Exhibit 10.33.1
EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
MS RESORT HOLDINGS LLC,
MS RESORT ACQUISITION LLC,
MS RESORT PURCHASER LLC,
ASHFORD SAPPHIRE ACQUISITION LLC
AND
CNL HOTELS & RESORTS, INC.
DATED AS OF JANUARY 18, 2007

 

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TABLE OF CONTENTS

              Page  
ARTICLE I
       
DEFINITIONS; INTERPRETATION
       
 
       
Section 1.1 Definitions
    2  
Section 1.2 Interpretation
    11  
 
       
ARTICLE II
       
THE MERGER
       
 
       
Section 2.1 The Merger
    11  
Section 2.2 Closing
    11  
Section 2.3 Effective Time
    12  
Section 2.4 Effects of the Merger
    12  
Section 2.5 Charter and Bylaws; Officers and Directors
    12  
Section 2.6 Tax Treatment
    12  
 
       
ARTICLE III
       
EFFECT OF THE MERGER
       
 
       
Section 3.1 Effect on Stock
    13  
Section 3.2 Paying Agent; Exchange Procedures
    14  
 
       
ARTICLE IV
       
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
       
 
       
Section 4.1 Organization; Minute Books
    16  
Section 4.2 Subsidiaries
    17  
Section 4.3 Capital Structure
    17  
Section 4.4 Authority
    18  
Section 4.5 Consents and Approvals; No Violations
    18  
Section 4.6 SEC Documents and Other Reports
    19  
Section 4.7 Absence of Material Adverse Effect
    20  
Section 4.8 Information Supplied
    21  
Section 4.9 Compliance with Laws
    21  
Section 4.10 Tax Matters
    21  
Section 4.11 Benefit Plans
    24  
Section 4.12 Litigation
    26  
Section 4.13 State Takeover Statutes
    26  
Section 4.14 Intellectual Property
    26  
Section 4.15 Properties
    27  
Section 4.16 Environmental Laws
    29  
Section 4.17 Employment and Labor Matters
    30  
Section 4.18 Material Contracts
    31  
Section 4.19 Insurance Policies
    33  
Section 4.20 Affiliate Transactions
    33  
Section 4.21 Opinion of the Company’s Financial Advisors
    33  
Section 4.22 Brokers
    34  

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TABLE OF CONTENTS
(continued)

              Page  
ARTICLE V
       
REPRESENTATIONS AND WARRANTIES OF PARENT, SUB AND MISSOURI
       
 
       
Section 5.1 Organization
    34  
Section 5.2 Authority
    34  
Section 5.3 Consents and Approvals; No Violations
    34  
Section 5.4 Information Supplied
    35  
Section 5.5 Litigation
    35  
Section 5.6 Capitalization of Sub
    35  
Section 5.7 Financing
    35  
Section 5.8 Brokers
    36  
Section 5.9 Certain Tax Matters
    36  
 
       
ARTICLE VI
       
REPRESENTATIONS AND WARRANTIES OF ARIZONA
       
 
       
Section 6.1 Organization
    36  
Section 6.2 Authority
    36  
Section 6.3 Consents and Approvals; No Violations
    36  
Section 6.4 Information Supplied
    37  
Section 6.5 Litigation
    37  
Section 6.6 Financing
    37  
Section 6.7 Brokers
    38  
 
       
ARTICLE VII
       
COVENANTS RELATING TO CONDUCT OF BUSINESS
       
 
       
Section 7.1 Conduct of Business by the Company Pending the Merger
    38  
Section 7.2 Acquisition Proposals.
    42  
Section 7.3 Actions by Parent and Conduct of Business of Sub Pending the Merger
    45  
 
       
ARTICLE VIII
       
ADDITIONAL AGREEMENTS
       
 
       
Section 8.1 Employee Benefits
    45  
Section 8.2 Deferred Share Awards
    46  
Section 8.3 Preparation of Proxy Statement; Stockholder Approval
    46  
Section 8.4 Access to Information; Confidentiality
    47  
Section 8.5 Fees and Expenses
    48  
Section 8.6 Public Announcements
    51  
Section 8.7 Transfer Taxes
    51  
Section 8.8 State Takeover Laws
    51  
Section 8.9 Indemnification; Directors and Officers Insurance
    52  
Section 8.10 Reasonable Best Efforts
    53  
Section 8.11 Financing
    54  
Section 8.12 Notification of Certain Matters
    56  
Section 8.13 Buyer Party Vote
    56  

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TABLE OF CONTENTS
(continued)

              Page  
Section 8.14 Additional Tax Matters.
    57  
Section 8.15 Certain Litigation Matters
    57  
Section 8.16 Resignations
    57  
Section 8.17 Third Party Consents
    57  
Section 8.18 Suspension or Termination of Reinvestment Plan and Redemption Plan
    58  
Section 8.19 Asset Sales
    58  
 
       
ARTICLE IX
       
CONDITIONS PRECEDENT
       
 
       
Section 9.1 Conditions to Each Party’s Obligation to Effect the Transactions
    58  
Section 9.2 Conditions to the Obligations of the Company to Effect the
Transactions
    59  
Section 9.3 Conditions to the Obligations of the Buyer Parties to Effect the
Transactions
    59  
 
       
ARTICLE X
       
TERMINATION AND AMENDMENT
       
 
       
Section 10.1 Termination
    61  
Section 10.2 Effect of Termination
    62  
Section 10.3 Extension; Waiver
    62  
 
       
ARTICLE XI
       
GENERAL PROVISIONS
       
 
       
Section 11.1 Non-Survival of Representations and Warranties and Agreements
    63  
Section 11.2 Notices
    63  
Section 11.3 Counterparts
    64  
Section 11.4 Entire Agreement; No Third-Party Beneficiaries
    64  
Section 11.5 Assignment
    65  
Section 11.6 Governing Law; Venue; Waiver of Jury Trial
    65  
Section 11.7 Severability
    65  
Section 11.8 Enforcement of this Agreement.
    66  
Section 11.9 Obligations of Subsidiaries
    66  
Section 11.10 Interpretation; Construction
    66  
Section 11.11 Amendment; Consents
    67  
 
       
ARTICLE XII
       
SALE OF SPECIFIED ASSETS
       
 
       
Section 12.1 Entry into Parent Asset Purchase Agreement
    67  
Section 12.2 Entry into Arizona Asset Purchase Agreement
    67  
Section 12.3 Declaration of Special Dividend
    68  
Section 12.4 Payment of Special Dividend
    68  
Section 12.5 Right to Structure Asset Sales as Purchase of Ownership Interests
    68  

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EXHIBITS
Exhibit A: Form of Guaranty
Exhibit B: Form of Tax Opinion
Exhibit C: Form of Parent Asset Purchase Agreement
Exhibit D: Form of Arizona Asset Purchase Agreement

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AGREEMENT AND PLAN OF MERGER
     AGREEMENT AND PLAN OF MERGER, dated as of January 18, 2007 (this
“Agreement”), by and among MS Resort Holdings LLC, a Delaware limited liability
company (“Parent”), MS Resort Acquisition LLC, a Delaware limited liability
company and a wholly-owned subsidiary of Parent (“Sub”), MS Resort Purchaser
LLC, a Delaware limited liability company and wholly-owned subsidiary of Parent
(“Missouri”), Ashford Sapphire Acquisition LLC, a Delaware limited liability
company (“Arizona”), and CNL Hotels & Resorts, Inc., a Maryland corporation (the
“Company”). Except as otherwise set forth herein, capitalized terms used herein
shall have the meanings set forth in Section 1.1. Parent, Sub, Missouri and
Arizona are hereinafter collectively referred to as the “Buyer Parties”.
W I T N E S S E T H:
     WHEREAS, the board of directors of the Company (the “Board”), has declared
that it is advisable and in the best interests of the Company and the
stockholders of the Company, to enter into this Agreement to provide for the
Merger (as defined below) and Asset Sales (as defined below) on the terms and
conditions set forth in this Agreement;
     WHEREAS, on the next day immediately following completion of the Parent
Asset Sale and Arizona Asset Sale (each as hereinafter defined) the Company and
Sub wish to effect a business combination through a merger of Sub with and into
the Company (the “Merger”), in accordance with the Maryland General Corporation
Law (the “MGCL”) and the Delaware Limited Liability Company Act (the “DLLCA”),
upon the terms and subject to the conditions set forth in this Agreement,
whereby each issued and outstanding share of common stock, par value $0.01 per
share, of the Company (the “Company Common Stock” or the “Shares”), other than
Dissenting Shares (as defined herein) and Shares owned directly or indirectly by
Parent, will be converted into the right to receive cash in an amount equal to
the Per Share Merger Consideration;
     WHEREAS, the Board approved the execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated hereby,
including the Merger, the Parent Asset Sale and the Arizona Asset Sale
(collectively, the “Transactions”), in accordance with the MGCL, upon the terms
and subject to the conditions contained herein and resolved to recommend
approval of the Merger by the stockholders of the Company;
     WHEREAS, the sole member of Parent and Parent, as the sole member of Sub
and Missouri, have; (a) approved this Agreement and declared it advisable for
Parent, Sub and Missouri to enter into this Agreement and (b) approved the
execution, delivery and performance of this Agreement by Parent, Sub and
Missouri and the consummation of the transactions contemplated hereby, including
the Merger and the Parent Asset Sale, in accordance with the DLLCA, upon the
terms and conditions contained herein;
     WHEREAS, the board of managers of Arizona has (a) approved this Agreement
and declared it advisable for Arizona to enter into this Agreement and
(b) approved the execution,

 

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delivery and performance of this Agreement and the consummation of the Arizona
Asset Sale upon the terms and conditions contained herein;
     WHEREAS, concurrently with the execution of this Agreement, the Guarantors
have delivered to the Company a joint and several guaranty (the “Guaranty”) of
the obligations arising under this Agreement of the Buyer Parties in the form
attached as Exhibit A to this Agreement; and
     WHEREAS, the parties intend that for federal, and applicable state and
local, income tax purposes the Merger will be treated as a taxable sale of the
Shares.
     NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements herein contained, and intending to be legally bound hereby, each
of Parent, Sub, Missouri, Arizona and the Company hereby agrees as follows:
ARTICLE I
DEFINITIONS; INTERPRETATION
     Section 1.1 Definitions. As used in this Agreement, the following terms
have the meanings specified or referred to in this Section 1.1 and shall be
equally applicable to both the singular and plural forms. Any agreement referred
to below shall mean such agreement as amended, supplemented or modified from
time to time to the extent permitted by the applicable provisions thereof and by
this Agreement.
     “Access” shall have the meaning set forth in Section 8.4.
     “Acquisition Proposal” shall have the meaning set forth in Section 7.2(d).
     “Affiliate” means, with respect to any Person, any other Person that, at
the time of determination, directly or indirectly Controls, is Controlled by or
is under common Control with such Person.
     “Aggregate Award Amount” shall have the meaning set forth in Section 8.2.
     “Agreement” shall have the meaning set forth in the introductory paragraph
of this Agreement.
     “Arizona” shall have the meaning set forth in the introductory paragraph of
this Agreement.
     “Arizona Asset Purchase Agreement” shall have the meaning set forth in
Section 12.2.
     “Arizona Asset Sale” shall have the meaning set forth in Section 12.2.
     “Arizona Commitment Letters” shall have the meaning set forth in
Section 6.6.
     “Arizona Debt Financing” shall have the meaning set forth in Section 6.6.
     “Articles of Merger” shall have the meaning set forth in Section 2.3.

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     “Asset Sale Time” means the time at which the first of the Asset Sales is
consummated.
     “Asset Sales” means the Parent Asset Sale and the Arizona Asset Sale.
     “Benefit Plan” means any bonus, pension, profit sharing, deferred
compensation, incentive compensation, stock ownership, stock purchase, stock
option, phantom stock, deferred stock, retirement, vacation, severance,
disability, death benefit, hospitalization, medical, employee stock purchase,
stock appreciation, restricted stock or other employee benefit plan, program,
agreement or arrangement as to which the Company or any of its Subsidiaries
sponsors, maintains, contributes or is obligated to contribute for the benefit
of any current or former employee, officer, director, consultant or independent
contractor of the Company or any of its Subsidiaries, including any ERISA
Benefit Plan.
     “Board” shall have the meaning set forth in the first recital of this
Agreement.
     “Board Recommendation” shall have the meaning set forth in Section 4.4(b).
     “Business Day” means any day other than a Saturday or Sunday or a day on
which banks are required or authorized to close in the City of New York.
     “Buyer Parties” shall have the meaning set forth in the introductory
paragraph of this Agreement.
     “Certificate” shall have the meaning set forth in Section 3.1(c).
     “Change in Recommendation” shall have the meaning set forth in
Section 7.2(e).
     “Closing” shall have the meaning set forth in Section 2.2.
     “Closing Date” shall have the meaning set forth in Section 2.2.
     “Code” means the U.S. Internal Revenue Code of 1986, as amended.
     “Company” shall have the meaning set forth in the introductory paragraph of
this Agreement.
     “Company Bylaws” shall have the meaning set forth in Section 4.1(b).
     “Company Charter” shall have the meaning set forth in Section 4.1(b).
     “Company Common Stock” shall have the meaning set forth in the second
recital of this Agreement.
     “Company Expenses” shall have the meaning set forth in Section 8.5(c).
     “Company Intellectual Property” shall have the meaning set forth in Section
4.14.
     “Company Letter” means the letter from the Company to the Buyer Parties
dated the date hereof, which letter relates to this Agreement and is designated
therein as the Company Letter.

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     “Company Preferred Stock” shall have the meaning set forth in Section 4.3.
     “Company Properties” means, collectively, the Leased Real Property and the
Owned Real Property.
     “Company Subsidiary REIT” shall mean CNL Hotel Investors, Inc., a Maryland
corporation.
     “Company SEC Documents” shall have the meaning set forth in Section 4.6(a).
     “Company Stock Plan” shall have the meaning set forth in Section 4.3.
     “Company Stockholder Approval” shall have the meaning set forth in Section
8.3(b).
     “Company Title Insurance Policies” means policies of title insurance issued
and insuring, as of the effective date of each such policy, the Company’s or its
applicable Subsidiary’s title to or leasehold interest in the Company
Properties.
     “Confidentiality Agreement” shall have the meaning set forth in
Section 8.4.
     “Contract” means any note, bond, mortgage, indenture, contract, agreement,
lease, license, permit, franchise or other binding commitment, instrument or
obligation.
     “Control” means, as to any Person, the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of voting securities, by contract or otherwise. The terms “Controlled
by,” “under common Control with” and “Controlling” shall have correlative
meanings.
     “Counterproposal” shall have the meaning set forth in Section 7.2(e).
     “Debt Financing” means the Arizona Debt Financing and the Parent Financing.
     “Deferred Share Awards” means deferred shares of Company Common Stock
granted under the Company Stock Plan.
     “Delaware Certificate of Merger” shall have the meaning set forth in
Section 2.3.
     “Dissenting Shares” shall have the meaning set forth in Section 3.1(d).
     “Dissenting Stockholder” shall have the meaning set forth in
Section 3.1(d).
     “DLLCA” shall have the meaning set forth in the second recital of this
Agreement.
     “DSOS” shall have the meaning set forth in Section 2.3.
     “Effective Time” shall have the meaning set forth in Section 2.3.

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     “Environmental Laws” means all Laws relating to the protection of the
environment, including the soil, subsurface strata, sediment, surface water or
groundwater, or relating to the protection of human health from exposure to
Hazardous Substances.
     “ERISA” means the Employee Retirement Income Security Act of 1974, as
amended, together with the rules and regulations promulgated thereunder.
     “ERISA Benefit Plan” means a Benefit Plan that is also an “employee pension
benefit plan” (as defined in Section 3(2) of ERISA) or that is also an “employee
welfare benefit plan” (as defined in Section 3(1) of ERISA).
     “Escrowed Amount” shall have the meaning set forth in Section 8.5(e).
     “Exchange Act” means the Securities Exchange Act of 1934, as amended,
together with the rules and regulations promulgated thereunder.
     “Exchange Fund” shall have the meaning set forth in Section 3.2(a).
     “Excess Shares” shall have the meaning set forth in Section 4.3.
     “Final Condition Satisfaction Date” shall have the meaning set forth in
Section 12.1.
     “GAAP” means United States generally accepted accounting principles and
practices as in effect from time to time consistently applied.
     “Governmental Entity” means any federal, state, provincial, local or
foreign government, any governmental, regulatory or administrative authority,
agency or commission, or any court, tribunal or other judicial body (including
any political or other subdivision, department or branch of any of the
foregoing).
     “Guaranty” shall have the meaning set forth in the sixth recital of this
Agreement.
     “Guarantors” shall mean the guarantors under that certain Guaranty, dated
as of the date hereof, the form of which is attached hereto as Exhibit A.
     “Hazardous Substances” means (i) regardless of whether subject to the
jurisdiction of a Governmental Entity, those substances defined in or regulated
under the following United States federal statutes and their state counterparts
and all regulations thereunder, including the Resource Conservation and Recovery
Act, the Comprehensive Environmental Response, Compensation and Liability Act,
the Clean Water Act, the Safe Drinking Water Act, the Atomic Energy Act, the
Clean Air Act; the Oil Pollution Act and the Toxic Substances Control Act,
(ii) natural gas, petroleum and petroleum products, including crude oil and any
fractions thereof and waste oil; (iii) polychlorinated biphenyls, asbestos and
radon; and (iv) any other pollutant, contaminant, substance, material, waste or
condition regulated by any Governmental Entity pursuant to any Environmental
Law.
     “Hotel Contracts” means all material service contracts, material
maintenance contracts, and other material contracts or agreements, including
material equipment leases capitalized for

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accounting purposes, in each case with respect to the ownership, maintenance,
operation, provisioning, or equipping of the Company Properties and material
guaranties relating thereto, if any.
     “HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended.
     “Indebtedness” means (a) indebtedness of the Company or any of its
Subsidiaries for borrowed money (including the aggregate principal amount
thereof and the aggregate amount of any accrued but unpaid interest thereon),
(b) obligations of the Company or any of its Subsidiaries evidenced by bonds,
notes, debentures, letters of credit or similar instruments and (c) all
obligations of the Company or any of its Subsidiaries to guarantee any of the
foregoing types of payment obligations on behalf of any Person other than the
Company or any of its Subsidiaries.
     “Indemnified Person” shall have the meaning set forth in Section 8.9(a).
     “Intellectual Property” means intellectual property or other proprietary
rights of any kind, including (a) all patents, patent applications and patent
disclosures, together with all reissuances, continuations, provisionals,
continuations-in-part, divisions, revisions, extensions and reexaminations
thereof (collectively, “Patents”), (b) all trademarks, service marks, logos,
trade names, corporate names, domain names, trade dress, including all goodwill
associated therewith, and all applications, registrations and renewals in
connection therewith (collectively, “Marks”), (c) all copyrights and
copyrightable works and all applications, registrations and renewals in
connection therewith (collectively, “Copyrights”), (d) all trade secrets and
confidential business and technical information (including research and
development, know-how, formulas, compositions, manufacturing and production
processes and techniques, methods, schematics, technology, technical data,
designs, drawings, flowcharts, block diagrams, specifications, customer and
supplier lists, pricing and cost information and business and marketing plans
and proposals) (collectively, “Trade Secrets”) and (e) all computer data and
software (including databases and related documentation).
     “IRS” means the U.S. Internal Revenue Service.
     “Knowledge” means, (i) with respect to the Company, the actual knowledge of
the Company’s chief executive officer; president and chief operating officer;
executive vice president, chief financial officer and treasurer; executive vice
president of portfolio management & administration; executive vice president,
chief general counsel and corporate secretary; and vice president of tax;
(ii) with respect to Parent, the actual knowledge of Michael Franco and Michael
Quinn; and (iii) with respect to Arizona, the actual knowledge of Ashford
Hospitality Trust, Inc.’s chief executive officer; president; chief operating
officer; chief financial officer; general counsel; and secretary.
     “Law” means any federal, state, provincial, municipal or local statute,
law, ordinance, regulation, rule, code, executive order, injunction, judgment,
decree or other order.
     “Lease Documents” shall have the meaning set forth in Section 4.15(b).

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     “Leased Real Property” means all material real property leased or otherwise
occupied (as lessee or sublessee) as of the date hereof by the Company or any
Subsidiary from a third party other than the Company or any Subsidiary,
including the improvements thereon.
     “Liens” means, with respect to any asset, any pledges, claims, liens,
mortgages, charges, encumbrances or security interests of any kind in respect of
such asset.
     “Major Space Leases” means all leases, subleases, licenses, concessions,
and other similar agreements for the use or occupancy of more than 10,000 square
feet of any of the Company Properties.
     “Management Agreement Documents” shall have the meaning set forth in
Section 4.15(h).
     “Marketed Portfolio Purchase and Sale Agreement” means that certain
Agreement of Purchase and Sale made and entered into on December 17, 2006
between W2005 New Century Hotel Portfolio, L.P. and the Sellers identified
therein.
     “Marketed Portfolio Sale” means, whether effected directly or indirectly or
in one transaction or a series of related transactions, any sale, transfer or
other business combination involving the 32 hotel properties owned by the
Company and under contract for sale on the date hereof pursuant to the Marketed
Portfolio Purchase and Sale Agreement.
     “Material Adverse Effect” means, (I) with respect to the Company, any
change, development, circumstance, event or effect that, when considered either
individually or in the aggregate together with all other changes, circumstances,
developments, events or effects (a “Change”), (a) that would prevent or
reasonably be expected to prevent the Company from consummating any of the
Transactions or (b) is materially adverse to the properties, business, condition
(financial or otherwise), liabilities or results of operations of the Company
and its Subsidiaries taken as a whole, excluding any Change to the extent
resulting from: (i) the execution or announcement of this Agreement or the
performance of obligations under this Agreement, (ii) Changes affecting the
United States economy or capital or financial markets generally (including
Changes in interest rates) or Changes that are the result of factors generally
affecting the industries in which the Company and its Subsidiaries conduct their
respective business, except to the extent that such Changes have a materially
disproportionate effect on the Company or the Company Properties relative to
other similarly situated participants in the business or industry in which the
Company operates, (iii) general Changes in conditions in or otherwise affecting
hotel real estate properties or hotel operators (including diseases and
epidemics), except to the extent that such Changes have a materially
disproportionate effect on the Company or the Company Properties relative to
other similarly situated participants in the business or industry in which the
Company operates (it being understood that the phrase “similarly situated” shall
take into account the geographical markets in which the Company operates),
(iv) any Changes in applicable Law or GAAP or interpretation or application
thereof, (v) earthquakes, hurricanes or other natural disasters, except to the
extent that such Changes cause physical damage to a Company Property or have a
materially disproportionate effect on the Company or the Company Properties
relative to other similarly situated participants in the business or industry in
which the Company operates (it being understood that the phrase

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“similarly situated” shall take into account the geographical markets in which
the Company operates), (vi) the commencement, occurrence, continuation or
escalation of any war, armed hostilities or acts of terrorism involving or
affecting the United States, its armed forces or any part thereof, except to the
extent that such Changes cause physical damage to a Company Property or have a
materially disproportionate effect on the Company or the Company Properties
relative to other similarly situated participants in the business or industry in
which the Company operates (it being understood that the phrase “similarly
situated” shall take into account the geographical markets in which the Company
operates) and (vii) any failure, but only in and of itself, by the Company to
meet any financial projection of the Company’s revenues, earnings or other
financial performance for any period (it being understood that the phrase “but
only in and of itself” shall mean that any Change from such failure that could
otherwise be described in clause (I)(a) or (b), above, shall constitute a
Material Adverse Effect); and (II) when used with respect to any of the Buyer
Parties, any change, development, circumstance, event or effect that, when
considered either individually or in the aggregate together with all other
changes, developments, circumstances, events or effects, would, with the passage
of time or otherwise, prevent the consummation of the Transactions following the
satisfaction of all other conditions precedent thereto or prevent any of the
Buyer Parties from performing their respective obligations under this Agreement.
     “Material Contract” shall have the meaning set forth in Section 4.18(a).
     “Maximum Premium” shall have the meaning set forth in Section 8.9(b).
     “Merger” shall have the meaning set forth in the second recital of this
Agreement.
     “MGCL” shall have the meaning set forth in the second recital of this
Agreement.
     “Missouri” shall have the meaning set forth in the introductory paragraph
of this Agreement.
     “Owned Real Property” means all real property owned by the Company or any
Subsidiary as of the date hereof, together with all buildings, structures, other
improvements and fixtures located on or under such real property and all
easements, rights, and other appurtenances thereto.
     “Parent” shall have the meaning set forth in the introductory paragraph of
this Agreement.
     “Parent Asset Purchase Agreement” shall have the meaning set forth in
Section 12.1.
     “Parent Asset Sale” shall have the meaning set forth in Section 12.1.
     “Parent Commitment Letter” shall have the meaning set forth in Section 5.7.
     “Parent Debt Financing” shall have the meaning set forth in Section 5.7.
     “Parent Expenses” shall have the meaning set forth in Section 8.5(c).

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     “Parent Financing” shall have the meaning set forth in Section 5.7.
     “Parent Preferred Equity Funding Letter” shall have the meaning set forth
in Section 5.7.
     “Paying Agent” shall have the meaning set forth in Section 3.2(a).
     “Per Share Merger Consideration” means (i) $20.50 per Share, minus (ii) the
Special Dividend Amount, divided by the number of Shares outstanding, on a fully
diluted basis, on the Closing Date.
     “Permits” shall have the meaning set forth in Section 4.9.
     “Permitted Liens” means (a) statutory liens for Taxes, assessments or other
charges by Governmental Entities not yet due and payable or the amount or
validity of which is being contested in good faith, (b) any matter disclosed in
the Company Title Insurance Policies, (c) Liens and obligations under the
Material Contracts, Management Agreement Documents, the Third Party Franchise
Agreements and Lease Documents, (d) mortgages and deeds of trust granted as
security for financings listed or described in the Company Letter or Company SEC
Documents, (e) inchoate mechanics’, materialmen’s, carriers’, workmen’s,
warehouseman’s, repairmen’s, landlords’ and similar liens granted or which arise
in the ordinary course of business, (f) liens, charges, encumbrances and/or
title exceptions or imperfections created by or resulting from the acts or
omissions of the Buyer Parties or any of their Affiliates, employees, officers,
directors, agents, representatives, contractors, invitees or licensees, (g) all
matters that may be shown by a current, accurate survey or physical inspection
of the Company Properties that do not adversely affect, in a material manner,
the value or marketability of such property, (h) any applicable Laws, including
building and zoning Laws, now or hereafter in effect and (i) such other
easements, rights of way, restrictions, covenants, liens, encumbrances or
imperfections that are not material in amount and do not materially detract from
the value of or materially impair the existing use of the Company Property
affected by such easement, right of way, restriction, covenant, lien,
encumbrance or imperfection.
     “Person” means an individual, corporation, partnership, limited
partnership, limited liability partnership, limited liability company, joint
venture, association, trust, unincorporated organization, Governmental Entity or
other entity (including any person as defined in Section 13(d)(3) of the
Exchange Act).
     “Proxy Statement” shall have the meaning set forth in Section 4.8.
     “Qualifying Income” shall have the meaning set forth in Section 8.5(e).
     “Redemption Plan” means the Company’s Amended and Restated Redemption Plan,
effective as of June 16, 2004, as the same may from time to time be amended or
modified.
     “Reinvestment Plan” means the Company’s Amended and Restated Reinvestment
Plan, as in effect as of the date hereof.
     “REIT” shall have the meaning set forth in Section 4.10(c).

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     “Release” means any spilling, leaking, pumping, pouring, emitting,
discharging, injecting, escaping, leaching, dumping or disposing of a Hazardous
Substance into the environment.
     “Representatives” shall have the meaning set forth in Section 7.2(a).
     “Required Vote” shall have the meaning set forth in Section 4.4(a).
     “Retained Employees” shall have the meaning set forth in Section 8.1(a).
     “SDAT” shall have the meaning set forth in Section 2.3.
     “SEC” means the Securities and Exchange Commission.
     “Securities Act” means the Securities Act of 1933, as amended, together
with the rules and regulations promulgated thereunder.
     “Shares” shall have the meaning set forth in the second recital of this
Agreement.
     “Significant Subsidiary” of any Person means a Subsidiary of such Person
that would constitute a “significant subsidiary” of such Person within the
meaning of Rule 1.02(w) of Regulation S-X as promulgated by the SEC.
     “Special Dividend” shall have the meaning set forth in Section 12.3.
     “Special Dividend Amount” shall have the meaning set forth in Section 12.3.
     “Stockholders’ Meeting” shall have the meaning set forth in Section 8.3(b).
     “Sub” shall have the meaning set forth in the introductory paragraph of
this Agreement.
     “Subsidiary” of any Person means another Person, of which at least a
majority of the securities or ownership interests having by their terms ordinary
voting power to elect a majority of the board of directors or other Persons
performing similar functions is owned or controlled, directly or indirectly, by
such first Person and/or by one or more of its Subsidiaries.
     “Superior Proposal” shall have the meaning set forth in Section 7.2(d).
     “Surviving Entity” shall have the meaning set forth in Section 2.1.
     “Tax” and “Taxes” means any federal, state, local or foreign income,
property, sales, hotel room sales, restaurant sales, excise, franchise,
employment, withholding, or other like assessment, together with any interest or
penalty, imposed by any Governmental Entity.
     “Tax Protection Agreement” shall have the meaning set forth in Section
4.10(j).
     “Tax Sharing Agreement” shall have the meaning set forth in
Section 4.10(j).

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     “Tax Return” means any return, report or similar statement filed or
required to be filed with respect to any Tax including any information return,
claim for refund, amended return or declaration of estimated Tax.
     “Termination Date” shall have the meaning set forth in Section 10.1(b)(i).
     “Termination Fee” shall have the meaning set forth in Section 8.5(b).
     “Third Party Franchise Agreements” shall have the meaning set forth in
Section 4.15(g).
     “Transactions” shall have the meaning set forth in the third recital of
this Agreement.
     “Transfer Taxes” shall have the meaning set forth in Section 8.7.
     “Treasury Regulations” means the regulations promulgated by the U.S.
Treasury Department pursuant to the Code.
     “Uncertificated Share” shall have the meaning set forth in Section 3.1(c).
     “WARN” shall have the meaning set forth in Section 4.17(d).
     Section 1.2 Interpretation. When a reference is made in this Agreement to
an Article, Section or clause, such reference shall be to an Article, Section or
clause of this Agreement unless otherwise indicated. The table of contents and
headings contained in this Agreement are for reference purposes only and shall
not affect in any way the meaning or interpretation of this Agreement. Whenever
the words “include,” “includes” or “including” are used in this Agreement, they
shall be deemed to be followed by the words “without limitation.” All references
to “dollars” or “$” means United States dollars.
ARTICLE II
THE MERGER
     Section 2.1 The Merger. Upon the terms and subject to the conditions
hereof, and in accordance with the DLLCA and the MGCL, Sub shall be merged with
and into the Company at the Effective Time. Following the Effective Time, the
separate existence of Sub shall cease and the Company shall continue as the
surviving entity (the “Surviving Entity”) and shall succeed to and assume all
the rights, privileges, franchises, powers and obligations of Sub and the
Company in accordance with Subtitle 1 of Title 3 of the MGCL and
Section 18-209(g) of the DLLCA. The Company shall cause the opinion described in
Section 9.3(d) to be brought down and dated as of the Closing; provided, that
the bringdown of such opinion shall not be a condition to the consummation of
the Merger.
     Section 2.2 Closing. The closing of the Merger (the “Closing”) will take
place at 10:00 a.m. on the day following the consummation of the Asset Sales or
such other date as mutually agreed to by Parent and the Company, at the offices
of Sidley Austin LLP, 787 Seventh Avenue, New York, New York 10019, unless
another date, time or place is agreed to in writing by the parties hereto (the
date upon which the Closing occurs shall be referred to herein as the “Closing
Date”).

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     Section 2.3 Effective Time. The Merger shall become effective when Articles
of Merger (the “Articles of Merger”), executed in accordance with the relevant
provisions of the MGCL, are duly filed with and accepted for record by the State
Department of Assessments and Taxation in the State of Maryland (the “SDAT”) and
a certificate of merger (the “Delaware Certificate of Merger”) has been duly
filed with the Secretary of State of Delaware (the “DSOS”) in accordance with
the DLLCA, or at such later time (not to exceed 30 days from the date of the
acceptance for record of the Articles of Merger) as Sub and the Company shall
agree and is specified in the Articles of Merger and the Delaware Certificate of
Merger. When used in this Agreement, the term “Effective Time” shall mean the
later of the date and time at which the Articles of Merger are duly filed with
and accepted for record by the SDAT and the Delaware Certificate of Merger has
been filed with the DSOS, or such later time (not to exceed 30 days from the
date of the acceptance for record of the Articles of Merger) established by the
Articles of Merger and the Delaware Certificate of Merger. The filing of the
Articles of Merger and the Delaware Certificate of Merger shall be made at the
Closing.
     Section 2.4 Effects of the Merger. The Merger shall have the effects set
forth in Section 3-114 of the MGCL, Section 18-209(g) of the DLLCA and this
Agreement.
     Section 2.5 Charter and Bylaws; Officers and Directors.
          (a) The Company Charter, as in effect immediately prior to the
Effective Time, shall be the charter of the Surviving Entity until thereafter
changed or amended as provided therein or by applicable Law.
          (b) The Company Bylaws, as in effect immediately prior to the
Effective Time, shall be the bylaws of the Surviving Entity until thereafter
changed or amended as provided by the charter or bylaws of the Surviving Entity
or by applicable Law.
          (c) The managers of Parent, if any, immediately prior to the Effective
Time shall be the directors of the Surviving Entity, until the earlier of their
resignation or removal or until their respective successors are duly elected and
qualify, as the case may be, in accordance with the Surviving Entity’s charter
and bylaws.
          (d) The officers of Parent immediately prior to the Effective Time
shall be the officers of the Surviving Entity until the earlier of their
resignation or removal or until their respective successors are duly elected and
qualify, as the case may be, in accordance with the charter and bylaws of the
Surviving Entity.
     Section 2.6 Tax Treatment. The parties hereto (i) intend that for federal,
and applicable state and local, income tax purposes, the Merger will be treated
as a taxable purchase by Parent of all of the Company’s outstanding Shares and
(ii) shall prepare and file their applicable Tax Returns based on such
treatment.

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ARTICLE III
EFFECT OF THE MERGER
     Section 3.1 Effect on Stock. As of the Effective Time, by virtue of the
Merger and without any action on the part of any of Parent, Sub, the Company or
the holders of shares of Company Common Stock or holders of any membership
interest in Sub:
          (a) Stock of Sub. Each membership interest of Sub issued and
outstanding immediately prior to the Effective Time shall be converted into and
become one validly issued, fully paid and nonassessable share of common stock,
par value $0.01 per share, of the Surviving Entity.
          (b) Parent Owned Stock. Each Share that is owned by Parent, Sub,
Missouri or any other wholly-owned Subsidiary of Parent immediately prior to the
Effective Time shall automatically be cancelled and retired and shall cease to
exist, and no consideration shall be delivered in exchange therefor.
          (c) Conversion of Shares. Subject to Section 3.1(d), each Share issued
and outstanding immediately prior to the Effective Time (other than Shares to be
cancelled in accordance with Section 3.1(b) and Dissenting Shares) shall be
cancelled and be converted into the right to receive in cash, without interest,
the Per Share Merger Consideration. As of the Effective Time, all such Shares
shall be cancelled in accordance with this Section 3.1(c), and when so
cancelled, shall no longer be outstanding and shall automatically cease to
exist, and (x) each holder of a certificate (a “Certificate”) representing any
such Shares shall cease to have any rights with respect thereto, except the
right to receive the Per Share Merger Consideration for each such Share, without
interest and (y) each holder of shares of Company Common Stock not represented
by a Certificate (each an “Uncertificated Share”) shall thereafter only have the
right to receive the Per Share Merger Consideration for each such Uncertificated
Share, without interest.
          (d) Shares of Dissenting Stockholders. Notwithstanding anything in
this Agreement to the contrary, any issued and outstanding Shares held by a
Person who has filed with the Company a written objection to the Merger, has not
voted in favor of or consented to the approval of the Merger (a “Dissenting
Stockholder”) and has properly exercised and perfected appraisal rights under
Title 3, Subtitle 2, of the MGCL (“Dissenting Shares”) shall not be converted
into the right to receive the Per Share Merger Consideration as described in
Section 3.1(c), but shall be converted into the right to receive such
consideration from the Surviving Entity as may be determined to be due to such
Dissenting Stockholder pursuant to the procedures set forth in Title 3, Subtitle
2, of the MGCL. If such Dissenting Stockholder withdraws its demand for
appraisal or fails to perfect or otherwise loses its right of appraisal and
payment, in any case pursuant to the MGCL, such holder’s Shares shall be deemed
to be converted as of the Effective Time into the right to receive the Per Share
Merger Consideration for each such Share, without interest, and such Shares
shall no longer be Dissenting Shares. The Company shall give Parent (i) prompt
notice of any demands received by the Company for appraisal of any Shares,
withdrawals or such demands and any other instruments served pursuant to Title
3, Subtitle 2, of the MGCL and received by the Company and (ii) the opportunity
to participate in all negotiations with respect to demands for appraisals under
the MGCL.

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     Section 3.2 Paying Agent; Exchange Procedures.
          (a) Paying Agent. Prior to the consummation of the Asset Sales, Parent
shall designate a bank or trust company, that shall be reasonably satisfactory
to the Company, to act as paying agent with respect to the Per Share Merger
Consideration and the Special Dividend (the “Paying Agent”). At or before the
Effective Time, Parent shall deposit, or cause Sub to deposit, with the Paying
Agent a cash amount in immediately available funds equal to the product of
(x) the Per Share Merger Consideration and (y) the number of Shares issued and
outstanding immediately prior to the Effective Time (exclusive of any Dissenting
Shares and Shares to be cancelled pursuant to Section 3.1(b)). At or following
the consummation of the Asset Sales, the Company shall deposit, or cause the
escrow agent under the Parent Asset Purchase Agreement and the Arizona Asset
Purchase Agreement to deposit, with the Paying Agent the Special Dividend
Amount. The amounts deposited pursuant to the prior two sentences shall be
referred to collectively as the “Exchange Fund”. Funds made available to the
Paying Agent shall be invested (if at all) by the Paying Agent as directed by
Parent or, after the Effective Time, the Surviving Entity; provided, however,
that such investments shall only be in obligations of or guaranteed by the
United States (it being understood that any and all interest or income earned on
funds made available to the Paying Agent pursuant to this Agreement shall become
a part of the Exchange Fund, and any amounts in excess of the amounts payable
under Section 3.1(c) shall be promptly returned to the Surviving Entity).
          (b) Exchange Procedure. As soon as practicable after the Effective
Time (and in any event within four (4) Business Days thereof), the Surviving
Entity or Parent shall cause the Paying Agent to mail to each holder of record
of one or more Shares (other than holders of Dissenting Shares and Shares to be
cancelled pursuant to Section 3.1(b)), (i) a letter of transmittal (which shall
specify that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon delivery of the Certificates (or affidavits
of loss in lieu thereof) to the Paying Agent and shall be in a form and have
such other provisions as Parent and the Company may reasonably agree) and
(ii) instructions for use in effecting the surrender of the Certificates (or
affidavits of loss in lieu thereof) in exchange for the Per Share Merger
Consideration as provided in Section 3.1. Upon surrender of a Certificate (or
affidavits of loss in lieu thereof) for cancellation to the Paying Agent,
together with such letter of transmittal, duly executed, and such other
documents as may reasonably be required by the Paying Agent or, in the case of
Uncertificated Shares, at or promptly following the receipt by the Paying Agent
of a duly executed letter of transmittal and such other documents as may be
required by the Paying Agent, the holder of such Certificate or Uncertificated
Shares shall be entitled to receive in exchange therefor the amount of cash
(after giving effect to any required Tax withholdings as provided in
Section 3.2(g)) equal to (x) the number of Shares held by such stockholder
multiplied by (y) the Per Share Merger Consideration, and any Certificates
surrendered shall forthwith be cancelled. No interest will be paid or will
accrue on the cash payable upon the surrender of any Certificate (or affidavits
of loss in lieu thereof) or in exchange for Uncertificated Shares. In the event
of a transfer of ownership of Shares that is not registered in the transfer
records of the Company, payment may be made to a Person other than the Person in
whose name the Certificate so surrendered (or affidavits of loss in lieu
thereof) is registered, if such Certificate (or affidavits of loss in lieu
thereof) shall be properly endorsed or otherwise be in proper form for transfer
and the Person requesting such payment shall pay any transfer or other Taxes
required by reason of the payment to a Person other than the registered holder
of

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such Certificate (or affidavits of loss in lieu thereof) or establish to the
satisfaction of the Surviving Entity or the Paying Agent that such Tax has been
paid or is not applicable. Until exchanged or surrendered as contemplated by
this Section 3.2, Uncertificated Shares and Shares represented by Certificates
(other than Shares to be cancelled in accordance with Section 3.1(b) and
Dissenting Shares) shall be deemed at any time after the Effective Time to
represent only the right to receive upon such exchange or surrender the amount
of cash, without interest, into which the Shares theretofore represented shall
have been converted pursuant to Section 3.1.
          (c) No Further Ownership Rights in Shares. All Per Share Merger
Consideration paid upon the surrender of Certificates (or affidavits of loss in
lieu thereof) or in exchange for Uncertificated Shares in accordance with the
terms of this Article III shall be deemed to have been paid in full satisfaction
of all rights pertaining to such Shares. At the Effective Time, (i) holders of
Certificates or Uncertificated Shares shall cease to have any rights as
stockholders of the Company, (ii) the stock transfer books of the Company shall
be closed and (iii) there shall be no further registration of transfers on the
stock transfer books of the Surviving Entity of the Shares that were outstanding
immediately prior to the Effective Time. If, after the Effective Time,
Certificates are presented to the Surviving Entity or the Paying Agent for any
reason, they shall be cancelled and exchanged as provided in this Article III.
          (d) Termination of Exchange Fund. Any portion of the Exchange Fund
that remains undistributed to the holders of Shares for nine months after the
Effective Time shall be delivered to the Surviving Entity, upon demand, and any
holders of Shares (other than Shares to be cancelled in accordance with
Section 3.1(b) and Dissenting Shares) who have not theretofore complied with
this Article III and the instructions set forth in the letter of transmittal
mailed to such holders after the Effective Time shall, after such funds have
been delivered to the Surviving Entity, look only to the Surviving Entity
(subject to abandoned property, escheat or other similar Laws) for payment of
the Per Share Merger Consideration (after giving effect to any required Tax
withholdings as provided in Section 3.2(g)) due upon surrender of their
Certificates (or affidavits of loss in lieu thereof as provided in
Section 3.2(f)) or exchange of their Uncertificated Shares, without any interest
thereon.
          (e) No Liability. None of the Buyer Parties, the Company or the Paying
Agent or any of their respective officers, employees, stockholders, directors,
agents or Affiliates shall be liable to any Person in respect of any Per Share
Merger Consideration delivered to a public official pursuant to any applicable
abandoned property, escheat or similar Law.
          (f) Lost, Stolen or Destroyed Certificates. If any Certificate shall
have been lost, stolen or destroyed, upon the making of an affidavit of that
fact by the Person claiming such Certificate to be lost, stolen or destroyed
and, if required by the Surviving Entity, the posting by such Person of a bond
in customary amount and upon such terms as may be required by the Surviving
Entity as indemnity against any claim that may be made against it with respect
to such Certificate, the Paying Agent will issue a check in the amount (after
giving effect to any required Tax withholdings as provided in Section 3.2(g))
equal to the number of Shares represented by such lost, stolen or destroyed
Certificate multiplied by the Per Share Merger Consideration.
          (g) Withholding Rights. The Surviving Entity and the Paying Agent
shall be entitled to deduct and withhold from the consideration otherwise
payable pursuant to this

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Agreement to any holder of Shares such amounts as the Surviving Entity or the
Paying Agent is required to deduct and withhold with respect to the making of
such payment under the Code or under any provision of state, local or foreign
Tax Law. To the extent that amounts are so withheld by the Surviving Entity or
the Paying Agent, such withheld amounts (i) shall be remitted by the Surviving
Entity or the Paying Agent, as applicable, to the applicable Governmental
Entity, and (ii) shall be treated for all purposes of this Agreement as having
been paid to the holder of the Shares in respect of which such deduction and
withholding was made by the Surviving Entity or the Paying Agent, as the case
may be. The parties acknowledge that this Section 3.2(g) is not intended to, and
shall not, amend the terms of any Deferred Share Award or employment agreement
related thereto.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
     Except as set forth in the Company Letter (it being agreed that disclosure
of any item in any section or subsection of the Company Letter shall be deemed
disclosure with respect to any other section or subsection to which the
relevance of such item is reasonably apparent), the Company hereby represents
and warrants to the Buyer Parties as follows:
     Section 4.1 Organization; Minute Books.
          (a) The Company is duly organized, validly existing and in good
standing under the Laws of the jurisdiction of its organization and has the
requisite corporate or similar power and authority to own, lease and operate its
properties and to carry on its business as now being conducted. Each of the
Company’s Subsidiaries is duly organized, validly existing and in good standing
under the Laws of the jurisdiction of its organization and has the requisite
corporate or similar power and authority to own, lease and operate its
properties and to carry on its business as now being conducted, except where the
failure to be so organized, existing and in good standing or to have such
corporate or similar power and authority have not had and would not reasonably
be expected to have a Material Adverse Effect on the Company. The Company and
each of its Subsidiaries are duly qualified or licensed to do business and in
good standing in each jurisdiction in which the nature of their business or the
ownership or leasing of their properties makes such qualification or licensing
necessary, except in such jurisdictions where the failure to be so duly
qualified or licensed and in good standing has not had and would not reasonably
be expected to have a Material Adverse Effect on the Company.
          (b) The Company has made available to the Buyer Parties complete and
correct copies of its Articles of Amendment and Restatement, dated August 7,
2006 (the “Company Charter”), and its Amended and Restated Bylaws, dated
August 30, 2006 (the “Company Bylaws”), and has made available to the Buyer
Parties the charter and bylaws (or similar organizational documents) of each of
its Significant Subsidiaries. The charter and bylaws (or similar organizational
documents) of the Company and each of its Subsidiaries are in full force and
effect and no dissolution, revocation or forfeiture proceeding regarding the
Company or any of its Subsidiaries has been commenced. Neither the Company nor
any of its Subsidiaries is in violation of any of the provisions of its charter
or bylaws (or similar organizational documents), except, in each case, for such
violations that would not have a Material Adverse Effect on the Company.

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          (c) The Company has made available to the Buyer Parties materially
correct and complete copies of the minute books of the Company of meetings of
the Board and committees of the Board held since January 1, 2004, except that
the Company shall not be obligated to make available those portions of any
minutes of meetings of the Board or committees of the Board related to the
deliberations by the Board or such committee with respect to the consideration
of strategic alternatives.
     Section 4.2 Subsidiaries. A correct and complete list of all of the
Subsidiaries of the Company, together with the jurisdiction of organization of
each such Subsidiary, and the percentage, if any, of the outstanding equity of
each such Subsidiary not owned, directly or indirectly, by the Company is set
forth in Item 4.2 of the Company Letter. All of the outstanding shares of stock
of each Subsidiary of the Company that is a corporation have been duly
authorized and validly issued and are fully paid and nonassessable. All of the
outstanding shares of stock or equity interests and other ownership interests of
each Subsidiary of the Company are owned by the Company, by one or more
Subsidiaries of the Company or by the Company and one or more Subsidiaries of
the Company, free and clear of all Liens. The Company does not own, directly or
indirectly, any stock or other voting or equity securities or interests (or any
interests convertible into or exchangeable or exercisable for any equity or
similar interests) in any other Person.
     Section 4.3 Capital Structure. The authorized stock of the Company consists
of 3,000,000,000 shares of Company Common Stock, 75,000,000 shares of preferred
stock, $0.01 par value per share (the “Company Preferred Stock”), and
600,000,000 excess shares, $0.01 par value per share (the “Excess Shares”). At
the close of business on January 17, 2007, (a) 156,968,775.0187 shares of
Company Common Stock were issued and outstanding, all of which were duly
authorized, validly issued, fully paid and nonassessable and free of preemptive
rights, (b) 2,872,743 shares of Company Common Stock were reserved for issuance
pursuant to Deferred Share Awards granted under the Company’s 2004 Omnibus
Long-Term Incentive Plan (the “Company Stock Plan”), (c) no shares of Company
Preferred Stock were issued and outstanding, and (d) no Excess Shares were
issued and outstanding. As of the date of this Agreement, except as set forth
above, no shares of stock of the Company or options, warrants, convertible or
exchangeable securities or other rights to purchase stock of the Company are
issued, reserved for issuance or outstanding. There are no outstanding bonds,
debentures, notes or other indebtedness of the Company having the right to vote
(or convertible into, or exchangeable for, securities having the right to vote)
on any matter on which the Company’s stockholders may vote. As of the date of
this Agreement, except as set forth above, there are no securities, options,
warrants, calls, rights, commitments, agreements, arrangements or undertakings
of any kind to which the Company or any of its Subsidiaries is a party or by
which any of them is bound obligating the Company or any of its Subsidiaries to
issue, deliver or sell or create, or cause to be issued, delivered or sold or
created, additional shares of stock or other voting or equity securities or
interests of the Company or of any of its Subsidiaries or obligating the Company
or any of its Subsidiaries to issue, grant, extend or enter into any such
security, option, warrant, call, right, commitment, agreement, arrangement or
undertaking relating to the voting of stock or equity securities or interests of
the Company or any of its Subsidiaries. As of the date of this Agreement, other
than pursuant to this Agreement, there are no outstanding contractual
obligations or rights of the Company or any of its Subsidiaries to register or
repurchase, redeem or otherwise acquire, vote, dispose of or otherwise transfer
or register

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pursuant to any securities Laws any shares of stock or equity interests of the
Company or any of its Subsidiaries. There are no agreements or understandings to
which the Company is a party with respect to the voting of any shares of Company
Common Stock and, to the Knowledge of the Company, as of the date of this
Agreement, there are no third party agreements or understandings with respect to
the voting of any shares of Company Common Stock.
     Section 4.4 Authority. (a) The Company has the requisite corporate power
and authority to execute and deliver this Agreement and, subject to approval by
the Company’s stockholders of the Merger, to consummate the transactions
contemplated hereby, including the Asset Sales. The execution, delivery and
performance of this Agreement by the Company and the consummation by the Company
of the Merger and the other transactions contemplated hereby, including the
Asset Sales, have been duly authorized by all necessary corporate action on the
part of the Company, subject to approval of the Merger and the other
transactions contemplated hereby, by the holders of a majority of the
outstanding Shares entitled to vote thereon (the “Required Vote”). This
Agreement has been duly executed and delivered by the Company and (assuming the
valid authorization, execution and delivery of this Agreement by the Buyer
Parties) constitutes the legal, valid and binding obligation of the Company
enforceable against the Company in accordance with its terms.
          (b) The Board, at a meeting duly called and held has unanimously
(i) approved and declared advisable and in the best interests of the Company and
its stockholders this Agreement, the Merger, the Parent Asset Purchase
Agreement, the Arizona Asset Purchase Agreement and the Asset Sales and
(ii) resolved to recommend approval by the stockholders of the Company of the
Merger and the transactions contemplated by the Merger Agreement, which
resolutions, subject to Section 7.2, have not been subsequently rescinded,
modified or withdrawn in any way (collectively, the “Board Recommendation”).
Approval of the Merger and the other transactions contemplated hereby, by the
stockholders of the Company by the Required Vote is the only vote of the holders
of any class or series of stock of the Company required to approve the Merger
and the transactions contemplated hereby.
     Section 4.5 Consents and Approvals; No Violations. Except (a) for filings,
permits, authorizations, consents and approvals as may be required under, and
other applicable requirements of, the Securities Act, Exchange Act, the HSR Act,
the MGCL, the DLLCA, state securities Laws and other applicable competition Law
clearances, if any, and (b) as may be required in connection with the Taxes
described in Section 8.7, neither the execution, delivery or performance of this
Agreement by the Company nor the consummation by the Company of the transactions
contemplated hereby will (i) conflict with or result in any breach of any
provision of the Company Charter or Company Bylaws or of the similar
organizational documents of any of the Significant Subsidiaries, (ii) require
any filing with, or permit, authorization, consent or approval of, any
Governmental Entity, (iii) conflict with or result in a breach of, or constitute
(with or without due notice or lapse of time or both) a default (or give rise to
any right of termination, amendment, cancellation or acceleration) under, or
result in a loss of benefit under or give rise to a right of purchase, first
offer or forced sale under, any of the terms, conditions or provisions of any
Contract to which the Company or any of its Subsidiaries is a party or by which
any of them or any of their properties or assets may be bound, (iv) violate any
Law applicable to the Company, any of its Subsidiaries or any of their
properties or assets, (v) result in the creation of any Lien on any properties
or assets of the Company or any of its Subsidiaries,

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except for Permitted Liens or (vi) require the Company or any of its
Subsidiaries to make any payment to any third Person, except in the case of
clause (ii) where the failure to obtain such permits, authorizations, consents
or approvals or to make such filings or, in the case of clauses (iii), (iv), (v)
or (vi), for breaches, defaults, terminations, amendments, cancellations,
accelerations, losses of benefits, violations, Liens or payments that have not
had and would not reasonably be expected to have a Material Adverse Effect on
the Company.
     Section 4.6 SEC Documents and Other Reports. (a) The Company has filed with
the SEC all forms, reports, statements, schedules, certifications, exhibits
thereto and other documents required to be filed by it since December 31, 2004
under the Securities Act or the Exchange Act (collectively, the “Company SEC
Documents”). As of their respective filing dates, the Company SEC Documents
(including any documents or information incorporated by reference therein)
complied, and all documents filed by the Company with the SEC under the
Securities Act or the Exchange Act between the date of this Agreement and the
date of Closing will comply, in each case subject to the accuracy of the
representations and warranties set forth in Sections 5.4 and 6.4, in all
material respects with the requirements of the Securities Act and the Exchange
Act, as the case may be, each as in effect on the date so filed. At the time
filed with the SEC, none of the Company SEC Documents (including any documents
or information incorporated by reference therein) contained, or, in the case of
documents filed on or after the date hereof will contain, in each case subject
to the accuracy of the representations and warranties set forth in Sections 5.4
and 6.4, any untrue statement of a material fact or omitted, or, in the case of
documents filed on or after the date hereof will omit, in each case subject to
the accuracy of the representations and warranties set forth in Sections 5.4 and
6.4, to state a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading. The consolidated financial statements of the Company
included in the Company SEC Documents (including the related notes and schedules
thereto) complied as of their respective dates in all material respects with the
then applicable accounting requirements and the published rules and regulations
of the SEC with respect thereto, have been prepared in accordance with GAAP
(except in the case of the unaudited statements, as permitted by Form 10-Q under
the Exchange Act) during the periods involved (except as may be indicated
therein or in the notes thereto) and fairly present in all material respects the
consolidated financial position of the Company and its consolidated Subsidiaries
as of the dates thereof and the consolidated results of their operations and
their consolidated cash flows for the periods then ended (subject, in the case
of unaudited statements, to normal year-end audit adjustments and to any other
adjustments described therein).
          (b) The Company has made available to the Buyer Parties correct and
complete copies of all material written correspondence between the SEC, on the
one hand, and the Company and any of its Subsidiaries, on the other hand,
occurring since December 31, 2004 and prior to the date hereof and will,
promptly following the receipt thereof, make available to the Buyer Parties any
such material correspondence sent or received after the date hereof. To the
Knowledge of the Company, none of the Company SEC Documents is the subject of
ongoing SEC review or outstanding SEC comment.
          (c) Neither the Company nor any of the Subsidiaries has any liability
or obligation of any nature (whether accrued, absolute, contingent or otherwise)
which would be required to be reflected, reserved for or disclosed in a
consolidated balance sheet of the Company

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and its consolidated Subsidiaries, including the notes thereto, prepared in
accordance with GAAP except (i) as reflected, reserved for or disclosed in the
consolidated balance sheet of the Company and its consolidated Subsidiaries as
of September 30, 2006, including the notes thereto, (ii) as incurred since
September 30, 2006 in the ordinary course of business consistent with past
practice, (iii) as incurred or to be incurred by the Company or any Subsidiary
pursuant to, in connection with, or as a result of, the Merger and the other
transactions contemplated by this Agreement, or (iv) as would not, or would not
reasonably be expected to, have a Material Adverse Effect on the Company.
          (d) The Company has (i) implemented and maintains disclosure controls
and procedures (as defined in Rule 13a-15(e) of the Exchange Act) designed to
ensure that material information relating to the Company, including the
consolidated Subsidiaries of the Company, is made known to the management of the
Company, and (ii) has disclosed, based on its most recent evaluation prior to
the date hereof, to the Company’s outside auditors and the audit committee of
the Board (A) all significant deficiencies and material weaknesses in the design
or operation of internal control over financial reporting (as defined in
Rule 13a-15(f) of the Exchange Act) which are reasonably likely to adversely
affect the Company’s ability to record, process, summarize and report financial
data and (B) any fraud whether or not material, that involves management or
other employees who have a significant role in the Company’s or any of
Subsidiary of the Company’s internal controls over financial reporting.
          (e) The Company has not identified, based on its most recent
evaluation, any material weaknesses in the design or operation of internal
controls over financial reporting.
     Section 4.7 Absence of Material Adverse Effect. Since September 30, 2006
and prior to the date hereof, the Company and its Subsidiaries have conducted
their respective businesses in all material respects in the ordinary course
consistent with past practice, and, other than in connection with the Marketed
Portfolio Sale, there has not been (a) any effect, event, development, change or
circumstance that, individually or in the aggregate, with all other effects,
events, developments and changes, has resulted in a Material Adverse Effect on
the Company, (b) except for regular quarterly distributions to the Company’s
stockholders with customary record and payment dates, any declaration, setting
aside or payment of any dividend or other distribution with respect to its stock
or equity interests or, except for regular redemptions of Shares pursuant to the
Redemption Plan, any redemption, purchase or other acquisition of any of its
stock or equity interests, (c) any change in accounting methods, principles or
practices used by the Company or any of its Subsidiaries materially affecting
its assets, liabilities or business, except insofar as may have been required by
a change in GAAP, (d) any material damage, destruction or loss not covered by
insurance to the Owned Real Property, (e) any material amendment of any term of
any material outstanding debt or equity security of the Company or any of its
Subsidiaries other than in the ordinary course of business, (f) any material
amendment of any material employment, consulting, severance, incentive stock,
stock option, deferred compensation, bonus, retirement, retention or any other
agreement, or the adoption of any material new such agreement, between (i) the
Company or any Company Subsidiary, on the one hand and (ii) any officer, trustee
or director of the Company or any Company Subsidiary, on the other hand, earning
more than $200,000 per year, other than as required by any contract, agreement
or Benefit Plan, (g) any incurrence of indebtedness for borrowed money or
guarantee for such indebtedness, in each case by the Company or any Subsidiary
of the Company in excess

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of $1,000,000, other than (i) to meet the current cash needs of the Company and
any Subsidiary of the Company not exceeding the amount contemplated by the
Company’s capital budget for such period, a copy of which has been previously
provided to the Buyer Parties and (ii) for projects currently under construction
in amounts disclosed in the Company’s capital budget for such period, or (h) any
agreement by the Company or any of its Subsidiaries involving any of the
foregoing since September 30, 2006 and prior to the date hereof, except as
disclosed on Item 4.7 of the Company Letter.
     Section 4.8 Information Supplied. None of the information supplied or to be
supplied by the Company or any of its Subsidiaries or representatives
specifically for inclusion or incorporation by reference in the proxy statement
relating to the Stockholders’ Meeting (together with any amendments or
supplements thereto and including any related filings required pursuant to the
Exchange Act, the “Proxy Statement”) will, at the time the Proxy Statement is
first mailed to the Company’s stockholders or at the time of the Stockholders’
Meeting, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they are made, not
misleading, except that no representation or warranty is made by the Company
with respect to statements made or incorporated by reference therein based on
information supplied by any Buyer Party or any of their respective
representatives specifically for inclusion or incorporation by reference
therein.
     Section 4.9 Compliance with Laws. The businesses and assets of the Company
and its Subsidiaries are not and, since December 31, 2005, have not been,
conducted or held in violation of any Law of any Governmental Entity, except for
any violations that have not had a Material Adverse Effect on the Company. Each
of the Company and its Subsidiaries has in effect all federal, state, local and
provincial governmental licenses, authorizations, consents, permits and
approvals (collectively, “Permits”) necessary for it to own, lease or operate
its properties and assets and to carry on its business as now conducted, and no
violation or default has occurred under any such Permit, except for the absence
of Permits and for violations or defaults under Permits that have not had and
would not reasonably be expected to have a Material Adverse Effect on the
Company.
     Section 4.10 Tax Matters.
          (a) The Company and each of its Subsidiaries has timely filed or
caused to be filed (after taking into account all applicable extensions) all
material Tax Returns required to be filed by them, except where the failure to
timely file would not reasonably be expected to have a Material Adverse Effect
on the Company, and all such Tax Returns are true, correct and complete in all
material respects.
          (b) Each of the Company and its Subsidiaries has paid or caused to be
paid all material Taxes required to be paid (whether or not shown on any Tax
return).
          (c) The Company and the Company Subsidiary REIT (i) for all taxable
years commencing in the year in which the Company or the Company Subsidiary
REIT, as applicable, first made an election to be subject to taxation as a real
estate investment trust within the meaning of Section 856 of the Code (a
“REIT”), through the most recent December 31, has

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qualified and been subject to taxation as a REIT and (ii) has operated, and
intends to continue to operate until the Effective Time, in such a manner as
would permit it to continue to qualify as a REIT, from the most recent
December 31 and through the Effective Time, without, however, taking into
account the effect on the Company or the Company Subsidiary REIT, as applicable,
of any of the Transactions required to be entered into, or distributions
required to be made, by the Company or the Company Subsidiary REIT under this
Agreement, and without any express or implied representation being made that the
Company or the Company Subsidiary REIT will have satisfied as of the Effective
Time any requirement to make dividend distributions as a REIT with respect to
2007 that would have existed if the Company’s and the Company Subsidiary REIT’s
2007 taxable years were to have closed at the Effective Time. The Company has no
Subsidiary classified as a REIT for federal income tax purposes other than the
Company Subsidiary REIT. To the Company’s Knowledge, no challenge to the
Company’s or the Company Subsidiary REIT’s status as a REIT is pending or
threatened in writing. Each Subsidiary of the Company and each Subsidiary of the
Company Subsidiary REIT that is a partnership, joint venture, or limited
liability company and that has not elected for federal income tax purposes to be
a corporation or a “taxable REIT subsidiary” within the meaning of Section 856
of the Code is treated for federal income tax purposes as a partnership or
disregarded entity, as the case may be, and not as a corporation or an
association taxable as a corporation. Each Subsidiary of the Company or the
Company Subsidiary REIT that is a corporation for federal income tax purposes is
a “qualified REIT subsidiary” pursuant to Section 856(i) of the Code, a “taxable
REIT subsidiary” pursuant to Section 856(l) of the Code or a corporation which
qualifies under the transitional rules set forth in Section 546(b) of the Tax
Relief Extension Act of 1999. Neither the Company, the Company Subsidiary REIT
nor any of their Subsidiaries holds any assets the disposition of which would be
subject to rules similar to Section 1374 of the Code as a result of (A) an
election under IRS Notice 88-19 or Treasury Regulations Section 1.337(d)-5 or
Section 1.337(d)-6 or (B) the application of Treasury Regulations Section
1.337(d)-7.
          (d) No written requests for waivers of the time to assess any material
Taxes of the Company or its Subsidiaries are pending.
          (e) There are no material pending or threatened audits, examinations,
investigations or other proceedings in respect of Taxes of the Company or any of
its Subsidiaries with respect to which the Company or any of its Subsidiaries
has been notified in writing. To the Knowledge of the Company, there are no
pending or threatening audits, examinations, investigations or other proceedings
in respect of Taxes of the Company or any of its Subsidiaries.
          (f) All Taxes which the Company or any of its Subsidiaries are
required by Law to withhold or to collect for payment have been withheld and
collected except as would not reasonably be expected to have a Material Adverse
Effect on the Company.
          (g) Neither the Company nor any of its Subsidiaries is a party to any
agreement, arrangement, understanding or plan that has resulted, or would result
in connection with the transactions contemplated by this Agreement or any change
in control, in the payment of any amount that would, by operation of
Section 280G of the Code, not be deductible by the entity making such payment.

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          (h) Neither the Company nor any Subsidiary has made or is obligated to
make any payment that would not be deductible pursuant to Section 162(m) of the
Code.
          (i) There are no Liens for Taxes (other than Taxes not yet due and
payable) upon any of the assets of the Company or any of its Subsidiaries.
          (j) Neither the Company nor any of its Subsidiaries is a party to any
Tax Sharing Agreement or Tax Protection Agreement, other than any agreement or
arrangement solely between the Company and any of its Subsidiaries, pursuant to
which it will have any obligation to make any payments after the Closing. For
purposes of this Section 4.10(j), a “Tax Sharing Agreement” means any written
agreement for the allocation or payment of Tax liabilities or payment for Tax
benefits with respect to a consolidated, combined or unitary Tax Return which
Tax Return includes or included the Company or any of its Subsidiaries. For
purposes of this Section 4.10(j), a “Tax Protection Agreement” means any written
agreement to which the Company or any of its Subsidiaries is a party pursuant to
which, in connection with the deferral of income Taxes of a third party partner
in any Subsidiary of the Company that is classified as a partnership for federal
income Tax purposes, the Company nor any of its Subsidiaries has agreed to
(i) maintain a minimum level of debt or provide rights to guarantee debt,
(ii) retain or not dispose of assets for a period of time that has not since
expired, (iii) make or refrain from making Tax elections, and/or (iv) only
dispose of assets in a particular manner.
          (k) Neither the Company nor any Subsidiary (other than a “taxable REIT
subsidiary” or a subsidiary of a “taxable REIT subsidiary”) has engaged at any
time in any “prohibited transactions” within the meaning of Section 857(b)(6) of
the Code. Neither the Company nor any of its Subsidiaries has engaged in any
transaction that would give rise to “redetermined rents,” “redetermined
deductions” or “excess interest” described in Section 857(b)(7) of the Code.
          (l) To the Knowledge of the Company, no claim has been made in writing
by a taxing authority in a jurisdiction where the Company or any of its
Subsidiaries does not file Tax Returns that the Company or any such Subsidiary
is or may be subject to taxation by that jurisdiction.
          (m) Neither the Company nor any of its Subsidiaries has requested a
private letter ruling from the IRS or comparable rulings from other taxing
authorities.
          (n) Neither the Company nor any of its Subsidiaries is a party to any
“listed transaction” described in Treasury Regulations Section 1.6011-4(b).
          (o) Neither the Company nor any of its Subsidiaries has entered into
any “closing agreement” as described in Section 7121 of the Code (or any
corresponding or similar provision of state, local or foreign income Tax Law).
          (p) Neither the Company nor any of its Subsidiaries has recognized
taxable gain or loss from the disposition of any property transferred or
received in an exchange that was reported as a “like kind exchange” under
Section 1031 of the Code.

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          (q) As of the date hereof, neither the Company nor the Company
Subsidiary REIT has any earnings and profits attributable to any non-REIT year
of the Company or the Company Subsidiary REIT, as applicable, or any other
corporation within the meaning of Section 857 of the Code and the Treasury
Regulations thereunder.
          (r) The dividends paid deduction of the Company and the Company
Subsidiary REIT for each taxable year of each such entity ending with the
taxable year ended December 31, 2006, will equal or exceed the sum of (i) the
amount determined under Code Section 857(a)(1) with respect to the Company or
the Company Subsidiary REIT, as applicable, but computed with the modifications
described in the next sentence, and (ii) the net capital gain of the Company or
the Company Subsidiary REIT, as applicable, for such taxable year; provided,
however, that such dividends paid deduction of the Company for the taxable year
ended December 31, 2006 takes into account any Section 858 dividend made by the
Company prior to the Closing Date. The amount described under clause (i) above
shall be computed by substituting “100%” for “90%” in each place it appears in
Code Section 857(a)(1).
          (s) The Special Dividend Amount will equal or exceed the sum of
(i) the amount determined under Code Section 857(a)(1) with respect to the
Company’s current taxable year, computed with the modifications described in the
next sentence and, and (ii) the net capital gain of the Company for such taxable
year, assuming for purposes of clauses (i) and (ii) that the current taxable
year of the Company will end on the date of the Closing. The amount described
under clause (i) above shall be computed by substituting “100%” for “90%” in
each place it appears in Code Section 857(a)(1).
          (t) The net proceeds received by the Company Subsidiary REIT from the
Asset Sales will equal or exceed the sum of (i) the amount determined under Code
Section 857(a)(1) with respect to the Company Subsidiary REIT’s current taxable
year, computed with the modifications described in the next sentence and, and
(ii) the net capital gain of the Company Subsidiary REIT for such taxable year,
assuming for purposes of clauses (i) and (ii) that the current taxable year of
the Company will end on the date of the Closing. The amount described under
clause (i) above shall be computed by substituting “100%” for “90%” in each
place it appears in Code Section 857(a)(1).
          (u) As of the Effective Time, the net operating loss for federal
income tax purposes carried over to the Company in its acquisition of KSL
Recreation Corp. in April 2004 that remained unused, based on the Company’s
information and belief, was not less than $125 million, with the use of such net
operating losses in 2007 and thereafter being subject to the limitations of
Section 382 of the Code.
     Section 4.11 Benefit Plans. (a) With respect to each Benefit Plan, the
Company has made available to the Buyer Parties a true and correct copy of
(i) each such Benefit Plan that has been reduced to writing and all amendments
thereto and a summary of any unwritten Benefit Plan; (ii) each trust, insurance
or administrative agreement or insurance policy or other funding medium relating
to each such Benefit Plan; (iii) the most recent written explanation of each
Benefit Plan provided to participants, and, if applicable, the most recent
summary plan description provided to participants; (iv) if applicable, the three
most recent annual reports (Form 5500) filed with the IRS, including all
schedules and accountants’ opinions; (v) the most recent

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determination letter and/or application thereof, if any, issued by the IRS with
respect to any Benefit Plan intended to be qualified under Section 401(a) of the
Code, and (vi) all correspondence to and from any state or federal agency within
the last six years with respect to any Benefit Plan. Except as required or
deemed advisable by Law, neither the Company nor any of its Subsidiaries has
adopted or amended in any material respect any Benefit Plan since September 30,
2006 and copies of any such amendments or Benefit Plans have been provided to
Parent.
          (b) Except as would not reasonably be expected to have a Material
Adverse Effect on the Company, (i) each Benefit Plan has been maintained in
compliance with its terms and, both as to form and in operation, with the
requirements of applicable Law and (ii) all employer or employee contributions,
premiums and expenses to or in respect of each Benefit Plan have been paid in
full or, to the extent not yet due, have been adequately accrued on the
applicable financial statements of the Company included in the Company SEC
Documents in accordance with GAAP. Each asset held under any such Benefit Plan
(other than assets held in the Company’s 401(k) plan for the benefit of the
participants) may be liquidated or terminated without the imposition of any
redemption fee, surrender charge or comparable liability. There is no Person
(other than the Company or any of its Subsidiaries) that together with the
Company or any of its Subsidiaries would be treated as a single employer under
Section 414 of the Code or Section 4001(b) of ERISA. Neither the Company nor any
of its Subsidiaries has at any time during the six-year period preceding the
date hereof maintained, contributed to or incurred any liability under any
“multiemployer plan” (as defined in Section 3(37) of ERISA) or any ERISA Benefit
Plan that is subject to Title IV of ERISA or Section 412 of the Code.
          (c) As of the date of this Agreement there are no pending or, to the
Knowledge of the Company, threatened disputes, arbitrations, claims, suits,
grievances, governmental proceedings or, to the Knowledge of the Company,
investigations involving a Benefit Plan (other than routine claims for benefits
payable under any such Benefit Plan) that would reasonably be expected to have a
Material Adverse Effect on the Company.
          (d) All Benefit Plans that are intended by their terms to be qualified
under Section 401(a) of the Code have been determined by the IRS to be so
qualified, or a timely application for such determination is now pending and,
except as would not reasonably be expected to have a Material Adverse Effect on
the Company, the Company has no Knowledge of any reason why any such Benefit
Plan is not so qualified in operation. Except as set forth on Item 4.11 of the
Company Letter, neither the Company nor any of its Subsidiaries has any
liability or obligation under any welfare plan or agreement to provide benefits
after termination of employment or service to any employee, director, consultant
or dependent other than as required by Section 4980B of the Code. Each Benefit
Plan may be amended, terminated, or otherwise modified by the Company to the
greatest extent permitted by applicable Law, including the elimination of any
and all future benefit accruals and no employee communications or provision of
any relevant document has failed to effectively reserve the right of the Company
to so amend, terminate or otherwise modify such Benefit Plan.
          (e) Neither the execution and delivery of this Agreement by the
Company nor the consummation of the transactions contemplated hereby will or may
(either alone or in connection with the occurrence of any additional or
subsequent events) (i) result in the

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acceleration or creation of any rights of any Person to compensation or benefits
under any Benefit Plan or other compensatory arrangement, loan forgiveness or
result in an obligation to fund benefits with respect to any Benefit Plan or
other compensatory arrangement; or (ii) constitute an event under any Benefit
Plan or other arrangement that will or may result in any payment of deferred
compensation subject to Section 409A of the Code.
          (f) The Company has made available to the Buyer Parties (or as
described in Item 4.11(f) of the Company Letter) all of the employment
agreements, bonus agreements, severance agreements, severance plans and similar
obligations that include amounts that are payable as a result of consummation
transactions contemplated hereby. Item 4.11(f) of the Company Letter sets forth
a good faith estimate of the amounts that will become payable to employees of
the Company under the terms of any employment agreements, bonus agreements,
severance agreements, severance plans and similar obligations as a result of the
consummation of the transactions contemplated by this Agreement.
     Section 4.12 Litigation. As of the date hereof, there is no outstanding
judgment, order, writ, injunction or decree and no suit, claim, audit, action,
proceeding, arbitration or investigation pending or, to the Knowledge of the
Company, threatened against the Company or any of its Subsidiaries that could
reasonably be expected to have a Material Adverse Effect on the Company or that
seeks to materially delay or prevent the consummation of the transactions
contemplated hereby. Except as set forth in Item 4.12 of the Company Letter,
none of the Company or any of its Subsidiaries is subject to any order,
judgment, writ, injunction or decree, except as would not have a Material
Adverse Effect on the Company.
     Section 4.13 State Takeover Statutes. The Company has taken all action
required to be taken by it in order to exempt this Agreement, the Parent Asset
Purchase Agreement, the Arizona Asset Purchase Agreement and the Merger from,
and this Agreement, the Parent Asset Purchase Agreement, the Arizona Asset
Purchase Agreement and the Merger are exempt from, the requirements of any “fair
price,” “moratorium,” “control share acquisition” or other similar antitakeover
statute or regulation enacted under state or federal Laws in the United States,
including the Maryland Business Combination Act and the Maryland Control Share
Acquisition Act, or any takeover provision in the Company Charter or Company
Bylaws.
     Section 4.14 Intellectual Property. Item 4.14 of the Company Letter
contains a complete and accurate list of all registered Marks and material
unregistered Marks and issued Patents and pending applications for Patents or
pending registrations for Marks, in each case owned or purported to be owned by
the Company and/or used in the conduct of the business of the Company. The
Company and its Subsidiaries own, or are validly licensed or otherwise have the
right to use, in each case free and clear of all Liens, except for Permitted
Liens, all Intellectual Property purported to be owned by the Company and/or
used in the conduct of the business of the Company and its Subsidiaries as
currently conducted, except for such Intellectual Property where the failure to
so own, be validly licensed or have the right to use would not reasonably be
expected to have a Material Adverse Effect on the Company (the “Company
Intellectual Property”). Except as would not reasonably be expected to have a
Material Adverse Effect on the Company, all registrations and applications filed
by the Company or its Subsidiaries with respect to Intellectual Property owned
or purported to be owned by the Company or any Subsidiary have been duly
maintained (including payment of maintenance fees) and are valid,

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enforceable, subsisting and unexpired. No claims are pending or, to the
Knowledge of the Company, threatened, (a) challenging the ownership,
enforceability, validity, or use by the Company or any Subsidiary of any Company
Intellectual Property, or (b) alleging that the Company or any of its
Subsidiaries is violating, misappropriating or infringing or otherwise adversely
affecting the rights of any Person with regard to any Company Intellectual
Property, other than claims that would not reasonably be expected to have a
Material Adverse Effect on the Company. Except as would not reasonably be
expected to have a Material Adverse Effect on the Company, (i) to the Knowledge
of the Company, no Person is infringing the rights of the Company or any of its
Subsidiaries with respect to any Company Intellectual Property and (ii) the
operation of the business of the Company and its Subsidiaries as currently
conducted does not violate, misappropriate or infringe (or has since
December 31, 2004 violated, misappropriated or infringed) the Intellectual
Property of any other Person, other than the rights of any other Person under
any Patent, and to the Knowledge of the Company, the operation of the business
of the Company and its Subsidiaries as currently conducted does not violate,
misappropriate or infringe (or has since December 31, 2004 violated,
misappropriated or infringed) the Intellectual Property of any other Person
under any Patent. To the Knowledge of the Company, no other Person is violating,
misappropriating or infringing any of the Company Intellectual Property. The
Company has taken reasonable security measures to protect the secrecy,
confidentiality and value of any Trade Secrets owned by the Company that are
used in and material to the conduct of the business of the Company.
     Section 4.15 Properties.
          (a) Item 4.15(a) of the Company Letter sets forth a correct and
complete list of all the Owned Real Property owned or held by the Company and
its Subsidiaries as of the date of this Agreement.
          (b) Item 4.15(b) of the Company Letter sets forth a correct and
complete list as of the date of this Agreement of (i) all the Leased Real
Property and (ii) each ground lease with a third party pursuant to which the
Company or any of its Subsidiaries is a lessee and, in each case, the Subsidiary
of the Company holding the leasehold interest, the date of the lease and each
material amendment or guaranty or other material agreement relating thereto (the
leases referred to in clauses (i) and (ii), collectively, the “Lease
Documents”). True, correct and complete copies of all Lease Documents have been
made available to Parent. Each of the Lease Documents is valid, binding and in
full force and effect, in all material respects, as against the Company or its
applicable Subsidiary and, to the Company’s Knowledge, as against the other
party thereto. As of the date hereof, neither the Company nor any of its
Subsidiaries or, to the Company’s Knowledge, other party is in material breach
or violation of, or material default (in each case, with or without notice or
lapse of time or both) under, any of the Lease Documents and none of the Company
or any of its Subsidiaries has received or given any written notice of material
default under any such agreement which remains uncured.
          (c) Except as would not reasonably be expected to have a Material
Adverse Effect on the Company, (i) the Company or one of its Subsidiaries has
good fee simple title to all Owned Real Property and valid leasehold estates in
all Leased Real Property, free and clear of all Liens, except for Permitted
Liens and (ii) there are no pending or, to the Knowledge of the Company,
threatened condemnation, eminent domain or similar proceedings or actions
affecting

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any portion of the Company Properties, and, neither the Company nor any of its
Subsidiaries has received any written notice of the intention of any
Governmental Entity or other Person to take or use any of the Company
Properties.
          (d) Company Title Insurance Policies have been issued insuring, as of
the effective date of each such Company Title Insurance Policy, the Company’s or
the applicable Subsidiary’s (or the applicable predecessor’s or acquiror’s) fee
simple or leasehold title to the Company Properties, subject only to Permitted
Liens, and to the Company’s Knowledge, such policies are, at the date hereof,
valid and in full force and effect and no written claim has been made against
any such policy. A true, accurate, and complete copy of each Company Title
Insurance Policy has been made available to the Buyer Parties.
          (e) Since January 1, 2005, neither the Company nor any of its
Subsidiaries has received any written notice to the effect that (i) any rezoning
proceedings adversely affecting the current use as a hotel of any of the Company
Properties are pending or, to the Knowledge of the Company, threatened with
respect to any of the Company Properties, or (ii) any laws including any zoning
regulation or ordinance, building or similar Law have been violated for any
Company Property, or will be violated by the continued maintenance, operation or
use of any buildings or other improvements on any of the Company Properties,
that, in the case of clauses (i) and (ii) above, would reasonably be expected to
have a Material Adverse Effect on the Company.
          (f) Except as set forth on Item 4.15(f) of the Company Letter, there
are no unexpired option agreements or rights of first refusal with respect to
the purchase of any real property that is owned or held by the Company or any of
its Subsidiaries.
          (g) Item 4.15(g) of the Company Letter lists each franchise, license
or other similar agreement providing the right to utilize a brand name or other
rights of a hotel chain or system at any Company Property and sets forth the
Company or any of its Subsidiary party to such agreement, the date of such
agreement and each material amendment, guaranty or other material agreement
binding on the Company or any of its Subsidiary and relating thereto
(collectively, “Third Party Franchise Agreements”). True, correct and complete
copies of each Third Party Franchise Agreement, including so-called property
improvement plans required to be completed by the franchisor or any property
improvement plans proposed by the franchisor, have been made available to the
Buyer Parties. Each Third Party Franchise Agreement is valid, binding and in
full force and effect, in all material respects, as against the Company or any
of its applicable Subsidiaries, and, to the Knowledge of the Company, as against
the other party thereto. Neither the Company nor any of its Subsidiaries is
liable for any termination, cancellation or other similar fees or any liquidated
damages under any franchise, license or similar agreements providing the right
to utilize a brand name or other rights of a hotel chain or system in connection
with or relating to any hotel previously owned or leased by the Company or any
of its Subsidiaries.
          (h) Item 4.15(h) of the Company Letter lists each management agreement
pursuant to which any third party manages or operates any Company Property or
material portion thereof on behalf of the Company or any of its Subsidiaries,
and identifies the property that is subject to such management agreement, the
Company or its Subsidiary that is a party, the date of such management agreement
and each material amendment, guaranty or other material

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agreement binding on the Company or any of its Subsidiaries and relating thereto
(collectively, the “Management Agreement Documents”). True, correct and complete
copies of all Management Agreement Documents have been made available to Parent.
Each of the Management Agreement Documents is valid, binding and in full force
and effect, in all material respects, as against the Company or its applicable
Subsidiary and, to the Company’s Knowledge, as against the other party thereto.
          (i) There are no structural defects or adverse physical conditions
affecting any Company Property or the improvements thereon and all building
systems are in good working condition, except as would not have a Material
Adverse Effect on the Company.
          (j) Item 4.15(j) of the Company Letter sets forth a correct and
complete list, as of the date hereof, of all agreements for the pending
acquisition, sale, option to sell, right of first refusal, right of first offer
or any other contractual right to sell, dispose of, or lease (by merger,
purchase or sale of assets or stock or otherwise) any personal property valued
at $2,000,000 or more. The Company and each of its Subsidiaries have good and
sufficient title, in all material respects, to all the material personal and
non-real properties and assets reflected in their books and records as being
owned by them, free and clear of all Liens, except for Permitted Liens.
          (k) A true, accurate and complete copy of all material equipment and
personal property leases, Major Space Leases, and Hotel Contracts entered into
by the Company and each of its Subsidiaries has been made available to the Buyer
Parties.
     Section 4.16 Environmental Laws. Except as would not reasonably be expected
to have a Material Adverse Effect on the Company:
          (a) Each of the Company and its Subsidiaries is, and at all times
during the Company’s and each of its Subsidiaries’ ownership and operation of
the Company Properties has been, in compliance with applicable Environmental
Laws except for any noncompliance which has been remedied;
          (b) Each of the Company and its Subsidiaries has obtained and
currently possesses and maintains in good standing, and has been and is in
compliance with the terms and subject to the conditions thereof, all Permits
required by Environmental Laws in connection with their ownership or operation
of the Company Properties or the development by the Company or its Subsidiaries
of the Company Properties; provided, that with respect to any permit required to
be obtained by any lessee of a Company Property or any Person other than the
Company or its Subsidiaries with respect to the conduct of business on the
Company Properties, the representation contained in this subsection (b) is
limited to the Knowledge of the Company;
          (c) There are no wetlands (as that term is defined in Section 404 of
the Federal Water Pollution Control Act, as amended, 33 U.S.C. Section 1254, and
applicable state laws) at any of the Company Properties, that would reasonably
be expected to adversely affect any ongoing development or currently planned
development;
          (d) All asbestos or asbestos-containing materials and lead-based paint
at any Company Property have been and are managed in accordance with
Environmental Laws pursuant to an operations and maintenance program;

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          (e) Neither the Company nor any of its Subsidiaries has received any
written notice alleging that the Company or any of its Subsidiaries may be in
violation of, or liable under, or a potentially responsible party pursuant to,
the Comprehensive Environmental Response, Compensation, and Liability Act of
1980 (or any other Environmental Law) that has not been resolved without further
liability to the Company, and to the Knowledge of the Company, there is no basis
for any such notice or claim;
          (f) Neither the Company nor any of its Subsidiaries has released,
stored, treated or disposed or transported, and to the Knowledge of the Company,
no other Person has released, stored, treated or disposed or transported,
Hazardous Substances on or from any of the Company Properties in a manner that
would reasonably be expected to result in liability under Environmental Laws;
          (g) Neither the Company nor any of its Subsidiaries (i) has entered
into or agreed to any consent decree or order or is a party to any judgment,
decree or judicial or administrative order relating to compliance with
Environmental Laws, Permits or the investigation, sampling, monitoring,
treatment, remediation, removal or cleanup of Hazardous Substances and no
investigation, litigation or other proceeding is pending or threatened in
writing with respect thereto or (ii) has assumed, by contract or operation of
Law, any liability under any Environmental Law or relating to any Hazardous
Substances or is an indemnitor in connection with any threatened or asserted
claim by any third-party indemnitee for any liability under any Environmental
Law or relating to any Hazardous Substances.
          (h) No Liens have been imposed or are in effect on any of the Company
Properties pursuant to any Environmental Law;
          (i) Underground storage tanks on any Company Property are in
compliance with applicable Environmental Laws; and
          (j) The Company has made available to the Buyer Parties true and
complete copies of all environmental reports, investigations, assessments
audits, Permits and material correspondence relating to compliance under or
liability pursuant to Environmental Laws in the possession or within the control
of the Company or any of its Subsidiaries.
     Section 4.17 Employment and Labor Matters.
          (a) (i) No employees of the Company or any of its Subsidiaries are
represented by any labor organization and neither the Company nor any of its
Subsidiaries is a party to any collective bargaining agreement; (ii) no labor
organization or group of employees of the Company or any of its Subsidiaries or,
to the Knowledge of the Company, any third party manager of the Company
Properties has made a written demand for recognition or certification; (iii) to
the Knowledge of the Company, there are no representation or certification
proceedings or petitions seeking a representation proceeding presently filed, or
to the Knowledge of the Company, threatened in writing to be brought or filed
with the National Labor Relations Board or any other labor relations tribunal or
authority concerning any employee of the Company or any of its Subsidiaries;
(iv) to the Knowledge of the Company, there are no organizing activities
involving the employees of the Company or any of its Subsidiaries pending with
any labor

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organization or group of employees of the Company or any of its Subsidiaries,
and (v) there is no actual or threatened work stoppage strike or other labor
disturbance involving employees of the Company, any of its Subsidiaries or, to
the Knowledge of the Company, any third party manager of the Company Properties.
          (b) There are no unfair labor practice charges, grievances or
complaints filed or, to the Company’s Knowledge, threatened in writing by or on
behalf of any employee or group of employees of the Company or any of its
Subsidiaries that have not been settled or remedied that would reasonably be
expected to have a Material Adverse Effect on the Company and its Subsidiaries,
taken as a whole.
          (c) There are no complaints, charges or claims against the Company or
any of its Subsidiaries filed or, to the Knowledge of the Company, threatened in
writing to be brought or filed, with any federal, state or local Governmental
Entity or arbitrator based on, arising out of, in connection with, or otherwise
relating to the employment or termination of employment of any individual by the
Company, any of its Subsidiaries or third party manager of the Company
Properties that have not been settled or remedied that would reasonably be
expected to have a Material Adverse Effect on the Company and its Subsidiaries,
taken as a whole.
          (d) With respect to employees of the Company and its Subsidiaries, the
Company and each of its Subsidiaries are in compliance with all laws relating to
the employment of labor, including all such laws relating to wages, hours, the
Worker Adjustment and Retraining Notification Act (as amended, “WARN”) and any
similar state or local “mass layoff” or “plant closing” Law, collective
bargaining, discrimination, civil rights, safety and health, workers’
compensation and the collection and payment of withholding and/or social
security Taxes and any similar Tax, except for any non-compliance that would not
reasonably be expected to have a Material Adverse Effect on the Company; and
there has been no “mass layoff” or “plant closing” as defined by WARN with
respect to the Company or any of its Subsidiaries within the last six
(6) months. To the Knowledge of the Company, with respect to the employees of
any third party manager of any Company Property, any such third party manager is
in material compliance with all laws relating to the employment of labor,
including all such laws relating to wages, hours, WARN and any similar state or
local “mass layoff” or “plant closing” Law, collective bargaining,
discrimination, civil rights, safety and health, workers’ compensation and the
collection and payment of withholding and/or social security Taxes and any
similar Tax, except for any non-compliance that would not reasonably be expected
to have a Material Adverse Effect on the Company; and, to the Knowledge of the
Company, there has been no “mass layoff” or “plant closing” as defined by WARN
with respect to any third party manager of any Company Property within the last
six (6) months except as would not reasonably be expected to have a Material
Adverse Effect on the Company.
     Section 4.18 Material Contracts.
          (a) Except as filed as exhibits to the Company SEC Documents prior to
the date of this Agreement, none of the Company or any of its Subsidiaries is a
party to or bound by any contract that, as of the date hereof:

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(i) is a “material contract” (as such term is defined in Item 601(b)(10) of
Regulation S-K under the Securities Act);
(ii) calls for aggregate payments by the Company or any of its Subsidiaries
under such contract of more than $12,000,000 over the remaining term of such
contract;
(iii) calls for annual aggregate payments by the Company or any of its
Subsidiaries under such contract of more than $5,000,000 over the remaining term
of such contract;
(iv) contains any non-compete or exclusivity provisions binding on the Company
or any of its Subsidiaries with respect to any line of business or geographic
area with respect to the Company or any of its Subsidiaries, or that restricts
the conduct of any line of business by the Company or any of its Subsidiaries or
any geographic area in which the Company or any of its Subsidiary may conduct
business;
(v) creates any (x) material partnership, limited liability company agreement,
joint venture or other similar agreement entered into with any third party or
(y) management, operating, franchise, license or other similar agreement entered
into with any third party;
(vi) provides for the purchase, sale or exchange of, or option to purchase, sell
or exchange any real property of the Company or any of its Subsidiaries;
(vii) is a contract or agreement pursuant to which the Company or any of its
Subsidiaries agrees to indemnify or hold harmless any director or executive
officer of the Company or any of its Subsidiaries (other than the organizational
documents for the Company or its Subsidiaries);
(viii) is a material loan agreement, guaranty, letter of credit, indenture,
note, bond, debenture, mortgage or any other agreement or instrument evidencing
a capitalized leased obligation or other indebtedness of, or for the benefit of,
the Company or any Subsidiary or any guaranty thereof; or
(ix) is an interest rate cap, interest rate collar, interest rate swap, currency
hedging transaction or any other similar agreement to which the Company or any
of its Subsidiaries is a party.
     Each contract of the type described in this Section 4.18(a), whether or not
set forth in Item 4.18 of the Company Letter, is referred to herein as a
“Material Contract.”
          (b) Each Material Contract is valid and binding, in all material
respects, on the Company and/or each of its Subsidiaries party thereto, and, to
the Knowledge of the Company, each other party thereto.

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          (c) Neither the Company nor any of its Subsidiaries is in default
under any Material Contract and no event or circumstance, with or without notice
or the passage of time, has occurred pursuant to any Material Contract which
would result in a default or acceleration of payment, or forfeiture of any
rights, except as would not (i) prevent or materially delay the consummation of
the Merger, the Parent Asset Purchase or the Arizona Asset Purchase and the
other transactions contemplated by this Agreement or (ii) result in a Material
Adverse Effect on the Company. To the Knowledge of the Company, no counterparty
of the Company or any of its Subsidiaries, as applicable, under any Material
Contract has failed to perform its material obligations thereunder when required
to be so performed and each is current in its material obligations to the
Company or its Subsidiaries, as applicable, thereunder.
          (d) Prior to the date hereof, the Company has made available true,
correct and complete copies of all agreements described in Section 4.18(a).
     Section 4.19 Insurance Policies. Item 4.19 of the Company Letter sets forth
as of the date hereof, a correct and complete list of the insurance policies,
other than the Company Title Insurance Policies, held by, or for the benefit of,
the Company or any of its Subsidiaries, including the underwriter of such
policies and the amount of coverage thereunder. Except as would not reasonably
be expected to have a Material Adverse Effect on the Company, (a) all insurance
policies maintained by the Company and its Subsidiaries are in full force and
effect and provide insurance in such amounts and against such risks as the
management of the Company reasonably has determined to be prudent in accordance
with industry practices and commercially available or as is required by Law, and
all premiums due and payable thereon have been paid and (b) neither the Company
nor any Subsidiary is in material breach or default of any of the insurance
policies, and neither the Company nor any Subsidiary has taken any action or
failed to take any action which, with notice or the lapse of time, would
constitute such a breach or default or permit termination or material
modification of any of the insurance policies currently in effect. The Company
has not received any notice of termination or cancellation or denial of coverage
with respect to any material insurance policy currently in effect. Except as set
forth in Item 4.19 of the Company Letter, such policies will not terminate by
their terms as a result of the consummation of the transactions contemplated by
this Agreement.
     Section 4.20 Affiliate Transactions. There are no material transactions,
agreements, arrangements or understandings between (a) the Company or any of its
Subsidiaries, on the one hand, and (b) any officer, director or Affiliate of the
Company (other than any of its Subsidiaries), on the other hand, of the type
that are required to be disclosed under Item 404 of Regulation S-K under the
Securities Act which have not been so disclosed.
     Section 4.21 Opinion of the Company’s Financial Advisors. The Board has
received an opinion from each of Banc of America Securities LLC and Houlihan
Lokey Howard & Zukin Financial Advisors, Inc. to the effect that, as of the date
of such opinions, the $20.50 per share cash consideration to be received by
holders of the Company Common Stock (other than the Buyer Parties and their
respective Affiliates) is fair, from a financial point of view, to such holders.
The Company shall deliver an executed copy of such opinions to Parent solely for
informational purposes promptly following the Company’s receipt thereof.

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     Section 4.22 Brokers. No broker, investment banker, financial advisor or
other Person, other than Banc of America Securities LLC, UBS Securities LLC and
Houlihan Lokey Howard & Zukin Financial Advisors, Inc. (or Hodges Ward Elliot in
connection with the Marketed Portfolio Sale), is entitled to any broker’s,
finder’s, financial advisor’s or other similar fee or commission in connection
with the transactions contemplated by this Agreement based upon arrangements
made by or on behalf of the Company. The Company promptly will make available to
the Buyer Parties a correct and complete copy of all agreements between the
Company and each of Banc of America Securities LLC, UBS Securities LLC, and
Houlihan Lokey Howard & Zukin Financial Advisors, Inc.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT, SUB AND MISSOURI
     Each of Parent, Sub and Missouri, jointly and severally, hereby represents
and warrants to the Company as follows:
     Section 5.1 Organization. Each of Parent, Sub and Missouri is a limited
liability company duly organized, validly existing and in good standing under
the Laws of the jurisdiction of its formation and has the requisite power and
authority to carry on its business as now being conducted.
     Section 5.2 Authority. Each of Parent, Sub and Missouri has the requisite
power and authority to execute and deliver this Agreement and to consummate the
Merger and the other transactions contemplated hereby, including the Parent
Asset Sale. The execution, delivery and performance of this Agreement by Parent,
Sub and Missouri and the consummation by each of Parent, Sub and Missouri of the
Merger and of the other transactions contemplated hereby, including the Parent
Asset Sale, have been duly authorized by all necessary action on the part of
each of Parent, Sub and Missouri. This Agreement has been duly executed and
delivered by each of Parent, Sub and Missouri and (assuming the valid
authorization, execution and delivery of this Agreement by the Company and
Arizona) constitutes the legal, valid and binding obligation of each of Parent,
Sub and Missouri enforceable against each of them in accordance with its terms.
     Section 5.3 Consents and Approvals; No Violations. Except (a) for filings,
permits, authorizations, consents and approvals as may be required under, and
other applicable requirements of, the Securities Act, the Exchange Act, the HSR
Act, the MGCL, the DLLCA, state securities Laws and other applicable competition
Law clearances, if any, and (b) as may be required in connection with the Taxes
described in Section 8.7, neither the execution, delivery or performance of this
Agreement by Parent, Sub and Missouri nor the consummation by Parent, Sub or
Missouri of the transactions contemplated hereby will (i) conflict with or
result in any breach of any provision of the respective certificate of formation
and other organizational documents of Parent, Sub or Missouri, (ii) require any
filing with, or permit, authorization, consent or approval of, any Governmental
Entity (except where the failure to obtain such permits, authorizations,
consents or approvals or to make such filings has not had and would not
reasonably be expected to have a Material Adverse Effect on Parent),
(iii) conflict with or result in a breach of, or constitute (with or without due
notice or lapse of time or both) a default (or

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give rise to any right of termination, amendment, cancellation or acceleration)
under, or result in a loss of benefit under, any of the terms, conditions or
provisions of any Contract to which Parent, any of its Subsidiaries or Missouri
is a party or by which any of them or any of their properties or assets may be
bound, (iv) violate any Law, order, writ, injunction, judgment, decree, statute,
rule or regulation applicable to Parent, any of its Subsidiaries, Missouri or
any of their properties or assets or (v) require Parent, any of its Subsidiaries
(including Sub) or Missouri to make any payment to any third Person, except in
the case of clauses (iii), (iv) or (v) for breaches, defaults, terminations,
amendments, cancellations, accelerations, losses of benefits, violations or
payments that have not had and would not reasonably be expected to have a
Material Adverse Effect on Parent.
     Section 5.4 Information Supplied. None of the information supplied or to be
supplied by Parent, Sub or Missouri, or any of their representatives,
specifically for inclusion or incorporation by reference in the Proxy Statement
will, at the time the Proxy Statement is first mailed to the Company’s
stockholders or at the time of the Stockholders’ Meeting, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they are made, not misleading, except
that no representation or warranty is made by Parent, Sub or Missouri with
respect to statements made or incorporated by reference therein based on
information supplied by the Company or Arizona or any of their representatives
specifically for inclusion or incorporation by reference therein.
     Section 5.5 Litigation. As of the date hereof, there is no outstanding
judgment, order, writ, injunction or decree and no suit, claim, audit, action,
proceeding, arbitration or investigation pending or, to the Knowledge of Parent
or any of its Subsidiaries (including Sub), threatened against Parent, any of
its Subsidiaries (including Sub) or Missouri that has had or would reasonably be
expected to have a Material Adverse Effect on Parent.
     Section 5.6 Capitalization of Sub. All of the issued and outstanding
membership interests of Sub and Missouri are, and at the Effective Time will be,
owned by Parent or a direct or indirect wholly-owned Subsidiary of Parent. Sub
and Missouri have not conducted any business prior to the date hereof and have
no, and prior to the Effective Time will have no, assets, liabilities or
obligations of any nature other than those incident to their formation and
pursuant to this Agreement and the Merger and the other transactions
contemplated by this Agreement, including the Parent Debt Financing.
     Section 5.7 Financing. Parent has delivered to the Company true and
complete copies of (a) an executed commitment letter from Morgan Stanley Asset
Funding, Inc. to invest in preferred equity of Parent in an aggregate amount set
forth therein (the “Parent Preferred Equity Funding Letter”) and (b) an executed
commitment letter (the “Parent Commitment Letter”) from Morgan Stanley Mortgage
Capital Inc. to provide debt financing in an aggregate amount set forth therein
(the “Parent Debt Financing,” and together with the financing referred to in
clause (a) being collectively referred to as the “Parent Financing”). None of
the Parent Preferred Equity Funding Letter or the Parent Commitment Letter has
been amended or modified prior to the date of this Agreement and the respective
commitments contained in such letters have not been withdrawn or rescinded in
any respect. Parent has fully paid any and all commitment fees or other fees in
connection with the Parent Preferred Equity Funding Letter and the Parent

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Commitment Letter that are payable on or prior to the date hereof, and the
Parent Preferred Equity Funding Letter and the Parent Commitment Letter are in
full force and effect and are the valid, binding and enforceable obligations of
Parent and, to the Knowledge of Parent, the other parties thereto. There are no
conditions precedent related to the funding of the full amount of the Parent
Financing, other than as set forth in or expressly contemplated by the Parent
Preferred Equity Funding Letter or the Parent Commitment Letter. The aggregate
proceeds contemplated by the Parent Preferred Equity Funding Letter and the
Parent Commitment Letter, together with the amounts funded by the other equity
owners of Parent, will be sufficient for Sub to pay the aggregate Per Share
Merger Consideration and for Missouri to pay the purchase price for the Parent
Asset Sale and for each of them to pay all related fees and expenses. As of the
date hereof, no event has occurred which, with or without notice, lapse of time
or both, would constitute a default on the part of Parent, Sub or Missouri under
the Parent Preferred Equity Funding Letter and the Parent Commitment Letter and,
as of the date of this Agreement, Parent does not have any reason to believe
that any of the conditions to the Parent Financing will not be satisfied or that
the Parent Financing will not be available to Sub at the Closing.
     Section 5.8 Brokers. No broker, investment banker, financial advisor or
other Person is entitled to any broker’s, finder’s, financial advisor’s or other
similar fee or commission in connection with the transactions contemplated by
this Agreement based upon arrangements made by or on behalf of Parent, Sub or
Missouri.
     Section 5.9 Certain Tax Matters. Parent’s ownership of the Surviving Entity
as of and after the Effective Time will not cause the Surviving Entity or any
Company Subsidiary REIT to fail to satisfy any requirements for qualification as
a REIT for the taxable year that includes the Effective Time.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF ARIZONA
     Arizona hereby represents and warrants to the Company as follows:
     Section 6.1 Organization. Arizona is a limited liability company duly
organized, validly existing and in good standing under the Laws of the
jurisdiction of its formation and has the requisite power and authority to carry
on its business as now being conducted.
     Section 6.2 Authority. Arizona has the requisite power and authority to
execute and deliver this Agreement and to consummate the Arizona Asset Sale. The
execution, delivery and performance of this Agreement by Arizona and the
consummation by Arizona of the Arizona Asset Sale have been duly authorized by
all necessary action on the part of the board of managers of Arizona. This
Agreement has been duly executed and delivered by Arizona and (assuming the
valid authorization, execution and delivery of this Agreement by the Company,
Parent and Sub) constitutes the legal, valid and binding obligation of Arizona
enforceable against Arizona in accordance with its terms.
     Section 6.3 Consents and Approvals; No Violations. Except (a) for filings,
permits, authorizations, consents and approvals as may be required under, and
other applicable requirements of, the Securities Act, the Exchange Act, the HSR
Act, the MGCL, the DLLCA,

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state securities Laws and other applicable competition Law clearances, if any,
and (b) as may be required in connection with the Taxes described in
Section 8.7, neither the execution, delivery or performance of this Agreement by
Arizona nor the consummation by Arizona of the Arizona Asset Sale will
(i) conflict with or result in any breach of any provision of the certificate of
formation and other organizational documents of Arizona, (ii) require any filing
with, or permit, authorization, consent or approval of, any Governmental Entity
(except where the failure to obtain such permits, authorizations, consents or
approvals or to make such filings has not had and would not reasonably be
expected to have a Material Adverse Effect on Arizona), (iii) conflict with or
result in a breach of, or constitute (with or without due notice or lapse of
time or both) a default (or give rise to any right of termination, amendment,
cancellation or acceleration) under, or result in a loss of benefit under, any
of the terms, conditions or provisions of any Contract to which Arizona or any
of its Subsidiaries is a party or by which any of them or any of their
properties or assets may be bound, (iv) violate any Law, order, writ,
injunction, judgment, decree, statute, rule or regulation applicable to Arizona,
any of its Subsidiaries or any of their properties or assets or (v) require
Arizona or any of its Subsidiaries to make any payment to any third Person,
except in the case of clauses (iii), (iv) or (v) for breaches, defaults,
terminations, amendments, cancellations, accelerations, losses of benefits,
violations or payments that have not had and would not reasonably be expected to
have a Material Adverse Effect on Arizona.
     Section 6.4 Information Supplied. None of the information supplied or to be
supplied by Arizona, or any of their representatives, specifically for inclusion
or incorporation by reference in the Proxy Statement will, at the time the Proxy
Statement is first mailed to the Company’s stockholders or at the time of the
Stockholders’ Meeting, contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in order
to make the statements therein, in the light of the circumstances under which
they are made, not misleading, except that no representation or warranty is made
by Arizona with respect to statements made or incorporated by reference therein
based on information supplied by the Company or Parent or any of their
representatives specifically for inclusion or incorporation by reference
therein.
     Section 6.5 Litigation. As of the date hereof, there is no outstanding
judgment, order, writ, injunction or decree and no suit, claim, audit, action,
proceeding, arbitration or investigation pending or, to the Knowledge of Arizona
or any of its Subsidiaries, threatened against Arizona or any of its
Subsidiaries that has had or would reasonably be expected to have a Material
Adverse Effect on Arizona.
     Section 6.6 Financing. Arizona has delivered to the Company true and
complete copies of executed commitment letters (the “Arizona Commitment
Letters”) from Wachovia Capital Markets, LLC to provide debt financing in an
aggregate amount set forth therein (being collectively referred to as the
“Arizona Debt Financing”). The Arizona Commitment Letters have not been amended
or modified prior to the date of this Agreement, no such amendment or
modification is contemplated, and the respective commitments contained in such
letters have not been withdrawn or rescinded in any respect. Arizona has fully
paid any and all commitment fees or other fees in connection with the Arizona
Commitment Letters that are payable on or prior to the date hereof, and the
Arizona Commitment Letters are in full force and effect and are the valid,
binding and enforceable obligations of Arizona and, to the Knowledge of Arizona,
the other parties thereto. There are no conditions precedent related to the
funding of the full amount

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of the Arizona Debt Financing, other than as set forth in or expressly
contemplated by the Arizona Commitment Letters. The aggregate proceeds
contemplated by the Arizona Commitment Letters, together with the amounts funded
by the equity owner of Arizona, will be sufficient for Arizona to pay the
purchase price for the Arizona Asset Sale and any other repayment or refinancing
of debt contemplated in the Arizona Commitment Letters or the Arizona Debt
Financing and to pay all related fees and expenses. As of the date hereof, no
event has occurred which, with or without notice, lapse of time or both, would
constitute a default on the part of Arizona under the Arizona Commitment Letters
and, as of the date of this Agreement, Arizona does not have any reason to
believe that any of the conditions to the Arizona Debt Financing will not be
satisfied or that the Arizona Debt Financing will not be available to Arizona at
the time of consummation of the Arizona Asset Sale.
     Section 6.7 Brokers. No broker, investment banker, financial advisor or
other Person, other than Wachovia Capital Markets LLC and Eastdil Secured,
L.L.C., the fees and expenses of which will be paid by Arizona, is entitled to
any broker’s, finder’s, financial advisor’s or other similar fee or commission
in connection with the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of Arizona.
ARTICLE VII
COVENANTS RELATING TO CONDUCT OF BUSINESS
     Section 7.1 Conduct of Business by the Company Pending the Merger. Except
as (v) required by applicable Law or by a Governmental Entity, (w) expressly
permitted or required by this Agreement, (x) for any action expressly required
by the Marketed Portfolio Purchase and Sale Agreement (including the retirement
of any Indebtedness in connection therewith), (y) otherwise set forth in the
Company Letter or (z) consented to by Parent in writing (which consent shall not
be unreasonably withheld, delayed or conditioned), during the period from the
date of this Agreement until the Effective Time (or such earlier date on which
this Agreement may be terminated in accordance with its terms), the Company
shall, and shall cause each of its Subsidiaries to, in all material respects
carry on its business in the ordinary course consistent with past practice and,
to the extent consistent therewith, the Company and its Subsidiaries shall use
their respective reasonable best efforts to preserve substantially intact their
business organizations and Intellectual Property and maintain in all material
respects, existing relations and goodwill with tenants, management companies,
customers, suppliers, officers and employees and others having business dealings
with them and, except as provided in clauses (v)-(z) above, during such period,
the Company shall not, and shall not permit any of its Subsidiaries to, without
the prior written consent of Parent (which consent shall not be unreasonably
withheld, delayed or conditioned; provided, that, for purposes of this
Section 7.1, a failure of Parent to respond to a request for consent from the
Company within five (5) Business Days from the receipt of such request shall be
deemed to constitute consent to such request):
          (a) (i) declare, set aside or pay any dividends on, or make any other
distributions in respect of, any of its stock or equity interests (except to the
extent necessary to maintain the Company’s status as a REIT or to eliminate any
Taxes otherwise payable (provided that any such dividend or distribution shall
require prior consultation with Parent) and dividends paid by any direct or
indirect Subsidiary to the Company or to any other direct or indirect Subsidiary
of the Company in the ordinary course of business consistent with past practice)
or

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(ii) split, combine or reclassify or redeem, purchase or otherwise acquire,
directly or indirectly, any of its or its Subsidiaries’ stock or equity
interests or securities convertible or exchangeable into or exercisable for any
shares of its or its Subsidiaries’ stock or equity interests, or issue or
authorize the issuance of any other securities in respect of, in lieu of or in
substitution for shares of its or its Subsidiaries’ stock or equity interests or
securities convertible or exchangeable into or exercisable for any shares of its
or its Subsidiaries’ stock or equity interests, except (x) as required by the
terms of such securities issued prior to the date of this Agreement, (y) for any
such transaction by a wholly-owned Subsidiary of the Company which remains a
wholly-owned Subsidiary after the consummation of such transaction or (z) the
acquisition of any Shares tendered by current or former employees or directors
in order to pay Taxes in connection with the vesting of Deferred Share Awards
outstanding on the date of this Agreement or expressly permitted to be issued
under this Agreement, in accordance with the terms of the Deferred Share Awards;
          (b) issue, sell, pledge, dispose of, grant, transfer or encumber, or
authorize the issuance, sale, pledge, disposition, grant, transfer or
encumbrance of, any shares of its or its Subsidiaries’ stock or equity
interests, any other voting securities or any securities convertible or
exchangeable into or exercisable for any such shares or interests, or any
rights, warrants or options to acquire, any such shares or interests, voting
securities or convertible or exchangeable securities, other than the issuance or
award of Shares in connection with Deferred Share Awards under the Company Stock
Plan outstanding on the date hereof;
          (c) adopt or propose any amendment to the Company Charter, the Company
Bylaws (other than to change the Company’s annual stockholder meeting date) or
the organizational documents of any Subsidiary;
          (d) acquire (by merger, consolidation, purchase of stock or assets or
otherwise), or agree to so acquire, in a single transaction or in a series of
related transactions, any Person, entity or division thereof, or otherwise
acquire or agree to acquire any assets outside the ordinary course consistent
with past practice having a purchase price in excess of $1,000,000 in the
aggregate (it being understood that this clause (d) shall not apply to capital
expenditures by the Company, which shall be covered by clause (e) below);
          (e) other than as required to avoid a breach of a Contract in effect
prior to the date of this Agreement (in which case the Company shall consult
with Parent to the extent reasonably requested by Parent), make or agree to make
any capital expenditure other than expenditures (i) out of reserves or escrows
for furniture, fixtures and equipment included in 2007 property budgets either
approved by the Company prior to the date hereof or, if the budget for a
property has not been approved prior to the date hereof, as made available to
Parent prior to the date hereof, (ii) reasonably required in response to an
incident at any Company Property to prevent further damage or injury to such
Company Property, following consultation with Parent or (iii) to the extent not
covered in clauses (i) or (ii), up to an aggregate amount of $1,000,000;
          (f) dispose of any Company Property or, other than for transactions
that are in the ordinary course of business or pursuant to Contracts in effect
prior to the date of this Agreement, transfer, sell, lease, license, mortgage,
pledge, surrender, encumber, divest, cancel, abandon or allow to lapse or expire
or otherwise dispose of (by merger, consolidation, sale of

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stock or assets or otherwise), or agree to transfer, sell, lease, license,
mortgage, pledge, surrender, encumber, divest, cancel, abandon or allow to lapse
or expire or otherwise dispose of, any entity, business or assets;
          (g) incur, guarantee or modify in any respect material and adverse to
the Company, any Indebtedness, other than Indebtedness (i) existing solely
between the Company and its wholly-owned Subsidiaries or among such wholly-owned
Subsidiaries or (ii) incurred in the ordinary course of business consistent with
past practice in an amount not to exceed $2,000,000 for all such incurrences,
guarantees and modifications in the aggregate or pursuant to Contracts in effect
prior to the execution of this Agreement;
          (h) other than as expressly required by Contracts in effect prior to
the date of this Agreement, make any loans, advances or capital contributions
to, or investments in, any other Person (other than the Company or any direct or
indirect wholly-owned Subsidiary of the Company);
          (i) (i) increase the salary, wages or other compensation payable or to
become payable to or the fringe benefits of its directors, officers or
employees, except for any increases required under employment agreements
existing on the date hereof, and except for increases for employees in the
ordinary course of business consistent with past practice; or (ii) enter into
any employment, change in control, consulting or severance agreement with, or
establish, adopt, enter into or amend any Benefit Plan, bonus, profit sharing,
thrift, stock option, restricted stock, pension, retirement, deferred
compensation, employment, change in control, termination or severance plan,
agreement, policy or arrangement for the benefit of, any director, officer or
employee of the Company, except, in each case, in the ordinary course of
business consistent with past practice, or as may be required by the terms of
any such plan, agreement, policy or arrangement existing on the date hereof and
disclosed in the Company Letter or to comply with applicable Law;
          (j) except as may be required by GAAP, as a result of a change in Law
or SEC rule, regulation or interpretation, make any material change in its
method of accounting;
          (k) other than in the ordinary course of business or to the extent
reasonably necessary to maintain the Company’s status as a REIT, (i) make,
change or revoke any material Tax election or (ii) settle or compromise any
material federal, state, local or foreign Tax liabilities; provided, that in the
event the Company takes any such action with respect to Taxes that is permitted
under this Section 7.1(k), the Company shall notify Parent of such action;
          (l) waive, release, settle or compromise any pending or threatened
suit, action, claim, arbitration, mediation, inquiry, proceeding or
investigation against the Company or any of its Subsidiaries, other than where
the amounts paid or to be paid either (A) do not exceed $1,000,000 in the
aggregate for all such waivers, releases, settlements or compromises or (B) are
fully covered by insurance coverage maintained by the Company; provided, in each
case that any such waiver, release, settlement or compromise includes a full
release of the Company with respect to the matters covered by the subject
litigation; provided, further, that no pending or threatened claim brought by or
on behalf of the Company’s stockholders may be settled without the prior written
consent of Parent;

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          (m) adopt or enter into a plan of complete or partial liquidation,
dissolution, restructuring or recapitalization of the Company or any of its
Subsidiaries;
          (n) modify or amend in any material respect or terminate any Material
Contract, Lease Documents (including ground leases), Third Party Franchise
Agreement or Management Agreement Documents or enter into any new contract or
agreement that, if entered into prior to the date of this Agreement, would have
been required to be listed in Item 4.18 of the Company Letter as a Material
Contract or enter into any new Lease Documents (including ground leases), Third
Party Franchise Agreement or Management Agreement Documents;
          (o) except as may be required by the terms thereof or in connection
with the Marketed Portfolio Sale, pre-pay any long-term debt, which shall be
deemed to include pre-payments or elective repayments of revolving credit
facilities or other similar lines of credit, payments made in respect of any
termination or settlement of any interest rate swap or other similar hedging
instrument relating thereto, or repayments of mortgage Indebtedness, or, except
in the ordinary course of business consistent with past practice, pay, discharge
or satisfy any material claims, liabilities or obligations (absolute, accrued,
contingent or otherwise);
          (p) initiate, continue or otherwise engage in any discussions, whether
formal or informal, or effect any filing, including administrative relief in the
form of a settlement or closing agreement or otherwise, with the IRS, including
any discussions relating to the classification of the “goodwill” or
“intangibles” of the Company or the ongoing audits of KSL Recreation Corporation
with respect to income Taxes;
          (q) take any action that is not in accordance in all material respects
with the Marketed Portfolio Purchase and Sale Agreement or take any action that
could reasonably be expected to materially frustrate or delay the consummation
of the Market Portfolio Sale;
          (r) amend or modify in any material respect or terminate or waive or
fail to enforce any material rights of the Subsidiaries of the Company under the
Marketed Portfolio Purchase and Sale Agreement;
          (s) fail to maintain in full force and effect the existing insurance
policies covering the Company and its Subsidiaries and their respective
properties, assets and businesses (unless such coverage cannot be maintained on
substantially similar terms, in which case the Company shall consult with
Parent);
          (t) adopt, renew, terminate, change or increase in any material
respect any liability or other obligations of the Company or any of its
Subsidiaries under any operating standards, loyalty programs or amenity packages
with the franchisors of any of the properties of the Company or its
Subsidiaries;
          (u) modify or amend in any material respect or terminate any Contract
with an Affiliate of the Company or modify in any material respect any material
relationship between the Company and its Affiliates, including the manner in
which the Company and its Affiliates own or holds their respective assets;
provided, that for purposes of this clause (u) only, “Affiliates” of the Company
shall be deemed to include Persons that were Affiliates of CNL Hospitality Corp.

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immediately prior to the time at which CNL Hospitality Corp. merged with, and
became, a Subsidiary of the Company; or
          (v) enter into any Contract to do any of the foregoing.
     Section 7.2 Acquisition Proposals.
          (a) No Solicitation. Neither the Company nor any of its Subsidiaries
shall, nor shall any of them authorize or permit any officer, director,
employee, or agent or any investment banker, financial advisor, attorney,
accountant or other representative (collectively, the “Representatives”) to,
directly or indirectly:
     (i) solicit, initiate, or knowingly facilitate or knowingly encourage any
inquiries regarding, or the making, submission or reaffirmation of any proposal
or offer that constitutes, or that reasonably may be expected to lead to the
submission of, any Acquisition Proposal;
     (ii) engage in, continue or otherwise participate in any discussions or
negotiations with, or furnish any non-public information or provide access to
its books, records or personnel to, any Person in respect of, or otherwise
cooperate with respect to, any Acquisition Proposal; or
     (iii) exempt any Person (other than the Buyer Parties) from the
restrictions on business combinations contained in Subtitle 6 of Title 3 of the
MGCL or from the similar restrictions contained in the Company Charter.
   Without limiting the foregoing, the Company shall be responsible for any
failure on the part of its Representatives to comply with this Section 7.2.
          (b) Notwithstanding anything to the contrary in this Section 7.2,
nothing contained in this Agreement shall prohibit the Company from, at any time
prior to receipt of the Company Stockholder Approval, furnishing any information
to, or entering into or participating in discussions or negotiations with, any
Person that makes an unsolicited bona fide Acquisition Proposal in writing that
did not otherwise result from a breach of this Section 7.2, if (i) the Board
determines in good faith after consulting with the Company’s legal counsel and
financial advisors that such Acquisition Proposal constitutes or is reasonably
likely to result in a Superior Proposal, (ii) prior to furnishing such
non-public information to, or entering into discussions or negotiations with,
such Person, the Company notifies Parent that it is furnishing information to,
or entering into discussions or negotiations with, such Person and (iii) prior
to furnishing such non-public information to such Person, the Company
(A) provides Parent with the information to be provided to such Person which
Parent has not previously been provided, and (B) receives from such Person an
executed confidentiality and standstill agreement no less favorable in any
material respect to the Company than the Confidentiality Agreement; it being
understood that such confidentiality agreement need not prohibit the making, or
amendment, of an Acquisition Proposal. The Company will not release any Person
from any standstill agreement or similar obligation to the Company or any
Subsidiary other than the automatic termination of standstill obligations
pursuant to the terms of agreements as in effect as of the date hereof, by
virtue of the execution and announcement of this Agreement or otherwise;
provided, that if the Company

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receives an Acquisition Proposal from a Person within 30 days from the date of
this Agreement, the Company may release such Person from such agreement or
obligation but only if the Board determines in good faith after consultation
with outside legal counsel that failure to take such action would be reasonably
likely to be inconsistent with the directors’ duties under applicable Law;
provided, however, that if the Board has not made a determination within 15 days
of the release that such Acquisition Proposal is a Superior Proposal, then the
waiver of such standstill agreement will be void and of no force or effect.
          (c) The Company shall provide prompt (but in no event more than
twenty-four (24) hours following receipt thereof) oral and written notice to
Parent of (i) the receipt of any Acquisition Proposal, or any material
modification or amendment to any Acquisition Proposal, by the Company, any
Subsidiary or any Representative, (ii) a copy of any documents or agreements
provided in contemplation of such Acquisition Proposal (including any
amendments, supplements or modifications thereto), (iii) the identity of such
Person making any such Acquisition Proposal and (iv) the Company’s intention, if
any, to furnish information to, or enter into discussions or negotiations with,
such Person. The Company shall keep Parent reasonably informed in all material
respects of the status and details (including any change to the material terms
and conditions thereof) of any such Acquisition Proposal. The Company shall not,
and shall cause each of the Subsidiaries not to, enter into any confidentiality
agreement with any Person subsequent to the date hereof which prohibits the
Company from providing such information to the Buyer Parties.
          (d) For purposes of this Agreement, (i) an “Acquisition Proposal”
means (A) any proposal or offer with respect to a merger, joint venture,
partnership, consolidation, dissolution, liquidation, tender offer,
recapitalization, reorganization, share exchange, business combination or
similar transaction other than the Marketed Portfolio Sale or (B) any other
direct or indirect acquisition, in the case of clause (A) or (B), involving 30%
or more of the total voting power or of any class of equity securities of the
Company, or 30% or more of the consolidated total assets (including, equity
securities of its Subsidiaries but excluding the assets associated with the
Marketed Portfolio Sale) of the Company, in each case other than the
transactions contemplated by this Agreement, and (ii) a “Superior Proposal”
means any bona fide Acquisition Proposal, (with all percentages in the
definition of Acquisition Proposal increased to 50%) that is on terms that the
Board determines in its good faith judgment (after consultation with the
Company’s independent financial advisor(s) and outside legal counsel), and after
taking into account all of the terms and conditions of such Acquisition Proposal
and such other factors as the Board considers to be appropriate (including,
without limitation, financing terms, any termination fee or expense
reimbursement payable under this Agreement, any conditions to the consummation
thereof, the likelihood of the Acquisition Proposal being consummated and the
likely timing of consummating the Acquisition Proposal), are more favorable to
the Company and its stockholders than the Transactions contemplated hereby.
          (e) Except as set forth in this Section 7.2(e), the Board shall not
(i) withdraw or modify, or propose to withdraw or modify, in a manner adverse to
either of the Buyer Parties, the Board Recommendation, (ii) approve or
recommend, or publicly propose to approve or recommend, any Acquisition Proposal
or (iii) enter into any agreement with respect to any Acquisition Proposal
(other than a confidentiality agreement referred to in Section 7.2(b)).
Notwithstanding the foregoing, at any time prior to receipt of the Company
Stockholder

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Approval, (x) if the Board determines in good faith that the failure to do so
would be inconsistent with its duties under applicable Law, then the Board may
withdraw, or modify or change in a manner adverse to the Buyer Parties, the
Board Recommendation (“Change in Recommendation”) and (y) in the case of any
Change in Recommendation being made in response to an unsolicited bona fide
written Acquisition Proposal (which did not otherwise result from a breach of
Section 7.2) that the Board has determined in good faith, after consultation
with the Company’s independent financial advisor, is a Superior Proposal, the
Board may approve and recommend such Superior Proposal and exempt the Person
submitting such Superior Proposal from the restrictions contained in any state
takeover or similar laws concurrently with terminating this Agreement pursuant
to Section 10.1(e); provided, however, that such actions may only be taken at a
time that is after (I) the third (3rd) Business Day following Parent’s receipt
of written notice from the Company that the Board is prepared to take such
action, and (II) at the end of such period, the Board determines in good faith,
after taking into account all amendments or revisions committed to by the Buyer
Parties and after consultation with the Company’s independent financial
advisors, that such Acquisition Proposal remains a Superior Proposal relative to
the transactions contemplated by this Agreement, as supplemented by any
Counterproposal (defined below). Any such written notice shall specify the
material terms and conditions of such applicable Acquisition Proposal, include
the most current version of any agreement relating to such Acquisition Proposal
(including any amendments, supplements or modifications thereto), identify the
Person making such Acquisition Proposal and state that the Board otherwise
intends to make a Change in Recommendation (subject to compliance with this
subsection (e)). During any such three (3) Business Day period, the Buyer
Parties shall be entitled to deliver to the Company a counterproposal to such
Acquisition Proposal (a “Counterproposal”) and Parent and the Company shall
negotiate in good faith in respect of any such Counterproposal. For the
avoidance of doubt, the parties hereto acknowledge and agree that any amendment
to the financial terms or any other material amendment to any material term of
an Acquisition Proposal which amendment affects the determination of whether the
Acquisition Proposal is a Superior Proposal to any Counterproposal shall be
treated as a new Acquisition Proposal for the purposes of this Section 7.2(e)
thereby requiring a new written notice by the Company and a new three
(3) Business Day period.
          (f) Nothing contained in this Agreement shall prevent the Company or
the Board from taking and disclosing to its stockholders a position contemplated
by Rule 14d-9 and Rule 14e-2(a) promulgated under the Exchange Act (or any
similar communication to stockholders) or from making any legally required
disclosure to its stockholders; provided, however, that any action covered by
Section 7.2(e) may only be made in compliance with Section 7.2(e). Further, any
“stop-look-and-listen” communication by the Company or the Board to the
stockholders of the Company pursuant to Rule 14d-9(f) promulgated under the
Exchange Act (or any similar communication to the stockholders of the Company)
shall not be considered a Change in Recommendation if it is made within ten
(10) Business Days of receiving an Acquisition Proposal.
          (g) Upon execution of this Agreement, the Company and its Subsidiaries
shall immediately cease and cause to be terminated any and all existing
activities, discussions or negotiations with any parties conducted heretofore
with respect to an Acquisition Proposal by or on behalf of the Company or any of
the Representatives and shall inform each of the Representatives of its
obligations under this Section 7.2 and instruct each of them to act in a

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manner consistent with such obligations; provided, however, that the Company may
comply with the next sentence. To the extent not previously requested, the
Company shall promptly request each Person with whom it has executed a
confidentiality agreement within the twelve (12) months prior to the date hereof
in connection with its consideration of any Acquisition Proposal to return or
destroy all confidential or other non-public information heretofore furnished to
such Person by or on behalf of the Company or any of the Representatives.
     Section 7.3 Actions by Parent and Conduct of Business of Sub Pending the
Merger. Parent shall not knowingly take or permit any of its Subsidiaries to
take any action that is reasonably likely to prevent or delay the consummation
of the Merger. During the period from the date of this Agreement through the
Effective Time, Sub shall not engage in any activity of any nature except as
provided in or contemplated by this Agreement.
ARTICLE VIII
ADDITIONAL AGREEMENTS
     Section 8.1 Employee Benefits. (a) For a period of not less than one
(1) year after the Effective Time, Parent shall cause the Surviving Entity to
provide all individuals who are employees of the Company or any of its
Subsidiaries as of the Effective Time and remain an employee of the Surviving
Entity or its successors or assigns or any of their Subsidiaries (including
employees who are not actively at work on account of illness, disability or
leave of absence) (the “Retained Employees”), while employed by the Surviving
Entity or its successors or assigns or any of their Subsidiaries, with base
salary and bonus opportunity and benefits (other than those that pertain to
equity-based compensation, equity-based benefits and nonqualified deferred
compensation programs) that are no less favorable in the aggregate to the base
salary and bonus opportunity and benefits provided to such Retained Employees
immediately prior to the Effective Time. After the Effective Time, the Surviving
Entity may terminate Retained Employees for any lawful reason and nothing
contained in this Section 8.1 shall be deemed to grant any employee any right to
continued employment after the Effective Time, ensure a continued amount of
commission-based compensation or interfere with the Surviving Entity’s right or
obligation to make such changes as are necessary to conform to applicable Law.
Parent shall take all necessary action so that each Retained Employee shall
after the Effective Time continue to be credited with the unused vacation and
sick leave credited to such employee through the Effective Time under the
applicable vacation and sick leave policies of the Company and its Subsidiaries,
and Parent shall permit or cause the Company, the Surviving Entity and their
Subsidiaries to permit such employees to use such vacation and sick leave in
accordance with such policies. Parent shall take all necessary action so that,
for all purposes (except for benefit accrual under any defined benefit plan)
under each employee benefit plan maintained by Parent or any of its Subsidiaries
in which Retained Employees become eligible to participate as of or after the
Effective Time, each such Person shall be given credit for all service with the
Company and its Subsidiaries recognized by the Company immediately prior to the
Effective Time.
          (b) Except as otherwise provided in this Section 8.1 or in
Section 8.2, nothing in this Agreement shall be interpreted as limiting the
power of the Surviving Entity to amend or terminate any particular Benefit Plan
or any other particular employee benefit plan, program, agreement or policy
pursuant to its terms or as requiring the Surviving Entity to continue (other

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than as required by its terms) any written employment contract; provided,
however, that no such termination or amendment may impair the rights of any
Person with respect to benefits or any other payments already accrued as of the
time of such termination or amendment without the consent of such Person.
          (c) Notwithstanding Sections 8.1(a) and (b), Parent shall honor or
cause to be honored by the Company, the Surviving Entity and their Subsidiaries
all employment agreements, bonus agreements, severance agreements, severance
plans and non-competition agreements with the Persons who are, immediately prior
to the Effective Time, directors, officers and employees of the Company and its
Subsidiaries (it being understood that nothing herein shall be deemed to mean
that the Company, the Surviving Entity and their Subsidiaries shall not be
required to honor any of their obligations under any such agreement).
          (d) Parent shall, or shall cause the Company and the Surviving Entity
to, (i) waive all limitations as to preexisting conditions, exclusions and
waiting periods with respect to participation and coverage requirements
applicable to the Retained Employees and former employees of the Company and its
Subsidiaries under any welfare or fringe benefit plan in which such employees
and former employees may be eligible to participate after the Effective Time,
other than limitations or waiting periods that are in effect with respect to
such employees and that have not been satisfied under the corresponding welfare
or fringe benefit plan maintained by the Company or its Subsidiaries for the
Retained Employees and former employees prior to the Effective Time, and
(ii) provide each Retained Employee and former employee with credit under any
welfare plans in which such employee or former employee becomes eligible to
participate after the Effective Time for any co-payments and deductibles paid by
such Retained Employee or former employee for the then current plan year under
the corresponding welfare plans maintained by the Company or its Subsidiaries
prior to the Effective Time.
     Section 8.2 Deferred Share Awards. The Company shall take all necessary
action to ensure that, at the Effective Time, except as otherwise provided in
Item 8.2 of the Company Letter, each Deferred Share Award then outstanding,
whether or not then fully vested, shall be cancelled by the Company in
consideration for which the holder thereof shall thereupon be entitled to
receive, at the Effective Time, a cash payment in respect of such cancellation
from the Company in an amount equal to (i) the product of (A) the number of
shares of Company Common Stock remaining subject to issuance pursuant to such
Deferred Share Award and (B) the Per Share Merger Consideration, plus (ii) the
product of (A) the number of shares of Company Common Stock remaining subject to
issuance pursuant to such Deferred Share Award and (B) the amount of the Special
Dividend issued with respect to each Share, minus (iii) all applicable federal,
State and local Taxes required to be withheld by the Company (the aggregate
amount of all such cash payments the “Aggregate Award Amount”). At or prior to
the Effective Time, Parent shall deposit, or shall cause Sub to deposit, with
the Company (or, at the Company’s request, the Paying Agent) a cash amount in
immediately available funds equal to the Aggregate Award Amount.
     Section 8.3 Preparation of Proxy Statement; Stockholder Approval. (a) The
Company shall promptly prepare (in consultation with Parent) and file with the
SEC, as soon as practicable following the date of this Agreement, the Proxy
Statement in preliminary form. The Company shall use its reasonable efforts to
respond as promptly as practicable (in consultation with Parent)

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to any comments of the SEC or its staff, and, to the extent permitted by Law, to
cause the definitive Proxy Statement to be mailed to the Company’s stockholders
as promptly as practicable after responding to all such comments to the
satisfaction of the SEC or its staff. The Company shall, in accordance with
Section 8.12, notify Parent promptly of the receipt of any comments from the SEC
or its staff and of any request by the SEC or its staff for amendments or
supplements to the Proxy Statement or for additional information and will supply
Parent with copies of all correspondence between the Company or any of its
representatives, on the one hand, and the SEC or its staff, on the other hand,
with respect to the Proxy Statement or the transactions contemplated by this
Agreement. If at any time prior to the Stockholders’ Meeting there shall occur
any event that the Company reasonably determines should be set forth in an
amendment or supplement to the Proxy Statement, the Company shall promptly
prepare (in consultation with Parent) and mail to its stockholders such an
amendment or supplement, in each case to the extent required by applicable Law.
The Buyer Parties agree that they shall cooperate with the Company in the
preparation of the Proxy Statement or any amendment or supplement thereto.
Notwithstanding anything to the contrary stated above, prior to filing or
mailing the Proxy Statement or filing any other required filings (or, in each
case, any amendment or supplement thereto) or responding to any comments of the
SEC or its staff with respect thereto, the Company shall provide Parent with an
opportunity to review and comment on such document or response and the Company
shall include in such document or response all comments from Parent reasonably
acceptable to the Company, and to the extent practicable, the Company will
provide Parent with the opportunity to participate in any substantive calls
between the Company or any of its Representatives and the SEC concerning the
Proxy Statement. All of the parties hereto shall cause the Proxy Statement to
comply as to form and substance as to such party in all material respects with
the applicable requirements of the Exchange Act. The Company and the Buyer
Parties agree to include in the Proxy Statement the disclosure set forth on
Item 8.3 of the Company Letter.
          (b) The Company shall, promptly (for the avoidance of doubt a
forty-five day solicitation period shall be deemed a prompt period of time)
after the Proxy Statement is cleared by the SEC for mailing to the Company’s
stockholders, in accordance with the Company Charter and Company Bylaws, duly
call, give notice of, convene and hold a meeting of its stockholders (the
“Stockholders’ Meeting”) for the purpose of obtaining the approval of the Merger
and the transactions contemplated hereby, by holders of a majority of the
outstanding Shares (the “Company Stockholder Approval”). The Company shall,
through the Board (but subject to the right of the Board to make a Change in
Recommendation in accordance with Section 7.2), recommend to its stockholders
that the Company Stockholder Approval be given.
     Section 8.4 Access to Information; Confidentiality. Upon reasonable notice
and subject to the terms of the Confidentiality Agreement, dated October 25,
2006, between Morgan Stanley Real Estate Advisor, Inc. and the Company and the
Confidentiality Agreement, dated October 23, 2006, between Ashford Hospitality
Trust, Inc. and the Company (collectively, the “Confidentiality Agreements”),
the Company shall, and shall cause each of its Subsidiaries to, afford to the
Buyer Parties and their respective officers, employees, accountants, financing
sources, counsel and other representatives of the Buyer Parties, reasonable
access, during normal business hours and upon reasonable advance notice during
the period prior to the Effective Time, to all of their respective senior
employees, properties and material books, contracts and records reasonably
requested by the Buyer Parties (the “Access”) (it being agreed that Access
necessary

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for Arizona to prepare financial statements required by Section 3.05 of
Regulation S-X shall be deemed reasonable), and during such period, the Company
shall (and shall cause each of its Subsidiaries to) furnish promptly to the
Buyer Parties all information concerning its business, properties and personnel
as may reasonably be requested by the Buyer Parties; provided, however, that
such Access and information shall only be provided to the extent that such
Access or the provision of such information would not violate applicable Law or
any applicable contractual provisions; provided, further, that the foregoing
shall not require the Company (i) to permit any inspection, or to disclose any
information, that in the reasonable judgment of the Company would result in the
disclosure of any trade secrets of third Persons or violate any of its
obligations with respect to confidentiality if the Company shall have used
reasonable efforts to obtain the consent of such third Person to such inspection
or disclosure and such consent was not obtained, (ii) to permit any invasive
physical testing, except as agreed to in writing by the Company, which consent
shall not be unreasonably withheld or (iii) to disclose any privileged
information of the Company or any of its Subsidiaries so long as the Company has
taken all reasonable steps to permit inspection of or to disclose information
described in this clause (iii) on a basis that does not compromise the Company’s
or such Subsidiary’s privilege with respect thereto; and, provided, further,
that notwithstanding anything contained herein to the contrary, Buyer Parties
shall have full Access with respect to any matters relating to the Company and
its Subsidiaries to the extent necessary to confirm the Company’s and the
Company Subsidiary REIT’s qualification as a REIT. The parties agree that they
shall seek appropriate substitute disclosure arrangements under circumstances in
which clause (iii) of the second proviso to the immediately preceding sentence
applies. In no event shall the Company be required to disclose to the Buyer
Parties, or the Buyer Parties’ respective officers, employees, accountants,
counsel or other representatives, any information relating to the indications of
interest from, or discussions with, any other potential acquirors of the
Company, except to the extent necessary for use in the Proxy Statement or as
required by Section 7.2. In the event of a termination of this Agreement for any
reason, the Buyer Parties shall promptly return or destroy, or cause to be
returned or destroyed, all nonpublic information so obtained from the Company or
any of its Subsidiaries and any copies made of such documents for the Buyer
Parties. Notwithstanding the foregoing, neither the Company nor any of its
Subsidiaries shall be required to provide Access or to disclose information
where such Access or disclosure would jeopardize the attorney-client or work
product privileges of the Company or its Subsidiaries or contravene any Law or
binding agreement entered into prior to the date of this Agreement. All
information provided pursuant to this Section 8.4 shall be governed by the terms
of the Confidentiality Agreement.
     Section 8.5 Fees and Expenses. (a) The Surviving Entity shall pay all
charges and expenses, including those of the Paying Agent, in connection with
the transactions contemplated in Article III, and Parent shall, to the extent
necessary, reimburse the Surviving Entity for such charges and expenses. Except
as otherwise expressly provided herein, all fees and expenses incurred in
connection with the Merger, this Agreement and the transactions contemplated
hereby shall be paid by the party incurring such fees or expenses, whether or
not the Merger is consummated. Costs and expenses incurred in connection with
the filing, printing and mailing of the Proxy Statement (including SEC filing
fees) and the filing fees for the premerger notification and report forms under
the HSR Act, if any, shall be shared 50% by the Buyer Parties and 50% by the
Company.

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          (b) The Company shall pay, or cause to be paid, by wire transfer in
same day funds to Parent the sum of $145,000,000 (the “Termination Fee”), under
the circumstances and at the times set forth as follows:
     (i) if Parent terminates this Agreement under Section 10.1(d) or the
Company terminates this Agreement under Section 10.1(e), the Company shall pay,
in either case, the Termination Fee on the date of such termination; and
     (ii) if the Company or Parent terminates this Agreement under Section
10.1(b)(iii) or 10.1(c) and prior to such termination or, in the case of a
termination under Section 10.1(b)(iii), prior to the Stockholders’ Meeting, any
Person or “group” (within the meaning of Section 13(d)(3) of the Exchange Act)
(x) shall have made an Acquisition Proposal to the Company or the stockholders
of the Company which shall be publicly announced or (y) shall have publicly
announced an intention to make an Acquisition Proposal and, in each case, such
Acquisition Proposal shall not have been withdrawn prior to such termination or,
in the case of a termination under Section 10.1(b)(iii), prior to the
Stockholders’ Meeting, then, if, within nine (9) months after such termination,
the Company shall enter into a definitive agreement providing for an Acquisition
Proposal (with all percentages in the definition of Acquisition Proposal
increased to 50%) or an Acquisition Proposal (with all percentages in the
definition of Acquisition Proposal increased to 50%) shall be consummated, the
Company shall pay the Termination Fee concurrently with the earlier of the
entering into of such definitive agreement or the consummation of such
Acquisition Proposal.
          (c) If this Agreement is terminated by the Company pursuant to
Section 10.1(f), the Buyer Parties shall pay to the Company within three
(3) Business Days after the date of termination (i) all reasonable costs and
expenses, including the reasonable fees and expenses of lawyers, accountants,
consultants, financial advisors and investment bankers, and expenses
contemplated by the last sentence of Section 8.5(a), incurred by the Company or
its Subsidiaries in connection with the entering into of this Agreement and the
carrying out of any and all acts contemplated hereunder up to an aggregate
amount of $15,000,000 (the “Company Expenses”). If this agreement is terminated
by Parent pursuant to Section 10.1(b)(iii), 10.1(c) or 10.1(d) or by the Company
pursuant to Section 10.1(e), the Company shall pay to Parent, within three
(3) Business days after the date of termination, all reasonable costs and
expenses, including the reasonable fees and expenses of lawyers, accountants,
consultants, financial advisors, and investment bankers, and expenses
contemplated by the last sentence of Section 8.5(a), incurred by the Buyer
Parties in connection with the entering into of this Agreement and the carrying
out of any and all acts contemplated hereunder up to an aggregate amount of
$15,000,000 (the “Parent Expenses”). Except as set forth in Section 8.5(g), the
payment of expenses set forth in this Section 8.5(c) is not an exclusive remedy,
but is in addition to any other rights or remedies available to the parties
hereto (whether at Law or in equity), and in no respect is intended by the
parties hereto to constitute liquidated damages, or be viewed as an indicator of
the damages

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payable, or in any other respect limit or restrict damages available in case of
any breach of this Agreement.
          (d) Each of the Company and Parent acknowledges that the agreements
contained in this Section 8.5(d) are an integral part of the transactions
contemplated by this Agreement. In the event that the Company shall fail to pay
the Termination Fee or Parent Expenses when due or Parent shall fail to pay the
Company Expenses when due, the Company or Parent, as the case may be, shall
reimburse the other party for all reasonable costs and expenses actually
incurred or accrued by such other party (including reasonable fees and expenses
of counsel) in connection with the collection under and enforcement of this
Section 8.5(d).
          (e) In the event that the Buyer Parties are obligated to pay the
Company Expenses set forth in Section 8.5(c), Parent shall pay to the Company
from an amount deposited into escrow (collectively, the “Escrowed Amount”) in
accordance with the next sentence, an amount equal to the lesser of (i) the
Escrowed Amount and (ii) the sum of (1) the maximum amount that can be paid to
the Company without causing the Company to fail to meet the requirements of
Sections 856(c)(2) and (3) of the Code determined as if the payment of such
amount did not constitute income described in Sections 856(c)(2)(A)-(H) or
856(c)(3)(A)-(I) of the Code (“Qualifying Income”), as determined by the
Company’s independent certified public accountants, plus (2) in the event the
Company receives either (A) a letter from the Company’s counsel indicating that
the Company has received a ruling from the IRS described in Section 8.5(f) or
(B) an opinion from the Company’s outside counsel as described in
Section 8.5(f), an amount equal to the Escrowed Amount less the amount payable
under clause (1) above. To secure the Buyer Parties’ obligation to pay these
amounts, the Buyer Parties shall deposit into escrow an amount in cash equal to
the Company Expenses with an escrow agent selected by Parent and on such terms
(subject to Section 8.5(f)) as shall be mutually agreed upon by the Company,
Parent and the escrow agent. The excess of the amount placed in escrow over the
amount(s) described in clause (a) and/or (b) above, as applicable, shall be
retained in escrow and released from time to time over the five year period
beginning on the date Company Expenses are deposited into escrow, subject, in
each case, to the Company’s satisfaction of the conditions set forth above. The
payment or deposit into escrow of the Escrowed Amount pursuant to Section 8.5(f)
shall be made at the time the Parent is obligated to pay the Company such amount
pursuant to Section 8.5(f) by wire transfer or bank check.
          (f) The escrow agreement shall provide that the Escrowed Amount in
escrow or any portion thereof shall not be released to the Company unless the
escrow agent receives any one or combination of the following: (i) a letter from
the Company’s independent certified public accountants indicating the maximum
amount that can be paid by the escrow agent to the Company without causing the
Company to fail to meet the requirements of Sections 856(c)(2) and (3) of the
Code determined as if the payment of such amount did not constitute Qualifying
Income or a subsequent letter from the Company’s accountants revising that
amount, in which case the escrow agent shall release such amount to the Company,
or (ii) a letter from the Company’s counsel indicating that the Company received
a ruling from the IRS holding that the Escrowed Amount would either constitute
Qualifying Income or would be excluded from gross income within the meaning of
Sections 856(c)(2) and (3) of the Code (or alternatively, the Company’s outside
counsel has rendered a legal opinion to the effect that the receipt by the
Company of the Escrowed Amount would constitute Qualifying Income, would be
excluded

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from gross income within the meaning of Sections 856(c)(2) and (3) of the Code
or would not otherwise disqualify the Company as a REIT), in which case the
escrow agent shall release the remainder of the Escrowed Amount to the Company.
The Buyer Parties agree to amend this Section 8.5(f) at the request of the
Company in order to (x) maximize the portion of the Escrowed Amount that may be
distributed to the Company hereunder without causing the Company to fail to meet
the requirements of Sections 856(c)(2) and (3) of the Code, (y) improve the
Company’s chances of securing a favorable ruling described in this
Section 8.5(f) or (z) assist the Company in obtaining a favorable legal opinion
from its outside counsel as described in this Section 8.5(f). The escrow
agreement shall also provide that any portion of the Company Expenses held in
escrow for five years shall be released by the escrow agent to Parent.
          (g) Notwithstanding anything to the contrary in this Agreement but
subject to Sections 10.2 and 11.8, the parties hereby acknowledge that, if the
Company is obligated to pay the Parent Expenses and Termination Fee pursuant to
Sections 8.5(b) and 8.5(c), the right of the Buyer Parties to receive such
payments shall be the sole and exclusive remedy of the Buyer Parties for damages
against the Company and any of its Subsidiaries and the Company’s and its
Subsidiaries’ respective directors, officers, employees, investment bankers,
attorneys, accountants and other advisors or representatives for the failure of
the transactions contemplated hereby to be consummated, and upon payment of such
amounts in accordance with Sections 8.5(b) and 8.5(c), none of the Company, any
of its Subsidiaries or any of their respective directors, officers, employees,
investment bankers, attorneys, accountants and other advisors or representatives
shall have any liability or obligation relating to or arising out of this
Agreement or the transactions contemplated hereby.
     Section 8.6 Public Announcements. The Buyer Parties and the Company shall
consult with each other before issuing any press release or otherwise making any
public statements with respect to the transactions contemplated by this
Agreement and shall not issue any such press release or make any such public
statement without the prior consent of the other parties (which consent shall
not be unreasonably withheld, conditioned or delayed), except as may be required
by applicable Law or fiduciary duties and shall provide the other parties with
an opportunity to review and comment on any such press release or statement to
the extent practicable.
     Section 8.7 Transfer Taxes. The Company and the Buyer Parties shall
cooperate in the preparation, execution and filing of all returns,
questionnaires, applications or other documents regarding any real property
transfer, recordation, or gains, sales, use, license, excise, custom or duty,
transfer, value added, stock transfer and stamp Taxes, and transfer, recording,
registration and other fees and any similar Taxes that become payable in
connection with the transactions contemplated by this Agreement (together with
any related interest, penalties or additions to Tax, “Transfer Taxes”) and shall
cooperate in attempting to minimize the amount of Transfer Taxes. All Transfer
Taxes shall be paid by the Buyer Parties and expressly shall not be a liability
of any holder of Shares.
     Section 8.8 State Takeover Laws. If any “fair price,” “moratorium” or
“control share acquisition” statute or other similar anti-takeover statute or
regulation enacted under state Laws in the United States is or shall become
applicable to the Merger or the other transactions contemplated hereby, the
Buyer Parties and the Company and their respective boards of directors shall,
subject to Section 7.2, use reasonable efforts to grant such approvals and take
such actions

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as are necessary so that the transactions contemplated hereby may be consummated
as promptly as practicable on the terms contemplated hereby and otherwise act to
minimize the effects of any such statute or regulation on the transactions
contemplated hereby.
     Section 8.9 Indemnification; Directors and Officers Insurance. (a) For a
period of six years after the Effective Time (unless otherwise required by
applicable Law), the charter and bylaws of the Surviving Entity and its
Subsidiaries shall contain provisions no less favorable with respect to the
exculpation of, indemnification of and advancement of expenses to directors,
officers, employees and agents than those set forth in the Company Charter or
Company Bylaws (or equivalent organizational documents) of the Company (or the
relevant Subsidiary) as in effect on the date hereof; provided, however, that if
any claim or claims are asserted against any individual entitled to the
protections of such provisions within such six-year period, such provisions
shall not be modified until the final disposition of any such claims. Parent and
the Surviving Entity shall, jointly and severally, exculpate, indemnify and hold
harmless, to the fullest extent provided in the Company Charter or Company
Bylaws or the organizational documents of any Subsidiary, as applicable, any
indemnification agreement or under any applicable Laws, in each case, as in
effect on the date of this Agreement (and Parent shall also advance expenses as
incurred to the fullest extent permitted under applicable Law), each present and
former director and officer of the Company or any of its Subsidiaries (each, an
“Indemnified Person”) against any costs or expenses (including reasonable
attorneys’ fees), judgments, fines, losses, claims, obligations, damages or
liabilities incurred in connection with any claim, action, suit, proceeding or
investigation, whether civil, criminal, administrative or investigative (formal
or informal), in and to the extent of their capacities as such and not as
stockholders and/or optionholders of the Company or its Subsidiaries (including
rights relating to advancement of expenses and indemnification rights to which
such persons are entitled because they are serving as a director or officer of
another entity at the request of the Company or any of its Subsidiaries) at or
prior to the Effective Time, whether asserted or claimed prior to, at or after
the Effective Time, including the transactions contemplated by this Agreement;
provided, however, that any determination required to be made with respect to
whether an Indemnified Person’s conduct complies with the standards set forth
under the applicable Law, the Company Charter or Company Bylaws or the
organizational documents of any Subsidiary, as applicable, or any such
agreement, as the case may be, shall be made by independent legal counsel
jointly selected by such Indemnified Person and Parent; provided, further, that
(i) nothing in this Section 8.9 shall impair any rights of any Indemnified
Person and (ii) neither the Surviving Entity nor Parent shall be liable for any
settlement effected without the prior written consent of the Surviving Entity
(which consent shall not be unreasonably withheld, delayed or conditioned).
Without limiting the generality of the preceding sentence, if any Indemnified
Person becomes involved in any actual or threatened action, suit, claim,
proceeding or investigation covered by this Section 8.9 after the Effective
Time, Parent shall, or shall cause the Company to, to the fullest extent
permitted by Law, promptly advance to such Indemnified Person his or her legal
or other expenses (including the cost of any investigation and preparation
incurred in connection therewith), subject to the providing by such Indemnified
Person of an undertaking to reimburse all amounts so advanced in the event of a
non-appealable determination of a court of competent jurisdiction that such
Indemnified Person is not entitled to indemnification.
          (b) Prior to the Effective Time, the Company shall purchase a “tail”
insurance policy (which policy by its express terms shall survive the Merger),
of at least the same coverage

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and amounts and containing terms and conditions that are no less favorable to
the directors and officers of the Company as the Company’s and the Subsidiaries’
existing policy or policies, for the benefit of the current and former officers
and directors of the Company and each Subsidiary with a claims period of six
(6) years from the Effective Time with respect to directors’ and officers’
liability for claims arising from facts or events that occurred on or prior to
the Effective Time; provided, however, that in no event shall the aggregate
premium payable for such “tail” insurance policies for its entire period exceed
$4,500,000 (such amount being the “Maximum Premium”). If the Company is unable
to obtain the “tail” insurance described in the first sentence of this
Section 8.9(b) for an amount equal to or less than the Maximum Premium, the
Company shall be entitled to obtain as much comparable “tail” insurance as
possible for an amount equal to the Maximum Premium.
          (c) If Parent or the Surviving Entity or any of its successors or
assigns (i) shall consolidate with or merge into any other corporation or entity
and shall not be the continuing or surviving corporation or entity of such
consolidation or merger or shall cease to continue to exist for any reason or
(ii) shall transfer all or a majority (measured by value) of its properties and
assets to any individual, corporation or other entity, then, and in each such
case, proper provisions shall be made so that the successors and assigns of
Parent or the Company, as applicable, shall assume all of the obligations set
forth in this Section 8.9. In addition, the Surviving Entity shall not
distribute, sell, transfer or otherwise dispose of any of its assets in a manner
that would reasonably be expected to render the Surviving Entity unable to
satisfy its obligations under this Section 8.9.
          (d) The provisions of this Section 8.9 are intended to be for the
express benefit of, and shall be enforceable by, each Indemnified Person (who
are intended to be third party beneficiaries of this Section 8.9), his or her
heirs and his or her personal representatives, shall be binding on all
successors and assigns of Parent, the Company and the Surviving Entity and shall
not be amended in a manner that is adverse to the Indemnified Persons (including
their successors, assigns and heirs) without the prior written consent of the
Indemnified Person (including the successors, assigns and heirs) affected
thereby. The exculpation and indemnification provided for by this Section shall
not be deemed to be exclusive of any other rights to which an Indemnified Person
is entitled, whether pursuant to applicable Law, contract or otherwise.
     Section 8.10 Reasonable Best Efforts. Each of the Company and the Buyer
Parties agrees to use its reasonable best efforts to effect the consummation of
the Transactions as soon as practicable after the date hereof. Without limiting
the foregoing, each of the Company and the Buyer Parties (i) agrees to use its
reasonable best efforts to take, or cause to be taken, all actions necessary to
comply promptly with all legal requirements that may be imposed on itself with
respect to the Transactions (which actions shall include furnishing all
information required in connection with approvals of or filings with any other
Governmental Entity) and shall promptly cooperate with and furnish information
to each other in connection with any such requirements imposed upon any of them
or any of their Subsidiaries in connection with the Transactions, (ii) shall,
and shall cause its Subsidiaries to, use its or their reasonable best efforts to
obtain (and shall cooperate with each other in obtaining) any consent,
authorization, order or approval of, or any exemption by, any Governmental
Entity or other public Person required to be obtained or made by the Buyer
Parties, the Company or any of their Subsidiaries in connection with the

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Transactions or the taking of any action contemplated thereby or by this
Agreement, the Parent Asset Purchase Agreement and the Arizona Asset Purchase
Agreement and (iii) agrees to execute and deliver any additional documents or
instruments necessary, proper or advisable to consummate the Transactions
contemplated hereby, and to fully carry out the purposes of this Agreement, the
Parent Asset Purchase Agreement and the Arizona Asset Purchase Agreement.
Subject to applicable Laws relating to the exchange of information, each of the
Buyer Parties and the Company shall have the right to review in advance, and to
the extent practicable each will consult with the other on and consider in good
faith the views of the other in connection with, all of the information relating
to the Buyer Parties or the Company, as the case may be, and any of their
respective Subsidiaries, that appears in any filing made with, or written
materials submitted to, any third Person and/or any Governmental Entity in
connection with the Transactions (including the Proxy Statement). In exercising
the foregoing rights, the Company and each of the Buyer Parties shall act
reasonably and as promptly as practicable.
     Section 8.11 Financing.
          (a) Parent, Sub and Missouri shall use their reasonable best efforts
to arrange the Parent Financing on the terms and conditions described in the
Parent Preferred Equity Funding Letter and the Parent Commitment Letter
(provided that Parent, Sub and Missouri may (x) replace or amend the Parent
Commitment Letter to add lenders, lead arrangers, bookrunners, syndication
agents or similar entities which had not executed the Parent Commitment Letter
as of the date hereof, or otherwise or (y) replace or amend the Parent Preferred
Equity Funding Letter to add investors which had not executed the Parent
Preferred Equity Funding Letter as of the date hereof, or otherwise, in each
case so long as the terms would not reasonably be expected to adversely impact
the ability of Parent, Sub or Missouri to consummate the transactions
contemplated hereby or the likelihood of consummation of the transactions
contemplated hereby), including using reasonable best efforts to (i) maintain in
effect the Parent Financing commitments, (ii) satisfy on a timely basis all
conditions applicable to Parent, Sub and Missouri to obtaining the Parent
Financing set forth therein, and (iii) negotiate and enter into definitive
agreements with respect thereto on the terms and conditions contemplated by the
Parent Preferred Equity Funding Letter and the Parent Commitment Letter or on
other terms that would not adversely impact the ability of Parent, Sub or
Missouri to consummate the transactions contemplated hereby or the likelihood of
consummation of the transactions contemplated and (iv) consummate the Parent
Financing at or prior to the Final Condition Satisfaction Date. If any portion
of the Parent Financing becomes unavailable on the terms and conditions
contemplated in the Parent Preferred Equity Funding Letter or the Parent
Commitment Letter, Parent shall use its reasonable best efforts to arrange to
obtain alternative financing from alternative sources on comparable or more
favorable terms to Parent (as determined in the reasonable judgment of Parent)
in an amount sufficient to consummate the transactions contemplated by this
Agreement as promptly as practicable following the occurrence of such event.
Parent shall give the Company prompt notice of any material breach or alleged
material breach by any party to the Parent Preferred Equity Funding Letter or
the Parent Commitment Letter of which Parent, Sub or Missouri becomes aware, or
any termination of the Parent Preferred Equity Funding Letter or the Parent
Commitment Letter. Parent shall keep the Company informed on a reasonably
current basis in reasonable detail of the status of its efforts to arrange the
Parent Financing, and shall not permit any material amendment or modification to
be made to, or any waiver of any material provision or remedy under, the Parent
Preferred Equity Funding Letter or the Parent

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Commitment Letter without first consulting with the Company or, if such
amendment would or would be reasonably expected to materially and adversely
affect or delay in any material respect the ability of Parent, Sub or Missouri
to consummate the transactions contemplated by this Agreement, without first
obtaining the Company’s prior written consent (not to be unreasonably withheld
or delayed)
          (b) Parent acknowledges and agrees that the consummation of the
transactions contemplated by this Agreement is not conditioned upon the receipt
by Parent, Sub or Missouri of the proceeds contemplated by the Parent Preferred
Equity Funding Letter and the Parent Commitment Letter and that any failure by
Parent, Sub or Missouri to have available all funds contemplated by the Parent
Preferred Equity Funding Letter and the Parent Commitment Letter on the Final
Condition Satisfaction Date shall constitute a material breach by Parent, Sub
and Missouri of this Agreement.
          (c) Arizona shall use its reasonable best efforts to arrange the
Arizona Financing on the terms and conditions described in the Arizona
Commitment Letter (provided that Arizona may replace or amend the Arizona
Commitment Letter to add lenders, lead arrangers, bookrunners, syndication
agents or similar entities which had not executed the Arizona Commitment Letter
as of the date hereof, or otherwise, so long as the terms would not reasonably
be expected to adversely impact the ability of Arizona to consummate the
transactions contemplated hereby or the likelihood of consummation of the
transactions contemplated hereby), including using reasonable best efforts to
(i) maintain in effect the Arizona commitments, (ii) satisfy on a timely basis
all conditions applicable to Arizona to obtaining the Arizona Financing set
forth therein, and (iii) negotiate and enter into definitive agreements with
respect thereto on the terms and conditions contemplated by the Arizona
Commitment Letter or on other terms that would not adversely impact the ability
of Arizona to consummate the transactions contemplated hereby or the likelihood
of consummation of the transactions contemplated and (iv) consummate the Arizona
Financing at or prior to the Final Condition Satisfaction Date. If any portion
of the Arizona Financing becomes unavailable on the terms and conditions
contemplated in the Arizona Commitment Letter, Arizona shall use its reasonable
best efforts to arrange to obtain alternative financing from alternative sources
on comparable or more favorable terms to Arizona (as determined in the
reasonable judgment of Arizona) in an amount sufficient to consummate the
transactions contemplated by this Agreement as promptly as practicable following
the occurrence of such event. Arizona shall give the Company prompt notice of
any material breach or alleged material breach by any party to the Arizona
Commitment Letter of which Arizona becomes aware, or any termination of the
Arizona Commitment Letter. Arizona shall keep the Company informed on a
reasonably current basis in reasonable detail of the status of its efforts to
arrange the Arizona Financing, and shall not permit any material amendment or
modification to be made to, or any waiver of any material provision or remedy
under, the Arizona Commitment Letter without first consulting with the Company
or, if such amendment would or would be reasonably expected to materially and
adversely affect or delay in any material respect the ability of Arizona to
consummate the transactions contemplated by this Agreement, without first
obtaining the Company’s prior written consent (not to be unreasonably withheld
or delayed)
          (d) Arizona acknowledges and agrees that the consummation of the
transactions contemplated by this Agreement is not conditioned upon the receipt
by Arizona of

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the proceeds contemplated by the Arizona Commitment Letter and that any failure
by Arizona to have available all funds contemplated by the Arizona Commitment
Letter on the Final Condition Satisfaction Date shall constitute a material
breach by Arizona of this Agreement.
          (e) The Company agrees to provide, and shall cause the Subsidiaries
and its and their representatives to provide, all reasonable cooperation in
connection with the arrangement of the Debt Financing as may be reasonably
requested by each of the Buyer Parties (provided that such requested cooperation
does not unreasonably interfere with the ongoing operations of the Company and
its Subsidiaries and does not require the Company or any of its Representatives
to execute and deliver any certificate or opinion to the extent any such
certificate or opinion certifies or opines, as applicable, with respect to
facts, circumstances or events that will exit after giving effect to the
transactions contemplated hereby and the incurrence of any indebtedness of the
Company pursuant to the Debt Financing); provided, that none of the Company or
any Subsidiary shall be required to pay any fees (including commitment or other
similar fees) or incur any other liability in connection with the Debt Financing
prior to the Effective Time. Each of the Buyer Parties, as applicable, shall,
promptly upon request by the Company, reimburse the Company for all reasonable
out-of-pocket costs incurred by the Company or the Subsidiaries in connection
with such cooperation. Each of the Buyer Parties shall indemnify and hold
harmless the Company, the Subsidiaries and their respective representatives for
and against any and all liabilities, losses, damages, claims, costs, expenses,
interest, awards, judgments and penalties suffered or incurred by them prior to
the Effective Time in connection with the arrangement of the Debt Financing and
any information utilized in connection therewith (other than historical
information relating to the Company or the Subsidiaries and information provided
by the Company, the Subsidiaries or the Representatives).
     Section 8.12 Notification of Certain Matters. Subject to applicable Laws
and the instructions of any Governmental Entity, each of the Company and the
Buyer Parties shall keep the other apprised of the status of matters relating to
completion of the transactions contemplated hereby, including promptly
furnishing the other with copies of notices or other communications received by
the Buyer Parties or the Company, as the case may be, or any of its
Subsidiaries, from any third Person and/or any Governmental Entity with respect
to the Merger and the other transactions contemplated by this Agreement. Neither
the Company nor any Buyer Party shall permit any of its officers or any other
Representatives to participate in any meeting with any Governmental Entity in
respect of any filings, investigation or other inquiry unless it consults with
the other party in advance and, to the extent permitted by such Governmental
Entity, gives the other party the opportunity to attend and participate thereat.
     Section 8.13 Buyer Party Vote. The Buyer Parties shall vote (or consent
with respect to) or cause to be voted (or a consent to be given with respect to)
any Shares and any voting interests held in Sub beneficially owned by it or any
of its Subsidiaries or with respect to which it or any of its Subsidiaries has
the power (by agreement, proxy or otherwise) to cause to be voted (or to provide
a consent), in favor of the approval of the Merger and the transactions
contemplated hereby, at any meeting of stockholders of the Company or members of
Sub, respectively, at which the Merger and the transactions contemplated hereby
shall be submitted for approval and at all adjournments or postponements thereof
(or, if applicable, by any action of stockholders of either the Company or
members of Sub by consent in lieu of a meeting).

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     Section 8.14 Additional Tax Matters.
          (a) To the maximum extent permitted by Law, Parent agrees that all Tax
Returns of the Company, the Surviving Entity, and the Company Subsidiaries
(including withholdings and withholding Tax Returns) shall be prepared on a
basis consistent with (i) the Tax Returns filed by them prior to the Closing
Date, including as to all continuing elections, characterizations and other
matters, (ii) the principle that the Merger constitutes a purchase of stock of
the Company by Parent and (iii) subject to the foregoing, in accordance with the
other provisions of this Agreement.
          (b) To the maximum extent permitted by Law, Parent shall cause the
Surviving Entity and each Company Subsidiary REIT to properly designate any
dividends paid prior to the Closing Date as capital gain dividends for purposes
of Code Section 857(b)(3).
          (c) Parent and the Surviving Entity will take all actions, and cause
each Company Subsidiary to take all actions, necessary to ensure that the
Company, the Surviving Entity and each Company Subsidiary REIT will be
classified and taxed as a REIT for its taxable year that includes the Effective
Time (including obtaining 100 shareholders as necessary for each REIT).
          (d) Parent, the Company and the Surviving Entity agree to treat any
gain recognized from the Asset Sales as “net capital gain” of the Company for
purposes of Code Sections 1(h) and 857(b)(3)(C) (but subject to the rate
designation rules of IRS Notice 97-64, 1997-2 C.B. 323) and to not take any tax
position inconsistent with such treatment, except as may be required pursuant to
a “determination” within the meaning of Code Section 860(e)(1), (2) or (3).
     Section 8.15 Certain Litigation Matters. Parent, Sub and the Surviving
Entity shall fulfill and comply with all of the Company’s obligations under that
certain Stipulation of Settlement (Case No. 6:04-cv-1231-Orl-31KRS (Consolidated
with 6:04-cv-1341-Orl-19JGG)), including payment on the notes issued by the
Company in connection therewith, to the extent not already done so by the
Closing Date.
     Section 8.16 Resignations. The Company shall use its reasonable efforts to
obtain and deliver to Parent at the Closing evidence reasonably satisfactory to
Parent of the resignation, effective as of the Effective Time, of those
directors of the Company or any Subsidiary designated by Parent to the Company
in writing at least five Business Days prior to the Closing.
     Section 8.17 Third Party Consents. Each of the Buyer Parties on one hand,
and the Company on the other hand, shall use their respective reasonable best
efforts to obtain any third party consents (i) necessary, proper or advisable to
consummate the Transactions, (ii) disclosed in Item 4.5 of the Company Letter or
(iii) required to prevent a Material Adverse Effect of the Company from
occurring prior to the Effective Time. In the event that the Company shall fail
to obtain any third party consent described above, the Company shall use its
reasonable best efforts, and shall take such actions as are reasonably requested
by Parent, to minimize any adverse effect upon the Company and the Buyer Parties
and their respective businesses resulting, or which could reasonably be expected
to result, after the Effective Time, from the failure to obtain such

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consent. Notwithstanding anything to the contrary in this Agreement, in
connection with obtaining any approval or consent from any Person (other than a
Governmental Entity) with respect to any transaction contemplated by this
Agreement, (i) without the prior written consent of Parent which shall not be
unreasonably withheld, conditioned or delayed, none of the Company or any of its
Subsidiaries shall pay or commit to pay to such Person whose approval or consent
is being solicited any cash or other consideration, make any commitment or incur
any liability or other obligation due to such Person and (ii) none of the Buyer
Parties or their respective Affiliates shall be required to pay or commit to pay
to such Person whose approval or consent is being solicited any cash or other
consideration, make any commitment or incur any liability or other obligation.
     Section 8.18 Suspension or Termination of Reinvestment Plan and Redemption
Plan. The Company shall promptly suspend or terminate, in accordance with its
terms, and shall not reinstate the Reinvestment Plan. The Company shall promptly
suspend or terminate, in accordance with its terms, and will not reinstate the
Redemption Plan.
     Section 8.19 Asset Sales. The Company and each of its Subsidiaries agree to
take, or cause to be taken, at the Buyer Parties’ sole cost and expense for the
Company’s reasonable out-of-pocket costs and expenses, all reasonable actions,
and to do or cause to be done all reasonable things as may be necessary to
consummate and make effective each of the Asset Sales as set forth in
Article XII.
ARTICLE IX
CONDITIONS PRECEDENT
     Section 9.1 Conditions to Each Party’s Obligation to Effect the
Transactions. The respective obligations of each party hereto to effect the
Merger and the Asset Sales shall be subject to the fulfillment or waiver in
writing (to the extent not prohibited by Law) at or prior to the Asset Sale Time
of the following conditions:
          (a) Company Stockholder Approval. The Company Stockholder Approval
shall have been obtained.
          (b) No Injunction or Restraint. No Governmental Authority in the
United States shall have enacted, issued, promulgated, enforced or entered any
injunction, order, decree or ruling (whether temporary, preliminary or
permanent) which is then in effect and makes consummation of the Merger or the
Asset Sales illegal or prohibits consummation of the Merger or the Asset Sales;
provided, however, that the party claiming such failure of condition shall have
used its reasonable best efforts to prevent the entry of any such injunction or
order, including taking such action as is required to comply with Section 8.10,
and to appeal as promptly as possible any injunction or other order that may be
entered.
          (c) Regulatory Approvals. Any waiting period (and any extension
thereof) applicable to the consummation of the Merger and the Asset Sales under
the HSR Act shall have expired or been terminated, and any approvals of a
Governmental Entity required to be obtained prior to the Effective Time
thereunder or otherwise shall have been obtained.

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     Section 9.2 Conditions to the Obligations of the Company to Effect the
Transactions. The obligation of the Company to effect the Transactions shall be
subject to the fulfillment or waiver in writing (to the extent not prohibited by
Law) as of the Asset Sale Time of the following additional conditions:
          (a) Accuracy of Representations and Warranties. The representations
and warranties of the Buyer Parties set forth in this Agreement, disregarding
all qualifications and exceptions contained therein relating to materiality,
Material Adverse Effect or similar standard or qualifications, shall be true and
correct as of the date of this Agreement and as of the Asset Sale Time as though
made on and as of such date and time (except to the extent that any such
representation and warranty expressly speaks as of an earlier date, in which
case such representation and warranty shall be true and correct as of such
earlier date) except where the failure of any such representations and
warranties to be so true and correct has not had and would not reasonably be
likely to have a Material Adverse Effect on Parent. The Company shall have
received a certificate signed on behalf of the Buyer Parties by a duly
authorized officer of each of the Buyer Parties certifying as to the
satisfaction of the condition in the preceding sentence.
          (b) Performance of Obligations. The Buyer Parties shall have performed
in all material respects all obligations and complied in all material respects
with all agreements and covenants of the Buyer Parties to be performed and
complied with by them under this Agreement prior to the Asset Sale Time. The
Company shall have received a certificate signed on behalf of the Buyer Parties
by a duly authorized officer of each of the Buyer Parties certifying as to the
satisfaction of the condition specified in the preceding sentence.
     Section 9.3 Conditions to the Obligations of the Buyer Parties to Effect
the Transactions. The obligation of the Buyer Parties to effect the Transactions
shall be subject to the fulfillment or waiver in writing (to the extent not
prohibited by Law) as of the Asset Sale Time of the following additional
conditions:
          (a) Accuracy of Representations and Warranties. (i) Other than with
respect to Section 4.3 (Capital Structure), Section 4.4 (Authority),
Section 4.13 (State Takeover Statutes) and Section 4.22 (Brokers), the
representations and warranties of the Company set forth in this Agreement,
disregarding all qualifications and exceptions contained therein relating to
materiality, Material Adverse Effect or similar standard or qualifications,
shall be true and correct as of the date of this Agreement and as of the Asset
Sale Time as though made on and as of such date and time (except to the extent
that any such representation and warranty expressly speaks as of an earlier
date, in which case such representation and warranty shall be true and correct
as of such earlier date) except where the failure of any such representations
and warranties to be so true and correct has not had and would not reasonably be
likely to have a Material Adverse Effect on the Company; and (ii) the
representations and warranties set forth in Section 4.3 (Capital Structure),
Section 4.4 (Authority), Section 4.13 (State Takeover Statutes) and Section 4.22
(Brokers), disregarding all qualifications and exceptions contained therein
relating to materiality, Material Adverse Effect or similar standard or
qualifications, shall be true and correct in all material respects as of the
date of this Agreement and as of the Asset Sale Time as though made on and as of
such date and time (except to the extent that any such representation and
warranty expressly speaks as of an earlier date, in which case such
representation and

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warranty shall be true and correct in all material respects as of such earlier
date). Parent shall have received a certificate signed on behalf of the Company
by a duly authorized officer of the Company certifying as to the satisfaction of
the condition in the preceding sentence. For purposes of this Section 9.3(a)
only, a Material Adverse Effect with respect to either (i) the Company
Properties not subject to the Arizona Asset Sale, taken as a whole, or (ii) the
Company Properties subject to the Arizona Asset Sale, taken as a whole, shall be
deemed to constitute a Material Adverse Effect on the Company.
          (b) Performance of Obligations. The Company shall have performed in
all material respects all obligations and complied in all material respects with
all agreements and covenants of the Company to be performed and complied with by
it under this Agreement prior to the Asset Sale Time. Parent shall have received
a certificate signed on behalf of the Company by a duly authorized officer of
the Company certifying as to the satisfaction of the conditions specified in the
preceding sentence.
          (c) No Material Adverse Effect. Since the date of this Agreement,
there shall not have been any Material Adverse Effect with respect to the
Company that has occurred and is continuing. Parent shall have received a
certificate signed on behalf of the Company by a duly authorized officer of the
Company certifying as to the satisfaction of the conditions specified in the
preceding sentence.
          (d) Tax Opinion. Parent shall have received a tax opinion of Sidley
Austin LLP, or other counsel to the Company reasonably satisfactory to Parent,
dated as of the date on which the Asset Sales are consummated, substantially in
the form attached hereto as Exhibit B (which opinion shall be based upon
customary assumptions, exceptions and qualifications, and customary
representations made by the Company and its Subsidiaries substantially in the
form attached hereto as an exhibit to such tax opinion), to the effect that the
Company has been organized and operated in conformity with the requirements for
qualification as a REIT under the Code for all taxable periods commencing with
the Company’s taxable year ended December 31, 1997 through the time immediately
prior to the consummation of the Asset Sales (determined without taking into
account, or giving effect to, the Merger, the Asset Sales, the Special Dividend
or any other transaction or distribution required to be taken or made by the
Company under this Agreement in order to effect the transactions contemplated
hereby, and assuming for such purposes that the Company shall satisfy all
requirements required to be satisfied upon or after the consummation of the
Asset Sales necessary for the Company to qualify as a REIT for the 2007 taxable
year including the applicable distribution requirements under the Code for the
taxable year including the date of consummation of the Asset Sales) as though
the Company’s taxable year ended immediately prior to the consummation of the
Asset Sales.
          (e) Special Dividend. The Special Dividend shall have been authorized
as set forth in Section 12.3.

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ARTICLE X
TERMINATION AND AMENDMENT
     Section 10.1 Termination. This Agreement may be terminated at any time
prior to the Effective Time, whether before or after the Company Stockholder
Approval is obtained, only as follows:
          (a) by mutual written consent of Parent and the Company;
          (b) by either Parent or the Company:
     (i) if the Merger shall not have been consummated on or before July 1, 2007
(the “Termination Date”); provided, however, that the right to terminate this
Agreement pursuant to this Section 10.1(b)(i) shall not be available to any
party whose failure to fulfill any obligation or other breach under this
Agreement has materially contributed to, or resulted in, the failure of the
Merger to occur on or before the Termination Date;
     (ii) if any court or other Governmental Entity of competent jurisdiction
shall have issued an order, decree or ruling or taken any other action
permanently enjoining, restraining or otherwise prohibiting the transactions
contemplated by this Agreement and such order, decree or ruling or other action
shall have become final and nonappealable; provided, however, that the right to
terminate this Agreement pursuant to this Section 10.1(b)(ii) shall not be
available to any party who has not used its reasonable efforts to cause such
order to be lifted or made inapplicable to such transactions or otherwise taken
such action as is required to comply with Section 8.10; or
     (iii) if the Company Stockholder Approval shall not have been obtained upon
a vote taken thereon (for the avoidance of doubt, not including any vote to
adjourn the Stockholders’ Meeting) at the Stockholders’ Meeting or any
adjournment or postponement thereof;
          (c) by Parent, if none of the Buyer Parties is in material breach of
its obligations under this Agreement, and if (i) any of the representations and
warranties of the Company herein are or become untrue or incorrect such that the
condition set forth in Section 9.3(a) would be incapable of being satisfied by
the Termination Date or (ii) there has been a breach on the part of the Company
of any of its covenants or agreements herein such that the condition set forth
in Section 9.3(b) would be incapable of being satisfied by the Termination Date;
          (d) by Parent if (i) the Board has effected a Change in
Recommendation, (ii) the Company enters into an agreement with respect to an
Acquisition Proposal (other than a confidentiality agreement entered into in
compliance with Section 7.2(b)), (iii) a tender offer or exchange offer relating
to the Company Common Shares shall have been commenced by a third

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party and the Board shall not have recommended that the Company’s stockholders
reject such tender or exchange offer within ten (10) Business Days following
commencement thereof (including, for these purposes, by taking no position
during such ten (10) Business Day period with respect to the acceptance of such
tender or exchange offer by the Company’s stockholders, which shall constitute a
failure to recommend rejection of such tender or exchange offer), or (iv) the
Company publicly announces its intention to do any of the foregoing or makes any
public statement inconsistent with the Board Recommendation;
          (e) by the Company prior to the Company Stockholder Approval, if the
Board authorizes the Company, subject to complying with the terms of this
Agreement to enter into a binding written agreement, concerning a transaction
that constitutes a Superior Proposal (other than a confidentiality agreement
entered into in compliance with Section 7.2(b)); provided, that for the
termination to be effective the Company shall have paid the Termination Fee; or
          (f) by the Company, if it is not in material breach of its obligations
under this Agreement, and if (i) any of the representations and warranties of
the Buyer Parties herein are or become untrue or incorrect such that the
condition set forth in Section 9.2(a) would be incapable of being satisfied by
the Termination Date or (ii) there has been a breach on the part of any of the
Buyer Parties of any of their respective covenants or agreements herein such
that the condition set forth in Section 9.2(b) would be incapable of being
satisfied by the Termination Date.
     Section 10.2 Effect of Termination. In the event of a termination of this
Agreement by either the Company or Parent as provided in Section 10.1, this
Agreement shall forthwith become void and there shall be no liability or
obligation on the part of any party hereto or their respective officers,
directors, stockholders or Affiliates except with respect to Section 8.5 (Fees
and Expenses), Section 8.6 (Public Announcements), this Section 10.2, Article XI
(General Provisions) and the last sentence of Section 8.4 (Access to
Information; Confidentiality); provided, however, that nothing herein shall
relieve any party for liability for any willful breach of any of its
representations or warranties, or any breach of its covenants or agreements set
forth in this Agreement prior to or concurrently with such termination.
     Section 10.3 Extension; Waiver. At any time prior to the Effective Time,
the parties hereto, by action taken or authorized by their respective board of
directors or members, as the case may be, may, to the extent legally allowed,
(a) extend the time for the performance of any of the obligations or other acts
of the other parties hereto, (b) waive any inaccuracies in the representations
and warranties contained herein or in any document delivered pursuant hereto or
(c) waive compliance with any of the agreements or conditions contained herein.
Any agreement on the part of a party hereto to any such extension or waiver
shall be valid only if set forth in a written instrument signed on behalf of
such party. The failure of any party to this Agreement to assert any of its
rights under this Agreement or otherwise shall not constitute a waiver of those
rights.

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ARTICLE XI
GENERAL PROVISIONS
     Section 11.1 Non-Survival of Representations and Warranties and Agreements.
None of the representations and warranties in this Agreement or in any
instrument delivered pursuant to this Agreement shall survive the Effective
Time.
     Section 11.2 Notices. All notices, consents, waivers and other
communications hereunder shall be in writing and shall be deemed given if
delivered personally, telecopied (which is confirmed) or sent by overnight
courier (providing proof of delivery) to the parties at the following addresses
(or at such other address for a party as shall be specified by like notice):
     (a) if to Parent, Sub or Missouri, to:
Morgan Stanley Real Estate Investing – MSREF
1585 Broadway
New York, NY 10036
Telecopier No. (212) 507-4571
Attention: Michael Franco
     with a copy to:
Goodwin Procter LLP
Exchange Place
Boston, MA 02109
Telecopier No: (617) 523-1231
Attention: Gilbert G. Menna, Esq.
     (b) if to the Company, to:
CNL Hotels & Resorts, Inc.
420 South Orange Avenue, Suite 700
Orlando, FL 32801-3313
Attn: Greerson McMullen
Facsimile: (407) 540-2702
     with a copy to:
Sidley Austin LLP
One South Dearborn
Chicago, Illinois 60603
Attn: Thomas A. Cole and Brian J. Fahrney
Facsimile: (312) 853-7036

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     (c) if to Arizona, to:
Ashford Hospitality Trust, Inc.
14185 Dallas Parkway, Suite 1100
Dallas, TX 75254
Fax Line: 972-490-9605
Attn: David A. Brooks,
                     Chief Legal Officer/Head of Transactions
     with a copy to:
Michael E. Dillard, P.C.
Akin Gump Strauss Hauer & Feld LLP
1111 Louisiana Street, Suite 4400
Houston, TX 77002-5200
Fax: 713-236-0822
     Section 11.3 Counterparts. This Agreement may be executed in counterparts,
all of which shall be considered one and the same agreement, and shall become
effective when one or more counterparts have been signed by each of the parties
and delivered to the other parties, it being understood that all parties need
not sign the same counterpart.
     Section 11.4 Entire Agreement; No Third-Party Beneficiaries. Except for the
Confidentiality Agreements, the Guaranty, the Parent Asset Purchase Agreement
and the Arizona Asset Purchase Agreement, this Agreement (together with the
Company Letter) constitutes the entire agreement and supersedes all prior
agreements and understandings, both written and oral, among the parties with
respect to the subject matter hereof. EACH PARTY HERETO AGREES THAT, EXCEPT FOR
THE REPRESENTATIONS AND WARRANTIES CONTAINED IN THIS AGREEMENT, NEITHER PARENT
AND SUB NOR THE COMPANY OR ANY OF THEIR RESPECTIVE OFFICERS, DIRECTORS,
EMPLOYEES, AGENTS, FINANCIAL AND LEGAL ADVISORS OR OTHER REPRESENTATIVES MAKES
ANY OTHER REPRESENTATIONS OR WARRANTIES, AND EACH HEREBY DISCLAIMS ANY OTHER
REPRESENTATIONS OR WARRANTIES MADE BY ITSELF OR ANY OF ITS OFFICERS, DIRECTORS,
EMPLOYEES, AGENTS, FINANCIAL AND LEGAL ADVISORS OR OTHER REPRESENTATIVES, WITH
RESPECT TO THE EXECUTION AND DELIVERY OF THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY, NOTWITHSTANDING THE DELIVERY OR DISCLOSURE TO THE OTHER OR
THE OTHER’S REPRESENTATIVES OF ANY DOCUMENTATION OR OTHER INFORMATION WITH
RESPECT TO ANY ONE OR MORE OF THE FOREGOING. Parent, Sub, Missouri, Arizona and
the Company hereby agree that their respective representations and warranties
set forth herein are solely for the benefit of the other parties hereto, in
accordance with and subject to the terms of this Agreement, and this Agreement,
except for the provisions of Section 8.9, is not intended to, and does not,
confer upon any Person other than the parties hereto any rights or remedies
hereunder, including the right to rely upon the accuracy or completeness of the
representations and warranties set forth herein.

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     Section 11.5 Assignment. This Agreement shall not be assigned (whether
pursuant to a merger, by operation of Law or otherwise), except that each of the
Buyer Parties may assign all or any of its rights and obligations hereunder or
the Parent Asset Purchase Agreement or the Arizona Asset Purchase Agreement to
any of their respective Affiliates; provided, that no such assignment shall
relieve the assigning party of its obligations hereunder if such assignee does
not perform such obligations
     Section 11.6 Governing Law; Venue; Waiver of Jury Trial. (a) This Agreement
shall be governed by, and construed in accordance with, the Laws of the State of
Maryland applicable to contracts executed in and to be performed in that State.
All actions and proceedings arising out of or relating to this Agreement shall
be heard and determined exclusively in any Maryland state or federal court. The
parties hereto hereby (a) submit to the exclusive jurisdiction of any Maryland
state or federal court for the purpose of any action arising out of or relating
to this Agreement brought by any party hereto, and (b) irrevocably waive, and
agree not to assert by way of motion, defense, or otherwise, in any such action,
any claim that it is not subject personally to the jurisdiction of the
above-named courts, that its property is exempt or immune from attachment or
execution, that the action is brought in an inconvenient forum, that the venue
of the action is improper, or that this Agreement or the transactions
contemplated by this Agreement may not be enforced in or by any of the
above-named courts.
          (b) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY
ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT
ISSUES, AND THEREFORE EACH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES
ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION
DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH PARTY CERTIFIES AND
ACKNOWLEDGES THAT (i) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY
HAS REPRESENTED, EXPRESSLY OR OTHERWISE, TO IT THAT SUCH OTHER PARTY WOULD NOT,
IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (ii) EACH
PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (iii) EACH
PARTY MAKES THIS WAIVER VOLUNTARILY AND (iv) EACH PARTY HAS BEEN INDUCED TO
ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION 11.6.
     Section 11.7 Severability. If any term or other provision of this Agreement
is invalid, illegal or incapable of being enforced by any rule of Law, or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic and legal substance of
the transactions contemplated hereby are not affected in any manner materially
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties shall negotiate
in good faith to modify this Agreement so as to effect the original intent of
the parties as closely as possible in a mutually acceptable manner in order that
the transactions contemplated by this Agreement may be consummated as originally
contemplated to the fullest extent possible.

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     Section 11.8 Enforcement of this Agreement.
          (a) Except as otherwise provided in Section 11.8(b) or elsewhere in
this Agreement, any and all remedies expressly conferred upon a party to this
Agreement shall be cumulative with, and not exclusive of, any other remedy
contained in this Agreement, at law or in equity and the exercise by a party to
this Agreement of any one remedy shall not preclude the exercise by it of any
other remedy. Except as otherwise provided in Section 11.8(b), the Company
agrees that, to the extent it or its Subsidiaries have incurred losses or
damages in connection with this Agreement, prior to the consummation of either
of the Asset Sales, (i) the maximum aggregate liability of the Buyer Parties and
the Guarantors for such losses or damages shall be limited to $300,000,000, and
the sole and exclusive remedy, (ii) the maximum liability of the Guarantors,
directly or indirectly, shall be limited to the respective obligations of such
Guarantors under the Guaranty and (iii) in no event shall the Company or the
Subsidiaries seek to recover any money damages in excess of such amount in
clause (i) from the Buyer Parties or the Guarantors or any of their respective
shareholders, partners, members, managers, directors, officers, agents, and
Affiliates in connection therewith. Following the consummation of either of the
Asset Sales, each of the Buyer Parties shall be jointly and severally liable for
any losses or damages incurred by the Company or any of its Subsidiaries arising
out of the breach by any of the Buyer Parties of any of their respective
covenants to be performed thereafter.
          (b) The parties hereto agree that irreparable damage would occur in
the event any provision of this Agreement were not performed by the Company or
in accordance with the terms hereof or were otherwise breached and that, prior
to the termination of this Agreement pursuant to Section 10.1, the Buyer Parties
shall be entitled to specific performance of the terms and provisions of this
Agreement or an injunction to prevent any breach of this Agreement, in addition
to any other remedy at law or equity. The parties acknowledge that the Company
shall not be entitled to an injunction or injunctions to prevent breaches of
this Agreement or to enforce specifically the terms and provisions of this
Agreement and that the Company’s sole and exclusive remedy with respect to any
such breach shall be the remedy set forth in Section 11.8(a); provided, however,
that the Company shall be entitled to seek specific performance to prevent any
breach by the Buyer Parties of or enforce their compliance with (i) the last
sentence of Section 8.4, (ii) Section 8.6 and (iii) those covenants of the Buyer
Parties to be performed following the consummation of either of the Asset Sales.
     Section 11.9 Obligations of Subsidiaries. Whenever this Agreement requires
any Subsidiary of Parent (including Sub) or of the Company to take any action,
such requirement shall be deemed to include an undertaking on the part of Parent
or the Company, as the case may be, to cause such Subsidiary to take such
action.
     Section 11.10 Interpretation; Construction.
          (a) The parties have participated jointly in negotiating and drafting
this Agreement. In the event that an ambiguity or a question of intent or
interpretation arises, this Agreement shall be construed as if drafted jointly
by the parties, and no presumption or burden of proof shall arise favoring or
disfavoring any party by virtue of the authorship of any provision of this
Agreement.

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          (b) The fact that any item of information is disclosed in the Company
Letter shall not be construed to mean that such information is required to be
disclosed by this Agreement.
     Section 11.11 Amendment; Consents. This Agreement may be amended by the
parties hereto at any time prior to the Effective Time; provided, however, that,
after approval of the Merger by the stockholders of the Company, no amendment
may be made without further stockholder approval which the Company determines
requires further approval by such stockholders under applicable Laws. The Buyer
Parties and the Company agree to amend this Agreement in the manner provided in
the immediately preceding sentence to the extent required to continue the status
of the Company as a REIT. This Agreement may not be amended except by an
instrument in writing signed by the parties hereto. Notwithstanding anything to
the contrary contained herein, any provision of this Agreement requiring the
consent of any of the Buyer Parties hereunder shall be deemed to be satisfied
upon receipt of a consent from Parent.
ARTICLE XII
SALE OF SPECIFIED ASSETS
     Section 12.1 Entry into Parent Asset Purchase Agreement. Concurrently with
the execution of this Agreement, the Company and Parent have entered into the
asset purchase agreement attached hereto as Exhibit C (the “Parent Asset
Purchase Agreement”) which agreement will become effective as provided therein.
On the first (1st) Business Day following the Stockholders’ Meeting and the
satisfaction (or, to the extent permitted by Law, waiver by the party or parties
entitled to the benefits thereof) of the conditions set forth in Article IX
(other than Section 9.3(e) which shall be satisfied in accordance with Section
12.3) of this Agreement (such first (1st) Business Day, the “Final Condition
Satisfaction Date”; provided, that if the day following such first (1st)
Business Day is not also a Business Day, the Final Condition Satisfaction Date
shall be delayed until the next Business Day that is also immediately followed
by a Business Day), the Parent Asset Purchase Agreement will become effective
and Parent and the Company will consummate the transactions contemplated by the
Parent Asset Purchase Agreement (the “Parent Asset Sale”). The obligation of the
Company to consummate the Parent Asset Sale is subject to the receipt by the
Company of a written letter, in form and substance, reasonably satisfactory to
the Company from Parent and Sub on the Final Condition Satisfaction Date that
confirms that the conditions to the obligations of Parent and Sub to effect the
Merger set forth in Section 9.3 have been irrevocably satisfied or waived; and
the receipt by the Buyer Parties of a written letter, in form and substance
reasonably satisfactory to the Buyer Parties, from the Company on the Final
Condition Satisfaction Date that confirms that the conditions to the obligations
of the Company to effect the Merger have been irrevocably satisfied or waived.
The Company and the Buyer Parties agree that the consummation of the Asset Sales
and the payment of the Special Dividend shall be conditions precedent to the
Closing of the Merger.
     Section 12.2 Entry into Arizona Asset Purchase Agreement. Concurrently with
the execution of this Agreement, the Company and Arizona have entered into the
asset purchase agreement attached hereto as Exhibit D (the “Arizona Asset
Purchase Agreement”) which agreement will become effective as provided therein.
On the first Final Condition Satisfaction Date, the Arizona Asset Purchase
Agreement will become effective and Arizona and the Company will consummate the
transactions contemplated by the Arizona Asset Purchase

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Agreement (the “Arizona Asset Sale”). The obligation of the Company to
consummate the Arizona Asset Sale is subject to the receipt by the Company of a
written letter, in form and substance, reasonably satisfactory to the Company
from Parent and Sub on the Final Condition Satisfaction Date that confirms that
the conditions to the obligations of Parent and Sub to effect the Merger set
forth in Section 9.3 have been irrevocably satisfied or waived; and the receipt
by Arizona, Parent and Sub of a written letter, in form and substance reasonably
satisfactory to Arizona, Parent and Sub, from the Company on the Final Condition
Satisfaction Date that confirms that the conditions to the obligations of the
Company to effect the Merger have been irrevocably satisfied or waived.
     Section 12.3 Declaration of Special Dividend. Immediately following, and
subject to, the consummation of the Asset Sales, the Company shall cause the
Board to authorize, and the Company shall declare, a dividend payable to the
holders of record of Company Common Shares at the close of business on the Final
Condition Satisfaction Date (the “Special Dividend”). The amount of the Special
Dividend per Company Common Share shall be equal to the quotient that results
from dividing an amount, as reasonably determined by the Company following
consultation with Parent, equal to the Company’s current and accumulated
earnings and profits through and including the Effective Time (the “Special
Dividend Amount”), by the aggregate number of Company Common Shares outstanding
at the close of business on the Final Condition Satisfaction Date.
     Section 12.4 Payment of Special Dividend. The Special Dividend shall by
payable on the close of business on the day on which the Asset Sales are
consummated and prior to the Effective Time. The Per Share Merger Consideration
shall be reduced by an amount equal to the Special Dividend.
     Section 12.5 Right to Structure Asset Sales as Purchase of Ownership
Interests. Notwithstanding the foregoing provisions of this Article XII, Parent
and Arizona each shall have the right to structure all or a portion of the Asset
Sales as a purchase of ownership interests in Subsidiaries of the Company that
own Company Properties that are the subject of the Asset Sales in order to
minimize Transfer Taxes and other transaction costs or to insulate them from
liabilities of the general partner of any Subsidiary, so long as such revised
structure has no adverse impact on the Company or its stockholders and does not,
and would not reasonably be expected to, delay the Closing. The Company shall
reasonably cooperate in connection with any such restructuring of the Asset
Sales.

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     IN WITNESS WHEREOF, Parent, Sub, Missouri, Arizona and the Company have
caused this Agreement to be signed by their respective officers thereunto duly
authorized all as of the date first written above.

            MS RESORT HOLDINGS LLC
      By:   /s/ Michael Quinn         Name:   Michael Quinn        Title:   Vice
President        MS RESORT ACQUISITION LLC
      By:   /s/ Michael Quinn         Name:   Michael Quinn        Title:   Vice
President        MS RESORT PURCHASER LLC
      By:   /s/ Michael Quinn         Name:   Michael Quinn        Title:   Vice
President        ASHFORD SAPPHIRE ACQUISITION LLC
      By:   /s/ David A. Brooks         Name:   David A. Brooks        Title:  
Vice President        CNL HOTELS & RESORTS, INC.
      By:   /s/ Greerson G. McMullen         Name:   Greerson G. McMullen       
Title:   Executive Vice President     

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