Form DEFA14A CONDOR HOSPITALITY TRUST

In addition to the other costs and expenses to be paid by Seller set forth elsewhere in this Agreement, Seller shall pay for the following items in connection with the transactions contemplated by this Agreement: (i) one-half (1/2) of the fees and expenses for Escrow Agent; (ii) the costs and expenses relating to the termination of the Operating Leases and the Excluded Management Agreements; (iii) all income taxes applicable to Seller or its direct or indirect owners including franchise or excise tax based on net earnings or income through but not including the Closing Date; (iv) all sales, VAT, or similar tax, levy, charge or fee incurred with respect to the transactions described in this Agreement; (v) the fees and expenses of its own attorneys, accountants and consultants; (vi) subject to Section 14.9, the costs and expenses due under Section 2.5(f) of the CMBS Loan Agreement including the cost of acquiring the Defeasance Collateral (as defined in the CMBS Loan Agreement) and such other costs and expenses of Seller and CMBS Borrower paid or incurred in connection with the defeasance; (vii) Seller’s Franchise Agreement Obligations; (viii) the fees and expenses for the title commitments, the title premium and any endorsements to the Title Policy, in each case, as expressly identified on Schedule 6.2 as Seller Costs; (ix) all state, county or other local documentary, transfer, conveyance, stamp, recording or similar tax payable in connection with the delivery of the Assignment of Interests expressly identified on Schedule 6.2 as Seller Costs; and (x) all costs in connection with discharging any Unpermitted Title Exceptions which are the obligation of Seller under Section 7.3.

In addition to the other costs and expenses to be paid by Buyer as set forth elsewhere in this Agreement, Buyer shall pay for the following items in connection with the transactions contemplated by this Agreement: (i) the fees and expenses incurred by Buyer for Buyer’s Inspectors or otherwise in connection with the Inspections; (ii) the fees and expenses for the New Survey; (iii) the fees and expenses for the title commitments, the title premium and any endorsements to the Title Policy, in each case, as expressly identified on Schedule 6.2 as Buyer Costs; (iv) any mortgage tax, title insurance fees and expenses for any loan title insurance policies, recording charges or other amounts payable in connection with any financing obtained by Buyer; (v) one-half (1/2) of the fees and expenses for Escrow Agent; (vi) the costs and expenses (including, without limitation, any application fees and any costs incurred in connection with the satisfaction and/or compliance with any property improvement plan required by Franchisor) to enter into a New Franchise Agreement with Franchisor for each of the Hotels and, if applicable, any Franchise Termination Payments (but excluding the Seller’s Franchise Agreement Obligations); (vii) all state, county or other local documentary, transfer, conveyance, stamp, recording or similar tax payable in connection with the delivery of the Assignment of Interests expressly identified on Schedule 6.2 as Buyer Costs; and (viii) the fees and expenses of its own attorneys, accountants and consultants.

Any other ordinary and usual closing costs and expenses, except as expressly provided in this Agreement, in connection with the sale of the Property shall be allocated between Buyer and Seller in accordance with the customary practice in the county where the applicable Hotel is located.

The obligations of the parties under this Section 6.2 shall survive the Closing (and not be merged therein) or any earlier termination of this Agreement until thirty (30) days after the applicable statute of limitations has expired.

operate the Seller’s Subsidiaries and Hotels and otherwise conduct their respective business in the manner which is substantially similar to Seller Group’s and Hotel Management Company’s past custom and practice for the business, taking into account the facts and circumstances in existence from time to time (provided that the existence of this Agreement and the potential to consummate the transactions contemplated hereby and the affect that same have on the operation of the Hotels shall not be taken into account):

provide a level of employment at each Hotel sufficient for the normal operations of such Hotel as currently conducted;

accept, in the ordinary course of business, Bookings for the use of guest rooms and facilities of the Hotel;

keep, observe, and perform all material obligations under the Contracts, the Equipment Lease, the Space Leases, the Franchise Agreements, the Management Agreements, the CMBS Loan Documents, the Leawood Loan Documents, the DeBartolo Option, the Rooftop Lease, all licenses and permits, and all other applicable contractual arrangements relating to the Property;

perform maintenance and repairs in the ordinary course of business, except that Seller Group shall not be required to make any capital improvements or replacements to the Property and other than in connection with an emergency repair shall not make, nor consent under the applicable Management Agreement or Franchise Agreement to the extent Seller Group has a right to approve or reject the same, any capital improvements to the Property that will not be fully completed and fully paid for prior to the Closing;

provide written notice to Buyer of (i) any litigation, arbitration proceeding or administrative hearing before any governmental authority that adversely affects the Seller’s Subsidiaries or the Properties, (ii) any violation of applicable Law or other material notices regarding the Seller’s Subsidiaries or the Property received by Seller, Seller’s Subsidiaries or Hotel Management Company, (iii) notices of default delivered or received under the Contracts, the Equipment Lease, the Space Leases, the Franchise Agreements, the Management Agreements, (iv) Seller obtaining Knowledge of any Seller’s Warranties being untrue, inaccurate or incorrect; and/or (v) Seller obtaining Knowledge of any threatened strike, lockout or similar material labor dispute involving the employees at the Properties;

keep the Properties insured in such amounts and under such terms as are substantially consistent with the insurance policies, and promptly after the Effective Date;

except to the extent that the same is entered into by the Hotel Management Company pursuant to the applicable Management Agreement as of the Effective Date without the consent of Seller Group, Seller Group shall not (and shall not grant any approval for Hotel Management Company to) execute any new Contract nor amend, terminate or accept the surrender of any existing Contract without the prior approval of Buyer (such approval not to be unreasonably withheld, conditioned or delayed in the case of Contracts that are not Material Contracts);

except to the extent that the same is entered into by the Hotel Management Company pursuant to the applicable Management Agreement as of the Effective Date without the consent of Seller Group, Seller Group shall not (and shall not grant any approval for Hotel Management Company to) execute any new Space Lease or Equipment Lease nor amend, terminate or accept the surrender of any existing Space Lease or Equipment Lease without the prior approval of Buyer (such approval not to be unreasonably withheld, conditioned or delayed in the case of Equipment Leases that are not Material Equipment Leases);

terminate the Operating Leases, Affiliate Agreements and Excluded Management ‘Agreements effective as of Closing without, with respect to Seller Subsidiaries, any liabilities or other obligations post-termination. All termination fees and any other costs and expenses relating to such terminations shall be the responsibility solely of Seller Group, and Buyer shall not have any responsibility or liability therefor; and

maintain customary levels of Inventory, subject to such depletion and restocking as shall occur and be made in the ordinary course of business consistent with past practice, provided that to the extent as of the Closing, Inventory levels are less than appropriate present levels for such Inventory as reasonably determined by the applicable Hotel Management Companies appropriate for the operations of the applicable Hotel (the “Par Standard”), Buyer shall receive a credit to the Purchase Price as set forth in Section 14.5.

Prior to the Effective Date, Buyer has ordered, and the Title Company has delivered to Buyer, the title commitment’s set forth on Schedule 7.3(a)-1 (the “Pre-Signing Title Commitments”) with respect to each Hotel and Buyer has approved and accepted all matters and exceptions listed in the Pre-Signing Title Commitments other than as set forth on Schedule 7.3(a)-2, if any (and such accepted title exceptions shall be deemed “Permitted Title Exceptions” for all purposes hereunder and the exceptions set forth on Schedule 7.3(a)-2 shall be deemed “Unpermitted Title Exceptions” for all purposes hereunder with Seller expressly covenanting to cure all such Unpermitted Title Exceptions). Buyer shall be deemed to have waived any further right to object to any such Permitted Title Exceptions, subject to Buyer’s right to review and object to any new title matter which may first arise from and after the effective date of the applicable Pre-Signing Title Commitment but prior to the Closing as set forth in Section 7.3(b) below.

If any supplement or revision to a Pre-Signing Title Commitment delivered to Buyer after the Effective Date contains exceptions to title or defects not shown in the Pre-Signing Title Commitment delivered to Buyer prior to the Effective Date and: (i) such additional matters or exceptions identified on the revised title commitment would be reasonably likely to result in a Title Material Adverse Effect and (ii) and such additional title objections were not caused by Buyer or any person on behalf of Buyer (such new exceptions satisfying the foregoing, as applicable, an “Intervening Encumbrance”), then Buyer shall be entitled to object to such Intervening Encumbrance(s) by delivery of written notice of objection to Seller on or before the third (3rd) Business Day after Buyer’s receipt of the supplement, underlying title exception documents and, if applicable, an updated survey showing such Intervening Encumbrance. Seller shall have five (5) Business Days from the receipt of Buyer’s notice of each such Intervening Encumbrance to elect by written notice to Buyer, in its sole and absolute discretion and without any obligation, whether or not to remove or to remedy the conditions or defects resulting in such Intervening Encumbrance (unless such Intervening Encumbrance is a Mandatory Cure Item) and procure a supplement to the title commitment, as applicable, removing such title objection or causing the Title Company to issue an endorsement thereto insuring Buyer against the applicable Intervening Encumbrance prior to or by the Closing. If Seller is either unable or unwilling to provide for the removal of one or more of such Intervening Encumbrances or does not agree to cure such Intervening Encumbrance (provided that Seller cannot decline to cure any Mandatory Cure Item), then, at Buyer’s option, this Agreement may be terminated upon written notice given by Buyer to Seller within three (3) Business Days after the expiration of Seller’s five (5) Business Day response period. For avoidance of doubt, if Seller fails to respond within such five (5) Business Day period, Seller shall be deemed to have elected not to cure such Intervening Encumbrance (unless such Intervening Encumbrance is a Mandatory Cure Item). If Buyer delivers a termination notice pursuant to this Section 7.3(b), then, upon delivery of such termination notice, this Agreement shall automatically terminate, and the parties shall be released from all further obligations under this Agreement (except for those which expressly survive Termination of this Agreement), provided that the Deposit shall be disbursed by Escrow Agent to Buyer. If Buyer shall have the right to, but does not terminate this Agreement in the manner set forth above in this Section 7.3(b), then Buyer shall be deemed to have waived its objection to any such Intervening Encumbrance (unless such Intervening Encumbrance is a Mandatory Cure Item) and this Agreement shall remain in full force and effect. Notwithstanding anything in this Agreement to the contrary, if Seller elects to cure an Intervening Encumbrance (or such Intervening Encumbrance is a Mandatory Cure Item), (A) the Closing Date shall be extended to the second (2^nd) Business Day after the date on which (i) Seller shall have cured such Intervening Encumbrance and (ii) the Title Company has delivered to Buyer a supplement to the title commitment or proforma evidencing the same, provided that in no event shall Seller be permitted to extend the Closing Date pursuant to this Section 7.3(b) for more than fifteen (15) days in the aggregate and (B) if Seller fails to remove such Intervening Encumbrance within such fifteen (15) day cure period, then Seller shall be in breach of this Agreement and Buyer may avail itself of any remedies provided in Section 11.2. Notwithstanding anything to the contrary contained or implied in this Agreement, Seller shall remove, pay and satisfy of record the following at or prior to Closing (without any extension right to cause such payment or satisfaction): (aa) any title exception placed on the Property as a result of Seller Group’s or Hotel Management Company’s consent or as a result of Seller Group’s or Hotel Management Company’s action or omission which may be removed by payment of a liquidated amount (or other means reasonably acceptable to the Title Company, provided, Seller shall not be obligated to spend more than One Million and No/100 Dollars ($1,000,000) in the aggregate (which for the avoidance of doubt shall exclude any judgment or mechanic’s Lien set forth in clause (ee) below); (bb) any mortgages, deeds to secure debt, deeds of trust or other security interests for any financing; (cc) Taxes relating to any period prior to the Closing Date which constitute exceptions to title which are not yet due and payable at Closing; (dd) any title exception created by Seller Group on or after the Effective Date other than permitted pursuant to the express terms of this Agreement and (ee) any judgment or mechanics Liens which may be removed in accordance with their terms by payment of a liquidated amount (or other means reasonably acceptable to the Title Company) (collectively, “Mandatory Cure Items”).

In addition, Buyer shall have the right to obtain from Title Company such endorsements to the Title Policies and/or such "extended coverage" or additional liability protection as Buyer may elect to obtain in its sole discretion; provided, however, that Buyer’s ability to obtain such title endorsements and/or extended coverage or additional liability protection shall not be a condition precedent to Buyer's obligations hereunder and shall not extend or delay Closing. Buyer shall be solely responsible for negotiating with Title Company with respect to such title endorsements and/or such extended coverage or additional liability protection as may be requested by Buyer, if any.

For purposes of this Agreement, the procurement by Seller of a commitment for the issuance of a title policy or endorsement thereto by the Title Company insuring Buyer against the exception or other matter (other than Unpermitted Title Exceptions and Mandatory Cure Items which shall be paid and satisfied of record at Closing) in a reasonably acceptable manner to Buyer without any additional cost or premium to Buyer shall be deemed a cure or remedy of such exception or matter as long as the Title Company agrees to delete such exception or affirmatively insure over such exception. Except as expressly set forth in this Section 7.3 and Seller’s obligations set forth in Article X, Seller has not agreed to take any additional actions with respect to title matters and Buyer hereby accepts as Permitted Title Exceptions the exceptions to title with respect to which Seller will not be taking any action. Notwithstanding anything to the contrary contained or implied in this Agreement, Buyer shall not have any right of action against Seller, at law or in equity, for Seller’s inability to convey title subject only to the Permitted Title Exceptions except in each instance as expressly provided herein, including, without limitation, as a result of a breach of any Seller’s obligations set forth in this Agreement.

Seller agrees to use their good faith efforts to cause its respective officers, employees and advisors to provide reasonable cooperation (at Buyer's sole cost and expense) with the efforts of Buyer to obtain any Association estoppels, as may be reasonably requested by Buyer upon reasonable advance notice to Seller; provided, however, that absent bad faith, Seller's or its respective officers, employees or advisors failure to reasonably cooperate shall in no event be deemed a breach or default under this Agreement.

Seller shall use commercially reasonable efforts to cure any building, zoning or fire code violations prior to the Closing (“Violations”); provided, however, to the extent Seller uses commercially reasonable efforts to cure such Violations, Seller’s failure to cure such Violations shall in no event be deemed a breach or default under this Agreement.  In addition, Seller agrees to use their good faith efforts to cooperate with Buyer (i) to cause any open or expired building permits to be closed out and (ii) to obtain any necessary documentation or approvals required to address insufficient or missing parking necessary to comply with zoning requirements under applicable Law; provided, however, that absent bad faith, Seller's failure to reasonably cooperate shall in no event be deemed a breach or default under this Agreement.

Seller agrees to use their good faith efforts to cause its respective officers, employees and advisors to provide reasonable cooperation (at Buyer's sole cost and expense) with the efforts of Buyer to obtain the written consent from the City Manager of the City of Austin, Texas to that certain Right of Way Encroachment License Agreement affecting the Hotel; provided, however, that absent bad faith, Seller's or its respective officers, employees or advisors failure to reasonably cooperate shall in no event be deemed a breach or default under this Agreement.

Except as otherwise provided in this Section 7.5, between the Effective Date and the Closing Date, Seller shall not, and shall cause its subsidiaries and its and their officers and directors not to, and shall not authorize and shall use reasonable efforts to cause any other Representatives of the Seller or any of its subsidiaries not to, directly or indirectly, (i) solicit, initiate, knowingly encourage or knowingly facilitate any inquiry, proposal or offer that constitutes, or would reasonably be expected to lead to, an Acquisition Proposal (an “Inquiry”), (ii) enter into, continue or otherwise participate or engage in any negotiations or discussions regarding, or furnish to any person other than Buyer or its Representatives any non-public information or data in furtherance of, any Acquisition Proposal or Inquiry, (iii) otherwise knowingly facilitate in any way any effort or attempt to make an Acquisition Proposal or Inquiry, (iv) approve or recommend any Acquisition Proposal, or (v) approve, recommend, declare advisable or enter into any letter of intent, memorandum of understanding, agreement in principle, acquisition agreement, merger agreement, share exchange agreement, consolidation agreement, option agreement, joint venture agreement, partnership agreement or other agreement, in each case related to an Acquisition Proposal (other than an Acceptable Confidentiality Agreement), or requiring or having the effect of requiring Seller to abandon, terminate or breach its obligations hereunder or fail to consummate the Transaction (each item referred to in this Section 7.5(a)(v), a “Seller Alternative Acquisition Agreement”), or (vi) resolve, agree to or propose publicly to do any of the foregoing. Seller shall, and shall cause each of its subsidiaries to, and shall direct the Representatives of Seller and its subsidiaries to, (A) immediately cease and cause to be terminated all existing discussions and negotiations with any person and its Representatives (other than Buyer or any of its Representatives) conducted heretofore with respect to any Acquisition Proposal, and (B) not terminate, amend, release or modify any provision of any standstill agreement (including any standstill provisions contained in any confidentiality or other agreement) to which it or any of its Affiliates or Representatives is a party except to allow the applicable party to make an Acquisition Proposal to the Seller Board on a non-public basis.

Notwithstanding anything herein to the contrary in Section 7.5(a), but subject to Seller’s compliance with this Section 7.5, if, at any time following the Effective Date and prior to obtaining the Shareholder Approval, (i) Seller receives an unsolicited written Acquisition Proposal that the Seller Board believes in good faith to be bona fide, (ii) such Acquisition Proposal was not the result of a violation of this Section 7.5, and (iii) the Seller Board determines in good faith (after consultation with outside legal counsel and its financial advisor) that such Acquisition Proposal constitutes, or would reasonably be expected to lead to, a Superior Proposal, then Seller may (and may authorize its Representatives to) (x) furnish non-public information with respect to Seller and its subsidiaries to the person making such Acquisition Proposal (and its Representatives) pursuant to an Acceptable Confidentiality Agreement; provided, that any non-public information provided to any person given such access shall have previously been provided to Buyer or shall be provided to Buyer as soon as reasonably practicable (and in any event within 48 hours of the time it is provided to such person), and (y) participate in negotiations with the person making such Acquisition Proposal (and such person’s Representatives) regarding such Acquisition Proposal. Seller agrees that any breach of this Section 7.5 by any of its subsidiaries or Representatives shall be deemed to be a breach of this Agreement by Seller.

Except as permitted in Section 7.5(d), neither the Seller Board nor any of its committees shall (i)(A) withhold, withdraw, qualify or modify (or publicly propose or resolve to withhold, withdraw, qualify or modify), in a manner adverse to Buyer, the Seller Board Recommendation, (B) authorize, approve, adopt or recommend or otherwise declare advisable (or publicly propose or resolve to authorize, approve, adopt, endorse or recommend or otherwise declare advisable) any Acquisition Proposal or (C) fail to include the Seller Board Recommendation in the Proxy Statement (each such action set forth in this Section 7.5(c) being referred to herein as a “Seller Adverse Recommendation Change”), (ii) except as expressly permitted by, and after compliance with this Section 7.5, authorize, approve, adopt or recommend or otherwise declare advisable (or publicly propose or resolve to authorize, approve, adopt, endorse or recommend or otherwise declare advisable), or cause or permit Seller or any of its subsidiaries to enter into, any Seller Alternative Acquisition Agreement (other than an Acceptable Confidentiality Agreement entered into in compliance with Section 7.5(a)).

Notwithstanding anything in this Agreement to the contrary, at any time prior to obtaining the Shareholder Approval, the Seller Board may (i) make a Seller Adverse Recommendation Change in response to a Seller Intervening Event if the Seller Board determines in good faith, after consultation with its outside legal counsel, that the failure to do so in response to such Seller Intervening Event would violate the Seller Board’s duties under applicable Laws or (ii) make a Seller Adverse Recommendation Change, terminate this Agreement pursuant to Section 11.3(d) and concurrently enter into a Seller Alternative Acquisition Agreement if the Seller Board has received an unsolicited written bona fide Acquisition Proposal (and the Seller has not breached this Section 7.5) that, in the good faith determination of the Seller Board, after consultation with outside legal counsel and financial advisors, constitutes a Superior Proposal, in each case after having complied with, and giving effect to all the adjustments which may be offered by Buyer pursuant to, this Section 7.5(d); provided, that the Seller Board shall only be entitled to effect a Seller Adverse Recommendation Change and, in the case of a Superior Proposal, terminate this Agreement pursuant to Section 11.3(d) and enter into a Seller Alternative Acquisition Agreement as permitted under this Section 7.5(d), if (A) Seller has provided a prior written notice (a “Seller Notice of Change of Recommendation”) to Buyer that Seller intends to take such action, (x) in the case of a Superior Proposal, identifying the person or entity making the Superior Proposal and describing in reasonable detail the financial and other material terms and conditions of the Superior Proposal that is the basis of such action including, if applicable, copies of any written proposals or offers and any proposed agreements related to a Superior Proposal and (y) in the case of an Seller Intervening Event, describing in reasonable detail the Seller Intervening Event that is the basis of such action (it being agreed that the delivery of the Seller Notice of Change of Recommendation by Seller shall not constitute a Seller Adverse Recommendation Change), (B) during the five (5) Business Day period following Buyer’s receipt of the Seller Notice of Change of Recommendation, Seller shall, and shall cause its Representatives to, negotiate with Buyer in good faith (to the extent Buyer desires to negotiate) to make such adjustments in the terms and conditions of this Agreement, so that, in the case of a Superior Proposal, such Acquisition Proposal ceases to constitute a Superior Proposal, or, in the case of an Seller Intervening Event, the failure to take such action would not violate the Seller Board’s duties under applicable Law; and (C) following the end of such five (5) Business Day period, the Seller Board shall have determined in good faith, after consultation with outside legal counsel and financial advisors, taking into account any changes to this Agreement proposed in writing by Buyer in response to the Seller Notice of Change of Recommendation or otherwise, that (I) the Acquisition Proposal giving rise to the Seller Notice of Change of Recommendation continues to constitute a Superior Proposal or (II) in the case of a Seller Intervening Event, the failure of the Seller Board to effect a Seller Adverse Recommendation Change would violate the Seller Board’s duties under applicable Law. Any amendment to the financial terms or any other material amendment of or material revisions to such a Superior Proposal shall require a new Seller Notice of Change of Recommendation, and Seller shall be required to comply again with the requirements of this Section 7.5(d); provided, however, that references to the five (5) Business Day period above shall then be deemed to be references to a three (3) Business Day period following receipt by Buyer of any such new Seller Notice of Change of Recommendation.

Seller shall promptly (but in no event later than 48 hours) notify Buyer after receipt of any Acquisition Proposal or any request for non-public information relating to Seller or any of its subsidiaries by any third party that informs Seller that it is making, or has made, an Acquisition Proposal, or any Inquiry from any person seeking to have discussions or negotiations with Seller relating to a possible Acquisition Proposal. Such notice shall be made orally and confirmed in writing, and shall identify the person making such Acquisition Proposal or Inquiry and shall indicate the material terms and conditions of any Acquisition Proposals, Inquiries, proposals or offers, to the extent known (including, if applicable, providing copies of any written Inquiries, requests, proposals or offers and any proposed agreements related thereto, which may be redacted to the extent necessary to protect confidential information of the business or operations of the person making such Acquisition Proposals, Inquiries, proposals or offers). Seller shall also promptly (and in any event within 48 hours), notify Buyer, orally and in writing, (i) if Seller determines to begin providing non-public information or to engage in discussions or negotiations concerning an Acquisition Proposal pursuant to Section 7.5(b) and shall in no event begin providing such information or engaging in such discussions or negotiations prior to providing such notice and (ii) of any change to the financial and other material terms and conditions of any Acquisition Proposal and otherwise keep Buyer reasonably informed of the status and terms of any such proposals, offers, discussions or negotiations on a current basis, including by providing to Buyer a copy of all proposals, offers, drafts of proposed agreements or correspondence relating thereto. Neither Seller nor any of its subsidiaries shall, after the Effective Date, enter into any confidentiality or similar agreement that would prohibit it from providing such information to Buyer.

Nothing contained in this Section 7.5 shall prohibit Seller or the Seller Board from (i) taking and disclosing a position contemplated by Rule 14d-9, Rule 14e-2(a)(2) or (3) or Item 1012(a) of Regulation M-A promulgated under the Exchange Act (or any similar communications to the Seller Shareholders) or (ii) making any disclosure that constitutes a “stop, look and listen” communication pursuant to Section 14d-9(f) promulgated under the Exchange Act (or any similar communications to the Seller Shareholders), which actions shall not constitute or be deemed to constitute a Seller Adverse Recommendation Change; provided, that Seller publicly and expressly reaffirms the Seller Board Recommendation in such disclosure; and provided, further, that neither Seller nor the Seller Board shall be permitted to recommend that the Seller Shareholders tender any securities in connection with any tender offer or exchange offer that is an Acquisition Proposal or otherwise effect a Seller Adverse Recommendation Change with respect thereto, except as permitted by Section 7.5(d).

Seller and the Seller Board shall not take any actions to exempt any person (other than Buyer, its parent company or their Affiliates) from or render inapplicable (i) the “Ownership Limit” in Seller’s articles of incorporation other than to accommodate internal transfers between Affiliates of Supporting Parties provided that such transferee, if applicable, executes a joinder to be bound by the terms of the Support Agreement to the same extent as its related Supporting Party, which joinder shall be in form and substance reasonably acceptable to Buyer; or (ii) any “fair price,” “business combination” or “control share acquisition” statute or other similar statute or regulation, in each case, unless such actions are taken concurrently with the termination of this Agreement in accordance with Section 11.3(d).

As promptly as reasonably practicable after the execution of this Agreement, Seller shall prepare and, after consultation with and consideration in good faith of any comments on the Proxy Statement proposed by Buyer, file with the Securities and Exchange Commission (the “SEC”) a proxy statement in preliminary form (together with any amendments thereof or supplements thereto and any other required proxy materials, the “Proxy Statement”) for a special meeting of the Seller Shareholders (including any adjournments and postponements thereof, the “Shareholder Meeting”) to obtain the Shareholder Approval. Seller shall use its reasonable efforts to (i) obtain and furnish the information required to be included by the SEC in the Proxy Statement and respond, after consultation with Buyer, promptly to any comments made by the SEC with respect to the Proxy Statement, (ii) mail or deliver the definitive Proxy Statement to Seller’s shareholders as promptly as practicable after the earlier to occur of (x) receiving notification that the SEC is not reviewing the preliminary Proxy Statement or (y) the conclusion of any SEC review of the preliminary Proxy Statement and (iii) if necessary, after the definitive Proxy Statement shall have been so mailed, promptly circulate amended or supplemental proxy materials and, if required in connection therewith, resolicit proxies; provided, that no such amended or supplemental proxy materials will be filed with the SEC or mailed by Seller without affording Buyer a reasonable opportunity for consultation and review, and Seller shall consider in good faith any comments on such materials reasonably proposed by Buyer. Seller will promptly notify Buyer of the receipt of comments from the SEC and of any request from the SEC for amendments or supplements to the Proxy Statement or for additional information, and will promptly supply Buyer with copies of all written correspondence between Seller or its Representatives, on the one hand, and the SEC or members of its staff, on the other hand, with respect to the Proxy Statement or the Transaction. Prior to responding to any comments of the SEC or members of its staff, Seller shall provide Buyer with a reasonable opportunity to consult and review such response and Seller shall consider in good faith any comments on such response reasonably proposed by Buyer. Buyer shall furnish all information concerning itself and its parent company as may be reasonably required to include in the Proxy Statement; provided that information about the Buyer, its parent company or their Affiliates included in the Proxy Statement shall be subject to the final review and approval of the Buyer. In addition, prior to or within ten (10) calendar days after the date of this Agreement (and thereafter as reasonably determined by Seller in consultation with Buyer), Seller shall conduct a “broker search” in accordance with Rule 14a-13 of the Exchange Act related to setting a record date for the Shareholder Meetings that is twenty (20) Business Days (or such shorter period as may be permitted by Rule 14a-13) after the date of such “broker search”. Seller shall include in the Proxy Statement the Seller Board Recommendation unless the Seller Board Recommendation has been withdrawn, modified or amended in accordance with Section 7.5.

If, at any time prior to the Shareholder Meeting, any information relating to Seller or Buyer, or any of their respective Affiliates, should be discovered by Seller or Buyer, as the case may be, which should be set forth in an amendment of, or a supplement to, any of the Proxy Statement, so that any of such documents would not include any misstatement of a material fact or omit to state any material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, the party that discovers such information shall promptly notify the other parties hereto, and Seller and Buyer shall cooperate in the prompt filing with the SEC of any necessary amendment of, or supplement to, the Proxy Statement and, to the extent required by applicable law, in disseminating the information contained in such amendment or supplement to the Seller Shareholders. Nothing in this Section 7.7(b) shall limit the other obligations of any party under this Section 7.7(a). All documents that Seller is responsible for filing with the SEC in connection with the Transaction will, at the time of the first mailing thereof, at the time of the Shareholders Meeting and at the time of any amendment or supplement thereof, as applicable, comply as to form and substance in all material respects with the applicable requirements of the Exchange Act and the rules and regulations thereunder.

As promptly as practicable after the Proxy Statement is cleared by the SEC for mailing to Seller’s shareholders, Seller shall, in accordance with applicable law and the articles of incorporation and bylaws of Seller, duly call, give notice of, convene and hold the Shareholder Meeting. Seller shall, through the Seller Board, recommend to its shareholders that they provide the Shareholder Approval, include such recommendation in the Proxy Statement and solicit and use its reasonable efforts to obtain the Shareholder Approval (including by soliciting proxies from the Seller Shareholders), except to the extent that the Seller Board shall have made a Seller Adverse Recommendation Change as permitted by and determined in accordance with Section 7.5. Seller shall keep Buyer updated with respect to proxy solicitation results as reasonably requested by Buyer. Unless this Agreement is terminated in accordance with its terms, Seller shall not submit to the vote of its shareholders any Acquisition Proposal. Notwithstanding the foregoing provisions of this Section 7.7(c), Seller, acting through the Seller Board, shall be permitted to adjourn, delay or postpone the Shareholder Meeting in accordance with applicable Law after consultation with Buyer (i) to the extent necessary to allow reasonable additional time for the filing and mailing of any supplemental or amended disclosure which the Seller Board has determined in good faith after consultation with outside counsel is reasonably likely to be necessary or appropriate under applicable Law and for such supplemental or amended disclosure to be disseminated and reviewed by the applicable Seller Shareholders prior to the applicable Shareholder Meeting, (ii) if there are insufficient shares represented (either in person or by proxy) to constitute a quorum necessary to conduct the business of the Shareholder Meeting or (iii) to allow reasonable additional time to solicit additional proxies in favor of the Shareholder Approval to the extent the Seller Board or any committee thereof reasonably believes necessary in order to obtain the Shareholder Approval; provided that, without the written consent of Buyer, in no event shall the Shareholder Meeting (as so adjourned, delayed or postponed) be held on a date that is more than thirty (30) days after the date for which the Shareholders Meeting was originally scheduled.

Unless this Agreement shall have been terminated in accordance with its terms, the obligation of Seller to duly call, give notice of, convene and hold the Shareholder Meeting, mail the Proxy Statement (and any amendment or supplement thereto that may be required by applicable law) to the Seller Shareholders and solicit proxies in favor of the Shareholder Approval shall not be affected by a Seller Adverse Recommendation Change.

proceed to Closing without any reduction in or set-off against the Purchase Price, in which case Buyer shall be deemed to have waived Seller’s default in performing its obligations and covenants under this Agreement or Seller’s incorrect representations and warranties; or

specifically enforce the terms and conditions of this Agreement (without the necessity of proving the inadequacy of money damages as a remedy); or

Terminate this Agreement by giving Seller written notice of such election prior to the consummation of the Closing whereupon Escrow Agent shall promptly return the Deposit to Buyer and, subject to Section 11.4, no party to this Agreement shall thereafter have any further rights or liabilities under this Agreement, except, however, that the parties shall remain obligated with respect to the provisions herein which specifically survive termination. In addition to the other rights and remedies available to Buyer hereunder (and without limitation of Section 11.4), if Buyer elects to terminate this Agreement due to a material breach or default by Seller pursuant to this Section 11.2, Seller shall reimburse Buyer or its designee within (5) Business Days following the date of such termination for all of the documented out-of-pocket costs and expenses incurred by or on behalf of Buyer or its Affiliates in connection with this Agreement and the transactions contemplated hereby (including fees and expenses of Representatives of Buyer and/or its Affiliates), up to an amount not to exceed Five Hundred Thousand and No/100 Dollars ($500,000) (the “Expense Reimbursement”).

By mutual agreement of Buyer and Seller.

By either Buyer or Seller if:

By Buyer if, prior to obtaining the Shareholder Approval, Seller or the Seller Board or any committee thereof:

by Seller if, prior to obtaining the Shareholder Approval, (i) after complying with Section 7.5 in connection with a Superior Proposal, the Seller Board authorizes Seller or any of its subsidiaries to enter into a definitive written agreement providing for the implementation of a Superior Proposal that did not result from a breach of Section 7.5, (ii) Seller or its subsidiary enters into a definitive written agreement providing for such Superior Proposal concurrently with or immediately after the termination of this Agreement in accordance with its terms and (iii) Seller, prior to or concurrently with such termination, pays to Buyer the Termination Fee in accordance with Section 11.4.

Seller shall pay, or cause to be paid, to Buyer by wire transfer of immediately available funds an amount equal to Five Million and No/100 Dollars ($5,000,000) (the “Termination Fee”):

Intentionally omitted.

Seller Group acknowledges that the agreements contained in this Section 11.4 and in Section 11.2(c) are an integral part of the Transaction, and that, without these agreements, Buyer would not enter into this Agreement and that each of the Termination Fee is not a penalty, but rather is liquidated damages in a reasonable amount that will compensate Buyer in the circumstances in which the Termination Fee or Expense Reimbursement are payable, as applicable, for the efforts and resources expended and opportunities foregone while negotiating this Agreement and in reliance on this Agreement and on the expectation or consummation of the Transaction, which amount would otherwise be impossible to calculate the precision. For the avoidance of doubt, (i) in no event shall Seller be required to pay the Termination Fee on more than one occasion. In the event that Seller shall fail to pay the Termination Fee or Expense Reimbursement when due, Seller shall reimburse Buyer for all reasonable costs and expenses actually incurred or accrued by it (including reasonable fees and expenses of counsel) in connection with the collection under and enforcement of Section 11.2(c) and/or this Section 11.4 in the event that Buyer prevails in such litigation.

BUYER ACKNOWLEDGES AND AGREES THAT, EXCEPT FOR THE SELLER’S WARRANTIES, NONE OF SELLER GROUP, HOTEL MANAGEMENT COMPANY OR ANY OF THEIR AFFILIATES, NOR ANY OF THEIR RESPECTIVE SHAREHOLDERS, MEMBERS, PARTNERS, TRUSTEES, BENEFICIARIES, DIRECTORS, OFFICERS, MANAGERS, EMPLOYEES, ATTORNEYS, ACCOUNTANTS, CONTRACTORS, CONSULTANTS, AGENTS OR REPRESENTATIVES, NOR ANY PERSON PURPORTING TO REPRESENT ANY OF THE FOREGOING, HAVE MADE ANY REPRESENTATION, WARRANTY, GUARANTY, PROMISE, PROJECTION OR PREDICTION WHATSOEVER WITH RESPECT TO THE PROPERTY OR THE BUSINESS OF THE HOTELS, WRITTEN OR ORAL, EXPRESS OR IMPLIED, ARISING BY OPERATION OF LAW OR OTHERWISE, INCLUDING, WITHOUT LIMITATION, ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, OR ANY REPRESENTATION OR WARRANTY AS TO (i) THE CONDITION, SAFETY, QUANTITY, QUALITY, USE, OCCUPANCY OR OPERATION OF THE PROPERTY, (ii) THE PAST, PRESENT OR FUTURE REVENUES OR EXPENSES WITH RESPECT TO THE PROPERTY OR THE BUSINESS OF THE HOTELS, (iii) THE COMPLIANCE OF THE PROPERTY OR THE BUSINESS OF THE HOTELS WITH ANY ZONING REQUIREMENTS, BUILDING CODES OR OTHER APPLICABLE LAW, INCLUDING, WITHOUT LIMITATION, THE AMERICANS WITH DISABILITIES ACT OF 1990, (iv) THE ACCURACY OF ANY ENVIRONMENTAL REPORTS, FINANCIAL AND OPERATING DATA OR OTHER INFORMATION SET FORTH IN ANY DUE DILIGENCE MATERIALS PROVIDED BY SELLER TO BUYER, OR (v) ANY OTHER MATTER RELATING TO SELLER, SELLER’S SUBSIDIARIES, THE PROPERTY OR THE BUSINESS OF THE HOTELS.

BUYER ACKNOWLEDGES AND AGREES THAT, EXCEPT FOR THE SELLER’S WARRANTIES:

By accepting the Assignment of Interests and closing the Transaction, Buyer shall thereby and thereafter assume and take responsibility and liability for the following: (i) any and all Liabilities attributable to the Property to the extent that such Liabilities first arise or accrue on or after Closing, including, without limitation under the Bookings, Contracts, Equipment Leases, Space Leases and Management Agreements, (ii) any and all Liabilities for third party tort claims that occur from or after the Closing; and (iii) any and all Liabilities with respect to which Buyer receives a credit at Closing (collectively, the “Assumed Liabilities”). Buyer acknowledges and agrees that the Liabilities to be assumed by Buyer pursuant to each of the foregoing clauses are intended to be independent of one another, so Buyer shall assume Liabilities described in each of the clauses even though some of those Liabilities may be read to be excluded by another clause. Buyer hereby agrees to indemnify, defend and hold harmless Seller Indemnitees from and against any and all Assumed Liabilities.

all non-delinquent real estate taxes, personal property taxes, special assessments and vault charges, if any, on the basis of the fiscal period for which assessed, shall be prorated as of the Apportionment Date between Seller and Buyer (it being understood that all Taxes relating to any period prior to the Closing Date which constitute exceptions to title which would be delinquent if unpaid at Closing are Mandatory Cure Items) giving effect the maximum discount allowed by law for early payment. If any assessments on any Hotel are payable in installments, then the installment for the current period shall be prorated (with Buyer assuming the obligation to pay any installments due and payable with respect to the period after Closing Date and Buyer receiving a credit for any installments due and payable with respect to the period prior to the Closing Date which have not been paid in full as of Closing). If the amount of any of the foregoing taxes not ascertainable on the Closing, the proration shall be based on the most recent available bill giving effect the maximum discount allowed by law for early payment and shall be re-prorated at the request of either party made within thirty (30) days after the tax bills are rendered;

water and sewer service charges and charges for gas, electricity, telephone, solid waste, and all other public utilities. Buyer 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;

amounts which have been prepaid, accrued or are due and payable under the Contracts, Equipment Leases and Permits assumed by Buyer pursuant to this Agreement and, with respect to trade payables that are not otherwise provided for in the prorations hereof, Seller shall pay such trade payables in full on or prior to the Closing Date;

all rental payments and other payments under Leases, including any prepayments received by Seller from tenants under the Space Leases prior to the Closing Date;

advertising expenses;

commissions of credit and referral organizations;

all other charges and fees customarily prorated and adjusted in similar transactions in the applicable State;

with respect to any special assessments that are not payable in installments, Seller shall pay any such special assessments related to any improvement which has been Completed (as defined below) prior to Closing, and Buyer shall pay any such special assessments related to any improvement which has not been Completed prior to Closing. For purposes of this paragraph, the term “Completed” shall mean, with respect to any public improvement by a governmental authority, that: (1) a Lien for special assessments related to such improvement has been certified by the governmental authority; or (2) a Lien for such special assessments is still pending, but the improvement has been substantially completed prior to Closing. Notwithstanding the foregoing, with respect to special assessments that are Completed prior to Closing but are payable in installments: (a) Seller shall pay any such installments attributable to the period of time before Closing; (b) Buyer shall pay any such installments attributable to the period of time after Closing; and (c) any such installments which are attributable to a period of time that commences before Closing and ends after Closing shall be prorated at Closing; and

License or permit fees that are assigned and transferred to Buyer at Closing shall be prorated as of the Closing Date. Seller Group will be credited for that portion of any charges, taxes and fees that have been paid by Seller Group that are allocable to the period after the Closing Date (except with respect to any license that is not transferred to Buyer) and Buyer shall be credited for any such amounts accrued prior to the Closing Date and to be paid by Buyer following Closing; and

All Association assessments and similar fees and assessments due and payable with respect to the Property with respect to the year in which the Closing occurs shall be adjusted and prorated based on the periods of ownership by Seller and Buyer during such year.

Except as provided in Section 14.2(b), all revenues received or to be received on account of room rents for the period prior to and including the Apportionment Date shall belong to Seller with Buyer to remit such revenues to Seller to the extent any such revenues are paid to Buyer following Closing and all such revenues attributable to the ownership and operation of the Hotels for the period beginning on the day immediately following the Apportionment Date shall belong to Buyer with Seller to remit such revenues to Buyer to the extent such revenues are paid to Seller following Closing.

All revenues received or to be received from transient guests on account of room rents, facilities occupied and the use of the premises (including without limitation parking areas, mini-bar sales, phone and other communication charges and the like) (the “Guest Ledger”) for the period prior to but excluding the Apportionment Date shall belong to Seller. At Closing, Seller shall receive a credit in an amount equal to: (a) all amounts charged to the Guest Ledger from current transient guests for all room nights up to (but not including) the night during which the Apportionment Date occurs, and (b) one half (½) of all amounts charged to the Guest Ledger for the room night which includes the Apportionment Date. For the period beginning immediately following the Apportionment Date, all revenues collected from the Guest Ledger shall belong to Buyer and Buyer shall be entitled to retain all deposits made and amounts collected with respect to such Guest Ledger.

Revenues from conferences, receptions, meetings, and other functions occurring in any conference, banquet or meeting rooms in the Hotels, including usage charges and related taxes, food and beverage sales, valet parking charges, equipment rentals, and telecommunications charges shall be allocated between Seller and Buyer, based on when the function therein commenced, with (i) one-day functions commencing on or prior to the Apportionment Date but ending prior to 5:00 a.m. local time at each Hotel on the Closing Date being allocable to Seller, (ii) functions commencing after the Apportionment Date being allocable to Buyer, and (iii) multi-day functions commencing prior to the Closing Date being allocated between Seller and Buyer according to when the event commences and ends, with revenues attributable to the period prior to the Closing Date allocable to Seller, and revenues attributable to the period from and after the Closing Date allocable to Buyer.

Buyer shall acquire (and Seller shall receive a credit for) all Accounts Receivable other than those due and owing from an Affiliate of Seller Group which are thirty (30) days or less outstanding; Buyer and Seller shall each retain fifty percent (50%) of all Accounts Receivable which are more than thirty (30) days but less than ninety (90) days outstanding (with Seller receiving an applicable credit therefor); and Seller shall retain all Accounts Receivable which are more than ninety (90) days outstanding. For a period of six (6) months after the Closing Date, Buyer shall use commercially reasonable efforts to collect, for the benefit of Seller and at no cost to Buyer, Accounts Receivable which were due and payable to Seller prior to the Apportionment Date; provided, however, to the extent that payments are received after the Closing from a counterparty with who at the time of such payment has an Accounts Receivable balance or monies owing to Buyer, such payment shall be paid (i) first, in payment of current Accounts Receivable at the time of receipt, (ii) second, to delinquent Accounts Receivable, if any, which became due after to the Closing and (iii) third, then to delinquent Accounts Receivable, if any, which became due and payable before the Closing. Buyer shall not have any obligation to commence any action or proceeding top collect any such Accounts Receivable and Seller shall have the right to commence legal action to collect such Accounts Receivable. Any Accounts Receivable which are the property of Seller and are collected by Buyer for a period of one hundred twenty (120) days after the Closing Date shall be delivered promptly to Seller. The Accounts Receivable addressed in this Section 14.2(d) shall not include the adjustments in Section 14.2(b) or Section 14.2(c).

All Accounts Receivable due and owing from, and all amounts payable to, an Affiliate of Seller Group, if any, shall be settled prior to Closing and neither Purchase nor Seller shall be entitled to a credit or adjustment therefor.

Any other ordinary and usual adjustments in connection with the sale of the Interests shall be allocated between Buyer and Seller in accordance with the customary practice for transactions for the sale of equity interests.

It is the parties’ intention that Buyer will continue to operate each Hotel under the same brand as such Hotel is currently operated as of the Effective Date, and this Agreement has been negotiated and entered into based upon that expectation. Buyer promptly after the Effective Date will make applications to the applicable Franchisor for such Franchisor’s approval of the re-issuance of the applicable Franchise Agreement to Buyer (such reissued Franchise Agreement or new franchise agreement, the “New Franchise Agreement” and collectively, the “New Franchise Agreements”); provided, however, Seller acknowledges that Buyer may be required to submit additional documentation and/or satisfy additional requirements as requested by such Franchisor in connection with such applications. Buyer shall use its commercially reasonable efforts to obtain the New Franchise Agreements and will keep Seller reasonably apprised of its efforts to obtain the New Franchise Agreements. Seller agrees to reasonably cooperate with Buyer in connection with Buyer obtaining the New Franchise Agreements, including, without limitation, (i) satisfying Seller Group’s or any Affiliate’s thereof, accrued monetary obligations to Franchisor as of the Closing, including to the extent required by Franchisor, an amount equal to a reasonable estimate of the costs and fees not yet accumulated and/or invoiced under the applicable Franchise Agreement and (ii) to the extent required by Franchisor, executing a general release of any claims of Seller Group and any Affiliate thereof against Franchisor, its Affiliates, officers, directors, agents and employees under the applicable Franchise Agreement in a form prescribed by Franchisor (collectively, “Seller’s Franchise Agreement Obligations”). In connection with the New Franchise Agreements, Buyer hereby agrees to diligently and timely execute all documents and pay all application and any and all transfer or other fees required by Franchisor, other than those which constitute Seller’s Franchise Agreement Obligations, in connection with obtaining the New Franchise Agreements for the continued operation of each Hotel pursuant to a New Franchise Agreement upon terms and conditions reasonably satisfactory to Buyer based on Buyer’s Affiliates’ prior dealings, if any, with Franchisor (including, without limitation, a property improvement plan with which Buyer will agree to comply), which may be more or less favorable to Buyer than the Franchise Agreement currently in force and effect in respect of such Hotel.

Subject to the second sentence of this Section 15.1(b), to the extent that Buyer fails to deliver any New Franchise Agreement on the Closing Date, such failure shall be deemed a default of Buyer hereunder; provided, however, that Buyer, may, in its sole and absolute discretion, to (i) nevertheless proceed to Closing and cause the termination of such existing Franchise Agreement by paying (through the Closing escrow) any and all costs, fees, penalties, liquidated damages or other damages in connection with such termination (the "Franchise Termination Payments") whereupon Buyer also covenants and agree to permit Seller access to the applicable Hotel after the Closing in order for Seller to fulfill all of its de-identification obligations under such terminated Franchise Agreement (at Buyer's sole cost); or (ii) terminate this Agreement whereupon Seller shall be entitled to avail itself of any remedies provided in Section 11.1 Notwithstanding the first sentence of this Section 15.1(b), to the extent Buyer’s failure to enter into any New Franchise Agreement is a result of Seller Group’s failure to use reasonable efforts to satisfy Seller’s Franchise Agreement Obligations, such failure shall be deemed a default of Seller and Buyer shall be entitled to avail itself of any remedies provided in Section 11.2.

The terms and provisions of this Section 15.1 shall survive the Closing or the earlier termination of this Agreement.