AGREEMENT AND PLAN OF MERGER

EXHIBIT 2.1

AGREEMENT AND PLAN OF MERGER

AMONG

LODGE HOLDINGS INC.

LODGE ACQUISITION I INC.

LODGE ACQUISITION II INC.

LA QUINTA CORPORATION

AND

LA QUINTA PROPERTIES, INC.

Dated as of November 9, 2005

TABLE OF CONTENTS

EXHIBITS

AGREEMENT AND PLAN OF MERGER

     THIS AGREEMENT AND PLAN OF MERGER (the “ Agreement ”), dated as of November 9, 2005, is made by and among Lodge Holdings Inc., a Delaware corporation (“ Parent ”), Lodge Acquisition I Inc., a Delaware corporation and a wholly owned subsidiary of Parent (“ Company MergerCo ”), Lodge Acquisition II Inc., a Delaware corporation and a wholly owned subsidiary of Company MergerCo (“ Properties MergerCo ”), La Quinta Corporation, a Delaware corporation (the “ Company ”), and La Quinta Properties, Inc., a Delaware corporation (“ Properties ” and together with the Company, the “ La Quinta Entities ”).

RECITALS

     WHEREAS, the parties wish to effect a business combination through (i) the merger of Company MergerCo with and into the Company, with the Company being the surviving corporation (the “ Company Merger ”), and (ii) the merger of Properties MergerCo with and into Properties, with Properties being the surviving corporation (the “ Properties Merger ” and together with the Company Merger, the “ Mergers ”) on the terms and conditions set forth in this Agreement and in accordance with the Delaware General Corporation Law (the “ DGCL ”);

     WHEREAS, the respective Boards of Directors of the Company (the “ Company Board ”) and Properties (the “ Properties Board ”) have approved this Agreement, the Mergers and the other transactions contemplated by this Agreement and determined that this Agreement, the Mergers and the other transactions contemplated by this Agreement are advisable and in the best interest of their respective stockholders and recommended that this Agreement be adopted by their respective stockholders;

     WHEREAS, the respective Boards of Directors of Parent, Company MergerCo and Properties MergerCo have determined that this Agreement, the Mergers and the other transactions contemplated by this Agreement are in the best interest of their respective stockholders, and immediately following execution of this Agreement by the parties hereto, Parent will adopt this Agreement as the sole stockholder of Company MergerCo and Company MergerCo will adopt this Agreement as the sole stockholder of Properties MergerCo; and

     WHEREAS, Parent, Company MergerCo, Properties MergerCo and the La Quinta Entities desire to make certain representations, warranties, covenants and agreements in connection with the Mergers, and also to prescribe various conditions to the Mergers.

     NOW, THEREFORE, in consideration of the mutual covenants, representations, warranties and agreements set forth herein, and intending to be legally bound, Parent, Company MergerCo, Properties MergerCo and the La Quinta Entities hereby agree as follows:

ARTICLE I

THE MERGERS

     1.1 The Mergers .

          (a) Subject to the terms and conditions of this Agreement, at the Effective Time, the Company and Company MergerCo shall consummate the Company Merger pursuant to which (a) Company MergerCo shall be merged with and into the Company and the separate corporate existence of Company MergerCo shall thereupon cease and (b) the Company shall continue as the surviving corporation in the Company Merger (the “ Company Surviving Corporation ”) and shall continue to be governed by the laws of the State of Delaware. The Company Merger shall have the effects specified in the DGCL.

          (b) Subject to the terms and conditions of this Agreement, at the Effective Time, Properties and Properties MergerCo shall consummate the Properties Merger pursuant to which (a) Properties MergerCo shall be merged with and into Properties and the separate corporate existence of Properties MergerCo shall thereupon cease and (b) Properties shall continue as the surviving corporation in the Properties Merger (the “ Properties Surviving Corporation ”) and shall continue to be governed by the laws of the State of Delaware. The Properties Merger shall have the effects specified in the DGCL.

     1.2 Certificate of Incorporation and Bylaws .

          (a) At the Effective Time, the amended and restated certificate of incorporation of the Company (the “ Company Certificate of Incorporation ”) shall be amended to read in its entirety in the form attached hereto as Exhibit A, and as so amended, shall be the amended and restated certificate of incorporation of the Company Surviving Corporation until thereafter amended as provided by Law and such amended and restated certificate of incorporation, and at the Effective Time, the bylaws of the Company (the “ Company Bylaws ”) shall be amended so as to read in their entirety in the form attached hereto as Exhibit B, and as so amended, shall be the bylaws of the Company Surviving Corporation until thereafter amended as provided by Law.

          (b) At the Effective Time, the amended and restated certificate of incorporation of Properties (the “ Properties Certificate of Incorporation ”) shall be amended to read in its entirety in the form attached hereto as Exhibit C, and as so amended, shall be the amended and restated certificate of incorporation of the Properties Surviving Corporation until thereafter amended as provided by Law and such amended and restated certificate of incorporation, and at the Effective Time, the bylaws of Properties (the “ Properties Bylaws ”) shall be amended so as to read in their entirety in the form attached hereto as Exhibit D, and as so amended, shall be the bylaws of the Properties Surviving Corporation until thereafter amended as provided by Law.

     1.3 Effective Time .

          (a) On the Closing Date, Company shall duly execute and file a certificate of merger (the “ Company Certificate of Merger ”) with the Secretary of State of the State of

Delaware (“ DSOS ”) in accordance with the DGCL. The Company Merger shall become effective upon the later of the time of filing of the Company Certificate of Merger with the DSOS, or such later time which the parties hereto shall have agreed upon and designated in such filings in accordance with the DGCL as the effective time of the Company Merger but not to exceed ninety (90) days after the filing date of the Company Certificate of Merger with the DSOS.

          (b) On the Closing Date, Properties shall duly execute and file a certificate of merger (the “ Properties Certificate of Merger ”) with the DSOS in accordance with the DGCL. The Properties Merger shall become effective upon the later of the time of the filing of the Properties Certificate of Merger with the DSOS, or such later time which the parties hereto shall have agreed upon and designated in such filings in accordance with the DGCL as the effective time of the Properties Merger but not to exceed ninety (90) days after the filing date of the Properties Certificate of Merger with the DSOS. It is the intention of the parties that the Mergers shall become effective at the same time, and that the Company Merger Certificate and Properties Merger Certificate shall provide for the same effective time.

          (c) The date and time when the Mergers become effective is referred to herein as the “ Effective Time .”

     1.4 Closing . The closing of the Mergers (the “ Closing ”) shall occur as promptly as practicable (but in no event later than the third Business Day) after all of the conditions set forth in Article VIII (other than conditions which by their terms are required to be satisfied or waived at the Closing) shall have been satisfied or, if permissible, waived by the party entitled to the benefit of the same, and, subject to the foregoing, shall take place at such time and on a date to be specified by the parties (the “ Closing Date ”). The Closing shall take place at the offices of Simpson Thacher & Bartlett LLP, 425 Lexington Avenue, New York, New York 10017, or at such other place as agreed to by the parties hereto.

     1.5 Directors and Officers .

          (a) The parties shall cause the directors of Company MergerCo immediately prior to the Effective Time to be the initial directors of the Company Surviving Corporation and the officers of Company MergerCo immediately prior to the Effective Time to be the initial officers of the Company Surviving Corporation, each to hold office in accordance with the certificate of incorporation and bylaws of the Company Surviving Corporation.

          (b) The parties shall cause the directors of Properties MergerCo immediately prior to the Effective Time to be the initial directors of the Properties Surviving Corporation and the officers of Properties MergerCo immediately prior to the Effective Time to be the initial officers of the Properties Surviving Corporation, each to hold office in accordance with the certificate of incorporation and bylaws of the Properties Surviving Corporation.

     1.6 Other Transactions . Parent shall have the option, in its sole discretion and without requiring the further consent of the La Quinta Entities or the board of directors or stockholders of any of the La Quinta Entities, upon reasonable notice to the La Quinta Entities, to request that the La Quinta Entities, immediately prior to the Closing, (a) convert one or more La Quinta Subsidiaries that are organized as corporations into limited liability companies and

one or more La Quinta Subsidiaries that are organized as limited partnerships into limited liability companies, on the basis of organizational documents as reasonably requested by Parent, (b) sell to one or more affiliates of Parent all or a portion of the stock, partnership or limited partnership interests, limited liability company or membership interests, property or assets owned, directly or indirectly, by the La Quinta Entities or by one or more La Quinta Subsidiaries at a price designated by Parent and (c) incorporate or form one or more new subsidiaries of the Company and execute organizational documents as reasonably requested by Parent; provided , however , that (i) the La Quinta Entities shall not be required to take any action in contravention of any organizational document or other Material Contract relating to any La Quinta Entity or any La Quinta Subsidiary or that would result in the failure of Properties to qualify as a REIT under the Code if the Mergers are not consummated, (ii) any such actions or transactions shall be contingent upon the receipt by the La Quinta Entities of a written notice from Parent confirming that all of the conditions set forth in Sections 8.1 and 8.2 have been satisfied or waived, and that Parent, Company MergerCo and Properties MergerCo are prepared to proceed immediately with the Closing (it being understood that in any event the transactions described in clauses (a), (b) and (c) will be deemed to have occurred prior to the Closing), and (iii) such actions (or the inability to complete such actions) shall not affect or modify in any respect the obligations of Parent, Company MergerCo or Properties MergerCo under this Agreement, including payment of the Merger Consideration. Parent shall, promptly upon request by the La Quinta Entities, reimburse the La Quinta Entities for all reasonable out-of-pocket costs incurred by the La Quinta Entities in connection with any actions taken by the La Quinta Entities in accordance with this Section 1.6. Parent, Company MergerCo and Properties MergerCo shall, on a joint and several basis, indemnify and hold harmless the La Quinta Entities and their Representatives for and against any and all liabilities, losses, damages, claims, costs, expenses, interest, awards, judgments and penalties suffered or incurred by them in connection with such actions, including any losses resulting from the failure of Properties to qualify as a REIT as a result of any such action. Without limiting the foregoing, none of the representations, warranties or covenants of the La Quinta Entities shall be deemed to apply to, or deemed breached or violated by, any of the transactions contemplated by this Section 1.6 and any such breach or violation shall be disregarded for purposes of Sections 8.2(a) and 8.2(b).

ARTICLE II

EFFECT OF THE MERGERS ON THE CAPITAL STOCK
OF THE CONSTITUENT CORPORATIONS

     2.1 Effect of the Company Merger on Company Capital Stock . At the Effective Time, by virtue of the Company Merger and without any action on the part of any holder thereof:

          (a) Each share of common stock, par value $0.01 per share, of Company MergerCo issued and outstanding immediately prior to the Effective Time shall automatically be converted into one fully paid and nonassessable share of common stock, par value $0.01 per share, of the Company Surviving Corporation (“ Company Surviving Corporation Common Stock ”) following the Company Merger.

          (b) Each share of common stock, par value $0.01 per share, of the Company (“ Company Common Stock ”) that is owned by the Company (or any of the La Quinta

Subsidiaries other than Properties) or Parent or any wholly owned Subsidiary of Parent (the “ Company Excluded Shares ) shall automatically be canceled and shall cease to exist, and no cash or other consideration shall be delivered or deliverable in exchange therefor.

          (c) Each share of Company Common Stock issued and outstanding immediately prior to the Effective Time that is owned by Properties shall automatically be converted into the right to receive one fully paid and nonassessable share of Company Surviving Corporation Common Stock. Each certificate representing shares of Company Common Stock immediately prior to the Effective Time that is owned by Properties shall, as of the Effective Time, automatically represent an equivalent number of shares of Company Surviving Corporation Common Stock.

          (d) Each share of Company Common Stock issued and outstanding immediately prior to the Effective Time (other than Company Excluded Shares, Company Common Stock owned by Properties and Company Dissenting Shares as described in Sections 2.1(b), 2.1(c) and 3.2(a), respectively) shall automatically be converted into the right to receive $10.65 per share, in cash, payable to the holder thereof, without any interest thereon (the “ Company Merger Consideration ”).

          (e) All shares of Company Common Stock, when converted as provided in Section 2.1(d), shall no longer be outstanding and shall automatically be canceled and shall cease to exist, and each Certificate previously evidencing such shares shall thereafter represent only the right to receive the Company Merger Consideration. The holders of Certificates previously evidencing shares of Company Common Stock outstanding immediately prior to the Effective Time shall cease to have any rights with respect to the shares of Company Common Stock except as otherwise provided herein or by Law and, subject to Sections 3.1(h) and 3.2(a), upon the surrender of Certificates in accordance with the provisions of Section 3.1, shall only represent the right to receive for their shares of Company Common Stock, the Company Merger Consideration.

     2.2 Effect of the Properties Merger on Properties Capital Stock . At the Effective Time, by virtue of the Properties Merger and without any action on the part of any holder thereof:

          (a) Each share of common stock, par value $0.01 per share, of Properties MergerCo issued and outstanding immediately prior to the Effective Time shall automatically be cancelled and shall cease to exist, and no cash or other consideration shall be delivered or deliverable in exchange therefor.

          (b) Each share of class A common stock, par value $0.01 per share, of Properties (“ Properties Class A Common Stock ”) that is owned by Properties (or any of the La Quinta Subsidiaries other than the Company) and each share of class B common stock, par value $0.01 per share, of Properties (“ Properties Class B Common Stock ”) that is owned by Properties (or any of the La Quinta Subsidiaries) or Parent or any wholly owned Subsidiary of Parent (collectively, the “ Properties Excluded Shares ” and, together with the Company Excluded Shares, the “ Excluded Shares ”) shall automatically be canceled and shall cease to exist, and no cash or other consideration shall be delivered or deliverable in exchange therefor.

          (c) Each share of Properties Class A Common Stock, issued and outstanding immediately prior to the Effective Time (other than Properties Excluded Shares) shall automatically be converted into the right to receive one fully paid and nonassessable share of common stock, par value $0.01 per share, of the Properties Surviving Corporation (“ Properties Surviving Corporation Common Stock ”). Each certificate representing shares of Properties Class A Common Stock immediately prior to the Effective Time shall, as of the Effective Time, automatically represent an equivalent number of shares of Properties Surviving Corporation Common Stock.

          (d) Each share of Properties Class B Common Stock issued and outstanding immediately prior to the Effective Time (other than Properties Excluded Shares and Properties Dissenting Shares as described in Sections 2.2(b) and 3.2(b), respectively) shall automatically be converted into the right to receive $0.60 per share, in cash, payable to the holder thereof, without any interest thereon (the “ Properties Merger Consideration ” and, together with the Company Merger Consideration, the “ Merger Consideration ”).

          (e) All shares of Properties Class B Common Stock, when converted as provided in Section 2.2(d), shall no longer be outstanding and shall automatically be canceled and shall cease to exist, and each Certificate previously evidencing such shares shall thereafter represent only the right to receive the Properties Merger Consideration. The holders of Certificates previously evidencing shares of Properties Class B Common Stock outstanding immediately prior to the Effective Time shall cease to have any rights with respect to the shares of Properties Class B Common Stock except as otherwise provided herein or by Law and, subject to Sections 3.1(h) and 3.2(b), upon the surrender of Certificates in accordance with the provisions of Section 3.1, shall only represent the right to receive for their shares of Properties Class B Common Stock, the Properties Merger Consideration.

     2.3 Company Stock Options and Related Matters .

          (a) Each option (collectively, the “ Options ”) granted under the Company Stock Option Plans, which is outstanding (whether or not then exercisable) as of immediately prior to the Effective Time, shall automatically become fully vested as of the Effective Time or earlier in accordance with the relevant Company Stock Option Plan. At the Effective Time, upon the surrender and cancellation of the option agreement representing such Option, the La Quinta Entities shall pay to the holder thereof cash in an amount equal to the product of (i) the number of paired shares (“ Paired Common Shares ”) (each of which consists of one share of Company Common Stock and one share of Properties Class B Common Stock) issuable upon exercise of such Option and (ii) the excess, if any, of the Merger Consideration over the exercise price per share provided for in such Option, which cash payment shall be treated as compensation and shall be net of any applicable income or employment Tax withholding required under (i) the Code, (ii) any applicable state, local or foreign Tax Law or (iii) any other applicable Law. To the extent that any amounts are so withheld, those amounts shall be treated as having been paid to the holder of such Option for all purposes under this Agreement.

          (b) Parent, Company MergerCo and Properties MergerCo acknowledge that all restricted stock awards granted under the Company Stock Option Plans shall immediately vest and the restrictions associated therewith shall automatically be deemed waived as provided

by the Company Stock Option Plans but in no event later than the date on which the Company’s stockholders adopt this Agreement.

          (c) With respect to each deferred stock unit or restricted stock unit (collectively, the “Stock Units”) granted under the Company Stock Option Plans, which is outstanding as of immediately prior to the Effective Time, the La Quinta Entities shall pay to the holder of each Stock Unit cash in an amount equal to the product of (i) the number of Stock Units and (ii) the Merger Consideration, at such time as required under the terms of the award agreement underlying the Stock Units.

          (d) The Company shall take all actions necessary to terminate the Company Stock Option Plans at the Effective Time.

ARTICLE III

PAYMENT FOR SHARES; DISSENTING SHARES

     3.1 Payment for Company Common Stock and Properties Class B Common Stock .

          (a) At the Effective Time, Parent shall deposit, or shall cause to be deposited, funds with a bank or trust company (the “ Paying Agent ”) as shall be mutually acceptable to Parent, the Company and Properties, for the payment of the aggregate Company Merger Consideration as provided pursuant to Section 2.1(d) and the aggregate Properties Merger Consideration pursuant to Section 2.2(d) (the “ Payment Fund ”). The Payment Fund shall be invested by the Paying Agent as directed by Parent; provided , however , that such investments shall be in obligations of or guaranteed by the United States of America or any agency or instrumentality thereof and backed by the full faith and credit of the United States of America, in commercial paper obligations rated A-1 or P-1 or better by Moody’s Investors Service, Inc. or Standard & Poor’s Corporation, respectively, or in certificates of deposit, bank repurchase agreements or banker’s acceptances of commercial banks with capital exceeding $1 billion (based on the most recent financial statements of such bank which are then publicly available). Any net profit resulting from, or income or interest produced by, such investments shall be payable to the Company Surviving Corporation.

          (b) Promptly after the Effective Time, Parent shall cause the Paying Agent to mail to each holder of record of Company Common Stock entitled to receive the Company Merger Consideration pursuant to Section 2.1(d) and Properties Class B Common Stock entitled to receive the Properties Merger Consideration pursuant to Section 2.2(d): (i) a form of letter of transmittal reasonably acceptable to the Company and Properties which shall specify that delivery shall be effected, and risk of loss and title to the certificate or certificates (the “ Certificates ”) which immediately prior to the Effective Time represented outstanding shares of Company Common Stock and shares of Properties Class B Common Stock, as the case may be, shall pass, only upon proper delivery of the Certificates to the Paying Agent and (ii) instructions for use in surrendering the Certificates in exchange for the Company Merger Consideration and the Properties Merger Consideration, as applicable.

          (c) Upon surrender of a Certificate for cancellation to the Paying Agent together with such letter of transmittal, properly completed and duly executed, and such other documents as may be required pursuant to such instructions, the holder of such Certificate shall be entitled to receive in exchange therefor the Company Merger Consideration and Properties Merger Consideration which such holder has the right to receive in respect of the shares of Company Common Stock or shares of Properties Class B Common Stock formerly represented by such Certificate, and the Certificate so surrendered shall forthwith be canceled. No interest will be paid or accrued on any Company Merger Consideration or Properties Merger Consideration payable to holders of Certificates.

          (d) Until surrendered in accordance with this Section 3.1, each such Certificate (other than Certificates representing Excluded Shares, Company Common Stock owned by Properties or Dissenting Shares) shall represent solely the right to receive the Company Merger Consideration and Properties Merger Consideration, as the case may be, relating thereto. If the Company Merger Consideration (or any portion thereof) or Properties Merger Consideration (or any portion thereof) is to be paid to any person other than the person in whose name the Certificate formerly representing shares of Company Common Stock or Properties Class B Common Stock surrendered therefor is registered, it shall be a condition to such right to receive such Company Merger Consideration and Properties Merger Consideration, as applicable, that the Certificate so surrendered shall be properly endorsed or otherwise be in proper form for transfer and that the person surrendering such shares shall pay to the Paying Agent any transfer or other taxes required by reason of the payment of the Company Merger Consideration or Properties Merger Consideration to a person other than the registered holder of the Certificate surrendered, or shall establish to the satisfaction of the Paying Agent that such tax has been paid or is not applicable.

          (e) Promptly following the date which is one year after the Effective Time, the Paying Agent shall deliver to the Company Surviving Corporation all cash, Certificates and other documents in its possession relating to the Mergers, and the Paying Agent’s duties shall terminate, and any holder of a Certificate formerly representing shares of Company Common Stock or Properties Class B Common Stock, as the case may be, shall thereafter look only to the Company Surviving Corporation, and the Company Surviving Corporation shall remain liable for, payment of such holder’s claim for the Company Merger Consideration and Properties Merger Consideration, as applicable. Any portion of the Payment Fund remaining unclaimed by holders of Certificates formerly representing shares of Company Common Stock or Properties Class B Common Stock, as the case may be, as of a date which is immediately prior to such time as such amounts would otherwise escheat to or become property of any Governmental Entity shall, to the extent permitted by applicable Law, become the property of the Company Surviving Corporation free and clear of any claims or interest of any person previously entitled thereto.

          (f) At the Effective Time, the stock transfer books of the Company and Properties shall be closed and thereafter, there shall be no further registration of transfers of shares of Company Common Stock or Properties Class B Common Stock on the stock transfer books of the Company Surviving Corporation or the Properties Surviving Corporation, respectively, of any shares of Company Common Stock or Properties Class B Common Stock which were outstanding immediately prior to the Effective Time. On or after the Effective Time, any Certificates formerly representing shares of Company Common Stock or Properties Class B Common Stock, as the case may be, presented to the Company Surviving Corporation, the

Properties Surviving Corporation or the Paying Agent shall be surrendered and canceled in return for the payment of the Company Merger Consideration and Properties Merger Consideration, as applicable, relating thereto, as provided in this Article III.

          (g) None of Parent, Company MergerCo, Properties MergerCo, the Company Surviving Corporation, the Properties Surviving Corporation or the Paying Agent or any of their respective Subsidiaries or affiliates shall be liable to any person in respect of any Paired Common Shares or cash from the Payment Fund delivered to a public official pursuant to any applicable abandoned property, escheat or similar Law.

          (h) If any Certificate shall have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming such Certificate to be lost, stolen or destroyed and, if reasonably required by Parent, the posting by such person of a bond, in such reasonable amount as Parent may direct, as indemnity against any claim that may be made against it with respect to such Certificate, the Paying Agent will pay the Company Merger Consideration and the Properties Merger Consideration, as applicable, in exchange for such lost, stolen or destroyed Certificate.

          (i) The Paying Agent, Parent, the Company Surviving Corporation and the Properties Surviving Corporation shall be entitled to deduct and withhold from the Company Merger Consideration, the Properties Merger Consideration or other amounts payable pursuant to this Agreement to any holder of shares of Company Common Stock or Properties Class B Common Stock such amounts as the Paying Agent, Parent, the Company Surviving Corporation or the Properties Surviving Corporation is required to deduct and withhold with respect to the making of such payment under all applicable Tax Law. To the extent that amounts are so withheld by the Paying Agent, Parent, the Company Surviving Corporation or the Properties Surviving Corporation, such amounts withheld shall be treated for all purposes of this Agreement as having been paid to the holder of the shares of Company Common Stock or Properties Class B Common Stock in respect of which such deduction and withholding was made by the Paying Agent, Parent, the Company Surviving Corporation or the Properties Surviving Corporation.

     3.2 Appraisal Rights .

          (a) Notwithstanding anything in this Agreement to the contrary, any shares of Company Common Stock held by a holder thereof that (i) has not voted in favor of the Company Merger or consented to the Company Merger in writing and (ii) has demanded the appraisal of such shares in accordance with, and has complied in all respects with, Section 262 of the DGCL (collectively, the “ Company Dissenting Shares ”) shall not be converted as described in Section 2.1(d), but will from and after the Effective Time constitute only the right to receive payment of the fair value of such shares of Company Common Stock in accordance with the provisions of Section 262 of the DGCL (the “ Appraisal Rights Provisions ”); provided , however , that all shares of Company Common Stock held by stockholders who shall have failed to perfect or who effectively shall have withdrawn or lost their rights to appraisal of such shares of Company Common Stock under the Appraisal Rights Provisions shall thereupon be deemed to have been canceled and to have been converted, as of the Effective Time, into the right to receive the Company Merger Consideration, without interest, in the manner provided in Section 2.1. The Company shall give Parent prompt written notice of any demands received by the Company for the exercise of appraisal rights with respect to shares of Company Common Stock, withdrawals

of such demands and all other instruments served pursuant to the DGCL and received by the Company, and Parent shall have the right to participate in all negotiations and proceedings with respect to such demands. The Company shall not, except with the prior written consent of Parent, make any payment with respect to, or settle or offer to settle, any such demands.

          (b) Notwithstanding anything in this Agreement to the contrary, any shares of Properties Class B Common Stock held by a holder thereof that (i) has not voted in favor of the Properties Merger or consented to the Properties Merger in writing and (ii) has demanded the appraisal of such shares in accordance with, and has complied in all respects with, Section 262 of the DGCL (collectively, the “ Properties Dissenting Shares ” and, together with the Company Dissenting Shares, the “ Dissenting Shares ”) shall not be converted as described in Section 2.2(d), but will from and after the Effective Time constitute only the right to receive payment of the fair value of such shares of Properties Class B Common Stock in accordance with the Appraisal Rights Provisions; provided , however , that all shares of Properties Class B Common Stock held by stockholders who shall have failed to perfect or who effectively shall have withdrawn or lost their rights to appraisal of such shares of Properties Class B Common Stock under the Appraisal Rights Provisions shall thereupon be deemed to have been canceled and to have been converted, as of the Effective Time, into the right to receive the Properties Merger Consideration, without interest, in the manner provided in Section 2.2. Properties shall give Parent prompt written notice of any demands received by Properties for the exercise of appraisal rights with respect to shares of Properties Class B Common Stock, withdrawals of such demands and all other instruments served pursuant to the DGCL and received by Properties, and Parent shall have the right to participate in all negotiations and proceedings with respect to such demands. Properties shall not, except with the prior written consent of Parent, make any payment with respect to, or settle or offer to settle, any such demands.

     3.3 Debt Offers .

          (a) Properties shall use its reasonable best efforts to commence, on the date 14 days prior to the estimated date of mailing the Proxy Statement or on any other date designated by Parent on at least five days notice to the La Quinta Entities, offers to purchase, and related consent solicitations with respect to, all of the outstanding aggregate principal amount of the Properties’: 8-7/8% Notes due March 15, 2011, 7% Notes due August 15, 2012, 7% Notes due August 15, 2007, 7.27% Medium Term Notes due February 26, 2007, 7.33% Medium Term Notes due April 1, 2008 (together with, to the extent not redeemed pursuant to Section 3.4, the Redemption Notes, collectively, the “ Notes ”) on the terms and conditions set forth in Section 3.3(a) of the La Quinta Entities Disclosure Schedule (or as may otherwise be agreed between the La Quinta Entities and Parent) and such other customary terms and conditions as are reasonably acceptable to Parent and the La Quinta Entities (including the related consent solicitations, collectively, the “ Debt Offers ”); provided that (A) this Agreement shall not have been terminated in accordance with Section 9.1, (B) Properties shall have received from Parent the completed Offer Documents (as defined below), which shall be in form and substance reasonably satisfactory to the La Quinta Entities, and (C) at the time of such commencement, Parent shall have otherwise performed or complied with all of its agreements and covenants required by this Agreement to be performed on or prior to the time that the Debt Offers are to be commenced. Properties shall waive any of the conditions to the Debt Offers (other than that the Mergers shall have been consummated and that there shall be no Order prohibiting consummation of the Debt Offers) as may be reasonably requested by Parent and shall not, without the consent of Parent,

waive any condition to the Debt Offers or make any changes to the terms and conditions of the Debt Offers other than as agreed between Parent and Properties. Notwithstanding the immediately preceding sentence, Properties need not make any change to the terms and conditions of the Debt Offers requested by Parent that decreases the price per Note payable in the Debt Offers as set forth in Section 3.3(a) of the La Quinta Entities Disclosure Schedule or imposes conditions to the Debt Offers in addition to those set forth in Section 3.3(a) of the La Quinta Entities Disclosure Schedule that are materially adverse to holders of the Notes, unless such change is approved by Properties in writing.

          (b) The La Quinta Entities covenant and agree that, immediately following the consent expiration date, assuming the requisite consents are received, each such La Quinta Entity as is necessary shall execute supplemental indentures to the indentures governing the Notes, which supplemental indentures shall implement the amendments set forth in the Offer Documents and shall become operative immediately prior to the Effective Time, subject to the terms and conditions of this Agreement (including the conditions to the Debt Offers). Concurrent with the Effective Time, Parent shall cause the Properties Surviving Corporation to accept for payment and thereafter promptly pay for the Notes that have been properly tendered and not properly withdrawn pursuant to the Debt Offers and in accordance with the Debt Offers.

          (c) Promptly after the date of this Agreement, Parent shall prepare all necessary and appropriate documentation in connection with the Debt Offers, including the offers to purchase, related letters of transmittal and other related documents (collectively, the “ Offer Documents ”). Parent and the La Quinta Entities shall cooperate with each other in the preparation of the Offer Documents. All mailings to the holders of the Notes in connection with the Debt Offers shall be subject to the prior review of, and comment by, the La Quinta Entities and Parent and shall be reasonably acceptable to each of them. If at any time prior to the completion of the Debt Offers any information in the Offer Documents should be discovered by the La Quinta Entities or Parent which should be set forth in an amendment or supplement to the Offer Documents, so that the Offer Documents shall not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading, the party that discovers such information shall promptly notify the other party, and an appropriate amendment or supplement describing such information shall be disseminated by or on behalf of Properties to the holders of the applicable Notes. Notwithstanding anything to the contrary in this Section 3.3, Properties shall comply with the requirements of Rule 14e-1 under the Exchange Act and any other applicable Law to the extent such laws are applicable in connection with the Debt Offers. To the extent that the provisions of any applicable Law conflict with this Section 3.3, the La Quinta Entities shall comply with the applicable Law and shall not be deemed to have breached its obligations hereunder by such compliance.

          (d) In connection with the Debt Offers, Parent may select one or more dealer managers, information agents, depositaries and other agents to provide assistance in connection therewith and the appropriate La Quinta Entities shall enter into customary agreements (including indemnities) with such parties so selected. Parent shall pay the reasonable fees and expenses of any dealer manager, information agent, depositary or other agent retained in connection with the Debt Offers, and Parent further agrees to reimburse the La Quinta Entities for all of their reasonable out-of-pocket costs in connection with the Debt Offers promptly following incurrence and delivery of reasonable documentation of such costs. Parent, Company

MergerCo and Properties MergerCo shall, on a joint and several basis, indemnify and hold harmless the La Quinta Entities, the La Quinta Subsidiaries, their respective officers and directors and each person, if any, who controls the Company or Properties within the meaning of Section 20 of the Exchange Act for and against any and all liabilities, losses, damages, claims, costs, expenses, interest, awards, judgments and penalties suffered or incurred by them in connection with the Debt Offers and the Offer Documents; provided , however , that none of Parent, Company MergerCo or Properties MergerCo shall have any obligation to indemnify and hold harmless any such party or person to the extent that any such liabilities, losses, damages, claims, costs, expenses, interest, awards, judgments and penalties suffered or incurred arises from disclosure regarding the La Quinta Entities that is determined to have contained a material misstatement or omission.

     3.4 Redemption and Satisfaction and Discharge .

          (a) Properties shall use its reasonable best efforts to redeem at the earliest possible date all of the outstanding 7.30% Medium Term Notes due January 16, 2006, 8.625% Medium Term Notes due August 17, 2015, 8.25% Medium Term Notes due September 15, 2015 and 7.82% Notes due September 26, 2026 (collectively, the “ Redemption Notes ”) in accordance with the terms of such securities and the related indentures. In the event that Properties is unable after expending its reasonable best efforts to arrange for such redemption with a notice of redemption being delivered within 30 days of the date of this Agreement with respect to a redemption to occur not later than 35 days after the date of such redemption notice, then the Redemption Notes not so redeemed shall be the subject of Debt Offers as described in Section 3.3.

          (b) In the event that majority consents are not obtained in relation to the consent solicitations comprising part of the Debt Offers within 60 days of the commencement of the Debt Offers, Properties may, in its discretion, (i) if any Notes as to which majority consents have not been obtained may be redeemed, call such Notes for redemption in accordance with the terms of such securities and the related indentures, provided that the redemption of such Notes is completed on or prior to the Closing Date or such Notes and the related indentures as they relate to such Notes are satisfied and discharged in accordance with the terms of such securities and the related indentures on or prior to the Closing Date, or (ii) to the extent permitted by such Notes and related indentures, satisfy and discharge such securities and the related indentures as they relate to such Notes, on or prior to the Closing Date. Any redemption and/or satisfaction and discharge initiated by Properties pursuant to this paragraph shall be subject to the prior approval of Parent, which approval shall not be unreasonably withheld. All terms of any new financing required for Properties to fund any redemption and/or satisfaction and discharge pursuant to this paragraph, including, without limitation, interest rates and fees, shall be subject to the prior approval of Parent and any such new financing shall contain provisions permitting such financing to be repaid at any time without penalty.

          (c) Upon the request of Parent, concurrent with the Closing, Properties shall deliver a notice of redemption calling the 8?% Senior Notes due March 15, 2011 and the 7% Senior Notes due August 15, 2012 for redemption pursuant to their terms and shall cooperate with Parent in effecting the satisfaction and discharge of such Notes and the related indentures concurrent with the Closing.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF
PARENT, COMPANY MERGERCO AND PROPERTIES MERGERCO

     Parent, Company MergerCo and Properties MergerCo jointly and severally hereby represent and warrant to the La Quinta Entities as follows:

     4.1 Organization . Parent is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and Company MergerCo and Properties MergerCo are corporations duly organized, validly existing and in good standing under the laws of the State of Delaware, and each has all requisite corporate power and authority to own, lease, encumber and operate their properties and to carry on their businesses as now conducted. Parent is duly qualified or licensed to do business and in good standing under the Laws of any other jurisdiction in which the character of the properties owned, leased or operated by it therein or in which the nature of its business makes such qualification or licensing necessary, except where the failure to be so duly qualified or licensed and in good standing would not, individually or in the aggregate, have a Parent Material Adverse Effect.

     4.2 Authorization; Validity of Agreement; Necessary Action . Each of Parent, Company MergerCo and Properties MergerCo has all requisite corporate power and authority to execute and deliver this Agreement and to consummate the transactions contemplated hereby and perform its obligations hereunder. The execution, delivery and performance by Parent, Company MergerCo and Properties MergerCo of this Agreement and the consummation of the transactions contemplated hereby have been duly and validly authorized by all necessary corporate action on behalf of the Board of Directors of Parent, the Board of Directors of Company MergerCo, and the Board of Directors of Properties MergerCo, and, subject to the next succeeding sentence, no other action on the part of Parent, Company MergerCo and Properties MergerCo is necessary to authorize this Agreement and the consummation of the transactions contemplated hereby. Promptly following execution of this Agreement by the parties hereto, (a) Parent shall execute and deliver to Company MergerCo a written consent adopting this Agreement in its capacity as sole stockholder of Company MergerCo and (b) Company MergerCo shall execute and deliver to Properties MergerCo a written consent adopting this Agreement in its capacity as sole stockholder of Properties MergerCo. This Agreement has been duly executed and delivered by Parent, Company MergerCo and Properties MergerCo and, assuming due and valid authorization, execution and delivery hereof by the Company and Properties, constitutes a legal, valid and binding obligation of each of Parent, Company MergerCo and Properties MergerCo, as the case may be, enforceable against each of them in accordance with its terms, subject to applicable bankruptcy, insolvency, moratorium or other similar Laws relating to creditors’ rights and general principles of equity.

     4.3 Consents and Approvals; No Violations . Except (1) for filings, permits, authorizations, consents and approvals as may be required under, and other applicable requirements of, the Exchange Act, the Securities Act, the HSR Act and (2) for filing of the Company Certificate of Merger and the Properties Certificate of Merger, none of the execution, delivery or performance of this Agreement by Parent, Company MergerCo or Properties MergerCo, the consummation by Parent, Company MergerCo or Properties MergerCo of the

transactions contemplated hereby or compliance by Parent, Company MergerCo or Properties MergerCo with any of the provisions hereof will (a) conflict with or result in any breach of any provision of the certificate of incorporation or bylaws of Parent, Company MergerCo or Properties MergerCo, (b) require any filing with, notice to, or permit, authorization, consent or approval of, any international, national, federal, state, provincial or local state or federal government or governmental regulatory or administrative authority, agency, commission, court, tribunal, arbitral body or self-regulated entity (each, a “ Governmental Entity ”), (c) result in a violation or breach of, or constitute (with or without due notice or lapse of time or both) a default (or give rise to any right of termination, cancellation or acceleration or other rights or obligations) under, result in a material loss of a material benefit under, any of the terms, conditions or provisions of any Contract to which Parent, Company MergerCo or Properties MergerCo is a party or by which any of them or any of their respective properties or assets may be bound, (d) require any consent, approval or other authorization of, or filing with or notification to, any person under any Contracts or any Permits or (e) violate any Order applicable to Parent, Company MergerCo or Properties MergerCo or any of their properties or assets, excluding from the foregoing clauses (b), (c), (d) and (e) such filings, notices, permits, authorizations, consents, approvals, violations, breaches or defaults which would not have a Parent Material Adverse Effect.

     4.4 Required Financing . Parent has delivered to the La Quinta Entities correct and complete copies of (a) an executed commitment letter from Blackstone Real Estate Partners IV L.P. to provide equity financing in an aggregate amount of $500,000,000 (the “ Equity Funding Letter ”), and (b) an executed commitment letter (the “ Financing Letter ”) from Bank of America, N.A., Merrill Lynch Mortgage Lending, Inc. and Bear Stearns Commercial Mortgage, Inc. (collectively, the “ Lenders ”) pursuant to which the Lenders have committed to provide Parent and certain existing or future subsidiaries of Company MergerCo and Properties MergerCo with financing in an aggregate amount of $2,960,000,000 (the “ Debt Financing ” and together with the financing referred to in clause (a) being collectively referred to as the “ Financing ”). The Equity Funding Letter, in the form so delivered, is a legal, valid and binding obligation of the parties thereto and is in full force and effect as of the date hereof. The Financing Letter is in full force and effect and is a legal, valid and binding obligation of Parent, and to the knowledge of Parent, the other parties thereto. No event has occurred which, with or without notice, lapse of time or both, would constitute a default on the part of Parent under either the Equity Funding Letter or the Financing Letter. Parent has no reason to believe that it will be unable to satisfy on a timely basis any term or condition of closing to be satisfied by it contained in the Equity Funding Letter or the Financing Letter. Parent has fully paid any and all commitment fees and other fees required by the Financing Letter to be paid as of the date hereof. Parent shall have at the Closing and at the Effective Time proceeds in connection with the Financing in an amount equal to up to $3,460,000,000 which will provide Parent with acquisition financing at the Effective Time sufficient to consummate the Mergers upon the terms contemplated by this Agreement.

     4.5 Formation and Ownership of Company MergerCo and Properties MergerCo; No Prior Activities .

          (a) Company MergerCo was formed solely for the purpose of engaging in the transactions contemplated by this Agreement. All of the issued and outstanding capital stock of Company MergerCo is validly issued, fully paid and non-assessable and is owned, beneficially and of record, by Parent free and clear of all security interests, liens, claims, pledges, options,

rights of first refusal, stockholder agreements, limitations on Parent’s voting rights, charges and other encumbrances of any nature whatsoever.

          (b) Properties MergerCo was formed solely for the purpose of engaging in the transactions contemplated by this Agreement. All of the issued and outstanding capital stock of Properties MergerCo is validly issued, fully paid and non-assessable and is owned, beneficially and of record, by Company MergerCo free and clear of all security interests, liens, claims, pledges, options, rights of first refusal, stockholder agreements, limitations on Company MergerCo’s voting rights, charges and other encumbrances of any nature whatsoever.

          (c) As of the date hereof and as of the Effective Time, except for (i) Liabilities incurred in connection with their incorporation or organization and (ii) this Agreement and any other agreements or arrangements contemplated by this Agreement (including the Financing) or in furtherance of the transactions contemplated hereby, neither Company MergerCo nor Properties MergerCo has (x) incurred, directly or indirectly, through any Subsidiary or affiliate, any obligations or liabilities or (y) engaged in any business activities of any type or kind whatsoever or entered into any agreements or arrangements with any person.

     4.6 Brokers . None of the Company, Properties or any La Quinta Subsidiary will be responsible for any finder’s fees, brokerage or agent’s commissions or other like payments in connection with the negotiations leading to this Agreement or consummation of the Mergers based upon any Contract, arrangement or understanding made by or on behalf of Parent, Company MergerCo or Properties MergerCo.

     4.7 Litigation .

          (a) As of the date hereof, there is no Legal Action pending or, to the knowledge of Parent, threatened against Parent, Company MergerCo or Properties MergerCo and (b) none of Parent, Company MergerCo or Properties MergerCo is subject to any outstanding Order, which, in either case, would (i) prevent or materially delay the consummation of the Mergers or (ii) otherwise prevent or materially delay performance by Parent, Company MergerCo or Properties MergerCo of any of their material obligations under this Agreement.

     4.8 Guarantee . Concurrently with the execution of this Agreement, Parent has delivered to the Company and Properties the duly executed guarantee of Blackstone Real Estate Partners IV L.P. (the “ Guarantor ”) in the form attached as Exhibit E to this Agreement (the “ Guarantee ”). The Guarantee is valid and in full force and effect, and no event has occurred which, with or without notice, lapse of time or both, would constitute a default on the part of the Guarantor under the Guarantee.

     4.9 La Quinta Entities’ Capital Stock . Immediately prior to execution and delivery of this Agreement, neither Parent nor any of Parent’s affiliates or associates (i) is the “owner”, or during the preceding three years, was the “owner”, of 10% or more of the outstanding “voting stock” of either the Company or Properties as the quoted terms are defined in Section 203 of the DGCL, or (ii) beneficially owns (as such term is used in the Exchange Act), or during the preceding three years, beneficially owned 10% or more of the voting securities of the Company or Properties.

     4.10 No Other Representations or Warranties . Except for the representations and warranties made by the Parent, Company MergerCo and Properties MergerCo in this Agreement, none of Parent, Company MergerCo or Properties MergerCo makes any representations or warranties, and each of Parent, Company MergerCo and Properties MergerCo hereby disclaims any other representations or warranties, with respect to each of Parent, Company MergerCo and Properties MergerCo, or their respective businesses, operations, assets, liabilities, condition (financial or otherwise) or prospects or the negotiation, execution, delivery or performance of this Agreement by Parent, Company MergerCo and Properties MergerCo, notwithstanding the delivery or disclosure to the La Quinta Entities or their affiliates or Representatives of any documentation or other information with respect to any one or more of the foregoing.

ARTICLE V

REPRESENTATIONS AND WARRANTIES OF THE LA QUINTA ENTITIES

     Except as set forth in the disclosure schedules (with reference to the section of this Agreement to which the information stated in such disclosure schedule relates) delivered at or prior to the execution hereof to Parent, Company MergerCo and Properties MergerCo (the “ La Quinta Entities Disclosure Schedule ”), the La Quinta Entities jointly and severally represent and warrant to Parent, Company MergerCo and Properties MergerCo as follows:

     5.1 Existence; Good Standing; Authority; Compliance with Law .

          (a) Each of the La Quinta Entities is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware. Except as set forth in Section 5.1(a) of the La Quinta Entities Disclosure Schedule, each of the La Quinta Entities is duly qualified or licensed to do business as a foreign corporation and is in good standing under the Laws of any other jurisdiction in which the character of the properties owned, leased, franchised, managed or operated by it therein or in which the nature of its business makes such qualification or licensing necessary, except where the failure to be so duly qualified or licensed and in good standing would not, individually or in the aggregate, have a Company Material Adverse Effect. Each of the La Quinta Entities has all requisite corporate power and authority to own, operate, franchise, manage, lease, encumber and operate its properties and carry on its business as now conducted.

          (b) Each of the La Quinta Subsidiaries listed in Section 5.4 of the La Quinta Entities Disclosure Schedule (the “ La Quinta Subsidiaries ”) (i) is a corporation, partnership, business trust or limited liability company duly incorporated or organized, validly existing and in good standing under the laws of its jurisdiction of incorporation or organization, (ii) has the requisite corporate power or other power and authority to own, operate, franchise, manage, lease and encumber its properties and to carry on its business as it is now being conducted, and (iii) is duly qualified or licensed to do business and is in good standing in each jurisdiction in which the character of the assets and properties owned, leased, franchised, managed or operated by it therein or in which the transaction of its business makes such qualification or licensing necessary, except in clause (iii) for jurisdictions in which such failure to be so qualified or

licensed would not, individually or in the aggregate, have a Company Material Adverse Effect. The La Quinta Entities have no Subsidiaries other than the La Quinta Subsidiaries.

          (c) Except as set forth in Section 5.1(c) of the La Quinta Entities Disclosure Schedule, none of the La Quinta Entities or any of the La Quinta Subsidiaries is, nor since January 1, 2002 has been, in violation or default of any Orders or Laws to which either of the La Quinta Entities or any La Quinta Subsidiary or any of their respective properties or assets is subject, where such violation or default, alone or together with all other violations, would have a Company Material Adverse Effect. The La Quinta Entities and the La Quinta Subsidiaries have obtained all licenses, permits, franchises, variances, consents, certificates, approvals and other authorizations issued or granted, in each case, by a Governmental Entity, and have taken all actions required by applicable Law in connection with their properties and businesses as now conducted (“ Permits ”), except where the failure to obtain any such Permit or to take any such action, alone or together with all other such failures, would not have a Company Material Adverse Effect. No suspension or cancellation of any of such Permits is pending or threatened, and no such suspension or cancellation will result from the transactions contemplated by this Agreement, except as would not have a Company Material Adverse Effect. None of the La Quinta Entities or any of the La Quinta Subsidiaries is, nor since January 1, 2002 has been, in violation or default of any such Permits where such violation or default, alone or together with all other violations, would have a Company Material Adverse Effect. The representations in this Section 5.1(c) do not apply to (i) Tax matters, as to which the representations and warranties are as set forth in Section 5.10, (ii) environmental matters, as to which the representations and warranties are as set forth in Section 5.13, (iii) employee benefits, as to which the representations and warranties are as set forth in Section 5.14 and (iv) labor matters, as to which the representations and warranties are as set forth in Section 5.15.

          (d) The La Quinta Entities have previously provided or made available to Parent true and complete copies of the Company Certificate of Incorporation, the Properties Certificate of Incorporation, the Company Bylaws, the Properties Bylaws and the other charter documents, bylaws, organizational documents and partnership, limited liability company, business trust and joint venture agreements (and in each such case, all amendments thereto) of the La Quinta Entities and each of the La Quinta Subsidiaries as in effect on the date of this Agreement (the “ Organizational Documents ”). The La Quinta Entities have made available to Parent complete and correct copies of the minutes of all meetings of the Company Board and the Properties Board (and each committee thereof) and the Boards of Directors and committees of the La Quinta Subsidiaries and of the stockholders of the Company, Properties and the La Quinta Subsidiaries (except that certain matters regarding the recent consideration of strategic alternatives may have been redacted therefrom as identified to Parent), in each case since January 1, 2003.

     5.2 Authorization, Validity and Effect of Agreements . Each of the La Quinta Entities has all requisite corporate power and authority to execute and deliver this Agreement and, subject only to the adoption of this Agreement by the holders of the Company Common Stock and the holder of Properties Class A Common Stock, to consummate the transactions contemplated hereby and perform its obligations hereunder. Subject only to the adoption of this Agreement by the holders of the Company Common Stock and the holder of Properties Class A Common Stock, the execution, delivery and performance by each of the La Quinta Entities of this Agreement and the consummation of the transactions contemplated hereby have been duly

and validly authorized by all necessary corporate action on behalf of each of the La Quinta Entities, and no other action on the part of the Company or Properties is necessary to authorize this Agreement and the consummation of the transactions contemplated hereby. This Agreement has been duly executed and delivered by each of the La Quinta Entities and, assuming due and valid authorization, execution and delivery hereof by Parent, Company MergerCo and Properties MergerCo, constitutes a legal, valid and binding obligation of each of the La Quinta Entities, as the case may be, enforceable against each of the La Quinta Entities in accordance with its terms, subject to applicable bankruptcy, insolvency, moratorium or other similar Laws relating to creditors’ rights and general principles of equity.

     5.3 Capitalization .

          (a) The authorized capital stock of the Company consists of 500,000,000 shares of Company Common Stock, 6,000,000 shares of preferred stock, par value $0.10 per share (“ Company Preferred Stock ”), and 25,000,000 shares of excess stock, par value $0.10 per share (“ Company Excess Stock ”). As of November 2, 2005 (the “ Capitalization Date ”), (i) 202,485,592 shares of Company Common Stock were issued and outstanding (including 563,100 shares of restricted Company Common Stock awarded to employees in October 2005), each of which is paired with one share of Properties Class B Common Stock; provided that such number of shares excludes 9,430,148 shares of unpaired Company Common Stock which are being held by Properties and 2,105,965 shares of Company Common Stock held in the treasury of the Company, (ii) no shares of Company Preferred Stock were issued and outstanding, (iii) no shares of Company Excess Stock were issued and outstanding, (iv) 8,000,000 shares of Company Common Stock have been authorized and reserved for issuance pursuant to the Company’s stock option plans listed in Schedule 5.3(a) of the La Quinta Entities Disclosure Schedule (the “ Company Stock Option Plans ”), subject to adjustment on the terms set forth in the Company Stock Option Plans, (v) Options to purchase 10,908,581 Paired Common Shares (which include Company Common Stock) were outstanding under the Company Stock Option Plans, and (vi) 40,528 Stock Units granted to members of the Company. As of the Capitalization Date, the Company had no shares of capital stock issued, outstanding or reserved for issuance other than as described above. All such issued and outstanding shares of capital stock of the Company are, and all shares of capital stock of the Company that are subject to issuance, upon issuance prior to the Effective Time under the terms and subject to the conditions specified in the instruments under which they are issuable will be, duly authorized, validly issued, fully paid, nonassessable and free of preemptive rights. Since the Capitalization Date through the date of this Agreement, other than in connection with the issuance of shares of Paired Common Shares pursuant to the exercise of, or lapse of restrictions under, Options outstanding as of the Capitalization Date, there has been no change in the number of shares of outstanding capital stock of the Company or the number of outstanding Options. Except as set forth above or as set forth in Section 5.3(a) of the La Quinta Entities Disclosure Schedule, as of the date hereof, there are no shares of capital stock or securities convertible into or exchangeable for or rights to acquire shares of capital stock of the Company authorized, issued, outstanding or reserved for issuance. No dividends have been declared on Company Common Stock during the preceding three years.

          (b) The authorized capital stock of Properties consists of 1,000,000 shares of Properties Class A Common Stock, 500,000,000 shares of Properties Class B Common Stock, 6,000,000 shares of preferred stock, par value $0.10 per share (“ Properties Preferred Stock ”), of which 805,000 shares are designated as 9% Series A Cumulative Preferred Stock, par value

$0.10 per share (“ Series A Preferred Stock ”), and 5,195,000 shares are undesignated preferred stock, par value $0.10 per share (the “ Properties Undesignated Preferred Stock ”), and 25,000,000 shares of excess stock, par value $0.10 per share (“ Properties Excess Stock ”). As of the Capitalization Date, (i) 100,000 shares of Properties Class A Common Stock were issued and outstanding, all of which were owned by the Company, (ii) 202,485,592 shares of Properties Class B Common Stock were issued and outstanding (including 563,100 shares of restricted Properties Class B Common Stock awarded to employees in October 2005), each of which is paired with one share of Company Common Stock; provided that such number of shares excludes 2,105,965 shares of Properties Class B Common Stock held in the treasury of Properties, (iii) 800,000 shares of Series A Preferred Stock were issued and outstanding and represented by 8,000,000 depositary shares pursuant to the Depositary Agreement dated June 17, 1998, as amended on December 24, 2003, between Properties and American Stock Transfer and Trust Corporation (the “ Depositary Agreement ”), (iv) no shares of Properties Undesignated Preferred Stock were issued and outstanding, (v) no shares of Properties Excess Stock were issued and outstanding, (vi) 8,000,000 shares of Properties Class B Common Stock have been authorized and reserved for issuance pursuant to the Company Stock Option Plans, subject to adjustment on the terms set forth in the Company Stock Option Plans, (vii) Options to purchase 10,908,581 Paired Common Shares (which include Properties Class B Common Stock) were outstanding under the Company Stock Option Plans, and (viii) 40,528 Stock Units granted to members of the Company Board. As of the Capitalization Date, Properties had no shares of capital stock issued, outstanding or reserved for issuance other than as described above. All such issued and outstanding shares of capital stock of Properties are, and all shares of capital stock of Properties that are subject to issuance, upon issuance prior to the Effective Time under the terms and subject to the conditions specified in the instruments under which they are issuable will be, duly authorized, validly issued, fully paid, nonassessable and free of preemptive rights. Since the Capitalization Date through the date of this Agreement, other than in connection with the issuance of shares of Paired Common Shares pursuant to the exercise of, or lapse of restrictions under, Options outstanding as of the Capitalization Date, there has been no change in the number of shares of outstanding capital stock of Properties or the number of outstanding Options. Except as set forth above or as set forth in Section 5.3(a) of the La Quinta Entities Disclosure Schedule, as of the date hereof, there are no shares of capital stock or securities convertible into or exchangeable for or rights to acquire shares of capital stock of the Properties authorized, issued, outstanding or reserved for issuance. All dividends on Properties’ Series A Preferred Stock that have been declared prior to the date of this Agreement have been paid in full to Properties’ paying agent. No dividends have been declared on Properties Class A Common Stock or Properties Class B Common Stock that remain unpaid as of the date hereof.

          (c) None of the Company, Properties or any La Quinta Subsidiary has any outstanding bonds, debentures, notes or other obligations the holders of which have the right to vote (or which are convertible into, exchangeable into or exercisable for securities having the right to vote) on any matter that the stockholders of the Company or Properties may vote.

          (d) Except as set forth in Section 5.3(d) of the La Quinta Entities Disclosure Schedule and except for the Options and the Stock Units (all of which have been issued under the Company Stock Option Plans), as of the date of this Agreement, there are not any existing options, warrants, calls, subscriptions, shares of capital stock, convertible or exchangeable securities, or other rights, agreements or commitments which obligate the Company,

Properties or any La Quinta Subsidiary to issue, transfer or sell any shares of capital stock of the Company, Properties or any La Quinta Subsidiary; provided that certain Options may have been exercised between the Capitalization Date and the date of this Agreement. Section 5.3(d) of the La Quinta Entities Disclosure Schedule sets forth a full list of the Options as of the Capitalization Date (except for the name of the person to whom such Options have been granted, which has been made available to Parent), including the number of shares subject to each Option and the per share exercise price for each Option. True and complete copies of all plans (and the forms of such options and awards) referred to in this Section 5.3(d) have been furnished or made available to Parent.

          (e) Section 5.3(e) of the La Quinta Entities Disclosure Schedule sets forth a complete list of the restricted stock awards outstanding under the Company Stock Option Plans as of the date of this Agreement (except for the recipient’s name, which has been made available to Parent); provided that certain restricted stock awards may have vested between the Capitalization Date and the date of this Agreement. True and complete copies of all plans (and the forms of options and awards) referred to in this Section 5.3(e) of the La Quinta Entities Disclosure Schedule have been furnished or made available to Parent.

          (f) Except for the restricted stock awards referred to in Section 5.3(e) and as set forth in Section 5.3(f) of the La Quinta Entities Disclosure Schedule, there are no agreements, voting trusts, proxies or understandings to which the Company, Properties or any La Quinta Subsidiary is a party with respect to the voting of any shares of capital stock of the Company, Properties or any La Quinta Subsidiary or which restrict the transfer of any such shares, nor does the Company or Properties have knowledge of any agreements, voting trusts, proxies or understandings with respect to the voting of any such shares or which restrict the transfer of any such shares.

          (g) Except as set forth in Section 5.3(g) of the La Quinta Entities Disclosure Schedule, there are no outstanding contractual obligations of the Company, Properties or any La Quinta Subsidiary to (i) repurchase, redeem or otherwise acquire any shares of capital stock, partnership interests or any other securities of the Company, Properties or La Quinta Subsidiary or (ii) provide any funds to, make any investment (whether in the form of a loan, capital contribution or otherwise) in any person (other than a La Quinta Entity or a wholly-owned La Quinta Subsidiary) or (iii) provide any guarantee to any party (other than a La Quinta Entity or a wholly-owned La Quinta Subsidiary) with respect to any La Quinta Subsidiary or any other person.

          (h) None of the Company, Properties or any La Quinta Subsidiary is a party to or has knowledge of any stockholder’s agreement, voting trust agreement or registration rights agreement relating to any equity interests of the Company, Properties or any La Quinta Subsidiary or any other similar agreement relating to disposition, voting or dividends with respect to any equity interests of the Company, Properties or any La Quinta Subsidiary. All dividends on the Series A Preferred Stock that have been declared or have accrued prior to the date of this Agreement have been paid in full to the Properties’ paying agent.

          (i) As of the date of this Agreement, the only outstanding Indebtedness of the La Quinta Entities and the La Quinta Subsidiaries is (i) $20 million in aggregate principal amount of 7.30% Medium Term Notes; (ii) $2 million in aggregate principal amount of 8.625% Medium Term Notes; (iii) $2.5 million in aggregate principal amount of 8.25% Medium Term

Notes; (iv) $160 million in aggregate principal amount of 7.00% Notes; (v) $50 million in aggregate principal amount of 7.27% Senior Notes; (vi) $50 million in aggregate principal amount of 7.33% Senior Notes; (vii) $325 million in aggregate principal amount of 8.875% Senior Notes; (viii) $200 million in aggregate principal amount of 7% Senior Notes; (ix) $124,000 in aggregate principal amount of 7.82% Senior Notes; and (x) approximately $16.5 million of letters of credit under the Amended and Restated Credit Agreement, dated as of November 12, 2003, by and among the La Quinta Entities, various lenders, and Canadian Imperial Bank of Commerce, as administrative agent, Fleet Securities Inc., as syndication agent, and Credit Lyonnais, as documentation agent, as amended to date (the “ Credit Agreement ”), (xi) less than $50,000 under letters of credit issued by banks to secure obligations under ordinary course agreements and (xii) such other obligations as are set forth in Section 5.3(i) of the La Quinta Entities Disclosure Schedule.

          (j) Neither of the La Quinta Entities has a “poison pill” or similar stockholder rights plan.

     5.4 Subsidiaries . Section 5.4 of the La Quinta Entities Disclosure Schedule sets forth the name and jurisdiction of incorporation or organization of each La Quinta Subsidiary. All issued and outstanding shares or other equity interests of each La Quinta Subsidiary are duly authorized, validly issued, fully paid and nonassessable. Except as set forth in Section 5.4 of the La Quinta Entities Disclosure Schedule, all issued and outstanding shares or other equity interests of each La Quinta Subsidiary are owned directly or indirectly by the Company free and clear of all Encumbrances.

     5.5 Other Interests . Except as set forth in Section 5.5 of the La Quinta Entities Disclosure Schedule, none of the Company, Properties or any La Quinta Subsidiary owns directly or indirectly any interest or investment (whether equity or debt) or any other securities convertible or exchangeable into or exercisable for any such interest or investment, in any person (other than investments in short-term debt securities and other than any interest or investment in any of Company, Properties or any La Quinta Subsidiary). Except as set forth in Section 5.5 of the La Quinta Entities Disclosure Schedule, the Company, Properties or a La Quinta Subsidiary, as the case may be, owns all such investments free and clear of all Encumbrances, and there are no outstanding contractual obligations of the La Quinta Entities or any La Quinta Subsidiary permitting the repurchase, redemption or other acquisition of any of its interest in such investments or to provide funds to, or make any investment (in the form of a loan, capital contribution or otherwise) in, or provide any guarantee with respect to, any such investment.

     5.6 Consents and Approvals; No Violations . Assuming the adoption of this Agreement by the stockholders of the Company and Properties and except (1) for filings, permits, authorizations, consents and approvals as may be required under, and other applicable requirements of, the Exchange Act, the Securities Act, the HSR Act, (2) for filing of the Company Certificate of Merger and the Properties Certificate of Merger, (3) any filings required under the rules and regulations of the New York Stock Exchange and (4) as otherwise set forth in Section 5.6 of the La Quinta Entities Disclosure Schedule, none of the execution, delivery or performance of this Agreement by the La Quinta Entities, the consummation by the La Quinta Entities of the transactions contemplated hereby or compliance by the La Quinta Entities with any of the provisions hereof will (a) conflict with or result in any breach of any provision of the organizational documents of the La Quinta Entities or La Quinta Subsidiaries, (b) require any

filing with, notice to, or permit, authorization, consent or approval of, any Governmental Entity, (c) result in a violation or breach of, or constitute (with or without due notice or lapse of time or both) a default (or give rise to any right of termination, cancellation or acceleration or other rights or obligations) under, result in a material loss of a material benefit under, any of the terms, conditions or provisions of any Contract to which the Company, Properties or any La Quinta Subsidiary is a party or by which it or any of its properties or assets may be bound or any Company Permit, (d) require any consent, approval or other authorization of, or filing with or notification to, any person under (i) any Contracts to which the Company, Properties or any of the La Quinta Subsidiaries are a party or by which their properties or assets are bound , or (ii) any Permits, other than as set forth in Section 5.6 of the La Quinta Entities Disclosure Schedule or (e) cause the creation or imposition of any Encumbrances on any properties or assets of the Company, Properties or any of the La Quinta Subsidiaries, other than as set forth in Section 5.6 of the La Quinta Entities Disclosure Schedule, violate any Order or Law applicable to the Company, or Properties or any La Quinta Subsidiary or any of their properties or assets, excluding from the foregoing clauses (b), (c), (d) and (e), such filings, notices, permits, authorizations, consents, approvals, violations, breaches or defaults which would not have a Company Material Adverse Effect.

     5.7 SEC Reports; Financial Statements; Undisclosed Liabilities; Certain Franchise Matters .

          (a) The La Quinta Entities have filed all required forms, and reports with the SEC since January 1, 2002 (collectively, the “ La Quinta SEC Reports ”), all of which were prepared in accordance with the applicable requirements of the Exchange Act, the Securities Act and the rules and regulations promulgated thereunder (the “ Securities Laws ”). As of their respective dates or as subsequently amended, the La Quinta SEC Reports (a) complied as to form in all material respects with the applicable requirements of the Securities Laws and (b) did not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements made therein, in light of the circumstances under which they were made, not misleading. The Company has made available to Parent copies of all material correspondence between the SEC, on the one hand, and the Company, Properties and any of the La Quinta Subsidiaries, on the other hand, since January 1, 2003 through the date of this Agreement. Each of the consolidated balance sheets of the La Quinta Entities included in or incorporated by reference into the La Quinta SEC Reports (including the related notes and schedules) fairly presents in all material respects the consolidated financial position of the La Quinta Entities and the La Quinta Subsidiaries as of its date and each of the consolidated statements of operations, changes in shareholders’ equity and other comprehensive income and cash flows of the La Quinta Entities included in or incorporated by reference into the La Quinta SEC Reports (including any related notes and schedules) fairly presents in all material respects the consolidated results of operations, changes in shareholders’ equity and other comprehensive income or cash flows, as the case may be, of the La Quinta Entities and the La Quinta Subsidiaries for the periods set forth therein, in each case in accordance with GAAP consistently applied during the periods involved (except as may be noted therein), and complied in all material respects with the requirements of Regulation S-X under the Securities Act; and except, in the case of the unaudited statements, as permitted by Form 10-Q pursuant to Sections 13 or 15(d) of the Exchange Act and normal year-end audit adjustments which would not be material in amount or effect. Except as set forth in Section 5.7(a) of the La Quinta Entities Disclosure Schedule, no La Quinta Subsidiary (except for Properties) is required to file any form, report or

other document with the SEC or any Governmental Entity that performs a similar function to that of the SEC or any securities exchange or quotation service. The La Quinta Entities have established and maintain disclosure controls and procedures, have conducted the procedures in accordance with their terms and have otherwise operated in compliance with the requirements under Rules 13a-15 and 15d-15 of the Exchange Act. All of the La Quinta Subsidiaries are consolidated for accounting purposes.

          (b) Except as and to the extent set forth on the consolidated balance sheet of the La Quinta Entities as at September 30, 2005 (including the notes thereto) included in the La Quinta Entities’ Joint Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2005 or as set forth in Section 5.7(b) of the La Quinta Entities Disclosure Schedule, none of the Company, Properties or any La Quinta Subsidiary has any Liability, except for Liabilities incurred (i) in connection with the Mergers or (ii) in the ordinary course of business and in a manner consistent with past practice since September 30, 2005 that would not reasonably be expected to have a Company Material Adverse Effect.

          (c) The Company has made available to Parent a complete and correct copy of any amendments or modifications which have not yet been filed with the SEC to Contracts which previously have been filed by the La Quinta Entities with the SEC pursuant to the Securities Act or the Exchange Act.

          (d) Since January 1, 2002, each of the applicable La Quinta Entities and the La Quinta Subsidiaries that is required to do so has prepared and maintained each of its Uniform Franchise Offering Circulars (“ UFOCs ”) in accordance with applicable Law, has filed its UFOCs in all states in which any such La Quinta Entity or La Quinta Subsidiary offered or sold franchises which required registration and approval prior to such offers or sales of franchises in such states and has not failed to file any required amendments or renewals on a timely and accurate basis, except where the failure to do any of the foregoing would not reasonably be expected to have a Company Material Adverse Effect. The La Quinta Entities have provided or made available to Parent copies of all material correspondence the La Quinta Entities or any of the La Quinta Subsidiaries have received or sent since January 1, 2002 affecting the registration and renewals of the UFOCs in the applicable states. Since January 1, 2002, other than supplemental earnings claims (which have been provided or made available to Parent), the La Quinta Entities and the La Quinta Subsidiaries do not and have not authorized their Representatives to furnish any materials or information which is inconsistent in any material respect with the “earnings claim” information set forth in Item 19 of the UFOCs, as that term is defined by federal and state franchising Laws.

     5.8 Litigation . Except as set forth in the La Quinta SEC Reports filed at least two Business Days prior to the date of this Agreement or in Section 5.8 of the La Quinta Entities Disclosure Schedule, (a) there is no Legal Action pending or, to the knowledge of the Company or Properties, threatened against the Company, Properties or any of the La Quinta Subsidiaries or their properties or assets or any director, officer or employee of the Company, Properties or any of the La Quinta Subsidiaries in his or her capacity as such or other person, in each case, for whom the Company, Properties or any of the La Quinta Subsidiaries may be liable, and (b) none of the Company, Properties or any La Quinta Subsidiary is subject to any outstanding Order which, in the case of (a) or (b), would have a Company Material Adverse Effect. No claims for indemnification have been made by any current or former director or officer pursuant to

Organizational Documents or any Contract between the Company, Properties or any La Quinta Subsidiary and any current or former director or officer since January 1, 2002 and other than pursuant to Organizational Documents or as set forth in Section 5.8 of the La Quinta Entities Disclosure Schedule, no Contract between the Company, Properties or any La Quinta Subsidiary and any current or former director or officer exists that was entered into since January 1, 1999 that provides for indemnification.

     5.9 Absence of Certain Changes . Except as disclosed in the La Quinta SEC Reports filed at least two Business Days prior to the date of this Agreement, since September 30, 2005, there has not been any event, circumstance, change, development or effect that had or would reasonably be expected to have, a Company Material Adverse Effect. Except as disclosed in the La Quinta SEC Reports filed at least two Business Days prior to the date of this Agreement or set forth in Section 5.9 of the La Quinta Entities Disclosure Schedule, since September 30, 2005 through the date hereof, the Company, Properties and the La Quinta Subsidiaries have conducted their businesses only in the ordinary course of business consistent with past practice and there has not been:

          (a) any declaration, setting aside or payment of any dividend or other distribution with respect to any shares of capital stock of the Company, Properties or any La Quinta Subsidiary, except for (i) dividends or distributions, declared, set aside or paid by Properties to the Company or any La Quinta Subsidiary to the Company, Properties or any La Quinta Subsidiary that is, directly or indirectly, wholly owned by the Company and (ii) distributions payable to holders of Series A Preferred Stock to the extent required by the terms of such stock;

          (b) any material commitment, contractual obligation (including, without limitation, any management or franchise agreement, any lease (capital or otherwise) or any letter of intent), borrowing, Liability, guaranty, capital expenditure or transaction that would be required to be disclosed in any La Quinta SEC Report (each, a “ Commitment ”) entered into by the Company, Properties or any of the La Quinta Subsidiaries outside the ordinary course of business except for Commitments for expenses of attorneys, accountants and investment bankers incurred in connection with the Mergers;

          (c) any material change in the Company’s, Properties’ or the La Quinta Subsidiaries’ accounting principles, practices or methods, except insofar as may have been required by a change in GAAP;

          (d) any amendment to the Company Certificate of Incorporation or the Properties Certificate of Incorporation or other Organizational Documents;

          (e) any increase in the compensation payable or to become payable or the benefits provided to their directors, officers or employees, except for increases in the ordinary course of business and in a manner consistent with past practice, or grant of any severance or termination pay to, or any employment, bonus, change of control or severance agreement entered into by the La Quinta Entities or any La Quinta Subsidiary with any director or officer or, except in the ordinary course of business in a manner consistent with past practice, any other employee of the La Quinta Entities or any La Quinta Subsidiary;

          (f) any damage, destruction or loss (whether or not covered by insurance), other than in the ordinary course of business, that has had a Company Material Adverse Effect;

          (g) any acquisitions or dispositions of real property;

          (h) any material tax election made or settlement or compromise of any material United States federal, state or local income tax liability;

          (i) reclassified, combined, split, subdivided or redeemed, or purchased or otherwise acquired, directly or indirectly, any of its capital stock except pursuant to cashless exercise of Options; or

          (j) any announcement of an intention to, or entry by the La Quinta Entities or any La Quinta Subsidiary into, any binding agreement, or other commitment to do any of the foregoing.

     5.10 Taxes .

          (a) Except as set forth in Section 5.10(a) of the La Quinta Entities Disclosure Schedule, each of the Company, Properties and the La Quinta Subsidiaries (i) has timely filed (or had timely filed on their behalf) all material Tax Returns required to be filed by any of them (after giving effect to any filing extension granted by a Governmental Entity) and all such Tax Returns (including information provided therewith or with respect thereto) are correct and complete in all material respects and (ii) has timely paid (or had timely paid on their behalf), or will timely pay, all material Taxes required to be paid by it, except to the extent that any such Taxes are being contested in good faith and for which adequate reserves have been established on the applicable La Quinta Entity or La Quinta Subsidiary’s books and records in accordance with GAAP. Except as set forth in Section 5.10(a) of the La Quinta Entities Disclosure Schedule, the most recent audited financial statements contained in the La Quinta Entities’ Annual Report on Form 10-K for the fiscal year ended December 31, 2004 reflect an adequate reserve for all Taxes payable by the Company, Properties and the La Quinta Subsidiaries for all taxable periods and portions thereof through the date of such financial statements in accordance with GAAP, whether or not shown as being due on any Tax Returns and such Taxes payable do not exceed that reserve as adjusted for the passage of time through the Closing Date in accordance with the past custom and practice of the Company, Properties and the La Quinta Subsidiaries in filing their Tax Returns. Except as set forth in Section 5.10(a) of the La Quinta Entities Disclosure Schedule, no deficiencies for any material Taxes have been proposed, asserted or assessed against the Company, Properties or any of the La Quinta Subsidiaries that remain outstanding as of the date of this Agreement, and no extensions or waivers of the time to assess any such material Taxes are currently in effect or have been requested. Except as set forth in Section 5.10(a) of the La Quinta Entities Disclosure Schedule, there are no material audits, examinations or other proceedings related to any material Taxes of the La Quinta Entities or any La Quinta Subsidiary in progress, and, to the knowledge of the La Quinta Entities, no La Quinta Entity or La Quinta Subsidiary has received any written notice from any taxing authority that it intends to conduct such an audit, examination or other proceeding in respect of any material Taxes. The La Quinta Entities and the La Quinta Subsidiaries have complied in all material respects with all applicable Law, rules and regulations relating to the withholding of Taxes and have duly and timely withheld and paid over to the appropriate taxing authorities all material

amounts required to be so withheld and paid on or prior to the due date thereof. No claim is pending by a taxing authority in a jurisdiction where the La Quinta Entities or the La Quinta Subsidiaries do not file Tax Returns that such entity is or may be subject to a material amount of tax by that jurisdiction. There are no material Tax liens on any assets of the Company, Properties or any of the La Quinta Subsidiaries (other than any liens for Taxes not yet due and payable for which adequate reserves have been made in accordance with GAAP or for Taxes being contested in good faith or statutory liens for unpaid property Taxes not yet due and payable). Except as set forth in Section 5.10(a) of the La Quinta Entities Disclosure Schedule, neither the Company, Properties nor any La Quinta Subsidiary has waived any statute of limitations in respect of Taxes or agreed to any extension of time with respect to a Tax assessment or deficiency (other than pursuant to extensions of time to file Tax Returns in the ordinary course). Except as set forth in Section 5.10(a) of the La Quinta Entities Disclosure Schedule, neither the Company, Properties nor any La Quinta Subsidiaries has made or is obligated to make any payment that would not be deductible pursuant to Section 162(m) of the Code. There are no pending or, to the knowledge of the La Quinta Entities, potential claims for indemnity (other than customary indemnity under credit or any other agreements or arrangements) against the Company, Properties or any La Quinta Subsidiary (other than against each other) under any indemnification, allocation or sharing arrangement with respect to Taxes. Neither the Company, Properties nor any La Quinta Subsidiary is, or has been, a party to any understanding or arrangement described in Section 6662(d)(2)(C)(ii) or Treasury Regulations Section 1.6011-4(b). Except as set forth in Section 5.10(a) of the La Quinta Entities Disclosure Schedule, neither the Company, Properties nor any La Quinta Subsidiary will be required to include any item of income in, or exclude any item of deduction from, taxable income as a result of any (1) adjustment pursuant to Section 481 of the Code, the regulations thereunder or any similar provision of state, local or foreign Law, (2) “closing agreement” as described in Section 7121 of the Code (or any corresponding or similar provision of state, local or foreign income Tax Law), (3) installment sale or open transaction disposition made on or prior to the Closing, or (4) prepaid amount not received on or prior to the Closing. Neither the Company, Properties nor any La Quinta Subsidiary has made an election under Section 341(f) of the Code.

          (b) Properties (i) for all taxable years commencing with January 1, 1997 through December 31, 2004 has been subject to taxation as a real estate investment trust (a “REIT”) within the meaning of Section 856 of the Code and has satisfied all requirements to qualify as a REIT for such years and (ii) has operated since December 31, 2004 to the date hereof and intends to continue to operate until the Closing Date, in such a manner as to permit it to continue to qualify as a REIT . Since the most recently audited financial statement contained in the La Quinta Entities’ Annual Report on Form 10-K for the fiscal year ended December 31, 2004, the Company, Properties and the La Quinta Subsidiaries have incurred no Liability for Taxes under Sections 857(b), 857(f), 860(c) or 4981 of the Code, including without limitation any Tax arising from a prohibited transaction described in Section 857(b)(6) of the Code, and neither the Company, Properties nor any La Quinta Subsidiary has incurred any material Liability for Taxes other than in the ordinary course of business. Except as set forth on Schedule 5.10(b) of the La Quinta Entities Disclosure Schedule, none of Properties or any Subsidiary of Properties hold any assets the disposition of which, pursuant to Treasury Regulations Section 1.337(d)-7, would be subject to a material amount of tax under the rules of Section 1374 of the Code.

          (c) The merger and transactions contemplated under the Agreement and Plan of Merger by and among the Company, LQP Acquisition Corp. and Properties dated as of October 17, 2001 were treated as an exchange that qualified as a recapitalization under Section 368(a)(1)(E) of the Code and as a contribution qualifying as a transaction under Section 351 of the Code.

          (d) For the taxable years beginning on or after January 1, 1997, the Company has not been subject to taxation as a REIT within the meaning of Section 856 of the Code and has not elected to be treated as a REIT.

     5.11 Real and Personal Properties .

          (a) Section 5.11(a) of the La Quinta Entities Disclosure Schedule lists each parcel of real property currently owned by the Company, Properties or any La Quinta Subsidiary, and sets forth the Company, Properties or the applicable La Quinta Subsidiary owning such property (collectively, the “ Owned Real Properties ” and together with the Leased Properties (defined below), the “ La Quinta Properties ” and each individually, a “ La Quinta Property ”). Except as set forth in Section 5.11(a) of the La Quinta Entities Disclosure Schedule, the Company, Properties or the applicable La Quinta Subsidiary set forth in Section 5.11(a) of the La Quinta Entities Disclosure Schedule owns fee simple title to the Owned Real Properties, free and clear of liens, mortgages or deeds of trust, pledges, options, rights of first refusal or offer, conditional or installment sales contracts, claims against title, charges which are liens, security interests or other encumbrances on title (“ Encumbrances ”), other than (i) Encumbrances for real estate taxes and assessments not yet due and payable, (ii) inchoate mechanics’ and materialmen’s liens for construction in progress, and (iii) to the extent such Encumbrances would not reasonably be expected to have a Company Material Adverse Effect, (A) workmen’s, repairmen’s, warehousemen’s and carriers’ liens arising in the ordinary course of business of the La Quinta Entities or any of the La Quinta Subsidiaries consistent with past practice, (B) all matters of record and other Encumbrances which are disclosed in the title policies made available to Parent, and (C) all Encumbrances and other imperfections of title that are typical for the applicable property type and locality or which would not reasonably be expected to materially interfere with the conduct of the business of the La Quinta Entities (collectively, “ Permitted Encumbrances ”). Except as set forth in Section 5.11(a) of the La Quinta Entities Disclosure Schedule, no La Quinta Property is subject to any Order to be sold nor is being condemned, expropriated or otherwise taken by any public authority with or without payment of compensation therefor, nor, to the knowledge of the La Quinta Entities, has any such condemnation, expropriation or taking been proposed. None of the Company, Properties or any La Quinta Subsidiary has violated any material covenants, conditions or restrictions of record affecting any La Quinta Properties which violation would have a Company Material Adverse Effect.

          (b) Section 5.11(b) of the La Quinta Entities Disclosure Schedule lists each parcel of real property currently leased or subleased by the Company, Properties or any La Quinta Subsidiary from a third party (except for billboard leases entered into in the ordinary course of business) (“ Leased Properties ”) and sets forth the Company, Properties or the La Quinta Subsidiary holding such leasehold interest, the date of the lease and each material amendment, guaranty of an obligation of an entity other than a La Quinta Entity or a La Quinta Subsidiary or other agreement relating thereto (the “ Lease Documents ”). The Company,

Properties or the applicable La Quinta Subsidiary holds a valid leasehold interest in the Leased Properties, free and clear of all Encumbrances other than Permitted Encumbrances. True, correct and complete copies of all Lease Documents have been made available to Parent. Each of the Lease Documents is valid, binding and in full force and effect as against the Company, Properties or the La Quinta Subsidiaries and, to the knowledge of the La Quinta Entities, as against the other party thereto.

          (c) None of the Company, Properties or any La Quinta Subsidiary is a party to any management, franchise, license or other agreement providing for the management of operations conducted at any La Quinta Property by any party other than the Company, Properties or any La Quinta Subsidiary, other than as disclosed in Section 5.11(c) of the La Quinta Entities Disclosure Schedule. True, correct and complete copies of each such agreement have been made available to Parent. Each such agreement is valid, binding and in full force and effect as against the Company, Properties or the La Quinta Subsidiaries and, to the knowledge of the La Quinta Entities, as against the other party thereto.

          (d) Section 5.11(d) of the La Quinta Entities Disclosure Schedule lists each management agreement pursu