exv10w14



 






Exhibit 10.14



 









AGREEMENT OF PURCHASE AND SALE




between




CAPSTAR WESTCHASE PARTNERS, L.P., the SELLER




and



INTERSTATE WESTCHASE, LP, the BUYER




Dated as of January 4, 2007




Hilton Westchase, Houston, Texas





 







 









 












TABLE OF CONTENTS




	 	 	 	 	 
	 	 	Page	 
	ARTICLE I. DEFINITIONS 
	 	 	2	 
	SECTION 1.1 Defined Terms 
	 	 	2	 
	 
	 	 	 	 
	ARTICLE II. SALE, PURCHASE PRICE AND CLOSING 
	 	 	2	 
	SECTION 2.1 Sale of Asset 
	 	 	2	 
	SECTION 2.2 Purchase Price 
	 	 	2	 
	SECTION 2.3 Earnest Money
	 	 	2	 
	SECTION 2.4 The Closing 
	 	 	2	 
	 
	 	 	 	 
	ARTICLE III. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE
SELLER 
	 	 	2	 
	SECTION 3.1 General Seller Representations and Warranties 
	 	 	2	 
	SECTION 3.2 Representations and Warranties of the Seller as to the Asset 
	 	 	2	 
	SECTION 3.3 Limitations on Representations and Warranties of the Seller 
	 	 	2	 
	SECTION 3.4 Covenants of the Seller Prior to Closing 
	 	 	2	 
	SECTION 3.5 Amendment to Schedules 
	 	 	2	 
	 
	 	 	 	 
	ARTICLE IV. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE
BUYER 
	 	 	2	 
	SECTION 4.1 Representations and Warranties of the Buyer 
	 	 	2	 
	SECTION 4.2 Covenants of the Buyer Prior to Closing 
	 	 	2	 
	SECTION 4.3 Employee Matters 
	 	 	2	 
	SECTION 4.4 Bookings 
	 	 	2	 
	SECTION 4.5 Franchise Agreement 
	 	 	2	 
	SECTION 4.6 Manager Defaults 
	 	 	2	 
	SECTION 4.7 Tax Clearance Certificates; Etc 
	 	 	2	 
	 
	 	 	 	 
	ARTICLE V. CONDITIONS PRECEDENT TO CLOSING 
	 	 	2	 
	SECTION 5.1 Conditions Precedent to the Seller’s Obligations 
	 	 	2	 
	SECTION 5.2 Conditions to the Buyer’s Obligations 
	 	 	2	 
	SECTION 5.3 Waiver of Conditions Precedent 
	 	 	2	 
	 
	 	 	 	 
	ARTICLE VI. CLOSING DELIVERIES 
	 	 	2	 
	SECTION 6.1 The Buyer Closing Deliveries 
	 	 	2	 
	SECTION 6.2 The Seller Closing Deliveries 
	 	 	2	 
	 
	 	 	 	 
	ARTICLE VII. INSPECTIONS; RELEASE 
	 	 	2	 
	SECTION 7.1 Right of Inspection 
	 	 	2	 
	SECTION 7.2 Examination; No Contingencies 
	 	 	2	 
	SECTION 7.3 RELEASE 
	 	 	2	 
	 
	 	 	 	 
	ARTICLE VIII. TITLE AND PERMITTED EXCEPTIONS 
	 	 	2	 
	SECTION 8.1 Title Insurance and Survey
	 	 	2	 
	SECTION 8.2 Title Commitment; Survey
	 	 	2	 
	SECTION 8.3 Delivery of Title 
	 	 	2	 
	SECTION 8.4 Cooperation 
	 	 	2	 






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	 	 	Page	 
	ARTICLE IX. TRANSACTION COSTS; RISK OF LOSS 
	 	 	2	 
	SECTION 9.1 Transaction Costs 
	 	 	2	 
	SECTION 9.2 Risk of Loss 
	 	 	2	 
	 
	 	 	 	 
	ARTICLE X. ADJUSTMENTS 
	 	 	2	 
	SECTION 10.1 Adjustments 
	 	 	2	 
	SECTION 10.2 Re-Adjustment 
	 	 	2	 
	SECTION 10.3 Accounts Receivable 
	 	 	2	 
	 
	ARTICLE XI. INDEMNIFICATION
	 	 	2	 
	SECTION 11.1 Indemnification by the Seller 
	 	 	2	 
	SECTION 11.2 Indemnification by the Buyer 
	 	 	2	 
	SECTION 11.3 Limitations on Indemnification 
	 	 	2	 
	SECTION 11.4 Survival 
	 	 	2	 
	SECTION 11.5 Indemnification as Sole Remedy 
	 	 	2	 
	 
	 	 	 	 
	ARTICLE XII. DEFAULT AND TERMINATION 
	 	 	2	 
	SECTION 12.1 The Seller’s Termination 
	 	 	2	 
	SECTION 12.2 The Buyer’s Termination 
	 	 	2	 
	 
	 	 	 	 
	ARTICLE XIII. TAX CERTIORARI PROCEEDINGS 
	 	 	2	 
	SECTION 13.1 Prosecution and Settlement of Proceedings 
	 	 	2	 
	SECTION 13.2 Application of Refunds or Savings 
	 	 	2	 
	SECTION 13.3 Survival 
	 	 	2	 
	 
	 	 	 	 
	ARTICLE XIV. MISCELLANEOUS 
	 	 	2	 
	SECTION 14.1 Use of Blackstone Name and Address 
	 	 	2	 
	SECTION 14.2 Exculpation of the Seller 
	 	 	2	 
	SECTION 14.3 Brokers 
	 	 	2	 
	SECTION 14.4 Confidentiality; Press Release; IRS Reporting Requirements 
	 	 	2	 
	SECTION 14.5 Escrow Provisions 
	 	 	2	 
	SECTION 14.6 Successors and Assigns; No Third-Party Beneficiaries 
	 	 	2	 
	SECTION 14.7 Assignment 
	 	 	2	 
	SECTION 14.8 Further Assurances 
	 	 	2	 
	SECTION 14.9 Notices 
	 	 	2	 
	SECTION 14.10 Entire Agreement 
	 	 	2	 
	SECTION 14.11 Amendments 
	 	 	2	 
	SECTION 14.12 No Waiver 
	 	 	2	 
	SECTION 14.13 Governing Law 
	 	 	2	 
	SECTION 14.14 Intentionally Omitted 
	 	 	2	 
	SECTION 14.15 Severability 
	 	 	2	 
	SECTION 14.16 Section Headings 
	 	 	2	 
	SECTION 14.17 Counterparts 
	 	 	2	 
	SECTION 14.18 Acceptance of Deed 
	 	 	2	 
	SECTION 14.19 Construction 
	 	 	2	 
	SECTION 14.20 Recordation 
	 	 	2	 
	SECTION 14.21 WAIVER OF JURY TRIAL 
	 	 	2	 
	SECTION 14.22 Time is of the Essence 
	 	 	2	 
	SECTION 14.23 Bulk Sale; Occasional Sale 
	 	 	2	 
	SECTION 14.24 STORAGE TANKS
	 	 	2	 






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	Schedules
	 	 	 	 
	 
	Schedule A

	 	—
	 	Land
	Schedule 1.1

	 	—
	 	Title Commitment
	Schedule 3.1(c)

	 	—
	 	Consents
	Schedule 3.2(a)

	 	—
	 	Operating Agreements
	Schedule 3.2(c)

	 	—
	 	Tenant Leases
	Schedule 3.2(d)

	 	—
	 	Brokerage Commissions
	Schedule 3.2(f)

	 	—
	 	Litigation
	Schedule 3.2(g)

	 	—
	 	Bookings
	Schedule 10.4

	 	—
	 	Interstate Payment
	 
	 	 	 	 
	Exhibits
	 	 	 	 
	 
	 	 	 	 
	Exhibit A

	 	—
	 	Form of Assignment of Leases
	Exhibit B

	 	—
	 	Form of Assignment of Contracts
	Exhibit C

	 	—
	 	Form of Special Warranty Deed
	Exhibit D

	 	—
	 	Form of Bill of Sale
	Exhibit E

	 	—
	 	Form of Assignment of Intangibles
	Exhibit F

	 	—
	 	Form of FIRPTA Certificate
	Exhibit G

	 	—
	 	Form of Title Affidavit
	Exhibit H

	 	—
	 	Form of Memorandum of Sale






-iii-









 






AGREEMENT OF PURCHASE AND SALE




     AGREEMENT OF PURCHASE AND SALE (this “Agreement”), made as of the 4th day of January,
2007 between CAPSTAR WESTCHASE PARTNERS, L.P., a Delaware limited partnership (the “Seller”), and
INTERSTATE WESTCHASE, LP, a Delaware limited partnership (the “Buyer”).



Background




     A. The Seller is the owner of the land more particularly described in Schedule
A attached hereto (the “Land”). The Seller is also the owner of the hotel facility located on the
Land having an address at 9999 Westheimer, Houston, Texas and commonly known as the “Hilton Houston
Westchase” (the “Hotel”). The Land and the Hotel shall be referred to herein, collectively,
as the “Property”; the Property and the Asset-Related Property (as defined below) shall be
referred to herein as the “Asset”.



     B. The Seller desires to sell to the Buyer, and the Buyer desires to purchase from
the Seller, the Asset on the terms and conditions hereinafter set forth.



AGREEMENT




     NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth in this
Agreement, and for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereby agree as follows:



ARTICLE I.




DEFINITIONS




         SECTION 1.1 Defined Terms. The capitalized terms used herein will have the following
meanings.



     “Accounts Receivable” means all amounts which the Seller is entitled to receive from
the operation of the Hotel, but are not paid as of the Closing, including, without limitation,
charges for the use or occupancy of any guest, conference, meeting or banquet rooms or other
facilities at the Hotel, or any other goods or services provided by or on behalf of the Seller at
the Hotel, but expressly excluding any credit card charges and checks which the Seller has
submitted for payment as of the Closing.



     “Agreement” shall mean this Agreement of Purchase and Sale, together with the
exhibits and schedules attached hereto, as the same may be amended, restated, supplemented or
otherwise modified.



     “Allocation” shall have the meaning assigned thereto in subsection 2.2(c).



4









 





     “Anti-Money Laundering and Anti-Terrorism Laws” shall have the meaning assigned
thereto in subsection 3.1(f)(i).



     “Asset” shall have the meaning assigned thereto in “Background” paragraph A.



     “Asset File” shall mean the materials with respect to the Asset previously delivered
to the Buyer or its representatives by or on behalf of the Seller or made available to the Buyer at
the Property or in Manager’s possession.



     “Asset-Related Property” shall have the meaning assigned thereto in
subsection 2.1(b).



     “Assigned Accounts Receivable” shall have the meaning assigned thereto in
subsection 10.3(b)(i).



     “Assignment of Contracts” shall have the meaning assigned thereto in
subsection 6.1(a)(ii).



     “Assignment of Intangibles” shall have the meaning assigned thereto in
subsection 6.2(a)(v).



     “Assignment of Leases” shall have the meaning assigned thereto in
subsection 6.1(a)(i).



     “Basket Limitation” shall mean an amount equal to $100,000.



     “Bill of Sale” shall have the meaning assigned thereto in subsection
6.2(a)(ii).



     “Bookings” shall have the meaning assigned thereto in subsection
2.1(b)(viii).



     “Books and Records” shall have the meaning assigned thereto in
subsection 2.1(b)(xvi).



     “Broker” shall mean Jones Lang LaSalle Americas, Inc., a Maryland
corporation.



     “Business Day” shall mean any day other than a Saturday, Sunday or other day on which
banks are authorized or required by law to be closed in New York City, New York.



     “Buyer” shall have the meaning assigned thereto in the Preamble to this
Agreement.



     “Buyer-Related Entities” shall have the meaning assigned thereto in Section
11.1.



     “Buyer’s Knowledge” shall mean the actual knowledge of the Buyer based upon the
actual knowledge of Leslie Ng, David Lee and Christopher Bennett without any duty on the part of
such Person to conduct any independent investigation or make any inquiry of any Person.



     “Buyer Waived Breach” shall have the meaning assigned thereto in 11.3.



5









 





     “Cap Limitation” shall mean an amount equal to $2,100,000.



     “Claims” shall have the meaning assigned thereto in Section 7.3.



     “Closing” shall have the meaning assigned thereto in subsection 2.4(a).



     “Closing Date” shall have the meaning assigned thereto in subsection 2.4(a).



     “Closing Documents” shall mean any certificate, assignment, instrument or other
document delivered pursuant to this Agreement.



     “Code” means the Internal Revenue Code of 1986, as amended from time to time, or any
successor statute. Any reference herein to a particular provision of the Code shall mean, where
appropriate, the corresponding provision in any successor statute.



     “Condition of the Asset” shall have the meaning assigned thereto in
subsection 7.2(b).



     “Cut-Off Time” shall have the meaning assigned thereto in subsection 10.1.



     “Deed” shall have the meaning assigned thereto in subsection 6.2(a)(i).



     “Earnest Money” shall have the meaning assigned thereto in subsection
2.3(a).



     “Employees” shall mean, at any time, all persons who are employed by the Seller or
Manager (whether on a full-time or part-time basis) at the Hotel at such time to operate the Hotel.



     “Environmental Laws” shall have the meaning assigned thereto in
subsection 3.2(h).



     “Equipment Leases” shall have the meaning assigned thereto in
subsection 2.1(b)(vii).



     “Escrow Account” shall have the meaning assigned thereto in subsection
14.5(a).



     “Escrow Agent” shall have the meaning assigned thereto in subsection
2.3(a).



     “Executive Order” shall have the meaning assigned thereto in subsection
3.1(f)(i).



     “Existing Survey” shall mean that certain survey of the Property prepared by Clark
Surveying Inc., CSI Job No. 06-09-0168-000, dated October 23, 2006, last revised October 31, 2006.



     “Extension Option” shall have the meaning assigned thereto in subsection
2.4(b).



     “FIRPTA” shall have the meaning assigned thereto in subsection 6.2(a)(vii).



     “Financing Liens” shall have the meaning assigned thereto in subsection 8.3(a).



6









 





     “FF&E” shall have the meaning assigned thereto in subsection 2.1(b)(ii).



     “Franchise Agreement” shall mean that certain Amended and Restated Franchise License
Agreement dated May 2,2006 by and between Franchisor and the Seller.



     “Franchisor” shall mean Hilton Inns, Inc., a Delaware corporation.



     “Governmental Authority” shall mean any federal, state or local government or other
political subdivision thereof, including, without limitation, any agency or entity exercising
executive, legislative, judicial, regulatory or administrative governmental powers or functions, in
each case to the extent the same has jurisdiction over the Person or property in question.



     “Government List” shall mean any of (i) the two lists maintained by the United States
Department of Commerce (Denied Persons and Entities), (ii) the list maintained by the United States
Department of Treasury (Specially Designated Nationals and Blocked Persons), and (iii) the two
lists maintained by the United States Department of State (Terrorist Organizations and Debarred
Parties).



     “Guest Ledger” means any and all charges accrued to the open accounts of any guests or
customers at the Hotel as of the Cut-Off Time for the use and occupancy of any guest, conference,
meeting or banquet rooms or other facilities at the Hotel, any restaurant, bar or banquet services,
or any other goods or services provided by or on behalf of the Seller.



     “Hazardous Materials” shall have the meaning assigned thereto in
subsection 7.2(b)(i).



     “Hotel” shall have the meaning assigned thereto in “Background” paragraph
A.



     “Intangible Property” shall have the meaning assigned thereto in
subsection 2.1 (b)(xiii).



     “Inventories” shall have the meaning assigned thereto in subsection
2.1(b)(xi).



     “IRS” shall mean the Internal Revenue Service.



     “IRS Reporting Requirements” shall have the meaning assigned thereto in
subsection 14.4(c).



     “Land” shall have the meaning assigned thereto in “Background” paragraph A.



     “Licenses and Permits” shall have the meaning assigned thereto in
subsection 2.1(b)(iii).



     “Liquor Holder” shall have the meaning assigned thereto in subsection 4.2(a)(ii).



     “Liquor Authorities” shall have the meaning assigned thereto in
subsection 4.2(a)(iii).



7









 





     “Memorandum of Sale” shall have the meaning assigned thereto in
subsection 4.2(a)(ii).



     “Losses” shall have the meaning assigned thereto in Section 11.1.



     “Management Agreement” shall mean that certain Hotel Management Agreement, which is
dated as of January 1, 2001 between MeriStar SPE Leasing Corp. and Manager, as assigned to the
Seller pursuant to that certain Assignment and Assumption Agreement dated as of May 2, 2006 among
MeriStar CMBS 2005 Lessee, LLC, the Seller and MeriStar Hospitality Operating Partnership, L.P.,
pursuant to which Manager is to provide management and other services with respect to the Property.



     “Manager” shall mean Interstate Management Company L.L.C., successor in interest
to MeriStar Management Company, L.L.C.



     “Material Casualty” shall have the meaning assigned thereto in subsection
9.2(b).



     “Material Condemnation” shall have the meaning assigned thereto in
subsection 9.2(b).



     “Miscellaneous Personal Property” shall have the meaning assigned thereto in
subsection 2.1(b)(xv).



     “Natural Hazard Expert” shall have the meaning assigned thereto in
subsection 7.4(b).



     “Operating Agreements” shall mean all maintenance, service and supply contracts,
management agreements, credit card service agreements, booking and reservation agreements, and all
other contracts and agreements which are held by the Seller in connection with the operation of the
Hotel, other than the Franchise Agreement, the Management Agreement, Tenant Leases, Equipment
Leases, the Bookings and Licenses and Permits.



     “Outside Closing Date” shall have the meaning assigned thereto in
subsection 4.5(b).



     “Permitted Exceptions” shall mean (i) the items set forth in exceptions 1, 2, 3,4, 5
(subject to the Seller’s and the Buyer’s proration obligations under subsection 10.1(a)) and 6
(but (1) as to 6(b) and (q), limited to only those Tenant Leases as contemplated under clause
(iii) below), (2) as to 6(c), subject only to such charges not yet due and payable and subject to
Seller’s and the Buyer’s proration obligations under subsection 10.1(o), and (3) as to 6(d) and
6(e), limited only to such matters as are shown on the Existing Survey) in the Title Commitment,
(ii) the matters shown on the Existing Survey, (iii) the Tenant Leases set forth in Schedule
3.2(c) attached hereto and the Operating Agreements and any Tenant Leases, Operating Agreements or
other contracts entered into after the date hereof, and in accordance with the terms of this
Agreement, (iv) liens for current real estate taxes which are not yet due and payable, (v)
discrepancies, conflicts in boundary lines, shortages in area, encroachments and any other state
of facts as disclosed on a new survey of the property that were not shown on the Existing Survey
and that do not have a material adverse effect on the use or value of the Property, (vi) subject
to




8









 







the adjustments provided for herein, any service, installation, connection or maintenance charge,
and charges for sewer, water, electricity, telephone, cable television or gas first due from and
after the Cut-Off Time, (vii) rights of tenants to remove trade fixtures at the expiration of the
term of the Tenant Leases of such tenants to the extent set forth in the applicable Tenant Lease,
(viii) right of tenants as tenants only under the Tenant Leases permitted in clause (m) above,
(ix) laws regulations, resolutions or ordinances, including, without limitation, building,
zoning and environmental protection, as to the use, occupancy, subdivision, development, conversion
or redevelopment of the Property currently or hereinafter imposed by any governmental or quasi
governmental body or authority, and (x) any title exception which is waived by the Buyer pursuant
to subsection 8.3(b).




     “Person” shall mean a natural person, partnership, limited partnership, limited
liability company, corporation, trust, estate, association, unincorporated association or other
entity.



     “Post Effective Date Monetary Encumbrance” shall have the meaning assigned thereto in
subsection 8.3(c).



     “Post Effective Date Seller Encumbrance” shall have the meaning assigned thereto
in subsection 8.3(a).



     “Property” shall have the meaning assigned thereto in “Background”
paragraph A.



     “Property and Equipment” shall have the meaning assigned thereto in
subsection 2.1(b)(x).



     “Purchase Price” shall have the meaning assigned thereto in subsection
2.2(a).



     “Releasees” shall have the meaning assigned thereto in Section 7.3.



     “Reporting Person” shall have the meaning assigned thereto in subsection 14.4(c).



     “Retail Merchandise” shall have the meaning assigned thereto in
subsection 2.1(b)(xii).



     “Retained Accounts Receivable” shall have the meaning assigned thereto in subsection
10.3(b)(ii)



     “Seller” shall have the meaning assigned thereto in the Preamble to this
Agreement.



     “Seller-Related Entities” shall have the meaning assigned thereto in Section 11.2.



     “Seller’s Knowledge” shall mean the actual knowledge of the Seller based upon the
actual knowledge of Robert Harper, Kenneth Caplan and Bruce Wiles without any duty on the part of
such Person to conduct any independent investigation or make any inquiry of any Person.




9









 








     “Survival Period” shall have the meaning assigned thereto in Section
11.4.



     “Tax Clearance Certificates” shall have the meaning assigned thereto in
Section 4.7(a).



     “Tax Liens” shall have the meaning assigned thereto in subsection 8.3(a).



     “Tenant Leases” shall have the meaning assigned thereto in subsection 2.1
(b)(vi).



     “Termination Option” shall have the meaning assigned thereto in
subsection 4.5(b).



     “Title Company” shall mean First American Title Insurance Company.



     “Title Commitment” shall mean that certain Owner Pro Forma issued by the Title Company
and referred to as GF No. or File No. NCS-268683-DC72 and attached hereto as Schedule 1.1.



     “Title Policy” shall mean a standard form TLTAT-1 Owner’s Policy of Title Insurance
without endorsements issued by the Title Company pursuant to the Title Commitment insuring the
Buyer’s title to the Property subject only to the Permitted Exceptions in an amount equal to the
Purchase Price.



     “Trade Payables” shall have the meaning assigned thereto in subsection
10.1(k).



     “Transferred Employees” shall have the meaning assigned thereto in
subsection 4.3(b).



     “UCC” shall mean the Uniform Commercial Code.



     “Uniform System of Accounts” shall have the meaning assigned thereto in
subsection 2.1(b)(x).



     “WARN Act” means the Worker’s Adjustment and Retraining Notification Act of 1988, 29
U.S.C. § 2101, et seq., and any similar state and local applicable law, as amended from time to
time, and any regulations, rules and guidance issued pursuant thereto.



     “Westchase Estoppel” shall have the meaning assigned thereto in Section
4.7(b).



ARTICLE II.




SALE. PURCHASE PRICE AND CLOSING




          SECTION 2.1 Sale of Asset.



10









 





     (a) On the Closing Date and pursuant to the terms and subject to the conditions set
forth in this Agreement, the Seller shall sell to the Buyer, and the Buyer shall purchase
from the Seller, the Asset.



     (b) The transfer of the Asset to the Buyer shall include the transfer of all Asset-Related
Property. For purposes of this Agreement, “Asset-Related Property” shall mean the following:




     (i) all of the Seller’s right, title and interest in and to all
easements, covenants and other rights appurtenant to the Land and all right, title
and interest of the Seller, if any, in and to any (A) land lying in the bed of any
street, road, avenue or alley, open or closed, in front of or adjoining the Land and
to the center line thereof, and (B) unpaid award or payment which may hereafter be
payable with respect to any taking by condemnation;




     (ii) all furniture, furnishings, fixtures, vehicles, rugs, mats,
carpeting, appliances, devices, engines, telephone and other communications
equipment, televisions and other video equipment, plumbing fixtures and other
equipment, and all other equipment and other personal property which are now, or may
hereafter prior to the Closing Date be, placed in or on or attached to the Property
and are used in connection with the operation of the Property (but not including
items owned or leased by tenants or which are leased under the Equipment Leases by
the Seller or Manager) (the “FF&E”);




     (iii) all of the Seller’s right, title and interest in and to and to the
extent transferable under applicable law, all licenses, permits and authorizations
presently issued in connection with the operation of all or any part of the
Property as it is presently being operated, other than the existing Liquor License
(the “Licenses and Permits”);




     (iv) all of the Seller’s right, title and interest in and to and to the
extent assignable, all warranties, if any, issued to the Seller by any manufacturer
or contractor in connection with construction or installation of equipment or any
component of the improvements included as part of the Property or FF&E;




     (v) all of the Seller’s right, title and interest in and to and to the
extent assignable all Operating Agreements;




     (vi) all of the Seller’s right, title and interest in and to all leases,
subleases, licenses, contracts and other agreements, granting a real property
interest to any other Person for the use and occupancy of all or any part of the
Property, other than the Bookings (the “Tenant Leases”) and all security
and escrow deposits or other security held by or for the benefit of, or granted to
the Seller in connection with, such Tenant Leases;




     (vii) all of the Seller’s right, title and interest in and to all leases and
purchase money security agreements for any equipment, machinery, vehicles,
furniture or other personal property located at the Hotel and used in the
operation



11









 







of the Hotel which are held by or on behalf of the Seller (the “Equipment
Leases”), together with all deposits made thereunder;




     (viii) all of the Seller’s right, title and interest in and to all bookings and reservations
for guest, conference, meeting and banquet rooms or other facilities at the Hotel for dates from
and after the Closing Date (the “Bookings”), together with all deposits held by the Seller with
respect thereto;




     (ix) all of the Seller’s right, title and interest in and to all Assigned Accounts
Receivable as set forth in Section 10.3;




     (x) all items included within the definition of “Property and Equipment” under the
Uniform System of Accounts for the Lodging Industry, Ninth Revised Edition, as published by the
Hotel Association of New York City, Inc. (the “Uniform System of Accounts”) and used in the
operation of the Hotel, including, without limitation, linen, china, glassware, tableware, uniforms
and similar items (“Property and Equipment”);




     (xi) all “Inventories” as defined in the Uniform System of Accounts and used in the
operation of the Hotel, such as provisions in storerooms, refrigerators, pantries, and kitchens,
beverages in wine cellars and bars, other merchandise intended for sale or resale, fuel, mechanical
supplies, stationery, guest supplies, maintenance and housekeeping supplies and other expensed
supplies and similar items and including all food and beverages which are located at the Hotel, or
ordered for future use at the Hotel as of the Closing, but expressly excluding any alcoholic
beverages to the extent the sale or transfer of the same is not permitted under applicable law (the
“Inventories”);




     (xii) all merchandise located at the Hotel and held for sale to guests and customers of
the Hotel, or ordered for future sale at the Hotel as of the Cut-Off Time, but not including any
such merchandise owned by any tenant at the Property or by Manager (“Retail Merchandise”);




     (xiii) all of the Seller’s right, title and interest in and to and to the extent the
Seller’s rights and interests therein are assignable, all names, tradenames, trademarks, service
marks, logos, and other similar proprietary rights and all registrations or applications for
registration of such rights to the used by the Seller in the operation of the Hotel (the
“Intangible Property”);




     (xiv) Intentionally Omitted;




     (xv) all of the Seller’s right, title and interest in and to and to the extent not
included in subsection 2.1(b)(ii) above and to the extent owned by the Seller, the Hotel’s
telephone numbers, printed marketing materials and any slides, proofs or drawings used by the
Seller to produce such materials, to the extent such slides, proofs or drawings are in the
Seller’s possession (“Miscellaneous Personal Property”); and



12









 






     (xvi) to the extent in the Seller’s possession or control, all surveys,
architectural, consulting and engineering blueprints, plans and specifications and
reports, if any, related to the Hotel, all books and records, if any, related to the
Hotel (collectively, “Rooks and Records”), and any goodwill of the Seller
related to the Hotel; provided, however, that the Seller may retain a
copy of all such books and records.



     (c) Excluded Property. Notwithstanding anything to the contrary in Section
2.1(a) and (b), the property, assets, rights and interests set forth in this subsection 2.1(c) are
expressly excluded from the Asset:




     (i) Cash. Except for deposits expressly included in subsections
2.1 (a) and (b) and except for any cash on hand or in house banks for which the
Seller receives a credit under subsection 10.1(1), all cash on hand or on deposit in
any house bank, operating account or other account maintained in connection with the
ownership of the Hotel, including, without limitation, any reserves maintained by
the Seller or Manager required by the Management Agreement (subject to subsection
10.1(1)); and




     (ii) Third Party Property. Any fixtures, personal property or
equipment owned by (A) the lessor under any Equipment Leases, (B) the supplier or
vendor under any other Operating Agreements, (C) the tenant under any Tenant Lease,
(D) any Employees, (E) Manager or (F) any guests or customers of the Hotel,
including, without limitation, those items set forth on Schedule 2.1(c) attached
hereto.



          SECTION 2.2 Purchase Price.




     (a) The consideration for the purchase of the Asset shall be $50,500,000 (the “Purchase Price”),
which shall be paid by the Buyer to the Seller at the Closing in immediately available
funds by wire transfer to such accounts or accounts that the Seller shall designate to the Buyer;
provided that such amount shall be reduced by the Earnest Money and adjusted for Closing
adjustments and credits provided for in Article X and elsewhere in the Agreement and the Interstate
Payment as described in Article X below.



     (b) No adjustment shall be made to the Purchase Price except as explicitly set forth in this
Agreement.



     (c) The Seller and the Buyer agree that the Purchase Price shall be allocated among the Assets
as determined by agreement of the parties prior to the Closing for federal, state and local tax
purposes in accordance with Section 1060 of the Code. The Buyer shall, within 10 days after the
date of this Agreement, prepare and deliver to the Seller for its review a schedule allocating the
Purchase Price (and any other items that are required for federal income tax purposes to be treated
as part of the purchase price) among the Assets (such schedule, the “Allocation”). The Seller shall
review such Allocation and provide any objections to the Buyer within 10 days after the receipt
thereof. If the Seller raises any objection to the Allocation, the parties hereto will negotiate in
good faith to resolve such objection(s). Upon reaching an



13









 




agreement on the Allocation, the Buyer and the Seller shall (i) cooperate in the filing of any
forms (including Form 8594 under Section 1060 of the Code) with respect to the Allocation as
finally resolved, including any amendments to such forms required pursuant to this Agreement with
respect to any adjustment to the Purchase Price and (ii) shall file all federal, state and local
tax returns and related tax documents consistent with such allocation, as the same may be adjusted
pursuant to Section 9.1 or any other provisions of this Agreement. Notwithstanding the foregoing,
if, after negotiating in good faith, the parties hereto are unable to agree on a mutually
satisfactory Allocation, each of the Buyer and the Seller shall use its own allocation for purposes
of this subsection 2.2(c).




          SECTION 2.3 Earnest Money.




     (a) On the date hereof, the Buyer shall deposit with the Title Company, as escrow agent (in
such capacity, “Escrow Agent”), cash in an amount equal to $2,800,000 (together with all
accrued interest thereon, the “Earnest Money”) in immediately available funds by wire to
such account as Escrow Agent shall designate to the Buyer. The Earnest Money shall be nonrefundable
to the Buyer except as otherwise expressly provided in this Agreement. If the Earnest Money is not
deposited by the Buyer by 5:00 p.m. (New York Time) on the date of this Agreement, the Seller shall
have the right, in the Seller’s sole and absolute discretion, upon written notice to the Buyer
delivered prior to the Buyer’s deposit of the Earnest Money with the Title Company, to terminate
this Agreement whereupon neither party hereto shall have any further rights or obligations
hereunder except for those that expressly survive the termination of this Agreement.



     (b) Upon delivery by the Buyer to Escrow Agent and upon receipt of an executed form W-9, the
Earnest Money will be deposited by Escrow Agent in an interest-bearing account acceptable to the
Buyer and the Seller and shall be held in escrow in accordance with the provisions of Section 14.5.
All interest earned on the Earnest Money while held by Escrow Agent shall be paid to the party to
whom the Earnest Money is paid, except that if the Closing occurs, the Buyer shall receive a credit
for such interest in accordance with subsection 2.2(a).



          SECTION 2.4 The Closing.




     (a) The
closing of the sale and purchase of the Asset (the
“Closing”) shall
take place on January 31, 2007 (such date, the “Closing Date”), Time Being Of
The Essence
with respect to the Buyer’s and the Seller’s obligations hereunder on the Closing Date,
subject only to the rights to extend and/or adjourn the Closing Date as are expressly permitted in
this Agreement.



     (b) The Buyer shall have the right to extend the Closing Date (as it may have
otherwise been extended in accordance with Section 4.5) for up
to 15 days (the “Extension Option”) in accordance with the terms of this subsection 2.4(b). In order to exercise
the
Extension Option, the Buyer must deliver written notice to the Seller and Escrow Agent of
such
extension no later than two Business Days prior to the then scheduled Closing Date.
Notwithstanding the provisions of subsection 2.4(b), the parties agree and acknowledge that
in
no event shall the Buyer have the right to extend the Closing Date under subsection 2.4(b)
beyond the Outside Closing Date. If the Closing Date is extended under any other provision of



14









 




this Agreement, the length of the Extension Option shall be reduced accordingly so that the Closing
Date shall not be extended under subsection 2.4(b) beyond the Outside Closing Date.




     (c) The Closing shall be held on the Closing Date at 10:00 A.M. at the offices of the Escrow
Agent or at such other location agreed upon by the parties hereto.



     (d) Notwithstanding the provisions of subsection 2.4(b), there shall be no requirement that
the Seller and the Buyer physically attend the Closing, and all funds and documents to be delivered
at the Closing may be delivered to Escrow Agent unless the parties hereto mutually agree otherwise.
The Buyer and the Seller hereby authorize their respective attorneys to execute and deliver to
Escrow Agent any additional or supplementary instructions as may be necessary or convenient to
implement the terms of this Agreement and facilitate the closing of the transactions contemplated
hereby, provided that such instructions are consistent with and merely supplement this Agreement
and shall not in any way modify, amend or supersede this Agreement.



ARTICLE III.




     REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE SELLER



          SECTION 3.1 General Seller Representations and Warranties. The Seller hereby
represents and warrants to the Buyer as follows:




     (a) Formation: Existence. It is a limited partnership, duly formed, validly existing
and in good standing under the laws of the State of Delaware and the State of Texas.



     (b) Power and Authority. It has all requisite power and authority to enter into this
Agreement, to perform its obligations hereunder and to consummate the transactions contemplated
hereby. The execution, delivery and performance of this Agreement, the sale of the Assets and the
consummation of the transactions provided for in this Agreement have been duly authorized by all
necessary action on its part. This Agreement has been duly executed and delivered by it and
constitutes its legal, valid and binding obligation, enforceable against it in accordance with its
terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or other laws affecting creditors’ rights and by general principles of equity (whether
applied in a proceeding at law or in equity).



     (c) No Consents. Except as set forth in Schedule 3.1(c), no consent, license,
approval, order, permit or authorization of, or registration, filing or declaration with, any
court, administrative agency or commission or other Governmental Authority or instrumentality,
domestic or foreign, is required to be obtained or made in connection with the execution, delivery
and performance of this Agreement or any of the transactions required or contemplated hereby.



     (d) No Conflicts. The execution, delivery and compliance with, and
performance of the terms and provisions of, this Agreement, and the sale of the Asset, will
not




15









 







(i) conflict with or result in any violation of its organizational documents, (ii) conflict with or
result in any violation of any provision of any bond, note or other instrument of indebtedness,
contract, indenture, mortgage, deed of trust, loan agreement, lease or other agreement or
instrument to which it is a party in its individual capacity, or (m) violate any existing term or
provision of any order, writ, judgment, injunction, decree, statute, law, rule or regulation
applicable to it or its assets or properties.




     (e) Foreign Person. It is not a “foreign person” as defined in Internal Revenue Code
Section 1445 and the regulations issued thereunder.



     (f) Anti-Terrorism Laws.




     (i) None of the Seller or, to Seller’s Knowledge, its affiliates, is in
violation of any laws relating to terrorism, money laundering or the Uniting and
Strengthening America by Providing Appropriate Tools Required to Intercept and
Obstruct Terrorism Action of 2001, Public Law 107-56 and Executive Order No. 13224
(Blocking Property and Prohibiting Transactions with Persons Who Commit, Threaten to
Commit, or Support Terrorism) (the “Executive Order”) (collectively, the
“Anti-Money Laundering and Anti-Terrorism Laws”).




     (ii) None of the Seller or, to Seller’s Knowledge, its affiliates, is
acting, directly or indirectly, on behalf of terrorists, terrorist organizations or
narcotics traffickers, including those persons or entities that appear on the Annex
to the Executive Order, or are included on any relevant lists maintained by the
Office of Foreign Assets Control of U.S. Department of Treasury, U.S. Department of
State, or other U.S. government agencies, all as may be amended from time to time.




     (iii) None of the Seller or, to Seller’s Knowledge, its affiliates or,
without inquiry, any of its brokers or other agents, in any capacity in connection
with the purchase of the Property (A) conducts any business or engages in making or
receiving any contribution of funds, goods or services to or for the benefit of any
person included in the lists set forth in the preceding paragraph; (B) deals in, or
otherwise engages in any transaction relating to, any property or interests in
property blocked pursuant to the Executive Order; or (C) engages in or conspires to
engage in any transaction that evades or avoids, or has the purpose of evading or
avoiding, or attempts to violate, any of the prohibitions set forth in any
Anti-Money Laundering and Anti-Terrorism Laws.




     (iv) The Seller understands and acknowledges that the Buyer may become
subject to further anti-money laundering regulations, and agrees to execute
instruments, provide information, or perform any other acts as may reasonably be
requested by the Buyer, for the purpose of: (A) carrying out due diligence as may
be required by applicable law to establish the Seller’s identity and source of
funds; (B) maintaining records of such identities and sources of funds, or
verifications or certifications as to the same; and (C) taking any other



16









 






actions as may be required to comply with and remain in compliance with anti-money
laundering regulations applicable to the Seller.




     (v) Neither the Seller, nor any person controlling or controlled by the
Seller, is a country, territory, individual or entity named on a Government List, and
the monies used in connection with this Agreement and amounts committed with respect
thereto, were not and are not derived from any activities that contravene any
applicable anti-money laundering or anti-bribery laws and regulations (including
funds being derived from any person, entity, country or territory on a Government
List or engaged in any unlawful activity defined under Title 18 of the United States
Code, Section 1956(c)(7)).



          SECTION 3.2 Representations and Warranties of the Seller as to the
Asset. The Seller hereby represents and warrants to the Buyer as follows:




     (a) Operating Agreements. To Seller’s Knowledge, (i) all material Operating Agreements
(and any amendments or modification thereof) affecting the Property as of the date hereof are set
forth on Schedule 3.2(a) attached hereto, (ii) the same have not been modified or amended,
except as shown in such documents, (iii) all material Operating Agreements are in full force and
effect, (iv) the Seller has delivered to the Buyer true and complete copies of each material
Operating Agreement to the extent in the Seller’s possession and (v) there are no material defaults
by any party under any material Operating Agreement.



     (b) Employees. The Seller does not have any employees. The Seller is not a party to
any collective bargaining agreement or other contract or agreement with any labor organization. The
Seller has not entered into any agreements with any Employees except through Manager.



     (c) Tenant Leases and Equipment Leases. To Seller’s Knowledge, Schedule 3.2(c)
sets forth a correct and complete list of the Tenant Leases and all material Equipment Leases for
the Hotel as of the date hereof. Except as set forth in
Schedule 3.2(c), as of the date hereof, (i)
to Seller’s Knowledge, all material Equipment Leases and Tenant Leases are in full force and effect
and the Seller has delivered to the Buyer true and complete copies of all material Equipment Leases
and Tenant Leases to the extent in the Seller’s possession, and (ii) the Seller has not given or,
to Seller’s Knowledge, received any written notice of any breach or default under any of the Tenant
Leases or Equipment Leases that has not been cured.



     (d) Brokerage Commissions. To Seller’s Knowledge, there are no unpaid brokerage
commissions or finders’ fees payable by the landlord with respect to the current or any renewal
term of any of the Tenant Leases other than those set forth on
Schedule 3.2(d) attached hereto and
the Seller has no agreement with any broker with respect to any renewal term of any Tenant Lease
except as set forth in Schedule 3.2(d).



     (e) Condemnation. As of the date hereof, there is no pending condemnation
or similar proceedings affecting the Property, and to Seller’s Knowledge, no such action is
threatened or contemplated.



17









 





     (f) Litigation.
To Seller’s Knowledge and except as disclosed in Schedule 3.2(f) attached hereto, as of the date hereof, there are no actions, suits or proceedings pending
against or affecting the Asset or the Seller in any court or before or by an arbitration tribunal
or regulatory commission, department or agency and to Seller’s Knowledge, no such actions, suits or
proceedings has been threatened or contemplated.



     (g) Bookings. To Seller’s Knowledge, Schedule 3.2(g) sets forth a correct list
of all Bookings for the Hotel as of the date hereof.



     (h) Environmental Matters. The Seller has not received any written notice from
any governmental or regulatory authority of a violation of any applicable Environmental Laws, which
have not been corrected. For the purposes of this subsection 3.2(h), “Environmental Laws”
means any and all federal, state, county and local statutes, laws, regulations and rules in effect
on the date of this Agreement relating to the protection of the environment or to the use,
transportation and disposal of Hazardous Materials.



     (i) Title to Personal Property. Other than FF&E, Property and Equipment, Retail
Merchandise and Inventories covered by an Equipment Lease or as it relates to the rights, if any,
of Franchisor under the Franchise Agreement therein, the Seller shall own the FF&E, Property and
Equipment, Retail Merchandise and Inventories free and clear of all liens and encumbrances as of
the Closing Date.



     (j) Franchise Agreement. The Seller has delivered to the Buyer a true and
complete copy of the Franchise Agreement. To Seller’s Knowledge, (i) the Franchise Agreement is in
full force and effect and (ii) there are no material defaults by any party thereunder as of the
date hereof.



     (k) Violation of Law. The Seller has not received any written notice from any
governmental or regulatory authority of a violation of any applicable material law within the past
two years, which have not been remedied.



     (l) Liquor Holder. All of the issued and outstanding shares of Liquor Holder
are held by MeriStar SPE Leasing LLC (f/k/a MeriStar SPE Leasing Corp.) and such interest will not
be encumbered as of the Closing.



          SECTION 3.3 Limitations on Representations and Warranties of the Seller. If the
representations and warranties relating to the Operating Agreements set forth in Section 3.2 and
the status of the contract parties thereunder (other than the Seller or its affiliates) contained
herein were true and correct as of the date of this Agreement, no change in circumstances or
status of such contract party (e.g., defaults, bankruptcies or other adverse matters relating to
such contract party) occurring after the date hereof shall permit the Buyer to terminate this
Agreement or constitute grounds for the Buyer’s failure to close.




          SECTION 3.4 Covenants of the Seller Prior to Closing. From the date hereof until
Closing or earlier termination of this Agreement, the Seller or the Seller’s agents shall:




18









 








     (a) Insurance. Keep the Property insured against fire and other hazards in
coverage, amounts and deductibles not materially less than those in effect as of the date of this
Agreement and otherwise under such terms as the Seller deems advisable consistent with past
practices.



     (b) New Operating Agreements. Without the prior written consent of the Buyer which
consent shall not be unreasonably withheld or delayed, not enter into any Operating Agreements or
Equipment Leases, or renew, amend or supplement any such contracts; provided that the Seller may
enter into or renew such contracts, or amend or supplement such contracts, without the Buyer’s
consent if such contract is entered into (or renewed, amended, or supplemented, as the case may be)
in the course of customary maintenance and repairs at the Property or is necessary as a result of
an emergency at the Property and in either case, is terminable on 30 days or less notice, without
penalty. If the Seller enters into or renews any such contracts, or amends or supplements any such
contracts, after the date of this Agreement, then the Seller shall promptly provide written notice
and a copy thereof to the Buyer and unless the same required the Buyer’s approval pursuant to this
paragraph and such approval was not obtained, the Buyer shall assume such contract at Closing and
the schedule of contracts attached to the Assignment of Contracts shall be so modified, and such
contract shall be deemed added to Schedule 3.2(a) attached hereto and Schedule
3.2(a) shall be deemed amended at the Closing to include such contracts. If a new contract, or
a renewal, amendment or supplement to an existing contract, requires the Buyer’s approval or Seller
otherwise requests Buyer’s approval and the Buyer does not object within seven days after receipt
of a copy of such contract, then the Buyer shall be deemed to have approved such contract. The
Seller shall observe and perform all of its material obligations under the material Operating
Agreements and Equipment Leases excluding any such agreements which may be terminated in the
ordinary course of the operation of the Hotel or as a result of a default by the other party.



     (c) New Tenant Leases. Without the prior consent of the Buyer, not execute any new
lease, or renew, amend or supplement any existing lease (unless required by the terms thereof), for
space at the Property. If the Buyer’s approval was obtained on a new lease or the renewal’,
amendment or supplement of an existing lease, the Buyer shall assume such lease at Closing and the
schedule of leases attached to the Assignment of Leases shall be so modified, and such lease shall
be deemed added to Schedule 3.2(c) attached hereto and Schedule 3.2(c) shall be deemed
amended at the Closing to include such leases. If the Buyer does not object within seven days after
receipt of a copy of a request for approval of a new lease, or to the renewal, amendment or
supplement of an existing lease (unless required by the terms thereof), then the Buyer shall be
deemed to have approved such new lease, renewal, amendment or supplement, as the case may be.



     (d) Franchise Agreement. Observe and perform all of its material obligations under the
Franchise Agreement. Without the prior consent of the Buyer, the Seller shall not amend, supplement
or terminate the Franchise Agreement.



     (e) Assets. Shall not sell, exchange, assign, transfer, convey or otherwise dispose of
all or any of the Asset or any interest therein except for any FF&E, Inventories, Retail
Merchandise, Miscellaneous Personal Property or Property and Equipment that are sold, replaced or
consumed in the ordinary course of business and shall, to the extent within the Seller’s control



19









 




under the Management Agreement, maintain levels of Inventory and Property and Equipment in a
manner substantially consistent with the Seller’s customary operating practices and
historical practice at the Property.




     (f) Operation. Shall, to the extent within the Seller’s control under the Management
Agreement, continue to operate and maintain the Hotel in substantially the same manner in which it
is being operated and maintained as of the date hereof, provided that, except for emergency
repairs, the Seller shall not perform any capital improvements at the Hotel including, without
limitation, any capital improvements or expenditures as may be contemplated by the existing capital
expenditure budget for the Hotel.



     (g) Management Agreement. At or prior to the Closing, the Seller shall terminate
(and the Buyer shall cause the Manager to terminate without payment of any termination fee,
termination penalty or termination damages being payable by Seller or its affiliates) the
Management Agreement effective as of the Cut-Off Time.



          SECTION 3.5 Amendment to Schedules. Notwithstanding anything to the contrary in this
Agreement, the Seller shall have the right to amend and supplement the schedules to this Agreement
from time to time prior to the Closing to reflect changes since the date of this Agreement by
providing a written copy of such amendment or supplement to the Buyer; provided,
however, that any amendment or supplement to the schedules to this Agreement shall have no
effect for the purposes of determining whether subsection 5.2(a) has been satisfied if the matter
raised in such supplement has a material adverse effect on the Asset, but shall have effect only
for the purposes of limiting the defense and indemnification obligations of the Seller for the
inaccuracy or untruth of the representation or warranty qualified by such amendment or supplement.




ARTICLE IV.




REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE BUYER




          SECTION 4.1 Representations and Warranties of the Buyer. The Buyer hereby represents
and warrants to the Seller as follows:




     (a) Formation; Existence. It is a limited partnership duly organized, validly
existing and in good standing under the laws of the State of Delaware.



     (b) Power; Authority. It has all requisite power and authority to enter into this
Agreement, to perform its obligations hereunder and to consummate the transactions contemplated
hereby. The execution, delivery and performance of this Agreement, the purchase of the Asset and
the consummation of the transactions provided for herein have been duly authorized by all
necessary action on the part of the Buyer. This Agreement has been duly executed and delivered by
the Buyer and constitutes the legal, valid and binding obligation of the Buyer enforceable against
the Buyer in accordance with its terms, except as such enforceability



20









 




may be limited by bankruptcy, insolvency, reorganization, moratorium or other laws affecting
creditors’ rights and by general principles of equity (whether applied in a proceeding at law or in
equity).




     (c) No Consents. No consent, license, approval, order, permit or authorization of, or
registration, filing or declaration with, any court, administrative agency or commission or other
Governmental Authority or instrumentality, domestic or foreign, is required to be obtained or made
in connection with the execution, delivery and performance of this Agreement or any of the
transactions required or contemplated hereby.



     (d) No Conflicts. The execution, delivery and compliance with, and performance of the
terms and provisions of, this Agreement, and the purchase of the Asset, will not (i) conflict with
or result in any violation of its organizational documents, (ii) conflict with or result in any
violation of any provision of any bond, note or other instrument of indebtedness, contract,
indenture, mortgage, deed of trust, loan agreement, lease or other agreement or instrument to which
it is a party in its individual capacity, or (iii) violate any existing term or provision of any
order, writ, judgment, injunction, decree, statute, law, rule or regulation applicable to it or its
assets or properties.



Anti-Terrorism Laws.





     (i) None of the Buyer or, to the Buyer’s Knowledge, its affiliates, is
in violation of the Executive Order or any Anti-Money Laundering and Anti-Terrorism
Law.




     (ii) None of the Buyer or, to the Buyer’s Knowledge, its affiliates, is
acting, directly or indirectly, on behalf of terrorists, terrorist organizations or
narcotics traffickers, including those persons or entities that appear on the Annex
to the Executive Order, or are included on any relevant lists maintained by the
Office of Foreign Assets Control of U.S. Department of Treasury, U.S. Department of
State, or other U.S. government agencies, all as may be amended from time to time.




     (iii) None of the Buyer or, to the Buyer’s Knowledge, its affiliates or,
without inquiry, any of its brokers or other agents, in any capacity in connection
with the purchase of the Property (A) conducts any business or engages in making or
receiving any contribution of funds, goods or services to or for the benefit of any
person included in the lists set forth in the preceding paragraph; (B) deals in, or
otherwise engages in any transaction relating to, any property or interests in
property blocked pursuant to the Executive Order; or (C) engages in or conspires to
engage in any transaction that evades or avoids, or has the purpose of evading or
avoiding, or attempts to violate, any of the prohibitions set forth in any
Anti-Money Laundering and Anti-Terrorism Laws.




     (iv) The Buyer understands and acknowledges that the Seller may become
subject to further anti-money laundering regulations, and agrees to execute
instruments, provide information, or perform any other acts as may



21









 





reasonably be requested by the Seller, for the purpose of: (A) carrying out due diligence as may be
required by applicable law to establish the Buyer’s identity and source of funds; (B) maintaining
records of such identities and sources of funds, or verifications or certifications as to the same;
and (C) taking any other actions as may be required to comply with and remain in compliance with
anti-money laundering regulations applicable to the Buyer.




     (v) Neither the Buyer, nor any person controlling or controlled by the Buyer, is a
country, territory, individual or entity named on a Government List, and the monies used in
connection with this Agreement and amounts committed with respect thereto, were not and are not
derived from any activities that contravene any applicable anti-money laundering or anti-bribery
laws and regulations (including funds being derived from any person, entity, country or territory
on a Government List or engaged in any unlawful activity defined under Title 18 of the United
States Code, Section 1956(c)(7)).



          SECTION 4.2 Covenants of the Buyer Prior to Closing. 



      (a) Licenses and Permits.





     (i) The Buyer shall use all commercially reasonable and good faith efforts to obtain
the transfer of all Licenses and Permits (to the extent transferable) or the issuance of new
licenses and permits. The Buyer, at its cost and expense, shall submit all necessary applications
and other materials to the appropriate Governmental Authority and take such other actions to
effect the transfer of Licenses and Permits or issuance of new licenses and permits, as of the
Closing, and the Seller shall use commercially reasonable efforts (at no cost or expense to the
Seller) to cooperate with the Buyer to cause the Licenses and Permits to be transferred or new
licenses and permits to be issued to the Buyer. It shall not be a condition to the Closing
hereunder that the Buyer has obtained any transfer of Licenses or Permits or issuance of any new
licenses or permits.




     (ii) The Seller agrees to reasonably cooperate with the Buyer in connection with the
transfer of the interest in the entity (the “Liquor Holder”) currently holding the license for the
sale and service of alcoholic beverages at the Hotel to the Buyer or its designee without any
representations or warranties except as specifically set forth herein or in the Memorandum of Sale
in substantially the form of Exhibit H attached hereto
(the “Memorandum of Sale”).




     (iii) Promptly after the date hereof, the Buyer shall (and to the extent required by law,
the Seller shall cause Liquor Holder to) execute and file with the Texas Alcoholic Beverage
Commission and any other Governmental Authority that maintains jurisdiction over liquor-related
matters at the Hotel (the “ Liquor Authorities”) and publish any notices as may be required
in connection with the acquisition of the Liquor Holder by the Buyer or its designee as of the
Closing. Notwithstanding anything to the contrary contained herein, the Seller shall not incur any
material cost or expense or any liability in connection with the transfer




22









 






of the Liquor Holder to the Buyer and no representations or warranties shall be
made by the Seller or its affiliates as to such conveyance other than that 100% of
the issued and outstanding shares of Liquor Holder is held by MeriStar SPE Leasing
LLC (f/k/a MeriStar SPE Leasing Corp.) and that such interest will not be encumbered
as of the Closing. Without limitation on the foregoing, in no event shall the
transfer or assignment of the Liquor Holder be deemed or construed to be a condition
to the obligations of either the Seller or the Buyer hereunder.



     (b) Operating Agreements and Equipment Leases. To the extent any Operating
Agreement or Equipment Lease requires the consent of the vendor party for the assignment of such
agreements from the Seller to the Buyer, the Buyer shall use commercially reasonable good faith
efforts to obtain such consent as of the Closing, provided, in any event the Buyer shall assume all
Operating Agreements and Equipment Leases as of the Closing even if such consent has not been
obtained.



          SECTION 4.3 Employee Matters.




     (a) Employees. The Buyer acknowledges that the Employees are currently employed by an
affiliate of the Buyer. At the Closing, the Buyer shall (or shall cause its manager to) offer
employment at the Hotel to all of the Employees in accordance with the terms of subsection 4.3(b).



     (b) Continuity of Employees. The parties intend that there will be continuity of
employment with respect to all of the Employees. It is agreed that prior to, or in connection with,
the Closing, the Buyer shall take no action to cause the Seller or Manager to terminate the
employment of any Employee, and neither the Seller nor the Manager shall be under any obligation to
terminate any Employee prior to or on the Closing Date. It is further agreed that on or prior to
the Closing Date, the Buyer shall offer employment at the Hotel (or cause its manager to continue
employment of), commencing on the Closing Date to all Employees, including those on vacation, leave
of absence, disability or layoff, on the same terms and conditions (including, without limitation,
compensation, salary, employee benefits, job responsibility and descriptions, location, seniority
and deemed length of service) as those provided to such employees by Manager on the day immediately
preceding the Closing Date. Those Employees who accept the Buyer’s (or its manager’s) offer of
employment and commence (or continue) employment with the Buyer (or its manager) on the Closing
Date shall hereafter be referred to as “Transferred Employees.”



     (c) Indemnity. The Seller shall pay all wages, payroll taxes and fringe benefits
(including accrued vacation pay to the extent actually earned) as well as social security,
unemployment compensation, health, life and disability insurance and pension fund contributions, if
any, of the Employees through the Closing Date, provided, that, the Seller shall have no liability
or obligation to pay for any sick pay or accrued but unearned vacation pay. The Seller shall
indemnify, defend and hold the Buyer harmless from and against any and all claims, actions, suits,
demands, proceedings, losses, expenses, damages, obligations and liabilities (including costs of
collection, attorney’s fees and other costs of defense) made by an Employee to the extent relating
to an event occurring prior to or an obligation relating to a period prior to the Closing Date,
provided that such indemnity shall not apply with respect to any losses



23









 








incurred by the Buyer with respect to the amount of employee expenses that have been prorated under
subsection 10.1(m) or such matters for which Manager would be liable to the Seller under
the Management Agreement. The Buyer shall indemnify, defend and hold the Seller harmless from and
against any and all claims, actions, suits, demands, proceedings, losses, expenses, damages,
obligations and liabilities (including costs of collection, attorney’s fees and other costs of
defense) arising out of or otherwise in respect of (i) the termination of any Employees in
connection with the transactions contemplated by this Agreement; (ii) failure of the Buyer (or its
manager) to continue the employment of any Transferred Employee on the same terms and conditions as
said employee enjoys on the day immediately preceding the Closing Date; (iii) a breach by the Buyer
of the covenants set forth in subsection 4.3(b); (iv) failure of the Buyer to comply with its
obligations including, but not limited to, any statutory obligations with respect to the
Transferred Employees; (v) any claim made by any Employee for severance pay; or (vi) any claim made
by any Employee arising with respect to acts or omissions at the Property which acts or omissions
occurred on or after the Closing Date.



     (d) WARN Act. The Buyer (or its manager) shall not, at any time prior to 90 days after
the Closing Date, effectuate a “plant closing” or “mass layoff,” as those terms are defined in the
WARN Act, affecting in whole or in part any site of employment, facility, operating unit or
Employee, without notifying the Seller in advance and without complying with the notice
requirements and other provisions of the WARN Act. In addition, the Buyer shall provide a full
defense to, and indemnify the Seller for any Losses which the Seller may incur in connection with
any suit or claim of violation brought against or affecting the Seller under the WARN Act for any
actions taken by the Buyer (or its manager or any of its and Manager’s affiliates) with regard to
the Hotel or any Employee affected by this Agreement subsequent to the Closing Date.



     (e) Survival. The provisions of this Section 4.3 shall survive the Closing.



          SECTION 4.4 Bookings. The Buyer shall honor all existing Bookings and all other
Bookings made in accordance with this Agreement for any period on or after the Closing Date. The
provisions of this Section 4.4 shall survive the Closing.




          SECTION 4.5 Franchise Agreement.




     (a) The parties acknowledge that the transfer of the franchise rights granted under the
Franchise Agreement to the Buyer is subject to the prior written consent of Franchisor under the
Franchise Agreement. Immediately following the date of this Agreement, (i) the Seller shall
proceed promptly and in good faith to give the notices required under the Franchise Agreement with
respect to the transactions contemplated hereby and (ii) the Buyer shall proceed promptly and in
good faith to effect the consent of Franchisor to the transfer of such franchise rights to the
Buyer, which may require the execution of a new franchise agreement with Franchisor. Accordingly,
the Buyer shall promptly submit to Franchisor a complete application to become a franchisee of
Franchisor’s franchise system accompanied by payment of the applicable application fee. As part of
the application process, the Buyer shall provide any and all information and documentation that
Franchisor requires (including, without limitation, financial statements, organizational
documents, background information regarding the owners of the Buyer and other documentation
supporting its application). Without limiting the foregoing, the



24









 







Buyer shall use commercially reasonable efforts to obtain the consent of the Franchisor to the
transfer of the franchise rights and a new franchise agreement in place of the Franchise Agreement,
which may entail promptly responding to requests from Franchisor and otherwise promptly complying
with all obligations of a transferee under the Franchise Agreement The Seller agrees to reasonably
cooperate, at no cost, in good faith with the Buyer and Franchisor in such process. The Buyer shall
agree with Franchisor to accept and be bound by any property improvement plan required by
Franchisor in connection with obtaining such consent (which may consist of the property improvement
plan currently incorporated into the Franchise Agreement, and to complete such property improvement
plan within the time periods set forth in such property improvement plan. In connection with the
transfer of the franchise rights, the Buyer shall be required to pay any and all fees and charges
associated therewith (including, without limitation, any transfer fee mandated under the Franchise
Agreement).



     (b) If Franchisor has not agreed to terminate the Franchise Agreement and enter into a
new franchise agreement with the Buyer by the then scheduled Closing Date, the Closing Date shall
be extended to a date that is the earlier of (i) ten Business Days after receipt of such agreement
and (ii) February 28, 2007 (the “Outside Closing
Date”). In the event Franchisor has not delivered
such new franchise agreement by the Outside Closing Date, the Buyer and the Seller shall each have
the option to terminate this Agreement by written notice to the other party (the “Termination
Option”). In the event the Termination Option is elected by either the Seller or the Buyer,
this Agreement shall terminate and provided the Buyer is not in default of any of its obligations
pursuant to subsection 4.5(a) or otherwise, the Earnest Money shall be refunded to the Buyer and
neither party shall have any further rights or obligations hereunder except for those that
expressly survive the termination of this Agreement.



          SECTION 4.6 Manager Defaults. The Buyer acknowledges that an affiliate of the Buyer
is Manager and that the Buyer is knowledgeable about the Asset. Notwithstanding anything to the
contrary contained herein, (a) the Buyer agrees that the Seller shall have no liability under this
Agreement for a breach hereof, including without limitation, any breach under Sections 3.2 and
3.4, to the extent such breach was caused by an act or omission of Manager (other than such acts
taken by Manager at the specific direction of the Seller) and any such act or omission shall not
serve as a basis for the Buyer failing to close on the purchase of the Assets in accordance with
the terms of this Agreement or any recourse against the Seller and (b) to the extent Manager has
actual knowledge of any inaccuracy or breach of any representation or warranty of the Seller
contained in this Agreement, such knowledge shall be imputed to the Buyer and the Buyer shall be
precluded from asserting a failure of the condition set forth in subsection 5.2(a) related thereto
as it relates to the representations and warranties made by the Seller in this Agreement as of the
date hereof (but not as the same are re-made as of the Closing pursuant to this Agreement). The
provisions of this Section 4.6 shall survive the Closing.




          SECTION 4.7 Tax Clearance Certificates: Etc.




     (a) The Seller shall promptly after the execution of this Agreement apply for and
thereafter use commercially reasonable efforts to obtain and deliver to the Buyer and the Title
Company on or prior to the Closing such municipal, state and county tax clearance certificates
demonstrating the payment of all tax liabilities which, if unpaid, could impose



25









 







successor
liability on the Buyer (“Tax Clearance Certificates”). To the extent the Seller is
unable to deliver such Tax Certificates on or prior to the Closing, the Seller shall use
commercially reasonable efforts to obtain such certificates as soon as practicable following the
Closing. The Seller shall be liable for the payment of all amounts which may be required to be paid
to obtain all Tax Clearance Certificates. The Seller shall indemnify, defend and hold the Buyer
harmless from and against (x) any and all amounts which may be required to be paid to obtain all
Tax Clearance Certificates and (y) any claims or other liabilities arising out of the Seller’s
failure to obtain all such Tax Clearance Certificates, each to the extent due with respect to the
operation of the Hotel prior to the Closing. Notwithstanding anything to the contrary contained
herein, the Seller shall have no liability to the Buyer or obligations hereunder as it relates to
any Tax Clearance Certificates with respect to unemployment taxes or mixed beverages taxes. The
provisions of this subsection 4.7(a) shall survive the Closing.



     (b) The Seller shall use commercially reasonable efforts to obtain and deliver to the
Buyer and the Title Company on or prior to the Closing an estoppel certificate from Westchase
Community Association, Inc. (the “Westchase Association”) or its successor or assign or such other
party as is vested with the power and authority to deliver such estoppel certificate (the
“Westchase Estoppel”) indicating that there are no material defaults with respect to the
Property (A) under (i) the Protective Covenants set forth in the Warranty Deed dated December
22,1977 from Tennwest Associates recorded as ###-##-#### through 0251 in the Harris County Records
(referenced as Clerk’s File No. F421210 in item 6(a) of Schedule B of the Title Commitment), and/or
any covenants, conditions and restrictions applicable to the Property and set forth in Volume 241,
Page 143 of the Map Records of Harris County, and (ii) in the Warranty Deed dated September 29,
1978 from Tennwest Associates acting through Westchase One, Inc. recorded as ###-##-#### through
0366 (referenced as Clerk’s File No. F790568 in item 6(a) of Schedule B of the Title Commitment) in
the Harris County records, all as modified and supplemented from time to time (collectively, the
“Protective Covenants”), if and to the extent such Protective Covenants are applicable to and
binding on the Property, and (B) under that certain Roadway Easement Agreement, dated as of April
15,1982, between George C. Ballas, Trustee, and 9999 Westheimer Hotel Joint Venture recorded as
###-##-#### through 0206 in the Harris County Records, as amended by that certain First Amendment
to Roadway Easement Agreement and Easement effective as of January 31,1997 between Redstone Group,
Ltd. and Westchase Holdings Ltd. recorded as ###-##-#### through 2426 (which documents are the
documents referenced in item 6(p) of Schedule B of the Title Commitment), all as modified and
supplemented from time to time (such Roadway Easement Agreement, as amended, the “Roadway
Easement”), which estoppel certificate may be in the customary form (if any) of Westchase
Association or such other party as is vested with the power and authority to deliver such estoppel
certificate and limited to the Westchase Association’s or such other party’s knowledge, without
investigation.



     (c) The Buyer acknowledges and agrees that the delivery of the Tax Clearance
Certificates by the Seller pursuant to this Section 4.7 or any matters disclosed therein shall not
be a condition precedent to the obligation of the Buyer to purchase and pay for the Asset in
accordance with the terms of this Agreement. Notwithstanding the foregoing, to the extent such
matters are raised as exceptions to the Title Policy, the Seller shall deliver such affidavits or
indemnities as reasonably required by the Title Company to omit such matters from the Title
Policy. The Buyer also acknowledges and agrees that the delivery of the Westchase



26









 







Estoppel shall not be a condition precedent to the obligation of the Buyer to purchase and pay for
the Asset in accordance with the terms of this Agreement if Westchase
Association or its successor or assign or such
other party as is vested with the power and authority to deliver such estoppel certificate does not
exist or is not active, if a representative of the Westchase Association or its successor or assign
or such other party as is vested with the power and authority to deliver the Westchase Estoppel
cannot, with reasonable diligence, be located, or if, and to the extent, the Westchase Association
or its successor or assign or such other party as is vested with the power and authority to deliver
such estoppel certificate does not provide estoppel certificates with respect to the applicable
Protective Covenants and/or Roadway Easement.



ARTICLE V.




CONDITIONS PRECEDENT TO CLOSING




          SECTION 5.1 Conditions Precedent to the Seller’s Obligations. The obligation of the
Seller to consummate the transfer of the Asset to the Buyer on the Closing Date is subject to the
satisfaction (or waiver by the Seller) as of the Closing of the following conditions:




     (a) Each of the representations and warranties made by the Buyer in this Agreement shall be
true and correct in all material respects when made and on and as of the Closing Date as though
such representations and warranties were made on and as of the Closing Date, subject to any
changes permitted pursuant to this Agreement.



     (b) The Buyer shall have performed or complied in all material respects with each obligation
and covenant required by this Agreement to be performed or complied with by the Buyer on or before
the Closing.



     (c) No order or injunction of any court or administrative agency of competent jurisdiction
nor any statute, rule, regulation or executive order promulgated by any Governmental Authority of
competent jurisdiction shall be in effect as of the Closing which restrains or prohibits the
transfer of the Asset or the consummation of any other transaction contemplated hereby.



     (d) The Seller shall have received all of the documents required to be delivered by the
Buyer under subsection 6.1(a).



     (e) The Seller shall have received the Purchase Price in accordance with subsection
2.2(a) and all other amounts due to the Seller from the Buyer hereunder.



     (f) The Seller shall have received evidence that (i) Franchisor has consented to the transfer
of the franchise rights associated with the Franchise Agreement in accordance with subsection
4.5(a), and (ii) the Seller and any affiliates thereof have been released by Franchisor pursuant
to such release as contemplated by the Franchise Agreement.



27









 





     (g) Manager shall have agreed to the termination of the Management Agreement
without any termination fee, penalty or damages being payable by Seller or its affiliates.



          SECTION
5.2 Conditions to the Buyer’s Obligations. The obligation of the Buyer to
purchase and pay for the Asset is subject to the satisfaction (or waiver by the Buyer) as of the
Closing of the following conditions:




     (a) Each of the representations and warranties made by the Seller in this Agreement shall be
true and correct in all material respects when made and on and as of the Closing Date as though
such representations and warranties were made on and as of Closing Date subject to (i) the Seller’s
right to cure the same prior to the Closing as expressly provided in this Agreement, (ii) any
changes permitted pursuant to this Agreement, and (iii) any changes relating to matters arising
after the date hereof in connection with the representations and warranties as set forth in
subsections 3.2(e) and 3.2(g).



     (b) The Seller shall have performed or complied in all material respects with each obligation
and covenant required by this Agreement to be performed or complied with by the Seller on or before
the Closing.



     (c) No order or injunction of any court or administrative agency of competent jurisdiction nor
any statute, rule, regulation or executive order promulgated by any Governmental Authority of
competent jurisdiction shall be in effect as of the Closing which restrains or prohibits the
transfer of the Asset or the consummation of any other transaction contemplated hereby.



     (d) Title to the Property shall be delivered to the Buyer in the manner required under
Section 8.1.



     (e) The Buyer shall have received all of the documents required to be delivered by the Seller
under Section 6.2, and all of the consents set forth on
Schedule 3.1(c) shall have been obtained.



     (f) Franchisor shall have issued a new franchise agreement to the Buyer in accordance with
Section 4.5(a).



     (g) Subject to the provisions of Section 4.7(b) and (c), the Buyer shall have received the
Westchase Estoppel in at least the form contemplated by Section 4.7(b) indicating that there are
no material defaults in respect to the Property under the Protective Covenants and the Roadway
Easement.



          SECTION 5.3 Waiver of Conditions Precedent. The Closing shall constitute conclusive
evidence that the Seller and the Buyer have respectively waived any conditions which are not
satisfied as of the Closing.




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ARTICLE VI.




CLOSING DELIVERIES




          SECTION
6.1 The Buyer Closing Deliveries.


     The Buyer shall deliver the following documents at Closing:




     (a) with respect to the Asset:




     (i) an assignment and assumption of the Seller’s interest in the Tenant Leases (an
“Assignment of Leases”) duly executed by the Buyer in substantially the form of Exhibit
A attached hereto; and




     (ii) an assignment and assumption of the Operating Agreements, Equipment Leases and
Bookings (an “Assignment of Contracts”) duly executed by the Buyer in substantially the
form of Exhibit B attached hereto.



     (b) with respect to the transactions contemplated hereunder:




     (i) a duly executed and sworn officer’s certificate from the Buyer (or the general
partner or managing member of the Buyer, where appropriate) certifying that the Buyer has taken all
necessary action to authorize the execution of all documents being delivered hereunder and the
consummation of all of the transactions contemplated hereby and that such authorization has not
been revoked, modified or amended;




     (ii) an executed and acknowledged incumbency certificate from the Buyer (or the general
partner or managing member of the Buyer, where appropriate) certifying the authority of the
officers of the Buyer (or the general partner or managing member of the Buyer, where appropriate)
to execute this Agreement and the other documents delivered by the Buyer to the Seller at the
Closing;




     (iii) all transfer tax returns which are required by law and the regulations issued
pursuant thereto in connection with the payment of all state or local real property transfer taxes
that are payable or arise as a result of the consummation of the transactions contemplated by this
Agreement, in each case, as prepared and approved by the Seller and the Buyer and duly executed by
the Buyer;




     (iv) the Memorandum of Sale duly executed by the Buyer or its designee;



29









 






     (v) a closing statement prepared and approved by the Seller and the Buyer,
consistent with the terms of this Agreement;




     (vi) a notice letter to each tenant of the Property under a Tenant Lease, if any, in
compliance with the notice requirements of §92.105(b) of the Texas Property Code advising the
tenant of: (a) the transfer of the Property; (b) the Purchaser’s assumption of any liability for
refundable tenant deposits; and (c) the manner in which Rent is to be paid subsequent to the
Closing Date; and




     (vii) counterparts of any applicable statutory notices Seller is required to deliver to
Buyer, and that Buyer is required to sign pursuant to applicable law, including, any notice
pertaining to deed restrictions affecting the Property.



          SECTION 6.2 The Seller Closing Deliveries.




     The Seller shall deliver the following documents at Closing:



     (a) with respect to the Asset:




     (i) a special warranty deed (a “Deed”) in substantially the form of Exhibit C
attached hereto and in recordable form in Texas, duly executed and acknowledged by the
Seller;




     (ii) a bill of sale (a “Bill of Sale”) duly executed by the Seller in
substantially the form of Exhibit D attached hereto, transferring the FF&E, Property and
Equipment, Inventories, Retail Merchandise, Books and Records, Miscellaneous Personal Property and
Accounts Receivable to the Buyer;




     (iii) the Assignment of Leases duly executed by the Seller, together with a copies, and
if available, originals of the Tenant Leases referred to in such assignment;




     (iv) the Assignment of Contracts duly executed by the Seller, together with copies, and
if available, originals of all contracts and agreements assigned thereby;




     (v) a general assignment of the Licenses and Permits and Intangible Property (the
“Assignment of Intangibles”) duly executed by the Seller in substantially the form of
Exhibit E attached hereto;




     (vi) all keys and keycards in the Seller’s possession and security and access codes to
the Property;




     (vii) an affidavit that the Seller is not a “foreign person” within the meaning of the
Foreign Investment in Real Property Tax Act of 1980, as amended, in substantially the form of
Exhibit F attached hereto (the “FIRPTA”);



30









 






     (viii) a closing statement prepared and approved by the Seller and the Buyer, consistent
with the terms of this Agreement;




     (ix) all Books and Records and receipts in the Seller’s possession relating to the
ownership, operating and management of the Hotel;




     (x) the title affidavits and documents referred to in Section 8.4; and




     (xi) evidence reasonably acceptable to the Title Company, to the extent required, of the
termination of the Management Agreement.



     (b) with respect to the transactions contemplated hereunder:




     (i) a duly executed and sworn officer’s certificate from the general partner of the
Seller certifying that the Seller has taken all necessary action to authorize the execution of all
documents being delivered hereunder and the consummation of all of the transactions contemplated
hereby and that such authorization has not been revoked, modified or amended;




     (ii) an executed and acknowledged incumbency certificate from the general partner of the
Seller certifying the authority of the officers of the general partner of the Seller to execute
this Agreement and the other documents delivered by the Seller to the Buyer at the Closing;




     (iii) the Memorandum of Sale duly executed by MeriStar SPE Leasing LLC;




     (iv) all transfer tax returns which are required by law and the regulations issued
pursuant thereto that are required as a result of the consummation of the transactions
contemplated by this Agreement, in each case, as prepared and approved by the Seller and the Buyer
and duly executed by the Seller; and




     (v) a notice letter to each tenant of the Property under a Tenant Lease, if any, in
compliance with the notice requirements of §92.105(b) of the Texas Property Code advising the
tenant of: (a) the transfer of the Property; (b) the Purchaser’s assumption of any liability for
refundable tenant deposits; and (c) the manner in which Rent is to be paid subsequent to the
Closing Date.




     (vi) any applicable statutory notices Seller is required to deliver to Buyer, and that
Seller is required to sign pursuant to applicable law, including, any notice pertaining to deed
restrictions affecting the Property.



31









 





ARTICLE VII.




INSPECTIONS: RELEASE




          SECTION 7.1 Right of Inspection. Prior to the Closing, the Buyer and its agents shall
have the right, upon reasonable prior written notice to the Seller (which shall in any event be at
least 24 hours in advance) and at the Buyer’s sole cost, risk and expense, to inspect the Property
during business hours, provided that any such inspection shall not unreasonably impede the normal
day to day business operation of the Property, and provided further that the Seller shall be
entitled to accompany the Buyer and its agents on such inspection. Notwithstanding the foregoing,
the Buyer shall not have the right to do any invasive testing of the Property without the prior
written consent of the Seller which may be granted or denied in the Seller’s sole and absolute
discretion. The Seller shall be entitled to accompany the Buyer and its agents on any such
permitted interviews and testing. The Buyer’s right of inspection of the Property shall be subject
to the rights of the tenants and Hotel guests and the rights of Manager under the Management
Agreement. Prior to any such inspection, the Buyer shall deliver to the Seller certificates
reasonably satisfactory to the Seller evidencing that the Buyer’s consultants and agents carry and
maintain such general liability insurance policies with such companies and in such scope and
amounts as are acceptable to the Seller in its reasonable discretion, in all cases naming the
Seller as an additional insured and loss payee thereunder. The Buyer hereby indemnifies and agrees
to defend and hold the Seller harmless from and against all loss, cost (including, without
limitation, reasonable attorneys’ fees), claim or damage arising out of, resulting from relating to
or in connection with or from any such inspection by the Buyer or its agents except to the extent
such claim or damage was caused solely by the Seller or the Seller’s agents’ The provisions of this
Section 7.1 shall survive the Closing and any termination of this Agreement. Notwithstanding the
foregoing rights to inspect, the Buyer acknowledges that there is no “due diligence period” or “due
diligence termination right” in this Agreement and the Buyer does not have the right to terminate
this Agreement based on the results of such inspections other than pursuant to an express
termination right set forth in this Agreement.




          SECTION 7.2 Examination; No Contingencies.




     (a) Before entering into this Agreement, the Buyer has made such examination of the
Asset and all other matters affecting or relating to the transactions contemplated hereunder as
the Buyer has deemed necessary. In entering into this Agreement, the Buyer has not been induced by
and has not relied upon any written or oral representations, warranties or statements, whether
express or implied, made by the Seller or any partner of the Seller, or any affiliate, agent,
employee, or other representative of any of the foregoing or by any broker or any other person
representing or purporting to represent the Seller with respect to the Asset, the Condition of the
Asset or any other matter affecting or relating to the transactions contemplated hereby, other
than those expressly set forth in this Agreement or in the Closing Documents. The Buyer’s
obligations under this Agreement shall not be subject to any contingencies, diligence or
conditions except as expressly set forth in this Agreement or in the Closing Documents. The Buyer
acknowledges and agrees that, except as expressly set forth



32









 




herein or in the Closing Documents, the Seller makes no representations or warranties whatsoever,
whether express or implied or arising by operation of law with respect to the Asset or the Condition of the Asset.
THE BUYER AGREES THAT THE ASSET WILL BE SOLD AND CONVEYED TO (AND ACCEPTED BY) THE BUYER AT THE
CLOSING IN THE THEN EXISTING CONDITION OF THE ASSET, AS IS, WHERE IS, WITH ALL FAULTS AND WITHOUT
ANY WRITTEN OR VERBAL REPRESENTATIONS OR WARRANTIES WHATSOEVER WHETHER EXPRESS OR IMPLIED OR
ARISING BY OPERATION OF LAW, OTHER THAN AS EXPRESSLY SET FORTH IN THIS AGREEMENT OR IN THE CLOSING
DOCUMENTS. Without limiting the generality of the foregoing, except as set forth in this Agreement
or in the Closing Documents, the transactions contemplated by this Agreement are without statutory,
express or implied warranty, representation, agreement, statement or expression of opinion of or
with respect to the Condition of the Asset or any aspect thereof, including, without limitation,
(i) any and all statutory, express or implied representations or warranties related to the
suitability for habitation, merchantability, or fitness for a particular purpose, (ii) any
statutory, express or implied representations or warranties created by any affirmation of fact or
promise, by any description of the Asset or by operation of law and (iii) all other statutory,
express or implied representations or warranties by the Seller whatsoever. The Buyer acknowledges
that the Buyer has knowledge and expertise in financial and business matters that enable the Buyer
to evaluate the merits and risks of the transactions contemplated by this Agreement.




     (b) For purposes of this Agreement, the term “Condition of the Asset” means the
following matters:




     (i) Physical Condition of the Property. The quality, nature and
adequacy of the physical condition of the Property, including, without limitation,
the quality of the design, labor and materials used to construct the improvements
included in the Property; the condition of structural elements, foundations, roofs,
glass, mechanical, plumbing, electrical, HVAC, sewage, and utility components and
systems; the capacity or availability of sewer, water, or other utilities; the
geology, flora, fauna, soils, subsurface conditions, groundwater, landscaping, and
irrigation of or with respect to the Property, the location of the Property in or
near any special taxing district, flood hazard zone, wetlands area, protected
habitat, geological fault or subsidence zone, hazardous waste disposal or clean-up
site, or other special area, the existence, location, or condition of ingress,
egress, access, and parking; the condition of the personal property and any
fixtures; and the presence of any asbestos or other Hazardous Materials, dangerous,
or toxic substance, material or waste in, on, under or about the Property and the
improvements located thereon. “Hazardous Materials” means (A) those
substances included within the definitions of any one or more of the terms
“hazardous substances,” “toxic pollutants”, “hazardous materials”, “toxic
substances”, and “hazardous waste” in the Comprehensive Environmental Response,
Compensation and Liability Act, 42 U.S.C. § 9601 et seq. (as amended), the
Hazardous Materials Transportation Act, as amended, 49 U.S.C. Sections 1801 et
seq., the Resource Conservation and Recovery Act of 1976 as amended, 42 U.S.C.
Section 6901 et seq., Section 311 of the Clean Water Act, 15 U.S.C. § 2601 et seq.,
33 U.S.C. § 1251 et seq., 42 U.S.C. 7401 et seq. and the



33









 






regulations and publications issued under any such laws, (B) petroleum, radon
gas, lead based paint, asbestos or asbestos containing material and polychlorinated
biphenyls and (C) mold or water conditions which may exist at the Property or other
matters governed by any applicable federal, state or local law or statue.




     (ii) Adequacy of the Asset. The economic feasibility, cash flow and
expenses of the Asset, and habitability, merchantability, fitness, suitability and
adequacy of the Property for any particular use or purpose.




     (iii) Legal Compliance of the Asset. The compliance or noncompliance
of the Seller or the operation of the Property or any part thereof in accordance
with, and the contents of, (A) all codes, laws, ordinances, regulations, agreements,
licenses, permits, approvals and applications of or with any governmental authorities
asserting jurisdiction over the Property, including, without limitation, those
relating to zoning, building, public works, parking, fire and police access, handicap
access, life safety, subdivision and subdivision sales, and Hazardous Materials,
dangerous, and toxic substances, materials, conditions or waste, including, without
limitation, the presence of Hazardous Materials in, on, under or about the Property
that would cause state or federal agencies to order a clean up of the Property under
any applicable legal requirements and (B) all agreements, covenants, conditions,
restrictions (public or private), condominium plans, development agreements, site
plans, building permits, building rules, and other instruments and documents
governing or affecting the use, management, and operation of the Property.




     (iv) Matters Disclosed in the Schedules and the Asset File. Those
matters referred to in this Agreement and the documents listed on the Schedules
attached hereto and the matters disclosed in the Asset File.




     (v) Insurance. The availability, cost, terms and coverage of
liability, hazard, comprehensive and any other insurance of or with respect to the
Property.




     (vi) Condition of Title. The condition of title to the Property,
including, without limitation, vesting, legal description, matters affecting title,
title defects, liens, encumbrances, boundaries, encroachments, mineral rights,
options, easements, and access; violations of restrictive covenants, zoning
ordinances, setback lines, or development agreements; the availability, cost, and
coverage of title insurance; leases, rental agreements, occupancy agreements, rights
of parties in possession of, using, or occupying the Property; and standby fees,
taxes, bonds and assessments.



          SECTION 7.3 . RELEASE. THE BUYER HEREBY AGREES THAT THE SELLER, AND EACH OF THEIR
PARTNERS, MEMBERS, TRUSTEES, DIRECTORS, OFFICERS, EMPLOYEES, REPRESENTATIVES, PROPERTY MANAGERS,
ASSET MANAGERS, AGENTS, ATTORNEYS, AFFILIATES AND RELATED ENTITIES, HEIRS, SUCCESSORS, AND ASSIGNS
(COLLECTIVELY, THE “RELEASEES”) SHALL BE AND ARE HEREBY, FULLY AND FOREVER RELEASED AND
DISCHARGED FROM




34









 







ANY AND ALL LIABILITIES, LOSSES, CLAIMS (INCLUDING THIRD PARTY CLAMS), DEMANDS, DAMAGES (OF ANY
NATURE WHATSOEVER), CAUSES OF ACTION, COSTS, PENALTIES, FINES, JUDGMENTS, REASONABLE ATTORNEYS’ FEES,
CONSULTANTS’ FEES AND COSTS AND EXPERTS’ FEES (COLLECTIVELY, THE “CLAIMS”) WITH RESPECT TO ANY AND
ALL CLAIMS, WHETHER DIRECT OR INDIRECT KNOWN OR UNKNOWN, FORESEEN OR UNFORESEEN, THAT MAY ARISE ON
ACCOUNT OF OR IN ANY WAY BE CONNECTED WITH THE ASSET OR THE PROPERTY INCLUDING, WITHOUT LIMITATION,
THE PHYSICAL, ENVIRONMENTAL AND STRUCTURAL CONDITION OF THE PROPERTY OR ANY LAW OR REGULATION
APPLICABLE THERETO, INCLUDING WITHOUT LIMITATION, ANY CLAIM OR MATTER (REGARDLESS OF WHEN IT FIRST
APPEARED) RELATING TO OR ARISING FROM (A) THE PRESENCE OF ANY ENVIRONMENTAL PROBLEMS, OR THE USE,
PRESENCE STORAGE, RELEASE, DISCHARGE, OR MIGRATION OF HAZARDOUS MATERIALS ON IN UNDER OR AROUND THE
PROPERTY REGARDLESS OF WHEN SUCH HAZARDOUS MATERIALS WERE FIRST INTRODUCED IN, ON OR ABOUT THE
PROPERTY, (B) ANY PATENT OR LATENT DEFECTS OR DEFICIENCIES WITH RESPECT TO THE PROPERTY, (C) ANY AND
ALL MATTERS RELATED TO THE PROPERTY OR ANY PORTION THEREOF, INCLUDING WITHOUT LIMITATION, THE
CONDITION AND/OR OPERATION OF THE PROPERTY AND EACH PART THEREOF, AND (D) THE PRESENCE, RELEASE
AND/OR REMEDIATION OF ASBESTOS AND ASBESTOS CONTAINING MATERIALS IN, ON OR ABOUT THE PROPERTY
REGARDLESS OF WHEN SUCH ASBESTOS AND ASBESTOS CONTAINING MATERIALS WERE FIRST INTRODUCED IN, ON OR
ABOUT THE PROPERTY, PROVIDED, HOWEVER, THAT IN NO EVENT SHALL RELEASEES BE RELEASED FROM (X) ANY
CLAIMS ARISING PURSUANT TO THE PROVISIONS OF THIS AGREEMENT OR THE SELLER’S OBLIGATIONS, IF ANY,
UNDER THE CLOSING DOCUMENTS OR (Y) ANY CLAIMS ARISING FROM ANY FRAUDULENT ACTS COMMITTED BY THE
SELLER TO THE BUYER IN CONNECTION WITH THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. THE BUYER
FURTHER AGREES THAT THE WAIVERS AND RELEASES HEREIN HAVE BEEN NEGOTIATED AND AGREED UPON IN LIGHT
OF THAT REALIZATION AND THAT THE BUYER NEVERTHELESS HEREBY INTENDS TO RELEASE, DISCHARGE AND ACQUIT
THE SELLER FROM ANY SUCH UNKNOWN CLAIMS, DEBTS, AND CONTROVERSIES WHICH MIGHT IN ANY WAY BE
INCLUDED AS A MATERIAL PORTION OF THE CONSIDERATION GIVEN TO THE SELLER BY THE BUYER IN EXCHANGE
FOR THE SELLER’S PERFORMANCE HEREUNDER. THE SELLER HAS GIVEN THE BUYER MATERIAL CONCESSIONS
REGARDING THIS TRANSACTION IN EXCHANGE FOR THE BUYER AGREEING TO THE PROVISIONS OF THIS SECTION
7.3. THE SELLER AND THE BUYER HAVE EACH INITIALED THIS SECTION 7.3 TO FURTHER INDICATE THEIR
AWARENESS AND ACCEPTANCE OF EACH AND EVERY PROVISION HEREOF. THE PROVISIONS OF THIS SECTION 7.3
SHALL SURVIVE THE CLOSING AND SHALL NOT BE DEEMED MERGED INTO ANY INSTRUMENT OR CONVEYANCE
DELIVERED AT THE CLOSING.




	 	 	 
	SELLER’S INITIALS:
	 	BUYER’S INITIALS:
	 	 	 
	/s/ M.C.	 	/s/ C.B.
	 
	 	 





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ARTICLE VIII.




TITLE AND PERMITTED EXCEPTIONS




          SECTION 8.1 Title Insurance and Survey.




     The Property shall be sold and is to be conveyed, and the Buyer agrees to purchase the
Property, subject only to the Permitted Exceptions.



          SECTION 8.2 Title Commitment: Survey.




     The Buyer has received and reviewed a copy of the Title Commitment and the Existing Survey.



          SECTION 8.3 Delivery of Title.




     (a) At or prior the Closing, the Seller shall obtain releases of (i) all mortgages
and/or deed of trust liens and other financing items encumbering the Asset (“Financing
Liens”),
(ii) tax liens (other than liens for taxes not yet due and payable) encumbering the Property
(“Tax
Liens”) and (iii) any liens encumbering the Property affirmatively placed on the
Property by the
Seller on or after November 19,2006 (“Post Effective Date Seller Encumbrance”). Other
than as
set forth in this Agreement (including without limitation the first sentence of this
subsection 8.3(a), and subsection 8.3(c)), the Seller shall not be required to take or bring any
action or proceeding or any other steps to remove any title exception or to expend any moneys
therefor, nor shall the Buyer have any right of action against the Seller, at law or in equity, for
the Seller’s inability to convey title subject only to the Permitted Exceptions.



     (b) Subject to the Seller’s obligations under subsections 8.3(a) and 8.3(c), in
the event that the Seller is unable to convey title subject only to the Permitted Exceptions,
and
the Buyer has not, prior to the Closing Date, given notice to the Seller that the Buyer is
willing to
waive objection to each title exception which is not a Permitted Exception, the Seller shall
have
the right, in the Seller’s sole and absolute discretion, to (i) take such action as the Seller
shall
deem advisable to attempt to discharge each such title exception which is not a Permitted
Exception or (ii) terminate this Agreement. In the event that the Seller shall elect to
attempt to
discharge such title exceptions which are not Permitted Exceptions, the Seller shall proceed
to
attempt to discharge such title exceptions diligently and in good faith and for so long as it
is so
attempting to discharge such title objections shall be entitled to one or more adjournments of
the
Closing Date for a period not to exceed 60 days in the aggregate. If, for any reason
whatsoever,
the Seller has not discharged such title exceptions which are not Permitted Exceptions prior
to
the expiration of the last of such adjournments, and if the Buyer is not willing to waive
objection
to such title exceptions, this Agreement shall be terminated as of the expiration of the last
of such
adjournments. In the event of a termination of this Agreement pursuant to this subsection
8.3(b),
the Earnest Money shall be refunded to the Buyer and neither party shall have any further
rights



36









 




or obligations hereunder except for those that expressly survive the termination of this Agreement.
Nothing in this clause (b) shall require the Seller, despite any election by the Seller to attempt
to discharge any title exceptions, to take or bring any action or proceeding or any other steps to
remove any title exception or to expend any moneys therefor, other than with respect to the Post
Effective Date Seller Encumbrance, the Post Effective Date Monetary Encumbrance, Financing Liens
and Tax Liens.




     (c) Notwithstanding the foregoing, at the Closing, in addition to releasing all
Financing Liens, Tax Liens and Post Effective Date Seller Encumbrances which the Buyer does not
waive its objection to pursuant to Section 8.3(b), the Seller shall obtain a release of any lien
encumbering the Property on or after November 19, 2006 which may be removed by the payment of a sum
of money (a “Post Effective Date Monetary Encumbrances”); provided that Seller shall not be
obligated to spend more than $250,000 in the aggregate to remove any Post-Effective Date Monetary
Encumbrances.



          SECTION 8.4 Cooperation. In connection with obtaining the Title Policy, the Buyer and
the Seller, as applicable, and to the extent requested by the Title Company, will deliver to the
Title Company (a) evidence sufficient to establish (i) the legal existence of the Buyer and the
Seller and (ii) the authority of the respective signatories of the Seller and the Buyer to bind the
Seller and the Buyer, as the case may be, (b) certificates of good standing of the Seller in
Delaware and, if applicable, Texas; and (c) an affidavit of the Seller in the form attached hereto
as Exhibit G.



ARTICLE IX.




TRANSACTION COSTS; RISK OF LOSS




          SECTION 9.1 Transaction Costs.




     (a) The Buyer and the Seller agree to comply with all real estate transfer tax laws
applicable to the sale of the Asset. The Seller agrees to pay for the “basic” title insurance
premium for a standard form TLTA T 1 Owner’s Policy of Title Insurance issued by Title Company in
the State of Texas with coverage in the amount of the Purchase Price. In addition to their
respective apportionment obligations hereunder, (i) the Seller and the Buyer shall each be
responsible for the payment of the costs of their respective legal counsel, advisors and other
professionals employed thereby in connection with the sale of the Asset, and (ii) the Buyer shall
be responsible for all costs and expenses associated with (A) the Buyer’s due diligence, (B) the
amount by which the title insurance premium for the Owner’s Policy and all endorsements (including
limiting the survey exception to shortages in area) exceeds the basic title insurance premium for a
standard form TLTA T 1 Owner’s Policy of Title Insurance with coverage in the amount of the
Purchase Price, (C) the policy premiums in respect of any mortgage title insurance obtained by the
Buyer, (D) all costs for any new survey and search costs with respect to the Property and updates
related thereto, (E) payment, at the Closing, of the recording charges and fees (other than deed
recordation taxes) for the documents necessary to transfer the Asset,



37









 




(F) obtaining any financing the Buyer may elect to obtain (including any fees, financing costs,
transfer taxes, mortgage and recordation taxes and intangible taxes in connection therewith) and
(G) all other costs which are the responsibility under applicable law for the Buyer to pay
(including, without limitation, all sales and use taxes due as a result of the sale of the Asset).
The fees, if any, of the Escrow Agent shall be equally divided between the Seller and the Buyer.




     (b) Each party to this Agreement shall indemnify the other parties and their respective
successors and assigns from and against any and all loss, damage, cost, charge, liability or
expense (including court costs and reasonable attorneys’ fees) which such other party may sustain
or incur as a result of the failure of either party to timely pay any of the aforementioned taxes,
fees or other charges for which it has assumed responsibility under this Section. The provisions of
this Article IX shall survive the Closing or the termination of this Agreement.



          SECTION 9.2 Risk of Loss.




     (a) If, on or before the Closing Date, (i) the Property or any portion thereof shall be
damaged or destroyed by fire or other casualty or (ii) any Governmental Authority or other entity
having condemnation authority shall take the property or any portion thereof or institute an
eminent domain proceeding by delivering written notice thereof to the Seller and the same is not
dismissed prior to the Closing, then the Seller shall promptly notify the Buyer and at Closing, the
Seller will credit against the Purchase Price payable by the Buyer at the Closing an amount equal
to the net proceeds (other than on account of business or rental interruption relating to the
period prior to Closing), if any, received by the Seller on or prior to the Closing as a result of
such casualty or condemnation, plus the amount of any deductible, less any amounts spent to restore
the Property. If as of the Closing Date, the Seller has not received all or any portion of such
insurance or condemnation proceeds, then the parties shall nevertheless consummate on the Closing
Date the conveyance of the Asset (without any credit for such as yet unpaid insurance or
condemnation proceeds except for a credit for any deductible under such insurance) and the Seller
will at Closing assign to the Buyer all rights of the Seller, if any, to the insurance or
condemnation proceeds (other than on account of business or rental interruption relating to the
period prior to Closing but including all business or rental interruption relating to the period on
or after Closing) and to all other rights or claims arising out of or in connection with such
casualty or condemnation and the Buyer may notify all appropriate insurance companies of its
interest in the insurance proceeds.



     (b) Notwithstanding the provisions of subsection 9.2(a), if, on or before the Closing Date,
the Property or any portion thereof shall be (i) damaged or destroyed by a Material Casualty or
(ii) taken as a result of a Material Condemnation, the Buyer shall have the right, exercised by
notice to the Seller no more than ten Business Days after the Buyer has received notice of such
Material Casualty or Material Condemnation, to terminate this Agreement, in which event the Earnest
Money shall be refunded to the Buyer and neither party shall have any further rights or obligations
hereunder other than those which expressly survive the termination of this Agreement. If the Buyer
fails to timely terminate this Agreement in accordance with this subsection 9.2(b), the provisions
of subsection 9.2(a) shall apply. As used in this
subsection 9.2(b), a “Material Casualty” shall mean any damage to the Property or any
portion thereof by fire or other casualty that, in the Seller’s reasonable judgment, may be
expected to



38









 




cost in excess of $2,800,000 to repair. As used in this subsection 9.2(b), a “Material
 Condemnation” shall mean a taking of the Property or any material portion thereof as a
result of a condemnation or eminent domain proceeding or the institution of such proceeding
pursuant to a written notice thereof to the Seller that, permanently impairs the use and value of
the Property, and which can not be restored to substantially the same use and value as before the
taking.




     (c) Subject to the provisions of this Section 9.2, the risk of loss or damage to the
Property shall remain with the Seller until delivery of the Deed. The parties hereto will have the
rights and duties set forth in this Section 9.2 rather than as prescribed by the Uniform Vendor and
Purchaser Risk Act (Texas Property Code, Section 5.007).



ARTICLE X.




ADJUSTMENTS




          SECTION 10.1 Adjustments. Except as otherwise
specifically provided in subsection 10.1(m), the Seller shall be responsible for and shall pay (or
credit the Buyer for) all liabilities, including, without limitation, all real property, personal
property and sales and use taxes, which accrue with respect to the Asset with respect to all
periods prior to the Closing and the Buyer shall be responsible for and shall pay all liabilities,
including without limitation all real property, personal property and sales and use taxes, which
accrue with respect to the Asset with respect to all periods from and after the Closing. Unless
otherwise provided below, the following are to be adjusted and prorated between the Seller and the
Buyer as of 11:59 P.M. on the day preceding the Closing (the “Cut-Off Time”), based upon a 365 day
year, and the net amount thereof under Section 10.1 shall be added to (if such net amount is in the
Seller’s favor) or deducted from (if such net amount is in the Buyer’s favor) the Purchase Price
payable at Closing:




     (a) Taxes and Assessments. All real estate and personal property taxes and assessments
(including, without limitation, special assessments and improvement assessments) levied against the
Asset shall be prorated as of the Cut-Off Time between the Buyer and the Seller. If the amount of
any such taxes is not ascertainable on the Closing Date, the proration for such taxes shall be
estimated based on the most recent available bill; provided, however, that after the Closing, the
Seller and the Buyer shall reprorate the taxes and pay any deficiency in the original proration to
the other party promptly upon receipt of the actual bill for the relevant taxable period. In the
event that the Asset or any part thereof shall be or shall have been affected by an assessment or
assessments which are payable in installments, the Seller shall, at the Closing, be responsible for
any installments due prior to the Closing and the Buyer shall be responsible for any installments
due on or after the Closing, provided that such assessments shall in any event be prorated between
the Buyer and the Seller as of the Cut-Off Time. The reproration obligation under this subsection
10.1(a) shall survive the Closing.



     (b) Water and Sewer Charges, Utilities. All utility services shall be prorated as of
the Cut-Off Time between the Buyer and the Seller. To the extent possible, readings shall



39









 




be obtained for all utilities as of the Cut-Off Time. If not possible, the cost of such utilities
shall be prorated between the Seller and the Buyer by estimating such cost on the basis of the most
recent bill for such service; provided, however, that after the Closing, the Seller and the Buyer
shall reprorate the amount for such utilities and pay any deficiency in the original proration to
the other party promptly upon receipt of the actual bill for the relevant billing period. The
Seller shall receive a credit for all deposits transferred to the Buyer or which remain on deposit
for the benefit of the Buyer with respect to such utility contracts, otherwise such deposits shall
be refunded to the Seller. The reproration obligation in this subsection 10.1(b) shall survive the
Closing.




     (c) Operating Agreements and Equipment Leases. Charges and payments (including the
reimbursement of expenses) under all Operating Agreements and Equipment Leases.



     (d) Miscellaneous Revenues. Revenues, if any, arising out of telephone booths, vending
machines, parking, or other income producing agreements, on an if, as and when collected basis.



     (e) Inventory. The Seller shall receive a credit for all Inventory and Retail
Merchandise in unopened cases as of the Closing in an amount equal to the Seller’s actual cost
(including sales and/or use tax) for such items.



     (f) Tenant Leases. Any rents and other amounts prepaid, accrued or due and payable
under the Tenant Leases shall be prorated as of the Cut-Off Time between the Buyer and the Seller.
The Buyer shall receive a credit for all cash security deposits held by the Seller under the Tenant
Leases and the Buyer thereafter shall be obligated to refund or apply such deposits in accordance
with the terms of such Tenant Leases.



     (g) Licenses and Permits. All amounts prepaid, accrued or due and payable under any
Permits (other than utilities which are separately prorated under subsection 10.1(b)) transferred
to the Buyer shall be prorated as of the Cut-Off Time between the Seller and the Buyer. The Seller
shall receive a credit for all deposits made by the Seller under the Licenses and Permits which are
transferred to the Buyer or which remain on deposit for the benefit of the Buyer.



     (h) Deposits for Bookings. The Buyer shall receive a credit for all prepaid
deposits for Bookings scheduled for accommodations or events on or after the Closing Date, except
to the extent such deposits are transferred to the Buyer and for all other amounts prepaid by
guests or other customers for accommodations or events on or after the Closing Date.



     (i) Restaurants and Bars, Etc. The Seller shall close out the transactions in
the restaurants and bars in the Hotel as of the Cut-Off Time and all revenues with respect thereto
and with respect to other services to guests of the Hotel, including without limitation, health
club revenues, room service revenues and banquet revenues, if any, shall be prorated between the
Seller and the Buyer as of the Cut-Off Time.



     (j) Vending Machines. The Seller shall remove all monies from all vending
machines, laundry machines, pay telephones and other coin-operated equipment as of the



40









 




Cut-Off Time and shall retain all monies collected therefrom as of the Cut-Off Time, and the Buyer
shall be entitled to any monies collected therefrom after the Cut-Off Time.




     (k) Trade Payables. Except to the extent an adjustment or proration is made
under another subsection of this Section 10.1, (i) the Seller shall pay in full prior to the
Closing all amounts payable to vendors or other suppliers of goods or services to the Hotel (the
“Trade Payables”) which are due and payable as of the Closing Date for which goods or services have
been delivered to the Hotel prior to Closing, and (ii) the Buyer shall receive a credit for the
amount of such Trade Payables which have accrued, but are not yet due and payable as of the Closing
Date, and the Buyer shall pay all such Trade Payables accrued as of the Closing Date when such
Trade Payables become due and payable up to the amount of such credit; provided, however, the
Seller and the Buyer shall reprorate the amount of credit for any Trade Payables and pay any
deficiency in the original proration to the other party promptly upon receipt of the actual bill
for such goods or services. The Seller shall receive a credit for all advance payments or deposits
made with respect to FF&E, Retail Merchandise, Property and Equipment and Inventories ordered, but
not delivered to the Hotel prior to the Closing Date, and the Buyer shall pay the amounts which
become due and payable for such FF&E, Retail Merchandise, Property and Equipment and Inventories
which were ordered but not delivered prior to Closing. The reproration obligation in this
subsection 10.1(k) shall survive the Closing.



     (l) Cash. The Seller shall receive a credit for all cash on hand at the Hotel
and all cash on deposit in any house bank at the Hotel as of the Closing and all such cash on hand
and cash on deposit in any house bank at the Hotel shall be transferred to and belong to the Buyer
from and after the Closing. The Seller shall retain all amounts in any operating accounts of the
Hotel in any bank, and there shall be no credit or adjustment hereunder with respect to such cash;
provided, however, the Seller shall receive a credit for any reserve fund or
account established pursuant to the terms of the Management Agreement which the Seller transfers to
the Buyer at Closing, if any.



     (m) Employee Compensation. The Seller shall pay all wages, payroll taxes and
fringe benefits (including accrued vacation pay to the extent actually earned) as well as social
security, unemployment compensation, health, life and disability insurance and pension fund
contributions, if any, of the Employees through the Closing Date, provided, that, the Seller shall
have no liability or obligation to pay for any sick pay or accrued but unearned vacation pay.
Notwithstanding the foregoing, with respect to accrued bonuses for 2007, the Seller’s pro-rated
share shall be based upon the bonus program in place as of the beginning of 2006 in the 2006
approved budget for the Hotel prepared by Manager. The Buyer shall be responsible for all other
liabilities relating to or in connection with Employees for the period on or after the Cut-Off Time
and any liabilities relating to or in connection with sick pay and accrued but unearned vacation
pay whether having accrued prior to, on or after the Cut-Off Time. The Buyer shall be responsible
for all severance payments for Transferred Employees arising on or after the Closing and for all
Employees not offered employment by the Buyer (or its manager) as of the Closing, or who do not
accept employment by the Buyer (or its manager) on the same terms as those provided to such
employees by Manager on the day immediately preceding the Closing Date.



     (n) The Buyer and the Seller each acknowledge that certain taxes and assessments accrue
and are payable to the various local governments by any business entity



41









 




operating a hotel and its related facilities. Included in those taxes and assessments may be
business and occupation taxes, retail sales taxes, gross receipts taxes, and other special lodging
or hotel taxes and assessments. For purposes of this Agreement, all of such taxes and assessments
(expressly excluding (x) taxes and assessments covered in Section 10.1(a) of this Agreement, which
shall be governed by the provisions of Section 10.1(a), and (y) corporate franchise taxes, and
federal, state and local income taxes) shall be allocated between the Seller and the Buyer such
that those attributable to the period prior to the Cut-Off Time shall be allocable to the Seller
and those attributable to the period after the Cut-Off Time shall be allocable to the Buyer (with
the attribution of such taxes and assessments hereunder to be done in a manner consistent with the
attribution under this Agreement of the applicable revenues on which such taxes and assessments may
be based). The Seller shall be obligated to pay all such taxes and assessments which accrue with
respect to the period prior to the Cut-Off Time, and the Buyer shall be obligated to pay all such
taxes and assessments which accrue with respect to the period after the Cut-Off Time.




     (o) Other. If applicable, the Purchase Price shall be adjusted at Closing to
reflect the adjustment of any annual maintenance charges under Section 11 of the Protective
Covenants described in Section 4.7(b) hereof applicable to the Property, the charges under the
Roadway Easement, if applicable, and any other item which, (i) under the explicit terms of this
Agreement, is to be apportioned at Closing, or (ii) is customarily prorated at the closing of
similar transactions.



     (p) The provisions of Section 10.1 and the obligations of the Seller and the Buyer
hereunder shall survive the Closing.



          SECTION 10.2 Re-Adjustment.




     (a) If any items to be adjusted pursuant to this Article X are not determinable at the
Closing, the adjustment shall be made subsequent to the Closing when the charge is determined. The
Buyer shall deliver to the Seller no later than 120 days following the Closing Date a schedule of
prorations setting forth the Buyer’s determination of all adjustments to the prorations made at
Closing that it believes are necessary to complete the prorations as set forth in this Article X.
Any errors or omissions in computing adjustments or readjustments at the Closing or thereafter
shall be promptly corrected or made, provided that the party seeking to correct such error or
omission or to make such readjustment shall have notified the other party of such error or omission
or readjustment on or prior to the date that is 180 days following the Closing.



     (b) The provisions of Section 10.2 and the obligations of the Seller and the Buyer hereunder
shall survive the Closing.



          SECTION 10.3 Accounts Receivable.




     (a) Guest Ledger. All revenues received or to be received from transient guests
on account of room rents for the period prior to and including the Cut-Off Time shall belong to
the Seller. At Closing, the Seller shall receive a credit in an amount equal to: (i) all amounts
unpaid as of the Cut-Off Time charged to the Guest Ledger for all room nights up to



42









 




(but not including) the night during which the Cut-Off Time occurs, and (ii) one-half of all
amounts unpaid as of the Cut-Off Time charged to the Guest Ledger for the room night which includes
the Cut-Off Time and the Guest Ledger and all amounts charged thereto and unpaid as of the Cut-Off
Time shall become the property of the Buyer. For the period beginning on the day immediately
following the Cut-Off Time, such revenues collected from the Guest Ledger shall belong to the
Buyer. In the event that an amount less than the total amount due from a guest is collected and
guest continued in occupancy after the Cut-Off Time, such amount shall be applied first to any
amount owing by such person to the Seller and thereafter to such person’s amounts accruing to the
Buyer.




     (b) Accounts Receivable (Other than Guest Ledger).




     (i) On the Closing Date, the Seller shall assign to the Buyer all
Accounts Receivable that are 90 days or less past due as of the Closing (the
“Assigned Accounts Receivable”), the Buyer shall pay to the Seller an amount
equal to 100% of all Accounts Receivable that are 90 days or less past due as of the
Closing Date and shall not credit to the Seller any amounts for Accounts Receivable
more than 90 days past due as of the Closing Date. The Buyer shall have the sole
right to collect and retain all such Assigned Accounts Receivable. If any Assigned
Accounts Receivable are paid to the Seller after the Closing, the Seller shall pay
to the Buyer the amounts received by the Seller within 10 days after receipt of such
amounts without any commission or deduction for the Seller.




     (ii) After the Closing, the Seller shall retain the right to collect all
Accounts Receivable other than the Guest Ledger which is addressed in subsection
10.3(a), and the Assigned Accounts Receivable, which is addressed in subsection
10.3(b)(i) (such retained Accounts Receivable, the “Retained Accounts
Receivable”). The Seller shall not receive a credit for the Retained Accounts
Receivable. The Seller shall have the sole right to collect the Retained Accounts
Receivable. If any Retained Accounts Receivable are paid to the Buyer after the
Closing, the Buyer shall pay to the Seller the amounts received by the Buyer within
10 days after receipt of such amounts without any commission or deduction for the
Buyer.




     (iii) The Accounts Receivable addressed in this subsection 10.3(b) shall
not include the Guest Ledger, which is addressed in subsection 10.3(a).




     (iv) The parties’ obligations under this subsection 10.3(b) shall survive
the Closing.



     (c) The provisions of Section 10.3 and the obligations of the Seller and the
Buyer hereunder shall survive the Closing.



43









 





ARTICLE XI.




INDEMNIFICATION




          SECTION 11.1 Indemnification by the Seller. From and
after the Closing and subject to Sections 11.3 and 11.4, the Seller shall indemnify and hold the
Buyer, its affiliates, members and partners, and the partners, shareholders, officers, directors,
employees, representatives and agents of each of the foregoing (collectively, “Buyer-Related
Entities”) harmless from and against any and all costs, fees, expenses, damages,
deficiencies, interest and penalties (including, without limitation, reasonable attorneys’ fees and
disbursements) suffered or incurred by any such indemnified party in connection with any and all
losses, liabilities, claims, damages and expenses (“Losses”), arising out of, or in any way
relating to (a) any breach of any representation or warranty of the Seller contained in this
Agreement or in any Closing Document and (b) any breach of any covenant of the Seller which
survives the Closing contained in this Agreement or in any Closing Document, including, without
limitation, any amounts due and owing to the Buyer following the Closing pursuant to Article X.
Notwithstanding anything to the contrary contained herein, the Seller shall have no liability or
obligation to indemnify and hold the Buyer Related Entities harmless from any Losses to the extent
such Losses results from or is related to any acts or omissions of Manager which would otherwise
result in an indemnification obligation of Manager in favor of the Seller pursuant to the terms of
the Management Agreement or constitute a default by Manager under the Management Agreement.




          SECTION 11.2 Indemnification by the Buyer. From and
after the Closing and subject to Sections 11.3 and 11.4, the Buyer shall indemnify and hold the
Seller, its affiliates, members and partners, and the partners, shareholders, officers, directors,
employees, representatives and agents of each of the foregoing (collectively, “Seller-Related
Entities”) harmless from any and all Losses arising out of, or in any way relating to, (a) any
breach of any representation or warranty by the Buyer contained in this Agreement or in any Closing
Document including, without limitation, any amounts due and owing to the Seller pursuant to Article
X and (b) any breach of any covenant of the Buyer which survives the Closing contained in this
Agreement or in any Closing Document including, without limitation, any amounts due and owing to
the Seller following the Closing pursuant to Article X.




          SECTION 11.3 Limitations on Indemnification.
Notwithstanding the foregoing provisions of Section 11.1, (a) the Seller shall not be required to
indemnify the Buyer or any Buyer-Related Entities under subsection 11.1(a) unless the aggregate of
all amounts for which an indemnity would otherwise be payable by the Seller under subsection
11.1(a) exceeds the Basket Limitation and, in such event, the Seller shall be responsible only for
such amount in excess of the Basket Limitation, (b) in no event shall the liability of the Seller
with respect to the indemnification provided for in subsection 11.1(a) exceed in the aggregate the
Cap Limitation, and (c) if prior to the Closing, the Buyer or Manager obtains or has actual
knowledge of any inaccuracy or breach of any representation, warranty or pre-closing covenant of
the Seller contained in this Agreement (a “Buyer Waived Breach”) and




44









 







nonetheless proceeds with and consummates the Closing, then the Buyer and any Buyer-Related
Entities shall be deemed to have waived and forever renounced any right to assert a claim for
indemnification under this Article XI for, or any other claim or cause of action under this
Agreement at law or in equity on account of any such Buyer Waived Breach.




          SECTION 11.4 Survival. The (a) representations and
warranties contained in this Agreement and the Closing Documents (other than the Deed or FIRPTA)
shall survive for a period of six months after the Closing and (b) the covenants contained in the
Agreement and the Closing Documents (other than the Deed or FIRPTA) shall survive for a period of
one year after the Closing (the period beginning on the date hereof and ending on such applicable
date in clause (a) or (b) being herein called the “Survival Period”) unless otherwise provided for
in this Agreement. Each party shall have the right to bring an action against the other for the
breach of the representations and warranties, covenants, obligations, provisions and liabilities
hereunder or under the Closing Documents, but only on the following conditions: the party bringing
the action for breach (i) gives a reasonably detailed written notice of such breach to the other
party within 91 days after the expiration of the applicable Survival Period, and (ii) files an
action for such breach on or before the first day following the second anniversary of the Closing
Date, after which time all representations and warranties, covenants, obligations and liabilities
(and any cause of action resulting from a breach thereof not then in litigation) herein or the
Closing Documents (other than the Deed or FTRPTA) shall terminate. The provisions of this Section
11.4 shall not be applicable to the Deed or FIRPTA, which shall survive the Closing without
limitation.




          SECTION 11.5 Indemnification as Sole Remedy. If the
Closing has occurred, the sole and exclusive remedy (other than the right to seek specific
performance of a covenant to be performed by the Seller or the Buyer after the Closing) available
to a party in the event of a breach by the other party to this Agreement of any representation,
warranty, covenant or other provision of this Agreement or any Closing Document which survives the
Closing shall be the indemnifications provided for under this Article XI or elsewhere in this
Agreement, which indemnifications shall survive the Closing as provided in Article XI. The
provisions of this Section 11.5 shall not be applicable to the Deed or FIRPTA.




ARTICLE XII.




DEFAULT AND TERMINATION




          SECTION 12.1 The Seller’s Termination.




     (a) This Agreement may be terminated by the Seller prior to the Closing if (i) any of
the conditions precedent to the Seller’s obligations set forth in Section 5.1 or elsewhere in this
Agreement have not been satisfied or waived by the Seller on or prior to the Closing Date or (ii)
there is a material breach or default by the Buyer in the performance of any of its obligations
under this Agreement.



45









 





     (b) In the event this Agreement is terminated by the Seller pursuant to subsection 12.1(a),
this Agreement shall be null and void and of no further force or effect and neither party shall
have any rights or obligations against or to the other except (1) for those provisions hereof which
by their terms expressly survive the termination of this Agreement and (ii) as set forth in
subsection 12.1(c). Notwithstanding the foregoing, if this Agreement is terminated by the Seller
prior to the Closing for a failure of (i) the condition precedent set forth in subsection 5.1(f)
and provided the Buyer is not in default of its obligation as set forth in Section 4.5 or (ii) the
condition set forth in subsection 5.1(c) and provided any matters arising under such subsection
5.1(c) is not based upon any act or omission by the Buyer or any of its affiliates, the Escrow Agent
shall disburse the Earnest Money to the Buyer as the Buyer’s sole and exclusive remedy, and upon
such disbursement the Seller and the Buyer shall have no further obligations under this Agreement,
except those which expressly survive such termination.



     (c) In the event the Seller terminates this Agreement as a result of a breach or default by
the Buyer in any of its obligations under this Agreement, the Escrow Agent shall immediately
disburse the Earnest Money to the Seller, and upon such disbursement the Seller and the Buyer shall
have no further obligations under this Agreement, except those which expressly survive such
termination. The Buyer and the Seller hereby acknowledge and agree that it would be impractical
and/or extremely difficult to fix or establish the actual damage sustained by the Seller as a
result of such default by the Buyer, and agree that the Earnest Money is a reasonable approximation
thereof. Accordingly, in the event that the Buyer breaches this Agreement by defaulting in the
completion of the purchase of the Asset, the Earnest Money shall constitute and be deemed to be the
agreed and liquidated damages of the Seller, and shall be paid by the Escrow Agent to the Seller as
the Seller’s sole and exclusive remedy hereunder; provided, however, the foregoing shall
not limit the Buyer’s obligation to pay to the Seller all reasonable attorneys’ fees and costs of
the Seller to enforce the provisions of this Section 12.1 or limit the Buyer’s indemnification
obligations owed to the Seller pursuant to this Agreement which survive a termination of this
Agreement. The payment of the Earnest Money as liquidated damages is not intended to be a
forfeiture or penalty, but is intended to constitute liquidated damages to the Seller.



          SECTION 12.2 The Buyer’s Termination.




     (a) This Agreement may be terminated by the Buyer prior to the Closing if (i) any of the
conditions precedent to the Buyer’s obligations set forth in Section 5.2 or specifically set forth
elsewhere in this Agreement have not been satisfied or waived by the Buyer on or prior to the
Closing Date or (ii) there is a material breach or default by the Seller in the performance of its
obligations under this Agreement.



     (b) In the event this Agreement is terminated by the Buyer pursuant to subsection 12.1(a),
the Escrow Agent shall disburse the Earnest Money to the Buyer as the Buyer’s sole and exclusive
remedy, and upon such disbursement the Seller and the Buyer shall have no further obligations
under this Agreement, except those which expressly survive such termination.



     (c) If there is a material breach or default by the Seller in the performance of its
obligations under this Agreement, the Buyer, at its option and as its sole and exclusive



46









 




remedy, may either (i) terminate this Agreement, direct the Escrow Agent to deliver the
Earnest Money to the Buyer and retain the Earnest Money, at which time this Agreement shall be
terminated and of no further force and effect except for the provisions which explicitly survive
such termination, or (ii) specifically enforce the terms and conditions of this Agreement provided
such action seeking specific performance is initiated within 90 days of the scheduled Closing Date.
The Buyer and the Seller hereby acknowledge and agree that it would be impractical
and/or extremely difficult to fix or establish the actual damage sustained by the Buyer as a result
of such default by the Seller, and agree that the remedy set forth in clause (i) above is a
reasonable approximation thereof. Accordingly, in the event that the Seller breaches this Agreement
by defaulting in the completion of the sale, and the Buyer elects not to exercise the remedy set
forth in clause (ii) above but instead elects the remedy set forth in clause (i) above, the
delivery of the Earnest Money to the Buyer shall be the Buyer’s sole and exclusive remedy. The
Buyer agrees to, and does hereby, waive all other remedies against the Seller which the Buyer might
otherwise have at law or in equity by reason of such default by the Seller.




ARTICLE XIII.




TAX CERTIORARI PROCEEDINGS




          SECTION 13.1 Prosecution and Settlement of Proceedings.
If any tax reduction proceedings in respect of the Property, relating to any fiscal years ending
prior to the fiscal year in which the Closing occurs are pending at the time of the Closing, the
Seller reserves and shall have the right to continue to prosecute and/or settle the same. If any
tax reduction proceedings in respect of the Property, relating to the fiscal year in which the
Closing occurs, are pending at the time of Closing, then the Seller reserves and shall have the
right to continue to prosecute and/or settle the same; provided, however, that the Seller shall not
settle any such proceeding without the Buyer’s prior written consent, which consent shall not be
unreasonably withheld or delayed. The Buyer shall reasonably cooperate with the Seller in
connection with the prosecution of any such tax reduction proceedings.




          SECTION 13.2 Application of Refunds or Savings. Any
refunds or savings in the payment of taxes resulting from such tax reduction proceedings applicable
to taxes payable during the period prior to the date of the Closing shall belong to and be the
property of the Seller, and any refunds or savings in the payment of taxes applicable to taxes
payable from and after the date of the Closing shall belong to and be the property of the Buyer.
All attorneys’ fees and other expenses incurred in obtaining such refunds or savings shall be
apportioned between the Seller and the Buyer in proportion to the gross amount of such refunds or
savings payable to the Seller and the Buyer, respectively (without regard to any amounts
reimbursable to tenants); provided, however, that neither the Seller nor the Buyer shall have any
liability for any such fees or expenses in excess of the refund or savings paid to such party
unless such party initiated such proceeding.




          SECTION 13.3 Survival. The provisions of this Article XIII
shall survive the Closing.




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ARTICLE XIV.




MISCELLANEOUS




          SECTION 14.1 Use of Blackstone Name and Address. The
Buyer hereby acknowledges and agrees that neither the Buyer nor any affiliate, successor, assignee
or designee of the Buyer shall be entitled to use the name “Blackstone”, “MeriStar”, “CapStar” or
“Equistar” in connection with the operation, ownership and use of the Property. The provisions of
this Section 14.1 shall survive the Closing and any termination of this Agreement.




          SECTION 14.2 Exculpation of the Seller. Notwithstanding
anything to the contrary contained herein, the Seller’s shareholders, limited partners, members,
the partners or members of such partners, the shareholders of such partners, members, and the
trustees, officers, directors, employees, agents and security holders of the Seller and the
partners or members of the Seller assume no personal liability for any obligations entered into in
connection with or relating to this Agreement on behalf of the Seller and their respective
individual assets shall not be subject to any claims of any person relating to such obligations.
The foregoing shall govern any direct and indirect obligations of the Seller under this Agreement.
The provisions of this Section 14.2 shall survive the Closing and any termination of this
Agreement.




          SECTION 14.3 Brokers.




     (a) The Seller represents and warrants to the Buyer that it has dealt with no broker, finder
or similar person with respect to this Agreement or the transactions contemplated hereby other than
Broker. The Seller agrees to indemnify, protect, defend and hold the Buyer harmless from and
against all claims, losses, damages, liabilities, costs, expenses (including reasonable attorneys’
fees and disbursements) and charges resulting from the Seller’s breach of the foregoing
representation in this subsection (a). The Seller shall be responsible for the payment of any
amounts due Broker. The provisions of this subsection 14.3(a) shall survive the Closing and any
termination of this Agreement.



     (b) The Buyer represents and warrants to the Seller that it has dealt with no broker, finder
or similar person with respect to this Agreement or the transactions contemplated hereby other than
Broker. The Buyer agrees to indemnify, protect, defend and hold the Seller harmless from and
against all claims, losses, damages, liabilities, costs, expenses (including reasonable attorneys’
fees and disbursements) and charges resulting from the Buyer’s breach of the foregoing
representations in this subsection (b). The provisions of this subsection 14.3(b) shall survive the
Closing and any termination of this Agreement.



          SECTION 14.4 Confidentiality; Press Release; IRS Reporting Requirements.





48









 








     (a) The Buyer and the Seller, and each of their respective affiliates shall hold as
confidential all information disclosed in connection with the transaction contemplated hereby and
concerning each other, the Asset, this Agreement and the transactions contemplated hereby and shall
not release any such information to third parties without the prior written consent of the other
parties hereto, except (i) any information which was previously or is hereafter publicly disclosed
or was available on a non-confidential basis prior to its disclosure (other than in violation of
this Agreement or other confidentiality agreements to which affiliates of the Buyer are parties),
(ii) to their partners, advisers, underwriters, analysts, employees, affiliates, officers,
directors, consultants, lenders, accountants, legal counsel, title companies or other advisors of
any of the foregoing, provided that they are advised as to the confidential nature of such
information and are instructed to maintain such confidentiality and (iii) to comply with any law,
rule or regulation (including without limitation those of the United States Securities and Exchange
Commission) or the requirements of any securities exchange on which such party or its parent
company is listed. The foregoing shall constitute a modification of any prior confidentiality
agreement that may have been entered into by the parties. The provisions of this Section shall
survive the termination of this Agreement for a period of one year.



     (b) The Seller or the Buyer may issue a press release with respect to this Agreement and the
transactions contemplated hereby, provided that the content of any such press release shall be
subject to the prior written consent of the other party hereto, not to be unreasonably withheld,
conditioned or delayed.



     (c) For the purpose of complying with any information reporting requirements
or other rules and regulations of the IRS that are or may become applicable as a result of or
in
connection with the transaction contemplated by this Agreement, including, but not limited to,
any requirements set forth in proposed Income Tax Regulation Section 1.6045-4 and any final or
successor version thereof (collectively, the “IRS Reporting Requirements”), the Seller and the
Buyer hereby designate and appoint the Escrow Agent to act as the “Reporting Person” (as that
term is defined in the IRS Reporting Requirements) to be responsible for complying with any
IRS Reporting Requirements. The Escrow Agent hereby acknowledges and accepts such
designation and appointment and agrees to fully comply with any IRS Reporting Requirements
that are or may become applicable as a result of or in connection with the transaction
contemplated by this Agreement. Without limiting the responsibility and obligations of the
Escrow Agent as the Reporting Person, the Seller and the Buyer hereby agree to comply with
any provisions of the IRS Reporting Requirements that are not identified therein as the
responsibility of the Reporting Person, including, but not limited to, the requirement that
the
Seller and the Buyer each retain an original counterpart of this Agreement for at least four
years
following the calendar year of the Closing.



          SECTION 14.5 Escrow Provisions.




     (a) The Escrow Agent shall hold the Earnest Money in escrow in an interest-bearing bank
account at a federally insured banking institution (the “Escrow Account”).



     (b) The Escrow Agent shall hold the Earnest Money in escrow in the Escrow Account until the
Closing or sooner termination of this Agreement and shall hold or apply such proceeds in
accordance with the terms of this subsection (b). The Seller and the Buyer




49










 




understand that no interest is earned on the Earnest Money during the time it takes to
transfer into and out of the Escrow Account. At the Closing, the Earnest Money shall be paid by the
Escrow Agent to, or at the direction of, the Seller. If for any reason the Closing does not occur
and either party makes a written demand upon the Escrow Agent for payment of such amount, the
Escrow Agent shall, within 24 hours give written notice to the other party of such demand. If the
Escrow Agent does not receive a written objection within five Business Days after the giving of
such notice, the Escrow Agent is hereby authorized to make such payment. If the Escrow Agent does
receive such written objection within such five Business Day period or if for any other reason the
Escrow Agent in good faith shall elect not to make such payment, the Escrow Agent shall continue to
hold such amount until otherwise directed by joint written instructions from the parties to this
Agreement or a final judgment of a court of competent jurisdiction. However, the Escrow Agent shall
have the right at any time to deposit the Earnest Money with the clerk of the court of New York
County. The Escrow Agent shall give written notice of such deposit to the Seller and the Buyer.
Upon such deposit the Escrow Agent shall be relieved and discharged of all further obligations and
responsibilities hereunder.




     (c) The parties acknowledge that the Escrow Agent is acting solely as a stakeholder at their
request and for their convenience, that the Escrow Agent shall not be deemed to be the agent of
either of the parties, and the Escrow Agent shall not be liable to either of the parties for any
act or omission on its part, other than for its gross negligence or willful misconduct. The Seller
and the Buyer shall jointly and severally indemnify and hold the Escrow Agent harmless from and
against all costs, claims and expenses, including attorneys’ fees and disbursements, incurred in
connection with the performance of the Escrow Agent’s duties hereunder.



     (d) The Escrow Agent has acknowledged its agreement to these provisions by signing this
Agreement in the place indicated following the signatures of the Seller and the Buyer.



          SECTION 14.6 Successors and Assigns; No Third-Party Beneficiaries. The stipulations,
terms, covenants and agreements contained in this Agreement shall inure to the benefit of, and
shall be binding upon, the parties hereto and their respective permitted successors and assigns
(including any successor entity after a public offering of stock, merger, consolidation, purchase
or other similar transaction involving a party hereto) and nothing herein expressed or implied
shall give or be construed to give to any person or entity, other than the parties hereto and such
assigns, any legal or equitable rights hereunder.




          SECTION 14.7 Assignment. This Agreement may not be assigned by the Buyer without the prior
written consent of the Seller. The Buyer may designate an affiliate to which the Asset will be
assigned at the Closing, provided that the Buyer provides the Seller written notice of such
designation at least five days prior to the Closing and the Buyer will continue to remain primarily
liable under this Agreement notwithstanding any such designation. Notwithstanding anything to the
contrary contained herein, the Buyer may assign its rights and obligations under this Agreement to
an affiliate of the Buyer provided that the Buyer provides the Seller with a fully executed
assignment of contract at least five days prior to the Closing and the Buyer will continue to
remain primarily liable under this Agreement notwithstanding any such assignment.




50









 





          SECTION 14.8 Further Assurances.




     (a) From time to time, as and when requested by any party hereto, the other party shall
execute and deliver, or cause to be executed and delivered, all such documents and instruments and
shall take, or cause to be taken, all such further or other actions as such other party may
reasonably deem necessary or desirable to consummate the transactions contemplated by this
Agreement.



     (b) The Seller shall after the Closing and if requested by the Buyer, based on the Buyer’s
obligations under regulatory requirements, reasonably cooperate with the Buyer in the Buyer’s
preparation of audited financial statements of the Property for the calendar year in which the
Closing occurs and the three preceding calendar years, by providing such information as may be in
the possession of the Seller as shall be required to enable an accounting firm of the Buyer’s
choosing to prepare such audited financial statements, the cost of which shall be borne by the
Buyer. Any information provided by the Seller to the Buyer pursuant to this subsection 14.8(b)
shall be without any representations or warranties. The Buyer agrees to reimburse the Seller for
the Seller’s actual and reasonable costs in connection with the Seller’s cooperation pursuant to
this subsection 14.8(b).



     (c) The provisions of this Section 14.8 shall survive the Closing.



          SECTION 14.9 Notices. All notices, demands or requests made pursuant to, under or by
virtue of this Agreement must be in writing and shall be (a) personally delivered, (b) delivered by
express mail, Federal Express or other comparable overnight courier service, (c) telecopied, with
telephone or written confirmation within one Business Day, or (d) mailed to the party to which the
notice, demand or request is being made by certified or registered mail, postage prepaid, return
receipt requested, as follows:




     To the Seller:


c/o
Blackstone Real Estate Acquisitions V L.L.C.

1925 Century Park Estates, Suite 1700

Los Angeles, CA 90067

Attention: Robert Harper

Facsimile: 310-228-6998

Telephone: 310-228-6950




     with copies thereof to:


LQ Management

909 Hidden Ridge, Suite 600

Irving, Texas 75038

Attention: Mark M. Chloupek

Facsimile: 214-492-6500

Telephone: 214-492-6990




51









 





     To the Buyer:


Interstate Hotel & Resorts, Inc.

4501 North Fairfax Drive — Suite 500

Arlington, Virginia 22203

Attention: Christopher L. Bennett, Esq.

Facsimile: 703-542-0965

Telephone: 703-387-3332




     with copies thereof to:


DeCampo, Diamond & Ash

747 Third Avenue — 37th Floor

New York, New York 10017

Attention: William H. Diamond, Esq.

Facsimile: 212-758-1728

Telephone: 212-758-3500




     To the Escrow Agent/Title Company:


First American Title Insurance Company

1801 K Street, NW, Suite 200-K

Washington, DC 20006

Attention: Craig A. Johnson

Facsimile: 202-530-1433

Telephone: 202-530-1200 ext. 456



All notices (i) shall be deemed to have been given on the date that the same shall have been
delivered in accordance with the provisions of this Section and (ii) may be given either by a party
or by such party’s attorneys. Any party may, from time to time, specify as its address for purposes
of this Agreement any other address upon the giving of 10 days’ prior notice thereof to the other
parties.




          SECTION 14.10 Entire Agreement. This Agreement, along with the Exhibits and
Schedules hereto contains all of the terms agreed upon between the parties hereto with respect to
the subject matter hereof, and all understandings and agreements heretofore had or made among the
parties hereto are merged in this Agreement which alone fully and completely expresses the
agreement of the parties hereto.




          SECTION 14.11 Amendments. This Agreement may not be amended, modified, supplemented
or terminated, nor may any of the obligations of the Seller or the Buyer hereunder be waived,
except by written agreement executed by the party or parties to be charged.




          SECTION 14.12 No Waiver. No waiver by either party of any failure or refusal by
the other party to comply with its obligations hereunder shall be deemed a waiver of any other or
subsequent failure or refusal to so comply.




52









 





          SECTION 14.13 Governing Law. This Agreement shall be governed by, interpreted
under, and construed and enforced in accordance with, the laws of the State of Texas.




          SECTION 14.14 Intentionally Omitted.




          SECTION 14.15 Severability. If any term or provision of this Agreement or the
application thereof to any person or circumstances shall, to any extent, be invalid or
unenforceable, the remainder of this Agreement or the application of such term or provision to
persons or circumstances other than those as to which it is held invalid or unenforceable shall not
be affected thereby, and each term and provision of this Agreement shall be valid and enforceable
to the fullest extent permitted by law.




          SECTION 14.16 Section Headings. The headings of the various Sections of this
Agreement have been inserted only for purposes of convenience, are not part of this Agreement and
shall not be deemed in any manner to modify, explain, expand or restrict any of the provisions of
this Agreement.




          SECTION 14.17 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, and it shall not be necessary in making
proof of this Agreement to produce or account for more than one such counterpart.




          SECTION 14.18 Acceptance of Deed. The acceptance of the Deed by the Buyer shall
be deemed full compliance by the Seller of all of the Seller’s obligations under this Agreement
except for those obligations of the Seller which are specifically stated to survive the Closing.




          SECTION 14.19 Construction. The parties acknowledge that the parties and their
counsel have reviewed and revised this Agreement and that the normal rule of construction to the
effect that any ambiguities are to be resolved against the drafting party shall not be employed in
the interpretation of this Agreement or any exhibits or amendments hereto.




          SECTION 14.20 Recordation. Neither this Agreement nor any memorandum or notice
of this Agreement may be recorded by any party hereto without the prior written consent of the
other party hereto. The provisions of this Section shall survive the Closing or any termination of
this Agreement. The Buyer also agrees not to file any lis pendens or other instrument against the
Asset in connection herewith in bad faith. In furtherance of the foregoing, the Buyer (i)
acknowledges that the filing of a lis pendens in bad faith against or encumbering the Asset or the
recording of any memorandum or notice of this Agreement could cause significant monetary and other
damages to the Seller, and (ii) hereby indemnifies the Seller from and against any and all
liabilities, damages, losses, costs or expenses (including without limitation attorneys fees and
expenses) arising out of a breach of this Section 14.20. The provisions of this Section 14.20 shall
survive the Closing or any termination of this Agreement.




          SECTION 14.21 WAIVER OF JURY TRIAL. THE SELLER AND THE BUYER HEREBY WAIVE TRIAL BY
JURY IN ANY ACTION,




53









 







PROCEEDING OR COUNTERCLAIM BROUGHT BY ANY PARTY AGAINST ANOTHER PARTY ON ANY MATTER ARISING
OUT OF OR IN ANY WAY CONNECTED WITH THIS AGREEMENT. THE PROVISIONS OF THIS SECTION 14.21 SHALL
SURVIVE THE CLOSING AND ANY TERMINATION OF THIS AGREEMENT.




          SECTION 14.22 Time is of the Essence. The Seller and the Buyer agree that time
is of the essence with respect to the obligations of the Buyer and the Seller under this Agreement.




          SECTION
14.23 Bulk Sale; Occasional Sale. The Seller and the Buyer specifically
waive compliance with the Uniform Commercial Code of the State of Texas with respect to bulk
transfers, with any similar provision under any applicable law of the County of Harris and City of
Houston. The Buyer and the Seller acknowledge that the Seller is selling the entire operating
assets of a business pursuant to this Agreement, which is intended to qualify as an occasional sale
as defined in the Tax Code Section 151.304.




     SECTION 14.24 STORAGE TANKS. THE BUYER (HAVING AN ADDRESS AS SET FORTH IN
SECTION 14.9) ACKNOWLEDGES THAT INCLUDED AS PART OF THE ASSET TO BE CONVEYED BY SELLER (HAVING AN
ADDRESS AS SET FORTH IN SECTION 14.9) HEREUNDER ARE TWO ABOVEGROUND STORAGE TANKS. ONE STORAGE TANK
IS A STEEL, 150 GALLON ABOVEGROUND STORAGE TANK CONTAINING DIESEL FUEL USED AS FUEL FOR THE
EMERGENCY GENERATOR. THE OTHER STORAGE TANK IS A STEEL, 6,000 GALLON ABOVEGROUND STORAGE TANK
CONTAINING WATER TO BE USED AS A RESERVE FOR THE FIRE SPRINKLER PUMP. THE ABOVEGROUND STORAGE TANKS
WHICH ARE INCLUDED IN THIS CONVEYANCE ARE PRESUMED TO BE REGULATED BY THE TEXAS COMMISSION ON
ENVIRONMENTAL QUALITY AND MAY BE SUBJECT TO CERTAIN REGISTRATION, DELIVERY PROHIBITION,
INSTALLATION NOTIFICATION, AND OTHER REQUIREMENTS FOUND IN TITLE 30 TEXAS ADMINISTRATIVE CODE,
CHAPTER 334.



54









 





     IN WITNESS WHEREOF, this Agreement has been duly executed by the parties hereto as of the
day and year first above written.



	 	 	 	 	 	 	 	 	 
	 	 	SELLER:	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	CAPSTAR WESTCHASE PARTNERS, L.P., a Delaware limited
partnership	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	WESTCHASE SPE LLC, a Delaware

limited partnership, its general partner	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:
	 	/s/ Mark M. Chloupek	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Name: Mark M. Chloupek	 	 
	 

	 	 	 	 	 	Title: Vice President	 	 






	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	BUYER:	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	INTERSTATE WESTCHASE, LP, a Delaware limited partnership	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	By:	 	Interstate Westchase GP, LLC, a Delaware limited liability
company, its general partner	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	By:	 	Interstate Westchase MC, LLC,
a Delaware limited liability company, its
manager and sole member	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	By:	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	Name:	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	Title:	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 





 









 





     IN WITNESS WHEREOF, this Agreement has been duly executed by the parties hereto as of the
day and year first above written.



	 	 	 	 	 	 	 	 	 
	 	 	SELLER:	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	CAPSTAR WESTCHASE PARTNERS, L.P., a Delaware limited
partnership	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	WESTCHASE SPE LLC, a Delaware

limited partnership, its general partner	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Name:	 	 
	 

	 	 	 	 	 	Title:	 	 






	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	BUYER:	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	INTERSTATE WESTCHASE, LP, a Delaware limited partnership	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	By:	 	Interstate Westchase GP, LLC, a Delaware limited liability
company, its general partner	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	By:	 	Interstate Westchase MC, LLC,
a Delaware limited liability company, its
manager and sole member	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	By:	 	/s/ Christopher L. Bennett	 	 
	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	Name:
	 	Christopher L. Bennett	 	 
	 

	 	 	 	 	 	 	 	Title:
	 	Secretary