall indemnify and hold Seller harmless from and against any and all Liabilities suffered or incurred by Seller and arising out of or in connection with a breach by Buyer of the provisions of this Paragraph. The indemnification obligations contained in this Paragraph shall survive the Closing or the earlier termination of this Agreement.

          B. Seller hereby agrees that prior to Closing it will not release or cause or permit to be released, and will use best efforts to prevent the Seller’s Representatives from releasing or causing or permitting the release of, any press notices, publicity (oral or written) or advertising promotion relating to, or otherwise announce or disclose or cause or permit to be

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announced or disclosed, in any manner whatsoever, the terms, conditions or substance of this Agreement or the Transaction, without first obtaining the written consent of the Buyer. The foregoing shall not preclude Seller from (a) discussing the substance or any relevant details of the transactions contemplated in this Agreement with any of its representatives as described above, or (b) from complying with any Laws applicable to such party, including, without limitation, governmental regulatory, disclosure, tax and reporting requirements, or, at and after Closing, issuing or causing the issuance of a press or media release or other information in the nature of a press release relating to this Agreement or the Transaction, provided, however, that such release has received the prior written approval of Buyer as to the exact text of such press release and of the extent of distribution thereof. Seller shall indemnify and hold Buyer harmless from and against any and all Liabilities suffered or incurred by Buyer and arising out of or in connection with a breach by Seller of the provisions of this Paragraph. The indemnification obligations contained in this Paragraph shall survive the Closing or the earlier termination of this Agreement.

          11.3 Indemnity. Buyer hereby agrees to indemnify, defend, and hold Seller and each of the other Seller Parties free and harmless from and against any and all Liabilities (including reasonable attorneys’ fees, expenses and disbursements) arising out of or resulting from the entry on the Property and/or the conduct of any Due Diligence by Buyer or any of Buyer’s Representatives at any time prior to the Closing; provided, however, that Buyer’s obligations under this clause shall not apply to the mere discovery of an pre-existing environmental, financial, legal or physical condition at the Property. The foregoing indemnity shall survive the Closing (and not be merged therein) or any earlier termination of this Agreement.

     12. Default At or Prior to Closing.

          12.1 Buyer Default. If Buyer defaults in the observance or performance of its covenants and obligations hereunder, and such default continues for five (5) Business Days after the date of receipt of written notice from Seller demanding cure of such default, Seller shall be entitled, as its sole and exclusive remedy hereunder, to Terminate this Agreement by written notice to Buyer of such termination and to receive payment of the Deposit as full liquidated damages pursuant to Official Code of Georgia Annotated §13-6-7 for such default of Buyer, the parties hereto acknowledging the difficulty of ascertaining the actual damages in the event of such a default, that it is impossible more precisely to estimate the damages to be suffered by Seller upon Buyer’s default, that such forfeiture of the Deposit is intended not as a penalty, but as full liquidated damages and that such amount constitutes a reasonable good faith estimate of the potential damages arising therefrom, it being otherwise difficult or impossible to estimate Seller’s actual damages which would be suffered by Seller in the event of default by Buyer. Notwithstanding the foregoing, a Buyer default for failure to perform all of the covenants, undertakings and obligations to be performed by Buyer at or prior to the Closing Deadline shall not entitle Buyer to any notice or cure period that would require an extension of the Closing Date. Except with respect to any right, obligation or liability which survives Closing or termination of this Agreement, including any indemnification provisions set forth in this Agreement, Seller’s right to Terminate this Agreement and receive payment of the Deposit as full liquidated damages, are Seller’s sole and exclusive remedies in the event of default

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hereunder by Buyer, and Seller hereby waives, relinquishes and releases any and all other rights and remedies (except any that survive Closing or termination pursuant to the express provisions of this Agreement), including, but not limited to: (1) any right to sue Buyer for damages or to prove that Seller’s actual damages exceed the Deposit which is hereby provided Seller as full liquidated damages, (2) any right to sue Buyer for specific performance, or (3) any other right or remedy which Seller may otherwise have against Buyer, either at law, or equity or otherwise.

          12.2 Seller Default. If Seller defaults in the observance or performance of its covenants and obligations hereunder, or if Seller breaches any of its representations and warranties under this Agreement, and such default continues for the greater of five (5) Business Days after the date of receipt of written notice from Buyer demanding cure of such default, or the expiration of other applicable cure periods set forth in this Agreement, then Buyer shall be entitled either, at Buyer’s option, (i) without waiving the right to elect the option to Terminate this Agreement, to sue Seller for specific performance of this Agreement, but only if such suit is filed within ninety (90) days after the occurrence of Seller’s alleged default, or (ii) to Terminate this Agreement by the delivery to Seller of notice of such termination and Buyer shall be entitled to the return of the Deposit and Seller shall pay Buyer the reasonable costs actually incurred by Buyer in connection with its investigation and efforts to purchase the Property, including, without limitation, actual reasonable fees and costs of counsel and consultants but in no event shall such costs payable by Seller to Buyer exceed $200,000. Except with respect to any right, obligation or liability which survives Closing or termination of this Agreement, including any indemnification provisions set forth in this Agreement, Buyer’s rights to so Terminate this Agreement or sue for specific performance, are Buyer’s sole and exclusive remedies hereunder in the event of default hereunder by Seller, and Buyer hereby waives, relinquishes and releases any and all other rights and remedies (except any that survive Closing or termination pursuant to the express provisions of this Agreement), including, but not limited to: (1) any right to sue for damages, or (2) any other right or remedy which Buyer may otherwise have against Seller either at law, in equity or otherwise. Buyer agrees that its failure to timely commence an action for specific performance within such the period noted above shall be deemed a waiver by it of its right to commence an action for specific performance as well as a waiver by it of any right it may have to file or record a notice of lis pendens or notice of pendency of action or similar notice against any portion of the Property.

     13. Notices. All notices, consents, approvals and other communications which may be or are required to be given by either Seller or Buyer under this Agreement shall be properly given only if made in writing and sent by (a) hand delivery, or (b) certified mail, return receipt requested, or (c) a nationally recognized overnight delivery service (such as Federal Express, UPS Next Day Air or Airborne Express), or (d) by telecopying to the telecopy number listed below (provided that a copy of such notice is also delivered within 24 hours to the party by one of the other methods listed herein), with all postage and delivery charges paid by the sender and addressed to the Buyer or Seller, as applicable as set forth below, or at such other address (or telecopy number) as each may request in writing. Such notices delivered by hand, by telecopy, or overnight delivery service shall be deemed received on the date of delivery and, if mailed, shall be deemed received upon the earlier of actual receipt or two days after mailing. Said notice addresses are as follows (and Seller and Buyer shall have the right to designate changes to their respective notice addresses, effective five (5) days after the delivery of written notice thereof):

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If to Seller:	InterContinental Hotels Group
	Three Ravinia Drive
	Suite 100
	Atlanta, Georgia 30346-2149
	Attention: Robert Chitty
	Telephone No.: (770) 604-5321
	Telecopy No.: (770) 604-5075
With a copy to:	InterContinental Hotels Group
	Three Ravinia Drive
	Suite 100
	Atlanta, Georgia 30346-2149
	Attention: Legal Dept. - Paul Huang
	Telephone No.: (770) 604-2644
	Telecopy No.: (770) 604-5075
	Alston & Bird LLP
	One Atlantic Center
	1201 West Peachtree Street
	Atlanta, Georgia 30309-3424
	Attention: Daniel Weede
	Telephone No.: (404) 881-7529
	Telecopy No.: (404) 253-8885
If to Buyer:	Orangemen Owner LLC
	c/o Pebblebrook Hotel Trust
	2 Bethesda Metro Center, Suite 1530
	Bethesda, Maryland 20814
	Attention: Thomas C. Fisher, Executive VP
	Telephone No.: (240) 507-1340
	Telecopy No.: (240) 396-5763
With a copy to:	John M. Ratino, Esquire
	Hunton & Williams LLP
	1900 K Street, N.W.
	Washington, DC 20006
	Telephone No.: (202) 778-2221
	Telecopy No.: (202) 778-2201

     14. General Provisions.

          14.1 Execution Necessary. This Agreement shall not be binding upon Seller until fully executed and delivered by a proper official of Seller, and no action taken by Seller’s

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representatives shall be deemed an acceptance of this Agreement until this Agreement has been so executed by Seller and delivered to Buyer.

          14.2 Counterparts. This Agreement may be executed in separate counterparts. It shall be fully executed when each party whose signature is required has signed at least one counterpart even though no one counterpart contains the signatures of all of the parties to this Agreement.

          14.3 Successors and Assigns. This Agreement shall be binding upon the parties hereto and their respective successors and assigns and inure to the benefit of the parties hereto and their respective permitted successors and assigns. Buyer shall not have the right to assign or delegate any right, duty or obligation of Buyer under this Agreement to any other party without the prior written consent of Seller, which consent Seller may grant or withhold in its sole and absolute discretion, and any such assignment shall be null and void ab initio.

          14.4 Governing Law. This Agreement shall be governed by the Laws of the state in which the Land is located.

          14.5 Entire Agreement. This Agreement and all the exhibits referenced herein and annexed hereto contain the entire agreement of the parties hereto with respect to the matters contained herein, and no prior agreement or understanding (including without limitation the Letter of Intent between Buyer and Seller dated April 16, 2010) pertaining to any of the matters connected with this Transaction shall be effective for any purpose. Neither this Agreement nor any provision hereof may be waived, modified, amended, discharged or terminated except by an instrument signed by the party against whom the enforcement of such waiver, modification, amendment, discharge or termination is sought, and then only to the extent set forth in such instrument.

          14.6 Time is of the Essence. TIME IS OF THE ESSENCE of the Transaction and this Agreement. If the time period by which any right, option or election provided under this Agreement must be exercised, or by which any act required hereunder must be performed, or by which the Closing must be held, expires on a Saturday, Sunday or legal or bank holiday, then such time period shall be automatically extended through the close of business on the next regularly scheduled business day.

          14.7 Interpretation. The titles, captions and paragraph headings are inserted for convenience only and are in no way intended to interpret, define, limit or expand the scope or content of this Agreement or any provision hereof. If any party to this Agreement is made up of more than one person or entity, then all such persons and entities shall be included jointly and severally, even though the defined term for such party is used in the singular in this Agreement. If any time period under this Agreement ends on a day other than a Business Day, then the time period shall be extended until the next Business Day. This Agreement shall be construed without regard to any presumption or other rule requiring construction against the party causing this Agreement to be drafted. If any words or phrases in this Agreement shall have been stricken out or otherwise eliminated, whether or not any other words or phrases have been added, this Agreement shall be construed as if the words or phrases so stricken out or otherwise eliminated

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were never included in this Agreement and no implication or inference shall be drawn from the fact that said words or phrases were so stricken out or otherwise eliminated.

          14.8 Survival. Except as set forth herein, the covenants, agreements, indemnities, representations and warranties contained herein shall not survive the Closing Date for more than one (1) year or any termination of this Agreement, except as otherwise set forth in this Agreement (limited, as applicable, as the term of survival may be otherwise specifically provided therein).

          14.9 Further Assurances. Each party agrees to execute and deliver to the other such further documents or instruments as may be reasonable and necessary in furtherance of the performance of the terms, covenants and conditions of this Agreement; provided, however, that the execution and delivery of such documents by such party shall not result in any additional liability or cost to such party.

          14.10 Exclusive Application. Nothing in this Agreement is intended or shall be construed to confer upon or to give to any person, firm or corporation other than Buyer and Seller hereto any right, remedy or claim under or by reason of this Agreement. All terms and conditions of this Agreement shall be for the sole and exclusive benefit of the parties hereto and may not be assigned.

          14.11 Partial Invalidity. If all or any portion of any of the provisions of this Agreement shall be declared invalid by Laws applicable thereto, then the performance of said offending provision shall be excused by the parties hereto; provided, however, that, if the performance of such excused provision materially affects any material aspect of this Transaction and the other party does not upon demand enter into a modification or separate agreement which sets forth in valid fashion the covenants of such offending provision in a manner which counsel to both parties determine is valid, then the party hereto for whose benefit such excused provision was inserted in this Agreement shall have the right, exercisable by written notice given to the other party within ten (10) days after such provision is so declared invalid, to Terminate this Agreement.

          14.12 Waiver Rights. Buyer reserves the right to waive, in whole or in part, any provision hereof which is for the benefit of Buyer. Seller reserves the right to waive, in whole or in part, any provision hereof that is for the benefit of Seller.

          14.13 No Implied Waiver. Unless otherwise expressly provided herein, no waiver by Seller or Buyer of any provision hereof shall be deemed to have been made unless expressed in writing and signed by such party. No delay or omission in the exercise of any right or remedy accruing to Seller or Buyer upon any breach under this Agreement shall impair such right or remedy or be construed as a waiver of any such breach theretofore or thereafter occurring. The waiver by Seller or Buyer of any breach of any term, covenant or condition herein stated shall not be deemed to be a waiver of any other breach, or of a subsequent breach of the same or any other term, covenant or condition herein contained.

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          14.14 Rights Cumulative. All rights, powers, options or remedies afforded to Seller or Buyer either hereunder or by Law shall be cumulative and not alternative, and the exercise of one right, power, option or remedy shall not bar other rights, powers, options or remedies allowed herein or by Law, unless expressly provided to the contrary herein.

          14.15 Attorney’s Fees. Should either party employ an attorney or attorneys to enforce any of the provisions hereof or to protect its interest in any manner arising under this Agreement, or to recover damages for breach of this Agreement, the non-prevailing party in any action pursued in a court of competent jurisdiction (the finality of which is not legally contested) agrees to pay to the prevailing party all reasonable costs, damages and expenses, including attorney’s fees, expended or incurred in connection therewith.

          14.16 Waiver of Jury Trial. EACH PARTY HEREBY WAIVES TRIAL BY JURY IN ANY PROCEEDINGS BROUGHT BY THE OTHER PARTY IN CONNECTION WITH ANY MATTER ARISING OUT OF OR IN ANY WAY CONNECTED WITH THE TRANSACTION, THIS AGREEMENT, THE PROPERTY OR THE RELATIONSHIP OF BUYER AND SELLER HEREUNDER. THE PROVISIONS OF THIS SECTION SHALL SURVIVE THE CLOSING (AND NOT BE MERGED THEREIN) OR ANY EARLIER TERMINATION OF THIS AGREEMENT.

          14.17 Facsimile Signatures. Signatures to this Agreement transmitted by telecopy shall be valid and effective to bind the party so signing. Each party agrees to promptly deliver an execution original to this Agreement with its actual signature to the other party, but a failure to do so shall not affect the enforceability of this Agreement, it being expressly agreed that each party to this Agreement shall be bound by its own telecopied signature and shall accept the telecopied signature of the other party to this Agreement.

          14.18 No Recordation. Seller and Buyer each agrees that neither this Agreement nor any memorandum or notice hereof shall be recorded and Buyer agrees (a) not to file any notice of pendency or other instrument (other than a judgment) against the Property or any portion thereof in connection herewith and (b) to indemnify Seller against all Liabilities (including reasonable attorneys’ fees, expenses and disbursements) incurred by Seller by reason of the filing by Buyer of such notice of pendency or other instrument. Notwithstanding the foregoing, if the same is permitted pursuant to applicable Laws, Buyer shall be entitled to record a notice of lis pendens if Buyer is entitled to seek (and is actually seeking) specific performance of this Agreement by Seller in accordance with the terms of Paragraph 12.2 hereof.

          14.19 Maximum Aggregate Liability. Notwithstanding any provision to the contrary contained in this Agreement or any documents executed by Seller pursuant hereto or in connection herewith, the maximum aggregate liability of Seller and the Seller Parties, and the maximum aggregate amount which may be awarded to and collected by Buyer, in connection with the Transaction, the Property, under this Agreement and under any and all documents executed pursuant hereto or in connection herewith (including, without limitation, in connection with the breach of any of Seller’s Warranties for which a claim is timely made by Buyer) shall not exceed Seller’s Liability Limit. The provisions of this section shall survive the Closing (and not be merged therein) or any earlier termination of this Agreement.

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          14.20 Exhibits and Schedules. All exhibits and schedules referred to in, and attached to, this Agreement are hereby incorporated herein in full by this reference.

          14.21 Jurisdiction. With respect to any suit, action or proceedings relating to the Transaction, this Agreement, the Property or the relationship of Buyer and Seller hereunder (“Proceedings”) each party irrevocably (a) submits to the exclusive jurisdiction of the Courts of the County of Fulton, State of Georgia and the United States District Court for the Northern District of Georgia, and (b) waives any objection which it may have at any time to the laying of venue of any proceedings brought in any such court, waives any claim that such proceedings have been brought in an inconvenient forum and further waives the right to object, with respect to such proceedings, that such court does not have jurisdiction over such party. The provisions of this section shall survive the Closing (and not be merged therein) or any earlier termination of this Agreement.

     15. Retention of Hotel Employees. Buyer acknowledges that an affiliate of Seller will manage the Hotel in accordance with the Management Agreement attached as Exhibit P and that Seller will continue to employ all Hotel Employees at the Hotel with Buyer having the responsibilities relative to the employment of and services of these employees as set forth in the Management Agreement.

     16. On-Going Management of Hotel. Buyer acknowledges that Seller is unwilling to sell the Hotel unless Buyer and Seller’s designated affiliate enter into a long term, hotel management agreement for the Property. Buyer and Seller, each in their respective discretion, shall try to agree on the specific form of the hotel management agreement on or before June 4, 2010 and, if the parties reach an agreement, shall manifest such agreement by signing an amendment to this Agreement attaching such hotel management agreement as Exhibit P to this Agreement. If the parties have not executed an amendment to this Agreement incorporating the agreed upon form of hotel management agreement into this Agreement by June 4, 2010, then, subject to the HMA Extension Option, either party may terminate this agreement upon notice to the other party, in which case the Deposit shall be returned to Buyer, and the parties shall have no further rights or obligations hereunder, except for those which expressly survive any such termination. Notwithstanding the foregoing, if the parties have not executed an amendment to this Agreement incorporating the agreed upon form of hotel management agreement into this Agreement by June 4, 2010, but the parties are actively engaged in good faith negotiations and progressing toward resolution of the remaining issues of the hotel management agreement, then, either party may extend the June 4, 2010 deadline to June 11, 2010 by written notice to the other party (the “HMA Extension Option”). At Closing, Seller’s designated affiliate and Buyer shall execute the Management Agreement in the form to be attached hereto as Exhibit P.

     17. Drainage. Buyer acknowledges and agrees that: (a) Buyer has been informed about a lawsuit which began in 2004, Charles J. Lynch, III; and Mary Ann Lynch v., IHC Buckhead, LLC et. al., in the Superior Court of Fulton County, State of Georgia, Civil Action File No: 2004-cv-89108) (the “Lawsuit”), which lawsuit related to drainage from the Property and was resolved, in part through the installation of a new drainage system; (b) Buyer has had the opportunity to familiarize itself with the Lawsuit and the obligations that the owner of the

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Real Property is obligated to perform pursuant to all matters in the public land record related to the Lawsuit and/or any water drainage obligations that the owner of the Real Property owes adjoining real property owners (the “Owner Drainage Obligations”); and (c) at Closing, Buyer shall assume all responsibility related to the Owner Drainage Obligations. In the event the Closing occurs, Buyer shall be deemed to waive, abandon, release and renounce any claims against Seller, its affiliates, officers, directors, employees, agents, including, without limitation, claims for indemnification and contribution, related to water run-off and drainage issues, the construction of the Hotel and related improvements on the Real Property. If the Closing of the Transaction occurs, Buyer shall indemnify, defend and hold harmless Seller, Seller’s affiliated companies, their respective directors, officers, employees, representatives, agents, in their individual capacities or otherwise, and their respective successors and assigns (collectively, “Seller Indemnitees”), from and against any and all liabilities, losses, costs, damages, judgments and expenses (including, without limitation, attorneys’ fees) (“Losses”) arising out of any claim, damages, demand, lawsuit or cause of action (“Claims”) related to Buyer’s failure to comply with the Owner Drainage Obligations from and after the Closing Date. If the Closing of the Transaction occurs, Seller shall indemnify, defend and hold harmless Buyer, Buyer’s affiliated companies, their respective directors, officers, employees, representatives, agents, in their individual capacities or otherwise, and their respective successors and assigns (collectively, “Buyer Indemnitees”), from and against any and all Losses arising out of any Claims related to Seller’s failure to comply with the Owner Drainage Obligations prior to the Closing Date. In addition, at Closing, Buyer and Seller agree to execute an appropriate document to memorialize the foregoing indemnifications of Seller Indemnitees and Buyer Indemnitees for Losses arising out of the Claims as part of the As Is Agreement attached as Exhibit L.

     18. Buyer’s Successor Payment Obligation. In the event the Closing occurs, and Buyer thereafter directly or indirectly sells a partial or full interest in the Hotel through one or more transactions on or before the thirtieth (30^th) month anniversary of the Closing Date (such sale being a “Successor Sale”), Buyer shall be obligated pay to Seller or its designated affiliate on or before the date of the closing of the Second Sale, an amount (the “Successor Payment”) equal to fifty percent (50%) of the “Net Sale Proceeds” (hereafter defined) above the “Sale Hurdle” (hereafter defined), which Successor Payment shall be subject to a maximum amount equal to the “Proceeds Cap” (hereafter defined). For the foregoing purposes, Net Sale Proceeds shall mean all sales proceeds from the Successor Sale, after deducing reasonable and actually incurred transaction costs, but would not deduct any other amounts, including without limitation satisfaction of outstanding debt or capital contributions. Sale Hurdle shall mean $105 Million plus capital expenditures made by Buyer in excess of the FF&E Reserve, which amount shall increase monthly from the date of the Closing through the date 30 months thereafter by an amount equal to five percent (5%) per annum. Proceeds Cap shall mean $5.0 million for the first twelve full calendar months following the Closing Date, $8.0 million for the thirteenth through twenty-fourth full calendar months following the Closing Date and $10.0 million for the twenty-fifth through thirtieth full calendar months following the Closing Date. This Section 18 shall survive the Closing and not be subject to any offset. Buyer and its affiliates shall notify Seller at least thirty (30) days prior to the closing of a Successor Sale and cooperate to provide information necessary for Buyer or its affiliate to confirm the Successor Payment.

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     19. Au Pied De Cochon License. Buyer acknowledges that it has received and reviewed that certain Exclusive Trademark and Know-How License and Technical Assistance Agreement by and between Au Pied De Cochon and PJB Holding (collectively, the “Licensor”) and Seller dated June 21, 2004 (the “Au Pied De Cochon License Agreement”) and acknowledges that Article 7 of the Au Pied De Cochon License Agreement requires that the Seller, as the licensee, continue to own and operate the restaurant. Buyer and Seller hereby agree that Seller shall have the option, prior to or subsequent to Closing, to amend or otherwise modify the Au Pied De Cochon License Agreement to either (i) permit the Manager to operate the restaurant without an equity interest in the Hotel, or (ii) permit Seller to assign its interest in the Au Pied De Cochon License Agreement to Buyer. If Seller proceeds with option (ii) above, Buyer must execute an assignment and assumption agreement in the form attached as Exhibit E. If Licensor terminates the Au Pied De Cochon License Agreement as a result of the Transaction, Seller shall pay all termination fees associated with such termination. However, if (a) Licensor amends the Au Pied De Cochon License Agreement pursuant to either option (i) or (ii) above, and (b) Buyer terminates (or directs Manager to terminate) the Au Pied De Cochon License Agreement, then Buyer shall be solely responsible to pay all termination fees associated with such termination. The provisions of Section shall survive the Closing.

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     IN WITNESS WHEREOF, Buyer and Seller have executed this Agreement under seal as of the day and year first above written.

SELLER: IHC BUCKHEAD, LLC a Georgia limited liability company
By:	/s/ Travis D. Ray
	Name:	Travis D. Ray
	Title:	Vice President
BUYER: ORANGEMEN OWNER LLC, a Delaware limited liability company
By:	/s/ Thomas C. Fisher
	Name:	Thomas C. Fisher
	Title:	Vice President

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SCHEDULE A

(attached to and made a part of that certain Purchase and Sale
Agreement by and between IHC BUCKHEAD, LLC as Seller,
and ORANGEMEN OWNER LLC, as Buyer, dated as of May
25, 2010)

     “Accounts Receivable” shall mean any and all rents, deposits and other sums and charges (including Guest Ledger Receivables) owing to Seller that are in any way attributable to the operation of the business at the Hotel, including, without limitation: (a) amounts receivable in connection with the letting of rooms, use of banquet services and facilities, use of conference facilities or meeting rooms or the provision of any other service by or on behalf of Seller on the Real Property; (b) credit card charges, whether or not they have been submitted to the applicable credit card company; and (c) rents and/or license fees due from Tenants under Leases.

     “Agreement” shall mean this Purchase and Sale Agreement between Seller and Buyer including all schedules, exhibits and other attachments hereto, and documents incorporated herein by reference.

     “Bond Documents” is defined in Paragraph 8.1F of this Agreement.

     “Bonds” is defined in Paragraph 8.1F of this Agreement.

     “Bookings” shall mean all contracts or reservations for the use of guest rooms, banquet facilities, meeting rooms, and/or conference or convention facilities at the Hotel.

     “Broker” shall mean Jones Lang LaSalle Americas, Inc., which Broker has been retained by Seller; Buyer has not retained any broker or finder in this Transaction.

     “Business Day” shall mean Monday through Friday excluding holidays recognized by the state government of the State in which the Property is located.

     “Buyer” shall mean the buyer referenced in the first paragraph of this Agreement.

     “Buyer’s Diligence Reports” shall mean the results of any examinations, inspections, investigations, tests, studies, analyses, appraisals, evaluations and/or investigations prepared by or for or otherwise obtained by Buyer, Buyer’s attorneys or Buyer’s officers John Bortz, Tom Fisher or Ray Martz in connection with Buyer’s Due Diligence.

     “Buyer’s Representatives” shall mean Buyer’s officers, employees, agents, advisors, representatives, attorneys, accountants, consultants, lenders, investors, contractors, architects and engineers.

     “Cause” shall mean (i) commission of a felony or crime involving moral turpitude, (ii) misappropriation or intentional destruction of company property, (iii) continuing failure or

Purchase Agreement
Property: IC Buckhead, Atlanta GA

refusal to obey a reasonable and lawful company directive after receiving a written warning, (iv) causing physical harm, or threatening to cause physical harm to another employee or a hotel guest, (v) violation of any Law or company policy prohibiting employment discrimination or harassment with respect to another employee or an applicant for employment, or (vi) violation of any Law applicable to the operation of the hotel at which the employee in question is employed.

     “Closing” shall mean the consummation and closing of the Transaction.

     “Closing Agent” shall mean the Title Company or such other party as is selected by Buyer and Seller to fund the Closing in escrow.

     “Closing Date” shall mean the date on which the Closing occurs, which shall be on or before the Closing Deadline as defined in Paragraph 1.1 of this Agreement.

     “Closing Deadline” is defined in Paragraph 1.1 of this Agreement.

     “Closing Documents” shall mean the documents and instruments delivered by Buyer and Seller, in order to consummate the Transaction.

     “Closing Notice” is defined in Paragraph 1.1 of this Agreement.

     “Closing Proration Time” shall mean (a) if the Purchase Price is received by Seller (or by the Closing Agent, along with authorization from Buyer to release such proceeds) prior to 1:00 P.M. local Atlanta, Georgia time on the Closing Date, as of 11:59 P.M. local Atlanta, Georgia time on the day prior to the Closing Date, in which event the day of Closing shall belong to Buyer, and (b) if the Purchase Price is received by Seller (or by the Closing Agent) at or after 1:00 P.M. local Atlanta, Georgia time on the Closing Date, 11:59 P.M. local Atlanta, Georgia time on the Closing Date, in which event the day of Closing shall belong to Seller, and, either at Closing or upon reproration after Closing, Buyer and Seller shall reprorate as of such new Closing Proration Time.

     “Closing Tax Year” shall mean the Tax Year in which the Closing Date occurs.

     “Condemnation Proceeding” shall mean any proceeding in condemnation, eminent domain or any written request for a conveyance in lieu thereof, or any notice that such proceedings have been or will be commenced against any portion of the Property.

     “Confidential Materials” shall mean any books, computer software, databases, records or files (whether in a electronic or printed format) that consist of or contain any of the following: appraisals; budgets; strategic plans for the Property; internal analyses; information regarding the marketing of the Property for sale; submissions relating to obtaining internal authorization for the sale of the Property by Seller or any direct or indirect owner of any beneficial interest in Seller; attorney and accountant work product; attorney-client privileged documents; internal correspondence of Seller, any direct or indirect owner of any beneficial interest in Seller, or any of their respective affiliates and correspondence between or among such parties; or other information or materials in the possession or control of Seller, Seller’s property manager or any

Affidavit of Seller’s Residence
Property: IC Buckhead, Atlanta GA

direct or indirect owner of any beneficial interest in Seller which such party deems proprietary or confidential.

     “Consumables” is defined in Paragraph 7.1F of this Agreement.

     “Contracts” shall mean all contracts respecting leasing, management, maintenance or operation of the Real Property, including, but not limited to, equipment leases, agreements with respect to building systems, service, construction, and maintenance contracts, but specifically excluding Bookings and any license to Seller of computer hardware, software, or system(s). A summary list of the Contracts (including identity of contract parties and type of service) is shown on Exhibit N and made a part hereof.

     “deemed to know” (or “deemed knowledge” or words of similar import) shall have the following meaning: Buyer shall be “deemed to know” of the existence of a fact or circumstance to the extent that: (i) Buyer’s attorneys or its officers John Bortz, Tom Fisher or Ray Martz knows of such fact or circumstance, or (ii) such fact or circumstance is disclosed by this Agreement, any documents executed by Seller for the benefit of Buyer in connection with the Closing, the Documents, any estoppel certificate executed by any tenant of the Property and delivered to Buyer, or any Buyer’s Diligence Reports. Without limiting the foregoing, Buyer shall be “deemed to know” that any Seller’s Warranty is untrue, inaccurate or incorrect to the extent that any of the aforesaid items contains information, or Buyer’s officers John Bortz, Tom Fisher or Ray Martz have knowledge of information, which is inconsistent with such Seller’s Warranty.

     “Deposit” shall mean the sum of Two Million and No/100 Dollars ($2,000,000.00), consisting of, collectively, the Initial Deposit of Five Hundred Thousand and No/100 Dollars ($500,000.00), and the Secondary Deposit of One Million Five Hundred Thousand and No/100 Dollars ($1,500,000.00), and any interest thereon.

     “Development Authority” is defined in Paragraph 2 of this Agreement.

     “Documents” shall mean the documents and instruments applicable to the Property or any portion thereof that Seller or any of the other Seller Parties deliver or make available to Buyer or Buyer’ Representatives prior to Closing or which are otherwise obtained by Buyer or Buyer’s Representatives prior to Closing, including, but not limited to, the Title Commitment, the Survey, the Title Documents, the Bond Documents and the Property Documents.

     “Due Diligence” shall mean the investigation by Buyer and Buyer’s Representatives of the feasibility and desirability of purchasing the Property, including all audits, surveys, examinations, inspections, investigations, tests, studies, analyses, appraisals, evaluations, investigations and verifications with respect to the Property, the Documents, title matters, applicable land use and zoning Laws and other Laws applicable to the Property, the physical condition of the Property, the economic status of the Property, and other information and documents regarding the Property, including, but not limited to, investigations of the legal and physical status of the Property by such consultants, engineers, architects and/or entomologists as Buyer requires, tests and assessments with respect to Environmental Matters, soil tests, asbestos analysis, mold

Affidavit of Seller’s Residence
Property: IC Buckhead, Atlanta GA

analysis, structural review, examination of title to the Property, preparation of a Survey of the Land, and verification of all information made or to be made available to Buyer with respect to Property.

     “Due Diligence Deadline” is defined in Paragraph 1.1 of this Agreement.

     “Effective Date” shall mean the date of this Agreement referenced in the first paragraph of this Agreement.

     “Employee Plans” means all plans and programs maintained by or on behalf of Seller or, after the Employment Transition, Manager (or an Affiliate of Manager), for the health, welfare or benefit of any Hotel Employees and/or their spouses, dependents or other qualified beneficiaries.

     “Escrow Deposits” shall mean the Deposit, and any other sums (including, without limitation, any interest earned thereon) which the parties agree shall be held in escrow hereunder.

     “Excluded Property” shall mean (i) any right or interest to any liquor license rights and intellectual property rights referenced in Section 5 hereto, (ii) any tax refunds for any period prior to Closing, (iii) any corporate minute books and records or files and records associated with the Seller entity, (iv) insurance claims for any casualty or Condemnation Proceeding that occurred prior to Closing, except as otherwise set forth in this Agreement, (v) Accounts Receivable; (vi) all cash, cash equivalents, working capital, reserve and other hotel accounts, accounts payable; (vii) any right to link to or utilize Seller’s affiliates’ reservation system; (viii) any employment files; (ix) any proprietary information or systems or intellectual property of Seller or any affiliate of Seller generally used by Seller to operate hotels, including without limitation, operational models and systems, the right to use of the “InterContinental” mark and marks controlled by Seller’s affiliates; (x) the rights to the “XO Bar” name,; (xi) any intellectual property, computer hardware, software, or system that is licensed to Seller and not freely assignable to Buyer without additional consent of a third party or cost; and (xii) any property owned by third parties, such as tenants, guests or equipment lessors.

     “Guaranty” shall mean that certain Guaranty Agreement between Seller and SunTrust Bank, as Trustee, dated as of December 1, 2002.

     “Guest Ledger Receivables” shall mean amounts, including, without limitation, room and service charges, accrued to (i) the accounts of guests occupying rooms at the Hotel as of the Closing Proration Time or (ii) group, conference or banquet customers of Seller at the Hotel as of the Closing Proration Time.

     “Hazardous Materials” shall mean any substance, chemical, waste or material that is or becomes regulated by any federal, state or local governmental authority because of its toxicity, infectiousness, radioactivity, explosiveness, ignitability, corrosiveness or reactivity, including, without limitation, asbestos or any substance containing more than 0.1 percent asbestos, the group of compounds known as polychlorinated biphenyls, flammable explosives, oil, petroleum or any refined petroleum product.

Affidavit of Seller’s Residence
Property: IC Buckhead, Atlanta GA

     “Hotel” shall mean the hotel located on the Land and commonly known as the InterContinental Buckhead Hotel located at 3315 Peachtree Road, NE, Atlanta, Georgia 30326.

     “Hotel Employees” shall mean all employees who are employed by Seller at or solely in connection with the Hotel immediately before the Effective Date (whether such employees are actively employed or on a leave of absence due to disability or any other reason).

     “Hotel Inventories” shall mean all inventory and operating supplies used in the use, operation or maintenance of the Hotel as commonly accepted in the hospitality industry, including, without limitation, all linens, bedding, tableware, glassware and silver.

     “Initial Deposit” shall mean the sum of Five Hundred Thousand and No/100 Dollars ($500,000.00), to the extent the same is deposited by Buyer in accordance with the terms of Paragraph 3.1 hereof, together with any interest earned thereon.

     “Land” shall mean that certain tract or parcel of land, more particularly described on Exhibit A.

     “Law” shall mean any federal, state or local law, statute, ordinance, code, order, decrees, or other governmental rule, regulation or requirement, including common law.

     “Leases” shall mean all leases, rental agreements and other occupancy agreements for the use or occupancy of any portion of the Property, if any, together with all amendments to, modifications of, renewals and extensions thereof, and all Tenant Deposits.

     “Lien” shall mean any mortgage, deed of trust, security deed, lien, judgment, pledge, conditional sales contract, security interest, past-due taxes, past-due assessments, contractor’s lien, materialmen’s lien, judgment or similar encumbrance against the Property of a monetary nature.

     “Liabilities” shall mean any and all direct or indirect damages, demands, claims, payments, problems, conditions, obligations, actions or causes of action, assessments, losses, liabilities, costs and expenses of any kind or nature whatsoever, including, without limitation, penalties, interest on any amount payable to a third party, lost income and profits, and any legal or other expenses (including, without limitation, reasonable attorneys’ fees and expenses) reasonably incurred in connection with investigating or defending any claims or actions, whether or not resulting in any liability.

     “Loan Commitment” is defined in Paragraph 4.4 of this Agreement.

     “Management Agreement” shall mean that certain agreement for management services between Buyer and Seller’s affiliate, the exact form of which shall be executed in accordance with the terms of Paragraph 16 hereof.

     “Manager” shall have the meaning set forth in the Management Agreement.

Affidavit of Seller’s Residence
Property: IC Buckhead, Atlanta GA

     “Master Lease” is defined in Paragraph 2 of this Agreement.

     “Other Interests” shall mean the following other interests of Seller in and to the Real Property, Leases, Contracts, or Personal Property, or pertaining thereto: (a) to the extent that the same are in effect as of the Closing Date, any licenses (but excluding any franchise license rights), permits and other written authorizations necessary for the use, operation or ownership of the Real Property, (b) any guaranties and warranties in effect with respect to any portion of the Real Property or the Personal Property as of the Closing Date; and (c) any sales and marketing materials benefiting the Property, provided that they are not Confidential Materials and Excluded Property.

     “Permitted Title Exceptions” shall mean, subject to Buyer’s rights to review and make objection to the status of title and survey as set forth in this Agreement, and the right of Buyer to Terminate this Agreement pursuant to Paragraph 4.4 if the Due Diligence is not satisfactory, the following: (a) the Leases and any new Leases entered into between the Effective Date and the Closing Date in accordance with the terms of this Agreement; (b) all real estate taxes and assessments not yet due and payable as of the Closing Date; (c) local, state and federal (if applicable) zoning and building Laws; (d) the Record Exceptions disclosed by the Title Commitment; (e) the state of facts disclosed by a current Survey of the Land obtained by Buyer; and (f) any other matters approved as Permitted Title Exceptions in writing by Buyer prior to Closing or deemed approved as Permitted Title Exceptions pursuant to this Agreement.

     “Personal Property” shall mean all tangible personal property owned by Seller and used in the operation of the Property, including (a) all Property Documents; (b) all keys and combinations to all doors, cabinets, safes, enclosures and other locking items or areas on or about the Improvements; (c) the food and beverage inventory of the Hotel; and (d) “Inventories”, as such term is defined in the Uniform System of Accounts, at normal operating levels, which Inventories include all china, glassware, linens, uniforms, works of art, materials and supplies, all fuel stored on site, an all inventory (at par levels), if any, held for sale in the Property’s gift shops or other retail outlets to the extent the retail outlets are not operated by third-party tenants, all merchandise, foot and beverages held for sale in connection with the operation of the Property at normal operating levels to the extent such food and beverage outlets are not operated by third-party tenants under a lease agreement; (e) all computers, computer equipment and manuals, and computer software, programs and databases; but with regard to all of the foregoing specifically excluding any Confidential Materials and Excluded Property.

     “Project Name” shall mean InterContinental Hotel Buckhead.

     “Property” shall mean the Real Property, the Leases, the Contracts, the Personal Property and the Other Interests, but specifically excluding the Confidential Materials and the Excluded Property.

     “Property Documents” shall mean all books, records and files of Seller and of the management agent for the Property related to the Property, other than those books, records or files containing Confidential Materials or which constitute Excluded Property.

Affidavit of Seller’s Residence
Property: IC Buckhead, Atlanta GA

     “Purchase Price” is defined in the Recitals to this Agreement. The Purchase Price shall exclude all Hotel cash, cash equivalents, working capital, reserve and other hotel accounts, accounts payable and Accounts Receivable.

     “Real Property” shall mean Seller’s interest in the Land, including, without limitation, (a) the Hotel and any other buildings located on the Land and all other improvements, (b) all easements appurtenant to the Land and other easements, grants of right, licenses, privileges or other agreements for the benefit of, belonging to or appurtenant to the Land whether or not situate upon the Land, including, without limitation, signage rights and parking rights or agreements, all whether or not specifically referenced on Exhibit A, (c) all mineral, oil and gas rights, riparian rights, water rights, sewer rights and other utility rights allocated to the Land, (d) all right, title and interest, if any, of the owner of the Land in and to any and all strips and gores of land located on or adjacent to the Land, and (e) all right, title and interest of the owner of the Land in and to any roads, streets and ways, public or private, open or proposed, in front of or adjoining all or any part of the Land and serving the Land.

     “Record Exceptions” shall mean all instruments recorded in the real estate records of the County in which the Land is located which affect the status of title to the Real Property.

     “Reimbursable Lease Expenses” shall mean, collectively, any and all costs, expenses and fees paid by Seller prior to Closing or costs, expenses and fees incurred by Seller prior to Closing arising out of or in connection with (a) any extensions, renewals or expansions under any Lease exercised or granted between the Effective Date and the Closing Date, and (b) any Lease entered into between the Effective Date and the Closing Date. Reimbursable Lease Expenses shall include, without limitation, (i) brokerage commissions and fees to effect any such leasing transaction, (ii) expenses incurred for repairs, improvements, equipment, painting, decorating, partitioning and other items to satisfy the tenant’s requirements with regard to such leasing transaction, (iii) legal fees for services in connection with the preparation of documents and other services rendered in connection with the effectuation of the leasing transaction, (iv) if there are any rent concessions covering any period that the tenant has the right to be in possession of the demised space, the rents that would have accrued during the period of such concession prior to the Closing Date as if such concession were amortized over (A) with respect to any extension or renewal, the term of such extension or renewal, (B) with respect to any expansion, that portion of the term remaining under the subject Lease after the date of any expansion, or (C) with respect to any new Lease, the entire initial term of any such new Lease, and (v) expenses incurred for the purpose of satisfying or terminating the obligations of a tenant under a new Lease to the landlord under another lease (whether or not such other lease covers space in the Property).

     “Remove” with respect to any exception to title shall mean that Seller causes the Title Company to remove or affirmatively insure over the same as an exception to the Title Policy, without any additional cost to Buyer, whether such removal or insurance is made available in consideration of payment, bonding, indemnity of Seller or otherwise.

Affidavit of Seller’s Residence
Property: IC Buckhead, Atlanta GA

     “Rent Roll” shall mean the rent roll set forth on Exhibit M, and any future rent rolls delivered by Seller pursuant to this Agreement, each of which shall show the categories of information described on Exhibit M.

     “Rental Payments” shall mean all payments received by on or behalf of Seller from Tenants or with respect to the Leases or with respect to any other use or occupancy of the Property for items such as minimum or base rent, additional rent, percentage rent, termination or cancellation charges, reimbursement for real estate taxes, utilities, parking fees, operating and maintenance expenses and insurance, as well as any other reimbursements or charges received thereunder.

     “Representation Exception Schedule” shall mean the exceptions to the representations and warranties of Seller, if any, as disclosed to Buyer in accordance with Section 6.2(J) hereto.

     “Required Removal Items” shall mean, collectively, any Title Objections to the extent (and only to the extent) that the same (a) have not been caused by Buyer or any Buyer’s Representatives, and (b) are either: (i) Liens evidencing monetary encumbrances (other than liens for non-delinquent general real estate taxes or assessments) which can be Removed by payment of liquidated amounts, but only if such Liens have been created by written instrument signed by Seller or assumed by written instrument signed by Seller and provided that in no event shall Seller be required to Remove any such Lien which is not related to the operation of the Property by any method other than indemnity of Seller in favor of the Title Company (for example, unrelated items would include a judgment against such party in connection with its other operations; whereas a mechanic’s lien for work on the Property pursuant to a contract entered into by Seller would be related to Property operations), or (ii) liens or encumbrances (including, but not limited to, Monetary Liens) created by Seller after the Effective Date in violation of this Agreement.

     “ROFO Agreement” shall mean that certain Right of First Offer affecting the Real Property dated January 20, 2006 by and between IHC Buckhead LLC and Hospitality Properties Trust a copy of which Buyer is deemed to have received.

     “Secondary Deposit” shall mean the sum of One Million Five Hundred Thousand and No/100 Dollars ($1,500,000.00), to the extent the same is deposited by Buyer in accordance with the terms of Paragraph 3.1 hereof, together with any interest earned thereon.

     “Seller” shall mean the seller referenced in the first paragraph of this Agreement.

     “Seller Indemnitees” is defined is Paragraph 18.3 of this Agreement.

     “Seller Parties” shall mean and include, collectively, (a) Seller; (b) its counsel; (c) any Broker retained by Seller; (d) Seller’s property manager; (e) any direct or indirect owner of any beneficial interest in Seller; (f) any officer, director, employee, shareholder or agent of Seller, its counsel, any Broker retained by Seller, Seller’s property manager or any direct or indirect owner of any beneficial interest in Seller; (g) Seller’s lenders, consultants, architects, attorneys,

Affidavit of Seller’s Residence
Property: IC Buckhead, Atlanta GA

accountants, engineers and other professionals, and (h) any other entity or individual affiliated or related in any way to any of the foregoing.

     “Seller Estoppels” shall mean lease estoppel certificates in the form of Exhibit R, executed by Seller. Upon receipt by Buyer of a post-closing Tenant Estoppel from a Seller Estoppel Tenant, any corresponding Seller Estoppel with respect to the Seller Estoppel Tenant referenced in the post-closing Tenant Estoppel shall thereupon and without further act of either party hereto become of no further force or effect to the to the extent that the Tenant Estoppel confirms in all material respects the information contained in the applicable Seller Estoppel. Except as aforesaid, the statements contained in the Seller Estoppel with respect to the respective Leases referenced therein shall survive the Closing for the benefit of Buyer for the remainder of the term (including renewals or extensions at the option of the Tenant) of the Lease, but in no event beyond the date of any subsequent voluntary modification entered into by Buyer or its successors or assigns with respect to such Lease.

     “Seller’s Knowledge” or words of similar import shall refer only to the actual knowledge of Robert J. Chitty, and shall not be construed to refer to the knowledge of any other Seller Party, or to impose or have imposed upon such parties any duty to investigate the matters to which such knowledge, or the absence thereof, pertains, including, but not limited to, the contents of the files, documents and materials made available to or disclosed to Buyer or the contents of files maintained by such parties. There shall be no personal liability on the part of such parties arising out of any of the Seller’s Warranties.

     “Seller’s Liability Limit” shall mean Five Million and no/100 Dollars ($5,000,000.00).

     “Seller’s possession”, “in the Seller’s possession” or words of similar import shall be deemed to mean to the extent the material or other item referred to by such phrase is located at the Hotel or in Seller’s corporate headquarters.

     “Seller’s Representatives” shall mean Seller’s officers, employees, agents, advisors, representatives, attorneys, accountants, consultants, investors, contractors, architects and engineers.

     “Seller’s Warranties” shall mean Seller’s representations and warranties set forth in Section 8.1 and if applicable, the limited warranty of title set forth in the deed executed by Seller in connection with Closing, as the same may be deemed modified or waived by Buyer pursuant to this Agreement.

     “Survey” shall mean a survey of the Land obtained by Buyer.

     “Tax Year” shall mean the year period commencing on January 1 of each calendar year and ending on December 31 of each calendar year.

     “Tenant” shall mean a tenant under a Lease; collectively, all tenants under the Leases are referred to as the “Tenants”.

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Property: IC Buckhead, Atlanta GA

     “Tenant Deposits” shall mean all prepaid rents, advance rentals, security deposits and other deposits made with respect to the Leases.

     “Tenant Estoppel” shall mean each estoppel certificate executed by a Tenant, which estoppel certificates shall be substantially in the form set forth on Exhibit S.

     “Terminate” shall mean the termination of this Agreement, by Buyer or Seller as applicable as set forth in this Agreement, in which event thereafter neither party hereto shall have any further rights, obligations or liabilities hereunder except to the extent that any right, obligation or liability set forth herein expressly survives termination of this Agreement.

     “Title Commitment” shall mean the Commitment of the Title Company to issue the Title Policy.

     “Title Company” shall mean the Baltimore office of Chicago Title Insurance Company, which will coordinate the Title Commitment through the Atlanta office of Fidelity National Title Insurance Company, located at, 200 Galleria Parkway, SE, Suite 2060, Atlanta, GA 30339; Attention Shawn Tidwell — https://www.fntic.com/ntsatlanta].

     “Title Objections” shall mean any defects in title (including any Record Exceptions which are not acceptable to Buyer) or survey (including the description of the Land) which may be revealed by Buyer’s examinations thereof to which Buyer timely objects in accordance with the terms of Paragraph 4.3.

     “Title Policy” shall mean the ALTA Owner’s Policy of Title Insurance (or such other comparable form of title insurance policy as is available in the jurisdiction in which the Property is located) issued by the Title Company in the amount of the Purchase Price and in the form of the Title Commitment, and containing, unless prohibited by applicable statutes or regulations, such endorsements as Buyer may obtain from the Title Company in the Title Commitment prior to the Due Diligence Deadline. Buyer shall be entitled to request that the Title Company provide such endorsements (or amendments) to the Title Policy as Buyer may reasonably require, provided that (a) such endorsements (or amendments) shall be at no cost to, and shall impose no additional liability on, Seller, (b) Buyer’s obligations under this Agreement shall not be conditioned upon Buyer’s ability to obtain such endorsements and, if Buyer is unable to obtain such endorsements, Buyer shall nevertheless be obligated to proceed to close the Transaction without reduction of or set off against the Purchase Price, and (c) the Closing shall not be delayed as a result of Buyer’s request.

     “Transaction” shall mean the purchase and sale transaction contemplated by this Agreement.

     “Uniform System of Accounts” shall mean the Uniform System of Accounts for the Lodging Industry, prepared by The Hotel Association of New York City, Inc., in effect as of the date hereof.

Affidavit of Seller’s Residence
Property: IC Buckhead, Atlanta GA

EXHIBIT A

Legal description of Land

All that tract or parcel of land lying and being in Land Lots 45, 46, 61 and 62 of the 17^th District, Fulton County, Georgia, and being more particularly described as follows:

Beginning at a T-bar found at the southeast intersection of Highland Drive and Peachtree Road; thence along the right of way of Peachtree Road along a curve to the left, an arc distance of 333.31 feet, said curve having a radius of 643.91 feet and being subtended by a chord of 329.60 feet, at North 31 degrees 30 minutes 42 seconds East to a 5/8” rebar set; thence North 16 degrees 25 minutes 07 seconds East, a distance of 31.87 feet to a 3/4” open top pipe found; thence South 74 degrees 57 minutes 58 seconds East, a distance of 356.81 feet to a nail set; thence South 07 degrees 05 minutes 55 seconds East, a distance of 37.53 feet to a nail set; thence South 08 degrees 47 minutes 56 seconds East, a distance of 91.13 feet to a 5/8” rebar set; thence South 48 degrees 35 minutes 11 seconds West, a distance of 6.26 feet to a 5/8” rebar set; thence North 85 degrees 20 minutes 49 seconds West, a distance of 51.29 feet to a 5/8” rebar set; thence South 21 degrees 20 minutes 08 seconds West, a distance of 5.39 feet to a 3/4” open top pipe found; thence South 21 degrees 39 minutes 31 seconds West, a distance of 329.32 feet to a point on the northern right of way of Highland Drive; thence along said right of way along a curve to the right, an arc distance of 119.98 feet, said curve having a radius of 272.38 feet and being subtended by a chord of 119.01 feet, at North 69 degrees 22 minutes 39 seconds West to a 3/4” to a point; thence South 59 degrees 53 minutes 59 seconds West, a distance of 27.39 feet to a point; thence North 54 degrees 58 minutes 23 seconds West, a distance of 294.63 feet to a point; thence North 26 degrees 55 minutes 03 seconds East, a distance of 24.76 feet to a T-bar found; said T-bar being the POINT OF BEGINNING.

TOGETHER WITH:

TRACT 2 (SOUTHWEST HALF OF HIGHLAND DRIVE)

ALL THAT TRACT OR PARCEL OF LAND lying and being in Land Lots 46 and 61 of the 17^th District, City of Atlanta, Fulton County, Georgia and being more particularly described as follows:

TO FIND THE POINT OF BEGINNING, COMMENCE at a T-bar found at the intersection of the southeasterly right-of-way of Peachtree Road (variable right-of-way) with the northeasterly right-of-way of Highland Drive; thence southwesterly along the southeasterly right-of-way of Peachtree Road South 26 degrees 55 minutes 03 seconds West a distance of 24.76 feet to a point, said point being the POINT OF BEGINNING. From the POINT OF BEGINNING as thus established, thence South 54 degrees 58 minutes 23 seconds East a distance of 294.63 feet to a point, thence southwesterly across said Highland Drive South 59 degrees 53 minutes 59 seconds West a distance of 27.24 feet to a point; thence South 46 degrees 19 minutes 01 seconds West a distance of 10.21 feet to a point located at the intersection of the southwesterly right-of-way line of Highland Drive and the northerly side of a 10-foot alley; thence northwesterly along the southwesterly right-of-way line of Highland Drive North 54 degrees 55 minutes 52 seconds West a distance of 281.71 feet to a point located on the southeasterly right-of-way line of Peachtree

Affidavit of Seller’s Residence
Property: IC Buckhead, Atlanta GA

Road; thence northeasterly along the southeasterly right-of-way line of Peachtree Road North 56 degrees 57 minutes 47 seconds East a distance of 10.78 feet to a point; thence continuing along said right-of-way line North 26 degrees 55 minutes 03 seconds East a distance of 24.76 feet to a point, said point being the POINT OF BEGINNING. Said property containing 9,876 square feet (0.23 acres).

TOGETHER WITH:

All that tract or parcel of land being and lying in Land Lot 46 of the 17^th District, City of Atlanta of Fulton County, Georgia. Said tract being part of Lot 4 as shown on plat titled “Re-Subdivision McKenzie Trust Co. Property” recorded at Plat Book 6, page 150, Fulton County public records and being more particularly described as follows:

Commencing at the intersection of the east right of way of Peachtree Road with the northeast right of way of Highland Drive; thence South 55 degrees 00 minutes 45 seconds East along the right of way of Highland Drive a distance of 299.21 feet to a point; thence continuing along said right of way along a curve to the left an arc distance of 70.42 feet, said curve having a radius of 272.38 feet and being subtended by a chord of 70.23 feet at South 61 degrees 58 minutes 12 seconds East to a point, said point being the POINT OF BEGINNING; thence North 25 degrees 23 minutes 15 seconds East, leaving said right of way a distance of 198.74 feet to a point; thence South 68 degrees 20 minutes 29 seconds East a distance of 46.45 feet to a point; thence South 21 degrees 39 minutes 31 seconds West a distance of 190.67 feet to a point on the north right of way of Highland Drive; thence along said right of way along a curve to the right an arc distance of 59.99 feet, said curve having a radius of 272.38 feet and being subtended by a chord of 59.87 feet at North 75 degrees 41 minutes 12 seconds West to a point and the POINT OF BEGINNING.

Said tract containing approximately 10,333 square feet or 0.24 acres.

LESS AND EXCEPT:

All that tract or parcel of land being and lying in Land Lots 46 and 61 of the 17^th District, City of Atlanta of Fulton County, Georgia. Said tract being part of Lot 3 and a portion of a 10 foot alley as shown on plat titled “Re-Subdivision McKenzie Trust Co. Property” recorded at Plat Book 6, page 150, Fulton County public records and being more particularly described as follows:

Commencing at the intersection of the east right of way of Peachtree Road with the northeast right of way of Highland Drive; thence South 55 degrees 00 minutes 45 seconds East along the northeast right of way of Highland Drive a distance of 299.21 feet to a point; thence continuing along said right of way along a curve to the left an arc distance of 5.42 feet, said curve having a radius of 272.8 feet and subtended by a chord of 5.42 feet at South 55 degrees 10 minutes 29 seconds East to a point, said point being the POINT OF BEGINNING; thence North 29 degrees 30 minutes 00 seconds East, leaving said right of way a distance of 103.32 feet to a point; thence South 36 degrees 36 minutes 45 seconds East a distance of 57.62 feet to a point; thence South 25 degrees 23 minutes 15 seconds West a distance of 110.42 feet to a point on the north right of way

Affidavit of Seller’s Residence
Property: IC Buckhead, Atlanta GA

of Highland Drive; thence along a curve to the right an arc distance of 65.00 feet, said curve having a radius of 272.38 feet and being subtended by a chord of 64.85 feet at North 62 degrees 32 minutes 25 seconds West to a point and the POINT OF BEGINNING.

Said tract containing approximately 6,601 square feet or 0.15 acres.

FURTHER LESS AND EXCEPT:

PROJECT NO.:	MSL-0004-00(689) Fulton
P.I. NO.:	0004689
PARCEL NO.:	22A
REQUIRED R/W:	0.066 acres
DATE OF R/W PLANS:	April 12, 2004
REVISION DATE:	August 31, 2004

All that tract or parcel of land lying and being in Land Lot 62 of the 17^th Land District of Fulton County, Georgia, being more particularly described as follows:

BEGINNING at a point 93.46 feet right of and opposite Station 121+82.01 on the construction centerline of Peachtree Road on Georgia Highway Project No. MSL-0004-00(689), Running

Thence S 30-30-44 W for a distance of 54.02 feet to a point.
Thence N 59-25-17 W for a distance of 30.00 feet to a point.
Thence N 59-25-17 W for a distance of 31.92 feet to a point.
Thence N 52-28-22 E for a distance of 19.74 feet to a point.
Thence N 43-35-49 E for a distance of 36.82 feet to a point.
Thence S 59-13-15 E for a distance of 46.20 feet back to the point of BEGINNING.

FURTHER LESS AND EXCEPT:

PROJECT NO.:	MSL-0004-00(689) Fulton
P.I. NO.:	0004689
REQUIRED R/W:	0.054 acres
PARCEL NO.:	22
DATE OF R/W PLANS:	April 12, 2004
REVISION DATE:	August 31, 2004

All that tract or parcel of land lying and being in Land Lot 62 of the 17^th Land District of Fulton County, Georgia, being more particularly described as follows:

BEGINNING at a point 93.46 feet right of and opposite Station 121+82.01 on the construction centerline of Peachtree Road on Georgia Highway Project No. MSL-0004-00(689), Running Thence N 59-13-15 W for a distance of 46.20 feet to a point.

Thence northeasterly 265.149 feet along the arc of a curve to the left (said curve having a radius of 650.000 feet and a chord distance of 263.314 feet on a bearing of N 30-19-06 E) to a point

Affidavit of Seller’s Residence
Property: IC Buckhead, Atlanta GA

51.88 feet right of and opposite Station 124+19.56 on said construction centerline of Peachtree Road.

Thence S 88-55-23 E for a distance of 5.34 feet to a point.

Thence southwesterly 241.951 feet along the arc of a curve to the right (said curve having a radius of 657.000 feet and a chord distance of 240.586 feet on a bearing of S 28-12-52 W) to a point 57.00 feet right of and opposite Station 122+00.00 on said construction centerline of Peachtree Road.

Thence S 21-20-13 E for a distance of 41.70 feet back to the point of BEGINNING.

FURTHER LESS AND EXCEPT:

PROJECT NO.:	MSL-0004-00(689) Fulton
P.I. NO.:	0004689
REQUIRED R/W:	0.011 acres
PARCEL NO.:	24
DATE OF R/W PLANS:	April 12, 2004
REVISION DATE:	August 31, 2004

All that tract or parcel of land lying and being in Land Lot 62 of the 17^th Land District of Fulton County, Georgia, being more particularly described as follows:

BEGINNING at a point 51.26 feet right of and opposite Station 125+15.79 on the construction centerline of Peachtree Road on Georgia Highway Project No. MSL-0004-00(689). Running Thence S 79-11-22 E for a distance of 5.74 feet to a point.

Thence S 13-57-36 W for a distance of 56.36 feet to a point.

Thence southwesterly 42.478 feet along the arc of a curve to the right (said curve having a radius of 657.00 feet and a chord distance of 42.471 feet on a bearing of S 15-48-44 W) to a point 57.00 feet right of and opposite Station 124+20.96 on said construction centerline of Peachtree Road.

Thence N 88-55-23 W for a distance of 5.34 feet to a point.

Thence northeasterly 68.131 feet along the arc of a curve to the left (said curve having a radius of 650.000 feet and a chord distance of 68.100 feet on a beating of N 15-29-13 E) to a point 52.23 feet right of and opposite Station 124+84.19 on said construction centerline of Peachtree Road.

Thence N 12-12-06 E for a distance of 31.62 feet back to the point of BEGINNING.

TOGETHER WITH rights and benefits pursuant to and created by the following instruments:

(A) Grant of Easements and Indemnity Agreement by and between Ferra Sabooni and IHC Buckhead, LLC, dated January 5, 2004, filed February 3, 2004 and recorded in Deed Book 36986, Page 508, records of the Superior Court of Fulton County, Georgia; as amended and restated by Amended and Restated Grant of Easements and Indemnity Agreement by and between Ferra Sabooni, Development Authority of Fulton County and IHC Buckhead LLC, a Georgia limited liability company, dated September 20, 2004, filed October 4, 2004 and recorded in Deed Book 38546, Page 109, aforesaid records.

Affidavit of Seller’s Residence
Property: IC Buckhead, Atlanta GA

(B) Stormwater Drainage Easement Agreement by and between Atlanta Financial Center, LLC, a Delaware LLC, Development Authority of Fulton County and IHC Buckhead LLC, dated October 1, 2004, filed October 4, 2004 and recorded in Deed Book 38546, Page 122, aforesaid records.

Affidavit of Seller’s Residence
Property: IC Buckhead, Atlanta GA

Exhibit A-1

General Property Descriptions and Allocation of Purchase Price

	Allocation of
	Purchase Price to		Allocation of		Allocation of
	Land (excluding		Purchase Price to		Purchase Price to
	improvements)		Hotel building		Personal Property
InterContinental Buckhead Hotel located at 3315 Peachtree Road, NE, Atlanta, Georgia 30326	$	25,000,000.00	$	69,000,000.00	$	11,000,000.00

Affidavit of Seller’s Residence
Property: IC Buckhead, Atlanta GA

FIRST AMENDMENT TO
PURCHASE AND SALE AGREEMENT

     This First Amendment to Purchase and Sale Agreement (this “First Amendment”) is made and entered into as of June 11, 2010 by and between IHC Buckhead, LLC, a Georgia limited liability company (“Seller”), and Orangemen Owner LLC, a Delaware limited liability company (“Purchaser”) with reference to the following facts:

RECITALS:

     A. Purchaser and Seller have entered into that certain Purchase and Sale Agreement dated as of May 25, 2010 (the “Agreement”); and

     B. Purchaser and Seller desire to amend and modify the Agreement as set forth below.

     NOW, THEREFORE, for and in consideration of the agreements and obligations hereinafter set forth and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by the parties hereto, Purchaser and Seller agree as follows:

AGREEMENT

1. Capitalized Terms. All capitalized terms not defined in this First Amendment shall have the meanings ascribed to them in the Agreement.

2. Title and Survey Objections. The first sentence of Section 4.3.A. is hereby deleted in its entirety and replaced with the following:

“Buyer shall have until 5:00 p.m. Eastern Time on June 18, 2010 to notify Seller in writing of any Title Objections; any such notice shall be accompanied by the Title Commitment and Survey and any other materials which evidence or disclose such objections to title.”

3. On-Going Management of Hotel.

     A. The second and third sentences of Section 16 are hereby deleted in their entirety and replaced with the following:

“Buyer and Seller, each in their respective discretion, shall try to agree on the specific form of the hotel management agreement on or before June 16, 2010 and, if the parties reach an agreement, shall manifest such agreement by signing an amendment to this Agreement attaching such hotel management agreement as Exhibit P to this Agreement. If the parties have not executed an amendment to this Agreement incorporating the agreed upon form of hotel management agreement into this Agreement by June 16, 2010, then either party may terminate this Agreement upon notice to the other party, in which case the Deposit shall be returned to Buyer, and the parties shall have no further rights or obligations hereunder, except for those which expressly survive any such termination.”

     B. The penultimate sentence of Section 16 is hereby deleted in its entirety.

4. Ratification. Except as modified by this First Amendment, the Agreement remains in full force and effect.

5. Counterparts. This First Amendment may be executed in multiple counterparts, each of which shall be deemed an original, and all of which, taken together, shall constitute one and the same instrument.

6. Successors and Assigns. This First Amendment shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns.

7. Governing Law. This First Amendment shall be governed by the laws of the State of Georgia, without regard to its conflict of laws principles.

[Signatures appear on the following page.]

IN WITNESS WHEREOF, the parties hereto have executed this First Amendment to Purchase and Sale Agreement as of the date first set forth above.

SELLER: IHC BUCKHEAD LLC, a Georgia limited liability company
By:	/s/ Travis D. Ray
	Name:	Travis D. Ray
	Title:	Vice President

PURCHASER: ORANGEMEN OWNER LLC, Delaware limited liability company
By:	/s/ Thomas C. Fisher
	Name:	Thomas C. Fisher
	Title:	Vice President

SECOND AMENDMENT TO
PURCHASE AND SALE AGREEMENT

     This Second Amendment to Purchase and Sale Agreement (this “Second Amendment”) is made and entered into as of June 16, 2010 by and between IHC Buckhead, LLC, a Georgia limited liability company (“Seller”), and Orangemen Owner LLC, a Delaware limited liability company (“Purchaser”) with reference to the following facts:

RECITALS:

     A. Purchaser and Seller have entered into that certain Purchase and Sale Agreement dated as of May 25, 2010 (the “Agreement”); and

     B. Purchaser and Seller desire to amend and modify the Agreement as set forth below.

     NOW, THEREFORE, for and in consideration of the agreements and obligations hereinafter set forth and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by the parties hereto, Purchaser and Seller agree as follows:

AGREEMENT

1. Capitalized Terms. All capitalized terms not defined in this Second Amendment shall have the meanings ascribed to them in the Agreement.

2. On-Going Management of Hotel.

     The second and third sentences of Section 16 are hereby deleted in their entirety and replaced with the following:

“Buyer and Seller, each in their respective discretion, shall try to agree on the specific form of the hotel management agreement on or before June 18, 2010 and, if the parties reach an agreement, shall manifest such agreement by signing an amendment to this Agreement attaching such hotel management agreement as Exhibit P to this Agreement. If the parties have not executed an amendment to this Agreement incorporating the agreed upon form of hotel management agreement into this Agreement by June 18, 2010, then either party may terminate this Agreement upon notice to the other party, in which case the Deposit shall be returned to Buyer, and the parties shall have no further rights or obligations hereunder, except for those which expressly survive any such termination.”

3. Ratification. Except as modified by this Second Amendment, the Agreement remains in full force and effect.

4. Counterparts. This Second Amendment may be executed in multiple counterparts, each of which shall be deemed an original, and all of which, taken together, shall constitute one and the same instrument.

5. Successors and Assigns. This Second Amendment shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns.

6. Governing Law. This Second Amendment shall be governed by the laws of the State of Georgia, without regard to its conflict of laws principles.

[Signatures appear on the following page.]

IN WITNESS WHEREOF, the parties hereto have executed this Second Amendment to Purchase and Sale Agreement as of the date first set forth above.

SELLER: IHC BUCKHEAD LLC, a Georgia limited liability company
By:	/s/ Travis D. Ray
	Name:	Travis D. Ray
	Title:	Vice President

PURCHASER: ORANGEMEN OWNER LLC, Delaware limited liability company
By:	/s/ Thomas C. Fisher
	Name:	Thomas C. Fisher
	Title:	Vice President

THIRD AMENDMENT TO
PURCHASE AND SALE AGREEMENT

     This Third Amendment to Purchase and Sale Agreement (this “Third Amendment”) is made and entered into as of June 18, 2010 by and between IHC Buckhead, LLC, a Georgia limited liability company (“Seller”), and Orangemen Owner LLC, a Delaware limited liability company (“Purchaser”) with reference to the following facts:

RECITALS:

     A. Purchaser and Seller have entered into that certain Purchase and Sale Agreement dated as of May 25, 2010 (the “Agreement”); and

     B. Purchaser and Seller desire to amend and modify the Agreement as set forth below.

     NOW, THEREFORE, for and in consideration of the agreements and obligations hereinafter set forth and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by the parties hereto, Purchaser and Seller agree as follows:

AGREEMENT

1. Capitalized Terms. All capitalized terms not defined in this Third Amendment shall have the meanings ascribed to them in the Agreement.

2. On-Going Management of Hotel.

     The second and third sentences of Section 16 are hereby deleted in their entirety and replaced with the following:

“Buyer and Seller, each in their respective discretion, shall try to agree on the specific form of the hotel management agreement on or before June 22, 2010 and, if the parties reach an agreement, shall manifest such agreement by signing an amendment to this Agreement attaching such hotel management agreement as Exhibit P to this Agreement. If the parties have not executed an amendment to this Agreement incorporating the agreed upon form of hotel management agreement into this Agreement by June 22, 2010, then either party may terminate this Agreement upon notice to the other party, in which case the Deposit shall be returned to Buyer, and the parties shall have no further rights or obligations hereunder, except for those which expressly survive any such termination.”

3. Ratification. Except as modified by this Third Amendment, the Agreement remains in full force and effect.

4. Counterparts. This Third Amendment may be executed in multiple counterparts, each of which shall be deemed an original, and all of which, taken together, shall constitute one and the same instrument.

5. Successors and Assigns. This Third Amendment shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns.

6. Governing Law. This Third Amendment shall be governed by the laws of the State of Georgia, without regard to its conflict of laws principles.

[Signatures appear on the following page.]

IN WITNESS WHEREOF, the parties hereto have executed this Third Amendment to Purchase and Sale Agreement as of the date first set forth above.

SELLER: IHC BUCKHEAD LLC, a Georgia limited liability company
By:	/s/ Travis D. Ray
	Name:	Travis D. Ray
	Title:	Vice President

PURCHASER: ORANGEMEN OWNER LLC, Delaware limited liability company
By:	/s/ Thomas C. Fisher
	Name:	Thomas C. Fisher
	Title:	Vice President

FOURTH AMENDMENT TO
PURCHASE AND SALE AGREEMENT

     This Fourth Amendment to Purchase and Sale Agreement (this “Fourth Amendment”) is made and entered into as of June 22, 2010 by and between IHC Buckhead, LLC, a Georgia limited liability company (“Seller”), and Orangemen Owner LLC, a Delaware limited liability company (“Purchaser”) with reference to the following facts:

RECITALS:

     A. Purchaser and Seller have entered into that certain Purchase and Sale Agreement dated as of May 25, 2010, as amended (the “Agreement”); and

     B. Purchaser and Seller desire to amend and modify the Agreement as set forth below.

     NOW, THEREFORE, for and in consideration of the agreements and obligations hereinafter set forth and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by the parties hereto, Purchaser and Seller agree as follows:

AGREEMENT

1. Capitalized Terms. All capitalized terms not defined in this Fourth Amendment shall have the meanings ascribed to them in the Agreement.

2. Management Agreement. Exhibit P attached hereto is hereby appended as Exhibit P to the Agreement.

3. Closing Deliveries. At Closing, counterparts of the documents attached as Exhibit P shall be executed and delivered as part of Buyer’s and Seller’s obligations under Sections 6.2 and 6.3 of the Agreement. Additionally, Buyer shall provide incumbency certificates evidencing that the Owner (as defined in the Management Agreement) and Guarantor (as defined in the Management Agreement) are each authorized to execute the applicable documentation attached as Exhibit P.

4. Ratification. Except as modified by this Fourth Amendment, the Agreement remains in full force and effect.

5. Counterparts. This Fourth Amendment may be executed in multiple counterparts, each of which shall be deemed an original, and all of which, taken together, shall constitute one and the same instrument.

6. Successors and Assigns. This Fourth Amendment shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns.

7. Governing Law. This Fourth Amendment shall be governed by the laws of the State of Georgia, without regard to its conflict of laws principles.

IN WITNESS WHEREOF, the parties hereto have executed this Fourth Amendment to Purchase and Sale Agreement as of the date first set forth above.

SELLER: IHC BUCKHEAD LLC, a Georgia limited liability company
By:	/s/ Travis D. Ray
	Name:	Travis D. Ray
	Title:	Vice President

PURCHASER: ORANGEMEN OWNER LLC, Delaware limited liability company
By:	/s/ Thomas C. Fisher
	Name:	Thomas C. Fisher
	Title:	Vice President

EXHIBIT P

Form of Hotel Management Agreement

(attached)