EXECUTION COPY
MIP BLOOMINGTON, LLC, MIP IOWA CITY, LLC, MIPS SAN DIEGO, LLC,
MIP TRUMBULL, LLC, MIP ANCHORAGE, LLC, MIP WALNUT CREEK,
LLC, and MIP PHILADELPHIA, LP, as Seller,
MIP LESSEE, LP, as Operating Lessee,
and
ASHFORD HOSPITALITY LIMITED PARTNERSHIP, as Purchaser
 
CONTRACT OF SALE
 
September 15, 2006
Properties: Seven Hotel Properties listed in Exhibit A

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TABLE OF CONTENTS

                      Page 1.  
Definitions
    1      
 
        2.  
Agreement to Sell and Purchase the Properties
    9      
 
        3.  
Purchase Price
    12      
 
        4.  
Permitted Exceptions
    13      
 
        5.  
Closing
    15      
 
        6.  
Apportionments
    16      
 
        7.  
Documents to be Delivered at the Closing
    25      
 
        8.  
Property Conveyed “As Is”; Other Representations and Warranties of Seller
    28      
 
        9.  
Representations and Warranties of Purchaser
    36      
 
        10.  
Conditions to the Sellers’ Obligation to Close Title
    37      
 
        11.  
Conditions to Purchaser’s Obligation to Close Title
    38      
 
        12.  
Casualty and Condemnation
    38      
 
        13.  
Operation of the Properties until Closing; Operating Lessee Covenants
    41      
 
        14.  
Title to the Properties
    49      
 
        15.  
Brokers, etc.
    51      
 
        16.  
Termination of Agreement; Default
    52      
 
        17.  
Expenses of the Transaction
    53      
 
        18.  
Notices
    54      
 
        19.  
Further Assurances
    55      
 
        20.  
Governing Law
    55      
 
        21.  
Entire Agreement; No Third Party Beneficiary, etc.
    56      
 
        22.  
Waivers; Extensions
    56      
 
        23.  
Construction
    56      
 
        24.  
Assignment
    57      
 
        25.  
Facsimile; Counterparts
    57      
 
        26.  
No Recording
    57      
 
        27.  
Escrow
    57      
 
        28.  
Confidentiality
    59      
 
        29.  
1031 Exchange
    60      
 
        30.  
Bulk Transfers
    60  

(i)

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                      Page 31.  
Saturdays, Sundays, Legal Holidays
    60      
 
        32.  
Attorneys’ Fees
    61      
 
        33.  
Staff
    61      
 
        34.  
Indemnification
    63      
 
        35.  
USA Patriot Act
    64      
 
        36.  
Tort Indemnity
    64      
 
        37.  
Highway Access
    65      
 
        38.  
Successors and Assigns
    65      
 
        39.  
Real Estate Reporting Person
    65  

(ii)

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Schedule of Exhibits
Exhibit A Hotels and Legal Descriptions; Vetro Leases
Exhibit B Franchise Agreements
Exhibit C Hotel Contracts
Exhibit D Management Agreements
Exhibit E Permitted Exceptions
Exhibit F Allocated Purchase Price
Exhibit G Surveys
Exhibit H Intentionally Omitted
Exhibit I Form of Bill of Sale and General Assignment
Exhibit J Form of Seller’s Representation Certificate
Exhibit K Form of Title Affidavit
Exhibit L Form of Purchaser’s Representation Certificate
Exhibit M Space Leases
Exhibit N Permits
Exhibit O Violations
Exhibit P Litigation
Exhibit Q Collective Bargaining Agreements
Exhibit R Certification Statement

(i)

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CONTRACT OF SALE
     THIS AGREEMENT (this “Agreement”) is made as of the 15th day of September,
2006 by and among MIP BLOOMINGTON, LLC, MIP IOWA CITY, LLC, MIPS SAN DIEGO, LLC,
MIP TRUMBULL, LLC, MIP ANCHORAGE, LLC, MIP WALNUT CREEK, LLC, each a Delaware
limited liability company, and MIP PHILADELPHIA, LP, a Pennsylvania limited
partnership, each with an office c/o Interstate Hotels & Resorts, Inc., 4501 N.
Fairfax Drive, Suite 800, Arlington, Virginia 22203 (each, a “Seller” and
collectively, the “Sellers”), MIP LESSEE, LP, a Delaware limited partnership
with an office c/o Interstate Hotels & Resorts, Inc., 4501 N. Fairfax Drive,
Suite 800, Arlington, Virginia 22203 (“Operating Lessee”), and ASHFORD
HOSPITALITY LIMITED PARTNERSHIP, a Delaware limited partnership, with an office
at 14185 Dallas Parkway, Suite 1100, Dallas, Texas 75254 (“Purchaser”).
W I T N E S S E T H :
     Each Seller is the owner of the hotel listed opposite such Seller’s name
and described in Exhibit A of this Agreement (each, a “Hotel” and collectively,
the “Hotels”).
     The Sellers desire to sell and convey the Hotels to Purchaser, and
Purchaser desires to purchase the Hotels from the Sellers, subject to and upon
all of the terms and provisions of this Agreement.
     NOW, THEREFORE, in consideration of the premises and the mutual
undertakings in this Agreement, the parties hereto agree as follows:
     1. Definitions.
          1.1 Defined Terms. Wherever used in this Agreement, the following
terms shall have the meanings set forth in this Section 1 unless the context of
this Agreement clearly requires another interpretation:
          “Adjustment Point” shall have the meaning set forth in Section 6.
          “Anchorage Hotel” shall mean the Hotel known as the Sheraton Anchorage
Hotel, which Hotel is located in Anchorage, Alaska.
          “Anchorage Joint Venture Agreement” shall mean that certain Joint
Venture Agreement, dated November 23, 1994, by and between Captain Cook and
MeriStar Laundry (as successor-in-interest to InterAlaskaHotel, Inc.).
          “Bill of Sale” shall mean each bill of sale to the Personal Property
to be delivered at the Closing as provided in subsection 7.1.2.
          “Blackout Period” shall mean the period from November 10, 2006 to and
including November 12, 2006.

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2

          “Bloomington Hotel” shall mean the Hotel known as the Hilton
Minneapolis/St. Paul Airport, which Hotel is located in Bloomington, Minnesota.
          “Bookings” shall mean contracts or reservations for the use or
occupancy of guest rooms, meeting rooms and/or the banquet facilities of a
Hotel, including without limitation volume transient agreements, if any, in
effect with respect to a Hotel.
          “Books and Records” shall mean all books, records, room rates,
customer lists and banquet and function room records with respect to a Hotel
(whether in electronic format or reduced to paper, but with respect to items in
electronic format (i) excluding software which is proprietary to the Operating
Lessee, the Manager, their respective affiliates or any third party, or is
licensed by the applicable Seller, the Operating Lessee, the Manager or any of
their respective affiliates from third parties, (ii) only in such form as they
exist on the Closing Date, (iii) only to the extent the same are not
consolidated with items from other hotels owned, leased or managed by a Seller,
the Operating Lessee, the Manager or any of their respective affiliates and not
being conveyed to Purchaser and (iv) without any representation or warranty that
the same are compatible with Purchaser’s software) to the extent the same
(x) are owned by a Seller, the Operating Lessee or the Manager, (y) reflect
operations at a Hotel and not at other properties owned, leased or managed by a
Seller, the Operating Lessee, the Manager or any of their respective affiliates,
and (z) are in a Seller’s, the Operating Lessee’s or the Manager’s possession.
          “Brand” shall mean any of Embassy Suites®, Hilton®, Marriott®,
Sheraton®, Vetro, MeriStar® or Interstate Hotels®.
          “Business Day” shall mean any day other than a Saturday, Sunday or a
day on which national banking institutions in New York City and/or the District
of Columbia are authorized or required to close.
          “Captain Cook” shall mean Hickel Investment Company, d/b/a The Hotel
Captain Cook.
          “Closing” shall mean the closing of the sale of the Properties by the
Sellers to Purchaser provided for in Section 5.
          “Code” shall mean the Internal Revenue Code of 1986, as amended.
          “Consumables” means all engineering, maintenance and housekeeping
consumable supplies including, without limitation, soap, cleaning materials,
matches, stationery, paper supplies, pencils, paint and painters’ supplies,
engineers’ supplies, fuel oil, gasoline and other supplies of all kinds, whether
used, unused or held in reserve storage for future use in connection with the
maintenance and operation of any Property, whether in opened or unopened
packages, owned by any Seller or the Operating Lessee and which are on hand on
the date hereof, subject to such depletion and including such resupplies as
shall occur and be made in the normal course

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3

of business, excluding, however, (i) Food and Beverage, (ii) Operating Supplies
and Equipment, (iii) Miscellaneous Personal Property, (iv) Furnishings and
(v) Excluded Items.
          “Costs of Collection” shall mean and include reasonable attorneys’
fees and other costs incurred by the Sellers, the Operating Lessee, the Manager
or Purchaser, as the case may be, in collecting Rents, but shall not include the
regular fees payable to any manager of the Hotels, the payroll costs of any
employees or any other internal costs or overhead of any Seller, the Operating
Lessee, the Manager or Purchaser.
          “Effective Date” shall mean the date of this Agreement.
          “Environmental Laws” shall mean any and all federal, state and local
laws, statutes, ordinances, rules, regulations, judgments, orders, decrees,
permits, licenses or other governmental restrictions or requirements now or
hereafter in effect with respect to the Hotels and relating to the environment
and/or Hazardous Substances, including without limitation the Comprehensive
Environmental Response, Compensation and Liability Act of 1986, as amended (42
U.S.C. §9601 et seq.), the Resource Conservation Recovery Act, as amended by the
Hazardous and Solid Waste Amendments of 1984, as now or hereafter amended (42
U.S.C. §6901 et seq.), the Hazardous Materials Transportation Act, as amended
(49 U.S.C. §1801 et seq.), the Clean Air Act, as amended (42 U.S.C. §7401 et
seq.), the Clean Water Act, as amended (33 U.S.C. §1251 et seq.), and the Toxic
Substances and Control Act, as amended (15 U.S.C. §2601 et seq.).
          “Escrow Agent” shall mean Chicago Title Insurance Company, through its
National Accounts Office in New York, New York, in its capacity as holder of the
Deposit.
          “Exhibits” shall mean the exhibits attached to this Agreement (or such
other documents which are referred to in this Agreement as Exhibits and are
initialed for identification by the parties), each of which shall be deemed to
form part of this Agreement whether or not so stated in this Agreement.
          “Food and Beverage” means all food and beverages which are on hand at
a Hotel whether issued to the food and beverage department of such Hotel or held
in reserve storage, in unopened packages and (in the case of certain beverages)
bottles (including, without limitation, all food and beverage located in any
guest room mini-bar), subject to such depletion and including such resupplies as
shall occur and be made in the normal course of business.
          “Franchise Agreement” shall mean the hotel franchise agreement or
license agreement and related documents pursuant to which a Hotel is being
operated under a brand name, together with all modifications and amendments
thereto, all of which Franchise Agreements are more particularly described in
Exhibit B.
          “Franchisor” shall mean the entity licensing to a Seller the hotel
brand name and systems under which the applicable Hotel is being operated
pursuant to a Franchise Agreement.

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4

          “Furnishings” shall mean all fixtures, furniture, furnishings,
fittings, equipment, machinery, apparatus, appliances, computer hardware and
equipment, software (to the extent such software is neither subject to a
licensing agreement nor proprietary to the Operating Lessee or Manager or their
respective affiliates), reservations terminals (to the extent not licensed to
any Seller, the Operating Lessee or Manager by the Franchisor under a Franchise
Agreement or other applicable documentation), vehicles, building materials,
telephones and other communication equipment, copiers, facsimile machines,
postal machines, televisions, signs, vacuum cleaners, video equipment and other
similar articles of personal property (to the extent any Seller or the Operating
Lessee has title to such items and such items are not subject to any equipment
leases or similar arrangements), located on or at the applicable Property and
used or usable in connection with the operation of a Hotel, subject to such
depletions, substitutions and replacements as shall occur and be made in the
ordinary course of business prior to the Closing Date and in accordance with the
terms of this Agreement, excluding therefrom any such personal property owned by
Manager and all (i) Consumables, (ii) Food and Beverage, (iii) Operating
Supplies and Equipment, (iv) Miscellaneous Personal Property and (v) Excluded
Items.
          “Governmental Authorities” shall mean all agencies, bureaus,
departments, and officials of federal, state, county, municipal and local
governments and public authorities having jurisdiction over the Properties or
any part thereof.
          “Hazardous Substance” shall mean any substance, material or waste
which is regulated, or governed by any Environmental Law including without
limitation (a) any substance, material or waste defined, used or listed as
“hazardous waste”, “extremely hazardous waste”, “restricted hazardous waste”,
“hazardous substance”, “hazardous material”, “toxic substance” or similar or
related term as defined, used or listed in any Environmental Law, (b) any
asbestos or asbestos containing materials, (c) any underground storage tanks or
similar facilities, (d) petroleum, petroleum-based substances or polychlorinated
biphenyl, (e) toxic mold, and (f) any additional substances or materials which
are hazardous or toxic substances under any Environmental Law.
          “Hotel Contracts” shall mean, with respect to each Hotel, all service
and maintenance contracts, employment agreements, union contracts, purchase
orders and other contracts or agreements, including without limitation equipment
leases, relating to the maintenance, operation, provisioning or equipping of
such Hotel, together with all related written warranties and guaranties, as the
same may be modified in accordance with this Agreement. Hotel Contracts shall
not include (i) the Franchise Agreements, (ii) the Management Agreements, or
(iii) any contracts, equipment leases or purchase orders (except to the extent
of Consumables, Food and Beverage, Operating Supplies and Equipment and/or
Furnishings or other Personal Property ordered prior to the Closing in the
ordinary course of business and not yet delivered to the applicable Hotel) under
which, or which are subject to master agreements under which, goods and/or
services are supplied or leased to more than one hospitality property owned,
leased or managed by the Operating Lessee, the Manager or any of their
respective affiliates, unless the same are set forth on Exhibit C attached
hereto.

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5

          “Hotel Employees” shall mean, with respect to each Hotel, the persons
employed at such Hotel, whether by the Seller owning such Hotel, the Operating
Lessee or the Manager, to operate such Hotel.
          “Impositions” shall mean all real estate and personal property taxes,
general and special assessments, water and sewer charges, license fees and other
fees and charges assessed or imposed by Governmental Authorities upon all or any
portion of the Properties (including any Personal Property).
          “Improvements” shall mean the buildings, structures (surface and
sub-surface), installations and other improvements, including such fixtures and
appurtenances as shall constitute real property, located on the Land.
          “Iowa City Hotel” shall mean the Hotel known as the Sheraton Iowa
City, which Hotel is located in Iowa City, Iowa.
          “Legal Requirements” shall mean all statutes, laws, ordinances, rules,
regulations, executive orders and requirements of all Governmental Authorities
which are applicable to the Properties or any part thereof or the use or manner
of use thereof, or to the owners, Tenants or occupants thereof in connection
with such ownership, occupancy or use.
          “Management Agreement” shall mean, with respect to each Hotel, that
certain management agreement by and between the Operating Lessee and the Manager
and all amendments, modifications, supplements or restatements thereto and
thereof, as listed and described in Exhibit D annexed hereto and made a part
hereof.
          “Manager” shall mean Interstate Management Company, L.L.C., the
current manager of the Hotels.
          “MeriStar Laundry” shall mean MeriStar Laundry, LLC, a Delaware
limited liability company.
          “Miscellaneous Personal Property” shall mean, with respect to each
Hotel, and only to the extent, if any, the applicable Seller and/or Operating
Lessee has any right, title or interest therein, such Hotel’s domain name, URL,
website (including access to the FTP files of such website) and web address (if
any, and only any such domain name, URL, website and/or web address, as relate
solely to such Hotel), the Hotel’s telephone numbers, printed marketing
materials, if any, relating solely to the Hotel, and any slides, proofs or
drawings used by the Seller owning such Hotel or the Operating Lessee to produce
such materials, to the extent such slides, proofs or drawings are in such
Seller’s or the Operating Lessee’s possession and without any express or implied
representation or warranty of any kind by such Seller or the Operating Lessee in
connection therewith. In no event shall Miscellaneous Personal Property include
any property licensed for use under the Franchise Agreements, unless Purchaser
continues to operate the applicable Hotel under the Franchise Agreement or
pursuant to a new franchise agreement with the Franchisor duly entered into by
Purchaser and such Franchisor. Miscellaneous Personal Property shall also
exclude (i) Consumables, (ii)

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6

Food and Beverage, (iii) Operating Supplies and Equipment, (iv) Furnishings and
(v) Excluded Items.
          “Operating Lease” shall mean, with respect to each Hotel, that certain
operating lease demising the applicable Property between the Seller owning such
Property, as owner, and the Operating Lessee, as tenant, which operating lease
shall be terminated on or prior to Closing at Seller’s sole cost and expense.
          “Operating Supplies and Equipment” shall mean, with respect to any
Hotel, all china, glassware, stemware, silverware, linens, sheets, pillow cases,
towels, face cloths, bathmats, bath rugs, shower curtains, blankets, tools,
employees’ uniforms, and any other equipment, goods, utensils, supplies or
reserve stock, whether in use or held in storage for future use in connection
with the operation of such Hotel, which are on hand on the date hereof, whether
in opened or unopened packages, subject to such depletion and including such
resupplies as shall occur and be made in the normal course of business,
excluding, however, (i) Food and Beverage, (ii) Consumables, (iii) Miscellaneous
Personal Property, (iv) Furnishings, and (v) Excluded Items.
          “Permits” shall mean, with respect to each Hotel, all governmental
licenses, permits, certificates, authorizations and approvals used in or
relating to the ownership, occupancy or operation of any part of such Hotel,
including, without limitation, those necessary for the sale and on-premises
consumption of liquor and other alcoholic beverages.
          “Permitted Exceptions” shall mean those items specified in Section 4
and Exhibit E, and all other matters affecting title to any of the Properties
which are hereafter accepted by Purchaser, treated as a Permitted Exception in
accordance with the terms of this Agreement, or waived by Purchaser in writing.
          “Personal Property” shall mean, collectively, the Furnishings,
Consumables, Food and Beverage, Operating Supplies and Equipment, Miscellaneous
Personal Property, Books and Records and Warranties owned by the Operating
Lessee, Sellers or any of them.
          “Philadelphia Hotel” shall mean the Hotel known as the Embassy Suites
Philadelphia Airport, which Hotel is located in Philadelphia, Pennsylvania.
          “Rents” shall mean all fixed, minimum, additional, percentage, overage
and escalation rents, porter’s wage or operating expense charges, real estate
tax charges, overtime expense charges, parking charges, insurance charges,
electricity charges, cleaning charges, sprinkler charges, water charges, utility
charges, HVAC charges and any other amounts payable under the Space Leases.
          “San Diego Hotel” shall mean the Hotel known as the Sheraton San Diego
Hotel, Mission Valley, which Hotel is located in San Diego, California.
          “San Diego Seller” shall mean MIPS San Diego, LLC.

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7

          “Seller” shall have the meaning set forth in the preamble, provided,
that in the event the Partial Termination Procedure is applied to any Property,
then the term “Seller” shall be deemed to exclude any party that is the owner of
such Property.
          “Seller’s Copy” or “Seller’s Copies” shall mean an executed
counterpart or, if an executed counterpart is not in any Seller’s possession, at
least one conformed photocopy.
          “Space Leases” shall mean all leases, tenancies, licenses, concessions
and other agreements (written or oral) for the occupancy and use of space at the
Properties, including but not limited to, agreements for the occupancy and use
of rooftop space on a Hotel for the installation of cellular telephone antennas
(but, with respect to such cellular antenna leases, net of brokerage commissions
to third parties), and all renewals, modifications, amendments, guaranties and
other agreements affecting the same. Space Leases shall not include the
Operating Leases or the Bookings.
          “Substantial Portion” shall mean, in the case of damage or destruction
to any Property by casualty, such portion of such Property as would cause the
cost to repair or replace the same to equal or exceed twelve and one-half
percent (121/2 %) of the Allocated Purchase Price of said Property.
          “Tenants” shall mean the tenants, licensees, concessionaires or other
users or occupants under Space Leases.
          “Title Company” shall mean Chicago Title Insurance Company, through
its National Accounts Office in New York, New York, in its capacity as title
insurer.
          “Trademarks” shall mean the trademarks, trade names, service marks and
copyrights, marks, logos, symbols, know-how, trade dress, slogans and all
similar proprietary rights associated with the Brands and any other marks used
by any Seller, the Operating Lessee or the Manager in the marketing, operations
and systems programs in connection with the Hotels and any and all goodwill
related specifically thereto, including all derivations of any of the foregoing.
          “Trumbull Hotel” shall mean the Hotel known as the Marriott Trumbull,
which Hotel is located in Trumbull, Connecticut.
          “USA PATRIOT Act” shall mean the Uniting and Strengthening America by
Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (USA
PATRIOT) Act of 2001 (Pub. L. No. 107-56).
          “Vetro Leases” shall mean those certain leases, as amended, pursuant
to which the Operating Lessee is a tenant, listed and described on Exhibit A.
          “Walnut Creek Seller” shall mean MIP Walnut Creek, LLC.

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8

          “Walnut Creek Hotel” shall mean the Hotel known as the Embassy Suites
Walnut Creek, which Hotel is located in Walnut Creek, California.
          “Walnut Creek Litigation” shall mean that certain litigation arising
out of the lawsuit filed by Gypsie Jones against Interstate in the United States
District Court, Northern District of California, on July 28, 2006.
          “Warranties” shall mean any assignable warranties benefiting any
Seller or the Operating Lessee with respect to the Furnishings, Miscellaneous
Personal Property and Improvements.
          1.2 Additional Defined Terms. The following additional terms, wherever
used in this Agreement, shall have the respective meanings specified in the
Sections of this Agreement set forth below after such terms:

      Term   Section
ADA Remedial Work
  13.13
Adjustment Point
  6.1
Agreement
  Preamble
Allocated Purchase Price
  3.2
Anchorage Joint Venture
  7.1.21
Applicable Period
  33.4
Appurtenances
  2.1.2
Asset Allocations
  3.2
Balance
  3.1.3
Bankruptcy Code
  3.1.2
Basket
  8.9.2
Broker
  15.1
Cash
  2.2.2
Casualty Loss
  12.1.1
Closing Date
  5.1
Closing Deposit
  5.1
Collective Bargaining Agreements
  8.3.13
Deed
  7.1.1
Deposit
  3.1.1
ERISA
  33.4
Excluded Items
  2.2
Fund
  33.4
Guest Property
  6.3
Hotel
  Recitals
Hotels
  Recitals
Incremental ADA Costs
  13.13
Indemnifying Party
  34
Initial Closing Date
  5.1
Interstate
  8.3.13
Land
  2.1.1

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9

      Term   Section
Leasing Costs
  6.4.1
Ledger
  6.1.12
MHOP
  10.5
MHOP ROFO
  10.5
Monetary Liens
  14.1
Multiemployer Plan
  33.4
OFAC
  35
Operating Lessee
  Preamble
Other Franchisor
  13.7.1
Partial Termination Procedure
  12.1.2
PBGC
  33.4
Permitted Exceptions
  4
PIP Default Risk
  6.5.2
Properties
  2.1
Property
  2.1
Proprietary Materials
  2.2.6
Protected Party
  34
Purchase Price
  3.1
Purchaser
  Preamble
Purchaser’s Leasing Costs
  6.4.2
Purchaser’s Representation Certificate
  7.2.4
Release
  10.4
Repair Contract
  6.5.3
Repair Contractor
  6.5.3
Repair Proposal
  6.5.3
Seller
  Preamble
Seller’s knowledge
  8.4
Seller’s possession
  8.4
Seller’s Representation Certificate
  7.1.12
Sellers
  Preamble
Title Affidavit
  7.1.13
Trademark Materials
  2.2.1
Transfer Taxes
  17.1
Transferred Employees
  33.1
WARN Act
  33.2

          1.3 Construction. Except as otherwise specifically indicated, all
references in this Agreement to Sections refer to Sections of this Agreement,
and all references to Exhibits refer to Exhibits attached hereto. The words
“herein,” “hereof,” “hereinafter,” and words and phrases of similar import refer
to this Agreement as a whole and not to any particular Section. Agreement to
Sell and Purchase the Properties.
          2.1 Sale and Purchase. Upon and subject to the terms and conditions of
this Agreement, the Sellers agree to sell and convey to Purchaser and

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10

Purchaser agrees to purchase from the Sellers, the following hotel properties
(each a “Property” and collectively, the “Properties”), comprising the following
interests owned by the applicable Seller or Operating Lessee:
               2.1.1 all those certain lots, pieces or parcels of land more
particularly described in Exhibit A annexed hereto and made a part hereof,
together with, all and singular, the tenements, hereditaments, easements,
appurtenances and rights belonging or in any way appertaining thereto, and the
reversions and the remainders thereof (the “Land”);
               2.1.2 all right, title and interest, if any, of the applicable
Seller in and to all of the following (collectively, “Appurtenances”).
        (a) land lying in the bed of any street, highway, road or avenue, open
or proposed, public or private, in front of or adjoining the Land, to the center
line thereof;
        (b) rights of way, highways, public places, easements, appendages,
appurtenances, sidewalks, alleys, strips and gores of land adjoining or
appurtenant to the Land which are now or hereafter used in connection with the
Land; and
        (c) awards made after the Closing or to be made after the Closing in
lieu of any of the foregoing, and all unpaid awards or other proceeds for
damages to the Land by reason of the change of grade of any street, highway,
road or avenue;
               2.1.3 all right, title and interest of each Seller in and to all
Improvements now located or hereafter erected on such Land, and all fixtures
constituting a part thereof;
               2.1.4 all right, title and interest of any Seller or the
Operating Lessee as lessor or sublessor, as the case may be, under the Space
Leases;
               2.1.5 the Sellers’ and Operating Lessee’s respective interests
under the Hotel Contracts, to the extent assignable;
               2.1.6 all Personal Property owned by the applicable Seller or the
Operating Lessee and used in connection with the operation of the Property owned
by such Seller;
               2.1.7 subject to the provisions of Section 13.10, all of the
Operating Lessee’s right, title and interest as tenant under the Vetro Leases;
and
               2.1.8 subject to the provisions of Section 13.11, all of MeriStar
Laundry’s right, title and interest in the Anchorage Joint Venture Agreement.

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          2.2 Excluded Items. Notwithstanding anything to the contrary set forth
in this Agreement, none of the Sellers shall be obligated to sell to Purchaser,
and Purchaser shall not be entitled or obligated to purchase, any of the
following (collectively, the “Excluded Items”):
               2.2.1 Any right, title, or interest in (a) the Trademarks and
(b) except to the extent, if any, that Purchaser shall, pursuant to
Section 13.7, either assume the applicable Franchise Agreement or obtain a new
franchise agreement from the applicable Franchisor, all printed materials,
signs, operating supplies, equipment and other items of personal property
containing the Trademarks (the “Trademark Materials”) located on the Properties.
               2.2.2 Subject to the provisions of Section 6.1, any cash and all
balances on deposit in the name of or to the credit of any Seller, the Operating
Lessee or the Manager, and all cash equivalent investments (collectively,
“Cash”) (it being agreed that, notwithstanding anything to the contrary
contained in this Agreement, the Sellers shall have the right to withdraw all
Cash in the bank accounts of (or relating to) any Property, other than cash on
hand in house banks as provided in Section 6.1.11, on the Closing Date).
               2.2.3 Non-transferable deposits such as utility deposits.
               2.2.4 Insurance policies covering any of the Hotels which are
carried by any Seller or the Operating Lessee or any of their respective
affiliates (it being agreed that, notwithstanding anything to the contrary
contained in this Agreement, the Sellers shall have the right to cause the
termination of such policies on the Closing Date).
               2.2.5 Except as otherwise provided in Section 12, proceeds from
insurance policies covering any of the Properties which are carried by any
Seller, the Operating Lessee or any of their respective affiliates. Except as
otherwise provided in Section 12, the Sellers and/or their respective affiliates
are and shall remain entitled to all of such insurance proceeds related to
claims arising prior to the Closing Date. Except as otherwise provided in
Section 12, Purchaser shall have no claim or right to any such insurance
proceeds related to Claims arising prior to the Closing Date. For purposes of
this Section 2.2.5, a “Claim” shall be deemed to have arisen at the time when
the matter giving rise to an insurance claim first occurs.
               2.2.6 All of the following materials of any Seller, the Operating
Lessee, the Manager or any of their respective affiliates relating to the Hotels
(collectively, “Proprietary Materials”): all income tax returns, property
valuations and appraisals, financial budgets and forecasts, market studies and
all materials which are subject to a confidentiality agreement with a third
party.
               2.2.7 Any item excluded from the definition of “Personal
Property” (or any component thereof) contained in this Agreement.

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          2.3 Operating Lessee Interests. A portion of the interests and
property constituting the Properties are or may be owned or held by the
Operating Lessee rather than any Seller. The Operating Lessee shall, at or prior
to Closing, cause any and all portions of the interests and property
constituting the Properties owned or held by the Operating Lessee to be
transferred to Purchaser on the terms and conditions of this Agreement.
     3. Purchase Price.
          3.1 Purchase Price. The aggregate purchase price (the “Purchase
Price”) payable by Purchaser to the Sellers for the Properties shall be TWO
HUNDRED SIXTY-SEVEN MILLION ONE HUNDRED FIFTY THOUSAND and 00/100 DOLLARS
($267,150,000.00), which shall be payable as set forth below.
               3.1.1 On the Effective Date, and as condition to the
effectiveness of this Agreement, Purchaser shall deliver to the Escrow Agent the
sum of TWENTY MILLION and 00/100 DOLLARS ($20,000,000.00) (the “Deposit”) by
wire transfer of immediately available federal funds to an account designated by
the Escrow Agent.
               3.1.2 The Deposit shall be held by Escrow Agent and disbursed in
accordance with the terms and conditions of this Agreement. Purchaser hereby
acknowledges and agrees that the Deposit held by Escrow Agent does not and shall
not constitute property of the estate of Purchaser within the meaning of section
541 of title 11 of the United States Code, or substantially similar provisions
of state law (the “Bankruptcy Code”), and Purchaser’s interest in such Deposit
is limited to the right to have the Deposit returned if and when the conditions
for the return of the Deposit to Purchaser are satisfied as set forth herein.
Purchaser hereby acknowledges and agrees that (i) the proper giving of notice by
the Sellers to release any portion of the Deposit as provided hereunder and/or
(ii) the proper release of any portion of the Deposit to the Sellers as provided
hereunder shall not be a violation of any provision of the Bankruptcy Code,
including, without limitation, section 362 of the Bankruptcy Code, or require
the approval of any court with jurisdiction over any case in which Purchaser or
any affiliate of Purchaser is a debtor. Purchaser hereby waives any provision of
the Bankruptcy Code necessary to invoke the foregoing, including, without
limitation, sections 105 and 362, and waives any right to defend against any
motion for relief from the automatic stay that may be filed by the Sellers.
               3.1.3 At the Closing, Purchaser shall pay to the Sellers the
balance of the Purchase Price, to wit, TWO HUNDRED FORTY-SEVEN MILLION ONE
HUNDRED FIFTY THOUSAND and 00/100 DOLLARS ($247,150,000.00), as such amount
shall be adjusted pursuant to any Closing adjustments pursuant to Section 6 and
any other adjustment expressly provided for in this Agreement (including,
without limitation, Section 5.1) and less the consideration payable for the
transfer of the liquor license and the alcoholic beverage inventory at the San
Diego Hotel and the Walnut Creek Hotel as provided in Section 6.1.16 (the
“Balance”), by wire transfer of immediately available federal funds to an
account or accounts designated by the Sellers

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to Purchaser in writing at least one (1) Business Day prior to Closing. Such
funds shall be received by the Sellers by 10:30 A.M. (New York City time) on the
Closing Date.
               3.1.4 Notwithstanding anything to the contrary in this Agreement
(including, without limitation, Purchaser’s right to adjourn the Closing
pursuant to Section 5.1), Purchaser expressly acknowledges and agrees that to
the extent Purchaser will seek or require financing to close on this
transaction, this Agreement is not subject to or conditioned upon Purchaser’s
ability to obtain such financing.
          3.2 Allocation. The Purchase Price attributable to each Property for
purposes of filing transfer tax, sales tax and other similar tax returns and
reports and for determining the value of a Hotel in connection with the Partial
Termination Procedure (the “Allocated Purchase Price” of such Property) is set
forth on Exhibit F. Prior to the Closing, the Sellers and Purchaser shall
cooperate in good faith to further allocate each Property’s Allocated Purchase
Price among such Property’s (a) Land, (b) Improvements, (c) Personal Property,
and (d) other asset categories, as applicable (the “Asset Allocations”),
provided that in the event that Sellers and Purchaser are unable to agree on
such Asset Allocations within twenty (20) days from the Effective Date, the
Sellers and Purchaser shall engage a mutually acceptable nationally recognized
accounting firm to determine the Asset Allocations, which determination shall be
binding on the Sellers and Purchaser for the purposes of this Agreement. In the
event the Purchase Price is increased pursuant to Section 5.1, such increase
shall be allocated among the Properties and the asset components of the
Properties on a pro rata basis in accordance with the allocations set forth on
Exhibit F and the Asset Allocations. The Sellers and Purchaser agree to file all
real property transfer tax, sales tax and other similar tax returns and reports
necessary in connection with the Closing consistent with the Allocated Purchase
Price and the Asset Allocations. Notwithstanding anything in this Agreement to
the contrary, the parties do not intend that the Allocated Purchase Price and
Asset Allocations will represent an indication of value for generally accepted
accounting principles (including, without limitation, for federal income tax
purposes), and each party expressly reserves the right make its own
determination of such value.
          3.3 Elimination of Property. In the event that this Agreement is
terminated with respect to any Property pursuant to the Partial Termination
Procedure, none of the provisions of this Agreement shall have any further force
or effect as to such Property (except for those provisions that expressly
survive termination of this Agreement), and the Purchase Price shall be reduced
by the amount allocated to all such Properties as shown on Exhibit F.
     4. Permitted Exceptions. Subject to the provisions of Section 14, at
Closing, the Properties are sold and are to be conveyed subject to the following
matters (“Permitted Exceptions”):
          4.1 the matters set forth in Exhibit E annexed hereto and made a part
hereof;

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          4.2 liens for Impositions which are not due and payable as of the
Closing Date or which are apportioned in accordance with Section 6;
          4.3 liens for Impositions which are paid directly by Tenants in
occupancy on the Closing Date to the entity imposing same;
          4.4 the state of facts shown on the surveys listed and described on
Exhibit G, and any state of facts a physical inspection of the Properties would
show;
          4.5 zoning, subdivision, environmental, building and all other Legal
Requirements applicable to the ownership, use or development of, or the right to
maintain or operate the Properties, or have space therein used and occupied by
Tenants, presently existing or enacted prior to the Closing;
          4.6 consents by any former owner of any Property for the erection of
any structure or structures on, under or above any streets, highways, roads or
avenues which the Property may abut;
          4.7 the terms and conditions of the Vetro Leases;
          4.8 all Space Leases in effect on the date of this Agreement, as well
as any extensions or renewals of Space Leases pursuant to options contained
therein, or extensions, renewals or amendments of Space Leases or additional or
substituted Space Leases made between the date hereof and the Closing Date in
accordance with the provisions of Section 13 hereof;
          4.9 rights of Tenants in occupancy of any Property on the Closing Date
as tenants only;
          4.10 financing statements and security agreements made by any Tenant;
          4.11 the standard pre-printed exceptions from coverage contained in
the form of title policy employed by the Title Company, as revised due to
delivery by the Sellers of the Title Affidavit;
          4.12 without derogating from the representation set forth in
Section 8.3.9, any lien which arises out of a violation of building, fire,
sanitary, housing, sidewalk and other similar laws and regulations;
          4.13 mechanics’ liens, lis pendens and notices of commencement of
action against any Seller (or which affect any Seller’s interest in the
Properties), provided that the same do not exceed $1,000,000 with respect to any
single Property and that the Title Company shall provide affirmative insurance
reasonably satisfactory to Purchaser insuring against the collection of such
items out of the Properties; and

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          4.14 all matters created by or on behalf of, or with the consent of,
Purchaser, including, without limitation, any documents or instruments to be
recorded as part of any financing for the acquisition of the Properties by the
Purchaser, and any matter that Purchaser shall have accepted or be deemed to
have accepted pursuant to Section 14.
     5. Closing.
          5.1 Closing Date. The Closing shall be held at 10:00 a.m. local time
on November 8, 2006 (the “Initial Closing Date”, as the same may be adjourned or
advanced pursuant to the terms of this Agreement, the “Closing Date”), at the
offices of Paul, Weiss, Rifkind, Wharton & Garrison LLP, 1285 Avenue of the
Americas, New York, New York 10019 or on such other date, or at such other time
and place, which may be agreed upon by the parties. TIME SHALL BE OF THE ESSENCE
with respect to the Closing Date set forth above or any adjourned Closing Date
pursuant to the following proviso; provided, that the Closing may be adjourned
as follows: (a) by the Sellers, one or more times, to a Business Day not later
than December 7, 2006 in order to cure exceptions to title, cure breaches of
representations and warranties, obtain any required consents, permit the
elapsing of any period during which a right of first refusal may be exercised
with respect to any Hotel or satisfy any other conditions to Purchaser’s
obligations to consummate the Closing (unless the same are waived in writing by
the Purchaser) or (b) by Purchaser not more than one (1) time to a Business Day
not later than December 7, 2006 in order to satisfy the condition to the
Sellers’ obligations to consummate the Closing set forth in Section 10.4 (unless
the same are waived in writing by the Sellers) and/or to arrange and close
interim financing (provided that the satisfaction of such conditions and/or
arrangement and closing of such financing shall not be a condition to
Purchaser’s obligation to consummate the Closing), provided further that
(A) prior to or simultaneously with the exercise of Purchaser’s right to adjourn
the Closing pursuant to this clause (b) Purchaser shall deliver the sum of FIVE
MILLION AND 00/100 dollars ($5,000,000.00) to Escrow Agent (the “Closing
Deposit”) in immediately available federal funds to an account designated by the
Escrow Agent, which Closing Deposit shall be deemed to be part of the Deposit
for purposes of this Agreement (it being agreed by Purchaser that Purchaser’s
right to adjourn the Closing Date as provided in this clause (A) shall be
ineffective and of no force or effect unless and until Purchaser delivers the
Closing Deposit to the Escrow Agent as provided in this clause (A)) and (B) in
the event the Closing occurs during the period from and after November 9, 2006
to and including December 6, 2006 by reason of the exercise of Purchaser’s
adjournment right hereunder, the Purchase Price shall be increased by One
Million Dollars ($1,000,000.00). Notwithstanding anything to the contrary in
this Agreement, in the event the Initial Closing Date is adjourned by Purchaser
or the Sellers to a date that falls within a Blackout Period or a date that is
not a Business Day, such extension shall be automatically extended to the first
Business Day following the expiration of such Blackout Period or such date that
is not a Business Day. Any right of adjournment provided for herein shall be
exercised by Notice to the non-adjourning party or parties, and, in the case of
the exercise of such right by the Purchaser, shall be exercised by facsimile
sent to the Sellers on or prior to October 30, 2006. Purchaser and the Sellers
hereby authorize their respective counsel to execute and deliver in the names

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16

of Purchaser and the Sellers any agreement(s) confirming an accelerated or
deferred Closing Date or changed place of Closing agreed to by the parties.
          5.2 Actions at Closing. At the Closing, the parties shall deliver and
accept all executed documents and instruments and take all other action required
of them pursuant to this Agreement, unless otherwise provided in this Agreement.
     6. Apportionments.
          6.1 Closing Adjustments. At the Closing (except where a later date is
specifically provided for in this Section), the parties shall adjust the items
set forth below as of 11:59 P.M. on the day preceding the Closing Date (the
“Adjustment Point”), and the net amount thereof shall be paid by Purchaser to
the Sellers, or credited by the Sellers to Purchaser, as the case may be, at the
Closing, or to the extent provided herein or otherwise appropriate in light of
the provisions hereof, after Closing (references to any Seller or the Sellers in
this Section 6 shall be deemed to include the Operating Lessee, to the extent
applicable):
               6.1.1 Impositions. All Impositions, whether payable in
installments or not, payable on account of the fiscal year in which the Closing
Date occurs, provided that with respect to the Bloomington Hotel, (i) general
real estate taxes and installments of special assessments payable therewith
payable in the year prior to the year of Closing and all prior years shall be
paid by the Sellers, (ii) general real estate taxes and installments of special
assessments payable therewith payable in the year of Closing shall be prorated
on a daily basis by the Sellers and the Purchaser as of the Adjustment Point
based upon a calendar year; and (iii) special assessments levied or which become
pending after the Effective Date shall be the responsibility of Purchaser.
Subject to the proviso in the immediately preceding sentence, if at the Closing
the amount of any Impositions is not known, such Impositions shall be
apportioned on the basis of the rate and assessment for the preceding year, with
the same to be reapportioned as soon as the new rate and assessment can be
ascertained. In the event that any Impositions which are apportioned shall
thereafter be reduced by abatement, the amount of such abatement, net of any
amount due to any Tenant in respect thereof under the terms of any Space Lease
and the reasonable cost of obtaining such abatement, shall be apportioned
between the parties as of the Adjustment Point, provided that neither party
shall be obligated to institute or prosecute proceedings for an abatement. If
any tax certiorari proceedings are pending at the time of Closing, Sellers shall
retain full control over all such proceedings. Any refunds or savings in the
payment of taxes resulting from any real estate or similar tax certiorari
proceedings applicable to taxes payable in respect of the period prior to the
Closing Date shall, subject to any obligation to reimburse Tenants under Space
Leases, belong to and be the property of Sellers, and any refunds or savings in
the payment of taxes applicable to taxes payable in respect of the period from
and after the date of the Closing shall belong to and be the property of
Purchaser.
               6.1.2 Room Rentals. One-half (50%) of the room rentals and
related taxes attributable to the night prior to the Closing Date shall be the
property of the Sellers and the remaining one-half (50%) shall be the property
of

 

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17
Purchaser. Subject to Section 6.1.12, room rentals attributable to any night
prior to the night before the Closing Date shall be the property of the Sellers.
               6.1.3 Reservation Deposits. Prepaid and unearned reservation
deposits and other items prepaid by guests of the Hotels and unearned shall be
credited or transferred (without additional credit to the Sellers pursuant to
Section 6.1.11) to Purchaser at the Closing.
               6.1.4 Utility Charges. Utility charges for telephone, gas,
electricity, sewer, water and other services shall not be prorated to the extent
that the Sellers can make arrangements for the rendering of final bills based on
meter readings as of a date not more than two days prior to or after the
Adjustment Point. The Sellers shall be responsible for the payment at the
Closing of all bills for utility charges up to and including the Adjustment
Point. To the extent that utility bills cannot be rendered as of the Closing
Date, such charges for the period through the Adjustment Point shall be prorated
as of the Adjustment Point based upon the most recent available bills and
(subject to the provisions of Section 6.2) readjusted on the basis of the actual
bills as and when received. If Purchaser elects, any transferable utility
deposits shall be transferred to Purchaser and credited to the Sellers.
               6.1.5 Operating Expenses and Trade Accounts. The Sellers shall be
responsible for all operating expenses and trade accounts of the Properties
(including charges and fees payable under the Hotel Contracts) up to and
including the Adjustment Point. To the extent the amounts of such items are then
known, the Sellers shall pay such items at Closing and shall pay the balance of
such amounts in the ordinary course of business but in no event later than
thirty (30) days after receipt of an invoice therefor. Purchaser shall assume
responsibility for purchase orders made by the Sellers in the ordinary course of
business for Food and Beverage, Operating Supplies and Equipment and Consumables
not delivered to the applicable Hotel as of the Closing Date. Purchaser shall be
deemed to have assumed any and all operating expenses and trade accounts to the
extent Purchaser shall have received a credit therefor under this Section 6.1.
               6.1.6 Food, Beverage and Other Income. Revenues from food,
beverage and banquet services, room service, public room revenues, health club
revenues and vending machine revenues belonging to any Seller or the Operating
Lessee, and revenues from other services rendered to guests of the Hotel, shall
be prorated as of the Adjustment Point, if, as and when collected, provided that
with respect to food, beverage and banquet services, such revenues shall be
prorated as of the end of the employee shift on the night preceding the Closing.
               6.1.7 Food and Beverage Supplies. On the day immediately prior to
the Closing Date, Purchaser and the Sellers shall take an inventory of the Food
and Beverage in unopened containers and retail items sold by the Hotels (to the
extent in unopened packages) located on the Properties for the sole purpose of
determining the amount of such items as of the Closing Date. The net cost of
such items shall be added to the Purchase Price. Any such items purchased in the
ordinary course of

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business prior to the time of such inventory but delivered to the Hotels
thereafter shall be deemed to have been purchased for the account of the
Purchaser, which shall make payment therefor to the supplier thereof.
Notwithstanding anything to the contrary contained herein, nothing in this
Agreement shall require that any alcoholic beverages be sold or transferred in
violation of any Legal Requirements (it being understood that if any alcoholic
beverages are owned by a Seller, such beverages shall be deemed “Excluded Items”
if the transactions contemplated hereby would be deemed to constitute a sale or
transfer of alcoholic beverages in violation of any Legal Requirements).
               6.1.8 Rents. All Rents shall be prorated as of the Adjustment
Point if, as and when collected (net, in the case of leases of antenna space, of
leasing commissions or similar amounts payable in respect of such leases).
Payments from Tenants for electricity, operating expenses and taxes which are
billed to Tenants in arrears or on an estimated basis shall be prorated on such
basis and readjusted if, as and when such amounts are finally determined and
collected. All amounts collected by or on behalf of Purchaser from Tenants after
the Closing, net of Costs of Collection, if any, shall first be deemed to be in
payment of Rents (or the specific components of Rents) then due for the month in
which the Closing occurs (and apportioned in accordance with this subsection),
next in payment of Rents (or the specific components of Rents) then due on
account of any month after the month in which the Closing occurs and finally in
payment of any delinquent Rents (or the specific components of Rents) which are
in arrears as of the first day of the month in which the Closing occurs. From
and after the Closing, any amounts collected by Purchaser from each delinquent
Tenant under a Space Lease which, in accordance with the preceding provisions,
are allocable to the period prior to Closing, net of Costs of Collection
properly allocable thereto, if any, shall be paid promptly by Purchaser to the
applicable Seller. In no event are the Sellers or the Operating Lessee assigning
to Purchaser any claims for past due Rents under the Space Leases.
               6.1.9 Employees. With respect to liabilities relating to any
Hotel Employee (whether current or former), such liabilities shall be
apportioned as provided under Section 33.1 of this Agreement.
               6.1.10 Security Deposits. Any security deposits under the Space
Leases shall be transferred to Purchaser at the Closing or credited against the
Purchase Price (in each case without additional credit to Seller pursuant to
Section 6.1.11).
               6.1.11 Cash. All cash on hand in house banks (i.e., petty cash
held at the Properties) on the morning of the Closing Date shall become the
property of Purchaser and the amount thereof shall be credited to the Sellers.
               6.1.12 Ledger and Other Receivables. All accounts receivable
attributable to guests in occupancy at any Hotel on the night preceding the
Closing (the “Ledger”) shall be prorated as provided in this Agreement, the
Sellers’ share shall be credited to the Sellers and the Ledger shall become the
property of Purchaser. Purchaser shall, at the Closing, purchase all other
accounts receivable that are ninety (90)

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19

or fewer days past due from the Sellers at a price (which shall be treated as an
increase to the Purchase Price) equal to one hundred percent (100%) of the value
of any such account receivable that is thirty (30) or fewer days past due,
ninety percent (90%) of the value of any account that is thirty-one (31) to and
including sixty (60) days past due, seventy-five percent (75%) of the value of
any such account receivable that is sixty-one (61) to and including ninety
(90) days past due. All accounts receivable greater than ninety (90) days past
due shall remain the property of the Sellers and the Sellers may take such
actions as they deem necessary to collect the same. Purchaser shall cooperate
with the Sellers, at the Sellers’ cost, in all reasonable respects in connection
with any collection efforts by the Sellers. If any receivables which are the
property of the Sellers under this Agreement shall be collected by Purchaser,
Purchaser shall remit the same to the Sellers within ten (10) days after
receipt.
               6.1.13 Franchise Agreements. All monetary charges, expenses and
fees (including, but not limited to, any reservation fees) incurred under or in
connection with any Franchise Agreement that remains in effect after the Closing
shall be prorated as of the Adjustment Point. The Sellers shall be responsible
for all such charges, expenses and fees incurred or relating to the period prior
to the Adjustment Point, and Purchaser shall be responsible for all such
charges, expenses and fees incurred, and relating to the period, after the
Adjustment Point, provided that the Sellers shall not be obligated to complete
or perform or to provide funds for the performance or completion of any property
improvement plan or other work requirements under the Franchise Agreements or to
satisfy requirements set forth in any Franchisor’s property inspection or
quality standard reports.
               6.1.14 Vetro Leases. In the event that the Operating Lessee
assigns, and Purchaser assumes, the Vetro Leases, all rents, charges, expenses
and fees incurred under or in connection with the Vetro Leases shall be prorated
as of the Adjustment Point. The Operating Lessee shall be responsible for all
such charges, expenses and fees incurred or relating to the period prior to the
Adjustment Point, and Purchaser shall be responsible for all such charges,
expenses and fees incurred, and relating to the period, after the Adjustment
Point; provided that with respect to the first payment of “percentage rent” due,
if any, under each Vetro Lease following the Closing, Operating Lessee shall
reimburse Purchaser Operating Lessee’s allocated share of such payment within
ten (10) Business Days after such payment is made, which allocated share shall
be calculated by multiplying the amount of such payment by a fraction, the
numerator of which is the number of days in the relevant rental period prior to
the Closing Date and the denominator of which is the total number of days in
such rental period; provided, further, that, subject to Section 6.2, with
respect to the first annual reconciliation of such percentage rent under each
Vetro Lease following the Closing, (i) in the event that additional percentage
rent is due and owing to the landlord, the Operating Lessee shall reimburse
Purchaser for Operating Lessee’s share of any additional percentage rent paid by
Purchaser under such Vetro Lease and (ii) in the event that percentage rent is
refunded by the landlord, Purchaser shall promptly reimburse the Operating
Lessee for the Operating Lessee’s share of any percentage rent refunded by the
landlord under such Vetro Lease, which reimbursement or refund, as applicable,
shall be calculated by multiplying the total payment to or refund from the
landlord under such

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Vetro Lease, as applicable, by a fraction, the numerator of which is the number
of days of the applicable reconciliation period prior to the Closing Date and
the denominator of which is the total number of days in such reconciliation
period.
               6.1.15 Anchorage Joint Venture Agreement. In the event that
MeriStar Laundry assigns its interests under the Anchorage Joint Venture
Agreement, all amounts payable or receivable by MeriStar Laundry shall be
prorated as of the Adjustment Point. MeriStar Laundry shall be responsible for
or entitled to all such payables and receivables relating to the period prior to
the Adjustment Point, and Purchaser shall be responsible for or entitled to all
such payables and receivables relating to the period after the Adjustment Point.
               6.1.16 Liquor Licenses. Notwithstanding anything to the contrary
in this Agreement, prior to the Closing, the Sellers and Purchaser, each acting
reasonably, shall agree upon the consideration to be paid for the liquor
licenses for and the alcoholic beverage inventory at the San Diego Hotel and the
Walnut Creek Hotel. Such consideration shall be paid at Closing by wire transfer
of immediately available funds to the liquor assets escrow provided for in
Section 13.6 and shall be deducted from the Balance paid by Purchaser to the
Escrow Agent at the Closing.
               6.1.17 Miscellaneous. Any other items of income or expense of the
Hotels which, in accordance with generally accepted accounting principles and
business practices, should be apportioned between the Sellers and Purchaser
shall be so apportioned in a commercially reasonable manner.
          6.2 Delayed Adjustments. If at any time following the Closing Date the
amount of an item listed in Section 6.1 shall prove to be incorrect, or if any
such amount which was unavailable or unknown on the Closing Date becomes
available or known, the applicable party shall pay to the other party within
fifteen (15) days after request the sum necessary to correct such error, or
which is payable pursuant to Section 6.1 with respect to such previously
unavailable or unknown item, upon receipt of proof of such error or of such
previously unavailable or unknown amount, provided that except with respect to
the reapportionment contemplated in Section 6.1.1, such proof is delivered to
the party from whom payment is requested on or before one hundred twenty
(120) days after the Closing Date. The acceptance of the closing statement by
either party shall not prevent later readjustment pursuant to this Section.
After the Closing Date, each party shall have reasonable access to the books and
records of the other party with respect to all matters set forth in this
Section 6 for the purposes of determining the accuracy of all adjustments and
the performance of the obligations of the parties under this Section 6.
          6.3 Guest Property in any Seller’s Possession on Closing Date.
Property of guests of any Hotel in the applicable Seller’s (or the Operating
Lessee’s or Manager’s) care, possession or control (excluding that in guest
rooms) (“Guest Property”) on the Closing Date shall be handled in the following
manner:

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               6.3.1 Safe Deposit Boxes. At least three days prior to the
scheduled Closing Date, the applicable Seller shall cause notice to be sent to
all guests of any Hotel who have safe deposit boxes advising them of the pending
sale of the Hotel and requesting the removal and verification of the contents of
such safe deposit boxes and entry into a new safety deposit box agreement with
Purchaser on the Closing Date. Purchaser may have a representative present at
the Hotel for the purpose of viewing such removal and verification. Boxes of
guests not responding to the written notice shall be listed at the end of such
three (3) day period. Such boxes shall be opened on the Closing Date in the
presence of representatives of the Sellers and Purchaser to be agreed upon
between the Sellers and Purchaser and the contents thereof shall be recorded.
Any property contained in the safe deposit boxes and so recorded and thereafter
remaining in the hands of Purchaser shall be the responsibility of Purchaser,
and Purchaser hereby agrees to indemnify and save and hold the Sellers and the
Operating Lessee harmless from and against any claim or obligation arising out
of or with respect to such property.
               6.3.2 Baggage Inventory. All guest baggage checked and left in
the possession, care and control of any Seller shall be listed in an inventory
to be prepared in duplicate and signed by such Seller’s and Purchaser’s
representatives on the Closing Date. Purchaser shall be responsible from and
after the Closing Date for all baggage listed in such inventory, and Purchaser
hereby agrees to indemnify and save and hold the Sellers and the Operating
Lessee harmless from and against any claim arising out of or with respect to the
baggage listed in the inventory.
               6.3.3 Other Property. All other Guest Property left in the
possession, care or control of any Seller, the Operating Lessee or Manager prior
to the Closing Date shall be returned by such Seller, the Operating Lessee or
Manager to guests prior to the Closing Date.
               6.3.4 Indemnity. Notwithstanding the foregoing, the Sellers shall
indemnify and save and hold the Purchaser and its operating lessee harmless from
and against claims relating to Guest Property arising prior to the Closing Date,
provided that Purchaser delivers written notice to the Sellers of any such claim
promptly after receiving same. Each such notice shall set forth in reasonable
detail the nature of the claim.
          6.4 Leasing Costs.
               6.4.1 The Sellers shall pay and indemnify Purchaser in respect of
all leasing costs payable by the landlord under the Space Leases, including
leasing commissions (other than commissions with respect to leases of antenna
space, payment of which is addressed in Section 6.1.8), costs of tenant
alterations and improvements performed or to be performed for Tenants at the
expense of the landlord thereof (or allowances payable by the landlord in lieu
thereof) and moving and other allowances, if any (collectively, the “Leasing
Costs”), in respect of (i) the existing term of each Space Lease executed by or
on behalf of all parties thereto before the Effective Date, (ii) the renewal
term of any Space Lease which resulted from the exercise by the

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Tenant thereunder of an option, or from an agreement executed by all parties
thereto, before the Effective Date, (iii) the portion of the term of any Space
Lease as to which the Tenant had a cancellation option which it did not exercise
and the right to exercise which expired before the Effective Date, and
(iv) additional space leased by any Tenant pursuant to an option exercised by
such Tenant, or an agreement executed by all parties thereto, before the
Effective Date.
               6.4.2 In respect of each Space Lease existing on the date hereof
or executed after the date hereof and prior to the Closing Date in accordance
with Section 13.4 (or executed on or after the Closing Date), Purchaser shall
and hereby does assume and agree to pay and indemnify the Sellers in respect of
all Leasing Costs not payable by the Sellers pursuant to Section 6.4.1
(“Purchaser’s Leasing Costs”), including, without limitation, Leasing Costs in
respect of the renewal term of any Space Lease where such renewal term results
from the exercise by the Tenant thereunder of an option, or from an agreement
executed by all parties thereto, on or after the Effective Date, additional
space leased by any Tenant pursuant to an option exercised by such Tenant, or an
agreement executed by all parties thereto, on or after the Effective Date, the
portion of the term of any Space Lease as to which the Tenant had a cancellation
option which it did not exercise and the right to exercise which expired on or
after the Effective Date and Space Leases executed by all parties thereto on or
after the Effective Date.
               6.4.3 The provisions of this Section 6.4 shall survive the
Closing.
          6.5 Capital Improvements.
               6.5.1 Without limiting the provisions of Section 8.1, the
Operating Lessee and the Sellers shall have no obligation to perform or complete
any capital improvements at the Properties prior to Closing and it shall not be
a condition to Purchaser’s obligation to close title under this Agreement that
all or any portion of any capital improvements have been commenced or completed.
               6.5.2 Notwithstanding the provisions of Section 6.5.1, the Seller
owning the Trumbull Hotel may commence work relating to the property improvement
plan for the Trumbull Hotel, provided that the parties agree that it is the
intention of the parties that such Seller shall not perform any such work except
to the extent that in such Seller’s good faith judgment the failure to perform
such work would result in a material risk of an event of default under the
Franchise Agreement for the Trumbull Hotel (a “PIP Default Risk”). In the event
that such Seller so determines that a PIP Default Risk exists, such Seller may
undertake or cause the Operating Lessee to undertake such capital improvements
as may be necessary or, in such Seller’s good faith judgment, desirable, to
mitigate such PIP Default Risk and such Seller shall be entitled to a credit at
Closing for any amounts expended by the Operating Lessee or such Seller prior to
Closing in connection with the performance of such capital improvements,
provided that such Seller shall regularly consult with Purchaser during the
undertaking of such capital improvements and shall obtain Purchaser’s approval
of the contract and budget for such capital improvements, such approval not to
be unreasonably withheld or

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delayed, provided further, that Purchaser shall at Closing assume any contracts
for performance of such work pursuant to an agreement of assignment and
assumption substantially in the form of Exhibit I (as it relates to the Hotel
Contracts) and without warranty and representation.
               6.5.3 Notwithstanding the provisions of Section 6.5.1, the San
Diego Seller shall diligently endeavor to promptly enter into an agreement (the
“Repair Contract”) with Landmark Hospitality Contracting, Inc. (the “Repair
Contractor”), which Repair Contract shall incorporate the material terms set
forth in that certain proposal dated June 29, 2006 (the “Repair Proposal”) from
the Repair Contractor to the Manager (a copy of which has been provided to
Purchaser prior to the date hereof), for repairs of work that was performed in
connection with the renovation of certain of the guest bathrooms at the San
Diego Hotel (as further described in Exhibit C). The Repair Proposal was
intended to include the correction of all material defects in the original
renovations of which the Sellers had knowledge. The terms and conditions of the
Repair Contract (not including the compensation payable thereunder) shall be
subject to Purchaser’s prior written consent, which consent shall not be
unreasonably withheld or delayed, provided that Purchaser hereby approves the
scope of work set forth in the Repair Proposal, and provided further that if
Purchaser fails to disapprove any other aspect of the Repair Contract within
three (3) Business Days from the receipt thereof, Purchaser shall be deemed to
have approved the Repair Contract. In the event the San Diego Seller, despite
the use of diligent efforts, is unable to enter into the Repair Contract with
the Repair Contractor or the terms and conditions of such Repair Contract are
not reasonably approved (or deemed approved) by Purchaser, the San Diego Seller
shall diligently endeavor to promptly enter into an agreement with another
contractor or contractors for such repair work which shall incorporate the
material terms set forth in the Repair Proposal, such other agreement (not
including the compensation payable thereunder) and contractor(s) to be subject
to Purchaser’s prior written consent, which consent shall not be unreasonably
withheld or delayed (such agreement, if applicable, also referred to herein as
the “Repair Contract” and such approved contractor, also referred to herein as
the “Repair Contractor”). In no event shall the specifications for the repair
work under the Repair Contract be of lesser quality in any material respect than
the specifications that were set forth in the contract for the original
renovations. During the period from and after the execution of the Repair
Contract to and including the Closing Date (but subject to the eighth sentence
of this Section 6.5.3), the San Diego Seller shall comply in all material
respects with the terms of the Repair Contract and shall not waive any material
provision of or materially amend the Repair Contract without Purchaser’s prior
written consent (not including for this purpose changes to the compensation
payable thereunder), such consent not to be unreasonably withheld or delayed;
provided, that upon the prior written approval of Purchaser, not to be
unreasonably withheld or delayed, the San Diego Seller shall be permitted to
delete any work from the Repair Contract that the San Diego Seller determines in
good faith is unnecessary because the original work was properly performed and
does not require repair. In connection with providing or withholding any such
approval, Purchaser shall have the right to first inspect any such work proposed
to be deleted by San Diego Seller. Notwithstanding anything to the contrary
contained in this Section 6.5.3, Purchaser acknowledges and agrees that the
Sellers are not making (nor shall they make as of the Closing Date) any
representation or

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warranty with respect to the quality, sufficiency or any other aspect of the
work performed by the Repair Contractor, that Purchaser shall look solely to the
Repair Contractor with respect to any claims arising with respect to the work
performed under the Repair Contract and that the Sellers shall be under no
obligation to have completed such repair work prior to the Closing Date or in
accordance with a schedule and lead times comparable to those set forth in the
Repair Proposal or any other particular timetable. Pursuant to Section 8.1,
Purchaser shall accept such Property on the Closing Date “as-is” and, except for
the work contemplated in the Repair Contract, neither the Operating Lessee nor
the San Diego Seller shall be obligated to perform any work at the San Diego
Hotel. In the event such repair work has not been completed as of the Closing
Date, (i) the San Diego Seller shall assign and Purchaser shall assume the
Repair Contract pursuant to an assignment and assumption agreement substantially
in the form of Exhibit I (as it relates to the Hotel Contracts) and without
warranty or representation, (ii) Purchaser shall receive a credit against the
Purchase Price at Closing equal to the unpaid amount remaining under the Repair
Contract (as same may have been amended by San Diego Seller from time to time
pursuant to this Section 6.5.3), (iii) the San Diego Seller shall, promptly
after the completion of such repair work, receive a refund of any portion of the
credit described in clause (ii) of this sentence that Purchaser is not obligated
or required to pay to the Repair Contractor (excluding the effect of any
amendment by Purchaser after the Closing Date that would result in an increase
in the amount payable to the Repair Contractor for work in excess of that
referred to in the Repair Proposal), and (iv) Purchaser shall provide such
information as the Sellers reasonably request from time to time regarding the
progress and cost of such work. Upon reasonable prior notice, Purchaser shall
have the right from time to time to inspect the work performed by the Repair
Contractor under the Repair Contract to satisfy itself that the work is being
performed in accordance with Repair Contract, provided that Purchaser shall not
interfere in any material respect with the operation of the San Diego Hotel or
the repair work being undertaken. The Sellers shall retain all claims against
the contractor that performed the original bathroom renovations and its
insurance carrier, which claims shall be an Excluded Item, and Purchaser shall
cooperate with the Sellers in all reasonable respects in Sellers’ assertion and
prosecution of such claims so long as the Sellers do not interfere in any
material respect with the ownership or operation of the San Diego Hotel.
Notwithstanding anything to the contrary in Section 6.7, none of Sellers’
obligations under this Section 6.5.3 shall survive the Closing nor shall Sellers
have any liability under this Section 6.5.3 from and after the Closing.
          6.6 Adjustment Statement. The Sellers shall deliver to Purchaser prior
to the Closing a copy of a proposed adjustment statement, showing all
adjustments to be made at the Closing. If Purchaser agrees with the figures set
forth in such proposed adjustment statement, Purchaser shall notify the Sellers
that Purchaser will execute and return counterparts of such adjustment statement
at the Closing; otherwise the parties shall seek promptly to reconcile any
difference, provided that no failure to reconcile such differences shall have
the effect of delaying the Closing, provided, further, that nothing in this
Section 6.6 shall derogate from the provisions of Section 6.2.
          6.7 Survival. The provisions of this Section 6 shall survive the
Closing.

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     7. Documents to be Delivered at the Closing.
          7.1 Seller’s Deliveries. At or prior to the Closing, each Seller
and/or the Operating Lessee, as applicable, will deliver or cause to be
delivered to Purchaser each of the instruments and documents listed in this
Section 7.1 applicable to such Seller or the relevant Property, executed and
acknowledged where appropriate by such Seller (and/or the Operating Lessee) or
other applicable party, but none of the documents shall be deemed delivered or
any other action taken until all Closing deliveries and actions are complete (it
being agreed that the Sellers shall be deemed to have delivered the items set
forth in Sections 7.1.5, 7.1.7, 7.1.14, 7.1.15 and 7.1.16 if the same are
delivered to Purchaser’s representatives at the applicable Property):
               7.1.1 A special or limited warranty deed (each, a “Deed”), in
proper statutory form for recording, executed by each Seller, conveying the fee
simple title to the applicable Land, related Appurtenances and Improvements
constituting a portion of each Property from such Seller to Purchaser, subject
only to Permitted Exceptions.
               7.1.2 A bill of sale and general assignment, substantially in the
form of Exhibit I, (i) conveying the Personal Property and the Permits to
Purchaser, (ii) assigning all of the Sellers’ right, title and interest in, to
and under (x) the Space Leases set forth on Exhibit M, and in and to all
security deposits (including all accrued interest thereon, if any) held by the
Sellers pursuant to the Space Leases (to the extent such security deposits are
being assigned to Purchaser), (y) the Bookings and (z) all Hotel Contracts set
forth on Exhibit C, and (iii) subject to Section 13.10, assigning all of the
Operating Lessee’s right, title and interest in, to and under the Vetro Leases.
Notwithstanding the foregoing, Purchaser shall have the right not to assume any
Hotel Contract (excluding for this purpose the Collective Bargaining Agreements)
designated by written notice given by Purchaser to the Sellers (and the
applicable Seller or the Operating Lessee shall terminate such Hotel Contract at
or prior to Closing), provided that (i) such Hotel Contract is by its terms
terminable by the applicable Seller or the Operating Lessee prior to Closing and
(ii) Purchaser shall pay to the Sellers or the Operating Lessee at or prior to
the time of termination any liquidated damages, termination penalties or other
amounts payable to the contractor in connection with such termination and shall
indemnify the Sellers and the Operating Lessee for any cost, loss, damage or
expense arising out of such termination. If Purchaser elects to assume any Hotel
Contract that is not assignable without the consent of the other party thereto,
the failure to obtain such consent shall not entitle Purchaser to reject such
assignment (and the Sellers and the Operating Lessee shall have no obligation to
request or obtain such consent) and Purchaser shall indemnify and hold harmless
the Sellers and the Operating Lessee from any cost, loss, damage or expense
arising out of any failure to obtain such consent. The indemnification
obligations in this Section 6.1.2 shall survive the Closing or termination of
this Agreement.
               7.1.3 Evidence reasonably acceptable to Purchaser of the
termination of each Management Agreement, which terminations shall be at the
Sellers’ or Operating Lessee’s sole cost and expense.

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               7.1.4 Evidence reasonably acceptable to Purchaser and the Title
Company of the termination of each Operating Lease, which terminations shall be
at the Sellers’ or Operating Lessee’s sole cost and expense.
               7.1.5 Seller’s Copies of the Space Leases, assignable Hotel
Contracts, assignable Permits and Books and Records for the Properties;
provided, that the Sellers shall have the right to retain copies of the same and
after Closing shall have reasonable access to same.
               7.1.6 Such notices of the transactions contemplated by this
Agreement to third parties as may be reasonably requested by the Sellers or
Purchaser.
               7.1.7 Receipted property tax bills for personal property taxes on
the Hotels, the Furnishings and the Operating Supplies and Equipment for the
latest period for which any such taxes, if the same were not paid prior to the
Closing Date, would be delinquent.
               7.1.8 An affidavit from each Seller that such Seller is not a
“foreign person” within the meaning of § 1445 of the Code, which affidavit shall
set forth all information required by, and otherwise be executed in accordance
with, Treasury Regulation § 1.1445.2(b)(2).
               7.1.9 Counterparts of the adjustment statement showing all
adjustments in respect of the Purchase Price to be made at the Closing.
               7.1.10 All Transfer Tax and other tax returns, if any, which any
Seller is required by law to execute and acknowledge and to deliver, either
individually or together with Purchaser, to any Governmental Authority as a
result of the transactions contemplated by this Agreement.
               7.1.11 A direction to Escrow Agent notifying it of the Closing
and directing that the Deposit, with interest thereon, is to be delivered to the
Sellers.
               7.1.12 A certificate of each Seller substantially in the form of
Exhibit J (a “Seller’s Representation Certificate”) that the representations and
warranties of such Seller set forth in Section 8.3 hereof are true, correct and
complete in all material respects as of the Closing Date (except where such
representations or warranties are made as of a specific date), subject to
changes occurring in accordance with this Agreement disclosed in such
certificate.
               7.1.13 One or more title affidavits executed by each Seller
substantially in the form of Exhibit K (collectively, “Title Affidavit”).
               7.1.14 All of the plans (including “as built” plans), drawings,
blueprints and specifications relating to the Properties which are in any
Seller’s, the Operating Lessee’s or the Manager’s possession.

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               7.1.15 All Warranties in possession of any Seller, the Operating
Lessee or the Manager, if any, of manufacturers, suppliers and contractors in
effect at the date of Closing Date.
               7.1.16 All keys, security codes and access codes to the
Properties which are in the possession of any Seller, the Operating Lessee or
the Manager.
               7.1.17 Endorsements in favor of Purchaser of the titles for all
vehicles owned by the Sellers and/or Operating Lessee and exclusively used on
the Properties.
               7.1.18 A copy of the resolutions, consents or other documentation
of each Seller (or its respective general partner, managing member or members),
which authorize (i) the transactions contemplated by this Agreement, and
(ii) the execution of the documents, instruments and agreements to be executed
and delivered by such Seller.
               7.1.19 To the extent any portion of any property constituting the
Properties, the Hotel Contracts, Space Leases, Permits, Bookings or the Personal
Property is or are owned by the Operating Lessee or Manager, assignment
documents in the applicable form described above.
               7.1.20 A good standing certificate for each Seller from the
Secretary of State of the state of formation of such Seller, dated within thirty
(30) days of the Initially Scheduled Closing Date.
               7.1.21 Subject to Section 13.11, an assignment of MeriStar
Laundry’s right, title and interest in the Anchorage Joint Venture Agreement in
form reasonably acceptable to the parties and without representation or warranty
other than (i) that MeriStar Laundry owns its interests in the joint venture
formed by the Anchorage Joint Venture Agreement (the “Anchorage Joint Venture”)
free and clear of all liens and encumbrances and (ii) that MeriStar Laundry has
delivered to Purchaser a true, complete and correct copy of the Anchorage Joint
Venture Agreement.
               7.1.22 An assignment of Interstate’s and Manager’s right, title
and interest in the Collective Bargaining Agreements generally in the form of
the general assignment set forth in Exhibit I and without representation or
warranty.
               7.1.23 All other instruments and documents, if any, to be
executed, acknowledged and delivered by any Seller, the Operating Lessee or the
Manager pursuant to any of the other provisions of this Agreement or as required
in connection with the recording of the Deeds.
          7.2 Purchaser’s Deliveries. At or prior to the Closing, Purchaser will
deliver or cause to be delivered to the Sellers or such other parties indicated
below each of the payments, documents and instruments listed in this Section

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7.2, such instruments and documents to be executed and acknowledged where
appropriate:
               7.2.1 The Balance as set forth in subsection 3.1.3 hereof,
together with any other sums which are payable to the Sellers at the Closing.
               7.2.2 Counterparts of each of the instruments and documents
listed in subsections 7.1.2, 7.1.6, 7.1.9, 7.1.10, 7.1.19, 7.1.21, and 7.1.22.
               7.2.3 A copy of the resolutions of the Board of Directors of
Purchaser or its direct or indirect controlling parent company, certified to by
the Secretary of such company, which authorize (i) the transactions contemplated
by this Agreement, and (ii) the execution of the documents, instruments and
agreements to be executed and delivered by Purchaser.
               7.2.4 A certificate of Purchaser, substantially in the form of
Exhibit L (the “Purchaser’s Representation Certificate”) that the
representations and warranties of Purchaser set forth in Sections 8.1 and 8.2
and Section 9 hereof are true, correct and complete as of the Closing Date in
all material respects.
               7.2.5 Written instructions to the Escrow Agent to deliver the sum
of the Deposit (including any interest thereon) to the Sellers upon Closing.
               7.2.6 A good standing certificate for Purchaser from the
Secretary of State of the state of formation of Purchaser, dated within thirty
(30) days of the Initially Scheduled Closing Date.
               7.2.7 All other instruments and documents, if any, to be
executed, acknowledged and delivered by Purchaser pursuant to any of the other
provisions of this Agreement. or as required in connection with the recording of
the Deeds.
     8. Property Conveyed “As Is”; Other Representations and Warranties of
Seller.
          8.1 Condition of Properties. Purchaser acknowledges (i) that Purchaser
has had a reasonable opportunity to inspect and investigate the Properties, and
all matters relating thereto, including, without limitation, all of the
physical, environmental and operational aspects of the Properties, and any
zoning or land use entitlements thereto, either independently or through agents
and experts of Purchaser’s choosing and (ii) that Purchaser will acquire the
Properties based upon Purchaser’s own investigation and inspection. THE SELLERS,
THE OPERATING LESSEE AND PURCHASER AGREE THAT, EXCEPT AS EXPRESSLY PROVIDED FOR
IN THIS AGREEMENT, THE PROPERTIES SHALL BE SOLD, AND PURCHASER SHALL ACCEPT THE
PROPERTIES, ON THE CLOSING DATE AS IS, WHERE IS, WITH ALL FAULTS AND WITH NO
RIGHT OF SET-OFF OR REDUCTION IN THE PURCHASE PRICE, AND THAT, EXCEPT AS
EXPRESSLY PROVIDED IN THIS

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AGREEMENT, SUCH SALE SHALL BE WITHOUT REPRESENTATION OR WARRANTY OF ANY KIND,
WHETHER EXPRESS, IMPLIED, STATUTORY OR OTHERWISE, INCLUDING, WITHOUT LIMITATION,
WARRANTY OF INCOME POTENTIAL, OPERATING EXPENSES, USES, AVAILABILITY OF
DEVELOPMENT RIGHTS, ZONING, MERCHANTABILITY, PHYSICAL CONDITION THEREOF OR
FITNESS FOR A PARTICULAR PURPOSE AND EACH SELLER AND THE OPERATING LESSEE HEREBY
DISCLAIM AND RENOUNCE ANY SUCH REPRESENTATION OR WARRANTY, EXCEPT AS EXPRESSLY
PROVIDED IN THIS AGREEMENT. PURCHASER SPECIFICALLY ACKNOWLEDGES THAT, EXCEPT AS
PROVIDED FOR IN THIS AGREEMENT, PURCHASER IS NOT RELYING AND SHALL NOT RELY ON
ANY REPRESENTATIONS OR WARRANTIES OF ANY KIND WHATSOEVER, WHETHER EXPRESS,
IMPLIED, STATUTORY OR OTHERWISE, FROM THE OPERATING LESSEE, ANY SELLER OR ANY
OTHER PERSON AS TO ANY MATTERS CONCERNING THE PROPERTIES, INCLUDING, WITHOUT
LIMITATION: (A) THE CONDITION OR SAFETY OF THE PROPERTIES, INCLUDING, BUT NOT
LIMITED TO, PLUMBING, SEWER, HEATING AND ELECTRICAL SYSTEMS, ROOFING, AIR
CONDITIONING, FOUNDATIONS, SOILS AND GEOLOGY INCLUDING HAZARDOUS SUBSTANCES, LOT
SIZE, OR SUITABILITY OF THE PROPERTY FOR A PARTICULAR PURPOSE; (B) WHETHER THE
APPLIANCES, IF ANY, PLUMBING OR UTILITIES AND ANY ASSOCIATED METERS ARE IN
WORKING ORDER; (C) THE LIVABILITY OR SUITABILITY FOR OCCUPANCY OF ANY STRUCTURE
AND THE QUALITY OF ITS CONSTRUCTION; (D) THE FITNESS OF ANY PERSONAL PROPERTY;
OR (E) THE PHYSICAL CONDITION OF THE PROPERTIES, INCLUDING, WITHOUT LIMITATION,
WHETHER THE IMPROVEMENTS ARE STRUCTURALLY SOUND, IN GOOD CONDITION, OR IN
COMPLIANCE WITH APPLICABLE CITY, COUNTY, STATE OR FEDERAL STATUTES, CODES OR
ORDINANCES. PURCHASER FURTHER ACKNOWLEDGES AND AGREES THAT, EXCEPT AS EXPRESSLY
PROVIDED IN THIS AGREEMENT, NEITHER THE OPERATING LESSEE NOR ANY SELLER SHALL BE
UNDER ANY DUTY TO MAKE ANY AFFIRMATIVE DISCLOSURE REGARDING ANY MATTER WHICH MAY
BE KNOWN TO SUCH PARTY, ITS OFFICERS, DIRECTORS, CONTRACTORS, AGENTS OR
EMPLOYEES, AND THAT PURCHASER IS RELYING SOLELY UPON ITS OWN INSPECTION OF THE
PROPERTY AND ITS OTHER DILIGENCE AND NOT UPON ANY REPRESENTATIONS MADE TO IT BY
ANY PERSON WHOMSOEVER. ANY REPORTS, REPAIRS OR WORK REQUIRED BY PURCHASER ARE TO
BE THE SOLE RESPONSIBILITY OF PURCHASER AND PURCHASER AGREES THAT THERE IS NO
OBLIGATION ON THE PART OF THE OPERATING LESSEE OR ANY SELLER TO MAKE ANY
CHANGES, ALTERATIONS, OR REPAIRS TO ANY PROPERTY, PROVIDED THAT NOTHING HEREIN
SHALL BE DEEMED TO DEROGATE FROM THE SELLERS’ OBLIGATIONS SET FORTH IN THE FIRST
SENTENCE OF SECTION 13.1. PURCHASER AGREES AND ACKNOWLEDGES THAT PURCHASER’S
OBLIGATIONS HEREUNDER SHALL REMAIN IN FULL FORCE AND EFFECT WITH PURCHASER
HAVING NO RIGHT TO DELAY THE CLOSING OR

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TERMINATE THIS AGREEMENT, EXCEPT AS EXPRESSLY PROVIDED IN THIS AGREEMENT,
REGARDLESS OF ANY FACTS OR INFORMATION LEARNED BY PURCHASER BEFORE OR AFTER THE
EFFECTIVE DATE.
          8.2 CERCLA Release. Except as may be expressly provided in this
Agreement, Purchaser, for itself and its successors in interest, hereby releases
the Operating Lessee, each Seller and their respective affiliates from, and
waives all claims and liability against the Operating Lessee, each Seller and
their respective affiliates for or attributable to, any structural, physical
and/or environmental condition at any Property, including without limitation the
presence, discovery or removal of any Hazardous Substances in, at, about or
under such Property, or connected with or arising out of any and all claims or
causes of action based upon CERCLA (Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended by SARA Superfund Amendment
and Reauthorization Act of 1986 and as may be further amended from time to time)
or any related claims or causes of action or any other federal or state based
statutory or regulatory or other causes of action for environmental
contamination at, in or under any Property. The provisions of this Section 8.2
shall survive the Closing.
          8.3 Representations and Warranties. Each Seller hereby represents and
warrants to Purchaser, with respect to itself and the Property owned by such
Seller, as follows (except as set forth in the applicable Exhibits hereinafter
referred to):
               8.3.1 Such Seller has been incorporated, organized or otherwise
formed as specified with respect to such Seller on Exhibit A, is duly organized,
validly existing and in good standing under the laws of the State of its
incorporation, organization or formation; it has the power, right, authority and
legal capacity to execute and deliver this Agreement and the other documents,
instruments, certificates and agreements required to be executed and delivered
by it hereunder and to enter into and perform the transactions contemplated
hereby. This Agreement constitutes the legal, valid and binding obligation of
the Sellers party hereto and is enforceable against each such Seller in
accordance with its terms, except as such enforceability may be limited by
(i) bankruptcy, insolvency and other similar laws affecting creditor’s rights
generally, and (ii) general principles of equity.
               8.3.2 All resolutions, authorizations and other actions required
to be taken by or on the part of such Seller which are necessary to approve or
authorize the execution of this Agreement by such Seller and the consummation of
the transactions contemplated herein have been obtained and taken.
               8.3.3 Neither the entry into nor the performance of this
Agreement by such Seller will (i) violate, conflict with, result in a breach
under, or constitute a default under, any corporate charter, certificate of
incorporation, by-law, partnership agreement, indenture, contract, permit,
judgment, decree or order to which such Seller is a party or by which such
Seller is bound, or (ii) except with respect to the Vetro Leases and the
Anchorage Joint Venture Agreement, require the consent of any third party other
than as has already been obtained or is otherwise specifically set forth

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herein, and other than such consents or approvals as may be required pursuant to
the applicable Franchise Agreement, any Permitted Exceptions or any Hotel
Contracts (Purchaser acknowledging and agreeing that such Seller is not
undertaking to obtain any such consents or approvals, except as set forth in
Section 13.10 and Section 13.11).
               8.3.4 Such Seller is not a “foreign person” within the meaning of
§ 1445 of the Code.
               8.3.5 There are no Space Leases affecting all or any portion of
the Property except as set forth on Exhibit M. To such Seller’s knowledge,
(i) all of the Space Leases are in full force and effect, (ii) true and complete
copies of the Space Leases, to the extent in such Seller’s or the Operating
Lessee’s possession, have been provided to Purchaser (or will be provided to
Purchaser within five (5) Business Days after the Effective Date), and
(iii) except as set forth on Exhibit M, there are no material defaults (or
written notice of any default which is still outstanding received) by such
Seller or the Operating Lessee or, to such Seller’s actual knowledge, any other
party thereunder.
               8.3.6 There are no material Hotel Contracts affecting all or any
portion of the Property except as set forth in Exhibit C, other than certain
multi-property agreements not set forth on Exhibit C pursuant to which goods
and/or services are supplied to more than one property owned, leased or managed
by the Operating Lessee or the Manager or their respective affiliates, which
multi-property agreements Purchaser and such Seller acknowledge and agree shall
be Excluded Items unless the same are set forth on Exhibit C. To such Seller’s
knowledge, (i) all of the material Hotel Contracts are in full force and effect,
(ii) true and complete copies of the Hotel Contracts listed on Exhibit C to
which such Seller or the Operating Lessee or Manager is a party have been
delivered to Purchaser (or will be delivered to Purchaser within five
(5) Business Days after the Effective Date) and (iii) except as set forth on
Exhibit C, there are no material defaults by such Seller or the Operating Lessee
or, to such Seller’s actual knowledge, any other party thereunder.
               8.3.7 The Franchise Agreement to which such Seller is a party is
described on Exhibit B. To such Seller’s knowledge, (i) such Franchise Agreement
is in full force and effect, (ii) true and complete copies of such Franchise
Agreement have been delivered to Purchaser (or will be delivered to Purchaser
within five (5) Business Days after the Effective Date) and (iii) except as set
forth on Exhibit B or as disclosed by any Franchisor to Purchaser, there are no
material defaults (or written notice of any default which is still outstanding
received) by any party thereunder except for such defaults as may be set forth
in the Franchisor’s property inspection or quality standards reports, and any
defaults arising from a failure to timely perform any property improvement plan
or other work requirements.
               8.3.8 To such Seller’s knowledge, all material Permits required
for and relating to the operation of the Hotel owned by such Seller are listed
on Exhibit N. To such Seller’s knowledge, (i) such Permits are in full force and
effect, (ii) except as set forth on Exhibit N, none of such Seller, the
Operating Lessee, the Manager

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or any of their respective affiliates has received written notice of any
material violation thereof which remains outstanding, and (iii) true and
complete copies of all such Permits which are in such Seller’s possession have
been delivered to Purchaser (or will be delivered to Purchaser within five
(5) Business Days after the Effective Date).
               8.3.9 Except as set forth on Exhibit O, neither such Seller nor
the Operating Lessee has received written notice from any Governmental Authority
of any material violations of any Legal Requirements relating to the Property
owned by such Seller or the ownership, use, maintenance or operation of the
Hotel owned by such Seller, which have not been corrected in all material
respects.
               8.3.10 Except as set forth on Exhibit P, there is no litigation,
action, investigation or proceeding (including, but not limited to, proceedings
in respect to a condemnation) pending or, to such Seller’s knowledge, threatened
in writing against such Seller, Operating Lessee or Manager, an adverse
determination of which would likely materially and adversely affect the
applicable Property or the results of its operations or such Seller’s ability
and right to enter into this Agreement or to consummate the transactions
contemplated hereby, other than employment claims and claims for personal injury
or property damage which are covered by liability insurance and for which the
insurer is providing a defense.
               8.3.11 Such Seller and/or the Operating Lessee owns title to the
Furnishings, Consumables and Operating Supplies and Equipment relating to the
Hotel owned by such Seller, subject only to the Permitted Exceptions (and liens
related to the Sellers’ and Operating Lessee’s existing or previous financings,
which liens shall be satisfied or paid on or prior to the Closing), the Hotel
Contracts (including without limitation any equipment leases for certain
Furnishings set forth on Exhibit C) and the rights, if any, of the Franchisor
under the Franchise Agreement therein or thereto.
               8.3.12 Neither such Seller nor the Operating Lessee employs any
personnel at the Hotel owned by such Seller in connection with the operation
thereof, and all employees of such Hotel are employees of the Manager.
               8.3.13 To Seller’s knowledge, there are no labor disputes or
organizing activities pending or threatened as to the operation or maintenance
of any of the Properties or any part thereof. Neither Seller nor the Operating
Lessee is a party to any union or other collective bargaining agreement with
employees employed in connection with the ownership, operation or maintenance of
any of the Hotels. Neither the Manager nor Interstate Hotels and Resorts, Inc.
(“Interstate”), an affiliate of Manager, is a party to any Collective Bargaining
Agreement, except for those described in Exhibit Q (the “Collective Bargaining
Agreements”).
               8.3.14 Sales, Use and Occupancy Taxes. All sales, use and
occupancy taxes due and owing with respect to the Hotels have been paid or will
be paid by Closing. All ad valorem personal property taxes due and owing with
respect to the Properties have been paid or will be paid by Closing.

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               8.3.15 No Commitments. No commitments have been made to any
Governmental Authorities, utility company, school board, church or other
religious body, or any homeowners’ association or any other organization, group
or individual, relating to the Property which would impose an obligation upon
Purchaser to make any contribution or dedication of money or land or to
construct, install or maintain any improvements of a public or private nature on
or off the Properties.
               8.3.16 Financial Statements. To Sellers’ knowledge, the monthly
statements of income for each Hotel for the period from January 1, 2006 through
June 30, 2006, copies of which have been delivered to Purchaser, present
accurately in all material respects the results of operations of the Properties
(other than the premises covered by the Vetro Leases) for the periods indicated.
               8.3.17 Zoning of Philadelphia Hotel. To Sellers’ knowledge, the
zoning classification for the Philadelphia Hotel Land is C-3 Commercial, and,
except as may be set forth in Certification Statement attached hereto as
Exhibit R, there exists no notice of an uncorrected violation of housing,
building, fire or safety ordinances.
               8.3.18 Wells. To Sellers’ knowledge, there are no “Wells” located
on the Minnesota Property within the meaning of Minn. Stat. §1031. This
representation is intended to satisfy the requirements of that statute.
               8.3.19 Individual Sewage Treatment Systems. Solely for purposes
of satisfying the requirements of Minn. Stat. §115.55, to Sellers’ knowledge,
there is no “individual sewage treatment system” (within the meaning of that
statute) on or serving the Minnesota Property.
               8.3.20 Anchorage Laundry Facility. To Seller’s knowledge, no
capital calls against MeriStar Laundry have been made or are pending under the
Anchorage Joint Venture Agreement which have not been satisfied, other than a
capital call against MeriStar Laundry in an amount not expected to exceed
$50,000 for new laundry equipment that has been made or may be made in the
future. The Seller of the Anchorage Hotel shall pay or cause to be paid such
capital call and the Purchase Price shall be increased by an amount equal to
one-half of such capital call. To Seller’s knowledge, neither MeriStar Laundry
nor Interstate has received written notice of any actual or alleged violation of
any Environmental Law with respect to the real property owned by the Anchorage
Joint Venture.
          8.4 Knowledge. Wherever the phrase “to Seller’s knowledge” or any
similar phrase stating or implying a limitation on the basis of knowledge
appears in this Agreement, unless specifically otherwise qualified, such phrase
shall mean the present actual knowledge of Bruce Riggins and Edward Dardani,
without any duty of inquiry or independent investigation of the relevant matter
by any of such individuals, provided that the Sellers have made inquiries (and
requested written responses) as to the accuracy of the representations and
warranties set forth in Section 8.3 to the general managers of the Hotels (to
the best of the knowledge of the general managers) and that

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Messrs. Riggins and Dardani shall be deemed to have knowledge of any matter set
forth in the written responses of the general managers of the Hotels to such
inquiries. Wherever the phrase “in Seller’s possession”, “in the possession of
Sellers” or any similar phrase appears in this Agreement, such phrase shall be
deemed to mean to the extent the material or other item referred to by such
phrase is located at a Hotel or in the Sellers’ corporate offices in Arlington,
Virginia.
          8.5 Delivery. Whenever in this Section 8 a representation has been
made that any document has been delivered to Purchaser, such document shall be
deemed to have been delivered if such document has been made available to
Purchaser on the due diligence website operated by the Broker.
          8.6 Disclaimer Regarding Estimates and Projections. In connection with
Purchaser’s inspection of the Properties and other diligence, Purchaser has (or
may have) received certain projections, estimates and forecasts, including the
projected statements of operating revenues and income from operation of the
Properties. Purchaser acknowledges that there are uncertainties inherent in
attempting to make such estimates, projections and forecasts, that Purchaser is
familiar with such uncertainties and that Purchaser is taking full
responsibility for making its own evaluation of the adequacy and accuracy of all
estimates, projections and forecasts so furnished to it (including the
reasonableness of the assumptions underlying such estimates, projections and
forecasts). Accordingly, and without limiting the provisions of Sections 8.1 or
8.4, neither the Sellers nor the Operating Lessee make any representation or
warranties with respect to such estimates, projections and forecasts (including
the reasonableness of the assumptions underlying such estimates, projections and
forecasts).
          8.7 Survival. The representations and warranties of the Sellers and
Purchaser set forth in Sections 8.1, 8.2 and 8.6 hereof shall survive the
Closing without limitation as to time. The representations and warranties of the
Sellers set forth in Section 8.3 shall survive the Closing for a period of six
(6) months, provided that the representations and warranties of Seller in
Sections 8.3.1 and 8.3.2 shall survive the Closing without limitation as to
time. All other representations, warranties, covenants and indemnities set forth
in this Agreement shall not survive the Closing unless otherwise expressly
provided in this Agreement. The provisions of this Section 8.7 shall survive the
Closing.
          8.8 Claims. Claims by Purchaser following the Closing based on a
breach of a warranty or representation shall be made by written notice to the
Sellers within the applicable time period set forth in Section 8.7 above. Each
such notice shall set forth in reasonable detail the nature of the claim or
claims and the provision of this Agreement claimed to be breached thereby. If
Purchaser fails in any case to give written notice to the Sellers of any such
claim within the time period as aforesaid or to institute legal proceedings in
respect of any such unresolved claim within six (6) months thereafter, then such
claim or claims shall be deemed waived and shall lapse. The provisions of this
Section 8.8 shall survive the Closing.

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          8.9 Joint and Several Liability; Limitations.
               8.9.1 The Sellers shall be jointly and severally liable to
Purchaser in respect of the breach of any warranty or representation set forth
in this Section 8.
               8.9.2 Notwithstanding anything to the contrary set forth in this
Section 8, (i) the Sellers shall have no liability to Purchaser for breach of
any warranty or representation set forth in this Section 8 or elsewhere in this
Agreement unless and except to the extent that the aggregate damages suffered by
Purchaser by reason of all such breaches exceed Five Hundred Thousand Dollars
($500,000.00) (the “Basket”) provided that, notwithstanding Section 8.9.4, for
the purposes of this clause (i), in the event that Purchaser obtains knowledge
on or prior to the Closing Date of the failure of a representation or warranty
of the Sellers set forth in Section 8.3 to be true and correct in all material
respects (other than as a result of changes in the ordinary course of business
between the date hereof and the Closing Date and changes resulting from the
operation of the Properties between the date hereof and the Closing Date in
accordance with the provisions of Section 13 and any other applicable provisions
of this Agreement) and such failure does not result in a failure of the closing
condition set forth in Section 11.2 because the inaccuracy in question together
with all other such inaccuracies would not reasonably be expected to have a
material adverse effect on the business, value or prospects of all of the
Hotels, taken as a whole, then the aggregate damages suffered by Purchaser by
reason of such failure shall count toward the Basket (but, as provided in
Section 8.9.4, shall not result in any liability on the part of the Sellers),
(ii) in no event shall the Sellers be liable to Purchaser for consequential or
punitive damages in respect of any such breach and (iii) except in the case of a
breach of the representations of Seller contained in Section 8.3.1 and
Section 8.3.2, in no event shall the Sellers’ aggregate liability to Purchaser
for all such breaches exceed Ten Million Dollars ($10,000,000.00) (which amount
shall, in connection with the application of the Partial Termination Procedure
to one or more Hotels, be reduced on a ratable basis equal to an amount
determined by applying a fraction, the numerator of which is the aggregate
amount of the Purchase Price allocated on Exhibit F to the affected Hotel or
Hotels to which the Partial Termination Procedure is applied and the denominator
of which is the Purchase Price).
               8.9.3 Notwithstanding each Seller’s obligation to deliver a
Seller Representation Certificate at the Closing pursuant to Section 7.1.13 or
anything else set forth in this Agreement, if any matter or event shall have
occurred between the date hereof and the date of the Closing or the Sellers
shall otherwise become aware of any fact which makes any such warranty or
representation untrue in any material respect, the Sellers shall have the right
to disclose such fact in the Sellers’ Representation Certificate, and if the
Sellers do so, the Sellers shall not be liable to Purchaser following the
Closing for the breach of the warranty or representation in question which
results from the occurrence or existence of such fact, but in no event shall
Purchaser be obligated to close hereunder unless the conditions precedent to
Purchaser’s obligation to close set forth in this Agreement shall have been
fulfilled.

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               8.9.4 Notwithstanding anything to the contrary set forth in this
Section 8 or elsewhere in this Agreement but subject to the proviso of clause
(i) of Section 8.9.2, if prior to the Closing Purchaser has or obtains knowledge
that any of Seller’s warranties or representations set forth in this Section 8
is untrue in any respect, and Purchaser nevertheless proceeds with the Closing,
then the breach by the Sellers of the warranties or representations as to which
Purchaser shall have or obtained such knowledge shall be waived by Purchaser and
the Sellers shall have no liability to Purchaser or its successors or assigns in
respect thereof. For purposes of this Section 8.9.4, Purchaser shall not have or
be deemed to have obtained “knowledge” of any untruth, change or inaccuracy of
any of the Seller’s warranties or representations set forth in Section 8 unless
the relevant matters were contained in written material delivered to Purchaser
or its agents or advisors, made available to Purchaser on the due diligence
website operated by the Broker or were disclosed to Purchaser or its employees
or agents by Hotel personnel or employees of the Manager.
               8.9.5 Notwithstanding anything to the contrary set forth in
Sections 8.3.5, 8.3.6 or 8.3.7, the representations and warranties contained
therein to the effect that the Sellers and the Operating Lessee have complied
with or are not in default under any of the terms of any agreement described
therein do not apply to any obligation on the part of any Seller or the
Operating Lessee, or any default or alleged default based on such Seller’s or
Operating Lessee’s failure, to maintain the Properties, or any of them, in good
repair and condition or to make any replacements or improvements thereto, it
being understood that Purchaser has agreed to accept the Properties in their
“as-is” physical condition.
               8.9.6 The provisions of this Section 8.9 shall survive the
Closing.
     9. Representations and Warranties of Purchaser. Purchaser hereby represents
and warrants to the Sellers as follows:
          9.1 Organization. Purchaser is a limited partnership duly organized
and validly existing under the laws of the State of Delaware; it has the power,
right, authority and legal capacity to execute and deliver this Agreement and
the other documents, instruments, certificates and agreements required to be
executed and delivered by it hereunder and to enter into and perform the
transactions contemplated hereby.
          9.2 Consents. All resolutions, consents, authorizations and other
actions required to be taken by or on the part of Purchaser which are necessary
to approve or authorize the execution of this Agreement by Purchaser and
consummation of the transactions contemplated herein have been obtained and
taken.
          9.3 Non-Contravention. Neither the entry into nor the performance of
this Agreement by Purchaser will (i) violate, conflict with, result in a breach
under, or constitute a default under, any corporate charter, certificate of
incorporation, by-law, partnership agreement, indenture, contract, permit,
judgment,

 

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decree or order to which Purchaser is a party or by which Purchaser is bound, or
(ii) require the consent of any third party other than as has already been
obtained or is otherwise specifically set forth herein.
          9.4 Closing of Hotels. Purchaser does not intend to close any of the
Hotels for at least ninety (90) days after the Closing, except for temporary or
partial closings reasonably deemed necessary by Purchaser in connection with the
performance of work required under a franchise agreement for a Property
following Closing provided that nothing herein shall derogate from Purchaser’s
obligations under Section 33.2.
          9.5 Survival. The representations and warranties of Purchaser set
forth in this Section 9 shall survive the Closing for a period of six
(6) months, provided that the representations and warranties of Purchaser set
forth in Sections 9.1 and 9.2 shall survive the Closing without limitation of
time. All of Purchaser’s representations and warranties set forth in
Sections 8.1, 8.2 and 8.6 and this Section 9 shall be remade on and as of the
Closing Date in the Purchaser’s Representation Certificate, which shall be
delivered to the Sellers at Closing. The provisions of this Section 9.5 shall
survive the Closing.
     10. Conditions to the Sellers’ Obligation to Close Title. The obligation of
the Sellers to close title under this Agreement is expressly conditioned upon
the fulfillment by and as of the Closing Date of each of the conditions listed
below; provided that the Sellers, at their election, may waive all or any of
such conditions:
          10.1 Purchaser shall have paid to the Sellers the Purchase Price as
provided in Section 3 hereof.
          10.2 Purchaser shall have delivered or caused to be delivered at
Closing all documents and executed counterparts of documents and instruments
required by this Agreement to be delivered by Purchaser and shall have taken all
other action and fulfilled all other conditions required of Purchaser under this
Agreement.
          10.3 All representations and warranties of Purchaser set forth in
Sections 8.1 and 8.2 and Section 9 shall be true and correct in all material
respects on and as of the Closing Date as if made on and as of such date.
          10.4 Each Franchisor shall have (i) either (A) approved Purchaser’s
change of ownership application with respect to the applicable Hotel, and agreed
to Purchaser’s assumption of, and Purchaser shall have assumed, the applicable
Franchise Agreement, or such Franchisor shall have entered into a new franchise
agreement with Purchaser with respect to the applicable Hotel, as required by
Franchisor, or (B) terminated the Franchise Agreement in accordance with
Section 13.7, and (ii) in the case of an assumption of the applicable Franchise
Agreement, delivered to the applicable Seller, the Operating Lessee and any
guarantor of the Franchise Agreement a release (a “Release”) of their respective
obligations under the Franchise Agreement (to the extent the same arise from and
after the Closing), executed by such Franchisor in such

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Franchisor’s customary form, with such changes as may be reasonably requested by
the applicable Seller.
          10.5 MeriStar Hospitality Operating Partnership, L.P. (“MHOP”) shall
have waived in writing its right of first offer with respect to the Properties
(the “MHOP ROFO”) as set forth in that certain Amended and Restated Agreement of
Limited Partnership of MeriStar Investment Partners, L.P., dated as of
February 9, 2005, by and among the Operating Lessee and MHOP.
     11. Conditions to Purchaser’s Obligation to Close Title. The obligation of
Purchaser to close title under this Agreement is expressly conditioned upon the
fulfillment by and as of the Closing Date of each of the conditions listed
below; provided that Purchaser, at its election, may waive all or any of such
conditions:
          11.1 The Sellers shall have delivered or caused to be delivered at
Closing all of the documents and instruments required by this Agreement to be
delivered by the Sellers and shall have otherwise complied in all material
respects with all of their covenants and obligations under this Agreement.
          11.2 The representations and warranties of the Sellers set forth in
Section 8.3 shall be true and correct in all material respects on and as of the
Closing Date as if made on and as of such date (unless the failure of such
representations or warranties to be true and correct, in all material respects,
would not reasonably be expected to have a material adverse effect on the
business, value or prospects of all of the Hotels, taken as a whole), subject,
however, to changes in the ordinary course of business between the date hereof
and the Closing Date and changes resulting from the operation of the Properties
between the date hereof and the Closing Date in accordance with the provisions
of Section 13 and any other applicable provisions of this Agreement.
          11.3 MHOP shall have waived in writing the MHOP ROFO.
          11.4 Purchaser acknowledges that the Sellers do not guarantee the
satisfaction of the conditions precedent listed in Sections 11.2 and 11.3 and
the failure to satisfy such conditions for any reason (other than Sellers’
breach of this Agreement) shall not be deemed to be a default hereunder but
rather, the same shall merely be a failure of a condition to Closing, in which
event Purchaser’s sole remedy shall be to terminate this Agreement and receive a
refund of the Deposit and upon termination neither party shall have any further
obligations or liabilities hereunder except as otherwise expressly provided in
this Agreement.
     12. Casualty and Condemnation.
          12.1 Casualty.
               12.1.1 Risk of loss as a result of fire or other casualty to each
Hotel shall be on the Sellers to and including the Closing Date and shall be on
Purchaser thereafter. If, at any time on or before the Closing Date, any Hotel
has

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suffered damage, destruction or casualty (each, a “Casualty Loss”), the Sellers
shall promptly notify Purchaser.
               12.1.2 In the event a Casualty Loss affects a Substantial Portion
of a Hotel, Purchaser shall have the right, by notice to Sellers given within
ten (10) Business Days after the date of the Sellers’ notice to Purchaser
setting forth the estimated cost to repair or replace the same (to the extent
then available) to terminate this Agreement with respect to such affected Hotel.
Upon such termination, (i) the parties hereto shall have no further rights or
obligations hereunder with respect to such Hotel (except for any obligations
that expressly survive termination), and (ii) the parties shall remain obligated
to purchase and sell the remaining Hotels in accordance with, but subject to,
the terms of this Agreement, except that the Purchase Price shall be reduced by
the amount allocated to the affected Hotel on Exhibit F hereto (the above
described notice of termination, release from obligations hereunder with respect
to the affected Hotel, and remaining obligation to purchase the unaffected
Hotels on the terms described above being hereinafter referred to as the
“Partial Termination Procedure”). In the event that Purchaser does not elect to
invoke the Partial Termination Procedure as to the affected Hotel within such
10-Business Day period, TIME BEING OF THE ESSENCE, such Casualty Loss shall be
treated in the manner described in Section 12.1.3 below with respect to a
Casualty Loss which does not relate to a Substantial Portion. If the Closing
Date shall be due to occur prior to the expiration of such 10-Business Day
period, the parties hereto agree to adjourn the Closing Date with respect to the
affected Hotel to the date that is five (5) Business Days after the expiration
of such 10-Business Day period, provided that if such fifth (5th) Business Day
falls within a Blackout Period, the Closing Date shall be adjourned to the first
(1st) Business Day following the Blackout Period.
               12.1.3 In the event of a Casualty Loss which does not relate to a
Substantial Portion of a Hotel, the Closing shall occur notwithstanding such
Casualty Loss, and at the Closing the applicable Seller shall assign to
Purchaser the proceeds of any insurance applicable to such Casualty Loss, less
any costs of adjustment and collection and less any amounts expended on
restoration in accordance with subsection 12.1.4, and such Seller shall pay to
Purchaser the amount of any deductible applicable thereto.
               12.1.4 In any case in which Purchaser shall purchase a Hotel
affected by a Casualty Loss, (i) the applicable Seller shall assign or, in the
case of insurance carried by the Manager or Operating Lessee, shall cause the
Manager or Operating Lessee to assign to Purchaser at the Closing all of its
rights to the proceeds of any business interruption insurance payable with
respect to the period from and after the day immediately following the Closing
Date and Purchaser shall control the adjustment and settlement of all claims
with respect to such insurance for such period and, if necessary to ensure that
Purchaser shall receive such business interruption insurance for such period,
the Sellers shall obtain an endorsement to such policy providing that Purchaser
shall receive such proceeds and (ii) the applicable Seller shall have the right
to commence to repair such damage to the extent necessary to operate the
affected Hotel, and such Seller shall have the right to deduct the cost of such
repairs performed and paid for prior on or to the Closing Date from any amount
of insurance proceeds (other than

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proceeds of business interruption insurance) hereinabove referred to; provided,
however, that prior to the commencement of any such repairs, the applicable
Seller shall consult with Purchaser with respect to the work which it intends to
perform and shall make any modifications thereto reasonably requested by
Purchaser provided that Purchaser agrees to pay any extra expense incurred in
connection with such modifications.
          12.2 Condemnation. If, prior to the Closing Date, part or all of any
Hotel is condemned or threatened with condemnation to such an extent as would
materially impair such Hotel’s fair market value or economic or functional use
as a full service hotel, or causes damage to such Hotel which affects a
Substantial Portion of such Hotel, Purchaser may at its option, exercised by
notice given to the Sellers within ten (10) Business Days of the receipt from
the Sellers of a notice setting forth all information within the Sellers’
possession relating to such condemnation, elect (a) to proceed with the Closing
in accordance with the terms hereof, in which event Purchaser shall purchase the
Hotel which is the subject of the condemnation in its then current condition
without any reduction in the Purchase Price, but subject to the further
provisions of this Section 12.2, or (b) terminate this Agreement with respect to
the affected Hotel, whereupon the Partial Termination Procedure shall occur with
respect to the affected Hotel. If the Closing Date is due to occur prior to the
expiration of such 10-Business Day period, the parties hereto agree to adjourn
the Closing Date with respect to the affected Hotel to the date which is five
(5) Business Days after the expiration of such 10-Business Day period provided
that if such fifth (5th) Business Day falls within a Blackout Period, the
Closing Date shall be adjourned to the first (1st) Business Day following the
Blackout Period. If, in the event of such condemnation or threatened
condemnation, Purchaser does not elect to terminate its obligation to purchase
the affected Hotel or in the event of a condemnation which would not entitle it
to exercise such right, Purchaser shall control the adjustment and settlement of
any award with respect to such condemnation and the applicable Seller shall
assign to Purchaser at the Closing the proceeds of such award, after the use
thereof by such Seller, prior to Closing, to pay the cost of any work performed
and paid for by such Seller or to repair any damage caused by an actual
condemnation and net of any reasonable expenses incurred by such Seller in such
condemnation proceeding. The obligation of the Sellers to turn over to Purchaser
such proceeds shall survive the Closing. Prior to the commencement of any such
repairs, the applicable Seller shall consult with Purchaser with respect to the
work which it intends to perform and shall make any modifications thereto
reasonably requested by Purchaser provided that Purchaser agrees to pay any
extra expense incurred in connection with such modifications. For the purposes
of the foregoing, a “threat” of condemnation shall not be deemed to have arisen
unless and until the applicable Seller either (i) shall have received an
official notice to such effect from a public authority or (ii) shall have actual
knowledge of same.
          12.3 Notwithstanding anything to the contrary contained in this
Agreement, (i) Purchaser acknowledges that the Iowa City Hotel has suffered
tornado damage and that the Seller which owns the Iowa City Hotel is in the
process of repairing such damage and (ii) if such repair is not completed on or
prior to the Closing Date, then Purchaser shall be responsible for completing
such repairs (and shall assume all contracts relating thereto), such Seller
shall have no responsibility therefore, and upon request made by Purchaser from
time to time together with all necessary supporting information,

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such Seller shall (or shall cause Manager to) apply to such Seller’s insurer for
disbursements of insurance proceeds on account of the cost of such repair, use
commercially reasonable efforts to collect the same and, promptly after receipt
of such proceeds, pay the same over to Purchaser.
     13. Operation of the Properties until Closing; Operating Lessee Covenants.
          13.1 Operation. Subject to Section 6.5, the Sellers agree to continue,
and shall cause Operating Lessee and Manager to continue, to operate and
maintain the Properties from and after the Effective Date to and including the
Closing Date in the ordinary course of business in accordance with the current
practices of the Sellers, Operating Lessee and Manager, except as otherwise
specifically provided in this Agreement. In addition, the Sellers and Operating
Lessee agree as follows:
          (a) The Sellers and Operating Lessee shall not before or after Closing
release or modify any Warranties, except with the prior written consent of
Purchaser.
          (b) The Sellers and Operating Lessee shall maintain in full force and
effect through their respective expiration dates, and shall not cancel or
voluntarily allow to expire prior to such dates, all insurance policies covering
the Properties or the operations thereof.
          (c) The Sellers and Operating Lessee shall cause to be paid prior to
delinquency all ad valorem, occupancy and sales taxes due and payable with
respect to the Properties or the operation of the Hotel (except to the extent
the same are being contested in good faith).
          13.2 Dispositions. No Seller nor the Operating Lessee shall sell,
exchange, assign, transfer, convey, lease or otherwise dispose of all or any
part of such Seller’s or the Operating Lessee’s Property or any interest therein
except for any Personal Property sold, replaced or consumed in the ordinary
course of business and each Seller and the Operating Lessee shall maintain
Personal Property at the Property in a manner substantially consistent with such
Seller’s and/or the Operating Lessee’s customary operating practices and
historical practice at the Property.
          13.3 Termination of Contracts and Permits. Each Seller and the
Operating Lessee shall keep the material Hotel Contracts, Space Leases and
Permits (including any such items entered into after the Effective Date in
accordance with Section 13.4, but excluding those which may be terminated in the
ordinary course of the operations of the Hotel (in the case of Hotel Contracts
only) or as a result of a default by the other party or which may expire by
their terms or pursuant to Section 7.1.2) in full force and effect, will pay all
charges when due under such agreements and will perform all of its material
obligations under such Hotel Contracts, Space Leases and Permits. Such Seller
will pay all charges when due under the applicable Franchise Agreement, but,
such Seller shall have no obligation to Purchaser to perform any work required
by the

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Franchisor with respect to the Hotel or to achieve any quality standards,
customer satisfaction scores or other operational standards under such Franchise
Agreement.
          13.4 New Contracts. Between the Effective Date and the Closing Date,
each Seller and the Operating Lessee shall not modify in any material respect or
enter into any new contracts, leases, licenses, easements, encumbrances (but
including for this purpose involuntary encumbrances) or other agreements
relating to the Properties (including, but not limited to, Hotel Contracts,
collective bargaining agreements, and Space Leases) without the prior consent of
Purchaser in each instance between the Effective Date and the Closing Date,
which consent shall not be unreasonably withheld, conditioned or delayed, other
than (i) contracts which may be terminated in the ordinary course of operations
of the applicable Hotel on not more than 60 days notice without penalty or which
provide for payments thereunder of $25,000 or less, (ii) contracts for room
reservations, Bookings or other advance commitments for room rentals at the
Properties in the ordinary course of business and consistent with past practice
or (iii) the Repair Contract or any contract referred to Section 6.5.2. The
Sellers shall consult with Purchaser and keep Purchaser informed with respect to
any such modified or new contracts entered into or proposed after the Effective
Date and shall make copies of the same available to Purchaser promptly after the
receipt thereof by the Sellers or the Operating Lessee. Purchaser shall advise
the applicable Seller of its approval or rejection of any such proposed
contract, lease, license, easement or other agreement within three (3) Business
Days after such Seller has delivered the same to Purchaser. Failure to provide
such approval or rejection within the stated time period shall be deemed
approval of the submission.
          13.5 Access. Each Seller shall permit Purchaser and its
representatives, contractors, agents, personnel, lenders, employees, investors
and partners to enter upon and inspect the Property and perform such
investigations of the Property and all Books and Records as Purchaser may from
time to time deem desirable, at Purchaser’s sole cost and expense, all on the
terms and conditions hereinafter set forth. Provided that Purchaser gives such
Seller reasonable prior notice, such Seller shall arrange for Purchaser and
Purchaser’s agents to have reasonable access to the Property during regular
business hours until the Closing Date to conduct additional due diligence
(provided that in no event shall such additional due diligence give rise to a
right of Purchaser to terminate this Agreement or to an adjustment of the
Purchase Price), prepare for Closing and to verify any change in the condition
of the Property since the Effective Date. Purchaser does hereby acknowledge and
agree, regardless of whether such entry and/or activities occurred before or
after the Effective Date, that (i) the costs and expenses of Purchaser’s access,
whenever incurred, shall be borne solely by Purchaser, (ii) Purchaser has been
obligated during all entries made prior to the Effective Date and shall be
obligated with respect to all entries made from and after the Effective Date not
to unreasonably disturb or interfere with the operation, management or use of
the Property by such Seller, such Seller’s agents, any tenant or any tenant’s
customers, invitees or guests, (iii) Purchaser has been obligated during all
entries made prior to the Effective Date, and shall be obligated with respect to
all entries made from and after the Effective Date, not to damage or adversely
affect the physical structure or any of the mechanical, electrical, plumbing or
HVAC systems of the Property and/or the Furnishings and (iv)

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Purchaser shall be obligated with respect to all entries made from and after the
Effective Date to give prior notice to such Seller of any such entry and such
Seller shall have the right to require that Purchaser’s representative be
accompanied by a representative of such Seller during any such visit to the
Property. Purchaser hereby agrees to indemnify, defend, and hold each Seller,
the Operating Lessee and the Manager and their respective affiliates harmless
from any and all actual costs, losses, damages (excluding consequential and
punitive damages) and expenses (including reasonable attorneys’ fees) arising
out of any personal injury or property damage resulting from such entry and/or
activities upon the Property by Purchaser, its agents, contractors and/or
subcontractors, regardless of whether such entry and/or activities occurred
before or after the Effective Date, which indemnity shall survive the Closing or
any termination of this Agreement. At all times that Purchaser is given access
to the Property in connection with its investigations under this Section 13.5,
Purchaser shall carry, and Purchaser shall cause all of its agents and
contractors to carry, reasonably adequate liability insurance covering their
respective activities at the Property and Purchaser shall deliver evidence of
such insurance to such Seller upon such Seller’s request. Unless this Agreement
is terminated, Purchaser shall have the right to communicate with Hotel
Employees, provided the same is coordinated through such Seller and, if so
requested by the Sellers, in the presence of a representative of the Sellers and
provided that Purchaser minimizes any disruption to the operation of the
Property and/or to the scheduling and staffing needs of the Property. In no
event shall Purchaser or its agents undertake any invasive testing at the
Property, other than a standard Phase I environmental test, without the prior
consent of such Seller, which consent shall not be unreasonably conditioned,
withheld or delayed.
          13.6 Liquor Licenses.
               13.6.1 Each Seller shall cooperate with Purchaser in all
reasonable respects in connection with the transfer of liquor licenses used in
connection with the operation of the Hotel to Purchaser or Purchaser’s
application for new liquor licenses. If Purchaser is (despite the use of
commercially reasonable efforts) unable to obtain approval to assume the
existing licenses, or new licenses or temporary permits to operate, issued by
the applicable liquor authority prior to the Closing Date, then, on the Closing
Date, the applicable Seller shall, to the extent permitted under applicable
Legal Requirements, cause the existing liquor licensee to enter into an
agreement with Purchaser, in form and content reasonably acceptable to Purchaser
and such Seller, providing for an interim arrangement of up to one hundred
twenty (120) days whereby such licensee shall operate (or if legally permissible
allow Purchaser to operate) the liquor concessions at the applicable Hotel under
the existing liquor licenses on behalf of Purchaser pending the transfer or
issuance of such approval, new license or temporary permit to operate, provided
that such interim arrangement shall be extended on a Hotel by Hotel basis by an
additional thirty (30) days in the event that Purchaser, despite the use of
continuous diligent efforts, has not received such approval to assume an
existing license, or new license or temporary permit to operate. Purchaser shall
indemnify, defend and hold such licensee harmless against any liabilities
incurred in such operation (unless caused by such licensee’s willful or
negligent conduct or omission or breach of its agreement with Purchaser) and
provide adequate dram-shop insurance naming such Seller, the Operating Licensee
and the licensee as additional insureds.

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               13.6.2 At the Closing, the Sellers shall cause the liquor
licensee for the San Diego Hotel and the Walnut Creek Hotel to enter into a
liquor assets escrow agreement with Purchaser or Purchaser’s designee(s), as
required by California Business and Professions Code Section 24074, in a form
reasonably acceptable to the parties, with an escrow agent reasonably acceptable
to the parties (and Purchaser shall, or shall cause its designee(s) to, execute
and deliver the required number of counterparts of such agreement). The amount
described in Section 6.1.16 shall be deposited into the escrow created under
such escrow agreement as provided in Section 6.1.16, and shall (together with
the liquor licenses for such Hotels) be disposed of as provided in such escrow
agreement.
               13.6.3 In no event shall the transfer of the existing liquor
license, the issuance of a temporary permit or a new license or the consent of
any liquor authority to the transactions contemplated hereby be a condition
precedent to Purchaser’s obligations under this Agreement. The provisions of
this Section 13.6 shall survive the Closing.
          13.7 Franchise Agreements.
               13.7.1 The Sellers shall proceed promptly and in good faith to
give the notices required under the Franchise Agreements with respect to the
transactions contemplated hereby. Purchaser shall promptly and in good faith
(a) seek, with respect to each Property, either (i) to obtain a new franchise
agreement from Franchisor or from another hotel franchisor (“Other Franchisor”),
or (ii) to assume the existing Franchise Agreement from the Franchisor, in
accordance with all applicable provisions of the Franchise Agreement, including
without limitation providing such financial and other information regarding
Purchaser as may be reasonably required by the Franchisor or by the Other
Franchisor, as appropriate, and submitting promptly after the date hereof all
application materials required by the Franchisor (b) endeavor to obtain a
Release for each Seller with respect to the applicable Franchise Agreement for
obligations arising or accruing from and after the Closing Date (it being agreed
that if Purchaser is unable to obtain a Release with respect to a particular
Franchise Agreement, Purchaser shall be required either to enter into a new
franchise agreement with the Franchisor as hereinabove provided or obtain such
Franchisor’s consent to the termination of such Franchise Agreement as provided
in Section 13.7.2), and (c) use commercially reasonable efforts to obtain a
release for each Seller with respect to the applicable Franchise Agreement for
obligations arising or accruing prior to the Closing Date, provided that in no
event shall Purchaser be obligated to assume any such obligation in order to
obtain such release. In connection therewith, the Sellers shall at no cost to
the Sellers cooperate in all reasonable respects with Purchaser in connection
with such application for a new franchise agreement or for the assumption of any
existing Franchise Agreement. In the event a Franchisor or Other Franchisor
requires an inspection for a product improvement plan or otherwise at the Hotel
in connection with such application, Purchaser shall upon demand therefor by the
Sellers forward to the Sellers, in immediately available funds, an amount equal
to the fee for such inspection as determined by the Franchisor or Other
Franchisor, as applicable, and, in the event Purchaser fails to do so the
applicable Sellers shall have no obligation to apply for or

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otherwise obtain such inspection, but Purchaser shall not be relieved of any of
its obligations under this Section 13.7.1. Purchaser acknowledges and agrees
that Purchaser’s obtaining (x) a transfer of a Franchise Agreement or a new
franchise agreement for the Hotel from the Franchisor or from an Other
Franchisor, (y) the Franchisor’s consent to the termination of the Franchise
Agreement as provided in Section 13.7.2 or (z) the agreement of any Franchisor
not to terminate its Franchise Agreement in connection with the sale of the
applicable Hotel shall not be a condition precedent to Purchaser’s obligation to
close the transaction set forth in this Agreement. Purchaser shall pay all
application fees as may be required by any Franchisor in connection with the
assumption of an existing Franchise Agreement by Purchaser, and the Sellers
shall work closely with Purchaser to avoid or minimize any such application
fees. In addition, Purchaser shall pay (i) all other amounts as may be required
by any Franchisor in connection with the assumption of an existing Franchise
Agreement by Purchaser and (ii) all application fees and other amounts as may be
required by any Other Franchisor, as appropriate, in connection with the
issuance of a new franchise agreement to Purchaser. Purchaser acknowledges that
as a condition to approving the transfer or assignment of the existing Franchise
Agreements, or entering into a new franchise agreement, the Franchisor or other
franchisor, as applicable, may require the institution of property improvement
plans or the imposition of work requirements. The Sellers shall have no
obligation with respect to any such property improvement plan or other work
requirement agreed to by Purchaser.
               13.7.2 Notwithstanding anything to the contrary set forth in
Section 13.7.1, Purchaser shall have the right with respect to any Property not
to assume the existing Franchise Agreement or not to obtain a new franchise
agreement from the Franchisor, as applicable, only if:
                    13.7.2.1 Purchaser shall notify the Sellers in writing prior
to the fifth (5th) Business Day prior to the Closing Date that Purchaser intends
to exercise said right; and
                    13.7.2.2 The Franchisor shall consent in writing to the
termination of the Franchise Agreement without payment of a termination fee or
damages (liquidated or otherwise) or Purchaser shall pay in full, at the
Closing, and indemnify, defend and hold harmless the Sellers and their
affiliates from and against, any and all such termination fees or damages
(liquidated or otherwise). In connection with such termination, Purchaser shall
use commercially reasonable efforts to obtain from such Franchisor a release for
the applicable Seller for obligations arising or accruing prior to such
termination, provided that in no event shall Purchaser be required to assume any
such obligation to obtain such release.
               13.7.3 Purchaser shall indemnify, defend and hold the Sellers
harmless from and against any and all costs, loss, damages or expenses
(including without limitation, reasonable attorneys fees) incurred by any Seller
under any Franchise Agreement as a result of Purchaser’s failure at or prior to
the Closing either (i) to obtain

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the Franchisor’s approval of Purchaser’s change of ownership application with
respect to the Hotel, and to either (A) assume the Franchise Agreement or (B) to
enter into a new franchise agreement with Franchisor, as required by Franchisor,
with respect to the Hotel, or (ii) to obtain Franchisor’s termination of the
Franchise Agreement as set forth in Section 13.7.2, including without any
limitation any termination fees or damages (liquidated or otherwise) incurred by
the applicable Seller under the Franchise Agreement and/or the Franchisor letter
in connection therewith. In the event Purchaser assumes the Franchise Agreement
with respect to a Hotel, Purchaser shall only assume all obligations and
liabilities under such Franchise Agreement which accrue to the period from and
after the Closing Date. In the event Purchaser enters into a new franchise
agreement with a Franchisor with respect to a Hotel, Purchaser shall not assume
any obligations or liabilities under the Franchise Agreement being replaced for
such Hotel. The provisions of this Section 13.7.3 and Section 13.7.2 shall
survive the Closing or any earlier termination of this Agreement.
          13.8 If Purchaser shall neither assume the Franchise Agreement nor
obtain a new franchise agreement from Franchisor with respect to any Property in
accordance with this Section 13.8, then at the Closing, the applicable Sellers
shall be entitled to remove from the applicable Property and return to the
Franchisor in accordance with the Franchise Agreement or transfer to other
hotels owned by affiliates of the Sellers all Trademark Materials, such items
shall be Excluded Items and Purchaser shall receive no credit against the
Purchase Price as a result of the removal of such Excluded Items from the
Property.
          13.9 Reporting. The Sellers shall or shall cause the Manager to
deliver to Purchaser as soon as the same shall become available monthly
operating statements for each of the Properties, together with copies of any
financial statements or forecasts produced by the Sellers or the Manager in the
ordinary course relating to any or all of the Properties.
          13.10 Vetro Leases. The Operating Lessee shall promptly and in good
faith seek the consent of the lessors under the Vetro Leases to assign the Vetro
Leases to Purchaser upon the Closing, provided that, the Operating Lessee shall
not be obligated to incur any cost or other liability in connection therewith,
provided, further, that the failure of the Operating Lessee to obtain such
consents or to extend the period during which any extension option under the
Vetro Leases may be exercised shall not (i) be deemed a default or breach of the
Operating Lessee’s or the Seller’s respective obligations under this Agreement
or a breach of any condition hereunder to Purchaser’s obligation to proceed with
the Closing, (ii) give rise to Purchaser of any right to terminate this
Agreement in whole or as to the applicable Hotel pursuant to the Partial
Termination Procedure or (iii) result in any reduction of the Purchase Price. In
the event that such consents are not obtained or in the event that Purchaser
notifies the Sellers at least three (3) Business Days prior to the Initial
Closing Date that Purchaser does not intend to assume the Vetro Leases, the
Vetro Leases shall be deemed Excluded Items and shall not be included in the
transactions contemplated herein.

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          13.11 Anchorage Joint Venture Agreement. The Sellers shall cause
MeriStar Laundry to promptly and in good faith seek the consent of Captain Cook
to permit MeriStar Laundry to assign its interest in the Anchorage Joint Venture
Agreement to Purchaser upon the Closing, provided that, neither the Sellers nor
MeriStar Laundry shall be obligated to incur any cost or other liability in
connection therewith, provided, further, that the failure of the Sellers to
obtain such consent shall not (i) be deemed a default or breach of the Sellers’
respective obligations under this Agreement or a breach of any condition
hereunder to Purchaser’s obligation to proceed with the Closing, (ii) give rise
to Purchaser of any right to terminate this Agreement in whole or as to the
Anchorage Hotel pursuant to the Partial Termination Procedure or (iii) result in
any reduction of the Purchase Price. In the event that such consents are not
obtained or in the event that Purchaser notifies the Sellers at least three
(3) Business Days prior to the Initial Closing Date that Purchaser does not
intend to assume the Anchorage Joint Venture Agreement, the Anchorage Joint
Venture Agreement shall be deemed an Excluded Item and shall not be included in
the transactions contemplated herein.
          13.12 Independent Audit. Promptly following the Effective Date, the
Sellers shall and shall cause Manager to reasonably cooperate with Purchaser’s
representatives and independent accounting firm to provide access to financial
information relating to the Properties in the possession of or otherwise
available to the Sellers, its affiliates or Manager which would be sufficient to
enable Purchaser’s representatives and independent accounting firm to prepare
audited financial statements for the three (3) calendar years prior to the
Closing and during the year in which the Closing occurs in conformity with
generally accepted accounting principles and to enable such representatives to
prepare such statements, reports or disclosures as Purchaser may reasonably deem
necessary or advisable (provided that in no event shall the results of such
activities by or on behalf of Purchaser give rise to a right of Purchaser to
terminate this Agreement or to an adjustment of the Purchase Price, or expand
the scope of any representation contained herein or create any liability to
Purchaser or any other person that would not otherwise exist under this
Agreement absent this Section 13.12). The Sellers shall also provide and shall
cause Manager to provide to Purchaser’s independent accounting firm a signed
representation letter in a form reasonably acceptable to Manager which would be
sufficient to enable an independent public accountant to render an opinion on
the financial statements related to the Properties. The Sellers shall authorize
and shall cause Manager to authorize any attorneys who have represented the
Sellers or Manager in material litigation pertaining to or affecting the
Properties to respond, at Purchaser’s expense, to customary inquiries from
Purchaser’s representatives and independent accounting firm. If and to the
extent the Sellers’ financial statements pertaining to the Property for any
periods during the three (3) calendar years prior to the Closing and during the
year in which the Closing occurs have been audited, promptly after the execution
of this Agreement the Sellers shall provide Purchaser with copies of such
audited financial statements and shall reasonably cooperate with Purchaser’s
representatives and independent public accountants to enable them to contact the
auditors who prepared such audited financial statements and to obtain, at
Purchaser’s expense, a reissuance of such audited financial statements.
Purchaser shall reimburse the Sellers and

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Manager for all out-of-pocket costs incurred by the Sellers and/or Manager in
connection with the foregoing.
          13.13 Walnut Creek Litigation Without limiting the provisions of
Section 6.5.1 and Section 8.1, the Sellers shall have no obligation to perform
or complete any remedial work or other capital improvements required in
connection with the Walnut Creek Litigation (the “ADA Remedial Work”) (or incur
any liability in connection therewith except as expressly set forth in this
Section 13.13) and Purchaser shall accept the Walnut Creek Hotel on the Closing
Date “as-is” and without any adjustment to or credit against the Purchase Price
on account of the Walnut Creek Litigation, and shall be solely responsible for
performing the ADA Remedial Work at its sole cost as required pursuant to (and
promptly after) the final resolution of the Walnut Creek Litigation; provided
that the Sellers shall, promptly after request by Purchaser (together with the
submission of appropriate supporting documentation), reimburse Purchaser for
(i) one hundred percent (100%) of the direct costs of the ADA Remedial Work that
are incremental to Purchaser’s capital improvement or project improvement plans
for the Walnut Creek Hotel (the “Incremental ADA Costs”) expended by Purchaser
to the extent the same exceed $100,000 and are less than or equal to $150,000
and (ii) fifty percent (50%) of the Incremental ADA Costs expended by Purchaser
to the extent the same exceed $150,000; provided, further, that the Sellers
shall be responsible for any monetary damages arising from the Walnut Creek
Litigation (including any attorneys’ fees and expenses awarded or otherwise paid
to the plaintiff thereto, but excluding damages arising from any failure of
Purchaser to perform the ADA Remedial Work in compliance with such final
resolution, which shall be the responsibility of Purchaser). Notwithstanding the
foregoing, the Walnut Creek Seller may, in its sole discretion, commence the ADA
Remedial Work prior to the Closing Date in which event (x) Purchaser shall at
the Closing (subject to the submission of appropriate documentation) reimburse
the Walnut Creek Seller for one hundred percent (100%) of any Incremental ADA
Costs expended by the Walnut Creek Seller to the extent the same do not exceed
$100,000 and fifty percent (50%) of any Incremental ADA Costs expended by the
Walnut Creek Seller in excess of $150,000 and (y) Purchaser shall assume the
contract for the ADA Remedial Work on the Closing Date pursuant to an agreement
of assignment and assumption substantially in the form of Error! Reference
source not found. (as it relates to Hotel Contracts) and without warranty or
representation, provided that any additional Incremental ADA Costs incurred by
Purchaser pursuant to such assumed contract shall be allocated among Purchaser
and the Walnut Creek Seller as set forth in the immediately preceding sentence,
taking into account the amounts previously paid pursuant to clause (x) of this
sentence. In the event that the final resolution of the Walnut Creek Litigation
has not occurred as of the Closing Date, the Sellers and Purchaser shall
negotiate in good faith a supplement to this Agreement providing for a hold back
of a portion of the Purchase Price (the “ADA Holdback”) in an amount equal to
the Walnut Creek Seller’s share of the reasonably anticipated costs of the ADA
Remedial Work, as computed pursuant hereto (but which amount shall not in any
event exceed $100,000). Such supplement shall provide that the Escrow Agent
shall continue to hold the ADA Holdback and shall make the ADA Holdback
available for payment of amounts owing by the Sellers pursuant to clauses
(i) and (ii) of the first sentence of this

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Section 13.13 (with any excess being paid to, and any shortfall being paid by,
the Walnut Creek Seller). The budget and scope of work in the contract for the
ADA Remedial Work shall specify the ADA Remedial Work separately from any other
work to be performed under such contract, and such contract shall (together with
any amendments thereto that would result in a direct or indirect increase in the
compensation payable to the contractor thereunder) be subject to the Walnut
Creek Seller’s prior written consent, such consent not to be unreasonably
withheld or delayed (provided that in the event the Walnut Creek Seller
commences the ADA Remedial Work prior to the Closing Date, such contract
(together with any amendments thereto that would result in a direct or indirect
increase in the compensation payable to the contractor thereunder) shall be
subject to Purchaser’s prior written consent, such consent not to be
unreasonably withheld or delayed). From and after the Closing Date, Purchaser
shall join as a party to the Walnut Creek Litigation, and the Walnut Creek
Seller and Purchaser shall jointly and diligently conduct the defense of the
Walnut Creek Litigation and shall cooperate with each other and keep each other
informed with respect thereto; provided that neither party shall have the right
to settle (either before or after the Closing Date) the Walnut Creek Litigation
or take any other material action with respect thereto without the consent of
the other party, such consent not to be unreasonably withheld or delayed
(provided, further, that the Walnut Creek Seller shall have the right, in its
sole discretion and without consent of Purchaser, to settle, or take other
actions with respect to, any matters related solely to monetary damages). The
Sellers shall be responsible for attorneys’ fees and expenses related to the
defense of the Walnut Creek Litigation incurred prior to the Effective Date.
From and after the Effective Date, the Sellers shall be responsible for one-half
of the attorneys’ fees and expenses incurred by the Sellers and/or Purchaser in
defense of the Walnut Creek Litigation and Purchaser shall be responsible for
one-half of such attorneys’ fees and expenses. The Sellers shall indemnify and
hold harmless Purchaser for any costs for which the Sellers are responsible
under this Section 13.13. Purchaser shall indemnify and hold harmless the
Sellers for any costs for which Purchaser is responsible under this
Section 13.13 and for the failure to perform the ADA Remedial Work in compliance
with the requirements set forth in the final resolution of the Walnut Creek
Litigation. The provisions of this Section 13.13 shall survive the Closing.
     14. Title to the Properties.
          14.1 Condition of Title. If, at the Closing Date, title to any
Property shall not be in the condition prescribed by Section 4, the Sellers
shall be entitled to (a) adjourn the Closing pursuant to Section 5.1 for the
purpose of causing title to be conveyed in the condition required by the
provisions of this Agreement (including curing Purchaser’s title objections to
the extent required to do so under this Section 14) or (b) terminate this
Agreement as to the affected Hotel by notice to Purchaser delivered at or prior
to the Closing Date, in which event the Partial Termination Procedure shall
occur with respect to the affected Hotel. If the Sellers shall adjourn the
Closing pursuant to subdivision (a) above and at the end of such extension
period any Seller shall be unable to cause title to any Property to be in the
condition prescribed by Section 4, either party may terminate this Agreement as
to the affected Hotel by notice to the other party

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delivered at or prior to the Closing Date as so extended, in which event the
Partial Termination Procedure shall occur with respect to the affected Hotel.
Purchaser shall have the right to object by delivery of written notice to the
Sellers, on or prior to the date that is five (5) Business Days after receipt of
any update to the title reports previously delivered to Purchaser (and after
receipt of an updated survey for the applicable Property), to any lien or
encumbrance that is not a Permitted Exception and is shown on such or update. If
Purchaser shall fail to give such notice as to any lien or encumbrance within
said five (5) Business Day period, then each such lien or encumbrance shall be
deemed to be a Permitted Encumbrance. Any lien or encumbrance to which Purchaser
timely objects or any Monetary Lien shall not be a Permitted Exception unless
and until such lien or encumbrance or Monetary Lien is cured and/or the Title
Company agrees to affirmatively insure over such lien or encumbrance as
hereinafter provided or such lien or encumbrance is waived by Purchaser. The
Sellers shall be under no obligation to take any steps or to institute or
prosecute any action or proceedings, or expend any sums of money or effort to
remove from title to the Properties any defect, encumbrance or objection to
title whether or not the remedying of the defect, encumbrance or objection to
title is within the Sellers’ control; provided, however that each Seller shall
be responsible to discharge or cause the Title Company affirmatively to insure
over any liens or encumbrances on such Sellers’ Property which do not constitute
Permitted Exceptions, which can be discharged solely by the payment of a
liquidated sum of money and which liens or encumbrances arise on account of
obligations undertaken or actions performed by such Seller (“Monetary Liens”);
provided, that the Sellers shall not be required to expend more than $3,000,000
in the aggregate to cure any such Monetary Liens (other than mortgages and deeds
of trust which the Sellers shall be obligated to discharge at or prior to
Closing in full). The Sellers may use any part of the Purchase Price to
discharge the same, provided that the Sellers shall deliver to Purchaser or the
Title Company at the Closing instruments in recordable form sufficient for the
Title Company to discharge such Monetary Liens. Except for any Seller’s failure
to discharge or cause the Title Company affirmatively to insure over such
Monetary Liens as aforesaid, the Sellers shall not be deemed in default of this
Agreement, and Purchaser shall not be entitled to damages of any kind by reason
of the failure of any Seller, for any reason whatsoever, to convey title to the
Properties in accordance with the provisions of this Agreement, nor shall
Purchaser in such circumstances be entitled to specific performance of this
Agreement.
          14.2 Waiver. Purchaser, at its election, evidenced by notice to the
Sellers either before or within five (5) Business Days following notice from the
Sellers to invoke the Partial Termination Procedure pursuant to Section 14.1,
(and the Closing Date shall be adjourned if necessary for such five (5) Business
Day period) may in writing accept such title to the affected Property or
Properties as the Sellers can convey, without reduction of the Purchase Price or
any credit or allowance on account thereof or any claim against the Sellers by
reason thereof, in which event the Partial Termination Procedure shall not
apply.
          14.3 Affirmative Insurance. If at the Closing any Property is subject
to any matter encumbering title thereto other than matters treated under
Section 14.1 or Permitted Exceptions, such matter shall not be deemed grounds
for termination of

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this Agreement or any other remedy if the Title Company will affirmatively
insure against enforcement of such matter against the Property by endorsement
reasonably satisfactory to Purchaser. Except as set forth in Section 14.1,
nothing in this Section 14.3 shall be deemed to create any obligation on the
part of any Seller to satisfy or to cause the Title Company to issue affirmative
insurance over any such liens, encumbrances or matters affecting title which are
not Permitted Exceptions.
          14.4 Full Performance. The acceptance of the Deeds by Purchaser from
each Seller shall be deemed full performance on the part of such Seller of all
of its respective obligations under this Agreement (including all promises,
agreements, conditions, representations and warranties), except as to any such
obligation which is specifically stated in this Agreement to survive the Closing
or is expressly contained in the documents delivered at Closing.
          14.5 Rights of First Refusal. Purchaser acknowledges that, as set
forth in Exhibit B and in addition to the MHOP ROFO, certain of the Properties
are subject to a right of first refusal or right of first offer in favor of an
unaffiliated third party. In the event that a Franchisor exercises such right of
first refusal or right of first offer with respect to a single Hotel, the
Sellers shall not be deemed to be in default under this Agreement, and the
Partial Termination Procedure shall apply with respect to the applicable
Property. In the event that one or more Franchisors exercise such rights of
first refusal or rights of first offer with respect to two or more Hotels,
Purchaser may elect in its sole determination (x) to apply the Partial
Termination Procedure to the applicable Properties or (y) to terminate this
Agreement and have the Deposit returned to it by the Escrow Agent.
     15. Brokers, etc.
          15.1 Sellers’ Representation. The Sellers warrant and represent to
Purchaser that the Sellers dealt with no broker, finder or like agent who might
claim a commission or fee in connection with the transactions contemplated in
this Agreement or on account of introducing the parties, the preparation or
submission of brochures, the negotiation or execution of this Agreement or the
Closing of the transactions contemplated herein, other than Jones Lang LaSalle
Americas, Inc. (“Broker”). The fees of the Broker shall be paid by the Sellers
or their affiliates pursuant to separate agreements between the Sellers or their
affiliates and the Broker. The Sellers agree jointly and severally to indemnify
and hold harmless Purchaser and its successors and assigns from and against any
and all claims, losses, liabilities and expenses, including without limitation
reasonable attorneys’ fees, disbursements and charges, arising out of any claim
or demand for commissions or other compensation for bringing about this
transaction by any broker, finder or similar agent or party, including, without
limitation, the Broker, who claim to have dealt with the Sellers or any
affiliate thereof in connection with this transaction.
          15.2 Purchaser’s Representation. Purchaser warrants and represents to
the Sellers that neither Purchaser, nor any affiliate thereof, has dealt with
any broker, finder or like agent who might claim a commission or fee in
connection with

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the transactions contemplated in this Agreement or on account of introducing the
parties, the preparation or submission of brochures, the negotiation or
execution of this Agreement or the closing of the transactions contemplated
herein, other than the Broker. Purchaser agrees to indemnify and hold harmless
the Sellers and their respective successors and assigns from and against any and
all claims, losses, liabilities and expenses, including without limitation
reasonable attorneys’ fees, disbursements and charges, arising out of any claim
or demand for commissions or other compensation for bringing about this
transaction by any broker, finder or similar agent or party, other than the
Broker, who claims to have dealt with Purchaser or any affiliate thereof in
connection with this transaction.
          15.3 A Real Estate Recovery Fund exists to reimburse any person who
has obtained a final civil judgment against a Pennsylvania real estate licensee
owing to fraud, misrepresentation, or deceit in a real estate transaction and
who has been unable to collect the judgment after exhausting all legal and
equitable remedies. For complete details about the fund, call (7l7) 783-3658 or
(800) 822-2113 (within Pennsylvania) and (717) 783-4854 (outside Pennsylvania).
          15.4 Survival. The provisions of this Section 15 shall survive the
Closing or termination of this Agreement.
     16. Termination of Agreement; Default.
          16.1 Non-Default Termination. If this Agreement shall terminate or be
terminated (excluding any partial termination pursuant to the application of the
Partial Termination Procedure) for any reason other than the default of
Purchaser or the Sellers hereunder, then upon such termination Escrow Agent
shall return to Purchaser the Deposit, together with any interest thereon.
Except for the foregoing, and for those obligations hereunder that are
specifically stated to survive termination hereof, following the termination of
this Agreement neither party shall have any obligations of any nature to the
other hereunder or by reason hereof.
          16.2 Purchaser’s Default. If at the Closing Date the conditions to the
obligations of the Sellers to consummate the Closing as set forth in Section 10
hereof have not been fulfilled on account of the default of Purchaser hereunder,
and such conditions have not been waived by Sellers, and the Closing shall not
occur as a result thereof, then the Sellers shall be entitled as their sole
remedy to receive and retain the Deposit together with all interest, if any,
earned thereon, as liquidated damages for loss of a bargain and not as a
penalty. Purchaser and the Sellers agree that such liquidated damages are based
in part upon the following damages which the Sellers shall suffer on account of
a default by Purchaser and the failure of the Closing to occur, which damages
Purchaser and the Sellers agree are incapable of an exact determination of
amount: the removal of the Properties from the real estate market during the
period of this Agreement and the loss of the possibility of obtaining a new
purchaser during such time at a higher amount; the possibility of being unable
to find a new purchaser for the amount of the Purchase Price after Purchaser’s
default; various restrictions related to the management and maintenance of the
Properties during the period of this Agreement; and the

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53

inconvenience of relisting the Properties for sale. Purchaser acknowledges and
agrees that such liquidated damages shall not be deemed to include or
incorporate any liability of Purchaser in respect of any indemnification
obligation under this Agreement that survives the termination of this Agreement,
and Purchaser shall remain liable for any such indemnification obligations
notwithstanding the receipt by the Sellers of such liquidated damages.
          16.3 Seller’s Default. If at the Closing Date, after any application
of the Partial Termination Procedure the conditions to the obligation of
Purchaser to consummate the Closing as set forth in Section 11 hereof have not
been fulfilled on account of the default of the Sellers hereunder, nor have such
conditions been waived by Purchaser, and the Closing shall not occur as a result
thereof, then Purchaser shall be entitled to pursue, at its election, either of
the following as its sole and exclusive remedy: (i) terminate this Agreement and
have the Deposit returned to it by the Escrow Agent (and in such circumstances
the Sellers shall join with Purchaser in a written instruction to Escrow Agent
to pay the Deposit to Purchaser) or (ii) seek specific performance of the
Sellers’ obligations under this Agreement to consummate the Closing, provided,
however, that Purchaser shall only be entitled to the remedy of specific
performance if (A) Purchaser first gives written notice to the Sellers of the
Sellers’ default and Purchaser’s intention to file an action for specific
performance within ten (10) Business Days after Purchaser first becomes aware of
the default by the Sellers, (B) any suit for specific performance is filed
within sixty (60) days after the scheduled Closing Date, and (C) Purchaser is
not in default under this Agreement. Purchaser hereby waives any right to sue
the Sellers, the Operating Lessee or any of their respective affiliates for
damages (including consequential and punitive damages) for any default
hereunder, but if the Closing occurs, subject to the provisions of Section 8
such waiver shall not apply to damages to which Purchaser may be entitled
hereunder (other than consequential and punitive damages) by reason of any
breach by the Sellers of any of their covenants, warranties or representations
hereunder which expressly survive the Closing.
          16.4 Survival. The provisions of this Section 16 shall survive the
termination of this Agreement.
     17. Expenses of the Transaction.
          17.1 Purchaser’s Expenses. Purchaser shall pay the cost of (i) title
insurance premiums, (ii) Survey costs of updates ordered by Purchaser, (iii) the
sum of one-half of all deed stamps, deed taxes, recording taxes and transfer
taxes imposed in connection with the conveyance of the Properties (collectively,
the “Transfer Taxes”), (iv) sales taxes imposed in connection with any items of
Personal Property, (v) the costs of its due diligence investigation of the
Properties, (vi) all amounts incurred in connection with the assumption or
termination of the Franchise Agreement or the issuance of a new franchise
agreement including, but not limited to, application fees, transfer fees,
termination fees, liquidated damages and costs of implementing a property
improvement plan, (vii) mortgage recording taxes, (viii) all fees and recording
charges, including without limitation the costs of recording any Deeds, except
for those fees and recording charges for which the Sellers are obligated to pay
pursuant to clause (iii) of

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Section 17.2 and (ix) the fees and disbursements of Purchaser’s attorneys.
Purchaser shall pay one-half of the escrow fees of Escrow Agent.
          17.2 Sellers’ Expenses. The Sellers shall pay (i) the cost of the fees
and disbursements of the Sellers’ attorneys in connection with this transaction,
(ii) one-half of all Transfer Taxes, (iii) all fees and recording charges for
releasing title objections which Seller has an obligation to remove pursuant to
this Agreement and (iv) one-half of the escrow fees of Escrow Agent.
          17.3 Other Costs. Any other closing cost not specifically allocated by
this Agreement shall be allocated in accordance with closing customs for similar
properties in the metropolitan area of the applicable Property.
          17.4 Indemnification. Purchaser shall indemnify the Sellers, Operating
Lessee, Manager and their respective affiliates, successors and assigns and the
Sellers shall jointly and severally indemnify Purchaser and its affiliates,
successors and assigns from and against any and all loss, damage, cost, charge,
liability or expense (including court costs and reasonable attorneys’ fees)
which such indemnified party or parties may sustain or incur as a result of the
failure of the indemnifying party or parties to timely pay any of the
aforementioned taxes, fees or other charges for which it has assumed
responsibility under this Section 17.
          17.6 Survival. The provisions of this Section 17 shall survive the
Closing or any termination of this Agreement.
     18. Notices. Except as otherwise provided in this Agreement, all notices,
demands, requests, consents, approvals or other communications which are
required or permitted to be given under this Agreement or which either party
desires to give with respect to this Agreement shall be in writing and shall be
deemed to have been properly given or served if (i) delivered by hand, (ii) sent
by registered or certified mail, postage prepaid, return receipt requested,
(iii) sent by reputable overnight courier service or (iv) transmitted by
facsimile transmission, in each case addressed to the party to be notified as
follows (or to such other address as such party shall have specified at least
ten (10) days prior thereto by like notice):
if to the Sellers, to:
MeriStar Investment Partners, L.P.
c/o Oak Hill Capital Partners
65 East 55th Street, 36th Floor
New York, New York 10022
Attention: Edward V. Dardani
Facsimile No.: 212-754-5685
with a copy at the same time to:

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Interstate Hotels & Resorts, Inc.
4501 N. Fairfax Drive, Suite 800
Arlington, Virginia 22203
Attention: Christopher Bennett
Facsimile No. 703-387-3944
and a copy at the same time to:
Paul, Weiss, Rifkind, Wharton & Garrison LLP
1285 Avenue of the Americas
New York, New York 10019-6064
Attn: Mitchell L. Berg, Esq.
Facsimile No.: 212-492-0048
if to Purchaser, to:
Ashford Hospitality Limited Partnership
14185 Dallas Parkway, Suite 1100
Dallas, Texas 75254
Attn: David A. Brooks
Facsimile No.: 972-490-9605
with a copy at the same time to:
Akin Gump Strauss Hauer & Feld LLP
1700 Pacific Avenue, Suite 4100
Dallas, Texas 75201
Attn: Carl B. Lee, P.C.
Facsimile No.: 214-969-4343
     Notices shall be deemed given when delivered by hand or overnight courier
or telecopied, or if mailed only three (3) Business Days after mailing, with
failure to accept delivery to constitute delivery for purposes hereof.
     19. Further Assurances. Each Seller and Purchaser agrees, at any time and
from time to time after the Closing, to execute, acknowledge, where appropriate,
and deliver such further instruments and documents and to take such other action
as the other party may reasonably request in order to carry out the intents and
purposes of this Agreement, provided that such request is made by notice given
within one (1) year of the Closing Date. If required by the party receiving the
request, the party making the request will bear the reasonable cost involved.
The provisions of this Section 19 shall survive the Closing.
     20. Governing Law. This Agreement shall be construed, interpreted and
enforced in accordance with the laws of the State of New York applicable to
contracts negotiated, executed and to be performed wholly within such State,
except to the extent that the law of the state where an applicable Property is
located mandatorily

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applies. The Sellers and Purchaser consent to the jurisdiction and venue of the
Courts of the State of New York and the United States District Court for the
Southern District of New York in connection with any claim or controversy
arising out of or relating to this Agreement on condition that, with respect to
any federal litigation, the amount in controversy exceeds the requirement in
force as of the date hereof. The agreements and appointments of the parties
pursuant to this Section shall be applicable to all agreements executed and
delivered by the parties in connection with this Agreement and all such
agreements shall so provide.
          20.1 WAIVER OF JURY TRIAL. THE PARTIES HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVE ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT OR
COUNTERCLAIM ARISING IN CONNECTION WITH, OUT OF OR OTHERWISE RELATING TO THIS
AGREEMENT.
          20.2 Acknowledgement; Survival. Each party hereto acknowledges that it
was represented by counsel in connection with this Agreement and the
transactions contemplated herein, that it and its counsel reviewed and
participated in the preparation and negotiation of this Agreement and the
documents and instruments to be delivered hereunder, and that any rule of
construction to the effect that ambiguities are to be resolved against the
drafting party shall not be employed in the interpretation of this Agreement or
the documents and instruments to be delivered hereunder. The obligations of
provisions of this Section 20 shall survive the Closing or termination of this
Agreement.
     21. Entire Agreement; No Third Party Beneficiary, etc. This Agreement,
including all Exhibits, contains the entire agreement between the parties with
respect to the subject matter hereof and supersedes all prior understandings, if
any, with respect thereto. The parties have made no representations with respect
to the subject matter of this Agreement and have given no warranties with
respect to the subject matter hereof except as expressly provided herein and/or
expressly provided in the documents delivered at Closing. This Agreement may not
be modified, changed, supplemented or terminated, nor may any obligations
hereunder be waived, except by written instrument signed by the party to be
charged or by its agent duly authorized in writing or as otherwise expressly
permitted herein. The parties do not intend to confer any benefit hereunder on
any person, firm or corporation other than the parties hereto. The provisions of
this Section 21 shall survive the Closing or termination of this Agreement.
     22. Waivers; Extensions. No waiver of any breach of any agreement or
provision herein contained shall be deemed a waiver of any preceding or
succeeding breach thereof or of any other agreement or provision herein
contained. No extension of time for performance of any obligation or act shall
be deemed an extension of the time for performance of any other obligations or
acts. The provisions of this Section 22 shall survive the Closing or termination
of this Agreement.
     23. Construction. Headings at the beginning of each Section are not a part
of this Agreement. Whenever required by the context of this Agreement, the

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 57
singular shall include the plural and the masculine shall include the feminine
and vice versa. This Agreement shall not be construed as if it had been prepared
by one of the parties, but rather as if both parties had prepared the same. All
Exhibits referred to in this Agreement are attached and incorporated herein by
reference, and any capitalized term used in any Exhibit which is not defined in
such Exhibit shall have the meaning attributed to such term in the body of this
Agreement. In the event the date on which Purchaser or any Seller is required to
take any action under the terms of this Agreement is not a Business Day, the
action shall be taken on the next succeeding Business Day.
     24. Assignment. Purchaser shall not have the right, without the prior
written consent of the Sellers, to assign this Agreement or its rights
hereunder, in whole or in part, to any other person. Notwithstanding the
foregoing, Purchaser shall have the right to designate one or more wholly-owned
subsidiaries of Purchaser to take title to one or more Properties at the
Closing; provided, however, that any such designation by Purchaser shall not
release Purchaser of its obligations under this Agreement unless and until
(x) the Closing shall occur and (y) such designated subsidiary or subsidiaries
shall assume all obligations of Purchaser under this Agreement jointly and
severally pursuant to an assumption agreement reasonably acceptable to the
Sellers; provided further, that in no event shall Purchaser be released of its
obligations under Section 33.4 of this Agreement. The provisions of this
Section 24 shall survive the Closing.
     25. Facsimile; Counterparts. This Agreement may be executed in
counterparts, each of which (or any combination of which, signed by all of the
parties) shall be deemed an original, but all of which, taken together, shall
constitute one and the same instrument. Executed counterparts of this Agreement
exchanged by facsimile transmission shall be fully enforceable.
     26. No Recording. The parties agree that neither this Agreement nor any
memorandum or notice thereof shall be recorded provided that in the event
Purchaser is pursuing the remedy of specific performance under this Agreement,
the foregoing shall not prohibit the filing of a lis pendens.
     27. Escrow.
          27.1 Deposit. The Deposit shall be held in escrow by the Escrow Agent
until the earliest of (a) the Closing, at which time the Deposit shall be
released to the Sellers; (b) ten (10) days after the Escrow Agent shall have
delivered to the non-sending party a copy of a notice sent by one or more
Sellers or Purchaser stating that this Agreement has been terminated and that
the party so notifying the Escrow Agent is entitled to the Deposit, following
which period the Deposit shall be (i) delivered to the Sellers, in the case of a
notice from the Sellers stating that the Sellers are entitled to the Deposit, or
(ii) delivered to Purchaser, in the case of a notice from Purchaser stating that
Purchaser is entitled to the Deposit; provided, in each case, however, that
within such ten (10) day period the Escrow Agent does not receive either a
notice containing contrary instructions from the other party hereto or a court
order restraining the release of all or any portion of the Deposit; or (c) a
joint notice executed by the Sellers and Purchaser is received by the Escrow
Agent, in which event the Escrow Agent shall release the Deposit

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in accordance with the instructions therein contained. The Escrow Agent shall
reasonably promptly deliver a duplicate copy of any notice received by it in its
capacity as Escrow Agent to the Sellers and Purchaser.
          27.2 Deposit Account; Payment of Deposit. The Deposit shall be held by
the Escrow Agent in an interest-bearing money market or bank account (not
separately maintained for this transaction), but the Escrow Agent shall not be
liable for any loss incurred by reason of any such investments. If the Closing
occurs, any interest earned or accrued on the proceeds of the Deposit shall be
paid to the Sellers and credited against the Purchase Price. In the event that
there is no Closing hereunder and the Deposit and interest thereon are to be
paid to the Sellers pursuant to the terms of this Agreement, such payment shall
be made to the Sellers; otherwise, the Deposit and all interest on the proceeds
of the Deposit shall be paid to Purchaser.
          27.3 Disputes. In the event that (i) the Escrow Agent shall have
received a notice containing contrary instructions or a court order as provided
for in Section 27.1 hereof and within the time therein prescribed, or (ii) any
other disagreement or dispute shall arise between the parties hereto resulting
in adverse claims or demands being made for the Deposit and/or interest thereon,
if any, whether or not litigation has been instituted, then and in any such
event the Escrow Agent shall refuse to comply with any claims or demands on it
and continue to hold the Deposit and the interest thereon, if any, as
applicable, until the Escrow Agent receives either (a) a written notice signed
by the Sellers and Purchaser directing the disposition of the Deposit and the
interest thereon, if any, as applicable, or (b) a final order of a court of
competent jurisdiction, entered in a proceeding in which the Sellers, Purchaser
and the Escrow Agent are named as parties, directing the disposition of the
Deposit and the interest thereon, if any, as applicable, in either of which
events the Escrow Agent shall then dispose of the Deposit and the interest
thereon, if any, as applicable, in accordance with said direction. The Escrow
Agent shall not be or become liable in any way to any person or entity for its
refusal to comply with any such claims or demands until and unless it has
received a direction of the nature described in (a) or (b) above. Upon the
taking by the Escrow Agent of any of the actions described in (a) and (b) above,
the Escrow Agent shall be released of and from all liability hereunder.
Notwithstanding the foregoing provisions of this Section 27.3, the Escrow Agent
shall have the following right in the circumstances described in subdivision
(i) or (ii) above: (y) if the Escrow Agent shall have received a written notice
signed by either the Sellers or Purchaser advising that litigation between the
Sellers and Purchaser over entitlement to the Deposit or any portion thereof
and/or the interest thereon, if any, has been commenced, the Escrow Agent may,
on written notice to the Sellers and Purchaser, deposit the Deposit, and the
interest thereon, if any, as applicable, with the clerk of the court in which
such litigation is pending, or (z) the Escrow Agent may, on written notice to
the Sellers and Purchaser, take such affirmative steps as it may, at its option,
elect in order to terminate its duties as escrow agent hereunder, including, but
not limited to, the deposit of the Deposit and interest thereon, if any, as
applicable, with a court of competent jurisdiction and the commencement of an
action in interpleader, the costs thereof to be borne by whichever of the
Sellers or Purchaser is the losing party. Upon the taking by Escrow Agent of
either of the actions described in (y) or

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(z) above, the Escrow Agent shall be released of and from all liability
hereunder except for any previous willful misconduct or gross negligence.
          27.4 Miscellaneous. The Escrow Agent shall not be liable for any error
in judgment or for any act done or omitted by it in good faith, or for any
mistake of fact or law and shall not incur any liability in acting upon any
signature, notice, request, waiver, consent, receipt or other paper or document
in good faith believed by the Escrow Agent to be genuine and is released and
exculpated from all liability hereunder except as aforesaid or for willful
misconduct or gross negligence. The sole responsibility of the Escrow Agent
hereunder shall be to hold and release the Deposit and the interest thereon, if
any, in accordance with the provisions of this Agreement. The Escrow Agent shall
be entitled to consult with counsel in connection with its duties hereunder.
Purchaser and the Sellers jointly and severally agree to reimburse the Escrow
Agent for its reasonable costs and expenses, including attorneys’ fees (either
paid to retained attorneys or representing the fair value of legal services
rendered by the Escrow Agent to itself), incurred as a result of any dispute or
litigation concerning the right to the monies held in escrow as provided herein.
The Escrow Agent has executed this Agreement solely to confirm that it is
holding and will hold the Deposit in escrow pursuant to the provisions of this
Section 27 and for no other purpose.
     28. Confidentiality.
          28.1 Due Diligence Material. Purchaser agrees that, until the Closing
has occurred, all documentation or other information delivered to Purchaser or
its representatives or agents by the Sellers or their representatives or agents
pertaining to the Properties and the other assets referred to herein shall be
kept strictly confidential and will not be used by Purchaser or its
representatives or agents, directly or indirectly, for any purpose other than
the acquisition of the Properties and the other transactions contemplated
hereby. Purchaser may however make appropriate disclosures on a confidential
basis to its investors and lenders and to its and their respective attorneys,
advisors, accountants and consultants engaged in connection with this
transaction or to such other persons or entities to which disclosure is legally
required. The provisions of this Section 28.1 shall be deemed to supersede and
replace any confidentiality agreement executed between the parties or their
respective affiliates in connection with this transaction.
          28.2 Failure to Close. If the Closing fails to occur for any reason
whatsoever, Purchaser shall deliver to the Sellers promptly upon demand at no
cost to the Sellers, all materials and documents previously obtained by
Purchaser from the Sellers (with no retention by Purchaser of copies of any such
materials and documents), and copies of all third-party engineering work, soils
reports, environmental/biological studies, appraisals, and other materials
pertaining to any Property (other than information generated by its counsel) as
Purchaser has prepared or caused to be prepared. Such delivery shall be made
without representation or warranty by Purchaser as to the contents of such items
and the Sellers shall not be entitled to rely on such items.

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          28.3 Press Releases and other Public Statements. Prior to the Closing,
neither party shall, without the prior written consent of the other party(ies)
(which consent shall not be unreasonably withheld), issue any press release or
other public statement (except such statements as may be required by applicable
law, rule or regulation, including, without limitation, the rules of the New
York Stock Exchange) in connection with the transactions contemplated hereby.
From and after the Closing, the parties may issue such a press release or other
public statement provided that the same does not describe the economic terms of
this transaction except to the extent required by law or as approved in writing
by the other party. Notwithstanding anything to the contrary contained in this
Agreement, Purchaser and/or the Sellers or any of their respective direct or
indirect equity owners shall be permitted to file with the Securities and
Exchange Commission one or more current reports on Form 8-K to disclose (i) the
execution of this Agreement as a material agreement under Item 1.01 thereof (and
to file a copy of this Agreement with the Securities and Exchange Commission in
connection therewith), and (ii) the Closing of the transactions contemplated
hereunder.
          28.4 Survival. This Section 28 shall survive the Closing or any
termination of this Agreement.
     29. 1031 Exchange. Purchaser acknowledges that the Sellers have advised
Purchaser that the Sellers are reserving their right to exchange any Property
for other property of like kind and qualifying use within the meaning of
Section 1031 of the Code, and the regulations promulgated thereunder. The
Sellers expressly reserve the right to assign rights, but not obligations, under
this Agreement to a “Qualified Intermediary” as provided in such regulations on
or before the Closing Date. Purchaser agrees to cooperate with the Sellers to
effectuate such exchange but Purchaser shall assume no liability or incur any
expense in connection therewith. The Sellers shall pay all costs and advance all
funds required in connection with such exchange and shall jointly and severally
indemnify, defend, and hold Purchaser harmless from all claims, damages,
liabilities, costs and expenses (including, but not limited to reasonable legal
fees) in connection with such exchange. Purchaser shall in no event be required
to take title to the exchanged property.
     30. Bulk Transfers. The Sellers and Purchaser specifically waive compliance
with any bulk sales provisions of the Uniform Commercial Code as in effect on
the Closing Date in each of the states in which any Property is located. In the
event such waiver is ineffective, the Sellers shall indemnify Purchaser for any
claims made by creditors under the applicable bulk sales laws relating solely to
any pre-Closing payment obligations to such creditors and only in the amount of
the payments due such creditors. The provisions of this Section 30 shall survive
the Closing.
     31. Saturdays, Sundays, Legal Holidays. If the time period by which any
right, option, or election provided under this Agreement must be exercised or by
which any acts or payments required hereunder must be performed or paid, or by
which the Closing must be held, expires on a Saturday, Sunday, or legal or bank
holiday, then such time period shall be automatically extended to the next
regularly scheduled Business Day.

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     32. Attorneys’ Fees. If any litigation between any Seller and Purchaser
shall arise in connection with this Agreement, then the substantially prevailing
party shall be entitled to the payment by the other party of the substantially
prevailing party’s actual reasonable attorneys’ fees and costs related to such
litigation.
     33. Staff.
          33.1 Hotel Employees. The Sellers shall cause the Manager to pay all
wages, payroll taxes and fringe benefits (including vacation pay and sick pay)
to the extent actually earned or accrued as well as social security,
unemployment compensation, health, life and disability insurance as well as
welfare and pension fund contributions, if any, through the time immediately
prior to the beginning of the “day shift” on the Closing Date and Purchaser
shall pay all such amounts which are earned or accrue for services rendered
thereafter. Except as set forth in Section 33.2, the Sellers shall jointly and
severally indemnify, defend and hold Purchaser harmless from and against any
loss, damage, liability, claim, cost or expense (including, without limitation,
reasonable attorneys’ fees) that may be incurred by, or asserted against,
Purchaser after Closing which involves any matter relating to a past or present
Hotel Employee concerning acts or omissions occurring up to the Adjustment
Point, including, but not limited to, the payments required under the prior
sentence. Those Hotel Employees who are offered employment by Purchaser and who
accept such offer of employment shall hereafter be referred to as “Transferred
Employees.” The Purchaser shall pay all wages, salaries, payroll taxes and
contributions due in respect of pension and welfare plans, if any, and other
fringe benefits, if any, implemented by Purchaser or its management company for
all Transferred Employees which are first earned or first accrue for services
rendered by such Employees to the applicable Hotel from and after the Closing
Date. Purchaser shall indemnify, defend and hold the Sellers harmless from and
against any loss, damage, liability, claim, cost or expense (including, without
limitation, reasonable attorney’s fees) that may be incurred by, or asserted
against, any such party after Closing which involves any matter relating to a
Hotel Employee concerning acts or omissions occurring from and after the
Adjustment Point, including, without limitation, any severance obligations and
any payment required to be made by Purchaser under this Section 33. For purposes
of this Section 33.1 and Section 33.2, a loss, damage, liability, claim, cost or
expense shall be deemed incurred when the matter giving rise to the claim occurs
(e.g., in the case of life insurance, when the death occurs, in the case of
long-term disability benefits, when the disability first arises and, in the case
of a hospital stay, when the employee first enters the hospital).
          33.2 WARN Act. Purchaser acknowledges that neither the Manager, the
Sellers nor the Operating Lessee is giving any notice under, or otherwise
complying with, the Worker Adjustment and Retraining Notification Act (together
with all rules and regulations promulgated thereunder, the “WARN Act”) or any
similar state or local Legal Requirements (including without limitation the
California WARN Act). Purchaser agrees to indemnify and defend the Sellers, the
Operating Lessee and the Manager and their respective affiliates, and hold each
of them harmless, from and against any and all loss, damage, liability, claim,
cost or expense (including, without limitation, reasonable attorneys’ fees)
incurred by any of such parties as a result of (i) the failure to

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give the notices referred to in this Section 33.2 or otherwise comply with the
WARN Act or any similar state or local Legal Requirements (including without
limitation the California WARN Act), including, but not limited to, the closing
of any Hotel by Purchaser or any of its affiliates within a period of ninety
(90) days after the Closing Date which would result in either (a) a “plant
closing” as defined in the WARN Act or (b) a violation under other applicable
Legal Requirements (including, without limitation, the California WARN Act) or
(ii) the failure of Purchaser to comply with the provisions of this
Section 33.2.
          33.3 Collective Bargaining Agreements. The Purchaser shall assume each
Collective Bargaining Agreement and agree to perform the obligations thereunder
arising from and after the Closing Date.
          33.4 ERISA Section 4204 Compliance. The Collective Bargaining
Agreements provide that the Manager or Interstate, as the case may be, must make
contributions to the “multiemployer plan” (within the meaning of Section 3(37)
of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”)
(each, a “Multiemployer Plan”) pension funds described in the Collective
Bargaining Agreements (each such fund, a “Fund”). At the Closing, the Purchaser
shall assume the Manager’s or Interstate’s, as the case may be, responsibility
for, and shall pay when due, all contributions required to be made to each Fund
with respect to the operations of each Hotel covered by a Collective Bargaining
Agreement for all periods on and after the Closing Date, and the Purchaser
further agrees that it shall make or cause to be made contributions to each Fund
with respect to the operations of the Hotel covered by such Collective
Bargaining Agreement for substantially the same number of contribution base
units for which the Manager or Interstate had an obligation to contribute with
respect to such Fund. In addition, with respect to each Fund, the Purchaser
shall take or cause to be taken all actions necessary to comply with
Section 4204 of ERISA, including, without limitation, (i) the posting, prior to
the Closing, of a bond or escrow in an amount, for the period of time and in a
form which complies with Section 4204(a)(1)(B) of ERISA, or (ii) prior to the
Closing, the obtaining of a variance from such bonding or escrow requirement
from the Fund or from the Pension Benefit Guaranty Corporation (the “PBGC”),
such that the transfer of contribution obligations to the Purchaser as described
above, and the other transactions contemplated by this Agreement, do not result
in a complete or partial withdrawal from any Fund under ERISA. The Purchaser
shall not be obligated to provide any bond or escrow described above in the
event and to the extent that the Purchaser obtains from the PBGC or the
applicable Fund a proper variance or exemption under Section 4204(c) of ERISA
and the applicable regulations thereunder, provided any and all requirements of
said variance or exemption are met. The Manager and Interstate agree to
reasonably cooperate with and assist the Purchaser in connection with any
application for such a variance or exemption made by the Purchaser to the PBGC
or the Funds. The Manager, Interstate, MIP Philadelphia, LP, MIP Anchorage, LLC
and the Operating Lessee acknowledge and agree that if (i) the Purchaser
completely or partially withdraws from any Fund with respect to the applicable
Hotel within five (5) plan years of such Fund commencing with the first (1st)
plan year of such Fund beginning after the Closing (the “Applicable Period”) and
(ii) the Purchaser fails to

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make any withdrawal liability payment in respect thereof when due, the Manager,
Interstate, MIP Philadelphia, LP (solely with respect to the transactions
contemplated by this Agreement with respect to the Hotel in Philadelphia,
Pennsylvania), MIP Anchorage, LLC (solely with respect to the transactions
contemplated by this Agreement with respect to the Hotel in Anchorage, Alaska)
and the Operating Lessee (and, to the extent required by Section 4204 of ERISA,
each other member of their respective “controlled groups,” as determined under
Section 4001(a)(14)(A) of ERISA, as in effect at the Closing) shall be
secondarily liable to such Fund in an amount equal to the withdrawal liability
that the Manager, Interstate or any of them would have had to such Fund under
Part 1 of Subtitle E of ERISA as of the Closing with respect to the applicable
Hotel (but for the application of Section 4204 of ERISA to the transactions
contemplated by this Agreement). If the Purchaser (or any successor) shall
withdraw (whether in a complete or partial withdrawal) from a Fund during the
Applicable Period with respect to such Fund, the Manager, Interstate, the
Operating Lessee, the Sellers and their respective affiliates shall each have
the right, but not the obligation, to pay the Purchaser’s (or the successor’s,
as the case may be) withdrawal liability with respect to such Fund, in which
event, and in addition to any and all other remedies available hereunder, the
Purchaser shall indemnify the party making such payment for (i) the cost of such
payment and (ii) all related claims, damages, losses, liabilities, costs and
expenses (including reasonable attorneys’ fees). The Purchaser shall in all
events indemnify, defend and hold harmless the Manager, Interstate, the
Operating Lessee, the Sellers, their affiliates and the members of their
respective “controlled groups,” as determined under Section 4001(a)(14)(A) of
ERISA from and against any and all claims, damages, losses, liabilities, costs
and expenses (including reasonable attorneys’ fees) which any of them may incur
as a result of the complete or partial withdrawal by the Purchaser (or any
successor) from such Fund with respect to the applicable Hotel or the failure by
the Purchaser (or any successor) to make contributions or withdrawal liability
payment to such Fund when due with respect to all periods on and after the
Closing Date. The parties to this Agreement shall cooperate to effectuate the
application of the provisions of Section 4204 of ERISA to the transactions
contemplated by this Agreement.
          33.5 Survival. The provisions of this Section 33 shall survive the
Closing.
     34. Indemnification. Any party entitled to indemnification by the other
party pursuant to any provision of this Agreement or under any instrument or
document executed and delivered pursuant hereto (the “Protected Party”) shall
give prompt notice to the other party (the “Indemnifying Party”) of any claim,
demand or action asserted, made or instituted against the Protected Party which
is covered by such indemnification; provided, however, that the Protected
Party’s failure to do so shall not relieve the Indemnifying Party of its
indemnification obligations except to the extent that the Indemnifying Party has
been materially prejudiced by such failure. The Indemnifying Party shall have
the right, by notice to the Protected Party, to assume the defense of any claim,
demand or action with respect to which the Protected Party is entitled to
indemnification hereunder, but only if, in such notice, the Indemnifying Party
acknowledges that such claim, demand or action is covered by the indemnity in
question.

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If the Indemnifying Party gives such notice, (i) such defense shall be conducted
by counsel selected by the Indemnifying Party and approved by the Protected
Party, such approval not to be unreasonably withheld or delayed (provided,
however, that the Protected Party’s approval shall not be required with respect
to counsel designated by the Indemnifying Party’s insurer), (ii) so long as the
Indemnifying Party is conducting such defense with reasonable diligence, the
Indemnifying Party shall have the right to control said defense and shall not be
required to pay the fees or disbursements of any counsel engaged by the
Protected Party for services rendered after the Indemnifying Party has given the
notice provided for above to the Protected Party or prior to the time that the
Protected Party has given to the Indemnifying Party the notice required by the
first sentence of this Section 34, and (iii) the Indemnifying Party shall have
the right, without the consent of the Protected Party, to settle such claim,
demand or action, but only provided that the Indemnifying Party pays all amounts
due in connection with or by reason of such settlement and, as part thereof, the
Protected Party is unconditionally released from all liability in respect of
such claim, demand or action. The Protected Party shall have the right to
participate in the defense of any claim, demand or action being defended by the
Indemnifying Party at the expense of the Protected Party, but the Indemnifying
Party shall have the right to control such defense. In no event shall the
Protected Party (a) settle any such claim, demand or action without the consent
of the Indemnifying Party or (b) if any such claim, demand or action is covered
by the Indemnifying Party’s liability insurance, take or omit to take any action
which would cause the insurer not to defend such claim, demand or action or to
disclaim liability in respect thereof. The provisions of this Section 34, shall
survive the Closing or any termination of this Agreement.
     35. USA Patriot Act. None of the funds to be used for payment of the
Purchase Price will be subject to 18 U.S.C. §§ 1956-1957 (Laundering of Money
Instruments), 18 U.S.C. §§ 981-986 (Federal Asset Forfeiture), 18 U.S.C. §§ 881
(Drug Property Seizure), Executive Order Number 13224 on Terrorism Financing,
effective September 24, 2001, or the USA PATRIOT Act. Neither the Purchaser nor
any of the Sellers is, and at Closing neither Purchase nor any of the Sellers
nor any persons or entities owning direct or indirect controlling equity
interests of any of the foregoing entities shall be, persons or entities with
whom U.S. persons are restricted from doing business with under the regulations
of the Office of Foreign Asset Control (“OFAC”) of the Department of Treasury
(including those named on OFAC’s Specially Designated and Blocked Persons list)
or under any statute, executive order (including the September 24, 2001
Executive Order Blocking Property and Prohibiting Transaction With Persons Who
Commit, Threaten to Commit, or Support Terrorism), the USA PATRIOT Act, or other
governmental action.
     36. Tort Indemnity. The Seller’s and the Operating Lessee shall indemnify,
defend and hold harmless Purchaser and its permitted assignees from and against
any reasonable third party out-of-pocket cost or expense incurred by Purchaser
or its permitted assignees (including reasonable attorney’s fees) arising from
third-party personal injury claims commenced after the Closing (or prior to the
Closing to which the Purchaser is joined after the Closing Date) but only to the
extent (x) the alleged injury

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occurred prior to the Closing, (y) such claim(s) is filed within one year from
and after the Closing Date and (z) Purchaser notifies the Sellers of such
claim(s) within one year and thirty (30) days from the Closing Date. In no event
shall the foregoing indemnity apply to injuries which occur after the Closing
even if the conditions which allegedly gave rise to, or contributed to, such
injury existed prior to the Closing. The provisions of this Section 36 shall
survive the Closing.
     37. Highway Access. Access to a public road in Pennsylvania may require
issuance of a highway occupancy permit from the Pennsylvania Department of
Transportation and/or from the Streets Department of the City of Philadelphia.
     38. Successors and Assigns This Agreement and the various rights and
obligations arising hereunder shall inure to the benefit of and be binding upon
the parties hereto and their respective successors and permitted assigns,
provided, however, that none of the representations or warranties made by the
Sellers or Operating Lessee hereunder shall inure to the benefit of any person
or entity that may succeed to Purchaser’s (or its designee’s) interest in any
Property after the Closing Date (other than to designees permitted under
Section 24). The provisions of this Section 38 shall survive the Closing.
     39. Real Estate Reporting Person The Title Company is hereby designated the
“real estate reporting person” for purposes of Section 6045 of Title 26 of the
United States Code and Treasury Regulation 1.6045-4 and any instructions or
settlement statement prepared by Title Company shall so provide. Upon the
consummation of the transactions contemplated by this Agreement, Title Company
shall file Form 1099 information return and send the statement to the Sellers as
required under the aforementioned statute and regulation. The Sellers and
Purchaser shall promptly furnish their federal tax identification numbers to
Title Company and shall otherwise reasonably cooperate with Title Company in
connection with Title Company’s duties as real estate reporting person.

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     IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the
day and year first above written.

            SELLERS:

MIP BLOOMINGTON, LLC,
a Delaware limited liability company
      By:   /S/ CHRISTOPHER BENNETT         Name:   Christopher Bennett       
Title:   Secretary        MIP IOWA CITY, LLC
a Delaware limited liability company
      By:   /S/ CHRISTOPHER BENNETT         Name:   Christopher Bennett       
Title:   Secretary        MIPS SAN DIEGO, LLC
a Delaware limited liability company
      By:   /S/ CHRISTOPHER BENNETT         Name:   Christopher Bennett       
Title:   Secretary        MIP TRUMBULL, LLC
a Delaware limited liability company
      By:   /S/ CHRISTOPHER BENNETT         Name:   Christopher Bennett       
Title:   Secretary   

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            MIP ANCHORAGE, LLC,
a Delaware limited liability company
      By:   /S/ CHRISTOPHER BENNETT         Name:   Christopher Bennett       
Title:   Secretary        MIP WALNUT CREEK, LLC
a Delaware limited liability company
      By:   /S/ CHRISTOPHER BENNETT         Name:   Christopher Bennett       
Title:   Secretary        MIP PHILADELPHIA, LP,
a Pennsylvania limited partnership
      By:   MIP Philadelphia GP, Inc.,         a Delaware corporation,       
its general partner              By:   /S/ CHRISTOPHER BENNETT         Name:  
Christopher Bennett        Title:   Secretary        PURCHASER:

ASHFORD HOSPITALITY LIMITED PARTNERSHIP,
a Delaware limited partnership
      By:   Ashford OP General Partner LLC,         a Delaware limited liability
company,         its general partner     

                     By:   /S/ DAVID BROOKS         Name:   David Brooks       
Title:   Vice President   

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     The undersigned is executing this Agreement solely to acknowledge its
obligations under this Agreement:

                      MIP LESSEE, LP            
 
                    By:   MIP GP, LLC,             a Delaware limited liability
company,             a general partner        
 
                        By:   /S/ CHRISTOPHER BENNETT        
 
      Name:   Christopher Bennett        
 
      Title:   Secretary        

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     Each of the undersigned is executing this Agreement solely (i) to
acknowledge their respective obligations under Section 33.4 of this Agreement
and (ii) in the case of Manager, to agree to perform any actions which under the
provisions of this Agreement are to be performed by the Manager:

                  INTERSTATE HOTELS & RESORTS, INC.        
 
                By:   /S/ CHRISTOPHER BENNETT        
 
  Name:   Christopher Bennett        
 
  Title:   EVP and General Counsel        

                          INTERSTATE MANAGEMENT COMPANY, L.L.C        
 
                        By:   INTERSTATE OPERATING COMPANY, L.P.,            
its member        
 
                            By:   INTERSTATE HOTELS & RESORTS, INC.,            
    a general partner        
 
                                By:   /S/ CHRISTOPHER BENNETT        
 
          Name:   Christopher Bennett        
 
          Title:   EVP and General Counsel        

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     The undersigned is executing this Agreement solely to acknowledge its
receipt of the Deposit and to evidence its agreement to be bound by the
provisions of Section 27 hereof:
CHICAGO TITLE INSURANCE COMPANY

             
By:
           
 
       
 
  Name:        
 
  Title: